[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JANUARY 26, 2011
__________
Serial No. 112-1
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas
Chairman Emeritus
CLIFF STEARNS, Florida
ED WHITFIELD, Kentucky
JOHN SHIMKUS, Illinois
JOSEPH R. PITTS, Pennsylvania
MARY BONO MACK, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
MIKE ROGERS, Michigan
SUE MYRICK, North Carolina
Vice Chair
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BRIAN BILBRAY, California
CHARLIE BASS, New Hampshire
PHIL GINGREY, Georgia
STEVE SCALISE, Louisiana
BOB LATTA, Ohio
CATHY McMORRIS RODGERS, Washington
GREGG HARPER, Mississippi
LEONARD LANCE, New Jersey
BILL CASSIDY, Louisiana
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
MORGAN GRIFFITH, Virginia HENRY A. WAXMAN, California
Ranking Member
JOHN D. DINGELL, Michigan,
Chairman Emeritus
EDWARD J. MARKEY, Massachusetts
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
ELIOT L. ENGEL, New York
GENE GREEN, Texas
DIANA DeGETTE, Colorado
LOIS CAPPS, California
JANE HARMAN, California
JAN SCHAKOWSKY, Illinois
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
JOHN BARROW, Georgia
DORIS O. MATSUI, California
_________________________________________________________________
Professional Staff
Gary Andres, Staff Director
James D. Barnette, General Counsel
Philip S. Barnett, Minority Staff
Director
(ii)
Subcommittee on Oversight and Investigations
CLIFF STEARNS, Florida
Chairman
SUE MYRICK, North Carolina DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee Ranking Member
LEE TERRY, Nebraska JAN SCHAKOWSKY, Illinois
JOHN SULLIVAN, Oklahoma MIKE ROSS, Arkansas
TIM MURPHY, Pennsylvania ANTHONY D. WEINER, New York
MICHAEL C. BURGESS, Texas EDWARD J. MARKEY, Massachusetts
BRIAN BILBRAY, California GENE GREEN, Texas
PHIL GINGREY, Georgia CHARLES A. GONZALEZ, Texas
STEVE SCALISE, Louisiana JOHN D. DINGELL, Michigan
CORY GARDNER, Colorado HENRY A. WAXMAN, California (ex
MORGAN GRIFFITH, Virginia officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 2
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 5
Prepared statement........................................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 7
Prepared statement........................................... 8
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 8
Prepared statement........................................... 9
Hon. Cory Gardner, a Representative in Congress from the State of
Colorado, opening statement.................................... 10
Prepared statement........................................... 11
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 12
Prepared statement........................................... 13
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 24
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, prepared statement..................................... 25
Witnesses
Cass R. Sunstein, Administrator, Office of Information and
Regulatory Affairs............................................. 28
Prepared statement........................................... 31
Answers to submitted questions............................... 113
Submitted Material
Supplemental memorandum, dated January 26, 2010, submitted by Mr.
Waxman......................................................... 15
``Toward a 21st-Century Regulatory System,'' article dated
January 18, 2011, by Barack Obama, Wall Street Journal......... 78
``The EPA's War on Texas,'' article dated January 4, 2011, Wall
Street Journal................................................. 80
Subcommittee exhibit binder...................................... 82
``EPA `confident' Obama reg policy won't affect new climate
rules,'' article dated January 18, 2011, by Andrew Restuccia,
The Hill....................................................... 118
THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM
----------
WEDNESDAY, JANUARY 26, 2011
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Washington, D.C.
The subcommittee met, pursuant to call, at 10:02 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Cliff
Stearns (chairman of the subcommittee) presiding.
Members present: Representatives Stearns, Terry, Sullivan,
Murphy, Burgess, Blackburn, Myrick, Bilbray, Gingrey, Scalise,
Gardner, Griffith, Barton, McKinley, Upton (ex officio),
DeGette, Schakowsky, Weiner, Markey, Green, Gonzalez, Dingell,
and Waxman (ex officio).
Staff present: Karen Christian, counsel; Stacy Cline,
counsel; Todd Harrison, chief counsel; Sean Hayes, counsel;
Alan Slobodin, deputy chief counsel; Sam Spector, counsel;
Peter Spencer, professional staff member; Kristin Amerling,
minority chief counsel; Karen Nelson, minority deputy committee
staff director, health; Karen Lightfoot, minority
communications director and senior policy advisor; Greg Dotson,
minority chief counsel, energy and environment; Alexandra
Teitz, minority senior counsel; Stacia Cardille, minority
counsel; Tiffany Benjamin, minority counsel; Anne Tindall,
minority counsel; Ali Neubauer, minority investigator; Brian
Cohen, minority senior investigator and policy advisor;
Jennifer Berenholz, minority chief clerk; Lindsay Vidal,
minority deputy press secretary; and Mitchell Smiley, special
assistant.
Mr. Stearns. Good morning everybody, and let me welcome
all of you to the Subcommittee on Oversight and Investigations.
We appreciate your early attendance, and if possible, we would
like to start promptly at 10:00. I would also like to point out
that Chairman Upton has indicated that this will be a very
active subcommittee. It is a very important subcommittee. I
think most of us on both sides of the aisle realize that
Congress, the House of Representatives, has a very important
role in oversight of the Executive Branch. In this case, there
are many areas that we can explore both in a way that is
substantive and at the same time, I think, in a bipartisan way
to have a better understanding of where there is error, where
there is complement, and in the long run to give full oversight
to the Executive Branch according to the Constitution. So I
welcome this opportunity as chairman of this very important
subcommittee, and I thank Mr. Upton, our chairman of the Energy
and Commerce Committee, for this distinct honor to be able to
be chairman.
And of course, on the Democrat side, they have had some
very illustrious people as Oversight and Investigations
chairmen, including Mr. Dingell and Mr. Waxman and others, so I
look forward to this opportunity for the next term and I
welcome from both sides of the aisle any comments or feedback.
Let me open with a little bit of procedure. All members
will have 5 days to make their opening statements part of the
record by unanimous consent. Also, we have agreed under our
procedures that there will be no opening statements except for
the chairman and the ranking member, Ms. DeGette, and then she
will allot 5 minutes to her members for another additional 5
and then I will do the same on this side. So again, I will do
my 5 minutes, Ms. DeGette will do her 5 minutes, then I have 5
minutes that I have allocated to members on this side, and then
you will have the same thing. With that, let me proceed to my
opening statement.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
We convene this hearing of the Subcommittee on Oversight
and Investigations today to gather information concerning the
Administration's views and plans for regulatory reform. Now, we
can all agree that this is a critically important topic, worthy
of being the Energy and Commerce Committee's first hearing
under the new Majority leadership.
Over the past 2 years, as the American public confronted
the worst unemployment crisis in a generation, it
simultaneously has faced an onslaught of federal regulations,
with more yet to come. While the growth of the regulatory state
has been a continuous concern over the past 2 decades, the pace
in recent years has been breathtaking, given the Nation's dire
economic situation.
According to the OMB data compiled by the Heritage
Foundation, in fiscal year 2009, which spanned both the Bush
and Obama Administrations, major rules added $13 billion in new
costs to the economy. In fiscal year 2010 alone, federal
agencies promulgated 43 major rules that imposed compliance
costs estimated by the regulators themselves at almost $27
billion, the highest annual level since 1981. And we know
agencies' estimates of costs may often be just the tip of the
iceberg when it comes to the economic impact on jobs,
competitiveness and innovation.
Now, along with all of these major rules come daunting
levels of red tape, the costs of which cannot easily be
counted. The Obama Administration's regulatory agenda released
this past fall identifies 4,225 rules under development. The
EPA alone has finalized 928 regulations since the start of this
Administration, and it has also proposed a number of expensive
and complex new rules affecting our energy system, our
industrial and manufacturing infrastructure, and even the
electric power we rely upon every day.
On top of this, new rules related to the expansive new
health care law and the financial services reforms are
certainly looming on the horizon, with regulatory impacts on
many different aspects of our lives. From our health to our
wealth to the freedom to live our lives the way we want, the
federal regulatory state continues to grow and intrude.
Of course, many regulations, derived from the laws Congress
enacted, are essential to protect the public health and welfare
and ensure free markets. While appropriate implementation of
these laws is essential for these purposes, appropriate
consideration of the economic and employment impacts of the
regulations is essential for protecting the Nation's economic
health and individual freedom. I am concerned that this balance
has not properly been struck during the apparent rush to
regulate over the past 2 years.
Against this backdrop, we consider today the President's
new Executive order, initiatives relating to regulatory review
and his stated focus on reducing the economic burdens of
regulations and promoting job growth. Now, this focus is to be
commended. We hope it will lead to meaningful results.
To this end, we seek to understand specifically how the
Administration performs its regulatory reviews and what changes
we can expect that will reduce the regulatory burden,
especially in the areas of this Committee's jurisdiction. We
will hear testimony and ask questions of a single witness
today: Mr. Cass Sunstein, the current Administrator of the
Office of Information and Regulatory Affairs, within OMB. Mr.
Sunstein's office serves as the intersection of the
Administration's rulemaking review process. In some respects,
his office serves or can serve as a regulatory traffic cop,
carefully reviewing significant rules to ensure that they are
consistent with the law, the President's policies and
priorities and that they receive appropriate review and
analysis from other federal offices and agencies. He is
especially qualified to explain the prospects and limits of the
Administration's regulatory reform plans.
My colleagues, it is important that rhetoric is matched
with measurable results and actions. For example, after the
Bush Administration took office in 2001, it made little change
to the existing regulatory guidance, but it made extensive use
of the available tools to return rules, ask questions and
prompt additional review. It took an active role, sending 19
so-called return letters in the first 2 years of the
Administration. The present Administration has not even sent
one return letter. We will gather information about this today.
We will also gather information to help us to understand
the substance of the plans for retrospective regulatory review
called for by the President. We should seek to understand the
limits of the review ordered by the President. Rules issued by
independent agencies like the FCC, the BCFP, CFTC, CPSC, FERC,
FTC, SEC, FDIC, and the Federal Reserve and the NRC, among
others, have apparently been placed beyond the purview of the
President's review, and thus will not be affected by this
initiative.
The information we gather today should help this
committee's various oversight projects in the coming session of
Congress. We have much ground to cover.
[The prepared statement of Mr. Stearns follows:]
Prepared Statement of Hon. Cliff Stearns
We convene this hearing of the Subcommittee on Oversight
and Investigations today to gather information concerning the
Administration's views and plans for regulatory reform. We can
all agree this is a critically important topic, worthy of being
the Energy and Commerce Committee's first hearing under the new
Majority leadership.
Over the past 2 years, as the American public confronted
the worst unemployment crisis in a generation, it
simultaneously has faced an onslaught of federal regulations,
with more yet to come. While the growth of the regulatory state
has been a continuous concern over the past 2 decades, the pace
in recent years has been breathtaking, given the nation's dire
economic situation.
According to the OMB data compiled by the Heritage
Foundation, in fiscal year 2009, which spanned both the Bush
and Obama Administrations, major rules added $13 billion in new
costs to the economy. In fiscal year 2010 alone, federal
agencies promulgated 43 major rules that imposed compliance
costs estimated by the regulators themselves at almost $27
billion, the highest annual level since 1981. And we know
agency estimates of costs may often be just the tip of the
iceberg when it comes to the economic impact on jobs,
competitiveness, and innovation.
Along with all of these major rules come daunting levels of
red tape, the costs of which cannot easily be counted. The
Obama Administration's regulatory agenda released this past
fall identifies 4,225 rules under development.
The EPA alone has finalized 928 regulations since the start
of this Administration. And it has also proposed a number of
expensive and complex new rules affecting our energy system,
our industrial and manufacturing infrastructure, even the
electric power we rely upon every day.
On top of this, new rules related to the expansive new
health care law and the financial services reforms are looming
on the horizon, with regulatory impacts on many different
aspects of our lives. From our health to our wealth to the
freedom to live our lives the way we want, the federal
regulatory state continues to grow and intrude.
Of course, many regulations--derived from the laws Congress
enacted--are essential to protect the public health and welfare
and ensure free markets. While appropriate implementation of
the laws is essential for these purposes, appropriate
consideration of the economic and employment impacts of the
regulations is essential for protecting the nation's economic
health and individual freedom. I am concerned that this balance
has not properly been struck during the apparent rush to
regulate over the past 2 years.
Against this backdrop, we consider today the President's
new Executive order and initiatives relating to regulatory
review and his stated focus on reducing the economic burdens of
regulations and promoting jobs growth. This focus is to be
commended; we hope it will lead to meaningful results.
To this end, we seek to understand specifically how the
Administration performs its regulatory reviews and what changes
we can expect that will reduce the regulatory burden,
especially in the areas of this committee's jurisdiction. We
will hear testimony and ask questions of a single witness: Mr.
Cass Sunstein, the current Administrator of the Office of
Information and Regulatory Affairs (OIRA), within OMB.
Mr. Sunstein's office serves at the intersection of the
Administration's rulemaking review process. In some respects,
his office serves or can serve as a regulatory traffic cop,
carefully reviewing significant rules to ensure they are
consistent with the law, the President's policies and
priorities, and that they receive appropriate review and
analysis from other federal offices and agencies. He is
especially qualified to explain the prospects and limits of the
Administration's regulatory reform plans.
It is important that rhetoric is matched with measurable
action and results. For example, after the Bush Administration
took office in 2001, it made little change to the existing
regulatory guidance, but it made extensive use of the available
tools to return rules and ask questions and prompt additional
review. It took an active role--sending 19 so-called return
letters in the first 2 years of the Administration; the present
Administration has not even sent one return letter. We will
gather information about this today.
We will also gather information to help us to understand
the substance of the plans for retrospective regulatory review
called for by the President. We should seek to understand the
limits of the review ordered by the President. Rules issued by
independent agencies--FCC, the BCFP, CFTC, CPSC, FERC, FTC,
SEC, FDIC, the Federal Reserve, the NRC, among others--have
apparently been placed beyond the purview of the President's
review, and thus will not be affected by this initiative.
The information we gather today should help this
Committee's various oversight projects in the coming Session of
Congress. We have much ground to cover; so let me recognize,
with pleasure, our new Ranking Member, Ms. DeGette.
Mr. Stearns. It is my pleasure to recognize our new
ranking member, Ms. DeGette.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you very much, Mr. Chairman. I am
excited about the opportunity to serve in the 112th Congress as
the ranking member of this esteemed committee. As you
mentioned, Mr. Chairman, this is one of the most effective
committees in the House, and in my 14 years on this
subcommittee, it can also be one of the most bipartisan
committees, and I look forward to working with you and my
colleagues on both sides of the aisle both on new initiatives
and also to follow up on some of the key investigations that we
were working on in the last session of Congress. I also want to
thank my chairman, Mr. Waxman, and my chairman emeritus, Mr.
Dingell, for their fine investigative work on this subcommittee
over the years.
Both Democrats and Republicans have supported laws to
protect the health, environment, financial security, and safety
of the American people. Today's hearing is about how to ensure
that the regulatory system that implements these laws functions
as effectively and efficiently as possible. This is a laudable
goal that both sides of the aisle should support and which I
personally support wholeheartedly. I was encouraged by the
President's announcement last night in the State of the Union
about his new initiative to streamline and modernize
government, which is way overdue in many cases.
The President's new Executive order on improving regulation
and regulatory review is an excellent starting point in this
process. The order is based on such sound principles as the
regulatory system must be based on the best available science,
regulations protect public welfare while promoting economic
growth and job creation should be retained, and the process
must allow for public participation and open exchange of ideas,
and the process must take into account both cost and benefits.
Consistent with this directive, the Obama Administration has
already identified several regulations that could be refined or
cut, and I expect that we will hear from our witness today
about additional areas where we can look at regulations.
I commend the Administration for this effort, and I hope
that we can work together to support cost-effective
implementation of the laws Congress has enacted to protect the
American public's health, financial safety and security and
their personal safety. These sensible safeguards are vitally
important to the American people.
We must recognize, however, that regulations per se are not
the problem. The mantra that all regulations are inherently bad
and kill jobs is wrong and dangerous. Just 2-and-a-half years
ago, for example, our financial system virtually collapsed
following years of deregulatory efforts by Congress. The
Securities and Exchange Commission and other federal financial
regulators sat on the sidelines while flawed and unchecked
financial practices robbed Americans of their retirement
savings and caused our economy to nearly collapse. It wasn't
regulations that caused the financial collapse and the deepest
economic recession since the Great Depression, it was unbridled
deregulation.
For too long, big polluters have been allowed to dump toxic
mercury into the air, resulting in birth defects and
developmental problems for children in affected communities.
Finally, after years of delay, the Administration is taking
action to rein in this toxic contamination, and we should all
support these efforts. Again, it is not regulations that caused
these problems, it is the lack of regulations.
At the direction of the Supreme Court, the EPA has recently
set standards to cut carbon pollution from cars and trucks.
This regulation is a win-win. Not only does it cut pollution
responsible for climate change, it saves 1.8 billion barrels of
oil, making the Nation more energy-independent and secure and
saving American families money at the pump.
Regulations to protect children from the health effects of
tobacco and to prevent another salmonella outbreak in eggs or
other threats to food safety are also important examples of
where these problems have not been caused by an excess of
regulations but rather a lack of regulations. So when you
examine the details of these and other safeguards, you find
that there is a real need for government action.
Now, I look forward to hearing from our witness today
regarding the implementation of the Obama Administration's
Executive order on improving regulations and the regulatory
process. It is a commonsense plan to cut outdated regulations
and promote transparency. I also look forward to working with
all members of this subcommittee to examine regulatory reform
in a sensible way. Thank you, Mr. Chairman.
[The prepared statement of Ms. DeGette follows:]
Prepared Statement of Hon. Diana DeGette
Both Democrats and Republicans have supported laws to
protect the health, environment, financial security, and safety
of the American public. Today's hearing is about how to ensure
that the regulatory system that implements these laws functions
as efficiently and as effectively as possible.
This is a laudable goal that both sides of the aisle should
support. The President's new Executive order on improving
regulation and regulatory review is an excellent starting
point. The order is based on sound principles such as:
The regulatory system must be based on the best
available science;
Regulations protect public welfare while promoting
economic growth and job creation;
The process must allow for public participation
and the open exchange of ideas; and
The process must take into account both costs and
benefits.
Consistent with this directive, the Obama Administration
has already identified several regulations that could be
refined or cut.
I commend the Administration for this effort. And I hope
that we can work together to support cost-effective
implementation of the laws Congress has enacted to protect the
American people's health, financial security, and safety. These
sensible safeguards are vitally important to the American
people.
We must recognize, however, how important regulations are
to our national welfare. The mantra that regulations are
inherently bad and kill jobs is wrong and dangerous.
Just 2-and-a-half years ago, our financial system virtually
collapsed. Following years of deregulatory efforts by Congress,
the Securities and Exchange Commission and other federal
financial regulators sat on the sidelines while flawed and
unchecked financial practices robbed Americans of their
retirement savings and caused the our economy to collapse.
It wasn't regulations that caused our financial collapse
and the deepest economic recession since the Great Depression.
It was unbridled deregulation.
For too long, big polluters have been allowed to dump toxic
mercury into the air--resulting in birth defects and
developmental problems for children in affected communities.
Finally--after years of delay--the Administration is taking
action to rein in this toxic contamination. We should all
support these efforts.
At the direction of the Supreme Court, EPA has recently set
standards to cut carbon pollution from cars and trucks. This
regulation is a win-win. Not only does it cut pollution
responsible for climate change, it saves 1.8 billion barrels of
oil--making the nation more secure and saving American families
at the pump.
Regulation to protect children from the health effects of
tobacco and to prevent another salmonella outbreak in eggs or
other threats to food safety are other important examples of
where government is on schedule to act and must do so.
When you examine the details of these and other safeguards,
you find that there is a real need for governmental action and
that action will substantially benefit the public and the
nation.
I look forward to hearing from our witness regarding
implementation of the Obama Administration's Executive order on
improving regulations and the regulatory process. This is a
common sense plan to cut outdated regulations and promote
transparency. In contrast, the Republican plan to eliminate
safeguards vital to the welfare of Americans makes absolutely
no sense at all.
Mr. Stearns. I thank the gentlelady.
And now, according to our procedures, we have 5 minutes on
this side, and they will be allocated to Mr. Upton, the
chairman, at 1 minute, Mr. Barton, 2, Mr. Burgess, 1, and Mr.
Gardner, 1. So the chairman, Mr. Upton, is recognized for 1
minute.
Mr. Upton. Well, thank you, Mr. Chairman, and I would ask
unanimous consent that my full statement be made part of the
record.
Mr. Stearns. By unanimous consent.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you for your very quick efforts to begin
work in this 112th Congress. We have a lot to accomplish over
the next 2 years, and this subcommittee will certainly play a
key role.
Let me begin by welcoming our witness today, Mr. Cass
Sunstein of the Office of Information and Regulatory Affairs.
It is fitting that our first hearing is focused squarely on job
creation and economic consequences of burdensome regulations
that stifle investment and shift jobs overseas. Our Majority
has made it clear that jobs are priority number one in this
Congress. We can create a climate of job growth by cutting
spending, by limiting the size and scope of government. I have
asked our committee members to track down burdensome
regulations that choke investment and destroy jobs, so we will
identify these regulations, shine a light on them and then seek
their repeal.
I welcome the President's announcement that his
Administration plans to evaluate regulations to ensure that the
benefits justify the costs and federal rules are tailored to
impose the least burden on society, and I would ask again that
the rest of my statement be made part of the record. I yield
back.
[The prepared statement of Mr. Upton follows:]
Prepared Statement of Hon. Fred Upton
Thank you, Mr. Chairman, and thank you for your quick
efforts to begin the work of the 112th Congress. We have a lot
to accomplish over the next 2 years, and this Subcommittee will
play a key role.
Let me begin by welcoming today's witness, Mr. Cass
Sunstein of the Office of Information and Regulatory Affairs.
Mr. Sunstein is the Administration's point person on regulatory
issues, which makes him the ideal witness for today's hearing
on recent changes--announced last week by President Obama--to
the Administration's regulatory stance.
It is fitting that our first hearing is focused squarely on
job creation and the economic consequences of burdensome
regulations that stifle investment and shift jobs overseas. Our
majority has made it clear that jobs are priority number one
for the 112th Congress. We can create a climate of job growth
by cutting spending, and by limiting the size and scope of
government. I have tasked our Committee Members to track down
burdensome regulations that choke investment and destroy jobs.
We will identify these regulations, shine a light on them, and
then seek repeal.
I welcome the President's announcement that his
administration plans to evaluate regulations to ensure the
benefits justify the cost and federal rules are tailored to
impose the least burden on society.
I also hope today's hearing will shed light on the many
unanswered questions about the new Executive order. How does it
differ from practices currently in place? How will the
administration's regulatory approach change for the thousands
of pages of forthcoming regulations as a result of legislation
enacted last year?
Last year more than 6,000 pages of regulations were
released to implement the health care law. Next month, the EPA
will issue Boiler MACT rules, an earlier version of which were
estimated by the agency itself to cost thousands of jobs.
We will also explore what this Executive order means for
the litany of other regulatory policies in the pipeline, from
greenhouse gas standards to government regulation of the
internet. With 20 consecutive months of near double digit
unemployment, the public expects, and demands, that we do
better.
Thank you. I yield back.
Mr. Stearns. The gentleman yields back.
The gentleman from Texas is recognized for 2 minutes.
Mr. Barton. Mr. Chairman, do you want to go back and
forth?
Mr. Stearns. No, we are going to take our full 5 minutes
on this side and then she is going to do her 5 minutes.
Mr. Barton. OK. I ask unanimous consent that my entire
statement be put in the record, Mr. Chairman.
Mr. Stearns. Consent granted.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Let me congratulate you on being the chairman
of this subcommittee. It is one of the important, if not the
most important subcommittee of what I consider to be the best
committee in the House. In a previous majority, I was
subcommittee chairman of this subcommittee for 4 years and
enjoyed it immensely. I have worked with numerous other
subcommittee chairmen in Oversight.
The importance of congressional oversight cannot be
overstated. In my opinion, the last 2 years under Mr. Waxman,
Subcommittee Chairman Stupak was not aggressive in subjecting
the Obama Administration to stringent oversight. I am sure you,
Mr. Chairman, are going to correct that. As chairman emeritus
of this committee, I stand with Chairman Upton and yourself in
support of immediate and ongoing oversight of the Obama
Administration and its practices and policies. Congressional
oversight, if effective, leads to better functioning of
government, one that protects the taxpayers by identifying
excessive government spending, abusive regulatory regimes, and
discovering ways to decrease spending and stimulate the
economy.
Today we are going to discuss the President's Executive
order entitled ``Improving Regulation and Regulatory Review.''
The order instructs federal agencies to develop plans to ensure
that past, present and new regulations protect the public
health, safety and welfare, and the environment while at the
same time promoting economic growth. Who can be opposed to
that, Mr. Chairman? However, having said that, in the last year
alone, I have sent three letters calling attention to the lack
of such analysis. I sent a letter to the White House concerning
the impact of the Environmental Protection Agency's
CO2 endangerment finding. I sent another letter to
the EPA regarding the proposed economic impact of proposed
ozone standards, and this September I sent a letter to Chairman
Waxman asking that he schedule a hearing on the
Administration's decisionmaking and consideration of job
impacts in connection with a major rulemaking and other
regulatory initiatives that might adversely affect employment
in the United States.
I see my time has expired, Mr. Chairman, so I am going to
yield back and ask that the rest of my statement be put in the
record.
[The prepared statement of Mr. Barton follows:]
Prepared Statement of Hon. Joe Barton
Thank you Mr. Chairman for holding this important hearing,
which marks the first oversight hearing of the 112th Congress.
The importance of congressional oversight of the Executive
branch cannot be overstated. For the past 2 years, the Obama
Administration has not been subject to stringent oversight. As
Chairman Emeritus, I stand with Chairman Upton and Subcommittee
Chairman Sterns in support of immediate and ongoing oversight
of the Obama Administration and its practices and policies.
Effective oversight leads to a better functioning
government-one that protects taxpayers by identifying excessive
government spending and abusive regulatory regimes and
discovering ways to decrease spending and stimulate the
economy.
Today we are here to discuss President Obama's Executive
order entitled ``Improving Regulation and Regulatory Review.''
The order instructs federal agencies to develop plans to ensure
that past, present, and new regulations protect the public's
health, welfare, safety, and environment while at the same time
promoting economic growth and job creation. In theory I agree
with the President's order. However, for the past two years the
Obama Administration has pursued an aggressive agenda of
regulatory expansion. Regulations were passed prior to the
completion of a meaningful cost-benefit analysis that weighed
the proposed benefit to the public against the actual cost to
the economy.
Last year alone, I sent three letters calling attention to
the lack of this analysis. In January, I sent a letter to the
White House concerning the impact of the Environmental
Protection Agency's CO2 endangerment finding on
American jobs. In June, I sent a letter to EPA regarding the
economic and job impacts of proposed ozone standards. And, in
September, I sent a letter to then Committee Chairman Waxman
requesting the Majority schedule a hearing to examine
Administration decision-making and consideration of job impacts
in connection with major rule-making and other regulatory
initiatives that may adversely affect employment in the United
States. I am glad that the President is finally asking for some
kind of cost-benefit review and I look forward to our
discussion on how his Administration plans to do this today.
I want the public to know what I stand for. I support
government regulations that equate to effective protection of
the public's health and safety. I do not support those that
suppress innovation and unnecessarily burden small businesses.
I support government regulations that are based on sound
science. I do not support those that are based on bureaucrats'
opinions. And, as long as I serve the American public I will do
my best to ensure that good governance prevails over lofty
ideological goals.
Mr. Stearns. By unanimous consent, will do. I thank the
gentleman from Texas and recognize Dr. Burgess for 1 minute.
Dr. Burgess. Thank you, Mr. Chairman, and I also want to
welcome our witness here today. An important subject, improving
the regulatory environment. In our country, in fact, the
President himself penned an op-ed in the Wall Street Journal on
January 18th. Quoting from the President, ``Over the past 2
years the goal of my Administration has been to strike the
right balance, and today I am signing an Executive order that
makes clear this is the operating principle of our
government.'' It is too bad that we didn't have that principle
2 weeks prior, because in another editorial in the Wall Street
Journal on January 4th they talked about the EPA violating
every tenet of administrative procedure to strip Texas of its
authority to issue air permits that are necessary for large
power and industrial plants. Going on, the best the EPA could
offer up as a legal excuse for voiding Texas permitting
authority last Thursday was that the EPA had erred in
originally improving the State's implementation plan in 1992.
The error that escaped the EPA's notice for 18 years was that
the Texas plan did not address all pollutants. Back then, Texas
hadn't complied with regulations that didn't exist and wouldn't
exist for an additional 18 years.
I will yield back the balance of my time, Mr. Chairman.
I would ask that both of these be made part of the record,
these reprints from the Wall Street Journal.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. I thank the gentleman, and I want to welcome
two freshmen on the Oversight and Investigation Subcommittee:
Morgan Griffith from Virginia and Cory Gardner from Colorado,
and at this point allow Mr. Gardner 1 minute.
Ms. DeGette. First of all, would the gentleman yield?
Mr. Stearns. I would be glad to yield.
Ms. DeGette. This is the first I can remember we have had
two Coloradoans on this committee, and so I also want to
welcome my neighbor to the north and also our other new
freshman, but particularly Cory.
Mr. Stearns. Good. Mr. Gardner, you have 1 minute.
Mr. Gardner. Thank you, Mr. Chairman, and thank you,
Congresswoman DeGette. Thank you very much for the time to be
here. Thank you to the witness. And I ask unanimous consent
that my statement be entered in its entirety in the record.
Mr. Stearns. By unanimous consent.
OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Mr. Gardner. Thank you. Each day I am in town, my staff or
I sit down with about five businesses from Colorado, and every
business that we meet with talks about the concern that they
have that this Administration is regulating them out of jobs
and out of business, and those that aren't already being
regulated out of business are fearful that the proposed rules
will put them on that path. We exist in an environment where
government regulation is the answer to all of our problems.
Congress can't get both the House and the Senate to pass a bill
so the Administration does it, and they do it without having a
process through Congress. The people speak through their
representatives and then the Administration circumvents the
people's representative. The process must be fixed and it must
be fixed here.
The Executive order is the Administration's attempt to
clean the regulatory house, so to speak. It is a directive to
agencies that they must provide a cost-benefit analysis when
justifying regulations and reduce the burdens on small
businesses that are forced to comply. The question I have,
though, is, how do you define benefits and what constitutes a
burden? The last 2 years have shown that the Administration has
a very different view of what benefits our economy and our
working families.
So today is the first step that we have to go back to our
hardworking constituents with the answers that are presented to
every member here. We need to examine these sweeping federal
rule changes that have the potential to cripple various sectors
of our economy and negatively affect every business.
I thank you, and I hope we move away from ``when all fails,
regulate.''
[The prepared statement of Mr. Gardner follows:]
Prepared Statement of Hon. Cory Gardner
Mr. Chairman, I've been in office for about 3 weeks now.
Each day I'm in town, I, or my staff, sit down with at least 5
businesses that operate in and out of Colorado. We have met
with a cement production company, various municipalities trying
to find ways to deal with water shortages, mining operations,
manufacturing companies, and the list goes on.
Every business that talks to my office has the same
complaint: the Administration is regulating them out of jobs
and out of business. And those that aren't already being
regulated out of business are fearful that proposed rules will
put them on that path.
We exist in an environment where government regulation is
the answer to all our problems. Congress can't get both the
House and the Senate to pass a bill like cap and trade so the
Administration does it--and they do it behind closed doors
without having had an open and honest vetting process. What
kind of democracy is that? The people speak through their
representatives, and then the administration circumvents the
people's will. The process must be fixed and it must be fixed
here.
Executive Order 13563 is the Obama Administration's attempt
to clean the regulatory house, so to speak. It's a directive to
agencies that they must provide a cost-benefit analysis when
justifying regulations, and reduce the burdens on small
businesses that are forced to comply. The question I have is:
how do you define benefits and what constitutes a burden? The
last 2 years have shown that the administration has a very
different view of what benefits our economy, our culture, and
our working families. I define benefits by protecting the
environment that has been given to us, providing affordable
healthcare to those that want it, while at the same time
keeping Americans at work, and allowing businesses to prosper.
I define burden as something that will put so much pressure on
industries that they must let go many of their employees, pay
fines that put them way behind production, litigate until they
can't afford it anymore, or worse--shut down entirely.
Today is the first step in addressing the concerns of my
hard-working constituents and those of every member present. We
need to examine sweeping federal rule changes that have the
potential to cripple various sectors of our economy and
negatively affect Colorado businesses.
I hope that this new Executive order is an indication that
the administration believes the same thing, but I am skeptical
that they are wed to the traditions of the past 2 years: when
all else fails, regulate. This cannot continue and I look
forward to hearing the witness's answers to many of our
questions on how it will assess pending and future regulations.
Thank you, Mr. Chairman. I yield back my time.
Mr. Stearns. I thank the gentleman, and I recognize Ms.
DeGette.
Ms. DeGette. Mr. Chairman, I will recognize our ranking
member of the full committee, Mr. Waxman, for our additional 5
minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Mr. Chairman, I am a strong opponent of
unnecessary regulations. In my years of service on this
committee and on the Oversight and Government Reform Committee,
I led numerous oversight and legislative efforts to promote
government efficiency and eradicate wasteful spending and
programs. In fact, in the 1990s, I served on the Advisory
Committee for the corrections calendar set up by Speaker Newt
Gingrich to identify outdated and pointless regulations so they
could be quickly eliminated. I believe eliminating unnecessary
government regulation is integral to ensuring effective
government, but this is an area where it is easy to paint with
too broad a brush. We need to remember that federal regulations
also play a vital role in growing our economy and protecting
our health and environment.
That is why I am concerned that much of the rhetoric we are
hearing from the Republican side of the committee is a repeat
of what happened the last time the Republicans took control of
Congress. In 1995, the newly elected Republican majority
conducted an all-out assault on regulations. They told alarming
anecdotes about the impact of senseless government regulation.
We were told that the Consumer Product Safety Commission
required holes in the bottoms of buckets and that OSHA killed
the tooth fairy by preventing parents from taking home their
children's baby teeth from the dentist's office. These stories
share two traits. They sounded compelling and they were simply
not true. Now we are hearing repeated claims that regulations
destroy jobs and stymie economic growth, and this is another
myth.
Consider the collapse of the financial markets in 2008.
This meltdown on Wall Street threw our economy into the deepest
recession since the 1930s. Millions of Americans lost their
jobs and it cost U.S. taxpayers billions of dollars to bail out
AIG and Wall Street banks. The cause wasn't regulation. It was
the absence of regulation. As Alan Greenspan testified before
me and other members of the Oversight Committee, he said he
made a mistake in promoting deregulation. He said he had found
a flaw looking back over the situation in his free market
ideology and was in a state of shock and disbelief.
The Deepwater Horizon oil spill, which Chairman Stupak held
hearings on in this subcommittee as well as on food safety as
well as on automobile problems, that Deepwater Horizon oil
spill wreaked havoc on the economies of the Gulf States. It was
caused by too little oversight and regulation, not too much.
Members who were on this committee last Congress may
remember our very first hearing. We brought in the CEOs from
our Nation's leading manufacturing and energy companies to
testify. What they told us is that they needed Congress to pass
comprehensive energy legislation so they could plan and invest
for the future. Jim Rogers, CEO of Duke Energy, told us: ``It
is critical we know the rules of the road of climate change as
soon as possible to make sure that we are making the right
investments. Regulatory uncertainty is postponing investments
and is postponing the creation of jobs from apprentices to
engineers to Ph.Ds.'' Jeffrey Immelt, chairman and CEO of
General Electric, who last week was asked by President Obama to
lead the Council on Jobs and Competitiveness, told us:
``Certainty in the investment world is critical to success and
what we lack today is certainty. I am a capitalist pure, plain
and simple, and I just want the system we have today not to be
untenable over the long term insofar as the science is
compelling on global warming.'' What these CEOs were telling us
is that they needed more energy and carbon regulation, not
less, so they would know the rules and plan and invest for the
future.
Subcommittee Ranking Member DeGette and I circulated a
memorandum to our Democratic members that provides more detail
about these examples and others, and Mr. Chairman, I ask
unanimous consent that this memorandum be included in the
record to today's hearing.
Mr. Stearns. Granted.
Mr. Waxman. Thank you.
As we commence this new Congress, let us put aside the
false and hyperbolic claims about regulations killing jobs. By
all means, let us prune unnecessary regulations where we find
them but let us also not hesitate to regulate where needed to
protect our economy and our children's future. There is no
doubt that anybody would understand if you don't regulate to
protect the environment, it is going to be at a disadvantage
for a company to put in pollution control if their competitors
don't do the same thing. Regulations can make the market work
better for everybody while at the same time protecting the
public interest. Yield back my time.
[The prepared statement of Mr. Waxman follows:]
Prepared Statement of Hon. Henry A. Waxman
Mr. Chairman, I am a strong opponent of unnecessary
regulations. In my many years of service on the Committee on
Oversight and Government Reform, I led numerous oversight and
legislative efforts to promote government efficiency and
eradicate wasteful spending and programs.
In the 1990s, I also served on the Advisory Committee for
the Corrections Calendar, an initiative established by Speaker
Newt Gingrich to identify outdated and pointless regulation so
it could be quickly eliminated.
I believe eliminating unnecessary government regulation is
integral to ensuring effective government.
But this is an area where it is easy to paint with too
broad a brush. We need to remember that federal regulations
also play a vital role in growing our economy and protecting
our health and environment.
That is why I am concerned that much of the rhetoric we are
hearing from the Republican side of the Committee is a repeat
of what happened the last time the Republicans took control of
Congress.
In 1995, the newly elected Republican majority conducted an
all-out assault on regulations. They told alarming anecdotes
about the impact of senseless government regulation. We were
told that the Consumer Product Safety Commission required holes
in the bottom of buckets and that OSHA killed the tooth fairy
by preventing parents from taking home their children's baby
teeth from the dentist.
These stories shared two major traits: they sounded
compelling, but they were simply not true.
Now we are hearing repeated claims that regulations destroy
jobs and stymie economic growth. This is another myth.
Consider the collapse of the financial markets in 2008.
This meltdown on Wall Street threw our economy into the deepest
recession since the Great Depression. Millions of Americans
lost their jobs and it cost U.S. taxpayers billions of dollars
to bail out AIG and Wall Street banks.
The cause wasn't regulation; it was the absence of
regulation. As Alan Greenspan testified before me and other
members of the Oversight Committee, he had ``made a mistake''
in promoting deregulation. He said he had ``found a flaw'' in
his free-market ideology and was in ``a state of shocked
disbelief.''
The Deepwater Horizon oil spill wreaked havoc on the
economies of Gulf states. It was caused by too little oversight
and regulation--not too much.
Members who were on this committee last Congress may
remember our first hearing. Like today's hearing, our focus two
years ago was on how to build a strong economic future for our
country. We invited nine CEOs from our nation's leading
manufacturing and energy companies to testify.
And what they told us was that they needed Congress to pass
comprehensive energy legislation so they could plan and invest
for the future. The told us that sensible, market-based
regulation of carbon emissions would spur billions of dollars
in new investments.
Here is what Jim Rogers, the CEO of Duke Energy, told us:
``It is critical we know the rules of the road of climate
change as soon as possible to make sure that we are making the
right investments. Regulatory uncertainty is postponing
investments and [i]t's postponing the creation of jobs from
apprentices to engineers to Ph.Ds.''
Jeffrey Immelt, Chairman and CEO of General Electric, was
asked last week to lead the President's Council on Jobs and
Competitiveness. He told us the same thing: ``Certainty in the
investment world is critical to success. And what we lack today
is certainty. I am a capitalist, pure, plain, and simple. And I
just think the system we have today is untenable over the long
term insofar as the science is so compelling on global
warming.''
What these CEOS were telling us is that they needed more
energy and carbon regulation--not less--so they would know the
rules and plan and invest for the future.
They understood what Alan Greenspan forgot: regulation is
often needed to promote jobs and economic prosperity.
Subcommittee Ranking Member DeGette and I circulated a
memorandum to our Democratic members that provides more detail
about these examples and others. I ask unanimous consent that
this memorandum be included in the record of today's hearing.
As we commence this new Congress, let's put aside the false
and hyperbolic claims about regulations killing jobs. By all
means, let's prune unnecessary regulations where we find them.
But let's also not hesitate to regulate where needed to protect
our economy and children's future.
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Mr. Stearns. I thank the distinguished member.
I ask unanimous consent that the written opening statements
of all members who so desire be introduced into the record.
Without objection, the documents will be entered into the
record.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. John D. Dingell
Thank you, Mr. Chairman.
I thank you for holding today's hearing, and look forward
to hearing from Administrator Sunstein.
Today's hearing topic is an important one. Executive
departments and agencies serve a critical role in our governing
process, promulgating rules and regulations as required in the
laws written here by Members of Congress.
But our responsibilities as Members of Congress do not end
when the President places his signature on a piece of
legislation. I have long held that it is our responsibility as
Members of Congress to ensure that the regulations and rules
laid forward as a result of legislation allow for public
comment, do not adversely impact our state and local
governments and business community, provide a benefit to
economic growth--not hinder it--and above all protect the
public good.
I commend President Obama for calling on the departments
and agencies to reform their regulatory process to increase
transparency, efficiency, coordination and public
participation, as well as to ensure that regulations and rules
protect public health, welfare, safety and our environment,
while also allowing for economic growth and job creation.
I also commend the President for taking into consideration
the impact regulations have on our small businesses, who serve
a vital role as engines of job creation in our communities.
Allowing for regulatory flexibility for small employers,
assures that small employers can comply with the letter of the
law without endangering their business.
Of some concern to me, is the President's directive for a
government-wide review of regulations and rules deemed to be
outdated or ineffective. I agree that we must constantly review
our programs to determine whether they are working effectively
or efficiently and to determine where gaps, if any, exist, and
I believe that this provision will further that goal.
However, we must ensure that the public participation
mandate is heeded to when departments or agencies determine
certain rules or regulations must be withdrawn or repealed.
George Santayana said something which I thought was very
interesting. He said, ``Those who cannot remember the past are
condemned to repeat it."
We have seen what happens when careful consideration is not
given to deregulation, most recently in the unholy alliance
between Wall Street and Bush-era policies that resulted in the
2008 financial crisis.
Moving forward we must strive to ensure that there is a
balance between our responsibilities as the federal government
to regulate effectively, while also protecting the good of the
public.
Thank you, and I look forward to hearing from Administrator
Sunstein.
----------
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Mr. Stearns. Also, I ask unanimous consent that the
contents of the document binder be introduced into the record.
Without objection, the documents will be entered.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. Now, we get to our witness, and let me
welcome the Administrator, Cass Sunstein, to our witness stand.
I thought before we move forward I would give you a little
brief background. I know oftentimes we have the witnesses and
we don't know a lot about them, but I thought it would be very
illustrative for all of us to hear a brief summary of his
resume. Before he became Administrator, Mr. Sunstein was the
Felix Frankfurter Professor of Law at Harvard Law School. He
graduated in 1975 from Harvard College and in 1978 from Harvard
Law School. After graduation, he clerked for Justice Benjamin
Kaplan of the Massachusetts Supreme Judicial Court and Justice
Thurgood Marshall of the United States Supreme Court, and then
he worked as an attorney advisor in the Office of Legal Counsel
of the U.S. Department of Justice. He was a faculty member at
the University of Chicago Law School from 1991 to 2008. A
specialist in administrative law, regulatory policy and
behavioral economics, he is the author of many articles and
books. And so Mr. Sunstein, I welcome you to the subcommittee's
hearing.
As you know, the testimony that you are about to give is
subject to Title 18, section 1001 of the United States Code.
When holding an investigative hearing, this committee has the
practice of taking testimony under oath. Do you have any
objection to testifying under oath?
Mr. Sunstein. None at all, Mr. Chairman.
Mr. Stearns. All right. The Chair then advises you that
under the rules of the House and the rules of the committee,
you are entitled to be advised by counsel. Do you desire to be
advised by counsel during your testimony today?
Mr. Sunstein. I do not.
Mr. Stearns. In that case, if you would please rise and
raise your right hand?
[Witness sworn.]
Mr. Stearns. We welcome your 5-minute opening statement.
TESTIMONY OF CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS
Mr. Sunstein. Thank you, Mr. Chairman. Thank you, other
Mr. Chairman. There are several other Mr. Chairmen. Thanks to
all of you. I am grateful and greatly honored to have the
opportunity to appear today to discuss our new Executive
order--it has a new number, 13563, on improving regulation and
regulatory review--and also our new Memorandum from the
President on small business and job creation, and I will have a
few words to say about that memorandum in a moment.
The President has made clear that these documents are meant
to create foundations for a regulatory system that protects
public health and welfare while promoting economic growth,
innovation--a key word in his State of the Union address--
competitiveness and job creation as several of you have just
emphasized. The Executive order and the Presidential Memorandum
require a number of concrete steps to achieve that overriding
goal.
By way of background, let me briefly note that since 1993,
the process of regulatory review has operated under Executive
order under 12866 from President Clinton, which builds very
directly on an Executive order issued by President Reagan in
1981 called Executive Order 12291. The Clinton Executive order
sets out a number of principles and requirements that were in
operation both under President Clinton and President Bush.
Among other things, it calls for careful consideration of costs
and benefits, for tailoring regulations to impose the least
burden on society, and for selecting the approach that
maximizes net benefits. It also calls for a process of
interagency review coordinated by the Office of Information and
Regulatory Affairs. That process has been in place for nearly
30 years.
The new Executive Order 13563 has six provisions that are
designed to supplement and improve the process. First, it
reaffirms the basic principles and structures of Executive
Order 12866. In doing so, it emphasizes a point to which
several of you have just pointed: the need for predictability
and certainty. That is right out front in the new Executive
order. It also emphasizes the importance of using the ``least
burdensome tools for achieving regulatory ends.'' That is a
quotation. It emphasizes finally what hadn't been in his
predecessor Executive orders, the need to ``measure and seek to
improve the actual results of regulatory requirements.'' That
is the beginning.
Second, the new Executive order calls for public
participation. It tries to bring rulemaking into the 21st
century by requiring use of the Internet to promote an open
exchange of ideas and perspectives. It also directs agencies to
act before they commence rulemaking to seek the views who are
likely to be affected, including those would be burdened by
regulatory requirements. Public participation is front and
center.
Third, and a point that has received considerable attention
over the last several years, indeed decades, the new Executive
order asks agencies to try to harmonize, simplify, and
coordinate rules. It emphasizes that some sectors and
industries face inconsistent, overlapping and redundant
requirements. To reduce burdens and costs and to promote
simplicity, it calls for greater coordination across the
Federal Government. That is designed explicitly to promote
innovation.
Fourth, the new Executive order asks agencies to consider
flexible approaches that maintain freedom of choice for the
public. Approaches that are choice preserving include, for
example, provision of information rather than foreclosure of
decisions through mandates and commands. This is more than a
plea, a direction for flexibility.
Fifth, as noted, Executive Order 13563 calls for scientific
integrity. It directs each agency to ensure the objectivity of
information on which it relies.
Sixth and finally, what has been most publicized in the
week since the Executive order was signed, it calls for
retrospective analysis of existing rules. It is concerned about
rules that may be outmoded, ineffective, or excessively
burdensome. It directs agencies to produce preliminary plans
for periodic review of significant rules and to submit them to
the Office of Information and Regulatory Affairs within 120
days, a pretty tight time frame. In this way, the Executive
order is aimed at the stock of existing requirements as well as
the flow of new requirements. Both are covered by the new
Executive order.
The Presidential Memorandum on Small Business and Job
Creation emphasizes the essential role that small businesses
play in the American economy. With job creation in the title
and economic growth in the body of the memorandum, the
President has insisted as he wrote in the Wall Street Journal
on federal agencies doing more to account for and reduce the
burdens regulations may place on small businesses. To do that,
he has emphasized of the Regulatory Flexibility Act and
directed agencies specifically to explain themselves whenever
in proposed rules or final rules they fail to provide
flexibilities to small businesses in the form, for example, of
partial or total exemptions, simplified reporting requirements
or delayed compliance dates.
Taken as a whole, Executive Order 13563 and the new
Memorandum on Small Business and Job Creation create strong
foundations for improving regulation and regulatory review. I
am looking forward to answering your questions.
[The prepared statement of Mr. Sunstein follows:]
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Mr. Stearns. I thank the witness.
Let me, before we start, perhaps set the tone here. You saw
that Mr. Sunstein, we sort of changed the rules here to
expedite things, and it is important, I think, to stress that
the members' questions that they are going to ask get a direct
answer from you. All of us have been in hearings where we just
have 5 minutes and it is very difficult to get an answer, and I
think that the questions that are going to be asked of you
reflect that we are willing to do away with our opening
statements so we can provide more time for testimony and
questioning. Therefore, I just ask to make it as productive as
possible if when you answer the questions you can answer yes or
no. Some members will ask you these type of questions, and I
know it is going to be difficult but we ask for your patience
and forbearance that you would answer yes or no to these
questions, and I thank you in advance for doing that. And with
that in mind, let me be the first one to ask you questions.
The Obama Executive order was issued but the comments from
organizations representing all the stakeholders and the job
creators in this country, a lot are concerned with the Obama
order: that there were a lot of independent regulatory agencies
not part of the OIRA review. So my question for you, Mr.
Sunstein, is, are the regulatory actions of the independent
regulatory agencies such as the SEC, the FCC, the Federal Trade
Commission, FERC and others, subject to OIRA regulatory review.
Are they, yes or no?
Mr. Sunstein. No.
Mr. Stearns. I am also concerned about what appears to be
a sort of amorphous type of standards that was articulated by
the President. This is what is quoted in the Executive order:
``Where appropriate and permitted by law, each agency may
consider and discuss values that are difficult or impossible to
quantify including equity, human dignity, fairness, and
distributive impacts.'' Now, these are all subjective terms so
you are going to make a decision on regulatory reform based
upon human dignity, fairness, and distributive impacts, which I
assume means distribution of income. Is my interpretation
correct when you say distributive impacts, yes or no? Does that
mean distribution of income?
Mr. Sunstein. That wasn't our intent.
Mr. Stearns. You are saying no. OK. But these standards, I
mean, just looking at it, any rational cost-benefit analysis is
going to be tossed out the window instead of saying does this
economically make sense, what you can quantify. These agencies
are going to be using these amorphous methods to determine the
economic value of a regulation, and they are subjective. As you
know, we are all inherently involved with either ideology or
political correctness, so I guess the question is, won't these
standards make it very difficult for any rational cost-benefit
analysis to be implemented?
Mr. Sunstein. That would be a no.
Mr. Stearns. OK. By April 2010, the Administration had
issued 190 economically significant regulations or regulations
having an economic impact of $100 million or more. Is that
correct?
Mr. Sunstein. I want to double-check that number.
Mr. Stearns. Sure. I appreciate that. And by December,
that number was up to 224.
Mr. Sunstein. I want to double-check that number as well.
Mr. Stearns. So the number of regulations the
Administration is issuing, in our humble opinion, is rising,
not falling. That is just a comment.
Mr. Sunstein. No, that is actually not true. The number of
regulations issued in the last 2 years is about the same or
slightly lower than the last 2 years of the----
Mr. Stearns. OK. And if you could just follow up with the
information to confirm what I asked you earlier, that would be
helpful.
Mr. Sunstein. Absolutely. That would be yes.
Mr. Stearns. OK. Good for you. So in our opinion, these
numbers represent a new amount of regulations including
regulations into, I think, new areas such as the FCC regulation
of the Internet for the first time. Will these regulations that
have been issued in the last 2 years be subject to review under
the President's new standard?
Mr. Sunstein. Yes.
Mr. Stearns. OK. And we expect to see more regulations
issued by Health and Human Service to comply with the new
health care law, new financial regulations to comply with the
Dodd-Frank law, and new regulations from the EPA. Now, will
these regulations be subject to review by OIRA?
Mr. Sunstein. I believe you referred to non-independent
agencies, and thus the answer is absolutely yes.
Mr. Stearns. What we have seen from the Administration in
the last 2 years is, in our opinion not a full exercise in
responsibility to review these regulations. Are you aware that
in the first 2 years of the Bush Administration, the agency
issued 19 return letters to agencies, letters rejecting
agencies' regulations while this Administration has issued zero
return letters in the same period?
Mr. Sunstein. I would say yes, I am aware of that. Would
you like an elaboration?
Mr. Stearns. We will keep going here. I think when the
Democrats have a chance, they are going to give you a chance
for elaboration.
Given that we have seen agencies respond to the Executive
order by stating that they don't need to make any changes, I
think this is what really concerns me and seems not to change
anything in terms of how much control your office will really
have. I think as a Congress we reach out to bureaucracies and
lots of times we see these bureaucracies unable to act. Back in
2003, in your book Risk and Reason, you wrote, ``All in all,
President Clinton's Executive orders did not seem to have much
impact. OIRA was largely passive and toothless, serving a
coordinating function without trying to steer regulation in any
particular direction.'' That is your quote in your book. The
President's new policy reaffirms this very Executive order you
have referred to as toothless and not performing, in our
opinion. Would you think what you said in your book is
applicable to what happened under the Obama Administration?
Mr. Sunstein. Absolutely not.
Mr. Stearns. OK. And let me just ask my last question
here. Do you see that there in tab #3 in the binder before you
is the President's Memorandum of January 30, 2009, on
regulatory review? In it, he directs the director of OMB to
produce within 100 days a set of recommendations for a new
Executive order on federal regulatory review. The question I
have for you is, were the set of recommendations produced
within 100 days of the President's directive?
Mr. Sunstein. Yes.
Mr. Stearns. OK. That completes my time, and Ms. DeGette.
Mr. Sunstein. Thank you for enabling me to be brief.
Mr. Stearns. That completes my questions. Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. Opening statement
might have been a better description. Actually on the Minority
side, we would like to hear some answers to some of these
questions, so Mr. Sunstein, I have a series of questions I
would like to ask you.
The first one is, OIRA was created in 1980 to oversee
certain agencies, correct?
Mr. Sunstein. That is correct.
Ms. DeGette. And----
Mr. Sunstein. By the Paperwork Reduction Act.
Ms. DeGette. Yes, and it was created by Congress. Is that
right?
Mr. Sunstein. That is correct.
Ms. DeGette. So President Obama and the Administration
could not in and of themselves change the jurisdiction of
OIRA--only Congress could do that, right?
Mr. Sunstein. That is correct.
Ms. DeGette. And all of these agencies that Mr. Stearns
mentioned that are exempt from the President's Executive order
are exempt from it because OIRA does not have congressional
jurisdiction to oversee those agencies, correct?
Mr. Sunstein. The basic answer is yes, but if I could
elaborate slightly, if you would permit?
Ms. DeGette. Sure.
Mr. Sunstein. Under the Paperwork Reduction Act, OIRA does
oversee the independent agencies' information-gathering
requests, and actually we have taken strong steps in the last
months to try to reduce paperwork burdens on the American
people, including from the independent agencies.
With respect to the applicability of the Executive order,
what President Obama has done is followed the practice of
President Reagan, who initiated the application of the
Executive order to the executive agencies because of legal and
political concerns about overreaching presidential authority.
Both President Bushes went along with President Reagan on that
issue.
Ms. DeGette. OK. Thank you.
Now, I want to talk for a few minutes about an issue that I
think we are going to be hearing a lot about in this
subcommittee, and that is the EPA regulations. The first target
that I have heard about is large industrial boilers and the EPA
proposed regulation to limit the emissions of toxic air
pollution like mercury, lead, and dioxin. Are you familiar with
that proposed rule, Mr. Sunstein?
Mr. Sunstein. Yes.
Ms. DeGette. And are you aware that EPA's proposed rule
would potentially save thousands of lives per year and protect
children from neurotoxins because the benefits are projected to
be about 14 times greater than the cost?
Mr. Sunstein. I don't have the exact number before me but
I am aware of numbers in that vicinity in the proposed rule.
Ms. DeGette. Did the Administration engage in an open
regulatory process in working on promulgation of that rule?
Mr. Sunstein. Absolutely, and it continues.
Ms. DeGette. Yes. In fact, the chairman of this committee
has said that there were flawed regulatory tactics, so I want
to talk for a minute about the EPA process that you just
referred to. After proposing the rule last April, EPA received
over 4,800 comments on the proposal from stakeholders including
a large amount of data from industry on the capabilities and
costs of various pollution-control options. Are you aware of
that data that the EPA received?
Mr. Sunstein. Yes, I am aware of the sheer volume of
comments.
Ms. DeGette. OK. And are you aware, sir, that in
September, Administrator Jackson of the EPA sent a letter to
Congress indicating that the EPA was going to give more time to
look at this because there were so many comments that were
being received?
Mr. Sunstein. Yes.
Ms. DeGette. And are you aware that on September 7th last
year, EPA asked the court for an extension of time to continue
the process but the extension given by the court was only very
short?
Mr. Sunstein. Yes, 30 days.
Ms. DeGette. Thirty days. And are you aware that the EPA
has suggested that if all the comments cannot be addressed in
the final rule, the parties may petition the EPA to reconsider
the rule and the EPA has the authority to stay the rule pending
the reconsideration? Is that correct?
Mr. Sunstein. I remember something very close to that, and
that may be precisely what the EPA said.
Ms. DeGette. OK. Now, do you think that the EPA's efforts
to respond to the comments on the proposed boiler MACT are in
line with this Executive order that is the subject of this
hearing today?
Mr. Sunstein. I would say very much that the EPA's careful
consideration of public comments is in line with section 2 of
the Executive order.
Ms. DeGette. Section 2. OK. Do you think that the EPA's
request for an extension was in any way an admission of failure
of the regulatory process?
Mr. Sunstein. No.
Ms. DeGette. And can you explain why you believe that?
Mr. Sunstein. Well, it is perfectly legitimate as some of
the opening comments have suggested to try to take account of
public concerns and comments to respond to stakeholder data or
stakeholder perspectives and sometimes that takes a long time.
There is a tradeoff between doing things and doing things
right.
Ms. DeGette. And finally, do you think that criticizing
the EPA's efforts on this rule is consistent with calls for
greater process and transparency?
Mr. Sunstein. What I would say is that greater
transparency is exceedingly important and the EPA's effort to
take account of public comment is admirable.
Ms. DeGette. Thank you. I yield back.
Mr. Stearns. I thank the gentlelady.
The chairman of the full committee, Mr. Upton from
Michigan, is recognized for 5 minutes.
Mr. Upton. Well, thank you, Mr. Chairman, and again, I want
to compliment you on the hearing. As I learned when I was
chairman of the Oversight and Investigations Subcommittee, we
are to identify problems and then come back with legislation to
fix them. I think that what is happening is that we are finding
a number of agencies that are exempt from OIRA's process, and
this is something we ought to look into and we ought to come
back with bipartisan legislation to fix that, give this
Administration and any future Administration the ability to
oversee all the regulations that are there. No agency should be
exempt.
I want to compliment the President on his Wall Street
Journal op-ed from this last week. I think many of us here
would agree with some of the comments that he made when he
wrote that we have to have the proper balance. Sometimes these
rules have gotten out of balance, placing unreasonable burdens
on business, which has had a chilling effect on growth and
jobs. We need to promote economic growth. Sometimes regulations
are not worth the cost, which is just plain dumb. I think a
number of us welcomed that piece.
But I want to go back to the boiler MACT regulations here
for a moment. EPA, as you know, estimated that the new rules
would impose new capital costs of $12.6 billion, annual costs
of over $3 billion. A study by the Council of Industrial Boiler
Owners concluded that the true economic costs would in fact be
$113.5 billion. The rules would place some 337,000 or more jobs
at risk. So as you know, on January 21st, the court rejected
EPA's request for a 15-month extension to finalize the boiler
MACT rules and directed EPA to issue final rules by February
21st. My first question is, when OMB cleared the proposed rules
last year, did OMB have concerns about the economic impacts
given the state of the economy, particularly related to the
numbers that I just cited?
Mr. Sunstein. Any rule that imposes significant cost, we
have significant concerns about.
Mr. Upton. Is OMB now working with EPA to make changes to
bring down the costs and ensure that the final rules will not
create those risks?
Mr. Sunstein. The EPA said in court filings that the rule
would look significantly different, the final, and we are
working closely with EPA to try to put it in the best form
possible, and that work will be undertaken in line with the
President's Executive order, which calls for careful attention
to cost.
Mr. Upton. So knowing all the comments that have been made,
all the work that has been done, particularly over this last
year, the admonition in essence by EPA in December that they
need 15 more months: do you believe that you can do all that
work in the next 3 weeks?
Mr. Sunstein. It would be premature to say exactly how
much can be achieved in the next 3 weeks.
Mr. Upton. I used to work at OMB so I know how many people
are there.
Mr. Sunstein. I know you did. You know how hard people
work. What I would say is that engagement with affected
stakeholders, with you, with members of your staff is most
welcome in the period we have, that EPA, as the earlier line of
questioning suggests, is completely alert to the concerns that
have been expressed about cost. The Administrator has been
clear on that. And we are going to do the best we can to get it
right and to keep the costs down, to take account of objections
and perspectives in the time that remains, and look forward to
working with you on that.
Mr. Upton. Knowing that you have got 3 weeks to go, would
OMB welcome a congressional delay to give the agency more time
to do its work on the rule that EPA in essence said will take
it 15 more months? It is just hard to believe that EPA says
that it needs 15 more months, the court says no, you are going
to do it in 30 days, and now you say that we are going to get
it done in 3 weeks even though your agency initially said it
would take 15 months?
Mr. Sunstein. Our focus, as your question suggests, is on
implementing the law, taking account of costs and concerns, and
complying with the court order. That is what we are focusing
on. With respect to congressional responses, that is not
exactly my lane. We are going to focus hard on implementation
and try to get it right.
Mr. Upton. Last question: would you like to have more time
if given an opportunity?
Mr. Sunstein. We agreed with the EPA that to get more time
of the length that the EPA sought was a very reasonable
request. So the EPA's request to the court, we supported.
Mr. Upton. Yield back.
Mr. Stearns. Thank you, distinguished Chairman.
I recognize Ms. DeGette.
Ms. DeGette. Mr. Waxman.
Mr. Waxman. Thank you very much, Mr. Chairman.
Mr. Sunstein, I appreciate your answers. The question that
was just being pursued was over the boilers under the Clean Air
Act. Now, let us not forget the purpose of it. The purpose of
the regulation is not to cost a lot of money to business which
might lead them to reduce jobs. The purpose is to reduce
mercury and lead damage which when it affects our children can
lead to lack of brain development. Dioxin causes cancer. These
industrial boilers are the second largest source of mercury
emissions in our country. So when the EPA has proposed a rule,
it has to be reviewed in terms of the costs and the benefits,
and at the same time under your new procedures you are trying
to fine-tube it to be sure it is the least costly way for
business to comply. Isn't that correct?
Mr. Sunstein. Exactly.
Mr. Waxman. Now, I know that no one here would support
duplicative and pointless regulations, but I worry a lot of
what we are going to hear the rest of this hearing are not
those regulations, they are going to single out important
regulations. Some Republicans are even saying that we shouldn't
regulate the most abusive and risky Wall Street practices, even
though those practices ended up nearly driving our economy over
a cliff. Regulations don't just prevent harm, they can also
help our economy. And the boiler one was to prevent harm.
But there are some regulations that really are important
for business. One example of that is a carbon pollution
standard for vehicles issued by the EPA and the National
Highway Traffic Safety Administration April 2010. I understand
that these standards improve national security by reducing our
dependence on oil. They reduce carbon pollution and improve
public health. They save consumers a lot of money, far more
than manufacturers will spend building more efficient cars. I
understand that these rules will save 1.8 billion barrels of
oil. Is there any other action by this Administration or its
predecessors that is even in this ballpark in terms of reducing
our oil dependence?
Mr. Sunstein. Offhand, I don't think there is an example
that is as impressive.
Mr. Waxman. So this regulation is to reduce our dependence
on oil, and in fact, as a result of it, for the first time
America's oil consumption is flat. Right now even though the
DOE regularly says that our consumption of oil was going to go
up, it is not increasing. We are projected to use less oil in
2020 than in 2007. So if we are concerned about oil exports
propping up unsavory governments around the world, which is
certainly the case, then this rule is very good news.
Mr. Sunstein, I also understand this rule will reduce U.S.
greenhouse gas emissions by 960 million metric tons, reducing
overall greenhouse gas pollution from light-duty vehicles by
about 20 percent by 2030. How does this compare with other
actions this or other Administrations have taken to tackle the
climate issue?
Mr. Sunstein. I think this is the prize winner on that
count as well.
Mr. Waxman. So these benefits don't cost the consumer a
thing. In fact, they save consumers money. The majority of
consumers will pay less overall for running their cars. On
average, consumers will save $3,000 over the life of the
vehicle. You are a nationally acclaimed expert on cost-benefit
analysis. Are these estimates solid? Will people really be
better off with these regulations in place?
Mr. Sunstein. We don't have any serious question that this
rule survives cost-benefit balancing.
Mr. Waxman. My understanding is that these cost savings
are based on assumed gas prices ranging from $2.61 per gallon
in 2012 to $3.60 per gallon in 2030, and we are seeing gas
prices go up. In fact, if they go up, it will produce even
greater net benefits of roughly $140 to $190 billion.
Now, we talked about the benefits to our national security
and the environment but the rule also benefits the auto
industry because it will harmonize State and federal standards
across the country, and that is why the industry strongly
supported these regulations. It provided certainty for them,
clear paths for innovation, and it will make their job better
as they try to innovate. EPA's contribution to these standards
produced benefits 30 percent higher if we just had the NHTSA
portion in place. Any effort to remove the EPA standard or its
statutory authority would severely undermine the benefits of
this rule. This is just one example. Overall, the benefits of
the Clean Air Act vastly outweigh its costs by a ratio of 32 to
1. Rather than being a drag on the economy, these critical
regulations improve our lives just as they are intended to do,
and that is the whole point of having regulations in the first
place.
Thank you very much, Mr. Chairman.
Mr. Stearns. I thank the gentleman.
The gentleman from Texas is recognized for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman. Timing is impeccable.
I am supposed to be doing a live radio interview right now; we
planned it very carefully that I can't do that.
There has been an explosion of regulation and regulations
issued in the first years of the Obama Administration. Quite
frankly, I don't see that your organization has done anything
to slow that down. I don't see that you have done anything to
actually do what the existing Executive order says. What gives
us the confidence to think that this new Executive order is
going to be any different? Does this Executive order require or
will your office require agencies to determine the net job gain
or loss of past, current, or new regulations?
Mr. Sunstein. OK. If I may, can I discuss the idea of
explosion? Actually----
Mr. Barton. Well, discuss it very quickly because I have
only got 3 minutes.
Mr. Sunstein. I will be very fast. The number of
regulations issued in the last 2 years is approximately the
same as the number of regulations issued in the last 2 years of
the Bush Administration. The total costs of regulation in the
last fiscal year are lower than the total costs of regulations
in the executive agencies in fiscal year 2007.
Mr. Barton. Just the regulations issued under the new
health care law are in the thousands.
Mr. Sunstein. The numbers that have been issued in the
last months are not in the thousands, so in terms of finalized
economically significant rules, I don't think the data supports
the claim.
Mr. Barton. But what is the answer to the question? Is
this new Executive order going to require a determination by
your group, your agency of the net job gain or loss of past,
current, and new regulations?
Mr. Sunstein. We will be focusing very much on job loss as
a result of regulations. The Executive order----
Mr. Barton. So the answer is yes?
Mr. Sunstein. Well, there are some technical reasons--
that----
Mr. Barton. So the answer is no?
Mr. Sunstein. Well, I am afraid that the answer to this
one uniquely thus far is neither yes or no.
Mr. Barton. Well, that is a very evasive answer, and the
President is going to give you an A plus for evading a straight
question.
Mr. Sunstein. Well, if I can explain----
Mr. Barton. Let me go on because I have only got 2 minutes
and 39 seconds.
You are aware, I am sure you are conversant with the
endangerment finding that was issued the first 90 days by the
EPA Administrator?
Mr. Sunstein. I am aware of it.
Mr. Barton. Are you aware of any cost-benefit analysis
that went into that endangerment finding?
Mr. Sunstein. A scientific finding is not a regulatory
action so----
Mr. Barton. So the answer is, there was none?
Mr. Sunstein. There couldn't be at that time. The
regulatory action that followed the scientific finding was full
of cost-benefit analysis.
Mr. Barton. Do you agree that that endangerment finding if
actually implemented would cost millions of jobs to the U.S.
economy and hundreds of billions of dollars?
Mr. Sunstein. The endangerment finding by itself costs no
money and no jobs. It is a scientific finding.
Mr. Barton. That is not my question.
Mr. Sunstein. If implemented, meaning if followed by
regulatory action?
Mr. Barton. Well, if implemented, if actually put into
practice.
Mr. Sunstein. Well----
Mr. Barton. Every independent analysis has said it would
cost millions of U.S. jobs and hundreds of billions of
dollars----
Mr. Sunstein. What I will tell you is----
Mr. Barton [continuing]. Per year.
Mr. Sunstein [continuing]. what we and the EPA are
determined to do and with the new emphasis in the Executive
order which I am grateful for your enthusiasm for is to try to
minimize burdens and----
Mr. Barton. I have 1 minute and 13 seconds. In Monday's
Wall Street Journal, an EPA spokesman was quoted as saying that
President Obama's new Executive order that you are here to
testify on will not affect the EPA at all. Do you agree or
disagree with the attestation of the spokesperson at the EPA?
Mr. Sunstein. The Executive order will affect all agencies
to which it applies, including the EPA.
Mr. Barton. So you will send a letter to the EPA and
inform them that they are going to be subject to this order?
Mr. Sunstein. It is clear on the face of the Executive
order that the EPA----
Mr. Barton. So the EPA spokesperson just misspoke?
Mr. Sunstein. I would like to see exactly what the EPA
spokesperson said, but it is as clear as day----
Mr. Barton. It is clear as day?
Mr. Sunstein [continuing]. That the Executive order applies
to the EPA.
Mr. Barton. My last question. Would you support an
amendment to the Clean Air Act that would require the EPA to do
a true cost-benefit analysis of any proposed regulation it
proposes to implement under that Act?
Mr. Sunstein. We are in favor of cost-benefit analysis of
any regulatory action, and that is already required by the
Executive order.
Mr. Barton. So the answer to that is yes?
Mr. Sunstein. With respect to legislative action, that is
not quite my lane. We are in the implementation business. So on
the general idea of cost-benefit analysis for regulatory
actions, absolutely.
Mr. Barton. Thank you. I yield back.
Mr. Stearns. I thank the gentleman.
The gentleman from Michigan, Mr. Dingell, is recognized for
5 minutes.
Mr. Dingell. Thank you, Mr. Chairman.
I am interested in the last question just raised. Under the
Clean Air Act, EPA is required to consider first, the health
implications, and second, the best and the most economic way of
accomplishing that purpose. Is that right?
Mr. Sunstein. It depends on the----
Mr. Dingell. Yes or no.
Mr. Sunstein. Not quite, no.
Mr. Dingell. Oh, yes, quite, because I helped write that
law.
Mr. Sunstein. No. If you need more than a yes or no
answer, no, that's not correct.
Mr. Dingell. What is wrong with it?
Mr. Sunstein. Under the National Ambient Air Quality
Standards, cost is not relevant. It is only a scientific
interpretation.
Mr. Dingell. Dearly beloved friend, I said that the first
step taken is to comply with the law and address the health
care questions. The second question that is addressed is to do
it in the most efficient and economic way. Is that right?
Mr. Sunstein. I don't think that is quite right either.
Mr. Dingell. I would suggest strongly you go back and take
a look at it because that is the way we wrote it.
Now, let me go into some matters here of concern. OIRA is
required under the Executive order to submit a preliminary plan
to review rules and regulations for the purposes of modifying,
streamlining, expanding, and repealing. Do you believe that 120
days is sufficient time for the agencies to conduct such a
review and to prepare an appropriate plan? Yes or no.
Mr. Sunstein. Yes.
Mr. Dingell. All right. Next question. Will these plans be
subject to public notice and comment requirements of the
Administrative Procedure Act?
Mr. Sunstein. It is not a rule so no, but we do hope to
have a high degree of public engagement.
Mr. Dingell. Well, the Administrative Procedure Act
requires these things to be subject to public notice and
comment, does it not?
Mr. Sunstein. No, it does not apply to preliminary plans.
Mr. Dingell. All right. Now, will the agencies be required
to have a public notice and comment period for any rules or
regulations that are withdrawn or repealed? Yes or no.
Mr. Sunstein. Yes.
Mr. Dingell. Given the intent to reduce federal non-
security spending in fiscal year 2008 levels, do you believe
federal agencies will have the funding necessary to complete
the required look-back of existing rules and regulations, yes
or no?
Mr. Sunstein. Yes.
Mr. Dingell. Do you believe that the agencies have the
personnel resources necessary to complete the look-back and do
the other things that they must do? Yes or no.
Mr. Sunstein. Yes.
Mr. Dingell. Do you anticipate that the regulatory
reviews, for example, by the Department of Health and Human
Services will prevent the agency from completing the
rulemakings required in and hinder the general implementation
of the Affordable Care Act? Yes or no.
Mr. Sunstein. No.
Mr. Dingell. Similarly, will regulatory reviews prevent
the Food and Drug Administration from completing the
rulemakings required in and hinder general implementation of
the Food Safety Modernization Act passed by the Congress in the
last session? Yes or no.
Mr. Sunstein. No.
Mr. Dingell. Thank you, Mr. Chairman. I have stayed within
my time.
Mr. Stearns. I thank the gentleman from Michigan.
Mr. Sullivan is recognized for 5 minutes. We have a vote,
and we are going to continue on, and then I urge everybody to
come back. We need just a couple members. So we will adjourn
after this vote and then come back. We don't have a series of
votes until 3:00, I believe, so we should be able to get
through the hearing. I recognize Mr. Sullivan.
Mr. Sullivan. Thank you, Mr. Chairman, and thank you, Mr.
Sunstein, for being here today.
The EPA responded to the President's new Executive order
last week by saying that they were confident it wouldn't need
to alter a single current pending rule. EPA's statement went on
to say that in fact EPA's rules consistently yield billions in
cost savings that make them among the most cost-effective in
government. Do you agree with the EPA's statement on this new
Executive order review rule?
Mr. Sunstein. The Executive order applies to the EPA. The
retrospective analysis it requires is new so the EPA will have
to do something new, and it welcomes that retrospective
analysis, and the various provisions of the Executive order
emphatically do apply to the EPA.
Mr. Sullivan. So it is yes?
Mr. Sunstein. Well, anything involving greenhouse gases or
air pollution or water pollution, and what I would want to
emphasize is the provision calling for integration and
harmonization. So sometimes sectors and industries are faced
with overlapping and redundant requirements, and EPA I know
welcomes the opportunity and direction to try to promote
greater simplicity, reduce burdens, and promote greater
certainty, a point which has had a lot of emphasis in this
hearing.
Mr. Sullivan. Do you believe that all of the pending
economically significant rules before the EPA as currently
drafted will yield taxpayer savings?
Mr. Sunstein. I would have to look at them all to make a
judgment.
Mr. Sullivan. Are you involved in that process, though?
Mr. Sunstein. We look at them when they come over
typically to our office so the ones that are in the early
stages of development where sometimes the EPA won't even decide
to send the rule over because it needs to do more work. We
don't typically engage with the agency before they have
something that they are able to submit to us.
Mr. Sullivan. Do you believe that all of the pending rules
before the EPA as currently drafted will create jobs which we
need desperately in this country?
Mr. Sunstein. It would be--I do not believe that every
rule that any agency is considering is likely to create jobs.
Mr. Sullivan. So your answer is no?
Mr. Sunstein. I do not believe that every rule that the
EPA is considering is likely to create jobs.
Mr. Sullivan. Do you disagree with the EPA then, for
example?
Mr. Sunstein. I am reluctant to disagree with newspaper
accounts of spokespeople, so I would need to see the quotation
and I would need to see what its accuracy is. It is true that a
number of EPA rules have benefits well in excess of costs.
Mr. Sullivan. And your boss seems to think that too.
Mr. Sunstein. Seems to think a number of EPA rules have
benefits well in excess of cost?
Mr. Sullivan. No, that he is concerned about our economy
and that some of these regulations might hurt jobs.
Mr. Sunstein. Oh, we very much--you are exactly right,
Congressman. That is our focus. That is the focus of this
Executive order, to make sure that regulations are helpful to
economic growth.
Mr. Sullivan. I hope so.
The President's new Executive order says that agencies must
consider equity, human dignity, fairness, and distributive
impacts in determining cost-benefit of regulations. I have no
idea what that actually means in bureaucratic language but say
for example your cost-benefit test imposed $110 billion in hard
costs to the economy but supposedly result in a $1 trillion
increase in human dignity. What does this mean, and please
explain this to me as I have several companies in my district.
Mr. Gardner pointed that out. They're scared to death. They
really are. They bring this up all the time--town hall
meetings, meetings in my office, chemical companies, Oklahoma
energy companies, trucking companies. And how do I explain all
this gobbledy gook and stuff that you talk about? I mean, can
you break it down on simple terms for me so I can go home to
Oklahoma and talk about this?
Mr. Sunstein. I am extremely grateful for that question
because it is very important, and I understand the concerns to
which it might give rise.
Mr. Sullivan. There are a lot of concerns.
Mr. Sunstein. Let me explain if I may.
Mr. Sullivan. It is the most concerning thing to this
economy and business right now.
Mr. Sunstein. I think it ought not to be, and let me
explain why. The sentence right before the one that refers to
human dignity says ``quantify in the most accurate way possible
costs and benefits using the best available techniques.'' That
is a firmer statement in favor of quantification than any
American President has made.
With respect to equity, here is an example. We have a rule
that has been proposed that involves children being run over--
this is an immense tragedy--by their own parents because there
isn't visibility, they can't see behind in the cars, and we had
parents begging Congress to have a law that would save hundreds
of children from being killed in those accidents. This rule,
which is directly implementing a statute, it is about equity.
It is about children typically. I have a son myself who is not
quite 2. The children are typically around that age just
learning to walk and getting hit. That is about 45 percent of
those who are hurt in those accidents. That is equity. That
plays a role.
With respect to human dignity, we do not mean this as an
all-purpose qualifier of cost-benefit analysis, which is the
foundation of the Executive order. We do mean it as a
recognition that if you have a regulation or a law that is
helping people who are wheelchair-bound--often they are
veterans, by the way--to have access to bathrooms, there is a
dignitary concern there. It is about human dignity, not just
about----
Mr. Sullivan. I understand that, but someone keeping their
job is dignity too.
Mr. Sunstein. Absolutely, and that is why----
Mr. Sullivan. It is a dignified thing to do.
Mr. Sunstein. That is why job creation is in the first
sentence of the Executive order.
Mr. Sullivan. Thank you. I yield back.
Mr. Stearns. I thank the gentleman. We will temporarily
put the subcommittee into recess until 11:35, 11:40. Coming up
on the Democrat side is Mr. Gonzalez and Mr. Green, and then on
our side would be Burgess and Blackburn. So I urge everybody to
return.
[Recess.]
Mr. Stearns. The subcommittee will reconvene, and the
chairman recognizes Ms. Schakowsky from Illinois for 5 minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
I wanted to thank you, Mr. Sunstein, for mentioning the
requirement now to have some rearward visibility in cars. Along
with Republican Peter King of New York, that was my legislation
that would require some rulemaking, and I am very grateful for
the lives that will be saved and injuries that will be
prevented because of the regulation.
I am wondering, one way to judge, I suppose, how we are
doing with regulation is just to count the numbers, but I think
another way would be to look at what are the net benefits of
those regulations, and I am wondering if you could describe
that and perhaps even compare that to prior Administrations.
Mr. Sunstein. Thank you for that question. In the first
year of the Clinton Administration, the net benefits of final
regulations were minus $400 million. In the first year of the
Bush Administration, the net benefits of regulations were minus
$300 million. In our first year, 2009, the net benefits of
regulations were plus $3.1 billion, and it is going to look a
lot better for 2010. So our net benefits are way ahead of our
predecessor Administrations.
In terms of human realities behind the numbers, which your
question points to, the rear visibility rule, which hasn't been
finalized yet but it has been proposed, will save hundreds of
lives or serious injuries, a plurality of which occur to
children. We have a rule involving salmonella and eggs which
will prevent 79,000 diseases, protect Americans a number of
whom would die without the rule. We have rules involving
stopping distance for trucks so they don't crash into people,
so they stop more quickly. This will save hundreds of lives. So
we are looking very carefully at the cost side, but as your
question suggests, it is sometimes worth incurring a cost if
you can save significant lives, prevent injuries, prevent
diseases and illnesses.
Ms. Schakowsky. I would also like you to describe the
process. Clearly, OIRA doesn't always agree with regulations
that are proposed, and again, there are a number of ways to
measure that but I am wondering if you could describe your
process and what the effect has been when you don't agree with
regulations that have been proposed.
Mr. Sunstein. Thank you for that question. The OIRA
process which has been built up really since President Reagan
and has had bipartisan approval involves agencies' submission
of rules, proposed or final, to the Office of Information and
Regulatory Affairs and then we coordinate a process of
interagency analysis. So different parts of the government with
different perspectives and expertise will weigh in on the
proposed rule, and we have a period when the proposed rule is
with the Office of Information and Regulatory Affairs when we
are available to members of the public including stakeholders,
including Congressional staffs, who can come over to us and
frequently do to weigh in on rules.
There was a reference to the return letter and the absence
of one from the Obama Administration thus far. That is a
nuclear option, and if you look at the practice under the Bush
Administration and the Clinton Administration and the Bush
Administration before, the return letter is a very rarely used
tool. I think the median number in the Bush Administration
certainly in its last 5 or 6 years was one or two for thousands
of rules. What more typically happens is a collaborative
process by which the agency responds to the concerns expressed
in the review process, and in our Administration, 75 percent of
the time, three-quarters of the time the rule has been
concluded on, meaning approved, consistent with change, meaning
in the overwhelming majority of cases when the rule is
concluded on, it has been altered, not necessarily by the
Office of Information and Regulatory Affairs, but as a result
of the process, typically by the agency itself which sees maybe
there is a less burdensome way to do it, maybe we can cut costs
this way, maybe this will have less of an adverse potential
effect on jobs. Also, agencies not infrequently withdraw their
rules when they conclude on the basis of what they have heard
that it is not appropriate to go forward, and the withdrawal is
a much more collaborative and constructive approach than the
return letter, and I am sure previous OIRA administrators would
agree with that. We have had at last count 99 rules that were
submitted to the Office of Information and Regulatory Affairs
withdrawn.
Ms. Schakowsky. So the record of this collaborative effect
is to actually get rid of some potential rules and to
significantly change a number of them?
Mr. Sunstein. Absolutely.
Ms. Schakowsky. In the very few seconds I have left, let
me just associate myself with the President's remarks yesterday
that he would not hesitate to enforce commonsense safeguards to
protect the American people. That is what we have done in this
country for more then a century, and I think that is the way we
should go forward. So I thank you very much.
Mr. Stearns. I thank the gentlelady.
The gentlelady from Tennessee, Ms. Blackburn, is
recognized.
Ms. Blackburn. Thank you, Mr. Chairman. I appreciate that,
and I thank our witness for being here. I do have about three
questions that I want to move through as quickly as possible.
We have discussed these orders that have been given, and
one is entitled Regulatory Flexibility, Small Business, and Job
Creation. In it, the President states that his Administration
is, and I am quoting, ``firmly committed to eliminating
excessive and unjustified burdens on small businesses.'' Now,
this is important to me because small business is our main
employer in Tennessee. So as the President states in his memo,
isn't it true that eliminating burdens on small business is the
purpose of the Regulatory Flexibility Act?
Mr. Sunstein. Absolutely correct.
Ms. Blackburn. OK. Under this Act, if any agency's
proposed regulation will have a--quoting from the Act--
``significant economic impact on a substantial number of small
entities'' an agency must conduct a regulatory flexibility
analysis, correct?
Mr. Sunstein. That is correct.
Ms. Blackburn. But isn't it true that in the vast majority
of cases, the agency does not end up performing that analysis
because it determines that its own regulation will not have a
significant impact on small businesses?
Mr. Sunstein. That is correct, with the qualification that
the agency's determination to that effect is subject to a
public and internal scrutiny including from the Office of
Advocacy, which is an important partner in the regulatory
process.
Ms. Blackburn. Well, I would point out to you also that a
GAO report showed that 89 percent of its rules were certified
as not having a significant impact. This is from the time
period from 1994 to 1999. So the EPA was doing the analysis
only 10 percent of the time. So do you have any current data on
how often agencies are making this determination and therefore
avoiding the requirement to fulfill that regulatory flexibility
analysis?
Mr. Sunstein. I don't have a number offhand but we can----
Ms. Blackburn. Would you submit for the record?
Mr. Sunstein. Absolutely.
Ms. Blackburn. OK. Also in the memo regarding small
business, it directs agencies to give, quoting, ``serious
consideration to reducing burdens on small businesses only in
those cases where the agency is conducting a regulatory
flexibility analysis,'' correct?
Mr. Sunstein. That is correct.
Ms. Blackburn. But since these agencies rarely do it, it
sounds like this memorandum won't really have much impact on
small businesses. Do you agree with that?
Mr. Sunstein. No, that I don't agree with, and you can
just see in the last week two rules from the Occupational
Safety and Health Administration have been withdrawn in order
to engage with small business.
Ms. Blackburn. Do you make the determination that
withdrawing those has a potential impact on small businesses'
ability to conduct business?
Mr. Sunstein. I don't personally make a determination that
the withdrawal will have a positive impact but the Department
of Labor----
Ms. Blackburn. But, sir, you are our witness today.
Second question that I'd like to go to with you. One of the
protections for small business found in current law is the
Small Business Regulatory Enforcement Act, and under that Act,
EPA and OSHA must notify the SBA before publishing the
regulatory flexibility analysis for a proposed rule so that an
advocacy panel, which you just mentioned, can be convened to
review it and provide feedback on its impact on small business.
Recently, the new governor of Tennessee, Bill Haslam, issued a
45-day freeze on all new regulations and rules as part of a
top-to-bottom review to fully understand new burdens being
placed on businesses in our State. Regulatory reviews like the
one that Tennessee is undergoing are important because States
and small businesses are concerned that agencies are ignoring
their feedback and the feedback that comes from the advocacy
panel. I do think this is a problem that you all have and needs
to be addressed. Here is an example. The EPA did not follow the
recommendation of the advisory panel with respect to the boiler
MACT rule, instead issuing a standard that many small
businesses feel and have spoken out on that it is impossible to
satisfy regardless of the cost. So who reviews the agency's
decision with respect to how it considers the panel's advice?
Does OIRA do that? What is the role here?
Mr. Sunstein. We participate in that. There is a group, we
participate in that, and you can be confident given the recent
Presidential Memorandum and Executive order, and not just that,
but concrete actions in the recent past that the concerns of
small business will be very much taken into account.
Ms. Blackburn. Your consideration of it, do you consider
it to be objective or subjective?
Mr. Sunstein. Consideration of the significant impact on a
substantial number?
Ms. Blackburn. Yes.
Mr. Sunstein. To the best of our ability, that is an
objective determination.
Ms. Blackburn. I have other questions. I will submit them
to you in writing and ask for your timely response in writing.
Mr. Sunstein. You will have that.
Ms. Blackburn. Thank you, sir. Yield back.
Mr. Stearns. Mr. Green is next. Mr. Green, you are
recognized for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
Mr. Sunstein, some of the regulations that raise the most
ire of my Republican colleagues are regulations that are
designed to implement the new health care reform law. In fact,
you have to have regulations to implement a law typically. I am
trying to think of an example that you don't. But Republicans
have voted to repeal the entire law but a close look at these
regulations shows that they will make insurance better and less
expensive for patients for companies that provide workers with
their insurance. On November 22, 2010, the Obama Administration
issued a regulation implementing the medical loss ratio
provision of the Affordable Care Act. This regulation will make
the insurance marketplace more transparent and make it easier
for consumers to purchase plans that provide better value for
their money. The guts of the regulation require that insurance
companies provide more value for their premium dollar by
actually spending your health insurance costs on health care.
Such a novel issue for a health care company, I think, and to
have a regulation that actually requires that, and not inflated
administrative costs or excessive executive salaries. Mr.
Sunstein, do you think that these rules would establish greater
transparency and accountability for insurers, that they will
guarantee Americans receive more value for their premium dollar
and they will even give more Americans a rebate of some of
their insurance premiums? Now, again, without the regulations
that law would not be effective. Is that correct?
Mr. Sunstein. That's correct.
Mr. Green. These all seem like they are good people who
need health insurance. Isn't there a good example of
regulations helping consumers, for example? Another regulation
put in effect as a result of the health care reform law is the
so-called grandfathering clause. This rule protects the ability
of individuals and businesses to keep their current plan. It
provides important consumer protections that give Americans
rather than insurance companies control over their own health
care. And it provides stability and flexibility to insurers and
businesses that offer insurance coverage as the Nation
transitions into a more competitive marketplace in 2014.
My question is, let me ask you about this rule. Isn't there
a good example of regulations helping consumers and providing
certainty for businesses?
Mr. Sunstein. Absolutely that is a good example.
Mr. Green. Can you give us any insight here where there
have been so many attacks on commonsense regulations that help
consumers? Again, this is something that we have it in the law,
and if the Administration didn't promulgate the regulations, I
think you would not be doing your job.
Mr. Sunstein. Well, we have a rule that has been issued
that is going to help consumers make choices about tires by
giving information--it is not a mandate, it is not very
expensive--about safety, fuel economy and durability, and that
is part of consumer protection providing information so that
people can make their own choices.
Mr. Green. There are rules, and these are good examples of
how regulations can actually help the American public and our
constituents. They give Americans better value for their health
insurance dollar and give businesses certainty about the
insurance that they are paying for for their employees. It
would seem like we should be cheering those kind of regulations
instead of saying no, we want to abolish them. Now, we can take
votes up here and you are not involved in that, but if you are
not promulgating the regulations, again, the Administration
would not be doing their job, and that is true whether it is
President Obama, President Bush, President Clinton, or all the
way back to President Reagan that promulgated regulations that
was the intent of the law. Is that correct?
Mr. Sunstein. Yes. Our first obligation is to respect the
law.
Mr. Green. Thank you.
Mr. Chairman, I have no other questions but I would be glad
to yield my 1 minute left to our ranking member.
Ms. DeGette. Thank you for yielding.
Let me just follow up on a couple of questions or maybe
one. Mr. Sunstein, you were asked earlier about the direction
in the Executive order to consider values that are difficult to
quantify like human dignity. Can you elaborate for about 40
seconds on the intent of this direction?
Mr. Sunstein. Yes. The idea is to recognize that under the
law as the previous question suggested, human dignity is
sometimes something that agencies are supposed to consider.
Just this week, the Department of Justice issued a rule
involving rape, and in the analysis of the rule the agency paid
careful attention to monetizable costs and benefits. That is
very important, but it recognized that the act of rape involves
an assault to human dignity and it is not reducible just to
numbers.
Ms. DeGette. Thank you.
Mr. Stearns. Dr. Burgess is recognized for 5 minutes.
Dr. Burgess. Thank you, Mr. Chairman.
Mr. Sunstein, we were all grateful when the President
signed an extension of the sustainable growth rate law in
December, but I think as we all recognize, access for our
seniors to physicians of their choice is being adversely
affected by what we know of as the sustainable growth rate
formula, the formula by which Medicare pays physicians. Now, is
it the President's intention to follow through on his promise
that this formula abnormality be fixed in this 13-month time
interval that we have given ourselves?
Mr. Sunstein. I greatly appreciate the questions. It is a
bit out of my domain as OIRA Administrator but----
Dr. Burgess. You do work in Office of Management and
Budget, correct?
Mr. Sunstein. I do.
Dr. Burgess. Is it likely to be in the President's budget
request to Congress that there is some type of relief on the
sustainable growth rate formula?
Mr. Sunstein. I would have to defer to the director of the
Office of Management and Budget lacking clarity on the right
answer to that one.
Dr. Burgess. Do you have a sense whether it is the
President's commitment to follow through on this?
Mr. Sunstein. My belief is that anything the President has
made a commitment to, he is likely to follow through on.
Dr. Burgess. Well, as you know, I mean, the price tag for
this varies depending on who you talk to, but you get figures
from $200 billion to nearly $400 billion over the 10-year
budgetary cycle. Do you have an idea, a sense as to what
programs the President is looking at cutting or replacing in
order to come up with this figure?
Mr. Sunstein. Actually on the budgetary side, there is an
army of people who are working and that is not a side that the
Office of Information and Regulatory Affairs works with at that
level of detail. So in particular budgetary requests, we are
respecting the workload of others.
Dr. Burgess. Perhaps we can get that information from
another source. But I do want you to understand that the
Administration has made a commitment on this and America's
doctors are looking to the Administration to fulfill that
commitment.
On the issue of regulations, there was an entirely new
federal agency that sprang up like mushrooms after a spring
rain after the health care law was signed, and this was the
Office of Consumer Information and Insurance Oversight. I
talked to some of the people who were at the head of that
agency in the fall and they could not identify for me where the
authorization language existed in the Patient Protection
Affordable Care Act for that new federal agency. I asked if
there were not other areas of HHS that might do this same
activity, and they said oh, no, this is an entirely new
activity that we will be undertaking. Never before has the
Federal Government regulated private insurance on a national
level. That has always been left up to the States. So in this
new climate of regulatory reform, is this a good idea to be
going in this direction?
Mr. Sunstein. As I say, the lane of the Office of
Information and Regulatory Affairs is relatively narrow so
issue of organization within HHS or DHS or others----
Dr. Burgess. Let me interrupt you. Never mind that,
because they actually have reorganized since we started asking
questions and it is now in a different part of HHS, but just
overall, if we are looking at a new climate of perhaps easing
some of the regulatory burden, your words, not mine, is it a
good idea to be instituting an entirely new federal agency that
will perform this function?
Mr. Sunstein. What I would say in the spirit of the
Executive order just signed is that any decision with respect
to regulation should be connected with the principles that the
President has laid out, and that includes structural decisions.
Dr. Burgess. Well, of course, it would have been helpful
if we could have had those individuals in front of us for an
oversight hearing during the fall. We were not permitted to do
that. I suspect we will be now under Chairman Stearns'
leadership. But again, in the interest of this new climate of
regulatory reform, it seems like this is something where your
office should take a direct interest. I mean, we are told, for
example, that you can't sell insurance policies over State
lines because that has always been a State regulated function
and yet this individual is telling me that for the first time
there is now going to be a national regulation of private
insurance that has never existed in this country before. If
that is OK, then maybe it is OK that we sell insurance across
State lines, that that may be a logical follow-on that perhaps
we should explore. But from the regulatory side, I do hope that
your agency will take at least some passing interest and have
some curiosity into this new agency that has been set up and
now been absorbed into CMS but it is still there. The purpose
is still there.
Mr. Sunstein. I appreciate it.
Mr. Stearns. I thank the gentleman.
Mr. Weiner from New York is recognized.
Mr. Weiner. Thank you. Let me begin by congratulating you,
Mr. Chairman, on this hearing. You are showing you are running
a very efficient, quick hearing, so quick in fact that it is
uncontaminated by actual testimony from the witness in most
cases.
We are learning a little bit about this Congress, which is
that we have lurched so quickly into a very successful campaign
by my Republican friends that all of the slogans are just being
transplanted. We are having committee hearings and we are
starting to see the slogans don't really hold up. For all this
talk about excessive regulation, the first thing that Mr. Issa,
a chairman of another committee, says is, hey, guys, tell us if
there are any regulations you don't like because we don't know
any. We hear my colleagues, particularly some of my freshmen
colleagues, talk about how small businesses always tell me
about regulations and how bad things are. Well, let us take a
look at the record. The record is that the Dow Jones has had a
better year than they have had any time in the last 12 years,
that we have now businesses sitting on over $1 trillion of cash
that they have done pretty well with, that we have now created
more private-sector jobs in 2 years of Obama than 8 years of
President Bush. So this whole idea of, my goodness, the
crushing regulations, and then the first exchange between
Chairman Stearns and Mr. Sunstein was interesting. He asked a
question or postulated something. Mr. Sunstein rebutted it and
then he returned and said well, let us assume I am right. Well,
OK, we can do that, or we can actually listen to the evidence.
There are no more regulations in these 2 years than there have
been in the past 2 years.
But let me just ask, perhaps to put into context, this idea
of regulation. No one likes bad regulations but regulation to
try the price on it is kind of a hard thing to do. For example,
when there was this big effort on the part of financial
services companies to change the capital requirements to allow
them to keep less capital, have more debt on their books, they
said that this regulation was costing us an enormous amount of
money. Well, I am curious. How do you calculate the cost of
easing that regulation? Well, you have to count the TARP fund,
750-some-odd billion dollars, but how do you count the pain
that it causes some person who did nothing wrong, whose home is
not foreclosed, who is not underwater but lives on a block now
with five foreclosed homes because capital requirements weren't
lived up to? How do you count that? Let us assume each house is
a $200,000 house. You can say well, there is the $200,000 home
that is foreclosed on but how do you assess the value to the
community that has lost the tax base? How do you assess the
value of that homeowner who did nothing wrong, who took out no
extra loans but now whose property value has plummeted 75
percent? How do you say to the rest of the economy that small
business guy that because the bank has gone under because that
requirement has been eased, now he can't get a loan?
The fact is, ladies and gentlemen, that these regulations
are in place and they seem so onerous and burdensome sometimes
but what they are intended to do is stop real damage to our
economy. The very same Wall Street people who advocated for the
lessening of the net capital rule are the ones who are now
unemployed. They thought they were doing a great, smart thing,
advocating to loosen that rule. We did it, and now their
company, Bear Stearns, doesn't exist. Now, would you rather
have a small regulation and have a beautiful company that is
employing lots of people and giving loans or get rid of that
burdensome, onerous regulation that requires this silly thing
like they keep enough money in their bank before they start
giving loans? Would you rather have a regulation that says all
hospitals have to have electronic recordkeeping so they can
share information or do you want to try to figure out the cost
that it is when someone is given the wrong drug and goes into
seizure? Yes, it may cost a little bit more money to have these
regulations in place, but if you are really going to do the
mathematic calculation that Mr. Stearns alluded to and others
have alluded to, how exactly do you do that? I think it would
be helpful, Mr. Chairman, for us to have a hearing on exactly
how it is you assess these costs. Let us see how much the cost
is on having a lead in toys regulation. Let us see. How do you
figure out the cost of brain cancer in a 6-year-old as opposed
to a 3-year-old? Huh. Let us put that in a ledger and see how
that works out. But the regulation is so burdensome and
onerous. Well, to that family, that is the difference between
their child having a lifetime illness and not, you know what?
That regulation seems OK. Maybe it is not so bad for a toy
company to have to not put lead in their toys.
So if we are really going to do the math, I think we should
have a hearing here perhaps when Mr. Sunstein can come back. He
clearly has a lot he wants to get off his chest, and I am not
giving him much opportunity here either, but let us really see
what that ledger looks like and let us be honest about it. Let
us get past the campaign rhetoric.
Mr. Stearns. Ms. Myrick is recognized for 5 minutes.
Mrs. Myrick. Thank you, Mr. Chairman.
I wanted to go back to the NHTSA rulemaking, and I am going
to ask you to submit some of this for the record because I have
got another question and I will be out of time, so I appreciate
it.
The proposed rulemaking that does say, rear visibility
system and then cameras inside the car, etc., supposedly what I
have been told is that the accidents that did happen were in
large trucks and SUVs and vans, bigger vehicles, where the rule
says it has to go in every car, and my question on the cost-
benefit analysis again, believe me, I don't want children to
lose their lives and there is nothing more unimaginable than
losing a child, and if we can save millions of lives, I support
saving millions of lives. But when you look at the change that
the Administration says they want to do in the rulemaking and
try and put cost-benefit analysis into it, the NHTSA's own
modeling that they use says that it isn't cost beneficial to do
it.
And then the other question is, if you do put this across
the board to all the cars, does it raise the price of the cars
to a point where people can't buy them and then you have still
got accidents because they don't have availability? So for the
sake of time, if you would be willing to answer that for me to
submit for the record, and then also, did you have consultation
with NHTSA before this happened, I mean, before the proposed
rulemaking on the----
Mr. Sunstein. Yes.
Mrs. Myrick [continuing]. Cost benefit?
Mr. Sunstein. Always with rules, we review the proposed
rules before they go out.
Mrs. Myrick. Thank you. My next question is on billion-
dollar costs to the economy on rulemaking. I know you were
asked by Speaker Boehner and some other House members last year
to tell them how many billion-dollar rules the Administration
is preparing, and they didn't receive any answers to my
knowledge, which has caused a lot of uncertainty in the
business community. I know Mr. Weiner says everybody is doing
wonderful but the reason they have got that cash setting aside
is because they are afraid to invest it, not knowing what
regulations are going to come down the pike. So, do you have an
answer today? Can you tell us how many billion-dollar rules
that you are planning?
Mr. Sunstein. I can tell you how many billion dollars we
have done, and it is a very small number. Planning, as our
discussion suggests thus far, requires the process of
interagency review, public review, cost reduction, so the
number of rules that are planned in any strong sense that cost
over $1 billion is very hard to specify. Often they are rules
that are under discussion but they weren't really planned and
they might come in like a lion and go out like a lamb.
Mrs. Myrick. But perhaps we can get back with you on that
later after a couple months or so.
Mr. Sunstein. Yes.
Mrs. Myrick. The other thing that I wanted to ask is, when
you look back on the regulations that have been issued during
the Administration, can you identify any in which it has been
determined that the benefits have not justified the cost? Do
you have that kind of analysis that you could share with us?
Mr. Sunstein. Yes. There is only one big one that comes to
mind. It is called Positive Train Control, and it is a
statutory requirement, and the Department of Transportation had
to issue it as a matter of law even though the monetizable
benefits are lower than the monetizable costs. There aren't a
lot like that.
Mrs. Myrick. Would you be willing to submit again for the
record?
Mr. Sunstein. Unquestionably.
Mrs. Myrick. I would appreciate a full answer and
explanation on that particular situation.
With that, I yield back the rest of my time, Mr. Chairman.
Mr. Stearns. I thank the gentlelady.
The gentleman from Massachusetts, Mr. Markey, is
recognized.
Mr. Markey. Thank you, Mr. Chairman, very much.
So we all know what the reality of this hearing is. The
Republicans hope that they can use the Regulatory Flexibility
Act to turn the United States into a health, environment,
safety, and consumer protection regulation-free zone, and the
presumption is that regulation is bad. But obviously that is
not necessarily the case. For example, we have heard a lot
about how EPA's efforts to regulate global warming pollution
will lead to an economic catastrophe but this is just not borne
out by the facts.
Before the Obama Administration's global warming
regulations for cars and SUVs were announced in 2009, the auto
industry in this country was literally in the tank before the
regulations were in fact promulgated. More than 300,000 jobs
lost, two American companies in bankruptcy and consumers no
longer willing to buy the gas-guzzlers that the domestic
automakers had bet the bank on. And what has happened since the
regulations were announced? Well, in 2010 auto sales went into
overdrive and soared more than 11 percent, snapping the
industry out of its 4-year decline. Companies were rehiring
thousands of workers, and there has been a proliferation of new
companies that plan to make and market electric vehicles and
other advanced vehicles. So this Groundhog Day recitation of
how regulations will destroy the economy and jobs has already
been shown to be flat-out wrong.
So I have some questions about EPA's future global warming
regulations that perhaps you could help me with, Mr. Sunstein.
Will regulations that seek to limit global warming pollution
from power plants or refineries also take into account the
increase in jobs that could result from the development and
installation of new clean energy technologies?
Mr. Sunstein. Yes.
Mr. Markey. Yes. Isn't it true that regulations to curb
dangerous air pollutants could result in quantifiable cost
savings in the form of medical expenses that won't be incurred
or environmental damages that won't need to be mitigated?
Mr. Sunstein. Yes.
Mr. Markey. Installing pollution control technologies on
power plants could also lead to increases in the efficiency of
the facilities and significant cost savings for companies. Will
you be quantifying these and other benefits as part of any
regulatory analysis?
Mr. Sunstein. These are not multiple-choice questions, and
the answer is yes.
Mr. Markey. Thank you. The EPA recently announced that it
would only issue its proposal to regulate global warming
pollution from refineries and power plants after meeting with
business leaders and other stakeholders to solicit their input.
Is this consistent with the President's Executive order
requiring agencies to seek the views of those who might be
impacted by regulations before proposing them?
Mr. Sunstein. Under section 2, absolutely.
Mr. Markey. EPA has also issued a rule that ensures that
millions of smaller sources of global warming pollution are
exempted from a requirement to obtain Clean Air Act permits and
that the requirements for medium and larger emitters would be
phased in over a period of several years. Is this consistent
with the President's requirement that regulations take the
special needs of small businesses into account?
Mr. Sunstein. Yes.
Mr. Markey. Are EPA's actions also consistent with the
President's Executive order requiring agencies to promulgate
regulations that impose the least burden on society and
maximizing the net benefits to society?
Mr. Sunstein. That was the goal of the PSD tailoring rule.
Mr. Markey. Thank you. EPA recently proposed a rule to
regulate air emissions from cement kilns. In its analysis, EPA
found that the health benefits of the rule would yield between
$17 and $18 for every $1 in cost. Do you think that this sort
of return on a regulatory investment is a good one?
Mr. Sunstein. It sounds like it would be a very good
investment.
Mr. Markey. Historically speaking, have industries
typically overestimated the costs of new regulations?
Mr. Sunstein. That is frequently the case.
Mr. Markey. Now, for the cement kiln rule, EPA didn't even
consider the benefits of reducing emissions of hazardous
substances like lead, chromium or arsenic. Historically
speaking, have agencies typically underestimated the benefits
of new regulations?
Mr. Sunstein. Often they have. We need to be very
systematic and not answer the question typically.
Mr. Markey. I thank you for that precision in your answer,
but I think the larger point is true, that our lives are longer
and safer and better because of a regulatory scheme that began
to be put in place in 1900. Average age of death in the United
States in 1900 was 48 years of age. These regulations that have
gone on the books from the Garden of Eden until 1900, 48 years
of age, now it's 79 years of age, 31 bonus years. Something
happened in the last 100 years and we exported it around the
world that we got all those extra years, and a lot of it is
protecting the health, the safety, the environment and ensuring
that those regulations are there to protect everyone, not just
the wealthy, which is what the first 5,000 years of humanity
was really focused on.
I thank the gentleman.
Mr. Stearns. I thank the gentleman. The gentleman is very
active and interested in baseball, and in this case he has
offered Mr. Sunstein a lot of softball questions.
Dr. Gingrey for 5 minutes.
Dr. Gingrey. Thank you, Mr. Chairman.
Mr. Sunstein, obviously it would appear on the Democratic
side of the aisle that all regulations and regulatory regimes
are good and they are suggesting that on our side of the aisle
they are all bad when obviously it is somewhere in between, and
really the purpose of this hearing and your testimony, we want
to glean the truth because clearly some regulatory rules are
bad, and in regard to the issue of human dignity and consumer
protection, let me reference last year the Administration
included an end-of-life Medicare payment rate for physician
services in its final rule at literally the last minute without
allowing for a period of public comment. Only after a large
public outcry did the Administration own up to its actions and
indeed reversed itself.
Section 1 of the President's recent Executive order states
that our regulatory system, and I quote, ``must allow for
public participation and an open exchange of ideas.'' I want a
yes or no answer. In your opinion, did the Administration allow
for public participation in the crafting of this regulation as
spelled out in section 1 of the Executive order? Yes or no.
Mr. Sunstein. As the repeal of the original rule suggests,
the judgment of HHS was that there had not been an adequate
opportunity for public comment.
Dr. Gingrey. So the answer is no?
Mr. Sunstein. Yes.
Dr. Gingrey. Thank you. Another yes or no question. Do you
or OMB know who in the Administration made that decision to not
allow public participation, instead slipped this regulation
into the rule in the dark of night? Yes or no?
Mr. Sunstein. I don't personally know.
Dr. Gingrey. OK. Another yes or no. Do you know which
individuals within the Administration would have the authority
to slip a regulation into a final rule in the dark of night
without allowing for this public comment?
Mr. Sunstein. I don't think anyone has that authority.
Dr. Gingrey. So the answer is?
Mr. Sunstein. No, I don't know. There are people--the
Secretary of HHS has considerable authority over her rules and
she does not slip things in in the dark of night.
Dr. Gingrey. Well, it certainly does appear that the
Administration purposely avoided obtaining Congressional
approval for an unpopular regulation that they could not sell
to the American people last Congress. So instead, the measure
was inserted into this morass of regulations in the hope that
no one would notice. Do you believe that the American people
deserve to know why they were not allowed to publicly view this
regulation before the Administration published it? Yes or no.
Mr. Sunstein. I think the American people deserve to see
the content of rules before they are finalized.
Dr. Gingrey. So the answer is yes. Thank you. Again, would
this recent Executive Order 13563 prevent the Administration
from enforcing a regulation without allowing public
participation in the future?
Mr. Sunstein. That is correct.
Dr. Gingrey. Can you assure us here today, Mr. Sunstein,
that this Administration will not attempt such an illegal end
run in the future? Yes or no.
Mr. Sunstein. Yes.
Dr. Gingrey. Thank you. And finally--and I will yield back
some time, Mr. Chairman.
Mr. Stearns. I thank the gentleman.
Dr. Gingrey. If the witness would answer this last
question? Would you agree this shows how regulations can make
unpopular actions possible without Congress having to support
political risky positions? Yes or no.
Mr. Sunstein. Well, if I have to answer yes or no, I would
answer yes to that one.
Dr. Gingrey. Thank you. You have been a great witness, and
I will yield back to the chairman.
Mr. Stearns. I thank the gentleman, and now we will move
on to Mr. Scalise, who is recognized for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman, and Mr. Sunstein, I
appreciate you coming before the committee.
I want to start asking about regulations regarding oil and
gas drilling operations, and I think you touched on some of
that but does OMB actually go and review the rules from the
Department of the Interior concerning oil and gas regulations?
Mr. Sunstein. If they are significant regulatory actions,
yes. So it depends on their nature but some of them, the answer
is yes.
Mr. Scalise. OK, some of them. When the Department of the
Interior came out with the moratorium on drilling, did you
review that?
Mr. Sunstein. No, that wasn't a regulatory action within
the meaning of Executive Order 12866 so we did not review the
moratorium.
Mr. Scalise. At least that is your feeling that it wasn't?
Mr. Sunstein. No, it is just, it doesn't fit easily within
the definition of a significant regulatory action.
Mr. Scalise. Why would you not think that would be
significant, the President literally shutting down an entire
industry?
Mr. Sunstein. OK, I----
Mr. Scalise. And which cost billions of dollars.
Mr. Sunstein. I completely understand appreciate the
question. The answer is somewhat technical, which is the
foundation for authority is rules within the meaning of the
Administrative Procedure Act. A moratorium isn't a rule within
the meaning of the Administrative Procedure Act. We do extend
review somewhat beyond that significant----
Mr. Scalise. When you look at--I will just bring you back
to President Clinton's Executive Order 12866, which is still in
effect and part of your department's purview. If it has an
annual effect on the economy of $100 million or more or more
adversely affects in a material way, I mean, we are talking
about a major policy decision that had an impact on well over
$100 million and in fact is one of the reasons that we are
seeing the price of oil approach $100 a barrel. Would you
consider that first of all a major economic impact of $100 or
more?
Mr. Sunstein. Yes, though the ``it'' which is the
reference is to regulatory actions, as I mentioned, and that is
a term of art under the Executive order. The moratorium didn't
quite fit under that.
Mr. Scalise. And I would reference you to also go back and
look at the federal judge's ruling, who felt that the
Department did go outside of their purview----
Mr. Sunstein. That is correct.
Mr. Scalise [continuing]. In issuing that, and I would be
curious to see what your relationship with those reviews was,
and I would be surprised if you didn't feel that it was
something that your department should have had review over. As
it relates to the current regulatory scheme, are you in review
of those rules?
Mr. Sunstein. Yes. Anything that counts as a rule under
the Administrative Procedure Act, absolutely, significant
guidance documents and interpretative statements under March
2009 memorandum by the director of OMB, we review this also.
Mr. Scalise. Is it true that the Department did not
perform a regulatory flexibility analysis regarding its impact
on small businesses?
Mr. Sunstein. I don't recall the answer to that one. What
are----
Mr. Scalise. I will help you. This is from OMB. This is an
OMB document that actually says that the oil and gas operations
on the Outer Continental Shelf, the actions that they took did
not require--according to your office, did not require--
flexibility analysis.
Mr. Sunstein. Are you referring to the moratorium or are
you referring to a rule?
Mr. Scalise. Their increased safety measures, as they
referred to them.
Mr. Sunstein. Oh, OK. Well, if it is a rule, then there
has to be an analysis to that effect, and my recollection is
that the small business impacts were not significant enough to
require that analysis.
Mr. Scalise. And who is that based on?
Mr. Sunstein. That is based in the first instance under
the Regulatory Flexibility Act on the judgment of the relevant
department.
Mr. Scalise. So you just take their word for it if they
say it won't have $100 million impact? Clearly, and I will just
run you off some numbers that the White House has actually
confirmed. It has cost up to 12,000 jobs that our economy has
lost because of that action. It has cost about 12 percent of
our current U.S. oil production and about $70 billion of
investment which there have been a number of private research
that has been done to show that, $70 billion, so you just took
their word that it wouldn't cost over $100 million?
Mr. Sunstein. OK. If you are referring to the moratorium,
as I say, that was not subject to our review under our
Executive order. If you are referring to some rules that we
have had----
Mr. Scalise. The overall rules.
Mr. Sunstein. Well, the moratorium is distinct from the
rules. I don't believe, though I might be wrong on this, that
the rules are anticipated to have significant adverse job
impacts. One of them is----
Mr. Scalise. Well, it already has. I mean, that has been
documented by the White House, so when you come out with
flexibility analysis, and you determine or you take their word
that they don't need to do one under the law----
Mr. Sunstein. No. I said in the first instance, which is a
very important qualification, we do not take their word as
authoritative and we engage with the Office of Advocacy and the
Small Business Administration very carefully.
Mr. Scalise. And I would like to get any kind of
documentation, e-mails, correspondence that you had with them
in relation to these rules and the determination not to do a
flexibility analysis by your department because that was a
ruling that your department----
Mr. Sunstein. I believe you are referring, though I am not
sure, to the moratorium, which, as I say, we didn't review. If
you are referring to the rules, then we did review at least
two----
Mr. Scalise. And did you review----
Mr. Sunstein [continuing]. With full analysis of costs and
benefits.
Mr. Scalise. Did you review the 30-day safety report that
the President's own scientific commission--because one of your
challenges or your tasks is to base this on science, and his
scientists actually said it would reduce safety in the Gulf.
The scientists said it would reduce safety in the Gulf to
impose the moratorium. That was in the 30-day safety report
that came out.
Mr. Sunstein. The 30-day safety report isn't a regulatory
action subject to formal OIRA review.
Mr. Scalise. Right. But it was doctored by, from every
report we have gotten from the climate czar, who is
conveniently leaving, but that document was doctored to imply
that the scientists said that the science backed it up when in
fact the scientists said it actually would reduce safety to
impose that, and that is what the Department of the Interior
used as the basis. So do you look at any underlying documents?
If a department says we are going to make a rule and we are
going to base it on underlying documents, do you look at those
underlying documents?
Mr. Sunstein. I was about to say I am very grateful that
is not a yes or no question, but it ended up being a yes or no
question. If it is not a regulatory action, then we don't have
formal review though there may be some participation by some of
OIRA's staff. Our lane is the lane of regulatory action with
central feature being rules. Reports of that sort, we may have
some informal----
Mr. Scalise. And I know I am out of time, but the
regulatory actions are costing jobs in the thousands right now.
Mr. Sunstein. That is----
Mr. Scalise. That is something we will have to follow up
on.
Mr. Sunstein. That is so appreciated, and at the core of
the small business memorandum and the Executive order is
insistent focus on job creation.
Mr. Scalise. Thank you, Mr. Chairman. I yield back.
Mr. Stearns. Mr. Scalise asked for some documents. I think
you might provide him, at his request, with some of those
documents.
Mr. Gardner is recognized for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman, and thank you, Mr.
Sunstein, again for your testimony before this committee.
I just want to talk a little bit about how something is
reviewed under these Executive orders and hoping to have you
help me understand what takes place. Could you explain briefly
how your office would review a regulation under Executive Order
12866 and what are the key components of your review?
Mr. Sunstein. OK. Thank you for that. What we would do
first is explore with other agencies which are going to see the
rule whether the requirement of consideration of alternatives
has been met, whether the agency has done a careful analysis of
costs and benefits, whether the agency has justified its
reasoned determination that the benefits justify the cost,
whether the agency has shown that there is a compelling reason
for federal action, whether the agency has considered reliance
on the market, reliance on State authority, as some of the
earlier questions suggested----
Mr. Gardner. So it is safe to say that there are basically
three core components where you identify and assess available
alternatives to direct regulation dealing with alternative
forms of regulation and of course getting to impose the least
burden on society including individuals and businesses?
Mr. Sunstein. Yes, and we recently issued a checklist that
basically puts in a page-and-a-half our essential inquiries.
Mr. Gardner. So if you take a real-world example of the
EPA and greenhouse gas regulations, how did your office use
those requirements when carrying out that rule review?
Mr. Sunstein. Well, the most costly of the greenhouse gas
rules is the one that there is considerable enthusiasm for,
which is the fuel economy rule, and what we did for that one
was to investigate the costs of the rule, the benefits of the
rule, to think of what alternatives there are in terms of
stringency, to consider what kind of flexibilities might be
provided for small business and others, to ensure that there
was full public participation so that people could comment on
the options, and to try to come up with the approach that
maximizes net benefits.
Mr. Gardner. And 12866 also says that the underlying
analysis of costs and benefits of potentially effective and
reasonably feasible alternatives to the planned regulation
identified by the agencies or the public, it goes on to say,
and an explanation why the planned regulatory action is
preferable to the identified potential alternatives. Did the
EPA provide and did you review an analysis of the reasonably
feasible alternatives----
Mr. Sunstein. Yes.
Mr. Gardner [continuing]. For the endangerment finding and
the subsequent greenhouse gas regulations?
Mr. Sunstein. Yes. That is laid out in great detail in the
regulatory impact analysis and it is also in the preamble to
the rule.
Mr. Gardner. And what alternatives then did the EPA
provide to you?
Mr. Sunstein. The EPA and NHTSA discussed different levels
of stringency and explained that a more stringent approach
would run into serious concerns about feasibility and cost.
Mr. Gardner. And that was your evaluation of each as well?
Mr. Sunstein. We concurred with the evaluation. We thought
it was a very reasonable evaluation.
Mr. Gardner. The testimony that we have heard today from
members of the committee as well as our colleagues on the other
side of the aisle seemed to, as the gentleman from Georgia
stated, be an extreme left to the right. What am I supposed to
tell my constituents when it comes to those who come to me and
say these regulations are costing me jobs? I mean, are they
wrong? Are they wrong that this is costing them jobs? Do they
not know what they are talking about?
Mr. Sunstein. Well, we need to know what regulation it is,
but I think the first thing you should say to them, as
reflected in your opening remarks, is that there are two sets
of concerns. One is about fear of what is coming and the other
is trouble caused by what is there. On fear of what is coming,
you have a very strong signal from the President of the United
States with respect to small business in particular, and that
is a document----
Mr. Gardner. So they are just fearful?
Mr. Sunstein. Well, that is not all. I am using your
words. And that is a legitimate fear that regulation can be
harmful. So you asked what should you say to your constituents.
I think you can say that both your subcommittee is on this
issue and the President of the United States and the
Administrator of the Office of Information and Regulatory
Affairs share this concern, and with respect to fear of what is
coming, we want to work directly with you to make sure things
are going right rather than wrong.
Mr. Gardner. So will you then make the commitment----
Mr. Sunstein. Let me say with respect to the current
regulations, I am very glad you introduced that because the
president has called for a look-back at existing regulations
that cause trouble, and you can find things in the very recent
past where agencies actually have looked back, including the
EPA----
Mr. Gardner. Who triggers the look-back? Who does that?
Mr. Sunstein. The look-back is a process that the Office
of Information and Regulatory Affairs is helping to coordinate.
Mr. Gardner. So you will request the look-back of the
agency?
Mr. Sunstein. Well, the President has requested the look-
back.
Mr. Gardner. But you will request to the regulatory agency
what rule to review?
Mr. Sunstein. They have to submit plans to us within 120
days, and we will work closely with them to figure out what
the----
Mr. Gardner. But looking back, you will request those
rules that are already in effect?
Mr. Sunstein. We will be participants in the process of
figuring out what to look back on. I hope you will be a
participant also.
Mr. Gardner. Will you make a commitment today then during
this time of economic crisis that you will use your power to
make sure that the Administration doesn't put its stamp of
approval on any regulation that costs American jobs?
Mr. Sunstein. Well, what I would say if there is----
Mr. Gardner. That can be a yes or no question pretty
easily.
Mr. Sunstein. A yes answer would be preposterous. If there
is a regulation that is saving 10,000 lives and costing one
job, it is worth it. But what I would make a commitment to do
is to focus every day on job creation and the urgent need, as
the President emphasized last night, to square everything we
are doing with the overriding imperative of promoting
competitiveness, economic growth, and helping people get good
jobs.
Mr. Gardner. Thank you, Mr. Chairman.
Mr. Stearns. I thank the gentleman.
I recognize Mr. Griffith.
Mr. Griffith. Thank you, Mr. Chairman.
If I might follow up on that question and ask you, are you
all taking a look at the--when you are looking at that job
loss, are you taking a look at the benefit not only in this
country but the cost of sending those jobs overseas? I mean,
one of the things that we worry about in my district when
people are talking about regulations, is this product is going
to be made and sold in the United States, the question is
whether or not it is made in the United States or whether or
not it is made in China or some other country where they don't
have these regulations, and so when you are looking at this, my
question to you is, are you looking at what other nations are
doing? Because if we having a small benefit but we are sending
the job overseas and we are still going to get the product but
now instead of having the jobs we have gotten a small benefit
and no jobs, and do you all take that into account when you are
looking at these regulations, and particularly the EPA?
Mr. Sunstein. Yes. We had in our 2010 report to you all,
our annual report to Congress, a detailed discussion of the
risk of job loss from regulations that might send jobs
overseas, and we continue to be very focused on that risk.
Mr. Griffith. Well, I understand that, but are you
marrying the two concepts? OK, we are worried about sending
jobs overseas but are you also looking at what is the net
benefit to the United States and then are we looking at what is
the net benefit in the world environment? Because if the
benefit is, is that we are going to clean up the air a little
bit but we are sending all the jobs to China where they won't
even have the regulations we currently have, aren't we in
effect, if we aren't marrying those two, so question number one
of this would be, are we marrying them, and number two is, are
we in effect making the environment of the world worse in many
ways if we send these jobs offshore where they won't follow the
same rules that we have?
Mr. Sunstein. That is a great question. It is a fabulous
question, and it has been raised in the context of some rules
where it may be that the environment, the world environment is
actually worse off as a result of what we do. Our basic source
of what we should consider and lay out is legal requirements,
so it may be that some of the environmental harms done
elsewhere in the world aren't really legally relevant. They are
not part of the statutory apparatus under which we are
operating. And thank you for letting me elaborate a bit on
this, but if you had asked me a yes or no question, I would
have said with slight embarrassment because it is too simple,
but I would have said yes.
Mr. Griffith. And let me ask this because it has just been
troubling me, and you have heard these questions before from
some of the other members about the EPA. Its spokesman has said
that they don't think that this will affect them, in essence,
and you have made it very clear that yes, the President's
Executive order does apply and that you all are looking at
those regulations as well but clearly somehow they got the word
they didn't. Do you know whether or not there was a private
``get out of jail free'' card or a wink and a nod that would
say that they don't have to--we are going to come look but
don't worry, everything is going to be OK?
Mr. Sunstein. I am confident there was no wink or nod or
side conversation.
Mr. Griffith. All right. I yield the rest of my time back,
Mr. Chairman.
Mr. Stearns. I thank the gentleman.
Mr. Terry is recognized for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman, and I appreciate you
being here today. It has been helpful.
First of all, I want to comment on a couple of things from
three of my colleagues on the other side. Do you believe that
this side of the aisle are regulatory anarchists and want toxic
materials thrown into rivers and----
Mr. Sunstein. If I may say, I think the questions--it is
an honor to talk with any of you about these things, and the
questions have been excellent and you deserve an answer, so I
see no evidence of----
Mr. Terry. And you have done well in that area. Let me
follow up one question from Mr. Markey. Do you think banning
all use of fossil fuels would yield positive health for human
beings?
Mr. Sunstein. All things considered, no.
Mr. Terry. What do you mean by, all things considered? I
mean, would it be healthier for our people if there were no
fossil fuels used?
Mr. Sunstein. On one dimension, it would be healthier
because the pollution would go down but the economic hardship
would be unhealthy.
Mr. Terry. And balance is the issue here, so we can't deal
in extremes is my point.
Mr. Sunstein. That is right.
Mr. Terry. Cost-benefit analysis is appropriate. And the
President's Executive Order 13563 includes a cost-benefit
analysis, correct?
Mr. Sunstein. Yes.
Mr. Terry. And you testified at the beginning that his
Executive order does not apply to independent agencies?
Mr. Sunstein. That is correct. Following President
Reagan's lead, really----
Mr. Terry. Well, yes, it doesn't. So the FCC--I am vice
chairman of Communications and Technology, so my focus is with
the FCC. So the Executive order does not apply to the FCC?
Mr. Sunstein. It does not.
Mr. Terry. And----
Mr. Sunstein. In the small business memorandum, the
President requests that the independent agencies comply with
the----
Mr. Terry. And has the FCC said they will comply to that
order?
Mr. Sunstein. We have not heard.
Mr. Terry. OK. And in that regard, we have talked about,
or you mentioned that the Executive order would help the
Administration reach that cost-benefit analysis where you weigh
both sides, so do you feel as you sit here today in your
position, not as a law review author but in your capacity today
that that would beneficial for the Administration if the
Executive order would apply to the independent agencies?
Mr. Sunstein. I believe that cost-benefit analysis is a
helpful tool for any government actor, and in that sense, I
believe that its use by the independent agencies would be
informative.
Mr. Terry. Would it be helpful to you in determining
whether to give advice and counsel from OMB on behalf of the
Administration through those agencies?
Mr. Sunstein. We are very respectful of the independence
of the Federal Reserve, the FCC, the FTC, which have
independence as a matter of legal authority. It would be
helpful to us, I will tell you in one domain that is
exceedingly important though slightly technical. We provide
annual reports to you all on the costs and benefits of
regulation. You have asked us to provide information on the
costs and benefits of regulations by the FCC, the FTC, all of
the independents. More often than not, we don't have anything
to tell you because there isn't a cost-benefit analysis, and--
--
Mr. Terry. I would appreciate it. Is there a separate of
powers or constitutional issue here in your view?
Mr. Sunstein. There is certainly an issue in the sense
that the President's legal authority over the independent
agencies has occupied many less than fascinating pages of law
reviews.
Mr. Terry. But can that be resolved by congressional
action or is there are still in your opinion----
Mr. Sunstein. You could resolve it.
Mr. Terry. I know you are not a Nebraska graduate so we
have to question your academic history, but nonetheless, in
your esteemed opinion.
Mr. Sunstein. I think the professors at the University of
Nebraska would agree that whether the independent agencies are
subject to presidential control is ultimately up to Congress.
Mr. Terry. So congressional authority would be necessary.
Is that something that the President would request of us?
Mr. Sunstein. I am not aware that the President has a view
on that issue.
Mr. Terry. And the independent agencies still have to
provide regulatory plans?
Mr. Sunstein. That is correct.
Mr. Terry. Did the FCC provide you a regulatory plan that
included net neutrality in 2010?
Mr. Sunstein. I believe so. I know they provided a plan
but I don't recall its exact ingredients.
Mr. Terry. My time is--would you submit that for the
record?
Mr. Sunstein. I would be delighted.
Mr. Terry. Thank you.
Mr. Stearns. Mr. Terry's time has expired, and the
gentleman from California, Mr. Bilbray, is recognized.
Mr. Bilbray. Thank you.
Mr. Sunstein, last night the President proposed building a
high-speed rail system in America that would cover 80 percent
of the people and do it within 25 years. Do you believe under
existing regulatory realities that that is possible?
Mr. Sunstein. As I noted, the OIRA lane is narrow. We
review existing regulations, so that is beyond my authority and
my knowledge base.
Mr. Bilbray. OK. Let me just say, as somebody who has
built a rail system, I think that is where you need to--people
like yourself need to be able to address that issue. When the
President proposes something and it is not just money, is it
legal to do it? And as somebody who has built a rail system, my
opinion, of somebody who has actually done it, is that no, it
is not legally possible under existing regulatory structure to
build the system that the President proposed, which places all
of us in the challenge of, do we not only talk about how much
it spends but how much regulatory reform we need to make it
possible? Do you have any experience in implementing projects
such as transit, such as sanitation, such as building a
factory? Do you have any experience in going through the
regulatory process as a participant of that process?
Mr. Sunstein. Any citizen has at least some experience in
navigating the regulatory process, but my own experience with
the regulatory process has been a participant over the last 2
years in making sure that the burdens to which you refer are as
streamlined and navigable as possible, and the most important
part of my experience in that domain, something that hasn't
gotten much publicity--I hope it is an answer to your
question--is that we quietly asked every agency of the Federal
Government including the independent agencies for burden
reduction----
Mr. Bilbray. Whoa, whoa, whoa. See, you are asking about
the process and you are doing it as a regulatory member. I am
asking you, though, have you been the applicant, have you
personally been through the gauntlet or have you observed it
from an administrative point of view?
Mr. Sunstein. Does my dad count? My dad had a small
construction company.
Mr. Bilbray. No, your dad doesn't count. We don't allow
crime of blood or benefits of blood on this issue.
Mr. Sunstein. My own career has not been navigating
regulatory processes but I am trying to make them easier for
people who do.
Mr. Bilbray. As somebody who has been on both sides, this
is where I see a real problem. If you haven't walked the mile,
if you haven't gone through the frustration, if you haven't
seen the obstructionism, you really don't understand how to
correct the problem appropriately, and I think you and I would
agree if the plumbing in your house was backed up, you would
not call a doctor or a lawyer to address that issue, and the
fact is--I would ask you a question. Let me back off and say
this. Do you believe there are environmental laws on the books
today that are hurting the environment with their enforcement?
Mr. Sunstein. Well, I do believe there are environmental
laws on the books today that can be significantly improved from
both the economic and environmental standpoint.
Mr. Bilbray. My question is, do you believe that there are
environmental regs on the books today that their enforcement is
actually hurting the environment rather than helping it?
Mr. Sunstein. It would be most surprising if the answer
weren't yes for at least some.
Mr. Bilbray. OK. Then my question to you is, when we get
into these review of assuming that the law's intention is
actually being fulfilled, wouldn't you agree that that is a
wrong assumption to make from the get-go, that laws' intentions
are assumed to be effective rather than questioning are they
effective so that there is a burden of proof of existence of
those laws need to consistently be tested for their
effectiveness and efficiency?
Mr. Sunstein. Well, the President gave a clear yes answer
in the Executive order which said we need to measure the actual
results of regulations and the look-back is intended to do
that.
Mr. Bilbray. OK. Do you know what the reductions for
vehicle was projected with the new environmental regs on auto
manufacturers?
Mr. Sunstein. The reduction per vehicle? I don't have the
number. The reduction of emissions per vehicle?
Mr. Bilbray. Yes. What was the goal with that reg? That is
a pretty big reg. We ought to know what the number was.
Mr. Sunstein. Per vehicle? I know that the number----
Mr. Bilbray. OK. I will give you per vehicle or fleet
reduction.
Mr. Sunstein. Well, the emission reduction?
Mr. Bilbray. Yes.
Mr. Sunstein. I don't have the exact number.
Mr. Bilbray. I am just asking for a percentage.
Mr. Sunstein. The goal is about 36.5 miles per gallon.
Mr. Bilbray. And what percentage is that a reduction they
are looking at?
Mr. Sunstein. We would have to do a little arithmetic to
get it right.
Mr. Bilbray. OK. What if I told you that scientists are
already telling us that we can reduce emissions and auto
emissions by 22.6 percent and Washington has done nothing to
consider that cost-effectiveness program while it is putting
burdens on the production of automobiles in this country?
Mr. Sunstein. If I may ask, what is the cost-effective
program you are----
Mr. Bilbray. The cost-effective program is for us to go
back and look at traffic control operated by government that is
inappropriate.
Mr. Sunstein. Oh, we are interested in any method that is
cost-effective, cost-justified, to make this situation----
Mr. Bilbray. Wouldn't that be the kind of savings that we
need to do more of with our cost-effective analysis?
Mr. Sunstein. It sounds like something very much worth
investigating, yes.
Mr. Stearns. I thank the gentleman, and I ask unanimous
consent to let Mr. McKinley ask questions. He is on the full
committee but he is not on the subcommittee. Without objection,
so ordered.
Mr. McKinley, thank you for taking the time to come down.
You are recognized for 5 minutes.
Mr. McKinley. Thank you. Thank you, Mr. Chairman.
Thank you for being here. I have a series of questions more
specific, and they deal with the Spruce Mine in West Virginia.
You are familiar with that?
Mr. Sunstein. That is not something----
Mr. McKinley. Can you give me some volume, please?
Mr. Sunstein. OK. Sorry. That is not something within our
purview. We review regulations and regulatory actions. I
believe what you are pointing to isn't something that is within
the domain of the Office of Information and Regulatory Affairs.
Mr. McKinley. But this was a retroactive veto. Are you
aware of that?
Mr. Sunstein. I have a recollection from newspaper
accounts, but this isn't something within our authority. We do
look at rules that have effects in this area but what you are
referring to, I don't believe is a regulatory action under
Executive Order 12866.
Mr. McKinley. Were you aware of this veto prior to it
happening?
Mr. Sunstein. No.
Mr. McKinley. You were not aware?
Mr. Sunstein. No.
Mr. McKinley. Do you have any idea why the EPA came to
that decision?
Mr. Sunstein. This is something which would be good to
engage the people who made the decision for their explanation.
Mr. McKinley. Were you aware that the EPA has made this
determination to do it retroactive based on some new science?
Mr. Sunstein. Because this wasn't regulatory action under
12866, if I am following, this wasn't something that we saw in
advance in any way.
Mr. McKinley. Do you think that it is something that they
should have checked with you about before they embarked on
something that was so draconian to West Virginia?
Mr. Sunstein. Well, one thing I will say which is that in
the regulatory domain, anything that is draconian for West
Virginia or anything else is of keen concern to us, but that
thing had better be under the new Executive order as under the
old a regulatory action within the meaning of both documents,
and so I wouldn't want to comment on the decision or the
process because my understanding is that this was not something
that is subject to our review.
Mr. McKinley. But you have enough awareness of it, so
now--and the last question has more to do with, is it possible
that if the regulatory bodies think that they can do this
retroactively to a specific site in West Virginia, it is only
in the Appalachian district they are doing this in the mines
and they have applied it--the first application has been in the
mines in West Virginia. If they feel they have the jurisdiction
to be able to do that, could they not also do that in other
markets like, for example, the chemical industry?
Mr. Sunstein. What I would say in our domain is that
rulemaking is not retroactive. Actually, the Supreme Court has
said that rulemaking is presumed not to be legitimately
retroactive and that under the President's new Executive order,
not only are rules not retroactive but they also must be
preceded by a period of public comment so stakeholders can see
it. Not only that, the agency is supposed to engage
stakeholders including those who would be adversely affected
before they even propose a rule. So that is our policy with
respect to rulemaking.
Mr. McKinley. Do you think that this was a violation then
if they made this retroactive?
Mr. Sunstein. Well, as I say, this is not our lane or our
area so I wouldn't want to speak to it absent authority or a
full account.
Mr. McKinley. Do you think if they--if rulemaking can
occur like this in a retroactive fashion directed to the coal
industry, would it not also apply to petroleum, chemical, other
industries as well?
Mr. Sunstein. The Supreme Court said in a decision a few
years ago retroactivity is disfavored, and to answer that
question, I want to know what exactly was the situation here
and whether there was something unique to it that justified the
action and whether----
Mr. McKinley. From what I understand, sir, there was new
science introduced but that new science was funded by the EPA.
The study was funded by the EPA. I don't know whether that
would--I am an engineer. I don't know that that would
necessarily--if I fund something whether I am--that is new
science. That is bolstering my cause.
Mr. Sunstein. I greatly appreciate the question, and with
your indulgence I would want to stay away from an area that I
don't have authority over and that I haven't studied. I would
say that with respect to the scientific issue generally, under
section 5 of the new Executive order, there is strong emphasis
on objective science and scientific integrity, and that is
something in the rulemaking area which is our domain that we
are taking exceedingly seriously.
Mr. McKinley. Since you have heard of this now, are you
going to look into it?
Mr. Sunstein. If you would like me to, I would be----
Mr. McKinley. I would love to have you look into it.
Mr. Sunstein [continuing]. Delighted to have you put in
contact with the people who have----
Mr. McKinley. I would like to know more about what the
repercussions of this are. Thank you very much.
Mr. Sunstein. And thanks to you.
Mr. Stearns. I thank the gentleman. We are going to go a
second round of questions. I ask for your help here. It is just
a few more and then----
Mr. Sunstein. Are you asking me yes or no questions?
Mr. Stearns. Say again?
Mr. Sunstein. Are you going to ask me yes or no questions,
Mr. Chairman?
Mr. Stearns. I try. There is something here I want to ask
you. It is a basic question. How many new government
regulations have been enacted since your appointment?
Mr. Sunstein. I believe the number of final regulations is
going to be approximate.
Mr. Stearns. No, I know.
Mr. Sunstein. It is about 500.
Mr. Stearns. Five hundred. OK. And do you perhaps have any
idea how many new regulations will be necessary because of the
new health care bill and because of the new financial service
bill?
Mr. Sunstein. I don't have that number. I would say that
our number----
Mr. Stearns. If you could venture a guess, that would be
really fine.
Mr. Sunstein. I wouldn't want to venture a guess because
there is a fact of the matter, and one doesn't want to guess
about things when the fact of the matter is not difficult to
find.
Mr. Stearns. I am just being a little humorous. I will
give you a range. Over 5,000 for health care?
Mr. Sunstein. It would surprise me if it is that high.
Mr. Stearns. And over 5,000 for the financial bill?
Mr. Sunstein. It would surprise me if it is that high.
Mr. Stearns. OK. Earlier I asked you this question and you
said yes. The director of OMB produced a set of recommendations
for a new Executive order within 100 days of the President's
January 30, 2009 directive. That means that the OMB
recommendations were sent to the President around May 2009. I
thought you said yes. Is that correct?
Mr. Sunstein. Yes.
Mr. Stearns. But the new Executive order wasn't issued
until January 18, 2011--I had staff check that out--after the
election. So your yes doesn't seem to comply with the facts.
Mr. Sunstein. Ah, OK. No, what the President asked for in
his memorandum to which you point, the early one, was not a new
Executive order for issuance. It was recommendations for a new
Executive order, and what we did was to run processes for a
significant period under the Clinton Executive order under
which President Bush also operated and acquired experience. We
had a public comment period. We got a lot of comments from
affected stakeholders, some from Members of Congress, there
were informal and formal communications, and the process of
acquiring information, learning from the agencies and from our
own processes what works well and what doesn't ran its course
such that we were able to issue the Executive order last week.
Mr. Stearns. In your testimony today, several times you
mentioned that ``retrospective'' review will be done of
regulations. It hasn't been defined in my mind: when does that
begin? Does it include regulations issued during the Obama
Administration or are you going back to the Bush
Administration? Are you going back to the Clinton
Administration? Maybe you might define what ``retrospective''
means.
Mr. Sunstein. The Executive order says significant
regulations that are on the books so everything is fair game.
Mr. Stearns. How far does that go back, in your mind?
Mr. Sunstein. It could go back to the 1920s if there is a
regulation that is costly and not helping people.
Mr. Stearns. It could go back to FDR?
Mr. Sunstein. It certainly could go back to FDR.
Everything is fair game. Needless to say, regulations that have
been issued within the last weeks and months wouldn't be the
first candidates for retrospective review because they were
reviewed very recently, but we are eager to get ideas from you,
Mr. Chairman, affected stakeholders, members of the public. We
really need your help to identify regulations that should be
revisited, and if they are doing harm but they are from 1945,
then by all means let us revisit it as much as we would if they
were doing harm in 1982.
Mr. Stearns. I commend you. You are the first person from
the Administration I have heard that said they were willing to
go back and look at regulations from FDR, so that is quite a
statement.
Now, will this review apply equally to all the agencies or
just certain agencies that you are focusing on? I imagine that
looking at all the agencies would be a mammoth job.
Mr. Sunstein. As you said, the independent agencies
following President Reagan's lead are not covered but all the
executive agencies are covered.
Mr. Stearns. You are promulgating vehicle fuel efficiency
standards. Did the agency consider the cost of additional
injuries and deaths stemming from the use of lighter vehicles?
Mr. Sunstein. Yes, that was investigated with great care.
Mr. Stearns. When you talk about this retrospective
review, how are you proposing to bring in the public? The
gentleman from West Virginia indicated that we had a company
that got approval for a license and then retrospectively EPA
revoked its license. Now the company is in jeopardy after
investing millions of dollars, and employees will lose their
jobs. Who would think that that could happen, especially after
the government gave it a license? How are you getting the
public to interface with you?
Mr. Sunstein. It is a tremendous question, and we love
your ideas. I will give you a few preliminary thoughts. One
idea we have had is that the public has a lot more information
than we do about what rules are actually doing on the ground.
Mr. Stearns. I agree with that.
Mr. Sunstein. So we need their help. It has happened
already in this very early time that we have gotten a lot of
communication from the public. The public has not been silent
about rules that are causing trouble. I think you can expect in
the relatively near future one very important Cabinet agency
going out to the public and asking for ideas about
retrospective analysis, what rules are causing trouble. I think
you can also expect a high degree of openness both with respect
to asking for ideas about rules that no longer warrant public
approval and also for ventilation of the plans, which are due,
mind you, in 120 days. I would love it if some of those plans
would beat that deadline and be out to the public before 120
days but my expectation is that the plans which will include
candidates will be made public and there will be a period of
comment, and as Chairman Dingell suggested, there is a full
process of comment and review as rules get repealed, so that
will also involve a high degree of public participation.
Mr. Stearns. Thank you. My time has expired.
Dr. Burgess, second round.
Dr. Burgess. Thank you, Mr. Chairman.
In reference to Dr. Gingrey's question about the regulation
that went forward without a period of public comment, are you
aware that there are in fact at least 10 such regulations under
the health care law, the Patient Protection and Affordable Care
Act, at least 10 such rules that were created without a period
of public comment?
Mr. Sunstein. Yes. What I am aware of is that some laws,
and this is one of them, have for some rules time constraints
that are so severe that the only option is to do what is called
an interim final rule rather than go out for public comment,
and that is a result of legal compulsion. What is noteworthy
about interim final rules, and we have paid a great deal of
attention to this, is they are interim rules.
Dr. Burgess. Well, let me just--you offered just a moment
ago that you would follow up with us. I actually look forward
to you joining us again in about 3 months' time. If you would
be willing to do that, maybe we could talk about some of the
public comment that has come in on some of the interim final
rules because it is important that this process be open and
transparent and that people be able to communicate with the
regulatory agencies and their government. I know I have heard
from a lot of providers, hospitals, and patients that this is
something that they would like to see.
Mr. Sunstein. Absolutely. I spend a lot of my own time,
sad but true, on regulations.gov where you can see those
comments on interim final rules and I am quite aware that some
rules have produced a lot of public interest.
Dr. Burgess. I provided to you--I apologize that it wasn't
in the briefing binder but something prepared by the Business
Council, the Business Roundtable, policy burdens inhibiting
economic growth. Did you have a chance to just glance at that
while we were at the vote?
Mr. Sunstein. I did glance at it.
Dr. Burgess. And I appreciate you being willing to do
that. Of course, our purpose here today is to talk about the
regulatory burden and what we might do. This paper was
prepared, interestingly enough, last June at the request of the
Obama Administration, difficulty in this economic climate
creating jobs, and the Obama Administration asked the private
sector, provide us some guidance on what the Obama
Administration might do to facilitate job creation. So I think
that was a good idea. The question I have is, why are we
ignoring some of the more important things that were put
forward in that monograph? We have, and I referenced this in my
opening statement, the new source review aspect that was talked
about in that paper was concerned about the fact that Texas
does seem to be singled out for some special attention on
taking its flexible permitting process and that other States
that are using this were not subjected to the same constraints
that Texas has been. Do you think this is helpful in creating a
climate for job creation that Texas be singled out in this way?
Mr. Sunstein. I should say that the document to which you
point has a lot of concerns and that that has been reviewed
carefully by relevant officials trying to make sure we do the
best we can for the country. Singling out any State, in some
ways Texas in particular, is not a good idea. Everyone should
be treated similarly. What I would say about the particular
example, I will give you my understanding, is that 49 States
all complied with the EPA's permitting rule in the sense that--
--
Dr. Burgess. My time is pretty limited. Let me just ask
you a more specific question.
Mr. Sunstein. This was an effort to help people in Texas
get permits. In order to go forward, there had to be some
permitting process, and the court approved it.
Dr. Burgess. Well, that was under the greenhouse gas
requirement, but did anyone at EPA consult with the Office of
Management and Budget or the White House before moving forward
with taking over the flexible permitting program under the
Clean Air Act?
Mr. Sunstein. That one was something that we were involved
in, yes, and this was an effort, as I say, to permit people to
get permits in Texas so they could go forward with
construction, etc. That is my understanding.
Dr. Burgess. And what is the status of that today?
Mr. Sunstein. The court has approved it.
Dr. Burgess. Let me ask you a question that is in a
different direction. Do you think there should be any
legislative effort to regulate broadcasting in the interest of
democratic principles?
Mr. Sunstein. What I would say is that as the
Administrator of the Office of Information and Regulatory
Affairs, I am focused on the Paperwork Reduction Act and on the
recent Executive order and Small Business Memorandum. I think
you might be referring to some academic writing that might have
had my name attached to it but academic speculations by anyone
including yours truly just aren't relevant to the current job.
Dr. Burgess. But still, there is some talk about people
who want to bring back the Fairness Doctrine and some people do
see that as a restriction on free speech. Would that be
something that would come through your regulatory agency if
that occurred?
Mr. Sunstein. No, we have no role, and I am on record as
opposing the Fairness Doctrine.
Dr. Burgess. Thank you, Mr. Chairman. I will yield back.
Mr. Stearns. Mr. Griffith, you are recognized for 5
minutes.
Mr. Griffith. Thank you, Mr. Chairman.
If I could go back to some of Congressman McKinley's
questions relating to the mine closure in West Virginia, and I
know that what actually may have happened may not be under your
watch, but wouldn't it be true under the Executive order that
you would need to look at that? Because as I understood the
President's comments last night in regard to the salmon, that
one of the things that he wants to do is to make sure we don't
have agencies having jurisdiction over what most people would
think would be the same thing, and in that particular case,
would you not agree with me that it didn't meet the
circumstances? The facts didn't meet with what the President
has said, even in section 1 of his Executive order because for
that mine, it didn't promote predictability and reduce
uncertainty, it created more uncertainty for everybody in
central Appalachia because of that ruling. Would you not agree?
Mr. Sunstein. I appreciate the question. I am reluctant to
say anything critical of colleagues in any agency when I just
don't know the underlying situation and it isn't something
within our authority. I can say that EPA in the rulemaking
domain has been extremely careful and scrupulous about ensuring
that there is public comment before it goes forward with rules,
and we had an earlier colloquy about the EPA's insistence
that----
Mr. Griffith. But wouldn't you agree with me that when the
Army Corps of Engineers signs off on it and says everything is
fine and then some 18 months to 2 years later the EPA comes in
and yanks the licenses out, that that does not promote
predictability and does promote uncertainty?
Mr. Sunstein. I would need to know more about the
particulars. I certainly agree with your emphasis on
predictability and certainty, which are upfront in the new
Executive order.
Mr. Griffith. And wouldn't you agree that at least on the
face of it that such action is not plain and easy to
understand?
Mr. Sunstein. Well, I am very concerned about clarity. The
Plain Writing Act is something that is within our domain. We
recently issued guidance on it. But I have learned from my
period in Washington that things that are on the face a certain
way sometimes aren't fully a certain way and so if you will
forgive me, I like to be cautious before speaking on that.
Mr. Griffith. Well, I understand being cautious but you
can appreciate that the uncertainty that has now been created
in the entire region about even attempting to invest money in
opening up a new mine that has been caused by the actions that
were taken, and isn't that something that under the Executive
order that you all should be looking at?
Mr. Sunstein. The Administration as a whole is committed
to promoting certainty, so to look at something that is raising
concerns along that front is completely appropriate.
Mr. Griffith. All right. I thank the gentleman.
Mr. Stearns. I thank the gentleman.
I now recognize the gentlelady, Ms. DeGette.
Ms. DeGette. Thank you very much, Mr. Chairman.
Mr. Sunstein, I really want to thank you for coming and
testifying today. I found your testimony very illuminating and
helpful, and I think this subcommittee is going to want to have
ongoing conversations with you.
You know, we all agree that unnecessary regulations should
be repealed and new regulations should not be overly burdensome
on business or anybody else. I mean, that is a fundamental.
Listening to the questioning on the other side of the aisle
today, I kind of realize that there is this assumption that may
have some vague historic basis but certainly with this new
Administration and with my colleagues on the Democratic side of
the aisle, we don't believe in overregulation and we don't
believe that regulations should be burdensome, especially right
now with unemployment still over 9 percent. We need to make
sure that regulations are sensible, that they protect the
public health and wellbeing and are not overly burdensome.
I was particularly interested--and I think, so there is
some thinking since there is a Democratic Administration, we
are just overregulating, but in fact, when you look at the
actual facts and statistics, this is not the case. I was
particularly interested in your comment earlier that the total
number of rules in the first 2 years of the Obama
Administration is comparable to the number of rules in the last
2 years of the Bush Administration, so about the same. And if
you look at the number for the EPA specifically, which seems to
be a great concern on the other side of the aisle, the
comparison between the Administrations is very noteworthy. The
EPA has finalized or proposed fewer Clean Air Act rules over
the last 21 months than in the first 2 years of either
President George W. Bush's Administration or President
Clinton's Administration. President Bush finalized or proposed
146 Clean Air Act rules while president Clinton issued only
115, and President Obama has issued just 87, and frankly, some
of the Obama Administration's rules, as you can attest, are
trying to clean up the mess left by the previous
Administration.
So let me give an example of that. A federal court threw
out President Bush's rule to cut toxic mercury emissions from
power plants in February 2008 because frankly, it was illegal
under statute. So what it would have done would have been to
let infants and children vulnerable to mercury pollution. So
President Obama and his Administration were then forced to go
back to the drawing board and repromulgate those rules because
they were illegal the first time.
And so frankly, I think that, you know, Mr. Stearns and I
are both eager to talk about regulations that might be
burdensome and we are eager to work with you and the
Administration to do that. We were just saying that we would
welcome suggestions by members on both sides of the aisle and
we would love to sit down and meet with you and your staff to
propose anything that we think is overly burdensome because
frankly, we are not facing a regulatory avalanche. These are
safeguards for the American public, but I know that you and
your staff intend to promulgate them in a way that is the least
burdensome possible. So I just wanted to say that.
And Mr. Chairman, I just wanted to ask the Majority a
question, and maybe you know the answer but if not, maybe your
staff or somebody else can tell me. The Republican have said
several folks on your side of the aisle have said that an EPA
spokesman said that the Executive order won't matter with
respect to the EPA regulations, and I don't know who that--we
are unaware of any statement like that on this side of the
aisle, and I am wondering if your staff or the members who said
that could tell us who that spokesperson was so that we could
set the Administration straight that the Executive order is
going to apply to all regulations of agencies within the
purview of Mr. Sunstein and his staff.
Mr. Stearns. We would be glad to provide it for you. It is
in The Hill, January 18.
Ms. DeGette. Thank you. And what is the name of the
person?
Mr. Stearns. Betsaida Alcantara, and the statement said
that the agency has already been following many of the
protocols formalized Tuesday, and so we would be glad to give
The Hill article to you.
Mr. Sunstein. May I----
Ms. DeGette. Wait a minute. This doesn't say that the
Executive order doesn't apply to EPA regulations, and Mr.
Chairman, I would ask unanimous consent to submit this article
for the record.
Mr. Stearns. I would be glad to, by unanimous consent.
Ms. DeGette. Thank you.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. But I think we have given you a name. It is
your interpretation.
Ms. DeGette. Yes, you didn't, but it doesn't say anything
about the Executive order and whether it applies.
Mr. Stearns. That is your interpretation.
Mr. Sunstein. May I make one brief addition to your
excellent remarks?
Mr. Stearns. Sure.
Mr. Sunstein. Which is, if you look at the most expensive
fiscal year of the last ones, it hasn't been 2010, it hasn't
been 2009, it was 2007.
Mr. Stearns. OK. The gentlelady's time has expired.
OK. Let me close. Mr. Sunstein, thank you for your patience
and forbearance while we went and voted. Let me just ask you a
question to clarify what Ms. DeGette was talking about. In the
first 2 years of the Bush Administration, how many regulations
were issued compared to the first 2 years of the Obama
Administration?
Mr. Sunstein. We will have to get that number.
Mr. Stearns. OK. That is important because I think what
she is alluding to--I think those facts are now apples and
apples instead of apples and oranges.
Let me also point out that when Ms. DeGette talks about
deregulation, on this committee we had a cap-and-trade bill we
passed which the Senate didn't agree with. We had a health care
bill pass. The Congress under the Democrats' majority had a
financial bill. They also had bailouts. And so during that
entire process, when you pass those four major pieces of
legislation, you are going to have more regulation. And this is
what I would like to conclude with. You had indicated that
there should be a comment period for the citizens of this
country to tell you and OMB that these regulations are killing
them, and you are saying that you are willing to listen. So can
I suggest that we sit down with you and we notify our members
both on the Democrat and Republican side that you have made
this very auspicious, generous offer to take seriously some of
the problems? Now, the gentleman from West Virginia pointed out
that this company has lost its license after getting approved
by EPA and that is a problem. That is losing jobs. That is
exactly what I think the President is talking about. So can we
have your agreement then today that you would sit down with
this committee at a later date, not in a hearing but an
opportunity where Ms. DeGette and I can present you with
regulations that we think indeed are hurting this country and
should be repealed?
Mr. Sunstein. I would welcome that.
Mr. Stearns. Well, I think you suggested the idea, so we
just want to follow up on it.
Let me conclude by saying members have 10 days to submit
questions for the record, and if there is no further comment,
the subcommittee is adjourned, and thank you.
[Whereupon, at 1:19 p.m., the subcommittee was adjourned.]
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