Text: S.Hrg. 113-371 — A MORE EFFICIENT AND EFFECTIVE GOVERNMENT: IMPROVING THE REGULATORY FRAMEWORK
(PDF provides a complete and accurate display of this text.)
[Senate Hearing 113-371]
[From the U.S. Government Publishing Office]
S. Hrg. 113-371
A MORE EFFICIENT AND EFFECTIVE GOVERNMENT: IMPROVING THE REGULATORY
SUBCOMMITTEE ON THE EFFICIENCY AND
EFFECTIVENESS OF FEDERAL PROGRAMS AND THE FEDERAL WORKFORCE
HOMELAND SECURITY AND
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
MARCH 11, 2014
Available via the World Wide Web: http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
88-281 WASHINGTON : 2014
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEIKAMP, North Dakota
Gabrielle A. Batkin, Staff Director
John P. Kilvington, Deputy Staff Director
Keith B. Ashdown, Minority Staff Director
Laura W. Kilbride, Chief Clerk
Lauren Corcoran, Hearing Clerk
SUBCOMMITTEE ON THE EFFICIENCY AND EFFECTIVENESS OF FEDERAL PROGRAMS
AND THE FEDERAL WORKFORCE
JON TESTER, Montana, Chairman
MARK L. PRYOR, Arkansas ROB PORTMAN, Ohio
CLAIRE McCASKILL, Missouri RON JOHNSON, Wisconsin
MARK BEGICH, Alaska RAND PAUL, Kentucky
TAMMY BALDWIN, Wisconsin MICHAEL B. ENZI, Wyoming
HEIDI HEITKAMP, North Dakota
Tony McClain, Majority Staff Director
Brent Bombach, Minority Staff Director
Kelsey Stroud, Chief Clerk
C O N T E N T S
Senator Tester............................................... 1
Senator Portman.............................................. 10
Senator Pryor................................................ 11
Tuesday, March 11, 2014
Hon. Angus S. King, Jr., A United States Senator from the State
of Maine....................................................... 3
Hon. Howard Shelanski, Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget............ 13
Hon. C. Boyden Gray, Founding Partner, Boyden Gray & Associates,
Katherine McFate, President, Center for Effective Government..... 25
Michelle Sager, Director, Strategic Issues, U.S. Government
Accountability Office.......................................... 26
Alphabetical List of Witnesses
Gray, Hon. C. Boyden:
Prepared statement with attachment........................... 42
King, Hon. Angus S. Jr.:
Prepared statement........................................... 33
Prepared statement........................................... 94
Prepared statement........................................... 104
Shelanski, Hon. Howard:
Prepared statement........................................... 39
Letter submitted by Ms. McFate................................... 123
Statement for the Record submitted by the Business Roundtable.... 125
Responses to post-hearing questions for the Record:
Mr. Shelanski................................................ 138
Ms. McFate................................................... 156
Ms. Sager.................................................... 158
A MORE EFFICIENT AND EFFECTIVE
GOVERNMENT: IMPROVING THE REGULATORY FRAMEWORK
TUESDAY, MARCH 11, 2014
Subcommittee on the Efficiency and Effectiveness of
Federal Programs and the Federal Workforce,
of the Committee on Homeland Security
and Governmental Affairs,
The Subcommittee met, pursuant to notice, at 2:32 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Jon Tester,
Chairman of the Subcommittee, presiding.
Present: Senators Tester, Pryor, McCaskill, and Portman.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. Good afternoon, and I will call this
hearing of the Subcommittee on Efficiency and Effectiveness of
Federal Programs and the Federal Workforce to order.
Senator Portman, the Ranking Member, will be here shortly.
He is en route. I thought I would start with my opening
statement, and then hopefully he will be here by the time I
finish it. And then we will hear from the good Senator from
Maine, Angus King, someone who has been dealing with this issue
for a long time.
Today's hearing is entitled, ``A More Efficient and
Effective Government: Improving the Regulatory Framework,'' and
I want to welcome all the witnesses that are going to testify
on the three panels today. I want to thank them for joining us
and sharing their perspective on this important issue.
Now, some folks would think that every regulation that
comes down the pike is a bad regulation, just the Federal
Government's latest attempt to stifle economic growth or expand
its reach. I certainly do not agree with every regulation that
has come out in this or previous Administrations, but I do
believe that some have gone too far, although I also believe
that some have not gone far enough. And I believe that far too
often agencies issue or proposed a one-size-fits-all regulation
that stacks the deck against potentially smaller businesses, in
my case family farms and ranches.
Most recently I expressed my strong opposition to a
proposal by the Food and Drug Administration (FDA) that would
prevent small farmers from selling their products at farmers
markets, and that treats groups of small farms like large
corporations. Senator Hagan from North Carolina and I wrote an
amendment to the Food Safety and Modernization Act to make sure
that small farmers selling directly to local consumers would
not face the same regulatory burden and scrutiny as the large
agribusinesses with nationwide supply chains and much higher
risks. However, the FDA's first draft rules were not in the
spirit of the Tester-Hagan amendment and would have forced many
small producers to close up shop, despite the fact that it was
large producers that caused the food safety concerns in the
Another example is a proposed United States Department of
Agriculture (USDA) rule that would turn over the role of
government inspectors to company employees and allow facilities
to process 175 chickens per minute. That is three per second,
and a 25-percent increase. This rule would further advantage
the biggest poultry plants and disadvantage the smaller
facilities. In these two cases, you have one agency I believe
overregulating the small guys and another agency cutting the
biggest companies a break.
But let me be clear. Over the years, regulations have
helped keep our drinking water clean, they have ensured our
food is more sanitary and labeled more accurately, and they
have led to dramatic improvements in workplace health and
safety. While some regulations have grown increasingly
irrelevant or costly over time and can no longer be justified,
there are others that have been on the books for years and
years but remain just as relevant today as when they were
passed. For instance, the regulation of rail rates, which was
initially driven by farmers back in the late 19th Century who
faced extraordinary rates when they brought their goods to
market, and it is still an issue today.
All you have to do is pick up a newspaper to identify
another example or two of potential need for smart regulations,
whether it is regulations on oil tankers, per the explosion in
North Dakota a month or so ago, or 8.7 million pounds of
diseased meat that may or may not have been distributed
throughout this country.
In approaching the topic of regulations from an oversight
perspective, I believe it is critical that we seek a better
understanding of the regulatory process. Why do some rules
clear the review process under the 90-day deadline while others
get stuck in a pipeline for years? How can we bring more
transparency and greater efficiency to the process?
The Administration has launched a lookback initiative to
take a look at regulations already in place and identify those
that are no longer relevant and what are some of the lessons we
have learned from that. How can these lessons be incorporated
to improve the regulatory process moving forward? These are
some of the questions that we will be asking today.
It is great to be joined by Ranking Member Portman, and it
is your turn for your opening remarks.
Senator Portman. Thank you, Mr. Chairman. Could I ask
unanimous consent if I could do my statement in whole after we
hear from our colleague from Maine?
Senator Tester. It is against my better judgment. I should
object, but I will not. [Laughter.]
Senator Portman. Before he goes, can I just say quickly, we
are going to talk, I think, about the permitting legislation
and to make the point that this is legislation that is
bipartisan, Senator Claire McCaskill and others, streamlines
and improves the Federal permitting process. Right now a lot of
uncertainty, unpredictability there. And make the point that
last week the House of Representatives did pass that
legislation. It is called the Federal Permitting--it is also
called the Federal permitting bill. It is not precisely like
our legislation. We think our legislation might be a little
better in some respects. But it did attract some Democrat
support in the House, and so just to say I really appreciate
Senator King's willingness to come today and talk about that.
Senator Tester. Thank you, Senator Portman.
Our first panel is Senator Angus King of the great State of
Maine. Senator King has been a great advocate for commonsense
reforms that help level the playing field for small businesses.
I look forward to hearing from him on his ideas on how we can
do more in that regard.
With that, Senator King, the floor is yours.
TESTIMONY OF THE HON. ANGUS S. KING, JR.,\1\ A UNITED STATES
SENATOR FROM THE STATE OF MAINE
Senator King. Thank you, Mr. Chairman and Ranking Member
Portman. Wonderful to have an opportunity to talk to you. I
think this is a very important Subcommittee, and you are doing
extremely important work. And what I would like to do is give
you just a few minutes of my own background as it is relevant
to what I am going to be talking about.
\1\ The prepared statement of Mr. King appears in the Appendix on
I once was introduced at a dinner, and the fellow went
through my resume, and I got up and said, ``The only conclusion
I can take from that is that this fellow cannot hold a job,''
because I have had so many careers. I have been a lawyer. I
have worked in public broadcasting. I have been a developer. I
have been an entrepreneur, owned my own business. And I was
also Governor of Maine for 8 years. And, in fact, when I was
Governor, one of my primary focuses was on the regulatory
When I was elected, I would say it was fair to say that the
most controversial and in some cases disliked agency in the
State was, not surprisingly, our Department of Environmental
Protection (DEP). Everybody had a story about the problems they
had with the regulatory process. So I have experienced--and I
have also been a board member of large companies and small
companies, particularly in the financial services field, so I
have seen how regulation right now, I think, is far
overburdening small community banks and financial
What I would like to do is just run through very briefly
four or five principles that I think need to be contemplated
when we are talking about regulations and regulatory reform.
Principle Number 1 is we live in a competitive world.
Everywhere in the world people are trying to take our jobs.
Everywhere in the world people are trying to compete with our
companies and put them out of business, if they can, and take
our jobs to their country. That means that regulation has to be
smart. We do not have the luxury of being able to impose
regulations that are going to impose unnecessary costs on
businesses in this country that leads to the business and the
jobs being shipped overseas. That is a constraint that we have
to have in the back of our minds at all times. We do not have a
free range to regulate in any and all fields with no regard to
what the costs of compliance are and what the costs of
implementation are, because somebody wants our jobs right now,
today, all over the world. That is Principle Number 1.
By the way, just to put a sharp line on that, a lot of
people do not realize that in the last 10 years, 32 percent of
the manufacturing jobs in the United States have been lost--32
percent, 42,000 factories have closed. Not jobs lost but
factories closed. And when you lose a third of your
manufacturing capacity in one decade, that is not evolution.
That is not a minor change. That is a revolutionary destructive
change, and I think I do not need to testify to you gentlemen
about the importance of manufacturing. I am not saying
regulation was necessarily all or a part of that, but the point
is we are in an economy where we are going to have to compete.
We do not own the world market anymore.
Principle Number 2, regulations have a cost, and not all
regulations are created equal. One of the examples is the
regulations that are currently starting to accumulate--
``accrete'' would be the word I would use--on the small
financial centers, community banks. Androscoggin Savings Bank
in Maine did not cause the great crash of 2008, but they are
being burdened with piles of new regulations to issue simple
home mortgages. One of the guys, my friend at one of the banks,
sent me literally a stack of papers 2 feet high of regulations
and forms that they have to comply with to do a simple home
mortgage. That is having very deleterious effects.
First, it is pushing the smaller banks into the arms of the
larger banks, which is not exactly what we want to do. We want
a lot of small institutions.
Second, it is costing these banks money--I had a compliance
officer from one of the community banks approach me on the
street in Maine just a couple of weeks ago, and she said, ``We
are having to let go loan officers to hire compliance
officers.'' And this is in a community small savings and loan
And, finally, it is having the effect of constraining
credit, which is something our society needs right now, and
these banks are not able to make loans for technical reasons
because of regulatory reasons, even though they have good
reason to believe that the borrower has good character and is
able to repay the loan and meets any kind of reasonable
The other way to look at this--and there are lots of
studies--and I am sure you have seen them, and in my written
testimony I cite some of them--where there have been studies of
the cost of regulation in a kind of meaningful statistic. And
the one that I focused on is cost per life saved. A lot of
regulations are protective--health regulations--and, for
example, the analysis was--and this is in my written testimony.
The regulation of unvented space heaters, which are dangerous,
is about $100,000 per life saved. I do not think many of us
would quibble with that as an important regulation. Asbestos
occupational exposure limit, about $9 million per life saved.
The atrazine-alachlor in drinking water standard, $109 billion
per life saved. And the point being that we have really got to
think about what the cost versus the benefits are when we
impose these regulations and that all regulations are not the
Principle Number 3, time is money. Cape Wind, which is
applying for a permit to build--I cannot remember how many
turbines, about 100 turbines in the waters between Nantucket
and Cape Cod in Massachusetts, has been in the permitting
process for 12 years, and the developer spent $65 million just
to get the permits. Now, I do not think there is a system--I
just do not know how anyone with a straight face can argue that
this is a good system.
Now, we can argue about whether Cape Wind is a good idea or
not, but some kind of decision should have been made somewhere
short of 12 years and somewhere short of $65 million, because
the developer--no rational developer will go to that extreme,
and I believe in Cape Wind's case it is because Jim Gordon just
said, ``They are not going to beat me,'' and he decided as a
personal matter he was going to stay in. But the economics of
it are terribly daunting, and what we do not see, gentlemen, in
these kinds of cases are the projects that never get brought
forward, the projects that are eliminated and intimidated and
excluded because people look at this process and say I am not
going to put myself in for that, I am not going to go through
that, or I cannot afford to go through that. And our country
loses dynamism and loses opportunity, economic opportunity, and
One of the problems that we have--and this goes into the
time is money, and I will talk a little bit about this and why
I am announcing today that I am cosponsoring Senator Portman's
bill. We have multiple regulators of the same essential thing.
I do not know the details of the offshore wind project in the
Nantucket Sound, but I know that we are talking about an
offshore wind project in Maine that potentially is going to be
regulated by the National Oceanic and Atmospheric
Administration (NOAA), National Marine Fisheries, Coast Guard,
U.S. Navy, the Federal Energy Regulatory Commission (FERC), and
I am sure I am leaving several out. But when you have a
situation like that where you have six or seven different
regulators, by definition it is going to take a long time, and
it is a crapshoot for the developer, because you can go to
these permitting agencies one at a time, you go through, say,
four, get your permit, spend $10 or $12 million, and then the
fifth one says no and you are out of luck.
One of the things we did in Maine to deal with this
problem, we created a one-stop shopping process where we had a
lead agency, said this is the agency that is going to issue the
permits, all the other agencies have to do their study, take
their position, and report in to the lead agency. But the
serial permitting is as bad as serial killing. It is a form of
serial killing, I guess. And I will get to that in a minute.
Principle Number 4, attitude really is everything, and this
is something we cannot get at through legislation. It would be
really nice if we could legislate, ``All regulators shall be
reasonable, thoughtful, and have a positive attitude.'' I do
not think we can legislate that. This is where the
Administration comes in. This is called leadership and
management. And in my experience, you can change attitudes
within regulatory agencies. We did it with our Maine Department
of Environmental Protection, but it took active management and
leadership from the commissioner that I appointed. When I took
office in Maine, I was astounded to find--we have a 13,000-
person workforce. The Governor had the appointment power over
about 150 people out of 13,000. But people expect the Governor
to change everything. And I said, ``How am I going to change
the DEP when I only can appoint three people?'' But the people
I appointed were on a mission, and their mission was to make
this a user-friendly agency. And they had classes and seminars
and worked with the personnel, and that attitude actually
changed, and some of the very same people that had been so
difficult before--and the attitude is: Is the regulator there
to help solve problems and abide by the law? Or are they there
to find problems? And that is what is so important, and I
cannot stress enough what a difference that makes. And that is
really not something we can do much about here, but I do think
it is a matter of the Administration and the management of the
Administration sending the message--which I did in Maine. I had
a very clear message to the environmental agencies. I said, ``I
want to have the toughest environmental standards in the Nation
and the most timely, predictable, and user-friendly process.''
I do not think there is any inconsistency in those two
things, but that message has to come from the management of the
Principle Number 5 I do not need to spend a lot of time on,
but it is one that sometimes arises: Abuse of the process is
not an appropriate regulatory technique. In other words, I am
very close to the environmental community in Maine. I used to
represent them at the legislature. I have been a big advocate.
I stayed up late last night talking about climate change. But I
part company with anybody who wants to use the regulatory
process in a kind of war of attrition just to wear down
somebody that wants to do something in our society. Projects
should be judged on their merits and not on who wins protracted
legal battles. So those are the principles.
I have two problems and then two solutions, and I will be
quiet. I notice, blessedly, my time thing is not running here,
so that is a good thing.
No. 1, permitting is generally too costly and the process
is too lengthy. We did an upgrade of our power grid in Maine
where I think 96 percent of the project--this was the
transmission grid. Ninety-six percent of the project was in
existing rights-of-way or right adjacent to existing right-of-
ways. Permitting that project took 4 years and cost $200
million. It was about a $1 billion project. So almost 20
percent of the cost of the project went into permitting, and
basically it was, as I say, 96 percent of it was within the
That is a cost that we are all paying, and the question is
whether--do the people of Maine get value for that $200
million? Or was this something that could have been done in a
more expeditious way? They had to go through a regulatory
process in 70 towns. One town had over 30 meetings. I certainly
do not want to be heard at this hearing saying I am against
local control. I think it is totally appropriate. But I think
that we need to be thinking about, what did the people of those
towns in Maine get in exchange for the $200 million that it
cost that project?
Can we find a way to permit major projects at a cost that
is not extraordinarily prohibitive and within a reasonable
timeframe without trampling on the legitimate rights of people
who need to have their voices heard and contribute to the
outcome of the project?
As I mentioned, we did something in Maine, we called it
``one-stop shopping.'' I know that Senator Portman and Senator
McCaskill have a bill, the Federal Permitting Improvement Act,
which is establishing a lead agency, and as I understand it,
Senator Portman, that is really the function, that is the
direction you want to move in, a lead agency to coordinate the
permitting process for major capital projects, those costing
more than $25 million.
I would like to cosponsor that bill. I think that is
exactly the direction that we have to go in. And it also has
some reform of the litigation provisions on the National
Environment Policy Act (NEPA) suits so the statute of
limitations is not 6 years but is a more reasonable period of
time and gives people a reasonable chance to appeal the
decisions, but they cannot just wait 6 years and let the clock
run and thereby cast a pall on the overall validity of the
Major capital projects. I would like you to ask
yourselves--and I think this is something that we all ought to
do. The major piece of infrastructure in your State, whatever
it is--interState highway, hydroelectric project, some major
project, power project--ask yourself if that project could be
permitted today. And if the answer to that question is maybe or
no, then that illustrates that I think we have a problem in
this country, because we cannot have our infrastructure be
essentially a nostalgic photograph of what was built in the
1950s. We have to be able to improve our infrastructure, and we
have to be able to do it in a timely and a reasonable cost way.
Problem Number 2, as I have already touched upon, is what I
call regulatory accumulation. Regulations tend to have an
eternal life, and they do not go away. I would commend to you
the best book I have ever read about Washington. It is now out
of print, but you can get it at Alibris or you could borrow it
from me. It is ``The Institutional Imperative: Or How to
Understand the U.S. Government and Other Bulky Objects,'' by
Robert M. Kharasch, who was a Washington lawyer in the 1970s.
It is the most brilliant analysis of institutional behavior
that I have ever seen, and basically, his basic principle, the
institutional imperative is that the fundamental function of
any institution is to perpetuate itself. And one of the
examples he uses--it is written like a geometry textbook with
laws, theorems, theories, and corollaries. One of the laws is
the iron law of the security office. The iron law of the
security office is if you create a security office, threats to
security will be found. And that is an example of this kind of
regulatory process. If you hire people to regulate, they are
going to regulate. That is what they are going to do. And we
need to find better ways to ensure that we revisit regulations
on a regular basis. Roy Blunt and I introduced S. 1390, which
basically is a Base Realignment and Closure (BRAC) Commission
for regulation, and the idea is an independent analysis of
regulations to come before the Congress with recommendations
about whether they should be continued, modified, or
eliminated. They would have an expedited process in Congress,
and this idea, by the way, came from the Progressive Policy
Institute (PPI), and it has received quite a bit of positive
In conclusion, as I said at the beginning, this is a very
important Committee, a very important topic. I think it is one
of the most important that we can do, particularly--I just came
from a meeting with housing authority directors. We are in an
age of zero-sum game when it comes to finances. Nobody is
getting any more money. Therefore, one of the things that we
have to look at is where we can relieve regulatory burdens to
allow people to go further with the funding that they have,
whether it is a housing authority, a community bank, or a
So I am delighted to have had the opportunity to meet with
you this morning, and I apologize for going on so long, but
this is a subject I feel very passionately about, as I hope you
can tell. Thank you.
Senator Tester. Well, I appreciate your comments. They are
very insightful. And as long as you have consented to a few
questions--this is actually very much out of the ordinary when
a Senator comes to testify for a Committee. In fact, I believe
this is the first time I have seen a Senator that would be
willing to open themselves up to questions. And I had a whole
bunch as you were talking through the principles.
I am just going to ask you about one, and it probably is
not in any recent books, but it deals with the amount of money
that is being pumped into campaigns, both sides of the aisle,
and if you have any thoughts on the dollars to campaigns'
impact on the regulatory scheme out there.
Senator King. You mean in terms of regulations of other
Senator Tester. In terms of influence.
Senator King. I cannot remember who it was, but somebody
some years ago said we have the only system in the history of
the world where perfect strangers are expected to give you
large sums of money and expect nothing in return. I think an
inherently dangerous system for democracy, and it has become
even more so in the last few years. I do not think we
collectively have fully realized the vast qualitative change
that has taken place in campaign finance just in the last 3 or
4 years since the Citizens United opinion and the rise of
501(c)(4)'s and the super PACs and the dark money. I think that
is a subject we could really spend some time on.
I am not ready to allege corruption or direct connection or
any of that kind of thing, but clearly it is not healthy for
democracy to have that amount of money sloshing around in the
Senator Tester. That is good. Thank you. Senator Portman.
Senator Portman. Thank you, Mr. Chairman. Again, I
appreciate having the hearing and appreciate the Chairman
allowing us to go through all these issues. And to Senator
King, that was terrific. I mean, I think the next book maybe
you ought to write with all of your experiences you have had
since you have not been able to keep a job. [Laughter.]
I love the regulatory accumulation theory. I also think
that you have laid out the case very clearly for not just
cosponsoring the Federal permitting bill but also getting that
thing done, because you are right, as a developer you ran into
this. As a Governor, you ran into it. We run into it in Ohio
all the time.
One of the reasons that I got involved in this
legislation--and I think I have told the Chairman this, but one
of our companies in Ohio that is interested in hydropower on
the Ohio River--it is called American Municipal Power--came to
me and said, we are trying to do something good here in terms
of energy, in terms of jobs, and we just cannot find investors
because it takes too long to go through the permitting process.
So it is your point about this notion that--I think the way
you put it was, ``Time is money.'' And it is going to be tough
for us to develop some of this infrastructure that everybody
now is acknowledging we need to help in our infrastructure. It
is hard if you have so many permits.
So here is some data I think you and I have discussed, but
the World Bank does this Ease of Doing Business study, and they
rank all the countries in the world, and the United States has
now fallen to 34th in the world for dealing with construction
permits. And so to the extent capital flows across borders now,
which it does, in an increasingly competitive global economy,
as you talked about, investors everywhere are looking at that,
not just American investors who are thinking maybe I should
invest somewhere else, often an emerging economy, or often a
developing country that does a better job with this, but also
those investors overseas who are thinking about whether they
are going to invest here or somewhere else are not likely to
look at the United States if we are number 34. That means there
are 33 countries where they can get a permit faster.
So I appreciate your testimony. I thought it was very
comprehensive. Former Interior Secretary and former Senator Ken
Salazar, the Obama Administration Interior Secretary, recently
said with regard to your Cape Wind example, ``Taking 10 years
to permit an offshore wind farm like Cape Wind is simply
unacceptable.'' And so this is about all forms of energy; it is
about all forms of construction; it is about all kinds of
You are right about the lead agency concept. That is in the
legislation. You are also right about the no serial permitting;
in other words, that is part of it, that the Federal Government
would have to provide to the developer the permits at the
outset so that you are not finishing one permit, then finding
We had testimony from the Energy and Power Subcommittee in
the House recently. There were 35 separate Federal permits
required for a single project, seriatim, serial permitting.
So, look, I really appreciate your willingness to step
forward and give us the benefit of your experience and advice
and having you join Senators McCaskill, Donnelly, Manchin, me
and others on this permitting bill is really great. And I
really appreciate the Chairman's willingness to allow us to
move forward with this.
I have lots of questions for you, but I do not want to put
you on the spot here today, so I will ask you those questions
maybe on the floor of the Senate when we talk about this
further. But just thanks very much for coming.
Senator King. Well, thank you. And I just want to
emphasize--and I think it goes without saying--nobody in this
body, at least nobody that I know, and certainly not me, wants
to gut regulation or wants to shortcut environmental review. I
mean, I have spent my whole life defending the environment. But
it does not have to be done in a clunky, inefficient,
expensive, redundant, and overly burdensome way. And what we
really have to separate is content from process, and we can
have the standards and have the content. What we have to do is
make sure the process makes sense.
And to your point, one of my careers was with a small
business that was in the hydro business, and we had a partner
from the country of Norway who invested substantial funds. And
after about 5 years, they pulled back basically because the
regulatory process in America they just found baffling and it
was a crapshoot. Capital goes where it can earn a return and
where there is a reasonable certainty of that return. And, we
should not rely on the fact that entrepreneurs are not only
entrepreneurial but are willing to take what are sometimes
really not very good risks on a regulatory process that is not
predictable, is not timely, and is so incredibly expensive.
So I really appreciate the work and your allowing me to
appear before you. Thanks again, gentlemen.
Senator Tester. We appreciate your contribution to the
Subcommittee. Thank you, Senator King.
Senator Portman, if you would like to go with your opening
statement at this point in time, we would certainly be----
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Great. Thank you, Mr. Chairman, again, and
Senator King can be excused now because he has other things to
do, and if the other witnesses want to start heading to the
table, that is fine, too. I am just trying to make it more
efficient for everybody.
But I do appreciate your letting us move forward on these
hearings on these bills. I think this is an incredibly
important hearing today. We are going to look at a number of
different potential regulatory reform efforts.
We all believe, as Senator King had said, that regulation
is necessary, an important function of government. But it needs
to be appropriately designed--I think Senator King made that
point well--implemented properly. After all, it was regulation
that took the lead out of our gasoline in 1973, secured United
States financial markets after the Great Depression.
Regulations are needed, but by its nature can be really
complex. And this expanding catalogue of Federal rules has made
it exceedingly difficult for us to attract investment and,
frankly, to do what businesses do best, which is to help create
jobs at a time when we are living through such a weak economic
Each year well over 70,000 pages of additional regulatory
requirements are now published in the Federal Register. That is
70,000. And in the past two decades, the Code of Federal
Regulations (CFR) has expanded by as much as 25 percent to an
astounding 180,000 pages. Many of these new rules do represent
significant costs to the economy, regularly in excess of $100
million each year.
Over President Obama's first 5 years in office, his
Administration on average put out more than 53 of these major
regulations each year, a substantial increase over what
Presidents George H.W. Bush, Bill Clinton, and George W. Bush,
each who had an average of about 45. So the annual costs of
Federal regulations now they are estimating at $2 trillion, and
this continues to grow substantially.
So, again, I think we have made the point well already this
morning that there is a way to do this smarter, and we have an
opportunity here to see some examples of how to do that.
I appreciate that Senator Pryor is here and Senator Tester,
because they have both been involved in this issue and both
have been involved with specific legislative initiatives to try
to deal with this issue. I know that we are going to talk more
about these bills, but the Regulation Accountability Act, for
instance, is one of them where these Senators and others have
agreed to step forward and say, hey, let us do this in a
smarter way, and not just require cost/benefit analysis but
look at the least burdensome way to achieve an objective, have
appropriate judicial review for major rules, and come up with
ways to eliminate rules that do not make sense.
The public rightly expects us to do this. The principles of
good government I think are already established in Executive
Order (EO) 12866, and we have talked a lot about that in this
Committee. It says ``only upon a reasoned determination that
the benefits of the intended regulation justify its costs''
should a regulation be adopted and ``the most cost-effective
manner to achieve the regulatory'' outcome. So I think in many
respects, we need to just follow these principles of good
governance that are already established in the Executive Order.
I look forward to the testimony from our experts here
today, Mr. Chairman. I want to particularly point out that I
probably would not be sitting here, which might be a good thing
for me or the country, if not for Boyden Gray, because he made
the grave error of hiring me in 1989. In 1989, he hired me as
Associate Counsel to the President and put me in his office in
the White House where he immediately had me look at regulatory
reform, believe it or not. So I appreciate Boyden being here in
particular and his vast experience in this area.
Thank you, Mr. Chairman.
Senator Tester. Yes, thank you, Senator Portman, for your
comments and your observations.
Senator Pryor. Well, thank you, Mr. Chairman. I really want
to thank you for having this today, because I know that Senator
Portman and I asked that you would do this sometime, and you
did, and we appreciate that very much. Senator Portman has
really been a great leader on this. I want to talk about him in
a just a moment.
But one of the things that I have experienced in my time in
the Senate is I have heard from many Arkansans and Arkansas
businesses, particularly the smaller businesses that are
struggling to meet the increasingly heavy regulatory burden.
Each year Federal agencies issued more than 3,00 final rules,
many of which do have a significant economic impact.
President Obama emphasized in Executive Order 13563,
President Obama emphasized that our regulatory system should
promote economic growth, innovation, competitiveness, and job
creation. I agree with that. Unfortunately, I do not think our
regulatory environment does that. I think that it is time for
Congress to review the laws that really form the foundation of
our regulatory system. We need to find the ways necessary to
make those laws fairer and more reasonable and more effective
in meeting the dual challenges of protecting the public while
making our economy stronger and more competitive.
That is why I have teamed up with Senator Portman to
introduce S. 1029, the Regulatory Accountability Act of 2013.
We call it Portman-Pryor. He really does deserve the lion's
share of the credit for working on this. It has been great to
have a partner like him on this. But I do feel that, done
right, the regulatory reform effort--the regulatory system can
be better, cheaper, and faster.
There is a lot in this bill. Some of it is basic. Some of
it is very basic, like just requiring an agency, a regulating
agency, just to State their statutory authority for doing what
they are about to do. That is pretty basic stuff. But we have
seen this before where they may not have that authority, it
goes to court, and it turns out they do not.
Some of it is much more complicated and really gets down in
the weeds, but basically what the Portman-Pryor effort does not
do is it does not go after one agency that may be unpopular on
a certain thing, like the Environmental Protection Agency (EPA)
or something, or, one agency on one specific thing. What it
really does is amend the Administrative Procedures Act to
really put a greater emphasis on early engagement between
agencies and the parties subject to these high-impact rules
that cost over $1 billion or more per year and major rules
costing $100 million or more. These expensive rules are where
the regulatory focus I believe should be. I mean, it is not the
only focus, but I think that is where the biggest focus should
And we all know that sometimes it takes way too long to do
the rules, it takes way too long to get to the final product.
So we need to find ways and I think one of Congress'
responsibilities should be to really find ways to make this
work a lot better than it is working right now.
So, again, I want to thank the chair for his leadership.
Chairman Tester has been great on this issue in a lot of
different ways, trying to make for a more sensible, more
commonsense regulatory environment here in the United States.
Senator Tester. Well, thank you, Senator Pryor. I
appreciate your comments, and thank you for the kudos.
We are fortunate in the second panel to have Howard
Shelanski with us. Howard, welcome.
Mr. Shelanski is the Administrator of the Office of
Information and Regulatory Affairs (OIRA), an executive branch
agency that reviews many of our rules and regulations. This
Committee held Mr. Shelanski's confirmation last year, and it
is always good to see you.
We are going to swear you in. It is customary that we swear
in all witnesses, so if you would stand and answer this in the
affirmative, if you would like, or in the negative, if you
would like, however you want to do it. Do you swear that the
testimony you will give before this Subcommittee will be the
truth, the whole truth, and nothing but the truth, so help you,
Mr. Shelanski. I do so swear.
Senator Tester. And let the record reflect that the witness
answered in the affirmative.
Mr. Shelanski, you have the floor.
TESTIMONY OF THE HON. HOWARD SHELANSKI,\1\ ADMINISTRATOR,
OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Shelanski. Thank you very much. Chairman Tester,
Ranking Member Portman, Senator Pryor, and Members of the
Subcommittee, thank you for the invitation to appear before you
today. I am pleased to have this opportunity to discuss recent
developments at the Office of Information and Regulatory
Affairs, and my priorities for OIRA going forward.
\1\ The prepared statement of Mr. Shelanski appears in the Appendix
on page 39.
Since I became OIRA Administrator this past July, it has
been my privilege to work with OIRA's outstanding staff, with
the first-rate leadership team at the Office of Management and
Budget (OMB), and with our colleagues across the Federal
Government. Together we are working to promote economic growth
and opportunity while simultaneously protecting the health,
safety, and welfare of Americans now and into the future.
OIRA does not set the agencies' policy agendas. The office
does work with agencies to ensure that the regulations through
which they implement policies are efficient, well designed to
achieve their objectives, and based upon the best available
evidence. Through the fourth fiscal year (FY) of this
Administration, the net benefits of rules reviewed by OIRA
total $159 billion, and we expect the fifth fiscal year numbers
to show $25 billion in additional net benefits.
Three priorities for OIRA, both now and looking ahead, are
the clarity and reliability of the review process and
regulatory environment, rigorous analysis of rules under
review, and retrospective review, or lookback, of existing
Clarity and reliability allow people, businesses and
organizations, and States and localities to plan for the
future. It is, therefore, important that stakeholders have
notice of the government's plans for forthcoming regulatory
activity. To that end, OIRA is charged with assembling and
publishing a Unified Regulatory Agenda each spring and fall,
setting forth the expected regulatory actions to be undertaken
by Federal agencies over the coming year. OIRA published the
fall 2013 Unified Regulatory Agenda and Plan just before
Thanksgiving and is on track to publish the update to the
Unified Agenda this spring.
The agenda is a broad list that includes all of the
regulations under development or review during the next 12
months, as well as longer-term actions that the agencies are
considering. Such an inclusive listing makes the regulatory
environment more transparent and participatory for all
stakeholders, especially when combined with the annual plan,
which focuses more narrowly on regulatory actions the agencies
intend to issue in proposed or final form within the upcoming
fiscal year. As OIRA Administrator, I will, therefore, continue
to do all I can to ensure timely publication of the Unified
Regulatory Agenda and Plan.
Of similar importance to the clarity and certainty of the
regulatory environment is that both new rules and those already
under review--move through OIRA as efficiently as resource
constraints and rigorous analysis permit. Reducing the
frequency of extended regulatory reviews and working with
agencies on rules that are already under extended review are
key objectives for OIRA. Thanks to the tireless work of OIRA
staff, we have significantly reduced the number of rules that
were under review for more than 200 days, and the number of
rules under review for more than 90 days is down considerably
and continues to fall.
In addition to improving the clarity of the regulatory
environment through notice and timeliness, we are updating the
tools the public can use to engage in the rulemaking process.
We continue to explore ways to make improvements to our
information systems that will increase transparency, including
making the disclosure of information associated with regulatory
review more complete, automated, and user friendly.
While increasing the predictability of the regulatory
process through timely review of rules and regular publication
of regulatory plans and agendas is essential, Executive Orders
13563 and 13610 also make clear that flexibility and removal of
unnecessary burdens are essential elements of the Federal
rulemaking process. Improving existing rules, ensuring
regulatory flexibility for small businesses, and reducing
unnecessary regulatory burdens for everyone through the
retrospective review process are high priorities for me as
Executive Order 13610 asks agencies to report regularly on
the progress of their retrospective review activities. This
week, agencies are posting their most recent retrospective
review updates on their Web sites. Taken together, Federal
agencies provided updates on their initiatives, many of which
are new efforts that agencies added since their July 2013
listing of lookback plans. These efforts are already saving
more than $10 billion in regulatory costs in the near term,
with more savings to come. Some additional examples that will
add to these savings include:
The Department of Transportation's proposed rule to rescind
the requirement that truck drivers submit and retain certain
kinds of inspection reports, a change that would save
approximately $1.5 billion in annual paperwork;
In the area of export control regulations, streamlined
licensing processes are now finalized for 11 of 17 targeted
categories of export controls, with more in the works;
And the Department of Veterans Affairs (VA) issued a
proposed rule to reorganize and rewrite its compensation and
pension regulations making it easier and less costly for
claimants, beneficiaries, veterans' representatives, and VA
personnel to locate and understand these regulations.
While there has been important progress on retrospective
review, I think we need to do even better. At OIRA, we are
working, along with colleagues elsewhere in OMB and at the
agencies, on several ways to further institutionalize
retrospective review as an essential component of government
regulatory policy. As part of this effort, we are developing
several features that will make regulatory lookback a more
systematic priority for agencies. Such institutionalization of
retrospective review, both to ensure follow-through on existing
plans and to help agencies develop their future plans, will be
one of our key objectives moving forward.
Thank you very much, and I look forward to your questions.
Senator Tester. Well, thank you very much for your
I am going to start by going back to what Senator King
talked about as some of his principles. First of all, how many
employees are in your department?
Mr. Shelanski. Right now we are at roughly 45 full-time
Senator Tester. OK, and I will get to that in a second. One
of the things that Senator King talked about initially is that
the regulations need to be looked at from a competitive
standpoint. Are you able to do that? Is that part of your
Mr. Shelanski. Thank you for your question, Mr. Chairman.
It is part of our mission. In Executive Order 12866, in the
section that talks about taking account of the costs and
benefits of regulation, competitiveness is actually one of the
factors that is specifically mentioned that should be taken
into account in assessing the burdens or costs a regulation
Senator Tester. So what do you do if you think regulation
Mr. Shelanski. Well, one of the things that we always look
to do when we are reviewing a rule at OIRA is to examine all of
the costs that the rule might create, as well as the benefits.
And we ask agencies to come to us with their best evidence of
all of the different costs that might result. And we are
charged under a variety of statutes--the Regulatory Flexibility
Act, the Paperwork Reduction Act--to look for areas where we
might be able to encourage the agency or ask the agency to
reduce such burdens.
Senator Tester. OK. So you do that in written form? Do you
send back recommendations to them?
Mr. Shelanski. There are a variety of ways that there is a
lot of deliberative process back and forth between the staffs
of agencies and OIRA.
Senator Tester. As the review goes on?
Mr. Shelanski. As the review goes on.
Senator Tester. OK. Look, we just had a hearing earlier
today on congressional intent of a regulation on banks versus
insurance companies. And it was pretty apparent at that hearing
that the authority for regulation is nothing like what Congress
had passed. Why is that? I mean, maybe you do not see it that
way, but I certainly do. There are many regulations that we put
up, and congressional intent does not seem to be a part of the
equation once it hits the agency.
Mr. Shelanski. Mr. Chairman, that is a question I would
have to do some more thinking about. That is a big question. We
typically see rules that are well within the authority of the
agencies to issue, and we----
Senator Tester. There is no doubt about that.
Mr. Shelanski. Yes.
Senator Tester. The question, though, is that when we pass
a rule and the discussion that is around that rule, whether it
is in Committee or on the floor, often indicates what Congress
would like to see in a regulation once it is out. Just let me
ask you this: Does OIRA take that into consideration? And, by
the way, you are not the end-all and the be-all, so I do not
expect you to do everything I am asking you. But the fact is I
am curious to know if, in fact, you are able to take a look at
proposed regulations and refer them back to the intent of
Mr. Shelanski. We typically look at the regulations on
their own terms once they are determined to be within the
Senator Tester. OK. You have 45 employees, and I know that
there are a lot of regulations that come out, maybe rightfully
so, maybe not. How do you assess your staffing and your
Mr. Shelanski. Like, I think, the agencies that we work
with on their regulations, like the rest of the Office of
Management and Budget, we are all working very hard to do a lot
with what I would describe generously as ``streamlined
Senator Tester. Do staffing challenges make it difficult
for you to do your reviews on time?
Mr. Shelanski. I think that if we had, like the rest of
OMB, like the agencies, if we had more staff, we would be able
to work more quickly. But I think we are managing to do a
pretty good job reviewing most rules within the normative time
of the Executive Orders.
Senator Tester. OK. You recently talked about improving
transparency as being one of your goals for this year, but you
cite a number of challenges to achieving that goal of greater
First of all, why do you think transparency is important?
And, No. 2, how do we make it so you can achieve it?
Mr. Shelanski. Thank you very much for that question,
because I do think that transparency, Mr. Chairman, is actually
one of the key features that really distinguishes the American
regulatory process. We have a process in which people have
notice of rules that are forthcoming. They get an opportunity
to comment on those rules during a period when there is still
the prospect of meaningful change. And agencies are held
accountable by the courts in taking public input meaningfully
into their process and into account in finalizing the rule. So
transparency is extremely important in the process, and I think
we actually have a remarkably transparent process by any
Senator Tester. Based on what? I mean, why do you say that?
Mr. Shelanski. We have a process here in the United States
that, when one looks around, we have stakeholders--businesses,
citizens, activist groups, anybody who wants to come in has a
chance under the Administrative Procedures Act, under the
Executive Orders, to weigh in and get their views heard.
Senator Tester. All right.
Mr. Shelanski. And the courts hold the agencies
Senator Tester. OK. Thank you very much. Senator Portman.
Senator Portman. Administrator Shelanski, I appreciate your
being here. You probably have the most important job in
Washington that nobody knows about. And it is not just an
important job; it is a really hard job. I was there at a time
when we had the opportunity to hire somebody for your role, and
I talked to a lot of people and ended up with someone who had
expertise, as you do, in this and got to learn more about the
skills that are required, so we appreciate your service.
As you know, I think our regulatory costs are going up, not
down. It concerns me. If I look at the White House language on
this, it says, ``We are constantly trying to minimize
regulatory burdens and avoid unjustified regulatory costs.''
That is something I agree with totally. And yet when I look at
one of the real measures of regulatory output, what should be
the costs of these economically significant rules--that is, the
rules with $100 million or more impact--in the first term,
which are the numbers that we have, the Obama Administration
was far more aggressive than any of their predecessors.
In fact, if you look at the Administration's own estimates,
the costs of those significant rules would be greater than the
costs in 2012 alone, which is, I think, the last year for which
we have data--that one year would be higher than the entire
cost of the first term of the Clinton Administration and the
first time of the George W. Bush Administration.
So I do think there is a change, and this past year is no
different. In 2013, what we have is that regulators had
published $112 billion in net and regulatory costs, including
the deregulatory measures, and added 157.9 million paperwork
burden hours. So I guess, my general question to you is: Can we
Before I ask you to answer that more general one, let me
just talk specifically about the lookbacks and trying to
eliminate old, inefficient rules. Again, I think it is a good
idea. I, again, am focused on, how do we look at the actual
results of that. Of the first 90 rules changes initiated as
part of the regulatory lookback, the estimated compliance cost
is $3.3 billion, according to an analysis by American Action
Forum Data Agency published in the Federal Register. Your
testimony suggests that the more recent efforts have boosted
lookback savings costs to around $10 billion. When you put that
figure in context, the picture becomes a little less
encouraging. According to data reported by the agencies
themselves, in 2012 alone, again, the administration's new
regulatory burdens imposed $236 billion in new burdens, so we
are talking about a relatively small reduction in burden,
whether it is 3.3 or 10 billion, compared to the new costs.
This same report I talked about says even if you look at
only the first 90 rules undertaken by the agencies as part of
this lookback, the new costs that are involved total $11
billion. In other words, the lookback itself, because it
expands other rules, cost $11 billion, and yet the savings is
either $10 billion, in your latest testimony, or $3.3 billion.
In other words, the costs of regulations attributed to the
lookback rules actually exceeded the cost savings.
Now, that might not be true going forward, but it does
concern me. The most recent analysis I have seen examining
quantified rulemaking in the retrospective reports found that
the rules' increasing costs outnumber rules implementing cost
savings measures by a ratio of 3.7:1.
So the first question for you here is: How can agencies be
incentivized to institute meaningful regulatory reviews that
will improve existing regulations and actually reduce overall
regulatory burdens? And what would you do to institutionalize
that kind of a retrospective review?
Mr. Shelanski. Thanks very much for your question, Senator
Portman. Without being able to comment on the particular
numbers or the particular report that you identified, I think
that the important thing to keep in mind is when a
retrospective review is done, it is typically done through a
rulemaking. You need to do a rulemaking to change a rule. And
we look, when we examine a retrospective rule, just as we do
with any other rule, to make sure that that rule, where
permissible by statute, is cost justified--that is to say that
the benefits justify the costs.
So we would be very concerned if we saw a rule that was
supposed to be reducing regulatory burdens that, in fact,
imposed regulatory burdens that exceeded the savings. And so we
do in the retrospective review process, just as in the review
of new regulations, look very carefully at the regulatory
impact analysis and the costs and benefits.
So what we are trying to do to further institutionalize the
lookback effort is to do a number of things. One thing is to
ask agencies to get into the habit--I think they have been
really excellent in getting into the habit of identifying
retrospective review plans, posting them, and every 6 months
telling us which ones have you accomplished, which new ones are
you adding, which one are ongoing.
So the retrospective review reports that we receive from
agencies and that we review prior to their posting them on
their Web sites are, I think, a key part of institutionalizing
and creating a mechanism, a routinized mechanism, if you will,
within the agencies of looking for good targets for lookback.
But we have other things that I think we need to start
considering, that we need to start working with the agencies
on, to make sure that there is follow-through on the plans that
they list and that the plans that they have identified are
really the valuable plans.
The truth is lookback is very difficult, as Senator King
said. It is not the easiest thing in the world to find high-
cost, low-benefit rules that are just lying around on agency
books. Most of the low-hanging fruit has been harvested in this
So it is a substantial dedication of effort and resources
by the agency, and we look forward, both at OIRA and with our
colleagues on the management side of OMB, to working with the
agencies on a number of mechanisms by which those resources and
that focus will be increased going forward.
Senator Portman. OK. Well, we will share with you these
numbers, and if you could give us a response in writing, that
would be terrific as to why you think the analysis is right or
wrong. And, again, the analysis that we have would indicate
that in the lookbacks there have been higher costs imposed than
actual savings, which, of course, is not your intent, as you
With regard to institutionalizing it, it is good for me to
hear that you think the agency attitude is to look--talking
about agency attitude, just one other question. Do you think
that agencies face a sort of inherent conflict of interest in
looking at their own rules in terms of the costs and benefits?
And is there a role here for OIRA, or for the Government
Accountability Office (GAO) or maybe an independent
congressional regulatory review office, to be tasked with
evaluating the actual costs and benefits of regulations after
they have been implemented?
Mr. Shelanski. In my time as Administrator, so since July,
I have not encountered a situation in which an agency has
seemed hampered by a conflict of interest in reviewing one of
its own rules. The agencies, insofar as I have dealt with them
on retrospective review, have been quite interested in doing
good policy and trying to improve their regulatory systems.
Senator Portman. Thank you, Administrator.
Thank you Chairman.
Senator Tester. I have a couple quick questions here.
Executive Order 12866--hopefully that rings a bell--directs
disclosure of all substantive comments and changes, which
includes the informal review process. Are those publicly
Mr. Shelanski. Just to clarify, Mr. Chairman, of course the
comments that are submitted during the public comment period
that a rule has been put out for comment by an agency are
disclosed and are docketed. We have meetings under Executive
Order 12866. We do not ask for the meetings, but any party that
wishes to weigh in on a rule under review at OIRA is entitled
to have a meeting with me or somebody who I designated.
Senator Tester. OK. And those----
Mr. Shelanski. We docket those meetings and any materials
Senator Tester. OK. So it is for public examination.
Mr. Shelanski. Yes. Very often there are no materials
provided, but the fact of the meeting, who attended, and
anything that they provided in terms of materials is docketed
and available to the public.
Senator Tester. OK. There have been 38 rules that have been
posted on the OIRA Web site for public comment for longer than
6 months. What is the main impediment to getting these reviews
Mr. Shelanski. There can be a variety of reasons that a
rule goes beyond the 90 or--there are permissible extensions,
but the normative times established in the Executive Orders.
Very often a rule is very complicated, it is extremely long and
detailed, and the normative time of 90 days in the Executive
Orders does not necessarily fit for all rules. And very often
what happens during the review procedure, just speaking
generally, is OIRA staff will raise very serious questions, or
through the interagency review process, an agency that may have
an interest in what another agency is doing might need quite a
bit of time to fully understand what the implications of that
rule will be for its regulatory program. And there can be a lot
of discussion amongst the agencies. And at the end of this
process, the agency that wishes to promulgate the rule may want
to do more research, may need to do additional studies, may go
partially back to the drawing board. And during that period,
the rule is back with the agency, and it could be for a very
good reason. It could be to improve the rule, to solidify the
So one of the reasons for an extended review period can
simply be that new information came to light during the review
process that required a bunch more effort.
Senator Tester. OK. I would just like to get your opinion.
You review rules all the time, and the one-stop shop suggestion
where you have a lead agency on regulations, do you have an
opinion on that?
Mr. Shelanski. So I do not have an opinion to offer here
today. I would note that I did listen with great interest to
Senator King's discussion of permitting and the idea of a one-
stop shop for permitting. And I know that the Administration is
absolutely committed to ensuring that we do have 21st Century--
not the nostalgic infrastructure but 21st Century
infrastructure, and that the permitting that will allow for
that infrastructure to develop can occur efficiently in a
modern way that is consistent with protecting our communities
and protecting our safety. And the President through a
Presidential memorandum did charge the Council for
Environmental Quality (CEQ) and the Office of Management and
Budget with leading a task force that would help to come up
with suggestions and proposals for that streamlining. And the
Office of Performance and Personnel Management at OMB is
working with CEQ on that effort, and I would be very happy to
take that question back to them.
Senator Tester. That would be fine. Do you know if there is
a timeline for recommendations from that?
Mr. Shelanski. I believe there is, sir, but I do not know
exactly what it is off the top of my head.
Senator Tester. Well, I appreciate that.
Senator Portman, further questions?
Senator Portman. Yes, just, I guess, following up on that.
In March 2012, there was an Executive Order issued as to
permitting specifically, and I do not know if that is the
memorandum you referred to earlier. It sounds like that might
be different. This is an Executive Order. And it said it was
aimed at improving performance of Federal permitting and review
of infrastructure projects. It is aimed at more efficient and
effective review projects, faster decisionmaking, transparency,
predictability, accountability for infrastructure permitting.
The White House has said that since that Executive Order,
agencies have expedited the review of a number of major
projects, 22 of which have completed the Federal permitting
process. There was a dashboard Web site containing a searchable
database of information for certain projects selected as part
of the initiative, so it is almost like a pilot program, it
sounds like to me, on dashboards.
And you might have heard Senator King talking about the
Federal Permitting Improvement Act that he is now a cosponsor
of, and it creates, as you probably know, a permitting
dashboard that is similar to this White House initiative, and
it would be available for larger projects, would provide
information on the status of the permits, status of approvals,
the NEPA reviews, basically providing more transparency and
accountability in permitting.
As OIRA Administrator, do you support this concept of a
permitting dashboard called for in the Federal Permitting
Improvement Act to encourage that transparency and
Mr. Shelanski. Senator Portman, I am not in a position
today to articulate an administration position on the bill,
but, of course, I would be very interested in the discussions
that would have to happen both within the Administration and
between the Administration and Congress in formulating such a
I will say that I do fully support as OIRA Administrator,
of course, the Administration's objectives that you mentioned
that are articulated in the Executive Order and, to the extent
that those have a regulatory component, look forward to working
in a complementary way with any of these permitting
Senator Portman. OK. You better say nice things about the
Federal permitting bill because Senator McCaskill has just
Mr. Shelanski. Just in time.
Senator Portman. You do not have to be nice to me, but you
better be nice to her.
OK. Let me ask you one quick one on independent regulatory
agencies, and I will try again not to put you on the spot,
because I do think that dashboard that we are talking about for
all projects is consistent with the dashboard that you have in
your own Executive Order. But on the independent agency review
issue, as you know, Senators Warner and Collins and I introduce
this thing that basically takes the President's language, as I
see it, and codifies it to make sure independent agencies are
subject to cost/benefit analysis requirements, other burden-
reducing principles that have long governed the executive
branch agencies that you review. It would require submission to
OIRA for a non-binding evaluation of the agency's analysis in
the public record. And prior to becoming OIRA Administrator,
you helped lead one of those independent agencies, and,
therefore, I think you are qualified to speak on this issue.
Out of the 21 major rules issued by independent agencies in
2012, not one was based on a complete cost/benefit analysis.
Now, that is based on OIRA and GAO annual reports. There are
also some other literature on this that I am happy to share
with you, but that is our sense of it, that it just does not
happen. The same basically was true in, by the way, 2009, 2010,
and 2011. So we are not seeing the kind of independent agency
review the President called for in his Executive Order.
Again, having been someone who led an independent agency
that was regulatory, do you believe it would be of value to
require sound review rulemaking principles through independent
regulatory bodies and to provide third-party review of the
rules they promulgate?
Mr. Shelanski. Thank you, Senator Portman. Maybe because I
did work at two independent agencies, I particularly value the
independence of those agencies, and I think that in my
experience, the agencies do a conscientious and careful job
with their rulemakings. I do think that the Executive Order
helps in that regard in letting the independent agencies know
sort of what additional principles they might want to bring to
So I think the way the current system works, the tools that
the independent agencies have and the tools that we have at
OIRA where we are available to consult upon request or to
discuss rulemakings with those agencies if they have questions
about implementing the Executive Order work quite well.
I have not had the chance to discuss within the
Administration any official administration position on the
bill, so I am certainly not in a position to comment in that
regard now. But my own experience is that the independent
agencies are--while all agencies can do better, they are doing
a conscientious job with their rulemakings.
Senator Portman. So you would disagree that out of the 21
major rules, say in 2012, that none were subject to a complete
cost/benefit analysis? You think it is just fine what they are
Mr. Shelanski. No, I do not disagree with the OIRA report,
but I do think that the independent agencies are subject to all
of the APA requirements, they are subject to judicial review;
and I just am not in a position to say right now whether any
particular piece of legislation would improve the situation.
Senator Portman. We would differ on judicial review, unless
you are talking about specific statutes that have judicial
review within them. But my time has expired, so we will come
back maybe with some questions in writing on that as well.
Senator Tester. Senator McCaskill.
Senator McCaskill. I know my colleagues and my cosponsor
have covered most of this, and I do not want to belabor it by
going back through some of the points that I would like to
emphasize. But I would ask you this question: Do you think that
one of the problems we have in this regard, in government there
are people like you who are giving your time and your service,
and you are kind of way up here. And then there are entry-level
people, and then there is what I call the calcified middle. And
the calcified middle in most instances are the ones that are
driving the rules and regs.
Do you think that the lack of private sector experience in
that calcified middle has an impact on some of the nonsensical
outcomes we have on some of these rules in terms of delays and
failure to do adequate cost/benefit analysis?
Mr. Shelanski. My experience with the people who write the
rules at the agencies is that they are very attentive and very
thoughtful about what they are doing. I have not seen a major
rule come to OIRA in my time there where the heart of the
agencies that have been involved with writing the rule have not
engaged in fairly significant interaction with stakeholders and
actually taken that stakeholder interaction quite seriously.
There are times that their analysis can be improved, and
that is one of the things that my office tries to work with the
agencies to do, and so I think we provide a valuable function
in terms of providing some additional perspective.
But I have not noticed, at least on the major rules that I
have had the opportunity to participate in reviewing in the
last 8 months, the kinds of hazards or problems to which you
Senator McCaskill. Well, it is hard to imagine that we
could make it any more complicated or difficult than it is
right now with some of these rules. So hopefully we can get
some of at least our permitting stuff that we know costs real
money, that we can maybe get some action on that legislation
that would make things go quicker and make accountability more
So thank you very much for being here today.
Mr. Shelanski. Thank you, Senator.
Senator Tester. Thank you, Mr. Shelanski, for your
testimony and your availability for questions. We will release
you now and bring on the third panel. Thank you very much and
Mr. Shelanski. Thank you, Mr. Chairman.
Senator Tester. Now on our third panel we have three
witnesses to round things out, and you folks can come up and
sit down as I introduce you.
We have Michelle Sager, who is the Director of Strategic
Issues at the U.S. Government Accountability Office. In this
role she oversees GAO's analysis of the regulatory process. I
want to thank you for being here, Michelle.
We have Katherine McFate, the president and CEO of the
Center for Effective Government and who co-chairs the Coalition
for Sensible Safeguards. The Center for Effective Government is
a nonpartisan organization that advocates for transparency in
government. We appreciate you being here, Katherine.
And last, but certainly not least, who Senator Portman
brought up, Boyden Gray, who is the former Ambassador to the
European Union and the White House Counsel to President George
H.W. Bush, who appointed him as Counsel to the President's Task
Force on Regulatory Relief. It is great to have you here today,
Boyden, and I appreciate you taking the time.
As with the previous panel, I would just like you to please
stand and answer in the affirmative or the negative as I swear
you in. Do you swear that the testimony you will give before
this Subcommittee will be the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. Gray. I do.
Ms. McFate. I do.
Ms. Sager. I do.
Senator Tester. Let the record reflect that the witnesses
answered in the affirmative. I am going to start out with you,
Mr. Gray, and then we will just go down the panel, I should
say, but once again, welcome, Boyden, and go ahead.
TESTIMONY OF THE HON. C. BOYDEN GRAY,\1\ FOUNDING PARTNER,
BOYDEN GRAY & ASSOCIATES, PLLC
Mr. Gray. Thank you very much, Mr. Chairman, and Senators
McCaskill and Portman.
\1\ The prepared statement of Mr. Gray appears in the Appendix on
Senator Portman was the best hire I ever made, so I wish he
was still in closer proximity. But the sky is the limit,
This is a great opportunity for me to make just a couple or
three points. I believe that overregulation, unnecessary
regulation, is a major wet blanket on growth, opportunity,
innovation, and employment, and so this is to me a very big
I want to talk about the Regulatory Accountability Act a
little bit, the permitting proposal that Senator Portman has
put up, and Senator King joined, and also just a comment about
On Regulatory Accountability, it codifies the cost/benefit
requirements that have been in place as a matter of Executive
Order for many years, since 1981 at least, subjects them to
judicial review. This is, I think, better than what you get
under the Executive Order, which is not reviewable. It also
would apply this to independent agencies. I do not think there
is a single academic in the country who would really argue
today that independent agencies should not be covered in the
same way the other agencies are. The fact that they are not,
for example, gives Europeans heartburn because it has so deep
an impact on financial services where there are so many
divergent issues that are facing Europe and the United States.
On the permitting proposal, this addresses one of the most
insidious brakes on economic growth, in large part because it
involves so many hidden delays and so many hidden burdens and
hurdles. And the one-stop shop idea, putting OMB in at the
heart of leadership, I think would be very important.
I want to make a parenthetical comment that 45 people is
not enough in that office. I think when we started out doing
this in 1981, I think there were double the number. And, of
course, the workload of that office has increased since then.
But if you are going to add independent agencies to the review
process, I think you have to also give OMB the resources.
I think the permitting thing, if you look at one report in
my testimony for the new gas shale that there is a new
opportunity, which is much under discussion today because of
what is happening in Ukraine, there are 1,400 miles of pipeline
that must be built yearly just to move this gas around the
country to where it is needed, to say nothing of moving it to a
place where it might be exported. EEI says it is going to be
spending $50 billion over the next 10 or 15 years on
transmission lines. None of this will take place without
permitting, and if the permitting is not expedited, none of it
will take place period.
So I am very much in favor of this legislation. It puts a
time limit, as Senator King noted, on judicial review. It gives
6 months to decide, not 6 years, and I think that is completely
If you look at what EPA is proposing for so-called PSD,
prevention of significant deterioration, it seems like it is
pretty obscure, but it would allow them to regulate every
building construction project practically in the country over
time. And I think that is just really overkill.
My one substantive comment about legislative review is that
there is a lot of stovepiping in the Congress, as there is, of
course, in the executive branch. Agencies and committees,
committees like this one, do not have the proper scope to make
the changes that need to be made or the oversight that needs to
be conducted. And so what I would recommend, in addition to
what you are already proposing, is a joint committee of some
sort that could take a broader view of what is going on across
the Senate, across the House, and take into account all the
things that are going on, the interconnections, the
disconnects, and that I think would make it easier to perform
the oversight function that you are really doing a great job as
it is now.
So thank you very much for the opportunity to appear.
Senator Tester. Well, thank you very much for being here,
Mr. Gray. We certainly appreciate your testimony. Katherine
TESTIMONY OF KATHERINE MCFATE,\1\ PRESIDENT, CENTER FOR
Ms. McFate. Thank you, Chairman Tester, Ranking Member
Portman. I think I am the outlier on this panel. As the co-
chair of the Coalition for Sensible Safeguards (CSS), we are a
collaboration of 150 groups of consumers, small businesses,
scientists, environmentalists, health and safety advocates, and
we are committed to defending and improving our regulatory
\1\ The prepared statement of Ms. McFate appears in the Appendix on
Our system of public protections has made America a better,
safer place. Workplace fatalities are a fraction of what they
used to be. Our air is less polluted. Our rivers are cleaner.
Our food, drugs, toys, and cars are all infinitely safer than
they were 30 years ago.
Our system of public protections has given us the highest
standard of living in the world. They have encouraged our
businesses to innovate and to improve, and they have produced
broadly shared prosperity.
But our infrastructure, both public and private, as we have
mentioned here, is aging. Resources for enforcement are
declining. Resources for inspections are declining. And our
standards and safeguards are not keeping up with the fast of
scientific knowledge, because our rulemaking system has become
increasingly slow and opaque. The regulatory process has been
burdened by unnecessary delays, process burdens, analytic
requirements, and new legal challenges, all of which make it
harder for us to translate new scientific knowledge and
evidence into effective public action.
And while we wait, children and elderly people develop
preventable cancers, toddlers get run over in driveways,
workers are debilitated by respiratory diseases, and the planet
My testimony will only focus on one step in the current
Federal regulatory process: the review of proposed rules by
We need to recognize that Federal agencies now take on
average 4 to 8 years to complete a rule. These rules are based
on comprehensive scientific reviews of the literature by
experts and testimony and materials collected from a variety of
stakeholders, including regulated industries. But centralized
review by OIRA actually delays the completion of these rules by
demanding duplicative cost/benefit analyses and by exerting
behind-the-scenes pressure on agency personnel to change the
rules, almost always in ways that weaken public health and
Current policy established a 90-day deadline for OIRA to
review new rules and requires it to be transparent about the
changes that it asks agencies to make, but the deadlines are
often missed, and transparency is circumvented by informal
review that can start at the very beginning of the rulemaking
So what do we recommend? Once a rule has been formally
submitted to OIRA for review, a failure to meet the 90-day
deadline should be considered default approval, and the rule
should be published. The scope of agency actions that require
OIRA review should be limited. Congress should stipulate that
OIRA may not review agency guidance documents, pre-rulemaking
actions, or rules that are not economically significant. This
would reduce its caseload and its workload.
Agencies should not be forced to engage in resource-
intensive exercises about paring back outdated rules. They need
to be scanning for emerging threats and risks. We have
increasing numbers of chemicals, new chemicals that are being
used in industrial processes, new drugs, new medical
technologies, emerging nanotechnology, more imports in this
country than we have ever had before. We need our public
protective agencies to be looking outward and identifying
emerging risks, not looking backward.
On transparency, we think OIRA should be required to
provide copies of pre-and post-review versions of the rule in
the rulemaking document. They need to provide a description of
all the substantive changes made to a rule during both the
informal as well as the formal review process in clear and
simple language. We need to know what changes are being made by
entities inside the Executive Office of the President, an
agency not responsible for the rule, and by individuals who are
not employed by the executive branch agency, because we do see
industry influence coming into play at the very end of the
Finally, we would like to see OIRA be required to provide a
summary of the subject matter that is discussed at meetings
with outside groups. In response to Senator Tester's question,
they do not post summaries of what is being discussed at the
meeting. They say who is in it, and then they post the
material, but not what is being discussed. The public has a
right to know why important public protections are being
delayed and oftentimes weakened and who is in on those
Senator Tester. Thank you very much for your testimony.
TESTIMONY OF MICHELLE SAGER,\1\ DIRECTOR, STRATEGIC ISSUES,
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Sager. Chairman Tester, Ranking Member Portman, and
Senator McCaskill, thank you for inviting me to be with you
today to talk about some of GAO's prior work, our findings, as
well as updates on our recommendations. I am pleased to have
the opportunity to discuss these important Federal rulemaking
\1\ The prepared statement of Ms. Sager appears in the Appendix on
One common theme that has repeatedly emerged in our body of
work is the importance of transparency in the rulemaking
process. Drawing on that body of work, my remarks today will
focus on three key topics: first, agencies' retrospective
reviews of their rules; second, the transparency of the
regulatory review process; and then, third, a brief mention of
some additional challenges and opportunities for increasing
public participation as well as knowledge of the rulemaking
process to outside parties.
So, first, with regard to retrospective regulatory reviews,
in 2007 we found that agencies were actually conducting many
more of these reviews than was readily apparent to the public.
We also found that reporting on the outcomes of these reviews
was often lacking. Agencies reported that most of their
retrospective reviews were actually conducted so that they
could get a better sense of the effectiveness of their existing
regulations. Agencies also told us that their retrospective
reviews, their discretionary reviews more often resulted in
changes than their mandatory reviews, which most often resulted
in no changes.
We made seven recommendations to OMB in that report in
2007, and OMB acted upon those recommendations. In addition,
the Administration addressed our recommendations through
additional guidance to agencies, asking them to plan for and
conduct retrospective analyses as well as to establish plans
for how they would conduct these analyses.
We are currently completing additional work at the request
of Senators Johnson and Warner, and this forthcoming report
will look at more recent updates on the retrospective review
process, factors that either facilitate or impede these
analyses, as well as the extent to which agencies are making a
connection between their retrospective regulatory reviews and
their agency priority goals.
I would now like to shift topics and move from
retrospective reviews to the transparency of the regulatory
In a series of products between 1996 and 2009, we
consistently found that OIRA's reviews of agencies' draft rules
often did result in changes, but the transparency and
documentation of those changes resulting from the review could
definitely be improved.
To date, OIRA has implemented only one of these
recommendations, the recommendation that we heard about
previously, to post information about the meetings with outside
parties. We continue to believe that our past recommendations
still have merit and that, if implemented, they would improve
the effectiveness and the transparency of the rulemaking
Third, I would like to briefly mention two additional
recent GAO reports that identify progress made in facilitating
transparency and public participation as well as additional
opportunities for improvement. These reports are summarized in
greater detail in my written statement that will be entered for
the record, but in brief, the first of these reports in 2012
found that agencies frequently cited what is known as the good
cause exception in publishing final rules without Notices of
Proposed Rulemaking. And, in addition, in 2013 for the first
time we reviewed agencies' international regulatory cooperation
efforts. Both of these reports also contained additional
recommendations to OMB.
In conclusion, as you all know, agencies issue thousands of
rules every year that affect numerous aspects of all of our
lives as citizens as well as consumers. The rulemaking process
must balance the public's right to be informed and involved
with the agencies and OMB's need to efficiently and effectively
implement their missions. The recommendations that I discussed
in my statement today intend to facilitate this balancing act.
Mr. Chairman, this concludes my prepared statement. Again,
I thank you for the opportunity to appear before you today, and
I look forward to any questions you and other members may have.
Senator Tester. Thank you for your testimony, Ms. Sager,
and thank you, everybody, for your individual testimony.
I am going to turn to Senator Portman at this point in
time, and he can rock and fire.
Senator Portman. Great. Thank you, Chairman. I appreciate
it. And, Ms. Sager and Ms. McFate and Ambassador Gray, I
appreciate your testimony and the time you have put into this.
We had a great discussion earlier about the Permitting Act, the
Independent Agencies Act, Regulatory Relief Act, which is--the
Regulatory Accountability Act, and I just have a general
question, if I could, for you, Boyden, and that has to do with
the comment you made in your testimony about procedural reform
versus substantive reforms. And you said in your testimony, and
I appreciate this, that you do support the regulatory relief
efforts, and you have been part of helping us put together
things that make sense here for looking at regulations
prospectively. But you also make the point that while
procedural reforms are critical to cleaning up the regulatory
process, you say equally important are substantive reforms to
underlying agency statutes to rein in delegated regulatory
authority and limit burdensome overreach.
You talk about the 1987 act where Congress repealed the
power plant and fuel uses prohibition against power companies
using natural gas, which is very timely in my State of Ohio.
There are few folks in Youngstown, Ohio, who are happy that
Congress took that action, and across eastern Ohio.
But what are some other examples of regulations today that
you think should be addressed through a substantive
congressional action to preserve jobs and grow the economy?
Mr. Gray. Well, the reason I mentioned the much feared,
maybe little known PSD permitting program is because that is
something that stems from the underlying Clean Air Act statute
itself. And the Supreme Court heard argument last week--it may
throw it out--but the Clean Air Act is one example of where it
has been around for a long time and has not been actually
revised since 1990. It is hard for the Environment and Public
Works Committee to open it up. That is why I suggested a joint
committee for statutory review.
But the Clean Air Act is one place where I would certainly
start, and I could get into a discussion of that which would
take the rest of the afternoon, and so I will stop with just
the Clean Air Act. But that one provision for dealing with the
permitting is absolutely ripe for congressional revisiting.
Senator Portman. On the permitting side, Senator McCaskill
helped put this together, and she is going to join us here
again in a second, but you talked about the fact that Senator
King's testimony that the current approach the government is
taking is holding back our economy, stifling job growth, I
think that is clearly true when you look at where the United
States has fallen, again, relative to other countries. And it
is a global economy, and just the fact that it is tough to find
investors for some of these projects, there is so much
uncertainty, and sometimes certainty, as to the length of time.
You said that there are myriad other examples in addition
to Cape Wind that do not earn such equivalent public notice. I
mentioned this American Municipal Power (AMP) hydro plant on
the Ohio River earlier, but I could also mention a gas
processing facility in Harrison County. It was delayed because
of an archaeological find that was over a mile away. And it
caused a significant increase in the cost because they had to
push it into the winter months, and so on, a country road that
more than doubled in cost because a Federal Highway
Administration (FHWA) permitting process resulted in 6 months
of delays; a wind turbine project in Logan County, they ended
up canceling that because of the delays.
So this is just in my State, but do you have other examples
of that? And what do you think it will take Congress to sort of
get notice of this? And how do we educate people as to what the
permitting process is resulting in, in terms of jobs? Boyden,
you are still up.
Mr. Gray. So your question is: What does the permitting do?
Senator Portman. Yes, other examples of that and how do we
better educate people as to what permitting delays and costs
result in terms of jobs.
Mr. Gray. Well, my answer is sort of like Senator King's
response, that the real harm is what you do not know, which is
the projects that never got off the ground, the projects that
you referred to, you cannot get an investor. That is impossible
to measure. That is why permitting is so insidious.
I remember the detail that the Southern Company executive
gave, talking about one of the biggest power plants they have,
which I do not think is in Ohio but it is in the Midwest
somewhere, not in the South. They were able to get it permitted
in 6 months. They cannot get anything permitted in 6 years
today. And that would be for trying to get a wind project going
or a solar project going, something that would be extremely
clean in terms of the environment, or a natural gas project,
which is much cleaner than coal.
So even things that are supposed to be cleaner get caught
up in this permitting, and that does not make any sense. But to
put a money value on it is impossible, and the metric that I
think is the most important is the one you used. You see these
international rankings where the United States has fallen back
to 34th, used in one survey. That is terrifying, really. This
country should be No. 1 or No. 2. And there is no way to put a
dollar value that I know of on projects that do not even get
Senator Portman. Yes. Well, thank you.
Thank you, Chairman. I have to run to my next one I am late
for, but I appreciate all the testimony and will look forward
to having some written questions to you all, if that is OK, and
getting some responses. Thank you.
Senator Tester. Thank you, Senator Portman.
Once again I appreciate the testimony by each and every one
of you today. I am going to start with you, Katherine. You are
an advocate for maintaining the 90-day review mandate. In fact,
you said in your testimony that if they did not meet it, it
would be a default approval.
Ambassador Gray talked about the fact that they had 90
people working in OIRA in 1981 and its down to 45 now. What is
your feeling about their staffing? Do you think it is adequate?
Do you think they need more folks?
Ms. McFate. I think it is not adequate for what they are
trying to do, and they need to stop trying to do so much. If
you took just that--if they only looked at economically
significant rules and we actually took that $100 million mark
in 1978 and did it as a percentage of the economy today, it
would be rules that had a cost of more than $660 million in an
economy the size of ours today.
So I think that there are things that they are trying to do
that they should stop trying to do, and if they did, then they
would be able to meet their deadlines better.
Senator Tester. OK. Ambassador Gray, whenever you talk
about changing environmental and judicial review, that always
brings up all sorts of folks that are concerned about it, and
depending on where it is done, my concerns, too. You have been
around the horn a few times. Do you see this---if we were to
change environmental and judicial review, could it lead to more
litigation? Or do you see it differently?
Mr. Gray. Well, it might lead to more litigation, but
remember, we have been through this big debate just recently
about the workload of the D.C. Circuit, which before the
addition of the last three judges had the lowest caseload by
far of any circuit court in the country. So I do not think
increasing the workload of that court, when you have added
three judges to the lowest workload court already, I do not
think that is a burden that is going to be insuperable.
Senator Tester. OK, good. Ms. Sager, your last report on
regulatory lookback was released in 2007. It appears that the
Administration has attempted to incorporate many of your
recommendations such as increased public engagement in its
current lookback program.
Today you testified that, if effectively implements, these
changes will improve transparency, credibility, and
effectiveness of the retrospective analysis. What challenges to
implementation do you foresee?
Ms. Sager. Again, I should mention, as I noted in my
statement, we will have additional work on this topic coming
out within the next month or so, which will illuminate some of
these issues. However, based on publicly available information,
certainly we expect some of the same issues that we found in
2007 to remain true today, in part due to some of the
challenges that we have already discussed, which are fewer
resources to conduct the reviews and sometimes overlapping or
duplicative requirements for multiple types of reviews.
Having said that, agencies are conducting more
retrospective reviews than is readily apparent often to the
general public. One of the challenges of conducting those
reviews is knowing what the actual results of those reviews are
and what perhaps the cost savings might be. This is in part
because agencies have different metrics that they are using as
they come up with costs. They may have different assumptions.
They may have different time periods that they are using in
their retrospective reviews. So one common question we get is:
Can we aggregate this information and come up with a total cost
savings? And that is difficult to do at best and difficult to
Senator Tester. And did you just say there is going to be a
report coming out from GAO?
Ms. Sager. Yes, we are doing a report at the request of
Senators Johnson and Warner.
Senator Tester. And it will be out when?
Ms. Sager. It should be out in the next month or so.
Senator Tester. And will it have additional recommendations
Ms. Sager. It most likely will. We are still finalizing our
Senator Tester. OK. You pointed out in your testimony that
OIRA has only implemented one of the 12 GAO recommendations on
how OIRA can increase its transparency. Has the Administration
made any additional progress on transparency?
Ms. Sager. They have implemented that recommendation. As I
mentioned, we have additional recommendations in our more----
Senator Tester. So it is just that one recommendation, that
Ms. Sager. That is the only one that they have implemented,
and we do update those--we do followup on those recommendations
every year, if not----
Senator Tester. OK. So what do you see as the biggest
obstacle to transparency?
Ms. Sager. One of the challenges is they are legally
complying with what they are supposed to do, but certainly the
public could be better informed, stakeholders could be better
informed if they did things such as made clear when a rule is
changed during the review process, what is the substantive
nature of that change. Sometimes it may not be a substantive
change. It may just be a typographical error or some minor
change. But for interested parties to sort through the rule
that is submitted and then the final rule and determine what
the nature of that change is, a simple identification of what
the nature of the substantive change is could go a long way
toward making that more transparent.
Senator Tester. So I had asked the question to Mr.
Shelanski earlier, and Ms. McFate talked about it a little bit,
and that was discussions ahead of the process, they would issue
a summary but they did not issue what was discussed, what was
actually talked about. Is there a problem with that from your
Ms. Sager. That is not something we have specifically
looked at. In our prior report, we did recommend that they just
simply make public who they are meeting with and what the
nature of that meeting is, and that is something that they have
taken action on.
Senator Tester. It appears to me it might be beneficial to
hear but to be able to read what they discussed.
Ms. Sager. To understand the substance of the meeting.
Senator Tester. OK. Well, I want to thank you all once
again for being here and taking time out of your busy schedule
and discussing a very important topic, not only to Senator
Portman, Senator Pryor, Senator McCaskill and myself, but a lot
of others in the Senate. So I just thank you for your time.
Let me see here, make sure I get the homework done here.
The hearing record will remain open for 15 days for any
additional comments or questions. Thank you again to our
This meeting is adjourned.
[Whereupon, at 4:12 p.m., the Subcommittee was adjourned.]
A P P E N D I X
[GRAPHIC] [TIFF OMITTED]