[House Hearing, 106 Congress] [From the U.S. Government Publishing Office] THE QUALITY OF REGULATORY ANALYSES ======================================================================= HEARING before the SUBCOMMITTEE ON REGULATORY REFORM AND PAPERWORK REDUCTION of the COMMITTEE ON SMALL BUSINESS HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION __________ WASHINGTON, DC __________ JUNE 8, 2000 __________ Serial No. 106-63 __________ Printed for the use of the Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE 67-352 WASHINGTON : 2000 COMMITTEE ON SMALL BUSINESS JAMES M. TALENT, Missouri, Chairman LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD, DONALD A. MANZULLO, Illinois California ROSCOE G. BARTLETT, Maryland DANNY K. DAVIS, Illinois FRANK A. LoBIONDO, New Jersey CAROLYN McCARTHY, New York SUE W. KELLY, New York BILL PASCRELL, New Jersey STEVEN J. CHABOT, Ohio RUBEN HINOJOSA, Texas PHIL ENGLISH, Pennsylvania DONNA M. CHRISTIAN-CHRISTENSEN, DAVID M. McINTOSH, Indiana Virgin Islands RICK HILL, Montana ROBERT A. BRADY, Pennsylvania JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico JOHN E. SWEENEY, New York DENNIS MOORE, Kansas PATRICK J. TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas EDWARD PEASE, Indiana DAVID D. PHELPS, Illinois JOHN THUNE, South Dakota GRACE F. NAPOLITANO, California MARY BONO, California BRIAN BAIRD, Washington MARK UDALL, Colorado SHELLEY BERKLEY, Nevada Harry Katrichis, Chief Counsel Michael Day, Minority Staff Director ------ Subcommittee on Regulatory Reform and Paperwork Reduction SUE W. KELLY, New York, Chairwoman LARRY COMBEST, Texas BILL PASCRELL, New Jersey DAVID M. McINTOSH, Indiana ROBERT A. BRADY, Pennsylvania JOHN E. SWEENEY, New York DENNIS MOORE, Kansas JOHN THUNE, South Dakota Meredith Matty, Professional Staff Member C O N T E N T S ---------- WITNESSES Page Hearing held on June 8, 2000..................................... 1 Hahn, Robert W., Director, AEI-Brookings Joint Center on Regulatory Studies......................................... 5 Murphy, Robert, General Counsel, General Accounting Office... 9 Addington, David S., Sr. Vice President, American Trucking Association................................................ 11 Ricciardi, Sal, President, Purity Wholesale Grocers, Inc..... 15 Wallman, Kathleen, President & CEO, Wallman Strategic Consulting, LLC............................................ 16 Appendix Opening statements: Kelly, Hon. Sue.............................................. 22 Prepared statements: Hahn, Robert W............................................... 37 Murphy, Robert............................................... 78 Addington, David S........................................... 92 Ricciardi, Sal............................................... 102 Wallman, Kathleen............................................ 127 THE QUALITY OF REGULATORY ANALYSES ---------- THURSDAY, JUNE 8, 2000 House of Representatives, Subcommittee on Regulatory Reform and Paperwork Reduction, Committee on Small Business, Washington, DC. The subcommittee met, pursuant to notice, at 10:48 a.m., in room 311, Cannon House Office Building, Hon. Sue W. Kelly, [chairwoman of the subcommittee] presiding. Chairwoman Kelly. Good morning, ladies and gentlemen. I would like to thank you for attending this hearing of the Subcommittee on Regulatory Reform and Paperwork Reduction. This is the second hearing in a series of hearings being held at the full Committee level and in this Subcommittee concerning the reauthorization of the Paperwork Reduction Act and the effectiveness of other regulatory reform efforts currently in place. Yesterday, we focused on the regulatory burdens imposed on small business and the regulatory relief efforts of the administration. Today, we will narrow our focus to discuss the quality of agency regulatory analyses. In order to explore this issue, we must discuss the adequacy of agency compliance with analytical requirements mandated by the Administrative Procedure Act, the Regulatory Flexibility Act, and various other executive orders meant to direct agencies in producing regulations whose benefits outweigh their costs and achieve their objectives in the lowest cost manner possible. Witnesses will focus on whether these analyses provide agencies with sufficient information to properly assess the impact that the rules will have on the regulated community and the small business community in particular. Additionally, we will discuss any changes that are needed to ensure that agencies recognize these impacts, including whether Congress should obtain an independent assessment of these analyses in order to carry out its legislative functions. And while the subject may not be as entertaining as hearing Chuck D expound on the sale of music on the Internet, for small businesses affected by the ever-burgeoning mound of regulation and paperwork requirements, it is critical that this Subcommittee place this rather dry subject at the top of legislative priority. Small business owners are very familiar with the burdens that Federal regulations place on them. Some studies have shown that for small employers, the cost of complying with Federal regulations is more than double what it costs their larger counterparts, and you do not need any study to reach that conclusion. Common sense will say that if a regulation costs General Motors and a 500-employee manufacturer of a copper tubing company the same amount of money, the overall impact on General Motors is going to be significantly less on a per unit basis. As a result, small business owners have historically been interested in regulatory reform efforts in Washington. Any mechanism that will help control the size of this burden is naturally appealing to the small business community. The APA, SBREFA, and several other executive orders are such mechanisms. But these efforts will manage the regulatory burden only if they are implemented fully and only if Congress keeps a watchful eye on their progress. As the Committee whose goal it is to promote and protect the interests of small businesses, we have the obligation to discuss how well agencies are satisfied with and are satisfying these analytical requirements and to explore ways in which Congress can better understand these regulations that small business owners struggle to comply with on a daily basis. There is yet another underutilized mechanism reducing the regulatory burden on small business, the Congressional Review Act. On March 29, 1996, the Small Business Regulatory Enforcement Fairness Act, or SBREFA, became law. Included with this legislation was a section that established a CRA, a formal tool by which Congress could review and prevent new regulations from taking effect without going through the normal legislative process. Used properly, this new oversight device could greatly enhance the regulatory process by ensuring that only those regulations which are truly in the public interest are allowed to go into effect. Unfortunately, the Congressional Review Act does not appear as if it is being used effectively because it is not being used at all. Not a single resolution of disapproval under the Congressional Review Act has passed. The House has failed even to vote on one. Some have given up on its ability to halt regulations that do not have sufficient justifications that go beyond what Congress, or that create unintended consequences that require correction. But I believe that combined with oversight hearings, legislative efforts, and the submission of Congressional comments, CRA still has some hope. Regardless of whether or not you believe CRA can be used, you must admit that Congress does not have enough information to undertake appropriate oversight of the powers delegated to agencies by Congress. The power delegated to these agencies enables them to issue rules and those rules may not meet the objectives or have the consequences that Congress expected when it enacted the legislation. For example, when Congress enacted the Federal Motor Carrier Safety Act to create the Federal Motor Carrier Safety Administration, it certainly expected that the agency would enact rules to improve the safety of our highways through improved regulation of truckers. However, the most recent proposal from the FMCSA may have substantial unintended consequences for tour bus operators, independent route salesmen, and manufacturers. These consequences apparently were not considered when the FMCSA decided to treat all those individuals who drive professionally on the nation's road systems in an identical manner. To help address this problem, I was joined by Chairman Jim Talent in introducing H.R. 3669, the Congressional Oversight and Audit of Agency Rulemaking Actions Act. We call it COAARAA. This office would focus solely on conducting independent regulatory assessments of regulations to help determine whether the agencies have complied with the law and executive orders. Unfortunately, Congress cannot obtain unbiased information from participants in the rulemaking because each participant, including the Federal agency, has a particular viewpoint and bias. A Congressional Office of Regulatory Analysis would help fill the information gap and assist members of Congress in determining whether action is warranted. The purpose of COAARAA, then, is to ensure that Congress exercises its legislative powers in the most informed manner possible. Ultimately, this will lead to better regulatory analyses, most cost effective regulations, and most importantly, legislation tailored in a manner to address a narrow problem and not overly broad legislation likely to impose unnecessary burdens on small business. Only through active oversight can Congress ensure that the laws that it passes are properly implemented. This is a responsibility that Congress must take seriously, because as countless small business owners can attest to, not doing so can have dramatic implications. We have joining us today an excellent panel who will discuss some of these issues. I wouldlike to thank each one of them for participating with us today and I look forward to hearing their testimony. I thank you very much. Now, I would like to turn to Mr. Pascrell for his opening statement. If anyone else has an opening statement, I am going to ask that it be submitted for the record so that we can move this hearing on. Mr. Pascrell? Mr. Pascrell. Thank you. I would like to start my opening statement by thanking my friend, the distinguished Chairwoman from New York, for setting up this hearing to discuss the issue of regulations and their impact on small businesses. In fact, we almost had a little preliminary yesterday at another hearing. I think this serves as a nice complement and more focused follow-up to the hearing that we had yesterday. The issue we deal with today is one of the most critical issues for small businesses. The need to have rules that are clear, well thought out, and that realistically gauge economic impact, can be critical to the success of small businesses, which are the backbone of our economy. I relish this opportunity to examine the strides that have been made in this area so we can see how successful agencies have been in completing economic analysis that reflect the true cost of these regulations. Both sides of the aisle have concerns with regulations and their burdens that they place on businesses, and indeed, if one was to look since 1980 at the number of acts and executive orders that have addressed the problem of bureaucracy and regulation and paperwork, particularly in the last seven or eight years, one of the questions that we all have sitting around here is whether these regulations, first of all, are being implemented and how would we know if they were, and second of all, what is the fallout and is that more treacherous than the regulation which was supposed to correct some problem in the first place? I do not think that there is any Democratic or Republican way to design a regulation. There is just the correct way, one that is thought out and is not a rush to judgment. It is a way that involves a comment period where the agencies not only take comments but they listen to the suggestions made and evaluate the validity of business concerns. I personally believe, and this is only my take on this, that any regulation or rule which is the result of legislation that the Congress passes, that since the Congress is taking great pains to discuss this with those folks who are most impacted, and that is why we debate these issues, that when an agency gets that law and now has to implement it, that the rules and regulations should reflect discussions with the particular business. Many times, they do, and many times, they do not, and that is where we have major problems. If there is no one monitoring how these regulations are being implemented, let alone promulgated, I think we have serious problems and we need to address them. A regulatory impact analysis, which was mandated by the administration, is crucial in making sure burdens are not excessive, and I believe some of those burdens are excessive. I believe some of those burdens do not reflect the spirit and intent of the original laws. They go beyond, and they are usually imposed by second- and third-level bureaucrats who have no appreciation whatsoever of what business folks have to go into day in and day out. As the study we will look at shows, and as we know from the many complaints our offices receive about overly burdensome regulations, the Federal Government has to do a better job with its analysis to ensure the regulations designed are efficient while at the same time being effective. It would seem to me the only way we can do that is have a report to each Congress of what has happened in the previous Congress and how these are being implemented so that the Congress itself knows of what has been monitored and what has not. You can have all the executive orders by whatever President you wish. If they are not being implemented or if the implementation of those executive orders are worse than the previous situation, then we have created a real amount of chaos and I am sure we do not want to do that. It is interesting to note that the two parties who compiled the report on both sides of the political spectrum joined together on their conclusions. It is much like our work on the Small Business Committee, which has been for the most part bipartisan. We try to steer away from the extremes. I think that is healthy. I look forward to using this hearing to look at the Chairwoman's COAARAA legislation contained in H.R. 3669. Maybe what we learn here today can help us weigh the need for an office within the General Accounting Office to compile separate analysis of regulations to balance the job currently done by the Office of Management and Budget. So I look forward to today's testimony and I thank the Chairwoman for her indulgence. Chairwoman Kelly. Thank you very much, Mr. Pascrell. I do want to say one thing before we begin. I look forward to the testimony, but I also thank all of you, every one in the audience and everyone who is on the panel, for waiting for us so patiently. We had no idea when we set the timing on this hearing that we would be caught in the involvement on the floor of the House. So I thank you very much, and with that, we will begin with the testimony. We will start with you, Mr. Hahn, Mr. Robert Hahn from the AEI-Brookings Joint Center on Regulatory Studies. He is the Director and we are very happy to have him with us today. STATEMENT OF ROBERT W. HAHN, DIRECTOR, AEI-BROOKINGS JOINT CENTER ON REGULATORY STUDIES Mr. Hahn. Thank you, Chairwoman Kelly, Congressman Pascrell, and Congressman Moore. In listening to your remarks, I am reminded of a Woody Allen story which I will tell you briefly, where his father comes home from work one day and says to his wife, ``You would not believe it. You would not believe it.'' And she goes, ``Well, what is wrong?'' And he goes, ``I have been replaced by a machine.'' She goes, ``Oh, that is terrible but you will go out and find another job.'' And his mother immediately went out to the department store and bought one of these machines. [Laughter.] I basically think that the remarks that you made in many ways reflect more common sense than what I am about to tell you, but I want to fill in some of the details that I think are important in talking about regulatory reform, but let me start with a couple of formalities. First, I am going to talk to you more, so I would ask that my formal remarks be placed in the record. They reflect not only my sentiments but those of Robert Litan, who is the Co- Director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies. Chairwoman Kelly. We are glad to have the remarks and we will put them in the record. Thank you. Mr. Hahn. Thank you. My sister once told my niece, who I am hoping to visit later this afternoon if this hearing ends at a reasonable hour, once told my niece what her Uncle Bobby did, and she told her that he was an egghead. She said, ``Well, what do eggheads do?'' ``They think a lot.'' So the next time I went down to visit my niece, who is now five, she said, ``Uncle Bobby, what is it that you really do?'' And I said, ``Well, I study regulation.'' And she goes,``What is regulation?'' Remember, I am talking to a five-year-old now. And I said, ``We sort of study how when you tell a person to do something, you tell them to do it in a nice way.'' She says, ``Well, how about an example?'' I said, ``Well, if Mommy tells you to clean up your room, she does not say, `Put this toy over in that corner and put that toy under your bed,' or whatever. She leaves it up to you how to do that.'' And she thought about it for a minute and she says, ``That is great. Can we watch Winnie-the-Pooh now?'' This is a real problem with regulatory reform in the large, and I do not have to tell you that. One is, one conveying to people why it is important, that it can have an impact on each of our freedoms, it can have an impact on the size of the economy, the way we run our personal lives, the way we choose to engage with each other in business. So it seems that the more things change, the more they remain the same. I am sure you have heard the story and probably testimony from former Senator George McGovern about when he left this august body, in this case the Senate, he talks about how he tried to start an inn in New England and he said, ``Gosh, if I only knew then what I know now about regulation, I would have done things a lot differently.'' There has been a steady stream of legislation and executive orders related to regulatory reform which you, Congressman Pascrell and you, Chairwoman Kelly, both told us about in your introductory remarks. The reality is that not much has been done. That is the bad news. The good news is, I think if we as foot soldiers, I include you in that army, if you will, and myself and the other distinguished members of the panel, if we stay focused and we stay focused on the right thing, I think we can make some headway. First, let me start by asking what is the nature of the problem, and we go into this in more detail in our formal remarks. Well, the nature of the problem is the Federal Government requires expenditures on the order of $200 billion a year, very, very, very roughly speaking. Those costs are imposed on the private sector, and to a lesser extent government bodies, to do things. We do not have a particularly good idea of what is being done. Congressman Pascrell, you talked about you have a hunch that some things are being done that do not make sense. Well, let me give you one example based on a study that I did not do but my colleagues, Randy Lutter and Elizabeth Mader, are just releasing today at the Joint Center. We have a lot of legislation regulating lead out there because lead is of concern for children's health, among other things. Did you know that the regulations that you were in charge of making the laws for and that EPA and HUD are in charge of implementing, those regulations require more stringent regulation of lead at hazardous waste sites than in the kid's back yard? There may be no kids at the hazardous waste site. Lots of kids play in their back yard. Do we have a problem? Maybe. We could be doing a much better job of improving kids' health, saving kids' lives, and saving money if we simply took a careful look at the process. We could do a better job of facilitating entrepreneurship in small business, in large business, if we took a serious look at what the paperwork requirements do and what these silly regulations of which I just gave you one example. George McGovern, for all we know, might be in business in New England today promoting bed and breakfasts. We could do a much better job of making sure that regulations do not impose a drag on the economy. Okay, how do we do this? How do we begin to think about improving the quality of regulation so that you and appointed civil servants can make better decisions? The short answer is it takes two things. One, you guys have got to step up to the plate. You have got to have guts. This is in short supply in this town. You have really got to have guts. And the second thing is it requires common sense, which you have already articulated in your opening remarks. Let me say a little bit about what I think we know about the quality of regulatory analyses, and I have a few people in the audience who I would like to acknowledge who have helped me on this, some of whom have already left me, very wisely. Irene Chan, who did some seminal work on this last year, looking at what the government actually does in terms of their regulatory analyses, and my colleagues, Jason Burnett and Aaron Labor, and will be happy to field any tough questions from you. But I will give you the broad-brush view of what I think we know. First of all, based on my earlier research, from an economist's point of view, many of the regulations that the Federal Government are implementing now are not likely to pass an economist's version of a benefit-cost test. I estimate that on the order of half the regulations, using the government's own analyses as data, would not pass a benefit-cost test. I find that rather disturbing. That is the first point. The second point, which speaks, Chairwoman Kelly, to the substance of this discussion today, is the quality of the analyses themselves. Well, the quality of the analyses in my view is really poor. We looked at analyses, so-called regulatory impact analyses, over the last three years, between 1996 and 1999, all of them that we could find for major environmental health and safety regulations, and the bottom line is they do a bad job of even complying with their own guidelines. This is based on a Joint Center study, not funded by any particular business or whatever, just an independent study by economists. What do we find? We find that of those rules that we reviewed carefully, and Irene and Jason can tell you more about this, only 28 percent of those rules presented information on net benefits, that is, benefits and costs and taking the difference. Well, if you are going to be making multi-million and in some cases multi-billion-dollar decisions, I think the American public deserves to know what is happening. The second thing we found is that they quantified benefits and costs of alternatives for only a quarter of the regulations. Did you think of another way to clean up your room, Katie, or is this the only way to do it? Most of the time, these guys did not bother to look whether there were other ways to clean up the room, the hazardous waste site, or the dirt in the back yard. Duh, we have got a problem. All right. What are we going to do about this problem? I am going to briefly go through some of my recommendations, some of which are based on the good work of your Committee. The first is, I think in the interest of accountability and transparency, you ought to put these regulatory impact analyses and their underlying supporting documents on the Internet. Hey, if Al Gore invented it, we might as well use it. Let us use the Internet to tell people what is happening about regulation, with all due deference to the Vice President--just a joke. And before a regulation--this is important--before a regulation is actually considered at OMB, we ought to put it on the Internet so it is available to eggheads like myself and also real people. My second point, and this is a point which you might find astounding, but it is not, is that these regulatory impact analyses do not summarize in any sort of standardized way what they actually do. What does that mean? I have to hire a group of some of the best graduate students to spend sometimes up to a week to figure out what these analyses are saying. Well, Congress people do not have a week to look at what is in these analyses, so we recommend that you write a clear executive summary when you do these regulatory impact analyses and you attach a table to tell people what you did and what you did not do. Did you consider costs? Did you quantify them? Did you consider benefits? Did you quantify them? Did you consider alternatives? Did you try to quantify the impacts of those alternatives?What were the kinds of technical assumptions you made underlying these analyses to get your results? Again, it is not rocket science, but this is not enough. As Congressman Pascrell pointed out, you have got to figure out whether you have the guts to enforce these things. I mean, there are executive orders on the books here and there are tons of beautiful laws in the Soviet Union, or the former Soviet Union, that make it look like everything is hunky-dory, but, in fact, everything is not always hunky-dory and sometimes you have to step up to the plate to do things that we believe are common sensical. Our third recommendation, and this follows along the suggestions of the Chairwoman, is to create something like the Congressional Office of Regulatory Analysis. We think it would help make the regulatory process more transparent to the American people. It would help Congress in finding out what is actually happening down at the other end of Pennsylvania Avenue in terms of regulations and their impact. If you want me to say more words about COAARAA, I will be happy to do it. Mr. Litan and I testified on this, as you know, previously. We are great supporters of these initiatives for the reasons we state in the paper. Something else we believe is important, and it would require a little bit of stepping up to the plate, but again, it is common sense, is we believe that Congress should require agency heads to balance the costs and benefits of major regulations. I am not even saying at this point, though I believe the benefits should be at least equal to the cost and ideally greater, but I am saying at least there should be a statement that we balanced these things and this is how we thought about them, if you are making a big decision like the national ambient air quality standards. And finally, and this is again where you can step up to the plate to make things happen, is we believe that Congress should require that all regulatory agencies adhere to established principles of economic analysis when undertaking a regulatory impact analysis. OMB has already articulated a beautiful set of guidelines. The Joint Center has convened a group of scholars that also talks about established principles. The question is, as Congressman Pascrell pointed out, when are we going to begin to think about implementing these things? So in conclusion, as I said earlier, it is really going to take guts and common sense. It is very clear to me that the common sense is out there. I hope the political will is there, and I will be happy to entertain any questions after the panel or now. Thank you. Chairwoman Kelly. Thank you very much, Mr. Hahn. [Mr. Hahn's statement may be found in appendix.] Chairwoman Kelly. Next, we go to Mr. Robert Murphy. Mr. Murphy is the General Counsel for the General Accounting Office and Mr. Murphy, COAARAA might land in your lap, so I am very much looking forward to your testimony. STATEMENT OF ROBERT P. MURPHY, GENERAL COUNSEL, GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY CURTIS COPELAND, ASSISTANT DIRECTOR, GENERAL GOVERNMENT DIVISION, GENERAL ACCOUNTING OFFICE Mr. Murphy. Thank you, Madam Chairwoman, Mr. Pascrell. I am pleased to be here today to talk about GAO reviews of the compliance by agencies with procedural and analytical requirements of rulemaking. One of the assistant directors at GAO, Curtis Copeland, who led many of these jobs, accompanies me at the table today. With your leave, I will briefly summarize my testimony and in particular talk about two reviews that we did of regulatory impact analyses and ask that the full text of my prepared remarks be incorporated in the record. Our reviews were conducted in response to Congressional concern that agencies were not, as Mr. Pascrell pointed out earlier, considering the effects of their actions on regulated entities, nor had they worked to minimize those negative effects. The requirements we examined are contained in a number of statutes from the Administrative Procedures Act to the Unfunded Mandates Reform Act, as well as Executive Orders 12866 and 12612. While they may not have been representative of all rulemakings, our work disclosed inadequate data, methodologies and assumptions, and disclosed noncompliance with the statutory requirements and executive orders. There were examples where, as a result of our work, agencies changed their practices and we helped ensure better adherence to applicable regulatory requirements. On the other hand, sometimes our reviews did not disclose noncompliances but they provided the facts and the analysis to the Congress to understand what the agencies were up to in their rulemaking. Sometimes we discovered that the issues that concerned the regulated community were not really those of the agencies but were of the underlying statutes concerned, that the aspects of the regulations that were considered burdensome by the regulated community were actually required by the statute being implemented. Some of our work on regulatory issues has clearly demonstrated the value of Congressional oversight of agency rulemaking. Congressional oversight can clarify issues left unclear in agencies' public statements about their rules and on occasion can directly result in changes to agencies' rules. The targets of that oversight can vary substantially, from the particular and sometimes highly technical elements of agencies' economic analyses used to support the rules to the general public participation requirements in the rulemaking process. I would like to address, as I said earlier, two particular reviews by GAO. In the last 20 years, we have seen enormous growth in both the breadth and the number of Federal regulations. According to OMB, these regulations have improved public health, safety, and environmental quality, but they come at a real cost. I do not think anybody estimates the annual cost of these regulations below hundreds of millions of dollars every year. To control the costs of these regulations, administrations have issued executive orders, such as 12866, and Congress has enacted laws, including the Unfunded Mandates Reform Act of 1995. These orders and laws require Federal agencies to prepare and use economic analyses, also known as regulatory impact analyses, to assess the benefit and costs of proposed significant actions before promulgating those regulations. These analyses are intended to inform and improve the regulatory process by identifying the likely costs and benefits of feasible alternatives. We were asked to describe the extent to which Federal agencies' economic analyses incorporate best practices and the agencies' actual use of these analyses in regulatory decision making. We included in our review all economically significant proposed and final rules issued between July 1996 and March 1997 that addressed environmental, health, and safety matters. As a result, GAO reviewed the economic analyses used in promulgating 20 regulations by five agencies, the Departments of Agriculture and Transportation, the Environmental Protection Agency, the Food and Drug Administration within the Department of Health and Human Services, and the Occupational Safety and Health Administration in the Department of Labor. We found that five of the 20 analyses did not discuss alternatives to the proposed regulatory action, six did not assign dollar values to the benefits, one did not assign dollar values to thecosts, all of which OMB recommended in its best practices guidelines. OMB guidance gives agencies flexibility to decide how thorough their economic analyses should be. At the same time, the guidance stresses the importance of disclosing the reasons for omissions, gaps or other limitations. Although GAO found many instances in which best practices were not followed in the analyses, the reason for not following was disclosed in only one case. In addition, eight of the economic analyses did not include an executive summary that could help the Congress, decision makers, the public, and other users quickly identify key information addressed in the analyses. Finally, only one of the 20 analyses received an independent peer review. I should say that this past March, OMB issued a revision to its best practice guidance for agencies and we found that, again, that guidance falls short of the recommendations that we have made for best practices, and incidentally, several of those that Mr. Hahn has touched upon today. In another instance, we found that a Congressionally requested review of agency regulatory analysis actually resulted in a change to those rules. We reported last year on the scientific basis for the Food and Drug Administration's proposed rule on dietary supplements containing ephedrine alkaloids and the agency's adherence to statutory and executive regulatory analysis requirements. Although the number and type of adverse event reports that FDA received warranted the agency's consideration of steps to address safety issues, we were concerned about the strength of the information FDA used to support two aspects of the proposed rule, the dosing level and the duration of use limits. We concluded that FDA generally complied with the statutory and executive orders applicable to rulemaking, but the economic analysis that accompanied the rule did not reflect the full range of uncertainty associated with the proposed rule. The agency did not always disclose why certain key assumptions were made or the degree of uncertainty involved in those discussions. It also did not disclose that alternate assumptions would have had a dramatic effect on the agency's estimate of the benefits of the proposed actions. We recommended that FDA obtain additional information to support conclusions regarding the specific elements in the proposed rule before proceeding to final rulemaking. We also recommended that FDA improve the transparency of its cost- benefit analysis in its final rule. I am happy to say that in April of 2000, FDA announced that it was withdrawing certain portions of its proposed rule, ``because of concerns regarding the agency's basis for proposing certain dietary ingredient level and a duration of use limit for these products.'' That was an example of where Congressional oversight had an immediate benefit to the public and to the government. There are numerous other examples of GAO reviews in recent years that demonstrate that Congressional oversight can be effective in ensuring that agency rules are carefully developed and that agencies permit public participation in the rulemaking process. Madam Chairwoman, this concludes my statement. I would be pleased to respond to any questions. Chairwoman Kelly. Thank you very much, Mr. Murphy. [Mr. Murphy's statement may be found in appendix.] Chairwoman Kelly. Let us move on to Mr. David Addington. Mr. Addington is Senior Vice President of the American Trucking Associations. Mr. Addington, thank you very much for being here today. STATEMENT OF DAVID S. ADDINGTON, SENIOR VICE PRESIDENT, AMERICAN TRUCKING ASSOCIATIONS Mr. Addington. Thank you, Madam Chairwoman. I have two documents I would like to ask your permission to have in the record, my full written statement submitted to the Committee and the document I transmitted to the staff yesterday, five pages entitled ``Summary of the Federal Motor Carrier Safety Administration's Proposed Hours of Service Changes, Updated May 15, 2000.'' Chairwoman Kelly. By all means, we will accept them into the record. Thank you. Mr. Addington. Madam Chairwoman and members of the Subcommittee, we appreciate the invitation to discuss the Department of Transportation's failure to properly conduct the required analyses to determine the full impact of proposed rules to govern the hours that truck drivers may work. The hours of service scheme proposed by the Department's Federal Motor Carrier Safety Administration is disastrous for the trucking industry, for the safety of the traveling public, and for American consumers. The proposed regulations hit trucking companies hard and they hit small trucking companies hardest. I will describe the trucking industry, some key problems with the Department's proposed rule, and the defective analyses on which the Department of Transportation, which I will call DOT, based its rule. The American Trucking Associations, which I represent, is a national trade association for the trucking industry, with more than 2,500 motor carrier company members, large and small who operate in every State of the union. Trucking is vital to the nation's economy. Trucks move the majority of the freight that moves in America. Trucking accounts for more than 80 percent of the transportation revenue in the economy. Seventy percent of America's communities depend for freight service exclusively on trucks. So DOT regulations restricting what companies can do with trucks and drivers directly affects a huge segment of the American economy. Although some trucking companies are multi-billion-dollar companies whose names you know, such as Mr. Moore's district has the Yellow Corporation, most of the trucking industry is small business. According to DOT, almost 50 percent of motor carriers have only one truck, and a full 95 percent of motor carriers, almost 395,000 of them, have 20 or fewer trucks. ATA has long called for reform of the existing Depression- era hours of service rule. We ask for new rules based on three things, sound science, public safety, and needs of the American economy. ATA spent two years forging an industry-wide consensus on a proposal for new rules that would meet these requirements and our board of directors adopted that proposal in November of 1999. We filed the ATA proposal with the Department of Transportation in December 1999, but instead, the Department published on May 2, 2000, proposed regulations that are inconsistent in a number of ways with fatigue science and are so far removed from safer highways and economic reality that the ATA must strongly oppose the DOT proposal. The Department's proposed rules fail the test of science, safety, and economics. On science, for example, the DOT proposal takes drivers whose jobs consist of five night shifts a week and requires them to switch over to sleeping on both weekend nights. But fatigue science would counsel against requiring them to switch their sleep/wake cycle over on both weekend nights. On safety, the Department's proposal will put more trucks and more drivers on the road just to move the same amount of freight that trucks move today and it will force more of the trucks to operate during daylight hours when traffic congestion is at its peak. Regulations that put more of the trucks on the roads when most of the cars are also on the roads can hardly be characterized as a safety regulation. On economics, shippers will face significant price increases for freight service. Trucking companies will face tough obstacles in trying to meet the payroll and turn a profit. And businesses and consumers will pay more for the goods they purchase. Congress should send DOT back to the drawing board on its proposed hours of service regulation. With regard to economic analysis, the Federal law requires the Department of Transportation to conduct an initial regulatory flexibility analysis, or IRFA, when it published its proposed rule. The Department failed miserably in its attempt to meet this legal requirement. The Department provided only a cursory and inaccurate examination of the economic effects of the proposed rules on the trucking industry. Moreover, it completely ignored the larger economic impacts of the proposed rules on the economy as a whole. With regard to the trucking industry, the Department undercounted by 100,000 the number of small trucking businesses and that taints the Department's entire IRFA. The IRFA also estimates the economic impact of only one part of the proposed rule, the requirement that companies install in their trucks electronic on-board recorders to monitor the compliance of drivers with the Department's hours of service regulation, and DOT even got that part wrong because DOT underestimates the number of companies that must install the recorders to be in compliance with DOT's proposed rule. In any event, the regulatory costs that DOT attempted to address are dwarfed by the additional costs that DOT ignored. The Department's regulations will force trucking companies to incur costs for the purchase of new trucks and hiring new drivers. While ATA has not yet completed its final economic analysis of the DOT proposal, our preliminary conclusion is that labor and equipment costs to the trucking industry will increase by approximately 20 to 30 percent. More trucks moving the same amount of freight also requires additional mechanics to maintain the trucks and additional dock workers to handle getting the freight in and out of the trucks, more costs that DOT ignored. Also, DOT ignored the cost of realigning trucking terminal networks, which were principally designed to allow truck drivers to move efficiently between terminals within the driving hours allowed under the current rules but not under the proposed DOT rules. The Department also ignored the bigger economic impact beyond the trucking industry. Shippers will pay more to move freight, including smaller manufacturers, wholesalers, and retailers who are the engine of the nation's economy. Many of those costs will, of course, be passed on to consumers in the form of higher prices for goods. The direct result of DOT's proposed rule is inflation, which is hardly what the American economy needs. With regard specifically to small business, the Department of Transportation failed to meet the legal requirement to compare the economic effects of the proposed rules on small entities with other alternatives. The Department examined alternatives, but only alternatives for the entire trucking industry. The Department did not design or analyze alternatives solely with small companies in mind, nor did it consider the alternatives for minimizing the impact on small entities that the law requires DOT to consider. Thus, the Department failed to produce an initial regulatory flexibility analysis comparing the relative costs and benefits of alternatives as they pertain to small entities. The Department also made a mistake in its proposal that calls into question the quality of the DOT economic analysis. When it published its proposed rule on May 2, 2000, the Department included the following sentence in the preamble to its rule, ``Therefore, the FMCSA, in compliance with the Regulatory Flexibility Act, 5 U.S.C. 601-612, has considered the economic impact of these requirements on small entities and certifies that this rule would not have a significant economic impact on a substantial number of small entities.'' Now, on May 26, just a few weeks later, the Department stated instead that, ``The FMCSA does not know with certainty the full economic impact of the proposal and, therefore, withdraws its negative certification.'' The withdrawal of the notification is a notable change because the certification has exempted the proposed rule from the Regulatory Flexibility Act's requirements. The Department has explained that its certification was included by error, but the initial erroneous inclusion of the language raises doubts about whether the Department conducted a careful initial regulatory flexibility analysis in the first place. Of course, the practical question also arises of how anyone at DOT could possibly think that the proposed rule would not have a significant economic impact on a substantial number of small entities. Lastly, while the Department of Transportation admits it does not know the full economic impact of its proposals, even after DOT has looked at various changes to hours of service rules for 20 years, it expects ATA and others to provide this information to DOT within the 90-day period that DOT allowed for comments on the proposed rule. We have asked for an additional 90 days so that we can effectively survey our trucking company members, large and small, and analyze and report the resulting economic data, but the Department has not granted our request. When the trucking industry, the law enforcement community, the manufacturing industry, the Teamsters, the AFL-CIO all agree that more time is needed to analyze the economic impact of the proposed rule, one would expect the Secretary of Transportation to grant the additional 90 days, but that request has not been granted. Madam Chairwoman, the Subcommittee asked only that I address the trucking hours of service issues and we appreciate having that opportunity, but I would be remiss if I did not draw the Subcommittee's attention that this rule is only one front of the current three-front regulatory war that this administration is conducting on the trucking industry. The rules on the other two fronts, OSHA's proposed rule on ergonomics and EPA's proposed rule on diesel engine and fuel standards, also are based on faulty economic analyses. On all three fronts, hours of service, ergonomics, and diesel, the rulemaking process is not driven by the science, it is not driven by health and safety, it is not driven by economics, and it is not driven by the law. It is driven by the desires of the heads of those agencies to issue final rules before the administration leaves office in January 2001. The interests of the public in these rulemakings should not be subordinated to that artificial deadline. The agencies will still be here with qualified people at the helm to make decisions after next January. Let us take our time and get it right. Thank you, Madam Chairwoman. Chairwoman Kelly. Thank you very much, Mr. Addington. [Mr. Addington's statement may be found in appendix.] Chairwoman Kelly. Next, we are going to hear from Mr. Sal Ricciardi. Mr. Ricciardi, you are here in actually a double capacity, are you not? You are the President of Purity Wholesale Grocers, but also you are the President of the Pharmaceutical Distributors Association, and we appreciate your taking the time to be with us here today and look forward to your testimony. STATEMENT OF SAL RICCIARDI, PRESIDENT, PURITY WHOLESALE GROCERS, INC., AND PRESIDENT, PHARMACEUTICAL DISTRIBUTORS ASSOCIATION Mr. Ricciardi. Thank you, Madam Chairwoman and members of the Subcommittee. Thank you for allowing me to speak to you today. I feel like I am really getting my money's worth because I am a member of his organization and I agree with everything he just said. Mr. Addington. Thank you. Mr. Ricciardi. I request that the text of my prepared statement be placed into the record. My name is Sal Ricciardi and I am President of Purity Wholesale Grocers of Boca Raton, Florida. I am speaking today for Supreme Distributors, a division of Purity that distributes prescription drugs and on behalf of the Pharmaceutical Distributors Association, PDA, a trade association of ten Rx drug distributors. Most importantly, I am informally representing approximately 4,000 small businesses which are licensed to distribute prescription drugs for human and animal use according to Food and Drug Administration estimates. That is an estimate the Food and Drug Administration made. And there are many thousand customers across America. As I explained in detail in my written statement, these 4,000 small businesses will be economically devastated and most will be forced to close their doors if an FDA rule issued to complete the implementation of a 1988 law known as the Prescription Drug Marketing Act is allowed to go into effect. The FDA rule establishes a ``catch-22'' type situation wherein smaller drug distributors are required to obtain a very detailed sales history for drug products going back to the first sale by the drug manufacturer before those products can legally be resold. However, neither the PDMA nor the FDA rule require either the drug manufacturer or the large national wholesalers who purchase the large majority of drug products directly from manufacturers to provide this sales history to the secondary distributors. I know this is a mouthful. However, allow me to explain a little further. The result is that the rule will make it illegal for most wholesalers to resell prescription drugs and this will cause the loss of thousands of jobs, disrupt existing distribution channels for thousands of nursing homes, clinics, doctors' offices, and veterinary practices across the country, potentially putting patients and animals at risk and remove an important restraint on pharmaceutical prices by reducing marketplace competition. To understand the real impact of the rule, we called the authorities in each State who license the distribution of prescription drugs. We found that more than 32,000 licenses had been issued to distribute Rx drugs. It is obvious from this figure that most distributors, including small companies like mine, distribute in multiple States. Of particular interest to the Subcommittee is the fact that the FDA's analysis of the effect of this rule on small business was 100 percent wrong. The FDA's analysis published in the Federal Register concluded that the majority of the estimated 4,000 small distributors will not be affected by this rule. In fact, they will all be seriously affected by the rule and most will be driven out of business. The FDA's analysis did not calculate the number of jobs that would be lost, the economic loss to the owners of the business that would be wiped out, the likely increased cost to pharmaceutical end users because of the elimination of existing supply channels, and a decrease in competition and the very real potential physical threat to patients whose supply of life-saving and life-enhancing drugs would be disrupted. I believe that these impacts are more than large enough to qualify this regulation as a major rule and that the FDA should be required to perform the proper analysis before the rule is reimposed. I would also like to note that for about the past 12 years during which the drug distribution has been operating under FDA interim policy guidance, which does not require tracing sales history of products back to the manufacturers, there have been no significant quality or safety problems. In conclusion, I would draw the Subcommittee's attention to H.R. 4301, a bipartisan bill that would make small but vital technical corrections to the statute. This bill would allow the 4,000 small distributors to continue to serve their customers and provide vital price restraining competition while preserving the current safety and integrity of our national pharmaceutical distribution system. I thank you for your attention and will be happy to answer any questions you might have. Chairwoman Kelly. Thank you very much, Mr. Ricciardi. [Mr. Ricciardi's statement may be found in appendix.] Chairwoman Kelly. Next, we would like to hear from Ms. Wallman, and thank you for being so patient, Ms. Wallman. Kathleen Wallman is President and CEO of Wallman Strategic Consulting, LLC. Thank you very much for being with us. STATEMENT OF KATHLEEN M.H. WALLMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, WALLMAN STRATEGIC CONSULTING, LLC Ms. Wallman. Thank you and good morning, Chairwoman Kelly and Congressman Pascrell. Thank you for the opportunity to participate in today's hearing. My statement addresses the experience of a particular kind of small business, rural telephone companies, and offers some observations about regulatory impact analyses conducted by the independent Federal regulatory agency that regulates them, the FCC. My observations are based on my work with these companies in different capacities. I have worked on these issues most recently as an advisor to small companies and their Washington representatives and previously as chief of the Federal Communication Commission's Common Carrier Bureau and at the White House as Deputy Assistant to the President for Economic Policy at the National Economic Council. Rural telephone companies have a vital role in ensuring that all Americans, no matter where they live, have access to telecom networks. The special challenges that these companies face in serving remote and sparsely populated parts of our country are well documented in the policy literature and in FCC proceedings. Congress expressly recognized these small rural telephone companies as a category unto themselves in the Telecommunications Act of 1996. Most rural telephone companies fit easily into the category of small business and do not have resources devoted exclusively to monitoring Federal regulatory matters or mounting advocacy efforts in FCC proceedings. This is why the Regulatory Flexibility Act passed in 1980 and amended by the Small Business Regulatory Enforcement Fairness Act in 1996 is potentially such an important tool in ensuring that Federal rules are adopted with an adequate awareness of the impact that the new rules or rule changes will have on small companies, such as rural telephone companies. The question is, how well is it working? My own view that it is starting to work in some ways but that its implementation can be improved. There are inherent difficulties in trying to implement regulations that affect rural telephone companies in a way that is sensitive to the burdens that new regulations impose. One difficulty is the inescapable complexity of common carrier regulation. Today's common carrier regulation is the result of decades of Federal and State legislative and regulatory action. There is some hope that this area will become less complex as competition diminishes the need for regulation, but that is unlikely to happen very quickly. A topic for another day would be what dramatic deregulatory and decomplexifying steps regulators and Congress could take. Another inherent difficulty and irony is the fact that many of these complex regulations were adopted to help rural telephone companies and their customers. Universal service regulations,for example, impose burdens on small companies in order to assess how much support the company and its customers should receive. So in appraising the process, it is important to remember that some regulations impose a burden in order to help the regulated entity. Another difficulty is presented by two realities about the rulemaking process at the FCC. First, there is the enormous workload of the FCC. The dedicated staff at the Commission is still working through the many assignments delegated to the agency by the 1996 Act. Under the pressure of a production schedule, it is not surprising that the agency has attracted some criticism about their execution of the statutory procedural requirements of the RFA. The second reality is that there is a tension between expertise and objectivity. It is very difficult to expect the same internal experts who advise the Commissioners that a new rule is sound and ripe for adoption to be objective in criticizing and editing that rule because of its anticipated impact on one constituency, small regulated companies. Another difficulty is that rural telephone companies are small. Some of them are very small. They do not have Washington offices of their own. They rely on membership associations and outside advisors. Even with such assistance, the resources needed to monitor what is going on and to advocate reasonable results in each of many pending proceedings spanning several of the FCC's operating bureaus simply are not available. There is some reason to praise progress and there are still some opportunities for improvement. At least some rural advocates have noticed some improvement. For example, OPASTCO, one of the leading membership associations that covers small telephone issues, has noted that the FCC has been more willing to treat rural telephone companies as small businesses rather than as dominant incumbents that would not be entitled to the benefit of the RFA small business analysis. But there remains room for more improvement and the question is what should be done. The answer might include legislation, but there are a few steps short of legislation that would help, in my view. First, Congress should consider whether the FCC needs more focused resources to conduct better RFA analyses. Adding more people to the process is not the answer, but adjusting the mix to include the right people might help. Additional economists and rural analysts specifically dedicated to the RFA process, for example, would help. Second, Congress should also consider whether there are process changes that could be implemented at the FCC that would address the tension between objectivity and expertise. The people most intimately familiar with the substance of a rulemaking may benefit from the perspective of others not so closely involved in doing the RFA analysis. There may be candidates already on the organizational chart at the FCC that could provide such assistance and perspective if given the right resources. Third, Congress should consider encouraging the FCC to adopt mechanisms that will allow it to communicate directly and easily with rural telephone companies. The simplest, best way for the FCC to ensure that it understands and can properly assess the impact of a proposed rule on small telephone companies is this: Ask them. But it is not always so simple. There are hundreds of small telephone companies. Which one should they call? The FCC could make this ``just ask'' approach easier by creating a standing task force or Federal advisory committee consisting of rural telephone companies' representatives and experts on rural economic development. This would put valuable expertise close at hand and it would increase the likelihood that the impact of new rules on rural telephone companies would be authentically considered at the beginning of the process and weighed appropriately throughout the process. That is the goal, after all. In a real way, the success of the RFA must be measured by these substantive results, and even the most scrupulous adherence to the formalities of the RFA's procedures should not be viewed as a substitute. My view is that it would be wise to pursue options such as these before creating another step in the regulatory review process, such as by empowering GAO to undertake its own RFA- type review. The views of GAO no doubt would make a thoughtful contribution to the process, but one of the great problems of rural telephone companies is the damage to investment plans that uncertainty inflicts. Adding another possible review step might exacerbate that uncertainty. Nevertheless, even without new legislation, Congress can have an important oversight role. Parties dissatisfied with the way the RFA has been conducted in a particular case can call to the Subcommittee's attention these deficiencies and provide the basis for oversight steps with resulting guidance to the agency for improvement. I thank you very much, the Subcommittee, for your work in this area and thank you very much for the opportunity to testify. Chairwoman Kelly. Thank you, Ms. Wallman. [Ms. Wallman's statement may be found in appendix.] Chairwoman Kelly. I appreciate the testimony of all of you today. It seems to me that we have a problem with regard to an enormous amount of rules and regulations that the agencies are promulgating. I think that all of this testimony and any of it is certainly helping us focus on how to resolve the problem and make it easier for all of us to do our business, our small businesses in the nation. I would like to ask some questions. I am just going to ask a few of my questions first and then go to Mr. Pascrell. Mr. Murphy, I was really interested in some of your testimony. I found that you cited cases where the statute actually limited the agency's discretion in developing sound regulation. When it is your belief that clarification is necessary and that a law should be amended, how do you communicate that to Congress? Mr. Murphy. Well, in cases where we have been asked to look at, for instance, the Unfunded Mandates Reform Act or the Regulatory Flexibility Act and we have concluded that there were aspects of the Act that really were not accomplishing what we believe that the Congress intended by passing them in the first place, we include recommendations in our reports to the Congress suggesting that the Congress should consider whether amending those statutes might accomplish their purpose. Chairwoman Kelly. And that is a written report that comes in? Mr. Murphy. Yes, ma'am. Chairwoman Kelly. I am interested because I am also thinking that it might help us in Congress if you too considered the Internet. That might be helpful to us. Are they posted on the Internet? Mr. Murphy. All of our reports are on the Internet. In fact, our website gets some accolades. I think it includes not only all of our reports, but all of our testimonies will be there within a day of being given. Our legal opinions are posted there, also. Chairwoman Kelly. Do you know how often a member will then take that information and use it to try to draft some sort of a legislative solution or a fix to the problem? Mr. Murphy. I have no way of knowing how often that occurs. We have anecdotal--I can remember occasions when that occurred, but we do not have any systematic way of measuring that. Chairwoman Kelly. If you can already provide Congress with independent assessments of the regulatory costs and benefits, do you think that we could use COAARAA? Mr. Murphy. Well, in this sense, I think it would be important. The General Accounting Office, for example, is responding to statutory requirements for evaluations and requests from chairs and ranking minority members of Committees and Subcommittees, and so when a request comes in for GAO to take a look at a cost-benefit analysis, we do not have staff that can drop the work they are doing for other members and immediately jump on that. In order for the Congress to have information about a regulatory impact analysis quickly enough so that it can affect what the agency is actually accomplishing and perhaps decide whether to use the Congressional Review Act, which as you pointed out really has not been used at all, that information has to come in very quickly. So a CORA approach would allow GAO, or if it were located someplace else, to establish a separate organization within GAO staffed--we would have to hire economists and experts in regulatory processes so that when the regulation hit the street and a Committee was interested and wanted us to take a look at it, we could look at it very, very quickly. Some of these regulations are in development for years and so in order to take a look at them and provide the information that Congress needs, we think that a separate organization either within GAO or in some other place is really critical. Chairwoman Kelly. Do you think that the agencies, the sheer number of regulations that the agencies produce every year contributes to their inability to comply with all of the regulations, or is that too loaded a question? Mr. Murphy. I can only speculate, really. Every year, agencies must report to GAO, provide to GAO and to the Congress all of the rules which they are promulgating. I took a look at the numbers that came in just last year to GAO and saw that there were over 4,500 rules filed with GAO spread across a lot of agencies. Many of these agencies have substantial numbers that they are processing. I was looking at the Internal Revenue Service which filed almost 250 rules with us. The Environmental Protection Agency filed almost 750 rules with us, and that is just in the last 12 months. Chairwoman Kelly. That number again is 4,000 and something, you said? Mr. Murphy. Last year, yes, ma'am. Chairwoman Kelly. Last year, it was 4,000---- Mr. Murphy. Four-thousand-five-hundred-and-thirty-four---- Chairwoman Kelly [continuing]. 534---- Mr. Murphy [continuing]. Regulations that were filed at GAO in calendar year 1999. Chairwoman Kelly. Well, it is no wonder that our small businesses are having some problems with keeping up with whatever is coming out there at them. Mr. Murphy. It is a big government. Chairwoman Kelly. And a highly active group of agencies. Mr. Murphy. Yes, ma'am. Chairwoman Kelly. It is not that anybody is doing something that we perhaps do not need, but we need to find out if there is a relief for some of this problem. The other thing I would like to ask you is, when you look at rules and regulations, do you also look for overlap and redundancy? Mr. Murphy. I think that is always something that you look at. You look to see whether what the regulation is seeking to accomplish is already being accomplished in other ways. That would be a baseline that you would have to begin with. Chairwoman Kelly. Within the single agency or across agency lines? Mr. Murphy. Well, we would have to be aware of whether it was being accomplished across agency lines. That would be a piece of information that agencies need. I am not sure as a legal matter that that would be important to an agency who was given the job of promulgating a regulation to implement a statute. The fact that another agency is already working in that area should be something that they take into account in drafting their regulations, but they are still going to have to implement their own regulations with respect to the statute. Chairwoman Kelly. I am wondering, Mr. Hahn, I see you have your hand up here. If you want to jump in, feel free. Anyone on the panel is free to speak up here. These questions, I am just speaking with Mr. Murphy, but feel free, Mr. Hahn. Mr. Hahn. The problem that Mr. Murphy and you are talking about is a fairly deep problem. Judge Breyer, before he became Supreme Court Associate Justice, wrote a book called Breaking the Vicious Circle, and one of the points that he made related to a point that Mr. Murphy was making, that you have all of these agencies trying to do good, if you will, on the basis of statutes and turning out tremendous numbers of regulations. We have no clue what is out there in terms of its impact. I can say that because I am viewed at this point as one of the grand old men in the field in terms of assessing the costs and benefits. We do not even have time to look at the minor regulations, and the agencies tell us they are simply too busy to do it, cranking out stuff for Congress. And Judge Breyer notes in his book, one of the problems is each of these agencies, while they are trying to do good, they are trying to do good usually in a single policy area, like the environment, like consumer product safety, like FDA, whatever, and he calls this tunnel vision, and it is not an accident that that occurs. The question is, can we begin to develop overarching legislation to put a check on this? COAARAA is one example of that. We could talk about other examples. I think COAARAA is really important. I think in earlier testimony I pointed out that we are not sure that GAO is the best place to put it. If I had my druthers, and perhaps it is because I am obsessed with regulation, I would set up an additional agency, which is not politically correct to do today, but I think regulation is an important enough area to do that. I think if you cannot do that, CBO is a more logical place to put it. But the generic problem, to suggest that we really know, in direct response to your question, whether regulations are consistent with each other and what is actually coming out of the pipeline, we only have a very dim idea of what is going on. Chairwoman Kelly. I thank you very much, Mr. Hahn. We have considered some other alternatives as to the placement of putting the office, the COAARAA office. Currently, I have a lot of confidence in Mr. Murphy's group and I think a number of other people do because they are in a position where they already have a number of experts on staff. A separate bureaucracy right now may be a step overreaching. The importance to me of trying to get COAARAA in place is simply that we have got, I think, to do something about the fact that we are getting 4,534 regulations a year thrown at us in all walks of business life and all walks of life, and I think people get very concerned that we have this huge bureaucracy. The only way that we can make it make sense is if we make it accountable. So I think that in the right instances, I think GAO is the first place to do it, to start, and hopefully we will be able to have in the budget enough money for them to be able to hire people. We will get it started and we will at least begin the walk. As you know, in Washington, thingsbegin slowly, and we want to take it one step at a time because we want to make sure if we are doing this, it is effective. That is the bottom line. We need to relieve the problem, and I am sure you understand and agree with that. Mr. Hahn, as long as we are talking, I think the alternatives that are supplied often by the regulated community and the data is often readily available, but the agencies just ignore the alternatives and they pay no attention to the executive order mandate. I wonder, again, if you want to address that. Do you think that there is a way we can try to make something happen there? I am concerned because from your testimony, it seems to me that this is worse than I thought. Mr. Hahn. Well, we did not know how bad it was until we actually did this fairly serious study, which is published on our website. How do you get the agencies to do it? Well, OMB issued guidelines. Several distinguished economists have said it is a good idea. Congressman Pascrell, this really relates to the point you made in the beginning about implementation. You and the other side of Pennsylvania Avenue have to have the political will to do this. You both can exercise it independently or you can work together, but you could do lots of very simple things. You could say, if you do not make an honest attempt to look at alternatives, the regulation will not move forward, except in cases of emergency because people will yell at you and say, my gosh, what if there is this emergency regulation? But that is one way to do it. You simply write into law that a regulation is not going to move forward unless it passes the kind of checklist that we put at the end of our testimony. Did you consider cost? Did you consider benefits? Did you consider alternatives? Did you consult with important parties to this regulation, or whatever? So you can do it. We are not talking rocket science here. The reason I am big on providing a summary statement at the beginning of a regulatory impact analysis and in clear English, a paragraph, what you did--we took a look at this regulation on truckers, for example, and we think it is going to have these costs, these benefits, these groups will be advantaged, these groups will be disadvantaged--people are going to see that. Right now, these documents are written in Greek. They are hard to dissect, purposely so in some cases. They do not want you to know that they are not considering alternatives. There are five people at OMB who know this. I know this. Jason Burnett knows this. But most of the rest of the world does not know or does not care. And if we can get this information out there in summary form so people can use it, see in some cases how regulations are well designed and in other cases they are very poorly designed, I think we can make a lot of progress. The key, as Congressman Pascrell points out, is what hooks do you put in either legislation or what executive orders do you impose and what enforcement guidelines are there. If there is no enforcement, we can just forget it. Chairwoman Kelly. So, Mr. Hahn, if I understand you correctly--let me rephrase this. What is so difficult about having some of these alternative things, do you think? Mr. Hahn. Nothing. It is political will. My shorthand language for that is guts. If a President wanted to spend some political capital on this, he or she could do so. If the Congress was oriented in this direction, and I think this is a bipartisan issue in a lot of ways---- Chairwoman Kelly. It definitely is. Mr. Hahn [continuing]. I just do not think it is on the radar screen of lots of people because it does not have a high political payoff, even though it is potentially big bucks in the large for the economy, these 4,500 regulations that Mr. Murphy talks about. But I think a starting point that is just not going to be controversial at all is to say, let us force these regulations before they move forward, force the analysts who are doing these analyses to fill out a little summary and write a paragraph in English that a layperson can understand with a high school education. I think that is a starting point, because then you are going to see the kinds of results that have emerged from our fairly exhaustive analysis, which took a summer to do. You can see it very quickly. Chairwoman Kelly. Mr. Hahn, can you explain why in approximately 60 percent of the rules that you studied, the benefit numbers in the Federal Register were inconsistent with the IRA? Mr. Hahn. With the RIA? Chairwoman Kelly. Excuse me, the RIA? Mr. Hahn. I would ask Jason to answer that. Chairwoman Kelly. Come forward and identify yourself, please. Mr. Burnett. I am Jason Burnett. I work at the AEI- Brookings Joint Center. I think that there are probably two reasons for that. First of all, the RIA is created for the proposed rule and there are some changes in the final rule and some changes both in the analysis as well as the rule itself. That would explain some of the inconsistencies. The second reason may be that incompetency on the behalf of agencies. We found several cases where agencies use an inconsistent discount rate or dollar year within a single document and there's no good explanation for that. Chairwoman Kelly. Do you think there are two sets of benefit numbers being calculated? Mr. Burnett. Two separate? Chairwoman Kelly. Yes, several sets? Mr. Hahn. Let me take this question, Jason. Jason is not used to being on the record. We simply do not know. I mean, we do not have the data. As he pointed out, the inconsistencies are there, but I do not think we know. Chairwoman Kelly. Okay. Thank you very much. I wanted to ask Mr. Ricciardi, Mr. Ricciardi, you have asked for a stay of action, and I really appreciate your testimony. I think both you and Mr. Addington offer good examples of just what the problem is with regard to these agencies promulgating rules that they perhaps have not looked at the total effect of. Can you just quickly tell me where that stay of action is? Mr. Ricciardi. The stay has been granted. Originally, the regulation was to take place December of this year and the stay was granted until October of the year 2001. But if I can equate it to our business and the businesses that I represent, I feel like a prisoner on death row who has been stayed, and the reason I say that is our attempts to bring our message to the FDA, in correspondence that the FDA has made, they do not seem to want to move on the regulation. I am relatively new at this process, Madam Chairman, and I am learning as I go. One of the suggestions I could make to any agency is for representatives of those agencies, prior to regulation, is to come and visit with the companies that they are regulating. I have had a couple meetings and correspondence with the FDA, and in every correspondence that I have had, I have suggested that they come and visit our organization, and to this date, they have not. Chairwoman Kelly. Thank you. We have just been called for a vote, and I am thinking I would like to hold this open. What I am going to do is I am going to hold the hearing open. I am going to allow Mr. Pascrell to question at this time. We can stay for at least the second bell. Mr. Pascrell. Thank you, Madam Chairman. Mr. Hahn, you held up the regulatory impact summary. Are you saying that nothing like that exists at this point? Mr. Hahn. Nothing to my knowledge. Mr. Pascrell. So this is a two-sheet form here which you are recommending. Mr. Hahn. Right. It could be a one-sheet form. It does not really matter. Mr. Pascrell. But how are records kept, then, by those rule makers? I mean, this seems to be a very simple form to the point you made it that way. This is like rule and regulation making disclosure. I want to know who makes these things. The folks out there have a right to know who makes the rules and where the regulations are coming from, and if these folks are hiding behind the screen of employment, behind their jobs, then there is something wrong. I mean, talk about cooking the books. If we are not disclosing the purpose of the rule, the cost and the benefit, it seems to me we are not doing anything. Mr. Hahn. They are disclosing. They are just disclosing sometimes in 100 to 1,000 pages and I would prefer it in one or two pages for people who do not have an infinite amount of time to read this wonderfully written prose, so-called regulatory impact analysis. Mr. Pascrell. If we lay this out, I think the political will will be there, and some of these things do not need another bill passage. These things can be done internally, so that if the administration, whatever that administration looks like in the future or is now, that administration can basically send out some orders to indicate that this is what we would like to happen so we keep track of what is going on if we want to do that. Now, we may not want to know what is going on. We may not want to. We may simply want a headline that these are the rules of the FDA, these are the rules, et cetera, et cetera, but we do not care down the road what is going to happen, what the results were going to be. I was interested, Mr. Murphy, how many of those 4,500 rules or regulations that you talked about were promulgated by the INS, God bless them? Mr. Murphy. Well, I think I can tell you, Mr. Pascrell. Sixteen. Mr. Pascrell. That is pretty conservative. Mr. Murphy. I have to say that we do an audit comparing the Federal Register to what is filed at GAO and we find annually several hundred that are not filed at GAO, largely through oversight. And also, there are a lot of regulations that are not filed because the agencies contend they are not regulations. For instance, the Tongass Forest management plan, which took ten years to develop, the agency says it is not a regulation and so they are not---- Mr. Pascrell. The agency determines itself whether it defines such and such as a regulation? Mr. Murphy. Yes. We have been unable to get OMB to take leadership to clarify that over the last four years. Mr. Pascrell. This is government in absentia. There is no two ways about it. It seems to me there is very little difference between Red China and what you are doing in subverting the will of the people. That is why we have a legislative branch of government, why we have an administrative branch of government, in terms of checks and balances but even to find public disclosure. I find that obscene, if I can choose that word, since every other word has been used. I find it obscene, the methodology of how most of these rules and regulations are coming to the fore. Let me ask, if the agencies are subverting--we have the idea in our minds that the end goal is who is the President and what does the Congress look like. Second-level, third-level management in these agencies remain the same, and we do this on the State level when I was a State legislator. We are forgetting this. They are going along the merry path writing these rules and regulations and I am sure it is not all cavalier, but that is the impression I am getting. Mr. Ricciardi, who benefits, to use your example, from the definition, the shrinking definition of who can sell pharmaceutical products? Who is benefitting from that rule, from that---- Mr. Ricciardi. From that new regulation? Mr. Pascrell. Yes. Mr. Ricciardi. The manufacturers, and they will increase drug prices. Mr. Pascrell. So the pharmaceutical companies are. Mr. Ricciardi. That is correct. Mr. Pascrell. Can you explain for the record, very briefly, how they do that? Mr. Ricciardi. There is multiple pricing throughout the country at any given point in time, and as long as there is more than one drug for a particular illness, such as to treat prostate, there is open market trading of pricing on drugs and we as a company and the 4,000 companies that are out there find opportunities to keep the prices down and buy throughout the country. By eliminating us as part of the open market system, the manufacturers will then be able to dictate their price and will be able to charge higher prices to the wholesaler, ultimately the consumer. Mr. Pascrell. And this came out of a 1988 law? Mr. Ricciardi. Yes. Mr. Pascrell. And we are just getting to the promulgation of this thing at this particular point, and 4,000 companies are going to be affected. Let me just conclude by saying this. The more I get into this, the more animated I become in spirit. If we are to compete on a worldwide basis, and indeed if we are going to compete within our own borders, we need to make sure that we are not shrinking the possibilities of competition. It would seem to me that many of our companies that have to deal with environmental rules and regulations have good records on the environment, but how can our companies compete with the Chinese rules and regulations in the final analysis? We have found the downside of our trade with Mexico when our companies just cannot compete. We have to spend thousands and thousands of dollars to meet these rules and regulations while these characters, many of them American corporations producing down in Mexico, have a cakewalk. So we talk out of both sides of our mouths and I want this to continue. I do not think we can continue today, but I think there is a lot more here than meets the eye and I really appreciate all of your testimony. Chairwoman Kelly. I am going to recess the Committee for approximately ten minutes while we go to the floor and vote and come back. Mr. Pascrell, thank you, and I will also hold the hearing open so that you can submit written questions if you would like. Thank you. [Recess.] Chairwoman Kelly. Thank you for waiting for the vote. I apologize. It took a bit longer than we expected. I want to go back and ask a couple more questions. I think Mr. Pascrell is coming back, but even if not, there are a couple more questions that I would like to ask. Ms. Wallman, do you think the FCC adequately estimates the costs and benefits of the proposed regulation of small telephone companies? Ms. Wallman. I think that there are ways in which they could do a much better job. The analogy that comes to mind, what I was thinking about, what I would do if I had a magic wand goes back to 1993 when the FCC started hiring a lot of economists. Before that time, the economic analysis review was done at the end of the process. There was a chief economist whohad no staff and he would look it over at the end and make sure it did not commit any mortal sins, but by that time, the decision was really made and it was made by people in other disciplines who did the best job that they could figuring out what the right answer was based on comments in the record. In 1993 and 1994, the FCC started hiring a lot of economists and they started sprinkling them throughout all the bureaus and it really effected a transformation in the way that the rules were conceived and developed and written because at every stage, not just at the end, you had the influence of economists saying not just what do you think is the right answer but what is the empirical case for this being the right answer or the best answer. And so I think that really this is a question of management focus and really changing the mission definition, the hearts and minds of the people actually writing the rules and sprinkling throughout the agency people who are adept at either knowing on their own or being able to draw from people who are in the small telephony business what the real impact will be on a day-to-day basis. So there is room for improvement, and if I had a magic wand, what I would do is sprinkle that expertise throughout the agency so that it would be there at the beginning, middle, and end of the process, not just at the end looking back at what has already been done. Chairwoman Kelly. Thank you. I think that is a very interesting and good answer that could be utilized by other agencies, as well. Should the FCC, do you think, establish a separate office? Would that help, a separate office to perform the reg flex analyses? Ms. Wallman. I think that they probably have enough boxes on the organizational chart that there may be some candidates there already. My experience there was in 1994 and 1995, so I am sure things have changed since then, but my understanding now is that in addition to having the bureau with substantive expertise and actually writing the rule involved, they do get comment from other groups. But the pen is held by the people in the substantive bureau. It may be that the folks who have stayed up all night actually writing a substantive regulation would benefit from stronger input from the general counsel's office and from the business opportunity office. So establishing an additional box, my inclination is generally against creating new units, but I think there are talented people there whose talents could be supplemented with the right resources so that they could improve the way that they do the analyses. Chairwoman Kelly. When the EPA and the OSHA issue some significant proposal, they are required by law to put together groups that are basically focus groups of the businesses, people who are affected by the proposed rulemaking and by the proposed rule. Do you think that that would be an option for the FCC? It might slow the process, but do you think that might be worth it? Ms. Wallman. I think it would be a great idea. I had an opportunity to see how some of those EPA-type groups work when I was at the White House and I thought they were really quite helpful. And hearing the presentation live was very helpful. The FCC gets written comments. I should say that in many cases, I know some decision makers in the Commission will bring people in. Sometimes they will bring them in and sort of stage a debate so that they can make sure they are not persuaded by the last voice they have heard. They have people come in and they actually go back and forth and try to hear the debate live. But I think opportunities like that, like what EPA does, like what OMB does in some cases, could be a real illumination of the process at the FCC. Chairwoman Kelly. Thank you. I really appreciate your testimony here today. I think you have added a lot because of your perspective. I want to go to you, Mr. Addington. Yesterday at the full Committee hearing, we had John Spotila, the Administrator of OIRA and he commended the FMCSA for their regulatory streamlining efforts, and I asked him then if the FMCSA had developed too many resources to streamlining and not enough resources to complete regulatory analysis, given the trucking and bus industry's complaints about the hours of service rule, and he replied, and I am quoting, that DOT would be considering all of the comments and that the comment period has not yet closed. He implied my question was jumping the gun. How do you respond to his suggestion? My question really is based a question that I am jumping from earlier that I asked, basically, and that is do you think that we should wait for the comment period to close before---- Mr. Addington. No, ma'am. As I told you in my testimony, the American Trucking Associations has worked before years because we want---- Chairwoman Kelly. Can you pull the microphone closer to your mouth? Thank you. Mr. Addington. The American Trucking Associations, as I said in my testimony, has been seeking hours of service reform. The rules we have now on the books come from 1937, I believe it is. They last had any significant amendment in 1962 and they are out of date and they need work, and we agree with the government on that. We were, frankly, surprised when they issued the proposal that they issued because we had expected it to be somewhat in the ballpark so that you could hope in the normal rulemaking process to improve things, to get the data out there and fix it. We also expected, frankly, that the Regulatory Flexibility Act, all the other requirements would be complied with in such a way that, frankly, they would have a better product. We think it is so bad that we need to stop and start over. One thing I will say in their defense in this process is what is now the Federal Motor Carrier Safety Administration has been through the bureaucratic equivalent of the seven circles of hell in the last year. At the beginning of 1999, they were known as the Office of Motor Carriers in the Federal Highway Administration. Then Congress passed as part of the Appropriation Act, because Congress was not satisfied with the performance of that office as part of the Federal Highway Administration, a prohibition on the Transportation Department's appropriations bill for the fiscal year 2000 that said the Secretary of Transportation cannot delegate his trucking authority to that office as long as that office stays in the Federal Highway Administration. So the Transportation Department had to figure out, okay, what do we do with it? They established a new office in the Office of the Secretary of Transportation known as the Office of Motor Carrier Safety, moved the bureaucratic boxes around, pushed people, different people in charge, lots of paperwork for delegations of authority and all that. It was not there more than a few months, I believe, at the most, because we, and we considered this a good thing, the trucking industry fought for this, creation of the Federal Motor Carrier Safety Administration as a separate modal in administration of the Department. That took effect January 1. So all the boxes over there are moving back and forth. The people are moving back and forth. People are spending their time trying to figure out, which appropriations accounts do I charge for what? They are in all this while they are trying to produce these rules. So that may account for some of the reason that people did not quite get the thorough job that the law requires done to put together the regulatory package. That is not necessarily an excuse, and certainly is not to us. We will fight in the rulemaking and we will fight in the courts later, if necessary, because it is thegovernment's responsibility to govern properly, but it may explain why they had as much trouble as they had trying to put together a regulatory package. Chairwoman Kelly. Well, I also sit on the Transportation Committee and I was in on those hearings and I know why Congress did what it did and I know it has been a problem perhaps to make sure that you are getting the right letterhead at the top of the stationery, but on the other hand, we want to make sure that we are able to have an office that is a responsible office. That was why it was moved around a little bit, but---- Mr. Addington. And we supported what Congress did. We think that is great. Chairwoman Kelly. Oh, I know you did. I know you were there, and there were many people from the industry that testified. But I am very saddened to see this regulation coming out and I am concerned that I believe there was just a sloppy initial reg flex analysis on this. You evidently feel that they just probably did not have the right information or enough careful information in order to put the rule together before they wrote the rule. I am not going to ask that in the form of a question because I do not want to put you on the spot, but I want to ask another question and that is, do you think that this proposal should be withdrawn and reissued after the DOT and the FMCSA do another analysis under the Regulatory Flexibility Act? Mr. Addington. Yes, ma'am. I think it ought to be withdrawn and done properly under the current laws, and that will be part of the comments that we will file with the Department. It is to their advantage, as well, because there is no point in all of us putting this massive energy in this to end up litigating this in court because they have not complied with the applicable laws. Chairwoman Kelly. All right. Thank you very much. I will not only--I am glad we have that in our record, but I will see that we manage to get the record transmitted to the other Committee, as well. I want to go back now just to discuss COAARAA, since it is dear to my heart. This question is really for Mr. Hahn and Mr. Murphy. Some people feel that Congress has oversight at any point in the process and that currently through hearings, Congress can better understand agency rulemakings and analyses and that COAARAA is not needed. I would like very much to hear both of you discuss how you feel that COAARAA would be useful. We can start with you, Mr. Hahn, or whichever. Mr. Murphy. Mr. Hahn. I testified on this, and I am happy to refer you to that, and I think you know more about this subject than I do, but let me suggest that I think COAARAA is useful for at least three reasons, and the relevant analogy here, as you know, has to do with OMB, when we had a budget process without CBO. I think it is much improved by having the two organizations compete with each other and they provide an independent check on each other. So that is one good reason. You have an independent check on the analysis of the executive branch. A second is a lot of what OMB does is not always open to the public, and I think COAARAA would make the process more transparent and improve the process and in so doing it will give you better ideas for improving your laws and the regulators better ideas for improving regulations. So it is really that simple to me. Chairwoman Kelly. Thank you very much, Mr. Hahn. Mr. Murphy? Mr. Murphy. Madam Chairwoman, I was thinking that maybe one way to respond would be to ask Curtis Copeland to talk about some actual examples where we have been able to look at economic models or look at the highly technical details of the regulation process, something that really would be more difficult for a Committee or a Subcommittee to do in the course of the hearing format or the hearing model, and because we have been able to get into those--in fact, we have a number underway at the moment with respect to EPA regulations--we have been able to get the kinds of information that would be useful to the Congress, that otherwise would be very difficult to come up with, through a more CORA-type model. Chairwoman Kelly. Mr. Copeland, would you like to identify yourself, and yes, by all means, we would be glad to hear from you. Mr. Copeland. Sure. I am Curtis Copeland. I am an Assistant Director within the General Government Division at GAO and we do a lot of the cross-cutting work that looks at agencies' compliance with these analytical and procedural requirements. The rules that we have looked at over the course of the last few years in many cases are highly technical. For example, we are looking at one now, a rule that EPA issued last year that drops the threshold for reporting of lead and lead compounds under the Toxic Release Inventory Program from 25,000 pounds to ten pounds, and EPA said that this rule would not have a significant economic impact on small businesses and so we have been asked to look at that certification statement. It is extraordinarily difficult to plow into an economic analysis that has six different chapters and is about 300 or 400 pages in length. So it is something that requires a great deal of effort just to get comfortable with what the agency is describing, much less trying to get into the particulars as to what alternatives they might could have considered. Last year, we looked at a rule that FDA issued on the dietary supplements containing ephedrine alkaloids and the science behind that and the adverse event reports that are being reported to FDA, and after a great deal of review, looking at more than 1,000 of these adverse event reports, we determined that only 13 of them really constituted the basis of the rule. And so it took a long time, though, to determine that those 13 were the critical ones that FDA relied on, and so we suggested that EPA get better data in order to support the rulemaking and FDA agreed with us and in February of this year withdrew the rule. Chairwoman Kelly. Good. Thank you very much for saying that. I think that is part of the problem. It is almost impossible for our staffs here, if we wanted to look at a rule before it was actually finalized, it is almost impossible for our staffs to, under the workload that they carry, to examine all of this. And also, it is a problem with regard to their expertise. So I think it is always important that we try to do something. I think that the whole point of what I am trying to do with COAARAA, what I am hoping to do with COAARAA is to raise the quality of the analyses and ask the agencies to be more careful, as you have just pointed out, in terms of not only looking within themselves but also transmitting that information to those people who are going to be affected by the rule or regulation. I think that we have identified in this hearing that there is a problem and we are following your model, Mr. Hahn. We are identifying the problem, we are analyzing the problem, and I think the answer for us perhaps is to start with passing COAARAA. I really thank you very much. I think that it is really wonderful that you were willing to sit through as lengthy a process as this has been. I did not expect it to be that when we set this meeting for ten o'clock in the morning, but I thank all of you for being here and I thank you very much for your testimony. You may be hearing from some of the other members of the Committee simply because there is so much going on on the Hill today, markups and so forth, that that is why some people could not be here. With that, I am going to adjourn. Thank you very much. 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