1. Announcements--Tuesday • Read committee simulation this week for breakout • Paper case—next week. Your TA will email or otherwise assign you to a role (e.g. EPA) this week. You do not need to meet in your group until late next week.

2. Announcements--Thursday • Paper case—next week. Your TA will email or otherwise assign you to a role (e.g. EPA) this week. You do not need to meet in your group until late next week.

3. G302, Week 11:The Supply of Policy

4. Ernst and Young • The Big Five accounting firms all do tax lobbying for clients • EY is a leader in this. In 2000 it bought a Washington lobbying firm • The current Asst. Secy. of the Treasury for Tax Policy used to be head of EY’s tax department

5. What you will learn today • Where a company can best intervene to get a law passed or blocked • The importance of procedure and process in lawmaking

6. What is the best time for a business to intervene in lawmaking?

7. 3 Branches—3 Chances • Legislative: The US House and Senate write the law • Executive: The President, Treasury Dept., EPA, and so forth implement the law • Judiciary: The courts decide disputes that arise under the law

8. The Path of a Bill... Subcommittee Congressman Committee Rules Committee Committee Hearings Floor debate Senate Conference Committee House & Senate President (veto) It’s a law!

9. The House Ways and Means Committee’s Jurisdiction • Customs, collection districts, and ports of entry and delivery • Reciprocal trade agreements • Revenue measures generally • Revenue measures relating to insular possessions • Bonded debt of the United States, subject to the last sentence of clause 4(f) • Deposit of public monies • Transportation of dutiable goods • Tax exempt foundations and charitable trusts • National social security (except health care and facilities programs that are supported from general revenues as opposed to payroll deductions and except work incentive programs)

10. Rep. Hostettler’s Committees (2002) • Armed Services Committee • Subcommittee on Military Installations and Facilities • Subcommittee on Military Research and Development • Judiciary Committee • Subcommittee on Courts, the Internet, and Intellectual Property • Subcommittee on the Constitution

11. Senator Lugar’s Committees (2002) • Agriculture, Nutrition, & Forestry Committee (ranking member) • Foreign Relations Committee • Subcommittee on Central Asia and South Caucasus • Subcommittee on European Affairs • Subcommittee on Western Hemisphere, Peace Corps and Narcotics Affairs • Subcommittee on East Asian and Pacific Affairs • Select Committee on Intelligence

12. The Filibuster:___________________________ In the Senate, it requires a 3/5 vote to end debate.

13. Example: The “Patients’ Bill of Rights” • Should patients be allowed to sign away their right to sue for certain kinds of damages, in exchange for a lower price for health care? • “Protecting the right to sue” = __________ ___________________________________ Taking away the right to promise not to sue

14. What Happened • 1998: Senators Lott and Nickles block legislation from coming to Senate floor. • 7/99: Senate passes bill with Nickles Amendment by 53-47; no right to sue. • 10/7/99: House passes Norwood-Dingell Bill by 272-151; has right to sue HMOs. • 10/99 – 6/00: Bill is stalled in Conference Committee chaired by Sen. Nickles. • 6/00: Sen. Kennedy attaches Norwood-Dingell to another Senate bill as a “rider”, a type of amendment. The bill loses by 1 vote.

15. Example:The Pickering Nomination • Charles Pickering was nominated by Republican President Bush to be an appellate judge in 2001. • But judicial nominations need Senate approval... • On a party line vote, the Judicial Committee refused to report the nomination to the floor • On the floor, Pickering would have won– he had several Democrats who would have voted for him

16. PROCEDURE WITH THREE CHOICES A: Tax breaks for buying American steel B: Tax credits for steel workers C: Depreciation tax breaks for steel companies 40 Typical voters ABC (A best, then B, C worst) 40 Steel unions BCA 20 Ernst and Young CAB B wins, 80 to 20 B vs. C : _____________________________ Winner vs. A: ________________________ ____________________________________ A wins, 60 to 40

17. First, vote on A vs. B. Second, vote on Winner vs. C. A: Tax breaks for buying American steel B: Tax credits for steel workers C: Depreciation tax breaks for steel companies 40 Typical voters ABC (A best, then B, C worst) 40 Steel unions BCA 20 Ernst and Young CAB If the senators vote these preferences, then (a) First A wins, then A again. (b) First A wins, then C. (c) First B wins, then B again. (d) First B wins, then C.

18. 1. Did the sign-in sheet get around? 2. If you answered a question, bring up a notecard for me. The Business Lesson: ___________________If you get to choose the order of votes, you get to choose the result of the votes It matters who sets the agenda.

19. Rulemaking and Litigation • The Clean Air Act (1970) directs the EPA to set air quality standards “requisite to protect the public health”. • State Public Utility Commissions are expected to set “just and reasonable” rates. • The FDA is required to establish the “safety and efficacy” of new drugs.

20. The Courts • The Chevron Doctrine:______________ ___________________________________ ___________________________________ • What is easiest to challenge are procedural mistakes by the regulator Courts should defer to agency interpretations of statutes unless the agencies are grossly wrong.

21. Agencies must ensure: • Broad representation • Rights of participation • A clear, predefined process • A public record of the evidence presented

22. The Rulemaking Process • A proposed rule or change to an existing rule is published in the Federal Register, which has upwards of 70,000 pages per year. Comments are invited. • The agency holds hearings to collect evidence. • The agency considers the evidence and publishes a final regulation in the Federal Register and the Code of Federal Regulations.

23. Example: The U.S. Forest Service halted a timber sale to the Wetsel-Oviatt Lumber Company on the grounds that it would hurt spotted owls