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WHAT IS THE BUSH ADMINISTRATION’S RECORD

IN REGULATORY REFORM?

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY POLICY, NATURAL

RESOURCES AND REGULATORY AFFAIRS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

NOVEMBER 17, 2004

Serial No. 108–282

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

PATRICK J. TIBERI, Ohio

KATHERINE HARRIS, Florida

MICHAEL C. BURGESS, Texas

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

BETTY MCCOLLUM, Minnesota

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY

AFFAIRS

DOUG OSE, California, Chairman

EDWARD L. SCHROCK, Virginia

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

CHRIS CANNON, Utah

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

PATRICK J. TIBERI, Ohio

JOHN F. TIERNEY, Massachusetts

TOM LANTOS, California

PAUL E. KANJORSKI, Pennsylvania

DENNIS J. KUCINICH, Ohio

CHRIS VAN HOLLEN, Maryland

JIM COOPER, Tennessee

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

BARBARA F. KAHLOW, Staff Director

LAUREN JACOBS, Clerk

KRISTA BOYD, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on November 17, 2004 ...................................................................... 1

Statement of:

Graham, Dr. John D., Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget; Stephen L. Johnson,

Deputy Administrator, Environmental Protection Agency; Howard M.

Radzely, Solicitor, Department of Labor; and Thomas M. Sullivan,

Chief Counsel for Advocacy, Small Business Administration ................... 16

Kovacs, William, vice president, Environment, Technology and Regulatory

Affairs, U.S. Chamber of Commerce; Todd O. McCracken, president,

National Small Business Association; Nancy McKeague, senior vice

president, Michigan Health and Hospital Association, representing the

Society of Human Resource Management; James L. Gattuso, research

fellow in regulatory policy, the Heritage Foundation; Catherine O’Neill,

associate professor, Seattle University School of Law, representing the

Center for Progressive Regulation; and John A. Paul, supervisor, Regional Air Pollution Control Agency, Dayton, OH, representing the

State and Territorial Air Pollution Program Administrators ................... 98

Letters, statements, etc., submitted for the record by:

Graham, Dr. John D., Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, prepared statement

of ..................................................................................................................... 19

Johnson, Stephen L., Deputy Administrator, Environmental Protection

Agency, prepared statement of .................................................................... 24

Kovacs, William, vice president, Environment, Technology and Regulatory

Affairs, U.S. Chamber of Commerce, prepared statement of .................... 100

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio:

Letter dated February 12, 2004 ............................................................... 88

Prepared statement of ............................................................................... 13

McCracken, Todd O., president, National Small Business Association,

prepared statement of ................................................................................... 109

McKeague, Nancy, senior vice president, Michigan Health and Hospital

Association, representing the Society of Human Resource Management,

prepared statement of ................................................................................... 115

O’Neill, Catherine, associate professor, Seattle University School of Law,

representing the Center for Progressive Regulation, prepared statement

of ..................................................................................................................... 133

Ose, Hon. Doug, a Representative in Congress from the State of California, prepared statement of ........................................................................... 4

Paul, John A., supervisor, Regional Air Pollution Control Agency, Dayton,

OH, representing the State and Territorial Air Pollution Program Administrators, prepared statement of ............................................................ 139

Radzely, Howard M., Solicitor, Department of Labor, prepared statement

of ..................................................................................................................... 49

Sullivan, Thomas M., Chief Counsel for Advocacy, Small Business Administration, prepared statement of .................................................................. 66

Tierney, Hon. John F., a Representative in Congress from the State

of Massachusetts, letter dated July 9, 2004 ............................................... 151

(1)

WHAT IS THE BUSH ADMINISTRATION’S

RECORD IN REGULATORY REFORM?

WEDNESDAY, NOVEMBER 17, 2004

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY POLICY, NATURAL

RESOURCES AND REGULATORY AFFAIRS, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 10:12 a.m., in room

2154, Rayburn House Office Building, Hon. Doug Ose (chairman of

the subcommittee) presiding.

Present: Representatives Ose, Schrock, Tierney, Kucinich, and

Van Hollen.

Staff present: Barbara F. Kahlow, staff director; Lauren Jacobs,

clerk; Megan Taormino, press secretary; Greg Dotson, Alexandra

Teitz, and Krista Boyd, minority counsels; and Cecelia Morton, minority office manager.

Mr. OSE. Good morning.

Welcome to today’s hearing of the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. Today’s subject matter is ‘‘What is the Bush Administration’s Record in Regulatory Reform?’’

Three years ago, the Small Business Administration estimated

that, in the year 2000, Americans spent $843 billion to comply with

Federal regulations. The report concluded, ‘‘Had every household

received a bill for an equal share, each would have owed $8,164.’’

The report also found that, in the business sector, those hit hardest

by Federal regulations are small businesses. Regulations add to

business costs and decrease capital available for investment and

job creation.

As an owner of small businesses, I am especially aware of the

need to relieve existing regulatory and paperwork burdens. This is

my twelfth and final hearing as a Government Reform subcommittee chairman toward that end. This problem is also important to

the administration. The fourth point in the President’s February

2004 6-Point Economic Growth Plan was ‘‘streamlining regulations

and reporting requirements.’’

Heritage scholar James Gattuso, who is with us today, analyzed

the Bush record. In his September 28, 2004 paper entitled ‘‘Reining

in the Regulators: How Does President Bush Measure Up?,’’ he

found, ‘‘So far, he has done much better than his recent predecessors at limiting the growth of regulations. However, he has a

much weaker record on eliminating existing rules.’’ Therefore, reviewing the base of existing rules remains a critical component in

2

this matter. As a consequence, on September 22nd, Congressman

Gresham Barrett introduced, with my co-sponsorship, H.R. 5123,

‘‘Major Regulation Cost Review Act of 2004.’’ This bill would require agencies to review all major rules—that is, those imposing

cost of $100 million or more—within 10 years of issuance, including

using a standard governmentwide cost-benefit analysis methodology.

Because of congressional concern about increasing costs and incompletely estimated benefits of Federal rules and paperwork, in

1996, Congress required the Office of Management and Budget to

submit its first regulatory accounting report. In 1998, Congress

changed the report’s due date to coincide with the President’s

Budget. In the year 2000, Congress made this a permanent annual

reporting requirement. Besides requiring a regulatory accounting

statement and an associated report assessing the impacts of Federal rules, Congress has required OMB to annually include recommendations for regulatory reform.

To date, OMB has issued six final regulatory accounting reports

and one draft report that has not yet been finalized. The Clinton

administration issued the first three; the Bush administration

issued the last four. I believe you will see over on the chart a recitation of that. The Clinton administration’s reports only included

one recommendation for reform, that being electricity restructuring. The Bush administration sought public nominations in its

2001, 2002 and 2004 draft reports. In sum, the result was 71 nominations in 2001 and 316 nominations in 2002. The number of nominations received in 2004 is unknown to us. I believe Chart 2 has

a list of the nominations that have been received. Two of the four

agencies with the most rules nominated are with us today, those

being the Environmental Protection Agency and the Department of

Labor.

Today, our hearing will examine the nomination process and the

reform results to date. We will pay particular attention to public

nominations affecting small business and several existing rules

issued or to be issued by EPA and the Department of Labor. These

include the Toxic Release Inventory, New Source Review, and mercury, and the Department of Labor’s implementation of the Family

and Medical Leave Act. This subcommittee has previously heard

testimony about the burdens associated with Toxic Release Inventory and the Family and Medical Leave Act.

I look forward to the testimony of our witnesses. They include:

Dr. John Graham, who is the Administrator of the Office of Information and Regulatory Affairs at OMB; Mr. Stephen Johnson, who

is the Deputy Administration at EPA; Mr. Howard Radzely, who is

the Solicitor at the Department of Labor.

Did I pronounce that correctly?

Mr. RADZELY. Close.

Mr. OSE. Correct me.

Mr. RADZELY. Radzely.

Mr. OSE. Radzely? All right.

And, Mr. Thomas Sullivan, who is the Chief Counsel for Advocacy at the Small Business administration.

Our second panel includes Mr. William Kovacs, who is the vice

president for Environment, Technology and Regulatory Affairs at

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the U.S. Chamber of Commerce; Mr. Todd McCracken, president of

the National Small Business Association; Ms. Nancy McKeague,

who is the sSenior vice president for Michigan Health and Hospital

Association, who will be representing the Society for Human Resource Management; Mr. James Gattuso, who is a research fellow

in regulatory policy at the Heritage Foundation; Ms. Catherine

O’Neill, who is an associate professor at Seattle University School

of Law, representing the Center for Progressive Regulation; and

Mr. John Paul, who is the supervisor for the Regional Air Pollution

Control Agency in Dayton, OH, representing the State and Territorial Air Pollution Program Administrators.

I want to welcome everybody to the hearing today. I do want to

advise everybody that the caveat by which we were able to be

moved from 2247 and allowed in here is that we are done by 12:45

at the latest.

[The prepared statement of Hon. Doug Ose follows:]

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Mr. OSE. I am pleased to recognize my friend from Massachusetts for the purpose of an opening statement.

Mr. TIERNEY. I thank the chairman and the witnesses for coming

here today to share their information with us.

Mr. Chairman, before we get started, let me informally say that

I understand this is probably the last subcommittee hearing that

you will be chairing before you retire, and I want to thank you for

the evenhandedness and the fairness with which you have conducted yourself in this committee. I know people expect things like

this to be said at the end of a period, but, in fact, in this case it

is absolutely true. You have shown good leadership here; you have

shown evenhandedness; you have been fair; you have allowed us to

have hearings on issues that we thought were important. And,

while we disagreed, we generally did that respectfully, which I

think is important. And, if we can impart that on the body at large,

maybe things would go well on a grander scale. But, I thank you

for the work that you have done and for your service to your country.

Mr. OSE. Thank you.

Mr. TIERNEY. Thank you.

Now, this hearing is obviously one on the Bush administration’s

record on regulatory reform. In my opinion, at least, I think the administration deserves a failing grade in its regulatory efforts. In

the name of making regulations more flexible, this administration

has taken unprecedented steps to weaken and dismantle important

environmental, health, and safety protections.

Today, I plan to focus on the administration’s proposal for controlling mercury pollution from power plants. I had asked the

chairman to hold a hearing on EPA’s rulemaking on mercury emissions, and, although the subcommittee’s schedule didn’t allow for

another hearing to address that issue, I am happy that the chairman agreed that this is an important enough issue that it needed

to be addressed within the context of today’s hearing.

The administration’s proposed regulation for controlling mercury

emissions benefits industry, but it fails to protect the public health

and environment. I think one of the more ironic aspects is even the

industry representatives within EPA’s working group made recommendations that were stronger than some of the EPA recommendations in terms of controlling mercury.

The administration’s proposal and the process that it has followed in developing its proposal are fundamentally flawed. I think

it was probably stated better in an article in the Environmental

Law Reporter, which indicates that it was an ‘‘effort to avoid the

clear implications of science, law, economics, and justice.’’ That, in

fact, seems to be the case.

Coal-fired power plants emit tons of mercury pollution into our

air each year that pollutes our waters and then is absorbed by the

fish that we eat. According to EPA scientists, approximately

630,000 infants are born in the United States each year with blood

mercury levels at unsafe levels. In fact, our children, as well as everybody else in our society, deserve the right to live in pollutionfree and poison-free environments.

Despite the clear need for strong clean air controls of mercury

pollution, the EPA issued a proposal last year that was shockingly

11

inadequate. The Clean Air Act requires a much larger reduction of

mercury production in much less time than EPA’s proposal. It is

not surprising that the substance of EPA’s proposal is so weak,

considering that parts of EPA’s proposals were literally copied from

memos prepared by industry lobbyists.

As a part of its rulemaking, EPA is required to analyze the effects of a full range of options for controlling emissions. EPA’s own

advisory group recommended that the EPA analyze more stringent

options than EPA’s proposal, but EPA refused to do so. In fact, Dr.

Graham and I hopefully will discuss that I had asked some questions at one of our previous hearings about his agency’s role in

working with the EPA on that, and I, despite two runs at that,

have not gotten adequate answers yet, and hope we can explore

that because I want some direct responses, as opposed to what I

have gotten so far.

Responding to public criticism on the point, Administrator

Leavitt promised in March that EPA would conduct more analysis.

Yet, despite requests from citizens, Members of Congress, States,

and the EPA’s own bipartisan advisory group, it appears that EPA

has still not performed the required analysis. The Los Angeles

Times recently quoted one EPA employee as saying, ‘‘We get talk

but no action from the Administrator.’’

So, Mr. Johnson, I am hopeful that today we will find out where

EPA is in terms of performing the additional analysis promised by

the Administrator and where EPA is in terms of issuing a strong

rule on mercury emissions that complies with the mandates of the

Clean Air Act.

It is the administration’s responsibility and obligation to protect

the hundreds of thousands of children being poisoned each year by

unsafe levels of mercury. This administration must implement a

strong and protective rule, and I look forward to our witnesses’ testimony and the questions and answers, Mr. Chairman. Thank you.

Mr. OSE. I thank the gentleman.

Gentleman from Virginia? Gentleman from Ohio.

Mr. KUCINICH. Thank you very much, Mr. Chairman. I would

like to echo Mr. Tierney’s remarks about your chair’s work for this

country on this committee, and it has been an honor and a privilege to work with you.

I would like to focus my remarks on what are the most egregious

examples of the administration’s efforts to gut our environmental

and health protections: the weakening of mercury and air standards from coal-fired power plants. Mercury emissions from coalfired power plants are the single biggest reason our fish consumption advisory specifically for mercury contamination in 45 States as

of 2003—45 States. The CDC says that roughly 8 percent of American women of childbearing age have levels of mercury in their bodies that exceed what is considered safe for the fetus. A more recent

study from the University of North Carolina puts the number closer to 20 percent.

A review of some of the health effects highlights the need to be

cautious. Mercury concentrates in certain nerves in the body, often

at the end of nerves, and alters the nerve cell’s ability to function.

That is why early signs of mercury poisoning include numbness

and tingling in the extremities. The nerve cells are dying. It makes

12

sense, then, that the brain, which contains so many more nerves,

is where the health damage is, and most vulnerable are those

whose brains are still developing.

Mercury crosses the placental barrier, which is normally supposed to help keep pollutants away from the fetus. In fact, some

newer studies show that the concentrations in the fetus are often

higher than the concentrations in the mother. If the mother eats

enough mercury-contaminated fish, the child could suffer from low

birth weight, small head circumference, severe mental retardation,

cerebral palsy, deafness, blindness, and seizures.

The symptoms can occur even when there are no symptoms of

mercury poisoning in the mother, again because the mercury concentrates in the child. If the dosage to the fetus is lower, the damage will be subtler and will occur later in the child’s development.

But, the damage can still be profound. Studies found deficits on behavioral tests like test of attention, fine motor function, language,

drawing abilities, and memory that were linked to low level mercury exposure in the womb.

Low level poisoning scenarios especially are insidious. It is likely

that these health problems may never be noticed, much less definitively linked to mercury from coal-fired power plants, so we may

never know the collective damage that is done. These children

sometimes become disadvantaged before they even take their first

breath of air.

You know, there is no reason for it. The excuse we keep hearing

from the administration is that technology is not adequate to

achieve the 90 percent end of pipe mercury reductions from coalfired power plants that the public is calling for. Yet, the Public

Service Electric and Gas Company fully supported a bill in Connecticut that requires a 0.6 lb. per trillion btu, or 90 percent control efficiency. PSEG is one of the largest electric generating companies in the United States, with over 16,000 megawatts of electric

generating capacity, operating or under development in New Jersey, New York, Pennsylvania, Ohio, Indiana, and Connecticut.

In their testimony, the Connecticut State Legislature, in support

of the bill, had this to say: ‘‘We consider environmental performance to be one indicator of overall business performance, and experience has taught us that proactive steps to improve environmental

performance can often lead to better bottom line results.’’

Why are we making environmental protection and profit mutually exclusive?

Mr. Chairman, reducing mercury from power plant stacks, as

much as technology will allow us to go a long way toward correcting the ongoing mercury poisoning of Americans, especially those

with the least ability to defend themselves, our children. One of the

biggest power generators in the country is on record as saying that

not only is the pollution reduction technology available, but it is

good business to use it. I look forward to hearing what the EPA

will be doing to achieve no less than the best public health protection which the American people deserve. Thank you.

[The prepared statement of Hon. Dennis J. Kucinich follows:]

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Mr. OSE. I thank the gentleman.

Gentleman from Maryland.

Mr. VAN HOLLEN. Thank you, Mr. Chairman, and thank you for

conducting this hearing. I will be brief. My colleagues have covered

some of the issues I wanted to raise, and we will obviously have

an opportunity during the questioning.

But, I would want to say, with respect to the mercury issue, that

we know that 45 States in this country have issued warnings with

respect to the consumption of fish. In my State of Maryland, the

Chesapeake Bay has been identified as one of those areas where

people are told, on the one hand, that fish is one of the healthiest

things you can eat. On the other hand, they are told that pregnant

women and young children can’t eat it, and are advised not to eat

it because of the potential on brain development and other health

issues.

I think we all agree that we should do something about it. The

question is should we do everything we can to reduce mercury

emissions by as much as possible. And, that is where I think that

so far EPA has been falling far short, both in terms of dragging its

feet in coming up with a strong response and proposal, and to the

extent that its proposals seem to me not to address the issue as

comprehensively and to the extent that we are able to do it and

still be cost-effective in doing so.

So I do look forward to pursuing that issue as we go through the

hearing today. Thank you, Mr. Chairman.

Mr. OSE. I thank the gentleman for his brevity.

All right, our typical hearing here is without prejudice; we swear

in all of our witnesses. We are not making any judgment, that is

just the standard operating procedure in this committee and in this

subcommittee.

Again, I want to remind everybody, not only this panel, but the

next panel, that we are under a time constraint, that we have to

be out of here by 12:45. I will proceed to swear these witnesses in.

So, if you would all please rise and raise your right hands.

[Witnesses sworn.]

Mr. OSE. Let the record show that the witnesses answered in the

affirmative.

We are joined on this panel by the four individuals I previously

introduced. Our first witness on the first panel is Dr. John

Graham, the Administrator for the Office of Information and Regulatory Affairs, the Office of Management and Budget.

Dr. Graham, welcome. We have received your written statement;

it has been entered into the record; I have read it. You are recognized for 5 minutes.

STATEMENTS OF DR. JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE

OF MANAGEMENT AND BUDGET; STEPHEN L. JOHNSON,

DEPUTY ADMINISTRATOR, ENVIRONMENTAL PROTECTION

AGENCY; HOWARD M. RADZELY, SOLICITOR, DEPARTMENT

OF LABOR; AND THOMAS M. SULLIVAN, CHIEF COUNSEL FOR

ADVOCACY, SMALL BUSINESS ADMINISTRATION

Mr. GRAHAM. Thank you, Mr. Chairman, and good morning,

members of the subcommittee. I cannot think of a more appropriate

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topic for this committee than the subject of oversight of OMB and

the agencies on streamlining the existing sea of Federal regulations

that burden our economy.

Before I make a few remarks about the modest progress that we

have made in the first term of President Bush, I want to emphasize

the magnitude of the challenge that we are facing.

Since OMB began to keep records in 1981, there have been

109,710 final regulations adopted by various Federal agencies. And,

of these, OMB has received 20,029.

Sad as it is to say, most of these regulations have never been

looked at to determine whether they actually accomplished the purpose for which they were adopted, or what their actual costs and

benefits to the public have been. During President Bush’s first

term, we initiated, as the chairman indicated, a modest program of

public participation in the nomination of regulations and guidance

documents to be reformed or, if they were outmoded, to be rescinded or modernized.

In the year 2001, OMB received 71 nominations from 33 public

commenters. My staff evaluated these 71 nominations and determined that 23 of them should be treated as high priority by Federal agencies. Today, I am pleased to report that Federal agencies

have taken at least some action, a proposed rule or a final rule,

with regard to 17 of those nominations, or 75 percent of the priority nominations.

In the year 2002, OMB again requested public nominations of

rules that should be modernized or rescinded. We also sought rules

that needed to be extended or expanded, and in an important innovation, we included guidance documents and paperwork requirements, as well as rules within that solicitation. We also engaged

in an extensive outreach effort to the public to alert them to the

availability of this opportunity.

We received a larger response in 2002 than in 2001, much larger

than we expected. In fact, we received 316 distinct reform nominations from more than 1700 commenters across the public. We reviewed these nominations as best we could, given the number of

them, determined that 109 of them were already the subject of

agency consideration, and referred 51 of them to the independent

agencies for their consideration; and that left 156 nominations that

we referred to the cabinet agencies and EPA.

In the year 2002, OMB did not attempt to define high priority

reforms for two reasons: the sheer volume of the reforms exceeded

our capacity to evaluate them effectively and, second, we felt that

the agencies, if they were to set the priorities, might take greater

ownership in the regulatory reform process, rather than being instructed by OMB which are the high priorities. We have not yet

finished a precise accounting of what has happened on these 156,

but at the subcommittee’s request we have made an estimate, and

there are about 55 of them for which some action, a proposal or a

final action, has been made, or about 35 percent of the 156.

We did not request nominations in 2003. As you can tell, we and

the agencies were still busy with 2002. And, we also revamped

OMB’s regulatory analysis guidelines in the year 2003 through the

same public comment process.

18

In February of this year, we again solicited reform nominations,

but we took a different tac and we took a clear focus on the manufacturing sector of the U.S. economy. It is the sector that is most

heavily regulated, as estimated by the burdens on small and medium-sized manufacturers, as well as the industry as a whole. We

have received, since February, 189 distinct reform nominations

from 41 commenters, and we are in the process of evaluating those,

and we plan to publish by the end of this year a process by which

agencies will evaluate and make decisions on these nominations.

Mr. Chairman, in conclusion, we have had a modest, but aggressive, effort to try to bring some of these existing regulations and

guidance documents into public light for reform, for modernization,

or, where they are no longer necessary, for their rescission. I want

to remind you, however, that the total number of reform nominations we receive should not be confused as the total number of meritorious reform opportunities. Not all the nominations that we receive are well argued from a standpoint of economics, from science,

or from law; hence, there is a process of agency evaluation that is

necessary, and we should expect that only a fraction of those nominations would actually be acted upon.

Thank you very much, and I look forward to the questions.

[The prepared statement of Mr. Graham follows:]

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Mr. OSE. Thank you, Dr. Graham.

Our next witness is Mr. Stephen Johnson, who is the Deputy Administrator at U.S. Environmental Protection Agency.

Sir, we have received your testimony, also, in its written form,

and it has been entered into the record; it has been read. You are

recognized for 5 minutes to summarize.

Mr. JOHNSON. Thank you very much, and good morning, Mr.

Chairman.

Mr. OSE. You need to turn the button on there. There you go.

Mr. JOHNSON. Thank you. Again, good morning, Mr. Chairman,

Mr. Tierney, and members of the subcommittee. Thank you for the

opportunity to appear before you today to discuss improvements in

EPA’s regulatory development process and the Agency’s response to

public nominations for regulatory reform. I certainly appreciate the

chairman’s and the subcommittee’s leadership in promoting regulatory improvements.

In my first appearance before Congress as President Bush’s

nominee for Deputy Administrator, I stated my belief that the best

way to fulfill our responsibility to protect public health and the environment is to promote transparency in our work and base our decisions on sound science. I have maintained that focus and I am

proud to say that improving our regulatory actions and other significant policy decisions continues to be a top priority for EPA

under Administrator Leavitt’s leadership.

Early in her tenure, former EPA Administrator Whitman established a task force to examine EPA’s regulatory development process and to make recommendations for improvement. The recommendations from that task force have become the basis for significant improvements in EPA’s decisionmaking and regulatory

process. I would like to provide a brief update for you on our

progress.

As one of our first steps, the Agency significantly strengthened

the quality of scientific and policy analysis. We appointed a science

advisor from EPA’s Office of Research and Development who has

seven full-time employees dedicated to supporting the use of

science in rulemaking; we appointed an economic advisor from

EPA’s Office of Policy, Economics and Innovation; and have added

more staff to EPA’s National Center for Environmental Economics

to bolster our economic analyses.

To ensure that we consider a broader set of regulatory options,

EPA created a new Regulatory Analysis and Policy Division. Its

primary responsibility is to ensure that EPA’s senior management

takes all pertinent scientific findings, relative benefits and costs,

and policy issues into account in our decisionmaking. The Agency

is also revising our economic guidelines to be consistent with

OMB’s new Circular A–4 guidance. To further improve our economic analysis and consistency with OMB guidance, the Agency is

now establishing special economic work groups for all economically

significant rules.

In addition to these forward-looking improvements, EPA takes

seriously its responsibility to review and respond to the public

nominations for regulatory reform. That process includes

prioritizing all nominations for appropriate attention and action. In

some cases, we have initiated certain reforms or maintained existVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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ing efforts to improve an agency program. In other instances, we

found that no change was needed or that statutory constraints

would prevent modification.

I am pleased with EPA’s overall track record in responding to

these nominations. Of the 70 regulatory reform nominations received between 2001 and 2002, we consider our response complete

for 44 nominations. That is 63 percent. I am also pleased to note

that the latest OMB report on Federal regulatory benefits and

costs finds that, over the past 10 years, EPA is responsible for twothirds to three-fourths of the total economic benefits of Federal regulation achieved by EPA, USDA, DOE, HHS, HUD, Labor, and

DOT combined.

Now, while we can’t yet measure the full range of benefits

achieved by our programs, the quantifiable benefits alone exceed

the costs by a factor of between 11⁄2 to 6. Although the reform nomination process has not always resulted in rule revisions, it has led

us to either confirm our approach, or to recognize the need and

begin to make revisions.

I would like to highlight an instance where the process has led

to a better outcome. Under the Safe Drinking Water Act, EPA

issued guidance in June 2000 that subjected apartment buildings

with more than 15 units and submetering systems to the same

Federal drinking water requirements that govern public water systems that sell water. Public comments revealed why this decision

needed reconsideration. By passing water from a regulated public

water source to tenants, the apartments were not creating any adverse health effects that needed further regulation. Nonetheless, it

imposed a regulatory burden on apartment owners and discouraged

water conservation.

After considering the comments, the Agency issued revised guidance that now provide States with flexibility to exclude apartment

owners from regulation and actually reflects EPA’s interest in encouraging water conservation. This outcome not only demonstrates

the value of public involvement in reviewing our actions, but serves

to illustrate the broader challenge we face in reaching consensus

in the regulatory arena, for EPA’s new guidance has now precipitated litigation aimed at limiting State discretion in determining

the applicability of Federal standards. Nonetheless, we strongly believe the process helps EPA to identify and resolve problems facing

the regulated community.

I have described other examples in my written testimony, including those of interest that have been mentioned already this morning, including mercury, the New Source Review Program, and the

Toxic Release Inventory.

In closing, I would like to say that EPA has taken significant

steps under this administration to improve the quality and credibility of our actions. These include strengthening our regulatory development process, investing in sound science and analysis, and

supporting and responding to public input. I believe these actions

have created a solid foundation for improving our effectiveness and

for accelerating progress toward our Nation’s environmental goals.

Thank you for the opportunity to testify, and I look forward to

taking your questions.

[The prepared statement of Mr. Johnson follows:]

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Mr. OSE. Thank you, Mr. Johnson. I am appreciative, in particular, of the chart that you attached to the end of your testimony.

Our next witness is the Solicitor of Labor at the U.S. Department

of Labor. That would be Mr. Howard Radzely.

Sir, welcome. We have received your written statement; it has

been entered into the record; it has been read. You are recognized

for 5 minutes.

Mr. RADZELY. Mr. Chairman and distinguished members of the

subcommittee, thank you for the opportunity to appear before you

today to discuss the Department of Labor’s efforts to strengthen

worker protections while reducing unnecessary regulatory burdens

on the economy.

The Department takes seriously its responsibility to protect

worker safety and health, retirement security, pay, and equal access to jobs and promotions. Over the years, advances in safety,

health, science, and technology, as well as changes in the law, have

rendered many Department regulations outdated or even unnecessary. As a result, we have adopted, revised, or eliminated regulations in an ongoing attempt to protect workers without imposing

unnecessary and costly burdens on the economy. We recognize the

economic costs that regulations place on the regulated community,

and have pursued alternatives to rulemaking whenever feasible.

At the outset, I would like to mention the Department’s successful effort to streamline our regulatory agenda in such a way that

it now provides a realistic and manageable number of regulatory

initiatives, allowing us to focus our attention and resources.

While continuing our commitment to strengthening protections

for the American work force, we are also trying to reduce the regulatory costs and burdens for employers, which will help employers

to create jobs.

Our multifaceted approach to regulatory reform, compliance assistance, and vigorous enforcement is working. Workplace fatalities

in 2002 fell to the lowest level in the history of the Bureau of Labor

Statistics’ National Census of Fatal Occupational Injuries, and the

fatality rate was unchanged in the recently released 2003 census.

Mining fatalities in particular are at their lowest level since 1910,

when records were first kept.

In fiscal year 2003, DOL’s Wage and Hour Division recovered

more than $212 million in previously unpaid back wages, the largest amount collected in 11 years and a 21 percent increase in a single year. And, data released last month by the Employee Benefits

Security Administration show a record-breaking 121 percent increase in enforcement results. The Agency protected $3.1 billion in

retirement, health, and other benefits for workers and their families.

As this subcommittee recognizes, one important regulatory tool is

the process for addressing the public’s reform nominations that are

included in OMB’s annual reports to Congress on the costs and

benefits of regulations. In considering what regulations to promulgate, revise, or withdraw, we evaluate many factors, including

input from the public through the OMB nominations process,

stakeholder meetings, industry experience, experience with previous regulatory initiatives in a given area, as well as possible alternatives to regulation.

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OMB’s 2001 report to Congress included 16 Labor Department

nominations, 5 labeled by OMB as priority candidates for reform,

and the 2002 report included 35, some of which overlapped with

the earlier nominations. These nominations were wide-ranging, including proposals to develop new regulations or to revise or rescind

regulations and guidance documents.

After consulting with OMB’s Office of Information and Regulatory Affairs, we provided OMB with a table describing our plans

for each referral. As requested by this subcommittee, I have included charts with my written testimony that describe the status

of each of the 2001 and 2002 nominations. The charts reflect many

actions we have taken that are consistent with the public nominations. In some cases, however, agencies decided not to take action

or could not take action on particular nominations for policy reasons or because action would require legislation rather than regulation.

The subcommittee also specifically requested that I discuss the

Department’s plan to address public recommendations having to do

with the Family and Medical Leave Act. Three of the 2001 nominations and four of the 2002 nominations address the FMLA. Congress also held a number of hearings over the years at which stakeholders identified various FMLA issues, many of which were also

raised by the public nominations. In addition, Federal courts, including the U.S. Supreme Court, have invalidated several provisions of the FMLA regulations.

The Department held stakeholder meetings to receive informal

feedback on how the regulations are working. In particular, we invited more than 20 groups, representing employees, unions, employers, women’s and family advocacy groups, elder groups, and

others with experience working with the regulations to share their

views about the rules. The Department intends to carefully consider the public’s views, the court decisions, and our experience in

administering the regulations before deciding what action, if any,

is appropriate to take.

Mr. Chairman, I look forward to responding to any questions you

or the other members of the subcommittee may have.

[The prepared statement of Mr. Radzely follows:]

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Mr. OSE. Thank you. I am also appreciative of the chart you attached to the end of your testimony.

Our fourth witness on the first panel is Mr. Thomas Sullivan,

who is the Chief Counsel for Advocacy at the U.S. Small Business

Administration, and in many respects the father of this hearing.

Sir, you are recognized for 5 minutes. We have received your testimony; it has been entered into the record and we have read it.

Mr. SULLIVAN. Thank you, Chairman Ose. Before I begin, I want

to recognize this as your last hearing as chairman. Your commitment to hold government accountable to how it affects the taxpayer

has helped small businesses throughout the country. Thank you.

The Office of Advocacy is an independent office within the SBA;

therefore, the comments expressed in the written and oral statement do not necessarily reflect the position of the administration

or the SBA.

In general, the Office of Advocacy believes that the public nomination process is beneficial, and that the process can and will be

an effective tool for regulatory reform. My office has itself participated in this process by representing the views of small business

regarding needed reforms and by communicating these reforms to

the Office of Management and Budget in 2002, 2003 as far as procedural reforms, and then in the 2004 call earlier this year.

Of the 68 total regulatory reform nominations prioritized by

OMB and the agencies between 2001 and 2003, according to my office, 14 can now be considered complete. This number may seem

low, though, compared to my colleagues’ written statements, and I

should explain why.

Because my office is charged with independently representing

the views of small business, I am characterizing regulatory reform

nominations as implemented or completed as viewed by a small

business interest who may have commented in this process. As

such, my office takes a more narrow view of whether the specific

nomination was addressed. For that reason, I have not counted as

completed or implemented those reform nominations where a decision was made not to move forward or reform nominations that are

on track in a proposed rule.

I make the parallel to major league baseball coming to Washington, DC. There are some who are very excited about major league

baseball coming to Washington, DC. There are others who remain

skeptical, until the first pitch is had, on whether or not it actually

happens.

Now, the reforms that have been implemented are significant,

ranging from revisions to EPA’s Clean Air Act New Source Review

Program to the updating and simplification of the Department of

Labor’s overtime compensation rules. Despite the success of this

call for reform endeavor, we have a lot of work to do for the process

to work best. For example, Health and Human Services issued an

interim final rule a few years ago containing standards for the use

of patient restraints in hospitals. The 1-hour restraint rule is especially burdensome for small and rural hospitals because it requires

treating physicians to make a face-to-face assessment of a patient

within 1 hour of initiating restraint or seclusion. CMS has failed

to adequately analyze the impact of its 1 hour restraint rule on

small entities or to revise the rule to reduce its burdens, despite

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stating its intention to do so in OMB’s 2003 final report to Congress.

In other cases, implementing small business reform recommendations have proven to be a time-consuming endeavor. An example is

the longstanding effort to reform reporting requirements under

EPA’s Toxic Release Inventory program. This program requires facilities, including small businesses, to report each year on toxic

chemical releases and other waste management activities. Since

2001, OMB has received numerous nominations for TRI reforms designed to reduce reporting burdens that appear to have little corresponding public benefit. These reforms include EPA’s accepting

simplified reports, setting higher reporting thresholds in some situations, and allowing less frequent reporting where there is no significant year-to-year change at a facility.

Small business stakeholders began pursuing these types of TRI

reforms as far back as 1992. With the added impetus of this public

reform nomination process, rulemaking action on these reforms is

now anticipated to get underway shortly.

How could this reform nomination process be improved? Well,

first I think that information should be provided in a transparent

process, which really is the hallmark of John Graham’s tenure at

OIRA about the status of ongoing rule reforms. The annual report

and the charts that show agencies leadership on these reforms is

certainly a step in the right direction. There could be more transparency to where they are in the pipeline.

Stakeholder involvement is necessary at every stage in the rule

reform process. Agencies certainly should take consideration of the

reform nomination seriously and Congress should stay involved in

the process.

In conclusion, from the perspective of small business, the public

rule reform nomination process is working and it is worthwhile. Although the process can be improved, it has the potential to be a

major tool for improved regulatory analysis in the accountability of

Federal agencies to the public.

Thank you for allowing me to present these views.

[The prepared statement of Mr. Sullivan follows:]

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Mr. OSE. I thank the gentleman.

All right, our normal procedure here is that we go through a series of 5 minute rounds of questions. So, for instance, it would be

me first, then Mr. Tierney, then Mr. Schrock, then Mr. Kucinich,

then Mr. Van Hollen.

Again, I want to remind everybody of our time constraint and the

fact that we have a second panel yet. Also, to the extent that questions don’t get asked, we do have the ability to submit them in

writing to you, and we would certainly appreciate timely responses

to those.

I am going to recognize myself here.

Dr. Graham, about 2 months ago we notified your office that we

were going to do this hearing. And, I want to note that Mr. Johnson, Mr. Radzely, Mr. Sullivan have attached charts to their testimony regarding the specific questions for status reports on certain

things within their respective agencies, but I also note that the

written statement you gave us did not have such a chart, and I am

trying to followup on that. I understand that your forthcoming report will include some of the information that we would hope to

have reflected in that chart. I am familiar with the 2003 report to

Congress that included information up to that time. I am looking

for an update since that time. When do you expect to be able to

give us that information?

Mr. GRAHAM. A perfectly reasonable question. Let me just clarify

that we were aware several months ago that this hearing was

scheduled, but the request for the chart details by agency, all those

years of nominations, status of all of them, we received that on November 1st.

Mr. OSE. OK.

Mr. GRAHAM. So what is happening is we have been working on

the final report to Congress, which has a lot of that information in

it. But, as I look at the November 1st letter, I think even when the

report comes in, there are going to be few areas where we are going

to need to supplement that with additional material, and we will.

But, the real reason is just the recalcitrant spirit of the OMB staff.

Mr. OSE. I can’t believe that.

Mr. GRAHAM. I didn’t think you would.

Mr. OSE. I am interested in even if it is an interim report or a

draft report or something. I think the word some of the witnesses

have used today, I am trying to make the process as transparent

as possible so that if there are things that others might look at

that list and say, hey, what about this, what about that, this would

give them a chance to do so, even if it is unofficial in nature. So,

I come back to my question. Recognizing your sworn testimony

about the recalcitrance of the OMB staff, when do you think we

will be able to get this information of an interim nature?

Mr. GRAHAM. Well, you will have the final report to Congress certainly by the end of the year, and then once you have had a chance

to examine that and see whether or not it meets the need, then it

seems to me we should have some dialog on what additional information is required.

Mr. OSE. What is the current status or in what form is the information today? For instance, if I walked over to your office with you

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after this hearing is over at 12:45 p.m., what would you be able to

show me?

Mr. GRAHAM. Well, we have a variety of charts, more than one,

certainly, reflecting all of the agencies of the Federal Government,

and they are organized by different topic areas. But, they don’t include some of the specific information that is in your November 1st

letter, and for us to obtain that information will require a data call

to a variety of agencies beyond SBA, Labor, and EPA. You are receiving, obviously, that information from these agencies today. So

just to give you a concrete example, the independent agencies that

we referred nominations to, we have not had a data call to them

on what has happened at the independent agencies. Even within

the cabinet level agencies, we don’t have an updated data call to

them. So we have some work to do to fill out all the specifics, but

we have a substantial amount of information in that report that

does directly address the aspects of the question that you have in

your November 1st letter.

Mr. OSE. I am willing, in what time I have remaining, to help

in any way I can to get this information or to provide influence,

whatever may be evaporating as quickly as we sit here. But to the

extent that I can, I would need to see what you already have.

Would you be willing to provide that to me?

Mr. GRAHAM. I can check on that. Of course, it is all part of the

report itself, and it is not going to be that long until the report is

ready. So, I would ask you to consider the possibility of just waiting

a few weeks to get the actual full report, and then we can discuss

that. But I am open to persuasion. If it is very important, you have

to have this information within a couple weeks, we will do our best

to get you information in a couple weeks.

Mr. OSE. Well, I was somewhat amused; I felt like I was listening to my obituary up here earlier. But, I am afraid that after December my obituary becomes real, so to the extent that I could get

it, again, I want to reiterate that I would be willing to help.

Mr. GRAHAM. Well, I think that the hearing itself has been extremely constructive to get these questions out, and we appreciate

your asking not only OMB, but the agencies for this information.

That is very constructive and helpful.

Mr. OSE. Would you forward to me the stuff that you have?

Mr. GRAHAM. Well, that is a pretty general question. So if you

could sharpen that up a little bit, I am happy to do the best I can.

Mr. OSE. All right, we will go through a series of questions, since

my time has expired. But I will refine the question sufficiently and

we will come back on a second round.

Mr. GRAHAM. That is fine.

Mr. OSE. Mr. Tierney.

Mr. TIERNEY. Mr. Johnson, just in following up on my opening

statement, where is EPA in terms of performing the additional

analysis on the mercury rule that Administrator Leavitt promised

and has yet to do?

Mr. JOHNSON. Let me start by saying, Mr. Tierney, that we certainly agree with you that mercury is a toxic material that needs

to be dealt with and dealt with in as expeditious and effective manner as possible. Also, as a reminder to all of us, mercury today is

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not regulated in coal-fired power plants, so we will be regulating

mercury for the first time in the history of the United States.

We have now received over 500,000 comments on our proposed

regulation to regulate mercury in coal fired power plants for the

first time. The more than 500,000 comments we received include

many, many analyses and a range of assumptions. As you are well

aware, as with any models, whether they model mercury deposition

or something else, it is whatever the assumptions that go into

those models are what really count.

Where we are today is that we have gone through the more than

500,000 comments and we will be, in the next few weeks, issuing

a Notice of Data Availability, a NODA, as it is referred to, which

will highlight those analyses and those issues which we feel are

going to be critical to informing us to our ultimate decision on regulating mercury from power plants.

Having said that, I want to also assure you that we intend to

meet our court deadline of March 15th. So we will be issuing this

NODA in the next few weeks, there will be a public comment period, and based upon those comments and whatever analyses that

we need to do to make an informed science-based decision, that is

what we will do.

Mr. TIERNEY. You say you are going to meet your court deadline.

That whole court deadline would seem to be a case that was under

the assumption that it was going under a whole different section

of the rulemaking process than the EPA has gone under. You’re

still working just on the cap and the trade approach?

Mr. JOHNSON. We proposed, as you are probably well aware,

three options. One option deals with a strict MACT control, MACT

stands for Maximum Achievable Control Technology, and then two

cap and trading programs, one under Section 111 of the Clean Air

Act and the other under Section 112 of the Clean Air Act. There

are advantages and disadvantages. We certainly see the advantages of the cap-and-trade. Given our experience with the acid rain

program, we believe we can achieve a greater reduction in mercury

from coal-fired power plants using a cap-and-trade rather than a

MACT approach, again, based upon the information that we had at

the time that we proposed this rule. But, we have proposed these

options, and these options are all options that we are considering

as part of the final rulemaking.

Mr. TIERNEY. I won’t burden everybody by going into it at this

point in time, but obviously I have some serious concerns about the

delay, which I don’t think benefits anybody that needs protection

under this rule; also, about the insistence on ignoring the advice

of people in working groups that have been set up to provide that

type of assistance on that. So, maybe some of the other witnesses

will get a little bit further into just what has been going on here,

but I hope at some point the Administrator and EPA realizes that

people are serious about this and the continued obfuscation isn’t

really helpful on that.

I will stop at this point, because I want to talk to you at a little

more length, Dr. Graham. I will just yield back.

Mr. OSE. Gentleman from Virginia.

Mr. SCHROCK. Thank you, Mr. Chairman.

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Dr. Graham and Mr. Sullivan, how many of the 2001 OMB

deemed high priority and 2002 Agency-accepted nominations were

intended to benefit small businesses? And, can you quantify any results to date in paperwork burden reduction hours or regulatory

burden financial relief?

Mr. GRAHAM. I don’t have those numbers off the top of my head,

and I would defer to Tom on the question of their small business

impact.

Mr. SULLIVAN. I am happy to fill in some of the data. Although

I wasn’t at Advocacy for the 2001 nominations and my office actually didn’t specifically nominate rules under that call, my office was

very involved in a number of these rules, and actually some of

them ended up not only achieving their original purpose, but also

saving small business money. For instance, in the Department of

Energy air conditioning conservation standards, while it was at a

10 percent efficiency standard, it was proposed to be raised to 30

percent efficiency. Small businesses worked with Department of

Energy, EPA, Dr. Graham’s office through that call and ultimately

were able to convince the regulators to go to a 20 percent efficiency,

and we measured a cost savings because of that of $130 million for

small business.

Another example is the Department of the Interior National Park

Service’s snowmobile regulations. Again, because of small businesses’ interaction with the Federal Government to convince them

of less burdensome alternatives, a 1-year postponement saved

small entities $15 million.

Now, both of those examples unfortunately have ended up in the

courts and the cost savings may just be on paper, not realized in

the wallets. But, it is an example of how agencies were receptive

to small business input.

Last, but certainly not least, Department of Transportation proposed changes to the hours of service requirements, and two

changes, one is exempting some motorcoach businesses and another removing the requirement for electronic onboard recorders,

saved small businesses $180 million in first-year compliance costs,

and that certainly is a success, although the original proposed

changes of hours of rest and sleep requirements, which continues

to be a nomination for reform from small entities, is not something

that the Department of Transportation has decided to act on.

Mr. SCHROCK. I am hoping there were more than just those.

Mr. SULLIVAN. Those are three. Within the overtime regulations,

there were two high priority small business nominations identified

not only by my office, but by a number of folks who may be represented on the next panel. Both the white collar exemption clarification and the administrative staff exemption built into the final

overtime regulations produced cost savings for small business but

we are not able to piece out the specific provisions as how they benefit small business from a dollars perspective.

Mr. SCHROCK. Tom, in your testimony you had some useful

charts here about your office’s nominations, including your top 30

priority reforms. How many of these total nominations did Advocacy submit to OMB in 2001, 2002, and 2004? I know you weren’t

there in 2001. How many were accepted? And, besides Labor’s overtime rule and EPA’s new source review rule, which specific regulaVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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tions or guidance documents were performed to date? And one

more. I will followup, if you want me to. How many of the completed actions were major or economically significant rules?

Mr. SULLIVAN. Congressman Schrock, I will try my best to hit

each of these questions. If I don’t, I am happy to respond to the

committee in writing following the hearing.

In 2001, again, my office did not submit nominations specific to

the call. In 2002, my office submitted 16 nominations. Dr. Graham’s office then assessed all of the comments, worked with my office under a Memorandum of Understanding to kind of cull in the

high priority. We suggested 30 high priority related to small business. Of that, in the kind of final cut, 10 were identified as being

the responsibility and having the stewardship of agency leadership

to take action. Of those, 2 that related to the overtime rules were

in fact acted on to the satisfaction of the small businesses who commented.

And, again, the way I described my characterization of narrowing

down the implementation and successful completion to 2 of the

broad universe is unique to my office’s perspective, it is not the

way that others are characterizing a job as a completed action from

a decision point on whether or not they took action on specific

nominations.

Mr. SCHROCK. Thank you.

Thank you, Mr. Chairman. My time is up.

Mr. OSE. I thank the gentleman.

Mr. Kucinich.

Mr. KUCINICH. Thank you, Mr. Chairman.

I have some questions for Mr. Johnson. The administration’s

process for developing mercury rules was so disturbing to five EPA

employees and several former EPA officials that they felt the need

to speak out to the media, among them the Los Angeles Times. The

Times reported, in March 2004, that long-time EPA staff revealed

they were told by political appointees at the EPA not to undertake

the required scientific and economic analysis of EPA’s mercury proposal. While the EPA’s decision not to listen to its own scientists

and advisory panel was disturbing in and of itself, it apparently did

listen to certain industry interests, with language copied verbatim

from memos prepared by industry lobbyists. EPA officials on the

administration’s mercury rulemaking, former officials such as

Bruce Buckheit, former Director of EPA’s Air Enforcement Division, retired last December, said, ‘‘There is politicization of the

work of the Agency that I have not seen before.’’ Russell Train, who

was head of the EPA during both the Nixon and Ford administrations, is quoted as having said, ‘‘The Agency has strayed from its

mission in the past 3 years.’’

This hearing gives us an opportunity to look into the culture of

rulemaking relating to the administration’s role with the industry

and industry’s role in actually writing regulations that benefit the

industry and are adverse to public health. You, of course, are

aware that the industry actually wrote the administration’s proposed mercury rule in the sense that what was published in the

Federal Register contained numerous paragraphs of verbatim language supplied by two separate industry advocates. You are aware

of that, are you?

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Mr. JOHNSON. I am aware that there was that language included,

yes.

Mr. KUCINICH. Yes, OK.

Mr. JOHNSON. After the fact.

Mr. KUCINICH. Now, let me ask you this. The President and EPA

administrators and other government officials have touted the rule

that relates to a 70 percent reduction in mercury emissions by

2018. That is what was said publicly, but isn’t it true that the

EPA’s own models project that mercury emissions will not fall by

70 percent until 2025, or even later, 20 years from now? Isn’t that

correct?

Mr. JOHNSON. I won’t say that it is not correct. What I mean by

that is, again, it is a model and it depends upon what assumptions

one uses. What our experience in the cap-and-trade program for

acid rain is, in fact, that we achieved better reductions and faster

reductions than what was projected by our original model.

Let me go back to the first comment that you made. In many

ways, I am unique among the political appointees because I have

been a career civil servant at EPA and have been at EPA for 24

years now, and have been involved in a lot of rulemaking. My experience in rulemaking is for those rules that are highly controversial, highly charged rules, such as mercury, it is not surprising that

there are differing opinions about the process, the assumptions, or

what have you; and you have mentioned a number. I think the important thing, certainly from my perspective as the deputy administrator, is that we, the Government, we, the EPA, need to regulate

mercury.

Mr. KUCINICH. But, let me ask you something, Mr. Johnson, if

I may?

Mr. JOHNSON. Yes, sir.

Mr. KUCINICH. How can the public have any confidence in EPA

if it has openly acknowledged that the industry is writing the regs?

Mr. JOHNSON. The industry did not write the regs, sir. There are

many comments that the Agency receives during its preliminary

process in developing regulation. We have information from academic institutions, from environmental organizations, from the

general public.

Mr. KUCINICH. But, it is true that you acknowledge that in the

rule published in the Federal Register relating to the administration’s proposed mercury rule, that you have paragraphs that are

verbatim that were supplied by the industry. So, I ask you again

how can the public, which is now getting all this information about

the adverse effects of mercury poisoning on themselves and their

children, how can they have any confidence at all? Tell the people

how can they have confidence?

Mr. JOHNSON. Well, again, one is we have a lot of information

coming from a variety of sources, and it is not unusual that information is put into a proposal. And, this is a proposed regulation.

The good news is this is an open, transparent process. The Agency

has laid out what we believe the options are for regulating mercury

from coal-fired power plants for the first time. We have made all

of our analyses available. As I have just mentioned, we are going

to be highlighting additional data to help inform our ultimate decision on mercury. But, the confidence that the American people

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should have is, yes, that EPA is on watch and we are going to be

regulating mercury from coal-fired power plants for the first time

in the history of the United States.

Mr. KUCINICH. Mr. Chairman, I know you have to move on. I just

think it would be important to resubmit for the record a letter that

was sent to the EPA by our ranking member, Henry Waxman, of

the full committee and Tom Allen, which really challenges this notion of transparency, because members of this committee had to demand of the EPA what is going on with respect to the contact between the administration and industry advocates. So I thank the

Chair.

[The information referred to follows:]

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Mr. OSE. I thank the gentleman.

Before I recognize Mr. Van Hollen and just advise Mr. Tierney

that we have had a little bit of a change in plans. We are being

advised by the full committee that our time here is limited to 12:15

p.m. So, the plans that evolves here is that our questions of this

panel and next panel will be limited to one round due to the time

constraints, and that questions will be necessarily submitted to you

in writing.

Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

First, let me just say, Dr. Graham, I agree with you that it is

obviously important to review regulations to determine whether or

not they are accomplishing the purpose we set out originally to accomplish. And, if they are not accomplishing them, we should either get rid of them or revise and modernize them to suit the purpose. I think you would also agree that where we identify a need

for an additional rule to protect the public health, we should move

forward. And where we identify it, we should move forward in the

best way and based on the best evidence; and that is what leads

me to the questions with respect to the mercury rulemaking.

Mr. Johnson, you say in your testimony that EPA is interested

in ensuring that the proposed mercury rule be based on the ‘‘best

available information.’’ I think that is something we would all

agree; we should have the best available information. But, that is

what leads me to my question, because best available information,

it seems to me, requires exploring all the options; and EPA did create a working group. We have somebody who is here who is going

to testify later, Mr. John Paul, who was a co-chair of that working

group; he represents State and local air pollution control officers.

In his testimony, he says, ‘‘As part of our report, we recommended

that EPA analyze through mathematical modeling the mercury

control levels recommended by the various stakeholders. EPA

agreed to that recommendation and scheduled a working group

meeting to review and discuss the modeling results. Unfortunately,

in April 2003, the working group was informed by EPA via e-mail

that the modeling was postponed indefinitely. Furthermore, the indefinite postponement turned out to be permanent.’’

Since then you have had just a series of correspondence going

back and forth to EPA administrators from Members of Congress,

from environmental groups, from all other stakeholders on this

question of why EPA isn’t doing the modeling of the working group

options, the working group that was created and established by

EPA itself for this purpose. In these letters, there are all sorts of

statements. In March of this year, Administrator Leavitt recognized that the analysis was not complete and finished to fix it, saying, in one of his responses, ‘‘I want it done well and I want it done

right.’’

Nothing has happened since then. We have heard really what

amounts to a lot of excuses from Assistant Administrator

Holmstead saying that first we had insufficient resources to model

mercury because EPA was modeling the clear skies proposal.

I guess my question to you is, having established the working

group, having received the benefit of the recommendations, having,

at least at the staff level of the EPA, agreed to model the recVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00095 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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ommendations that were set out, does EPA intend, as part of its

analysis, to model the recommendations of the working group that

it established? I just want a simple yes or no answer so we can cut

through a lot of the back and forth.

Mr. JOHNSON. Well, I was not there, involved with the decision

or in the beginning of making that decision to accept or not to accept, so I don’t know the specifics of what that work group did recommend. What I can say is that the Administrator has been very

public that he will require whatever analyses that are necessary to

be able to make a sound scientific and good public policy decision

with regard to mercury.

Mr. VAN HOLLEN. Well, let me just ask you, because we have a

timetable now.

Mr. JOHNSON. Yes, sir.

Mr. VAN HOLLEN. You have said that EPA intends to move forward by the March 15th date, is that right?

Mr. JOHNSON. Yes.

Mr. VAN HOLLEN. OK. We are now in November. It seems to me

that, if the EPA is going to model these results, it needs to make

a decision, yes or no. I am simply asking whether or not, as of

today, as of today, you are the Deputy Administrator, EPA intends

to model the recommendations of its work group?

Mr. JOHNSON. We will be doing whatever modeling is necessary

to make the decision by March. I don’t know——

Mr. VAN HOLLEN. I am just trying to get on the record. We have

had all this back and forth. We got a letter in response to Mr. Waxman today from a letter he wrote back in June. We have everybody

here; a lot of people are wondering how to interpret all this. I just

want a yes or no of whether you are going to model those recommendations?

Mr. JOHNSON. We will be using models to make our final decision. What specific models, what data input and all, that is what

the public comment process is about. We have 500,000 pages of

comments. We have over multiple analyses on all sides of the

issues with all kinds of assumptions, and we are going to be

issuing a Notice of Data Availability to be able to highlight the

range and the depth and the breadth of those kinds of assumptions, because we want to get additional public comment to help

understand what is fact, what is fiction, what is gray, what is

white versus black. So that information will then help us to make

a decision. If we have to do additional modeling to make the decision, then we will do additional modeling to make the decision.

We are also mindful of the Administrative Procedure Act which,

if we come up with a new model that hasn’t been used before, then,

under the Administrative Procedure Act, we have to go through a

public comment period for that. Those are all part of the factors.

At this point in time what I can say is that we are going out with

a Notice of Data Availability, highlighting the models, highlighting

those issues and the data that we have received that we believe are

pivotal in making an informed judgment; and we want public comment, and public comment quickly, so that we can make the best

scientifically sound decision as well as good public policy decision.

Mr. VAN HOLLEN. All right.

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Mr. Chairman, if I could just ask how much time would be required to model?

Mr. OSE. Mr. Van Hollen, we are going to have one more round.

Mr. VAN HOLLEN. Oh, we are? OK. I am sorry.

Mr. OSE. Two minutes each on this panel.

Mr. VAN HOLLEN. Got you. Thank you.

Mr. OSE. Dr. Graham, your testimony is that on November 1st

we sent you a request for a chart indicating the status of each nomination from 2001, 2002, and 2004 nominations processes, the chart

indicating whether a nomination was accepted or rejected; and

then what was the actual or expected publication dates for any proposed or final rules derived from that nomination; and whether or

not if a reform candidate was only partially accepted, please so indicate.

You have information in your office that perhaps incompletely

addresses that question, but we don’t yet have it in our possession.

My question is will you send it to us, whether complete or incomplete, the information that would be responsive to this request, on

or before November 30th of this year?

Mr. GRAHAM. November 30th? We certainly can give you a partial response, no question. But, for example, the 2004 information,

that is deliberative information. That is not coming to you until a

report comes out.

Mr. OSE. All right. That is fine.

Mr. GRAHAM. For example. Also, there you have an analysis of

whether what we did was similar to or different than the commenter. That is a very substantial body of work. That will not be

done by November 30th.

Mr. OSE. All right.

Mr. GRAHAM. I will give you the best we can get to you by November 30th.

Mr. OSE. I appreciate that.

Mr. Radzely, what is the timetable for the Department’s issuance

of proposed revisions for the various family leave implementing

documents, including the non-binding guidance, the paperwork requirements, and what I refer to as the other regulatory provisions,

such as recordkeeping and the like?

Mr. RADZELY. Mr. Chairman, the Department is still reviewing

the stakeholder comments, the congressional hearings on this

issue, the OMB nominations, and the court cases to determine

what, if any, actions to take regarding the regulations, and we

hope to have a decision some time next year as to what, if any, actions to take.

Mr. OSE. When you say next year, what do you mean? I mean,

is that January or is that December?

Mr. RADZELY. At this point we are still reviewing the volume of

material that we have, and we hope to make a decision as to

whether to take any action at some point next year.

Mr. OSE. Are you going to wait until you have a final decision

on all of it before you release any of it, or is it going to come out

in dribs and drabs?

Mr. RADZELY. We are reviewing all of the nominations that we

have received and all the comments that we have together, and at

the point where we decide what, if any, actions to take, if there are

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discreet actions, I presume the Department will take them at an

appropriate time. But I, at this point, do not know what, if any,

action we are going to take, so I can’t say specifically whether it

will be one or multiple actions.

Mr. OSE. All right.

I am going to exercise a little discretion of the Chair. I don’t

know to whom this question needs to be directed, whether it is Dr.

Graham or Mr. Johnson, but I know that my friends on the other

side of the isle have sent letters regarding mercury to which they

have not received answers. And I have to tell you, whether I am

on one side of the isle or the other, as near as I can tell, under the

constitutional oversight provisions that we enjoy here, we are entitled to that information. I am going to recognize my friend Mr.

Tierney to expand on this, but this is an issue that, as chairman,

I will tell you it has my attention.

Mr. TIERNEY. Well, Dr. Graham, let me get right to that, because

the last time you were here I asked you some important questions

about the mercury rulemaking at EPA. After the hearing I sent you

a handful of followup questions, which is why I was reticent to

have followup questions today, because we don’t have a good track

record with this. You did not address specifically the responses to

my questions. Your initial request had about a page and a half of

very general comments. I wrote to you again on October 15th, asking you to respond. At 7 last Friday night, this most recent Friday

night, somebody faxed over a letter that still, in my estimation,

fails to answer those questions directly. Let me give you an example.

Through EPA’s advisory group, State, industry, and environmental stakeholders developed three options for levels of mercury

controls. The advisory panel recommended that EPA perform a

modeling analysis of each of these options. Yet, for the past year

and a half, EPA has failed to conduct this analysis. I asked you

whether you agree that the recommendations for necessary analytical work made by the EPA’s public advisory group on the mercury

rulemaking should be given substantial weight. All you responded

to me was a general statement, ‘‘In any important rulemaking, including its mercury regulation, EPA considers a number of important factors. . . . All of these factors go into the Agency’s decisions

regarding the appropriate analysis to undertake, for example, in

considering the input of this working group.’’

I am looking for a specific answer to that question. Has OIRA

taken a position on whether the EPA should comply with the advisory group’s recommendations? And, if so, what is the position?

Mr. GRAHAM. Considered, yes. Substantial weight, not necessarily.

Mr. TIERNEY. I also asked you: ‘‘In the mercury rulemaking, does

OIRA support analysis of a full range of regulatory options for controlling mercury?’’ You replied, ‘‘We have indeed encouraged EPA

to perform a rigorous comparison of the cap-and-trade versus

MACT alternatives.’’

I wanted to know, and I still want to know, whether OIRA supports analysis of a full range of regulatory options, including options more stringent than either of EPA’s proposals. Can I have a

clear answer on that?

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Mr. GRAHAM. Well, full range?

Mr. TIERNEY. Full range.

Mr. GRAHAM. OK, the Executive Order 12866 does not require a

full range of all—what do you mean by that, full range?

Mr. TIERNEY. Well, including options that were more stringent

than either of EPA’s proposals.

Mr. GRAHAM. I think that in the comments that Mr. Johnson

mentioned there are substantial number of comments and analyses

done on proposals more stringent and less stringent than the proposal. By definition, they will in fact be considered.

Mr. TIERNEY. Would you support that they are considered?

Mr. GRAHAM. They will be considered because they are in the

public comment process.

Mr. TIERNEY. Is part of that the advisory group’s recommendations?

Mr. GRAHAM. In your question before you asked me whether I

was aware of the specifics of the advisory committee recommendations, and I told you that I was not. But, ideas and models and recommendations are part of the public comment process, they will be

considered.

Mr. TIERNEY. Well, Mr. Johnson, I didn’t get that direct inference

from you in the last round of questions with Mr. Van Hollen. Are

you willing to be as direct?

Mr. JOHNSON. Yes. Yes.

Mr. TIERNEY. You will consider and run those models?

Mr. JOHNSON. Whatever is in our public comments, we will consider all of that.

Mr. GRAHAM. Mr. Tierney, those models are already run. Those

are models that were run with the same model that EPA uses, but

outside parties contracting the model. They have run those models

and submitted them as part of the public record.

Mr. TIERNEY. Well, to date they just don’t seem to have given

much credence or much attention.

Mr. JOHNSON. Mr. Tierney, that is why we are putting and identifying those models and those analyses as part of our Notice of

Data Availability, because we now have them, and there is a wide

range of assumptions and conclusions from those model analyses.

That is why we want people to look at them, comment on them,

and particularly focus on those areas of the assumptions.

Mr. TIERNEY. Well, maybe I am a little cynical, but it seems to

me that you are trying to kill everybody with an overwhelming

amount of information to keep delaying this thing, and I hope that

is not the case. It seems somebody could target this and we could

get right to the bottom of it and we can get some work done here

if you listen to your own advisory working group and you follow it

along and did that. I don’t see that being done; I see trying to

switch from Section 112 to 111. I hope not, but it seems like somebody welcoming a lawsuit to delay things further under that

premise. If you keep enlarging the amount of information out there

and the work done on this thing, we will never get a rule, and kids

continue to live in a poisoned atmosphere. So, I just hope that is

not the case.

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Mr. GRAHAM. Mr. Tierney, the advisory committee does not have

the authority to require EPA to stay within Section 112 of the

Clean Air Act.

Mr. TIERNEY. I understand that.

Mr. GRAHAM. The administration supports a market-based approach, and we believe the authority exists under 111. That is perfectly adequate to guide the policymaking of the administration.

Mr. TIERNEY. There is a lot of discussion on that, and there

should be even more.

Mr. GRAHAM. We are delighted to have it, sir.

Mr. TIERNEY. Very few people agree with you on that.

Mr. GRAHAM. Absolutely.

Mr. TIERNEY. You have a fringe group on that area. Essentially,

this whole thing has gone on for years under the premise of Section

112. At the last second this administration comes in and takes a

pivot and drives the whole thing in a different direction.

Mr. GRAHAM. That is because this administration believes in

market-based approaches to environmental policy, Mr. Tierney.

Mr. TIERNEY. Would that they believed more in science.

Mr. GRAHAM. We certainly agree that it should be implemented

with science.

Mr. TIERNEY. Then, we would get something done here to stop

kids from being poisoned.

I have one last question I want to go over, if I may. In your role

as Director of OIRA, you have emphasized how important it is for

agencies to incorporate into rulemaking an analysis of the cost the

rule will have on those who have to comply with it and the benefits

of the proposed rule. You have not at all been reticent in strongly

advising agencies on analytical and even science and policy decisions and rulemaking. In this case EPA failed to conduct even the

most basic analysis necessary to understand the cost and benefits

of various control options.

Don’t you agree that EPA should conduct this analysis as recommended by its own advisory panel?

Mr. GRAHAM. I certainly think they should do benefit analysis of

the rulemaking, including the benefits to children, both the health

benefits and long-term economic benefits to those children.

Mr. TIERNEY. Well, we can only hope that we get some action,

and relatively soon. Thank you.

Mr. OSE. Dr. Graham, to followup on Mr. Tierney’s questions,

have you done a prompt letter to EPA regarding that particular

issue?

Mr. GRAHAM. Have I yet?

Mr. OSE. Yes.

Mr. GRAHAM. No, sir.

Mr. OSE. OK.

Mr. Van Hollen for 1 minute.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Dr. Graham, you made a couple comments I wanted to respond

to. I would put it in the form of a question, but we don’t have time.

I also support market-based approaches to many of these issues. I

am an original cosponsor of legislation to do that with respect to

carbon dioxide, as the House cross-file to the McCain-Lieberman

bill on global warming issues. Where it works, the difference here

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we are talking about is mercury. Mercury is listed as a hazardous

pollutant under Section 112 of the Clean Air Act.

Now, under cap-and-trade, as you know, one company, one generator of pollution can buy the ability to not have to put on the pollution control equipment. That means that in the immediate surrounding of that area people could be subject to pollution from that.

The difference is we are dealing with mercury, which is described

under Section 112 as a hazardous pollutant. That is why the capand-trade approach is questionable under this particular scenario,

when it is not questionable when you are dealing with pollutants

that have more of an aggregate global impact and are not necessarily toxic at the local level. I think that is why the working

group specifically recommended against a cap-and-trade approach.

So, I am for market-based approaches too, where it makes sense

and where it is in the public health interest, but I am not for it

when it results in people in the immediate area surrounding a

power plant being subject to mercury poisoning.

Mr. GRAHAM. Would you like me to respond? Actually, EPA’s

modeling shows that the largest power plants, the only ones that

may have sufficient mercury to cause a localized problem, in fact

have the largest reductions under the cap-and-trade program and,

hence, provide greater protection for residents near those facilities.

Mr. VAN HOLLEN. That would be great if they decide to exercise

the option to do the pollution control.

Mr. GRAHAM. But, that is what the modeling says, that they will

in fact do that.

Mr. VAN HOLLEN. Then the only question remaining is shouldn’t

we do—from your earlier response to me it sounds like you hadn’t,

but shouldn’t we do all the modeling of all the different options, including the options put forward by the working group, to make

sure—the question is whether there are different assumptions in

these models, and what assumptions are being made. It seems to

me that what you are creating, as I understand it, by not doing the

mathematical modeling of the working group, you are creating a

suspicion that doesn’t have to be there, that you are not exercising

your full authority to examine all available options. So, the question is, OK, model it and see what the results are, and then compare your results. But, the question is whether all available options, that reasonable people can agree or based on some reasonable assumptions, have been modeled so we can reach fair comparisons.

Mr. OSE. May I suggest that you follow this line of questioning

in writing to the witnesses?

Mr. VAN HOLLEN. Yes. I would be happy to. Thank you. Thank

you, Mr. Chairman.

Mr. OSE. I want to thank this panel. I apologize for the dilemma

of location today. I do appreciate all four of you appearing and providing testimony. To the extent that we have followup questions,

we will forward them to you as quickly as possible. And, as always,

we appreciate timely responses. The record will be open for 10 days

on this. Believe me, there are additional questions we didn’t get to

due to time constraints.

Gentlemen, thank you. You are excused.

Could we have the second panel gather immediately?

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While we are getting set up for the second panel, I will advise

everybody that the equipment being arrayed here, the setup of that

will continue; it is done to facilitate the hearing that will commence

in this room at 1. If you have any complaints about that, you

should take it to the chairman of the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs.

OK, before you sit down, let us get you all sworn in. Please rise.

All six witnesses are at the witness table. Please raise your right

hands.

[Witnesses sworn.]

Mr. OSE. Let the record show all the witnesses answered in the

affirmative.

All right, we are going to change the rules here a little bit, given

our time constraints. We have received each of your written statements, and they have been entered into the record. We have read

each of your written statements. Unfortunately, as opposed to the

normal 5 minute period of time that you are going to have to summarize, we are going to reduce that to 2 minutes for each of you.

Any objections?

All right, our first witness on the second panel is Mr. William

Kovacs, who is the vice president for Environment, Technology and

Regulatory Affairs of the U.S. Chamber of Commerce.

Mr. Kovacs, you are recognized for 2 minutes.

STATEMENTS OF WILLIAM KOVACS, VICE PRESIDENT, ENVIRONMENT, TECHNOLOGY AND REGULATORY AFFAIRS, U.S.

CHAMBER OF COMMERCE; TODD O. MCCRACKEN, PRESIDENT, NATIONAL SMALL BUSINESS ASSOCIATION; NANCY

MCKEAGUE, SENIOR VICE PRESIDENT, MICHIGAN HEALTH

AND HOSPITAL ASSOCIATION, REPRESENTING THE SOCIETY

OF HUMAN RESOURCE MANAGEMENT; JAMES L. GATTUSO,

RESEARCH FELLOW IN REGULATORY POLICY, THE HERITAGE FOUNDATION; CATHERINE O’NEILL, ASSOCIATE PROFESSOR, SEATTLE UNIVERSITY SCHOOL OF LAW, REPRESENTING THE CENTER FOR PROGRESSIVE REGULATION;

AND JOHN A. PAUL, SUPERVISOR, REGIONAL AIR POLLUTION CONTROL AGENCY, DAYTON, OH, REPRESENTING THE

STATE AND TERRITORIAL AIR POLLUTION PROGRAM ADMINISTRATORS

Mr. KOVACS. Thank you, Mr. Chairman. Without using up too

much of my time, since this is your last hearing, I want to thank

you for all of your efforts over the years.

Mr. OSE. Enough of the obituaries. Get to your subject matter.

Mr. KOVACS. Regulatory reform has been a bipartisan issue for

30 years. Presidents Carter, Bush, and Clinton used executive orders to move the issue forward and examine regulations on a regular basis. This administration has chosen to use the regulatory

right-to-know, and they have accepted public nominations. It has

been a fine process for us in the sense that it has gotten us to talk

to our members, but the biggest problem with the process is there

are no timely updates and it is very difficult to find out where the

regulations might be in the process. In fact, the Chamber actually

contacted every single person who nominated a regulation, both the

business and environmental groups and other non-profits. Virtually

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throughout the entire list of nominations, most, 70 percent did not

know where their regulations were in the process and couldn’t

identify how they were moving through; and that is something that

I think can be easily corrected.

You have three tools, very quickly: one, there are the executive

orders, which really do give the President and the agencies the

right to go in and examine the regulations; No. 2, you have now

the public nomination process; and, three, I would just like to refresh everyone’s recollection, you also have Section 610, which was

passed as part of the Regulatory Reform Act, where every single

agency is required to provide a plan for how they are going to systematically review regulations, and that is something the Congress

has had for oversight for almost two decades and has never really

used.

So, if we are going to make a difference right now in how the regulatory process is reviewed, I would suggest that Congress and

these hearings show what oversight can do. You would get a lot of

answers to your questions. Two, you have the White House, who

could issue an executive order to enforce Section 610 and tell the

agencies it is serious. And, three, I think as part of the OIRA nomination process, they could do what is required under 610, and that

is to link it to the unified agenda. If you have all three of those

processes in place, you do have a way in which, over a regular

basis—and that is the key, regular, systematic basis—Congress

could ask the agencies to undertake the 610 reviews and to undertake the nominations; and that way we don’t worry, 4 or 5 years

later, that we didn’t get the kind of information we need.

Thank you.

[The prepared statement of Mr. Kovacs follows:]

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Mr. OSE. I thank the gentleman, and for his attempt at kind

words. I didn’t mean to be rude; I have just got to move.

Mr. McCracken for 2 minutes.

Mr. MCCRACKEN. Thank you very much. I will try to be very

brief as well, and condense my statements.

Bottom line, I represent the small business community; I am the

president of the National Small Business Association. Fundamentally, what I think this hearing is about, and what we are all trying to achieve, is instead of constantly looking at all the new rules

coming down the pike, and how to keep them in check and how

they can be made to be usable and achievable by the small business community, it is at least as important, if not in some cases

more important, to continue to look at what is already on the

books, to see how they can be revised, simplified, and done away

with in some cases. That is usable.

As Mr. Kovacs mentioned, we have had on the books for more

than 20 years the Section 610 review, which has been almost entirely not complied with. That is why we have been pleased, the

last few years, the administration has adopted this process for accepting nominations, so that we can at least begin to do some level

of review of the regulatory burden that the small business community faces.

So, I am loathe to criticize or to suggest that is a bad idea, because it is certainly a big step forward from where we have been,

but we think there is a lot more than can be done in that process.

It is clear to the typical juror that perhaps, I would think, that the

OIRA may need a few more resources. We constantly hear how

they are overburdened, and it is not hard to see that there is some

validity to that charge. We also think, though, as Mr. Kovacs said,

that there is a significant role for Congress to play here as well.

If Section 610 review were coupled with meaningful oversight, particularly by the authorizing committees of the agencies, that those

various agencies report to, I think that we could see an enormous

impact and sort of get the attention of those agencies.

The other thing that I would—and these are very brief remarks—point to is something that a lot of speakers have hit on

today, which is the visibility of the process, the ease with which we

can find out how this review is actually happening. I mean, some

of that was illustrated earlier in the last panel, where even the

head of OIRA has a hard time presenting all the information that

you might expect. Now, how can a citizen or a trade group out

there that submitted comments expect to know what in the world

is happening to those comments?

But, in closing, I really appreciate all that this subcommittee has

done over the last few years in moving this ahead, and we look forward to more work. Thank you very much.

[The prepared statement of Mr. McCracken follows:]

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Mr. OSE. I thank the gentleman.

Our next witness is Ms. Nancy McKeague, senior vice president

for Michigan Health and Hospital Association.

Ma’am, you are recognized for 2 minutes.

Ms. MCKEAGUE. I am here specifically to discuss with you the

Family and Medical Leave Act and the problems which have resulted in the workplace for us attempting to abide by the regulations. I am assuming, for the sake of brevity, that you are familiar

with the FMLA. And I would like to tell you that our members believe that the FMLA has made an important contribution by providing a supportive environment for employees and their families

in their time of need.

As the mother of six children, and as someone who has personally utilized leave under the FMLA, I support the intent of the law.

However, the spirit of the law has been undermined when the complexities of the statute have left employers guessing how best to

comply with it, while still leaving employees guessing as to what

leave is protected under interpretations I don’t believe Congress

ever considered.

In enacting the FMLA, Congress stated that the term ‘‘serious

health condition’’ is not intended to cover short-term conditions for

which treatment and recovery are very brief, recognizing that it is

expected that such conditions will fall within the most modest sick

leave policies. The DOL regulations as originally developed, however, do not follow Congress’s intent.

Unfortunately, the real victims of this confusion are the employees themselves. The most prevalent method used by employers to

cover work during FMLA leave is to assign it temporarily to other

coworkers. With the FMLA interpretations requiring little or no notice, this often results in requiring unscheduled overtime by coworkers. Work coverage for questionable, unscheduled leave absences has been especially challenging in the health care arena,

where adequate coverage with qualified staff can involve issues as

critical as life or death. Employee morale issues are also extremely

important in the hospital setting, and my understanding is that

DOL also has some public comments on that point.

I have attached a chart to my testimony, which is also displayed

here, which I will leave you to take a look at as you see fit. But,

I would like to note that our compliance involves 69 regulations

and 29 processes, and may require us to process up to 17 documents for a single leave situation. The FMLA’s implementing regulatory interpretations issued by the previous administration have

left employers and HR professionals struggling with management

of intermittent leave, communications with physicians, and difficult

determinations as to whether a serious health condition exists

within the meaning of the FMLA.

There are additional information and examples of specific instances in my written testimony, Mr. Chairman, and I would be

glad to respond to any questions.

[The prepared statement of Ms. McKeague follows:]

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Mr. OSE. I thank the gentlelady. For the record, this is your

chart over here?

Ms. MCKEAGUE. Yes, sir, it is.

Mr. OSE. All right.

Our next witness is Mr. James Gattuso, who is a research fellow

in Regulatory Policy at the Heritage Foundation.

Sir, welcome. You are recognized for 2 minutes.

Mr. GATTUSO. Thank you, Mr. Chairman. I want to thank you for

summarizing some of my points in your opening statements. I hope

that saves me a few seconds on my statement.

Mr. OSE. I thank the gentleman for his comment.

Mr. GATTUSO. As you had mentioned in your opening statement,

the Bush administration, I believe, has done a good job at slowing

the train of excessive regulation. Many fewer new costly regulations are being adopted, saving taxpayers and consumers a lot over

the past few years.

However, that train has not been reversed; unnecessary and excessive regulations are not being reviewed adequately and taken off

the books when they need to be. Some numbers on that: OIRA has

already released numbers looking at the totals on cost-benefit analyses by the agencies on the cost of new regulations averaging, during the Bush administration, $1.5 billion per year, which is still a

lot, but much less than the $5.7 billion or $8.5 billion per year

under the two previous administrations. So, there is an improvement there.

My own study looking at major regulations, as reported in the

GAO data base under the Congressional Review Act, shows that

the Bush administration has been reporting approximately seven

major pro-regulatory rules per year during its tenure, as opposed

to 20 new pro-regulatory major rules under the Clinton administration. That is a significant difference.

However, as I say, the train has not been reversed. It is still true

that, under both administrations, the number of deregulatory actions has only been about a quarter of the total number of

rulemakings. In other words, the number of actions increasing regulation outnumbered the numbers of actions decreasing regulation

by a factor of 3 to 1, and that is relatively constant during both

the Bush and the Clinton administrations. So, I believe there is

clearly work to be done to examine and decrease, where appropriate unnecessary regulation.

This committee has already reported legislation in that regard

which I think will be helpful to improve regulatory accounting. I

think that is an important step.

There are a number of other additional steps that should be considered. Just very quickly, those include: strengthening OIRA. I believe OIRA needs to be the cop on the beat to provide independent

analysis and review of new regulations. Right now OIRA staffers

are outnumbered 4300 to 1 by staffers at regulatory agencies. I

think they need to have a stronger presence.

Congress needs to have a stronger presence. Congress should establish its own regulatory analysis office, similar to the existing

Congressional Budget Office, to provide an independent review of

regulations.

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There should be a regulatory review office in each regulatory

agency charged with reviewing, analyzing, and considering the

costs and benefits of new rules so that analysis and that consideration begins in the agencies, not when it leaves the agencies. Similarly, there should be a designated regulatory czar, an individual

in each agency with personal responsibility for ensuring that regulatory review and analysis remains a focus in each agency.

And, last, I think independent agencies should be required to

submit cost-benefit analysis to OIRA. I believe ideally they should

be subject to the full regulatory process. If that is not possible, at

the very least, those analyses should be submitted to OIRA for nonbinding review. Thank you, Mr. Chairman.

Mr. OSE. I thank the gentleman.

Our next witness is Ms. Catherine O’Neill, who is an associate

professor at Seattle University School of Law and a member scholar for the Center for Progressive Regulation.

Ma’am, welcome to our subcommittee. You are recognized for 2

minutes.

Ms. O’NEILL. Thank you, Mr. Chairman and members of the

committee.

EPA’s mercury rule shows an agency that has wandered far

afield from a commitment to rational regulation. I would like to

focus on three points.

First, there is no question that the science shows that mercury

poses a grave threat to the health of children and other Americans.

Second, EPA’s rule fails to address mercury contamination nationally, and actually increases it locally. EPA’s preferred option, a capand-trade approach, is weak. It delays a final cap on emissions

until 2018, and, even 2 years later, in 2020, EPA’s own models, on

the most generous assumptions, show that emissions will be reduced, at most, 61 percent.

Further, the emissions picture would be even worse in some regions. EPA’s cap-and-trade approach would permit 11 times more

mercury in the upper Great Lakes States in 2010 than a properly

conducted MACT approach. This is illustrated by the chart on the

right and a comparison between the blue line, showing cap-andtrade, and the green line, showing the much more substantial reductions under a properly conducted MACT for the upper Great

Lakes States. Even in 2020 we see that cap-and-trade would permit six times more mercury in this region than would a properly

conducted MACT approach.

Of particular concern, EPA’s cap-and-trade approach would likely

beget hot spots. Hot spots are localized areas of concentrated mercury emissions and, ultimately, exposure. EPA’s own models reveal

significant hot spots in the upper Great Lakes States of Michigan,

Minnesota, and Wisconsin. In these three States in this region,

mercury would decline only 27 percent by the year 2020, and locally emissions would actually increase at 20 out of the 44 facilities

located in these three States. These hot spots would coincide with

a Great Lakes population, where even the average person is more

likely to eat fish caught from local waters.

Third, EPA’s rule is not only weak, it is unjust. Who is left unprotected? EPA itself acknowledges that anyone who regularly eats

fish may not be protected by its rule. This includes recreational

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fishers on lakes and rivers across the Nation, it includes low-income families in our urban areas who depend on fish for food, and

it includes tribal fishers in the Great Lakes and elsewhere exercising treaty rights.

Notably, EPA concedes that those left unprotected by its rule are

disproportionately tribes, communities of color, and low-income

communities. Having said this in the Federal Register, however,

EPA does nothing to address the injustice. Instead, EPA instructs

these groups, and particularly children and women of childbearing

age, to reduce or eliminate fish from their diets in order to avoid

the risks of mercury. Thus, rather than take real steps to reduce

the risks at the source, EPA shifts the burden to those who are exposed and asks them to protect themselves. This is not EPA ‘‘on

watch,’’ but EPA asking those at risk to protect themselves.

This shift introduces its own adverse health effects as fish, a staple food, is placed virtually off limits. Consider the extraordinary

burden on a young girl who must avoid fish throughout her childhood until age 20, and then throughout her childbearing years to

age 49.

In sum, EPA ought to produce regulations that are scientifically

defensible, legally supportable, and just. The proposed mercury

rule fails on all three counts.

Thank you.

[The prepared statement of Ms. O’Neill follows:]

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Mr. OSE. I thank the gentlelady for her testimony.

Our final witness on the second panel is Mr. John Paul, who is

the supervisor of the Regional Air Pollution Control Agency of Dayton, OH, and vice president of the Association of Local Air Pollution Control Officials.

Sir, welcome to our subcommittee. You are recognized for 2 minutes.

Mr. PAUL. Thank you, Mr. Chairman.

I would like to comment today on the regulatory reform process

and how the mercury rule is an example of how this could have

gone right, but, in fact, how it went wrong.

You have heard a lot of comments and testimony with regard to

what are the proper components of regulatory reform. You heard

Mr. Sullivan say you need stakeholder involvement. You heard Mr.

Johnson say you need an open and transparent process.

The utility MACT working group which I co-chaired fit exactly

that formula for 18 months and over 14 meetings. We had all the

stakeholders that were involved; we had State and local agencies;

we had the utility industry; we had environmental groups; we even

had equipment vendors. We had great discussions of what were the

potential issues, what were the different stakeholder positions on

those issues. However, that process broke down, as you heard, in

April 2003, when we were scheduled to get together to discuss and

see the modeling results of the stakeholder recommendations as

promised by EPA. But, instead, we were informed by EPA that

meeting was indefinitely postponed.

Now, unfortunately, even as the co-chair of the working group,

I didn’t find out that the working group had in fact been disbanded

until I read about it in August in the Atlanta Journal Constitution

paper. So this was a process that had all the ingredients of being

good reform, but then broke down.

In the 18 months and the 14 meetings, never once was cap-andtrade mentioned. Not once. Never once did the administration come

to us and say this is great that you are talking about the different

options under Section 112, but our preferred approach is Section

111.

I feel that had this really been the preferred approach, and had

they really wanted to use the working group that they had assembled, that this could have been done, that they could have come to

us, they could have said devote two meetings to discussing this. As

important as the modeling was, the discussion of the modeling was

also important. You have heard that also. The assumptions that go

into the model, those need to be challenged and discussed.

So I would just say that the mercury rule is an example of how

reform could be done, but how it was not done. I would also add

that this is not an isolated event with the administration. we have

been treated the same way with New Source Review. They have an

opportunity to talk to the stakeholders and to get all of the stakeholders together. State and locals implement the rules. We really

feel we need to be talking with them about the rules so that we

can avoid situations where EPA promulgates rules and then ends

up in court over those rules.

Thank you very much.

[The prepared statement of Mr. Paul follows:]

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Mr. OSE. I thank the gentleman for his testimony.

We are going to do 2-minute rounds here up on the panel.

Mr. Gattuso, you served in the Bush 41 administration in the

Vice President’s office, and your research that you have done at

The Heritage Foundation indicates that little effort or progress—

I am not clear which—has been spent focusing on rules that were

in place prior to January 20, 2001. What steps do you recommend

that the administration take regarding rules that were in existence

prior to January 20, 2001? Who at the White House, for instance,

could intervene here? Would OMB prompt letters be useful? What

is your thinking on this?

Mr. GATTUSO. I think the answer is not really a mechanical one.

There are lots of mechanisms that should be put in place and could

help, but the answer really has to be one in terms of priority for

the administration and for involvement and engagement within the

agencies themselves. I think the efforts to reduce regulatory taxes,

as it were, must be a priority of the administration and that priority must be communicated by the President himself. I think over

the last year the President has made statements regarding regulatory reform much more prominently in his public discussions

than he had in the past, so it is becoming a priority. That is a very

good sign. A more active and engaged OIRA, more resources at

OIRA also would be helpful.

Mr. OSE. If the burden placed by regulation since January 20,

2001 is X, whatever X is, what is the burden for rules that predate

January 20, 2001? In other words, are we nibbling at the elephant

or are we actually taking a bite out of the elephant? I am trying

to figure out where we ought to be spending our time.

Mr. GATTUSO. Well, I don’t have numbers of how much it has increased, but——

Mr. OSE. What is your sense?

Mr. GATTUSO. The number of new regulations that impose new

burdens have outnumbered the rules that have decreased burdens

by a factor of about 3 to 1. So there have been, I believe, if you

look at major rules, several dozen major rules, so you can do the

math on that.

Mr. OSE. I didn’t state my question very well. We will come back

to that.

Mr. Tierney.

Mr. TIERNEY. Mr. Paul, it seems to me that there were members

of industry as part of the group that you were working with, am

I right?

Mr. PAUL. Yes.

Mr. TIERNEY. Isn’t it accurate that some of the recommendations

that came out of that industry group were actually stricter or for

stricter controls of mercury than the recommendations EPA ultimately came forward with?

Mr. PAUL. Yes. The recommendations from industry varied between 26 and 31 tons per year of emissions, what is actually in the

MACT rule as 34 tons per year.

Mr. TIERNEY. What further work would your working group have

done, if you hadn’t been disbanded, unbeknownst to you?

Mr. PAUL. The biggest thing we would have done would have

been to look at the modeling results from the working group recVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00151 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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ommendations. The good thing about that is you had the environmentalists at the table, you had the industry at the table, and they

challenge each other back and forth. So there would have been a

full venting of those modeling results and the assumptions that

went into them. That is the biggest thing that we would have done.

Mr. TIERNEY. Thank you.

Ms. O’Neill, I look and see the EPA, they set four or five guiding

principles for going forward with a rule on the coal-fired utilities.

The first one was the final rule that concentrated on the need to

protect children and pregnant women. In your estimation, have

they come even close to doing that with the two proposals they

made?

Ms. O’NEILL. I think that is perhaps the most troubling aspect

of the EPA’s rule. They cite this as one of their guiding principles,

and yet it utterly fails children and women. This is troubling especially in the face of the National Academy of Sciences’ finding. The

National Academy of Sciences, as you know, at the direction of

Congress, completed a study in 2000, and they found, ‘‘the risk to

children of women who eat fish is likely to be sufficient to result

in an increase in the number of children who have to struggle to

keep up in school and who may require remedial classes or special

education.’’

In the face of this finding, nonetheless, EPA hopes to delay real

regulation of mercury for an entire decade, again, viewed most generously. This threatens an entire generation of children. Studies

show that currently up to 76 percent of the fish samples in the

United States are contaminated at levels that are not safe for a

young child. To the extent that EPA asks children and women to

curtail their fish consumption, it looks to deprive them of a nutritious, healthy source of food and other nutrients. And given the

widely heralded benefits of eating fish, I think this move by EPA

is unconscionable. Again, it is contrary to the National Academy of

Sciences’ direct recommendation not to address the problem by

means of fish consumption advisory, but to actually reduce

methylmercury in fish.

Mr. TIERNEY. Thank you.

Mr. OSE. Gentleman from Virginia.

Mr. SCHROCK. Thank you, Mr. Chairman.

Mr. Kovacs and Mr. McCracken, I am going to ask you the same

question, one of the same questions I asked of Dr. Graham and Mr.

Sullivan. How many of the 2001 OMB deemed high priority and

2002 agency accepted nominations benefited small businesses?

And, can you quantify any results to date in paperwork burden reduction hours or regulatory burden financial relief?

Mr. KOVACS. That would be a question that, if it was going to

be addressed at all, I think that the only people with the analysis

would be SBA’s Office of Advocacy, but I can give you some general

numbers on the regulatory structure.

Regulations cost the American public about $850 billion annually, which is equal to about the entire non-Defense budget of the

United States. When you get into specific questions such as, let us

say, health and safety regulations, the burden is about 40 percent

more on small business than it is on large business. In other words,

if you look at per employee lost, it is about $6,000 for a small busiVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00152 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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ness; whereas it is about $4,000 for a large business. That is too

big of a number, but that is about what we have.

Mr. SCHROCK. Mr. McCracken.

Mr. MCCRACKEN. I don’t have a lot to add to that, in all candor.

It is very hard to come up with a specific number. Almost any regulation affects small business. What is operative, of course, is the degree to which it affects how many businesses. But, I think probably

few people would dispute probably the single-most significant regulation that has been reformed that has benefited small business directly has been the overtime standards.

Mr. SCHROCK. Thank you, Mr. Chairman.

Mr. OSE. Gentleman from Maryland, 2 minutes.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Ms. O’Neill, Dr. Graham, in response to a question I asked, said

that their modeling had showed that the cap-and-trade approach

would actually get you more significant reductions in mercury than

other options they looked at. One of the big questions here is compared to what. Could you expound a little bit more on your findings

with respect to cap-and-trade versus MACT?

Ms. O’NEILL. I think there are two parts to the response to that

question. In the first, if you look at a properly constructed MACT—

as you know, the administration has proposed a MACT approach

that is quite lenient; it requires only 29 percent reductions, as opposed to the typical 90 percent reduction. If you compare the capand-trade approach to MACT as proposed by the administration,

then cap-and-trade fares decently. However, if you compare capand-trade to a legally supportable MACT standard, then I think

you will find that cap-and-trade actually fares quite poorly by comparison: you have a delay in reductions. You have actually very

unambitious reductions. It generally imposes weak caps and delays

them for a very long time.

The second point of comparison is the hot spots problem. With

MACT you have a facility-by-facility approach, facility-by-facility

attention to contamination and a guarantee of, ideally or typically,

90 percent control, or on that order, at the plant. With cap-andtrade, as a result of trading, you may have sources that in fact increase their emissions. As my analysis of EPA’s own models show,

this is in fact what you have at, as I mentioned, 20 out of 44 facilities in the upper Great Lakes. This is a very large number, an astounding number, and you have very modest reductions in this region, only 29 percent. So you have real problems with local hot

spots under cap-and-trade that simply don’t exist under, again, a

properly conducted MACT.

Mr. VAN HOLLEN. Thank you.

Mr. OSE. Second round, 1 minute each.

Mr. Kovacs, in terms of regulatory burden existing prior to January 20, 2001, as compared to OIRA’s focus on rules since January

20, 2001, where is the greatest burden, is it rules that existed before or rules that have been adopted since?

Mr. KOVACS. This time I am going to slow down and take my 2

minutes. I don’t think anyone really knows. If you look at the Section 610 reviews, the agencies are planning to review about 42

rules out of about 109,000. A lot of the historic rules have become

actually business standards, so if you wiped out the entire reguVerDate 11-MAY-2000 10:51 May 11, 2005 Jkt 000000 PO 00000 Frm 00153 Fmt 6633 Sfmt 6633 D:\DOCS\98899.TXT HGOVREF1 PsN: HGOVREF1
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latory process, you would actually wipe out some standards. This

is why the 610 process is so important, is that the agencies need

to sit there and really focus on what are the rules that everyone

can live with and what are the rules that are causing problems,

and are out of joint.

It is just like today I am hearing a lot about mercury and NSR,

and I don’t want to jump into that side of the debate because it is

really two separate hearings, but the mercury rule has been

around for a long time. So has NSR. Twenty, 30 years into the

rulemaking process. The mercury rule finally came about as a result of the Bush v. Gore decision. A day later Carol Browner then

decided to make the finding that a hazardous air pollutant. That

was pursuant to a consent mercury is decree. So, we have regulation by litigation in there, which is a huge problem. The agencies

can’t tell you where consent decrees are, but they are spawning

regulations.

So, what you need to do is go back to a systematic process, and

I think that will give you your answers.

Mr. OSE. Mr. Tierney.

Mr. TIERNEY. I think it is stunning, to stay on this mercury thing

a little bit, that under both of the EPA’s proposals, they would not

require anything to be done beyond what has to be done under separate EPA rulemaking to control sulfur dioxide and nitrogen oxides

before 2018. So essentially its idea on mercury is do nothing for

that period of time.

Now, one of the excuses they give for that is that EPS claims

that there is no commercially available technology to control mercury emissions. We have indications that is inaccurate and pretty

much a red herring.

Mr. Chairman, I would like to ask unanimous consent to put in

testimony that was given before the Senate by the Institute of

Clean Air Companies, which is a trade association for pollution

control manufacturers.

Mr. OSE. Without objection.

[The information referred to follows:]

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Mr. TIERNEY. And essentially they indicate that there are a

growing number of companies that offer commercially available

mercury control technologies for sale to the electric power sector,

and that a 50 to 70 percent reduction in current mercury emissions

is feasible by 2008 or 2010.

Ms. O’Neill, Mr. Paul, do you think that the clean air companies

are correct or do you think that the administration is correct?

Mr. PAUL. Mr. Chairman, Mr. Tierney, I would agree with that,

and I would point out that the Department of Energy technology

development goal is for 50 to 70 percent mercury capture by 2005

for bituminous plants; by 2007 for lignite and sub-bituminous

plants. The longer term goal is to develop advanced mercury control technologies that can achieve 90 percent or greater capture,

and that would be commercially available by 2010. There is a lot

of progress that has been made on this. There is progress that is

being made every day.

If they were to stick with a cap-and-trade, if they were to set a

cap of 90 percent control and put it by 2010, 2012, it could be met.

So, they could be aggressive on this. They also could write a good

MACT standard and meet that also.

Mr. OSE. Ms. O’Neill, do you have anything to add? Briefly.

Ms. O’NEILL. I would just add that sources are achieving these

levels of control right now. If you look at the average, and this is

the average of the best performers, they are achieving 95 percent

removal rates right now. And there have been independent studies

that have been entered into the record during the public comment

period that have separately come to this same conclusion, that 90

percent control is, in fact, achievable.

Mr. TIERNEY. Thank you.

Mr. OSE. Mr. Schrock.

Mr. SCHROCK. Thank you, Mr. Chairman.

I don’t mean to keep picking on Mr. Kovacs and Mr. McCracken,

but another frequent public nomination for regulatory and paperwork reform was the EPA’s TRI, the Toxic Release Inventory. How

have the current rules and paperwork requirements negatively affected your members, and what factors do you think have contributed to EPA’s delay in reducing this burden on small businesses?

Mr. KOVACS. Well, you have always got to balance. I mean, certainly paperwork, it is what kind of paperwork, it is how many

forms. My understanding right now is that EPA is really moving

toward some type of an electronic reporting system, and it should

cut down on the paperwork, and it puts everything in real time.

But, people really have to understand what that is going to mean

in terms of public criticism. I think the biggest single problem that

the government has is the amount of time that is addressed on paperwork, but a lot of that, if you really look at it, is the Internal

Revenue Code; that is probably about 60 percent of all the paperwork.

So, when you get into these regulatory issues, you have to sort

of slice and dice and decide, OK, where is the analysis. That is why

we keep on coming back and saying we need a systematic approach

rather than an ad hoc approach.

Mr. SCHROCK. Mr. McCracken.

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Mr. MCCRACKEN. One of the problems with TRI is the kind of

cliff effect that happens, because a lot of small businesses are exempt under a threshold approach, and that has dramatically

changed recently for some forms of chemicals. We had a member

who testified before this committee last year who was an organ

manufacturer who, of course, uses lead in that work, and the

threshold reporting went from 10,000 to 100 pounds. He is just

over that, so he is caught up in this from no regulation to a fairly

extensive reporting burden that is fairly extensive for him to comply with.

That needs to be addressed. We hope EPA is working on that,

but, again, we are not really sure where that fits right now in

EPA’s overall guidance, and that is why we think that there needs

to be a lot more openness about this process.

Mr. SCHROCK. Thank you.

Thank you, Mr. Chairman.

Mr. OSE. Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Mr. Paul, you stated in your testimony that you first learned via

e-mail that EPA was going to postpone the working group, and that

you saw in the Atlantic Journal Constitution that it was permanently disbanded. One question is why do you think they disbanded

the working group? A pretty simple question. I don’t know if the

answer is simple or not.

The second question relates to a response we received from EPA

in a letter that Mr. Waxman had sent them, a response we received

today, that EPA has now raised concerns about its own integrated

planning model, the IPM, and says that it wants to fix those before

doing remodeling. Apparently, it now believes that some of the assumptions in the IPM model are inconsistent with the Agency assumptions with respect to the near-term availability of control

technology. I wondered if you had any comments on this recent development and whether that could have been addressed earlier.

Mr. PAUL. Well, that is exactly why the process needs to be open

and transparent. We don’t know why they disbanded the working

group. We suspect it is because they decided that their preferred

option was to go with Section 111, and that had never been discussed.

With regard to the modeling assumptions and problems that are

coming up now, once again, that is exactly the type of thing that

needs to be discussed with all the stakeholders, so that you can

have a full conversation about that and challenge the different assumptions. A good reform process is open and transparent. This

one was an open and transparent process for 18 months, and then

it stopped; and then, we got a proposal, a preferred approach,

something which we believe is very weak.

Mr. OSE. I thank the gentleman.

In wrapping up, I want to first thank the witnesses for joining

us today. We have additional questions that we will be submitting

to you in writing. We would appreciate timely response. The record

itself will be left open for 10 days. I thank you for joining us today.

To my friend from Massachusetts, I wish you well. I thank you

for your leadership here.

To my friend from Virginia, I wish you well too.

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Mr. Van Hollen, we are going to leave this to you.

We are adjourned.

[NOTE.—Additional information is on file with the subcommittee.]

[Whereupon, at 12:16 p.m., the subcommittee was adjourned.]

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