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75–057 2001

SMALL BUSINESS REGULATORY ISSUES

ROUNDTABLE

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND

PAPERWORK REDUCTION

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JUNE 21, 2001

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

DONALD MANZULLO, Illinois, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVE CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

JOHN R. THUNE, South Dakota

MIKE PENCE, Indiana

MICHAEL FERGUSON, New Jersey

DARRELL E. ISSA, California

SAM GRAVES, Missouri

EDWARD L. SCHROCK, Virginia

FELIX J. GRUCCI, JR., New York

TODD W. AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

BILL SHUSTER, Pennsylvania

NYDIA M. VELAZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

BILL PASCRELL, JR., New Jersey

DONNA M. CHRISTENSEN, Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

JAMES R. LANGEVIN, Rhode Island

MIKE ROSS, Arkansas

BRAD CARSON, Oklahoma

ANIBAL ACEVEDO-VILA, Puerto Rico

PHIL ESKELAND, Deputy Staff Director

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

MIKE PENCE, Indiana, Chairman

LARRY COMBEST, Texas

SUE W. KELLY, New York

SAM GRAVES, Missouri

ROSCOE G. BARTLETT, Maryland

TODD W. AKIN, Missouri

PAT J. TOOMEY, Pennsylvania

ROBERT A. BRADY, Pennsylvania

BILL PASCRELL, JR., New Jersey

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

JAMES R. LANGEVIN, Rhode Island

ANIBAL ACEVEDO-VILA, Puerto Rico

BARRY PINELES, Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on June 21, 2001 ............................................................................... 1

WITNESSES

Noah, Jeff, and Krese, Jenny, National Association of Manufacturers .............. 4

Mucklow, Rosemary, Executive Director, National Meat Association ................ 7

Sweatt, Loren, Associated General Contractors .................................................... 12

Laird, Betsy, Vice President of Government Relations, International Fanchise

Association ............................................................................................................ 15

Green, Rob, National Association Restaurant Association ................................... 19

Seiffert, Grant, Vice President, TIA ....................................................................... 22

Eichelberger, John, National Association of Convenience Stores ........................ 24

Page, Matt, AEA ...................................................................................................... 28

Kelley, Ty, Food Marketing Institute ..................................................................... 29

Fitch, John, National Funeral Directors Association ........................................... 32

Little, Bryan, American Farm Bureau .................................................................. 35

APPENDIX

Prepared statements:

Noah, Jeff, and Krese, Jenny .......................................................................... 57

Mucklow, Rosemary ......................................................................................... 85

Sweatt, Loren .................................................................................................... 88

Laird, Betsy ....................................................................................................... 97

Green, Rob ......................................................................................................... 103

Seiffert, Grant ................................................................................................... 106

Eichelberger, John ............................................................................................ 115

Page, Matt ......................................................................................................... 118

Kelley, Ty .......................................................................................................... 122

Fitch, John ........................................................................................................ 125

Little, Bryan ...................................................................................................... 130

Additional material:

SBLA’s prepared statement ............................................................................. 135

(1)

SMALL BUSINESS REGULATORY ISSUES

THURSDAY, JUNE 21, 2001

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY REFORM

AND OVERSIGHT,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Subcommittee met, pursuant to call, at 10:00 a.m. in Room

2360, Rayburn House Office Building, Hon. Mike Pence (chairman

of the Subcommittee) presiding.

Mr. PENCE. Thank you so much for coming to this regulatory

summit. I could not be more delighted with the turnout and with

the commitment that all of you have shown to assisting us in the

Regulatory Reform and Oversight Subcommittee of the Small Business Committee as we develop what we hope to be a very aggressive agenda for this Congress and our subcommittee and also develop an agenda that, we hope even beyond the hearings process,

will be an agenda that we can take to the White House and ask

the friendly occupants there for administrative relief.

Let me tell you that this summit, while not formally a hearing,

is going to have a couple of basic ground rules so that we can expedite.

I also want to indicate that my legislative director, Pat Wilson,

has informed me that we are expecting our first vote this morning

between about 10:40 and 10:45. It will be a vote on the rule, and

so we may have to adjourn briefly for those that can accommodate

that and we will reconvene immediately after that vote if there is

not a member here that we can switch out with.

But, basically, a couple of ground rules. I am going to ask everyone, as we go around the room, just to introduce yourself and your

organization and then we will begin the process of calling on you

for a couple of very brief remarks. I know that many of you have

prepared written statements for the record, know that those will

not only be formally added to the record, but they will be very carefully reviewed by this chairman and also by the staff of this committee.

This is not a pro forma summit. This is a working session and

we are going to be taking a very hard look and getting out the

highlighter and the red ink pen and going through as we develop

our top 100 examples of regulatory excess.

We are going to be tearing into those statements that you prepare, so feel free, in your presentations, to highlight specifically one

to three regulations that are particularly problematic for your

membership.

If you can keep your remarks to between three and five minutes,

you will score points with the chair, and I will try and be courteous

2

but somewhat strict about holding us to no more than five minutes

of remarks.

And then I would like you to kind of hold any questions that you

might have or dialogue opportunities you might have until we have

each had a chance to pitch in a little bit.

Although many of you do not know, I am a freshman member of

Congress. My background, after practicing law for a number of

years, was that I spent seven years in talk radio and television. I

pride myself on getting some of the most boring people in the world

to talk a lot and to talk to each other, present company excluded,

but I am really looking forward to a dialogue this morning, one between another about issues that you may agree on.

So I encourage you to take notes as other people are talking. If

you hear someone point out a particular regulatory issue that also

is of interest to your membership, whether it is in your statement

or not, we would love you to reflect on each others’ comments as

we go, and then in the discussion portion of the summit.

Finally, Barry Pineles, who is our staff director, has suggested

that, if you wish to ask a question or comment, turn your nameplate on its end and wait to be recognized by the chair when we

get to that portion and we will try and do that in and orderly way.

Should there be votes and no member is present, in the interest

of time for your initial presentations, Mr. Pineles will handle the

meeting while I duck down the hall and jump on the train to vote.

Let me, again, thank you all for being here and for helping in

this prioritization process. Let me say I really believe that part of

success in any enterprise is to know the end at the beginning,

know where we want to go, and just so you know, my vision is to

truly develop a regulatory agenda. We have not quite lighted on

what the name of it will be. We understand that the term ‘‘D-reg

for Dummies’’ is probably trademarked, but we want to come up

with a written document of up to 100 examples of regulations that

wage war on small business enterprise in the United States and

that are redundant, that are costly, that are meaningless, that

have no justification for their existence, and we want to make those

a target.

And the goal would be, by the end of the 107th Congress, either

through administrative fiat or through legislative action, we want

to see how many of those we can run a red line through before we

get to the end of this Congress.

With that said, I want to begin on this side of the room and we

will begin with you and just kind of name, rank, and serial number. We will get around and we will start with opening comments.

Pass the mike.

Ms. KRESE. Jenny Krese with the National Association of Manufacturers.

Mr. NOAH. Jeff Noah, National Association of Manufacturers.

Ms. MUCKLOW. Rosemary Mucklow with the National Meat Association from Oakland, California.

Ms. SEEGER. Arline Seeger with the National Lime Association.

Ms. SWEATT. Loren Sweatt with the Associated General Contractors.

Ms. CAMPAGNA. Shannon Campagna, National Beer Wholesalers

Association.

3

Mr. KIRKLAND. Kerry Kirkland with the National Black Chamber

of Commerce.

Ms. BLANKENBILLER. I am Amy Blankenbiller and I am with the

American Foundry Society.

Ms. KERRIGAN. Karen Kerrigan with the Small Business Survival

Committee.

Mr. NIPPER. Joe Nipper with the American Public Power Association.

Mr. EICHBERGER. John Eichberger with the National Association

of Convenience Stores.

Mr. KELLEY. Ty Kelley, Food Marketing Institute.

Mr. FITCH. John Fitch, Funeral Directors Association.

Ms. LEON. Mary Leon, NFIB.

Mr. MAHER. Kevin Maher with the American Hotel and Lodging

Association.

Mr. GREENHAUS. Douglas Greenhaus with the National Automobile Dealers Association.

Mr. LITTLE. Bryan Little with the American Farm Bureau Federation.

Ms. DODGE. Sarah Dodge with Petroleum Marketers Association

of America.

Mr. MAHORNEY. I am Bill Mahorney with the American Bus Association.

Mr. PAGE. I am Matt Page with AEA, formerly the American

Electronics Association.

Ms. PHILLIPS. I am Debra Phillips with the American Chemistry

Council, formerly the Chemical Manufacturers Association.

Mr. DOZIER. Damon Dozier, National Small Business United.

Mr. SEIFFERT. Grant Seiffert, Telecommunications Industries Association.

Mr. GREEN. Rob Green, National Restaurant Association.

Mr. CORATOLO. Giovanni Coratolo, U.S. Chamber of Commerce.

Ms. LAIRD. I am Betsy Laird with the International Franchise

Association.

Mr. COX. John Cox, National Tooling and Machining Association.

Mr. HERZOG. John Herzog, Air Conditioning Contractors of

America.

Mr. HANNAPEL. Jeff Hannapel, National Association of Metal

Finishers.

Mr. LUZIER. Michael Luzier, National Association of Home Builders.

Mr. PENCE. Great. We are going to begin.

I am going to alternate, just to keep it interesting, for very brief

introductory remarks and, specifically as I suggested earlier, try

and focus your remarks on those two or three regulations that you

think are most deleterious to your membership and we are going

to be hopefully being able to dialogue and discuss those.

Let us begin with Jeff Noah of the National Association of Manufacturers.

4

STATEMENT OF JEFF NOAH AND JENNY KRESE, NATIONAL

ASSOCIATION OF MANUFACTURERS

Mr. NOAH. I think I will score lots of points because I will be real

brief, and also, Jenny Krese has got a couple comments she is

going to make, too.

But I want to thank you, Congressman, for the opportunity to

provide the Small Business Committee a list of rules and regulations that NAM members find very onerous, to say the least. And

these rules, I will name three of them, then I will go over one that

is particularly onerous and then Jenny can comment on the other

one.

The ones that we have some strong concerns about are HHS privacy regulations regarding patient confidentiality, DOL’s final rule

on claims procedures under ERISA, EPA’s rule ordering reporting

threshold for lead under Toxic Release Inventory (TRI) program,

and of particular concern is the EPA’s metal products and machinery proposed rule, which would require manufacturers to significantly stop or limit the amount of processed water being discharged

to sewer systems or any water body.

Companies that are manufacturers or rebuild or maintain finished metal products, parts, or machines would have to curtail

their production, decrease the amount of metals used, or install unnecessary and costly product control equipment. The MPM rule, as

it is called, would cover more than 89,000 facilities. EPA admits

that there are potentially 10,000 unknown industrial sectors.

The EPA has not made any justifications for the need for this

new rule. The EPA has made numerous flaws in its regulatory

analysis, underestimating cost and grossly mischaracterizing the

impact of manufacturers on U.S. waterways.

We think it is one of the most expensive environmental regulations ever proposed, costing upwards of $1.9 million on an

annualized basis. And finally, the total cost of compliance, for us

anyway in terms of our calculations, would be 6.5 percent of sales.

So I hope I scored some points by being brief. Jenny will talk to

you now about the OSHA’s proposed recordkeeping regs.

Ms. KRESE. I do not know that I need to say much beyond that,

but as many of you in this room know, I would be remiss not to

mention recordkeeping. The NAM has sued OSHA over its final

rule that was put out January 19th, the day before the previous

administration left office.

We have got a number of concerns which we will be submitting

for the record and for your records and have been meeting with

OSHA on a fairly regular basis to come to some sort of agreement

and negotiate out some kind of rulemaking that would be good for

manufacturers and for the business community as a whole.

We have gotten a lot of support from the business community in

our efforts with OSHA and we would hope that others would join

in as well.

[Mr. Noah’s and Ms. Krese’s statement may be found in appendix.]

Mr. PENCE. Jenny, very quickly, what has been the response

from the agency up to this point?

Ms. KRESE. Fairly positive, but, with that said, they are just

overwhelmed by the number of regulations, about 20 of them, that

5

they are contending with from the previous administration, so this

is just one in that group, but our initial conversations with them

have been quite positive.

Mr. WILSON. Jenny, I know that the new OSHA—I do not know

if you all saw that, but the new Assistant Secretary of Labor for

OSHA was just named and does anybody have an opinion about

recordkeeping, one way or the other, about what their position was

or——

Ms. KRESE. The new nominated—— Mr. WILSON. The new OSHA Administrator. Yes, the nominee.

Ms. KRESE. I do not know his position on recordkeeping.

Mr. WILSON. Okay.

Mr. PENCE. Thank you.

Michael Luzier of the National Association of Home Builders.

STATEMENT OF MICHAEL LUZIER, NATIONAL ASSOCIATION

OF HOME BUILDERS.

Mr. LUZIER. Thank you, Congressman. It is a pleasure to be here.

I want to mention three issues very briefly and then I will make

a few short remarks.

First issue that is of very much concern to us is the designation

of critical habitat under the Endangered Species Act. The way we

read the statute, the statute requires the designation of areas that

are essential for the conservation of species. It specifically says this

is not to include the entire occupied range of the species, yet we

find that the Department of Interior, Fish and Wildlife Service, and

National Marine Fisheries are either unable or unwilling to make

that tough decision.

As an example, in California, the red-legged frog has an area

designated of over five million square acres. A complicating problem with that is that we are unable to get the Fish and Wildlife

Service, once they have done surveys of where individual species

exist, to disclose that information.

As a result, we say we have a duty to avoid take, you have data

that tells us where these organisms are, it would be useful to the

landowners and regulated community to know what you know

about where these species are so that we could fulfill our obligations under the Endangered Species Act.

I forget the total amount of acreage in California alone, but there

are probably 30 million acres of critical habitat, many of which

overlay each other. It has resulted in a regulatory maze that is impenetrable, so that is a critical problem.

A second area that is of great concern to us is the EPA’s and the

Corps of Engineers’ continued efforts to regulate isolated waters

despite the fact that the Supreme Court has told them they do not

have the authority to do so, and Solid Waste Agency v. Corps of Engineers, 531 U.S. 159 (2001), a recent Supreme Court opinion. The

Supreme Court said that the supposed legal justification for regulating isolated waters, the migratory bird rule, is invalid. It does

not comport with the plain meaning of the Clean Water Act and

it does not comport with its legislative history.

This is the way that the Corps of Engineers and EPA have said

that they will draw this Commerce Clause nexus, that migratory

birds may fly from one area to another, one state to another, and

6

that is sufficient to draw regulatory jurisdiction. The Supreme

Court said no.

In January what we found was the EPA and the Corps of Engineers issued a legal memo that said that though the Supreme

Court has said we cannot use the migratory bird rule, there may

well be other ways to get to these areas through other Commerce

Clause bases.

We think none of those make sense in light of the clear opinion

in the Supreme Court. The key point is what we have been encouraging agencies to do, is to embrace what the Supreme Court has

told them rather than look for ways around it. That has been a

problem.

The third area, which is a potential problem but actually one

that we have a potential to work cooperatively on, is forthcoming

regulations by EPA under the Clean Water Act for effluent limitation guidelines. Effluent limitation guidelines are being established

by EPA for construction activity discharges.

These, depending on how they are written, literally have the potential to impose billions of dollars of housing costs across the nation, literally billions.

Our concern is that the preliminary proposal EPA has made

about developing the scientific basis is simply inadequate. It is almost anecdotal and our view is the Clean Water Act demands more

than that and more so what we have found is that if, in fact, you

are going to impose billions of dollars of costs on the economy and

you expect people to embrace that, they have to have confidence

that this is, in fact, solving a problem.

We have proposed to EPA a thorough water monitoring and sampling program that we believe the federal government needs to do

in support of this regulation. We believe it is justified in light of

the tremendous impacts that may be imposed.

The technical people at EPA say, ‘‘It kind of makes sense to us.’’ We met with Governor Whitman. She said she would consider it,

but simply may not have the budget to do what we want.

Two quick things and I will end. One, we have said if we can find

a way to do this and do real science, which all the agencies say

they want to do, but somehow cannot afford to do, if we can do real

science, we will go out and sell this to our members. We will tell

the members we are part of the problem and we will contribute to

it.

My closing comment is we should keep in mind that, according

to the states in reporting to Congress pursuant to the section

305(b) of the Clean Water Act, construction activity discharges are

responsible for only one-tenth of one percent of the water quality

impairment in this nation, so in light of the agency’s own admission that this is a small problem, we think that better information

ought to be generated.

Thank you, sir.

Mr. PENCE. Thank you, Michael.

Has the EPA defined navigable water when you talk about regulating isolated waters? Is that—— Mr. LUZIER. There is a long-standing definition or understanding

of navigable waters under the Clean Water Act. What the government is now doing is saying since we cannot regulate isolated waVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
7

ters, they are doing a couple of things. They are saying let us expand the concept of adjacency. The Supreme Court said it is legitimate to regulate wetlands adjacent to navigable waters. Now, in

many situations, we have a lot of property owners who are miles

from any truly navigable water that are being claimed to be adjacent by virtue of ditches and drainage conduits and that kind of

thing.

Mr. PENCE. Okay. Very helpful. Thank you very much.

Rosemary Mucklow.

STATEMENT OF ROSEMARY MUCKLOW, EXECUTIVE

DIRECTOR, NATIONAL MEAT ASSOCIATION

Ms. MUCKLOW. Thank you very much. I appreciate enormously

being here to talk to you today.

Regulatory uncertainty is devastating to small business. A significant consequence of regulatory uncertainly is consolidation and

the industry that I represent, the meat industry, has undergone

substantial consolidation at a highly accelerated pace in the last

ten years. It has been going in that direction for 20 or 30 years,

but it has really heated up.

A small business is faced with uncertainty about what rules to

follow, whether their business can be profitable and whether their

line of business has become subject to substantial fines, criminal

penalties, or other actions exercised by government agencies, and,

in this case, it is the United States Department of Agricultures, as

huge incentives to leave the business and cash in and leave the

money to their family in stocks and savings accounts rather than

in a going small business. It creates a great deal of fear in minds

and hearts and souls of small business.

We have had some very serious problems in the last several

years with the development of major new rules that hold small to

medium size businesses responsible for microorganisms on their

meat, on the meat that they bought from somebody else, and it was

USDA passed and inspected meat. But this small firm, because

they make it into ground beef, are put high on the pedestal and

held accountable for what somebody else has sold them.

We cannot regulate microorganisms. They do not understand and

read the books like people do. The government developed this regulation without full advice from its scientific advisory panel. They

went for two years and did not even meet with the microbiology

panel and yet they implemented new rules that were hugely substantial.

One small business that USDA closed down in Texas went to

court. It is unprecedented but the firm got an injunction from a district court that required USDA to go back in and inspect them.

What did USDA do? They went back in and they hard-timed him

until eventually, they put him out of business another way. He is

now closed. That case is before the 5th Circuit because the government lost. They did not like losing and they have enormous resources.

We have another small business that is engaged in litigation.

The government is on the losing end. You have no idea. I mean,

the government has such deep pockets that it can wind on and on

8

and that small business does not have that kind of deep pocket to

keep a lawsuit going. It has been very, very difficult.

Because regulatory uncertainty is so devastating to small business, USDA needs to treat small firms as cooperators rather than

as adversaries or enemies. Regulation should serve the common interest of business and government to provide safe food to consumers, rather than to be structured as a contest, or even a war,

between the government and the industry.

I have given you a lot more detail. In respect to your rules, I decided you did not want me to read all of it.

[Ms. Mucklow’s statement may be found in appendix.]

Mr. PENCE. That is great. Thank you, Rosemary.

And the one piece of legislation that I am involved in very heavily is the Equal Access to Justice Act that, in effect, would require

the government to pay legal fees in cases the likes of which you are

referring to.

Would you see that as real positive for your membership, that

bill?

Ms. MUCKLOW. Yes, but to save that company, it is too late, because they finally, when the government put them in the newspapers every day and really hoisted them on their petard, they

really could not tolerate it. Their customers could not tolerate it.

They could not say we are buying that company’s meat because the

government has controlled the media on it.

It is highly irresponsible and their science is wrong and it was

very interesting to hear the Home Builders who just want science.

They want to know what the science is. The government has got

a piece of convoluted science. They had not even presented that to

their expert committee while they were developing that regulation

and enforcing that rule. There is something blatantly wrong that

they can just simply choose to avoid their scientists.

Mr. PENCE. Thank you, Rosemary.

Ms. MUCKLOW. Thank you. I appreciate being here.

Mr. WILSON. We have heard that before, about the government

regulators ignoring science.

Mr. PENCE. Yes. More than once.

Good. Let’s go. And I am going to ask, in the interest of time,

maybe let us shoot for a three minute timetable, and I will give you

tap when you hit three minutes. If you hit five, then I will throw

the gavel.

Jeff Hannapel.

STATEMENT OF JEFF HANNAPEL, NATIONAL ASSOCIATION OF

METAL FINISHERS

Mr. HANNAPEL. Thank you, Chairman Pence. I appreciate the opportunity to be here this morning. I am here on behalf of the Metal

Finishers. They are the folks who make your metal products last

longer, work better and look better. I am going to talk about two

EPA regulations that are a problem, the first is the proposed

MP&M regulations, and echo NAM’s.

This proposed regulation is proposing new limits that lower existing limits 50 to 90 percent. These limits are not needed, particularly for the metal finishers, who are already covered by federal

standards. There are, in addition, local limits set by POTWs and

9

also, metal finishers have a lot of voluntary programs that they are

working with as part of EPA’s Common Sense Initiative and the

National Metal Finishing Strategic Goals Program.

In addition, these proposed limits just cannot be met with the

technology that EPA has used to define the limits. It is in essence

the same technology that they are using now and was the technology for setting the existing regulations and EPA expects the 50

to 90 percent reduction in metals using the same technology.

This rule is not justified and EPA has grossly overestimated the

pounds of pollutants that would be removed as a result of this rule.

For the metal finishing subcategory, EPA’s estimates would be

about 1200 pounds of pollutants removed per facility. Based on

many of their sampling and analysis errors that we have identified

in the administrative record, a more realistic total would be about

25 pounds per facility of pollutants.

In addition, the economic impact on the industry is significant.

EPA’s estimates are 10 percent of the industry would be forced to

close as a result of this rule. Again, EPA has made significant errors in its economic impact analysis and it as many as half of the

metal finishing industry could be forced to close as a result of this

industry.

Also, EPA has undertaken a somewhat novel—and even they

admit it, novel approach to environmental benefits in this rule in

assessing human health, recreational water quality benefits. They

have estimated those monetized benefits to be $2.4 billion. Based

on our estimates, it is closer to only $200 million. And a good example of that is they have taken the monetized benefits for avoided

cancer risks, 98 percent of that was attributable to one chemical

and they are not even proposing a regulatory limit for that chemical.

And lastly, the POTWs are vehemently opposed to this rule because it does nothing and it imposes a significant burden on them.

Mr. PENCE. Thank you, Jeff.

Arline Seeger of the National Lime Association.

Welcome.

STATEMENT OF ARLINE SEEGER WITH THE NATIONAL LIME

ASSOCIATION

Ms. SEEGER. I am going to make my remarks in the context of

a systemic problem that we have been facing with EPA and their

reluctance to convene small business panels for small businesses

and that they throw up every trick in the book in order to avoid

convening panels.

A panel is supposed to be convened when EPA determines that

there has been a significant impact on a substantial number of

small businesses and among the many roadblocks that we have encountered in our six-year journey with EPA is the so-called mini industry.

From the outset, EPA knows that in the United States there are

only 28 lime manufacturers and from at least six years ago they

know that 12 of them are small businesses. So there are those 12

businesses that have been the focus of attention.

While we have convinced the agency that the annual costs of the

rule are crippling and so no we have finally gotten to the point

10

where we have demonstrated beyond a shadow of a doubt that

there has been a significant impact, EPA is now saying, well, there

are only 12 businesses, they have coined the term the ‘‘mini industry’’ issue, which is very disheartening because they have known

from the start that we only had 12 small businesses and so if 12

small businesses could be cast aside without a thought, they should

have told us that from the beginning, because it is the significant

impact on a substantial number of small businesses.

Our view is that substantial number should be looked at in the

context of the industry and since we only have 28 companies and

11 are small businesses, all have impacts over 5 percent of their

revenues from the entity that is being regulated, that of course

EPA should be convening a panel and they are loathe to do so.

Mr. PENCE. Is it your judgment that this policy over the long

term would be very harmful to the survival of small businesses in

yours and any other industry where that was practiced?

Ms. SEEGER. The industries that only have a handful of members

are those that are usually quite threatened because the larger

groups tend to have more sophisticated trade associations, so there

are a network of, for example, industrial trade associations that

have dozens or so members, those are the ones that find it particularly difficult to carry on a theme of Rosemary’s, which is that you

are up against the government and you may have a staff person

or two confronting a very gross overstatement of benefits, understatements of costs, mischaracterizations of what the rule is going

to do. And so it is precisely these people that need to have a panel

convened.

Thank you.

Mr. PENCE. And it is Arline.

Ms. SEEGER. Arline.

Mr. PENCE. Great. Arline, that is terrific.

I want to compliment all the people that have made presentations so far. It is precisely what we are hoping for, a very focused

presentation on things that we can begin to tackle.

John Herzog is next.

John, thank you for coming.

STATEMENT OF JOHN HERZOG, AIR CONDITIONING

CONTRACTORS OF AMERICA

Mr. HERZOG. Thank you, Representative Pence, for the opportunity. This is going to sound like deja vu to Pat and several others

in the room because we have been fighting these battles for three

years, but perhaps they are new to you.

We have tried legislative solutions to some of these issues and

we have gotten fairly far in some instances, but it has failed because either the administration opposed it or what. But what you

are doing on the Equal Access to Justice Act really crosses many

of these areas that we are concerned about and that is that under

the existing statute the process is extremely time consuming and

is usually more costly than the fees they are paying themselves.

I think that the only way that you can really stop frivolous suits

by the government or by others such as in salting cases is the loser

pay rules which many states have passed. And getting into some

of these issues, on the salting issue, we had an instance, we have

11

a chapter in Indianapolis, we were finally able to get the National

Labor Relations Board to pull off the local union. It was Local 20.

But they had filed in a period of six years 300 salting cases

against—half of them were against our chapters, other against others. Those are just the ones that were filed.

In many cases, they had figured out how much it cost to defend

those cases so they went to the contractor and said for blank number of dollars we will go away. So basically what they were doing

was blackmailing them into paying.

The local union had set up their apprenticeship program so that

in the final year, in the last six months of the program, they had

what they called a youth to youth program and what was going on

was that they would use those youth for salts. Some would be overt

salts and some would be below the radar screen and the overt salts

would go in and they would ask for jobs, they would be wearing

the union hats so that you knew that they were union members.

The ones who were non-overt would go in just asking for jobs.

Most of them were not qualified because a lot of these were residential contractors, so they were trained through their union in

commercial work.

Generally, they would go in and they would falsify their records

and then after a few weeks they would tell the contractor they had

falsified their records, they were not qualified. They were looking

to get fired so they could file with NLRB. Those that actually

stayed quit anywhere from three to four months after they joined.

They went back to finish their apprenticeship, get a job with a

union contractor, et cetera.

So that is one issue that is the overriding concern in regulations

that seems to affect our folks.

The other one where that affects also is the equal opportunity

law where we have had—one of our board members had a case

filed against him which was without merit, he ended up paying for

it, and, of course, it cost him time and money and he won.

The other ones that we certainly should mention which is currently under hearing by the government is blacklisting which has

been brought up. They are trying to resurrect the Clinton era regulation. Tying in with that, too, is the fact we support the idea that

the government can debar contractors who consistently break the

law. Unfortunately, that is not the case. They continue to get contracts maybe because they are the sole source provider. We are concerned about where a salting case can be filed against a contractor

and then he could be disqualified by a contracting officer.

The other one that ties in with that is federal bundling contracts,

which is something that there has been hearings on, and then the

cash versus accrual accounting, which we have had legislation on,

but it is still not been decided and that was an arbitrary decision

of the IRS to go after these small businesses.

Thank you.

Mr. PENCE. Thank you, John.

A show of hands of people in the room that think the loser pays

legislation would be beneficial to your membership as a priority.

[Show of hands.]

Mr. PENCE. A fair amount. Good.

Let’s jump next to Loren Sweatt with AGC.

12

Welcome.

STATEMENT OF LOREN SWEATT, ASSOCIATED GENERAL

CONTRACTORS

Ms. SWEATT. Let me say we unequivocally oppose the blacklisting

regulation. There is absolutely no reason for it to be in the Federal

Acquisition Regulations. And I have a list of other things that we,

if I could pass that down, that we are concerned about. They had

hearings on Monday. The Administration has proposed to revoke it

and we have been told by the procurement professionals that at

this time the Bush administration has not told them directly what

they are going to do once they take all of the comments that are

out there. So we would certainly hope that there is some congressional nudging that could go on to make sure that this does get

completely removed from the Federal Acquisition Regulations.

The second thing that we are concerned about is definitely the

cash versus accrual accounting. There are IRS regulations on the

books that allow construction contractors to use the cash method

of accounting and the IRS has told construction contractors that

they do not care that those regulations are on the books, they are

going to use the accrual method. We have a detailed description of

why that is harmful to construction contractors in our formal statement.

And then I also wanted to address some of the things that the

Home Builders were talking about. We are currently on the effluent limitation guidelines SBREFA panel with the Home Builders

and the Associated Builders and Contractors. The only reason EPA

is going forward with this is that they settled a lawsuit with the

NRDC and I do not think that they woke up one morning and decided that they wanted to regulate us in this manner, but we would

certainly be happy to share our experience on the SBREFA panel

in the next couple of months.

It has already been an eye opener and the first meeting was last

Thursday. We have had some problems with getting the information out of EPA. Our regulatory folks are working on doing that.

But the most interesting part was my counterpart on the regulatory side did not get the e-mails that our folks got who were the

small entity representatives and she is considered a helper on this

panel. So I do not know if the Home Builders have had that problem, I think ABC is sort of in the same boat with us, that they

have not communicated very well.

We are hoping that this process has just hit sort of an immediate

bump in the road, but in a couple of months we would definitely

like to come in and talk about how this has worked.

Thank you.

[Ms. Sweatt’s statement may be found in appendix.]

Mr. PENCE. Thank you. Good to have you here, Loren.

John Cox is next.

Welcome.

STATEMENT OF JOHN COX, NATIONAL TOOLING AND

MACHINING ASSOCIATION

Mr. COX. Thank you, Mr. Chairman, for having this opportunity.

Our association represents small manufacturers and we assumed,

13

and I have been borne out with that, that the big, larger issues

would be raised: recordkeeping, a lot of OSHA stuff, EPA, that type

of thing that can be applied across the board to small business, so

we purposely e-mailed some of our more—it is a core of people that

we rely on that are more involved than others, and asked them to

specifically pick out certain issues that just bugged the hell out of

small manufacturers and they are in the process of doing that.

They are not scholars in Federal regulations, so we are still in

the process and for that reason I would request the record remain

open for about two weeks that we can submit more detailed material and more examples.

With that, one example that has been cited that we were able to

track down and find out is, in 29 C.F.R. 1910.242. Our companies

are required to clean parts and metal of various equipment with

compressed air. There is actually an OSHA reg that says you can

do that, but you have to use less than 30 psi to do that and then

you have to have effective chip guarding and personal protective

equipment. Well, with this type of cleaning, it is not effective unless you use 60 psi, so we are looking for things of that nature.

One of our companies called me and he said that he just had a $5000 fine from OSHA because the new machine that he put on his

floor had the wrong color buttons, the control knobs on it.

So I am going to—I love to say this—yield the balance of my

time. [Laughter.]

And I will get you more written material. Thank you.

Mr. PENCE. Thank you, John.

And let me say that all submitted statements will made a part

of the formal record, although I intend to some significant reading

over the July 4th recess as I am traveling in my district, so if there

is any opportunity to get those to us prior to that, then you will

know I will be reading it somewhere in a rural county near you.

The competition is very stiff so far for egregiousness. The wrong

colored buttons fine now is very close to edging out the red legged

frogs getting five million square acres. So keep those coming.

John, thank you. A very good presentation.

Shannon——

Ms. CAMPAGNA. Campagna. Like lasagna.

Mr. PENCE. Campagna. Thank you. That helps.

Good to have you, Shannon.

STATEMENT OF SHANNON CAMPAGNA, NATIONAL BEER

WHOLESALERS ASSOCIATION

Ms. CAMPAGNA. Thank you, Mr. Chairman. Thanks for inviting

us here to participate in this forum. We appreciate it.

By way of introduction, let me tell you just a little bit about the

beer wholesaling industry. As set forth by State regulation in response to the 21st Amendment to the Constitution, beer wholesalers are the middle tier of a three-tier system within the beer industry. We distribute beer from the brewers to the retail locations.

Those beer trucks you see navigating safely down your hometown

streets delivering America’s beverage to your local grocery store,

that is your beer wholesaler. The average wholesaler has annual sales of around $12 million,

employs 36 people, maintains and operates a fleet of 12 delivery veVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
14

hicles and owns a temperature controlled warehouse. Most are family owned and operated.

Regulation is a fact of life for beer wholesalers. We are regulated

every day by BATF, the FCC, the DOT, NHTSA, EPA, OSHA, the

IRS and many other agencies. I would like to address a couple of

ways the subcommittee might be of assistance to the industry in

regard to our regulatory concerns.

Commercial driver’s license reform is tantamount to ergonomics

within our industry. Beer is delivered by your local wholesaler by

truck to bars, restaurants, supermarkets and convenience stores.

Our drivers generally double as our salespeople. Sales, delivery and

customer satisfaction is their primary responsibility. Driving is secondary. They are in and out of their trucks all day, servicing their

accounts. In fact, they spend the majority of their time with their

engines turned off and only drive about 25 percent of their work

day. Further, they only drive within a 100-mile radius of their

warehouse, if that, and spend the night at home each night with

their families. They are not long haul interstate truck drivers.

Currently, however, our drivers are required to have the same

commercial driver’s licenses (CDL) as long haul interstate drivers.

While MBWA fully supports rigorous testing standards for our

drivers, it is unduly regulatory and unnecessary to require a driver

engaged in intrastate commerce where the operation of a truck is

but a small part of the employee’s job to the same standards as

someone driving an 18-wheeler from Maine to California.

Beer wholesalers have inadvertently found themselves in the

business of training CDL drivers for the larger trucking companies.

While not true in every market, our members find themselves providing costly training and licensing fees for CDL drivers who are

then cherry picked from our operations to drive for the interstate

trucking companies. The cost and burden of training drivers is one

our members are willing to bear, but they are growing weary of

training drivers for other companies.

To this end, Congressman Howard Coble will soon introduce the

CDL Devolution Act of 2001. This bill would return power to the

states by allowing states to license intrastate drivers of commercial

vehicles based on testing standards determined by the State. The

emphasis is on allowing the states to regulate intrastate trucking,

not mandating that the power return to the state. I submit to the

subcommittee that this is exactly the type of regulatory relief that

helps small businesses: let states decide how best to regulate what

happens within that state if they so choose.

Additionally, I will just hit on this one point very quickly. I understand ergonomics is not the focus of this forum, but I appreciate

the subcommittee’s role in stopping implementation of the

ergonomics standards issue during the last administration and I

would be remiss in my duties if I did not also add that recent

changes in leadership in the Senate and Secretary Chao’s announcement of forums to be held in three locations around the

country are sure signs that this issue is not going away.

I implore the Subcommittee not to let the fox into the henhouse

by permitting new and equally onerous ergonomics regulations to

be promulgated. Congress cannot rest on its laurels and must be

proactive in the debate and formulation of fair and legitimate ergoVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
15

nomic standards that protect workers while not unduly punishing

business.

That is the end of my comments. I appreciate the opportunity to

be here. Thank you.

Mr. PENCE. Shannon, thank you very much. I want to recognize

Congressman Phelps for joining us.

Thank you for being with us at this summit.

And with that, I believe Betsy Laird is next on the docket.

Ms. LAIRD. I am up. Yes. Thank you.

Mr. PENCE. For three minutes. Thank you.

STATEMENT OF BETSY LAIRD, INTERNATIONAL FRANCHISE

ASSOCIATION

Ms. LAIRD. Okay. I will try to talk fast. I am Betsy Laird with

the International Franchise Association. You recognize most of our

members, McDonald’s, Blockbuster, Holiday Inn, Krispie Kreme.

Sorry I did not bring any Krispie Kreme donuts this morning.

Many of our members also belong to other organizations sitting

around the table: Rob Green’s organization with the Restaurant

Association, Kevin Maher, and I would just add that we would support some of the views that they are going to represent today as

well.

I am here to really talk about a good news story. The FTC since

1979 has had in place a very good trade regulation rule requiring

comprehensive pre-sale disclosure for any company that wants to

go into franchising, making available to a prospective franchisee an

enormous amount of information. There is probably no other business venture that you have access to more information going into

it than franchising. There is a comprehensive disclosure document

required by the FTC. Many states also have their own disclosure

requirements. The kind of information that is required by this regulation are things like the litigation history, a list of current and

past franchisees and how to get a hold of them.

We believe that the current regulatory scheme that is in place

at the FTC has worked very well. And to support that, let me tell

you that franchising has provided 8 million jobs. Every year it accounts for a trillion dollars in retail sales and it has also created

300,000 different franchise units across the country, making available to consumers a quality consistent option when they go to either do their dry cleaning or get their hair cut or grab a burger.

We would like to see the subcommittee continue to support the

work of the FTC. It is in the final stages of streamlining this regulation, improving the disclosure rule and our members have worked

very closely with the FTC and we would hope the subcommittee

would continue to support its work.

Secondarily, I wanted to talk about franchising has been utilized

by 75 different businesses as a way to do business. Franchising is

not an industry, but it is a way to distribute goods and services.

We have been contacted by a couple of our members with very specific regulatory concerns. One is a recent U.S. Postal Service regulation requiring anyone that operates their office and has a post office box, say at a Mail Boxes, Etc. or some facility like that, to identify it as such instead of calling it a suite number. The rationale

behind the new reg is that it would cut down on mail fraud. Our

16

members believe that it is unwarranted and unnecessary, but very

expensive to small businesses who operate their mail through that

fashion.

Secondarily, I have talked to Barry Pineles about this. There is

an issue of a midnight proposed rule by the last administration,

doing away with an exemption in home health care for companion

services. The current rule exempts employers of care giver services

in the home from overtime regulations. The proposal would now require them to follow the overtime regulations. We believe that

these regulations—I can submit more information about this—were

to be implemented, would be costly for families and the quality of

care would suffer. We will submit more information about that.

Thank you.

[Ms. Laird’s statement may be found in appendix.]

Mr. PENCE. Great. Thank you, Betsy. Appreciate that energetic

presentation.

Also, I recognized Mr. Phelps earlier, but I certainly would recognize my colleague for any opening statement or any comment.

I know that all of the participants are grateful for your participation and attendance.

I believe, Kerry, you are next for three minutes. Thank you.

STATEMENT OF KERRY KIRKLAND, NATIONAL BLACK

CHAMBER OF COMMERCE

Mr. KIRKLAND. Good morning, Mr. Chairman and Congressman

Phelps. I just wanted to bring to your attention this morning an

issue that has been of concern particularly for our members over

the past several years and that is the certification requirements for

minority and women as well as small and disadvantaged business

determinations that is required by the federal level, State, and

local level.

Notwithstanding the fact that our members are strongly supportive of certification requirements that would minimize fronts

and frauds, we think that the process has become time consuming,

burdensome and certainly expensive for our members. I mean, we

have DOT certifications, LBE certifications, Hubzone, 8(a), SDB,

along with a host of other certification requirements at both the

state and local level.

We think that it is long, long overdue for a national uniform certification process that is electronic-based, along with arranging

some type of reciprocal agreements with state and, local jurisdictions, that would accept those certifications. This would eliminate

the unnecessary paperwork on the part of our members.

Thank you.

Mr. PENCE. Thank you, Kerry. I appreciate your comments.

Another freshman colleague member of the committee, Congressman Langevin is here.

I do not know if you wanted to make an opening statement or

any remarks?

Mr. LANGEVIN. Thank you all for being here today. I look forward

to your comments.

Mr. PENCE. Thanks for being here, Jim.

Next on the docket, Giovanni Coratolo.

The names are not easy in this room. Give me a Smith.

17

Giovanni, you are up for up for three minutes. Thank you.

STATEMENT OF GIOVANNI CORATOLO, U.S. CHAMBER OF

COMMERCE

Mr. CORATOLO. Thank you, Mr. Chairman, and thank you, Congressmen, for allowing us to be here.

I, too, would like to highlight the blacklisting regulation or the

procurement rule that gives sweeping values to the procurement officers. There are over $200 billion in government sales and contracts that are provided to all businesses. This rule that was

passed in the waning hours of the last administration and would

provide blanket discretion for these contracting officers to judge

what is an undefined unsatisfactory record of compliance by a company with any federal, state or even foreign law and then disqualify any business from competing for a particular government

contract, based on that judgment.

Mere allegations of wrongdoing can prevent a business from winning a federal contract. If this blacklisting rule goes forward, federal contracting officers would be instructed to consider anything

they deemed credible in evaluating a company’s record. This would

be particularly hard on small businesses. No one thinks that GE

is going to be precluded from obtaining government contracts, but

we can see small businesses being discriminated against. They are

the most easy to sweep aside and we have seen that currently in

bundling and the proclivity of government contracting to go toward

larger businesses.

Enough said on blacklisting. Another area that I think is good

to highlight what I call regulating the regulators. They can certainly provide sweeping regulations on our business, some of which

are not based on sound science. As we know, they have tremendous

discretion, yet we have to be able to regulate the regulators that

are controlling our business.

A lot has been done in the passage of Pub. L. 104–121, which

was SBREFA, in 1996 which gave us sweeping rights. That has to

be examined, that has to be expanded. We have seen the Congressional Review Act which was part of SBREFA, passed as part of

SBREFA, have a fantastic effect as far as controlling ergo and

eliminating that from the horizon. That was very important. If

SBREFA had not passed through the small business efforts, we

would have seen the ergonomics regulation in force today, which I

think we all in this room agree would have had devastating effects

on small business.

So regulating the regulators is an important agenda for this subcommittee, including IRS as part of SBREFA panel process, looking

at making these agencies more accountable. The Senate has had

hearings on SBREFA and the definitions of economic impact. We

also have to make sure that the Office of Advocacy is strengthened,

and the Chief Counsel for Advocacy is speedily appointed. That

agency has been very beneficial to regulation and controlling regulation within the Administration, you have so many different aspects to controlling regulation, that is just one aspect. That is certainly not the total answer, but certainly having a Chief Counsel

or permanent Chief Counsel appointed, having legislation that

18

would make consistency and continuity within that office I think

would be very important.

I do not want to take any more time, but these different aspects

to regulation I think are important to focus on and we appreciate

being able to provide you with this information.

Mr. PENCE. Thank you, Giovanni.

And—it is behind a glass. Is it Amy?

Ms. BLANKENBILLER. Amy.

Mr. PENCE. With the American Foundrymen Society.

Welcome for three minutes opening comment.

STATEMENT OF AMY BLANKENBILLER, AMERICAN FOUNDRY

SOCIETY

Ms. BLANKENBILLER. Mr. Chairman, Congressmen, thank you

very much for the opportunity to be here.

I would like to make one correction for the record. The American

Foundrymen Society has actually come into being politically correct

and it is now called the American Foundry Society.

Similar to what John Cox was saying, the American Foundry Society took the opportunity, rather than looking at some of the

broader regulations that affect small business on whole, to try and

identify some regulations that are specifically egregious to our

membership.

There are two under the Clean Air Act at EPA that I would like

to specifically identify. They are both MACT standards, maximum

achievable control technology standards under the Clean Air Act.

One is the secondary aluminum MACT standards and the second

rule is the iron and steel MACT.

Our industry is the metal casting industry and we take molten

metal and produce solid products. A wide variety of metals, from

aluminum, magnesium and zinc to iron and steel.

Under the secondary aluminum MACT, which would affect the

smelting industry, they provide us with our raw material in the

aluminum metal casting sector. EPA did not do their homework

and they lumped aluminum metal casting facilities into the smelting industry sector, which is overregulating the aluminum metal

casting. We are at the point of having a remedy to this situation,

but it took us four years, a lawsuit and untold man-hours and

other resources to fight EPA and educate them when they chose

not to do their homework.

The second part of this issue with the MACT processes in general is the iron and steel MACT and the fact that EPA inconsistently applies the discretion allowed under the Clean Air Act when

they are developing their regulations. And I will give you one specific example and that is when you collect data, there is always an

error band. It is 5 percent give or take around that number, similar

to polling. And under the secondary aluminum MACT, for example,

the staff used discretion to allow a 5 percent margin of error.

Under the iron and steel MACT, for example, they are only allowing a 1 percent margin of error. That draws in another 250 facilities that are going to be affected by the rule and, again, adds cost

to the regulatory process. So my point with the MACT is the fact

that EPA does not do their homework and they use their discretion

inconsistently.

19

Another example under the iron and steel MACT for inappropriate discretion is that within the metal casting industry and in

the iron metal casting facilities specifically, there are two kinds of

air control technologies. There is a wet scrubber that is a wet filter

and there is a fabric filter, a bag house. Forty-nine percent of our

industry uses wet scrubbers, 51 percent of our industry uses bag

houses. Bag houses are literally a better control technology but

only incrementally. EPA is not using their discretion to subcategorize bag houses and wet scrubbers, so they are going to require

49 percent of our industry to rip out their control technology and

put in a $1.5 million bag house for questionable gains in environmental protection.

I also wanted to raise one other point that I think is interesting

within the EPA’s analytical processes, that the agency has started

using the TRI data to do risk analyses and they have some very

questionable defaults that they use. For example, they automatically assume that if you emit chromium you are emitting

hexavalent chromium. We have all seen Erin Brockovich, we all

know how bad hexavalent chromium is, but there is also good chromium that is out there and automatically defaulting to bad chromium is going to skew the risk analysis and identify an industry

sector as being much more detrimental to the surrounding neighborhood than it may very well be, which takes small businesses

like ours, we have 85 percent small business membership, a lot of

time, resources, money to try and, again, go back and help EPA do

the homework that they chose not to do.

Thank you very much for the opportunity to be here.

Mr. PENCE. All written statements will be included, even if you

want to submit them in a week or two and they will be a part of

the record of these proceedings.

Robert Green with the National Restaurant Association.

Welcome.

STATEMENT OF ROB GREEN, NATIONAL RESTAURANT ASSOCIATION, ACCOMPANIED BY STEVE GROVER, NATIONAL RESTAURANT ASSOCIATION

Mr. GREEN. Thank you, Mr. Chairman, and members of the subcommittee. I am also accompanied by Steve Grover, our Vice President of Regulatory Affairs, and we are very happy to be here on

behalf of the National Restaurant Association.

Three issues on the regulatory side that have concerned our industry. Ninety-two percent of restaurants in the United States employ 50 or fewer employees, so we have a very large small business

component. The three issues are the need for better federal agency

coordination with regard to food safety, particularly between the

USDA and FDA, the Department of Labor’s white collar regulations and the Department of Labor’s teen regulations.

Dealing with the first issue of the agency coordination, the National Restaurant Association has helped to develop effective food

safety regulations and educational materials based upon current

science and it is very important that improvements in food safety

be science-based and coordinated between the various federal agencies and industries that will implement the changes. We believe

that the current FDA system of food safety regulation is disjointed,

20

inconsistent and in need of a clear food safety focus and the FDA’s

current system makes it almost impossible for small restaurant operators to comply with the varying recommendations and regulations.

One example regards egg safety and storage. New USDA proposals require that eggs be maintained at 45 degrees Fahrenheit

during transport and storage, while FDA recommends in its model

food code a storage temperature of 41 degrees Fahrenheit. It is

very difficult for small business restaurant to determine which

standard is appropriate, which standard is effective and it would

cost the industry $8 billion—$8 billion—to change the refrigeration

systems for the industry and that is just for small refrigeration

units. Without making light of this, I would like to say I am not

‘‘eggs-aggerating.’’ And that is just one example.

In addition, the disjointed nature of FDA’s agenda makes it difficult, if not impossible, for the restaurant industry to consistently

develop training materials for restaurants that are reflective of the

varying food regulations established by both USDA and FDA. And

we also feel it is time to move on from the Clinton administration

proposals and look forward to the Bush administration. There is a

lot of talk about existing food safety proposals, a lot of it is left over

from the Clinton administration and we want to see it moved forward to the Bush administration.

Secondly, real briefly, white collar reform. Federal law currently

requires covered employees be compensated if they work over 40

hours a week at time and a half pay. The law also provides that

certain employees in executive, administrative and professional capacities be exempt from these standards based on a salary test,

and a duties test that is very complex. These are known as the

white collar regulations. These have not been updated since 1954.

For our industry in particular, the classification of restaurant

managers and assistant managers is very difficult on a unit-by-unit

basis and it is a direct result of the complexity and the confusion

caused by these outdated regulations. In the last 46 years, a lot of

changes have occurred in the industry and we would just like to

see DOL move forward with aggressively pursuing a new standard.

Finally, teen labor. We just want to try to encourage additional

employment of teenagers. Two proposals, one dealing with the

hours of work requirement for 14 and 15 year olds, allow them to

work a little bit later in the evening with certain restrictions and

more, importantly, 14 and 15 year olds cooking in certain establishments with restrictions. There is an outdated example of snack

bars and lunch counters. We would like to see it broadened with

certain restrictions to allow teenagers to cook in certain situation

and we will provide a written statement.

Thank you very much.

[Mr. Green’s statement may be found in appendix.]

Mr. PENCE. Thank you, Robert.

I appreciate everyone’s brevity, although I think Kerry Kirkland

still holds the prize for two sentences forcefully presented. I want

to acknowledge that and everyone’s brevity. We are going to get

through to everybody and then have time for discussion before we

break.

21

Karen Kerrigan for three minutes from the Small Business Survival Committee.

STATEMENT OF KAREN KERRIGAN, SMALL BUSINESS

SURVIVAL COMMITTEE

Ms. KERRIGAN. Thank you. Thank you, Chairman, for having this

forum and, thank you, Congressman, for inviting us to be here

today.

With a membership as diverse as our organization, let me just

say that this was indeed a challenging endeavor to come up with

the top two regulatory concerns of small business. Depending upon

the type of business or industry in which a small business is engaged, which state they are in, how labor intensive they are, the

top regulatory concerns that we catalog and receive reflect the

range of businesses we represent. And I would just like to say

many of the specific regulations that have already been brought up

by the industry specific group also reflect what has come in from

our membership as well and I would like to include all those in a

written statement that not only represents the views of SBC, but

also support the other groups as well.

If you look at it really from a consensus perspective when we

asked our members about the top regulatory problem, under the

broadest interpretation of regulatory, we just keep coming back to

the overly complex IRS tax code. Of course, this top concern comes

as no surprise to us, will not come as startling news to Congress.

Small business really has been lamenting the complexity of the tax

code and the regulatory headaches they must endure for many

years.

I guess if I had to drill it down to issues that we continue to receive back from our membership on an ongoing basis it is the alternative minimum tax, the calculations the forms, this is a major

problem, as well as the payroll deposit rules.

Secondly, the other—and this is going to be another broad concern—is the impact that regulations, federal regulations and, indeed, state regulations are having on the cost of health care. The

medical privacy rule came up and our members feel that as Washington continues to regulate the health care industry that indeed

this is putting the ability of small businesses to provide health care

for their employees out of reach.

So those are just two broad issues representing the broad membership of SBSC. And, again, as I mentioned, I will submit the

other specific ones as well that support the group, although I will

be interested to hear from Bryan Little at the Farm Bureau whether the ding dong forms required by USDA are on his list.

Thank you.

Mr. PENCE. I await with anticipation for a definition of the ding

dong forms.

Ms. KERRIGAN. I was waiting for that as well.

Mr. PENCE. Thank you, Karen.

I am very provoked by your observation about the Internal Revenue Code as a form of government regulation. A show of hands,

do your membership consider that a part of the regulatory burden

typically, ordinarily?

[Show of hands.]

22

Mr. PENCE. Yes? Okay. Yes. Good. That is a new thought for me.

I usually segment those. Grant with the Telecommunications Industry for three minutes. And let me also introduce Congressman

Sam Graves, also a member of the subcommittee. Did you have an

opening statements or any comments you care to make?

Mr. GRAVES. I have no statement. Thank you.

Mr. PENCE. Well, thank you for being here.

And to all the members, I know we are extremely grateful for

your time, as I know you are grateful that all these members are

here.

Grant.

STATEMENT OF GRANT SEIFFERT, TELECOMMUNICATIONS

INDUSTRIES ASSOCIATION

Mr. SEIFFERT. Good morning and thank you for having TIA here

participating in the panel discussion. I would like to thank the

chairman and the subcommittee for having us.

T.I.A. represents 1100 companies. Seventy-six percent of those

are small business companies selling into the carrier world. I will

mention a few things quickly.

The Federal Communications Commission (FCC), is a hot topic

of debate in this town for our industry. It has gone under several

hearings for FCC reform and reauthorization hearings. That has a

significant impact on our industry by the streamlining process

which the path to market of new equipment is certified by the FCC

engineers. So privatizing the FCC labs is critical. It can have an

immediate impact on our industry and that is slowly going on, but

we would like to see that speed up if we could have your help on

that.

Export controls for our companies, certain international trade is

a huge part of our opportunities to grow worldwide. We operate in

a global economy here and certainly we would support the Export

Administration Act in lifting restrictions on encrypted products and

technology.

And then also we are working with the Pentagon and the Department of Defense on spectrum allocation. That is a new opportunity for our industry to grow and to harmonize with the rest of

the world for 3G services and products and that is going to be a

critical issue. It is not necessarily—we are regulated, but we are

sort of regulated out of business opportunity and future economic

benefits for our country.

So with that, thank you.

[Mr. Seiffert’s statement may be found in appendix.]

Mr. PENCE. Thank you very much, Grant.

Joe Nipper with the American Public Power.

Thank you for being here, Joe.

STATEMENT OF JOE NIPPER WITH THE AMERICAN PUBLIC

POWER ASSOCIATION

Mr. NIPPER. Thank you very much, Mr. Chairman, and members

of the committee for inviting me here this morning. I represent the

2000 publicly owned electric utilities around the country, almost all

of whom are municipal electric utilities and the vast majority of

which serve communities of 10,000 people or less. I want to menVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
23

tion just two regulations that are affecting electricity supply and,

of course, energy supply is a focus of national attention at the moment.

One I will mention just briefly is the Federal Energy Regulatory

Commission’s regulations and process for licensing and re-licensing

hydroelectric projects. The process is severely out of whack and is

the subject of other pending legislation. But there has been little

consideration in all of that of the impact on very small electric utilities, the administrative and financial burden imposed in that process on them and their special characteristics.

But let me focus a little bit more on an EPA regulation, the regulations dealing with emissions of nitrogen oxide from power plants

and their disproportionate adverse impact on small utilities. Most

of my members purchase electricity at wholesale and resell it at retail in their communities. However, many of them also have very

small generating units in their town, often diesel powered generators that they use to meet peak load demands in the summer and

other times of peak load and for reliability purposes as backup supply in case there are problems on the system.

E.P.A. has ignored the special operating characteristics of those

small backup units which, as I say, operate typically only a few

days during the year for emergency purpose or to meet peak loads

and yet they are regulated virtually in the same manner as the

large base load power plants, particularly with regards to NOX

emissions, and so we call that just to your attention as a regulatory

area where EPA has, again, not taken into consideration the operating characteristics of those small units. They are regulated now

on what is called the potential to emit, which is, as the name implies, the potential level of emissions if they were running virtually

continuously as large power plants do, but, again, since they operate on a very limited basis, we feel that they should be afforded

some—and because they are owned and operated by small entities—should be afforded some additional consideration in that regard and to date they have not.

So we also would like to submit some additional examples because as operating utilities we have a number of concerns, some of

which have been addressed earlier: NAM’s comments on TRI reporting, for example; OSHA regulations and other regulations. We

can provide some more information for your consideration.

Mr. PENCE. Thank you, Joe.

Damon Dozier, I cannot see your name plate there, with the National Small Business United.

Good to have you here for three minutes.

STATEMENT OF DAMON DOZIER, NATIONAL SMALL BUSINESS

UNITED

Mr. DOZIER. Thank you, Congressman, and thank you, Congressman Graves and Congressman Phelps. My name is Damon Dozier

and I represent National Small Business United. We have about

65,000 members nationwide, which represent a variety of small

business industry sectors, if you will.

I sort of feel like the guy who followed the Beatles in that a lot

of the things here have already been mentioned and, you know,

some of the thunder has been stolen a bit. But what I would like

24

to do is actually echo the comments of Arline Seeger, Loren Sweatt

and Giovanni Coratolo in terms of enforcement of the Small Business Regulatory Enforcement Fairness Act.

Senator Bond has introduced legislation that would actually

strengthen the act and add additional agencies such as IRS, the

National Marine Fisheries Service, the Department of Interior and

some other offices into the scope of that law, but what we are particularly concerned about at National Small Business United is the

rationale used to convene small business regulatory enforcement

fairness panels.

For example, EPA uses a cost over sales test and they examine

an industry and if the regulatory cost is 1 percent over a business’ sales, then that is sort of their trigger to be concerned and if it is

3 percent cost over sales, then they will go into a SBREFA panel.

And, as any teenager could probably tell you, 3 percent over sales

could be a greater ratio in terms of profits. That could actually be

25 percent, 30 percent, even 50 percent of your profits when you

talk about 3 percent cost over sales. So actually the test that EPA

and other agencies use to go into the SBREFA panel process is

flawed and we would encourage this body to take a look at actually

the process by which EPA actually decides which rules will go into

panel and which rules are not going into panel. And the same thing

with OSHA.

Thank you for your time.

Mr. PENCE. Thank you, Damon, very much.

Now, John, help me out.

Mr. EICHBERGER. Eichberger.

Mr. PENCE. Eichberger. Thank you, John. You are recognized for

three minutes. We appreciate you being here.

STATEMENT OF JOHN EICHBERGER WITH THE NATIONAL

ASSOCIATION OF CONVENIENCE STORES

Mr. EICHBERGER. Thank you. I am here on behalf of the National

Association of Convenience Stores and I want to start out by echoing the comments made on the recordkeeping rule and with NRA’s

on the white collar working situation.

The convenience store industry sells approximately 70 percent of

the motor fuels in America. We have two main issues we want to

bring up with you today. Number one is in January, EPA issued

a rule requiring a 97 percent reduction in the sulphur content of

on-road diesel fuel. EPA implement this by a phase-in. Starting in

2006, 80 percent of the diesel produced for refiners must meet this

15 parts per million sulphur content requirement, 100 percent compliance is not until 2010.

Our concern as marketers is that essentially puts another brand

of fuel on the market. In order for our members to sell both types

of diesel fuel, they are going to have to install a second temporary

underground storage tanks. These tanks can cost up to $50,000 to

$60,000 to install and within four years that tank will become obsolete because the second fuel will be off the market. Therefore, you

have a problem whether they go to put in that type of investment

or do they even have the physical space to put in a second tank

to service both fuels? A lot of our members do not. There are other

options to choose: to service one fuel and that means they have to

25

choose between two classes of customers. Either they service those

customers driving vehicles built after 2007 which have new emission technology which require the new fuel or those who drive

other vehicles. The new fuel is estimated to cost approximately

anywhere between six and estimates up to 50 cents per gallon more

than the older fuel. Therefore, there is a cost advantage to selling

the cheaper fuel, but then you eliminate one class of customers. So

they are in a situation where either you put in the $50,000 temporary investment or you have to choose between customers. That

is putting them in a really tough situation.

We support a 100 percent implementation. There is legislation

introduced in the house by Congressmen Bryant and Gordon to require 100 percent implementation in 2006. It is H.R. 1891 and we

fully support that. We have also filed suit against the EPA to try

and get the court to remand the rule back to the agency to revise

their rule to take into consideration these marketing concerns.

The other issue we want to bring to your attention is the Department of Transportation’s hours of operation for commercial motor

vehicle drivers. Right now, the way this is set up, they want to address driver fatigue and we support that. But they are trying to

put in mandatory on duty/off duty rest periods as applied to all

drivers. And similar to the beer wholesalers, our drivers oftentimes

only service one small market, they leave from one location, they

return to one location. They are susceptible traffic congestion, they

are susceptible to delivery delays. The way this rule is written, it

applies to them the same way it applies to a driver who crosses the

country. We would like to see the rule reassessed and take into

consideration the different characteristics of the different classes of

drivers and how their operations apply to their on duty/off duty

time periods.

Those are the two number one things we wanted to bring to your

attention today and we have submitted comments for the record

and if there is anything we can do for you, please let us know.

[Mr. Eichberger’s statement may be found in appendix.]

Mr. PENCE. Thank you very much. Good to have NACS here.

Debra Phillips is next, recognized for three minutes.

STATEMENT OF DEBRA PHILLIPS, AMERICAN CHEMISTRY

COUNCIL

Ms. PHILLIPS. I am here representing the American Chemistry

Council, which I think is typically viewed as an organization of

larger business. However, more than one third of our member companies are small, in fact, small businesses. And I would like to take

the opportunity to bring up two regulatory programs that are of

particular concerns to our members and both of these programs

have to do with EPA regulatory requirements.

The first, I think, was touched on by NAM and that is the TRI

Section 313 reporting requirements. The requirements of this program are such that industries must report emissions to the air,

water, land, et cetera, and while this is a good goal, the fact is a

lot of the data that is required in the reporting is not used. And

the data is very labor intensive to gather. For example, a current

requirement is that companies report internal concentrations of

chemicals within their facility that really has no impact on what

26

is being emitted to the environment, yet this is a reporting requirement within this program. I feel I can speak fairly intelligently

about this because I was responsible for this kind of reporting at

a small chemical facility for about four years and I can say that

I would spend weeks completing the report and that is at the expense of taking care of important issues like regulatory and environmental compliance at the facility. So we feel like there are opportunities to really streamline this program and make the requirements such that the important information is reported and extraneous material is not.

The second program that I think was also mentioned by some of

the utilities that our members are having issues with is the new

source review program. This is a program that is getting a lot of

attention as of late due to energy implications, but it is also an

issue for some of our smaller companies. The intent of this program

is to ensure that when new facilities are built and when significant

modifications are undertaken at existing facilities that these

projects undergo a stringent review to make sure that there are not

decreases in air quality associated with the projects or new facilities. We agree with the program’s intent. However, in recent years,

the EPA has taken to expand that program such that pretty much

any modification that is taken falls under this program.

It is of particular interest to our smaller members because typically they operate in markets that must change fairly quickly. They

have to make fast changes due to market demands and they are

not able to undertake these modifications, many of which have a

beneficial effect on energy, efficiency, and also emissions and they

cannot undertake these projects because they are triggering this

new source review program, which is making the projects cost preventive to them being undertaken and I will give just a brief example.

We have a small chemical company that wants to make a change

to its waste water treatment facility that will increase its energy

efficiency by 40 percent and decrease its actual emissions by 5 percent. It cannot undertake this project because it will trigger the

new source review program. They will have to go through an approximately three-year permitting procedure to undertake the

project and its cost will be about $750,000. The plant currently

earns about $1.5 million. So it is half of their annual earnings to

undertake a project that will result in energy efficiency and decreased emissions.

So we feel like there is some real reform needed in this program

such that our companies can operate efficiently, effectively and are

environmentally conscious.

Thank you.

Mr. PENCE. Thank you, Debra. Good presentation.

Craig, I think you are next.

Mr. BRIGHTUP. Yes, sir.

Mr. PENCE. Thank you for being here.

STATEMENT OF CRAIG BRIGHTUP, NATIONAL ROOFING

CONTRACTORS ASSOCIATION

Mr. BRIGHTUP. Thank you, Mr. Pence. My name is Craig

Brightup. I am with the National Roofing Contractors Association

27

and it is nice to see Mr. Phelps again. This morning we had a very

good roundtable discussion on health care. And thank you for the

opportunity to talk about some other regulatory problems that the

industry has.

N.R.C.A., the National Roofing Contractors Association, has

about 5000 members. We estimate that about 60 percent of the

roofing work in this country is performed by our members, certainly 60 percent of the commercial roofing work, but all of our

members are small business people. So if you are going to a roofing

contractor, the first thing that you need and the first area I want

to talk about are workers. There is an acute labor shortage right

now and immigrants comprise more and more of a substantial percentage of the workers that are being employed by our members.

The first area, then, in the regulatory realm that we are concerned with and having problems with are immigration regulations

from the Immigration and Naturalization Service. Now, I do not

know if you have ever had a chance to take a look at these or not,

but you would really kind of need an Ouija board to figure out exactly what you should and should not be doing. We have a roofing

contractor in Portland, Oregon, one of our larger, 130-employees.

INS came in, did an audit, said congratulations, Mr. Satron, he is

the owner of Interstate Roofing, in Portland, Oregon, you have

done everything right, but half of your workforce has to go. Now,

that is the kind of thing that our members are dealing with and

I suspect other small businesses that hire workers that are immigrants are dealing with.

We support President Bush’s proposal to split the INS into two

so that one of the agencies helps people, helps small business employers and those that wish to follow the rules and do things right.

Number two, we are a member of the Essential Worker Immigration Coalition, which supports, among other things, perhaps developing a guest worker program or programs similar to what agriculture has so that we can deal with the acute labor shortage and

do things the right way.

Now, once you have the workers, you have to get them to the job.

And I echo the comments made by our friends around the table,

particularly I heard the National Beer Wholesaler’s Association

complaining about the Federal Motor Carrier Safety Regulations.

These regulations are intended to deal with trucks of a size of

26,000 pounds gross vehicle weight rating. These are overland carriers that go from Portland, Maine to Portland, Oregon. But roofing

contractors are getting nailed on this and, believe me, the different

things that you have to comply with, not just the commercial driver’s license or the hours of service, there is a lot more going on

there than that. They are getting nailed for vehicles of 10,000

pounds, between 10,000 and 20,000 pounds and we would like to

address that and fix it.

Finally, once you get to the job, you may need to tear off an old

roof. What do you do with the roof tear off? Well, no thanks to

Superfund, you are highly likely to get nailed in a Superfund legal

morass which is almost impossible to get out of, so we applaud the

U.S. House of Representatives for voting for H.R. 1831 on May 22d,

the Small Business Liability Protection Act, by a vote of 419 to

nothing. Just very quickly, as you know, Mr. Pence, it would exVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
28

empt any business, regardless of size, from Superfund liability if

responsible for less than 110 gallons of liquid waste or 200 pounds

of solid waste, but, perhaps more importantly, small businesses are

defined as having fewer than 100 full-time employees and would be

protected from lawsuits filed by companies responsible for a majority of the waste at the site. Will this cure all of our problems? No,

but it is a terrific start and the Senate seems intent on dealing

with a broader, more comprehensive approach dealing with brown

fields. I hope ultimately that the House is able to put pressure to

get this done. Four hundred nineteen to nothing speaks volumes

and we completely support it and anything that we can do to get

the Senate to move, we would be glad to support your efforts.

Mr. PENCE. Thank you very much, Craig.

And I believe Matt Page is next on the docket for three minutes.

Matt, thank you.

STATEMENT OF MATT PAGE, AMERICAN ELECTRONICS

ASSOCIATION

Mr. PAGE. Thank you, Mr. Chairman. Thanks to the subcommittee for calling this roundtable together. I represent the high

tech industry. AA represents semiconductor manufacturers, software industry folks, and about 70 percent of our members are

small business. The issue I want to talk about today is involving

the IRS and specifically the duplicative reporting of stock option

compensation.

Currently, on W–2s, the exercise of non-qualified stock options

are taxable as wages and they are reported on the W–2 form in no

less than three different areas. Last year, the IRS came out with

an announcement which is now going to impose on employers a

new reporting requirement. It is called Code V, and is under box

12 on the W–2 form. This is to report separately the amount of

compensation received upon exercise of non-statutory stock options.

Separately, another announcement came out which advised employers that the reporting requirement for Code V was going to be

optional for 2001, but that it was going to become mandatory in

years after 2001. The reason this is a problem is that Code V reporting will have no net tax effect. It is already being reported on

the W–2 form, as I mentioned, in boxes 1, 3 and 5, so accordingly

the income is already subject to the appropriate income and Social

Security taxes. There is no net benefit to the employee. Code V reporting would have no beneficial impact on employees because

stock option compensation, again, is already disclosed to them as

either part of their non-qualified stock option program as part of

their pay stubs. And also there is no other tax-related purpose for

this information.

On the W–2 form, which you are probably all familiar with, in

box 12, there are actually 18 different items that need to be reported in that area. Types of information that are put in there are

for legitimate compliance purposes such as for the proper calculation of Social Security benefits, compliance with welfare and pension limitations, or information about non-taxable fringe benefits

not otherwise reported on W–2 forms. None of these purposes justify separately reporting income from non-statutory stock options.

29

What does this mean? It is a needless administrative burden and

will require companies, particularly smaller ones, to redesign their

payroll system, again, for no specific tax purpose or informational

purpose. Treasury may find it more convenient to have such information on W–2 forms for their statistical and economic models.

However, this information can be found in other sources, such as

SEC filings. In any case, it is inappropriate to impose additional

costs and burdens on employees without demonstrated immediate

compliance justification.

There is also a question of whether or not they have the legal

ability to do this. Let me just state that when the IRS went

through with this, there was no normal regulatory hearing process

or request for comments, so essentially there was no public input

on this new requirement and we would just simply recommend that

the reporting requirement be withdrawn permanently.

I would echo other comments that have been made about

SBREFA and the expansion of SBREFA and the Office of Advocacy.

Thank you.

[Mr. Page’s statement may be found in appendix.]

Mr. PENCE. Thank you very much, Matt.

I think it was in our subcommittee’s first hearing that we heard

from a number of people in your industry who talked about the

need to lift the regulatory burden to encourage more

entrepreneurism and stock options. It came up then, so I appreciate you calling our attention to this Code V problem.

Ty Kelley.

Mr. KELLEY. Correct.

Mr. PENCE. Thank you for being here, Ty.

STATEMENT OF TY KELLEY, FOOD MARKETING INSTITUTE

Mr. KELLEY. Thank you, Mr. Chairman. I am with the Food Marketing Institute. We represent the supermarket industry. We sell

food and a lot of our members are getting into the prescription

drug business, like Marsh’s out of Indianapolis.

The regulation that I wanted to bring to your attention nobody

else around this table has mentioned and it comes from the Food

and Drug Administration and it relates to the sale and distribution

of prescription drug products in the United States. It is a reg that

impacts secondary wholesalers and here is the problem. If this rule

goes into effect, it is a final rule whose enforcement has been

stayed, issued in December of 1999, it will close down 4000 small

businesses throughout the United States that currently distribute

prescription drugs throughout this nation.

Now, how would this reg close down 4000 small businesses?

Very easily. It imposes a massive paperwork burden on these

companies because they simply do not purchase prescription drug

products directly from the manufacturer. In other words, they

would be required under this FDA rule to obtain the entire sales

history or pedigree of the product they have purchased, but we

have a classic Catch-22 situation. The FDA reg requires them to

get the pedigree, but it does not require the manufacturer or the

primary wholesaler to provide it. Thus, they cannot distribute prescription drugs legally in this country.

30

What does this mean? It is going to mean less competition, higher prices, reduced access to life saving medications, especially for

folks in rural communities because the secondary wholesalers are

the primary source of supply to remote locations.

Our interest is very simple. Our members from time to time buy

from secondary wholesalers and they do for two key reasons: one,

availability of product when our members need it and, two, these

secondary wholesalers because of prudent purchasing practices can

get prescription drugs at lower prices than, say, the full like

McKesson types.

We have a solution to this FDA reg and it is going to kick in next

year. The solution is a bill that has been introduced by Joanne

Emerson and Marion Berry, H.R. 68. What it does is very simple.

It provides for reasonable accountability of the purchase of these

drugs by secondary wholesalers, number one, and, number two, it

clarifies congressional intent in terms of the law that Congress

passed back in 1987. And I mention that because the regs were

issued in 1999, 12 years after Congress passed the law. None of

this makes any sense. So we can avoid a huge problem by enacting

into law the Joanne Emerson-Marion Berry bill, H.R. 68, and I

would urge you to take a look at that. We have 45 co-sponsors to

date and I have a number of materials that I would love to share

with the subcommittee.

Thank you.

[Mr. Kelley’s statement may be found in appendix.]

Mr. PENCE. Thank you, Ty. It is good to have FMI here.

Let’s go to Bill Mahorney with—— Mr. MAHORNEY. American Bus Association.

Mr. PENCE [continuing]. The American Bus Association. Thank

you.

Mr. MAHORNEY. Thank you, Mr. Chairman.

Mr. PENCE. I promise our next summit I will bring my prescription glasses so that I am not failing my reading test on the back

panel.

Thank you for your patience, Bill. Go ahead.

STATEMENT OF BILL MAHORNEY, AMERICAN BUSINESS

ASSOCIATION

Mr. MAHORNEY. Thank you, Mr. Chairman. I represent the

American Bus Association. We have about 850 operator members,

such as the Greyhounds of the world, but about 96 percent of our

membership and of our industry is small businesses that operate

less than ten motor coaches.

Three of the issues that we would like to talk about today, the

first has been mentioned by a couple of other folks is hours of service of drivers. Back in May, the Federal Motor Carrier Safety Administration proposed sweeping changes that would severely limit

the time a driver can operate. It was supposedly based on sound

science. The first mention of motor coaches or buses in this proposal was, and I quote, ‘‘For purposes of this proposal, the FMCSA

has assumed that bus drivers operate in ways similar to truck drivers.’’ Now, that certainly is a problem for us. We do not operate like

trucks. In fact, the rule lumps a trip from Philadelphia, a threeday trip from Philadelphia to D.C. to Baltimore, where the driver

31

is operating maybe three or four hours a day, as a long haul type

1 driver, which would be the same as someone who is carrying

something from New York to California, jamming all the way. So

we have some basic problems with that.

We estimate it would reduce our ability to provide services in

rural areas because we would have to cut—the driver’s pay would

be greatly reduced. We estimate about a 30 percent reduction in

our operations.

Our biggest problem with it is, though, is our safety record has

been so good. In 1999, we carried 774 million passengers. That is

a third more than the airlines. We average about five passenger fatalities a year and our hours of service violation rate is about a

third that of trucks, so we figure we are complying with the current rule and we are safe, so we do not need any changes. So our

goal is to be carved out of that rule and continue to operate under

the current rules, until someone proves to us we have a fatigue

problem. And if someone proves that to us, we will certainly work

with them to try and address it.

The other issues relate to NAFTA. There are three rulemakings

on the table now that relate to safety monitoring and authority of

carriers coming into the U.S. Our big concern with those is we support NAFTA. We are very much looking forward to working in

Mexico, even more so than we do now, but our concern is the lack

of enforcement at the border. We really think that border enforcement is critical.

Our president went to Brownsville, Texas last week and it was

told to us that there is approximately 350 motor coaches a day

coming across one of the bridges there, the Los Tomates/Veterans

bridge, but enforcement is only done one day a month, so that is

quite a gap that we think needs to be addressed. We are very concerned about the enforcement of the Federal Motor Vehicle Safety

Standards which govern the construction of buses and we are very

concerned with the Federal Motor Carrier Safety Regulations

which govern hours of service, et cetera, for the drivers and making

sure that the drivers have the Mexican equivalent of a CDL, the

licensia federal. So that is something that we are looking very

much to Congress to maybe step in and give some additional

money to the appropriate parties to enforce at the border.

There are also a couple other rulemakings regarding small passenger vans that we would like to see enacted prior to the border

opening. There is a proposal on the board that hopefully the Federal Motor Carrier Safety Administration will have completed.

The last thing I would like to mention is transit competition.

Many of our members are facing increased competition from publicly subsidized transit agencies, which is clearly against the law.

Small businesses rely a lot on some of these shuttle type services

to and from football games and that type of thing and we are getting competition that we cannot handle. In fact, the Federal Transit Act does prohibit funding for charter and sightseeing and also

prohibits a recipient from providing service if a private company

can do it. We have brought it up several times with the FTA. It

is not really enforced very strongly. What we would like to see is

maybe a clear definition of charter bus service that is not eligible

for funding and specifically provide that transit agencies may not

32

provide regular route service beyond their urban area boundaries.

So we would like to see a little stronger regulation and better enforcement.

We do have comments to submit as well.

Thank you.

Mr. PENCE. Bill, thank you. Good presentation.

I appreciate how people are commenting on what other presenters have stated. That is very helpful.

John Fitch with the National Funeral Directors Association for

a few minutes.

John, welcome.

STATEMENT OF JOHN FITCH, FUNERAL DIRECTORS

ASSOCIATION

Mr. FITCH. Thank you, Mr. Chairman. I will briefly discuss some

of the key issues that funeral homes are experiencing from a regulatory standpoint.

One major issue that they would like to see is an amendment to

the federal Fair Labor Standards Act to allow compensation time

in lieu of overtime for employees. Because of the irregular hours

that funeral directors work, nights, weekends, holidays, a lot of

their employees, particularly their licensed employees, would like

to have comp time to be with their families and make up that time

and right now that is impossible under the Fair Labor Standards

Act because licensed funeral directors do not meet a lot of the tests

for the current exemption.

The second issue that we would like to have the committee take

a look at is to codify what some of the courts have already decided

in favor of employers and that is to allow the defense of an employee error by an employer for an OSHA citation. In essence the

defense permits an employer to show that he has done everything

conceivably and reasonably possible to prevent an accident and the

employee has disregarded that and caused harm or injury, that

that should be an employer defense under the OSHA law.

We also believe that OSHA should adopt what the state of Maryland has adopted, which is a state plan state, and that is a streamlined, simplified review process of informal conferences and formal

hearings that are purely administrative in nature rather than

quasi-judicial. In other words, adopt a streamlined, easy administrative review process rather than having employers go through the

federal court system to challenge an OSHA citation.

The other issue we would like to bring to your attention is to

allow an employer under the OSHA rules to offset any civil penalties that may be assessed for an alleged violation of the OSHA

law, regulations and standards by the documented amount spent to

correct the condition, retrain employees, or to make other corrections or actions to abate the hazard. In other words, offset the penalty with corrective action under the OSHA law.

Lastly, unfortunately funeral homes also come under RCRA. In

many instances, funeral homes use swabs, cotton swabs and cotton

products to remove certain spots and they may contain halogenated

compounds, which makes them a hazardous waste, so you have

these swabs that we use for your ears and things and they may

have very few of these, but they are considered a hazardous waste,

33

they come under the RCRA rules. Therefore, funeral homes have

to hire a special hazardous waste hauler to come and pick up these

little cotton swabs, they have to take them to a certain place. This

costs them a great deal of money and aggravation and we would

like to see some kind of reasonable exemption under the RCRA

rules for these kinds of small situations that otherwise would not

be a problem for any disposal.

Thank you very much.

[Mr. Fitch’s statement may be found in appendix.]

Mr. PENCE. Thank you, John. We have been very strongly supportive of a bill that I know you are familiar with and maybe will

be interested in and we will look at putting the subcommittee’s efforts behind the 90 days to cure provisions where employers would

not be subject to fines. Again, it is in the spirit of getting away

from the judicial approach to more of an administrative review and

cooperative role. Sarah Dodge with the Petroleum Marketers Association.

Welcome and thank you for your patience.

STATEMENT OF SARAH DODGE, PETROLEUM MARKETERS

ASSOCIATION OF AMERICA

Ms. DODGE. Thank you. And thank you, Mr. Chairman, for holding this forum.

At P.M.A., we represent about 42 state and regional trade associations and about 7800 petroleum marketers nationwide. Our

members are terminal operators, they deliver fuel, they also store

fuel and offer it for retail sale.

By far, our most important priority this year is getting the

phase-in, as was mentioned earlier, of the EPA diesel sulphur rule

removed. We have worked hard with Congressman Bryant and

Congressman Gordon to get a bill introduce and we thank you for

your co-sponsorship of that bill, H.R. 1891. In addition, I think I

mentioned to Patrick that Congressman Blunt recently put forward

an RFG/diesel sulphur proposal and he did include that provision

as well in that legislation.

It was already mentioned earlier the cost to industry to install

a whole new universe of underground storage tanks. Obviously,

that is a huge concern for our members. But an even bigger concern is the possible price spikes and supply problems which we anticipate will occur. EIA has also done a study and said that that

is very likely with the phase-in.

So we are pleased to say that although during the rulemaking

almost every industry group, environmental group, agency opposed

the phase-in, DOE was the only entity that supported it. They have

now changed their tune and are supporting a repeal of the phasein.

So we thank you for your support on that and I have a number

of other issues that I have submitted for the record.

Thank you.

Mr. PENCE. Very good. Thank you, Sarah.

And, Mary, I appreciate your patience and very much appreciate

NFIB sending you to be with us today.

34

STATEMENT OF MARY LEON, NFIB

Ms. LEON. Thank you, Chairman Pence. I am delighted to be

here with you today. I think NFIB recognizes that much of what

you are charged to do is to undo what the previous administration

did while they were in office and what I want to focus on today certainly falls in that category and that has to do with the OSHA recordkeeping rule which a number of other people around the table

have already mentioned.

Really, the OSHA recordkeeping rule is one of the regulations

that would threaten small business owners if it were to go into effect. The recordkeeping rule will affect nearly every small business

in the country and significantly add to the paperwork burden of

small business owners. In particular, NFIB is concerned with the

provision requiring employers to determine and record injuries that

occur outside the workplace, but are aggravated on the job. The

rule specifically states ‘‘You must consider an injury or illness to

be work-related if an event or exposure in the work environment

either caused or contributed to the resulting condition or significantly aggravated a preexisting injury or illness.’’ The regulation is

supposed to be designed to help employers recognize workplace

hazards and correct hazardous conditions by keeping track of workrelated injuries and their causes, they should not be responsible for

recording injuries and illnesses that have occurred or were caused

outside the workplace.

One of our NFIB members, Eamonn McGready, who owns Martin Imbach, Inc. in Baltimore, Maryland, a marine construction

company, testified before House Education and Workforce Committee last year and he made a very interesting statement. He

said, ‘‘OSHA seems to want to record every rash or blemish that

an employee may have at some time during the workday, every

muscle strain or twinge, every runny nose or respiratory infection,

every sore shoulder, knee or ankle, even if these perceived or real

ailments may have occurred as a result of weekend gardening or

softball.’’

As Jenny Krese has mentioned earlier, the recordkeeping rule

was finalized, ironically, on Friday, January 19, 2001, the last day

of the Clinton administration. The Department of Labor has pulled

the rule back from OMB as a result of complaints from our organization and other organizations like NAM and it is my understanding that the OMB can deny the regulation approval under the

Paperwork Reduction Act if it determines the rule will produce unnecessary paperwork for employers. So we simply urge you to hold

hearings on this very dangerous regulation for small businesses

and to work with OMB to deny the regulation’s final approval.

Thank you, Chairman.

Mr. PENCE. Thank you, Mary.

A show of hands about a level of awareness about that particular

recordkeeping issue, you are hearing about that from your members?

[Show of hands.]

Mr. PENCE. News to the chairman.

Bryan Little with American Farm Bureau.

Thank you for your patience and please proceed.

35

STATEMENT OF BRYAN LITTLE, AMERICAN FARM BUREAU

Mr. LITTLE. Mr. Chairman, one of the good things about being

one of the last people to get a chance to have your say is that an

awful lot of my work has already been done for me because an

awful lot of folks have already mentioned a lot of the things I was

going to talk about. In recognition of the fact that one of the most

dangerous places to be is between a roomful of people and their

lunch, I will try to keep this as brief as I can, except to say that

Mike did an excellent job talking about our concerns about the Endangered Species Act and wetlands regulations. We have all those

same problems and his discussion of that was a tour de force in describing what our problem is with that as well.

As to the effluent discharge regulations, Mike, welcome to our

nightmare. They did it to us in January of this year when they decreased the number of animal units that their effluent guidelines— a farm with the number of animal units applies so that about

39,000 farms would have to be permitted now that did not have to

be permitted before, subjecting a lot of our members to the tender

mercies of the Environmental Protection Agency that did not have

to deal with that before, and treating them essentially as though

they are a point emitter of runoff, which does not make a whole

lot of sense in an agricultural context. And, amazingly, for the first

time in more than a century, applying these kinds of regulations

to a common agricultural practice, the spreading of animal manure

on a farm field as fertilizer. This has been done by farmers for at

least 150 years in this country and all of a sudden EPA thinks this

is a problem. I am not quite sure why after all this time they think

it is a problem.

Shannon, your description about ergonomics problems was right

on point. A lot of our people have that problem. The only problem

we have is that it is not supposed to be an agricultural regulation

and yet an awful lot of what farmers do fall under the description

that OSHA offered us about what ergonomics problems are, so we

do not even know whether we would have been covered or not if

we had ever had to be in compliance with it.

Giovanni, you talked about SBREFA and we would like to see

the Forest Service and the Fish and Wildlife Service covered by

that. I can assure you, Mr. Chairman, that the prospect of bureaucrats from the Forest Service and Fish and Wildlife Service having

to sit and listen to farmers and ranchers talk about the way they

run their agency is something that would make a lot of our members’ mouths water with anticipation. Even though a lot of you

have been through those processes before and understand that it

is maybe not the perfect solution to your problems, but at least it

is a start because right now these agencies are famous for their inability to listen.

Hours of service—I am sorry, I did not catch your name with

your dissertation about hours of service, but thousands of farmers

operate commercial motor vehicles as an incidental activity in the

operation of their farm businesses and the new hours of service

regulation that our friends at DOT brought forth last year would

have been hugely problematic for a lot of these people. One of the

common features you will find in agriculture is that the work needs

to be done when the work needs to be done. Otherwise, your liveliVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00039 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
36

hood for an entire year is potentially at stake. And trying to make

bureaucrats at the Department of Transportation understand this

is an incredibly high hill to climb.

Craig, you talked about your problems with INS and I am

amused that you cited our guest worker program as an example

you would like to follow. We have been trying to fix ours for six

years now. So your comments kind of reminded me of the bumper

sticker you will see on cars from time to time, you know, ‘‘Don’t follow me, I’m lost.’’ You do not want our guest worker program or

anything like it.

We have been trying to figure out a way to deal with our problem

with a huge illegal labor force. At least 60 to 70 percent of the

labor force that works in agricultural at various times of the year

are people who are fraudulently documented. When INS comes to

call, we find out that a lot of them are illegal. They do not wind

up leaving the country and the INS does not deport them, they just

wind up working for a guy down the road or for a packing plant

or for a carpet factory or furniture factory or something like that.

So we have this enormous game of musical chairs that goes on

every time INS does any significant amount of enforcement activity

in a region. And you do not really serve the underlying enforcement need to actually enforce the law, you are just forcing people

to move around. INS can do a press release and look good in the

local paper, the folks from the Federation for American Immigration Reform think it is wonderful and all you have done is you have

created a massive headache for employers in that area.

One thing that nobody else mentioned and I will mention very

quickly is our ongoing concern with the way the Environmental

Protection Agency regulates the registration and use of pesticides

which we now in the new politically correct age call crop protection

chemicals. After the Alar scare in the 1980s when Meryl Streep

suddenly became an authority on the effect of a relatively benign

chemical like Alar on the bodies of young people, we later came to

find out that Alar really was not all that bad after all, we have had

an ongoing problem with this issue. We tried legislation in the mid

1990s to get EPA to recognize the need to use sound science rather

than political science when they are figuring out what kind of

chemicals ought to be registered and that was singularly unsuccessful with the last administration. We are making a little more

headway with the current administration, but there is still a lot of

work that needs to be done and a lot of this has to do with issues

of simply the kinds of assumptions the agency makes. They are

still in the habit of making the most conservative—and this is not

conservative good, this is conservative bad—assumption they can

make about how much exposure to something is bad as opposed to

maybe a more liberal assumption. They will always default to the

most conservative assumption they can make. What that means is

that a lot of chemicals that have been used commonly in agriculture for years now are in potential danger of not being able to

be used to perform vital functions that will allow you to cultivate

and grow a lot of these kinds of crops.

So all these issues are—we feel like we are a very heavily regulated industry, even though a lot of people think that we are not,

37

and a lot of these issues amazingly we have in common with a lot

of our colleagues in other industries.

[Mr. Little’s statement may be found in appendix.]

Mr. PENCE. Thank you very much, Bryan.

Mr. LITTLE. And, by the way, I do not know what dum-dum

forms are. I thought you were talking about a Form I–9.

Mr. PENCE. It was ding dong forms.

Mr. LITTLE. I thought you were talking about a Form I–9.

Mr. PENCE. We will have to find that out.

I think we only have to worry when the EPA has a problem with

spreading manure in Washington, D.C. That will be a real threat

to the nation.

Kevin Maher with——

Yes, go ahead.

Mr. WILSON. Bryan, I was chuckling back there when I heard

Craig Brightup’s comments today about the guest worker program.

I used to be a member of the Essential Worker Immigration Coalition and I was chuckling a little bit, Craig, whenever you were

talking about if only we could be like the ag worker program. I

think at one time I have had back-to-back meetings with the Farm

Bureau saying could you please reform the temporary worker program and then also from my friends at the Hotel and Motel Association about why we need to get a new program. So just as a staffer, I thought I would observe that we probably could all agree that

more paperwork is not necessarily the answer to the worker shortage problem.

Mr. PENCE. Before I introduce Kevin Maher, and we have two

more presenters, let me give you an idea of the lay of the land

here. We are going to cut loose for lunch here at about a quarter

after 12 and I am expected over for a vote and have a brief meeting. There would be no obligation that you would return here at

1:00. I know that Barry Pineles indicated to all of you that we

would be done by 12:30 or 1:00 and you are all—particularly given

the caliber of people in this room, I am sure you have appointments

and commitments.

If you do not, please know that the chair will reconvene more of

a dialogue session at 1:00 in this room and we will be here from

1:00 to 2:00 to really talk about and knock around in a more informal way what have been extraordinarily effective presentations.

And with putting that pressure on you, Kevin, not to blow the

curve, with American Hotel and Lodging Association you are recognized.

STATEMENT OF KEVIN MAHER, AMERICAN HOTEL AND

LODGING ASSOCIATION

Mr. MAHER. Thank you. I appreciate the opportunity to be here

and I will be brief.

I certainly want to echo a few of the issues that have been

brought up. I do not want to re-plow the field, but the hours of

service issues, the immigration issues, recordkeeping, comp time,

flex time, blacklisting are all a concern. Although fortunately I did

want to talk about one issue that has not been brought up yet and

I think in my eight years with the association the number one

38

issue the largest source of confusion and complaints for our members is the Americans with Disabilities Act.

And I am not here to condemn the ADA, we have made tremendous strides in the last ten years as a result of this act, and we

have no sympathy for any lodging property that willingly ignores

the requirements of the ADA. In fact, there are about 40 million

disabled travelers in the United States. That is a significant market that we cannot ignore.

But while there are pluses to the ADA, there are also problems

and I am speaking primarily of Title 3, the public accommodations

provisions. Essentially, it is a national building code and if you

want to build a hotel or make an extension to your property, you

can go to your local commission and get your building permits and

your water permits and whatever permits you need, but you cannot

get an ADA permit. There is no source you go to get an ADA permit or a certification to prove that you do comply or your property

does comply with the ADA. And that is a concern particularly for

smaller members that are not able to hire the attorneys that they

need.

And we certainly know that what is a disability and what our

members need to accommodate is an elusive and constantly changing target. Courts have been defining and redefining over the last

few years what is a disability. I have taken phone calls from members who tell me that they had a guest checking in at that moment

at the hotel who has a dog with him and the guest is obviously not

blind and the hotel has a no dog policy, but the guest is claiming

that under the ADA they need to be allowed to bring in this dog

and they want to know does the ADA requirement, and it does, and

is there any way to prove that this is in fact a comfort or service

animal as defined in the ADA for a disability of a guest. And there

really is not. There is no way to determine if this is a service animal or if this is somebody traveling around with their dog and just

claiming that it is a comfort animal.

There is an obvious concern with litigation. There are a number

of properties that have been hit with drive-by lawsuits, certainly

you have heard of a number of those, and it is a particular concern

for the smaller members who cannot afford the expensive attorneys

that someone like Clint Eastwood can to fight these in court. Our

members have to settle as quickly as they can, do what they can,

and they need some help in that area.

A particular concern is the ADAG and the organization that begins the process of setting the ADA standards, is undergoing

changes. They are looking at how they can implement technical

corrections in the ADA. What that is going to do is that at some

point it is going to be handed over to our members to comply and

it is going to start a new round of lawsuits because everything is

going to change a little bit and our members will not know what

the new rules are versus what the old rules are and attorneys are

going to show up saying you are not in compliance, here is a lawsuit.

I will stop right there, that was the one issue I wanted to talk

about today.

Thank you very much.

Mr. PENCE. Thank you, Kevin. Appreciate your patience today.

39

Being new to Washington, terms like ‘‘comfort animal’’ and ‘‘service animal’’ are just not part of the world I used to live in, so I just

appreciate that education.

Doug Greenhaus with National Automobile Dealers.

Thank you for being here. Proceed.

STATEMENT OF DOUGLAS GREENHAUS, THE NATIONAL

AUTOMOBILE DEALERS ASSOCIATION

Mr. GREENHAUS. Thank you, Mr. Chairman. It is our pleasure to

come today to mention a few issues, fortunately none of which have

been talked about today. That is not, of course, to say that we— I think I have heard about at least a dozen issues that are equally

of concern to our industry, but we do have a couple that have not

been mentioned, two of which are specific to our industry, one of

which is a more general nature.

First is one that is due for compliance July 1st of this year, less

than a week away, I believe, now and it comes from the GrammLeach-Bliley Act of 1999. Now, privacy, of course, is a big issue. We

have heard about the medical privacy issue mentioned a couple of

times today. Gramm-Leach-Bliley, of course, is well intended. We

do not question the goals of that act. Unfortunately, the way the

Federal Trade Commission has implemented that rule has left

things a little short and our members are truly struggling to meet

the requirements set out in the regulation which is found at 16

C.F.R. 313.

Any retail business significantly involved in financial transactions, and by that I mean everything from running a credit report to taking credit applications, doing leasing, it would apply, of

course, to not only car dealers, to equipment sellers, to the sellers

of appliances, so it is a fairly broadly applicable rule. All of these

industry folks are trying to struggle to meet this rule. Now, to the

agency’s credit, they are trying to be responsive. They are overwhelmed by the difficulty that industry is having. At the same

time, they do not have the resources perhaps and have not made

any attempt to issue compliance assistance materials for small

business and I think it is clear that their rule unduly affects small

business as compared to large business.

So what is the solution? I think the solution at this point, given

the rule is taking effect the first of next month, is for your committee perhaps to exercise some oversight authority some time

later this year and see how it is working out, see what impact it

has had, see perhaps how in the future the rule can be amended

to reduce some of the burden that it clearly has on small business.

The next two issues I want to mention are dealership specific, so

most folks can probably tune out a little bit.

The first is known as the dealer certification requirement. It

comes from EPA. It is 40 C.F.R. 85.2108 and it dates from 1981

and it comes out of the 1977 Clean Air Act amendments. Very simply, it is an outdated rule. It does not comport with the 1990 Clean

Air Act amendments, it does not comport with the newly issued

Clean Air Act rules for motor vehicles and the language unfortunately that is mandated by the act, the Clean Air Act, Section

207(g), just does not make sense any more. It requires that every

single new car sold in this country or leased have this form proVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
40

vided to the customer which the customers do not understand,

which the dealers do not quite understand and it really is just one

of these things where you mentioned at the outset you can draw

a red line right through it. The solution is elimination.

And lastly the insurance cost information requirement. This is a

NHTSA rule. It stems from the Motor Vehicle Information Cost

Savings Act, Section 201(c). It dates back to 1972, another outdated

rule. Someone mentioned earlier the gap between the statute and

the regulation of 12 years, the gap here was 20 years. The rule was

not issued until 1993 and, again, it resulted from a lawsuit, Consumers Union v. DOT. The agency has no more interest in this rule

being on the books than we do, the regulated community, and they

resisted for some 20 years, as I have said, to its issuance. But unfortunately it is on the books, is it of very little utility, requires

that insurance cost information, information describing the historical collision experience of a given model of vehicles be provided in

booklet form at the point of sale upon request. To my knowledge,

I have never run into a dealer who has had a request from a single

consumer for this information. So it is of admitted limited utility,

according to the agency. Again, the solution is elimination. Unfortunately, it is statutorily mandated under Section 201(c) of the

Motor Vehicle Information Cost Savings Act.

Mr. PENCE. Thank you very much, Doug.

Lastly, Charles Maresca with Associated Builders and Contractors.

Thank you for your patience, Charles.

STATEMENT OF CHARLES MARESCA, ASSOCIATED BUILDERS

AND CONTRACTORS

Mr. MARESCA. Thank you, Mr. Chairman. I was going to begin

by saying I see my time has already expired. We will submit a

more extensive comment for the record.

The blacklisting regulations are, of course, a problem.

Ergonomics, ergonomics particularly in construction a problem. Paperwork, paperwork reduction. Sound science, especially with regard to EPA and OSHA, sound science and reliable data as well.

And also small business outreach by EPA and the agencies. E.P.A.

simply seems unable to find small businesses and when they do

find them, do not know how to contact them. That is a problem

that the committee might take a look at.

We wanted to raise the issue and in two regards. One is under

the Davis-Bacon Act, the definition that the Department of Labor

uses for helpers is unnecessarily restrictive. We think that that

regulation really cuts out a lot of important entry-level training opportunities on public works and we think that that regulation

needs to be looked at.

On the apprenticeship and training side, we believe that a new

look, a fresh look at the apprenticeship and training regulations

would produce regulations that allow for new training programs.

There is a need in our industry and other industries as well for expanded training programs and new approaches to training and we

think that a new look at those regulations would produce new opportunities, not just for training programs, but also for entry level

workers.

41

Mr. PENCE. Thank you, Charles. I appreciate your brevity. I am

happy to inform you that we are already planning a hearing on the

Wicker bill on apprenticeship and training in this subcommittee.

We will look forward also to discussing, for those of you that can

reconvene after 1:00, other potential hearings, there have been

some formal suggestions for hearings, but that is kind of the next

part of the conversation we would like to have.

Craig, do you have a quick question?

Mr. BRIGHTUP. Mr. Chairman, may I make just one brief comment? I am not going to be able to come back and I certainly do

not want this to sound offensive because I work with everybody in

this room and we get a lot done, but I wanted to get back to the

guest worker program. Our association and I personally and the

Essential Worker Immigration Coalition are completely aware of

how unhappy the agricultural community is with the guest worker

program. So when I spoke of that I was speaking of the fundamental concept which has at least been accepted at its base level

of allowing foreign nationals to come into this country perform certain jobs.

And just one other comment on what Bryan had to say about the

fact that when the INS comes in, like it did with our member in

Portland, and says half of your workers have to go. When our member asked him if this serves no purpose, these people are simply

going to take jobs with my competitors, the INS person, the regional director, said, yes, we know, we call this technique reshuffling.

Thank you.

Mr. PENCE. Thank you, Craig.

There are a couple of other people that wanted to add to the discussion. I am going to go ahead and get off to my vote, but Barry

will go ahead and hold forth here until 12:30, if there are other

clarifications for people that cannot be with us at 1:00.

Let me say this has been enormously educational for me and I

am extremely impressed with the quality of individuals that are

here and I am very honored by that and know that you have provoked the chair to even a more energetic approach to the agenda

of this subcommittee by your remarks. And those of you that can

return at 1:00, we will look forward to a more informal conversation about all the issues that you have raised. But if there are people that want to add who cannot be here at 1:00, Barry will take

the chair and I will see some of you back at 1:00.

Thank you all very, very much.

[Applause.]

Mr. PINELES. Before people leave, Craig, if you can call me about

a hearing on Mr. Wicker’s bill that Mr. Pence mentioned. Call me

because I would like to arrange a hearing some time in July for

that. Yes, you, too, Loren. Yes. And Charlie and John. If all the

construction contractor people can call me about that,that would be

great.

Now, I know Rosemary has a plane to catch—— Ms. MUCKLOW. I just wanted to thank——

Mr. PINELES. Rosemary, you need a microphone.

Ms. MUCKLOW. Oh, I am sorry. I just wanted to thank both Robert Green and Betsy Laird for their industries’ concomitant comVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
42

mitment to producing safe food. They work very hard to train their

people to do the most effective job to kill ugly organisms, microorganisms. Things like salmonella, e-Coli 0157H7. We cannot regulate them out of business. We can set up systems to destroy them

before that food is served to consumers and they are excellent partners in accomplishing that activity and Betsy and Robert both had

comments this morning and that really fits.

Thank you very much. Much better than government regulation.

Mr. PINELES. Jeff or Jenny?

Ms. KRESE. I wanted to add one small point which is actually

kind of a big point on recordkeeping. As you all know, the rule is

set to go into effect and to be implemented January 1, 2002. Of

course, further, as you probably are aware, the states and companies would need six months to come up to speed with the current

recordkeeping rule if it is to be implemented by January 1, 2002.

That six-month deadline starts on July 1st, so just in about a week

and a half to two weeks. I meant to offer this earlier, but if the

chairman or anyone on this subcommittee, any member on this

subcommittee, can weigh in with the Department of Labor to just

simply ask for a stay of the rule for a very short period of time

while these issues are getting resolved, and they are getting resolved, we feel, through our discussions with OSHA, that would be

very much appreciated. If it is not stayed within the next week or

two, it will become implemented in January.

Mr. WILSON. Does anybody know, is there a recordkeeping letter

going around on the Hill on recollection?

Ms. KRESE. There is not. I have just personally been making contact with offices to tell them about it and this roundtable was another good opportunity. My gut feeling is that they probably will

issue a very short stay, but we have not gotten that confirmation

from them yet. We have written them several letters asking for

that clarification and we feel that they will probably make a decision—well, they have to—in the next two weeks, but probably this

week.

Mr. WILSON. That is a really good action point for us to take

away from this today, Jenny. Perhaps Chairman Pence could circulate a letter to all of his colleagues asking them to sign a letter

on this very point because I think if we had 60 days or 90 days

to help with the communication that is going on between the regulated community and OMB and OSHA, I think that would be really

helpful, so thanks for bring that up.

Ms. KRESE. We included something in our packet, actually a letter we just sent over to the department again this week that you

can probably gather some information from, but if you need anything further, I am happy to help.

Mr. WILSON. Excellent. Another follow-up on that point, I just

wanted to say that on the recordkeeping issue, if you have statements, if anyone here has a statement, that we do not have, we

want to make sure that Barry or I have that before you leave so

we can be sure that that is included in the official record of what

has transpired today. I just want to add that little reminder.

Thanks, Jenny.

Mr. PINELES. Does anybody have any comments, other comments

that they need to break before we break for lunch?

43

[No response.]

Mr. PINELES. Obviously everybody wants to eat lunch before we

make more comments.

All right. Well, under the authority granted by the chairman to

me, I declare this summit in recess until 1:00.

[Recess.]

Mr. PINELES. I think we should probably get started. Yes. Would

people please sit in front of your name tags? That helps the court

reporter handle what is going on here.

Since the chairman has not returned, I will take the authority

he delegated to me to reconvene the regulatory submit.

Let me start off by asking a sort of generic question.

We have heard lots of different regulatory problems, we have

heard about Endangered Species Act issues, we have heard about

Federal Trade Commission lending rules, Federal Motor Carrier

Safety stuff, EPA issues, OSHA issues.

Let me ask for the people remaining, without going through each

individual statute and changing the individual statutes or without

using the Congressional Review Act, which given the changes in

the Senate probably will not be happening, what sort of process

changes can you envision that would apply across the board that

would help the agencies recognize small business problems and not

promulgate really problematic regulations?

Who wants to start? Come on, somebody volunteer.

Mr. MAHORNEY. I will. Bill Mahorney, American Bus Association.

I think probably a theme that is shared by everybody in here is

economic analysis, proper economic analysis. I always think especially with respect to the Federal Motor Carrier Safety Administration, they just do not put the resources into that area and it is critical for us as small businesses. So I would say that is my number

one, spending a little more time and effort in advance to do regulatory analysis.

Mr. PINELES. Amy.

Ms. BLANKENBILLER. To just dovetail on what Bill was talking

about, I know we have talked privately about these MACT standards. Publicly, I raised them again today. You know, time and time

again we meet with the agency and they say, oh, there is only

going to be 20 foundries in the United States that are going to have

to meet the requirements of this particular MACT standard, but

they put no baseline requirement, so every single foundry has to

do something to get out of the standard or prove that it does not

impact them, and we go back and we say your economic analysis

that it is really not that burdensome or it really does not cost that

much is completely skewed because they are only looking at the 20

or 30 facilities that are actually going to have to follow the steps

within the requirement of changing control technologies or changing processes, but they are not accounting for what they have to

do to determine if it affects them, what they have to do to hire

some consultants in most facilities when they do not have somebody who works there and the steps they have to take to keep

themselves out, all those monitors, recordkeeping and those kinds

of things.

And you go to talk to them and it falls on deaf ears because they

say, oh, we have a court deadline. Or NRDC is going to sue us. And

44

so I think—believe me, I am the last person to be on EPA’s side,

but they get pushed up against a wall and at the same time they

are getting sued.

So we are trying to help them with economic analysis and they

are like but we do not have time or we cannot do it. So there is

some legitimacy to why they are having problems.

Ms. SEEGER. Barry, is it all right if I follow up on what Amy was

talking about?

Mr. PINELES. Sure.

Ms. SEEGER. All right. Do you still have the chair?

Mr. PENCE. Not any more.

Ms. SEEGER. Well, Congressman, we were talking about EPA’s

hazardous air pollutant program and this is one in which EPA has

to put out over a ten-year period hundreds of rules and they have

backed into a situation where they have another year to go in this

ten-year program and they still have 50 rules to go. And those 50

that EPA has to finish are rather dreadfully written, though when

you try to go into the agency and ask to have a meeting on how

this would decimate small businesses, EPA says I do not have time,

I do not have time for your.

When it was a problem of their own making—in our instance six

years ago, we said half of our folks are small businesses and we

would like to explain to you some opportunities where you might

be able to minimize the impact of the rule, and they said, well, we

do not really know what the rule is going to be right now, so that

would be a waste of time.

And so then the rule gets further and further into the mind set

of the mid-level people that are preparing it and now we are at a

point where EPA is saying exactly what they are saying to Amy,

which is that we are bumping up against this statutory deadline

when we are supposed to get all of these rules out by a date certain. In this instance, it is not the end of the world sort of deadline

in that basically you just have to get a case-by-case permit, but up

front early on participation rather than the gaming of the system

here, which is that EPA will offer up the excuse that we cannot

really listen to your concerns now, we do not want to convene these

panels because they take forever, and we are very sorry.

I do not have the sympathy that Amy has about——

Ms. BLANKENBILLER. It is not sympathy.

Ms. SEEGER. Because for years, if you go through and read what

they have asked the Congress to implement this program, they will

say they have enough money, but then when you go to the program

office and ask them to do some differential analysis or risk assessment or something just a little bit out of the ordinary, they will

say, my God, we do not have the resources to do that. So they are

speaking out of both sides of their mouths.

And with that, I yield the floor.

Mr. PENCE. Let me jump in. I appreciate very much Barry getting the conversation going and let me thank you all for sticking

around. I have an agriculture committee caucus, so I will be leaving in about 30 minutes, but I really wanted to encourage less formality at this point and feel free to interrupt even the chair if you

have a thought or a point.

Maybe we could just start right there, Arline.

45

I mean, that seems to me to be a very difficult issue for you and

for your membership to deal with, if you are going to agency officials and they are essentially saying they are understaffed or they

are incapable of meeting the deadlines?

Ms. SEEGER. They are understaffed and over the course of the

years it is too early to come talk to us now because we do not know

what you are going to do, then we have lost our contractor money

so we are in a holding pattern, and then you just learn because you

are part of a group that is sort of—this group analysis that the

Small Business Administration convenes every two months, that is

where we learn that these MACTs are about to come out of the

agency.

And so that is the participation—or there has been no participation by the small businesses.

Mr. PENCE. See, I would be very interested—and Barry and I can

talk about this. I think my vision for the subcommittee is that we

are going to take what we got from this summit and then collaborate with the members of the Subcommittee and develop an agenda

that is really reflective of the priorities that we heard here today.

But phase one would be let us add definition by picking a subject

area per hearing. Then the next phase is what I like to call the

confrontation phase and that is bringing administration officials in,

and we have been assured by the White House a couple of weeks

ago that we will have access in a cooperative way to very high

ranking officials in the relevant agencies to come and talk to us

about this. But it seems to me that tyranny by inefficiency is still

tyranny and I am very intrigued about Barry possibly developing

a series of hearings on simply how inefficiency wages war on small

business.

Ms. BLANKENBILLER. Congressman—— Mr. PENCE. Yes, go ahead.

Ms. BLANKENBILLER. Sorry. I am the first one to interrupt the

congressman.

Mr. PENCE. Yes. Please.

Ms. BLANKENBILLER. One of the things, while we are being more

informal and speaking a little more candidly is talking to a top

ranking official at EPA is going to—it not going to be helpful because while—— Mr. PENCE. Who do we need to talk to?

Ms. BLANKENBILLER. You need to talk to the mid level people at

EPA because, for example, in the air office, it took us two years,

seven letters and I do not know how many phone calls to request

meetings with top level people at EPA during the time we were

having problems with the secondary aluminum MACT issue. The

staff was telling us one thing, as the rule started going up the

chain of command, political influences were coming down from the

top, technical expertise or decisions or whatever was coming up

from the bottom, and they were reaching this log jam.

Mr. PENCE. So you are saying it is more—it could have more

short-term impact. I mean, is that true around the room? If we

brought in more mid-level people that have more direct contact

with your membership in resolving these issues?

Ms. BLANKENBILLER. And I would bring them into your office and

not a hearing because the only way you are going to get testimony

46

at EPA—I worked at EPA during Bush 1 is to get it approved

through the OMB process and all that kind of stuff. Even when

John Sites testifies, that is official EPA policy that goes through

OMB. But if you sit down and talk to John Sites in your office

about some of the problems of managing the technical staff, he is

going to give you a much more candid response to exactly—potentially—and then you can ask the higher level officials some of those

suggestions.

Mr. LEITER. One way to accomplish that would be to have a

briefing. My name is Jeff Leiter. I am counsel for the National Association of Convenience Stores.

Mr. PENCE. Oh, hi, Jeff. I did not think you were here before.

Mr. LEITER. I was a back bencher.

Mr. PENCE. Okay. Well, thank you. Thank you.

Mr. LEITER. John Eichberger had to go back to Alexandria and

asked me to fill in for the rest of the session. I appreciate the opportunity to be here.

Typically, what I have found, one example has been in the underground storage tank area where it is just that detailed where they

have to bring the staff over to explain to members of Congress or

their staffs just how the program operates. So to the extent, let us

say, you had this effluent limitation guideline or the MACT issues,

having those people come over and say, all right, tell us how this

works, and then raising these kind of questions is probably the

proper context.

Mr. PENCE. Are you talking about in a hearing context or are you

talking about in an informal context?

Mr. LEITER. No, no. Just an informal session.

Mr. PENCE. Okay.

Mr. LEITER. Because otherwise, you are not going to get the testimony.

Mr. PENCE. That is saying—and you cannot insult a freshman

member of Congress, so what you are saying is then I say in that

kind of a meeting, I say, well, gee, that is interesting how that is

supposed to work because what I am hearing is something else.

Mr. LEITER. Otherwise, the staffer who has been working on the

science on this for the last two years is either not going to be allowed to testify or they are going to write it for him.

Mr. PENCE. Yes. That helps a bunch, actually.

Mr. LEITER. I kind of liken this to a Whack-a-Mole game where

there is somebody there that knows what the answer is and, you

know, people are doing this. And it depends on the rule what is

going to pop up. They may do the science piece of it, but when you

get to the economics, let us say, on this diesel desulphurization rule

where we are talking about having to install additional tanks, the

economic analysis says, well, I am going to amortize that cost over

10 or 15 years. Number one, I cannot get a loan from the bank for

that long period of time and the IRS depreciation period is five and

a half years when I am going to get rid of it after four. But they

just gloss over that when they do this financial side. So that is the

particular Whack-a-Mole on that.

Mr. PENCE. Right.

Mr. LEITER. You go to any other rule, you are going to find something else that pops up, it is just a defect.

47

Mr. LUZIER. Mr. Chairman, Mike Luzier with Home Builders. I

endorse the comments about the process changes in the economic

analysis that is done. Endangered species is one even where that

is done honestly that—we are groping with this right now in light

of a 5th Circuit opinion which said, Fish and Wildlife Service, the

way you have been doing economic analysis is invalid, go back and

do it right, so they have asked us—— Mr. PENCE. Is that the Solid Waste Agency decision?

Mr. LUZIER. No, that is in wetlands. This is an ESA. And it is

significant, it dovetails to the critical habitat thing. Congress clearly said in the ESA economic considerations are not relevant when

we decide to list a species, it is a purely biological decision. And

we agree with that as home builders, we think that should be a biological decision. What the Congress did go and say is when you

designate critical habitat, though, that is an economic decision and

we want to make sure that the costs do not outweigh the benefits.

Well, the Fish and Wildlife Service always says—and there are

two outs to designating critical habitat, it is either indeterminable,

which almost all of them are, or it is imprudent to do so, which we

would think would be the only out to say, well, the economic costs

outweigh it. We have some very good economists and what they are

saying is the status of economic theory really does not allow us to

put an objective number on what 20 golden cheek warblers is

worth. It is a normative decision, it is a value judgment. And what

the Fish and Wildlife Service is struggling with is saying but we

need an answer, at what point do the scales tip. We support the

economic analysis, but it is not going to solve all of the problems

that are out there.

One of the things in answering your question or picking up on

your idea that might be helpful is if we could think of a way to

force the agencies and applicants, too, to do what they say they

want to do and that is better science.

If I could give you one example, EPA is concerned about—— Mr. PENCE. Force the agencies?

Mr. LUZIER. To do better science. Let us do that.

They say, for example, under the ESA we are only required to

go with best available data and Congress unfortunately did not say

but that has to be at least credible data. Many of the listings are

based on data that would not pass muster at a Master’s level thesis, yet the Fish and Wildlife Service has an ironclad defense: Congress said just give me the best that is out there.

In one case, the petition to list the golden cheek warbler was

based on a one-paragraph letter from an amateur naturalist. And

we fought that. There are billion dollar consequences that flow

from that and it does not seem reasonable to us.

One of our frustrations, this is my closing point, not to dominate,

is that as we talk to Governor Whitman about our willingness and

desire to do this effluent limitation guideline process correctly, our

president committed, we will go out and educate the members that

you need to do this. If we are impairing water quality, we want to

certainly do our share to fix it.

The immediate response is, well, geez, we do not think we have

the money, yet I can point to probably—if you gave me a day, a

billion dollars worth of expenditures EPA has made where ConVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
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gress has never mandated them to do anything and it seems to me

that an administrator of an agency ought to at least attend to their

statutory obligations before they attend to discretionary items. So

that is an idea.

They funded this major smart growth effort out of EPA, which

has been okay, but it makes it hard for business people who are

then told we cannot do good science on the listing end, but you had

better do definitive science on your end when we are going to approve a mitigation plan, you had better give us more. And so many

of our guys feel that there is a certain level of disingenuousness to

the debate and we would think in a multi-billion dollar budget—

if it is a million dollars, that is not much.

Last word. There is hope because if we can truly get the regulatory discussion down to an honest technical debate, we can often

make good decisions. I will give you one example of a success story.

When EPA proposed its total maximum daily load regulation

(TMDL), it was very controversial. One of the requirements they

were going to impose was that for any impaired level, any impaired

stream, that our industry was going to have to remove one and a

half times the amount of pollution it was going to pose. We were

going to have to correct other people’s problems.

We had our economists and our Ph.D. biologists sit down with

EPA’s economists and they jointly concluded that that cost was

going to be $5000 per lot. EPA concluded it was not justified and

eliminated it from the final rule.

That was because there was an honest effort on both ends to get

the right answer. We told them if the numbers show that this is

cost effective, then we should do it. It turned out not to be cost effective. I think the difference was when they came to the table,

they, the EPA, there was not a preordained outcome in mind. It

was truly saying how do we find the right answer? And then when

we got the number, we did that. Last year, that saved housing consumers $6.5 billion.

Ms. BLANKENBILLER. Barry, the other thing I want to add into

your general question.

Before you got here, Congressman, he was asking us what kind

of general ideas do we have to make the process better.

I would suggest a more limited role for the Office of Enforcement

or a more cooperative role for the Office of Enforcement at EPA.

We were in the process of working on the iron and steel MACT

standards. We had four United States foundries that were willing

jointly with EPA to test the stacks to find out what emissions were

there, the levels and what we needed to do. The Office of Enforcement, however, said if you found one thing out of whack in those

we are going to fine you, we are going to give you a notice of violation. And we said can’t we get a waiver? Can’t we get a 30-day

waiver, a 90-day waiver or something because we are trying to get

the science for you at an operating facility rather than having some

computer-generated modeling that they use most of the time.

And they would not do it. So we had to test in a facility in Mexico and it is not necessarily representative of the same way that

we operate in the United States and it makes the data not necessarily as good as we could have gotten if we did it in the United

49

States, but the Office of Enforcement stood right in the way. And

we have seen that repeatedly.

I do not know if you guys have seen it in other industries, but

we just thought it was absolutely ridiculous when we had four facilities willing to do it, but EPA basically said we do not want it,

we do not want your information.

Mr. PENCE. I am involved with some legislation involving 90

days to cure with regard to OSHA, but it seems like what I hear

you saying is how about a different culture in the whole regulatory

agency structure.

It is my experience, having grown up in a small business, Amy,

that there are very few small business people that just are not interested in getting it right and if they get it wrong, they will fix

it, pay the lawyers and pay the fee, whatever we need to get it

done, but what I heard again and again and again today is more

like a gotcha game in the regulatory state which seems to me to

be really antithetical to what we want to do in terms of the mission

of the original legislation, which is to achieve the goals of the legislation and not to be collecting fees and fines.

Mr. LEITER. Since you mentioned legislation, if I could just put

out a bold suggestion, and it is something that I have mentioned

in meetings that the small business community has had on an ongoing basis with the deputy administrator of EPA, one of the continuing refrains we have is, well, we have the statute and many

times the administration is proposing amendments to the statute

or it is being reauthorized and they are looking to try to fix problems with the statute. And we constantly get, well, we do not have

any flexibility here to deal with a small business issue because of

Congress.

And EPA has made a decent effort, it has not been perfect by any

means, to do outreach to the small business community. The one

area I have kept suggesting is the legislative office at EPA. If they

are developing a proposal to respond on brown fields, Superfund,

whatever the issue may be, why not have a discussion with small

business before that legislative language comes up here to the Hill?

Many times then we are having it come up to you or your staff

and say there is a problem here and to the extent that there is deference paid to the agency’s expertise, we get some bad laws written

that then we have problems trying to deal with the agency when

they have to write the rule. If there is some way to encourage the

agency, particularly in the legislative shop, to have those kind of

discussions before they send something over here and they can look

you straight in the face and say, yes, we have talked to a lot of the

players, it might make things a lot easier.

Mr. PENCE. Doug, you are being awful quiet.

And, Bill, I do not want to exclude you guys, having waited the

longest to speak this morning.

Mr. GREENHAUS. Just to pick up on what Jeff was saying, again,

to be bold, I always thought it would be great if there was some

way to have a uniform process up here on Capitol Hill to review

in some fashion—I do not know who would have this responsibility—the potential small business impacts of most pieces of substantive legislation. Only so many things are going to come through

your committee and even fewer your subcommittee and get a good

50

look at from a small business perspective, but if we could have— because it all starts up here. The agencies claim their hands are

tied and to a large degree, unfortunately, they are tied. Not as

much as they say, but there are certain things that are done up

on Capitol Hill with respect to time constraints, with respect to

substantive requirements where perhaps it was not thought completely through what the small business impacts would be, almost

a scoring, if you will, of legislation with respect to its potential

small business impact, that could be later on when it goes down

to the agencies.

Mr. PENCE. You made a comment that I thought was one of the

most provocative things that was said all morning and I wanted to

ask you to elaborate on it for my benefit and for the benefit of the

staff, but you said that with regard to dealer certification under the

EPA that there are regulations that do not comply with the current

Clean Air Act, but these are regulations and certification requirements that your members have to meet in addition to other regulations or just—I mean, it may sound like a dumb question and it

probably is, or maybe naive, but—— Mr. GREENHAUS. Just to review quickly, it is a piece of paper

that is mandated very specifically, I do not know if it actually

spells out what size it has to be and what font, although some of

these rules do, believe it or not, but it is a form that is handed out

to consumers that has language in it that is inconsistent with both

the 1990 Clean Air Act and with the emissions regulations promulgated under that.

Mr. PENCE. So the language in the form is inconsistent.

Mr. GREENHAUS. Information given the consumer is contrary to

the language of the statute. And it was—originally, it made sense,

going back to 1977, the so-called tier 1 emission standards, but it

no longer makes sense. And I think there are a lot of these provisions that still exist in the laws and the regulations where someone

just has not taken them off the books.

Mr. PENCE. Okay. Yes. That was very—and then the NHTSA

rule. The legislation was 1972 and they did not promulgate the regulation until 1993?

Mr. GREENHAUS. 1993. Right. And the idea there is that they

could not find anything that they thought would satisfy the intent

of the legislation, which was to provide consumers with useful information regarding the crash worthiness of motor vehicles they

were going to buy.

Mr. PENCE. So that lawsuit created a fact circumstance and some

legal decisions.

Mr. GREENHAUS. Right. And they just grabbed something and

threw it in just to satisfy the court.

Mr. PENCE. Is there any inherent value in terms of ensuring that

regulations reflect legislative intent? Does a time table or a time

limit or deadline for the promulgation of regulations make sense?

Does it exist?

Ms. BLANKENBILLER. They exist. There are time lines, there are

requirements. I mean, just like the MACT standards.

Mr. PENCE. In the enabling legislation.

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gated within five years and certain categories that are within 10

years and EPA just willy-nilly has a million reasons why they do

not meet certain things.

And I will tell you, if anybody asks the EPA to justify something,

they will. They will figure out a way to do it.

Mr. LUZIER. We have this problem in spades in the Clean Water

Act and in the Endangered Species Act. One of the down sides of

hard deadlines in a statute is they provide very easy targets for

litigation for those that would want to stop rational progress. ESA,

we have one environmental organization called—they have renamed themselves because they were getting such bad press, but

they were called the Southwest Biodiversity Institute or something.

All they did was litigation. And the only litigation they brought

was the statute requires critical habitat designated within a year,

you are one year past, that is it. It is a very easy case for a judge

who has a heavy docket, geez, we have that in the Clean Water

Act, these standards were to be out at such and such a time.

There are often—I do not have a solution, sir, but there are

often, at least on the Clean Water Act side, legitimate reasons why

EPA said we need a little bit more time. It was very cumbersome,

of course, to come back to Congress, open up the Clean Water Act

with all that is attendant to that. So we have thought about that.

We see it often in state legislation where we often want a permit

review deadline. The reason they are ineffectual is the agency says,

all right, you can either get denied or you can give me another

month. And being business people, we say take your time.

And so my experience has been under the environmental statutes

those have hurt us more than they have helped us.

Ms. SEEGER. But in some instances, the deadlines are not as draconian as EPA. They only look at the consequences of the deadlines

from their narrow point of view and, again, this hazardous air pollutant program or MACT program, EPA is given a certain amount

of time to regulate 200 industries, if they fail to do it by a date certain, the world does not come to an end, though EPA thinks it does,

and so that is why they are rushing to promulgate bad regulations.

The statute has what I would call a soft hammer, which is that

rather than have a rule go out and be in effect, then the states on

a case-by-case basis make the control technology decision in a permit. But EPA is ignoring what I think is a rather sensible part of

the Clean Air Act, which is to just let that hammer fall because

EPA in its arrogance thinks that the states cannot possibly make

control technology decisions and so that is why they are going to

have lousy rules on the books, which was an artifact of their own

inefficiency, rather than let the statutory scheme take place. So

there are times when—if a hammer is not bad, then it makes some

sense because it does stop—they are put in there to stop the

gamesmanship where strong industry groups will come in and just

comment a rule to death.

Ms. BLANKENBILLER. But one thing to elaborate a little bit on

what Jeff said is that—— Mr. PENCE. We will go right to you next, Bill.

Ms. BLANKENBILLER. Oh, I am sorry.

Mr. PENCE. Excuse me, Amy.

Mr. MAHORNEY. That is all right.

52

Ms. BLANKENBILLER. Is that the small business community does

sit down—or at least did during the Clinton administration and before that was Bush—on a quarterly basis in face-to-face meetings

with the deputy administrator and the small business representatives, most of us who are here today meet with the deputy administrator and have an open forum. You can put anything you want to

on the agenda. And, personally, in the foundry industry, we have

put several things on the agenda and have seen action because the

deputy administrator has it on their radar screen and somebody

has to be accountable.

So Jeff just mentioned it and I wanted to let you know what that

was.

Mr. PENCE. Okay. Thanks.

Bill.

Mr. MAHORNEY. One thing, talking about all these things is we

in our industry have issues with all these things that are even

more fundamental. There is not a definition at DOT of what a

motor coach is. We are bus. Period. So are school buses, so are

transit buses. So everything starts with bad data to start with.

The National Governors Association accident data that the law

enforcement officers use on the road, if there is a fatality accident,

they check bus, we do not know. We do not know unless we find

out whether it is a school bus, a transit bus or a nine to 15–passenger van, which sometimes they classify as a bus. So we have

even got fundamental issues down at that level for basic data that

is needed before any of this can occur. And I will, to give National

Highway Traffic Safety Administration some credit, about a year

ago they did at our urging convene a group to try and come up with

these definitions and, of course, through the Commercial Vehicle

Safety Alliance and some other groups that we are involved in, we

submitted some sample definitions that said here is what we understand these things to be, but they still have not moved forward

and until these fundamental definitions are completed, the data is

never going to be any good. We can study it forever, but unless you

have that core fundamental definition, it is always going to be a

problem and we are always going to be shooting at them then.

Ms. BLANKENBILLER. But that is just like we heard with the

transportation of being short haul versus cross-country, that is

what our problem was under the secondary aluminum MACT. They

thought aluminum foundries were some other kind of business. You

have four or five kinds of buses and that is them doing their homework.

Mr. MAHORNEY. Exactly. It is fundamental.

Ms. BLANKENBILLER. Right.

Mr. MAHORNEY. Fundamental.

Ms. BLANKENBILLER. And we got surprised by the secondary aluminum MACT standards because when the advance notice of proposed rulemaking was put in the Federal Register, it was for a different industry. We never had the idea it would affect us. Same

thing with different classifications of buses or different classifications of delivery system.

Ms. SEEGER. Thank you, Amy.

I am going to head in the direction of the agricultural committee,

but I really want to encourage you to stick around. Obviously, you

53

have the majority counsel and also the ranking member’s staff director here and your input is very, very valuable. I appreciate you

coming back after lunch.

I want to tell you that I am really looking forward to circling the

wagons with all the members of the Subcommittee and coming up

with a real set of goals and an aggressive series of hearings and

you will be hearing from us about participating in those and seeing

if we could not get your membership to be in and to be a part of

that.

I just want to thank you again and I will yield to Mr. Pineles

to run the rest of the meeting.

Mr. PINELES. Thank you. I actually want to follow up on a question that Mike had that sort of relates to sort of how people do economic analysis and I think this applies both to EPA, the Fish and

Wildlife Service and lots of other agencies.

For example, one of the things that I have seen in the past with

respect to the Fish and Wildlife Service is that they claim that the

economic impact of designating critical habitat really is not the

designation of the critical habitat, it is the actual listing of the species, so that their economic analysis starts from the basis that we

are more worried about the so-called benefits of whatever we are

doing than we are worried about the costs. In other words, that

their economic analysis starts off with a bias.

Is that something that people around the room see at EPA, at

Federal Trade Commission or lots of other agencies? In other

words, they want to analyze what the benefits are and they are not

so much worried about getting an accurate analysis of what the

costs are because they are regulators, that is what they do.

Mr. LUZIER. That has certainly been our experience, not only

under the Endangered Species Act or the Clean Water Act, many

of the technology standards under the Clean Water Act require

consideration of achievability and costs.

You probably know, but just to reiterate, that incremental approach under the ESA has actually been the way they have rendered away the economic analysis. The 5th Circuit just threw that

out and said that is not the way the ESA is intending this to be

done. So I think there is an increase certainly in our industry and

hopefully in the courts there is an increased sensitivity to getting

a fair assessment of costs.

Let me go back to my TMDL example. We have had great success in that case where we could have an honest discussion about

what these costs are when there was not a preordained outcome in

mind.

Ms. SEEGER. We were given a three-quarter page summary of a

rule in November which has a 25 foot docket, so that is the level

of small business participation we have had and we have been

given incrementally spreadsheets that would purport to describe

the cost, the capital cost, the operating costs, of this, that and the

other thing. And they were replete with errors. And one of the

problems is that in the air program, anyway, there is no look at,

let’s say, the lime industry or even what preceded it. These default

assumptions that EPA says in terms of a scrubber being put onto

a lime plant may have been transferred from a study of a utility

two decades ago. So their underlying—just their unit cost informaVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
54

tion is abysmal and outdated and you marry that up with a total

unfamiliarity with how your particular people make their product,

and then carrying that forward, that is simply cost, unit cost information, then you get into the impact analysis, which is a much

more complicated thing, and EPA will say that, well, ideally, we

would measure these costs, as one of the speakers spoke about this

morning, in terms of the profits and whether this organization’s

profits will be able to carry these costs.

But EPA says that is entirely too complex. Well, they have never

asked our industry what the profits are, so it might be complex,

but since they have never even posed the question, they are never

going to get any expertise in taking a look at what probably is the

sensible way to do an impact analysis.

So then they use this sales test approach, but what Damon was

getting at, even there it is rather perverted because lots of small

businesses are in more than one line of business. They come down

through families. And so rather than compare the cost of the rule

to the part of the business that is being affected, the compare it

to the revenues of the entire enterprise. And they are quite—they

are not even ashamed to advance the principle that the small portion, the profitable part of the business, will continue to subsidize

in perpetuity the losing part of the business. So they will say that

a rule is not necessarily going to wipe out this small business because the profitable side of the business will subsidize it. So their

whole methodologies to do impact analyses just do not mirror how

American businesses operate and that, I think, it would be delightful to have EPA explain across the board how they do impact analyses.

Mr. PINELES. We will go to Doug and then we will go to Jeff.

Mr. GREENHAUS. To sort of build on what these folks have been

just mentioning, there is a crying need, in my opinion, perhaps

spurred on by this Committee and the Subcommittee in particular,

some uniformity in practice on how these economic analyses are

done.

We have the requirements of the law, we have the requirements

of the executive orders, but because of cultural reasons, because of

resource reasons, because of just level of knowledge reasons, every

agency, every office within every agency, does a better or worse job

at economic analysis than the others. And I am very hopeful with

this OMB and with this OIRA in particular we are going to see

some changes, but that could very well be relatively temporary,

eight years at the most, maybe.

And so I think something more systemic has to be built into it.

And it is not an easy task. I mean, cultures are not easily changed

and government cultures in particular, but the willingness to do

the right thing is the first thing we have to see. The willingness

to hold themselves up to the highest standard of economic analysis

and the willingness to be accepting of and, in fact, to go out and

look for small business input is what we have to see built into

these low level or secondary agency decision makers.

Mr. PINELES. Jeff.

Mr. LEITER. I just want to build on that as well. I mean, I wrote

down two notes. One is if you want to have a witness on this, I

think probably OMB is the best witness. My experience with difVerDate 31-AUG-2001 23:50 Sep 19, 2001 Jkt 075057 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 E:\HR\OC\A057.XXX pfrm01 PsN: A057
55

ferent agencies in this area of economic analysis is that they have

to pass muster with the reviewers, at OIRA, before the rule is allowed to go forward and really that is where the dialogue takes

place between the agency and OMB on the economic analysis.

And, as I mentioned a few minutes ago, some of the data points

that are used to make those analyses, what the discount rates are,

what interest rates you can borrow at. They do not, I do not believe, properly test or discriminate for small business in those analyses in terms of what a typical small business can do.

And then secondly is that when they do these analyses, they are

done in a vacuum. They do not look and say, All right, I have five

other regulations that are hitting me at the same time or I have

these other costs that I am looking to bear that they may affect

and so that it does not take a much more macro picture of what

the overall regulatory burden is for this particular—what it will do

to add to their ongoing burden, this is what it is going to cost, we

amortize it, does the benefit exceed it, sure, we will let it go forward.

So that is another piece to the economic analysis that I always

have felt has been drastically missing.

Mr. PINELES. Bill.

Mr. MAHORNEY. One of the things that has been a challenge for

our industry as well when we are talking about any kind of research, whether it be economic analysis research or fatigue research on the specific operational characteristics of our industry,

we have actually heard from folks at FMCSA that you guys are not

enough of a safety problem, why am I going to spend any money

on you?

So, of course, you know, our response is, well, then, leave us out

of the rules.

But we certainly have no problem with the proper analysis being

done, but since we operate so much differently, but we do not have

a separate administration like the transit folks or FAA or anybody

else who carries passengers, we have a tendency to be just lumped

in all the time.

One of the things that we had pushed hard for when the Federal

Motor Carrier Safety Administration was created was a separate

office. What we are thinking now is what we probably need is a

deputy administrator for motor coach or passenger carrier issues

because as long as we are a part of the trucking organization over

there, none of these things are ever going to happen for us and we

do not have any problem with research, we will help with it, but

we have to have the data and we have to have the focus on our

own operations to make anything meaningful in a regulatory environment.

Mr. PINELES. Arline.

Ms. SEEGER. I just wanted to follow up on one thing that Jeff

mentioned and I think it is a great idea to have OMB explain their

new philosophy and hopefully some rigor in terms of how to make

these economic impact analyses sensible, but there is a whole

group of rules that OMB never sees because the only rules that go

over to OMB are those that are significant or, in some instances,

there is an agreement that EPA will even send over rules that

have greater than a $25 million per year annual impact. Well, the

56

staff at EPA will always at the outset, certainly at the proposed

rule stage, understate the costs so OMB never sees those rules. So

OMB is a nice safeguard for those rules that actually get some elevated attention because it is a big industry, but there is a lot of

the smaller industries that do not have that protector.

Mr. PINELES. Well, unless anybody has any final comments, the

chairman promised that you would get out by 2:00 and since he

delegated the responsibility of me taking this home, it is 2:00 and

I will adjourn the regulatory summit and thank everybody for staying.

[Whereupon, at 2:00 p.m., the proceedings were adjourned.]

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