MIDNIGHT REGULATIONS: 

EXAMINING EXECUTIVE BRANCH OVERREACH 

HEARING 

BEFORE THE

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

February 10, 2016 

Serial No. 114–60 

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MIDNIGHT REGULATIONS: 

EXAMINING EXECUTIVE BRANCH OVERREACH 

HEARING 

BEFORE THE

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

February 10, 2016 

Serial No. 114–60 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

FRANK D. LUCAS, Oklahoma 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

DANA ROHRABACHER, California 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

JIM BRIDENSTINE, Oklahoma 

RANDY K. WEBER, Texas 

JOHN R. MOOLENAAR, Michigan 

STEVE KNIGHT, California 

BRIAN BABIN, Texas 

BRUCE WESTERMAN, Arkansas 

BARBARA COMSTOCK, Virginia 

GARY PALMER, Alabama 

BARRY LOUDERMILK, Georgia 

RALPH LEE ABRAHAM, Louisiana 

DARIN LAHOOD, Illinois 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

ALAN GRAYSON, Florida 

AMI BERA, California 

ELIZABETH H. ESTY, Connecticut 

MARC A. VEASEY, Texas 

KATHERINE M. CLARK, Massachusetts 

DON S. BEYER, JR., Virginia 

ED PERLMUTTER, Colorado 

PAUL TONKO, New York 

MARK TAKANO, California 

BILL FOSTER, Illinois 
(III) 

C O N T E N T S 

February 10, 2016 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Lamar S. Smith, Chairman, Committee on 

Science, Space, and Technology, U.S. House of Representatives ..................... 6 

Written Statement ............................................................................................ 8 

Statement by Representative Eddie Bernice Johnson, Ranking Member, Committee on Science, Space, and Technology, U.S. House of Representatives .... 10 

Written Statement ............................................................................................ 12 

Witnesses: 

Ms. Karen Kerrigan, President and CEO, Small Business & Entrepreneurship 

Council 

Oral Statement ................................................................................................. 15 

Written Statement ............................................................................................ 17 

Mr. Jerry Bosworth, President, Bosworth Air Conditioning 

Oral Statement ................................................................................................. 26 

Written Statement ............................................................................................ 28 

Ms. Kateri Callahan, President, Alliance to Save Energy 

Oral Statement ................................................................................................. 34 

Written Statement ............................................................................................ 36 

Mr. Sam Batkins, Director of Regulator Policy, American Action Forum 

Oral Statement ................................................................................................. 47 

Written Statement ............................................................................................ 48 

Discussion ................................................................................................................. 61 

Appendix I: Answers to Post-Hearing Questions 

Ms. Karen Kerrigan, President and CEO, Small Business & Entrepreneurship 

Council .................................................................................................................. 86 

Ms. Kateri Callahan, President, Alliance to Save Energy ................................... 108 

Mr. Sam Batkins, Director of Regulator Policy, American Action Forum .......... 109 

Appendix II: Additional Material for the Record 

Letter submitted by Representative Eddie Bernice Johnson, Ranking Member, 

Committee on Science, Space, and Technology, U.S. House of Representatives ....................................................................................................................... 112 

Documents submitted by Representative Gary Palmer, Committee on Science, 

Space, and Technology, U.S. House of Representatives .................................... 124 

Slide submitted by Representative Eric Swalwell, Committee on Science, 

Space, and Technology, U.S. House of Representatives .................................... 140 

Documents submitted by Representative Lamar S. Smith, Chairman, Committee on Science, Space, and Technology, U.S. House of Representatives .... 142 

(1) 

MIDNIGHT REGULATIONS: 

EXAMINING EXECUTIVE BRANCH OVERREACH 

WEDNESDAY, FEBRUARY 10, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, D.C. 

The Committee met, pursuant to call, at 10:06 a.m., in Room 

2318, Rayburn House Office Building, Hon. Lamar Smith [Chairman of the Committee] presiding. 
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Chairman SMITH. The Committee on Science, Space, and Technology will come to order. Without objection, the Chair is authorized to declare recesses of the Committee at any time. 

Welcome to today’s hearing entitled ‘‘Midnight Regulations: Examining Executive Branch Overreach.’’ I’ll recognize myself for five 

minutes and then the Ranking Member for her opening statement. 

President Obama has rushed through many costly and burdensome regulations over the last seven years. These include the ozone 

National Ambient Air Quality Standards, the Waters of the United 

States, and the Clean Power Plan. The Obama Administration 

shows no signs of slowing down and no doubt will continue to pursue its partisan and extreme agenda, regardless of the price to the 

American people. 

The speed at which these regulations are being finalized provide 

little certainty that these rules are based on a sound and transparent review of the underlying scientific data and analysis. The 

President’s regulatory overreach will cost billions of dollars, cause 

financial hardship for American families, and diminish the competitiveness of American employers, all with no significant benefit 

to climate change, public health, or the economy. 

According to the American Action Forum, regulatory costs topped $197 billion in 2015. This is a cost of over $600 for every American 

citizen. From 2016 alone, the Obama Administration has proposed 

another $98 billion in regulatory costs. According to AAF’s analysis, my home State of Texas is one of the hardest hit by these burdensome regulations. 

Despite heavy and growing public opposition to these proposals, 

the Obama Administration is actively willing to commit the United 

States to costly new regulations that will do nothing to improve the 

environment but will negatively impact economic growth. The 

Clean Power Plan and the Waters of the United States rule are 

just more of the EPA’s attempts to expand its jurisdiction and increase its control over Americans. Congress voted against these 

rules through the Congressional Review Act last month. And the 

governors of most states continue to challenge overreaching regulations in court. 

Yesterday, the Supreme Court blocked the Administration’s rules 

to limit greenhouse gas emissions from power plants. The Court’s 

ruling confirms that this rule overreaches EPA’s authority. 

But nothing seems to deter President Obama from achieving his 

extreme and unconstitutional climate agenda. Now, in an attempt 

to solidify his legacy before he leaves office, the President plans to 

rush through even more regulations. In the past year, the Department of Energy proposed 15 new energy efficiency standards, compared with just five energy efficiency standards proposed between 

2009 and 2012. The DOE now works to issue costly energy efficiency rules on everything from household appliances to vending 

machines, including ceiling fans, air-conditioning and heating 

equipment, and residential boilers. 

We should all be concerned about the process the EPA uses to 

reach their regulatory conclusions. The agency rushes to enact environmental regulations without thorough, public review of the 

data used to justify these rules. This hearing provides yet another 

example of why legislation like the Secret Science Reform Act and 
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the Science Advisory Board Reform Act are important checks on 

regulatory overreach. We should require more fairness, transparency, and public engagement in the rulemaking process. The 

President should not rush scientific analysis to appease his political 

supporters. 

We all support energy efficiency and a clean environment. The 

air we breathe is significantly cleaner and will continue to improve 

due to the development of new technologies. Basic research and development will continue to lead the way to energy solutions. This 

research should be allowed to mature so the private sector can 

transition new technologies into the market before the federal government sets new energy efficiency and environmental standards. 

There may be serious economic consequences if the EPA and the 

DOE rush forward with these proposed regulations. The cost is certain but the benefits are not. 

Today’s witnesses will discuss how regulatory burdens fall disproportionately upon small businesses and negatively impact economic productivity. Small businesses, like individual Americans, 

ultimately pay for these regulations. Higher prices for goods and 

services, combined with reduced economic activity, hinder private 

sector innovation and cause businesses to struggle to stay open. 

These proposed regulations will have an even greater adverse impact on those who live on fixed incomes, such as the elderly and 

the poor, who are the most vulnerable to increases in the price for 

basic necessities like electricity and heat. More should be done to 

hold this Administration accountable. We must cut regulatory red 

tape and put America back on a path to growth and prosperity. 

For this reason, I am pleased that the Speaker has selected the 

Science Committee to help lead a taskforce to reduce costly and unnecessary regulatory burdens. Rushed regulations in a President’s 

last year are bad for the American economy and the American people. We can’t afford to rush through regulations with little substantive environmental benefit and heavy costs to our economy. 

[The prepared statement of Chairman Smith follows:] 
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Chairman SMITH. That concludes my opening statement. And the 

Ranking Member, the gentlewoman from Texas, is recognized for 

hers. 

Ms. JOHNSON OF TEXAS. Thank you very much, Mr. Chairman. 

This hearing is unfortunately not a surprise. It fits a clear and 

constant and consistent pattern on this committee, one that ignores 

the important work that actually falls under the Committee’s jurisdiction and instead attacks the Federal Government’s legitimate 

and necessary role in helping to ensure that the citizens of the Nation are protected from public health threats and environmental 

dangers. 

It may be fruitless to remind us of this, Mr. Chairman, but the 

Committee has little if no jurisdiction over the regulations likely to 

be discussed today. And, while you and your colleagues may disagree with me, I think our time would be better spent on hearings 

that advance the Nation’s research, innovation, and manufacturing 

enterprises. 

Nevertheless, today, we will undoubtedly hear again the same 

tired rhetoric from the majority dismissing the need and value of 

regulations. The notion that Federal regulations are not necessary 

because private industry would never harm the financial interests 

or health of the public is simply false. Federal regulations protect 

us from public health hazards, and our children from unsafe products, communities from environmental dangers, and families from 

financial collapse. Federal regulations have played an important 

role in curbing the tobacco industry’s past practices of marketing 

their knowingly harmful products to children, and Wall Street investment practices led to the 2008 financial crisis with dire economic consequences for millions of Americans. 

Federal regulations are not necessary or appropriate in every instance or for every issue. However, I believe they are a critical tool 

in many instances in helping to improve our health, make our children safer, and prevent deadly disasters. For example, the lead 

contamination crisis in Flint, Michigan, is a clear example of the 

need for rigorous implementation of federal regulations and standards, not pulling back. 

Similarly, an ongoing massive methane gas leak in California is 

continuing to foul the environment and endanger the safety of the 

public’s health. No federal regulation currently addresses the identification or repair of methane gas leaks across this country, but 

perhaps federal regulations could have helped prevent the Southern California Gas Company’s leak or the 1,724 significant natural 

gas incidents that have claimed the lives of 79 people and injured 

396 others between 2010 and 2015. 

I believe that the regulations proposed by this Environmental 

Protection Agency and the Department of Interior to help detect 

and repair of methane leaks are a positive first step. I hope we can 

agree that issues like the methane gas leak in California should be 

thoroughly investigated to identify measures to prevent them from 

occurring in the future. 

That is why I am asking GAO, the Government Accountability 

Office, to investigate the Southern California Gas Company leak 

where the continuing release of methane has forced thousands from 

their homes and posed a significant threat to public health. There 
11 

are serious unanswered questions surrounding this leak and the 

safety and operation of these pipelines in general, which are far 

more worthy of this committee’s time and consideration than today’s hearing. 

In particular, this committee has a role to play in the technical 

standards and pipeline safety research governing the country’s natural gas infrastructure. Mr. Chairman, I hope you will join me in 

requesting this review. 

In closing, I look forward to the day when this Congress and this 

committee will step back from its counterproductive opposition to 

efforts by EPA and DOE and other federal agencies who are just 

trying to carry out their statutorily mandated missions. They may 

not always get everything exactly right, nor do we, but trying to 

prevent them from doing their job at all is not a good use of our 

time. Instead of seeking to score political points by undermining 

their important work, we should come together in a productive way 

to advance our economy, a cleaner environment, and a healthier 

public. 

[The prepared statement of Ms. Johnson of Texas follows:] 
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Ms. JOHNSON OF TEXAS. And finally, Mr. Chairman, before I 

yield back, I’d like to enter into the record a letter from 600 physicians, nurses, and other health professionals who support EPA’s 

proposed rule to reduce methane emissions. 

Chairman SMITH. Okay. Without objection, that will be part of 

the record. 

[The information appears in Appendix II] 

Chairman SMITH. And I thank you—— 

Ms. JOHNSON OF TEXAS. Thank you very much. And I must say 

that I will be departing the Committee for a markup in another 

committee. 

Chairman SMITH. Okay. Thank you, Ms. Johnson. 

Let me introduce our witnesses today. And our first one is Ms. 

Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council. Ms. Kerrigan’s leadership and advocacy for 

nearly a quarter of a century have helped foster U.S. entrepreneurship and global small business growth. She has been appointed to 

numerous federal advisory boards, including the National Women’s 

Business Council. In addition, she is a founding member of the 

World Entrepreneurship Forum and is a board member of the Center for International Private Enterprise. In 2009, Ms. Kerrigan was 

awarded the Small Business Advocate of the Year by the New York 

Enterprise Report. Ms. Kerrigan received her bachelor’s degree in 

political science from the State University of New York System. 

I will now yield to the gentleman from Texas, Mr. Weber, to introduce our next witness, Mr. Jerry Bosworth. 

Mr. WEBER. Thank you, Chairman Smith. I’m pleased to introduce our third witness and fellow Texan Mr. Jerry Bosworth, President of Bosworth Air Conditioning and Vice Chairman of the Air 

Conditioning Contractors of America. Bosworth Air Conditioning is 

a family-owned and -operated business of ten employees, which was 

founded in 1959. Jerry was just a young whippersnapper back 

then. Bosworth A.C. specializes in both installation and service and 

replacement of both residential and commercial systems. Jerry 

served as Chairman of ACCA, Air Conditioning Contractors Association, and of the Members Services Committee. Prior to being 

elected to the National Board, he donated his time and energy as 

a member of the local contracting association, TACCA, or we would 

call it also Houston’s Air Conditioning Contractors Association, and 

served on the board of his state contracting association. 

Mr. Chairman, we are very grateful to have you here today. He’s 

got one of the oldest and, I might add, finest air-conditioning companies next to Weber’s Air and Heat on the Gulf Coast. So I’ll—— 

Chairman SMITH. Waiting for that. 

Mr. WEBER. So a free plug now, but, Jerry, I’ll send you an invoice later. Welcome. We’re glad to hear. 

Chairman SMITH. Thank you, Mr. Weber. 

Our next witness is Ms. Kateri Callahan, President of the Alliance to Save Energy. Ms. Callahan also serves as a board member 

for the Keystone Energy Board and the Business Council for Sustainable Energy. She also serves on advisory councils to the U.C. 

Davis Policy Institute on Energy, Environment, and the Economy; 

and Duke University’s Center for Energy Development and the 

Global Environment. Prior to joining the Alliance, Ms. Callahan 
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served as the President of the Electric Drive Transportation Association. She received her bachelor’s degree in political science from 

the University of Louisville. 

Our final witness is Mr. Sam Batkins, Director of Regulatory Policy at the American Action Forum. Mr. Batkins focuses his research on examining the rulemaking efforts of administrative agencies in Congress. His work has appeared in the Wall Street Journal, the New York Times, the Hill, Reuters, and the Washington 

Post, among other publications. Prior to joining the forum, Mr. 

Batkins worked at the U.S. Chamber of Commerce, the Institute 

for Legal Reform, and the National Taxpayers Union. Mr. Batkins 

received his bachelor’s degree in political science from the University of the South and his law degree from Catholic University. 

We welcome you all, look forward to your testimony. And, Ms. 

Kerrigan, if you’ll begin. 

TESTIMONY OF MS. KAREN KERRIGAN, 

PRESIDENT AND CEO, 

SMALL BUSINESS & 

ENTREPRENEURSHIP COUNCIL 

Ms. KERRIGAN. Great. Well, thank you, Chairman Smith. It’s a 

pleasure to be here. Thanks. Good morning to all the committee 

members. And it’s—again, thank you for the invitation. This is a 

very important issue for our members in the small business sector 

of the economy. 

It should come as no surprise to members of the committee that 

many small businesses have concerns about federal regulations and 

the process by which the rules are made. A host of new rules and 

ones yet to come are piling on at a time when small businesses continue to struggle in a very tough economy. Complying with existing 

regulations and navigating new rules takes time and significant resources. Business owners are now looking at what’s currently in 

the pipeline, which only perpetuates the uncertainty that’s behind 

less risk-taking and growth. 

The period between the recession until now has been challenging 

for small businesses. A Bank of America survey conducted midyear 

last year found that only one in five small business owners say 

they have completely recovered from the Great Recession. So it is 

times such as these that federal agencies and government policies 

need to be especially sensitive about how proposed actions impact 

entrepreneurship and small business growth. After all, even given 

their struggles and challenges, small businesses and startups still 

remain the engine of job creation and innovation in our nation. 

And it’s that understanding that was behind the development 

and passage of laws meant to protect small businesses from excessive regulation and provide them with some voice in the regulatory 

process. But unfortunately, there has been a breakdown in the 

process and responsiveness to their concerns. 

So as we enter a period where there will be a change of Administrations, and historically, this has been a time where there is an 

uptick in new rulemakings, I think you can empathize with the 

concerns of small business owners who feel that their voice and 

concerns can be minimized even further. We are concerned that an 
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anticipated regulatory rush could lead to more shortcuts in a process that is meant to look out for small business owners. 

The Mercatus Center analyzed data during the midnight regulatory period across Administrations from 1975 to 2006 and found 

regulatory analysis quality drops and regulatory oversight by the 

Office of Information and Regulatory Affairs weakens. As a result, 

federal agencies produce ineffective regulation, and these rules are 

more likely to be more costly. 

So this is why we do hope there can be some actions, some reforms that will improve the process and make it more accountable 

and inclusive for the small business community because small businesses are disproportionately impacted by regulation, and I would 

add more so by environmental regulation. A National Association 

of Manufacturers’ report details the disproportionate cost, which 

I’ve included in my written testimony. 

EPA’s possible activity is of concern given the Agency’s history 

of improper certification of proposed rules when it comes to small 

business impact. On several major rulemakings, the SBA’s Office 

of Advocacy made it clear that EPA’s certification of rules did not 

comply with the Regulatory Flexibility Act. This was the case, for 

example, with greenhouse gas rules and the Waters of the United 

States Rule. In each of these cases, EPA’s own analysis contradicted its certification. 

The bottom line is that small businesses remain very concerned 

about what’s ahead in 2016 on the federal regulatory front. With 

an economy that lacks a strong traction and with indications that 

economic growth may slow further, regulations that raise compliance and energy costs and make it more difficult to compete only 

create more headwinds for small businesses. 

But I am somewhat optimistic. Thankfully, both sides of the political aisle recognize that we have a regulatory problem, a process 

problem as well. There are solid bipartisan solutions that have 

been proposed in the House and Senate that begin to chip away at 

the lack of accountability and to provide small businesses a greater 

voice and more protection in the regulatory process. And I look forward to discussing these with committee members. Thank you. 

[The prepared statement of Ms. Kerrigan follows:] 
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Chairman SMITH. Thank you, Ms. Kerrigan. 

And, Mr. Bosworth. 

TESTIMONY OF MR. JERRY BOSWORTH, 

PRESIDENT, BOSWORTH AIR CONDITIONING 

Mr. BOSWORTH. Yes. Is this still on? There we go. I’m sorry. 

Chairman Smith, Ranking Member Johnson, and members of the 

committee on energy, thank you for the opportunity to testify before you today. My name is Jerry Bosworth, and I am the President 

of Bosworth Air Conditioning and Heating in Galveston, Texas. 

Bosworth Air Conditioning and Heating has been selling, installing, and servicing Galveston County’s residential and commercial 

comfort systems since 1959. I am here today representing the interests of ACCA, the Indoor Environmental and Energy Efficiency Association. ACCA is the leading national association representing 

the technical, educational, and policy interests of small business 

contractors that design, install, and maintain residential and commercial heating and cooling systems. But I am also before you 

today representing more than the 1 million Americans employed by 

the manufacturers, distributors, contractors—and contractors of the 

HVACR industry. 

Today, I would like to highlight some of the concerns related to 

the uptick in the number of rules and regulations related to the energy and environmental regulations the Department of Energy and 

the Environmental Protection Agency have had significant adverse 

impact on manufacturers, distributors, and contractors. 

From the Department of Energy, we have seen an aggressive 

push to increase the energy efficiency standards for residential and 

commercial heating, ventilation, air-conditioning, refrigeration 

equipment, as well as water heaters. At the time—at the same 

time, we have been—there have been problems with the test procedures used to rate some of the equipment that makes it more difficult to achieve these higher standards, affecting a double impact. 

As an example, the Department of Energy recently proposed a 

set of new minimum national energy conservation standards for 

residential natural gas furnaces at 92 percent AFUE, a ratio that 

describes how efficiency—how efficiently the appliance converts gas 

to heat. According to DOE’s own economic models, nearly 1/3 of all 

homeowners in 19 southern States and territories would never see 

a positive payback from replacing their existing furnace; 12 percent 

of homeowners in the 33 northern States, a similar prospect. 

In proposing to set this standard, DOE is effectively eliminating 

one type of furnace technology that represents half of the current 

models shipped today. I have installed a lot of furnaces in my lifetime, but only once have I installed a furnace that approached the 

standard DOE wants to set as the basic model for all States. 

Higher efficiency furnaces like the ones DOE wants to mandate 

as a minimum are not appropriate in all parts of the country, not 

even the North. This is because furnaces that have an AFUE ratio 

equal or above 90 percent have special requirements that can only 

add thousands of dollars to the installation cost. This may force the 

homeowners to repair or maintain an older, inefficient model instead of upgrading, or it can drive many homeowners in areas of 
27 

low heat load to opt for a heat pump, driving up the utility costs, 

leading to more fossil fuel emissions at the energy plant. 

On Section 608, 608, the production, use, and handling of hundreds of refrigerant compounds that make air-conditioning and refrigeration possible are controlled and regulated by the EPA. Many 

have found it—many of these have been found to harm the ozone 

layer or have a higher global warming potential if they are released 

into the atmosphere. EPA rules requires anybody who works on an 

air-conditioning system to take a certification test to obtain their 

608 card, named after Section 608 of the Clean Air Act, prohibiting 

the release of most refrigerants while performing any service or 

maintenance. 

In order to comply with these rules, the service technician must 

be trained, have the required equipment, take the extra time to 

properly evacuate the entire refrigerant into an appropriate container before performing any service work to the sealed system. 

ACCA has no problem with these rules, but unfortunately, there 

are a lot of individuals who claim to be professional contractors 

who skirt these rules and are never caught. The bottom line—the 

bottom-feeders take advantage of a lax enforcement and undermine 

our industry. 

So we think that better enforcement of—we would like to see better enforcement of the Section 608 rule. Unless significant changes 

are made to Section 608 program through increased enforcement, 

it cannot accomplish its mission to protect the environment and 

should be abandoned. 

Lastly, I would like to bring to the Committee’s attention an important gap in existing regulatory scheme for residential equipment. According to a 2013 National Institute of Standards and 

Technology study, there are substantial equipment efficiency losses 

due to poor installation practices typically due to duct leakage, refrigerant undercharge/overcharge, low indoor airflow, oversized 

equipment, and undersized ductwork. 

For years, ACCA has championed the need for quality installations in the HVACR contracting business, and DOE seems to ignore our pleas. 

So I look forward to any questions from the Committee. Thank 

you much. 

[The prepared statement of Mr. Bosworth follows:] 
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Chairman SMITH. Thank you, Mr. Bosworth. 

And, Ms. Callahan. 

TESTIMONY OF MS. KATERI CALLAHAN, 

PRESIDENT, ALLIANCE TO SAVE ENERGY 

Ms. CALLAHAN. Thank you, Mr. Chairman, and members of the 

committee, for the opportunity to testify before you today. I’m going 

to take a bit of departure from my fellow witnesses so far and talk 

about the significant and very positive impacts that appliance, 

equipment, and vehicle efficiency standards are having on our 

economy. 

My organization, the Alliance to Save Energy, is a nonprofit coalition that has worked for 39 years to advance energy efficiency for 

the economic benefits, the improvement of the environment benefits, and also to enhance our energy security. 

I’m very proud of the fact that we were founded by two then-sitting Members of Congress, Hubert Humphrey, a Democrat from Illinois; and Chuck Percy, a Republican from—excuse me—Hubert 

Humphrey, a Democrat from Minnesota; and Chuck Percy, a Republican from Illinois. 

We have jealously guarded our inherited culture of bipartisanship, and today, we count 14 sitting Members of Congress from 

both sides of the aisle and both sides of the Capitol as honorary 

members of our board. And I’d like to take this moment to note 

that we are very pleased that Congressman Paul Tonko, a member 

of this committee, is part of our august group. 

Our Congressional Members are joined on our Board of Directors 

by leaders from business and organizations across all sectors of the 

economy, including manufacturers and HVAC folks. Since the birth 

of the Alliance, our country has made very great strides in advancing energy efficiency, and that’s thanks in large measure to effective national public policies, most notably, the appliance, equipment, and vehicle efficiency standards. 

Efficiency standards have proven to be the most cost-effective 

way of driving energy efficiency into our market. In fact, if you 

take together the corporate average fuel economy standards and all 

our appliance and equipment standards, we’re shaving off the energy use equivalent to ten percent of what we consume today. And 

that translates into very big money savings for Americans. 

Studies have shown that American businesses and consumers 

today are saving $800 billion every year on their energy bills. And 

as a country, we’ve doubled our energy productivity over the past 

three decades. That is to say that we are creating twice as much 

gross domestic product today than we did—using half of the energy 

than we did in 1980. 

We’ve done this once, and at our organization we believe we can 

do it again. The Alliance has articulated the goal of doubling energy productivity once again by 2030. If we do it, the benefits to 

our country are simply transformative. We would recycle $327 billion into our economy from energy cost savings. We would create 

1.3 million new jobs, and we’d reduce the need for imported energy 

to represent less than seven percent of our total demand. But we 

can only achieve this goal with a strong foundation of public poli-
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cies, and efficiency standards are a cornerstone of good national energy efficiency policy. 

Fortunately, the history of our national efficiency standards is 

one of bipartisan support. I’m not sure committee members are 

aware, but the first corporate average fuel economy standards were 

signed into law by President Ford, and the first appliance and 

equipment standards were signed into law by President Reagan. 

These laws were created and moved through the Congress with 

broad bipartisan support. Over the decades, this tradition of bipartisan support has remained solid, with the Congress enacting significant legislation in 1990, ’92, 2005, and 2007. All included efficiency standards. 

The bipartisan work—this bipartisan work on standards is paying big dividends for our economy. For example, by 2020, appliance 

and equipment standards alone, not including CAFE standards, 

will be contributing 387,000 annual jobs to our economy. And these 

are jobs that are spread all across all 50 States. 

As the focus of this hearing is on midnight regulations, I believe 

it’s important to note that in the case of efficiency standards at 

least, it’s Congress—not the Administration—that dictates the 

timelines and deadlines for action. And these aren’t tied in any way 

to a given President’s term in office. 

The typical time needed to complete a standards rulemaking is 

three years because it involves a significant engagement with impacted manufacturers, stakeholders, and others throughout the 

process. It is true that the pace of standards rulemaking has been 

brisk during the Obama Administration. This was driven in large 

part by a need to meet Congressional directives and court-ordered 

mandates to catch up on backlogged standards. We see no evidence 

that the Administration can or will rush any efficiency standards 

at the end of this President’s term. 

While we have achieved great success through our—through appliance and equipment efficiency standards, we do believe there’s 

always room for improvement. The Alliance, along with many 

stakeholders and others, would like DOE to make more transparent the models and data that it’s using to perform its energy 

savings and performance calculations. And doing so would help to 

avoid delays in litigation. 

There’s also a big something I’m here to ask you to do, and that 

is to refrain from placing ad hoc policy riders on legislation that 

prevents DOE from enforcing standards that have been codified. 

Mr. Bosworth already mentioned that this allows what I would call 

unscrupulous manufacturers—he calls them bottom-feeders—to 

flout the law. So we’d like to see that. 

So in conclusion, there is a huge portfolio of research and analysis that demonstrates that efficiency standards are driving innovation, saving American businesses and consumers money on their 

energy bills, and they’re creating jobs. All of this leads to a more 

energy-productive and more globally competitive economy. Congress should be proud of the work it has done in this area and 

should continue this legacy of bipartisan legislation to set minimum efficiency standards for our appliances, our equipment, and 

our vehicles. Thank you. 

[The prepared statement of Ms. Callahan follows:] 
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Chairman SMITH. Thank you, Ms. Callahan. 

And, Mr. Batkins. 

TESTIMONY OF MR. SAM BATKINS, 

DIRECTOR OF REGULATOR POLICY, 

AMERICAN ACTION FORUM 

Mr. BATKINS. Thank you, Chairman Smith, and Members of the 

Committee. 

[Slide.] 

Mr. BATKINS. I will direct your attention to the chart, which is 

now everywhere, which shows midnight regulatory activity from 

1997 to 2012, and you’ll notice two pronounced spikes. Those are 

in red, in 2000 and 2008. And what I mean by midnight regulations, when we studied the midnight quarter, which is just between 

November and January—and you’ll notice that if you look at—all 

midnight rules where this chart shows are just significant 

rulemakings. It’s roughly 80 to 90 percent more than other similar 

midnight quarters. For example, in 2000 and 2008 OIRA concluded 

review of 51 and 54 significant rulemakings. 

During those next subsequent quarters, so February to April, the 

next closest economically significant reviews were 20 and 29. So we 

had almost double the amount of significant regulatory activity 

during the presidential midnight quarters as opposed to the next 

subsequent quarters. This chart is somewhat reflective of action at 

DOE and EPA as well, although perhaps a bit less so. 

Now, Administrations, of course, have tried to curb this practice 

in the past, and this makes sense. Administrator Howard 

Shelanski has a memo sort of ushering in a new era of let’s slow 

down the process. Let’s not rush any particular regulations. Josh 

Bolten, who was the White House Chief of Staff in 2008, issued a 

memorandum which set up sort of a brief schedule of when proposed rules should come to OIRA and when final rules should head 

to OIRA. But as you can see in 2008, agencies still managed to finalize quite a number of midnight regulations, including from DOE 

and EPA. 

Now, what does this mean? It has profound implications. We’ve 

heard the Mercatus data on quick OIRA review times generally 

lead to poor economic analysis, and poor economic analysis can 

often lead to poorer results as well. And when we’re talking about 

multibillion, multimillion dollar rules, the Nation can’t afford poor 

analysis. We want to be able to look back at these rules 5, ten 

years down the road and determine whether or not we were—they 

were effective. And rushing rulemakings through the process 

doesn’t allow us to examine rulemakings, again, five, ten years 

later. So a measured pace that allows the small staff of OIRA to 

do their job is important. 

Now, the Nation has already paid a pretty high price—I mentioned DOE and EPA—for those regulations. If you add up EPA 

and DOE on a net present value basis, it’s roughly $500 billion in 

costs with an associated 33 million paperwork burden hours. Just 

to put that paperwork burden in context, it would take 16,500 employees working full-time, 2,000 hours a year, to complete the new 

paperwork from just these two agencies, which is one reason why 

the Nation’s paperwork burden—and I checked today; it hasn’t 
48 

changed that much—is still at the highest level we’ve seen in recent history. 

So I’ve mentioned a lot of figures. What do they mean generally 

for individuals? Well, regulation imposes transition costs. Those 

costs can be borne by the firms in terms of their employees’ pay 

or perhaps even employee dislocation, they can be borne by the 

shareholders of the companies, or they can be passed on to consumers in the form of higher prices, sometimes all three. 

And agencies themselves do routinely admit—and there is evidence—that a lot of these costs do get passed on to consumers. For 

example, a hypothetical consumer purchasing a furnace fan, refrigerator, water heater, according to analysis, could pay an additional 

$600 on what is in essence a regulatory tax. 

The G.W. Regulatory Studies Center and Sofie Miller have found 

that these burdens can often be regressive. They are based generally sort of on a one-sized-fits-all, but not all consumers have the 

same preferences. By using discount rates of 3 and seven percent, 

we sort of assume that all consumers behave the same way, and 

in many respects, that’s not the case. 

In terms of reform to the midnight regulation system, there are 

a lot of options, some of which are messy. We can do what Rahm 

Emanuel and Andy Card did when the Administration changed 

over and, in essence, issue a regulatory moratoria. I mean, for an 

entire month when President Obama took office, no new significant 

regulations came out of the White House. 

We can also use the Congressional Review Act, which is, again, 

a messy sort of piecemeal approach. If there are regulations Congress doesn’t like in 2017, they can use that approach to repeal 

them. 

And there’s also a positive approach. Congress could enact legislation providing for a flexible schedule for midnight regulation during presidential election years. 

Another way, the ALERT Act, which Congress is currently considering, would prohibit a rule from taking effect unless posted on 

the internet for at least 6 months. That doesn’t have the direct intended effect of curbing midnight regulation, but it is one approach. 

And with that, I will conclude and I’ll be happy to take your 

questions. 

[The prepared statement of Mr. Batkins follows:] 
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Chairman SMITH. Okay. Thank you, Mr. Batkins. 

Ms. Kerrigan, let me address a question to you but at the outset 

point out, as I mentioned in my opening statement, that in 2015 

the President proposed 15 different energy regulations. In the 

three-year period prior to that, he proposed only five. So that 

means that last year, the rate of energy regulations was about nine 

times what it had been in the previous three years. No telling what 

it’s going to be in 2016 if that trend continues. But what is the impact of all these regulations on two discrete groups: small business 

and the economy? 

Turn on your mike. Yes. 

Ms. KERRIGAN. Got it. I will also add that if you looked at—if you 

look at the unified agenda that was put out in November 2015, 

that the Administration will also issue 75 economically significant 

rules this coming year, and last year, they issued 62 such rules. So 

there will be an uptick on—— 

Chairman SMITH. Right. 

Ms. KERRIGAN. —that side as well. 

I mean, look at the—as I mentioned in my statement, I mean, 

we’re still dealing, I think, with a very tough economy from the 

small business perspective. They’re very concerned and continue to 

be about weak sales, sales growth, the direction of the economy in 

2016. I think NFIB had—its small business index came out yesterday, which showed they’re very concerned about sort of where the 

economy is headed in 2016 and what that means for sales growth. 

So when—so there’s a little wiggle room, you know, when it 

comes to costs, and regulations add costs on these small businesses. 

They’re already dealing with a flood of—I mean, the ObamaCare 

regulations and regs over the last few years, and if we’re—and 

we’re also staring down the—staring at many more workplace regulations, overtime regulations, a whole host of things on top of environmental and energy regulations. 

So this cumulative impact has a massive impact on their ability 

to invest, to grow, to hire new employees, to compete in the marketplace, and to survive, quite frankly. 

Chairman SMITH. Okay. Thank you, Ms. Kerrigan. 

Mr. Batkins, you have heard today and we’ve heard the Administration say that somehow all these regulations are good for the 

economy. What’s the response to that assertion? 

Mr. BATKINS. Well, I mean, if you take a deep dive and go into 

their own regulatory analysis, you’ll find them admit often that 

regulations could raise healthcare costs, could raise energy costs, 

and could raise costs to the consumer. Another impact which is 

probably not talked about a lot is there are, I think, by our account, roughly 30 regulations where even regulatory agencies admitted that costs would exceed the benefits. And there have been 

a few in the environmental realm as well. So, you know, I think 

a lot of the big regulations get a lot of play in the press, but again, 

there are several where the agencies have admitted costs would exceed benefits. 

Chairman SMITH. Okay. Mr. Batkins, last question. What can we 

do to make the regulatory process more transparent, more honest? 

Mr. BATKINS. Well, it’s a great question. One we’ve mentioned, 

Mercatus here, their research, looking at sort of the completeness 
62 

of regulatory analysis. And they use a scale of—out of 30, and I 

think DOE on that scale is a 19 out of 30, which is not a grade 

that I would want to get. But it does actually best other Cabinet 

agencies. EPA is about a 15 out of 30. 

So one thing that a lot of—when I talk to people who actually 

have to comply with regulations that are looking at the regulatory 

impact analysis is they want a way that they can sort of completely 

reproduce what the agency’s analysis says. And that might be the 

case sometimes, but oftentimes, that’s not the case, and the ability 

to sort of really see what the agency—what their assumptions are 

and how those assumptions play out in the data represented to the 

public. 

Chairman SMITH. Okay. Thank you, Mr. Batkins. 

The gentleman from New York, Mr. Tonko, is recognized for his 

questions. 

And let me say I’m going to need to excuse myself for a few minutes but will catch up on the gentleman’s questions later on. 

Mr. TONKO. Okay. Thank you, Chair. And thank you to all of our 

witnesses for joining us today. 

Kateri, it indeed is great to see you, and thank you for the awesome work the Alliance does on this issue. I’m proud to serve as 

an honorary member, as you indicated, of the Alliance’s board, and 

I strongly believe that energy efficiency should be our fuel of 

choice. 

I have to tell you, I shared with Chair Smith—he had asked me 

about that assignment. I said I was on the board with the Alliance 

prior to my days in Congress also as President and CEO of 

NYSERDA, New York State’s Energy Research and Development 

Authority. So I’m proud of that assignment. I’m especially proud 

that New York’s capital region has recognized that it is indeed necessary to innovate and make the transition to a more energy efficient world. 

So my question to you, Ms. Callahan, in your assessment of the 

industry, it is your experience that regulation often will spur the 

private sector to innovate. Do you agree that private industry in 

America has proven time and time again that it has the ability to 

adapt and grow when new rules or policies are introduced? And 

specifically, how have you seen industry innovate as a result of energy efficiency standards? 

Ms. CALLAHAN. Thank you very much for that question, Congressman Tonko. I couldn’t agree more strongly that regulations 

have led to innovation and technology, and I want to talk about 

that in a minute. But I also want to address, if I could for a second, 

Chairman Smith’s questions as well. 

We—our information that we have is that DOE issued 10 standards or updates to standards in 2014 and 10 in 2015. There are 16 

on the regulatory agenda now, and if they follow suit, a couple of 

those, they’ll defer from updating. A couple others may follow—flow 

over. So we don’t see that there’s going to be any big uptick in that. 

And I think it’s also really important to note that of all of the 

regulations that are at OIRA for review, all but one have been 

there for more than 90 days, so they’re overdue. And only one is 

a final rule. So it’s just going along in the regular process in the 

regular order of how we establish efficiency standards. 
63 

So let’s talk about how they’ve created innovation and driven it. 

A great example is a refrigerator. A refrigerator today uses 75 percent less energy. It only uses a quarter of the energy of one that 

was built in the ’70s, it’s 20 percent bigger, and it consumes—and 

it costs about 25 percent less in real dollars. 

So if—we’re getting it all. We’re getting better products, we’re 

getting greater choice. The light bulbs which have caused some 

controversy in terms of the mandates that were put forward there, 

I would note that it was the manufacturers working with us, the 

stakeholders working with Members of Congress to put those in 

place. And what we’ve seen now, instead of one choice of an inefficient incandescent light bulb, we have many, CFLs, we have LEDs 

coming onto the market. The prices are falling dramatically. Now, 

you can choose color in the light you want, you can choose longevity of light bulbs. You have a wide selection, and all for costs 

that are coming down very significantly. 

The list goes on and on. Clothes washers, dishwashers, they perform better. Clothes washers, as an example, they are—cost about 

45 percent less than they did before standards were put in place. 

Dishwashers are down about 30 percent. So you see costs falling 

for the first price. You also get the savings on the backend. And 

let’s remember that homeowners are spending the second-most 

amount of money in their budget on their energy bills. After the 

mortgage, next up is energy bills, which are about $2,000—between 

$2,000 and $2,500 a year. 

So we’re getting all kinds of innovation and products, we’re getting savings in both ways, products that are coming to market and 

on the energy savings. So we see it really as a win-win-win, and 

a lot of that secret sauce is because the manufacturers are working 

with DOE in a transparent way to develop standards that they 

know they can meet. 

Mr. TONKO. And also, Mr. Batkins’ testimony argues that efficiency standards can have a negative impact on low-income consumers that may have to pay more initially for equipment that 

meets the standards, and then they may not keep those items long 

enough to reap the lifecycle cost benefits. How would you respond 

to those assertions? And is this a significant issue? And if so, what 

would you recommend to address it? 

Ms. CALLAHAN. Well, I couldn’t disagree with that more. First of 

all, a lot of low-income people actually rent homes and pay utility 

bills, but there’s a split incentive. The people that own the buildings that supply them with the dishwashers, the clothes dryers, 

they don’t have an incentive to put in the most efficient equipment 

because they’re not going to be paying the bills. The person that 

lives there pays the bills. And so if you set minimum levels of efficiency allowable in the market, you make sure that the low-income 

people, like the people that can afford higher-end products, are getting an efficient model and they’re saving on their energy bills. 

I also—I’ll go back to the light bulb. You know, people on fixed 

incomes or low incomes might make a choice to buy a 25 cent incandescent light bulb over a $2 CFL or a $3 LED. They’re going 

to—that’s going to cost them $60 over the cost of the product. So, 

you know, a lot of people just don’t have the information at hand, 
64 

don’t know the decisions they’re making are going to cost a lot 

more. 

So again, I think that, you know, as long as it’s cost-effective, as 

long as these are improving and innovating products, the low-income folks are benefiting, as are the high-income folks. 

Mr. TONKO. Thank you very much. And with that, Mr. Chair, I 

yield back. 

Mr. WEBER. [Presiding] I thank the gentleman. 

Before I recognize myself for five minutes, I would like to give 

Mr. Batkins a chance to respond to that previous statement. 

Mr. BATKINS. Sure. In my testimony I sort of just merely highlighted the research which exists now, which basically just looks at 

consumer preferences by income range. Obviously, there are some 

consumers who will come out with a net benefit from efficiency 

standards. But what the existing research looked at was discount 

rates, and they found that lower-income consumers typically had 

much higher discount rates than higher-income consumers. And if 

you use those higher discount rates for a lot of these energy efficiency rules that were studied, they turn net costs as a result. 

Mr. WEBER. Thank you, Mr. Batkins. And actually, Mr. 

Bosworth, would you like to weigh in on that as well? 

Mr. BOSWORTH. Well, one thing I would say is she is correct 

about refrigerators. Refrigerators are a sealed system. They come 

in a box. You slide it into your house. It operates. The only problem 

I see with the modern refrigerator is the old refrigerators had a little defrost timer. It cost about 30 bucks to replace. These new refrigerators, they got a control board in them, a circuit board. They 

go out, it costs a couple hundred dollars to replace, plus the labor. 

So there is—with the energy efficiency, there is more cost on repair 

and maintenance. 

As far as central air-conditioning and heating, the unit is only 

as good as the installation. And you can put in a 13, 14. You can 

put in a 92 AFUE furnace, but if it’s installed improperly or if it’s 

installed to undersized ductwork or a duct leaking in the attic or 

return air is leaking from the attic or from the basement or whatever, it’s not going to get the efficiency. So the equipment is fine 

and dandy, but it’s the installation that makes a difference. 

Mr. WEBER. Well, it is. And of course you know I own an air-conditioning company, and you’re not—you know, your—Bosworth was 

started in ’59, and I’m guessing you probably didn’t start that in 

’59—— 

Mr. BOSWORTH. No, I’m—— 

Mr. WEBER. —because you look a little younger than I do. But 

you’ve been in the air-conditioning company—business how long? 

Mr. BOSWORTH. I went to work for my dad in 1985, and I took 

the business over in 2001 when he passed away, and so far we’ve— 

we’re still paying the bills. 

Mr. WEBER. Well, I started Weber’s Air and Heat in 1981, November of ’81, and, you know, you and I would agree there’s a lot 

of stories of people who are hard-pressed to pay for these higherefficiency units, and then when they do break, boy it is, there is 

a shock to them because they are so much more expensive to repair. 
65 

And, Ms. Kerrigan, I’m going to give you a chance to weigh in 

on what they cited as well. 

Ms. KERRIGAN. I think I’ll address this from the—you know, from 

the small business impact in terms of, you know, the energy—in 

terms of, you know, some of these standards and regulations that, 

you know, there are winners and losers, I think, in the small business community. I mean, certainly, there are those businesses who 

gain, you know, from these types of regulations and mandates. 

And—but there’s a host of other businesses, you know, the manufacturers and others, that—I mean, these are—they’re real costs, 

you know, involved to the—into their businesses in terms of the 

changes that they have to make, in terms of their opportunity for 

growth, in terms of where their capital goes, their competitiveness, 

et cetera. So, I mean, there’s a cost to businesses, to small businesses, and to the people that work for those businesses as well. 

Mr. WEBER. Well, thank you. I just wanted—since your study 

was cited, Mr. Batkins, I wanted to make sure that the others had 

a chance to weigh in on that as well. 

I’m now going to recognize myself for five minutes with questions. 

Mr. Batkins, continuing with you, the Chairman mentioned in 

his opening statement that your analysis that you conducted on the 

cost of the regulations promulgated under President Obama, which, 

for last year alone, cost $197 billion or about $600 for every American citizen. Now, I’m assuming that means men, women, and children, quite frankly, and I’m just thinking children don’t pay utility 

bills. Is it just me? It doesn’t take an economist to understand that 

this regulatory burden will hit the poorest Americans the hardest. 

So I want you, if you can, I want you to elaborate on the kind 

of economic damage we have seen from the DOE and EPA rules 

and what has that meant in terms of cost for American families 

just during this Administration’s tenure. 

Mr. BATKINS. Sure. Whenever you, you know, hear figures, tens 

of billions, hundreds of billions, realize that a good portion or at 

least some of the costs ultimately get passed down to consumers, 

and that acts as a sort of regressive tax. It almost acts like a sales 

tax on consumers. And beyond just the consumer angle, there’s also 

the angle of businesses. We’ve done some research which has found 

that as higher regulatory burdens increase, you’ll actually get 

fewer small business growths and more deaths from small businesses. And what we have found, which was I think most surprising as the regulatory burdens increase is that we actually 

found growth in the largest businesses. So not only do these businesses have sort of regressive impacts on consumers through higher prices, higher energy bills, higher utility bills, but it can also impact small businesses as well because they don’t have the capital, 

the ability to, you know, compete with—sometimes with large competitors. 

Mr. WEBER. Well, that’s great. And I want to move right over to 

Mr. Bosworth because he and I both ran an air-conditioning company for a long time. And so every time the SEER rating is 

changed, I can tell you that it makes for—that company is going 

to have change their advertising, change their ads, they’re going to 

have to train their technicians, they’re going to have to bring more 
66 

literature in, not to mention that the manufacturers and distributors have to do that as well. And so every time we do that, Jerry, 

I think—would—have you experienced that it runs your costs up, 

and then therefore, you have to charge more for that equipment? 

Mr. BOSWORTH. Well, the equipment definitely costs more money. 

That’s just the way it is. I mean, every time it’s more efficient, 

somebody gets paid. So with us, with getting more and more higher 

efficiency equipment, we have to learn how to install it better. 

We—or actually, we do install it better. We have somebody that 

has different techniques for the installations. 

And—but my biggest concern is is that on—especially on 92 percent furnace, they’re a condensing furnace. Right now, the furnaces 

we install are non-condensing furnaces. And they’re 80 percent efficient. When I first got in the trade in 1975, the standard furnace 

was a 60 percent furnace. It was—40 percent of the heat went out 

the roof and that’s just the way it was. But the repair on the—between the 60 percent furnace and the 80 percent furnace went up 

dramatically when we started installing 80 percent furnaces. 

And, like I said, I don’t know about the 92 percent because we’ve 

only installed one, and it was only installed for a few years and the 

customer didn’t like it and took it out. 

Mr. WEBER. Well, I can tell you, we’ve looked at them and they’re 

super expensive and not—they don’t pay back into Texas. And so 

what happens is the cost of all of this expensive equipment is going 

to hurt the low income consumers the absolute most. 

And let me just say, you mentioned earlier in your testimony 

about the Department of Energy. You know, when I was a Texas 

State Rep, I was on the Environmental Regulatory Committee, and 

we wanted people on the TDLR, Texas Department of Licensing 

and Regulation. I’m an air-conditioning contractor. We wanted people on that board who actually knew our business and hopefully 

had experience in our business. Do any of you all know or are there 

any members—any of the folks that work for these agencies, DOE 

or EPA, that has actual business experience in an air-conditioning 

company? Ms. Callahan, you seem—— 

Ms. CALLAHAN. I—— 

Mr. WEBER. —chomping at the bit. 

Ms. CALLAHAN. I’m chomping at the bit. I don’t know about airconditioning companies. I’ll think about that for a minute. But the 

gentleman that runs the Building Technology Program, which is 

where the appliance and standards program sits, is a 30-plus year 

veteran of Pacific Gas and Electric Company, one of the largest 

utilities in the country and ran all of their efficiency and demand 

side management programs and worked directly with manufacturers—— 

Mr. WEBER. While—— 

Ms. CALLAHAN. —understands those issues and—— 

Mr. WEBER. While I appreciate that, I want somebody who’s been 

in those homes looking those people in the face—— 

Ms. CALLAHAN. Well—— 

Mr. WEBER. —having to deal with it. 

Ms. CALLAHAN. —let me—yes, and let me say that in the process, 

the way that it’s set up—and there’s a big ongoing debate on the 

furnace standard right now and a lot of input coming in. There are 
67 

stakeholders sitting at the table working with DOE, manufacturers, the stakeholders working with DOE trying to come to a consensus opinion on this and rate, and so it’s a process that’s ongoing. They’re—those voices are being heard at the table. 

Mr. WEBER. I’m running way over out of time so I appreciate 

that, but let me just say that we want to make absolutely certain 

that regulations that are promulgated are based on not just the 

idea that somehow they ought to all be more and more efficient. 

And I would add, too, for the record that—and, Jerry, I know 

you’ve experienced this in the air-conditioning business—manufacturers, in order to gain a competitive edge, will actually build a 

better product. They will build a more efficient product. They will 

build a better product just for competition. 

And I’m going to end by saying—quoting one of my favorite 

speakers, Ronald Reagan. You know, Reagan said somebody who 

comes along with a better mousetrap, the government comes along 

with a better mouse. 

So anyway, I’m going to yield to the gentleman from Virginia, 

Mr. Beyer. 

Mr. BEYER. Thank you, Mr. Chairman, very much. I’d like to 

thank the Chair and the Ranking Member for having this hearing 

in the first place. It’s very important. And thank all of you for coming and being with us. And I especially appreciate the perspective 

from both the majority and the minority that regulations are important and that it’s important that we get them right. 

I’ve been in business 42 years, and the—see the impact that 

OSHA has had, that clean air and clean water and food safety and 

drug effectiveness and all these incredible things. 

But it’s also important that we get the balance right in terms of 

the cost-effectiveness. I remember when I served in the Virginia 

Senate, one of the proposals was that we get rid of all asbestos in 

Virginia schools at a cost of $2 billion, and they estimated it would 

save the life of one child. We said, well, is that the best way to 

spend $2 billion in terms of children’s health? And maybe not. 

So let me move on. To Mr. Batkins, your chart I thought was fascinating because I just wanted to point out that the high point was 

in 2008 when George W. Bush was President, and that the low 

point over all those years was in 2012 when President Obama faced 

a very uncertain election against Mitt Romney. So I was glad to see 

that it was very—presented in a nonpartisan way, that this is not 

just beating up on President Obama for what you fear will happen 

in 2016. 

Mr. Bosworth, thank you for talking about the unintended consequences of the condensing versus non-condensing furnaces. I 

loved your line that the false choice between short-sighted solution 

to repair and maintain old efficiency equipment—inefficient equipment and purchasing new equipment that will never have a positive payback. 

Ms. Callahan wrote, and I quote, ‘‘The process that leads to 

standards is informed at every step by stakeholders representing 

diverse sectors so that negotiations reflect the respective interests 

of industry and consumers and will have positive effects on the environment.’’ And you just elaborated on that, Ms. Callahan, just a 

minute ago. 
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Mr. Bosworth, so you’re in the business at the retail level. You 

said the process is broken. How does your experience differ from 

what Ms. Callahan talked about in terms of promulgating these 

regulations? Why haven’t this process with industry and stakeholders and consumers not apparently worked with respect to these 

furnaces? 

Mr. BOSWORTH. Well, we already have 92 plus furnaces available. I mean, they’re sitting on the shelves ready to be sold. There’s 

just no demand for them, at least in my area and I would think 

in the Midwest—or not the Midwest but the Southwest there’s no 

demand for them. Maybe in Minnesota, Wisconsin, those areas it’d 

be nice and would work good. Matter of fact, I used to work in Minnesota where the—most of the furnaces were condensing furnaces. 

So there is a place for them, but it’s not in the whole United 

States. 

Like I said, where I live, air-conditioning is more important and 

selling higher-efficiency air-conditioning—when it went from 13 

SEER to 14 SEER this year, it was no big deal. Everybody wants 

a higher-efficiency air-conditioning because they pay a high light 

bill. Their gas bill is minimum. 

Mr. BEYER. So your argument would be that the regulation needs 

to be fine-tuned based on where you live in the country? 

Mr. BOSWORTH. Well, I really think it’s what people want. It’s— 

consumers will drive the economy. I mean, they’ll drive the force 

towards the 92 percents. 

Mr. WEBER. Mr. Beyer, I’m going to give you extra time because 

I went over so much, but would you yield for just a second? 

Mr. BEYER. Sure. Yes. Yes, sir. 

Mr. WEBER. I’m thinking really what you’re driving at is the idea 

that somehow one size fits all we would argue that high-efficiency 

furnaces are probably not going to be popular in Texas. You can’t 

hardly give them away. But, then again, high-efficiency air-conditioners may not be all that popular in Minnesota. 

Mr. BEYER. Yes. Yes. 

Mr. WEBER. So I yield back. Thank you. 

Mr. BEYER. Okay. Thank you. Yes, we sell a lot of all-wheel drive 

cars after Snowmageddon here, but they’re tough to sell in Florida 

so—Ms. Kerrigan, your—some of the statistics that you quoted, I 

know you—they’re not your statistics, that leaving aside manufacturing, that other firms, 50 employees or less, the full regulatory 

burden, $11,724 per employee, environmental regulations $3,574 

employee, I’m trying to think here because I know my financial 

statement really well how I could ever get to numbers that high 

for my employees. The only way I could do it would be to consider 

the built cost of, you know, complying with fire codes. 

I certainly don’t think you would want us not to dispose of Freon 

and antifreeze. I actually remember back in early 1980s we used 

to pour the antifreeze down the drain. And I called the EPA and 

they said, well, that’s what everyone does. It’s—we’re in a very different world right now. How much did that $3,574, which I can’t 

imagine is more than about $600, do you think we shouldn’t be 

doing? 

Ms. KERRIGAN. Well, that’s a very good question. I—you know, 

I think the—you know, the point of the—including the National As-
69 

sociation of Manufacturers’ study, which shows the impact of regulation on small business and the disproportionate impact is that 

when it comes to smaller firms that—particularly in the manufacturing sector, that it’s very difficult to—I mean, they do not have 

the scale, they don’t have the size to, you know, to spread these 

costs around. And it does cost them more to comply with these 

rules and regulations. 

So I don’t have an answer to that, you know, specific question. 

I mean, I just—from our perspective, I mean, we just want—from 

a regulatory process perspective, we want the process to do what 

it’s supposed to do in terms of protecting small businesses, to look 

at the economic impact, to consider their concerns, to mitigate the 

costs where possible in terms of complying with those rules and 

regulations. 

So—and, I mean, I think both sides of the aisle in terms of—you 

know, in terms of small business impact and regulation in general, 

I mean, do agree that, you know, small businesses being sort of undermined, you know, in this process and their voice is not being 

heard. So—— 

Mr. BEYER. Well, I’d just like to invite you or somebody from 

your organization—and I do this with great respect—to come into 

my business with my daughter or my brother and walk through 

and see where you could figure out which regulation we should reverse because I can’t think of one. I also can’t think of one that 

costs very much so—— 

Ms. KERRIGAN. You mean on the—in the environmental side 

or—— 

Mr. BEYER. Across the board. 

Ms. KERRIGAN. —more broadly? I mean—— 

Mr. BEYER. Across the board. 

Ms. KERRIGAN. Oh, okay. Well, I mean—well, there’s—— 

Mr. BEYER. And I’m talking about retail automobile dealerships, 

you know, as gritty as you get. 

Ms. KERRIGAN. Right. Right. Well, I’d love to respond to you in 

a—you know, get with my staff and my chief economist to provide 

you sort of maybe what the—but if you look at healthcare regulations, the ObamaCare regulations in terms of tax compliance costs, 

things like that, I mean there are ways, I think, where we can 

squeeze these costs and make them less burdensome for small businesses. 

Mr. BEYER. All right. Thank you. And one last question. Ms. Callahan, thank you, too, for being so bipartisan in your—— 

Ms. CALLAHAN. Thank you. 

Mr. BEYER. —and reminding us that these things have evolved 

over decades with Democrats and Republicans working together, 

which is what we would like again moving forward. 

But you also talked about there are ways to make improvements, 

transparency in data. Can you talk about that for just a minute 

until the Chairman tells me my time has run out? 

Ms. CALLAHAN. Sure. I think it really goes to the point the Chairman’s making and Mr. Bosworth, that we need to have the people 

that are impacted by these regulations at the table. And I actually 

think DOE does a pretty good job at that. Where we think they 

could improve is the transparency of the calculations that they’re 
70 

making. What are the models they’re using? How are they coming 

up with the numbers on cost-effectiveness, on performance? Because often, industry will have very different numbers. 

And so if the stakeholders are—they understand and it’s transparent what DOE is doing, they can make more informed and better inputs into the process. 

We also think that if you vest people in the process and listen 

and hear them, it’s less likely that you’re going to have litigation, 

which causes delays in these standards. 

I would say that, you know, so many of the standards—we’re 

talking about a couple that are controversial—most of them are 

ones that manufacturers have agreed to before they’re put into 

final form. So these are things that the manufacturers are working 

with the stakeholders and with DOE, and it’s a process where air 

conditioners in Texas aren’t a big deal when it goes up to SEER 

14. 

Mr. BEYER. We just want to make sure the Mr. Bosworths and 

Mr. Webers are at the table. 

Thank you, Mr. Chair. 

Mr. WEBER. And I thank the gentleman for yielding back. 

I now recognize Dr. Babin from Texas for five minutes. 

Mr. BABIN. Yes, sir. Thank you, Mr. Chairman. And thank you, 

panelists, for being here today. 

At last week’s full committee SST hearing, we learned that this 

Administration has apparently been using fuzzy math to justify 

their promised reductions, 26 to 28 percent reduction of greenhouse 

gas emissions from 2005 levels at the Paris Climate Conference 

this past December. It’s another example of how far this President’s Administration will go to fulfill a politically driven agenda. 

It is an agenda not based on sound science. 

Over the last seven years, this President has pushed some of the 

costliest regulations in the history of the republic, including the 

Clean Power Plan, the ozone rule, and Waters of the United States. 

And in the final year of his Administration, President Obama is 

eager to push more of his ‘‘all pain, no gain’’ regulations in the 

same manner in which he pushed his other regulations, with little 

regard to regulatory process and the underlying science. And more 

importantly, he shows little regard as to how this would adversely 

affect senior citizens, the poor, and those living on fixed incomes, 

as we’ve heard earlier today. 

It’s extremely important to invoke all stakeholders in the regulatory process. We heard from the agricultural sector and others 

that EPA did not meaningfully involve them in the rulemaking 

process. And now, we have a WOTUS rule that doesn’t work for 

rural America, among others. Many farms and ranches are small 

businesses. We know that EPA failed to conduct a small business 

advisory panel, a SBREFA, to calculate the impact that the 

WOTUS rule will have on small businesses. 

So my question is, Ms. Kerrigan, in your capacity with the Small 

Business and Entrepreneurship Council, what are your thoughts on 

this procedural failure and the impact that the WOTUS rule will 

have on our small businesses? 

Ms. KERRIGAN. Well, the procedure was a huge failure, I think, 

from a small business perspective. It was a travesty. The—well, 
71 

there’s been this and then other major rulemakings as well where 

it’s obvious that the EPA is not taking its legal responsibilities 

under the Regulatory Flex Act and its legal responsibilities to—on 

the impact on small businesses. 

But—and the SBA Office of Advocacy, which is a watchdog for 

the RFA and for small business in the regulatory process, called 

them out. They said the EPA should pull the rule, begin again, and 

they did not. But even their economic analysis that the EPA did 

showed that it would have a pretty significant impact on small 

businesses. But their certification where they said it would not impact small business obviously contradicted their economic analysis. 

So that’s very disheartening to small businesses in terms of the 

process failure. A law that was meant to protect them and where 

they feel they have some voice and input into the process is totally 

broken, and obviously we need to fix that. 

And, you know, in terms of the impact the agricultural sector, 

the home-building sector, you know, any type of business that’s 

looking, you know, to build out and expand its facility, a lot of the 

economic development projects that you see happening not only 

in—you know, in inner cities but in rural America, I mean, this is 

going to have a huge impact in terms of costs or the ability for any 

of these projects to move forward. 

So—but we’re happy to see that it’s in the—we shouldn’t have to 

go to the legal process, obviously, the courts, where we are right 

now. I mean, EPA should just do this. They should take their job 

responsibilities seriously. 

Mr. BABIN. And if you don’t mind, I’d like to follow up real quickly. Has this been a procedural failure by EPA to conduct a 

SBREFA panel with other regulatory rules, not just WOTUS? 

Ms. KERRIGAN. Well, with the Clean Power Plan, there was a 

very hastily arranged last-minute, you know, type of panel that 

they put together. I think they were sort of shamed into that, but 

it really did not have a meaningful agenda, and obviously, they 

didn’t consider the impact on small business. 

Their—in the Tailoring Rule, that was another instance where 

they—in their economic analysis or in their analysis they found 

that six million small businesses would be impacted, you know, by 

that regulation, yet they certified that it would not. So, yes, there’s 

been several instances. 

Mr. BABIN. Absolutely. Okay. Thank you so very much. 

Thank you, Mr. Chairman, and I yield back. 

Mr. WEBER. The gentleman yields back. 

The gentleman from California, Mr. Swalwell, you’re recognized 

for five minutes. 

Mr. SWALWELL. Thank you, Chair, and thank you to our witnesses. 

And I wanted to start first with Ms. Kerrigan. Ms. Kerrigan, in 

your statement to the Committee, on page 2 you state in the third 

paragraph, if I’m correct, ‘‘Regulation and the threat of new regulation continue to be a major issue of concern for our members.’’ Is 

that right? 

Ms. KERRIGAN. Yes. 
72 

Mr. SWALWELL. This is not the first time you’ve come to Washington to, I would say, argue that regulation of an industry is burdensome, is that right? 

Ms. KERRIGAN. Yes. 

Mr. SWALWELL. And, in fact, in 1997 you were on the federal legislative team for Philip Morris, is that right? 

Ms. KERRIGAN. No. 

Mr. SWALWELL. Have you ever—— 

Ms. KERRIGAN. I am—I’m—I am President and CEO of the Small 

Business and Entrepreneurship Council. We are an organization 

that represents small business owners. And I have been in this capacity for more than 20 years. 

Mr. SWALWELL. Would it surprise you, Ms. Kerrigan, if in its 

Good Science Project Plan in October 1997 Philip Morris listed you 

as part of four people on its federal legislative team? 

Ms. KERRIGAN. Yes. 

Mr. SWALWELL. Okay. And would it surprise you if Philip Morris 

said that they intended to call as a witness to the Senate Environment and Public Works Committee Hearing Karen Kerrigan with 

the Small Business Survival Committee and ask her whether she 

would consider testifying? She’s done some very good work, having 

several letters to the editor published on OSHA issues? 

Ms. KERRIGAN. Well, that might not surprise me in terms of a— 

being invited to a committee and perhaps having a corporation recommend, you know, if they’re working with staff that I testify before the committee. 

Mr. SWALWELL. But putting you on their federal legislative team 

would have been done without your permission? 

Ms. KERRIGAN. Yes. 

Mr. SWALWELL. Okay. And the Small Business Survival Committee did in fact back in the late ’90s receive money from Philip 

Morris, is that right? 

Ms. KERRIGAN. Yes. We have a variety of corporate partners—— 

Mr. SWALWELL. And—— 

Ms. KERRIGAN. —who support our organization. 

Mr. SWALWELL. And, Ms. Kerrigan, in 1999 on March 23, you 

sent a letter to Majority Leader Lott at the time stating that 

‘‘America’s tobacco industry is a legitimate one.’’ Is that right? 

Ms. KERRIGAN. I did probably. I mean, I—I mean, it was a legitimate industry so—I have to look at what the context of the letter 

is, though. If I could see that letter and if you have access to it, 

I’d—— 

[Slide.] 

Mr. SWALWELL. Behind you and to your right you’ll see the Good 

Science Project Plan. That’s Philip Morris’s Good Science Project 

Plan where they list you, and you can see your name is highlighted 

in a red box, Karen Kerrigan, as being a federal legislative team 

member. 

Ms. KERRIGAN. Right. 

Mr. SWALWELL. And would you call tobacco something that is 

good for science or good for health? 

Ms. KERRIGAN. I wouldn’t call it good for health, no. 

Mr. SWALWELL. Okay. Thank you. No further questions, Chair. 
73 

Mr. WEBER. I thank the gentleman. That was an interesting exchange, but we do want to be a bit more current and on the issues 

here today, I think. So I’m going to recognize the gentlelady from— 

I’m going to recognize the gentleman from Illinois, Mr. LaHood, for 

five minutes. 

Mr. LAHOOD. Thank you, Mr. Chairman, and thank the witnesses for being here today. And I want to thank Chairman Smith 

for having this hearing today. 

There was some references earlier on, you know, why we’re having this hearing and the reason for it, and I would just tell you in 

my district when I talk to small and medium-sized businesses or 

I talk to farmers or healthcare providers or people in business, it’s 

the number one issue that they talk about in terms of regulation, 

the overreach of the federal government, and, you know, the biggest hindrance to growing their small or medium-size business. 

And, you know, when you also look at these regulations and the 

overreach, you know, from the standpoint—we’ve heard some arguments on, you know—from the other side on how these regulations 

make sense and we all want clean water and clean air, which we 

all share in that, but I think the other part of this is you look at 

what these lawsuits that have been filed in federal court, we look 

at yesterday the Supreme Court ruled—you know, put a stay on 

the climate rule, which is significant, basically let these lawsuits 

go forward, stopping that in its tracks. 

You look at the Waters of the United States regulation, two federal judges, one in North Dakota, one in Cincinnati, have issued injunctive declaratory judgments on them basically saying these need 

to be stopped. They cannot go forward. And I think that’s—if you 

look at the legal reasoning there, it’s because of the overreach and 

the violation of laws here. 

You also look at the executive order on immigration that has now 

gone to the U.S. Supreme Court because the Fifth Circuit underlying that has ruled that that appears to be unconstitutional, the 

point being that, you know, when you look at what this Administration has done particularly in terms of, you know, the regulation, 

the over-compliance, the—you know, the standards that have been 

put in place, and I think what I hear is, you know, there has not 

been a balanced kind of reasonable approach on this, working with 

business and industry. That seems to be the common theme. 

And the question was asked earlier, well, what rule would you 

reverse? I think it should be asked from the standpoint of what 

could be put in place so that you have a dialogue and a discussion 

on how you work together to implement these rules to make it easier on business? 

And, Mr. Bosworth, I commend you for engaging in the business 

you are and trying. It’s a tough environment to do that. 

But I guess for you, Ms. Kerrigan, in terms of a more balanced, 

reasonable approach in working with business on implementing 

these rules, you know, whether you could comment on that. 

Ms. KERRIGAN. Well, I think it all starts at the beginning of the 

process, the federal regulatory process. And you’re right, there 

needs to be a balance. I mean, regulation is essential to the functioning of our society, to the environment, to health, to the free 

market, to business, to job creation. 
74 

But—and there has been protections in place in law where that 

type of small business input and engagement, along with the economic analysis and the analysis that’s supposed to take place, to 

look at what the impact will be on small businesses. I think the 

dialogue needs to take place before the rule is proposed. And in 

fact, in January of 2011 when the President issued his executive 

order on regulation, which built on Clinton’s Executive order, I 

mean, that was one of the pieces that he put in there, that regulations where it’s appropriate and where it’s feasible should bring in 

stakeholders, small businesses, other groups at the front end of the 

regulatory process before the regulations are even proposed. 

Mr. LAHOOD. Well, and I would follow up with Mr. Batkins on 

this. You know, at the end of your testimony you talked about what 

we need to do to reform this or change this. I mean, clearly, when 

you hear of a midnight regulation, that frightens every business 

owner when you’ve had an election that has occurred, and then between the period of time of an election and when somebody gets 

sworn in that you’re going to have all these regulations come forth 

when there’s really no accountability, right? Nobody is being held 

accountable. And that’s what’s scary and is what makes people 

very cynical about government, that exact phraseology. And then 

you see what’s occurred. 

So you mentioned in terms of reform, moratorium, but are there 

other things that are more substantial that can be put into place 

to kind of stop this mentality? 

Mr. BATKINS. Sure. I mentioned that Congress has under consideration the ALERT Act, which would basically allow sort of posting 

on the internet a regulation for at least 6 months before it can go 

into effect. There are some regulations that we’ve studied where 

there’s been an economically significant regulation imposed before 

it was even published in the Unified Agenda, period, and very little 

in the way of public feedback. 

And I’ll give you one example. From the 2000 midnight period, 

there was a Department of Energy regulation which was proposed 

in October of 2000, published in the Federal Register the following 

January 2001. The entire rulemaking history was less than the 

comment period for the Clean Power Plan. So that’s how quickly 

some rulemakings can move through the process, in the matter of 

a few weeks. 

Mr. LAHOOD. Thank you. Those are all my questions, Mr. Chairman. 

Mr. WEBER. I thank the gentleman for yielding back. And seeing 

that the minority side has no other witnesses, we will now go to 

Barry Loudermilk of Georgia. 

Mr. LOUDERMILK. Thank you, Mr. Chairman. And thanks to the 

witnesses being here. I’ve got a couple of questions, but first, I 

was—as we were listening to the testimony, I was reading over the 

testimony and I started wondering when does the madness actually 

come to an end? And as a small business owner for 20 years, I experienced the impact overregulation has on the small business community, whether it be environmental regulations, it being the IT 

business, affected my customers, whether it be health regulations 

brought on by the Affordable Care Act, which affected my cus-
75 

tomers, or whether it be Dodd-Frank, which affected everyone. I 

definitely saw the impact of overregulation. 

But as I was reading over some of the testimony here, something—a question came to me as who gains? Who’s going to gain 

from all of this? We had testimony here in this Committee that the 

average American family, the average American family pays 

$15,000 a year in hidden regulatory cost. Another report said that 

the 60 percent, 60 percent of the cost of a new home is due to government regulation. 

So I’m wondering with all of this who actually gains, and then 

I read something in Ms. Kerrigan’s testimony, which may indicate 

who gains from this. It was dealing with the Waters of the United 

States. When—I think the testimony said that there’ll be $158 million in new permits that I would assume the EPA would be collecting those funds. So I think it’s clear who gains in some of this 

regulation. It’s not the consumer, it is not the individual citizen, it’s 

the government. The government is the one that gains. But on to 

my question. 

I did find a ray of hope as I was reading over the—I hope there’s 

a ray of hope here as I was reading over some of the written testimonies. And Ms. Callahan writes in her written testimony ‘‘Many 

stakeholders would like the U.S. Department of Energy to find 

ways to increase transparency with respect to the data and models 

it uses to make performance and energy-saving calculations. More 

transparency could help stakeholders make more informed contributions to the standards process and perhaps, more importantly, 

help prevent situations that lead to litigation and delay. Simply 

put, process pays dividends beyond energy savings.’’ 

This is refreshing because definitely we need—we need more 

transparency, and if—what I’d like to ask of Ms. Kerrigan, Mr. 

Bosworth, and Mr. Batkins is are you seeing more transparency? 

Do we need to look for more transparency? Because, let me tell you, 

even with subpoena power, this committee is having a hard time 

getting transparency from these agencies, especially the EPA, who 

fails to respond to our requests for their data, for their models, for 

information. And so my first question is do we need—do you see 

a need for more transparency? And are these agencies looking? Ms. 

Kerrigan? 

Ms. KERRIGAN. Yes. I mean, we definitely need more transparency, I think, on the economic analysis side, the scientific data, 

I mean, all the data and the technical information that’s being used 

to justify the regulations. And in terms of if we’re seeing any more, 

I’m not quite sure. I don’t think so. Again, we were—we had some 

hope with President Obama’s Executive order in January of 2011, 

which again said that we are—that scientific and technical information, I mean, the goal was—I think there was actually a requirement and where possible to begin moving this stuff online so that 

everyone can see it on Regulations.gov so the regulatory—regulated 

community could also see it. 

But as you noted, with subpoena power you’re not getting this 

data—— 

Mr. LOUDERMILK. Right. 

Ms. KERRIGAN. —and I think—I mean, the ozone rule and the 

underlying data in that very significant regulation—I know you’ve 
76 

subpoenaed for that information and you’re not getting it. So I 

don’t see any sign of transparency—— 

Mr. LOUDERMILK. Well, thank you. Since I’m—— 

Ms. KERRIGAN. —in that regard. 

Mr. LOUDERMILK. —running out of time, let me skip to the second question—— 

Ms. KERRIGAN. Sure. 

Mr. LOUDERMILK. —and hopefully, we can get the other two to 

weigh in on both of these is even with subpoena power we’re having a hard time getting transparency. So as we bring these stakeholders in for these meetings, are they having the transparency? 

And as I—as some of the testimony says, this—again, Ms. Callahan 

writes, ‘‘These standards are proof that even when dealing with the 

biggest impacts, regulation in this context can work and result in 

the benefits to all stakeholders.’’ By saying we’re bringing them in, 

the stakeholders buy into this, but are the stakeholders getting the 

information they need, and is the choice that they’re given equating 

to would you rather be shot or hung and not giving a third option? 

Mr. Bosworth? 

Mr. BOSWORTH. To be quite honest, I am not in the political atmosphere of all this stuff, so this is not really my expertise. 

Mr. WEBER. Count your blessings. 

Mr. BOSWORTH. So I’m going to have to just—— 

Mr. LOUDERMILK. Okay. 

Mr. BOSWORTH. —defer on this one. 

Mr. LOUDERMILK. Mr. Batkins, would you like to weigh in on either of those? 

Mr. BATKINS. Sure. I mean, there’s always—I think what you 

fear, especially, like I mentioned, when you’re dealing with these 

multimillion, multibillion dollar regulations, you don’t want that 

unknown. If a regulation is getting finalized and industry still has 

questions and there might even be some uncertainty—a great deal 

of uncertainty for regulators, you don’t want that degree of unknown. 

And what’s more troublesome is that, you know, we’re sort of 

issuing hundreds of regulations, and the number that actually we 

go back and look at and determine whether or not they were effective or not is on the area of 1 or two percent. I mean, Congress has 

the benefit of passing a budget and going back and seeing whether 

or not programs were effective. On the regulatory side, it is really 

just sort of a black hole of information. 

Mr. LOUDERMILK. Is—— 

Ms. CALLAHAN. May I make a comment, Mr. Loudermilk, since 

you’re quoting my testimony? Can I comment on this as well? 

Mr. LOUDERMILK. Sure. And then I’ll yield back, Mr. Chairman, 

after—— 

Ms. CALLAHAN. Okay. 

Mr. LOUDERMILK. —her comments since I’m out of time. 

Ms. CALLAHAN. Okay. I just want to say that narrowly focused 

on the energy efficiency standards that are being set by the Department of Energy, I want to remind you what’s also in my testimony is that Department of Energy is just executing the job that 

it’s been given by the Congress, and it sets regular timelines and 

dates for looking at updating standards. Sometimes they demur. 
77 

They believe—and they have to make a designation that it’s not 

time to increase that energy efficiency standard, and they did that. 

They did that last year, they did it the year before, we expect them 

to do it again this year. 

It’s a three-year process typically, and it engages stakeholders 

from the beginning of the process so—— 

Mr. WEBER. Ms. Callahan, I hate to cut you off, but I’ve got to 

go to the gentleman from Florida, Mr. Posey. We’re running out of 

time. 

Mr. Posey, you’re recognized. 

Mr. POSEY. Thank you very much, Mr. Chairman. 

Most people think Members of Congress make all the laws. In 

my office, four years ago we started collecting the daily register 

that’s delivered to every Member of Congress, 435 Members of Congress, 100 Members of the Senate every day—excuse me—of the executive orders, rules, proposed rules, changes in rules. And I ask 

people how big do you think that stack is now? And I get answers, 

you know, from like four feet, six feet, eight feet, ten feet. Well, it’s 

seven stacks over my head now, and that mostly is laws made by 

unelected people, unelected bureaucrats. It shocks a lot of people, 

but that’s the very issue we’re talking about here. 

Ms. Kerrigan and Mr. Batkins, how do EPA and DOE regulations hurt those who live paycheck to paycheck, for example, senior 

citizens or others who may be on a low income level? Ladies first, 

time is wasting. 

Ms. KERRIGAN. Sure. No, sorry about that. Well, cost. I mean, 

you know, look at—we—it’s a very difficult economy. I mean, there 

is—you know, in terms of wage growth is not growing. There’s a 

lot of cost and, you know, with—for example, under the, you know, 

Clean Power Plan, if you’re going to have electricity costs that are 

going to be jacked up anywhere between, you know, 5 or 20 percent 

depending upon which country—which part of the country you live 

in. I mean, this is—that’s real money. That’s real money. 

And in sectors, too, for example, you know, the whole coal industry and some of these mining towns that are being wiped out. I 

mean, the small businesses and their employees because of—you 

know, because of rules that are—you know, that are affecting coal. 

So it impacts—it has a very, very difficult—a regressive impact 

I think, you know, particularly on low-income and middle-income 

people. 

Mr. POSEY. Okay. Thank you. Mr. Batkins? 

Mr. BATKINS. Sure. I mean, I would echo those comments as 

well, noting that, you know, the—a lot of the research that we have 

today shows that not everyone along the income ladder benefits the 

same way from EPA or DOE regulations. And—but when the regulations are promulgated, they sort of assume homogenous consumer 

and that’s not always the case. Our consumer preferences are different. Our time series are different. Our income streams are different. So, yes, a lot of these regulations can have regressive impacts. 

Mr. POSEY. Do—and back to Ms. Kerrigan and Mr. Batkins, do 

you foresee any downsides from a healthcare perspective? 

Ms. KERRIGAN. You mean, you know, I guess dis-benefits if you 

will to—— 
78 

Mr. POSEY. Yes. 

Ms. KERRIGAN. —you know, individuals impacted by these regulations? I mean, certainly, it’s very—if you lose your job, I mean, 

you know, that has an impact on access to healthcare, it has an 

impact on your health in terms of stress and everything that goes 

along with that, in terms of your ability to provide, you know, for 

your children and your family. I mean, that’s one thing that comes 

to mind. 

Mr. BATKINS. Sure, there was actually an EPA regulation which 

was issued, I believe, I in 2011 or 2012, and in it EPA forecasted 

$52 million in environmental dis-benefits was the term that they 

used from dirtier air and dirtier water, which was a bit of a surprise coming from EPA. There is actually some research on employment dislocation and what that means for mortality and morbidity 

going forward. And researchers found that employment dislocations 

can lead to a 15 to 20 percent jump in mortality the 20 years after 

a dislocation. So in a sense it can all be connected. 

Mr. POSEY. I hear from a lot of senior citizens—and I have quite 

a few in my district—that the pressure is on them to choose between medication and paying their utility bills. Is that a common 

thread that any of you have seen among seniors? 

Mr. BATKINS. I mean, I don’t study at that sort of granular level, 

but I can understand certainly, you know, how that would be the 

case. When you’re talking about, you know, in some instances a 

regulatory tax of a few hundred dollars, there are going to have to 

be some tradeoffs made, and I can certainly see that taking place 

in the real world. 

Mr. POSEY. Okay. Mr. Bosworth, could you give examples from 

your business experience about how excessive regulations have resulted in unintended consequences? 

Mr. BOSWORTH. Well, with the energy efficiency standards going 

up and up, we have seen where we’ve been pulling out like 10 

SEER equipment and trying to install 13 and 14 SEER equipment 

in a spot and it won’t fit. If you go to—all of you all have homes 

and all of you all have furnaces and air conditioners at your home. 

You go take a look at your furnace and see what’s—where it’s sitting. It’s sitting usually in a closet or in the basement and it’s usually got walls built around it because nobody wants to see them. 

The problem comes is when it needs to be replaced and you go 

to like a condensing furnace. Well, a condensing furnace is probably about a foot taller than the standard non-condensing furnace. 

So then you’ve got a height—— 

Mr. WEBER. And you’ve got to deal with the condensate. 

Mr. BOSWORTH. You’ve got to deal with the condensation because 

it’s got an acid-based condensate on it and it can’t go into a cast 

iron drain. It’s got to go into a PVC drain. So there you have to 

do some plumbing. 

Then you have venting. If you stand—if you change out a standard furnace, you have what we call B vent aluminum piping or 

steel piping that we vent through. These—now, for these condensing furnaces, they use PVC pipe. And then again, if your unit 

is in the basement and you’re in a—or you’re in a basement that’s 

been made into a bonus room or something, you have a ceiling that 
79 

you might have to remove in order to—or tear a piece of it out in 

order to run vent pipe. 

Or if you’re in a closet, you might have an issue to where the 

vent pipe doesn’t go straight up. It might go over and up and you 

still have to do some carpentry work in order to get this system installed. 

Mr. POSEY. But they had the best of intentions when they wrote 

the rule. 

Mr. BOSWORTH. Well, you know, that’s what I mean. The equipment itself, you’re looking at adding about $600 to the job cost, 

marking up, you looking at a couple hundred bucks, but then 

you’re looking at the construction work that might be required to 

install this system, and the sky’s the limit. 

Mr. POSEY. If you’ll indulge one more question, on automotive 

air-conditioning, we had to get rid of Freon and we have a replacement now. 

Mr. BOSWORTH. Yes, we went from R–12 to 134a. 

Mr. POSEY. You know, I’m told you could, you know, breathe all 

the Freon you want, too, and it won’t hurt you. 

Mr. BOSWORTH. Well, it’ll get you high. 

Mr. POSEY. It’ll get you high? We better not—— 

Mr. WEBER. We probably want to strike that—— 

Mr. POSEY. —broadcast that. 

Mr. WEBER. —from the record. 

Mr. POSEY. Yes. But I’m told if you breathe the replacement 

stuff, it can kill you. 

Mr. BOSWORTH. Well, the replacement stuff we have now is—we 

don’t breathe it; we reclaim it. And that’s what I was talking about 

Section 608. Most of us that are ACCA contractors are premium— 

we try to be premium contractors. We abide by the rules. We reclaim the refrigerant. We take it to a disposal site or a recycling 

site. But there’s a lot of contractors who are what I call bottomfeeders—— 

Ms. CALLAHAN. Right. 

Mr. BOSWORTH. —who—— 

Ms. CALLAHAN. That’s a great word. 

Mr. BOSWORTH. —will go and they’ll install a condensing unit, 

they’ll take the old unit back to their garage or their house or 

whatever and they’ll just slowly vent it out on the way home. So 

some of these EPA rules, which are—which I believe in; I think 

they’re good. They’re good for the environment, but a lot of them 

are being ignored because there’s no bite to it. 

Mr. POSEY. Okay. Thank you, Mr. Chairman. 

Mr. WEBER. Mr. Knight, you’re up. 

Mr. KNIGHT. Thank you, Mr. Chair. 

I have a couple things. One I’d just like to state for the record 

because I know this was said about Aliso Canyon earlier today that 

we have called for a Congressional committee on the gas leak in 

southern California. It is in my district. Hopefully, we will be capping that in the next week or so. And I have put forward a piece 

of legislation that will be a baseline of regulation from the federal 

level. So not all regulations are bad. There should be a baseline. 

But in that there’s about 30 states that have to deal with under-
80 

ground piping, and they should be the authority and they can build 

regulation and legislation around that. 

A couple things I wanted to bring up, though. You know, I think 

everyone goes around their district and they talk to businesses and 

businesses say, ‘‘regulation is killing me,’’ ‘‘it’s hurting me,’’ ‘‘it’s 

taking away from my bottom line,’’ or ‘‘I’m having to pass along to 

the customer’’ or whatever, but then we don’t hear specifics. 

And we had a bill earlier this year by Representative Smith 

about the—called the SCRUB Act. And it was talking about regulations that might not have been looked at over years or have been 

outdated or looking at the hundreds of thousands of pages that we 

have on the books already and why can’t we look at some of these 

regulations and maybe get rid of them. 

When I was in the state legislature in California there was a 

state in the south that had just gotten rid of their law that you 

couldn’t leash your alligator to a fire hydrant. That probably had 

gotten outdated. I don’t know when that was dated, but at some 

point somebody said that was no good anymore. 

So what do we do about this, Ms. Kerrigan? How do we find certain regulations from industries or how do we get industries to 

come forward and say this is hurting me? And I’m going to give you 

a little follow-up on that here in a second but I want to let you 

start with that. 

Ms. KERRIGAN. Well, I think the SCRUB Act is a good idea, and 

I think legislative efforts or the—anything that we can do, I 

think—or Congress can do to reassert its authority in this area is 

needed. I know over in the Senate and in the House actually there 

is bipartisan legislation that would establish a legislative commission to do just that, to, you know, look at all the rules and regulations, see what needs to be not only repealed but modified, 

changed, updated, modernized, whatever. And I think that’s a really good idea because you will get the input from a wide array of 

stakeholders on that. 

Mr. KNIGHT. And that’s exactly what I’m looking for. I need the 

Mr. Bosworths to come forward and say, you know, these are the 

regulations. This is what I have to do on a daily basis when I 

shouldn’t have to do this on a daily basis. If we did this on a 

monthly basis, if we did these reports on a monthly or biannual 

basis, it would still cover what we need to. But since I have to do 

them on a daily basis or a weekly basis, it’s costing me time or I 

have to hire somebody and it’s taking six hours out of their week. 

Recently, we’ve seen a decision that I’ve written a letter—and 

we’ve gotten 108 Members on this letter—about the decision to 

raise the $23,000 of—where you have to pay overtime, and they’re 

raising it to over $50,000. At that point you’re going to hurt small 

business. You’re going to impact them, and that’s why we’ve gotten 

so many small businesses and so many organizations to sign on to 

this letter. 

But that’s something that we can identify. We can say if you take 

that $23,000 overtime limit and you raise that to $50,000 now everyone under $50,000 has to be paid overtime, I can actually point 

to that and I can actually say this will detrimentally hurt small 

business. 
81 

So that’s what I’m kind of asking for homework is, especially 

some of these industries—you know, I come from California, so we 

over-regulate pinball machines. So I know that some of these folks 

come from states that don’t do that, but the farming industry in 

California and the farming industry across this country is detrimentally hurt. Many of the small shops that work on cars, that 

work on houses are hurt beyond belief. And it gets passed onto us. 

So what I’m going to ask is if we can look into some of these industries and maybe help us, maybe help us with a list because I 

do believe that regulations can help. I do want clean air, I do want 

clean water, I do want clean working conditions, but I also want 

to be able to buy products at a price where I can afford them and 

a middle-class person can afford them instead of sitting at home 

saying I just can’t afford to do that so I’m not going to do it or I’m 

not going to be in compliance because I can’t afford to do it or the 

small business person that says if I do that, my business goes 

under. 

Those are the things we hear on a daily basis, and those are the 

bad stories that we hear, I’m not going to comply with the law. 

So the last question I’ll ask to Mr. Batkins is how often do you 

hear that, that we just—well, you probably don’t hear that we don’t 

comply, but how often do you hear stories that people just don’t 

comply with the law because, one, there is no bite to the law; or 

two, it’ll just put them out of business? 

Mr. BATKINS. I mean, quite frankly, frequently. I mean, we have 

I think over 176,000 pages of regulation. And I know a specific example for the new silica standard which is being drastically lowered. It’s currently at the White House—— 

Mr. KNIGHT. I know this story well. 

Mr. BATKINS. It’s currently at the White House now, and OSHA 

has said that, you know, they don’t have—they haven’t fully enforced, you know, the old standard. They don’t know that 100 percent of businesses are currently running—are in compliance with 

the old standard. So when you have 176,000 pages and tens of 

thousands of regulators, obviously, you will get some instances 

where there is non-enforcement, and then that won’t stop a regulator from going back and tightening the standard further. 

Mr. KNIGHT. Thank you, Mr. Chair. I just wanted to say one 

more comment. If we do regulations that have no bite, that have 

no enforcement, why would we do that? Just for the people that 

have good morals and good ethics that are going to do it on their 

own, that’s fine, but we also know that if it’s going to kill the business or if it’s going to damage them in such a way and there is no 

enforcement, then we should probably think about that, too. 

Thank you, Mr. Chair. I yield back. 

Mr. WEBER. I thank the gentleman. Alligators leashed to fire hydrants? What, did the OSHA mandate stronger fire hydrants? 

Mr. KNIGHT. I’m surprised California didn’t pick it up. 

Mr. WEBER. Okay. All right. The gentleman from Alabama, Mr. 

Gary ‘‘Roll Tide’’ Palmer is recognized for five minutes. 

Mr. PALMER. Thank you, Mr. Chairman, especially for that appropriate salutation. We’ll try to make sure that Alabama stays on 

the radar for years to come unless they’re regulated out of it. 
82 

Let’s get back to the issue at hand. I know everybody’s tired of 

questions and answers and—but a couple of points have been 

raised that I want to come back to. And there’s two things about 

this whole issue of midnight regulations and really about how we’re 

doing regulations, but particularly this idea that the executive 

branch, by executive fiat, can make law outside the legislative process. You lose transparency; you lose accountability. So that’s one 

aspect of it. It’s a constitutional aspect. And if we’re going to have 

a constitutional government, we’ve got to get back to Congress 

making law rather than the executive branch bypassing Congress, 

making law through agencies. 

But there’s also the economic consequences. Ms. Kerrigan, there 

is a report out of Brookings, came out in May of 2014 that indicated that business dynamism is in decline. Have you seen that in 

your field of work? And here’s a slide from that report that I want 

to draw your attention to. 

[Slide.] 

Mr. PALMER. That’s a pretty severe slide over the last few decades. 

Ms. KERRIGAN. Yes. I have seen that, and I’ve seen some other 

reports with Census Bureau data showing the same thing. 

Mr. PALMER. Well, I’m going to get to that in a moment. That’s 

a little bit different. This indicates some stagnation in 

entrepreneurism. 

Ms. KERRIGAN. And new business creation—— 

Mr. PALMER. Yes, new business—— 

Ms. KERRIGAN. —correct. 

Mr. PALMER. —creation. And in respect to this, how much of this 

is—do you think is attributable to regulation not just by the federal 

government but at every level? 

Ms. KERRIGAN. I can’t say what—how much, but I do think it 

does impact. I mean, certainly, I think that the weak recovery, 

there is an economic—there is a regulatory drag where we haven’t 

had a robust recovery, that regulations have played into the uncertainty where there’s a lack of investment, business growth, people 

taking risks, et cetera. And if you don’t have a competence that 

there’s going to be a strong economy, then that’s going to impact 

people willing to start businesses. 

Mr. PALMER. Well, that’s the whole point is, for instance, DoddFrank. We’ve only issued half of the regulations that will come out 

of Dodd-Frank. And if you look at all of the regulations that have 

been issued, all the pages of regulation during the last seven years, 

for instance, I think it’s somewhere north of 25,000 pages, Mr. 

Chairman, and that includes all the regulations related to 

ObamaCare, somewhere north of 25,000 pages. But Dodd-Frank by 

itself right now is over 27,000 pages. 

So we have an environment that is not conducive to risk-taking, 

it’s not conducive to capital investment, and as a matter of fact, 

there’s—I think Mr. Loudermilk mentioned it—that the cost of regulations on our economy last year was right around $2 trillion. 

That’s a little over $15,000 per household. Some people say that’s 

a hidden tax. Well, it’s not a tax. I mean, at least a tax goes to 

fund something. 

Mr. LOUDERMILK. And it ain’t hidden. 
83 

Mr. PALMER. And it’s not hidden. It’s buried in everything that 

you come in contact with, and it’s killing us in terms of disposable 

income that would go into the economy and in terms of investment 

capital that could go into business startups. And it’s had an impact 

on business growth. The United States, in terms of other industrialized nations, we don’t rank in the top two, three. We’re not number five. We’re number 12. We’re behind Hungary. 

There’s another slide I’d like for the committee staff to put up. 

[Slide.] 

Mr. PALMER. This is where we are in terms of businesses starting 

versus businesses closing. Prior to 2008, on a regular basis we had 

100,000 more businesses start up than closed. From 2008 forward, 

we’re now running at 70,000 more businesses closing than starting 

up. 

And I just—you work with small business. I just want to ask you 

to—again, to comment on this and how this uncertainty that we’ve 

created with an overregulated economy not only again at the federal level, the state level, the local level is a driver behind this. 

Ms. KERRIGAN. Well, I mean, certainly the Great Recession had 

a huge impact on business closures and bankruptcies and all of 

that. And I—as I noted in my written testimony, one in five small 

business owners say they haven’t fully recovered from the recession. So you know that they’re operating under very difficult conditions and there could be something that, you know, it could be a 

regulation potentially that can put them under. 

But I do think there is—again, there’s a regulatory drag. I mean, 

you do mention the Dodd-Frank Act. I mean, there has been legislation that was signed by the President that we supported to allow 

for equity in debt-based crowdfunding, to improve capital formation 

and all of that, but, you know, capital access is still very difficult 

to come by, particularly for startup and high-growth firms. 

So I think 2016 will be an interesting year because, you know, 

businesses still continue to have this same outlook in terms of 

weak sales and they’re not confident in terms of where the economy is going. And you have to have that confidence and that momentum, that traction in the economy and strong growth, I think, 

to reverse that chart. 

Mr. PALMER. Having come out of a think tank environment working in a think tank world for 25 years, I’m very much data-driven. 

But I’m also informed by what I hear on the street. And I constantly run into people who talk to me about the regulatory environment, the uncertainty, and how difficult it is today to start a 

business. And I’ve literally heard guys tell me that they’re going 

to shut their business because it’s just not worth it anymore. I’ve 

heard guys say I was thinking about expanding; I’m just not going 

to do it because it’s just not worth it anymore. 

And this is a huge issue, Mr. Chairman. I thank the committee 

for having this hearing, and my time is expired. I yield. 

Mr. WEBER. I thank the gentleman. 

And I do want to say also that I thank the witnesses for staying 

on topic to the issue at hand. And actually, I would note for the 

minority, we hope that going forward the minority would focus 

more on the substance of the hearing rather than on the background or actions of any witnesses. 
84 

Ms. Kerrigan, I’m sorry you had to endure what I believe was a 

pretty staunch cross examination. I guess if I was doing it, I would 

say there’s probably times in some of the witnesses’ lives where 

they even drank beer in college. I won’t ask you to raise your hand, 

and maybe even too much of it, and maybe I should ask up here 

for them to raise their hands. 

But anyway, we do appreciate you all being here. I thank the 

witnesses for their testimony and the members for their questions. 

The record will remain open for two weeks for additional written 

comments and written questions from the members. This hearing 

is adjourned. 

[Whereupon, at 11:54 a.m., the Committee was adjourned.] 
(85) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
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ANSWERS TO POST-HEARING QUESTIONS

Responses by Ms. Karen Kerrigan 
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Responses by Ms. Kateri Callahan 
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Responses by Mr. Sam Batkins 

(111) 

Appendix II 

ADDITIONAL MATERIAL FOR THE RECORD
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LETTER SUBMITTED BY COMMITTEE RANKING MEMBER

EDDIE BERNICE JOHSNON
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DOCUMENTS SUBMITTED BY REPRESENTATIVE GARY PALMER
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DOCUMENTS SUBMITTED BY REPRESENTATIVE ERIC SWALWELL
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DOCUMENTS SUBMITTED BY CHAIRMAN LAMAR S. SMITH
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