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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

       EPA RULEMAKING: DO BAD ANALYSES LEAD TO IRRATIONAL RULES?

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON REGULATORY REFORM
                             AND OVERSIGHT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                    WASHINGTON, DC, NOVEMBER 8, 2001

                               __________

                           Serial No. 107-35

                               __________

         Printed for the use of the Committee on Small Business

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
76-760                     WASHINGTON : 2001

____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MICHAEL PENCE, Indiana               STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                 Phil Eskeland, Deputy Staff Director 
                 Michael Day, Minority Staff Director 
                                 ------                                

            Subcommittee on Regulatory Reform and Oversight

                     MIKE PENCE, Indiana, Chairman
LARRY COMBEST, Texas                 ROBERT BRADY, Pennsylvania
SUE KELLY, New York                  BILL PASCRELL, Jr., New Jersey
SAM GRAVES, Missouri                 CHARLES GONZALEZ, Texas
ROSCOE BARTLETT, Maryland            DAVID D. PHELPS, Illinois
TODD AKIN, Missouri                  JAMES R. LANGEVIN, Rhode Island
PAT TOOMEY, Pennsylvania             ANIBAL ACEVEDO-VILA, Puerto Rico
                Barry Pineles, Professional Staff Member

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 8, 2001.................................     1

                               Witnesses

Lutter, Randall, Resident Scholar, AEI-Brookings Joint Center for 
  Regulatory Studies.............................................     3
Abrams, Fern, Director of Environmental Policy, IPC--Association 
  Connecting Electronics Industries..............................     5
Bopp, Andrew, Executive Director, Society of Glass & Ceramic 
  Decorators.....................................................     7
Conrad, James, Counsel, American Chemistry Council...............    10
Giesecke, Anne, Director, Environmental Activities, American 
  Bakers Association.............................................    12

                                Appendix

Opening statement: Pence, Hon. Mike..............................    20
Prepared statements:
    Lutter, Randall..............................................    23
    Abrams, Fern.................................................    30
    Bopp, Andrew.................................................    34
    Conrad, James................................................    39
    Giesecke, Anne...............................................    49
Additional material:
    Submission of Harold Koenig, The Annapolis Center for 
      Science-Based Public Policy................................    55
    Letter to Chairman Pence from American Farm Bureau Federation    87

 
       EPA RULEMAKING: DO BAD ANALYSES LEAD TO IRRATIONAL RULES?

                              ----------                              

                       THURSDAY, NOVEMBER 8, 2001

              House of Representatives,    
          Subcommittee on Regulatory Reform
                                     and Oversight,
                               Committee on Small Business,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:25 a.m. in 
room 2361, Rayburn House Office Building, Hon. Mike Pence 
(chairman of the subcommittee) presiding.
    Chairman Pence. The Subcommittee on Regulatory Reform and 
Oversight will come to order on the topic of EPA Rulemaking: Do 
Bad Analyses Lead to Irrational Rules?
    I would like to apologize to the gentleman from Illinois 
and also to the distinguished panel of witnesses that we have 
for my tardiness. Ironically, I was attending a briefing with 
EPA officials regarding the cleanup of my congressional office 
from an anthrax contamination, which suffice it to say that 
there are good things the EPA does. Today we may hear a 
different perspective from some of our witnesses, but I am 
grateful for my colleague's patience and for the patience of 
all of those attending.
    On June 21, I convened a roundtable on regulation to hear 
more than 30 small business trade associations describe for 
this Chair the struggles that they and their membership face 
from the regulatory state. Despite the diversity of concerns 
raised at the roundtable, one constant theme was evident; the 
inadequacy of the regulatory analyses that agencies use to 
support rulemakings. One agency in particular that was singled 
out for its poor regulatory analyses was the Environmental 
Protection Agency. Today's hearing will attempt to address 
those flaws.
    Small business owners are very familiar with burdens that 
federal regulations place on them. Many studies, including 
those sponsored by the Office of Advocacy of the United States 
Small Business Administration, have shown that small businesses 
face disproportionately higher costs to comply with federal 
regulations, including those issued by the EPA, than their 
larger business counterparts.
    Thus, accurate estimates of cost, if derived from the 
experiences of large businesses, may paint a false picture of 
the economic impact of an EPA regulation on small businesses. 
If the EPA misjudges the economic impact, will it produce a 
rational rule if the vast majority of businesses in America 
cannot comply?
    The polestar of the rulemaking process is that the 
regulations must be rational. When Congress passed the 
Administrative Procedure Act in 1946, it believed that the 
process of notice, comment and agency response to the public 
comment would be sufficient conditions to insure a rational 
outcome.
    After the regulatory onslaught of the 1970s, which saw the 
creation of the EPA and the enactment of many statutes that EPA 
implements by rulemaking, Congress and the executive branch 
determined that further refinements were necessary. Congress 
imposed new analytical requirements to assess the impacts on 
small businesses and other small entities. Presidents Reagan, 
Bush and Clinton produced Executive Orders mandating analysis 
of costs and benefits beyond those required by the 
Administrative Procedure Act or specific statutes such as the 
Clean Water Act.
    In 1980, Congress enacted the Regulatory Flexibility Act. 
The Act represents another tool in the decisional calculus 
designed to develop rational rules. The RFA requires federal 
agencies to consider whether their proposed or final 
regulations will have a significant economic impact on a 
substantial number of small businesses. If the regulations do 
have a sufficient impact, the agencies are required to consider 
whether less burdensome alternatives exist that achieve the 
same objective.
    The authors of the RFA expected that if an agency had two 
equally effective alternatives to achieve its regulatory 
objective it would logically select the one that is less 
burdensome on small businesses. Of course, a critical element 
of this analytical filter is the agency's proper assessment of 
the impact of the regulation on small businesses.
    If the agency's cost estimate is incorrect, then its 
assessment of the burdens on small business will not be 
accurate, and the agency will not seek more effective cost 
alternatives. Therefore, the analytical requirements of the 
Administrative Procedure Act and the Regulatory Flexibility Act 
are crucial. They have been supplemented by regulatory review 
mandates by each President since 1980.
    While the details are somewhat different, each Executive 
Order requires federal agencies like the EPA to conduct cost-
benefit analysis for significant regulations, usually those 
with more than $100 million impact on the economy. If the costs 
of the proposed or the final rule outweighs the benefits, then 
the regulatory action would be detrimental to the overall 
welfare of society, and the rational policy maker, barring 
statutory imperative to the contrary, would not seek to 
implement that particular regulation.
    More importantly, regulatory analysis which demonstrates 
that the cost of a particular regulation outweigh the benefits 
should give policy makers greater pause. That should be a 
signal for them to seek other alternatives to meet their 
statutory objectives, but that do not impose unnecessary costs 
on society or commerce. Thus, inadequate and incorrect 
regulatory analyses, including the scientific underpinnings of 
the estimates of costs and benefits, are detrimental to 
rational rulemaking and that mandated by the Administrative 
Procedure Act.
    Today's hearing focuses on a cross section of regulations 
from the EPA that highlight the problems that can arise from 
incorrectly constructed regulatory analyses. They often lead 
into a realm of irrational rulemaking such as the proposed 
cross media electronic reporting and record keeping rule, which 
would in essence require replacement of a substantial amount of 
existing information systems that currently keep track of more 
than 216 pages worth of EPA mandated record keeping. Proper 
application of the tools available to the EPA should eliminate 
such results.
    I look forward to the recommendation of all of our 
witnesses today on the corrective actions that the EPA can take 
to avoid poor analyses and would now turn to the Ranking 
Minority Member who joins us today, the gentleman from 
Illinois, for any opening comments that he might have for this 
panel or on this topic.
    Mr. Phelps. I do not have any. I am just anxious before the 
vote to hear from this panel. Thank you.
    Chairman Pence.. Thank you very much.
    With that, I will introduce Randall Lutter or Lutter?
    Mr. Lutter. Lutter.
    Chairman Pence. Lutter, thank you, is a resident scholar at 
the American Enterprise Institute and a fellow at the AEI-
Brookings Joint Center for Regulatory Studies. He previously 
served as senior economist for the environment and regulation 
on the President's Council of Economic Advisors and as staff 
economist for regulatory affairs at the OMB.
    Mr. Lutter is recognized for five minutes. We thank you for 
being with us today.

    STATEMENT OF RANDALL LUTTER, RESIDENT SCHOLAR, AMERICAN 
 ENTERPRISE INSTITUTE, AND FELLOW, AEI-BROOKINGS JOINT CENTER 
                     FOR REGULATORY STUDIES

    Mr. Lutter. Thank you, Mr. Chairman. Thank you, Members of 
the Committee. I am pleased to appear before you to provide my 
views on how to improve regulatory analysis at the 
Environmental Protection Agency.
    For more than ten years I have worked inside and outside 
government on regulations to reduce risks. I am now with the 
AEI-Brookings Joint Center for Regulatory Studies. A primary 
objective of the Center is to hold lawmakers and regulators 
accountable by providing thoughtful, objective analyses of 
existing regulatory programs and new regulatory proposals.
    You have asked me for my views on whether EPA's benefit-
cost analyses are adequate to support sound rulemaking. I would 
like to start by making a distinction between two separate 
purposes of these analyses. One is to inform decision makers at 
EPA and elsewhere in the Administration about the economic 
effects of regulation.
    From the perspective of the decision makers who already 
control the resources and have the authority to get the quality 
of analyses that they want, these analyses may well be 
adequate. They have control of the resources, and they can get 
the answers to the questions that they are interested in 
learning the answers to.
    A second purpose of EPA's regulatory analyses is to inform 
Congress and the public about the economic effects of its 
regulatory decisions. A significant number of EPA's analyses 
are inadequate for this purpose, primarily because the 
incentives for EPA to prepare high quality analyses are poor. 
As an institution, EPA faces incentives to overstate the net 
benefits of its rules, particularly those rules that have very 
small or negative net benefits.
    The biggest cause of poor economic analysis at EPA is the 
lack of incentives for more forthright research. The absence of 
independent review of EPA's benefit-cost analysis illustrates 
the lack of incentives. Courts rarely review EPA's benefit-cost 
studies because environmental laws generally authorize EPA to 
regulate without full consideration of the benefits and the 
costs.
    No government body outside the executive branch assesses 
analytic quality. There are private sector critiques of EPA 
analyses, but these are often ineffective because they also 
comment on the regulations themselves. Independent observers 
tend to think that such comments on the regulations motivate 
the critiques of the analyses rather than the other way around.
    I would like to make four specific recommendations on how 
EPA's regulatory analyses could be improved. First, Congress 
should create a separate Office of Policy Analysis within EPA 
and charge that office with doing all risk assessments and all 
benefit-cost analyses of significant regulations.
    Currently, EPA program offices charged with administering 
particular programs oversee most of the economic analysis 
supporting these new regulations, but these offices suffer from 
a conflict of interest; tunnel vision, if you will. The air 
office naturally supports air regulations. This conflict of 
interest could be substantially mitigated if there were a 
separate office in charge of regulatory analyses within EPA.
    Second, Congress should require that EPA's benefit-cost 
analyses adhere to established principles for high quality.
    The Office of Management and Budget, where I used to work, 
has developed guidelines for doing sound regulatory analyses, 
yet it is clear from a careful review of EPA's economic 
analyses that the agency has not taken these guidelines 
seriously. To add political weight to the guidelines, Congress 
should adopt the kinds of principles contained in them and 
require that an agency such as OMB certify that EPA adheres to 
such principles.
    Third, Congress should ask an agency other than EPA to 
conduct peer review of the economic analyses and of the risk 
assessments supporting EPA's significant rules.
    Most of the economic analyses in the risk assessments 
supporting EPA's decisions do not go through any sort of 
outside peer review. Peer review may be no guarantee of 
absolute quality, but mandatory peer review of EPA's analyses 
of economically significant rules could provide an important 
new incentive for EPA to improve the quality of its analysis.
    Fourth, Congress should fund regulatory analysis at the 
General Accounting Office in accordance with the Truth In 
Regulating Act of 2000.
    It is important that there be a federal office outside the 
executive branch that is capable of assessing the analyses 
supporting federal regulations and the regulations themselves. 
The reason that the Truth In Regulation Act project is 
appropriate in discussing the improvement of regulatory 
analysis at EPA is that EPA is responsible for a very large 
share of all costs associated with new federal regulations. 
Congress could use the information generated by the General 
Accounting Office to improve regulation and the regulatory 
process.
    In conclusion, a significant number of EPA's benefit-cost 
analyses, while technically very sophisticated, fail to comply 
with established principles for sound analysis. Improving the 
quality of the analysis requires establishing incentives for 
the agency to do high quality work.
    There are four steps likely to be effective. Congress could 
create a separate policy office to conduct the analysis, it 
could mandate adherence to sound analytic principles in each of 
the benefit-cost analyses and risk assessments prepared by EPA, 
it could ask an agency other than EPA to conduct peer review of 
EPA's economic studies and the associated risk assessments, and 
it should fund the Truth In Regulating Act research at the 
General Accounting Office.
    Thank you very much. I would be happy to take any 
questions.
    [Mr. Lutter's statement may be found in the appendix.]
    Chairman Pence. Thank you, Mr. Lutter.
    Now Fern Abrams, who is the director of environmental 
policy for IPC, which is the Association Connecting Electronics 
Industries, responsible for advocating a number of positions in 
the areas of environment, health and safety. Prior to joining 
IPC, she served as manager of environmental affairs at the 
American Trucking Association, where she focused in particular 
on Clean Air Act and hazardous water issues.
    We thank you for being with us today. You are recognized 
for five minutes.

  STATEMENT OF FERN ABRAMS, DIRECTOR OF ENVIRONMENTAL POLICY, 
     IPC--THE ASSOCIATION CONNECTING ELECTRONICS INDUSTRIES

    Ms. Abrams. Good morning, Chairman Pence and Members of the 
Committee. My name is Fern Abrams. I represent IPC, the trade 
association for the electronic interconnection industry.
    Our 2,800 members manufacture and assemble printed circuit 
boards, which are the backbone of the nation's high tech 
industries, including consumer, industrial and defense 
electronics. On behalf of our members, I would like to thank 
you and your staff for organizing this important hearing.
    Ninety percent of IPC members that manufacture printed 
circuit boards are small businesses. As you know and stated in 
your opening, the cost of regulatory compliance often has a 
disproportionate impact on small businesses. Environmental 
regulations must be based on sound scientific and regulatory 
analysis so that they do not create unnecessary burdens while 
failing to achieve their goal of environmental protection.
    IPC members, along with many other industries affected by 
the EPA's proposed effluent limit guidelines for industries 
that manufacture and maintain metal products, or more commonly 
known as MP&M, are deeply concerned that the agency has 
overestimated the benefits of the proposed regulation while 
significantly underestimating the economic impact.
    The Clean Water Act requires that effluent limits be based 
on best available technology that is economically achievable, 
yet the agency has proposed limits that are neither affordable 
nor achievable. A review of discharge monitoring data indicates 
that none of the facilities on which the proposed limits are 
based could meet the limits consistently. In fact, some of the 
proposed limits are so low that incoming drinking water would 
not meet them. These are not achievable limits.
    The proposed limits also fail to credibly meet the 
requirement that they be economically achievable. The agency 
has significantly underestimated the cost of compliance. Their 
errors include faulty assumptions concerning technology 
capabilities, monitoring costs and facility space constraints, 
just to name a few out of dozens. For example, the agency has 
incorrectly assumed there will be no increase in monitoring 
costs when IPC member expected increases range from $1,000 to 
$350,000 per facility.
    The agency's economic analysis also fails to meet common 
sense inspection by projecting that many firms will remain 
profitable despite facing compliance costs that are several 
times greater than their profit margins. This unreasonable 
analysis is made possible only because the agency's economic 
analysis assumes that compliance costs will be passed on to 
customers through a 90 percent increase in prices.
    This assumption was apparently based on analysis of other 
unrelated industries conducted over five years ago in a vastly 
different economic climate. In reality, over 72 percent of our 
members have stated that they would not be able to raise their 
prices at all.
    In addition, the rule's economic analysis assumes that 50 
percent of printed circuit board facilities will be able to 
remain in business without being able to replace worn out 
equipment or modernize for 15 years. That is an astounding 
assumption, given that printed circuit board manufacturers must 
constantly invest in new equipment to meet customer demands for 
increasingly smaller electronics.
    In addition to underestimating the cost of the proposed 
regulations, the agency has significantly overestimated its 
environmental benefits. Unlike previously effluent limitations 
rulemakings which use actual facility wastewater data to 
estimate the benefits of the proposed rule, the agency relied 
upon models to simplify the task of estimating costs and 
pollution benefits of this complex regulation covering 18 
different industrial sectors under 200 SIC codes.
    By using inadequately detailed models populated with data 
borrowed from unrelated industries, the agency has fabricated 
an environmental benefit that does not exist. Pollution 
removals calculated from actual facility data are 98 percent 
lower than those predicted by the agency's flawed models.
    In conclusion, we believe that the agency has not 
demonstrated that the rule is cost effective. The agency has 
estimated the social costs of the proposed rule are $2.1 
billion annually, while the total benefits that can be valued 
in dollar terms in categories traditionally analyzed for 
effluent guidelines are only in the range of $400 million to 
$1.1 billion annually.
    The agency should not promulgate a rule with costs that 
exceed its benefits. The agency should follow the 
recommendations of the Small Business Regulatory Enforcement 
Fairness Act panel and remove from this rulemaking industries 
for which regulation is not cost effective.
    Fortunately, the MP&M effluent limits have not yet been 
finalized. In fact, the agency has been working constructively 
with affected industries, including printed circuit boards, to 
try to improve the quality of its regulatory analysis prior to 
issuance of a final rule.
    Going forward, the agency must make a better effort to get 
regulatory analysis right the first time around. It should not 
be standard practice to propose a rule based almost entirely on 
faulty analysis and poor assumptions and then depend on 
industry to try to uncover mistakes in the very short time for 
public comment. A more open regulatory process with regular 
data exchange between the agency and affected industries, 
combined with the early use of reality checks, would make both 
proposed and final rules more accurate and effective.
    Thank you again for giving IPC the opportunity to express 
our concerns, and we welcome any questions.
    [Ms. Abrams' statement may be found in the appendix.]
    Chairman Pence. Thank you very much, Ms. Abrams.
    We have a journal vote on the Floor. What we will do is 
recess very briefly and do so now. That will permit me and the 
gentleman from Illinois to go and record our vote. The Chair 
will return. I know Mr. Phelps will return if his schedule 
permits, and we will continue with the testimony.
    I thank you for your forbearance, and we will return 
quickly.
    [Recess.]
    Chairman Pence. We will return to our testimony in this 
hearing of the Subcommittee on Regulatory Reform and Oversight.
    Andrew Bopp has been the executive director of the Society 
of Glass & Ceramic Decorators since 2000. He previously served 
as SGCD's director of communications from 1995 forward. Mr. 
Bopp was also communications director for the Association of 
Incentive Marketing in Union, New Jersey, and is gratefully 
recognized for five minutes. Thank you for your patience.

STATEMENT OF ANDREW BOPP, EXECUTIVE DIRECTOR, SOCIETY OF GLASS 
                      & CERAMIC DECORATORS

    Mr. Bopp. Thank you. Thank you for the opportunity to 
testify on the TRI lead rule today. As you said, my name is 
Andrew Bopp. I am the executive director of the Society of 
Glass & Ceramic Decorators. We are the trade association of 
companies that decorate glass and ceramic tableware, souvenir 
mugs and other items. This is a sample of what our members 
produce, this type of thing.
    S.G.C.D. represents 650 companies and a manufacturing 
segment that is facing increasingly fierce competition from 
overseas production facilities, especially in China. Most SGCD 
members are small, often family owned companies that have more 
in common with the average local print shop than with a large 
industrial facility. Many of these companies are into their 
third generation of family ownership. SGCD has members in 37 
states, including Indiana, Pennsylvania and Illinois.
    The colors used by glass and ceramic printers contain 
various metal bearing borosilicates. Some colors cannot be 
produced without lead. When fired, they become chemically part 
of the glass or ceramic ware. Almost all of these lead bearing 
colors are used to produce the product. Very little ends up as 
waste. SGCD and member companies work closely with FDA and 
other federal and state agencies to guarantee the safety of all 
wares.
    I am testifying today to point out major flaws in EPA's 
economic analysis of changes to its toxic release inventory 
reporting threshold for lead and lead compounds. It is 
important to note that SGCD has made every attempt to work with 
EPA as it developed the rule. This included testimony at the 
agency's December 1999, hearing after the original TRI rule was 
issued. It is obvious, however, that the economic analysis was 
developed without any consideration of the rule's impact on 
glass and ceramic decorators.
    I can understand why EPA would balk at evaluating every 
industry that might possibly be required to complete TRI 
reports under the new standard. However, EPA listed stone, 
clay, glass and concrete products, SIC 32, as being among the 
five largest lead reporting groups in the 1998 TRI reporting 
year at the 10,000 pound threshold.
    Even after recognizing the significance of this industry 
group, Mr. Chairman, EPA chose to examine glass and ceramic 
decorators as part of a wide range of unrelated industries. 
This was done even though the other four top 1998 filers were 
evaluated separately. In so doing, EPA failed to consider the 
situation in the glass and ceramic industry where TRI reporting 
burdens and costs are dramatically greater for small companies 
than large companies.
    It is possible that in some industries the differences in 
tracking lead usage may not be great between companies of 
varying sizes. However, the use of lead bearing colors in the 
glass and ceramic decorating industry is fairly unique. It is 
important to first note that every lead bearing color may 
contain a different quantity of lead. Every decorator must 
trace every lead bearing color used and make different 
calculations for that color.
    You must also consider that large glass and tableware 
plants produce and decorate millions of matching plates, bowls, 
glasses and related items using a limited number of colors. 
These colors are likely to be used in large quantity, though. 
Some of these colors do contain lead, and the steps required to 
trace the lead used are confined to the numbers of colors used. 
Such tracking and reporting can be handled efficiently by a 
large decorator that employs an environmental compliance 
department.
    On the other hand, the small contract glass and ceramic 
decorator fills orders that typically number in the dozens or 
hundreds of pieces. These small plants may use a greater 
variety of colors in a day than a large decorating facility 
will use in a month.
    It is important also to note that none of these small 
businesses employ environmental compliance staff to handle such 
complicated burdens. There is no indication that EPA even 
considered the possibility of such a situation for small glass 
and ceramic decorators. As a result, EPA's estimate of the time 
necessary to compile and complete the TRI forms of 111 hours 
per year does not remotely correspond with reality for small 
glass and ceramic decorators. Remember, this is a rule that is 
supported by more than 500 pages of instructions and guidance.
    As a further result, EPA's compliance cost estimates are 
correspondingly low. This directly affects the number of 
companies that the agency believes will feel an impact beyond 
the one percent and three percent annual revenue thresholds 
that are used to determine the rule's small business impact.
    To add insult to injury, EPA's economic analysis also 
includes the ridiculous assertion that there will be no first 
time filers in SIC 32 based on their research efforts such as 
they are. In reality, there are hundreds of small decorators 
that have never completed a TRI form for lead or any other TRI 
substance who must now comply.
    Problems started when EPA failed to conduct small business 
outreach before first issuing the TRI proposal. From the 
appearance of the agency's economic analysis, it is obvious 
that SGCD's efforts to work with the agency after that point 
were ignored.
    I also want to point out that the drastic reduction in the 
lead TRI threshold from 10,000 pounds to 100 pounds is based on 
a scientific premise that EPA has still not sent for 
independent peer review as it had promised. Given the massive 
effort and costs required to comply with the new TRI rule, one 
must ask what purpose do reports of this low threshold serve. 
There is no evidence whatsoever that glass and ceramic 
decorators present an environmental problem in their 
operations.
    In conclusion, I urge the Committee to require federal 
agencies to meet with and learn from small businesses before 
regulatory proposals are issued. Early outreach will insure 
that federal agencies properly assess small business impacts 
and develop proposals that are tailored to meet agency 
objectives with the smallest business impact.
    In terms of the TRI proposal, EPA's failure to conduct 
early small business outreach and the resulting inadequacy of 
its economic analysis deprived small businesses of the 
opportunity to have their unique situations considered. Due to 
these omissions and the large number of scientific 
uncertainties, I urge you to request the agency to reconsider 
the lead TRI rule to comply with the letter, as well as the 
spirit, of SBREFA while also conducting a prompt and thorough 
review of the scientific premise upon which the rule is based.
    Thank you for the opportunity to testify before you today, 
and please ask if you have any questions.
    [Mr. Bopp's statement may be found in the appendix.]
    Chairman Pence. Nicely done, Mr. Bopp. Thank you. We will 
have questions, I and my colleague, for each of you at the 
conclusion of the testimony.
    James Conrad, Jr., is counsel with the American Chemistry 
Council, where he provides legal and policy advice to the 
regulatory and legal innovation team. Jamie leads the council's 
advocacy regarding environmental innovation, legislation 
programs, compliance and enforcement issues, governmental 
management of environmental information and the use of 
information as a regulatory or policy tool. He spent eight 
years in private practice with the Washington, D.C., office of 
Davis, Graham, Stubbs & Cleary where his practice encompassed 
regulatory advocacy counsel and litigation. He also developed 
and edits the Environmental Science Desk Book, which is 
published by West Group.
    With gratitude, he is recognized for five minutes.

  STATEMENT OF JAMES CONRAD, JR., COUNSEL, AMERICAN CHEMISTRY 
                            COUNCIL

    Mr. Conrad. Thank you, Mr. Chairman and Mr. Phelps. I am 
pleased to testify before you today regarding EPA's recently 
proposed Cross Media Electronic Reporting and Record keeping 
Rule or ``CROMERRR''.
    While many American Chemistry Council members are Fortune 
500 companies, we estimate that between a third and a half of 
our members--or between 60 and 90 percent--meet the SBA 
standards for a small business. Many of these members have only 
a single manufacturing plant. These smaller companies stand to 
benefit the most from the efficiencies made possible by 
information technologies. Most of these companies already keep 
records electronically.
    Unfortunately, CROMERRR would do nothing to help that 
process. In fact, it would have the opposite effect, driving 
businesses back to using paper records. It would also cost $48 
billion in initial costs--and that is based on EPA's own 
numbers.
    What exactly is CROMERRR, and why is it so expensive? In a 
nutshell, the proposal imposes elaborate technical requirements 
on electronic information systems to guard against the remote 
prospect that data might be tampered with. For example, records 
must have secure, computer generated, time stamped audit trails 
that identify anyone who ever created or modified the record, 
when they did it and what changes they made. No off-the-shelf 
software does this now.
    Mr. Chairman, the Food and Drug Administration imposed 
essentially the same regulation on drug companies in 1997. Most 
of them are still struggling, four years later, to comply with 
it. The average cost of compliance with this rule for drug 
companies is over $100 million apiece.
    E.P.A. and authorized states regulate a lot more entities 
than the FDA does. In fact, EPA's own cost-benefit analysis 
estimates that about 1.2 million facilities file reports under 
EPA administered laws. These facilities keep a lot of records 
for EPA as well. What will it cost for these 1.2 million 
facilities, most of them small businesses, to comply with 
CROMERRR?
    E.P.A.'s own analysis estimated that the up-front costs, on 
average, would be about $40,000, with annual costs thereafter 
of $17,000. $40,000 times 1.2 million facilities is $48 billion 
up front. That is almost seven times EPA's annual budget. 
$17,000 times 1.2 million is $20 billion in annual costs. That 
is over four times what the OSHA ergonomics rule would have 
cost annually.
    Now, EPA's cost-benefit analysis does not contain these $48 
billion or $20 billion figures because EPA contends that 
CROMERRR is entirely voluntary. In fact, their cost-benefit 
analysis assumes that very few companies would even adopt these 
requirements because of the great cost. The problem, though, is 
that most people would have no choice but to comply.
    We are not accusing EPA of dishonesty. They just did not 
analyze their own regulation well enough to understand how it 
would work. Here is how it would work. Under CROMERRR, as long 
as a piece of information has ever passed through a computer, 
at any time in its life, it is an electronic record.
    Next, the proposal says that any electronic record has to 
meet all the technical requirements of CROMERRR or else that 
record no longer satisfies the obligation to keep records. You 
are basically in violation of your record keeping obligation. 
You either comply with CROMERRR, or you switch to paper. What 
an ironic result: an EPA rule designed to implement the 
Government Paperwork Elimination Act driving people to using 
paper record keeping.
    What is worse, if a regulation is generated by a computer 
in the first instance, then it is an electronic record from the 
get go, and printing it out on a piece of paper does no good.
    For example, one of our smallest members has only 100 
employees in two plants. In one of those plants they monitor 
the pressure on a pump in their air pollution control 
equipment. That data is generated by an electronic sensor, and 
it goes directly into the company's distributed process control 
system. Under CROMERRR, that data is an electronic record from 
the moment it is created, and paper is not an option to comply. 
That company would potentially have to redo its entire 
electronic control system.
    Mr. Chairman, we agree that EPA has some legitimate 
concerns about protecting the integrity of data, but insuring 
integrity has an impact, and how much impact depends upon how 
secure the system needs to be. That is why OMB's guidance for 
implementing the Government Paperwork Elimination Act calls for 
agencies to do a risk analysis to decide how much security is 
appropriate. That guidance specifically says not to adopt a 
one-size-fits-all approach. EPA never completed that analysis, 
and they ended up instead adopting a single, high-security 
approach.
    It may be too late for the drug companies that are spending 
hundreds of millions of dollars to comply with another rule 
that was also supposed to be voluntary. Let's not make the same 
mistake twice. We encourage EPA to withdraw CROMERRR 
immediately so that they can sit down with regulated entities 
large and small and learn about how these entities keep records 
and what sort of a problem there is, if one at all, in this 
case. The American Chemistry Council is ready and willing to 
engage in that discussion.
    Thanks very much. I would be happy to answer any questions.
    [Mr. Conrad's statement may be found in the appendix.]
    Chairman Pence. Thank you, Mr. Conrad.
    Our final witness is the vice-president of environmental 
activities at the American Bakers Association, Dr. Anne----
    Ms. Giesecke. Giesecke.
    Chairman Pence [continuing]. Giesecke. Thank you for your 
assistance.
    As vice-president of environmental activities with the 
American Bakers Association, Dr. Giesecke has been in charge of 
identifying and managing environmental issues and projects 
related to the baking industry. Dr. Giesecke is on the 
governing boards of the American Society of Baking and Baking 
Industry Sanitation Standards Committee. Her career focus on 
environmental issues began in 1980 with the Department of the 
Interior and continued with the U.S. Environmental Protection 
Agency as an environmental specialist from 1986 to 1991. She is 
the author of more than 60 articles related to resource 
management published in a variety of law reviews and 
environmental journals and is gratefully recognized for five 
minutes.

 STATEMENT OF ANNE G. GIESECKE, VICE-PRESIDENT, ENVIRONMENTAL 
 ACTIVITIES, AMERICAN BAKERS ASSOCIATION, AND CO-CHAIR, CLEAN 
                    WATER INDUSTRY COALITION

    Ms. Giesecke. Thank you, Mr. Chairman and Mr. Phelps. On 
behalf of the Clean Water Industry Coalition chaired by myself 
and Meg Hunt of Edison Electric--we call it CWIC--we would like 
to thank you for this opportunity.
    CWIC is made up of more than 250 companies and associations 
representing the nation's major manufacturing and service 
industries. CWIC is pleased that this Subcommittee is exploring 
the quality of EPA regulatory analyses and whether those 
analyses are adequate to support rational rulemaking.
    At the onset, it is important to remind everyone that 
millions of people working to make our economy function share 
basic American environmental, health and safety values and want 
them applied to their workplaces, their homes and their 
communities. We certainly support strong environmental and 
health rules that are founded on sound science and developed in 
a deliberative and public process that includes working with 
the states and the regulated community so that the requirements 
achieve the rules' goals and are both effective and cost 
conscious.
    The members of CWIC, and I would like to acknowledge the 
National Association of Manufacturers for their help with this 
testimony, believe that last year's rulemaking pursuant to the 
Clean Water Act to revise the total maximum daily load, TMDL, 
regulations was hastily issued and seriously underestimated the 
available science and the economic impacts on state and local 
governments and the regulated community.
    Among the rule's many problems, it did little to address 
serious concerns with current 303(d) lists of impaired waters 
arising out of poor or nonexistent available water quality 
data, thereby establishing a potential for a gross 
misallocation of scarce resources. The Clean Water Act requires 
each state to identify waters that are not meeting water 
quality standards after the application of technology controls 
on point source dischargers. The resulting list is often 
referred to as the state's 303(d) list, and states are required 
to establish total maximum daily loads, TMDLs, for all waters 
on this list.
    Establishing a TMDL requires a state to determine how much 
reduction each point and non-point source of pollution on the 
water body must make for water quality standards to be met. It 
is a complex, difficult and expensive calculation that needs 
science based monitoring data to be effective and presents a 
resource management issue for the federal government, the 
states and the regulated community.
    We believe, therefore, that the process should be targeted 
toward those waters clearly established as impaired based on 
good data and upon sound scientific analysis. Manufacturers, 
particularly those of us in the food sector, need a clean, 
abundant and affordable water supply.
    CWIC has supported many state and local concerns expressed 
during this rule writing process. For example, the Association 
of State and Interstate Water Pollution Control Administrators, 
ASIWPCA, the national professional organization of state and 
interstate water quality program officials, stated in their 
June 20, 2000, comments to EPA that, ``State TMDL development 
and implementation to date clearly demonstrates that the cost 
estimates developed by EPA are inadequate, incomplete and 
misleading. Far more will be required to develop a TMDL than 
the $25,000 the EPA envisions.''
    ASIWPCA members testifying before Congress have estimated 
the costs to states of preparing nearly 40,000 TMDLs over 15 
years, as presently required, to be between $1 billion and $2 
billion annually. Moreover, in a recent draft cost report 
mandated by Congress, the National Cost of the TMDL Program, 
the EPA estimates that the average annual cost for developing 
TMDLs will be $63 million to $69 million.
    In a recent General Accounting Office study, only six 
states responded that they have a majority of the data needed 
to fully assess all their waters. Forty-five states reported a 
lack of resources, and several states pointed out that they are 
operating under state imposed staffing restrictions. Others 
said that they are limited in how many samples they can analyze 
because of the shortage of laboratory funding. EPA staff 
admitted that fewer resources are being devoted to monitoring 
and assessment at the state level than ever before.
    In addition to these program costs are the costs that will 
be incurred by the regulated community to participate in TMDL 
development and even more significant costs of compliance. The 
capital and annual operating and maintenance cost for companies 
is staggering. The Advent Group, a wastewater consulting 
company, estimates the cost of the TMDL regulations on the 
regulated community to be between $20 billion and $80 billion 
over a ten year period.
    Was the TMDL rule the result of bad analysis? In a recent 
National Academy of Sciences National Resource Council study, 
the NRC listed numerous errors, the lack of sufficient data and 
unscientific rationale for proposing the rule. These issues 
must be addressed in any revision of the TMDL promulgated in 
July, 2000.
    We are hopeful that during the next 18 months steps can be 
taken to revise the rule and to establish a framework that is 
technically, scientifically and programmatically sound.
    We applaud you for holding this hearing, and I would be 
glad to answer any questions. Thank you.
    [Ms. Giesecke's statement may be found in the appendix.]
    Chairman Pence. I am going to break protocol and recognize 
the patient gentleman from Illinois who awaited the Chair for 
the initial round of questions. The Chair will reserve the 
opportunity to question the panel after Mr. Phelps is done.
    Mr. Phelps. Thank you, Mr. Chairman. No apologies 
necessary. It is a tough schedule sometimes, so we appreciate 
your indulgence.
    Mr. Conrad, first, industry groups have a paramount job of 
record keeping standards, strict standards that should be met. 
Why should EPA not have specific requirements for measuring or 
making sure that your records are legally kept and legally I 
guess would be tested in some way, but an alternative?
    Mr. Conrad. You are absolutely right. Our members have 
legal obligations to retain records and to preserve them and 
not change them, and they do that. They are at the risk of 
criminal prosecution, certainly, if they monkey with them 
intentionally.
    It is also appropriate, I think, in the area of electronic 
records to have some degree of security so that the records are 
not immediately accessible by anybody, but in fact our members 
have some sorts of security procedures in place now. The 
computers where these data are kept are not accessible to just 
about anybody. They have PIN numbers and other kinds of access 
restrictions.
    They have been doing all this for years, and there is, to 
our knowledge, no evidence that any of this is insufficient. We 
are not aware of any cases where electronic data have been 
manipulated or, perhaps more to the point, where the government 
has had any difficulty in prosecuting any of these kinds of 
cases, so I guess our plea is that we sit down with EPA--and 
apparently the Justice Department as well--and sort of talk 
through how we keep these records and what the concerns are, 
what would be a cost effective approach to guaranteeing their 
security.
    Mr. Phelps. Are you satisfied with the opportunities that 
groups were given to participate in public comment meetings, 
written comments, on the regulations about electronic record 
keeping? If so, what concerns were raised by your group at any 
of the meetings?
    Mr. Conrad. Well, the ironic thing is that this rule 
actually was developed in a fairly open fashion, and the EPA 
did have a couple of public meetings in the summer of 2000 to 
lay out what was going on. Folks actually spoke up.
    I happen to have a reliable paper copy of the handout of 
that meeting and my notes from it, and I wrote up at the top 16 
months ago with a star next to it, ``People are freaked about 
not being able to print out computer documents and sign them. 
Few people have or can afford all the electronic audit trail 
stuff to ensure no changes.''
    People were raising these concerns at the meeting. I mean, 
I knew nothing about this issue until I went to this meeting. I 
gathered from what I heard over the course of that day that 
people had tremendous heartburn about what this could mean from 
the record keeping.
    We assumed that, having heard that, the agency would take 
those concerns into account, and yet the proposal is 
essentially exactly the same as they talked about back then.
    Mr. Phelps. So what was the agency's response when these 
concerns were raised at the meeting?
    Mr. Conrad. They sort of just took notes. I mean, it was 
sort of a one-way thing. People explained how they felt, and 
they wrote them down, but there was never really a give and 
take.
    Mr. Phelps. Kind of one of those things the doctor puts 
down when you are getting diagnosed. Hmmm. Kind of like that?
    Mr. Conrad. Maybe they couldn't read their own handwriting.
    Mr. Phelps. Dr. Lutter, you have been an outspoken critic 
of the cost-benefit analysis obviously. Would you think it 
would be most efficient in some cases for an agency to do an 
economic analysis even knowing that data gaps exist and make 
corrections based upon public comment?
    Mr. Lutter. I am not sure I understand your question. 
Currently the agencies prepare economic analyses of 
regulations, publish them at the proposal stage and solicit 
comments on that analysis along with comments on the rule at 
the proposal stage. I think that is an appropriate procedure.
    Mr. Phelps. Well, what I am getting at is when a rule is 
trying to be substantiated, the expenditures can be compared 
with the final projected benefits. The question is would it be 
just as cost effective to proceed with publishing the rule and 
allowing the industry to fill in the gaps?
    Mr. Lutter. Sir, to fill in the gaps in the analysis? No. I 
think that is a role for the government to undertake, provided 
that there is adequate opportunity for the public and the 
affected industries to comment on the appropriateness of the 
analytic procedure the agency is following.
    Mr. Phelps. So adequate reliability you think could be 
achieved. I think it has been noted that you have established 
that it cannot be achieved by peer review, adequate 
reliability, to replicate agency analysis, but by systematic, 
independent efforts to replicate agency analyses.
    Do you believe that the taxpayer is best served using 
replicating agency analyses, or is this a theory based on 
resources and time?
    Mr. Lutter. I would like to focus attention on the key and 
often neglected purpose of the economic analysis, which is to 
inform Members of Congress and the public about the merit of 
the regulatory decisions. I think that the existing 
institutional incentives that the agency faces do not really 
promote forthright and neutral analysis from the agency.
    The question is how does one improve those incentives? 
There are several procedures. One would be peer review. Surely 
that is worth doing. Currently there is no adequate independent 
peer review of EPA's regulatory analysis. A separate one in 
addition to that--these are complementary approaches--would be 
for Congress to fund the Truth In Regulating Act project at the 
General Accounting Office. I think that that office could, as 
part of its work, seek to verify whether or not agency 
estimates are replicable.
    My inspiration for that comment is largely based on 
longstanding work in the community of academic economics. Even 
peer reviewed articles are not always replicable in the sense 
that other researchers trying to ask whether identical methods 
applied to identical data lead to identical answers discover 
that they do not.
    It is for that purpose that I think it would be very useful 
to have a TIRA project at GAO seek to ascertain the 
replicability of analyses by regulatory agencies.
    Mr. Phelps. Thank you.
    Ms. Abrams, representing a large rural district--I have the 
largest geographic district east of the Mississippi, a lot of 
small counties with 4,000 or 5,000 in the whole county--one of 
the greatest challenges I have had as a state legislator, as 
well as a congressman now, is to try to work with those people, 
you know, at whatever degree or level of wastewater treatment 
plants they have.
    It is a Catch-22 in trying to attract industry to small 
areas that need jobs that do not have the tax base for other 
mandates and obligates for the people to get industry to come 
in. One of the first things they are looking at is what kind 
of, of course, infrastructure totally, but water and sewer and 
waste treatment plants.
    In Illinois, most of the small communities, to be able to 
access government grants it is based on a matching system like 
an 80/20 for local, for state, federal flow through money to 
the economic commerce agencies, or sometimes 70/30, 90/10.
    These small communities, you know, by the mere nature of 
the cost of wastewater treatment and those infrastructure needs 
cannot attract or do not do a very good job--I should not say 
cannot--by their own limitations industry, and yet where 
industry does exist the question is when we get into your 
industry, the metal products and machinery, do you think your 
industry avoids passing along the cost to the townspeople of 
treating the waste?
    Ms. Abrams. The industry is already 100 percent regulated 
by pre-treatment standards under the existing 413 metal 
finishing and 433 standards, so I think to the extent that the 
EPA has seen fit, the industry is already pre-treating and 
covering the large cost of treatment pursuant and resultant 
from their processes.
    I think it is important to note in the case of this 
proposed rule that it is a re-regulation of industries already 
fully regulated and that it is opposed by the trade 
associations representing the publicly owned treatment works 
because they feel that it imposes a large cost completely 
underestimated by EPA on the POTWs to implement a federal 
effluent limit guideline. They feel that existing effluent 
limit guidelines fully protect them and allow them to do the 
job that they need to protect the community's water sources.
    They also already have fully delegated authority to impose 
local limits that are higher when they see fit to protect 
either environmental quality or their own economic viability, 
so they feel that these standards are wholly unneeded and in 
fact present a burden, not a benefit for them and for the 
communities that you are speaking of.
    Mr. Phelps. Is that a major concern, though, for your 
industry, the wastewater treatment cost, or is it just pretty 
much accepted?
    Ms. Abrams. Right now it is the cost of doing business. 
Those regulations have been around for over a decade. I am not 
sure there is a company out there that could tell me off the 
top of their head what percentage of their environmental 
compliance costs it represents. It is a significant cost, but 
it is part of being a corporate citizen in America that you 
need to treat your wastewater.
    The issue at hand is that the proposed regulation has no 
environmental benefit and would increase costs to the extent 
that we fully believe over 50 percent of the domestic printed 
circuit board industry would be unable to compete globally and 
that there would never be a new circuit board plant constructed 
in this country.
    Mr. Phelps. Thank you very much. I may have questions 
later.
    Chairman Pence. The Chair would also like to thank the 
panel for some very provocative and thoughtful presentations.
    A few questions starting with Dr. Lutter; not to put you on 
the spot after that good exchange. What agency do you think 
should be charged with selecting peer reviewers for EPA's 
regulatory analyses?
    Mr. Lutter. The simple answer is not EPA.
    Chairman Pence. Okay.
    Mr. Lutter. The more complete and truthful answer and much 
more informative answer is much harder. In discussions with 
other people, NAS or NRC has come to mind, but it is not clear 
what would be the perfect answer to that question.
    I think what one can say is that it should not be EPA 
because the process of picking peer reviewers, and the process 
of managing the questions given to the peer reviewers is one 
that can be controlled in such a way as to make analysis look 
like it is blessed when in fact people continue to have serious 
reservations about its credibility. This suggests that some 
non-EPA agency would be more apt to do that job well.
    Chairman Pence. Ms. Abrams, I have the impression that you 
believe the EPA did not perform an effective outreach in 
developing and seeking comments on the proposed MP&M rule. What 
should EPA have done to improve the outreach in specific 
recommendations?
    Ms. Abrams. I think that the EPA made a good effort to 
outreach. They convened a SBREFA panel, which they do not do 
for every proposed rule. They also held public hearings.
    I think with respect to the SBREFA panel that there was 
just not enough data presented to the SBREFA panel for them to 
make adequate review and assessment, and even after the rule 
had been published in the Federal Register a good bit of the 
background data and analysis was not available in the public 
record for several months after that, resulting in an extension 
of the rulemaking period.
    Chairman Pence. Mr. Bopp, I found some of your testimony 
really breathtaking.
    Mr. Bopp. So do our members.
    Chairman Pence. The estimate of 111 hours per year to make 
their way through 500 pages of instruction.
    I guess my question is you essentially are saying the EPA 
failed to assess the impact specifically on ceramic and glass 
decorators, not understanding the nature of the industry 
essentially as a subset of the regulated class.
    Do you have any recommendations about if the EPA did 
identify your industry in particular how we would insure that 
they would develop regulatory analyses based on the correct 
data and a correct understanding?
    Mr. Bopp. That is a good question because the correct data 
was there. I mean, the rule was first announced and then pulled 
back, and then several of our members, small members, testified 
before a panel, so it was not a question of them being unaware 
of us. One way or the other, it just was not considered, or if 
it was considered it did not come out in the research at all.
    I guess it would get down to better peer review of the 
research. Again, I mean, to come out with something like this, 
as flawed as it is. And in the end it was a very, very rushed 
rule. It was pushed through officially finally January 17 of 
this year. There were a lot of rules that went through that 
way, and I think not enough care was given at that point for 
whatever reasons.
    It was not a question of them not getting the information 
from us. It was a question of for one reason or another it did 
not enter into their economic reports. Therefore, it did not 
enter into consideration. I guess better peer review, like some 
others have mentioned, would really help that and, again, 
someone other than EPA reviewing their research.
    Chairman Pence. Thank you.
    Dr. Giesecke, the EPA originally estimated that the total 
incremental cost of TMDL was going to be about $220 million, 
and then one year later in a draft economic report the cost 
estimate was raised to a minimum of $10 billion over ten years.
    With your background in this area, how do you account for 
that kind of almost logarithmic difference in estimates?
    Ms. Giesecke. They had taken advantage of a regulatory 
interpretation and determined that they did not have to fully 
account for expenses that might be incurred by the states 
because this was a delegated authority in most cases, so they 
simply used a number limited to what EPA headquarters and 
regional offices might be expected to incur and not consider 
what the delegated states and certainly not even in the next 
estimate what the regulated community would be subject to in 
terms of costs.
    Chairman Pence. Thank you.
    Mr. Conrad, did the EPA recognize in the CROMERRR 
circumstances any substantial differences between the chemical 
industry and the pharmaceutical industry? In your testimony you 
indicated that 60 to 90 percent of the businesses in your 
association are small businesses.
    I do not have testimony or information about the nature of 
the pharmaceutical industry, but it seems to me there are very 
few companies that can survive in that industry that would 
qualify for any of this Committee's jurisdiction.
    Mr. Conrad. Right. Of course, CROMERRR does not just affect 
us. I mean, essentially it affects anybody who is required to 
keep records under any EPA requirement under any statute, so 
Clean Air, Clean Water, RCRA.
    I mean, you have all kinds of regulated entities down to 
the size of gas stations, as well as all of the consultants and 
analytical labs and so on who work for them whose computers 
have to mesh with them and who are all affected, so it is a 
much wider range of facilities.
    I am not really familiar with the size distribution of 
businesses in the drug industry, but certainly my experience 
kind of off the cuff is that drug companies tend to be pretty 
big, and that they are gobbling each other up and have a lot 
more capacity to absorb a regulation like that.
    Frankly, the things they are regulating, I mean, these are 
things people eat, as opposed to materials which certainly 
people have the potential to be exposed to, but it is a much 
more attenuated chain from a regulated facility under EPA to a 
person than in the case of drugs.
    Chairman Pence. Thank you.
    Having conferred with the gentleman from Illinois, my 
colleague, that he does not have any additional questions, we 
will move to adjourning this hearing with a word of gratitude 
to each one of you for greatly illuminating our understanding 
of the challenges in the area of the analyses the EPA uses.
    I particularly appreciate Dr. Lutter's comment with regard 
to using established principles for sound analysis, which will 
be very much of a lodestar.
    Mr. Phelps. I would also like to thank the panelists for 
their very well designed testimony. Thank you.
    Chairman Pence. With that, again my gratitude for your 
patience with my schedule today. Enjoy your lunch.
    [Whereupon, at 11:45 a.m. the subcommittee was adjourned.]

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
```