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TENNESSEE JOB CREATION: DO FEDERAL GOVERNMENT REGULATIONS HELP OR HINDER TENNESSEE’S ECONOMIC DEVELOPMENT? 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

June 18, 2012 

Serial No. 112–156 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on June 18, 2012 ............................................................................... 1 

WITNESSSES 

The Honorable Bill Haslam, Governor, State of Tennessee 

Oral Statement ................................................................................................. 7 

Written Statement ............................................................................................ 10 

The Honorable Lamar Alexander, A U.S. Senator from the State of Tennessee 

Oral Statement ................................................................................................. 13 

Written Statement ............................................................................................ 15 

The Honorable Bob Corker, A U.S. Senator from the State of Tennessee 

Oral Statement ................................................................................................. 17 

Mr. William F. Hagerty, IV, Commissioner, Tennessee Department of Economic and Community Development 

Oral Statement ................................................................................................. 19 

Written Statement ............................................................................................ 22 

Mr. Mark Faulkner, Owner, Vireo Systems, Inc. On Behalf of The National 

Federation of Independent Business 

Oral Statement ................................................................................................. 35 

Written Statement ............................................................................................ 38 

Mr. H. Grady Payne, Chief Executive Officer, Conner Industries, Inc. 

Oral Statement ................................................................................................. 42 

Written Statement ............................................................................................ 44 

Mr. Scott Cocanougher, Chief Executive Officer, First Community Bank of 

Bedford County 

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

Written Statement ............................................................................................ 49 

Mr. Bob Bedell, Sales Unit Manager, Coca-Cola Bottling Company Consolidated on Behalf of The Beverage Association of Tennessee 

Oral Statement ................................................................................................. 51 

Written Statement ............................................................................................ 53 

(1) 

TENNESSEE JOB CREATION: DO FEDERAL 

GOVERNMENT REGULATIONS HELP OR 

HINDER TENNESSEE’S ECONOMIC DEVELOPMENT? 

Monday, June 18, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

Washington, D.C. 

The Committee met, pursuant to call, at 9:05 a.m., in S102 Business and Aerospace Building, Middle Tennessee State University, 

1301 East Main Street, Murfreesboro, Tennessee, Hon. Darrell Issa 

[Chairman of the Committee] presiding. 

Present: Representatives Issa and DesJarlais. 

Also Present: Mrs. Black and Mrs. Blackburn. 

Staff Present: Sharon Casey, Senior Assistant Clerk; John 

Cuaderes, Deputy Staff Director; Kristin L. Nelson, Counsel and 

Cheyenne Steel, Deputy Press Secretary. 

Chairman ISSA. You know, Bob, before we lost the gavel, I took 

it for granted. Once I got it back, it has been a whole different 

world. 

[Laughter.] 

Mr. DESJARLAIS. Mr. Chairman, I ask unanimous consent that 

our colleagues from Tennessee, Mrs. Blackburn from the Seventh 

District and Mrs. Black from the Sixth District, be allowed to participate in today’s hearing and ask questions of the witnesses. 

Chairman ISSA. Without objection, so ordered. 

I want to thank everyone in the audience for being here, before 

we begin. Further, this is a regular federal congressional hearing, 

so all the normal rules apply. The only difference is you all did not 

have to drive as far. 

So with that, the hearing will come to order. 

This hearing is entitled ‘‘Tennessee Job Creation: Do Federal 

Government Regulations Help or Hinder Tennessee’s Economic Development?’’ Now knowing the answer to that, I will go on anyway. 

[Laughter.] 

Chairman ISSA. The Oversight and Government Reform Committee exists to secure two fundamental principles. First, Americans have a right to know the money Washington takes from them 

is well spent. And second, Americans deserve an efficient, effective 

government that works for them. Our duty on the Oversight and 

Government Reform Committee is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, 

because taxpayers have a right to know what they get from their 

2 

government. It is our job to work tirelessly in partnership with citizen watchdogs to deliver the facts to the American people and 

bring genuine reform to the federal bureaucracy. 

I am pleased today to be here in Tennessee, mostly because Dr. 

DesJarlais has asked me to be here and pushed on this schedule 

for more than a year; but also because since joining the Committee, 

he has gone around his District and asked job creators where the 

problems were coming from Washington. And that is the basis for 

today’s hearing. 

We understand that we are in the Volunteer State, and there 

have been many successful job stories here. Your Governor continues a tradition that Senator Lamar Alexander did before him. 

The fact is that whether it is Senator Corker or my two colleagues 

here, Marsha Blackburn and Diane Black, we understand that in 

fact government has to be reined in, that the good intentions of our 

predecessors and good law, laws designed to protect clean air, clean 

water and in fact improve the quality of life and the safety for all 

Americans have to be protected. At the same time, we cannot regulate ourselves into unemployment. 

The national unemployment rate stands at 8.2 percent. It was 

falling, it is now rising. Here in Tennessee, it has risen also from 

about 7.8 to 7.9 percent. This in a state that welcomes business, 

that has in fact been attracting new companies including perhaps 

some from my home state. 

I periodically have the opportunity to call one of my old friends 

and mentors who used to live within my congressional district and 

who was Ronald Reagan’s economic advisor, a gentleman named 

Art Laffer. Art Laffer is now a resident of Tennessee and he rubs 

it in every time I talk to him. He left California because California’s regulations? No. He was a financial manager and a member 

of a board. He left for the simple reason that our state taxed its 

way right out of successful people like him wanting to remain in 

that state. 

But he too understands, as most of here on the dias do, that regulations and red tape can often add no value, they only add cost. 

And cost is passed on in products. And if those products, like those 

produced here in Tennessee, in fact compete in a world market, 

they either will not sell in America or often will not sell to the rest 

of the world as we once did. Our export sector is healthy in areas 

such as raw copper ore, areas such as raw coal, but less and less 

are we productively able to export our finished products. Even Boeing, a company that is renown for being the largest exporter from 

America finds itself often unable to compete. 

This Committee went to Charleston, South Carolina specifically 

for Boeing some months ago, because Boeing needed a plant in a 

state that was right-to-work that could guarantee delivery to customers around the world who wanted Boeing to match Airbus’ 

must-deliver, will-deliver policy. Fortunately, that has ended well. 

But today, we look here in Tennessee at some critical areas including, on our second panel, agriculture. As we know, crops can be 

grown overseas, but farms cannot move overseas. A job not producing food in America will mean that America does not feed itself, 

it will mean that in fact the jobs are lost here in America. So 

whether it is mining or agriculture, the 112th Congress has been 

3 

about learning about the areas in which we need to make changes, 

going over those that are going the wrong way under this administration and in fact those who have gone the wrong way under previous administrations. 

Our goal at this point is to make sure that the next administration, the next Congress, has ample warning of the areas that have 

been hurting job creators and that in fact we push back on as 

many as 106 new major rules that have been made just in the last 

three years which cost over $46 billion to taxpayers. And I know 

that in Washington, $46 billion seems just like a rounding error; 

unless you do it over ten years, it doesn’t add up to real money. 

But we know, in the private sector, that a few dollars or a few 

pennies, perhaps just the increase in the cost of healthcare under 

Obamacare or the increased cost of regulations under Dodd-Frank, 

can in fact make the difference between a successful business and 

one that is beat out by foreign competition. 

We are here today to hear from our first panel, without a doubt 

the most blue-ribbon panel we have had in our seven hearings in 

the field; but also to hear from our second panel of job creators. 

With that, I would like to once again thank my colleague, Dr. 

Scott DesJarlais, for insisting that we come here, for being patient 

as we were able to make it work within our two schedules, and also 

for our two guests to the Committee, who have taken time to be 

here to meet with job creators. 

With that, I would recognize Dr. DesJarlais for his opening statement. 

Mr. DESJARLAIS. Thank you, Mr. Chairman, and a special thanks 

to MTSU for this wonderful facility and hosting this venue, and a 

special thanks to our distinguished panel for making this fit your 

schedules. I know it has been very difficult. 

Chairman Issa, I would like to thank you for holding this field 

hearing and welcome to the great State of Tennessee. I am extremely grateful to be a member of the House Oversight Committee 

and Government Reform, and I want to thank you personally for 

your leadership of this Committee and your dedication to upholding 

the principles of what our Committee should be doing on behalf of 

the citizens of this country. 

I know that we have a tradition of repeating our mission statement at the commencement of each of our hearings, but I wanted 

to reiterate one of these core principles in my opening statement 

because I believe it strikes at the core of what we are highlighting 

in this field hearing. Americans deserve and efficient and effective 

government that works for them. 

Mr. Chairman, that quote is simple, straight-forward and to the 

point, and just about all of us would agree with it, regardless of 

party or affiliation. Yet, I think we have discovered that in many 

instances, the reality of what is happening today is that this idea 

of an efficient, effective government that should work for us is actually working against us. 

One of the primary reasons I chose to run for Congress two years 

ago is that I discovered that people had lost faith in the federal 

government. As a private practice physician in a small community, 

I was seeing folks from all walks of life and the tone of their conversation had changed. For years, I would look forward to talking 

4 

to patients about their families, their children, grandchildren, their 

jobs, their hobbies and other interests. But recently, I began to notice a change in the topics of discussion. More and more folks were 

talking about lost jobs, uncertain futures for their children, and 

crushing debt awaiting future generations. And in almost all of 

these cases, people were showing frustration that their government 

and their elected officials were not only failing to listen to their 

concerns but were also incapable of solving our current problems. 

Finding myself agreeing with their concerns, I chose to get involved. From the campaign to my 18 months on the job as a United 

States Congressman, I have made it a point to reach out and visit 

people on the ground, with the lifeblood of our economy—the job 

creators. 

This Committee as a whole has focused on the subject, and I initiated my own Tennessee job creator’s tour. Throughout the Fourth 

Congressional District of Tennessee, I visited employers large and 

small with over 40 visits, from small family-owned businesses to 

major multi-national corporations with factories and plants in Tennessee. I wanted to get first-hand information on what is working 

and what is not in Washington. 

Of course, one of the over-reaching themes of these visits focused 

on the interference from Washington and from the federal government. The topics were varied, from tax and paperwork compliance 

to regulatory burdens requiring more administrative time, and 

legal costs, to the fear and uncertainty of new regulations and proposed rules. The narrative often led to a similar conclusion, the federal government is either directly or indirectly getting in the way 

of creating more jobs, or has created an environment of fear and 

uncertainty that is keeping businesses from expanding, hiring new 

personnel or taking those entrepreneurial risks that have been a 

linchpin of our economic engine for so many years. 

There are many representatives with us today who were part of 

these stops. I was humbled at the reception that I received and 

most appreciative for the feedback that was allowed to me to make 

decisions with my debate and votes in the House. 

We have a distinguished set of panelists before us today, government leaders who also bring successful private sector experience. 

We will hear from them directly as to what they have brought from 

their private experience and transferred into a perspective that 

should be followed by all of our elected officials in Washington. 

We will focus on what Tennessee is doing to create and attract 

jobs and lessons that can be learned from their proactive, flexible 

approaches. And we will hear from a panel of witnesses representing large and small businesses both in the Fourth District 

and from other parts of our great state. They will highlight some 

of their stories and their concerns, and I look forward to their testimony and answers to our questions. 

Mr. Chairman, I again thank you for your desire to hear first 

hand from our people here in Tennessee. I think you can see from 

the distinguished witnesses on the panels, not to mention the desire of my colleagues from the Tennessee congressional delegation 

to spend time here today with us on the panel, that there has been 

a keen interest to explore this topic as much as possible. I am 

5 

proud of this Tennessee job creator’s tour and I look forward to continuing to build on it with this hearing. 

Chairman ISSA. Thank you. 

Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I want to welcome 

you to Tennessee. We are absolutely thrilled that you are here and 

want to make certain that you go home with plenty of good barbecue, and glad you enjoyed—— 

Chairman ISSA. I have got to come back, you keep telling me to 

come down to Nashville but it is always about music and food, not 

about field hearings. 

[Laughter.] 

Mrs. BLACKBURN. Actually, Mary Bono Mack and I are going to 

do one later this year. I vice chair Commerce, Manufacturing and 

Trade. As we look at this very important issue, we are going to be 

doing some more work in the field. 

I want to commend Scott DesJarlais. Congressman DesJarlais 

has done a fabulous job as a freshman, and the fact that he has 

worked so hard and so diligently to get this field hearing in place 

is exemplary work. 

I want to thank all of the witnesses for coming before us. I have 

the opportunity to talk with you each regularly about what I think 

is so important to our state, and it is jobs, it is the economy. There 

is an equation that I use regularly that I say sums it all up. You 

know, when the President says that jobs is all about math, I say 

yes, Mr. President, there is an equation that works, it is called less 

regulation plus less litigation plus less taxation equals more innovation and job creation. It is an equation you can take to the bank, 

it works every single time. And certainly for our Tennessee businesses, Governor, you are to be commended for keeping the focus 

on what we can do to grow businesses that are here. 

Commissioner Hagerty is doing a stellar job and yes, indeed, Mr. 

Chairman, we are recruiting lots of your constituents. They are becoming our constituents here in Tennessee and we welcome them 

with good old southern hospitality and are delighted to see those 

companies and those jobs choosing to say Tennessee is the place 

where we want to be. You mentioned Mr. Laffer. Indeed, the fact 

that we had a state income tax battle in this state, I was fortunate 

to lead that fight, Diane was a big part of that fight. But leading 

that fight, that is what caused Tennessee to come to his attention. 

And the fact that we had citizens and businesses that were willing 

to take a stand and say no, we are not going to have a state income 

tax in this state and we are going to focus on being a businessfriendly state. You all have done a great job with that, Governor, 

and we appreciate the attention that is there. 

Welcome to everyone. We want to get rid of some of this 80,000 

pages of new regulation and 4000 new regulations. 

And with that, I yield back my time. 

Chairman ISSA. Thank you. And now due to the miracle of redistricting, we are in two Members’ districts, depending upon last 

Congress, next Congress. We recognize our host for today, Mrs. 

Black. 

Mrs. BLACK. Well, thank you, Mr. Issa, Chairman Issa. We appreciate your coming here. I know that our schedules are busy and 

6 

we really appreciate your coming to the district. I want to thank 

my colleague, Scott DesJarlais, for putting all this together and 

helping to raise the awareness of what is so important. The number one issue, jobs, jobs, jobs. 

Thank you so much for our blue ribbon panel as you said. It is 

really an honor to have our great leaders both at the state level 

and also at the national level here today. So thank you. 

Over the last 18 months, I have led 12 job task force meetings 

and visited businesses, small, medium and large, in all 15 of my 

counties in the Sixth Congressional District. And while each business and community faces its own unique challenges, in this tough 

economy, the over-arching message has been the same—federal 

regulatory burdens and the constant growth of bureaucratic red 

tape are stifling our job creation. And as a small business owner 

myself for many years, I know first hand how economically destructive and frustrating over-regulation can be to one’s own business 

and the local economy. 

Since President Obama has taken office in 2009, the acceleration 

of new regulations and economically significant regulations have 

been staggering and stifling to our economy. In his first three years 

in office, President Obama has finalized 620 economically significant rules, and each of these rules has at least a $100 million impact annually. His record of regulations gets even worse when you 

consider how many more rules have been mandated by the DoddFrank Act and of the Obamacare, and these are still regulations 

that are being written and they are in the progress, not being finalized. 

Thus far, one of the most aggressive regulatory bodies of the administration has been the EPA, the Environmental Protection 

Agency, with boiler MACT, national ambient air quality standards, 

utility MACT, green gas regulations, just to name a few. And this 

avalanche of new regulations is driving up the costs and killing 

jobs. 

In Rutherford County, the EPA boiler MACT regulation is already having a devastating impact on our businesses such as the 

International Paper Company, which I visited, and they just talked 

how much this is going to impact them. They are frozen by the uncertainty and the new compliance cost. And the final boiler MACT 

rules could likely cost $14 billion—and yes, that is billion, not million—in capital for the manufacturing sector, plus billions more in 

annual operating costs with very minimal environmental effects. 

Rolling back the costly and unnecessary regulations is imperative 

to jump start our economy and provide certainty for our job creators. 

I look forward to hearing from both panels on their experience 

of how we can help to address these issues in Washington and help 

create conditions for a robust economic recovery. 

And I yield back my time. Thank you, Mr. Chairman. 

Chairman ISSA. I thank the gentlelady. 

When I said we had a blue ribbon panel, obviously I was not 

being just complimentary. I do not do that, if you have seen us in 

Washington. To have the Governor of the state, the Honorable Bill 

Haslam, who is also a former mayor here and somebody who understands from his family business what it takes to create jobs, is 

7 

truly an honor. And I guess you are welcoming me to your state, 

but I am welcoming you to the Committee. 

My friend, Lamar Alexander, who has for so many years, both 

when he attracted companies such as Nissan and others during his 

tenure before becoming a U.S. Senator in 2003, and now as a member of the leadership of the Senate. It is an honor to be in your 

state. 

And Senator Corker, my staff helped get you elected, we believe 

in you. 

[Laughter.] 

Chairman ISSA. You have not let us down. But also, in your time 

as mayor, you come with a variety of insight that we wanted to 

hear here today before we get to the current business creators. 

And Mr. Hagerty, this is the first time that I have met you, but 

your credentials also as a job creator, somebody that was helping 

in the private equity and banking industry before becoming the 

head of the Department of Economic and Community Development 

in 2011, makes your testimony well worthwhile. 

I would let you know, as the Senators would let you know, that 

your entire written statements will all be placed in the record, so 

you can use your five minutes in any way that you wish. Governor, 

I must admit that if you go a little over, I am not going to stop 

you, but members of the House being able to gavel a Senator for 

speaking too long is something we cannot resist. 

[Laughter.] 

Chairman ISSA. With that, pursuant to our rules, would you 

please all rise to take the oath, and raise your right hands. 

[Witnesses sworn.] 

Chairman ISSA. Let the record reflect that all witnesses answered in the affirmative. Please have a seat. 

I have already belabored the whole point on the five minutes, but 

Governor, you are recognized. 

STATEMENTS OF WITNESSES 

STATEMENT OF THE HONORABLE BILL HASLAM 

Governor HASLAM. Thank you, Mr. Chairman, and welcome to 

Tennessee. I join all of our congressional colleagues in welcoming 

you. We appreciate the work you do. And I will also make a note, 

speaking on behalf of the State, we are incredibly proud of our congressional delegation. We are biased, but we tend to think we have 

the very best in the country. 

Chairman ISSA. I am proud of them too. 

Governor HASLAM. They are terrific. They work hard up there 

and down here, they all do. And I appreciate that. 

Let me just start, I loved the Committee’s mission statement 

about that the government owes the people to give effective service 

for their tax dollar. 

In Tennessee, we think there are two kinds of taxes. There is the 

income tax or sales tax or business tax that you pay. There is also 

a tax when government does not give you effective service for the 

dollar you pay. You give a dollar’s worth of taxes, but you only get 

60 cents of service in return. And that tax is as onerous as anything there is. So we focused here on trying to be the very bestVerDate Aug 31 2005 09:04 Aug 02, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\75304.TXT APRIL
8 

managed state in the country. It is what we think our obligation 

is to the people who pay taxes. 

But within that, our biggest mission is to try to be the number 

one location in the entire southeast for high quality jobs. And so 

we spend a lot of time talking about that and we think we have 

made some great headway. Here is what we believe in Tennessee, 

that government does not create jobs. We can create the environment for them but we do not create jobs. Capital is always going 

to go where it can get the very best return, that is just the nature 

of capital, it does not know boundaries. 

So my big idea for this morning is to have Congress think about 

using the states as—states have been called the laboratories for democracy by the founders, but think of that in terms of job creation 

as well. You have 50 laboratories out there doing things very differently in terms of their approach to regulation and taxation and 

job creation. So what are the places that are having success, now 

I realize it is not an equal gain, some people have more natural resources or better climate or more history of capital, et cetera. But 

taking all that into account, you really can see the states that are 

making progress. And I would argue it is the states that do understand it is about giving capital, getting the very best return it can 

and that is where jobs are being created. 

Over the past year and a half that we have been in office, Commissioner Hagerty and I have been touring the state and the country talking with people. And we have taken very seriously that mission to do that and you are going to hear more from Commissioner 

Hagerty, so I will not steal a lot of his thunder. But suffice it to 

say there are states where the recruiting is a little better than 

other places and you were nice enough to mention that maybe your 

state is one of those. And we literally can go into states and we 

spend more time in states that are higher taxes and higher regulation because more companies are becoming frustrated. 

Chairman ISSA. You have been to California? 

Governor HASLAM. I have been there once or twice, yeah. And we 

really appreciate the hospitality. 

But that would be my point. If Congress would look and see what 

is working in these laboratories out there and see what is the lesson for us as a country. There has been a lot of discussion recently 

about whether the private sector was doing fine and whether the 

public sector needed more stimulus. Well, I would just say this, 

since we have been in office, the state has lost over a billion dollars 

in federal funding when the stimulus plan ran out. And yet, we 

have not cut teachers, we have kept our K–12 funding increasing, 

all the things that the states are supposedly, you know, in a hard 

spot on. We have done that while cutting taxes even. 

So my point would be those states who are managing their states 

well, doing the right things to bring in business, increase revenue, 

we are not seeing that same kind of need. And again, I would say 

that is a model for what we encourage the federal government to 

look at doing. 

When Commissioner Hagerty and I toured the state, we talked 

with businesses all over about federal and state regulations. Most 

of the feedback that came to us was from federal regulations. But 

in the process, we looked at our state, everything, from top to botVerDate Aug 31 2005 09:04 Aug 02, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 C:\DOCS\75304.TXT APRIL
9 

tom, reviewed every department, to make certain we were being as 

customer-friendly as we can. I think the federal government can do 

that exact same thing. Our model is to keep taxes low, as Congresswoman Blackburn said, to work hard at education, preparing 

our teachers to make certain in K–12 that we have the very best 

people speaking in front of the classroom every day. And then to 

address other things. Recently, we have cut out the estate or the 

inheritance tax in Tennessee. We visited a farm, the Luckey family, 

well-named, in west Tennessee. Farm had been in their family for 

over 100 years and the gentleman who is running the farm now 

said I do not want to sell this or even a piece of it, it would be like 

selling one of my kids. But if I passed away right now, we would 

have to. And his father, who is 85 and could not get out of the car 

because he had oxygen on, called me over to the car and said, ‘‘Governor, I really appreciate you doing this.’’ We are actually phasing 

it out over four years. He said, ‘‘If you could pick up the pace a little, I would very much appreciate it.’’ 

[Laughter.] 

Governor HASLAM. So we think we have the right model here. We 

are excited about being part of what you are doing. The purpose 

of this hearing we could not applaud more. We are in a competitive 

world, we know that as a state, we know that as a country. And 

we salute what you are trying to do here. 

Thank you. 

Chairman ISSA. I was recently in New Hampshire for one of 

these field hearings and there they live free, but I guess here it will 

be cheaper to die than it used to be. 

Governor HASLAM. Right. I have made that point a couple of 

times. 

Chairman ISSA. Senator Alexander. 

[Prepared statement of Governor Haslam follows:] 

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Insert offset folio 3 here 75304.003
13 

STATEMENT OF THE HONORABLE LAMAR ALEXANDER 

Senator ALEXANDER. Thanks, Mr. Chairman. 

I have been in New Hampshire myself some time ago. 

[Laughter.] 

Chairman ISSA. Lamar, I went after the primary though. 

Senator ALEXANDER. Darrell, we are delighted to have you here. 

And Scott DesJarlais has been a real workhorse in putting this together. I am delighted to be a part of it. It is a treat to work with 

Marsha Blackburn and Diane Black in Washington, and it is an 

honor really to serve with Bob Corker and to watch Bill Haslam 

with Bill Hagerty, as Governor of Tennessee. 

It is good to be at Middle Tennessee State University, a tremendous campus. 

During the last three years, the Obama administration has produced an avalanche of regulations that have thrown a big wet blanket over the American economy and made it more difficult and 

more expensive to create private sector jobs. The most conspicuous 

examples are the Dodd-Frank Act and the healthcare law, which 

was a historic mistake in my judgment. 

But let me just mention quickly three specific examples of how 

federal regulations are hurting job creation in Tennessee. The first 

is the NLRB’s attack on the right-to-work law. Nissan is in this 

county. It came here first because of our central location; but second, because every state north of us does not have a right-to-work 

law and we do. So when the National Labor Relations Board told 

Boeing it could not go to South Carolina because presumptively it 

was moving from a non-right-to-work state to a right-to-work state, 

that sends a chill through every auto supplier who might be thinking about doing the same thing. And they may not have the money 

and the determination to fight the NLRB in the same way. So that 

makes it harder to create jobs in Tennessee, an attack on a rightto-work law. 

Second, the healthcare law is taxes and mandates. I met not long 

ago with the CEOs of all the big chain restaurant companies in 

America. Other than government, they are the largest employer of 

young people and low income people. One of them, my friend Sandy 

Bell, head of Ruby Tuesdays in Maryville, told me that the cost of 

complying with the healthcare law would more than equal the entire profit his company would make in that year. So what is he 

doing? He is not investing in new jobs in the United States. A bigger restaurant company told me their goal was to run their store 

with 90 employees; because of the cost of the healthcare act, they 

are going to do it with 70 employees. That is not a good way to create jobs. 

A third is the Medicaid mandates on the states. As a former Governor, I am very sensitive to this but I know that Governor Haslam 

is doing all he can to have Tennessee have more college graduates. 

Yet when Medicaid mandates make it harder for him to put the 

money he wants to into Middle Tennessee State University, what 

happens? The quality is not as good, the tuition goes up, it is harder for people to graduate from college. So that is the effect of Medicaid mandates on the State of Tennessee. 

I agree with Representative Black, perhaps the worst offender of 

this avalanche of regulations is the Environmental Protection 

14 

Agency. It has become a happy hunting ground for goofy regulations. And we can list them—boiler MACT, I am sure you will hear 

from the President of the Farm Bureau about regulating dust on 

farms, changing the Clean Water Act so that you are regulating 

puddles of water. But as the late William Buckley used to say, even 

a stopped clock is right twice a day. And there are two of their regulations that I support because they help make it easier to create 

jobs in Tennessee. They are the clean air regulations. We have a 

big clean air problem in our state. We have done a lot of good work 

on it, but when Nissan came to this county, the first thing it had 

to do was get an air quality permit from the State Air Quality 

Board, and if it could not get it, it would have gone to Cartersville, 

Georgia. Fortunately, local leaders have been working to clean up 

the air. 

Chattanooga in 1959 had the dirtiest air in the country and local 

leaders, including Senator Corker, worked hard to clean that up. 

So by the time Volkswagen was looking for a site, Volkswagen 

came to Chattanooga. But if our air had not been clean, Nissan 

would be in Cartersville, Georgia and the Volkswagen site would 

be a vacant lot. We cannot stop now, especially stopping dirty air 

blowing in from other states. 

But overall, this avalanche of regulations has been a big wet 

blanket on our economy and the best thing we could do as elected 

officials is to lift that wet blanket from the economy and free it to 

create more jobs and the way to start with that would be to repeal 

the misguided healthcare law and the Dodd-Frank Act. 

Chairman ISSA. Thank you, Senator. 

Senator Corker. 

[Prepared statement of Senator Alexander follows:] 

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STATEMENT OF THE HONORABLE BOB CORKER 

Senator CORKER. Mr. Chairman, thank you for being here. 

I was thinking as we were driving over today that so many of 

the companies around the country today are having their board 

meetings in Washington, and being on the Banking Committee and 

having had the background that I have, I am asked often, as I am 

sure you are, to present to these boards who come to Washington 

for their board meetings, which speaks, I think to the unhealthy 

situation that exists in our country where so much of Washington 

is affecting what they are doing. So I thank you so much for coming to Tennessee and being out here with people who are creating 

jobs in Tennessee. We are importing jobs, as the Governor mentioned, due to the outstanding job he and those before him have 

done, and exporting products. So we are proud of our state, we are 

especially proud of the three Congressmen who sit with you, who 

I love serving with and I think do an outstanding job. And as you 

can imagine, tremendous pleasure for me to serve with Lamar Alexander, who is one of the best that exists in the Senate and of 

course to be able to do so with Bill and Bill. 

I do want to mention that I know there has been a lot of discussion today about regulations and I think both Governor Haslam 

and Senator Alexander have done an excellent job in talking about 

those. I still believe the biggest issue that faces our nation as it relates to job creation is the issue of us in Washington not solving 

the fiscal issues that we have. I think if you talk with the business 

folks here, they will tell you that the uncertainty of whether we are 

going to be able to come together and solve this fiscal issue is the 

biggest impediment to job creation. 

As I meet with these board members, as I know you do, Chairman—and for what it is worth, for those of you in the audience, 

I have been on panels with Chairman Issa here but also around the 

world in other places, and the way he conducts himself causes people to listen to him in many, many places, not just here in our 

country. But I think we both listen to corporate boards as they talk 

about the fact that they are unwilling to invest in capital and they 

are unwilling to invest in people because they are concerned about 

whether we in Congress are going to have the ability to come together and deal with this fiscal issue. And I think in spite of our 

frustration with the many regulations that we are dealing with— 

and again, I applaud this tremendously and you have a wonderful 

panel coming after us—that still is the biggest issue as it relates 

to job creation in our nation. 

I think all of us know at the end of this year, we have another 

issue, which is the tax issue, the fiscal cliff is coming at the end 

of the year, which, by the way, people on both sides of the aisle understand is a problem and becoming more of a problem, but the 

overall insolvency of our country is the biggest. 

I want to add just a little detail to what Senator Alexander mentioned earlier, and that is as I travel the state, I was highly involved, as you were, in the financial regulatory legislation that took 

place. I do not think any of us here at Middle Tennessee—by the 

way, the largest university in the state now—supported that legislation. But as I travel the state, in counties that especially depend 

on their local community banks, the banks that have leaders that 

18 

are in their Kiwanis Club, their Lions Club, their Rotary Club, 

these leaders tell me that in many cases now they have more compliance officers than they have lenders. And some people think that 

is a great way to create jobs, is to create regulations that cause 

people to hire compliance officers. 

But I think what we have seen and what Washington does so 

often is we create a one-size-fits-all piece of legislation, a piece of 

legislation that is intended to deal with some of the complexities 

of organizations like J.P. Morgan or Bank of America or CitiBank 

or Wells Fargo. And what we do is cause these same rural community banks to have to comply with those regulations, and it is absolutely stifling credit. In many cases, these banks have no idea what 

the examiner in charge is going to do in their particular entity. As 

a matter of fact, one bank might have an examiner in charge that 

comes in and talks with him about one thing. Another institution 

has another examiner in charge who is totally different, who comes 

in and so it is not just the regulatory over-burden that is taking 

place, it is also the lack of consistency that is really creating a lot 

of fear. 

And what happens is when many of the small businesses that 

are represented in this room go to an institution like this, they are 

more fearful about whether they are going to be in business than 

they are being able to create jobs in their own community, more 

focused on creating jobs in their own community. 

So I do hope—and by the way for what it is worth, I think most 

people in Washington are beginning to understand that DoddFrank missed the mark and I hope that during this next Congress, 

we will peel away these things that I absolutely know are hurting 

job creation, especially in some of the places that are not major 

metropolitan areas. 

I will second what Lamar mentioned about the healthcare bill. 

I do not think there is any question, especially people who have the 

ability to not hire people for a full 40-hour week—what we are seeing with numbers of companies around our state is that if they can 

cause an employee to work under 30 hours as they move ahead, 

that is what they are doing. And so you have major employers who 

have had people working with them for years, decades, and they 

have become very important to their institutions, but as they look 

at the healthcare bill beginning to be implemented, what they are 

doing is focusing on ways of reducing those hours below 30, so they 

will not have to comply. I think all of us know that that is not a 

good thing for our state. 

For what it is worth on that note, candidly, I think there are people on both sides of the aisle that understand that this is not workable. I do not know of a thinking person on either side of the aisle 

that believes this bill can work as it is laid out. And I certainly 

look forward to working with you and others to make sure that we 

rectify many of the problems that are being created. 

And, of course, Lamar mentioned the EPA. There is no question 

you are going to have people from the agriculture community and 

others that can speak specifically to that. But all of us have heard 

horror stories about the EPA and the kind of inflictions that it is 

creating on business. 

19 

So I thank you so much for being here. I know everybody wants 

to get to the meat and that is the panel of folks who actually create 

jobs, but all of us are committed to creating an environment. We 

know it is the environment, as our Governor said so well, that we 

all need to focus on that allows those in the private sector to create 

jobs. And I thank you for ensuring, through this field hearing, that 

we continue our focus on that. 

Chairman ISSA. Thank you, Senator. 

Mr. Hagerty, you have been on the job for more than a year trying to create jobs. Do you want to tell us about it in five minutes? 

STATEMENT OF WILLIAM F. HAGERTY, IV 

Mr. HAGERTY. That is correct, Mr. Chairman. It has been my 

great pleasure to come into Governor Haslam’s administration at 

the outset in January of 2011. And I cannot tell you what a great 

honor it has been to serve with each of the leaders to my left here 

and also with each of your congressional colleagues. Congressman 

Blackburn, Congressman Black, Congressman DesJarlais are in 

regular contact with my office and certainly Senator Alexander, 

Senator Corker stay in close touch, and Governor Haslam could not 

be a better leader of our state as we move forward in the effort to 

create jobs. Their advice, their guidance and their support really 

has made a big difference in terms of our success. 

I also think it might be helpful to give you a taste of some of the 

success we have had here in Tennessee, to put some matters in 

context, then I would like to go into some specifics, if I might. 

But to put things in context, when Governor Haslam came into 

office in 2011, he set some very specific goals for our department. 

He mentioned the fact that we have had significant cuts in terms 

of our federal money coming to the State and he also mentioned 

that he has been able to maintain priorities like teachers and 

schools and delivering substantive services that we need. But at 

the same time, he challenged every member of his cabinet to undertake a top-to-bottom review. We reduced the size of my department by 42 percent as a result of that effort and in 2011, we had 

the second best year of job creation in history in 2011, only surpassed in 2007 at the peak of the bubble. 

And I would like to say this, in January of 2011, when Governor 

Haslam came into office, Tennessee was at a 9.5 percent unemployment rate while the national average was nine percent. Today, we 

stand at 7.9 percent while the national average is at eight—sorry, 

at 8.2. What we have done is we have moved our unemployment 

rate 1.6 percent, 1.6 percent improvement while the national average has improved only eight-tenths of a percent. Tennessee has improved at twice the national average and that is due in no small 

part to the leadership here in this room and the leadership of Governor Haslam. 

Our department had to reorganize the way we do business. We 

put people in the field in nine different regions. We have explicit 

outreach to entrepreneurs and to investors. We manage two venture capital programs now in the state, constantly reaching out to 

entrepreneurs. We have launched nine accelerators in each of our 

regions and last year, we reached out to more than 2000 companies 

here in the state of Tennessee. We conducted meetings with over 

20 

700 stakeholders in economic development. And this year, in 2012, 

we are moving that pace ahead at an even higher rate. We have 

undertaken 12 regional roundtables now focused on rural economic 

development. We think our job is to try to get out and understand 

what is happening, just as you are, at the state level, how we can 

help businesses thrive and grow. 

One of the things that Governor Haslam challenged us to do was 

to undertake a regulatory review last year. Our department organized a working group led by my Assistant Commissioner Paul 

Fassbender. Commissioner Fassbender led a series of 12 

roundtables across the state, all focused on opportunities to improve the regulatory climate for Tennessee businesses. The group 

identified existing federal and state regulations that negatively impact business in this state and Commissioner Fassbender’s team 

delivered a report to the Governor last year with several recommendations. As the Governor said, the majority of our issues 

were federal regulations. What I would like to do is touch on the 

four primary areas and we can get to specifics in questioning. 

The number one area of concern amongst the businesses that we 

met with and interviewed was the new healthcare legislation, the 

Patient Protection and Affordable Healthcare Act. That uncertainty 

that the Act creates, and the example that Senator Alexander mentioned with restaurant owners, it permeates our entire state. Every 

business owner is concerned about the cost and the uncertainty of 

what is happening with that legislation. As it gets batted around 

through the judicial system, as we wait for an answer later this 

month from the Supreme Court, there is a great chilling effect that 

this regulatory burden has created in the State of Tennessee. 

A second federal issue that creates a tremendous amount of concern is the one that Senator Alexander mentioned, that is the National Labor Relations Board activity. The Boeing decision could 

not have had a more chilling effect on companies looking at the 

State of Tennessee. As companies who are in states that have 

union activities, they look at right-to-work states as a very desirable location. But many of those companies are stifled or frozen in 

terms of their inability to move forward. We need clarity on that 

matter. Certainly we are not a regulatory agent, my department, 

but we hear a lot of feedback from businesses in terms of the constraints that the NLRB decisions have imposed upon us. 

Third, as Senator Corker mentioned, the Dodd-Frank reforms 

have had a tremendous chilling effect on community banking. Tennessee is mostly a rural state, community banking is the lifeblood 

of our state. And community bankers tell us that the regulatory 

and compliance costs are exceeding their ability to manage their 

business. They are not certain what the law means for them, but 

they feel imperiled as they undertake lending decisions and as they 

look at their cost structure, they see it increasingly challenged by 

the ramifications of this law. 

And fourth, and as has broadly been discussed, the EPA regulations have a tremendous negative effect in our state. Our Tennessee Department of Environment and Conservation does an excellent job of trying to help businesses comply with these regulations, but many companies told us through our regulatory review 

that the regulations have become so unduly burdensome that they 

21 

have a very great concern about their ability to expand and to 

grow. 

Overall, Tennessee is blessed with a wonderful business climate. 

We have great leadership, we have a great entrepreneurial spirit 

in this state and we are very optimistic here that we are going to 

continue to expand and grow. But we very much appreciate you 

being here today to listen to our problems and to work with us, 

work with Governor Haslam and everybody in our state to try to 

help continue to make Tennessee the place that it can be. 

Thank you. 

[Prepared statement of Mr. Hagerty follows:] 

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Chairman ISSA. Thank you. 

Governor, this is a successful state, so we will stick strictly to the 

federal problems, but I must tell you that I did not give Rick Perry 

any credit for taking jobs from California, so I will not give you 

very much either. 

Governor HASLAM. Is this the fish-in-a-bill analogy, or what are 

we doing? 

Chairman ISSA. Yeah, pretty much. I was a Romney supporter 

early on, so I maybe was disingenuous a little bit. 

But, Governor, you mentioned what you have dealt with post- stimulus. The stimulus was $800 billion roughly spread over two 

years, more than half of it going to essentially state and local employees. 

Governor HASLAM. Right. 

Chairman ISSA. A lot of teachers, no question at all. And you 

have had to deal with that. But for about a decade, we have been 

on a stimulus pace, in other words, large deficits. We have a trillion dollars a year deficit right now. Now a trillion dollars a year 

of deficit spending is, by definition, a trillion dollar stimulus every 

single year. 

Governor HASLAM. Right. 

Chairman ISSA. We borrow the money and spend what we are 

not taxing for. Job creation is important. Can you do a better job 

if over time the federal government cuts back the portions that essentially go to Washington and come back or come from China and 

go to the states—can you adjust to where over time states are more 

self-reliant and less money comes to the states if it is phased in as 

a matter of policy, recognizing that, particularly in the case of Medicaid there is a federal-state match, highway there is a federalstate match? Is this something you would like to have or would you 

prefer that we, in order to continue this kind of circular money, increase taxes at the federal level, basically take it from your stockholders? 

Governor HASLAM. I would make two comments. Number one, 

when the President talks about we need to provide more to the 

public sector, what he is really saying to the people in Tennessee 

is you have managed your budget well, you have made the cuts 

that you need to, we have a surplus this year, which we will wisely 

invest next year, but other states have not; and so we would like 

the people of Tennessee to pay more taxes so that the other states 

which have fundamental structures of their state government that 

do not work, their costs have gotten too high just fundamentally, 

but we would like the people of Tennessee to make up that difference because the people in these other states have budgets that 

do not balance. So it does feel like it is just basically wrong for my 

shareholders, who have been disciplined. 

The second comment I would make to your question would be 

this—like I said, when the stimulus plan money ran out, we saw 

that coming, it was right when we were transitioning in and our 

predecessor did quite frankly a good job of laying out a road map 

and we took that and changed that but made it work. But I actually go back to his comments, my predecessor Democrat, but back 

when the recession happened, state revenues fell off, he said we 

can make the adjustments here now. We will take the federal 

27 

money if they send it, but we are prepared and can make the adjustments in Tennessee. And I feel like that. 

But the last thing is this, you talked about Medicaid. I am with 

those folks who said if you will just block grant the money to states 

for Medicaid, give us much more authority over how we use that, 

trust us to make decisions. I think there is a sense that the federal 

government says we cannot trust states to do the right thing. I will 

say it is really interesting, and I will stop with this, the current 

Obama administration really I thought in some ways took the right 

steps when they ended—or gave waivers to states with No Child 

Left Behind. It was not the perfect approach I would like, but they 

did say states if you will show us how you will do it the Tennessee 

way, then we will give you a waiver from the requirements for No 

Child Left Behind. I would submit for the administration that is 

a great road map for how to do it in other ways, to do that in Medicaid. Let us put the basic parameters and then let you run the 

program. I guarantee you every state will run it better than the 

federal government. The closer to home government is, the better. 

That is just a truth and it always will be. 

Chairman ISSA. Mr. Hagerty, you particularly mentioned some of 

the challenges for the community banks. Would you particularly 

feel that we, the Senators with you and the House Members, need 

to reopen Dodd-Frank specifically as to recognizing that these noninternational, non-credit default swap entities who simply bring in 

dollars from the community and send them back out to the community should be under a different standard, if you will, a much closer 

standard to what had done well for so long before the meltdown in 

2008? 

Mr. HAGERTY. Mr. Chairman, our agency is not a regulatory 

agency with specific expertise on banking, so I can only offer you 

general comments. 

Chairman ISSA. But you do come from that background. 

Mr. HAGERTY. I do, I can offer you some general comments. If I 

think about the response that we have gotten from the field and 

from community banks in particular, Dodd-Frank has been imposed upon them in a one-size-fits-all perspective. That is great for 

J.P. Morgan, they have got 100 lawyers on staff, maybe more. 

Same for many of these other international banks that do business 

in the United States. That is not the case for rural Tennessee community banks. They do not have the overhead. This is absolutely 

diverting attention that needs to be paid to businesses the compliance activity, it is diverting capital that needs to be invested in 

more lending, more loan officers the compliance activity; and frankly, I think it is having a significant effect, curtailing lending into 

an area where we need it the most. So anything that you could do 

to ease the burden on those sized community banks and not impose 

a one-size-fits-all on them, seems to me to fit squarely into the area 

where the community banks would benefit from some type of 

change or redress. 

Chairman ISSA. If I could just ask one quick followup. Our Committee in the House has voted out unanimously something called 

the Data Act. It is designed to have all recipients of federal dollars 

report in a format that is completely, if you will, data searchable, 

28 

similar to the way you reported the stimulus act. As a matter of 

fact, it is taken from the way that recovery board went. 

If that bill becomes law, which of course depends on the Senate— 

that must be why I am asking this question—— 

[Laughter.] 

Chairman ISSA. —you would have transparency for all the dollars passing through, back and forth, not just from your state, but 

every other state. Would that be helpful if the federal government 

standardized a system so that you really would be able to use the 

money flowing in and out, being able to see where it is, including, 

for example, Medicaid, you would be able to see every entity that 

was ever barred from Medicaid on a national basis and so on. 

Mr. HAGERTY. Real short answer—yes. 

Chairman ISSA. Thank you. I just needed to ask that one, for 

some reason. 

Scott. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

Chairman ISSA. Mr. DesJarlais is recognized for five minutes. 

Mr. DESJARLAIS. Senator Corker, you started your own business, 

you were a job creator prior to being Mayor of Chattanooga and becoming Senator. Do you think that you would be willing to start 

that company in today’s regulatory environment? 

Senator CORKER. Well, I like swimming upstream, so you know, 

I would say I would. I will tell you though that many of my friends 

who have now, later in life, attempted to go out in business are 

finding it much more difficult. And I do not think there is any 

question about that. And I think it has been building for a long, 

long time. I just think as our country has continued to evolve rule 

on top of rule—you know, one of the things that we do well, and 

I say that euphemistically, we pass a lot of laws, but what we do 

not do is repeal laws underneath them. And so we end up building 

a lot of bureaucratic issues and I know Governor Haslam even has 

to peel back and deal with that here in the state of Tennessee. 

So I would just say this; number one, thank you for having this 

hearing; thanks for all the work you did in creating this; thanks 

for your focus on regulation. You too are a job creator and have 

been a job creator. 

It is no doubt more difficult in today’s society with all the things 

that have been mentioned here to create a business. And as a country, we need to be moving in exactly the opposite direction. 

Mr. DESJARLAIS. Thank you, sir. 

Senator Alexander, the Oversight Committee has voted multiple 

regulatory reform bills out of the Committee to help curb burdensome and costly regulations and some of these bills should be going 

to the House floor soon. Can you help move regulatory reform 

through the Senate? 

Senator ALEXANDER. Yes. 

[Laughter.] 

Mr. DESJARLAIS. Will you? 

Senator ALEXANDER. I could do a lot more if we had more Republican Senators, just to be very blunt about it. 

One I have thought a lot about—Senator Corker just said something that I think is worth pausing on. The problem is you have 

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essarily an evil force or a Democratic force or a Republican force, 

it is just a natural force. You come in every two years and you forget about all this stuff you have already done. 

For example, when we were reauthorizing the higher education 

bill, here we are at a university, I worked on it for a year and a 

half and voted against it. Why? Because the higher education regulations today are as tall as I am, and the new bill would double 

the size of it. And the President of Stanford said that seven cents 

out of every dollar the university spent is complying with regulations. So how do you stop that? 

I think the best structural way to develop a countervailing force 

is a two-year budget. Does not sound very sexy, does not sound 

very glamorous, but the idea would be every other year we would 

pass our budget for two years, which states do. And then in the odd 

numbered year, we would devote our entire time to oversight and 

repealing laws and repealing regulations that have become unnecessary. We could sunset more laws and regulations, we could start 

over again. And I think if we had that pressure going in the other 

direction, every other year—one year to consider what laws and appropriations need to be passed, the next year the main focus being 

what could we get rid of. I think that we create a countervailing 

force and would do a lot for regulatory reform. The answer to your 

question is yes, and that is one example of how I would like to try 

to do it. 

Mr. DESJARLAIS. Thank you, Senator. 

Governor, I applaud one of your mission statements when you 

became Governor and that was to focus on improving Tennessee’s 

education. One of our attendees at our roundtable breakfast this 

morning, Jim Greene, from Richland LLC, brought up the point 

that he has had for months, if not up to a year now, multiple job 

positions available but does not have skilled labor to match those 

jobs. What are you doing in the state to help bridge that gap? 

Governor HASLAM. That is probably the thing we are focused on 

the most. It begins obviously with K–12 education. Tennessee has 

made some big strides recently, over the last three or four years, 

with kind of the Tennessee Diploma Project, requiring higher 

standards. Our ten-year reform law I think will make certain that 

we only have the very best teachers standing in front of the classroom. 

But then I think what you will see, and let us turn our focus to 

now, what is our role in post-secondary education in terms for preparing that workforce, we do hear whether it be a manufacturer, 

whether it be a Volkswagen or IT professionals in middle Tennessee, and I can go—or truck drivers, all across the board, employers who say I have got jobs to fill, I just do not have the people 

with the right training to fill them. And so we are beginning to 

focus on that. How do we help, again, post-secondary education of 

all types—technical centers to four year schools to Ph.D. programs—to prepare those graduates. And I think the good news is, 

I think our institutions of higher ed are understanding that and 

they are starting to focus not just on enrolling students but graduating them and making sure those graduates are prepared in the 

right way. 

Mr. DESJARLAIS. Thank you, Governor. 

30 

My time has expired. 

Chairman ISSA. I thank the gentleman. 

Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you. I appreciate that and appreciate so 

much that you all are giving us this time this morning. 

Governor and Commissioner, I want to start with the two of you. 

I appreciated what you had to say about having Tennessee be customer friendly. I think that is so important. And much of the emphasis has been reshaping the interaction between government and 

the citizens. And you all have done a stellar job of that. 

So what I would like to get on the record is just a little bit from 

each of you, a minute or so, about your process and what lessons 

the federal government could learn. Because, Commissioner 

Hagerty, the fact that you have reduced your department by 42 

percent, the fact that every department in the state is reducing, 

employee counts are going down, square footage that you use is 

being reduced. We need to be looking at this at the federal level 

and indeed the states are the labs for innovation. 

Governor. 

Governor HASLAM. When I came into office, we literally asked all 

22 agencies to do a top-to-bottom review, which basically said this, 

if you were starting that department all over again, would you set 

it up the same way you have now. And when people were honest, 

they said no, we would not. And so we began to make those 

changes and we morphed that effort into what we call customerfocused government to say, okay, what is the best way to set it up 

for the lowest price, which is what taxpayers pay, and that gives 

the best service. We have made dramatic changes, everything from 

Bill restructuring his department to looking at how we lease office 

space when the state needs it, to how we use vehicles in the state. 

All of that, as Lamar said, sometimes real government is not real 

sexy or exciting but it is finding a way to save $100,000 in a $30 

billion budget that if you save enough of them, it can make a real 

difference. So we focused on both the cost side and then on our customer response time. Everything from how long does it take—if a 

child is up for adoption in Tennessee, how long does it take us to 

find a family or to find a foster family to how long does it take you 

to get a driver’s license. All those things we do, we want to see if 

we can do them faster, better and cheaper. 

Mrs. BLACKBURN. The superman way. 

Mr. Hagerty. 

Mr. HAGERTY. Thank you very much, Representative Blackburn, 

for the question. It really gets to the insight Governor Haslam 

brought to our administration with his private sector background. 

And it was very simple. He challenged each of us to question our 

departments and say is this function, is this activity, is this structure something we should be doing as a state. And if the answer 

to that question were yes, then it was are we doing it the best way, 

are we going about it the best way. 

We took that sort of approach, a very simple and straight-forward approach, and really looked at our department at least, and 

I can speak from specific experience, like you would a business. 

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tioned and restructured and moved to a place where people could 

be more efficient. 

I mentioned we did a 42 percent reduction of the staff, the number of positions. But of the remaining positions, I turned 50 percent 

of those over. We brought in a lot of new blood and we have been 

knocking the ball out of the park. 

We called on over 2000 businesses last year. We implemented 

that measure in July and so that really was half a year of activity 

that we captured. We are going to be way beyond that this year. 

We are out touching the customer, as Governor Haslam wants us 

to, we are there with them every day now. Whatever they need to 

expand and grow, we are doing our best to help get these burdens 

out of their way. 

So I think that sort of fresh approach that Governor Haslam 

brought has made all the difference in the world in our state. 

Mrs. BLACKBURN. Thank you. 

Senator Corker and Senator Alexander, you each have mentioned 

federal agencies and regulations as being a problem. And Mr. 

Chairman, I want to, at this point, give my website, because at Energy and Commerce we handle the EPA. I am also on the 

Healthcare Subcommittee, we are handling a lot of what will be 

next in healthcare. And it is blackburn.house.gov and people can 

follow us on Facebook and Twitter and we tweet out the links to 

the hearings that we are doing on these issues. 

Senator Corker, you mentioned something about access to capital. I hear a lot about that and just very briefly from the two of 

you, when you are across the state meeting, what do you hear from 

people? I hear frustration, but I do not know if there are other 

agencies that you mentioned that they are having frustrations with 

that you would like to add to the record. 

Senator CORKER. And you are talking about on the access to capital component or just in general? 

Mrs. BLACKBURN. In general. 

Senator CORKER. I do think that the most direct, aside from the 

big picture of us not dealing with the fiscal issues and just the concerns that that creates, I mean if people want to build a wall 

around where they are because they are concerned about, you 

know, what we are not going to do and where the country is going 

from the standpoint of solvency, but I think the most direct really 

is going out into these smaller communities and them going down 

to see their loan officer and candidly the loan officer being concerned. Dodd-Frank was put in place, as you well know, and the 

speed that it was put in place, to create certainty. 

Mrs. BLACKBURN. Uh-huh. 

Senator CORKER. And what has happened is it has done just the 

opposite. There are—there was a 2400 page bill, the rules—what 

happened was Congress did not do its job, it punted all of the decisions to the regulators. And so it will take at least three years for 

all of the regulations to come out. In the interim, the local financial 

institutions, because they do not know the rules of the road, are 

withholding capital. And so I do think that is one of the most direct 

issues. 

These other things—credit clout, some of the things with NLRB, 

people just do not know, it is sort of a fog. But I think from the 

32 

standpoint of a direct issue, and possibly it is because I am on the 

Banking Committee and people talk with me more directly, it is 

this issue of really not being able to get the capital. I borrowed a little money, I had $8000 when I went in business 

and as time went on, I borrowed a little bit of money, not much, 

$12,000. But I think the difficulties of that today are far different 

than they were at that time. And I think a lot of it is again, because of that uncertainty. 

Mrs. BLACKBURN. Senator, anything to add? 

Senator ALEXANDER. Marsha, what you are making me think 

about, a few years ago when I walked across Tennessee to be Governor, I had a lot of time to think out there walking by myself. And 

one of the things I thought about was would it not be great if in 

the State of Tennessee, if you wanted to start a business you could 

call up the state government and say send me two pieces of paper 

that have everything on it that I need to fill out in order to go into 

business. Of course, I never got that done. I would like to see it 

done for the federal government, but maybe we could do it piece 

by piece. 

We could start with the forms you have to fill out when you buy 

a car or get a mortgage on your house. They are absolutely absurd. 

What happens today is you go in and they are that thick [indicating] and the bank or the car dealer has it all worked out on the 

computer, so you sign a bunch of pages without know what is in 

it and then they run it through the computer and it is that thick 

and you go on and you are not warned of anything, because you 

have not really understood it. 

I think if we took the consumer protections that were really important for a car or a mortgage and put them on one page, that 

we would protect the consumers a lot better, we would have a lot 

more loans, and we would have—to reverse Bob Corker’s statement, we would have more people making loans than complying 

with federal regulations. 

Mrs. BLACKBURN. Thank you. I yield back. 

Chairman ISSA. Thank you. 

Mrs. Black. 

You know, feel free to applaud as long as it is quick. 

[Laughter.] 

Mrs. BLACK. Thank you, Mr. Chairman. And I so appreciate all 

of you being here today. 

You know, we keep talking about uncertainty. I think, just as 

you have just said, Senator Alexander, there are some really just 

common sense ways to boil all this down and to get us back under 

control. 

So let me go to—actually, Senator Corker, I want to ask you 

first, because I am interested, you have a bill that is the Global Investment American Jobs Act, where you in that bill help to identify 

some of those outdated barriers. And what I want to do is have you 

talk a little bit about that to show that not only are we recognizing 

the issues, we are listening to our job creators, but that we are also 

thinking about ways that we can find solutions. So if you can talk 

a little bit about that. 

Senator CORKER. Sure. You know, our state, because of the great 

leadership of Bill Haslam and Bill Hagerty and people before them, 

33 

Governor Alexander when he was here, it has been a magnet for 

investment and, you know, one of the things we like to encourage 

is even more foreign direct investment. I mean, you know, we do 

not differentiate in the State of Tennessee between jobs at 

Springhill and jobs at Nissan or jobs at Volkswagen. All of them 

to us are Tennessee jobs, they are American jobs and we would like 

for them to be here. So I have co-sponsored a bill—I think we are 

speaking of the same bill—with Senator Kerry, it is a bipartisan 

piece of legislation, to really break down—look at the barriers that 

keep foreign direct investment from occurring here. I know California has been the tremendous beneficiary in years past, maybe 

not today, of—— 

Chairman ISSA. Well, they have got to get to America on their 

way to Tennessee. 

Senator CORKER. That is exactly right. 

[Laughter.] 

Senator CORKER. That is right. I could say that a little differently, but I will not out of courtesy. They have got to go through 

California to get to America, that is for sure. 

[Laughter.] 

Senator CORKER. But the fact is—— 

Chairman ISSA. The gentleman is not in order. 

Senator CORKER. The fact is that, look, we want to see investment in our country. We know in Tennessee we have the best 

workforce you could possibly imagine, we have the best environment you can possibly imagine, and yet we have barriers for foreign investment and we want to break those down and make sure 

we continue to create even more jobs here. 

Thank you for the question. And thanks for your great service. 

Mrs. BLACK. You are welcome, and thank you because barriers 

are absolutely—the uncertainty of the barriers are absolutely what 

are keeping our job creators. I was visiting with Boeing not too 

long ago, and they said uncertainty creates paralysis and the retraction of our businesses from growing because of that uncertainty 

and breaking those barriers down. 

I want to go to you, Commissioner Hagerty, because you also did 

a study to take a look at what some of those federal and state regulations were that were negatively impacting our businesses, which 

are also barriers. Can you talk a little bit about what you found 

there and share that with us? 

Mr. HAGERTY. I would be happy to provide a copy of the survey. 

Mrs. BLACK. That would be great. 

Mr. HAGERTY. And again, we are not a regulatory body, but we 

reached out and asked questions to the business community. And 

I would just like to summarize that in the broadest sense, uncertainty, as has been mentioned by each of my panelists here, each 

of the leaders that are to my left, has been the over-arching concern, whether it is uncertainty driven by the NLRB, it is uncertainty with the healthcare legislation, it is uncertainty from DoddFrank. EPA, for example, just creates a stifling amount of uncertainty. That has been the over-arching theme. It is uncertainty, 

cost and the whole burden of compliance. 

And I think that the Tennessee business people that we spoke 

with feel stifled and feel very concerned that they just cannot tell 

34 

which way things are coming from Washington. And I wish I could 

be more specific, and indeed I could go through specific examples, 

but they all roll up to this one common theme of uncertainty. 

Mrs. BLACK. Well, I appreciate what you have done in your work 

and if you can share it with us, this is a good piece of information 

for us to take back. All of our committees deal with issues of job 

creation, so that would be good information for us all to be able to 

use as we talk about it in our various committees. 

Governor Haslam, why don’t I go to you. One of the things that 

you did not mention that was a shining star this last year in the 

legislative session is what happened with the—I cannot believe I 

just lost my train of thought there—with the—— 

Governor HASLAM. Tort reform? 

Mrs. BLACK. —with the lawsuits. 

Governor HASLAM. Okay. 

Mrs. BLACK. And tort reform, so if you could just talk about tort 

reform. 

Governor HASLAM. You know, back to the predictability that 

Commissioner Hagerty was talking about, businesses want to 

know, tell us the rules, tell us what is coming and let me know 

that. And I think what we tried to do is provide a more predictable 

business environment. Again, we do not think government creates 

jobs, but we can create the environment where that can happen 

and the tort reform bill that put a cap on damages I think for businesses helped to define that. It also helped to define okay, where 

a lawsuit could happen, under what circumstances. So I think 

again, most people—there was a lot of people who questioned that, 

said oh, that does not really feel like that will create jobs, but I 

know of three companies, two or three companies, who have said 

I was not considering Tennessee, but now it is on our list of places. 

That is just anecdotally that I know of. So I do think again that 

is part of setting the environment right. 

Mrs. BLACK. Tort reform has been talked about a lot here in the 

State of Tennessee over the years when I was in service here and 

I congratulate you and commend you for listening to our job creators, because we did hear that consistently, that lawsuits are very 

difficult for our job creators. 

Governor HASLAM. Right. 

Mrs. BLACK. And maybe that is not one that always rises to the 

top in the discussion, but certainly it is one that we have to look 

at very closely to see what that does for our job creators. 

Thank you and I yield back my time. 

Chairman ISSA. Thank you. 

I want to thank our panel of witnesses. 

Since each one of you mentioned NLRB more than once, I will 

tell you that after Boeing came to a union settlement out in Everett, Washington and suddenly their problem in South Carolina 

went away, our Committee has not given up on getting to the bottom of whether or not there was a wink and a nod, because there 

is no logical reason to pursue them for wrongdoing and then give 

it up because they sign a new union contract that apparently fit 

the administration. So we do oversight and we do oversight even 

after someone says oh, no, it is okay, we have settled that. So we 

35 

will get to the bottom of it to make sure that never again will that 

technique be used to coerce some sort of an agreement. 

Again, I want to thank our panel. Senators, Governor and Mr. 

Hagerty, we are pleased to have you, but this is not a typical field 

hearing, so the level of participation, we very much appreciate. 

And with that, we will take a short recess to set up the next 

panel. Thank you. 

[Recess.] 

Chairman ISSA. The hearing will come back to order. 

We are now joined by our second panel of witnesses. Mr. Mark 

Faulkner is owner of Vireo—— 

Mr. DESJARLAIS. Vireo. 

Chairman ISSA. Oh, Vireo. Okay, I do actually know that name. 

It just looks hard to spell. —Systems, a small manufacturing plant 

that produces various chemical compounds. He is testifying on behalf though of an organization we respect a great deal in Washington, the National Federation of Independent Business. Mr. 

Grady Payne, a returning witness to the Oversight Committee, is 

CEO of Conner Industries, a lumber and assembled wood products 

supply company, which has a plant in Fayetteville, Tennessee. And 

Mr. Scott Cocanougher? 

Mr. COCANOUGHER. Very good. 

Chairman ISSA. CEO of First Community Bank of Bedford County. And of course we talked a great deal on the first panel about 

the plight of community banks after Dodd-Frank. And Mr. Bob Bedell is the Unit Sales Manager for Coca-Cola, a small but meaningful company that we have heard about before. 

[Laughter.] 

Chairman ISSA. Actually a worldwide leader in beverage. He is 

testifying on behalf of the Beverage Association of Tennessee. 

Gentlemen, you saw on the first panel, pursuant to our rules, 

would you please rise and take the oath? Raise your right hands. 

[Witnesses sworn.] 

Chairman ISSA. Let the record reflect that all witnesses answered in the affirmative. Please be seated. 

Now I have noted that none of you are governors or senators, so 

that red light means stop. Please stay within your five minutes, to 

allow time for questioning. And your entire opening statements 

plus additional things that come from you will allowed to be placed 

into the record so that we have a full understanding. 

Mr. Faulkner. 

STATEMENT OF MARK FAULKNER 

Mr. FAULKNER. Very good. Chairman Issa and Members of the 

Committee, thank you very much. I appreciate the opportunity to 

testify on the federal regulatory climate and its effects on my business. As you mentioned, I own Vireo Systems. We are a small manufacturing plant that produces chemical compounds, and I currently have 22 employees. 

And although this is an over-simplification, current interactions 

with regulatory agencies boil down to a process of audit, review 

and critique, issuance of fines and then potentially the engagement 

of some combination of hindrance, threats, seizing of property, et 

cetera, all in an adversarial manner. Most times, the agencies do 

36 

succeed in collecting money from businesses because most owners 

are simply very scared of the authorities. They can declare us 

guilty, assess huge fines, and we are left to have to try and prove 

ourselves innocent—guilty until proven innocent. But most small 

businesses do not have the financial resources or time to defend 

ourselves and we know the punitive powers that the agencies 

wield. 

We know that job growth in America remains stagnant and for 

small businesses, government requirements are the most significant problem facing us after taxes and demand for our products. 

Reducing the regulatory burden is a step the government could 

take that would go a long way towards giving entrepreneurs the 

confidence that they need to expand and hire more people. 

I personally have held off hiring people over the past year because I do not know how a recent OSHA audit may hit us in the 

way of fines, fines for things that have been safe and within codes 

for years. I could add at least six new jobs to my payroll right now, 

but I am unwilling or actually unable to do so because the budget 

that I have for payroll may be needed to pay for fines for somewhat 

dubious regulations or regulatory interpretations. 

So simply stated, government regulations are stopping me from 

creating new jobs. And while a few jobs at our little business may 

be small potatoes, if that is multiplied across the nation by thousands of small businesses, it adds up to a serious squelching of economic activity and job creation. 

As I just mentioned, I am currently undergoing an audit with 

OSHA and this and other agency experiences have made me think 

that the main goal of the various agencies has become to target 

businesses for fines that support their departments in what feels 

like a government shakedown. Agencies like OSHA assess fines for 

alleged compliance infractions, but then also they will end up suggesting that they will reduce the fines if we agree to rapid payment 

and skip any appeals processes or legal challenges. Basically it is 

a pay now or risk paying more later if you fight the charges and 

want to try and introduce some due process into the situation. 

After one particular DOT audit, it was alleged that a torque 

wrench at my facility was not calibrated correctly even though the 

wrench was working fine and we had never had any leaks in using 

it to tighten container lids. Regardless, to make sure, I bought a 

new one for $40 so that there was no question, but the DOT auditor wanted to fine me about $5000 for this. I refused, saying that 

it was ridiculous. After going through a few rounds of DOT employees and managers offering to cut the fines, which made me feel like 

I was living ‘‘Let’s Make a Deal,’’ they insisted that if I did not take 

the reduced fines offered on the table, I would be forced to pay the 

original amount. I finally threatened to get my attorney involved 

and they eventually agreed to just have me pay $200 to get the situation put to bed. I felt like it was a case of attempted government 

extortion. 

It seems as though regulators need to justify their existence and 

generate some of their own job survival revenue. And I believe that 

Congress should mandate a change in the culture of those agencies 

from policing to education, because most businesses want to be safe 

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tive fines, if the small business is showing good faith and good 

faith efforts, then the department should be limited to giving supportive guidance and warnings and only resort to fines if the business does not resolve issues and if legal action finds them guilty 

of repeated non-compliance. Agencies should be tough on businesses that blatantly ignore regulations, but they should not treat 

every small business as a bad actor. 

Right now, there is none of our American tradition of checks and 

balances against growing agency power. Congress can help this situation by holding federal agencies accountable. I hope Congress 

will seriously consider the reforms that I included in my written 

testimony and specifically Congress should expand the Small Business Reg Enforcement and Fairness Act to include additional agencies, and require all agencies to include indirect costs as economic 

analysis for rule. And then also strengthen the U.S. Small Business 

Administration’s Office of Advocacy to be able to fight on behalf of 

small business. 

Thank you and I will look forward to any questions. 

Chairman ISSA. Thank you. 

Mr. Payne. 

[Prepared statement of Mr. Faulkner follows:] 

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STATEMENT OF H. GRADY PAYNE 

Mr. PAYNE. Yes. Thank you, Mr. Chairman and Members of the 

Committee for this opportunity. 

I am Grady Payne, CEO for Conner Industries headquartered in 

Fort Worth, Texas. We have plants in eight states including the 

plant in Fayetteville, Tennessee. We supply cut lumber and assembled wood products to manufacturing companies for their shipping 

and crating needs as well as logistics and supply training management services. 

Our company was started in 1981 with five people. Today, 31 

years later, we have got over 450 people in 11 plant locations. Over 

120 of our people have been with us more than five years and over 

22 have been with us over 15 years. Our locations operate in distinct markets and each location employs fewer than 50 people. 

In each of our markets, we compete against companies with 

fewer than 50 people and companies importing crating products 

into our markets. These companies will not be subject to the penalties and mandates imposed under the Obamacare law. 

According to the SBA, we are a small business, but not so by the 

Affordable Care Act. We are caught in a no man’s land between assistance and exemptions for small business and waivers for large 

corporations and other powerful entities. 

We started our medical plan in the 1990s and offered coverage 

to all employees. Most of our production people opted out due to 

the cost of the programs. To meet federal discrimination rules, we 

were forced to redesign our plans and that redesign is what we are 

working on today. 

We offer a fully insured plan to about 140 employees and we 

struggle every year to keep 75 percent participation in the plan. 

The company pays approximately 55 percent of the total premium 

cost. The new discrimination rules created by the law forces us immediately into a self-insured alternative or face fines of up to 

$500,000 under the law. The IRS has delayed enforcement of this 

new non-discrimination testing until regulations can be written. 

However, our plan could be tested as early as next year. Without 

changes we may be forced to drop our plan completely prior to 

state-based exchanges becoming available. The mandate to us may 

be 2013, not 2014. 

In 2014, we do face some other difficult choices. One option is to 

expand coverage to all our employees and pay the full premium 

cost. This additional cost to us will be $1,750,000 or more, over and 

above the $750,000 we spend today in premiums. 

On the other end of our options, we discontinue all policies and pay a non-tax deductible penalty of $2000 for each of our employees at a cost to us that will be well over a million dollars, and 

again, it is not tax deductible. 

Other available options with employee participation are projected 

to cost upwards to a million and a quarter in additional cost. 

The impact of this law will cost our company over a million dollars, no matter which option we take. Some of the extra cash cost, 

if not all of it, will be penalties and not tax deductible. Today, these 

costs could significantly impact the company’s financial strength 

and stability. We have been a very blessed company, profitable 

even through these hard times in the past few years. We have had 

43 

to make many sacrifices in pay, bonus programs and people. We 

have no tax loopholes, our company is a taxpayer; and no, the private sector strapped with this law and continued new rules and 

regulations is not doing fine. 

We are a company caught in the middle. As the law stands now, 

our 30-year business is at risk of being legislated out of existence. 

How can this be? Our lives are in this company. We have done a 

good job for our customers, our employees and all of our families. 

This law has taken a problem and made it a potential fatal blow— 

jobs versus insurance. 

We understand the goal of getting everyone medical coverage and 

agree that it is a worthy goal. But the massive cost hits us right 

between the eyes. We are too small to get favorable group rates 

and self-insurance contracts and too large, by statute, to be exempt 

even though each of our profit centers are less than 50 employees. 

There has to be a more equitable way to achieve this goal than to 

cripple a small business like ours. 

Our current capital expansion and business development plans 

are and will be stopped by this law because expansion and hiring 

requires cash. The impact of the law robs us for needed growth 

capital. Our goals turn from hire and grow to cut and survive. 

Our Tennessee plant was started as an expansion plant in 2007 

and today has 48 employees. This law may force us to close our expansion locations as the new cost and penalties may not be able to 

be absorbed. Men and women working hard and providing for their 

families today may be faced with going home with no job in a difficult job market and fearing how they are going to face their families and meet their needs. A man without work carries a sense of 

shame and feeling of failure to his wife and children. The family 

may have subsidized insurance, but the job he knows may be gone. 

I and managers feel the burden. Our people depend on us. This 

law mandates a cost that is difficult to overcome. No new efficiency 

can offset the big cost. I work with men like Adolfo and Ricky, 

brothers who started their careers with us in high school; and 

today, after 21 years, have both advanced to leadership roles. They 

are married and have young children and like all our people do a 

great job and are proud of our company. These men and many others like them and their families deserve the jobs they have, they 

have earned them. This federal mandate that was not wellthought-out could destroy these men’s lives, careers and plans. I 

pray something might be done that these working families may not 

see and feel the pain caused by such a reckless legislation. 

I thank all of you for your service to our great nation and allowing me to plead the case of Conner Industries and our people. 

Chairman ISSA. Thank you. 

Mr.Cocanougher. 

[Prepared statement of Mr. Payne follows:] 

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47 

STATEMENT OF SCOTT COCANOUGHER 

Mr. COCANOUGHER. Thank you for allowing me to come down 

and speak to you all today and taking your time to come down. 

My name is Scott Cocanougher, I am the CEO of First Community Bank of Bedford County, which is located in Shelbyville, Tennessee. We are about a $320 million bank that serves Bedford and 

Moore Counties. We also own a mortgage company that services 

Tennessee and its surrounding states. 

Although we have identified and taken some losses on loans 

made in the development and construction industry, we have set 

aside sufficient funds to cover those losses and any losses in the 

future, while also returning a good return to our shareholders. 

Before I get started, I do want to say that I wish Senator Corker 

and Commissioner Hagerty were back here because they pretty 

well took the thunder out of my speech today. And I do want to 

let you know that we do have a good working relationship with the 

FDIC and State regulators that examine us. We are a conservative 

run bank and over the past 24 years, we have assisted our community through local projects, sports teams, and by simply being a 

good neighbor, which I think is important in community banking. 

We also have financed small businesses and are there to watch 

them grow and develop. 

I want to let you know that over the last few years, we have been 

financing a different type of business, one that started with two 

employees in the late 1980s, grew to four employees in 2005–2006 

and now has eight employees. It does not sell a product, nor does 

it earn a profit, but it does provide a valuable product to the bank. 

That small business is our compliance department within our bank. 

It performs feats of nature never seen before, including creating interest rate risk shock analysis on loan portfolios as well as investment and deposit portfolios, keeping logs on complaints received no 

matter how small or trivial. One of those is whenever somebody 

calls in and complains about an ATM card that does not work and 

when we do the investigation, find out it is because they did not 

have any money in their account. Or maybe they lost their PIN 

number, or maybe when a loan officer calls a customer, they call 

and complain because that loan officer was not nice when he told 

me I was past due. 

And my personal favorite is the Suspicious Activity Report, classified as a SAR, which essentially turns normal, everyday bankers 

into police officers by having them assist in capturing criminals by 

reporting suspicious activities of our customers’ bank accounts, 

check writing habits, and the use of cash. We log in that information, create reports for instances of suspicious activities and submit 

it electronically where it is then stored in case a law enforcement 

agency needs it in the future. They can then look at it and find 

some background and see if anybody is moving, hiding, or laundering funds. Just this compliance requirement takes two full time 

employees at my institution. 

Meeting these compliance requirements continually drains our 

bank of the ability to produce new products or services for our customers that will serve their needs and in the end earn a profit for 

the bank, and those customers. We have 69 employees, of those 

eight work in the compliance department. As Senator Corker said, 

48 

they do outnumber our lenders. As of yesterday, we had seven 

lenders in our bank. We have one more person working in our compliance department than we do lending. Each one of these regulations affect our daily operations and although we do have eight 

people that work in the compliance department, the other 61 spend 

approximately 10 percent of their day gathering information, completing paperwork to assist the compliance department. 

Because of the Dodd-Frank Act, which has been mentioned several times today, my bank is looking forward to the opportunity of 

hiring over the next couple of years seven additional officers, bringing our total to 15. Once again, we have seven lenders at our bank. 

As for the businesses we serve, as you will hear from these gentlemen here, they too are struggling. They too feel the same effects 

of over-regulation and the uncertainties in the market, and uncertainty of what will come out of Washington. Are businesses in the 

community hiring people right now or do they plan to hire in the 

future? No, they do not. Are regulatory burdens on banks and mom 

and pop businesses affecting the ability to make loans to people 

and create jobs? Yes, they are. 

It is not actually the rules and regulations a lot of times, it is 

the interpretation of the rules. I just mentioned the SARs, the Suspicious Activity Reports. We have examiners come in and basically 

say that a bank our size should have X number of Suspicious Activity Reports monthly on a basis and that we are behind that particular number, and gave us information on how to look deeper into 

those things and find things that are suspicious nature so we can 

report. So yes, we are now filling out Suspicious Activity Reports 

on things that I am not sure are actually suspicious activities, but 

we are meeting the examiners’ goals. 

You know, whenever we can get rid of these things and getting 

out with our customers and helping them find ways to increase revenues, decrease costs and produce a better product, when we have 

the time, resources, and staff to do these things, I believe the country stands a better chance of creating opportunities for jobs than 

just sitting behind our desk and filling out reports. When we can 

cut down on regulations and have time to spend with customers, 

I look forward to being there with that new startup business and 

watching it grow and prosper. That is why I got in this business, 

is to help people. 

Thank you. 

Chairman ISSA. Thank you. 

Mr. Bedell. 

[Prepared statement of Mr. Cocanougher follows:] 

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51 

STATEMENT OF BOB BEDELL 

Mr. BEDELL. Mr. Chairman, Committee Members, I am Bob Bedell, Sales Unit Manager for Coke Consolidated, representing the 

Beverage Association of Tennessee. We appreciate the opportunity 

to appear before the Committee today. 

Coke Consolidated is the local Coke bottler here in middle Tennessee; however, we do business in ten other states employing 6000 

people including 700 in five facilities right here in Tennessee. 

Those include 440 workers at a nearby sales center here in 

LaVergne and then we have got 120 in our production facility in 

Nashville. 

Nationally, the industry provides 227,000 jobs paying $18 billion 

in wages and $900 million in charitable contributions. We have a 

long history of good corporate citizen and we are the companies 

people turn to first when they need a product donation for their 

charity or community event. We are usually the first ones on the 

scene in a national disaster to provide potable water. We are proud 

of the relationship we have with our consumers and the communities we serve. 

In recent years, we have become the scapegoat on the issue of 

obesity. While this indeed is a serious health issue, singling out one 

type of food or beverage for blame is not an effective way to seek 

a solution. 

Our industry is a leader in innovation. We provide a wide variety 

of choices to consumers so they can decide what best fits their lifestyle. We clearly post the number of calories on our product so our 

consumers know what they are consuming. We put it right on the 

front of all of our packages. We did this after another successful 

program in schools where we removed the full calorie drinks from 

the schools, because we realize schools are places where kids do not 

have their parents to help guide their choices. This resulted in an 

88 percent drop in beverage calories from schools, and in fact, regular soft drink consumption is now down 39 percent over the last 

decade. That is according to the CDC. Yet obesity rates continue 

to rise. 

In spite of all this, we were shocked to learn that our own tax 

dollars are being used against us in the form of CDC grants under 

the guise of obesity prevention. Incredibly, the CDC has funded advertisements in communities across the nation not only demonizing 

our industry, but urging people not to drink our beverages. The ads 

are inaccurate and they are over the top. They lead the viewer into 

believing soft drink consumption will cause diabetes and make people sick. Language such as ‘‘Are you pouring on the pounds?’’ and 

‘‘Do you know what your kids are drinking?’’ and ‘‘Don’t get 

smacked by fat.’’ The fact is that all calories matter, not just those 

from beverages. 

Even the New York Times looked into these grants and uncovered a string of emails between the state’s public health officials 

who argued about the appropriateness of targeting one element of 

the diet. Included in that exchange was a comment from one official, ‘‘Well, what can we get away with?’’ I repeat—‘‘What can we 

get away with?’’ That was the kind of conversation that was going 

on. 

52 

On behalf of the 227,000 men and women who work hard every 

day in this industry, I can assure you we take issue with these irresponsible and contrived attacks on our products. We agree, obesity is a serious issue and have taken steps to provide consumers 

with the options and information they need to make the appropriate choices. We also have a history of supporting programs and 

initiatives which promote physical activity and healthy lifestyles. 

A simplistic approach of targeting one industry for a complicated 

issue like obesity simply will not work, and taxpayer funded ads 

attacking our products is unacceptable. For this reason, we wholeheartedly support Congressman DesJarlais’ bill Protecting Foods 

and Beverages from Government Attack Act that would stop these 

ads from running. H.R. 3848 would not stop other prevention efforts, if that is how Congress chooses to spend taxpayer money, but 

it would stop these inappropriate ads that unfairly target a vibrant 

industry and in an effort to suppress sales which will kill jobs. 

We thank you for your time and attention and we appreciate the 

opportunity to participate in this morning’s hearing. 

Thank you. 

[Prepared statement of Mr. Bedell follows:] 

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56 

Chairman ISSA. Thank you. I will ask a few brief questions. 

One of them, Mr. Bedell, I think the product in front of you says 

Zero on it. Does that tell me the amount of calories? 

Mr. BEDELL. That is exactly right, Chairman. 

[Laughter.] 

Chairman ISSA. So is it not true that in the beverage industry 

roughly half of your sales of soft drinks in fact are zero calorie or 

near zero calorie beverages? 

Mr. BEDELL. It is getting very close to that, yes. 

Chairman ISSA. And next to it, I notice that you have a container 

of water. Coca-Cola is also in the water business, are they not? 

Mr. BEDELL. That is correct, Dasani water. 

Chairman ISSA. So let us see, you can buy water, you can buy 

no calorie or you can buy calorie sodas and it is your fault if people 

get fat. That is the theory of government. 

Mr. BEDELL. You summed it up very well. 

Chairman ISSA. These are the people that brought us a convention in Las Vegas. 

Mr. BEDELL. Yes, yes. We believe the consumer has a choice and 

therefore we make products available for those consumers to have 

a choice. We find even locally where we have pulled out of schools, 

the folks that have really suffered are all the sports, the band, all 

the different functions that used to get that money from the vending. 

Chairman ISSA. Just on a personal note, I am a little heavy and 

I drink diet sodas. My wife is light and she does not like sugarfree, so she drinks the sugary ones. I am not sure the correlation 

is not reverse in my case. I think it is the no calorie that has been 

hurting my diet, but that is a separate point. 

Mr. BEDELL. Well, we appreciate both of you. 

Chairman ISSA. Mr. Cocanougher, do you have any credit default 

swaps? 

Mr. COCANOUGHER. No, we do not. 

Chairman ISSA. International banking activities including complex instruments all over the world? 

Mr. COCANOUGHER. We send some wires out, but no lending or 

deposits, no. 

Chairman ISSA. So what part of the crisis in 2008 did you participate in as a bank? 

Mr. COCANOUGHER. We had the word ‘‘bank’’ on the name of our 

building. 

Chairman ISSA. So in fact, Dodd-Frank regulated you without an 

actual tragedy that you participated in or were subject to. 

Mr. COCANOUGHER. I would agree with that, yes. 

Chairman ISSA. Well, do not feel bad. In Washington, we closed 

Pennsylvania Avenue because an airplane landed on the south side 

of the White House. It is the same kind of thinking that, you know, 

any tragedy, any emergency is a good excuse to do something you 

wanted to do anyway. Not that I have an opinion on that. 

[Laughter.] 

Chairman ISSA. Let me go through one round. I was a manufacturer for a number of years. Mr. Bedell, Coca-Cola, I believe you 

would be an ISO 9002 for your quality and safety standards, your 

company observes a set of internal safety and quality standards 

57 

and it includes how you do your bottling, the whole quality circle, 

how you deal with defects and so on. Now you do not get that from 

the government, do you? 

Mr. BEDELL. No. 

Chairman ISSA. So the whole question of quality, how you treat 

your customers globally, Coca-Cola worldwide, is in fact voluntary 

standards with you paying for people who not only help you learn 

how to do it, but come in and do the evaluation and they pass or 

fail your facilities for whether you meet these high global standards, is that right? 

Mr. BEDELL. Yes. 

Chairman ISSA. Mr. Faulkner, similar? 

Mr. FAULKNER. Yes. We are actually ISO certified. When we 

were accredited, we were one of the smallest in the country because 

we only had six people at that point. 

Chairman ISSA. So you go through this whole process of globally 

accepted standards, ones that are rigorous, ones that you actually 

pay to go through. Just one kind of a question for all of you, do 

they come in and fine you if you do not meet the standard on a 

test? 

Mr. FAULKNER. No, it is a cooperative, supportive educational activity. 

Chairman ISSA. But you can flunk. 

Mr. FAULKNER. Absolutely. 

Chairman ISSA. And if you come up with a major defect in some 

part of your quality or some sort of a problem related to a set of 

standards that the world has bought into and improve every year, 

what happens? 

Mr. FAULKNER. We would be warned on it to fix it and we would 

be given a very specific amount of time in which to fix it. We would 

be re-audited or held accountable for having done so. And if we did 

not, we would be decertified. 

Chairman ISSA. Mr. Payne, similar situation in your experience 

in business? 

Mr. PAYNE. Yes. We are not ISO certified, we are ISO compliant 

and we comply with Sigma and a lot of our customers force us to, 

but same kind of thing. 

Chairman ISSA. And your customers rely on that, particularly 

when you are ISO or other standards. So do you advertise it? 

Mr. PAYNE. Uh-huh. 

Chairman ISSA. It is important to you and in fact, you pay to 

make sure that your company does it. And we could add, of course, 

the Better Business Bureau and other organizations like that. 

Should we take back to Washington that in fact Washington’s problem is we do not think like the very entities that mostly ensure 

quality and delivery and predictability, and that if government regulators—and I think you said this in your opening statement very 

well—government regulators need to in fact go to ISO 9000 type 

training, find out what it is like to actually come with a set of 

standards, test to those standards and if you fail those standards, 

be part of the remediation of those standards. 

Mr. FAULKNER. Correct. 

Chairman ISSA. You would all agree that that is what I should 

take back? 

58 

Mr. BEDELL. Yes. We have very high standards for quality for 

our brands. And with ISO, all that does is add cost. 

Chairman ISSA. Well, thank you very much. As a former businessman, I wanted to hear that things had not changed in my 12 

years in government. 

Mr. DesJarlais. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

With all due respect to our prior panel, this is the kind of thing 

that people need to hear. I think listening to each and every one 

of you, there was a chilling tale of how the federal bureaucracy can 

over-burden businesses. And we can just go down the line. Mr. 

Faulkner, the ‘‘Let’s Make a Deal,’’ you pay this fine now and we 

will let you off easy or we can do it the hard way. That unfortunately is not a story that I have only heard once. I have heard any 

number of people with MSHA, OSHA and other regulatory agencies 

tell that same tale of being strong-armed, basically you cooperate 

and we can make this less painful on you. And that is clearly no 

way to create jobs and businesses. 

And Mr. Payne, basically what your company is facing is saying 

we have all these employees that have been with us for an awful 

long time, a lot of them are like family, they are happy here, but 

yet we are going to have to turn them away when it comes to providing healthcare, one of the things people look to. In essence, you 

are going to say that the government, you know, not necessarily 

can do a better job providing healthcare, but they are going to have 

to turn to the government. And it kind of makes me wonder about 

the healthcare law intent, when we were told that if you like your 

insurance, you can keep it. Clearly companies like yours show that 

it is just not feasible from a cost standpoint to continue to pay for 

health insurance rather than just pay the fines that the government asks you to pay. And we will get back to that. 

Mr. Cocanougher, you are asked to police people and anyone sitting in the room is sitting here thinking about their habits being 

investigated by people in the bank that are hired to just watch 

whether or not your cash expenditures or the way you write checks 

is inappropriate. That ought to make everyone just wonder a little 

bit about where this government is heading in terms of our personal rights and freedoms. 

And Mr. Bedell, first of all, thanks for the kind words even 

though I am drinking a competitor over here. 

Chairman ISSA. You did not have to point that out. 

Mr. BEDELL. We will get you fixed, for sure. 

[Laughter.] 

Mr. DESJARLAIS. How demoralized do your workers feel when 

this current administration puts out stimulus money in the name 

of job creation and then your workers see ads on TV attacking the 

very product that they produce and count on for their livelihood? 

Mr. BEDELL. It is outrageous, it is very demoralizing. It is just 

wrong. 

Mr. DESJARLAIS. And these are FDA approved products. You are 

a leader in putting the facts out there and people being responsible, 

helping schools educate on physical activity, clearly labeling your 

products but yet taxpayers, and the very workers that pay taxes for 

your company are paying taxes for ads to attack their own job. 

59 

Mr. BEDELL. That is exactly right. 

Mr. DESJARLAIS. Okay. Well, clearly that is not right. 

And Mr. Payne, it sounds like when 2014 rolls around, you do 

not have a good option when it comes to the healthcare law. You 

know, I had the pleasure of visiting you down in Fayetteville and 

a great bunch of folks there and I know you want their healthcare 

to continue. But you do not have a good option, do you, with this 

current law? 

Mr. PAYNE. No, we really do not. There is not a good option, we 

are in the middle size that it just hits us wrong. 

Mr. DESJARLAIS. And it kind of shows a failure in planning because a small company is labeled as one with 50 employees or less 

and a large company is 500 employees or more. But under this law, 

you are kind of stuck in between and there was not really a provision or a thought out plan for that. 

Mr. PAYNE. You are exactly right. 

Mr. DESJARLAIS. So you can either pay a $3000 penalty for a higher number or a $2000 penalty for the 50 or less, but either 

way, it is cheaper for you to turn these people back to the federal 

exchanges. 

Mr. PAYNE. Unfortunately that is right. 

Mr. DESJARLAIS. Mr. Faulkner, just—I mean if you want to 

elaborate a little bit more, how does that feel to have a regulatory 

agency come in and levy a fine that makes absolutely no sense. You 

go out and clearly do the right thing. How does that make you feel 

about our federal government? 

Mr. FAULKNER. Certainly not that it is by and for and of the people. We, in 37 years of manufacturing over at the plant, have never 

had a workers comp claim. We are hellions on safety and for them 

to come in and treat us as if we are either ignorant or malicious 

or that we do not care about safety. We are small enough that we 

cannot afford not to be intensely concerned about safety because 

any accident, any situation is too expensive for us to shoulder. Prevention is what keeps us in business. And they come in and have 

us doing things or threaten to force us to do things that honestly 

make no sense. You know, put up railings in places where people 

never go and are not allowed to go. Sprinkle buildings that were 

built to code that were not needed to be sprinkled. Any one of a 

number of things, but it clearly shows that they are out of touch 

and really that their motivation is less about safety and is more 

about parasitic department survival. 

Mr. DESJARLAIS. And I know my time has expired, but Mr. 

Cocanougher—— 

Chairman ISSA. But go ahead anyway. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. If you will yield an 

additional 30 seconds. 

I had some community bankers say an interesting comment to 

me as well as home healthcare companies, that if the government 

would just leave the status quo alone, we can deal with it. But the 

changes occur so rapidly in terms of compliance, you are constantly 

having to hire new people. It is almost like we have been beaten 

down to the point that we will just accept what we have now if 

they just will not change it any further. 

Have you had a similar experience? 

60 

Mr. COCANOUGHER. I think you are correct there. And as we 

shared earlier today, we have a lot of banks now that are doing 

merger and acquisitions and it is not merger and acquisitions because of capital, because of bad loans or otherwise. They are merging because they cannot afford the compliance departments they 

have and by merging two groups to get to a certain size, they can 

afford to be in business. So what you wind up with is less banks, 

probably eliminating departments within the merger of those 

banks, and making less employees. 

But yes, if we could just have some certainty about the rules that 

are there and interpret them the same from one meeting to the 

next, it would make a great deal of difference. Right now, whenever 

you have an examiner come in, they interpret a rule differently 

than the one that came in before that interpreted it differently 

than the one that came before that. And it is very difficult to hit 

that moving target. 

Mr. DESJARLAIS. Thank you, Mr. Chairman, for your generous 

extension of time and I yield back. 

Chairman ISSA. I thank the gentleman. I thank you for bringing 

us here to Tennessee. 

Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you. 

We are so appreciative that each of you would take your time to 

be here and to talk with us, because you are doing this on your 

own dime. And we appreciate that you are investing in that, I 

think it shows why so many of us believe that the men and women 

who are participating in the free enterprise sector every day get up, 

go to work, create these jobs, they are a big part of the answer. 

They are not the problem. 

Congressman DesJarlais mentioned some of the listening sessions that he has done. We have also followed that format in our 

congressional district and spent the past two years holding listening sessions with our job creators that are out there, large and 

small. 

Last week, I was over in Arkansas with one of our colleagues and 

in Charleston, South Carolina with another of our colleagues doing 

similar job creating, and I have got to tell you, we hear these stories everywhere we go—the cost of compliance, the cost of uncertainty, the cost of the over-reach of federal regulations. So I thank 

you for adding to what is becoming volumes of information from 

our job creators about what is wrong with the federal government 

structure right now. 

Mr. Faulkner, I have got to tell you, I love your idea of mandating change on the agencies. I do think that that is the way to 

go and I think that is one thing we need to do. 

Mr. Cocanougher, I want to come with you, I want to be sure 

that my note I made is correct. You have got two full time employees that are dedicating to looking at suspicious activity and then 

you estimate that 10 percent of every day of your other employees 

is spent gathering information or filling out paperwork and—— 

Mr. COCANOUGHER. I would say that is correct. 

Mrs. BLACKBURN. So you have got three-quarters of an hour— 

three-quarters of your workday if you have got an eight-hour workVerDate Aug 31 2005 09:04 Aug 02, 2012 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 C:\DOCS\75304.TXT APRIL
61 

day, that would be about three-quarters of an hour that is spent 

with nothing but doing compliance. 

Mr. COCANOUGHER. My wife would tell you that she would yearn 

for me to have an eight-hour day, but yes, 10 percent would be correct. 

Mrs. BLACKBURN. All right, that is what I wanted to verify. 

Mr. Payne, welcome, I am glad to see a Texan back in Tennessee. 

You all would not be in existence if not for us. 

[Laughter.] 

Mr. PAYNE. Glad to be here. 

Mrs. BLACKBURN. So I just want to remind you of that good fact 

and I say that lovingly. 

Chairman ISSA. Now if they had only treated Davy Crockett as 

kindly when he left. 

[Laughter.] 

Mrs. BLACKBURN. Right. We could all benefit by listening to some 

Davy Crockett, reading some of those remarks that he made. 

But being married to a Fort Worth, Texan now for I guess 38 

years is how long we have been married, I appreciate and I love 

that pioneer spirit that all you Texans bring to bear. 

I appreciate what you are saying about you are into cut and survive right now. And we want to see you move to grow and expand. 

And you talked specifically about the healthcare law. Now I want 

you to articulate for me, kind of go through just a brief summary 

what your steps would be if this goes into existence and you feel 

like it is going to legislate you out of business. What are you going 

to have to do, because you are now at 450 employees, with 11 plant 

locations. We like that we have got one of those here. If it goes into 

effect, what do you fear would happen to Conner Industries within 

a couple of years? 

Mr. PAYNE. Well, there are several things that could happen. You 

know, we are working on our budgets to try to see where money 

could come from and what our options are. Obviously one of the options is to cancel all the policies and pay the penalty. What we fear 

there is there is not enough capital retention from profits after the 

penalties to keep our covenants alive in the banks. You have to 

make money to be able to sustain financing. And today, we do not 

have a financing problem. 

You know, one thing that we are looking at is everybody in the 

company taking a little bit of percentage of the cost which would 

hit a lot of our key people. You average it out and everybody takes 

a certain amount of the hit. That is one option we have got. 

The other option is we tend to try to add new locations about 

every other year and that is what we have done, that is where our 

11 locations have come from. So we always have one to two, maybe 

even three that we call expansion locations that are in growing 

modes and it takes several years to develop those markets to where 

they can actually be self-sustaining and profitable. And we may 

have to take some of those down, which would also result in overhead cutbacks in Forth Worth, maybe sell off some individual locations. The model will be different. I cannot tell you exactly what 

it looks like, none of them are very good alternatives. 

62 

You know, to answer your question, there is a lot of variables 

that could go in there and none of them are really very good options. 

Mrs. BLACKBURN. Thank you. My time has expired, I yield back. 

Chairman ISSA. Thank you. 

Mrs. Black, we have saved the best for last. The floor is yours. 

Mrs. BLACK. Thank you, Mr. Chairman. 

The stories are great. I was just writing down as you were telling 

the stories. Mr. Faulkner was talking about OSHA and what they 

are doing to impact his business and his lack of ability to be able 

to grow because of all the things you have to do to comply with. 

Then I hear Mr. Payne talk about Obamacare. 

Mr. Cocanougher, you talked about the Dodd-Frank Act and in 

particular SAR. And as I read your testimony here, I wrote ‘‘crazy’’ 

out beside it because I thought I cannot believe that we are actually doing this. We are, the government—I do not want to say us 

here on this panel, but it is good to know what you are dealing 

with so we can go back and make a difference. 

And then Mr. Bedell, you talk about us using our own taxpayer 

dollars, the dollars that you are paying and your company is paying, to actually come back and lobby against yourself—just crazy 

again. I guess crazy is the word here that is the word of the day 

when we hear these stories. 

I want to go back, Mr. Faulkner, to what you said about this 

would be so much more effective if it were an education process 

that really helps you as job creators to do your job better. If they 

came in with the mentality and we flip that mentality from it trying to penalize you for something to trying to help you do it better. 

So I am going to take that back with me because I think as we 

take a look—obviously we need to have agencies where there is 

oversight, where we are making sure everyone is abiding by the 

rules. But if we change the perspective on that from being education from being penalties, I think we would be doing a benefit 

both to society and also to you as job creators. 

And then, Mr. Cocanougher, I think it was you that said about 

the interpretation of the rules. So obviously when those rules were 

written, unlike here at the state level where rules always come 

back to the governing body to be looked at and made sure that they 

are abiding by whatever the intent was, we do not do that at the 

federal government. So if there is a way that we can get more involved in making sure that the rules are the rules that reach the 

intent of whatever the legislation was, I would say that Chairman 

Issa and his committee comes the closest to doing that. But it is 

not done on a regular basis. 

I use this term of the Barney Fife syndrome. I think all the 

things you have talked about are the kinds of things that as Barney Fife shot himself in the foot, that we are shooting ourselves in 

the foot right here in the United States. We are either driving you 

out of business, as Mr. Payne talked about, or we are driving people offshore because they do not have to abide by these same crazy 

regulations if they go offshore. 

So what we are hearing the President say this last week or so 

is that the private sector is doing fine, and I would just like to—— 

Chairman ISSA. Just fine. 

63 

Mrs. BLACK. Just fine. The private sector is doing just fine. I 

would like each of you to talk about how you feel that statement 

either applies—how you agreed with or did not agree with that 

statement. 

Mr. Faulkner. 

Mr. FAULKNER. I would say that we are doing fine in spite of the 

burdens that are being put on us. And it makes me excited to think 

if we had some of these shackles taken off, some of the burdens 

taken off, how much better we could do and what a restoration to 

America as the leading economic engine of the globe could be. 

Mrs. BLACK. Mr. Payne. 

Mr. PAYNE. Well, one thing about the downturn in the market, 

it did force companies, and ours is one of them, to look internally 

and restructure ourselves into a more profitable and efficient company. And we have done that. We are in good shape. The uncertainties of Obamacare is something that to us really is a cloud 

hanging there and we do not know really what it is going to do. 

We also share a lot of the same things that some of the other 

guys—OSHA and a few of these others—are giving us problems. So 

we deal with that. But the killer is the big one for us. 

Mr. FAULKNER. Can I just say that it is really a testimony to the 

American worker and the spirit that in spite of all of this craziness, 

we are buckling up under it and trying to work. 

Mrs. BLACK. Mr. Cocanougher. 

Mr. COCANOUGHER. I would like to know what the bar was for 

doing fine. Like you said, compared to what? I subscribe and read 

on a daily basis three to four economists a day and I am not sure 

I see that in the numbers they produce. When you have got negative production, you have unemployment going up and not down, 

and I do not think that 8.2 is a real number. I think it is probably 

closer to 12 to 13 percent unemployment. I do not see how that is 

fine. I would say a lot of times when people say how are you doing, 

it is fine. Well, fine is not really a good answer. 

[Laughter.] 

Mrs. BLACK. Mr. Bedell. 

Mr. BEDELL. I think Mr. Cocanougher just summed it up, but we 

need the federal government to back out and get out of the way so 

we can take care of business. And that would be a big, big change 

that would be very positive. 

Mrs. BLACK. Thank you and I yield back my time. 

Chairman ISSA. I want to thank all of you for your testimony 

today and I want to take a privilege of the chair first to thank the 

audience for your participation quietly throughout these proceedings. 

And I think I would like to close by paraphrasing Ronald Reagan 

who I understand told the story one time about the stagecoach that 

flipped over. And the crew that came to find the stagecoach down 

in the gully realized that there was a whimpering and it was a dog 

from the stagecoach. And it was very badly damaged and nearly 

dead and the person took out his revolver and put it out of its misery. 

Then he went on and realized that there was another noise and 

it was sadly a horse and had two broken legs and there was nothing they could do, so he put it out of its misery. 

64 

Then, thank goodness, he found the stagecoach driver, he was 

trapped and they got him out, he had a broken leg and they asked 

him how he was and he said, ‘‘just fine.’’ 

[Laughter.] 

Chairman ISSA. You know, the American spirit is we always say 

we are doing just fine, particularly if it will keep us from being 

shot. 

Thank you, we stand adjourned. 

[Whereupon, at 11:25 a.m., the Committee was adjourned.] 

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