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68–363 PDF 2011

ASSESSING THE CUMULATIVE IMPACT OF

REGULATION ON U.S. MANUFACTURERS

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS,

STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MARCH 9, 2011

Serial No. 112–41

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

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman

ANN MARIE BUERKLE, New York, Vice

Chairwoman

CONNIE MACK, Florida

RAU ́ L R. LABRADOR, Idaho

SCOTT DESJARLAIS, Tennessee

FRANK C. GUINTA, New Hampshire

MIKE KELLY, Pennsylvania

DENNIS J. KUCINICH, Ohio, Ranking

Minority Member

JIM COOPER, Tennessee

JACKIE SPEIER, California

BRUCE L. BRALEY, Iowa

(III)

C O N T E N T S

Page

Hearing held on March 9, 2011 .............................................................................. 1

Statement of:

Harman, Donna A., CEO, American Forest and Paper Association; Aris

Papadopoulos, CEO and chairman, Portland Cement Association, Titan

America LLC; Michael P. Walls, vice president, regulatory and technical affairs, American Chemistry Council; Michael Kamnikar, senior

vice president of marketing and business development, incoming president, Forging Industry Association, Ellwood Group; Bernard ‘‘Terry’’

Schimmel, vice president, technical services, Boral Bricks, Inc.; and

David C. Foerter, executive director, Institute of Clean Air Companies . 30

Foerter, David C. ....................................................................................... 81

Harman, Donna A. .................................................................................... 30

Kamnikar, Michael .................................................................................... 64

Papadopoulos, Aris .................................................................................... 39

Schimmel, Bernard ‘‘Terry’’ ...................................................................... 74

Walls, Michael P. ....................................................................................... 45

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

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 12

Foerter, David C., executive director, Institute of Clean Air Companies,

prepared statement of ................................................................................... 83

Harman, Donna A., CEO, American Forest and Paper Association, prepared statement of ........................................................................................ 33

Jordan, Hon. Jim, a Representative in Congress from the State of Ohio:

Prepared statement of ............................................................................... 4

Various prepared statements ................................................................... 15

Kamnikar, Michael, senior vice president of marketing and business development, incoming president, Forging Industry Association, Ellwood

Group, prepared statement of ...................................................................... 66

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

of Ohio:

Article dated August 9, 2010 .................................................................... 94

Pulp & Paperworkers’ Resource Council map ......................................... 90

Papadopoulos, Aris, CEO and chairman, Portland Cement Association,

Titan America LLC, prepared statement of ................................................ 41

Schimmel, Bernard ‘‘Terry’’, vice president, technical services, Boral

Bricks, Inc., prepared statement of ............................................................. 76

Walls, Michael P., vice president, regulatory and technical affairs, American Chemistry Council, prepared statement of ......................................... 47

(1)

ASSESSING THE CUMULATIVE IMPACT OF

REGULATION ON U.S. MANUFACTURERS

WEDNESDAY, MARCH 9, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT AND GOVERNMENT SPENDING,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:35 a.m., in room

2154, Rayburn House Office Building, Hon. Jim Jordan (chairman

of the subcommittee) presiding.

Present: Representatives Jordan, Buerkle, Labrador, Guinta,

Kelly, Issa (ex officio), Kucinich, and Cummings (ex officio).

Staff present: Molly Boyl, parliamentarian; Joseph A.

Brazauskas, counsel; Kate Dunbar, staff assistant; Adam P.

Fromm, director of Member services and committee operations;

Ryan M. Hambleton, professional staff member; Frederick Hill, director of communications and senior policy advisor; Christopher

Hixon, deputy chief counsel, oversight; Justin LoFranco, press assistant; Mark D. Marin, senior professional staff member; Kristina

M. Moore, senior counsel; Krista Boyd and Brian Quinn, minority

counsels; Cecelia Thomas, minority counsel/deputy clerk; and Alex

Wolf, minority professional staff member.

Mr. JORDAN. The committee will come to order.

We exist to secure two fundamental principles: First, Americans

have a right to know that 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 responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from

their government. We will work tirelessly in this partnership with

citizen watchdogs to deliver the facts to the American people, to

bring genuine reform to the Federal bureaucracy. This is the mission of the Oversight and Government Reform committee.

I want to thank all our witnesses for being here with us this day.

I will do a quick opening statement, and then my friend and colleague and ranking member, Mr. Kucinich, will have an opening

statement, and then we will get right to your testimony.

We do have the Australian Prime Minister on the floor at 11, so

we want to get through as much as we can prior to adjourning for

that.

Thank you all for coming today.

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Last month, the Oversight and Government Reform Committee

held a hearing entitled, ‘‘Regulatory Impediments to Job Creation.’’

This hearing was the result of a committee effort to learn about

which regulations were standing in the way of job creation. We

heard from many employers and industries from across the Nation.

As chairman of this subcommittee, I am especially looking forward to continue this work, examining the effects of regulations on

American job creators. This subcommittee has jurisdiction over the

regulatory process, and we recognize that job creators do not live

in a world where they are only subject to one regulation issued by

one agency. In the real world, outside the Beltway, job creators are

subject to numerous regulations and compliance obligations enforced by a virtual alphabet soup of Federal agencies. As we attempt to get our economy going again and get people back to work,

it is crucial that we all start to think about the numerous burdens

and mandates that we are putting on the private sector.

On January 21, 2011, President Obama issued Executive Order

13563 directing agencies to, ‘‘take into account the cost of cumulative regulations.’’ I applaud this commonsense plan. Today’s hearing will examine whether the government has begun to follow this

directive and what Congress can do to help implement it.

I believe we should start by first looking at the bedrock of our

economy, the manufacturing sector. U.S. manufacturing is the industry hit the hardest by regulatory costs. With per-firm costs at

approximately $688,000, half-a-million dollars greater than the national average cost for other industries. Moreover, small manufacturers bear a proportionately larger regulatory burden, with an estimated cost of $26,000 per employee—more than double the burden that is faced by larger manufacturers.

While the Oversight Committee was collecting information from

job creators about the regulatory burdens they faced, it quickly became obvious which agency was the number-one concern to them:

the Environmental Protection Agency. This hearing will provide

Congress with an opportunity to understand how all the regulations in the pipeline at EPA, in addition to the ones already in existence, impact a critically important part of our economy.

I would like to take a moment to say how disappointed I am that

the EPA chose not to send a witness to this hearing. The reason

given was that their witness would not be scheduled to testify

alone on the first panel.

I think this subcommittee has been very fair in offering to seat

their witness alone on a second panel that would be guaranteed to

start at 10:30 sharp this morning. However, that offer was rejected.

It is too bad that the EPA not only refuses to sit at a witness table

with some of the very people that they are regulating, but also refused to wait and listen to the rest of the witnesses’ testimony.

Also, in contract to the EPA, our other witnesses here today have

agreed to take time out of their schedules and provide their testimony to us without a list of demands. EPA’s behavior is the type

that gives people throughout the country the impression that their

government is aloof and not listening to them.

Despite EPA’s lack of participation, I still think we can have a

productive and informative hearing. The panel we have here today

can speak very well to the cumulative impact of government reguVerDate 17-JUN-2003 16:34 Oct 13, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68363.TXT KATIE PsN: KATIE
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lations. This information, straight from the people affected, is invaluable.

In fact, the committee even has a Web site,

americanjobcreators.com, where any American can log in and tell

us their story. We are listening, and we want to hear what you

have to say.

With that, I would yield 5 minutes to the ranking member, Mr.

Kucinich.

[The prepared statement of Hon. Jim Jordan follows:]

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Mr. KUCINICH. I thank you very much, Mr. Chairman.

And the chair and I have had discussions about the witnesses,

and I am hopeful that in the future we will be able to work out

our differences with a commonsense approach.

I want to state for the record, there is a longstanding precedent

in Congress of putting administration witnesses first on their own

panel. And there have been exceptions, but the committee has allowed witnesses from Republican and Democratic administrations

to testify first on their own panel.

Now, I certainly respect the prerogative of this chair, and I respect the prerogative of the chair of the full committee. And we

don’t need to be at loggerheads about things like the sequence of

witnesses. We have things that are much more serious to get into

here. And I have every confidence, given our relationship, Mr.

Chairman, that we will work it out down the line.

I want to thank you for holding the hearing. I fully——

Mr. JORDAN. Would the gentleman yield?

Mr. KUCINICH. Of course I would.

Mr. JORDAN. Just for 10 seconds. The gentleman is right; the

precedence has been for the administration to have the first panel

witness. We thought, in light of the economic situation, in light of

the concern we all have, regardless of party, about the regulatory

burden, that it made sense to hear from the people who faced these

regulations and then have the administration have their complete

panel to themselves, talk, and then follow back up with the same

people.

We thought that would be a better way for Members of Congress

and the public to get information, and that is why we chose the approach we did. As I indicated, unfortunately, the EPA decided not

to send a witness.

Mr. KUCINICH. Well, again, Mr. Chairman, you know, I think

that if you and I had had an opportunity prior to this moment right

here to work this out, I think we probably could have found a way

to get the EPA participating.

I certainly think that it is a good idea for them to hear witnesses

testify, particularly those who are subject to the EPA regulations.

It makes sense. It can actually help you be a better regulator, to

hear what people have to say.

I fully support having a discussion about the impact of regulations on industry, and I want to know if there are regulations that

are unnecessarily burdensome on this country’s manufacturers.

I also know that regulations are creating jobs and the regulations

are saving lives. And, in order to have a truly productive conversation about regulations that yield real results, we cannot focus solely

on cost. The cost must be weighed against benefits.

This year, the Office of Management and Budget estimated that,

from 2000 to 2010, Federal regulations resulted in a financial benefit of $136 billion to $651 billion, with a cost of $44 billion to $62

billion. That is a 2:1 benefit-to-cost ratio using OMB’s lowest estimations and greater than a 10:1 benefit-to-cost ratio based on

OMB’s highest estimations.

EPA’s air pollution rules alone account for 60 to 85 percent of

these benefits. That means that in a 10-year period from 2000 to

2010, during both a Democrat and Republican White House, EPA

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regulations have resulted in anywhere from $81.7 billion in benefits to a remarkable $550.4 billion in benefits.

These kinds of regulations also have a positive effect on job creation. A 2008 study found that environment protection as an industry generated $300 billion in sales in 2003 and provided 5 million

jobs.

Many of the regulations identified as burdensome by today’s witnesses fall under the umbrella of the Clean Air Act. I think that

we are going to hear a lot today about the cost of the Clean Air

Act, so I want to take a minute to talk about its benefits.

EPA’s most recent estimate of the total financial benefit of the

Clean Air Act is $1.3 trillion. This figure dwarfs the estimated cost

at $53 billion. That is a ratio of about 26:1. By 2020, the financial

benefit of the Clean Air Act is expected to skyrocket to an astounding $2 trillion, while the proportion of costs increases marginally

to $65 billion, a ratio of 32:1.

In this same report, the EPA went on to say, ‘‘It is extremely unlikely the cost of the 1990 Clean Air Act amendments programs

would exceed their benefits, under any reasonable combination of

alternative assumptions of methods, even if one were to adopt the

extreme assumption that air pollution no effect on premature mortality or that avoiding such effects has no value.’’

In 2003 alone, EPA estimates that the Clean Air Act standards

on only particulate matter and ozone pollution have prevented

160,000 premature deaths, 130,000 cases of acute myocardial infarction, 1.7 million cases of asthma exacerbation, 86,000 hospital

admissions, 86,000 emergency-room visits, 3.2 million lost schooldays, and 13 million lost workdays.

We don’t want to emulate what is happening in India and China.

We don’t want to turn the clock back to the 19th century, when the

absence of regulation led to pollution of our air and water, exploitation of our natural resources, and destruction of our environment.

So, Mr. Chairman, as we sit here today and talk about the impact of regulations, let’s be careful not to forget that premature

deaths, heart attack, asthma, lost schooldays, and lost workdays

are also results that we want to avoid.

I thank the chair.

Mr. JORDAN. I thank the gentleman.

Our ranking member of the full committee, the distinguished

gentleman from Maryland, would like to make an opening statement.

Mr. CUMMINGS. I will be very brief. Thank you very much Mr,

Chairman, and thank you for your courtesy.

Chairman Jordan, Ranking Member Kucinich, this is a very important hearing.

At last month’s full committee hearing on the impact of regulations on job creation, I said in my opening remarks that effective

regulatory review should include several elements: an examination

of the costs and benefits, conclusions based on solid data, and input

from a variety of sources.

I support a comprehensive review of the impact of regulations,

but I stand firm in my belief that any assessment of cumulative

impact must take into account the benefits of those regulations and

not just the costs. We are better than that.

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I am also mindful that there are costs associated with the lack

of regulation, as well. The 2008 financial collapse and subsequent

loss of 8 million jobs taught us that much. As a matter of fact, just

held a hearing in my district—this committee held a hearing in my

district yesterday, where we have seen a loss in Baltimore city of

$11⁄2 billion with regard to real estate and foreclosures because of

this financial collapse, lack of regulation.

At a time when creating jobs is our top priority here in Congress,

I believe we must consider that regulation has the potential to actually create jobs, as Mr. Kucinich just said. A February 2011 report issued by Ceres and the Political Economy Research Institute

concluded that EPA’s Clean Air Transport and the boiler MACT

rules will strengthen our economy and grow jobs. Specifically, the

report estimates that, over the next 5 years, 11⁄2 million jobs will

be both directly and indirectly created by these two rules. This includes jobs in steel manufacturing, catalyst system manufacturing,

and control system manufacturing. This is in addition to the substantial public health benefits from cleaner air. EPA estimates that

the benefits of the Clean Air Act are projected to exceed the costs

by a factor of more than 30 to 1 by 2020.

I am reminded, when I talk about this, of when I worked as a

high school student at Bethlehem Steel. And when you would go

on the yard of Bethlehem Steel, if you blew your nose, what came

out was red or black after being there for an hour. Thank God

some OSHA rules have come about where you now have to wear

masks. Because people want to go to work, they want jobs, but they

want to come home safely to their families and not be shipped to

them in a coffin.

In November 2010, the World Resources Institute concluded that

EPA’s greenhouse gas rules will drive innovation and lead to energy savings for manufacturers. The institute found that for refineries, glass manufacturers, and others, investments in efficiency

technologies would offset most, if not all, current environmental

costs combined.

In December 2010, several business organizations representing

60,000 firms across the country wrote to President Obama and

Members of Congress, urging us to support the EPA and the Clean

Air Act.

In addition, in a December Wall Street Journal letter to the editor titled, ‘‘We’re OK with the EPA’s New Air Quality Regulations,’’

eight leading utility companies explained that EPA air quality regulations carry economic benefits, including job creation.

Finally, Mr. Chairman, I continue to hope that we will conduct

responsible evaluations of regulations consistent with the President’s recent Executive order. However, any discussion on the cumulative effect of regulation must include the positive impact regulation has on our economy and on our families and on our constituents and the benefit it holds for individuals and businesses alike.

I thank all of our panelists for being here today, and I look forward to hearing from you on how we can improve regulations to

make America safer.

And I wanted to be very clear, Mr. Chairman, on this side of

aisle, we are concerned about a balanced approach to this. We realize that there are regulations that are probably outdated. But we

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must be very, very careful, because regulations were, after all, put

forth to make sure that the American people’s health, safety, and

welfare are protected. And that includes every single person in

these great United States of America.

Again, Mr. Chairman, I thank you for your courtesy, and I yield

back.

[The prepared statement of Hon. Elijah E. Cummings follows:]

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Mr. JORDAN. I thank the gentleman.

Members have 7 days to submit opening statements and extraneous material for the record.

[The information referred to follows:]

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Mr. JORDAN. We welcome our panel of witnesses today.

First, we have Ms. Donna Harman. She is CEO of the American

Forest and Paper Association.

Mr. Aris Papadopoulos—close, right? That is one of those fun

names to say. It is like ‘‘Sheboygan,’’ like, you know, one of those

fun names to say. He is the CEO and chairman of Portland Cement

Association. We appreciate you being with us today.

Mr. Michael Walls is the vice president of regulatory and technical affairs for the American Chemistry Council.

Mr. Michael Kamnikar is senior vice president of marketing and

business development and incoming president of the Forging Industry Association.

And Mr. Terry Schimmel is vice president of technical services

at Boral Bricks, Inc.

And David Foerter is the executive director of the Institute of

Clean Air Companies.

It is the practice of the committee to swear all witnesses in, so

if you would please rise and raise your right hands.

[Witnesses sworn.]

Mr. JORDAN. Let the record reflect that all the witnesses answered in the affirmative.

Thank you. And you can be seated.

In order to allow time for discussion, we would like for you to

limit your comments to 5 minutes. There should be some lights

somewhere that you can see.

Do we have those?

I don’t know where our lighting system is. I will give you a little

tap or something.

Oh, you have it in front of you. We can’t see it because your

names are there. OK, great, so you know when it gets close. It is

sort of like the traffic signals we are all used to.

So now let’s recognize Ms. Harman for 5 minutes.

STATEMENTS OF DONNA A. HARMAN, CEO, AMERICAN FOREST

AND PAPER ASSOCIATION; ARIS PAPADOPOULOS, CEO AND

CHAIRMAN, PORTLAND CEMENT ASSOCIATION, TITAN

AMERICA LLC; MICHAEL P. WALLS, VICE PRESIDENT, REGULATORY AND TECHNICAL AFFAIRS, AMERICAN CHEMISTRY

COUNCIL; MICHAEL KAMNIKAR, SENIOR VICE PRESIDENT

OF MARKETING AND BUSINESS DEVELOPMENT, INCOMING

PRESIDENT, FORGING INDUSTRY ASSOCIATION, ELLWOOD

GROUP; BERNARD ‘‘TERRY’’ SCHIMMEL, VICE PRESIDENT,

TECHNICAL SERVICES, BORAL BRICKS, INC.; AND DAVID C.

FOERTER, EXECUTIVE DIRECTOR, INSTITUTE OF CLEAN AIR

COMPANIES

STATEMENT OF DONNA A. HARMAN

Ms. HARMAN. Thank you, Mr. Chairman. I appreciate the opportunity to be here with you and with the other members of the subcommittee. My name is Donna Harman. I am the president and

CEO of the American Forest and Paper Association. And the issue

that you have brought before us today, to look at the challenges

presented by the cumulative impact of the EPA regulations on

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manufacturers, is, in our view, very timely and extremely important.

Many of the laws and, now, regulations that come from them

were enacted decades ago, and they have contributed to significant

improvements in air and water quality. The forest-products manufacturing supply chain is heavily regulated, and we will continue

to adapt to well-reasoned regulations that are both affordable and

achievable.

But we can not respond to regulations in a vacuum. Businesses

in our sector must consider the global competitive environment in

which they operate. They must compete for capital globally, and

they need to have the time to build new regulatory requirements

into their capital planning process. They must also be able to rely

on government, so once a regulation is in place, it will not be selectively enforced or changed within a short timeframe.

Paper and wood products manufacturers are facing over 20 major

regulations from EPA’s Clean Air Act program alone. The pace and

volume of regulation is not sustainable for the Agency, the States,

or the companies that are required to meet them or the Congress

whose obligation it is to provide oversight.

I would like to call your attention to the chart that was included

with my testimony and on the screen that gives you just an idea

of the regulations that are currently under the Clean Air Act, in

the pipeline, that affect the forest-products industry.

Mr. KUCINICH. Excuse me, Mr. Chairman. Do you have a copy of

that so we can look at it?

Mr. JORDAN. We will provide copies for all Members. Thank you.

Ms. HARMAN. And I believe it was attached to my testimony, as

well.

Mr. JORDAN. OK.

Ms. HARMAN. The forest-products industry, like many other manufacturing industries, has been hit hard by the economic crisis.

Since 2006, when the housing and economic crisis began, the forest-products industry has lost 31 percent of its work force, nearly

400,000 high-paying jobs, largely in small, rural communities that

can barely afford to lose them.

The closure of a mill in a rural community, in a small town, has

an enormous ripple effect when that mill is the largest employer

and a major contributor to the local tax base and to the community

programs. In many cases, without these facilities, these communities die.

Government regulations that are not cost-effective can exacerbate what is already a bad situation. AF&PA recently commissioned a study by Fischer International to assess the jobs impact

of the cumulative burden of the largest pending and expected EPA

regulations. The study concluded that several upcoming Clean Air

rules would cause 62 mills to close and result in a direct loss of

nearly 27,000 paper-industry jobs. If supplier jobs and jobs associated with the re-spending of worker incomes are included, the total

job losses would reach nearly 114,000.

These results did not even include the boiler MACT rule, which

I would like to talk about now.

Boiler MACT is just one of many rules adding to the cumulative

burden. EPA’s boiler MACT rule will require more than 90 percent

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of boilers to make significant changes. And these changes are on

top of the changes and the capital they previously invested during

the past decade to comply with the 2004 boiler MACT rule. For the

forest-products industry alone, our initial estimate of the capital

cost of the final rule is about $3 billion and $11 billion for all manufacturing, plus the operating costs.

Unfortunately, as our technical experts delve deeper, their concerns about achievability and cost have grown. For example, the

carbon monoxide limits for some biomass boilers actually became

more stringent. Burning wet biomass will be particularly challenging even with the combustion improvements EPA assumes necessary to meet the more stringent requirements.

While Congress authorized EPA to adopt a health-based approach, they determined that they would not do so in the rule that

was just recently released. We believe, if they were to do that, that

we could reduce the capital costs required to meet this rule without

any impact on human health.

I want to just, in my remaining time, mention two other rules:

the Pulp and Paper MACT and residual-risk rules.

The Pulp and Paper MACT rule is intended to be a one-time

rule. EPA concluded that rule about 10 years ago. We have implemented that rule. We have made significant changes and gotten a

lot of environmental improvement as a result of it. Now they are

talking about a redo. That is an example of the Agency going further than is necessary, overregulating and overcontrolling when it

is not necessary to protect health.

The last rule I would like to mention briefly is the National Ambient Air Quality Standards. I think others will also mention this

rule. This rule is another rule that, collectively, will cost the forestproducts industry alone over $8 billion.

Your look at these and other rules today is critically important

because jobs are at stake. Investment in making our facilities internationally competitive and securing their future is really what is

at stake.

So thank you for taking the time to delve into and understand

these issues. And I would love to answer your questions as followup after the other witnesses.

[The prepared statement of Ms. Harman follows:]

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Mr. JORDAN. Sure. Thank you, Ms. Harman.

Mr. Papadopoulos.

STATEMENT OF ARIS PAPADOPOULOS

Mr. PAPADOPOULOS. Mr. Chairman and congressional committee

members, my name is Aris Papadopoulos. I serve as CEO of Titan

America, a heavy construction material producer in eight States,

employing over 2,000 Americans. I presently chair the Portland Cement Association that represents 97 percent of U.S. cement capacity, with nearly 100 manufacturing plants in 36 States and distribution in all 50.

Cement is to concrete what nails are to wood. Without it, our

bridges, roads, dams, schools, and hospitals would be rubbles of

rock. At $61⁄2 billion combined revenue, we are a relatively small

industry, but without us the entire trillion-dollar construction economy would come to a halt. Without cement, our already-deteriorating infrastructure would degrade to unsafe levels, along with

our communities and quality of life.

The great recession has hit our industry very hard. Cement demand has dropped in half. Profitability has been wiped out. Yet we

sought neither handouts nor bailouts. We cut costs, which, sadly,

included more than 4,000 jobs. What remain are 15,000 well-paying

jobs with average compensation of $75,000 and a high representation of minorities. But today these jobs are in jeopardy, and the

spillover could affect millions employed in the construction sector.

Not only did the Stimulus Act fail to raise construction demand,

but, at our weakest moment, this government’s EPA, whose budget,

by the way, was enriched 33 percent through the same act,

launched an unprecedented regulatory attack against our industry.

This is not a static but a dynamic industry. In its century-long

history, cement manufacturers have demonstrated their commitment to continuous improvement in environment stewardship. In

the decade prior to this recession, it invested tens of billions of dollars in modernizing and expanding facilities with state-of-the-art

technology that were win-win for both economics and environment.

Today our industry is one of the largest recyclers of industrial and

urban byproducts that would otherwise be landfilled.

Yet the current EPA has switched from win-win to win-lose.

There should be no doubt that win-lose will lead to lose-lose. Other

strategic materials, such as rare earths, once a vital U.S. industry

but now controlled by China, are living proof that overregulation

leads to offshoring.

This is not a choice between environment and economy, because

the two go hand-in-hand, and when economic vitality suffers, so

does environmental sustainability. Without strategic materials like

cement, economic vitality cannot be sustained.

Without time to get technical, I would like to note that for one

compound, mercury, EPA imposed standards 5 to 12 times stricter

than those in Germany. The irony is that this rule won’t even help

the environment, as 80 percent of the mercury found in the United

States originates from offshore. EPA has justified these rules with

incomprehensible computer models, but they lack any empirical

proof or field evidence.

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Our economic study of EPA’s rules concludes that two rules alone impose a compliance burden of $5.4 billion in the next 4 years,

equal to 85 percent of this industry’s total annual sales. They also

increase production costs by 20 percent. One rule, NESHAP, will

force almost 20 percent of U.S. plants to shutdown in 3 years. The

industry could lose 25 percent, or an additional 4,000 jobs, by 2015.

Assuming economic recovery through 2025, this reduced domestic

cement capacity will force the United States to depend on foreign

imports for 56 percent of its needs.

We conclude that, in totality, these rules make investing in the

United States unattractive compared to overseas. In the end, neither the economy nor the environment win: American jobs and investment are lost; the same emittants reach Americans in even

greater quantities from offshore; dependence on foreign cement follows the road of dependence on foreign energy. And with cement

more cumbersome to import than oil, shortages and price volatility

will become more common. This could hurt the entire construction

economy, with impacts on infrastructure, housing, commerce, and

jobs.

This industry is committed to its longstanding spirit and practice

of continuous improvement and environmental stewardship, but we

need a government that we can work with in a win-win, constructive manner.

Unfortunately, we feel that industries like ours are getting

caught in the crossfire of the major assault against coal by globalwarming forces in this country. Immediate action is needed to rescind these regulations when we are in the midst of one of the

worst economic crises before they prolong or worsen the harm, and

place a near-term moratorium on more rules. Congress needs to

step up and take back legislative ownership if we are to revive private-sector confidence that will retain and create good jobs for

Americans and restore economic prosperity.

We also need Congress to undertake broader legislative reform

that will return EPA to its original purpose, strengthen standards

of justification for rules, consider cross-border economic and environmental impacts, approach industry with win-win rather than

win-lose frameworks, objectively inform rather than panic the public, and reduce wasteful environmental litigation.

Thank you for this opportunity to testify. I would be happy to answer any of your questions.

[The prepared statement of Mr. Papadopoulos follows:]

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Mr. JORDAN. Thank you.

Mr. Walls.

STATEMENT OF MICHAEL P. WALLS

Mr. WALLS. Thank you, Mr. Chairman. Good morning to you and

members of the subcommittee. I am Mike Walls, the vice president

of regulatory and technical affairs at the American Chemistry

Council.

Earlier this year, both the leadership of this subcommittee and

President Obama called for an examination of existing rules to ensure that they don’t create an undue burden on American businesses. We strongly support that effort.

We believe there is an appropriate role for regulation in encouraging behavior. Efficient and effective regulation can help markets

function. Regulation can help address important public-policy objectives. But regulations promulgated without an analysis of the impact on the economy and the impact on jobs, including how multiple regulations compound those impacts, can have quite the opposite effect.

If manufacturing is to make a significant contribution to economic recovery, including the creation and maintenance of wellpaying jobs, it is imperative that we have an accurate understanding of the impact of these proposed regulations. The full regulatory burden on any particular sector can only be known if that

cumulative impact is assessed.

Now, the lack of cumulative-impact assessments is a fundamental shortcoming in the way government agencies develop and

evaluate proposed rules. That shortcoming creates regulatory tunnel vision. It puts innovation, investment, and jobs at risk.

Now, ACC and its members have a keen interest in getting regulations right. Our industry is arguably America’s most highly regulated industry. There is no aspect of chemical manufacture, distribution, user disposal that isn’t regulated by one or more Federal,

State, or local requirements.

Now, while we understand that substantial benefits can flow

from regulation, our industry also understands that very regulation

can translate to fewer American jobs, a less competitive economic

position, and reduced innovative capacity.

Now, a quick example is useful. Our industry stands right now

on the cusp of the most significant energy and feedstock development in a generation. The market changes that are occurring as a

result of the vast shale gas formations around the country have the

potential to put our industry and our economy in a significantly improved global competitive position. The game-changing nature of

shale gas can bring billions in new capital investment, thousands

of new jobs, and more than $100 billion in additional economic output and Federal, State, and local tax revenue—just flowing from

those shale gas activities and the downstream uses of it. But that

game-changing development could be impacted severely if regulatory barriers minimize the ability to capitalize on the opportunity.

Now, ACC has analyzed the impact of regulatory burdens across

eight major regulatory programs at EPA and at other agencies.

That suite of regulations alone could impose a cumulative burden

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on our industry of over $15 billion between 2011 and 2020, with

undiscounted annualized costs as high as $2.7 billion a year in the

out-years.

Now, we are not saying that those rules, collectively or individually, would eliminate any potential jobs-creating investment. But

we are saying that those costs, those burdens, are very relevant to

the market decisions about where and when investments are made.

So the compounding effect of those compliance costs diminish the

resources available to make meaningful long-term investments that

create jobs, promote innovation, and solidify our competitive position.

The Federal regulatory process and analysis of regulations can

be improved. We would like to see OMB and the individual agencies update their respective economic impact analysis guidance to

require cumulative impact of multiple regulatory actions. We would

like to see agencies identify and catalogue the sectors impacted by

a new regulation and even extend that approach into the paperwork burden.

Agencies should seek impact from the affected regulated community before developing a proposed regulation. It goes to the win-win

that is possible from an early engagement, so that the public, the

government, and the regulated community all benefit.

We would also like to see Federal agencies consider the regulatory-induced employment changes as either a cost or a benefit in

their assessment and not consider them some indirect cost that is

not routinely assessed.

Mr. Chairman, CCC supports the efforts to ensure that cumulative impact of Federal regulatory programs is considered as new

regulatory requirements are considered.

And I will just leave you with one final thought. If our regulatory

agencies are capable of assessing the cumulative benefit of their

regulatory programs, surely they are capable of assessing the cumulative burden.

Thank you.

[The prepared statement of Mr. Walls follows:]

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Mr. JORDAN. Thank you. Great point.

Mr. Kamnikar.

STATEMENT OF MICHAEL KAMNIKAR

Mr. KAMNIKAR. Thank you, Chairman Jordan, ranking members,

and members of the subcommittee. Thanks for the opportunity to

testify today.

I am Mike Kamnikar of the Ellwood Group, and our company

produces specialty steel for other forgers and open- and closed-die

forgeries. I am also the incoming president of the Forging Industry

Association, with operations from member companies in 38 States.

The modern forging process is capital-intensive, and most forging

companies are small businesses. Forging is one of oldest known

metal-working processes, where metal is pressed or pounded or

squeezed under great pressure to make high-performance parts. In

a nutshell, nothing that moves on land or in the air or on the sea

can move without forgings.

Mr. Chairman, U.S. manufacturers need a regulatory system

that works. Appropriate regulations that improve health, safety,

and the environment are a necessary part of doing business in the

United States. However, when the regulatory process produces new

regulations that do not provide additional benefits for the attendant costs and the regulatory community has little to no opportunity

to participate in the process, the system is broke.

FIA believes there are two overall problems with the regulatory

process. First, there is a lack of understanding of the manufacturing supply chain and effects of regulations on that supply chain.

You cannot build a wind turbine with wind energy. Said another

way, you cannot regulate, say, the power generation or automotive

industry and not have an effect on the suppliers in that supply

chain.

Second, there is a lack of transparency and sufficient stakeholder

involvement in the regulatory process. When agencies bypass the

Administrative Procedures Act or allow only brief public comment

periods on complex, technical regulatory changes, we get ill-conceived regulations with unintended or unexpected consequences,

and we undermine the integrity and the public’s confidence in the

rulemaking process.

Many FIA members are small and rely on the FIA to assess the

potential impact of our government action on their operations and

to weigh in on their action on our behalf. But the FIA does not

have technical experts on all subjects at all times, so we need the

time to consult with member companies of all sizes on proposed

government regulation, including determining when specialized expertise may be needed.

I would like to highlight three examples of current and proposed

regulations from my written testimony.

The first example involves EPA’s regulation of greenhouse gas

emissions under the Clean Air Act. Most forging work is done at

2,300 degrees Fahrenheit, and subsequent heat treatment is done

at temperatures up to 1,900 degrees F and using natural gas, electric, or induction furnaces. There are no alternative technologies

available.

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EPA’s decision to start regulating greenhouse gas emissions with

large stationary sources means forgers will only have to worry

about the potential effect of these regulations on their suppliers.

Our company makes steel for the forgers, and we make forgings

ourselves.

So how much will our electricity costs rise, and what will be the

effect on other raw materials? When suppliers are regulated, we

are very concerned that we will be pushed into a regulatory system

merely because we use natural gas or make critical components.

The second example involves an EPA proposal for metal-working

facilities to be considered in the development of the financial responsibility requirements under the Superfund law. The proposal

also required that the entire metal-working industry be examined

to determine if they should be subject to these requirements.

These types of financial assurance mechanisms for potential

Superfund liability can be very expensive and extremely difficult to

obtain for most metal-working companies, which are small- and

medium-size and pose little risk, and we also carry insurance.

Finally, I would be remiss if I didn’t mention the forging industry’s concern with OSHA’s recent proposal to reinterpret the definition of ‘‘feasible’’ as it related to engineering and administrative

controls to reduce overall noise in the workplace. Fortunately, as

we know, that was withdrawn.

Last, it is critically important that we regulate only that which

requires regulation and only after a thorough vetting of the potential benefits, impacts, and costs to that regulation.

Thank you.

[The prepared statement of Mr. Kamnikar follows:]

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Mr. JORDAN. Thank you, Mr. Kamnikar. We appreciate that.

We are also pleased to be joined by the chairman of the full committee, Mr. Issa. Pleasure having you with us today.

Mr. Schimmel.

STATEMENT OF BERNARD ‘‘TERRY’’ SCHIMMEL

Mr. SCHIMMEL. Good morning, Chairman Jordan, Ranking Member Kucinich, and subcommittee members. Thank you for the privilege of testifying about the cumulative impact of regulation on a

small, essentially U.S. industry, the clay-brick industry.

My name is Terry Schimmel, and I am vice president of technical

services at Boral Bricks. Boral is one of the largest brick manufacturers, with 22 manufacturing plants and 55 distribution centers

across 11 States. I have been in the brick business for 39 years,

and my responsibilities include oversight of emission control equipment for Boral’s U.S. plants in compliance with environmental,

health, and safety regulations.

Boral’s energy-efficient brick kilns have reduced energy usage 15

percent over the past 5 years. It is only one example of our commitment to environmental stewardship. We take these steps voluntarily, without government mandates, but we are concerned about

future viability, given the tremendous hit the industry has taken

and the rising number of regulations.

At full production, Boral employs approximately 2,000 Americans. Today, nearly 1,100 of Boral’s U.S. jobs, or 55 percent, have

been temporarily or permanently lost due to the construction recession. According to the most recent census, brick production nationwide has dropped 66 percent since 2005, reaching the lowest level

in 3 decades. Approximately 9,000 direct brick manufacturing jobs

and 86,000 indirect brick jobs have been lost since 2006.

Brick industry business is only very slowly beginning to pick up,

but there is no end to the escalation of the cost of doing business

due to the regulations that derive no commensurate benefit to the

environment, health, and safety. We believe responsible, reasonable

regulations can be developed to protect both environmental and

health, but the number of rulemakings in the pipeline and their

anticipated mandates jeopardize brick jobs and our recovery.

Our greatest concern: EPA is currently redeveloping a Maximum

Achievable Control Technology rule for clay brick and tile. The key

word is ‘‘redeveloping,’’ as the industry recently spent more than

$100 million in capital costs alone to come in compliance with the

original act rule that was finalized in 2003. Boral spent more than

$12 million to install mandated control devices to meet the 2006

compliance date.

While the U.S. district court vacated the original MACT rule in

2007, more than a year after the compliance date, most States continue to enforce MACT limits as part of existing Title V permits.

The result is that the brick industry has spent approximately $170

million in cumulative ongoing compliance costs for these controls

since 2002, due to the now-vacated MACT.

EPA now is using the reduced emission levels achieved by kilns

with control devices installed for the vacated rule to calculate an

even more stringent baseline for all kilns. The technology to meet

the final standard may not even exist if EPA cherry-picks data to

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establish a standard that no real-world brick kiln has actually

achieved. The EPA’s cost estimate of the revised MACT is approximately $188 million per year, a staggering 20 percent cost-of-sales

ratio for one rule.

Congress provided flexibility in the Clean Air Act to allow reasonable rules. As Borel and the brick industry continue to work

with the EPA, we appreciate the Agency’s willingness to discuss a

health-based compliance approach. We are hopeful it could ensure

that controls are installed when needed to protect the environment,

rather than mandated controls that are unnecessary due to an imperfect data base.

EPA could use its discretion under the Clean Air Act to find alternative solutions to avoid unnecessary job-loss and expenditures

that provide little to no benefit to the environment.

Our second big concern is OSHA’s proposed crystalline silica rule

that is expected to substantially decrease the permissible exposure

limit across general industry.

Worker safety is vitally important to Borel. However, decades of

scientific studies demonstrate that the risk from exposure to silica

from quartz in brick clays and shale are not the same as risks from

quartz used in other industrial settings. Silicosis caused by crystalline silica is essentially nonexistent in brick manufacturing

workers. But because OSHA undertook the peer-reviewed process

without providing an opportunity for industry input, this brick-specific evidence may not be reflected in the proposed rule.

The current PEL protects brick workers, and any reduction for

the brick manufacturing industry would impose cost burdens for

non-demonstrated health benefits. These two issues alone could

overwhelm the industry; taken together with EPA’s greenhouse gas

regulations, however, that could encompass numerous brick kilns

in the coming years and its tightening of National Ambient Air

Quality Standards, the burden is unsustainable.

Given the important progress the Federal agencies have helped

guide to protect the environment and safety, future steps should

independently demonstrate reasonable costs for potential improvements. Congressional oversight should ensure maximum benefit

per dollar invested for the regulatory compliance to prevent small,

historical U.S. industries, like brick, from being regulated out of existence.

Thank you, and I would be happy to answer any questions.

[The prepared statement of Mr. Schimmel follows:]

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Mr. JORDAN. Thank you.

Mr. Foerter.

STATEMENT OF DAVID C. FOERTER

Mr. FOERTER. Thank you, Mr. Chairman, members of the subcommittee, for the invitation to share another industry perspective

in the hearing on how regulations and requirements create real

jobs in the American economy. I am David Foerter, the executive

director of the Institute of Clean Air Companies [ICAC].

Today we would like to briefly highlight the fact that investments and efforts to clean the air we breathe creates real jobs for

real people in the U.S. economy, and it saves lives. In these brief

comments, I hope to impart a few realities from the perspective of

a mature manufacturing industry.

For more than 50 years, the Institute has been the nonprofit national trade association of companies working to equip stationary

sources—generally power and large industrial facilities—with air

pollution control and measurement technologies. The Institute’s

members count to about 100 companies, leading manufacturers in

both measurement and control. We believe, and history affirms,

that equipping these sources ensures industrial progress while

cleaning the air we breathe.

Here are a few realities I would like to highlight today. We know

that investments in clean air technologies result in substantial returns in avoided health costs for the American public. We know

that these same investments are plowed back into the U.S. economy as real jobs in my industry and many related industries. We

know that many of the business interests testifying at these hearings also provide materials that are used in the manufacture of

equipment in the air pollution control industry, and, as such, there

is an innate need and desire to work toward sustainable solutions.

I find that these realities can be distilled down into a rather simple formula: The Clean Air Act spurs investments which creates

jobs, improved health, and a modernized and more sustainable

fleet. The formula has worked well for 40 years, and this is something we need now more than ever.

The principal function of clean air requirements is to clean the

air we breathe. We, therefore, are heartened that a renewed interest in jobs has reintroduced one of the most amazing aspects of air

pollution and control technologies: Simply, for every dollar spent,

as much as $40 comes back as avoided health costs. This fact has

withstood the test of time, and it is a testimonial to the value of

the Clean Air Act, the technology innovations in our industry, and

the combined efforts of industries to clean the air while ensuring

industrial progress.

It is important not to lose focus that the safeguards are there to

create cleaner air for all of us, helping to save lives and avoid or

reduce illness. Fortunately, these safeguards are a win-win. To

comply with them, companies will need to undertake construction

projects. That means jobs in areas that are currently facing challenging times.

The clean air investments spurred by regulations and requirements create real jobs while satisfying their principal goal of

healthy air. Most air pollution equipment for large sources is conVerDate 17-JUN-2003 16:34 Oct 13, 2011 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68363.TXT KATIE PsN: KATIE
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structed or fabricated onsite and requires high levels of engineering

and design, labor, and depends on component equipment and materials. This means jobs for skilled craft labor, such as boilermakers,

and new upstream and downstream employment and economic benefits for a variety of industries and communities where they are located.

For example, building this equipment requires construction materials such as steel plate, alloy steel, fabricated steel components,

structural steel, and concrete. In addition, these projects require

engineered equipment and specialty materials such as slurry

pumps, fans, motors, and catalysts. And to sustain operation of

these systems, reagents such as urea, anomia, limestone, Trona,

and activated carbon are needed, as well as other consumables

such as fabric filters used for particulate removal.

While the focus of installing controls is on our industry, we rely

on many other industries and employers to get the job done. And

that is just what we have been doing with tremendous success for

several decades: getting the job done where and when needed most.

As an industry, ICAC offers constructive comment on almost

every major requirement that is out there. And these comments are

part of the public record, and they demonstrate what we believe is

constructive insight on how industries can make changes and still

serve industrial progress.

A similar story exists for industrial sources, where we were looking at: The Clean Air Act spurs investments which create jobs, improved health, and a modernized fleet. We are at a juncture where

necessary upgrades are long overdue, and an experienced work

force is fully available to complete the effort.

In addition, the U.S. Environmental Protection Agency finalized

a rule for the industrial boilermaker sector that is significantly less

stringent and at a lower cost than was proposed last year. This is

something we need now to get America back on the job and protect

public health.

The reality is that my industry works constructively to help

other industries comply with regulatory requirements.We are highly competitive, and we are looking at many technology solutions,

not just one, often offering a suite of solutions.

In closing, President Obama’s Executive order on January 18th

characterized a regulatory system that ‘‘protects public health, welfare, safety, and our environment while promoting economic

growth, innovation, competitiveness, and job creation.’’ I hope that

I have been clear that is shared vision within my industry, where,

for more than 50 years, the members have existed, prospered, innovated, and made a significant contribution to the U.S. economy.

I look forward to continued efforts that create real jobs, for real

people, and real health benefits. Thank you.

[The prepared statement of Mr. Foerter follows:]

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Mr. JORDAN. Thank you, Mr. Foerter.

If we all stick to our 5 minutes, I think we can all get a round

of questions in before the joint session.

Mr. Kamnikar, you mentioned in your testimony many of your

members of your association are small-business owners. In our previous full committee hearing, we had a number of small-business

owners there. And one of our, I believe, freshman Members asked

what I thought was just the most compelling question. They asked

each of those small-business owners, if you knew then what you

know now, would you have started? And it was amazing to me that

every single witness that day said they would not have started

their business if they knew then what they are faced with now on

the regulatory front.

And so, tell me, was that an anomaly or would that be consistent

with the members in your respective associations?

And we will start with Mr. Kamnikar.

Mr. KAMNIKAR. Yeah, I would say that is an accurate assessment. Most of our small member companies are family owned,

third-, fourth-generation, so when the businesses got established, it

was quite different than it is today.

Mr. JORDAN. Uh-huh.

Ms. Harman.

Ms. HARMAN. Many of our businesses, too, our small businesses.

We also represent large businesses who have——

Mr. JORDAN. Sure. Sure.

Ms. HARMAN [continuing]. Been in business for over 100 years.

I think the most striking thing that they would tell you that is

most difficult is that they begin a project or a proposal under one

set of rules only to have those rules later changed.

Boiler MACT is an excellent example, where they invested millions of dollars to comply with the 2004 rule, and complied with

that by the deadline of 2007, only to find now that they have to

invest another $3 billion, you know, a mere few years later, 4 years

later. It is not sustainable.

And they would tell you that it has a real impact on their capital

decisions, whether to invest that capital here, invest it overseas, or

not invest at all. And the not investing it at all is probably the biggest economic and environmental problem that we face today.

Mr. JORDAN. Before we go to Mr. Papadopoulos, let me—you

made me think of a—we have this Web site, americanjobcreators,

and we have several responses from our State. The ranking member and I have the privilege of representing folks in Ohio. And one

comes to us from a gentleman from Mina, Ohio, close to Mr.

Kucinich’s district. He says, ‘‘A wise man once told me that the

human mind can accept good news, can accommodate bad news,

but can never get comfortable with uncertainty.’’ And that is a

huge impediment.

And I think in your testimony, Mr. Papadopoulos, you talked

about Congress reclaiming its responsibility over this area. So talk

to me a little bit more about the uncertainty; and the first question

I asked, do your members in your association, would they echo

what others have said that, if they knew then what they know

now, they wouldn’t have started their business?

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Mr. PAPADOPOULOS. Congressman, first let me start by talking

about myself, because over the last 20 years I have encouraged and

sold to my own parent company to invest in the United States, and

it has been $1 billion to $2 billion. And I find it very difficult today

to make that argument, you know.

You know, I heard Mr. Foerter talk about win-win, but win-win

for who? Win-win for the companies selling this equipment? Yes.

This, you know, control equipment. Win-win for the environmental

activists? What about a win-win for the companies that have to

gain a return on investment? I don’t see that in today’s U.S. environment.

And it saddens me as an American citizen, more than anything

else. I see other countries getting ahead of us, I see we have worldclass companies here in the United States. We have the best environment here in the United States; we breathe the best air. And

yet we are pushing our own world-class companies to the brink.

You know, we are not going to be breathing our own air, we are

going to be breathing other countries’ air, the way we are going,

without the jobs, without the investment.

That is, to me, the sad big picture. And I have difficulty convincing, in today’s world, today’s environment, why the United

States is the best place to keep pouring money, with this regulatory, you know, situation.

Mr. JORDAN. Mr. Walls.

Mr. WALLS. Mr. Chairman, the member companies of the American Chemistry Council operate in a globally, very intensely competitive industry. It is that regulatory uncertainty that is the primary determinant in whether or not they are making investments

here or elsewhere around the world.

I will just go back to my example on shale gas.

Mr. JORDAN. Shale gas, right.

Mr. WALLS. That, you know, again, is the type of game-changing

development here that is going make us more competitive. We have

folks in our industry saying that this development alone could put

a whole new lease on life in this industry. We want to capitalize

on that opportunity and reduce the uncertainties that are out

there.

Mr. JORDAN. Great.

Mr. Schimmel, I apologize, you have 15 seconds because we have

to stick to the 5 minutes so everyone gets in.

Mr. SCHIMMEL. I guess in answer to your question, Boral, of

course, is internationally traded, and we have a responsibility to

return shareholder value. And I would think that, were they to

make additional acquisitions in the United States, they would have

to think twice about the regulatory burden imposed by these rules.

Mr. JORDAN. Yeah.

I recognize the ranking member, Mr. Kucinich.

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

I was listening to Ms. Harman’s testimony on how the industry

has to consider the global competitive environment. And I had a

visit a couple weeks ago from the Pulp and Paperworkers’ Resource

Council, and they provided me with a lot of information that would

be interesting for this committee. And I am going to submit it. This

is a chart here that shows the closed saw mills and paper mills,

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1989 to 2003, most of them after 1993, I might mention; and also

shows the closed saw mills and paper mills, 2004 to 2007.

And as I look at all these closures, it is pretty stunning. Then

they showed me a map of how many have gone to other countries,

notably China. OK?

Now, it is a very interesting point here when I am listening to

this discussion, because I think you are mentioning one part of the

equation but it is only, frankly, a small part of the equation, because we are looking at trade agreements that were absent workers’ rights—the right to organize, the right to collective bargaining,

the right to strike, right to decent wages and benefits—human

rights—prohibitions on child labor, slave labor, prison labor—and

environmental quality principles, protection of air and water.

Those weren’t in our trade agreements in NAFTA. And we look

at the U.S. paper mill shutdowns; we see how many shutdowns occurred right after and NAFTA. And then after China trade, the

shutdowns skyrocketed.

Now, I am going to submit this for the record because I think

that——

Ms. BUERKLE [presiding]. No objection.

[The information referred to follows:]

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Mr. KUCINICH. Thank you.

I think that we have to consider the global competitive environment, and we certainly don’t want our air quality standards or our

labor standards to be reduced to a point where we become like

countries that are less democratic. Because in order to have a political democracy, you have to have an economic democracy.

I also want to put into the record a news story out of the Guardian, U.K., which shows that China—China—this is last year—ordered a polluting and unsafe factory shut down, including, I might

add, in China they shut down some of their older paper mills, 279

to be exact, because the Premier of China was concerned about

making sure the energy efficiency of all of his industries could be

increased. So China gets the connection now between upgrading

and energy efficiency, and that it also means paying attention to

the environment.

So, for the record.

Ms. BUERKLE. Without objection.

[The information referred to follows:]

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Mr. KUCINICH. Now, Mr. Foerter, I wanted to ask you, in your

written testimony you state that each dollar spent on air pollution

control technologies produces $40 in health savings. Can you explain how that occurs?

Mr. FOERTER. The types of pollutants that we are talking about

in many cases are going to be sulfur dioxide, oxides of nitrogen.

Sulfur dioxide is—we are looking at an acid rain program. That is

the big pollutant in that group. The oxides of nitrogen, that is frozen and transported into ozone, which gets into the lungs.

The others are these hazardous air pollutants, which are a lot of

metals that come from that. So even, I think, looking at the most

recent industrial boiler MACT, those numbers come out to be very

close to that $40.

Mr. KUCINICH. Well, you are telling us that EPA regulations actually create jobs and support industry. The figures I have seen

from OMB, from the EPA, and from numerous private studies support your claims that environmental protections like the Clean Air

Act have a positive impact on the economy.

In fact, a 2008 study from the Journal of Environmental Management entitled, ‘‘Environmental Protection, the Economy, and Jobs:

A National and Regional Analysis,’’ states that, ‘‘Contrary to general public perception and public policy understanding, since the

late 1960’s protection of the environment has grown rapidly, to become a major sales-generating, profit-making, job-creating industry.’’

Mr. Foerter, is that assessment consistent with what you have

observed?

Mr. FOERTER. That is correct. The costs of controls are much less.

In fact, when we actually do the implementation of the rules, they

often are much less than they are even projected in the EPA

rulemakings.

Mr. KUCINICH. Well, the authors of that 2008 study state that

environmental protection, as an industry, generated $300 billion

per year in sales in 2003, created 5 million jobs.

The authors went on to state, ‘‘Most of the 5 million jobs created

are standard jobs for accountants, engineers, computer analysts,

clerks, factory workers. And the classic environmental jobs—environmental engineers, ecologists, etc.—constitute only a small portion of the jobs created. Most of the persons employed in these jobs

created may not even realize that they owe their livelihood to protecting the environment.’’

Mr. Foerter, that sounds good, and it sounds like good, well-paying, middle-class jobs. Are these the kind of jobs that you have seen

created in the industry?

Mr. FOERTER. These are. And we are talking about companies

that actually do the IT work, the financial investments. I mean, we

do bidding on the projects, as well as going into the engineering design, which are some of the ones I talked about in my testimony.

Mr. KUCINICH. Thank you, sir.

Thank you.

Ms. BUERKLE. Thank you, Mr. Kucinich.

I guess I will yield myself 5 minutes.

Good morning to all of you, and welcome.

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First, I want to thank Mr. Chairman for holding this particularly

timely meeting.

As we make jobs and the economy a priority here in this Congress, what is becoming more and more apparent to us—and I am

sure you all have recognized this for a long time—is the crushing

regulations that you all face. And it makes doing business in this

country extremely difficult. We would like to change that. Our

chairman, Mr. Issa, has charged us with going out and finding out

the ways that these regulations are standing in the way of success.

And so that is what we are doing here this morning.

I think we can all agree that all of these regulations really represent a hidden tax on businesses and the cost of doing business.

And I would like to get into the cost of compliance in a few minutes.

I think that we can agree, as was mentioned earlier, that the

stimulus failed, because the government can’t create jobs. And so,

I want to thank all of you this morning for being the job creators

in our country and for keeping our economy—you all are the ones

that can get this economy back on track. So we need to work with

you to figure out how we get the government out of your way.

I also want to comment that, not only have I heard from businesses throughout the hearings that we have conducted, you hear

from not-for-profits, you hear from schools that the costs of these

regulations don’t even make sense, and it just impairs and impedes

their success.

So I look forward to hearing from all of you this morning.

I guess I want to go back to my colleague Mr. Kucinich’s comments about the costs and the cost-benefit. I think I would like to

hear from all of you, if you wouldn’t mind. Can you just tell me,

in each of your industries, if you can give me a figure for the cost

of compliance, the cost of regulations within your various industries?

Ms. Harman.

Ms. HARMAN. In multiple billions of dollars, between the capital

costs plus the operating and maintenance costs that are ongoing.

It is not just the cost of initially complying with the regulation; it

is the day-in, day-out costs.

It is also the cost of projects that can’t go forward because they

can’t make it through the regulatory red tape. A lot of these

projects are energy efficiency improvement projects. Some of them

are mill modernization projects. They are projects that will secure

the future of the mill so that our mills can actually buy the technology that Mr. Foerter is talking about. But if those mills close,

they can’t buy that technology and they can’t create those jobs.

Ms. BUERKLE. Thank you.

Mr. Papadopoulos.

Mr. PAPADOPOULOS. Let me just say, from the international experience I have, that today it costs in the United States in our industry twice as much to build capacity than it does, not in China—I

am not using that as a role model—but even in the EU. We have

gone to such an extreme in that count.

So, you know, I know we don’t want to go back to where we were

30 years ago; that we know. But I think we have reached the point

of diminishing returns. We have reached the point where we do

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have a healthy environment. We do have a world-class industry.

And we can’t accept that. We want to just keep pushing ourselves

when others need to catch up with us, because, as I mentioned before, you know, we are going to be breathing other people’s

emittants. It is not going to be our own.

Ms. BUERKLE. Thank you.

Mr. PAPADOPOULOS. And that is something that, you know,

should occupy us.

Ms. BUERKLE. Mr. Walls.

Mr. WALLS. Our situation is similar to that of the forest and

paper industry, not only in terms of the billions of dollars our industry spends in direct compliance costs, but we also experience a

number of indirect costs as a result of those regulatory requirements.

One of those indirect costs, frankly, is in jobs. Our industry now

employs about 780,000 Americans. That is down from a high of almost a million. In the mid-2000’s, when natural gas prices spiked

over a 5-year period, we lost 140,000 jobs. Year on year, between

February 2010 to February 2011, we lost another 15,000 jobs. I am

not saying that the regulations themselves are the sole cause of

those jobs being lost, but they are one of the impacts we are seeing

from the additional regulatory burden being proposed.

Boiler MACT is an excellent example. In the original proposal

that came from EPA, they would establish emissions limitations

that could not be met by the existing technology. If the technology

isn’t there to meet the emission limitations, what job is going to be

created to create the equipment to then meet the standard?

Ms. BUERKLE. Thank you.

Mr. Kamnikar.

Mr. KAMNIKAR. I have made six trips to China and three trips

to India in the last 5 years to benchmark against industries that

we compete with. The point is—and Congressman Kucinich made

a long list of achievements that all of us, across the table, have

achieved in terms of safety and in the environment. And if we just

put a moratorium on where we are today, it would take 20 years,

if ever, for the industries in China and India to catch up.

Ms. BUERKLE. Thank you.

I apologize, Mr. Schimmel. We are out of time.

I yield back to the chairman.

Mr. JORDAN [presiding]. Well, we will recognize the ranking

member.

Mr. CUMMINGS. Thank you very much.

I want to thank all of you for your outstanding testimony.

As I sat here, I could not help but think and go back to something that the chairman of the subcommittee said when he was

talking about that we had some witnesses—and, Mr. Chairman,

forgive me, it may have been another hearing that I was in. I think

we are talking about the same hearing. And when people were

asked, would they start their businesses again, there was one person—the reason why I remember this is because he was the one

person who said, ‘‘You know what? Although I’m concerned about

regulations, I would start my business again because I’m so honored to have the opportunities that I have to conduct a business in

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the United States of America.’’ I will never forget that as long as

I live.

You know, as I hear the complaints and concerns, I am just—I

guess maybe I come from a different world. You know, in Baltimore, if you look at the obituary page, you know, most people, as

in most places, most people die from one or two things. The first

thing I read in the morning is the obituary page. It is either cancer

or heart disease.

And there are some communities in Baltimore, where I come

from, a particular area called Fairfield, where the chemical industry had a lot of plants and they were pumping out all kinds of stuff

years ago. And there came a point in time when they pretty much

said that, after years and years of people living in that environment, said, you know, nobody should be living in this environment.

And a lot of those people found themselves getting cancer and suffering greatly.

And I am not trying to paint these industries in a negative way.

What I am trying to say is that we must always have balance. And

I appreciate that each and every one of you, I think, each and every

one of you talked about the fact that there is definitely—regulations are important for the safety, health, and welfare of our people. And so often I think we get confused, thinking that, on this

side of the aisle, all we want is regulate, regulate, regulate. No,

that is not what we are saying. We are saying that we want to get

rid of regulations that make no sense. And I think all of you have

made cases for some of those regulations that need to go. But, at

the same time, we want to make sure that there is balance. When

we get away from balance, then we have a problem in this Nation.

When we get away from balance in our family decisions, we have

problems. And that is the key.

And one of you—well, several of you talked about uncertainty.

And, certainly, in the United States of America, in a democracy,

you are going to have uncertainty no matter how you look at it.

When you change administrations, you are going to have uncertainty. A lot of the regulations that you are talking about, that you

are complaining about came under a Republican administration;

some came under Democrat. Folks changed because that is part of

the price that we pay in living in a democracy: uncertainty,

changes of policy, and what have you.

And so, I think we have to—when we look at all of this, we have

to ask the question—and I think Mr. Kucinich hit on it pretty hard.

Somebody said a moment ago that it would take them 20 years—

I think it was—who said that?—20 years to catch up with us. I

think it was Mr. Kamnikar. Yeah, that is true, but we are better

than that. This is America. This is the United States of America.

We are better than that.

And I have seen over and over again, I think we can—when we

don’t have the balance that I am talking about, we can get caught

up in a culture of mediocrity. And while we think we are ahead of

the game, if we get caught up in that culture of mediocrity long

enough we will be behind the game.

We want our people to have good health. We want people to be

able to have safe jobs. I want your son, who may want to do like

I did and have a tough job at Bethlehem Steel, to be able to go

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there, and when he blows his nose, he doesn’t blow out soot. I want

that. I want that desperately.

At the same time, I want you all to make the money so that he

can have a job. And so that is where the balance comes from. There

is nobody—we want job-creating opportunities. We want you all to

be successful. But, at the same time, we want to safeguard our citizens.

Unfortunately, there are a lot of people who don’t even know the

environments that they are walking into. And so we have to speak

for them. If we don’t speak for them, nobody else will. Somebody

has to say, wait a minute, let’s make sure that these regulations

are fair.

And so, I think the President is right. I think he hit the right

balance. I think there are Members on both sides of the aisle who

have said the President has hit the right balance. Now what we

have to do is we have to go through these regulations, we have to

look at them carefully, make sure that industry is able to thrive

and survive.

But let’s keep one thing in mind: We are so fortunate to have

companies operating in this country. It is an honor, as the gentleman said. I didn’t say it; he said it. It is an honor to have the

opportunity that we have here. And so, I don’t want us to take that

for granted.

And, with that, Mr. Chairman, I yield back.

Ms. BUERKLE [presiding]. Thank you——

Mr. CUMMINGS. I’m sorry—Madam Chairlady.

Ms. BUERKLE. Thank you.

I would like to now recognize the gentleman from Pennsylvania,

Mr. Mike Kelly.

Mr. KELLY. Thank you, ma’am.

I am going to yield to Mr. Issa.

Mr. ISSA. I thank the gentleman. I am a little surprised.

I will be brief. And I apologize; we have two hearings of this committee going on, so I am going back and forth.

Mr. Kamnikar, I believe that when you were talking about the

demands to the forging industry, in a sense, isn’t the greatest demand, by far, the greatest challenge, simply the energy? I mean,

when you get past capital costs, doesn’t it really boil down to, no

matter how effectively you use energy, if your competitors in other

countries can get their energy source significantly less expensively,

you will be outgunned in the international market? Isn’t that true?

Mr. KAMNIKAR. It is quite clear. And regulating greenhouse gases

in the way that has been outlined will effectively put many of our

suppliers and many forgers out of business, because the energy, either electricity or the natural gas, will not—it will become cost-prohibitive throughout the supply chain.

Mr. ISSA. And, Mr. Foerter, now, I know there is a whole industry of green jobs and green energy and so on. But isn’t it true today

that, if you use green energy, let’s just say all of it, by definition,

on an unsubsidized basis, you are paying dramatically more for

this energy? There is no, ‘‘alternative energy’’ industry that can

provide, on an unsubsidized basis, competition with the base fuels

of coal, oil, and natural gas? Isn’t that true?

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Mr. FOERTER. Well, I would be unqualified to talk about renewables, like solar and wind. But what we do is we clean up mostly

the fossil fuels. So, basically, we keep coal operating, keep oil, natural gas, as it comes into the mix.

Mr. ISSA. Right. And even after you clean up coal, it is still in

the neighborhood of 7 cents a kilowatt, dramatically less than any

of the, if you will, new renewable fuels.

Mr. FOERTER. Yeah, we have actually seen, while these air pollution control requirements have gone in place for coal-fired utilities,

the cost of electricity has actually gone down.

Mr. ISSA. So, for Mr. Schimmel, it is interesting that you are sort

of involved in the brick-making business, because I was in Hanoi

some time back and I got to observe how they make bricks. Now,

they are totally supportive of Kyoto and all the other protocols.

They take pure, just plain coal and they burn it, high-sulfur coal,

and the tops of every leaf are black. Literally, you can see your way

back 1,000 years into how you would make bricks.

When we look at the amount of BTUs you use, and, thus, the

amount of carbon you put in, even if you were using a source fuel

of coal, wouldn’t it be true that you would probably use 1/20th the

fuel that is used in an open-hearth-type brick production?

Mr. SCHIMMEL. I would say that is probably approximately correct. I have been to Malaysia and seen some of the slope kills that

you probably are referencing, where they burn waste wood.

You know, traditionally, in the 1970’s, the U.S. brick industry

was around 4,000 BTUs a pound. Now we are down to about 1,200.

And in Boral, at least, as well as some of our competitors, we use

landfill gas, we use wood waste, natural gas, some coal.

But, yes, the industry, as a whole, has changed its technology

substantially over the years. And periodic kilns, although there are

a few of them still in existence, most of them are automated, computer-controlled tunnel kilns that are highly efficient.

Mr. ISSA. So, in a sense, every time an American operation shuts

down and most overseas locations, particularly in the developing

world, take their place, you are going to have a larger carbon footprint, rather than a smaller carbon footprint. Isn’t that what the

industry has found?

Mr. SCHIMMEL. I think that is traditionally true. Some of the European technology, of course, is probably on par with where we are.

But, certainly, if we go to China and some of those other less energy-savvy countries——

Mr. ISSA. Well, you know, it is funny you mention Europe, because we will be going to France to visit the nuclear reprocessing

facility that allows France to have all its entire base load coming

from nuclear with zero emissions, because they are willing to use

a source of fuel that costs less than 6 cents a kilowatt hour after

all the costs of disposal. So, hopefully, that will be a lesson learned,

is that we should copy the Europeans in at least one item—well,

two if you count dark chocolate.

Ms. Harman, the general health of the forest industry in North

America is considered to be good. But if you take Canada out, how

good is it? How good is the ability to get the source material and

to work with the pulp in the United States versus Canada versus

most of your competitor countries?

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Ms. HARMAN. Well, the U.S. forest-products industry is highly

competitive. And we are competitive because we have made very

difficult decisions, because we have right-sized our business. That

means downsizing, unfortunately. EPA rules and regulations have

been a contributing factor in that. Some of the high energy costs

that affected the chemical industry have also affected us.

An interesting comment that you raised earlier about renewable

energy, I would offer to you that the forest-products industry is one

place where, on an unsubsidized basis, we can produce renewable

energy as a byproduct of our manufacturing process. And we can

do it very cost-effectively. And, in fact, it is a large portion of our

energy, which is why the biomass rules in the boiler MACT regulation so negatively affect our industry.

Mr. ISSA. Well, thank you. And I commend you for that work.

And I think we are all well-aware that you have been an industry

in which nothing goes to waste.

I yield back.

Ms. BUERKLE. Thank you, Mr. Chairman.

I would like to now yield 4 minutes to Chairman Issa.

Mr. ISSA. Which I will yield to the gentleman from Pennsylvania.

Thank you.

I owe you.

Mr. KELLY. Well, I am going to thank the gentleman from California for yielding back. And, Madam Chairman, thank you, as we

continue to do things the proper way.

First of all, I want to thank all of you from being here. I come

from the private industry also. And there is an old adage that is

out there, and it goes something like this: ‘‘Don’t worry about the

mule. Just load the wagon.’’ And I think we are at a point where

the mule is about ready to walk away from the harness himself.

And it is really great that we are concerned about clean air and

we are concerned about clean water and we are concerned about

the health of our workers—and I would suggest this: That is not

just one party’s concern. All of us are concerned about that. It is

the cumulative effect of all these regulations that keep building

and building and building to where it is going to break.

Now, I am somewhat of an athlete, not a great one, but one sport

that always interested me was golf. And what interested me about

golf is a guy like me, who is a lousy golfer, can beat a guy who is

really good. It is called a handicap.

Now, we have continued to handicap you—and now I am part of

this government—to handicap you and handicap you and handicap

you. So I think you are about ready to walk away from the harness.

But, in particular—first of all, Mr. Kamnikar, thanks for being

here. In the district, you know, we have so many people in the

business, and I want to congratulate you on becoming the president

of the organization.

But the effect of these cumulative regulations, if you could just

walk us through. Because a lot of us have never signed the front

half of a check and have absolutely no idea of the unintended consequences of all these costs, if you could, just kind of walk us

through, for an example, something like ITAR and how difficult it

makes it for somebody who makes roll bearings to go through that

type of regulation, and the cost involved.

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Because, at the end of the day, it is the cost that concerns me,

and our ability to compete in the global market. We have handicapped ourselves to the point where we are forfeiting the ability to

compete.

If you could, sir.

Ms. BUERKLE. Excuse me. If I could just interrupt. The House

rules are requiring that we adjourn this meeting. However, if you

would like to take 30 seconds to answer Mr. Kelly’s question, and

then we will adjourn.

Mr. KAMNIKAR. It is difficult to answer. I would simply say this,

and I think this is true of everybody on the panel. We have done

a lot to get to where we are today, and the uncertainty, the possibility of further regulation is what we are most concerned about.

And I go back to my point about competing with the Chinese and

Indians. It will take them a very long to get where we are today,

but while they continue to operate, they have a very big advantage

over us. We will take our chances against them, but let’s not regulate us even more.

Ms. BUERKLE. Thank you.

Again, I apologize for the time constraints this morning. I would

like to thank all of our guests here for taking time out of your busy

schedules to appear before us, give us your testimony.

The meeting will stand adjourned.

Thank you so much.

[Whereupon, at 11:57 a.m., the subcommittee was adjourned.]

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