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THE IMPACT OF REGULATION ON U.S. MANUFACTURING: SPOTLIGHT ON DEPARTMENT OF

LABOR AND DEPARTMENT OF TRANSPORTATION

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JUNE 28, 2005

Serial No. 109–70

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON REGULATORY AFFAIRS

CANDICE S. MILLER, Michigan, Chairman

GINNY BROWN-WAITE, Florida

CHRIS CANNON, Utah

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

STEPHEN F. LYNCH, Massachusetts

WM. LACY CLAY, Missouri

CHRIS VAN HOLLEN, Maryland

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

ED SCHROCK, Staff Director

ERIK GLAVICH, Professional Staff Member

ALEX COOPER, Clerk

KRISTA BOYD, Minority Professional Staff Member

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C O N T E N T S

Page

Hearing held on June 28, 2005 ............................................................................... 1

Statement of:

Sessions, Stuart L., vice president, Environomics, Inc.; Jeff Melby, vice

president, environmental and safety, Genmar Holdings, Inc.; and Joan

Claybrook, president, Public Citizen ........................................................... 86

Claybrook, Joan ......................................................................................... 105

Melby, Jeff ................................................................................................. 98

Sessions, Stuart L. .................................................................................... 86

Stidvent, Veronica Vargas, Assistant Secretary for Policy, U.S. Department of Labor; and Jeffrey A. Rosen, General Counsel, U.S. Department of Transportation ................................................................................. 20

Rosen, Jeffrey A. ........................................................................................ 34

Stidvent, Veronica Vargas ........................................................................ 20

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

Claybrook, Joan, president, Public Citizen, prepared statement of ............. 107

Lynch, Hon. Stephen F., a Representative in Congress from the State

of Massachusetts:

Letter dated April 12, 2005 ...................................................................... 9

Prepared statement of ............................................................................... 16

Melby, Jeff, vice president, environmental and safety, Genmar Holdings,

Inc., prepared statement of .......................................................................... 101

Miller, Hon. Candice S., a Representative in Congress from the State

of Michigan, prepared statement of ............................................................. 3

Rosen, Jeffrey A., General Counsel, U.S. Department of Transportation,

prepared statement of ................................................................................... 36

Sessions, Stuart L., vice president, Environomics, Inc., prepared statement of ........................................................................................................... 89

Stidvent, Veronica Vargas, Assistant Secretary for Policy, U.S. Department of Labor, prepared statement of ......................................................... 23

(1)

THE IMPACT OF REGULATION ON U.S. MANUFACTURING: SPOTLIGHT ON DEPARTMENT

OF LABOR AND DEPARTMENT OF TRANSPORTATION

TUESDAY, JUNE 28, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY AFFAIRS,

COMMITTEE ON GOVERNMENT REFORM

Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2003, Rayburn House Office Building, Hon. Candice S. Miller

(chairman of the subcommittee) presiding.

Present: Representatives Miller and Lynch.

Staff present: Rosario Palmieri, deputy staff director; Dena

Kozanas, counsel; Erik Glavich and Joe Santiago, professional staff

members; Alex Cooper, clerk; Alexandria Teitz, minority counsel;

Krista Boyd, minority professional staff member; and Teresa

Coufal, minority assistant clerk.

Ms. MILLER. I would like to call the hearing to order.

Good afternoon, everyone. We are here today to discuss the overall progress that the Department of Labor and the Department of

Transportation have made in responding to the public’s reform

nominations that were included in the Office of Management and

Budget’s 2005 Report on Regulatory Reform of the U.S. manufacturing sector. This is the second in a series of hearings discussing

those regulations and guidance documents that merits priority consideration because of the impact on domestic manufacturing.

For many years it has been widely acknowledged that the very

foundation of a nation’s economy is manufacturing. It is certainly

a critical component. It is a backbone of America, because manufacturing actually creates goods. But it also creates progress, innovation, it creates economic and human prosperity. The manufacturing

industry also helps employers and employees which plays a role in

creating.

For many years, the government has understood that we do not

actually create jobs; rather, the private sector actually creates jobs.

The role of the government has been to generate an environment

that attracts business investments and encourages job creation.

However, the manufacturing industry has come under attack lately

by the very government that once helped to hold it together.

Even though manufacturing provides 14 million Americans with

jobs and accounts actually for 62 percent of all the imports, domestic manufacturing has lost 2.8 million jobs between 2000 and 2003.

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These are jobs that have provided a high quality of life for Americans because of salaries and benefits. In manufacturing of course,

they are about 18 percent higher than the rest of the private sector.

More than any other sector, manufacturers bear the highest

share of the cost of complying with regulation. At $8,000 per employee, domestic manufacturers assume almost twice the average

cost for all the other U.S. industries. Workplace regulations alone

cost manufacturers over $2 million per firm per year, roughly about

$1,700 per employee.

Our global competitors do not have this large of a burden. Regulatory compliance has become so burdensome that those costs are

now the equivalent of a 12 percent excise tax on manufacturing.

Such domestically imposed costs are harming manufacturing and

adding over 22 percent to the cost of doing business in the United

States. And we are not the only developed nation with high structural costs, of course, but these costs are higher here in almost

every category. And that 22 or 23 percent is an enormous drag on

economic growth and on job creation.

The high cost of regulation, the increase in costs of health care

and the often-unwarranted tort litigation have all altered the dynamics of domestic manufacturing. These new dynamics have hindered the international competitiveness of manufacturers and have

constrained the demand for workers in U.S. facilities.

Make no mistake, I certainly am a defender of regulations that

protect worker health and safety. I am a defender of regulations

that watch over consumers and safeguard our natural resources. In

fact, I have spent about three decades in public service, and I have

always thought of myself as a principal advocate of our environment. But I do think that the common standard must always be

what is actually reasonable. And that is the purpose of our hearing

today. I am eager to have a dialog about how best to improve Federal regulations for the benefit of all Americans. In particular, I am

hopeful that this hearing will have a positive impact on those regulations flagged by OMB for priority review that are still outstanding.

I am extremely troubled by the adverse effects some of these regulations could have on our ability to remain competitive with our

key trading partners around the globe. By acting on the combined

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and the Department of Transportation, I do believe that we could

be one step closer to reducing the cost and burden on domestic

manufacturing firms. The savings accrued by reducing the regulatory burden on U.S. manufacturers could be redirected into hiring

new workers, investing in new equipment and protecting American

jobs.

Streamlining all of the unnecessary regulatory burdens on the

manufacturing sector is a powerful antidote for reinvigorating the

economy, for helping our small businesses and certainly for the

competitiveness agenda that we have here in the United States of

America, as we recognize that all of our manufacturers are facing

much different dynamics in the global marketplace as well.

[The prepared statement of Hon. Candice S. Miller follows:]

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Ms. MILLER. At this time I would like to yield to the ranking minority member for his opening statement.

Mr. LYNCH. Thank you, Madam Chair.

Again, I want to thank you for leading this whole process and reviewing our regulatory framework in an effort to remove unnecessary burdens on industry.

The manufacturing industry provides over 14 million American

jobs, which are critical to our economy. But as someone who has

worked in auto plants and steel mills and oil refineries across this

country, I can tell you that manufacturing jobs can also be very

tough and dangerous. But there are significantly fewer injuries and

deaths today than just 30 years ago, because of our Federal and

health safety requirements.

Based on my own experience, I know how important the health

of the manufacturing industry is to the economy and to the workers it employs. While I am committed to the growth of the American manufacturing industry, I honestly believe that exposing more

workers to disease and injury will not accomplish that goal. I must

admit, as a threshold matter, that I am concerned about OMB’s approach and their activities in this area. In reviewing the conduct

of OMB, it is apparent that OMB has created a regulatory hit list

to focus on weakening or gutting many existing health, safety and

environmental protections. This raises a lot of questions in my

mind, and I hope that we can explore them here today.

As a factual matter, I am concerned that weakening many of

these regulations will hurt workers and their families. I don’t believe that is necessary. We can have strong health, safety and environmental protections while at the same time growing manufacturing and the economy.

Now, I will concede that there are some regulations that we can

reform and eliminate. But I remain concerned about how OMB and

the agencies selected the regulations which we have targeted.

There seems to be a lack of transparency in OMB’s process for developing this list, and OMB solicited public comments last year on

agency regulations that should be reformed.

But it is unclear how the relevant agencies and OMB got from

a list of 189 nominations to OMB’s list of 76 priority nominations.

Accordingly, I am looking forward to hearing from the representatives that are with us today from DOL and the Department of

Transportation about the selection process and how they will respond to the nomination on OMB’s list.

Finally, I hope we can carefully consider what weakening each

of these targeted regulations would mean to real Americans. Two

areas that I am particularly interested in: the Department of

Transportation’s plan to issue proposed changes to the hours of

service rules pertaining to commercial drivers; and the Department

of Labor’s plan to propose changes to the Family and Medical

Leave Act. Previous DOT rules limited the amount of time that

commercial drivers could be on the road to 10 consecutive hours

with 8 hours off duty. In 2003, however, the Department issued a

new rule that actually increased the number of permitted driving

hours from 10 to 11, with a required 10-hour break between shifts.

Madam Chair, in July 2004, the U.S. Court of Appeals for the

D.C. Circuit vacated the Department of Transportation’s rule, findVerDate 11-MAY-2000 11:54 Nov 21, 2005 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 D:\DOCS\23627.TXT HGOVREF1 PsN: HGOVREF1
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ing that the Department amazingly enough had not considered the

effect of their rule on driver health. Now, you would think that

would be a good place to start.

Specifically, the court deemed the final rule to be arbitrary and

capricious, because the agency neglected to consider the driver’s

health as a statutorily mandated factor. I find this unbelievable. It

is my understanding that despite this ruling, the Department recently reissued notice of proposed rulemaking and comments and

concerns—the same rule that had been vacated by the Federal Appeals Court. Accordingly, I am interested in whether DOT has in

fact addressed the court’s primary concern and taken driver health

into account this time around.

In addition, I hope the Department of Labor will not weaken the

Federal Family Medical Leave Act. It is my understanding that

there is interest in modifying certain definitions of serious illness

and also extending the amount of time that a person must be in

recovery or disabled before an event is eligible for FMLA consideration or inclusion.

It is an important law that protects the rights of workers to take

unpaid leave when they are suffering from a serious health condition or when they need time off to care for a new child or a sick

family member. Under current regulations, a serious health condition is defined in part as a condition that requires more than 3 consecutive days of treatment and recovery.

According to a May 26, 2005 USA Today article, one of the proposed changes to FMLA would amend the statute’s coverage to only

those illnesses that are serious enough to require 10 or more days

off. The current definition protects workers who suffer from illnesses such as appendicitis or kidney stones or are severe enough

to require time off for treatment but do not last for 10 days. Accordingly, the rollback to these protections would cause employees

who miss work because of a serious illness to lose their jobs.

Madam Chair, I would like to submit for the record a letter

signed by over 200 groups, such as the National Partnership for

Women and Families, the Epilepsy Foundation, the Communication

Workers of America, the Children’s Alliance of New Hampshire,

there are also some religious groups that have signed on as well,

urging the Department of Labor not to make any regulatory

changes that would undercut the protections of the Family Medical

Leave Act.

Ms. MILLER. Without objection, that will be entered.

[The information referred to follows:]

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Mr. LYNCH. Thank you, Madam Chairman.

The Family Medical Leave Act is just one of the important protections that should be addressed today. It is not perfect, and it

could use some adjustment, some tweaking to make it better and

fairer to employers, understandably so. But I am hoping to hear

from Mr. Rosen and Ms. Stidvent more about the status of all the

Department of Labor and DOT nominations.

I want to thank you, Madam Chairman, again, you have been a

great leader on this issue and this whole process. I thank you for

your willingness to work with me and with the Democratic party

on this. I look forward to hearing all the testimony here today, and

I thank you, Madam Chairman, and I yield the remainder of my

time.

[The prepared statement of Hon. Stephen F. Lynch follows:]

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Ms. MILLER. Thank you.

It is a practice of the Government Reform Committee to swear

in all our witnesses, so the second panel as well, if you would also

rise and then we can dispense with at the next panel.

[Witnesses sworn.]

Ms. MILLER. Thank you.

Just in the interest of moving things along, you will see the little

boxes in front of you for the witnesses there. We ask you to try to

keep your oral testimony to about 5 minutes. If you have other testimony you want to submit for the record, we certainly will take

that of course. When you see the yellow light, that means you have

1 minute remaining, to just give you an idea to wrap it up and try

to stay within the 5 minutes.

Our first panelist today is Secretary Veronica Stidvent. She is

the Assistant Secretary for Policy in the Department of Labor, and

she was confirmed by the Senate on December 8, 2004. On a daily

basis, some of Ms. Stidvent’s responsibilities include management

and implementation of policy development, oversight of regulations

and compliance assistance strategies, among other duties as well.

Prior to joining the Department of Labor, Ms. Stidvent joined the

White House Chief of Staff’s Office, and before her White House

job, she was a special assistant to the OMB Office of Information

and Regulatory Affairs.

We welcome you to the committee today and look forward to your

testimony.

STATEMENTS OF VERONICA VARGAS STIDVENT, ASSISTANT

SECRETARY FOR POLICY, U.S. DEPARTMENT OF LABOR; AND

JEFFREY A. ROSEN, GENERAL COUNSEL, U.S. DEPARTMENT

OF TRANSPORTATION

STATEMENT OF VERONICA VARGAS STIDVENT

Ms. STIDVENT. Thank you. Chairman Miller and distinguished

members of the subcommittee, thank you for the opportunity to appear before you today to discuss the Department of Labor’s

progress in responding to the 11 reform nominations that were included in OMB’s 2005 Report on Regulatory Reform of the U.S.

Manufacturing Sector.

My written testimony addresses the Department’s progress on

each of the 11 reform nominations. I would like to highlight just

a few of those for you now.

Regarding permanent labor certification, one commenter was

critical of the current process for certifying the unavailability of

U.S. workers for positions for which foreign nationals are sponsored, and recommended the Department publish final regulations

that used a broader approach and streamlined the certification

process. The Department’s Employment and Training Administration published the final permanent labor certification rule on December 27, 2004, and has implemented the re-engineered permanent labor certification program. The new process includes an e-filing capability and through the utilization of technology, has reduced processing times from as long as several years to approximately 60 days for those applications not identified for audit.

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Regarding the coke oven emission standard, two commenters recommended that OSHA update its coke oven emission standard. In

January of this year, OSHA published Phase II of its Standards

Improvement Project, which streamlined several provisions of the

coke oven emissions standard. For example, OSHA reduced the frequency of medical monitoring for certain employees from semi-annually to annually after determining that medical evidence did not

support the need for semi-annual monitoring.

The next reform suggestion pertains to hazard communication/

material safety data sheets. Several commenters stated that these

MSDSs should be prepared using a consistent format and that the

quality of information needed to be improved. OSHA is preparing

proposed guidance for the preparation of MSDSs that will be posted on the agency’s Web site for comment in 2005 and will be completed in 2006.

In addition, OSHA has added to the spring 2005 regulatory agenda the possible modification of the Hazards Communication Standard to be consistent with the Globally Harmonized System of Classification and Labeling of Chemicals.

Regarding OSHA’s annual training requirements for separate

standards, one commenter observed that OSHA has separate annual training requirements for a number of these standards, and

the commenter pointed out that EPA includes training requirements for a number of regulations that are not always compatible

with OSHA requirements. The comment recommended that the

agency develop a single integrated training program.

The Department’s May 2005 report to OMB on this referral

noted that OSHA does not actually require separate training programs for each standard that requires such training. Rather, employers are permitted to organize and present training in whatever

manner is most effective for the workplace involved. The report

also noted that OSHA has sought to avoid duplication of EPA’s

training requirements on subjects where both agencies have jurisdiction.

In order to further clarify training requirements and to assist

employers, OSHA plans to revise and update its publication, Training Requirements in OSHA Standards and Training Guidelines, before the end of 2005. These guidelines help employers to design,

implement and evaluate their training programs to ensure that

they are effective.

Regarding hazard communication training, one commenter stated

that OSHA’s 2004 draft guidance on training requirements under

the Hazard Communication Standard was too complicated for small

businesses and recommended that OSHA develop a simplified approach. OSHA anticipates finalizing the draft guidance in 2005 and

expects to include a simplified approach as recommended.

Furthermore, on hexavalent chromium, two commenters urged

OSHA to minimize the impact of its final hexavalent chromium

standard on small business. The agency is very much aware of the

concerns of small business and other stakeholders. OSHA conducted a SBREFA panel review to focus on small business concerns

prior to publishing the proposed rule, and received comments from

many small business representatives at public hearings held this

past February.

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Although under a court-ordered deadline to complete this final

rule by January 18, 2006, I can assure this committee that OSHA

will observe all the requirements applicable to the regulatory process and will consider the issues raised by all commenters as it develops this final rule.

Finally, there are the OSHA sling standards. Two commenters

recommended that OSHA update the sling standard to reflect the

American Society of Mechanical Engineers consensus standard.

OSHA does plan to update this sling standard as part of its regulatory project to update standards based on national consensus

standards. OSHA is developing a guidance document on the selection and use of slings which it plans to issue by February 2006.

This document will make it clear that slings meeting the newer

ANSI/ASME standard are acceptable.

Madam Chairman, I ask that my written testimony be submitted

for the record. I would be happy to respond to any questions you

may have.

Thank you.

[The prepared statement of Ms. Stidvent follows:]

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Ms. MILLER. Thank you, Ms. Stidvent.

Our next witness is Jeffrey A. Rosen. He is the General Counsel

at the Department of Transportation. Mr. Rosen was sworn in on

December 15, 2003, and as the chief legal officer, he has final authority over all legal questions within his department and oversees

the activities of over 400 attorneys in the Department as well.

In the 21 years prior to his swearing in, Mr. Rosen was a private

practice attorney with Kirkland and Ellis, where he built up extensive experience with matters pertaining to government enforcement

actions, business torts, and anti-trust, among others. Until he

joined the Department of Transportation, he was also a professor

at Georgetown University Law Center.

We certainly appreciate your attending today, and we look forward to your testimony as well.

STATEMENT OF JEFFREY A. ROSEN

Mr. ROSEN. Thank you. I am Jeffrey Rosen, General Counsel of

the U.S. Department of Transportation. I am pleased to have the

opportunity to speak with you this morning about the regulatory

review and reform efforts of the Department.

To fully appreciate DOT’s regulatory review and reform efforts

and our response to the specific nominations of DOT rules in the

OMB report, it is useful to understand both the scope of our responsibilities and the many steps we already take to improve them

or to eliminate them if no longer needed. We take that responsibility seriously. And among other things, DOT has been an active participant in OMB’s regulatory review efforts.

In OMB’s review of the manufacturing sector, OMB asked DOT

to focus on five items. Two of those involved our Federal Motor

Carrier Safety Administration, which has among other things responsibility for safety in the trucking area, and three of the nominations dealt with the National Highway Traffic Safety Administration’s [NHTSA] responsibilities. NHTSA primarily regulates

automotive safety.

So let me give you a quick update on those five areas that were

the subject of the OMB nominations. I will start with the two from

the Federal Motor Carrier Safety Administration. The first one concerned an existing rule on motor vehicle brakes. The National Association of Manufacturers and the National Marine Manufacturers

Association have proposed that our Motor Carrier Safety Administration consider allowing commercial motor vehicles to use a certain type of brake, sometimes called surge brakes, that is now authorized for consumer uses but not for commercial uses.

The status of that is that our agency is currently planning to

publish a proposed rule on this subject in September 2005. So we

are working on the proposed rule and we will be responsive to the

OMB nomination with a Federal Register notice that should be expected in September 2005.

With regard to the other FMCSA rule, the Small Business Administration’s Office of Advocacy raised a question with regard to

the hours of service regulation. The hours of service regulation is

a somewhat lengthy and complex regulation dealing with the rules

on how many hours truck drivers, for example, can work, dealing

with fatigue and other kinds of requirements. SBA had asked that

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for drivers who deliver goods locally, short haul, that they be permitted to drive more than 11 hours.

What I can say about that regulation is a couple of things.

FMCSA published a Federal Register notice last February 4, 2005,

asking for public comment in response to the earlier rule from 2003

having been partially invalidated by the court of appeals. And it

has been collecting input and is considering, among other things,

how to handle short haul and other effects on small entities.

This is a rule that Congress, in the last extension on the highway bill, provided an additional year of it being in effect, notwithstanding the court’s decision. So the rule remains in effect, but unless Congress acts again, the congressional extension of the rule

would expire at the end of this fiscal year.

So FMCSA is currently working on a final rule that we anticipate would likely be published this August. The resolution of the

SBA issue will be a part of that, but I can’t tell you today what

the resolution will be.

Switching over to the three NHTSA items that were on the nominations list, and I see I am actually going to run over time, so I

will try to cover all three of them very quickly.

Ms. MILLER. That is fine.

Mr. ROSEN. The one on lighting, we expect to publish a proposed

rule in December of this year. The one on occupant ejection,

NHTSA has published two proposed rules dealing with side impact

protection and door latch strength in May of this year and in December of last year. And with regard to vehicle compatibility standards, NHTSA will soon be submitting a report to OMB on the status of research that has been conducted in that area, which may

address whether a rule is appropriate.

Since I see my time is coming to an end, I will stop there, other

than to just emphasize that regulatory review and improvement is

a very important priority for the Department of Transportation and

will continue to have our efforts and attention going forward.

[The prepared statement of Mr. Rosen follows:]

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Ms. MILLER. Thank you very much. I appreciate both of you coming here today. These are important issues, and I will start the

questioning.

I would like to address this issue that OSHA is in the process

of looking at and that is the hexavalent chromium rule. I probably

have learned more about that particular thing in the last month or

so than I even knew before. Even though it is not a household

word, if you are in a particular business, it is of utmost importance,

certainly, to you.

Some in the industry have actually said that the linear risk

model that you have utilized as you have been promulgating your

rule there over-predicts lung cancer risks, because the studies that

OSHA was using were based on workers employed between the

1940’s and the 1970’s, when exposure was quite a bit higher. I am

just wondering if you might have a comment on whether or not

that is a true observation and if so, why would you use that kind

of antiquated data basing?

Ms. STIDVENT. Madam Chairman, I will say at the outset that I

am a bit limited in what I can discuss at this point, and since this

is an open rulemaking and we plan to publish the final rule in January.

But I can assure you that we did receive a number of comments

on the analyses used by OSHA in this rulemaking at different

stages. We took public comment in the requests for information,

during the SBREFA panel, during the number of hearings we held

in February of this year. And a number of stakeholders raised a

variety of issues with the analyses and the methodology used by

OSHA. We are taking all those comments into consideration and

will look very carefully at the analysis used and the quality of the

data that is being inputted into those models that OSHA is using.

Ms. MILLER. I appreciate that you have to be somewhat guarded,

because of where you are in the rulemaking process, but I intend

to make a few other comments, to make sure they are on the record

and push this case. I hope you take those into consideration as

well. Because a number of people have brought to my attention the

fact that, and you know, it is interesting, but we had another hearing previous to this about regulatory burdens on manufacturing

and the National Manufacturers Association had mentioned, I

think I made that point in my opening comments, a study about

structural costs for all of our manufacturers are about 22 or 23

points higher than any of our foreign trading partners, including

Canada. I come from Michigan, that is really our largest trading

partner in my State.

But I was looking at a list of other countries that have standards

as well for these particular elements, and in looking at what the

proposal is from OSHA, we are going, I guess, from our current 50

down to 1, I think is the proposal that you are looking at in your

rules. If you look at every one of our other competitors, Mexico at

50, even Canada, which I have always thought to be an extremely

progressive nation, at 50, Japan, European Union, on and on and

on, China, India, 50, 50, 50 all the way down the line. Sweden is

at 20.

And I am just wondering, don’t you think, and I don’t know if

you can comment on this or not, but it would seem to me that

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would certainly put our industries here in the United States at a

distinct competitive disadvantage to our foreign trading partners.

I have heard from quite a few people in the industry in my area,

their total consternation to the point that they have just said they

are going to close the doors. I unfortunately come from a State that

is continuing to bleed manufacturing jobs. As I say, I think we

have to be very cognizant of the fact that OSHA requirements and

other kinds of regulations that we pass in the past have raised our

standard of living, have increased of course safety standards in the

labor force, etc.

But as a reasonable standard, reasonable being the operative

phrase, if we put our companies at this kind of a disadvantage, I

think we are going to lose a lot more jobs. Can you comment on

that?

Ms. STIDVENT. Yes, that is certainly a concern that we have

heard in a number of arenas, not just limited to hexavalent chromium. The question about how our work force and our businesses

compete on a global level, that is something that we certainly share

the concern about. Our utmost priority is the health and safety of

workers, of course.

In promulgating OSHA rules, we are constrained by the OSH Act

in what we can and cannot consider. But economic and technological feasibility are part of that consideration. I can assure you

that we will be looking at all of these factors as we move forward

with the hexavalent chromium rule.

Ms. MILLER. Just one other thing on that issue. Those can’t be

the only factors, of course, that we have to look at. It is interesting,

in this particular element, as you are going through your rulemaking process, I was looking at some testimony from a fellow who

is a colonel in the Air Force who actually testified, apparently to

OSHA, that the compliance with this proposed rule, ‘‘would require

major reallocation and that productivity would be expected to drop

by 50 percent.’’ In other words, that the proposal apparently could

have some sort of an adverse impact on national security, because

of the way the element is utilized with aircraft.

I also serve on the House Armed Services Committee, so I raise

that as well. I am not sure if you wish to comment on that or not,

but I certainly want to raise that. I thought that was rather startling.

Ms. STIDVENT. Again, I hope I am not frustrating you with my

limited responses, but——

Ms. MILLER. No problem. I just wanted to get it on the record.

Ms. STIDVENT. But we hear you and I can assure you that all of

these comments and concerns from all stakeholders will be taken

into consideration as we develop the rule.

Ms. MILLER. Thank you.

I yield to the ranking member.

Mr. LYNCH. Thank you.

Let me just go right back into that same issue on hexavalent

chromium. It is my understanding that, I am a former welder, I

used to weld stainless, I know this is a concern for folks in that

industry. I understand that this regulation does not cover the construction industry, so they are not under this reg.

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But I am concerned that a lot of these processes have not

changed significantly since the data was gathered. I believe the two

studies that are out there are the Gibb study and the Lippold

study. The Gibb study obviously is the one that is being criticized

by some in industry because it dates back to between the 1940’s

and 1970’s.

However, it did involve 2,300 employees, and did involve 70,000

individual routine interventions of gathering data on these people.

The one that is being suggested by industry that is more recent in

time involves less than 800 employees instead of 2,300. It involves

less than 800 interventions instead of 70,000.

So I am reluctant to suggest that we move to something that is

more recent in time when it is not as thorough and probably not

as indicative or expressive of the threat that is out there. So my

suggestion is to proceed with caution and whatever action you take,

take it on the basis of sound evidence and not because India has

it or because Mexico has it. Because my knowledge of their safety

and health standards does not lead me to believe that is some direction that we should go in.

I think that if manufacturers are leaving this country, it is be- cause they can exchange $25 an hour workers for $1 an hour workers. That is the reason folks are closing up shop. And as someone

who used to work at a GM plant, I certainly understand the impetus for that plant relocation to Mexico. And it was not because of

hexavalent chromium, it was because, as I say, they could exchange $20 an hour jobs for $1 an hour jobs. That is the thing that

we have to deal with.

The second issue is that we also have trade laws and tax laws

in this country that provide incentives for employers and manufacturers to relocate. Until we deal with that through our trade policy,

that trend will continue.

But again, I would ask with respect to this regulation on

hexavalent chromium, just to please proceed with caution. There

may be room here for a compromise, though I am not sure. Certainly I think it is right to revisit it and make sure that it is as

effective and efficient as possible. I do not oppose that, but again,

I would not displace the previous study because of the closeness in

time of the, I believe it was the Lippold study.

Mr. Rosen, I would like to talk to you about the hours of service

piece. I understand we are going to leave the 11 hour standard in

place until and unless Congress deals with it, is that correct?

Mr. ROSEN. I don’t think I could say that. The rule that was

issued in 2003 that has that is in place under the extension that

Congress enacted through the end of this year.

Mr. LYNCH. That’s the one that the Third Circuit actually vacated, is that correct?

Mr. ROSEN. The court of appeals, I think, for the D.C. Circuit vacated the rule, but then Congress reinstated it. And the current extension from Congress would expire at the end of the fiscal year.

Our Motor Carrier Safety Administration is working on a rule that

would be issued in August to take effect in the event that the current rule were to expire.

The content of the rule that will be issued—what I am saying is

I don’t think I could say yet what it will include, in part because

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it is a pending, open rulemaking. I don’t think I can comment exactly on what its comments will be.

Mr. LYNCH. That’s not very helpful to me.

Let me just say that there is a lot of data out there indicating

the causality between driver fatigue and fatal accidents. I think at

least it has been reported that about 20 percent of those truck accidents, big truck accidents that have fatalities involved, 98 percent

of the time, it is a person in a passenger vehicle, it is not the truck

driver, that there is some fatigue involved.

What amazes me is that the D.C. Circuit vacated the rule because the Department of Transportation had failed to consider the

health of the driver when issuing and formulating its rule. That is

particularly troubling to me. Wouldn’t that be a good place to start,

given the evidence that is out there regarding the connection between fatigue and fatal accidents? These are our families that are

on the road. There is a lot of cargo being hauled around and a lot

of these trucks are clearly mismatched for the road, and they are

a clear threat to passenger vehicles on the road. These are our families and these are the people we are sworn to protect.

Yet you have a rule here by the Department of Transportation

that completely ignores that. That is troubling for me.

Mr. ROSEN. Well, let me say a couple of things about that.

Mr. LYNCH. Please.

Mr. ROSEN. First, the primary purpose of the FMCSA, the Motor

Vehicle Safety Administration’s regulations, is for trucking safety,

for the safety of the motorist, to prevent accidents and injuries resulting from crashes with the trucks. With regard to the drivers,

there has been a longstanding memorandum of understanding between FMCSA and OSHA by which OSHA has set some of the requirements for driver health and safety.

Now, the statute, and I think what you are referencing and what

the court of appeals was referencing, does talk about the physical

condition of the driver as one of the criteria. I think it was the

agency’s view that factor had been considered, the court obviously

disagreed and the court has the final say with regard to its ruling.

But ultimately, it is the objective to have these things decided

with the best available data. One of the complexities for a rule like

this is the knowledge and the data that is available is not always

as perfect or as extensive as might be liked. But in the process of

working on this rule, the Department is in fact looking at and considering the available data.

Mr. LYNCH. OK, I am not sure that is—I appreciate it, Mr.

Rosen, I really do, that you come here and testify, both of you, I

appreciate that. I am not trying to hold you to blame for any of the

gaps in the process, by any means. I just see a weakness, I guess,

in the process, and I am just trying to point that out and asking

you to take another look at it, look at it hard and try to remember

that the court was fairly clear in their decision.

There was a lot of evidence presented by the Department, extensive in terms of the evidence that you put forward. It is just that

none of it covered the health of the driver. They were not complaining that there was not enough evidence in the aggregate presented,

they just pointed out that none of it went to the health of the driver. Clearly, the health of the driver, not the condition of the driver,

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the health of the driver. I think that is a central concern of any

attempt to draft or to reissue a reg in this area.

Thank you, Madam Chair, I yield back.

Ms. MILLER. I was not going to ask this question, but as I was

listening to my colleague talk about the health and safety of the

driver, I have to ask you this question as well as about when you

are actually promulgating these rules, and you are looking at different things. In a former life, before I got this job, I was a secretary of state in Michigan. I served for 8 years as the chairperson

of the Michigan Traffic Safety Commission. So we had a lot to do

with truck driving incidents and different kinds of things.

One of the biggest problems, whatever you are driving, whether

it is trucks or cars or what have you, is driver distraction. Just yesterday I was at a Visteon plant in my district where they are doing

some unbelievable things about simplifying within the car for police officers relating to driver distraction, with all the different

kinds of things that they have. Do you ever look at those kinds of

issues when you are looking at drivers?

In fact, just as a follow-up to that as well, you did mention something about surge brakes and that you had several groups that

came to you and talked about surge brakes, etc. Do you often promulgate your rules as an impetus because of private groups or individuals coming to you or is this something you just come to at your

own looking at NHTSA statistics?

Mr. ROSEN. Taking the second half first, the impetus for creating

new rules can come either way, from the agencies reviewing existing data and determining that there is either a safety need or an

opportunity for a safety improvement that is sensible. So sometimes rules are self-initiated. And sometimes members of the public

petition us or request that we institute rules.

I think on the list that OMB has provided and the five that I am

here primarily to address today, all of those are nominations from

the public. So the rule dealing with the brakes is a nomination

from a couple of associations as to what they think, what they have

suggested would be an improvement and from their standpoint a

more fair approach to the rule.

Ultimately the primary consideration for us is the safety consequence. But if the rule can be improved in a way that is beneficial to safety or is less costly without being detrimental to the

safety standard, then we are of course open to suggestions from the

public as to how to improve it.

Ms. MILLER. You also mentioned in your written testimony about

sunset provisions in some of these various regulations. Could you

comment on your thought process? Sometimes these regulations

seem to take on their own life and then they go on ad infinitum

rather than ever having any kind of regulatory review again of how

they are actually working and years go by and circumstances

change, etc.

What is your thought about sunsetting some of these kinds of

things? I wonder if we ought not to codify that in many of the

things we do in this town.

Mr. ROSEN. I would agree with that. I think it is a useful mechanism that we ought to do more of, because it forces you to reevaluate the effectiveness and accomplishments of a regulation and deVerDate 11-MAY-2000 11:54 Nov 21, 2005 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 D:\DOCS\23627.TXT HGOVREF1 PsN: HGOVREF1
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cide, is it worth continuing, does it need improvement or has it expired in its usefulness. I think one of the examples I had identified

in my testimony, in the written testimony, was the computer reservation system rule that had been promulgated with a sunset provision, but a good number of years ago, when the economic circumstances in both the airlines and the airline reservation business were extremely different than they are today. And at a time

when those systems were owned by the airlines, unlike today.

So that was a good example—by having a sunset, it required us

to take a careful look at the conditions that were prevalent at the

sunset date, rather than because of the press of business or other

things, just look at it at a convenient time. I think as a tool, it is

extremely useful. It is a very effective way to have agencies, as I

say, assess the continuing validity of the assumptions that went

into the original rules.

I think there will be sunset provisions that will result in some

rules, that will have a decision made to continue them. I think that

is likely to happen. But even then, you have the benefit of having

made a careful, systematic, thoughtful decision to continue it rather than inertia or ignorance. So I think it is a tool that makes

sense and I would like to see us, and others, for that matter, use

more of it more often.

Ms. MILLER. I appreciate that. Shifting gears a little bit, but

talking about a rule that was made many, many years ago, I think

it is 36 years old, is the fire safety standard rule, which was

brought to my attention by a number of different industry groups.

The thing about any rule that is 36 years old, never having a proper review of it certainly is alarming, I would say, astounding is

probably a good categorization of that as well.

But I note in 2001 that OSHA said they could not update it because they did not have adequate resources. I can appreciate that

as well. But perhaps there could be some comment on something

else OSHA could do. Could you publish a best practices guide?

Again, this particular rule being 36 years old is crazy.

Ms. STIDVENT. Yes, that is true, in many instances, as Mr. Rosen

pointed out, because rules tend to be on the books and stay on the

books, that happens over time. We are aware that there are a number of instances where we have based rules on consensus standards

and then those consensus standards have become updated. We currently do not have authority just to go in and update the fast, easy

way. We have to go through notice and comment rulemaking.

So the final flammable liquid standard that you mentioned is

part of our ongoing project to update those standards based on national consensus standards. That is on the agenda to work on and

to update, and we are planning on doing so.

Ms. MILLER. I appreciate that. It is highly likely there will be

some legislation introduced in regard to that particular issue.

I would yield to the ranking member for a second round of questions.

Mr. LYNCH. Thank you.

Let me ask you, I just want to go back to Mr. Rosen, we were

talking earlier about the process, we got public input and I think

there were 189 recommendations. Then OMB went directly to the

individual agencies and as a result of that, it was pared down to

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I think 76 that were priority recommendations. I am trying to

think how many of those were DOT regs, 15, was it?

Mr. ROSEN. From the original set, or how many are in the——

Mr. LYNCH. How many finally made the priority cut?

Mr. ROSEN. Five.

Mr. LYNCH. What was the process? I assume you were part of

that process in going from whatever the original pool was, and I

do not expect you to know that, but how did you go from 189 to,

in your case, 5 final regs on the hit list at the end of the day?

Mr. ROSEN. Ultimately you would need to ask the folks at OMB

for exactly how they pared it down. But I think the process——

Mr. LYNCH. Well, they say they work with you.

Mr. ROSEN. I was going to say, I think the process included consultation with us and presumably the other departments as to our

reactions to various rules, as to how significant are they, how farreaching are they, how costly are they, how dated are they, if they

are very old. And that we provided back some comments and observations as to those that seemed like they had more potential to be

meaningful.

But how the line was drawn as to say, well, here is the exact

number, I do not know that I could illuminate very much for you.

But I think the process is pretty much what I just said.

Mr. LYNCH. OK. I am just trying to figure out why some made

the list and why some did not. It seems like there was a fairly

broad spectrum of nominees, and I am just curious as to why particular regs made that list. I am just trying to get an idea of what

that process involved.

Mr. ROSEN. Let me try this. We at DOT have done something of

our own version of this, where we in January had a Federal Register notice inviting the public to comment on all of our regulations

and then held a public meeting in April where people could come

and tell us of places they thought our rules could be improved or

had provisions that were unnecessary or really whatever they

wanted to comment on.

So we have done something parallel, and I can tell you a little

bit about my own thought process as to how to go about that. I

have some numbers——

Mr. LYNCH. Mr. Rosen, I appreciate it, I really do, I am limited

in my time. I really wanted to go not to your own thought processes, but to the actual process of going——

Mr. ROSEN. Well, I think they are related. As I said, we got 66

nominations. And we are in the process of responding to those in

a public report. Inherently there is judgment to be applied. That

is the process that we have used, is looking at a whole series of

criteria and factors. I would assume that OMB did something similar, because the consultations with us would reflect that.

Mr. LYNCH. Just so I am clear on this, was the requirement that

drivers drive more hours, was that part of this process, instead of

having 10 consecutive hours of driving, was that something that

came out of this process?

Mr. ROSEN. No, because the process you are referencing is in the

2005 OMB report. The hours that were set in the current rule were

issued by FMCSA in 2003.

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Mr. LYNCH. But the issue itself, making truck drivers drive more

hours, did that issue come out of this public comment process?

Mr. ROSEN. If I understand the question, I think the answer is

no.

Mr. LYNCH. OK, good. That is fair enough. I am just asking a

general question.

Let me ask Ms. Stidvent a similar question. I believe there were

a number of recommendations that were focusing on DOL, and

then you culled it down to how many?

Ms. STIDVENT. I believe the report listed 11.

Mr. LYNCH. Do you remember how many originally were——

Ms. STIDVENT. I do not remember originally how many. Well, actually, my staff has been kind enough—in 2004, there were 37. In

2005, there were 11. To answer your question about process, we received the public comments that had been submitted to OMB’s report from OMB. They asked, as Mr. Rosen said, for our input on

that.

In many of the instances, some of the nominations were

rulemakings we had already completed. Some of them were

rulemakings that we were willing to consider, but given the workload we had, others were higher priority for us. So we provided

that kind of feedback. Again, I think OMB could shed more light

on exactly how they took that input from the agencies and reworked it. But it was a collaborative process where we said, this,

we think, is a good idea, we are doing it already, it is done already,

that type of thing, because a number of the nominations we received, because of the time delay and the publication of the OMB

report, sometimes they are outdated.

Mr. LYNCH. Fair enough. Maybe I could take that up with OMB.

I do want to ask you about the Family Medical Leave Act,

though. This has been hugely important to a lot of families. We are

requiring both spouses to work at least a couple of jobs nowadays.

We have very little support out there for families, and we are supposed to be trying to help them with that. Given all the hours that

moms and dads have to work these days and care for families, this

is a pretty important piece of legislation for those families who

need to raise children and maybe in some cases take care of parents and do a number of things.

I understand that one of the proposals that is being floated, and

I am not so sure how solid it is, but it is to recommend that the

definition of serious health issue be revised to capture only those

illnesses or disabilities that last for 10 days, versus the current definition of 3 days or more. Can you comment on that?

Ms. STIDVENT. Sure, I can comment on it generally and specifically, I think. I can tell you that my condition over the last 7

months has exposed me to a number of people, who, myself included, this definitely is a very important law. I think that they at

the Department recognize that. It is important to a lot of people,

as you mentioned, for a variety of reasons. Understanding that, we

are reviewing the regulations, prompted in part by the Ragsdale

decision and other court decisions.

The proposal you mentioned, I do not know where that originates

from. I can tell you that no decisions have been made at the Department on what changes to make and what policies to pursue.

85

This is a deliberative process, and we have received a number of

comments. In 2003, we met with over 20 groups, employer and employee groups, who have a variety of concerns about the FMLA. We

are processing all of those and mulling all of that over.

No decisions have been made, so I guess I would be wary of reports that say that a particular policy is being pursued or is not

being pursued. Because at this point it is definitely at the deliberative stage.

Mr. LYNCH. I understand. There are some reasonable suggestions

here about the impact of the law itself. I understand some employers justifiably feel that they should not be required to give perfect

attendance to employees who take advantage of the Family Medical

Leave Act, because they are not physically there. That is an employee benefit, an employer decision that should be left with the

employer, and I understand that.

But on the other hand, I think 10 days is a rather long period

of time. I had a major surgery a couple of years ago, and between

the HMO trying to boot me out of the hospital and my wife not

wanting me at home, I was back to work in about 8 days. [Laughter.]

Mr. LYNCH. It was major in my mind. I just see a whole lot of

families out there who do not have the support that I did. This 10-

day rule could be very, very damaging to any relief that we might

have intended to give those families. So I just ask you to pay close

attention to that, if you could.

Ms. STIDVENT. I can assure you that we will. Other rulemakings

will follow all the notice and comment process. So there will be

nothing that can be rushed into implementation without that notice and comment process.

Mr. LYNCH. Thank you. Thank you, Madam Chair.

Ms. MILLER. Thank you very much.

Now we will move on to the next panel, unless you have any

more questions. I would just make one comment about the Family

Medical Leave Act as well. It is a very important piece of legislation. Unfortunately, not in place when I was in your condition, in

another lifetime, a long, long time ago.

But I do think again, reasonableness, being reasonable, the operative phrase has to be the standard. You hear stories out in the

industry about somebody who is 6 minutes late for work or something and then the small company has to go through an unbelievable burden of paperwork, etc., to give this person a half day off

under the FMLA. I do not know all the different stories, but you

hear these kinds of things.

There are always people, individuals, who take advantage of a

very good law and make it difficult for everyone to comply with. So

I do think you need to look at some of those kinds of things as well.

I recognize the challenges, certainly, that you both face.

We appreciate both of your attendance here today. You have

been very, very informative and enlightening. We look forward to

working with you together as we try to do what is best for the

American people. Thank you so much.

Ms. STIDVENT. Thank you very much.

Mr. ROSEN. Thanks for having us.

Ms. MILLER. We will take a quick break.

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[Recess.]

Ms. MILLER. I would like to call the meeting back to order.

Our next panelist will be Mr. Stu Sessions. Mr. Sessions is an

economist with over 25 years of experience in supervising and performing analysis of environmental, energy, and natural resource

policy. Mr. Sessions also has lengthy experience in analysis of regulatory issues associated with air and water pollution and solid and

hazardous material waste as well, having managed the division at

EPA which is responsible for this, and also having consulted frequently in this area. He received a B.A. in economics from Amherst

College and a Masters in public policy from Harvard.

Mr. Sessions, we certainly welcome you to the hearing today and

appreciate your attendance. The floor is yours.

STATEMENTS OF STUART L. SESSIONS, VICE PRESIDENT,

ENVIRONOMICS, INC.; JEFF MELBY, VICE PRESIDENT, ENVIRONMENTAL AND SAFETY, GENMAR HOLDINGS, INC.; AND

JOAN CLAYBROOK, PRESIDENT, PUBLIC CITIZEN

STATEMENT OF STUART L. SESSIONS

Mr. SESSIONS. Good afternoon, Madam Chair and Ranking Member Lynch. Thank you for inviting me to testify.

I am here representing two manufacturing industry groups: the

Surface Finishing Industry, representing the U.S. metal finishing

industry; and the Specialty Steel Industry of North America. I will

be discussing OSHA’s proposed regulations lowering the Permissible Exposure Limit [PEL], for worker exposure to hexavalent

chromium. The proposed regulation, as was discussed earlier,

would reduce the current PEL from 52 micrograms down to 1

microgram.

Industry believes that the regulation would have three significant adverse effects. First, compliance costs will be very high. We

estimate the proposed PEL will cost industry nearly $2.9 billion per

year. A breakdown of these costs is given in exhibit 1 to my written

testimony. This price tag would make this regulation one of the

very most expensive environmental, safety or health regulations

considered by the government in recent years.

The high cost is due partly to the broad scope of the regulation.

It will affect at least 35 different manufacturing industries, plus

shipbuilding and construction, which are not considered to be manufacturing industries. The high cost is also partly due to the difficulty in reducing exposure so far below the current PEL.

I will say a little about three particular manufacturing industries

that will have the highest costs. First, aerospace manufacturing.

The industry estimates a cost of about $1.1 billion per year. This

cost for this one industry alone would roughly equal the cost of the

most expensive single Federal regulation issued during fiscal year

2004. Metal finishing, a second industry, we estimate a cost of $780

million per year for this industry.

Both aerospace and metal finishing estimate a cost per employee

of roughly $15,000 to $18,000 per year. And I reference the chairman’s statement indicating that the average regulatory costs for

manufacturing overall now is about $8,000. So for affected employVerDate 11-MAY-2000 11:54 Nov 21, 2005 Jkt 000000 PO 00000 Frm 00090 Fmt 6633 Sfmt 6633 D:\DOCS\23627.TXT HGOVREF1 PsN: HGOVREF1
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ees in these two industries, this single regulation would roughly

double the average cost that exists currently.

A third affected industry with very high costs is steel making

and steel processing. Costs will be highest for those who make and

process stainless steel, in particular. We estimate a cost of about

$600 million per year for steelmakers and their customers. Most of

the costs for steel processing industries will involve changing welding processes for those who fabricate stainless steel. These changes

can reduce a welder’s productivity by 25 to 40 percent, plus other

costs.

A second major adverse economic impact that we foresee is that

many manufacturers will not be able to afford these high compliance costs, and will be forced to close. As facilities go out of business, the employees at these facilities will lose their jobs.

One industry on which we have done detailed studies on facility

closures and job losses is metal finishing. We estimate that the rule

will cause half or more of all U.S. metal finishing shops to close.

In this one relatively small industry, 80,000 employees in these facilities will lose their jobs, and another 70,000 or more jobs will be

lost among companies who would have supplied the metal finishing

shops and their employees.

In my written testimony I discuss some of the other industries

where the rule will also cause plant closures and job losses.

The third major adverse impact, the added cost to comply with

the proposed rule, will hurt manufacturers in competition with foreign producers. The proposed rule requires a large reduction in the

existing standard and the chairman has already indicated the comparison of the proposed PEL at 1 with the standard that exists for

most of our trading partners, which is on the order of 50.

I will review the competitive impacts for a couple of the industries. Aerospace. For many years, aerospace has contributed the

largest positive amount to the Nation’s balance of trade of any

other manufacturing industry. We estimate that this rule will add

a cost penalty of about 1 percent of current aerospace costs, 1 percent in addition to the roughly 12 percent that was again cited in

the chairman’s opening statement. We estimate that the 1 percent

might be enough to tip some close aerospace competitions to foreign

producers.

Metal finishing. In recent years, the metal finishing industry has

suffered a very sharp loss of business to Asia. This rule will cost

the metal finishing shops that survive, I indicated that half or

more won’t, those who survive will bear costs on the order of 2 to

10 percent or more of their current cost of production.

Steel and stainless steel. The stainless industry, many people are

quite aware, has suffered intense foreign competition and currently

some 25 to 30 percent of the domestic steel market is filled by foreign imports. This will prevent domestic steelmakers from passing

through the cost of the regulations to the market and the domestic

steelmakers are further worried that the industry’s downstream

customers will also be seriously affected by this revised PEL.

High compliance costs by the customers will cause many U.S.

stainless steel fabricators to outsource more operations to other

countries. The work will be performed abroad, and the steel that

they buy to work on will be bought abroad.

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In conclusion, the statute requires OSHA to promulgate a PEL

that eliminates all significant health risks, but subject to the constraint that the standard must be technically and economically feasible. I have discussed the industry’s belief that the PEL is not economically feasible for most of the affected industries.

In closing, I would quickly like to comment on technical feasibility and health risks. In short, industry believes that the proposed

PEL of 1 is not technically feasible for many affected manufacturing industries. Many facilities have found that the controls that

OSHA identifies as adequate to meet the proposed PEL in fact cannot reliably reduce exposures to that level.

With regard to health risks, industry is committed to protecting

the health of its workers. Industry believes there is evidence of significant risks to worker health at high levels of exposure well above

the current standard of 52. However, as the PEL option being considered is lowered much below the current standard, uncertainty

about health risks increases, particularly for those industries

where the nature of the exposures differs substantially from those

in the industries on which OSHA’s studies were based.

On balance, the industry would support a reduction in the exposure limit to somewhere in the 20 to 25 micrograms per cubic

meter range. Such a standard would protect worker health, would

be operationally feasible and would avoid substantial job losses and

the erosion of U.S. manufacturing competitiveness.

Thank you very much.

[The prepared statement of Mr. Sessions follows:]

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Ms. MILLER. Thank you.

Our next witness this afternoon is Jeff Melby. Mr. Melby is the

vice president of environmental and safety at Genmar Holdings,

Inc. Joining Genmar in 1996, Mr. Melby’s primary responsibilities

included coordinating the environmental and safety programs for

the nine manufacturing facilities that Genmar has in the United

States, and leading Genmar’s product compliance program. He is a

registered professional engineer in Minnesota, also a member of

the Minnesota State Bar.

We appreciate your coming to Washington to testify before our

committee this afternoon.

STATEMENT OF JEFF MELBY

Mr. MELBY. Thank you, and good afternoon. I am here today on

behalf of my company as well as the National Marine Manufacturers Association, which represents many of my fellow recreational

boat builders. We urge this committee to direct OSHA to update

the spray finishing using flammable and combustible materials

standard under 29 C.F.R. Section 1910.107, which I will refer to as

the OSHA fire safety standard.

This particular rule has burdened my company and many others

with unnecessary complication. In May 2004, NMMA responded to

the OMB’s request for regulations that are unduly burdensome or

that need reform. NMMA nominated the outdated OSHA fire safety

standards because they are still based upon the 1969 standards set

by the National Fire Protection Association, rather than the 2003

NFPA standards, which are designed specifically for the recreational boat building and composites industries, and are based

upon updated information and know-how.

NFPA is the Nation’s standard-bearer for fire protection standards, because it is comprised of the Nation’s leading insurers as

well as the firefighting community. NMMA also nominated the outdated Federal Motor Carrier Safety Administration rules prohibiting the use of surge brakes on trailers used for commercial purposes. I have included discussion of this issue in my written comments and I will work with the committee to address any questions

that may arise in connection with it. But admittedly, my focus here

is on the OSHA fire safety standards.

As I mentioned, the NFPA fire safety standards were adopted by

OSHA in the early 1970’s, and have not been updated since that

time, even though fire suppression technology and know-how has

progressed dramatically. OSHA has even acknowledged that these

standards need to be reviewed and updated, but has continued to

do nothing about it.

Specifically, the issue has to do with the level of fire protection

necessary for operating a boat manufacturing plant. Back in the

early 1990’s, NMMA and the American Composite Fabricators Association approached OSHA and asked that the fire safety standards be updated. Based on these discussions with OSHA, we were

directed to contact NFPA to have them evaluate spray operations

at boat manufacturing plants and determine if the hazards from

these operations warranted a change to the safety standards.

Subsequently, NFPA revised its standards in 1996 by creating a

separate chapter to address the specific hazards and requirements

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with regard to applying flammable resin in the manufacturer of

recreational boats and other fiberglass composite products. The

resin used to make fiberglass is presently regulated under the

OSHA fire safety standards because styrene, which is present in

the resin, is considered a class I flammable liquid. NFPA created

this separate chapter based on extensive testing and several years

of evaluation within the NFPA 33–34 Spray Finishing Committee.

We then returned to OSHA in the late 1990’s, requesting that

they update the 107 standards. In fact, OSHA included this change

in 1999 to update its unified agenda, but rescinded the effort in

2001, citing ‘‘resource constraints and other priorities.’’ Prior to the

rescission, however, OSHA called this rule ‘‘one of OSHA’s most

complex and out of date rules.’’ Yet even with this acknowledgement, OSHA has been unable to correct it.

One of the tests that was performed was to spray resin in an enclosed booth with no ventilation for 15 minutes. After 15 minutes,

the concentration of flammable styrene vapor in the booth was 690

parts per million. To put that in perspective, consider that the

lower flammable limit for styrene vapor is 11,000 parts per million.

The reason why this type of material acts this way is because styrene, which usually totals about 30 percent of the resin, does not

volatilize like the solvents in paints and remains within the resin

as it is applied and cures to make fiberglass.

In fact, the NFPA tests revealed that the resin does not readily

ignite and burns slowly when it does ignite. When OSHA wrote the

rules back in the 1970’s, they actually examined flammable solvents found in paints and other coatings such as toluene and xylene, which are extremely volatile and flammable.

The main problem we face is that many State OSHA agencies

and local fire departments refer to the Federal OSHA standards

when enforcing local fire code or worker safety regulations. There

have been countless cases in our industry, including two at our

plants, where a State OSHA office cited us for not complying with

the 107 standards even though the plants were in compliance with

the updated NFPA fire safety standards.

After expending a great deal of time and resources, including attorneys fees, we were able to convince one of the State OSHA agencies to withdraw the violation. The other State office refused to

withdraw their citation, but did agree to a compromise that did not

increase our operational costs to the extent that full compliance

with the 107 standards would require. The expended costs and continuing operational costs in that case do not create a safer working

environment.

There are three points that I want you to take away from my testimony. First, in writing its regulation, OSHA originally adopted

the 1969 NFPA fire safety standards and OSHA has not updated

them since then, even though NFPA has revised the standard to

reflect new technologies and knowledge.

Second, OSHA has acknowledged that their standard is out of

date and actually written letters to other industry manufacturers

stating that if a facility is not in compliance with the OSHA fire

safety standards but is in compliance with the NFPA 33 standards,

OSHA would consider this a de minimis violation under the OSHA

de minimis policy. Nonetheless, in our cases, State OSHAs do not

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follow the OSHA de minimis policy, which causes us manufacturers

great problems.

Finally, as you probably hear from many company representatives that testify on regulatory issues, it is a great challenge and

burden to manufacturers to comply with the complex regulations

imposed on us today by local, State and Federal Governments.

When a regulatory agency has a rule on their books that they understand to be outdated and we understand to be outdated, something needs to be done to fix it. That is why I am here today, to

ask you to have OSHA update its 29 C.F.R. Section 1910.107 regulation to reflect the NFPA 33 Chapter 17 consensus standards.

Thank you, and I ask that my written testimony be made part

of the permanent record. I am available for questions.

[The prepared statement of Mr. Melby follows:]

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Ms. MILLER. Thank you. Your written statement will be entered

into the record, and we certainly appreciate your testimony here

today.

Our next witness is Joan Claybrook. Ms. Claybrook is the president of Public Citizen. She has an extensive career in automobile

safety and public interest, dating back four decades. She has

worked on Capitol Hill and in the Department of Transportation,

as well as founding Public Citizen’s Congress Watch in 1973 and

directing it until 1977. She received a B.A. from Gaucher College

and a law degree from Georgetown Law Center. We appreciate

your being here today, Ms. Claybrook, and look forward to your testimony.

STATEMENT OF JOAN CLAYBROOK

Ms. CLAYBROOK. Thank you very much, Madam Chairman and

Mr. Lynch. I appreciate the opportunity to testify. I am a former

regulator myself, as administrator of the National Highway Traffic

Safety Administration in the U.S. Department of Transportation. I

have worked extensively in motor vehicle safety, but also in other

regulatory areas.

The first point I would like to make is that well designed regulations stimulate the economy, produce better products and improve

the overall quality of life. While it may seem intuitive that regulation costs businesses a lot of money in jobs, there is little actual

research to suggest that this is true. The industry mainly cites a

study called Crain and Hopkins, which is badly flawed and inflated. The OMB often cites World Bank and OECD studies.

But these studies do not in fact address the economic consequences of rollbacks of our well-justified health, safety, and environmental rules. Most of the evidence points in just the opposite

direction in terms of the effectiveness. Just as pollution wastes resources, unchecked harm to society is a squandered opportunity to

prevent injury or save lives. We all pay, in terms of higher insurance and medical costs, lost worker productivity and illness, even

traffic delays.

In the automobile area, 42,000 people die every year, 3 million are injured. This in terms of economic costs is $230 billion in 2000

dollars, or $800 for every single man, woman and child in America.

Well-crafted regulation actually spurs innovation and growth.

Regulation helps to protect industries from the consequences of

short-term profit made decisions. For example, the fuel economy

standards I issued in 1977 helped the auto industry when it found

itself in a competitive problem during the domestic oil crisis of the

late 1970’s. Both the literature and the core insights from my years

of participation in the regulatory process show that rules can improve economic well-being. I have four that I would like to mention.

It is far cheaper to prevent harm than to clean it up afterwards.

Stimulating investment in sustainable practices also benefits industry. Regulation levels the playing field and reduces societal

costs for beneficial innovations. Health, safety, and environmental

rules are beneficial on balance.

The assault on regulation is a very convenient lobbying strategy,

and not that there are not certain areas where regulation should

be changed, I completely agree that it should be, but it is far easier

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to blame the government standards than to deal with economic

truths. A wealth of research shows that direct labor costs such as

wages for comparably skilled workers are the major driver for industrial decisions to relocate jobs and not regulatory costs, which

are less than 1 percent of the cost of shipped goods.

While manufacturing losses are devastating, very few major regulatory burdens were added to the manufacturing sector since the

1990’s and that has been, there is no reason then to blame regulatory burdens for changes and fundamental shifts that have occurred in our global economy since 2000.

My second point is that OMB’s 2000 draft report lacks objectivity

and balance. OMB has earned more than skepticism in the public

interest community by repeatedly publishing reports that make no

mention of the serious objections that have been endlessly submitted to OMB. It is a miscarriage of OMB’s assignment to conduct

a notice and comment process on draft versions of its report, yet

never actually respond to the comments that are presented.

Every government agency in its preambles does that, and I commend, by the way, the Department of Transportation both for its

extensive response to commets that are submitted to it in its dockets, even if they do not agree with us, and also for its transparency,

which has been better than any other government agency. I don’t

know if you are aware of that, but it is excellent in terms of the

availability of information of proposed regulations and comments.

The docket is all on the web, and they are really a model for the

government.

I have detailed the continuing grave deficiencies of OMB’s 2000

draft report in my full written testimony.

My third point is that OMB’s hit list is an inappropriate interference with agency functions. First of all, the hit list is a list of

rules to remove. They never asked us for rules to improve. New

rules, areas where they are lacking information or lacking protection. So Public Citizen submitted 30 proposals last time to the

OMB when they asked for their hit list. They took two of them and

put them in their final version, which is still called a hit list, even

though there are two positive proposals that we recommended. One

was for stopping ejections when vehicles roll over, the other was for

vehicles that are in a vehicle mismatch, for lessening the impact

of that on the smaller vehicle.

OMB casts this process as a method for unearthing commonsense regulatory fixes. But two of the major ones highlighted that

you have been discussing in this hearing are ongoing rulemaking

decisions. They are not things that no one ever heard about or

know about. They are highly controversial. One is the hours of

service rule, which Public Citizen has been deeply involved in, and

actually brought the lawsuit that overturned the rule. The other is

the hexavalent chromium rule, which I would like to discuss further, perhaps in questions. I think there are some things that are

inaccurate that have been said here today. That is also one which

Public Citizen brought a lawsuit and forced the agency to actually

act.

I appreciate the opportunity to testify today, Madam Chairman,

and would be pleased to answer any further questions.

[The prepared statement of Ms. Claybrook follows:]

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Ms. MILLER. Thank you. We appreciate all of our witnesses being

here. In regards to the auto industry and traffic safety, I think

Government has done such a great job of regulating the automobile

industry in the last several decades that we have been an integral

part of driving them to bankruptcy, quite frankly, to the brink of

bankruptcy, I think, with General Motors, of where they are right

now, and some of the other problems.

Living in Michigan, in the Motor City, I see it every day, these

kinds of things. They are not leaving the United States or Michigan always because of $1 an hour jobs. That certainly is a part of

a business decision. But I think the burden, unbelievable regulatory burden that the Government has placed, certainly the Federal Government as well as the State government, we have been

handmaidens.

That old saying, I am from the Government and I am here to

help you—it is a choking grain of truth, I suppose.

I would like to ask a question of Mr. Melby, if I could. I thought

your testimony was interesting, sir. You mentioned a couple of your

plants, the Genmar plants, have actually been cited for adhering

to the outdated Federal fire standards. But that the States sometimes will not listen to what the Federal Government’s lead is on

this. How often does that actually occur? Do you have quite a bit

of consternation with the way that the individual States are dealing with the Federal standards as well, and making it even worse?

Mr. MELBY. On two occasions it was States that operate their

own, and have authority to run their OSHA programs. They have

adopted the Federal standards. They are comfortable with the 107

standards as far as looking at any supporting information running

back through that this is the consensus standard NFPA. It has

been changed. You shouldn’t cite us for this.

They have told us, they do not have de minimis policies. They

are not able to do that. The rules are the rules. If we wanted to

take and contest it and spend the money, who knows how that

would turn out. But they are not able to vary from the 107 standards the way they are written.

Ms. MILLER. Does your industry have any data on what kind of

a burden you think financially this particular, by OSHA not updating the fire standard, what actually the financial burden might be

on perhaps a small business, as a general amount, and a large

business? Any idea at all?

Mr. MELBY. I am not sure, but I can tell you what the standard

is requiring for us in this particular part of the standard, which is

dealing with what we put in the floor of our booths to keep the

sticky resin off the floor. If we went with the flameproof cardboard

that would be required under 107 as opposed to a workplace standard with cardboard, it was going to be a couple hundred thousand

a year.

And that was the reference that I made that we were able to

compromise. We are probably going to increase our costs $50,000

in that instance. But under the standards, what we are doing

meets best practice.

Ms. MILLER. Now, in full disclosure, I have to tell you why I am

asking you some of these questions. My dad built one of the first

fiberglass boats ever, back in the 1950’s. In fact, he had a big

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placque up in his shop that said, if God wanted us to have fiberglass boats, he would have made fiberglass trees. [Laughter.]

But I am somewhat familiar with the utilization of the different

elements that you use in the manufacturing of boats. This is an

area that I have some interest in. I watched during the 1980’s

when the Federal Government put the Federal excise tax on the

boat manufacturing, thinking they were going to tax the rich. And

of course, what they did is destroy an industry where they just simply went to another country, quite frankly. And those that are rich

amongst us would just order their boats from a different country

and document them somewhere else and bring them in.

So I do have some consternation with this, and it looks like you

have some numbers there of what kind of impact this is actually

having on your industry.

Mr. MELBY. What I have been handed, it says that the total boat

builders with fewer than 20 employees, very, very small businesses, 794, the regulatory costs for these businesses would be approximately $5.6 million. That is a conservative estimate.

Ms. MILLER. And if you think of the boat manufacturing industry

today, for the most part, outside of the larger ones, there are so

many small boat manufacturing industries. They are not unionized

and they are trying to comply. As has been indicated with a number of these different studies, the cost of compliance is particularly

hard felt on small businesses as well, as they are trying to comply

with these things.

I would like to ask a question of Mr. Sessions in regard to the

hexavalent chromium rule that we have been discussing somewhat

today. It was interesting to me, listening to your testimony about

what your industry estimates the cost to be. I wrote down here, I

think you said $2.9 billion. Yet the OSHA estimates for compliance

costs fluctuate wildly from that. Do you have any comment on why

the huge difference?

Mr. SESSIONS. Yes. OSHA’s estimates are far, far smaller than

industry estimates. I think the reasons encompass sort of every

step in the technical process of estimating the cost of regulations.

For example, there are a number of additional industries affected

by the rule beyond those that OSHA considered, such as fiberglass

insulation manufacturing, the mining industry, the auto repair and

body shops.

Second, for the industries that were identified as affected, in general, industry thinks that far more of the industry will be affected

than OSHA assumes. For example, in the steel industry, OSHA estimated costs for the specialty steel producers but estimated no

costs for the carbon steel producers. But in fact, some of the carbon

steel operations will be affected.

Or in the metal finishing industry, OSHA estimated costs for

three particular varieties of metal finishing. But in fact, hexavalent

chromium is used in many more varieties and in probably about

twice as many facilities as metal finishing. So the number of affected industries, the number of affected sectors, the number of affected plants, the number of affected workers. For example, the

U.S. Navy has estimated that ship repair workers, somewhere on

the order of three to six times as many of them will be affected by

the regulation as OSHA costed costs for.

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Beyond that, the number of entities or workers affected, there

are differences about the capability of control technologies, there

are strong disagreements, as I mentioned, about the technical feasibility of getting to one with the control technologies that OSHA

asserts will do the job.

Further differences in such kind of mundane things as unit costs,

a very small portion of the cost of this rule involves more workers

having to take showers and change their clothes more often. So a

part of the cost analysis is, how long does it take a worker to shower and change. OSHA’s estimate to shower and change was 7 minutes. We think on average it takes quite a bit more than that.

So across the whole range of bits and pieces that have to be aggregated together to estimate costs, we disagree substantially with

OSHA. We wish that there were more time in the rulemaking to

sort of hash out these differences and get some agreement and get

a more reasonable agreement on what the cost will be.

Ms. MILLER. OK. I would like to yield to the ranking member.

Mr. LYNCH. Thank you, Madam Chairman.

Let me start with you, Mr. Sessions. To kind of follow this court

order that required the standard to be changed, and then OSHA

through its own process reduced the PEL from 52 micrograms per

cubic meter to 1 microgram per cubic meter. I do know that the

court was particularly incensed by OSHA’s unwillingness to proceed in a timely fashion.

Is it your estimation that the new standard, the 1 microgram per

cubic meter, is that arbitrary, or are you saying there is no science

behind that? I just wanted to get a sense of your perspective, and

then I am going to ask Ms. Claybrook the same question.

Mr. SESSIONS. First, a clarification. The existing limit is 52 right

now; the 1 is a proposed new standard.

Mr. LYNCH. That’s correct.

Mr. SESSIONS. I think industry’s opinion is that, as I mentioned,

the standard must eliminate significant risks, but the standard

must also be technically and economically feasible. Industry believes strongly that one is not technically nor economically feasible

for most of—I don’t know, I am not sure I should say most—for

many of the regulated industries.

Mr. LYNCH. I was just curious. That seems to be a drastic shift,

going to from 52 to 1. I just am not familiar with the methodology

that was used by OSHA.

But let me ask the same question of Ms. Claybrook.

Ms. CLAYBROOK. First of all, Mr. Lynch, this existing standard

is 33 years old. It is a very old standard. And many of the companies and industries that are going to be covered by this already

meet the standard of 1. So it is not something that is not technologically or economically feasible in many companies and many industries.

There are some that have a harder time than others, which we

will acknowledge. I think it is the electroplaters and there is another industry that also has difficulties with this.

One of the solutions for a problem like this, where many companies can do something about this, this is a carcinogen, a well-recognized carcinogen that causes lung cancer. There are thousands and

thousands, tens of thousands of workers that are affected by this.

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It is time, it is past time to do something about this issue. But one

possible solution is under OSHA’s authority, they can have a separate engineering control air limit called a CCAL that if there is justification for it, can have a separate limit.

So we would urge and recommend, and we have to OSHA, that

they address the standard as they have proposed. In fact, we proposed a more stringent one. But at a minimum, most companies

will have to comply with it and can. And it has been shown in the

industry that they can. Then where there are exceptions, to have

this other process.

Mr. LYNCH. It sounds like progress.

Ms. CLAYBROOK. If I could make one other comment in response

to the chairman’s point on the use of this old data. The exposure

time is very long for the development of lung cancer. And the studies that have been, the data is the best we have available, it is

through the 1980’s. So it is really not all that old given the development time for lung cancer.

The linear risk model that is used is the standard for occupational cancer. That is the standard that is used. The industry-funded study, the Lippold study, acknowledges that the linear model is

good in predicting lung cancer. So it is not that it is something that

is not common and well understood in the science.

Mr. LYNCH. Thank you. Ms. Claybrook, I want to stay with you

for a minute. I had been trying in the previous panel to shed a little light on the process that OMB used to target certain regulations. I am particularly troubled by the hours of service rule targeting, if you will. Could you discuss, you are the former NTSB administrator, and I think you might have the ability to speak to

this, but could you speak to the issue of the OMB process and what

the suggested changes in the hours of service rule might mean to

the general public?

Ms. CLAYBROOK. First of all, to drivers, to truck drivers, it is the

most hazardous occupation in America. Let’s start there. There are

almost 800 truck drivers a year that are killed in truck crashes,

even though they are in these huge, huge vehicles; 5,000 Americans are killed, and about 130,000 are seriously injured. So it is a

huge issue.

Between 20 and 40 percent, depending on which study you look

at, of the crashes in trucks are from fatigue, fatigue-related crashes. And so this is an issue of dire importance.

The Congress in 1996 I think it was, or 1997, commanded the

Department of Transportation to issue a new standard to protect

the public. Instead, they issued one that increases the number of

driving hours from 10 to 11 hours a day, even though all the studies show that after 8 hours there is a drastic increase in fatigue

related crashes.

But they didn’t only do that. They also said that you have to

have only 34 hours off before you have to start driving again. The

overall impact of this rule is a 20 percent increase in driving time.

Also, they did not put in the requirement for a black box to enforce

so that there would be an efficient enforcement mechanism. Everybody knows that every driver has three log books, which they call

comic books, so they have different ones for different purposes, one

for getting paid, one for the police and so on.

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So that is why the court was outraged by this rule, it went in

the opposite direction from what the Congress had asked them to

do. Also, when the Federal Motor Carrier Safety Administration

was created in 1999, written right into the statute it says that safety is the priority of this agency. So that is why the rule was overruled then. On the day that the highway bill was about to expire,

on October 1st, that day they snuck into the highway bill a 1-year

extension for keeping the rule that was vacated by the court. It

was never debated, no one had a chance to discuss it.

So it is in there for another year, and now they are doing a new

rulemaking and it looks like they are going to try and keep essentially the old rule, the vacated rule, as the one they are going to

reissue. We have been extremely upset about this and very concerned for both the public and for drivers.

Mr. LYNCH. Thank you. I am equally as troubled. I find it unbelievable. Maybe we can do something about it.

Thank you, Madam Chair. I yield back.

Ms. MILLER. Thank you.

I want to go back to Mr. Sessions and talking about OSHA, as

they are going through promulgating their rule right now in regard

to this particular element. I thought it was interesting when you

were talking about the aerospace industry, in particular. I think

you said $1.1 billion we could lose because of that. Certainly when

you think of France, which is at about 50 as well, with Airbus, and

these kinds of things, it is rather startling, or even foreign

steelmakers, you mentioned the steel.

Obviously the cost of steel is something with the economic modeling forever changing, with China and some of the other emerging

nations, with the cost of steel, scrap steel, etc., and then this rule

on top of all of that is rather mind boggling. I have had a number

of the metal finishing shops in my areas, just the smaller ones that

have come forward with their consternation about this rule. Basically these fellows are just throwing their hands up in the air and

saying, look, we are out of business if this happens. We’re out of

business. And you don’t know if that is really true or not, but obviously there is great angst on their part about what is going to happen here.

And you were estimating that more than half of all the metal finishing shops would close. I am always trying to understand how

these estimates are actually done. What is the construct for these

estimates? Could you talk about that a little bit more, why you

really think half of them will close?

Mr. SESSIONS. Sure. There are kind of two lines of analysis that

get there. The starting point in estimating what the impact of any

regulation will be is estimating the cost that the regulated entities

will have to try to bear. For this rule, for example, we had engineers go to a sample of six representative metal finishers and work

with the facility owners and look at their current exposure data

and estimate exactly what they would have to do to reliably meet

the proposed standard. They developed for these six facilities estimates of the cost to meet the standard.

Then the question is, are these costs affordable. Part of the answer to that is, will the producer be able to pass some of the costs

on to his customers, or will the facility owner have to try to absorb

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the cost. Essentially we had economists look at the markets served

by each of these six facilities and exactly what products they were

selling where, what was the nature of the competition. Some of

them in fact were serving industries where they could well pass

costs through, but many others were in cut-throat competition with

producers from Mexico or China or whatever.

So anyway, the next step is to assess how much of the cost will

have to be absorbed by the facility, then you can compare the cost

that is to be absorbed with some estimate of the facility’s ability

to pay those costs in terms of its revenues and its profits and its

business outlook for the long term. So in essence, the decision as

to whether a facility will close is a balancing of the cost impacts

against the ability to pay. And with these six facilities ,we did a

very detailed analysis on and concluded that at least three of them

will definitely close. It is likely that the others would be threatened

substantially also.

The second half of the analysis, though, is a very similar analysis

that the Environmental Protection Agency did a couple of years ago

for a water pollution rule that would affect this very same industry. EPA did a very similar process of taking case study facilities,

collecting economic data, estimating the costs and weighing the

costs against the ability to pay. EPA concluded in this rule that a cost averaging $61,000 would

close more than half of the industry. This was another regulatory

agency a couple of years ago. And in fact, EPA decided that its

rule, which would cost an average of $61,000, they would not promulgate because it would close so much of the industry.

Well, we take that as a benchmark. And here is a rule that we

contend will cost on average more than $100,000 per facility. And

EPA’s impacts that they see at $61,000 we think provides substantial guidance to what we see with costs of $100,000 or more. So we

have the case studies as well as the EPA study that lead us to this

conclusion.

Ms. MILLER. As we sort of conclude our hearing here, do you

have any comment on what Congress could do perhaps to facilitate

with the various agencies and how they might streamline their

rulemaking process or things that you have seen over your years

dealing with the various agencies, and what kinds of things Congress might be able to do that would be helpful?

Mr. SESSIONS. I think a number of the things Congress has done

are extremely helpful already, the Small Business Regulatory and

Enforcement Fairness Act is very important for identifying impacts

on small entities and getting agencies to seriously consider alternatives that can reduce the burden on small entities. I think the

ultimate congressional authority to overturn regulations if need be,

it has been used very, very, very rarely, but that is important.

I think there are a number of requirements, and people have

been talking about the OMB requirements for regulatory analysis

and the OMB list, etc. I submit that contributes to good analysis.

It contributes to identifying the impacts on health, on economics,

on jobs for any regulation that is under consideration. I think Congress in its oversight role, perhaps as you are doing here, encouraging agencies to take those requirements seriously and to do as good

a job as is possible of identifying those impacts so that it can be

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sorted out and balancing decisions can be made, I think that is a

critical role.

Ms. MILLER. I want to thank you all for your comments. They

have called us for a vote.

Do you have any other questions before we adjourn?

Mr. LYNCH. Just one final question. In the area of hexavalent

chromium, since proper ventilation equipment and those types of

technologies for containment are seen as probably the best way of

addressing the danger, would it be helpful if Congress, if we decided to adopt this rule in this fashion, provided a tax credit for

those who purchase this ventilation equipment? Would that lessen

the impact of the rule if it were adopted?

Mr. SESSIONS. I think that a significant share of the cost for

many of the industries will be additional ventilation. And so a reduction in the cost of that ventilation would be helpful. I think

there are some industries where the answer is not ventilation, but

for many that would be very helpful.

Mr. LYNCH. It is something we might look at.

Thank you, and I yield back, Madam Chair.

Ms. MILLER. I certainly appreciate all of you attending today. We

appreciate your testimony so very, very much. And with that, we

are going to adjourn the meeting.

[Whereupon, at 3:47 p.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

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