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THE ADMINISTRATION’S PROGRAM TO REDUCE

UNNECESSARY REGULATORY BURDEN ON MANUFACTURERS—A PROMISE TO BE KEPT?

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, APRIL 28, 2005

Serial No. 108–14

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT 

W. TODD AKIN, Missouri Chairman 

MICHAEL SODREL, Indiana 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

SUE KELLY, New York 

STEVE KING, Iowa 

TED POE, Texas 

MADELEINE BORDALLO, Guam 

ENI F. H. FALEOMAVAEGA, American 

Samoa 

DONNA CHRISTENSEN, Virgin Islands 

ED CASE, Hawaii 

LINDA SA ́ NCHEZ, California 

GWEN MOORE, Wisconsin

NELSON CROWTHER, General Counsel/Subcommittee Coordinator

(II) 

C O N T E N T S 

WITNESSES

Page 

Graham, Honorable John D., Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget ............................................. 4

Will, Mr. Howard, President, Caldwell Group ...................................................... 5

Stidvent, Honorable Veronica Vargas, Assistant Secretary for Policy, Department of Labor ....................................................................................................... 7

Greenblatt, Mr. Drew, Owner, Marlin Steel Wire Products ................................ 9

Daigle, Honorable Stephanie, Acting Associate Administrator, Policy, Economics and Innovation, Environmental Protection Agency ..................................... 10

Sullivan, Honorable Thomas M., Chief Counsel for Advocacy, Office of Advocacy, Small Business Administration ................................................................. 12

Schull, Mr. Robert, Senior Analyst, Director of Regulatory Policy, OMB 

Watch .................................................................................................................... 14

APPENDIX

Prepared statements: 

Graham, Honorable John D., Administrator, Office of Information and 

Regulatory Affairs, Office of Management and Budget ............................. 26

Stidvent, Honorable Veronica Vargas, Assistant Secretary for Policy, Department of Labor ......................................................................................... 29

Daigle, Honorable Stephanie, Acting Associate Administrator, Policy, Economics and Innovation, Environmental Protection Agency ...................... 39

Sullivan, Honorable Thomas M., Chief Counsel for Advocacy, Office of 

Advocacy, Small Business Administration ................................................. 49

Schull, Mr. Robert, Senior Analyst, Director of Regulatory Policy, OMB 

Watch ............................................................................................................. 61

Attachments: 

Twarog, Mr. Daniel L., President, North American Die Casting Association ................................................................................................................. 77

(III) 

(1)

THE ADMINISTRATION’S PROGRAM TO REDUCE UNNECESSARY REGULATORY BURDEN ON MANUFACTURERS—A PROMISE TO 

BE KEPT? 

THURSDAY, APRIL 28, 2005

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON REGULATORY REFORM AND

OVERSIGHT, COMMITTEE ON SMALL BUSINESS

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:32 a.m. in Room 

311, Cannon House Office Building, Hon. W. Todd Akin [chairman 

of the Subcommittee] presiding. 

Present: Representatives Akin, Kelly, Poe and Bordallo.

Mr. AKIN. The meeting will come to order. It is a pleasure to see 

some witnesses. We have a lot of witnesses today. We are going to 

have to try to keep on time and all, but welcome everybody. Thank 

you so much for taking the time to join us. 

Minority Member Bordallo, it is also great to have you here. 

We were just chatting a moment beforehand on a subject of red 

tape and paperwork. It is sort of a peculiar subject for me to be 

chairing a meeting on this because I would like to get rid of all of 

it if I could. I have already expressed a political opinion. I try to 

stay away from that to some degree. 

I would like to say good morning and welcome to the hearing of 

the Subcommittee on Regulatory Reform and Oversight. A special 

welcome to those of you who have come some distance to participate and attend this meeting. 

We are holding the hearing in light of a disturbing reality: In the 

past five years the United States has lost over two million jobs in 

the manufacturing sector. Small manufacturers, which make up 

the core of the industrial base of our country, have been struggling. 

I am happy to say that in the recent months the economy and 

manufacturing specifically have shown signs of improvement. Much 

of that can be attributed to the tax reductions proposed by the 

President and enacted by this Congress and of course to the hard 

work, creativity and initiative of the American workforce. 

A number of factors have been cited in causing the loss of manufacturing jobs. They include the tax burden, overvaluation of the 

dollar, low wage rates in countries such as China, outsourcing to 

foreign countries of jobs formerly performed here in the United 

2

States, governmental paperwork and red tape, and needless bureaucratic regulations. 

I want to make it very clear that we are not talking here about 

eliminating regulations that are essential to maintaining the public 

health, safety and necessary protection to the environment. To 

eliminate such regulations would be bad business and detrimental 

to the nation as a whole. 

The Administration has heard the plea of manufacturers, especially small manufacturers, to eliminate needless and burdensome 

regulations. In February 2004, the Office of Management and 

Budget, OMB, asked for recommendations from the public as to 

those regulations affecting the manufacturing sector that should be 

modified or otherwise reformed to reduce the costly regulatory burden. Comments were received from over 40 businesses and nonprofit organizations that nominated 189 regulations, guidelines and 

paperwork requirements for reform. 

In December 2004 OMB submitted the 189 nominations to the 

federal agencies for their review. In March of this year the Administration announced that, ‘‘Federal agencies will be taking practical 

steps to reduce the cost burden on manufacturing firms operating 

in the United States by acting on 76 public nominations to reform 

federal regulations.’’ 

It was further announced that, ‘‘OMB has directed agencies to 

take the most appropriate action to ease the excessive burden for 

the manufacturing industry while maintaining health, safety and 

environmental protections for the public.’’ 

This is a good start, but there are a number of questions that 

need to be asked. Will this program be implemented and completed 

as advertised? Are the 76 proposals, of the 189 nominated for reform, the ones that will have the most beneficial effect on manufacturers and our country’s economy? 

These are the critical questions we are seeking to have answered 

today, and we appreciate all of you who have agreed to testify to 

that end. Thanks again to all of our witnesses for coming, and now 

I will turn to our distinguished Ranking Member, Mrs. Bordallo, 

for her opening remarks. Thank you.

Ms. BORDALLO. Thank you very much, Mr. Chairman, and I 

would like to thank you for calling this important hearing today. 

I think it is an important first step to call for regulations that I 

believe to be outdated and overly burdensome and review them. 

In that respect I am encouraged by the actions of the Office of 

Information and Regulatory Authority, the Office of Advocacy, the 

Department of Labor and the EPA. However, I am somewhat discouraged at the time it has taken to move forward with such a program and at the lack of resources available to conduct such reviews. 

One of the key conclusions we have reached is that more needs 

to be done to help small businesses with the federal regulatory and 

paperwork burden. In the four hearings that we have held on this 

issue in the last month, every small business witness and every 

major association that has testified before the Small Business Committee has put regulatory burden at or near the top of their priority list. 

3

It is clear something is definitely wrong, and in spite of promises 

to rectify this problem made in recent years the regulatory burden 

has only increased for our nation’s 23 million small businesses. 

Federal agencies need to be held accountable for their agencies’ 

performance, and I hope that a connection is being made between 

the federal red tape and paperwork burden and national competitiveness. 

As you know, I represent Guam, the Territory of Guam, which 

is located on the doorstep of China, Japan, South Korea and many 

other Asian countries, some of the most competitive economies in 

the world. Our small businesses need to be efficient and competitive as they can be to succeed. Action on regulatory reduction 

starts with setting standards for agency performance and then following through from the highest to the lowest level. 

I know that during the term of President Clinton he put the Vice 

President in charge of a government-wide effort to review and 

renew our commitment to regulatory overhaul and compliance. 

During this Administration there was a dramatic reduction in 

small business dissatisfaction about red tape that has recently, I 

am sorry to say, bottomed out. I hope that high priority level has 

not been lost. 

The U.S. should avoid a race for the bottom, and by that I mean 

we should maintain our high standards. We must instead adopt the 

attitude that innovative and effective solutions exist to achieve our 

regulatory goals without jeopardizing our ability to maintain worldwide competition. 

The Committee has been careful in the past to ensure that small 

businesses are not simply used as a mantra to dismantle regulations, but rather that we find intelligent ways to provide protection 

to health, safety and fair competition, and the best way to do this 

in my view is with the cooperation of the small business community, as well as state and local governments like Guam to review 

problems in our present system and reduce outmoded and redundant regulations. 

I look forward to hearing about your efforts to review previous 

regulations, and I do hope that small businesses form a major part 

of that effort. 

Thank you, Mr. Chairman.

Mr. AKIN. Thank you so much. I am looking forward to comments. 

One of the things I have tried to do in my Subcommittees is to 

try to keep things on time, so it is my job to make sure that we 

keep the opening comments at five minutes per witness. 

We have, I think, from most of you written statements that you 

have submitted for the record. So, I think probably for the purposes 

of our proceeding it might be best if you just summarize what you 

came here to say. Congressmen get chased to all different kinds of 

Committees and directions, so if you think of the one or two things 

that you really want to communicate, maybe that is the easiest 

way to proceed. 

I like to run things fairly informally, and we are not overwhelmed with people. There are so many different Committees 

4

meeting at the same time that we will be able to get through 

things in a good amount of time I think. 

The first person I would like to call is the Honorable John 

Graham from OMB. Perhaps, John, you can touch on that one set 

of numbers that I mentioned, that there were I think 189 nominations, and we picked 76. 

You know the old 80/20 rule. Sometimes 80 percent of the trouble 

comes from 20 percent of the regulations. I hope that we have 

picked some of the real juicy ones, but I look forward to your testimony. 

STATEMENT OF THE HONORABLE JOHN D. GRAHAM, OFFICE 

OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF 

MANAGEMENT AND BUDGET

Mr. GRAHAM. Thank you, Mr. Chairman. Good morning to you 

and to other Members of the Subcommittee. 

Let me start with some good news and bad news on the subject 

of regulatory burden. During the first full year of the President’s 

Administration we slashed the growth of new regulations by about 

70 percent compared to the 20 year previous average, so we have 

been making progress and slowing the growth of the burden of regulation. 

The bad news is that we at OMB are humbled by the sea of existing federal regulations that have accumulated over the last dozens of years of the republic. Since OMB began to keep records in 

1981, there have been 115,000 new federal regulations adopted. 

Twenty thousand of them we at OMB cleared and allowed to be 

published in the Federal Register. Of those, 1,100 of them were estimated to cost the economy more than $100 million when they 

were enacted. 

Sad as it is to say, most of these regulations have never been reviewed to determine whether they accomplished their intended purpose, how much they actually cost or what their benefits are. 

Mr. Chairman, as you mentioned in your opening remarks, we 

have taken a modest step in this Administration in 2004 to identify 

a particular sector of the American economy, the manufacturing 

sector, which compared to all of the other various sectors is estimated to bear the largest burden measured as cost per employee 

for a business in terms of regulatory burden. 

We received, as you mentioned, 189 nominations from 41 commenters, and we have identified in collaboration with the agencies 

76 of them that we feel we can make practical progress without 

new legislation, simply with actions of our federal regulatory partners. 

I want to thank the collaboration we had not only from our regulatory agencies, but from the Advocacy Office of the Small Business 

Administration and the Commerce Department, the new Manufacturing Unit of the Commerce Department, that helped us identify 

these targets for practical progress. 

Let me conclude my oral statement by just giving you a sense of 

the global economy that we work in and how even the most regulated segments of the world economy in the European Union today, 

they are aggressively seeking efforts to reduce the burden on EuroVerDate 0ct 09 2002 12:03 Sep 08, 2005 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 G:\HEARINGS\21289.TXT MIKE
5

pean businesses in order to make them more competitive in the 

global economy. While we certainly hear about China, and that is 

a very significant concern, let me tell you what is happening in Europe. 

Financial Times dated Monday, April 25, 2005, Bonfire of Red 

Tape Planned for Brussels. ‘‘As many as 50 European laws could 

be scraped by this summer as Gunter Verheugen, the new EU Enterprise Commissioner, tries to signal a new era of lighter regulation from Brussels. Mr. Verheugen has ordered a bonfire of legislation that was proposed under the former administration of Commissioner Prodi in one of the most thorough cleanouts of red tape 

ever conducted by the European Commission.’’ 

The article continues, ‘‘The Commission has suggested it would 

withdraw or radically simplify a string of existing laws in such 

areas as medical devices, waste disposal, the approval of motor vehicles, company law and taxation.’’ 

I draw your attention to this reality, Mr. Chairman, because we 

not only need to do this in this country aggressively in order to reduce the current burdens, but we need to recognize the global competitive environment that our workers and our businesses are operating under. 

There are other parts of the world that are dramatically taking 

steps to make themselves more competitive. That is why I am very 

encouraged that you are here this morning helping us and drawing 

attention to our modest effort to streamline these 76 manufacturing regulations. Thank you very much. 

[The Honorable John Graham’s statement may be found in the 

appendix.]

Mr. AKIN. You get the extra points for being 45 seconds under 

time. Good work. Thank you very much, Administrator. 

Our second witness is going to be Howard Will, and I believe 

that Howard is the president of the Caldwell Group, if that is correct.

Mr. WILL. Correct. 

STATEMENT OF HOWARD WILL, CALDWELL GROUP

Mr. WILL. Chairman Akin, Ranking Member Bordallo, Members 

of the Committee, I am Howard Will. I am here on behalf of the 

U.S. Chamber of Commerce and the Associated Wire Rope Fabricators. 

I am the CEO/owner of Caldwell Group, a 70 employee small 

manufacturer located in Rockford, Illinois. I purchased this company in 1976, so I have been at it for about 30 years. Caldwell 

manufactures below-the-hook lifting products, and the Caldwell 

Company was one of two firms that invented the web slings back 

in the 1950s using MIL spec web. 

I have been active in technical aspects of trade associations for 

almost all of my professional life, first with the Web Sling Association as past chair of their technical committee and past president 

of that organization and currently with the Associated Wire Rope 

Fabricators as a past board member, a member of the technical 

6

committee and chair of their testing committee for the past 10 

years. 

These associations have conducted a number of technical activities. The Web Sling Association back in the 1970s developed a web 

sling standard which is the basis for Chapter 5 in the ASME B30.9 

standard. They did UV and saltwater testing of web slings to determine deterioration of boat slings, and mostly recently they have 

done UV testing of web slings to see how slings hold up in a construction environment. 

The Associated Wire Rope Fabricators is the most active testing 

committee in the industry with 10 to 12 test programs completed. 

Many of the problems they have tested are web slings, heat effects 

on web slings, braided wire rope slings, fatigue of round slings and 

cuts in web slings. 

The point I am making is these trade associations, particularly 

their members, and many of their members are the chief engineers 

of these companies, and these companies are small companies. 

They have the technical expertise. They do the testing. They provide the input to draft and update the ASME standards, specifically the B30.9 standard, which is updated every three years. 

This standard, ASME B30.9, is the recognized safety standard 

for slings. It covers six types of slings—chain, wire rope, metal, 

mesh rope, web, round slings—and is updated every three years. 

The OSHA position, they use and promote an old standard. Back 

in the 1970s B30.9, the 1971 version, was the basis for OSHA’s 

rules which were published in the Federal Register and adopted in 

1975. There has been no change or update in this regulation in 30 

years. 

They have also published a booklet, 3072, and there has been no 

update since 1996 on that. The problem is there are new slings, 

new technical info, and there are errors in the booklet. AWRF in 

particular has pointed out problems with the booklet. 

Changing the OSHA standard is one of the 76 items pointed out 

by OMB for action, and nothing has happened. The basic problem 

is the industry uses the B30.9 standard. They create operating instructions for their products. They use warnings on their products, 

and they conduct training in the field based on that standard. 

O.S.H.A. relies on its outdated rules, and obviously there is a 

conflict when there is something newer. There is potential for more 

conflict. It pops up in another area, and that is court cases where 

you have product liability. You have two sets of rules/interpretations in a court of law. 

In conclusion, please follow OMB’s recommendation and adopt 

the B30.9 standard as the safety standard for slings. OSHA, please 

use an accelerated ruling process and adopt this new updated 

standard and update your 1971 rules. 

Thank you.

Mr. AKIN. Thank you very much. Do you have one of those little 

counters over there? You had that timed perfectly.

Mr. WILL. Three seconds.

Mr. AKIN. I appreciate your testimony. Thank you. 

7

The third witness is going to be the Honorable Veronica Stidvent, 

the Assistant Secretary for Policy for the Department of Labor. You 

can proceed, Veronica. Thank you. 

STATEMENT OF THE HONORABLE VERONICA VARGAS 

STIDVENT, DEPARTMENT OF LABOR

Ms. STIDVENT. Thank you. Chairman Akin and distinguished 

Members of the Subcommittee, thank you so much for the opportunity to appear before you today to discuss the Department of Labor’s ongoing efforts to strengthen worker protections while reducing unnecessary regulatory burdens on the economy, particularly 

on the manufacturing sector and on small businesses. This hearing 

is especially timely coming as it does during Small Business Week. 

As requested by the Subcommittee, my testimony will address 

the Department’s overall progress in responding to the public’s reform nominations in OMB’s report. The Department takes very seriously its responsibility to protect worker safety and health, retirement security, pay and equal access to jobs and promotions. 

Over the years, advances in safety, health, science and technology, as well as changes in the law, have rendered a number of 

Department regulations outdated or even unnecessary. As a result, 

these advances have required us to revise or eliminate regulations 

and to consider and adopt new rules and approaches that ensure 

strong protections for workers without imposing unnecessary and 

costly burdens on the economy. 

The Department recognizes the costs that regulations place on 

the regulated community, particularly the small business community. We have pursued alternatives to rulemaking whenever feasible and have attempted to minimize the costs of any regulations 

while ensuring that strong worker protections are in place. 

The Department also recognizes that employers often need help 

understanding their rights and responsibilities under federal labor 

laws and regulations. That is why Secretary Chao launched the 

Compliance Assistance Initiative in June of 2002. The initiative 

aims to provide businesses, employees, unions and other regulated 

entities with the knowledge and tools they need to comply with the 

Department’s rules. 

As part of the initiative, we have developed a variety of free 

tools, often tailored to small business, to provide employers with 

access to clear and accurate information when and where they need 

it. The initiative also involves working with other government 

agencies such as the Small Business Administration and 

partnering with private organizations to help educate business 

owners and workers about available compliance assistance tools 

and resources. 

Our multifaceted approach to regulatory reform, compliance assistance and vigorous enforcement is working. Due in part to these 

activities, the rate of workplace fatalities and the injury and illness 

rate are at the lowest levels in OSHA history. In 2004, the Mine 

Safety and Health Administration reported the fewest number of 

fatalities since 1910 when records were first kept. 

As this Subcommittee recognizes, one important regulatory tool 

in the process is addressing the public’s reform nominations that 

8

are included in OMB’s annual report to Congress on the costs and 

benefits of federal regulations. OMB’s 2005 report included 11 reform nominations for the Department of Labor, including recommendations addressing the Family and Medical Leave Act, permanent labor certification and nine OSHA regulations and guidance documents. 

The Department either has or will be taking action on each of 

these reform nominations. For example, a commenter recommended that the Department finalize the new labor certification 

application process to bring permanent alien workers into the 

United States. The Department’s Employment and Training Administration published this final rule on December 27, 2004. 

To conclude my testimony, I would like to briefly describe two of 

the regulatory actions listed on the Department’s spring 2005 regulatory agenda. First, OSHA will complete its respiratory protection 

standard by publishing its assigned protection factors final rule. 

The protection factors are numbers that describe the effectiveness of various classes of respirators in reducing employee exposure 

to airborne contaminants. This action will reduce compliance confusion among employers and provide employees with consistent and 

appropriate respiratory protection. 

Second, and consistent with the Secretary’s priority for ensuring 

pension and health benefits security, the Employee Benefits Security Administration will finalize its rules to protect and preserve 

retirement assets of workers who are covered by 401[k] plans that 

have been abandoned by their employers. 

These rules will empower financial institutions that hold assets 

of abandoned plans to help workers gain access to their retirement 

benefits, benefits that might otherwise be depleted as a result of 

ongoing administrative costs. 

Mr. Chairman, the Department is proud of its achievements in 

streamlining its regulatory agenda since 2001. In doing so, we have 

provided clarity in our regulations for employers, workers and the 

public at large. We value the important input we receive from the 

public during the rulemaking process, OMB’s reform nomination 

process and the feedback we receive through other outreach efforts. 

We are dedicated to reducing the regulatory costs and burdens 

for employers which will help them create jobs while at the same 

time continuing our commitment to strengthen protections for the 

American workforce. 

Mr. Chairman, this concludes my testimony, and I would be 

happy to respond to any questions you may have. 

[The Honorable Veronica Vargas Stidvent’s statement may be 

found in the appendix.]

Mr. AKIN. Thank you, Veronica. We are going to do the questions 

after we have a chance to have the opening statements. Some people have come a long distance. We want to make sure everybody 

gets a chance. 

Our next witness please would be Drew Greenblatt. You are with 

Marlin Steel Products I believe?

Mr. GREENBLATT. That is correct. 

9

STATEMENT OF DREW GREENBLATT, MARLIN STEEL 

PRODUCTS, LLC.

Mr. GREENBLATT. Mr. Chairman, Members of the Regulatory Reform and Oversight Subcommittee, my name is Drew Greenblatt, 

and I am the owner of Marlin Steel Wire in Baltimore, Maryland. 

I am before you representing the views of the National Association 

of Manufacturers or the NAM. 

The National Association of Manufacturers is the nation’s largest 

industrial trade association representing small and large manufacturers in every industrial sector and in all 50 states. 

Headquartered in Washington, D.C., the NAM has 10 additional offices across the country. Three-quarters of the NAM’s members are 

manufacturers with small to medium sized operations. Visit the 

NAM’s award winning website at www.nam.org for more information about manufacturing and the economy. 

N.A.M. president John Engler testified about the impact of regulations on manufacturing earlier this month before the Regulatory 

Affairs Subcommittee of the House Committee on Government Reform. Since his testimony is so recent and on the same topic, the 

Subcommittee staff agreed that it would make sense to submit that 

written testimony for the record of this hearing. 

Briefly, Governor Engler’s April testimony noted that regulations, especially environmental and workplace regulations, impact 

the manufacturing sector more than any other sector. In addition, 

regulations impact small manufacturers in terms of cost per employee more than twice as much as larger manufacturers, nearly 

$17,000 for firms with fewer than 20 employees versus $7,000 for 

firms with more than 500 employees. 

Thus, it is appropriate for last year OMB’s annual report to Congress on the costs and benefits of regulatory programs to focus on 

regulations that impact manufacturing. In particular, the NAM 

submitted several small technical suggestions and strongly urged 

OMB to improve seven regulations that have a broad effect on 

manufacturing. 

On March 9 of this year, after consultation with the agencies 

about these regulations, OMB listed 76 regulations that agencies 

were directed to consider improvements for. I would like to note 

that any substantive changes to any of the regulations on this list 

will be subject to notice and comment requirements of the Administrative Procedures Act, so any such changes to be made will be 

transparent and open. 

Turning to my company, these regulations may seem like abstract concepts, but they have a major impact on Marlin. Marlin 

makes wire baskets, shelves, wire forms and hooks for U.S. companies like Baxter, Boeing, Caterpillar, Honeywell, Johnson & Johnson and Rubbermaid. We make 100 percent of our products in Baltimore, and we import nothing. We do not outsource our employees 

from overseas. 

We were established in 1968, and we have 20 employees. We are 

an example of the American job growth machine. Growing my company in a profitable manner is my goal, and as I grow I am going 

to need smart people and I am going to need to hire them. I am 

going to need to buy more equipment. Some of that equipment is 

10

made in Rockford, Illinois. The congressman on the other Committee is in that area. I buy from Lewis, Ideal and Schlotter, three 

major manufacturers in Rockford. 

For the record, all my employees get great health insurance, vacation, holiday pay, 401[k], 100 percent college reimbursement, but 

there are government caused obstacles to my growth. For me and 

many of my peers, it is just not one or two regulations that are 

troublesome. It is a cumulative effect of many regulations. We follow the regulations. Some are good, but the bad ones need to go. 

Let us discuss a few of the bad ones that directly affect Marlin 

and my employees. The first is taxes. Small and medium sized 

firms are burdened with high expenses. We fill out lots of paperwork and file taxes. It costs my company over $17,000 for outsiders 

to comply with all these rules. 

In addition, I have to pay $30,000 just for internal bookkeeping 

costs. This makes no sense. That money could be redeployed to 

more productive purposes like purchasing that robot over there. We 

bought one of these two months ago so now we can weld as fast 

as four on welded Mustangs. 

If we bought a second one, which I would love to do, we could 

reduce our costs, narrowing the price difference between me and 

China. We could make higher quality parts. That would improve 

the quality difference between me and China, and we could ship 

faster. Thereby I would win more jobs. 

I assure you a Chinese factory does not pay $47,000 a year for 

this kind of paperwork. This improvement will increase my revenue, which will let me hire more well paid people. This is a win/

win solution. 

In summary, I think it is a good idea for us to keep the good regulations, get rid of the bad regulations, and what will occur is a 

renaissance in American manufacturing. 

Thank you very much.

Mr. AKIN. Drew, thank you very much for your comments. 

Our next witness is going to be the Honorable Stephanie Daigle 

is it?

Ms. DAIGLE. Yes, it is.

Mr. AKIN. You are with the EPA?

Ms. DAIGLE. Yes.

Mr. AKIN. Thank you, Stephanie. 

STATEMENT OF THE HONORABLE STEPHANIE DAIGLE, OFFICE OF POLICY, ECONOMICS AND INNOVATION, ENVIRONMENTAL PROTECTION AGENCY

Ms. DAIGLE. Good morning, Mr. Chairman and Members of the 

Subcommittee. My name is Stephanie Daigle, and I am the Acting 

Associate Administrator of the Office of Policy, Economics and Innovation at the Environmental Protection Agency. 

11

Thank you for inviting me here today to discuss the report on 

regulatory reform of the U.S. manufacturing sector. This report includes 42 wide-ranging reforms to be undertaken by the Agency. I 

would also like to highlight a few of the Agency’s activities that address the needs of small business. 

Each year EPA publishes hundreds of regulations and guidance 

documents. While these actions are necessary to protect public 

health and the environment, they can pose challenges to small 

business. In recent years, my office has overseen several reforms 

to strengthen the credibility and quality of our regulations. At EPA 

we are fully committed to creating a regulatory system that works 

for small business. 

I am confident that we can achieve this goal because EPA has 

a long history of working with small business to identify their 

unique needs and concerns. One of our most recent actions is the 

development of a small business strategy. The overall goal of the 

plan is to improve our regulations so that they are easy to understand and practical to implement. 

An important element of the small business strategy is to rigorously implement the Small Business Regulatory Enforcement Fairness Act or SBREFA as we like to call it. EPA is a government 

leader in implementing SBREFA. 

Over 450 small business, small government and small nonprofit 

representatives have provided regulatory advice to the Agency 

through participation on our small business advocacy review panels. Twenty-seven notices of proposed rulemakings have been published following completion of a panel process, and each regulatory 

proposal reflected the advice and recommendations of the panel. 

I would like to give you one example of a successful panel. In 

May 2004, EPA finalized a clean air non—road diesel rule, a rule 

that was strongly supported by industry, health advocates, states, 

territories and local governments. Since the non—road diesel rule 

will affect many small entities, EPA convened a SBREFA panel to 

solicit information and comments from these industries. 

Several of the participants expressed concerns with the projected 

impacts of meeting the new requirements. To accommodate these 

concerns, the final rule includes a number of provisions to reduce 

the impact of the rule on small business such as providing additional time and temporary exemption for small volume equipment 

sales. This is just one example that shows EPA’s commitment to 

addressing small regulatory issues. 

Now let me turn to the manufacturing sector report. Each year 

OMB is required to submit a report to Congress that estimates the 

total annual cost, benefits and impacts of federal rules and paperwork. While I discuss a number of reforms in my written testimony, I would like to highlight one in particular because it demonstrates the value of the reform process initiated by the report. It 

concerns a recycling of solid waste. 

In the nomination process leading to the manufacturing report, 

eight industry trade associations, the Chamber of Commerce and 

SBA requested that the Agency revised its definition of solid waste 

to exclude certain types of recycling from regulatory coverage. Commenters told us that EPA’s current regulatory system for 

12

classifying waste materials actually discourages recycling instead 

of encourages it. 

We listened to their concerns, and in October 2003 the Agency 

proposed revisions to the definition of solid waste to enable certain 

types of materials be more easily recycled. In response to the manufacturing initiative, the Agency has committed to finalizing the 

rule on an expedited schedule. It is our intent to publish a rule by 

the fall of 2006. 

In reaching this conclusion, EPA actively and rigorously sought 

out the perspective of small business. As part of the outreach effort 

for the proposed rule change, EPA met with the SBA Advocacy Environmental Roundtable twice, and we plan to participate on a 

panel at the 2005 Small Business Ombudsman/Small Business Assistance Program National Conference this June. 

The solid waste initiative shows how it is possible to protect public health and the environment and meet the needs of the small 

business community. 

Mr. Chairman, Members of the Subcommittee, under this Administration the EPA has taken significant steps towards improving 

the quality and credibility of our regulations. The reforms we have 

outlined in the manufacturing initiative are an important part of 

that improvement process. 

Thank you for inviting me here today. 

[The Honorable Stephanie Daigle’s statement may be found in 

the appendix.]

Mr. AKIN. Thank you for your testimony, Stephanie. 

Our next witness, speaking from the endowed chair of the SBA, 

is the Honorable Thomas Sullivan. Have you missed any hearings 

in the last year or two, Thomas?

Mr. SULLIVAN. I sure hope not, Mr. Congressman. 

STATEMENT OF THE HONORABLE THOMAS M. SULLIVAN, 

OFFICE OF ADVOCACY, SMALL BUSINESS ADMINISTRATION

Mr. SULLIVAN. Thank you, Mr. Chairman, Members of the Committee. It is a pleasure to be here again to testify on the public regulatory reform nominations. 

Because my office is independent I think I should start out by 

saying that the views that I express are not the official views of 

SBA or the Administration. Rather than go through in some detail 

my written statement I would like to just summarize a few points. 

We have heard certainly from a case example how individual 

businesses help the American economy, but I would like to shed 

some light on how manufacturing overall helps the American economy. Quite frankly, it keeps the American economy afloat. 

I am lucky enough to have economists in my office who produce 

data spoken about by Mr. Greenblatt, and this other data will certainly be welcome news for this Committee. The economic data 

from 2002 indicate that nearly 99 percent of all manufacturing 

firms are small business. Put another way, the small businesses 

employ over 42 percent of the more than 14 million Americans who 

are manufacturing employees. 

13

Additionally, small firms innovate more than large ones do, producing 13 to 14 more patents per employee than larger firms do. 

Finally, small manufacturing firms are more likely than large companies to produce specialty goods and custom demand items. For 

these reasons, manufacturing is very important to the small business sector of the United States economy, and small business is important to U.S. manufacturing. 

I think just that little segment from my written testimony highlights why small business analysis and in particular small business 

flexibility is so important in the way that agencies conduct their 

business and draft rules and regulations. 

I want to make sure that this Subcommittee realizes that when 

we talk about reform nominations this is a completely public and 

transparent process, much to the credit of John Graham’s team at 

OIRA. Additionally, I also want to make sure that the Subcommittee realizes that the responsibility for these reforms rests 

with the individual agencies. 

That is an important starting point because where OIRA makes 

sure that there is scientific and economic peer reviewed data that 

is the underpinnings for regulations and my office makes sure that 

there is small business impact analysis and flexibility for the alternatives that make any regulation less burdensome for small business, the ultimate authority for those regulatory decisions do rest 

with the agencies like EPA, OSHA, IRS, Department of Transportation and others. 

The reason that this public reform nomination process is so important is that the agencies themselves have stepped up to the 

plate and said these are the rules that we have reviewed that may 

be outdated, may be duplicative or may simply be unnecessary and 

so that bears note that the agencies are ultimately responsible. 

Lastly, I want to shed some light and disparage on any type of 

discussion that calls small business flexibility a political process. It 

is not. My office was created under a Democratic President. The 

Regulatory Flexibility Act was a Republic President with a heavy 

Democrat Congress. The Reg Flex Act was amended under President Clinton, and most recently President Bush signed an Executive Order giving the Office of Advocacy even more authority to 

compel small business flexibility in the way that agencies regulate. 

In order for America to remain competitive, and I believe Dr. 

Graham really hit on this about not only is China looking over our 

shoulders, but European companies as well are breathing down our 

necks. In order to make sure that we maintain this country’s competitiveness we must make sure the economic engine which is 

small business is not stifled by overburdensome or unnecessary 

regulations. 

Thank you, Chairman. 

[The Honorable Thomas Sullivan’s statement may be found in 

the appendix.]

Mr. AKIN. Thank you very much. 

We have been called for a vote. I think we have time, Robert, for 

your testimony for five minutes, and then I think what we will do 

is stand in recess. I do not know how many votes we have, but 

14

probably several. I would guess in about 20 minutes maybe we 

could take up the time for some questions. 

Would you proceed, please, Robert? 

STATEMENT OF ROBERT SCHULL, DIRECTOR OF 

REGULATORY POLICY, OMB WATCH

Mr. SCHULL. Certainly. I am Robert Schull. I am the Director of 

Regulatory Policy for OMB Watch, which is a nonprofit, nonpartisan research and advocacy center promoting an open accountable government responsive to the public’s needs. I want to thank 

you, Mr. Chairman, and Members of the Subcommittee, for inviting 

me to testify. 

We definitely agree that small businesses should not be an excuse for weakening or eliminating the regulatory protections of the 

public health, safety and environment that we definitely need. 

We are concerned because the project being promoted today by 

OMB is a project that we see as nothing less than a hit list of regulatory protections to be weakened or eliminated and a give away 

of the public’s valuable protections to benefit not small business, 

but large corporate special interests. 

Now, one of the keys to identifying how this hit list will not serve 

small businesses is to look at the fact that it is targeted at manufacturers. According to Census data, at best 2.5 to five percent of 

America’s small businesses are manufacturers, and if you look at 

the items on this hit list, the 76 items, and you go through and 

count up those that were either recommended by the SBA on its 

list of high priority items or if you look at those whose description 

mentioned specifically alleviating a small business burden you will 

find that only 11 out of those 76 items on the hit list meet those 

criteria. 

Additionally, I would like to point out that there were numerous 

attacks on workers’ rights to family and medical leave in this hit 

list. In fact, of all the suggestions for weakening or eliminating 

family and medical leave rights that were originally submitted in 

the 189 suggestions, all but one of those FMLA suggestions were 

added to the 76 items on the final hit list. I wanted to point this 

out because the FMLA already by law exempts employers with 

fewer than 50 employees. This is not a list to benefit small business. 

The fact is small business wants to be a responsible member of 

the public. Small business owners and their families live in the 

very communities that will be affected by this hit list, but we have 

to recognize that small business does contribute, just as every other 

business does, to workplace health and safety injuries, to pollution, 

to the things, the very problems that we need regulations to protect 

us from. 

So the answer is not a free pass or the elimination of valuable 

safeguards. The answer, especially if you are considering the needs 

of small business, is to help small business comply with the regulations so that they can compete on a level playing field with the big 

corporations that they are competing against. 

Give them free compliance assistance that is well funded. Continue the laudable efforts of the Department of Labor and EPA to 

15

work with small businesses on SBREFA panels with compliance assistance. The answer is not a free-for-all that forces the agencies 

to stop everything and consider an onslaught of recommendations 

handed to them by OMB. 

Now, my written statement has I think just been distributed. I 

have to warn you the level of vitriol in it is probably a little high, 

but then again the stakes are high. 

I want to point out one item in particular, the listeria rule. This 

is one of the items that OMB actually proudly touted back in December as a regulatory reform accomplishment. Just the same, that 

rule is on this 76 item hit list of protections to be weakened or 

eliminated. 

This is important because listeria is a deadly foodborne pathogen 

that causes close to 2,500 cases of food poisoning every year. Over 

90 percent of the victims are hospitalized and 20 percent die. This 

foodborne pathogen is particularly dangerous to women, to pregnant women, because women who contract listeriosis almost inevitably will miscarry or bear children with significant birth defects. 

Why is this rule that was proudly touted as a regulatory reform 

accomplishment on the hit list of rules to be weakened or eliminated? It is hard to know in part because we do not have enough 

transparency in this process. I mean, this hit list is arguably an 

expanded version of a petition for rulemaking under the APA. 

Normally with a petition for rulemaking we send those petitions 

to the agencies and the agencies directly respond to us with their 

reasons for accepting or rejecting the petition. We do not have the 

agency responses here. I mean, the agencies, as was just pointed 

out, will be responsible for implementing these reforms, but we do 

not know why the listeria rule was accepted as a regulatory reform 

nomination.

Mr. AKIN. Robert, your time has expired now.

Mr. SCHULL. Certainly. 

[Mr. Schull’s statement may be found in the appendix.]

Mr. AKIN. We will stand in recess for probably about 20 minutes 

I would expect. 

[Recess.]

Mr. AKIN. The meeting will return to order. Thank you all for 

your forbearance. Fortunately it was just one vote, so it will be 

okay to get going and get you out in time for lunch hopefully. 

I guess I had quite a number of questions. As you all testified, 

it raised some other questions as well. I guess maybe one of the 

things that might be appropriate after Robert’s testimony would be 

some kind of a response from someone else I think. 

Mr. Sullivan, would you like to take a crack at a couple?

Mr. SULLIVAN. Mr. Chairman, I would. First I should say that 

had I seen Robert Schull’s testimony ahead of time like I did all 

the other witnesses’ I probably would have been able to help him 

out with pointing out some of the inaccuracies in his statement, but 

now I will just take the opportunity to do it with your question. 

16

Mr. Schull talked about how only 11 of the public reform nominations were recommended by my office. Unfortunately, that is inaccurate. Twenty-eight were, so roughly half of the recommendations 

that we put forward will be part of the agency’s commitment. 

I also want to assure this Subcommittee in particular that the 

other recommendations that did not make it into the manufacturing report, if my office can convince agencies to look again at 

these rules to see whether or not they can be reformed we most 

certainly will. That is certainly the job of the Office of Advocacy, 

and we will certainly pursue those.

Mr. AKIN. Can I interrupt just a second? The 76 that you chose 

would not take legislative action to make reforms. Is that correct?

Mr. SULLIVAN. Actually there are two that would take legislative 

action.

Mr. AKIN. Okay.

Mr. SULLIVAN. One was the permanent expensing, Section 179 

expensing, and the other is the Do Not Fax rule that unfortunately 

was misinterpreted by the Federal Communications Commission, 

and that is being taken care of.

Mr. AKIN. So it was not necessarily a parameter for the reforms 

that we were looking at here that they did not require legislative 

action; they were chosen for other reasons as well then?

Mr. SULLIVAN. Yes, Mr. Chairman, and Mr. Schull did talk about 

the listeria rule. That was one of ours. Mr. Schull is absolutely correct that food safety is of paramount importance, but is it more important to designate and require a specific irradiation machine 

than to make sure that the food is safe? 

That is really what is at stake here with this listeria rule because as of now you are required to operate irradiation equipment. 

What small businesses say is that yes, the meat must be safe, but 

does it not make sense to have flexibility if you cannot afford the 

equipment or if you get the equipment and it does not work or if 

you get the equipment and you do not get training on how to operate it correctly? 

Would it not make sense to go to a system that is flexible for 

small business where you would allow for personal inspection to 

make sure of its safety? When you talk about listeria and you talk 

about regulatory reform that is what we are talking about here. 

I should just close with the fact that the laws that my office oversee, the Small Business Regulatory Enforcement Fairness Act and 

the Reg Flex Act, specifically require that agencies not compromise 

their missions of environmental protection, workplace safety, road 

safety, air safety in order to build in flexibilities to small business. 

That is the law and so when we encourage agencies to be flexible 

the law says that they can be flexible but without compromising 

the important public safety measures.

Mr. AKIN. The basic mission that they were assigned to do?

17

Mr. SULLIVAN. Yes, Mr. Chairman.

Mr. AKIN. Ms. Bordallo?

Ms. BORDALLO. Thank you very much, Mr. Chairman. 

My first question is to Mr. Sullivan. You mentioned a study performed for advocacy that found two regulatory areas where regulatory compliance is dramatically higher for small manufacturers 

than large—environmental compliance and tax compliance. 

Small business cost is 4.5 times higher in these areas, so I look 

at the 76 recommendations and I see 42 at EPA but only one from 

Treasury. Can you explain that?

Mr. SULLIVAN. Yes, Congresswoman. Actually the Chairman referred to this a few moments ago. Many of the provisions imposed 

by IRS and burdensome for small businesses are statutory in nature, and the complexity, the sheer complexity of the Code primarily is what is driving the high cost. 

When the President’s bipartisan Tax Advisory Panel comes out 

with recommendations later on this summer I think this Subcommittee certainly will take great interest in what legislative options exist to reduce that burden. 

Now, you pointed out that the environmental regulations are 

very high, and you are right. The Crain Hopkins study does point 

out that on environmental regulations there is a severely disproportionate negative impact and so I commend the EPA for looking at those situations where they can reduce impact, but at the 

same time maintain environmental protections.

Ms. BORDALLO. All right. I have a follow up for Dr. Graham. You 

heard that Mr. Greenblatt’s first recommendation for regulatory reform was tax regulations. I think that is what he mentioned. However, only one tax regulation made your list so can you go on to 

explain that?

Mr. GRAHAM. Yes. I think it would be useful to actually go back 

and look at the entire 189 nominations that we received from largely the business community about regulations they sought to be 

changed, and I think you will find that there are a relatively small 

number of tax regulations compared to environmental regulations 

or labor regulations.

Ms. BORDALLO. How many recommendations were there?

Mr. GRAHAM. We would have to go back and do the actual count, 

but there were 189 total. Then we would have to count the number 

that were in Treasury.

Ms. BORDALLO. So you have no idea how many?

Mr. GRAHAM. I think there were under 10 is my guess, but I can 

get those exact numbers for you. 

I think the answer lies in Tom Sullivan’s answer, which is there 

is so much of tax regulation that is actually embedded in the Tax 

18

Code that Congress specifies that it is very hard to identify things 

that agencies can do without actually having new legislation pass 

through the Congress. 

Now, Mr. Chairman, on your point I want to emphasize and 

elaborate on Tom’s answer. We were looking and gave emphasis to 

reforms that could be adopted without requiring new legislation. It 

was not an absolute criterion. We did not say we were not going 

to consider anything, but as a practical matter we felt we wanted 

to give emphasis to those kinds of reforms. 

Tom mentioned two that may require legislation, and in one of 

those cases, the FCC example, we at OMB are not convinced it requires legislation. We think that FCC could make that change and 

fix that problem even without it, but we certainly will not argue 

if Congress is going to fix it through legislation.

Ms. BORDALLO. One more, Mr. Chairman. Thank you. This is for 

Mr. Graham. 

Last year you told this Subcommittee that environmental regulations impose the largest burden on small firms followed by economic regulations, tax compliance and then workplace rules. 

That sounds fairly balanced to me, but I look at your list and I 

notice that 42 of your 76 recommended rules are for EPA and nine 

are from OSHA. That seems somewhat lopsided. 

Is there a reason that your choices are concentrated so heavily 

in environment, health and safety standards?

Mr. GRAHAM. I think actually it would be good to direct those 

questions to each of the agencies. The agencies were evaluating 

these nominations that we referred to them, and the Labor group—

Ms. Stidvent is here, and her group evaluated theirs. Ms. Daigle 

and her team evaluated those at EPA. 

They made a merits evaluation, and we took into account in that 

dialogue input we got from SBA Advocacy. I do not think there was 

any effort to draw a certain percentage from each agency. We just 

looked on the merits at how strong the case was for these various 

proposals, and that is the distribution that resulted.

Ms. BORDALLO. Do any of the agencies want to answer that?

Ms. DAIGLE. Sure. I would be happy to. We received well over 90 

nominations from the different submitters. They were not from any 

one particular sector. 

What we did is we took a close look at it. We accepted 42 of them 

because we thought they could be done in a reasonable timeframe 

and that they could be done without harming either health or the 

environment.

Ms. STIDVENT. That is similar to the process that we followed. 

We looked at the nominations that the public sent in to OMB, evaluated them on their merits. In many instances we were already underway with a reform process, and we continued that. 

There were a few instances in which we decided we needed more 

information to pursue a decision on those particular nominations, 

19

but I will say, and I will reiterate this for Dr. Graham and Mr. Sullivan. We really value this process. 

It is incredibly resource intensive to try and review all possible 

regulations that are currently existing and so it is very helpful to 

us when the public comes forward and suggests some possibilities 

for reform and improvement in regulations.

Ms. BORDALLO. Mr. Chairman, I have a concluding statement.

Mr. AKIN. Yes, if you will.

Ms. BORDALLO. Yes. Actually, we are talking today about difficult 

problems that Congress must resolve and agencies together. I am 

from Guam, and in my travels I have seen factory conditions all 

over Asia, including China, Taiwan, Korea. You name it, I have 

been there. Steel factories, manufacturing companies of all kinds. 

How do we set a balance and where do we draw the line in setting our standards so that we can protect public health and safety, 

but still compete with these countries and continue to do business 

with them? 

In the short time that I have been a Member of Small Business, 

every public hearing we have had are the saddest stories you will 

ever want to hear about small businesses that have been in families for generations are collapsing. How can they survive? 

Perhaps if we discontinued some of our business with some of 

these countries, but they do not have to comply with anything. People that work in steel factories do not even have safety shoes or 

anything. I mean, it is incredible. 

I am not saying that we should cut down on our regulations. We 

need them there for the protection of people, but we have to come 

to some kind of a balance, and I think this is what we are asking 

so that it is not so difficult for small businesses. 

It is bad enough they are losing. They are shutting down, and 

then they have to have all these burdens of regulations, surveys or 

whatever goes on and so we have to cut the red tape. Mr. Chairman, I am just feeling that we have to look at this very seriously 

so that we can discontinue the erosion of small businesses in our 

nation. 

Thank you.

Mr. AKIN. Thank you very much. I appreciate your comments 

and am very sympathetic to what you are saying. 

Let me just back up a little bit here if I could, John, to your comments from the very beginning. I got the impression from what you 

were saying that we are just merely scratching the surface of what 

we have basically accumulated through years of legislation and 

rulemaking. First of all, am I right in that assumption?

Mr. GRAHAM. Yes, sir.

Mr. AKIN. Second of all, it is also my impression that in each one 

of these specific recommendations, if you cut through the red tape, 

you come down to sort of a common sense balance between certain 

things that we want in terms of our society, in terms of health and 

20

welfare and taking care of people and at the same time not creating some sort of a monster nightmare of federal regulations, 

which makes it so we are not competitive as an industry. Every one 

of these things is kind of a balance question. 

That is I guess a long wind-up for my main question, and that 

is let us say that you were king for a day and you really had to 

take on this problem, Doctor. How would you proceed to try to 

make us more competitive internationally with dealing with the 

whole red tape situation? What sort of mechanical procedure would 

you put in place?

Mr. GRAHAM. Mr. Chairman, I want to start by saying that I do 

not think we actually have to have a balancing determination in 

many of these reforms. In many cases we can achieve the same 

amount of worker protection, the same amount of environmental 

protection, but at the same time allow the businesses to pursue 

those goals through more cost effective, more efficient means. 

Hence, when you write a regulation that specifies as a small 

business you must adopt this particular technology and you cannot 

consider any other alternatives, even equally effective and less 

costly alternatives, then you have written a regulation that is going 

to put us in an economic disadvantage.

Mr. AKIN. And certainly it is a time bomb because over time, 

technology is going to say that there may be a better way to solve 

the same problem.

Mr. GRAHAM. So another concrete example. We all want leaks of 

pollution in factories detected and cleaned up, but do we have to 

have a separate leak detection and repair report on each pollutant 

submitting to the federal government? Would it be all right if we 

had one report permitted for all of the leaks of all the various pollutants and that report submitted? 

That does not change the amount of cleanup that occurs. It reduces the amount of recordkeeping and red tape in the process. 

That is not a question of balance. That is just a question of cutting 

out unnecessary regulatory activity. 

Now, in some cases you are right. You sort of have to make a 

balancing judgment. I think it is fascinating that in most of the 76 

cases no one is calling for the removal of the regulation. They are 

simply calling to allow more flexible and less costly alternatives to 

achieve the same objective.

Mr. AKIN. I appreciate you sharpening that point, but still the 

basic question is, are you are saying we are scratching the surface? 

I guess the concern I have is that I started in the business world, 

and we have this 20 or 30 employer business, and it is a little bit 

like letting leaking water into some sort of a chamber. At a certain 

point the water gets high enough that the guy drowns and the 

same thing happens economically. 

We raise the cost of doing business high enough in this country 

one of two things happens. They go out of business, or they ship 

the business overseas, one or the other. Those are your two choices. 

21

My question is seeing a lot of jobs going overseas, let us say we 

focus on this problem. How do you proceed if we want to do more 

than scratch the surface? How do we get into all of this stuff? 

I am saying say we want to accelerate the pace of really looking 

over the red tape that we are—

Mr. GRAHAM. I think that is a fundamental question. I am not 

going to pretend I have the answer to it because we have 20,000 

of these regulations that were adopted in 1981 when OMB, my office, was first created. How in the world do we have enough people 

at OMB or the agencies to even begin to scratch the surface of 

these existing regulations? 

One little nugget that I will give you that has helped us. At the 

Department of Transportation they had a regulation that governed 

how consumers would get airline tickets. In their wisdom the Clinton Administration included a sunset provision in that regulatory 

program that said that if it is not affirmatively renewed in a new 

rulemaking within a certain period of time it goes away. 

Let me tell you how valuable that little sunset provision was 

adopted by the Clinton Administration for this Administration because we worked with the Department of Transportation for over 

a year on do we really need to have a regulation to help people get 

airline tickets. Can people not get on the Internet and get their 

own airline tickets? It is not that hard. 

After a year of debate we finally agreed that maybe we really did 

not have to have this. Frankly, if it was not for that little sunset 

provision I do not know where that debate would have ended up. 

That is a concrete example of a tool, but it has to be used very 

carefully and very specifically in order to be constructively used.

Mr. AKIN. I want to open that question now up to everybody else 

on the panel, whoever. Put your hand up and run down if you have 

some thoughts as to how do you proceed.

Mr. SULLIVAN. Mr. Chairman, I think doing what is effective, 

finding out what works and doing it over and over again certainly 

deserves to be considered. The agencies deserve credit for taking 

leadership on, stepping up to the plate and saying we are going to 

reform some of these rules. 

I would encourage this Subcommittee in particular to make sure 

to follow up on a regular basis to see where those reforms are, so 

the oversight. I cannot overstate the importance of oversight on 

these nominations. 

A second legislative option is look at what is working with Executive Order 12866, which is primarily the responsibilities that 

John Graham is responsible for in OIRA. 

Additionally, look at the responsibilities of Executive Order 

13272 and work with your colleagues in the House and the Senate 

to see whether or not some of those provisions can be enacted into 

law so that some of these efforts can become the way that government operates. 

Last, but not least, any time you do have these oversight committee hearings please bring in small businesses to give even more 

suggestions on reform because as soon as small businesses are 

22

asked amazingly small business common sense from Main Street 

makes a huge impact.

Mr. AKIN. Thank you. 

Anybody else? Yes, Robert?

Mr. SCHULL. Well, I want to say that if the question is how do 

we improve our global competitiveness then we cannot just look at 

regulation in isolation. There are many other factors, among them 

the current trade environment. 

I mean, the free trade agreements that we have with China and 

Africa, with Mexico, I mean we are forcing American manufacturers to compete with manufacturers in nations where people can go 

to work with no shoes, people have no overtime rates, no collective 

bargaining. 

I mean, there is a much bigger picture so that if the question 

really is how do we improve competitiveness we really have to look 

at the big picture so that we can make sensible policy decisions 

that look at everything in the bigger context.

Mr. AKIN. Thank you. I think all of us recognize there are a lot 

of different components to competitiveness, and certainly the red 

tape is one that this Committee is charged with paying particular 

attention to, so that is why the focus on that point. 

Let me toss out an idea. What would happen, and I do not know 

politically whether this could ever be done, but you take one of 

these federal agencies that has grown for so many years, and as 

congressmen one of the problems we have is our time is divided so 

much. I used to be a part-time legislator as a state rep. I am even 

more of a part-time legislator as a congressman because we have 

multiple Committee hearings going on even right now. 

I do not really have a lot of confidence that Congress, although 

we perhaps initially created a lot of these regulations by the laws 

that we passed, have the ability to really review them and reform 

them and to make sure that they are up to date. 

What would happen if we were to take some sort of a large systems integrator, some big corporation, a glorified consultant, and 

say look, they do not have a political dog in the fight. We are going 

to turn them loose inside a particular agency, and we are going to 

go through department or section or whatever it is by section. 

We list out all of the products that each particular department 

creates, and we also list out how many people are employed to 

produce those particular reports or oversight or whatever it is that 

these departments are doing. Then we systematically go through it 

and say first of all can it be reorganized or are these things really 

necessary. 

You come back to Congress and say look, you have 15 people all 

tasked with the same thing so we have grouped them together so 

this is an organizational shift. Here are the different things that 

are being produced, and here is what each one costs you. Okay, 

Congressman. You decide. How much do you really want to pay for 

this? 

Has that ever been tried? Has anybody thought about using that 

sort of a large systems integrator to do that research? Perhaps you 

23

could make the case that that is a more objective way of kind of 

wading into these things. That is a thought anyway. 

Response?

Mr. GRAHAM. Just one quick response in terms of sympathy for 

the logic behind the suggestion, and that is that after four years 

of being in the role I am in and seeing the interaction between the 

various federal agencies and the Congress on regulation, one thing 

I have noticed is that for a lot of regulatory agencies there is more 

enthusiasm and excitement for creating new regulatory programs 

than there is for going back and looking at that existing sea of regulation and doing the hard work of modernizing, rescinding, refining and so forth. 

The heart of your idea is to try to find some other force, some 

institutional force in that dynamic, whether it be the example you 

gave or another type of agency or something that has the resources 

and expertise to really force a re—look at this substantial body of 

regulation. 

I do not know exactly how to do that, but I want to make it clear 

to you that in spite of the best leadership of these various agencies 

by their own psychology as institutions they want to create new 

regulations. They do not want to spend their time working on these 

existing regulations. 

Thank the Lord I have the two colleagues to my right from two 

agencies who are sympathetic enough to work with us to try to just 

look at a modest number of these affecting the manufacturing sector.

Mr. AKIN. That has been my observation as a past engineer coming to this place; that we have created a system which continues 

to churn this out, but from a political point of view it does not 

make us look good if we say I went back and looked in these old, 

moldy books of regulations and got rid of 10 of them or something. 

I mean, you do not get any brownie points back in your district. 

We do not really have a way of getting back into and taking a 

look, particularly some of these things that are written with the 

mindset of a particular time period where now a lot of things have 

moved on and it maybe should be approached in a different way.

Mr. GREENBLATT. Mr. Chairman, if I may?

Mr. AKIN. Yes, Drew?

Mr. GREENBLATT. I wonder if it makes sense and a more direct 

approach would be to have a sunset provision on all existing regulations and another rule is that any future legislation must be sunset. If it is a good idea we will reenact it. If it is a bad idea, it will 

die. 

That way in a couple years—three, five years from now—we will 

not have 20,000 regulations on the books. We will have 7,000 really 

good ones that really are effective that are really helpful. The 

13,000 regulations small business will not have to review, monitor, 

be unsure of if they are complying, do the paperwork for. 

24

They are adding no value, so if we could just constantly be 

sunsetting all future regulations and all existing regulations, the 

good ones will stay. The bad ones will go away.

Mr. AKIN. Thank you for the thought. Sunsetting is a useful tool. 

No doubt about that. The trick is how do you go back to however 

many thousands of these things there are? 

Any other comments? I prefer if I can to run Committee hearings 

more like a discussion than like an official hearing, so people jump 

in if you want to.

Ms. BORDALLO. Mr. Chairman, if I could? Getting back to, you 

know, dealing with the foreign countries and all of that I am just 

curious. 

Have any of you ever sat down with your counterparts in these 

countries to check on regulations, rules and regulations? Has there 

ever been an effort on the part of our government to discontinue 

trade with some of these that are absolutely not paying any attention to any kind of rules and regulations in their factories and 

manufacturing companies? 

I know there is such a thing as the free trade and foreign countries do not like others interfering, but I just wonder has there ever 

been anything in the past in the way of this, and do you meet with 

your counterparts to discuss this because we continue to trade with 

these people? 

In essence our small businesses are going bankrupt, going out of 

business, and here they are. We are competing with all these rules 

and regulations that we have, and we are still trading with these 

countries.

Mr. SULLIVAN. Congresswoman, the answer is yes. Yes, there is 

a regular meeting of counterparts in other countries. 

Dr. Graham referred to the bonfire in Brussels. I meet with folks 

from Sweden, from Norway, from northern Ireland, from the U.K., 

Ireland in general, Australia, Canada. Each one of these countries 

that I mentioned is aggressively looking on how to build in flexibilities to reduce regulatory costs so that they can up their competitive 

ante in the global marketplace. 

This effort that is ongoing, the public reform nominations, is not 

at all done in isolation, and if we do not make sure to stay on track 

with this annual public transparent process then the other agencies—excuse me. The other countries will do it. They will do a better job, and they will be more aggressive, and our competitive edge 

then becomes compromised.

Ms. BORDALLO. You mentioned all European countries. Have you 

ever been to Asia?

Mr. SULLIVAN. I have not. My travel budget does not allow for 

me to get out there, but if I do, Congresswoman, I am going to stop 

by Guam on the way.

Ms. BORDALLO. I will tell you. No. Really seriously, you should 

get to Asia. This is where you are going to find your eye opener. 

25

I think it is about time we sit down, since we do so much trade 

with this part of the world, you know, that you must make that. 

Talk to whomever, budget people, and set some money aside for 

Asian travel. 

Thank you, Mr. Chairman.

Mr. AKIN. Thank you. 

If there are no further questions or comments here then we will 

go ahead and close the hearing, and I will have fulfilled my promise of getting you out in time for a good lunch.

Mr. GRAHAM. Thank you, Mr. Chairman.

Mr. AKIN. The meeting is adjourned. 

[Whereupon, at 12:07 p.m. the Subcommittee was adjourned.]

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