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78–870 PDF 2002

S. HRG. 107–413

THE BUSINESS OF ENVIRONMENTAL TECHNOLOGY

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

AUGUST 1, 2001

Printed for the Committee on Small Business and Entrepreneurship

(

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

(II)

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED SEVENTH CONGRESS

JOHN F. KERRY, Massachusetts, Chairman

CARL LEVIN, Michigan

TOM HARKIN, Iowa

JOSEPH I. LIEBERMAN, Connecticut

PAUL D. WELLSTONE, Minnesota

MAX CLELAND, Georgia

MARY LANDRIEU, Louisiana

JOHN EDWARDS, North Carolina

MARIA CANTWELL, Washington

JEAN CARNAHAN, Missouri

CHRISTOPHER S. BOND, Missouri

CONRAD BURNS, Montana

ROBERT F. BENNETT, Utah

OLYMPIA J. SNOWE, Maine

MICHAEL ENZI, Wyoming

PETER G. FITZGERALD, Illinois

MIKE CRAPO, Idaho

GEORGE ALLEN, Virginia

JOHN ENSIGN, Nevada

PATRICIA R. FORBES, Democratic Staff Director and Chief Counsel

EMILIA DISANTO, Republican Staff Director

PAUL H. COOKSEY, Republican Chief Counsel

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CONTENTS

OPENING STATEMENTS

Page

Kerry, The Honorable John F., Chairman, Committee on Small Business

and Entrepreneurship, and a United States Senator from Massachusetts .... 1

Bond, The Honorable Christopher S., Ranking Member, Committee on Small

Business and Entrepreneurship, and a United States Senator from Missouri ....................................................................................................................... 35

Edwards, The Honorable John, a United States Senator from North Carolina . 38

WITNESS TESTIMONY

Bentley, Jeff, chief operating officer, Nuvera Fuel Cells, Inc., Cambridge,

MA ......................................................................................................................... 8

Bedogne, Ralph, vice president, Finance and Government Relations, Engineered Machined Products, Escanaba, MI ......................................................... 26

Kennard, Byron, executive director, the Center for Small Business and the

Environment, Washington, D.C. ......................................................................... 39

Dreessen, Thomas, chief executive officer, EPS Capital Corporation,

Doylestown, PA .................................................................................................... 44

Patterson, Ed, president, Natural Environmental Solutions, Inc., St. Louis,

MO ......................................................................................................................... 49

Renberg, Dan, member, Board of Directors, Export-Import Bank of the United

States, Washington, D.C. ..................................................................................... 66

Stolpman, Paul, director, Office of Atmospheric Programs, U.S. Environmental Protection Agency, Washington, D.C. .................................................... 74

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bedogne, Ralph

Testimony ............................................................................................................. 26

Prepared Testimony ............................................................................................. 29

Bentley, Jeff

Testimony ............................................................................................................. 8

Prepared Testimony ............................................................................................. 11

Bond, The Honorable Christopher S.

Opening Statement .............................................................................................. 35

Prepared Statement ............................................................................................. 37

Dreessen, Thomas

Testimony ............................................................................................................. 44

Prepared Testimony ............................................................................................. 47

Edwards, The Honorable John

Opening Statement .............................................................................................. 38

Kennard, Byron

Testimony ............................................................................................................. 39

Prepared Testimony ............................................................................................. 41

Kerry, The Honorable John F.

Opening Statement .............................................................................................. 1

Prepared Statement ............................................................................................. 4

Patterson, Ed

Testimony ............................................................................................................. 49

Prepared Testimony ............................................................................................. 51

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Renberg, Dan

Testimony ............................................................................................................. 66

Prepared Testimony ............................................................................................. 69

Snowe, The Honorable Olympia J.

Prepared Statement ............................................................................................. 56

Stolpman, Paul

Testimony ............................................................................................................. 74

Prepared Testimony ............................................................................................. 76

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THE BUSINESS OF ENVIRONMENTAL

TECHNOLOGY

WEDNESDAY, AUGUST 1, 2001

UNITED STATES SENATE,

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP,

Washington, D.C.

The Committee met, pursuant to notice, at 9 a.m., in room 428-

A, Russell Senate Office Building, The Honorable John F. Kerry

(Chairman of the Committee) presiding.

Present: Senators Kerry, Bond, Edwards, and Snowe.

STATEMENT OF THE HONORABLE JOHN F. KERRY, A UNITED

STATES SENATOR FROM MASSACHUSETTS

Chairman KERRY. The hearing will come to order. Thank you all

very much. I appreciate everybody being here and I look forward

very much to this hearing and I apologize to the witnesses who

were prepared to come previously and who on short order switched

their schedules. Unfortunately, the Senate is not always the most

orderly process and we live with these changes ourselves and I

apologize and I am very, very grateful to all of you for being able

to switch your schedules and come in today. Thank you for doing

that.

I personally am very excited about this hearing. It is going to

have to be conducted under some relatively tight constraints because I have to be at a markup for the State Department authorization bill in the Foreign Relations Committee where I have personal pending business and that will start at 10:30, so I am going

to have to excuse myself at that time.

But the reason I am excited about this hearing, and I think it

is a very important one, is that we are embroiled in a longstanding

debate in this country about the environment. Historically, many

politicians have been prepared too easily and too quickly to pit

good public policy, good environmental policy, against the economy,

against common sense economic choices.

The fact is that there are literally thousands of extraordinarily

successful small businesses in this country that are growing into

big businesses, in many cases that have proven again and again

that this is a phony conflict, that this is a tension that doesn’t have

to exist if we are smart about it, and sensitive, and we create good

public policy. The fact is that small business can thrive. Big businesses can save tens of thousands, hundreds of thousands, and

even millions of dollars by adopting good policies and we can do

well economically even as we do good for the country.

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So I thank the Administration and all of our witnesses for coming here today to focus on the important connection between small

business, job creation, and environmental protection. Over the past

30 years, we have taken some very significant steps in the country

to safeguard the environment. We have enacted the National Environmental Policy Act, the Clean Air Act, the Clean Water Act, the

Endangered Species Act, the Safe Drinking Water Act, Superfund,

and other principal environmental protections.

Now, I will acknowledge, and sometimes some of my friends in

the environment don’t like this, but I will acknowledge that sometimes, as in any bureaucracy, the bureaucracy has a way of getting

in front of the intent of Congress, or even the sort of common sense

application of the law, and sometimes we have bad results because

young bureaucrats are excessively zealous enforcers; they don’t

apply common sense and they reach too far, or they try to apply

a one-size-fits-all rule in a way that just doesn’t make sense when

distinguishing between a very large corporate entity versus a very

small entity.

I believe that we can work through those kinds of problems. But

the bottom line is that we have created a broad legal mandate in

this country for environmental protection, and in doing so, we created a demand for new technologies. For the first time, industry

and government demanded environmental assessment, waste management, remediation of contaminated properties, emissions reduction technologies, clean energy, improved efficiency, and a slew of

other environmental services, and the private sector responded to

that new demand through the creation of innovative technologies.

I would remind people that there is no inherent automatic marketplace for Abrams tanks or for B–1 bombers or for other matters

of our defense industry, but we have huge companies and tens of

thousands of Americans working in those industries. Why? Because

we defined a threat, we put a certain amount of money into the

definition of that threat, and the private sector responded and so

we find a certain component of our economy therefore thriving in

response to that created demand.

The environment is no different. We define a threat. If we were

to put a certain amount of our revenue toward the remediation of

that threat or dealing with that threat, the private sector would

have the opportunity to respond and we would be the better for it.

Let me provide an example of some of the hysteria and some of

the positive benefits that come out of this equation. In 1990, Congress enacted amendments to the Clean Air Act that mandated

cuts in sulfur dioxide emissions from power plants and refineries.

We all know the negative impact of sulfur dioxide—heart disease,

respiratory illness, premature death, and so forth. Its environmental impacts range from reduced visibility, acid rain, forest crop

ecosystem damage, and so forth. There was no question that we

would benefit from lower sulfur emissions, but the question and

controversy focused on the cost of those sulfur emission reductions.

At the outset, industry told us with certainty that meeting the

cost of reductions would be roughly $10 billion, and EPA, on the

other side, estimated that the cost would approach about $4 billion.

Well, to our credit, we did put the requirements in place. The actual cost has turned out to be approximately $2 billion, which is

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half of the EPA’s estimate and one-fifth of the industry’s estimates.

One of the principal reasons that these costs fell so far below projection was because no one took the time or worked through the

difficulties of predicting how innovation, like catalytic systems and

conversions and other technologies, would cut compliance costs.

So as we look at past experience, we learn that implementing environmental safeguards in our future, whether it is further cuts in

air and water pollution or protection of the public in many other

ways, that we can use energy more efficiently and generate renewable, reliable and domestic energy and push the technology curve

in ways that will significantly alter the outcomes of cost and significantly increase the revenue flow to companies in this country.

This is a vital lesson for us to learn; an important principle for us

to apply as we go forward.

When a market demands progress, change and evolution will

flow and small firms play a key role in making that happen. In

1999, the Small Business Administration investigated this role and

found the following: ‘‘Small businesses are sources of constant experimentation and innovation. They are an integral part of the renewal process in defining market economies. They have a crucial

role as leaders of technological change and productivity growth. In

short, they change the market structure.’’ Now, I am going to put

the rest of my text in the record as if read in full because I want

to try to adhere to the standard here to keep this on time.

But the bottom line is this: We do not need to be trapped in a

false prison publicly with respect to this dialog. We don’t have to

fear what we do best in this country, which is innovation and entrepreneurial activity. If we can encourage that kind of activity,

with a sense to the marketplace, that it will be sustained and that

we are serious, we will see, I believe, an explosion within the small

business community of this country of people pursuing their efforts

to privately meet the demand that they recognize is there and that

is supported through the Federal dollars that would be available to

help encourage the technology and the movement in those directions.

If we do that, we can again be the world leader in some of these

alternative and renewable possibilities as well as other sectors of

the technology field. The United States should not be lagging behind Germany or Japan or any other country in the world, given

our technological prowess and the capacity of our universities and

our basic research playing field, and I think it is important for us

to begin to recommit to that and that is what these hearings are

about.

We also want to look in these hearings a little bit at how we

undo this tension between a small entity and good environmental

policy. I mean, how do we make it possible for people to not feel

that the bureaucracy is their enemy but rather to have a more

user-friendly cooperative process. Anyone who wants to share any

thoughts on those lines, we also welcome them because we really

want to explore fully all of the possibilities here.

[The prepared statement of Chairman Kerry follows:]

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Chairman KERRY. So I thank the panel for being with us. We

have Mr. Byron Kennard, the executive director of the Center for

Small Business and the Environment in Washington; Mr. Jeff

Bentley, COO of Nuvera Fuel Cells, Inc., in Cambridge, Massachusetts; Mr. Thomas Dreessen, CEO, EPS Capital Corporation from

Pennsylvania and Export Council for Energy Efficiency in Washington; Mr. Ed Patterson, president of the Natural Environmental

Solutions, Inc., St. Louis, Missouri; and Mr. Ralph Bedogne, vice

president of Finance and Government Relations, Engineered Machined Products, Escanaba, Michigan.

Gentlemen, if you would each keep your comments in summary

form, your full text will be placed in the record as if read in full

and I look forward to your testimony. Why don’t we begin over

here, Mr. Bentley, with you and we will run right down the line.

STATEMENT OF JEFF BENTLEY, CHIEF OPERATING OFFICER,

NUVERA FUEL CELLS, INC., CAMBRIDGE, MASSACHUSETTS

Mr. BENTLEY. Good morning and thank you very much for allowing me to testify. I am Jeff Bentley, the chief operating officer of

Nuvera Fuel Cells in Cambridge, Massachusetts. Nuvera is a designer and developer of fuel cell technologies for companies providing clean energy solutions to stationary power and transportation markets.

Nuvera employs about 130 people in the United States and 45

people in our office in Milan. Our suppliers and partners include

U.S. companies like DuPont, Corning, Caterpillar, Engelhard, and

Chevron, to name a few, and we also work with leading international companies, such as RWE, the second largest utility in Germany, and Mitsui, one of the largest Japanese trading companies.

We hope to commercialize fuel cell technology to make the world

a better place to live.

If you are unfamiliar with the technology or the Nuvera story,

10 years ago, Nuvera’s senior staff worked at Arthur D. Little, a

technology consulting firm. In 1997, we created a breakthrough.

We were able to, in a very ungainly device, create 100 watts of

electricity, enough to light one light bulb, using gasoline. This was

a breakthrough because it meant that you could have an electric

car with zero pollution that runs on regular gasoline—no major

fuel infrastructure changes, no problems with vehicle range, and

zero emission driving. News of the breakthrough was communicated worldwide as the critical link to someday realizing the commercial benefits of fuel cells and transportation.

I would like at this point in time to extend my sincere gratitude

and appreciation to the U.S. DOE. They have been and continue

to be one of our strongest supporters. They were there in 1992

when I approached them for funding for studies. They were there

in 1997, along with the National Labs from Illinois and New Mexico at our breakthrough, supplying technology as well as insights.

DOE continues to support Nuvera’s groundbreaking technology development in fuel cells.

Turning back to fuel cells, how they work is pretty simple. They

take hydrogen. They separate protons and electrons. The protons

make water. The electrons drive an electric motor, a light bulb, or

anything that requires electric energy. A fuel cell stack can, in fact,

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power a home. A fuel cell stack about 1-foot long can be integrated

into a unit that is about the size of your home heater and power

your home and, if designed correctly, also provide all of the energy

for hot water and heating.

A significant challenge to realizing this technology has always

been finding ways to produce hydrogen for the fuel cell. There is

a global infrastructure for gasoline and for natural gas, but not for

hydrogen. Early on, Nuvera recognized this potential fatal flaw and

went on to develop a fuel processor which converts gasoline or natural gas or renewable ethanol into hydrogen for a fuel cell. This enables fuel cells to operate wherever you have a gas pump, wherever

you have a natural gas pipeline, wherever you have ethanol, such

as the Midwest and now California, or where you have a propane

tank.

Today, Nuvera designs and develops fuel cells and fuel processors

into devices that range from 1 kilowatt to over 50 kilowatts, and

we are integrating our proprietary technologies into power plants

for transportation and for stationary power. In the United States,

we intend to apply these for critical power for telecommunications

applications.

Fuel cells are one of the most exciting environmental technologies today because they do have a real ability to use energy

more efficiently and address global warming. This is certainly recognized by our customers and partners in Europe and Japan and

we are hoping it becomes more realized in the United States, as

well. Even major oil companies like Shell and BP are taking steps

to address global warming, and fuel cells represent the best technology to more efficiently and cleanly generate electricity.

Bringing the discussion a little closer to home, fuel cells offer a

viable alternative to generating clean, deployable, dependable energy onsite for residences, for commercial buildings, and remote applications. You can see here on the screen the progression we have

made since 1999 in reducing, again, ungainly equipment into packages that will fit inside a home to power a home or a small business.

As far as commercial prospects are concerned, our near-term

business plan is to export integrated fuel cell power systems to Europe and Japan. Why? Because both of those countries are further

advanced than the United States in terms of environmental consciousness and the support of their government in terms of deployment of fuel cells.

Fuel cells are a revolution, not an evolution, and as a result,

small businesses like Nuvera have a key role because of our ability

to innovate. We are a small company seeking to bring innovation

to stationary power and transportation, two of the biggest sectors

in the economy. We are committed to advancing the development

of technologies.

I indicated before DOE’s enormous role in helping us get started.

I would also like to recognize the Department of Commerce Advance Technology Program. They funded a high-risk program and

that is now embedded into a system that we are shipping to Europe, exporting to Europe and Japan, and also, the DOE has helped

us work with the State of Illinois and others to use ethanol in fuel

cells, gaining a double advantage.

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So I would urge you to continue the U.S. Government’s work

with companies like Nuvera to help us commercialize the technology. Some of the specific recommendations that I have help us

to remove regulatory barriers that impede the use of fuel cells in

utilities; help fund high-risk R&D, as you have in the Department

of Energy and the NIST ATP; provide incentives for the use of renewable fuels and fuel cells—you get a double win if you are using

a renewable fuel in a high-efficiency system; and finally, help the

U.S. Government be a pathfinder by applying fuel cell.

The ungainly device that we used to demonstrate our 100-watt

device is now on its way to the Smithsonian, and in its place we

have on test a device that, instead of 100 watts, produces 90,000

watts, 90 kilowatts, in the same size. So we have made tremendous

progress since 1997 and the U.S. Government has been a big part

of that and we look forward to continuing to work with them.

Chairman KERRY. Thank you very much, Mr. Bentley. That is

very interesting. I look forward to following up with you.

[The prepared statement of Mr. Bentley follows:]

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Chairman KERRY. Mr. Bedogne.

STATEMENT OF RALPH BEDOGNE, VICE PRESIDENT OF FINANCE AND GOVERNMENT RELATIONS, ENGINEERED MACHINED PRODUCTS, INC., ESCANABA, MICHIGAN

Mr. BEDOGNE. Thank you very much. As you mentioned, Senator

Kerry, the business—we are in a different element. We actually

deal with diesels, and there is a perception out there that diesels

are dirty and diesels do pollute, and they do add to the pollution.

But we have been able to develop some technology that has helped

that.

My written comments, which are part of a handout, summarize

in detail a number of points we as small businesses face. I would

like to elaborate on a few of those. First, it needs to be well understood by this Committee and the general public that small businesses can contribute and do contribute daily on cutting-edge technological solutions facing our Nation. One of the main reasons for

this is that our large business partners have and continue to be

preoccupied in the diverse activities that are required to run their

core business. This has allowed smaller businesses like EMP to

capitalize on the opportunity of adding value to our customers’

products. This value-added business development principle has

been our mantra since the beginning of EMP and obviously it has

worked, and I will show you as our growth demonstrates.

As larger companies are required to meet very specific environmental and conservation regulatory limits, their focus is on finding

viable and affordable solutions to these issues. This is not to say

that the larger companies are not doing new product development.

On the contrary, in our business of diesel engine manufacturing,

our customers continue to develop new engine platforms on a regular basis. But what EMP has been able to offer through our engineering and product development is that process of quickly designing or redesigning technologies for these next-generation platforms

in a timely and cost-effective manner.

One important component for our success has been the capable

staff at the Federal levels who have identified innovative research

and development ideas and concepts that concur with ours. A specific example, as you mentioned, is the U.S. Army, the National

Automotive Center, located in Warren, Michigan, under the direction of General Caldwell and Dennis Wynne. New and innovative

ideas and concepts are tested and implemented in a speed we as

small businesses have to react to, without layer upon layer of documentation and paperwork. With a fleet of over 250,000 mediumand heavy-duty vehicles at the NAC, anything that can improve

engine performance and efficiencies affects the bottom line, and

then it can be tested, as it is now, for commercialization, and that

is what has been very unique in the last 2 or 3 years of our, I will

call it, adventure with the agencies and departments. Everyone is

talking about, let us bring this to market, which we as small businesses rely on. We are not here to get a line of revenue to just subsidize our research and development.

Another staff is located at the Office of Heavy Vehicle Technologies at the DOE, and this is under the direction of Tom Gross

and Jim Eberhardt. Identifying our capabilities, much like a bank

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or a company does proper due diligence, the OHVT was able to

quickly decide that EMP could do this technology and was capable

of doing it. In less than 6 months, using DOE funds, Argonne National Lab as the steering committee, and our technology of an advanced oil filtration system, we were able to bring to a test facility

the proven technology and we are now ready to commercialize.

Historically, programs that have helped us—and I say that in a

past tense because we have continued to grow and we will continue

to grow—programs like STTR and SBIR programs occasionally

come under budget scrutiny. EMP is an example of how sound

business practices along with innovative research and new product

development can work. Using SBIR funding as a conduit for proof

of concepts is appropriate for small businesses and they also fuel

larger businesses. We shouldn’t stall innovation. We need to work

together with some of these larger businesses because it is a proven opportunity for us.

I think the playing field is set when we require larger businesses

to percent cost share. This was something that came out of discussions in the government the past 3 or 4 years, and cost share eliminates those abuses. If I am going to put in 50 percent of $1.6 million, that means I am going to bring it to market. I am not going

to use it just for the sake of having this revenue flow.

That cost share requirement should alleviate a number of ownership issues, also, with patents and some obtrusive negotiations that

we have to deal with. If we own the technology, it should be our

technology. The government should get credit and should be on the

same page with us when we bring it to market.

Smaller companies can spend as much on contractual review and

negotiations as they can on testing, and that is obtrusive because

sometimes we can’t bring innovative ideas when we are spending

most of our time and money going over contractual review. I think

a real simplistic idea—a business principle that can be brought

up—is why not have a boilerplate agreement across all agencies,

across all departments that fit, so we are not doing something for

the DOE that is different from the DOD that is different than the

DEQ. Those things make some sense.

I have some slides on my company overview, but I think it is important that we hear some others. You have those in the permanent record, and I will be more than willing to answer questions.

But I think the important thing is that we, as a small company,

have grown since our president, Brian Larche’s, inception of this

facility out of the ashes of a larger business leaving our community. In the 1980’s when cash cows were moved to larger metropolitan areas, our little town in Escanaba, Michigan, in the Upper Peninsula, of less than 15,000 people, he took an idea and a concept

with less than $250,000 worth of sales and has increased those

sales to $150 million this year and over 450 employees. We have

not stopped doing research and development.

Research and development has been the key to our success, and

that success is based on the fact that we are bringing new and innovative ideas. One idea that can add to the parasitic loss and the

efficiencies of diesel engines is the electronic and controllable water

pumps, and these are being tested and bench tested and are on

trucks at the National Automotive Center today.

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Chairman KERRY. Mr. Bedogne, that is very interesting, and I

appreciate your idea. It is a good idea. We should follow up on that

in questions.

[The prepared statement of Mr. Bedogne follows:]

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Chairman KERRY. Senator Bond has joined us. I have an urgent

phone call I need to take. Do you want to comment now and make

an opening statement?

STATEMENT OF THE HONORABLE CHRISTOPHER S. BOND,

A UNITED STATES SENATOR FROM MISSOURI

Senator BOND. I would love to. I will just cover for you until you

get back.

Chairman KERRY. You have made a career out of that. Thank

you, sir.

[Laughter.]

Senator BOND. I have learned from an expert. In any event, my

thanks to the witnesses for being here today. Please accept my

apologies for arriving late. I was hosting a breakfast on problems

of maintaining good information among governmental agencies,

and those of you who have dealt with governmental agencies may

appreciate the need for that. In about 35 minutes, I have to join

a markup on some very important health legislation that is coming

out of the Health, Education, Labor, and Pensions Committee.

But this is a fascinating subject and hearings today for me. I believe the development, sale, and use of environmental technologies

is a tremendous opportunity for small business. It is going to be

good for the environment.

Mr. Bedogne talked about the small town in Michigan, 15,000

that got hit with the big companies leaving. You hit a nerve. My

hometown of Mexico, Missouri, is 12,000 people and the major industries there, basic industries have been bought out. The employment is declining. We are looking at bringing a soy diesel processing plant, among other things, perhaps set up as a cooperative

with soybean producers to make soy diesel, and I know you are

working in the diesel area. I hope that soy diesel can be used.

We have also worked with the Missouri Soybean Association to

get soy diesel used by the Army in training, because they used to

use petroleum-based or diesel smoke to mimic battlefield conditions. We are working to get them to use soy smoke, environmentally much more friendly. The only danger is that the soldiers

may want french fries instead of focusing on their efforts.

[Laughter.]

Senator BOND. But we are very excited today that we have a

Missouri small business who is going to be testifying. The business

uses one of my, I think, exciting new areas of interest, biotechnology. Mr. Patterson has developed a natural, nontoxic, biodegradable product extracted from bioengineered seaweed that can

remove pollutants from the air, a product sprayed into industry

plant emissions to cut the release of volatile organic compounds. It

is really exciting.

This past weekend, I visited Carthage, Missouri, and there, a

small company, a joint venture, Renewable Environmental Solutions, was breaking ground on a plant. I happened to get a grant

through the EPA for a process that will take all the waste from

chicken and turkey processing plants, and I will skip describing

what that waste is—they refer to it euphemistically as low-value

organic material—and turn it into natural gasses that can fuel the

operation plus turn out 200 barrels of sweet crude grade oil a day

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plus other environmental byproducts that, if this all works together, can have a tremendous impact on the environment, first of

all, and even provide energy.

So we in Missouri are very excited about the developments that

are going on, and they are going on through small entities. We

know that, No. 1, Mr. Bentley has said that one of the problems

is environmental, is sometimes regulation. My colleagues earlier

this spring heard a Missouri small business testify that the company was shut out of an EPA rulemaking on ozone-depleting

chemicals. The EPA did not conduct the proper small business impact on the rule and they did not know this regulation would prevent the small business in my State from developing new environmentally-friendly products.

EPA at the time was very proud that they had managed to keep

the regulation secret before they proposed it. Well, Mr. Chairman,

as you know, I have proposed the AAA, Agency Accountability Act,

to help ensure that agencies give open and full consideration to

small business before issuing a regulation that we think could help.

I also look forward—I hope I will be able to stay for the testimony of the Administration witnesses. I will have questions for

them. Your colleague has called a markup on the Health Committee today that, when they buzz me, I am going to have to go

join. But the EPA has a lot of experience in funding research and

the Energy STAR program is an important part of our Nation’s effort to promote energy policy.

I think that the Vice President’s National Energy Policy has very

strong and clear commitments to advance the environmental technologies, increase energy supply, and encourage cleaner, more energy efficient use. I think the Administration is on the right track

with a sound energy policy. By bringing together the resources of

the EPA, DOE, and the ingenuity of small business, there is an incredible potential to raise awareness of the Nation’s energy needs

and serve the vital resources and protect the environment.

Mr. Chairman, I thank you very much for holding this hearing

to give these tremendous efforts and these exciting technologies the

opportunity to be shared with our colleagues. So with that, thank

you.

Chairman KERRY. Thank you, Senator Bond.

[The prepared statement of Senator Bond follows:]

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Chairman KERRY. We were in the middle of testimony. Senator

Edwards, do you want to make any statement?

Senator EDWARDS. I have a brief statement which I would like

to make, if that is OK with the Chairman.

Chairman KERRY. Absolutely.

STATEMENT OF THE HONORABLE JOHN EDWARDS, A UNITED

STATES SENATOR FROM NORTH CAROLINA

Senator EDWARDS. Thank you, Mr. Chairman, very much. First

of all, thank you for holding this hearing. The importance of the

small business economy, we are all aware of, and the need to promote environmental technology make this hearing particularly

timely. Small business is the backbone of our national economy,

which we all know, and we need to do everything in our power to

promote their growth.

I would like to talk today about one particular environmental

technological innovation involving dry cleaning. Toxic and flammable solvents are used in 95 percent of the 35,000 small dry

cleaning businesses in our country. Dry cleaned clothes are the primary source of toxins entering our home, endangering our health.

These solvents often leak from storage tanks, spill on the ground.

They contaminate property where businesses are located. They are

a part of the large number of brownfields that we have in this

country.

There is a scientist in North Carolina named Dr. Joseph Simone

who has developed an environmentally-friendly alternative to these

solvents. He and his graduate students developed the process that

cleans clothes using liquid carbon dioxide and special detergents,

and this method has been commercially available since February

1999. Several machines are in operation around the country. The

EPA has issued a case study declaring that this is a viable alternative for dry cleaning. R&D Magazine named Dr. Simone’s technology one of the 100 most innovative technologies that can change

people’s lives in this country.

This new technology is becoming increasingly recognized as a

safer, cleaner alternative to traditional dry cleaning, but it is still

expensive to use. I think we need to do everything we can to encourage the use of these kinds of technologies as a way to improve

our health and to protect our environment.

Today, I will be introducing legislation that will provide new and

existing dry cleaners a 20-percent tax credit, 40 percent for those

who are in enterprise zones, as an incentive to switch to environmentally friendly and energy efficient technology. The idea is that

this legislation will encourage the use of these new technologies

and reduce the use of chemicals that are hazardous to the health

of all of us. It will also help prevent contamination of our drinking

water, protect the land on which these dry cleaners exist, and the

legislation is supported by groups such as the Sierra Club and the

Physicians for Social Responsibility.

Mr. Chairman, when these environmentally-beneficial technologies are available, commercially available, it makes sense to

provide modest incentives for people to use them. That is the purpose of this legislation. I hope we will be able to get it through this

Committee and through the Senate so that we can encourage the

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use of these kind of environmentally-friendly technologies, which I

think are not only important to small businesses, but important to

the environment and the health of all Americans.

Mr. Chairman, thank you for the time.

Chairman KERRY. Senator Edwards, thank you very much. That

sounds very exciting. I mean, that is exactly the kind of innovative

effort that often needs to break into the marketplace and it needs

some help from good policy to do so. I congratulate you on that, and

I think it is terrific.

Senator EDWARDS. Thank you.

Chairman KERRY. Mr. Kennard, thank you, sir, for letting us interrupt you for a moment.

STATEMENT OF BYRON KENNARD, EXECUTIVE DIRECTOR,

THE CENTER FOR SMALL BUSINESS AND THE ENVIRONMENT, WASHINGTON, D.C.

Mr. KENNARD. Thank you, and I thank you and Senator Bond for

your leadership on behalf of the small business community. It is

much appreciated.

The Center for Small Business and the Environment was founded in the belief that many environmental problems can be solved

through innovations that increase efficiency and resource productivity. As Senator Kerry has pointed out, most such innovations

come from small organizations, not large ones, and this connection

provides a basis for collaboration that profits small business and

helps protect the environment.

For example, a solar water heater can dramatically reduce the

utility bill of a cafeteria or a laundry or any small business that

uses a lot of hot water. Now, chances are, these water heaters, like

many other energy efficient and micropower technologies, were conceived and designed by a small business innovator, manufactured

by a small manufacturer, and marketed by a small business. Then

to complete the cycle, it is also likely that such technologies will

be installed and serviced by other small businesses.

I hope this example conveys some sense that small businesses

are also the beneficiaries as well as the innovators of technologies

that are efficient and innovative. In this connection, I would like

to comment on the President’s National Energy Plan. We are urging the energy planners to add a special focus on small business

to the energy plan, something that it does not have now.

We think that small business has special problems and opportunities in the energy area. Small businesses are often most at risk

from rising energy costs and uncertain power supplies. A restaurant can be damaged by a rolling blackout and its refrigeration

lost and employees laid off. They operate on low-profit margins,

and so interrupted service can be a real disaster.

There are also special opportunities for small business in the energy area. We see energy efficiency and micropower as particularly

attractive for small businesses. Small businesses are, by nature,

decentralized. Micropower technologies, like the solar water heater

I mentioned, are decentralized technologies. Micropower fits small

business like a glove.

The big issue I think that needs to be addressed, is this: We

don’t know how much energy small business as a whole consumes,

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but it has got to be vast. There was one study by E SOURCE done

in 1997 that concluded that more than half of all commercial energy in North America was used by small businesses, but that

doesn’t include small business manufacturers, and as you may

know, 85 percent of the membership of the National Association of

Manufacturers are small and medium businesses. So small manufacturers have got to be significant users of energy, although nobody, so far as we know, has estimated the total amount used.

What about energy use by home-based businesses? Approximately 12 million Americans are now operating businesses out of

homes, basements and garages.

The flip side of this immense energy consumption of small business is its potential for energy efficiency, and lower energy consumption means lower bills. So there is a big motivation for small

businesses to become energy efficient.

Small business energy upgrades pay for themselves over time,

and can be put into effect quickly. It doesn’t take 2 or 3 years to

upgrade a small business. It can be done virtually overnight with

very simple technologies, such as improved lighting, better thermostats, occupancy sensors in bathrooms, offices, and storerooms.

These things can save small business a lot of money. One energy

efficient exit sign can save $20 a year, and most small businesses,

of course, have more than one.

Finally, reduced energy use by small businesses would prevent

the release of millions of tons of carbon dioxide into the atmosphere. This would also reduce air pollution from power plants and

conserve natural resources.

As you pointed out, small businesses are the heart and soul of

every American community and they need reliable and affordable

energy supplies to keep their doors open. But just as important,

small business people need a clean and healthy environment in

which to live and work. Unlike big businesses, small businesses

cannot leave town whenever they feel like it. The plant cannot be

closed and moved elsewhere. Small business people are part and

parcel of local communities where they breathe the air, drink the

water, and raise their children. Thank you.

Chairman KERRY. Thank you very much, Mr. Kennard.

[The prepared statement of Mr. Kennard follows:]

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Chairman KERRY. Mr. Dreessen.

STATEMENT OF THOMAS DREESSEN, CHIEF EXECUTIVE OFFICER, EPS CAPITAL CORPORATION, DOYLESTOWN, PENNSYLVANIA, ON BEHALF OF THE EXPORT COUNCIL FOR ENERGY

EFFICIENCY, WASHINGTON, D.C.

Mr. DREESSEN. Mr. Chairman and Members of the Committee,

thank you for the opportunity to testify before you today regarding

opportunities for small business and the impact of environmental

regulations. I am Tom Dreessen, a small business entrepreneur

who owns several energy service companies called ESCOs that operate both domestically and internationally.

The ESCO industry is very unique in that it is mostly made up

of entrepreneurs like me that develop, finance, and implement energy efficiency projects of all technologies and we risk repayment

for our services based on actual achievement of savings. We are essentially performance contractors that deliver actual measured

emissions reductions through measured energy savings on the

projects that we implement.

Our business model is a win-win proposition for the business

owners themselves by getting savings and for the ESCO community and for all of the small contractors and service providers and

product manufacturers that we use in our projects, because our

projects are paid from savings, so it is a win-win strategy for the

end-use customer, as well. So we deliver these emissions and environmental benefits at no cost to the public at all. It comes right out

of the projects and the savings and the costs that they were already paying to the utility providers in most cases.

I am or have been a board member on three of the five founding

organizations of the Export Council for Energy Efficiency, called

ECEE, and consequently, I appear before you today wearing three

hats: First, as a small business entrepreneur; second, as a representative of the U.S. ESCO industry; and third, as a spokesman

for ECEE. So it is quite a charge that I have today, but my comments will consequently cover both domestic and international

issues because of that experience.

Given the very limited time, I cannot appropriately cover the

merits of energy efficiency, but I hope all the Committee Members

recognize and embrace its many domestic and international benefits. Three of those major benefits are environmental, economic,

and a source of electric capacity.

From an environmental perspective, energy efficiency reduces the

demand for burning fossil fuels, which conserves the nonrenewable

resources of oil, coal, and natural gas, and thus dramatically reduces greenhouse gas emissions and air pollution, resulting in

cleaner air, water, and lower social welfare costs.

Economically speaking, the simple fact is that energy efficiency

results in reduced energy costs to consumers, like small businesses,

allowing them to not only repay the investment to achieve the energy efficiency, but also to have lower operating costs to better compete in a world economy.

As a source of electric capacity, energy efficiency, studies have

shown, if properly funded, has the potential to displace up to

130,000 megawatts of domestic electric capacity by the year 2020,

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which represents about one-third of the amount of increase that

will be needed by that time, and at a benefit of getting this additional electricity through efficiency versus through new generation

is that it provides less reliance on foreign sources and an increase

to national security.

Mr. Chairman and Members of the Committee, it is important to

note that ESCOs and similar companies like ESCOs that develop,

finance, and implement energy efficiency projects and technologies

are predominately small contractors and consultants from the highly skilled engineering and financing industry. Therefore, as a representative of this small industry, I feel it is appropriate for me to

offer the following two recommendations for your consideration

today.

On the domestic front in the United States, I recommend that a

Federal environmental incentive payment be provided to energy

consumers, including small businesses, who implement energy efficiency that achieves measured reductions of energy savings. Incentive payments should be based on the actual measured energy

units reduced from energy efficiency measures installed. A possible

implementation mechanism for funding the incentive payments

could be a Federal public benefits fund, which I strongly support,

with the environmental payment being included as one of its uses

of proceeds. Small energy efficiency businesses would be able to use

this incentive payment to stimulate energy efficient investment

and promote the related environmental benefits as offsets against

environmental regulation and compliance. Thusly, environmental

regulations serve as an incentive for energy consumers to achieve

savings and reduce emissions to achieve compliance.

On the international front, given the economic and environmental benefits, along with the insatiable demand for U.S. energy

efficiency technologies overseas, it is recommended that a minimum of $100 million be funded over the next 3 years for use by

small energy efficiency companies like ESCOs and other energy

companies to develop, finance, and implement energy efficiency

projects in the international markets. The funding could be provided through ECEE, which has provided market access for many

small companies to large emerging markets, such as China, Brazil,

India, and Mexico, but we certainly want to stress the fact of keeping the administrative requirements down and actually getting

that market access to the marketplace.

A second recommendation, a more immediate need is to restore

ECEE’s $1 million operating budget for next year, which after six

successful years of operation was eliminated by DOE in its fiscal

year 2002 budget. They work predominately for small businesses in

foreign governments of our competitors in Japan and Europe. They

spend far more than the United States in supporting the development efforts of their local small energy efficiency businesses in foreign markets. I have had direct access and tried to compete against

them, and it is unbelievable, the amount of monies that are funneled to them through their governments, the small efficiency companies. This makes the need for Federal funding to small U.S. energy efficiency companies of higher importance to the vitality of our

economy and, indeed, the world.

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In summary, providing new financial support for energy efficiency improves the environment, increases national security for reducing reliance on imports of scarce resources while increasing

high-skilled jobs, social welfare, and economic growth both domestically and internationally. Thank you for the opportunity to testify

today and I am happy to address any questions that you may have.

Chairman KERRY. Thank you very much, Mr. Dreessen. Very interesting. I know we will want to follow up on it a little bit.

[The prepared statement of Mr. Dreessen follows:]

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Chairman KERRY. Mr. Patterson.

STATEMENT OF ED PATTERSON, PRESIDENT, NATURAL

ENVIRONMENTAL SOLUTIONS, INC., ST. LOUIS, MISSOURI

Mr. PATTERSON. Good morning, Senator Kerry. I thank you and

Senator Bond for giving me the opportunity to express my views

today.

Natural Environmental Solutions is a year-old biotech company

based in St. Louis, Missouri, with four employees. We recently participated in Missouri’s first roundtable meeting to develop initiatives to further our State’s ability to help attract and grow biotech

companies. NES is an environmentally-friendly company dedicated

to solving our air pollution problems.

We manufacture a product that is derived from seaweed and

other sea plants. It is nontoxic, biodegradable, and safe for human

and animal alike. We utilize genetically-coated microcell technology

to clean the air, water, and land. The applications for this product

grow daily as we talk to members of other industries.

Because this product is not a masking agent, but removes the hydrocarbons and gasses from the air, we took the next step and tested it for the removal of VOCs within Performance Roof Systems,

Incorporated, an asphalt manufacturing company located in Kansas City, Missouri. Like companies from other industries, they

gather volatile organic compounds from the manufacturing line and

incinerate them utilizing natural gas. Although this process is effective, it is extremely costly and increases our national consumption of natural gas.

We tested our material by spraying it directly on the VOCs within the exhaust stack and turned off the incinerators. Our results,

conducted by an independent lab in Columbus, Ohio, confirmed

that we exceeded the EPA guidelines for clean air within the roofing industry by removing 90 percent of the VOCs. This one small

plant could heat 1,000 homes per year with the gas saved and decrease the VOC removal cost by 50 percent. There are 200 plants

within the United States in this industry alone. The asphalt roofing industry uses $80 million worth of gas per year.

As a small business, we would like to bring this environmentally

friendly product to market. The testing required and red tape associated with dealing with regulatory agencies are two of our biggest

obstacles. As with any new technology, we have found the first obstacle is to change the mindset of the scientific community. Each

corporation we talk with has an environmental engineer who has

never heard of our technology and frequently is extremely doubtful.

They all demand testing and expect our firm to pay for it. As with

anything new, you have some people willing to test immediately

and others who prefer to take a wait and see approach. These companies all fear of being shut down for noncompliance of permits,

even though our results meet the standards.

Although Missouri has attracted $22 million of venture capital

funds, they will not look at a product like ours because it does not

have a patent. The inventor of this process will not file a patent

because he does not want to disclose the process for making it

work. This process took 18 years to develop and we feel confident

it cannot be cross-engineered.

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* See letter on page 58.

We need to have alternate funding for companies that fall in a

gap from conventional methods of financing. Whether by Federal or

State grants, guaranteed bank loans, tax credits, or all of the

above, we need help financing our testing. We also need to have incentives in place to help companies subsidize the cost of changing

their manufacturing equipment to utilize new technology instead of

using natural gas.

Performance Roof Systems, Incorporated, is ISO–9000 certified

and must follow Chapter 643 within the air law of Missouri. To

change to another source, you have to obtain a construction trial

permit, and their red tape to do so is quite expensive. Simply put,

we need to obtain an operating permit exemption to further test

our system and we have not been able to find out how to do this

through city or State offices. We make calls to explore our options,

but no one calls us back. Our goal is to be put on the EPA’s recommended product list and we need help to do so.

We are excited to promote life sciences within Missouri because

St. Louis, Kansas City, and rural areas all prosper by promoting

this industry. By utilizing our technology, the environmentalists

achieve their goals of clean air. Manufacturing companies reduce

their costs and America will drastically reduce consumption of natural gas. Everyone wins.

Our products remove VOCs and carbon dioxide from the air by

engulfing it within microcells. Scientists around the world are concerned about the CO2 gasses in the upper atmosphere changing

weather conditions. We feel we have the technology to eliminate

these gasses from the air and rectify these problems, but we need

funds for testing in order to prove it will work.

I am enclosing a letter from the president of Performance Roof

Systems, who is a board member for the Roofing Manufacturers Association, with his concerns.* We agree with Senator Bond that we

need a bipartisan approach to develop or bring to market technology needed to overcome the environmental challenge of the next

century. Thank you for your time today.

Chairman KERRY. Thank you very much, Mr. Patterson.

[The prepared statement of Mr. Patterson follows:]

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Chairman KERRY. I thank all the witnesses for keeping their testimonies to the time. It affords us an opportunity to have a dialog

and that is very helpful.

Senator Snowe, would you like to make any comment before we

proceed to questions?

Senator SNOWE. No, that is fine, thank you. I do have a statement.

Chairman KERRY. Your statement will be placed in the record as

if placed in full.

Senator SNOWE. Thank you.

[The prepared statement of Senator Snowe follows:]

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Chairman KERRY. Mr. Patterson, let me just follow up quickly,

simply because your testimony was last, with respect to a number

of questions. First of all, your product is tested very well, but nevertheless, you have not been able to attract financing, et cetera. Do

you need more tests notwithstanding that you have exceeded the

EPA’s guidelines?

Mr. PATTERSON. Yes.

Chairman KERRY. Why is that?

Mr. PATTERSON. Well, for instance, while we did independent

testing and we exceeded the EPA guidelines, you need to get permits in Missouri to begin trials in other facilities. For instance,

there is a roofing manufacturer called Tamko in Joplin, Missouri.

I have contacted them. They have heard about our testing. They

would like to have us test it and they have the instrumentation in

place to do it, but it is going to cost $30,000 to have this independent testing done and they expect us to pay for it.

Chairman KERRY. Well, let me ask you this. Obviously, testing

and meeting public approval standards is a component of R&D. It

is a component of product development.

Mr. PATTERSON. Correct.

Chairman KERRY. You have not sought R&D capital, is that correct?

Mr. PATTERSON. Well, we are trying to pursue that at this time.

Chairman KERRY. Have you been in touch with the SBA itself?

Mr. PATTERSON. Yes. I am actually trying to look for SBIR loans.

Quite frankly, that is a very lengthy process that we are just getting involved in.

Chairman KERRY. Several of you, in each of your answers, have

sort of articulated a sense of frustration, if not indirectly at least

implicitly, but I think it is pretty direct, in the process. The process

is annoying to you. I think several of you have articulated that the

red tape somehow gets in the way. Part of the purpose of these

hearings is for this Committee to be able to start to think about

if there is a more appropriate balance and what we might be able

to do to try to eliminate some of the red tape and facilitate the

process.

I have heard from companies all across the country that part of

the problem in bringing new energy efficient products to market is

the regulatory process. Now, when you get specific, you run up

against the hurdle, obviously, of trying to guarantee that you are

still protecting the public adequately, which is our responsibility

also, and balancing it with the need to move more rapidly and be

more user friendly.

Can you give us, each of you or any of you, some thoughts about

places where very quickly that could be done. For instance, I think

it was you, Mr. Bedogne, who suggested the boilerplate contract. I

mean, that is a fast way, obviously, and I would think a sensible

way, to be able to, in certain size of deals, move the process more

rapidly.

I think each of us here hates bureaucracy. I mean, bureaucracy

is the enemy of everybody. It doesn’t have a party label on it. It

is a terrible problem and we would love to facilitate a solution. So

could you deal with that a little bit in each context? Mr. Patterson

first.

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Mr. PATTERSON. Well, I would think that if you can go to your

regional EPA office, whatever region you are in, and submit, quite

frankly, independent testing that proves that you meet the guidelines, that there should be some sort of way to quicken the process.

Chairman KERRY. You are saying the testing you are being required to do is duplicative?

Mr. PATTERSON. Basically, it is duplicative because the companies themselves are being afraid to be shut down for noncompliance

of permits as well as the results. I have talked to the State’s Attorney General’s office and their feeling was, if you meet the guidelines, that they will not prosecute, period. So we are not so much

in fear of being prosecuted by them, but if you don’t have the right

permits in place, EPA can shut down any of these plants, and that

is their biggest fear.

Chairman KERRY. So you think the permitting process itself

needs to be facilitated?

Mr. PATTERSON. Streamlined, absolutely, and especially for a

process like this, where we have the owner of this company in the

roofing market per se saying, we would like to use this product because we are going to save 50 percent on our gas costs. So we are

meeting all the guidelines it seems like everybody wants.

Chairman KERRY. I understand. Mr. Dreessen, do you want to

address that?

Mr. DREESSEN. It is a little difficult for me because the proposals

that I am making are fairly new and there are no existing programs. There is a lot of funding being provided for international efforts, and what I try to do—one of the things I am interested in

in that $100 million is to remove barriers for U.S. energy service

companies to get U.S. technologies and products into the marketplace, and there are a lot of barriers out there and the major one

is project financing. There is a lot of it. We have got Ex-Im Bank,

we have got a lot of agencies, U.S. agencies that are out there

doing that. The unfortunate thing is, they are not structured to

meet the needs to where any energy efficiency companies can access it.

Chairman KERRY. I am very interested to hear you say that because earlier this year, in the end of January, I made a proposal

that we should create a trading partner/environmental development fund which the key developed countries ought to be making

available. I believe this serves several purposes.

First, it would help build the consensus for the benefits on the

upside of the trading regime that we are working under, which is

frayed, at least at the edges now, if not more seriously. That would

help us to deal with both the environmental and then, subsequently, the labor component here at home.

Second, it advances the interests of all of our small businesses

and all of our technologies in the country by helping to put them

out into the marketplace in an aggressive way.

Third, obviously, the final benefit is that less developed countries

then are participating within the global climate change and other

kinds of environmental concerns we have, and in a positive way

that helps to satisfy demand here. So I think it is a win-win-win

and it obviously is very much similar to what you are recommending today.

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Mr. DREESSEN. Exactly. One of the fundamental issues, if it

could ever be changed, is almost all of our funding mechanisms

that we have in the United States as far as financing require that

repayment is made in hard currency. For those of you who don’t

understand, that is a huge barrier in doing anything in a developing country where then that exposes them to the devaluation of

the local currency. It is a huge barrier. It really makes the financing not even available. They are not even interested in it.

Chairman KERRY. Let me interrupt the flow of questions, if I can,

for a moment. Senator Bond has to go to another markup and I

want him to be able to welcome and say a few words about the

next panel, even though it will be a few moments before they come

up.

Senator Bond.

Senator BOND. Thank you very much, Mr. Chairman. I really appreciate the chance. I was going to very briefly say how much we

appreciate Mr. Stolpman from EPA and Mr. Renberg from the ExIm Bank. I know they have a great deal to do, and some of the

international aspects that Mr. Dreessen was talking about will be

addressed there.

I have just mentioned some of the things that EPA is doing in

Missouri on the thermal depolymerization. I spent all weekend trying to learn how to say that. I gave it a shot. If you ever hear of

it again, remember, you heard it here first. But we appreciate the

small business witnesses and the government witnesses. I will

have some questions for the governmental witnesses that I will

probably have to submit for the record. I would rather have them

offer their questions first.

But let me turn in questions first to Mr. Patterson. You talked

about the regulatory burdens, and we are trying to work with you

to help. Do you have any suggestions in what you have seen of how

EPA or the State Department of Natural Resources could be of

more assistance to businesses like yours to identify and overcome

the regulatory hurdles?

Mr. PATTERSON. I would think that the permit process could possibly be streamlined, No. 1.

No. 2, within the State of Missouri, it seems that when you start

talking about trying to change anything regarding the air and the

air pollution, they are very hesitant to look at any new technology

or change anything, period. It is almost as though they are afraid

to change. So I guess I would like them to be a little bit more open

minded.

Senator BOND. All right. Mr. Bentley, you mentioned regulatory

barriers. When I came in, you were talking about how the regulatory hurdles are a significant hindrance. What kind of hurdles

have you encountered specifically and how can we help to overcome

those?

Mr. BENTLEY. Well, I would go back to my comment that we are

trying to innovate in two very large industries, power production

and in transportation. In power production, of course, there are incumbents who have a stake in the wire lines, the generating facilities, and others, and we are trying to bring micropower, the same

concept that was discussed on the panel discussions, we are trying

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to bring micropower, which is a game changer to large generating

companies and large utilities.

The problem is, you have to connect at some point to their facilities and what you need is a common set of standards for that interconnection so that they can’t be used as barriers by the incumbents

and also safety. We have a pretty high technology device that involves the use of hydrogen, so you can imagine that every local fire

marshal might have an opinion on that.

So on both counts, both on safety and interconnection, there

needs to be Federal action to harmonize how you interconnect with

the utilities and how safety for fuel cells, in particular, a new technology, is dealt with. This has happened before in things like natural gas vehicles and others where there has been a national effort

to coordinate regulations and it has been very successful.

So I would recommend that FERC or the Department of Energy

or also the Department of Commerce, they all have efforts ongoing

now to try and harmonize those interconnect standards. The Europeans and the Japanese are further ahead on that basis and so

they have taken some of the risk—it takes the commercial risk out

of implementing these technologies if you have surety about implementing them on a local level.

Senator BOND. Thank you. Let me ask the same question of Mr.

Bedogne. How can we help with the——

Mr. BEDOGNE. I am going to be candid here, if I may.

Senator BOND. Oh, you might as well because it is Wednesday

morning and what better.

Mr. BEDOGNE. First and foremost, I am a businessman and I act

like a businessman. Our company acts like a businessman. I don’t

look at the opportunities that avail us through small business

grants as corporate welfare. I look at it as opportunities for us to

expand our technology. In order for us to do that, we have to prove

that we can bring this to market and we can actually make this

technology work. It costs us money to do that. So we had to spend

our own money and our own time and resources.

The thing that worked for us is that we didn’t start at the Federal Government level. We started right at the local government,

and the local government has resources available to us that were

beyond my understanding of ‘‘resource’’. I mean, I am not an expert

on finding out all the areas that I needed to go to, so those people

helped me, and I will talk to Mr. Patterson after this to give him

some ideas of where to go to find this, but that is where I started.

Then from the State, we have a very—and our State went

through some major problems in the 1980’s. As businesses left, we

had to redevelop and bring people back and they really focused on

job creation and that job creation was funded through research and

development for new product development.

There is one thing that I see that the Government can help us

with is help give us the credit, if you will, for research and development. Canada gives you dollar for dollar if you create jobs. We need

to get a little more aggressive on how we create jobs, and if it is

coming out of products that work, we do have some opportunities

that are here, that were just discussed here that are cutting edge,

but it takes years for things to come out.

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We chose to be very focused and we went to the Market Segment

where it was going to cause the most concern on the part of the

public. If diesels were polluting here, we could help prevent that.

We could help improve the efficiencies of a diesel and improve the

efficiencies of that engine, cut back on the consumption of power

and also through EGR meet the exhaust emission to help trap the

particulates. So there was some cutting-edge technology that we

chose, but it was something that we funded and we got help

through the State, local, and then the Federal Government.

I do think that the Government needs to be accessible to small

business so we can can react. I mean, we move. Quickly, nimbly.

We will decide. If we need to buy a test piece, we will buy it if it

makes good business sense. We don’t buy it for the purpose of having another piece of equipment. It is going to improve our bottom

line.

I think if the Government sometimes would act that way and

say, OK, we are going to bring this, much like the Argonne National Lab deal with DOE, we moved in 6 months where a normal

other transaction or a dual-use takes 2 years. Then the budget

cycle says, ‘‘well, you are going to get funded in October for our research and development, and remember, we spent just as much as

the Government did.’’ We were going to get funded in October.

Well, they approved the grant in January. The funding doesn’t

come through. We are spending all our money in that first year,

and if the budget is cut, the small business hurts.

So there are areas that need to be streamlined. Don’t reinvent

the wheel, please. But I think you need to go in and have people

like us give you some advice on how we can streamline it, and I

think the regulatory issues are a concern, our customers are dealing with that. The Caterpillars and the John Deeres and the

Navistars International are dealing with that in a very proactive

way to improve that. We are helping in that, though, with opportunities to assist in technology.

Senator BOND. Well, we appreciate very much your willingness

to give us that guidance. If you use a little more soy diesel, people

won’t complain about the diesel smoke so much. But we do have

things that we work on on this Committee, SBIR, STTR, those

other programs that are designed to provide that assistance, but

the information you give us can be very helpful.

Mr. Chairman, I thank you and I will leave it to you to carry on.

Chairman KERRY. Thank you very much, Senator Bond.

Senator BOND. We will look forward to reading the rest of the

testimony of the witnesses. I thank you and apologize for leaving.

Chairman KERRY. Thank you very much.

Senator Snowe.

Senator SNOWE. Thank you, Mr. Chairman. I want to thank the

panel here today for, I think, some very illuminating testimony. I

gather that there is no doubt about the fact that the Government

can play a key role in providing incentives in some way or providing a supportive role in encouraging small business to develop

these technologies that are environmentally friendly and energy efficient. Would you all agree that government can play a role?

[Chorus of yes in response.]

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Senator SNOWE. Beyond the regulatory burdens, what about tax

incentives? I mean, as a Member of the Senate Finance Committee—both Senator Kerry and I are both Members of the Finance

Committee and we had a hearing recently on various tax incentives

and proposals to encourage the development of technologies that

are energy efficient.

Mr. Bentley, I know that there is legislation that I have cosponsored with Senator Lieberman on fuel cells, providing a $1,000 tax

credit for every kilowatt. What would you say about that kind of

approach? Would that be helpful?

Mr. BENTLEY. Again, it is Wednesday morning, so I guess candor

is the order of the day, Senator Snowe. I have watched in previous

efforts to commercialize fuel cells the use of tax incentives as a

mechanism and I have seen that as somewhat of a barrier in that

it reduces the pressure on companies to become more cost competitive quickly. So while there is a role for incentives, I think the danger becomes that those incentives replace the inexorable drive that

you have to have as a small or large business to take these new

technologies and knock the costs down to where they can compete

with traditional technologies.

So our company does not propose that tax incentives are a big

part of the commercialization effort. We have seen the U.S. Government as being more effective in taking the risk out of R&D. So we

do differ with some of the other companies in the fuel cell area, and

I would just point to history to say that those programs in the past

have, I think, impeded the drive to become more cost effective.

Senator SNOWE. That is interesting. So you are saying for example that it would be preferable to have the money for venture capital money for research and development, to encourage that.

Mr. BENTLEY. We have found that the Department of Energy and

the Department of Commerce, in particular, have a pretty solid

staff of people who understand new technology. It is complex. The

ability to make poor choices is there, certainly. But a good sustained effort, in particular in those two areas, where you have a

legion of technical managers who stay with these programs for 4

or 5 years, can result in some high-impact R&D. So I am much

more a believer in the front end.

Chairman KERRY. Are you talking about the STTR and SBIR?

Mr. BENTLEY. Well, actually, I am speaking more about the programs like the Department of Energy Office of Transportation

Technologies and the ATP within the Department of Commerce.

Those are the two I am most familiar with, where they really do

have people who understand the technology and get the technology.

So dollar for dollar, I would vote that new technologies—of

course, we are on the cutting edge. It is hard to get capital for

high-risk technologies and that is where the Government, the Federal Government, has played a role here. I think as you move more

toward commercialization, companies and investors have to pick up

some of the risk.

Senator SNOWE. Mr. Bedogne.

Mr. BEDOGNE. I agree. I think that if the Government can offset

our research and development, we can create jobs. I think you

should tie it back to jobs. I think if you are going to create jobs to

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not only improve the communities that you serve or that you live

in, you are winning for everybody.

The issue we have is that we will spend the money for research

and development, and as we had some comments before the hearing, we did not stop. Even though our sales are down about 20 percent, the economy is starting to percolate back in our industry, but

for the past 6 months, we didn’t cut back on research and development because we need to stay in touch with that.

I think you could look at some States that have been innovative.

Michigan has a very obtrusive single-business tax. But if you create jobs, you get a reduction in that single-business tax, which has

pretty much funded our research and development facility. We

built a 35,000-square foot facility that cost about $1.6 million, and

over the next 10 years, because of the jobs we created out of that

new product development or the new products, we get a tax credit.

I think the same could work on R&D. We are the ones that are

doing the R&D, not that the organizations that we all alluded to

aren’t. We are.

There was one comment on small businesses as far as energy.

We chose to use geothermal energy. We live in the Upper Peninsula. It is cold. It snows a lot. We have an abundant source of

water. My proper due diligence is that I look at it as an opportunity. If it makes good business sense, we do it. Then if I can get

a credit or tax break for it, it is a win. That is just the way we

do business.

So I went back and I looked at—you know, geothermal was hot

in the 1980’s. It was if you put a geothermal and saved money, you

could get a credit for it. Well, it was sometime in 1990, it was next,

and so we didn’t get a credit. But we spent $600,000 on a

dehumidification and air conditioning because it made business

sense to do that. It would be nice to get that credit back for energy

efficiency.

Senator SNOWE. Would others care to comment? Yes, Mr.

Kennard?

Mr. KENNARD. I might say about Senator Edwards’ proposal for

tax credits for dry cleaners to get new technology, the dry cleaning

industry is a mom-and-pop industry. They don’t have a lot of cash

reserves. There is this superior new technology available that

doesn’t use PERC, that is better for workers, better for consumers,

better for the environment, but it is expensive. It costs like maybe

$50,000.

So a tax credit of the sort he described would certainly encourage

a lot of small businesses to buy that new technology and enable

them to do it. My understanding actually is that in that industry,

there are a lot of people trying to decide what to do, should they

go with the new stuff, and so a tax credit would, I think, encourage

them to go ahead and commit to a superior technology.

Mr. DREESSEN. I would like to add, although our energy services

business, we don’t really deal in new technologies. We only implement proven technologies because we are on the hook for the performance of them. However, having said that, I do support the

R&D. I think that is something we have to do to stay ahead of the

world on our technologies, but I also do it on the basis of a coinvestment, because I think if both parties don’t have money in the

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deal, it is a simple business logic, then it becomes when things

start becoming difficult, the one without the money tends to be less

interested.

But one of the common themes, I guess, and I had offered in my

testimony was an environmental incentive payment, and I think

the common theme again is that payments, any benefit incentive

payments, should be based on the delivery of results and the payment of the benefits incentives should be aligned with when the

benefits are delivered.

I think that is a common theme that I think we believe in and

I think everybody else here does, and I am afraid that using tax

credits as a motivation creates barriers to when a customer could

receive those benefits. I mean, there are timing issues. Then there

are complexities with tax laws that change. There are just all kinds

of additional barriers as opposed to just a straight incentive,

whether it is on employees or whatever. But the more you can

make that benefit received align with when they deliver whatever

the benefit to the environment is, the better off you are.

Mr. PATTERSON. I tend to agree. I think the environmental incentive payments make a lot of sense, at least for a company as a

startup. Tax incentives might be of use to the individuals that we

are going to sell this product to. If they have to change over their

manufacturing lines in order to change from using natural gas, either a tax incentive or some other sort of incentive really needs to

be in place.

Senator SNOWE. Thank you very much. Thank you, Mr. Chairman.

Chairman KERRY. Senator Snowe, thank you very, very much.

I want to thank the Members of this panel. We are a little bit

truncated because of the pressure, and I apologize for it.

Mr. Bedogne, Senator Levin apologizes personally that he isn’t

able to be here because of another hearing. That is the tension always here. He is very grateful to you for coming and offering your

testimony.

Chairman KERRY. Let me just say to each of you, this is very,

very helpful to us. I know that it is a short time in terms of the

panel, but we are going to leave the record open. There may well

be questions from colleagues. I know I have some questions I want

to submit in writing to amplify on the record. I will leave the

record open for about 10 days. I ask you if you could supplement

the testimony in response to some of the questions.

We are going to try to build on this. This will not be the only

hearing we are going to have. We are going to try to come up with

a concrete set of proposals, if we can, and follow up on it. So I am

very grateful to each of you for your testimony today. Thank you.

Chairman KERRY. If I could ask the second panel to come forward, Mr. Paul Stolpman and Mr. Dan Renberg.

Mr. Renberg, you are the first seated. You are going to start.

STATEMENT OF DAN RENBERG, MEMBER, BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES,

WASHINGTON, D.C.

Mr. RENBERG. Thank you, Mr. Chairman. It is a privilege to be

here. Having worked for Senator Specter, I know the pressures

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that you are under, so I will abbreviate my abbreviated remarks

and try to see if I can’t get this done in about 2 minutes so that

you can ask questions.

Chairman KERRY. Great.

Mr. RENBERG. I am privileged to be here on behalf of the U.S.

Export-Import Bank, as you know. In fiscal year 2000, over all, we

authorized $12.6 billion in financing to support $15.5 billion in

sales of U.S. goods and services to foreign markets. But significantly for your Committee’s perspective, 86 percent of our 2,500

transactions involved small businesses, with the dollar amount for

small business authorizations increasing by nearly 10 percent to

$2.3 billion. We have a very strong environmental exports program

and that is why we had offered to come up here today to brief you

and your colleagues and actually just to raise awareness. Overall, the U.S. environmental industry produced $197 billion

in revenues in 1999. Environmental exports have doubled from the

United States since 1993, up to $21.3 billion in 1999, and it runs

a surplus. It is one of the few industries where we are actually running a trade surplus as a Nation.

Ex-Im Bank’s story, I think, has been a good one. In 1994, we

financed 13 transactions that were environmentally beneficial exports, and in the last fiscal year, we were able to do 65. Now, some

of those involve more than one company, numerous sub-suppliers,

but it gives you an idea that we are experiencing the same kind

of growth that the industry is. However, we know we could be

doing so much more and that is why we are up here today.

The U.S. environmental industry generates less of its revenues

from exports than companies in, say, Japan and Germany, and a

recent study attributed this revenue differential in part to the fact

that the U.S. export industry is heavily small and medium-sized

businesses and they often perceive risks of international business

as well as the higher costs of developing export sales as impediments to increasing their export sales earlier. That is where the

U.S. Ex-Im Bank can really come in and play a role. We have several enhanced financing incentives for environmentally beneficial

exports, which would include renewables as well as air pollution

monitoring systems and the like.

A couple of success stories picked at random, Missouri and Massachusetts. I am privileged to be able to say in Senator Bond’s absence, I guess, that Environmental Dynamics of Columbia, Missouri, which is a small business manufacturer of advanced water

and wastewater treatment technologies, received Ex-Im Bank’s

2001 Small Business Exporter of the Year Award in April at our

annual conference. Over the first 22 years of the company’s existence, their sales were mainly domestic. Then they found us, they

found our export credit insurance policies, and now they have expanded into new foreign markets and they have increased their

workforce from 38 to 63 employees. The only reason they won this

year is because there was no Massachusetts nominee. I assure you,

next year, we will rectify that.

[Laughter.]

Mr. RENBERG. But we have got a potential winner in Krofta

Technologies in Lenox, Massachusetts. I am not sure if you are familiar with them.

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Chairman KERRY. I am familiar with them. Absolutely.

Mr. RENBERG. Great.

Chairman KERRY. I have been out there and visited them, as a

matter of fact.

Mr. RENBERG. Maybe we can go back together and see exactly

how Ex-Im Bank is helping them. Bank of America has offered two

10-year loans to the Government of the Dominican Republic, with

our guarantee, to win $7.4 million in orders. This took place just

last month—actually, now, 2 months ago—and the orders were to

design and build wastewater treatment plants in three cities in

this country.

I know you read in the newspapers about Argentina and Brazil

and some of the troubling economic issues. We were still able,

nonetheless, to approve recently a solar transaction, a mediumterm loan guarantee, just last month which will go to rural individual home units. There is a province there where 50,000 people

have no electricity, which I guess is like Los Angeles on a good day.

But we are able to find reasonable assurance of repayment, as the

statute requires.

To just conclude, we are very active in Southeastern Europe. I

noted Mr. Dreessen mentioned the hard currency issue, and one

thing I would just mention to him is we are able to finance now

in Euros and in Rands. Rands, because South Africa’s Rand can

help us penetrate Sub-Saharan Africa. The Euro is very helpful in

Central and Southeastern Europe. We are trying to make whatever

inroads we can to help businesses, as Mr. Dreessen said.

I will submit the rest for the record, with your indulgence.

Chairman KERRY. Thank you, Mr. Renberg. I really appreciate

your sensitivity to that. I was just handed a note that I am the

only amendment at foreign relations, so I have to be there, so——

Mr. RENBERG. You are in the majority now.

Chairman KERRY. Yes, but a quorum is a quorum, and when you

have got it around here, they generally take advantage of it, so

that is the problem.

[The prepared statement of Mr. Renberg follows:]

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Chairman KERRY. Mr. Stolpman, thank you for being with us.

We really appreciate it.

STATEMENT OF PAUL STOLPMAN, DIRECTOR, OFFICE OF ATMOSPHERIC PROGRAMS, U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C.

Mr. STOLPMAN. Thank you, Mr. Chairman. Thank you for inviting me to this very interesting panel discussion. My name is Paul

Stolpman at EPA. I am the Director of the office that manages

many of the voluntary energy efficiency programs and also the kind

of emissions trading programs you mentioned in your opening

statement.

As you know, both the President and Congress on both sides of

the aisle agree that we can all move ahead together to encourage

the private sector and small businesses in particular to bring innovative technologies to the marketplace, and if we do that, it will

bring particular benefits to our environment.

EPA recognizes the great contribution of small businesses that

they can make in bringing about environmental improvement. I am

pleased to be able to comment on the ways that EPA helps small

businesses bring innovative technologies to market, but also how

we help them use energy efficient technologies in their daily business.

In my oral statement, I am going to try to provide a brief summary of my written statement, and I am going to focus on three

areas at EPA and how they interface with the National Energy Policy Report.

The first area is Energy STAR, which Senator Bond mentioned.

It is a joint EPA-DOE program. We help small businesses that develop and sell energy efficient technologies to distinguish their

products in the marketplace. The Energy STAR label makes it easy

for consumers and businesses to find and purchase energy efficient

products. All businesses participating in the Energy STAR program

must demonstrate that their product meets a third-party objective

performance criteria. The Energy STAR program allows small businesses to leverage the public awareness of the Energy STAR label

in marketing their products.

Over 30 product categories now carry the Energy STAR label. In

the year 2000 alone, over 1,600 manufacturers with Energy STAR

produced 120 million labeled products, contributing to the more

than 600 million products that have been introduced into the market over the last decade. Small businesses manufacture, sell, and

service many of these products, such as high-efficiency windows, reflective roof products, residential lighting fixtures, et cetera.

Second, Energy STAR helps small businesses become more energy efficient themselves, allowing greater investment. Remember,

we heard an investment in groundsource heat pumps. They can return the savings from their investments into their product development. Close to 3,000 small businesses have partnered with EPA in

committing to improve their energy performance.

Many more have taken advantage of the resources that EPA

makes available to them. Energy STAR provides a website where

small businesses can learn about evaluating their own energy performance. They can find energy efficient products. They can find

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contractors, ask questions, and read about other success stories in

small businesses. Energy STAR also provides guide books, hotlines,

and many other resources to small industry. Each month, about

6,000 new users, new small business users, go on our website and

about 3,000 of these have already downloaded a guide book specifically aimed at small businesses.

Recognizing the difficulty in reaching the millions of small businesses across the country, Energy STAR works with many organizations that small businesses trust for reliable information. These

include agencies such as the Small Business Administration and

organizations such as the Association for Small Business Development Centers, U.S. Chambers of Commerce, and the National Restaurant Association. Through these relationships, EPA is helping

many thousands of small businesses across the country to recognize

the importance of energy efficiency.

Third, EPA’s new green energy program helps small businesses

advance the use of renewable energy technologies. Partners in this

program pledge to switch to renewable energy for some or all of

their energy needs within the next year, and I am happy to say

that 15 percent of all of our partners in that new program are

small businesses.

In closing, Senator, these are just three examples of EPA’s efforts

to help small businesses innovate in the marketplace, which in

turn brings about substantial reductions in greenhouse gases. We

likewise encourage small businesses to bring forward creative solutions to other environmental challenges and help small businesses

understand and comply with environmental regulations. We look

forward to our continuing partnership with small businesses and to

benefiting from their creativity. Thank you, Mr. Chairman.

Chairman KERRY. Thank you very much, Mr. Stolpman.

[The prepared statement of Mr. Stolpman follows:]

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Chairman KERRY. I appreciate your testimony and I appreciate

your coming up today. It is significant that we have a representative here from EPA to discuss small business. If we were to turn

to the SBA to have had someone here, we would have probably had

to ask somebody from the Office of Advocacy. I am not sure where

else we would turn within SBA, which is a statement in and of

itself.

You do have a link. There is a link through the website, but

frankly, we had staff go to the link and try to work through it and

I think the lack of an energy site for small businesses, particularly

within the SBA, is a mistake. No. 1, and we don’t have time to discuss it fully now, but I want to put it on the table that SBA needs

to have an energy site.

No. 2, I think the Energy STAR program is a terrific program.

It is a great beginning. I think you are doing pretty well with it,

and certainly the numbers, the number of products and so forth,

is impressive. But, and here is the significant ‘‘but,’’ when you

measure that against the numbers of consumers and the numbers

of small businesses in the country and the numbers of opportunities, I think it is really fair to say that our outreach is simply not

where it ought to be.

The SBA outreach on this topic specifically is almost nonexistent.

Let me phrase it this way to be fair. I think it is incidental. It is

not a main mission, it is incidental, and I don’t think it should be

parenthetical anymore. I think it ought to be square, main mission,

major effort, because, No. 1, you can grow so much small business,

and create so many jobs through it. But, No. 2, obviously, you have

the benefit of enhancing participation and the environmental benefits also.

I hope we can work together to try to figure this out. Maybe we

will follow up on this, either publicly through a hearing process

without this kind of pressure, for which I again apologize, or privately. We can meet on it and see how we can do this, now that

we have a new Administrator coming into place at the SBA, and

ultimately, I think pretty quickly, we will have these jobs filled.

I would like to see how we could really create a much more

proactive outreach effort, and broadly speaking, how we can get

consumers across the country to be much more tuned in to what

Energy STAR is or means. I mean, I think if you asked anybody

on the street today, it would be the rare person who could link the

program to something meaningful in terms of their purchases. I regret that, but I think that is probably the reality. I don’t know if

you want to comment on that.

Mr. STOLPMAN. I actually would like to comment on that, because, in fact, we have done customer surveys. Brand recognition

is dramatically increasing on Energy STAR, in part because we are

working very closely with companies like Sears and Home Depot

and others, because a lot of media is now running public service

ads on Energy STAR. We are getting brand recognition in the order

of 60 percent at this point in time——

Chairman KERRY. Well, that is good.

Mr. STOLPMAN [continuing]. Which is very high. Now, I agree

with you that more outreach is necessary. It is certainly a goal of

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ours to increase that public awareness, so we look forward to working with you, Senator, on that.

Chairman KERRY. We will follow up with you through staff to try

to do it. What I want to try to do is see how we could get a link

with EPA, DOE, and SBA so that there is a real synergy there. I

think it would be helpful to everybody if that were to happen, a

sort of automatic referral process that would take place for certain

kinds of inquiries. Perhaps we could even develop some kind of

working effort to figure out how we respond to the first panel with

respect to some of their streamlining issues that we really only

began to scratch the surface. But if we could pursue that, I think

that would be very helpful.

I did want to pursue, and I am going to have to put these questions into the record—I will just state them publicly and we will

follow up, Mr. Renberg—I think, again, what you are engaged in

is terrific and very, very important for us, just enormously important for the country. Again—I think, as you have noted, there is

much further that we can go. We know that foreign competitors are

receiving a larger percentage of their sales from exports from the

United States. This is a huge growth industry in Asia, Eastern Europe, Latin America, and will be on a global basis. So I don’t think

we want to lag, and I don’t think you do, either.

Mr. RENBERG. No.

Chairman KERRY. My sense is, and I think you share this, that

we could build the relationship between SBA and Ex-Im Bank in

positive ways that would really bring a lot of small businesses to

the marketplace—if even through the virtual marketplace, through

cyberspace in their ability to be able to sell in places they have

never thought they could. I think there is much we could do to augment that, I look forward to exploring that further with you.

Again, thank you for the preparation you put into your testimonies. Thank you very much. We stand adjourned.

[Whereupon, at 10:34 a.m., the Committee adjourned.]

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