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REGULATORY CHAOS: FINDING LEGISLATIVE 

SOLUTIONS TO BENEFIT JOBS AND THE ECONOMY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENVIRONMENT AND THE 

ECONOMY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JULY 14, 2011 

Serial No. 112–74 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON ENVIRONMENT AND THE ECONOMY

JOHN SHIMKUS, Illinois 

Chairman 

TIM MURPHY, Pennsylvania 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

JOHN SULLIVAN, Oklahoma 

CHARLES F. BASS, New Hampshire 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

GENE GREEN, Texas 

Ranking Member 

TAMMY BALDWIN, Wisconsin 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

FRANK PALLONE, JR., New Jersey 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 6 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 7 

WITNESSES

William L. Kovacs, Senior Vice President, Environment, Technology and Regulatory Affairs, U.S. Chamber of Commerce ..................................................... 8 

Prepared statement .......................................................................................... 11 

W. Kirk Liddell, President and CEO, IREX Corporation, on behalf of National 

Association of Manufacturers .............................................................................. 28 

Prepared statement .......................................................................................... 30 

Karen R. Harned, Executive Director, Small Business Legal Center, National 

Federation of Independent Business .................................................................. 43 

Prepared statement .......................................................................................... 45 

Kevin Rogers, President, Arizona Farm Bureau, on behalf of American Farm 

Bureau Federation ............................................................................................... 53 

Prepared statement .......................................................................................... 55 

SUBMITTED MATERIAL

Study, dated March 5, 2010, ‘‘How Accurate Are Regulatory Cost Estimates?,’’ 

by Resources for the Future, submitted by Mr. Butterfield ............................. 83 

(1) 

REGULATORY CHAOS: FINDING LEGISLATIVE 

SOLUTIONS TO BENEFIT JOBS AND THE 

ECONOMY 

THURSDAY, JULY 14, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENVIRONMENT AND THE ECONOMY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:08 a.m., in room 

2322 of the Rayburn House Office Building, Hon. John Shimkus 

(chairman of the subcommittee) presiding. 

Members present: Representatives Shimkus, Murphy, Whitfield, 

Pitts, Latta, McMorris Rodgers, Cassidy, Gardner, Barton, Green, 

Butterfield, Barrow, and Waxman (ex officio). 

Staff present: Charlotte Baker, Press Secretary; Jerry Couri, Professional Staff Member, Environment; Heidi King, Chief Economist; 

Dave McCarthy, Chief Counsel, Environment and the Economy; 

Carly McWilliams, Legislative Clerk; Tina Richards, Counsel, Environment and the Economy; Chris Sarley, Policy Coordinator, Environment and the Economy; Alison Cassady, Democratic Senior Professional Staff Member; Greg Dotson, Democratic Energy and Environment Staff Director; Caitlin Haberman, Democratic Policy Analyst; and Alexandra Teitz, Democratic Senior Counsel, Environment and Energy. 

Mr. SHIMKUS. The committee will come to order. We want to welcome you all here. I would like to recognize myself for the first 5- 

minute opening statement. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

From our first hearing of this Congress we have continued to 

focus on the impact that Federal regulations can have on the economy, particularly on job prospects. 

We have heard from Administration officials speaking for the 

White House, Department of Energy, the Environmental Protection 

Agency, and even the Department of Homeland Security. We have 

asked them, did you take economic impacts into account when you 

proposed these regulations? Did you perform a job impact analysis? 

Are you concerned as much about protecting existing jobs, particularly in the manufacturing and energy sectors, as the President 

claims to be about creating new jobs in the so-called green economy? 

2 

The problem for many of the people who send us here to find solutions is not the green economy. It is the red ink economy. Family 

debt, unemployment, collapsed home values, mortgages underwater. These are real life problems we are challenged to solve. 

And witness after witness before the subcommittee has traced 

the root of many of their challenges to the burden of Federal regulations that drive up cost of doing business while adding no economic value. That is not to say that all regulations are bad. I am 

thankful for the many good and important Federal regulations. 

For example, every time I take a flight home to my family I am 

thankful for the Federal aviation regulations that keep planes flying safely from one place to another. When you step outside this 

building and take a deep breath, even on a hot summer day, you 

can thank Federal and State regulations for the improvement in 

air quality over the past 10 or 20 years. I don’t want the ranking 

member of the full committee to faint on that statement, but we 

all know that that is true. 

And just yesterday this committee overwhelmingly reported on a 

bill to set up an innovative new regime that balances State management and Federal standards to ensure safe handling of coal ash 

whether it is recycled or disposed of as waste. 

But then we hear the horror stories about other regulations. We 

have heard from witnesses about EPA proposals to impose needless 

new burdens on hard rock mining that duplicate what other Federal and State agencies already have on the books and which could 

put some facilities out of business. We hear about proposed restrictions on recyclers that could actually discourage beneficial reuse 

from fly ash to printer ink. 

Enough of the problems. We are not psychologists. We need solutions to prevent the issues that have us in this predicament. Today 

we will hear from the small business sector, the farm community, 

the manufacturers, and other business voices. We hope our witnesses will bring along some suggestions to make things better. 

How can we guide the Federal Government toward good regulations? How can we make sure that the benefits really do outweigh 

the economic costs? Can we be sensitive to impacts on job opportunities? 

We will also ask, are there any laws on the books that can become a model regulatory approach? If so, what is it, and what other 

steps can Congress take to ensure the Administration only proposes regulatory action that serve the people instead of harming 

them? 

And just an aside, when we travel back to our districts every 

week and we hear from our farmers and our small manufacturers 

and the small businesses, we hear this concern everywhere we go. 

This hearing is an attempt to put a national voice and bring forth 

the concerns that we are hearing at home at a national level. So 

I appreciate you all attending. I look forward to the hearing. 

[The prepared statement of Mr. Shimkus follows:] 

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Mr. SHIMKUS. And now I would like to yield to the ranking member of the subcommittee, Mr. Green from Texas. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, for calling this hearing 

because we all share an interest in sharing the appropriate balance 

between cost and benefits in environmental regulation. This committee has held numerous hearings, examined the regulatory look 

back process envisioned by the President’s January Executive 

Order. Executive Order 13563 calls for Federal agencies to develop 

preliminary plans for periodically reviewing existing regulations to 

determine whether any should be modified, streamlined, expanded, 

or repelled. 

Well, I certainly share my colleague’s concern about certain regulations, and I do not believe that all regulations or even the process 

of reviewing regulations are overly burdensome and hurts the economy. By focusing on regulatory cost of business we sometimes risk 

ignoring the real, very real human costs of unchecked pollution and 

the costs that these burdens place on the economy as a whole. 

I will give you an example. For years I have worked with local 

officials in Harris County, I have a very urban industrial district 

in East Houston, Harris County, Texas, to address a significant 

threat from a superfund site that is in our area. The San Jacinto 

Waste Pits in the 1960s, a paper mill that actually was in our district, dumped dioxin contained waste in a waste pit in a sandbar 

in the San Jacinto River. Unfortunately, the resource recovery, Resource Conservation Recovery Act had not been passed and neither 

had the EPA in—until 1969. Regulations of disposal of dioxin waste 

from paper mills were not yet developed. 

If these regulations had been placed, the waste would not have 

been dumped where they were, and the superfund site would not 

have been created. Now that the San Jacinto River has reclaimed 

that sandbar, these vessels were below water, examinations widespread and cleanup will be very costly. 

Harris County officials and the EPA have been working hard to 

ensure that taxpayers don’t bear the cost of that cleanup, and they 

are continuing the fight. Proper waste regulations could have 

avoided these cleanup costs and these litigation costs and could 

have protected the people in my district. Examples like this demonstrate why it is so important to review the laws and regulations 

to ensure we protect public health, the environment, and the economy. 

OMB estimated that the economic benefits of major regulations 

over the last 10 years have found tremendous benefits up to $616 

billion. The benefits outweighed the cost by three to one and by as 

much as 12 to one in some cases. The economic benefits of environmental regulation offer reflected avoided costs, costs associated 

with treated asthma attacks, costs associated with educating children with developmental delays, costs associated with lost work or 

productivity due to pollution and illnesses. 

So while I agree we should carefully examine the regulations to 

be sure we are not inadvertently harming jobs, not all regulations 

7 

are the enemy. They do protect the public and to save the Federal 

Government money, and I yield back my time. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair recognizes the vice-chairman of the subcommittee, Mr. 

Murphy from Pennsylvania. 

Mr. MURPHY. Thank you, Mr. Chairman. By the way, we do have 

a psychologist on the committee. 

Mr. SHIMKUS. And it is not me. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. MURPHY. While deliberations are continuing to deal with our 

$14.3 trillion deficit or debt, America is concerned where we are 

going. June unemployment at 9.2 percent and the growth of only 

18,000 jobs translates to a meager 360 jobs per State. Let us keep 

in mind that one way to balance America’s budget, one very important way to deal with America’s debt is to grow jobs. For each 1 

percent decline in unemployment it is $90 billion to $200 billion 

per year in Federal revenue. That is a decrease in unemployment 

compensation, that is an increase in Federal revenues, that is one 

and a half million jobs for every 1 percent decline in unemployment. 

Well we can’t grow jobs, and we saddle job creators with $1.75 

trillion in regulatory costs according to numbers from the Small 

Business Administration. As we look at these issues of how to deal 

with a wide range of energy sources, I want to highlight another 

way we can create jobs. 

Instead of sending $129 billion a year to OPEC for foreign aid 

to buy their oil, let us drill and use our own. A bill I introduced, 

H.R. 1861, the Infrastructure Jobs and Energy Independence Act, 

would yield between $2.2 trillion and $3.7 trillion over a 30-year 

period in new Federal revenues, but it is not from raising taxes. 

It is just using the standard royalties and lease agreements that 

come from this, and it is not borrowing from China. This bill leads 

to 1.2 million jobs annually. It is jobs for the roughnecks, the steelworkers, the electrician and laborers who work on these rigs. It is 

jobs for those who take the oil and refine it into gasoline. It is jobs 

for those who build all the infrastructure as this bill also provides 

the money needed to begin to build, rebuild our roads, bridges, 

locks, dams, water and sewer projects, and it funds nuclear power 

plants and the cleaning up of our coal-fired power plants. 

So with our leaders over at the White House arguing over how 

to take care of the debt, let us not forget Americans are saying, 

grow more jobs to grow more taxpayers, not finding ways of increasing taxes and not finding ways of increasing regulations that 

move our jobs into submission. 

And with that I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

Seeing no other members on the minority side I would now like 

to turn to the panel and welcome you for coming. I will do an overall introduction of the table, and then we will go individually. At 

the first—at our panel is Mr. William Kovacs, Senior Vice PresiVerDate Nov 24 2008 15:07 Mar 21, 2012 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\112-074 REGULATORY CHAOS-SUBMIT FOR OK 3-2\112-74 REGULATORY CHAOS P
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dent, Environment, Technology, and Regulatory Affairs for the U.S. 

Chamber of Commerce. Welcome. 

Kirk Liddell, President and CEO of IREX Corporation on behalf 

of the National Association of Manufacturers. Karen Harned, Executive Director of National Federation of Independent Business 

Legal Center, and Kevin Rogers, President of the Arizona Farm 

Bureau Federation and on behalf of the American Farm Bureau 

Federation. 

So welcome. I would like to now recognize Mr. Kovacs, your full 

statement is submitted for the record. You have 5 minutes for an 

opening statement. As you can see, we may not be that pressed for 

time, so you don’t have to kill yourself, and we will be very patient 

with the clock here. So you are recognized for 5 minutes. 

STATEMENTS OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, ENVIRONMENT, TECHNOLOGY, AND REGULATORY AFFAIRS, U.S. CHAMBER OF COMMERCE; W. KIRK LIDDELL, 

PRESIDENT AND CEO, IREX CORPORATION, ON BEHALF OF 

NATIONAL ASSOCIATION OF MANUFACTURERS; KAREN R. 

HARNED, EXECUTIVE DIRECTOR, SMALL BUSINESS LEGAL 

CENTER, NATIONAL FEDERATION OF INDEPENDENT BUSINESS; AND KEVIN ROGERS, PRESIDENT, ARIZONA FARM BUREAU FEDERATION, ON BEHALF OF AMERICAN FARM BUREAU FEDERATION 

STATEMENT OF WILLIAM L. KOVACS 

Mr. KOVACS. Thank you very much, Mr. Chairman and Ranking 

Member Green and members of the committee. I would like to 

spend the first minute of my 5 minutes on how we got here into 

this regulatory chaos and then go into some solutions. 

Congress has been dealing with what they—what you might call 

regulatory chaos since 1946. I mean, we have been trying to get 

control of the agencies when you passed the Administrative Procedure Act, which really was the first time you required the agencies 

to be somewhat transparent, and you involved the public. 

But, unfortunately, over the years one of the things that happened after this and within its structure is that Congress passed 

vague laws that required the agencies to fill in the blanks, and as 

the agencies began to fill in the blanks, one of the things that happened was the courts began in the 1980s to award deference to the 

agencies. So you had an agency that was, one, filling in the blanks, 

and now the courts were looking at them as the experts, and this 

literally allowed them to go from filling in the blanks to writing 

legislation. And this combination of delegation and deference really 

has tipped the constitutional scales to the Executive Branch. 

Now, Congress has tried very, very hard, both Republicans and 

Democrats, to gain control over the agencies. In the ’80s you passed 

the Regulatory Flexibility Act, unfunded mandates, Information 

Quality Act later on, data access, paperwork reduction, and in all 

of your environmental bills you have some of the best jobs analysis 

provisions in the entire body of the U.S. Codes. You have done 

what you need. I think the conclusion is best summed up when 

CBO and GAO concluded in several studies that the agencies are 

literally masters at manipulating the regulatory process. So as you 

9 

talk about cost benefit or finding out what the $100 million threshold is, they know how to do the system better than you will ever 

know how to do the system. 

So what is it that we can do, because I think that is really where 

you want to go. There are some issues that would hopefully be bipartisan. The first is in very simple terms you require the agencies 

to do just what Congress has asked them to do for years. I mean, 

if you look, let us just take Section 321 of the Clean Air Act. Between Section 321, which requires continuing jobs analysis for all 

major regulations, which you haven’t gotten in 30 years, that is 

just besides the point, Section 312 and 317, which requires both 

the cost benefit and an economic assessment, all of which Congress 

has in there. They are all mandated on the agencies, so this isn’t 

a discretionary. This isn’t something discretionary. Congress needs 

to start with that, and frankly, even with the President’s Executive 

Order, had they decided instead of just doing an Executive Order, 

had they demanded that the agencies implement what Congress 

has passed, I think we would be further ahead. 

Another statute that is really an excellent statute is unfunded 

mandates. There are two provisions in unfunded mandates relating 

to major Federal actions, which are very significant. One is that actually for every major role, the agency that is over $100 million, 

the agency actually has to identify a reasonable number of regulatory alternatives, and it must, under Congress’s rule, select the 

least costly and the least burdensome approach to it. And if they 

don’t, then the head of the agency must state why they selected a 

more expensive approach. That is generally honored in the breech 

or not even observed. UMRA also requires before the publication of 

the rural statement of anticipated costs and benefits that impact 

the national economy. 

So a lot of what Congress is trying to do today on jobs is there, 

and then you have the Information Quality Act, which is perhaps 

one of the most significant transparency acts that Congress has 

ever passed, and there you have a requirement that the agencies 

actually use the most up-to-date data, that they use peer reviews 

data based on sound, whether it be science or economics. So you 

have four acts. 

The second issue is permit streamlining. This is an issue that 

Congress has agreed upon many times in the last several years. We 

did this report called Project No Project, and we just examined the 

number of permits that were not being issued in the year 2010 for 

energy-based facilities, and there were 351, but the key is that by 

denying those 351 facilities’ permits, there was—we failed to capture about $1.1 trillion in economic activity for our GDP, and we 

failed to capture—and we lost the ability to create 1.9 million jobs 

annually during the construction period. 

So this—not giving a permit is significant, and the key point in 

this is that Congress in I think it was 2006, passed the Permit 

Streamlining Provisions to safely move the Highway Infrastructure 

Bill, bipartisan, and then the Stimulus Act you had two very different senators, Senator Barrasso and Senator Boxer, coming to an 

agreement that if you are going to get projects into commerce, you 

were going to have to do something with the permitting process, 

and they used—and I will stop after this. And they used as part 

10 

of that, they required the most expeditious route possible for addressing NEPA, and that was a categorical exclusion. The Administration was able to use that simple provision over 180,000 times for 

220,000 projects. 

So Congress can come to grips with this, and they have shown 

they can. It is just a question of going back and enforcing the laws, 

I think, that you have already got on the books. 

[The prepared statement of Mr. Kovacs follows:] 

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Mr. SHIMKUS. Thank you very much. 

Now I would like to recognize Mr. Liddell for 5 minutes. Sir, welcome. 

STATEMENT OF W. KIRK LIDDELL 

Mr. LIDDELL. Thank you. Thank you, Chairman Shimkus, Ranking Member—— 

Mr. SHIMKUS. If you would just hold—we are going to get you all 

set up there. 

Mr. LIDDELL. Yes. Got to push the button. 

Mr. SHIMKUS. Yes. Thank you. 

Mr. LIDDELL. Well, thank you for the opportunity to testify before 

you today about reform of the regulatory system and job creation. 

My name is Kirk Liddell. I am the President and CEO of IREX 

Corporation based in Lancaster, Pennsylvania, Congressman Pitts’ 

area. We are very proud of Congressman Pitts. We are a specialty 

contracting business. Although we are based in Lancaster, we have 

operations throughout the United States and Canada. Today we 

employ approximately 1,500 individuals, many of whom are building trades union members, and that is down from about 2,500, 

2,700 in our peak at 2008. So we are down about 1,000 employees. 

I serve as a board member of the National Association of Manufacturers. I am a member of their executive committee, and I am here 

today testifying on their behalf. 

Manufacturers provide good, high-paying jobs, and yet we have 

lost about 2.2 million manufacturing jobs in this economy since the 

recession, since December of 2009. We have, in fact, generated 

about 250,000 net new jobs, but the last couple of months that 

slowed. We have definitely slowed the job creation over the last few 

months, and to regain momentum and return to net manufacturing 

job gains we do need improved economic conditions and improved 

government policies. 

And the deluge in regulation the past couple of years has not 

helped us, has not helped us in our effort to create jobs and to improve the economy. Unnecessary or cost ineffective regulations 

dampen economic growth and hold down job creation. Regulatory 

change and uncertainty impose high costs on businesses, especially 

small business, disproportionately small businesses, and of course, 

most manufacturers are small businesses. 

Unintended adverse consequence of government regulations are 

also a huge problem and a growing problem. A current example is 

the EPA’s accelerated recondition—reconsideration of the already 

stringent and costly ozone air quality standard. The Manufacturers’ Alliance studied this one proposal and concluded that it could 

cost as many as 7.3 million jobs and add up to $1 trillion in new 

regulatory costs annually between 2020 and 2030. 

And on behalf of manufacturers I thank Chairman Shimkus, 

Representative Barrow, and several other members of this subcommittee for sending a letter to EPA Administrator Lisa Jackson 

in late June, urging the EPA to defer its reconsideration until 

2013, which is the normal 5-year reconsideration timeframe. And 

I would encourage other members of this subcommittee to join that 

effort. 

29 

Now, at a broader level there are a number of powerful and potentially bipartisan regulatory reforms to choose from. One would 

be an easy one, I believe, would be for Congress to confirm the authority of OMB’s Office of Regulatory Analysis to review the regulations issued by independent regulatory agencies and to ensure 

their adherence to strong analytical requirements. 

We do applaud the President’s recent request to independent 

agencies that they conclude retrospective regulatory reviews of 

their own regulations. We believe giving him the formal authority 

to do so would compliment this voluntary request and importantly 

be a positive sign of seriousness about regulatory reform. 

Another helpful reform would be strengthening the Regulatory 

Flexibility Act to ensure that agencies engage in thoughtful analysis, of proposed rules, and their economic impact on small businesses. Most manufacturers, as I said, are small businesses, and an 

agency should not be permitted to view the law as a mere formality. I would urge the subcommittee’s support of H.R. 527, the 

Regulatory Flexibility Improvements Act, which was favorably recorded out of both the Judiciary and Small Business Committees. 

Congress pays an important role within the regulatory process 

but does not have a group of analysts who develop their own cost 

estimates of proposed or final regulations. OMB has OIRA to review regulations, and Congress, perhaps through the Congressional 

Budget Office, should have a parallel office that analyzes and reviews the impact of significant regulatory initiatives. 

To truly build a culture of continuous improvement and thoughtful, retrospective review of regulations, the existing regulations 

should automatically sunset unless they are fervently shown to 

have strong continued justification. 

In my written statement I concluded additional broad-based regulatory reform examples for your consideration. I appreciate the opportunity to provide testimony today on behalf of manufacturers. I 

applaud you for holding today’s hearing, and I would be happy to 

respond to any questions you have. 

[The prepared statement of Mr. Liddell follows:] 

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Mr. SHIMKUS. Thank you very much. 

And now I would like to recognize Ms. Karen Harned from the 

Executive Director, National Federation of Independent Business 

Legal Center. Welcome. You have 5 minutes. 

STATEMENT OF KAREN R. HARNED 

Ms. HARNED. Thank you. Good morning, Chairman Shimkus and 

Ranking Member Green. 

NFIB, the Nation’s largest small business advocacy organization, 

commends the subcommittee for examining legislative solutions 

like those proposed in H.R. 527, which would grow the economy by 

reducing overly-burdensome regulations. The NFIB Research Foundation’s Problems and Priorities, has found unreasonable government regulations to be a top ten problem for small businesses for 

the last 2 decades. 

Job growth in America remains at recession levels. Small businesses create two-thirds of the net new jobs in this country, yet 

those with less than 20 employees have shed more jobs than they 

have created every quarter but one since the second quarter of 

2007, according to the Bureau of Labor Statistics. Moreover, for the 

first 6 months of 2011, 17 percent of small businesses responding 

to the NFIB Research Foundation’s Small Business Economic 

Trends cite regulation as their single most important problem. Reducing the regulatory burden would go a long way toward giving 

entrepreneurs the confidence that they need to expand their workforce. 

NFIB does believes that Congress must take actions like those 

proposed in H.R. 527 to level that playing field. One key reform 

would expand the Small Business Regulatory Enforcement and 

Fairness Act and its Small Business Advocacy Review Panels to all 

agencies, including independent agencies. In so doing, regulators 

would be in a better position to understand how small businesses 

fundamentally operate, how the regulatory burden disproportionately impacts them, and how the agency can develop simple and 

concise guidance materials. 

In reality, small business owners are not walking the halls of 

Federal agencies lobbying about the impact of proposed regulation 

on their business. Despite great strides in regulatory reform, too 

often small business owners find out about a regulation after it has 

taken affect. Expanding SBAR panels and SBREFA requirements 

to other agencies would help regulators learn the potential impact 

of regulations on small business before they are promulgated. It 

also would help alert small business owners to new regulatory proposals in the first instance. 

Regulatory agencies often proclaim indirect benefits for regulatory proposals, but they decline to analyze and make publicly 

available the indirect costs to consumers, such as higher energy 

costs, jobs lost, and higher prices. The indirect cost of environmental regulations is particularly problematic. It is hard to imagine a new environmental regulation that does not indirectly impact 

small business. Whether a regulation mandates a new manufacturing process, sets lower emission limits, or requires implementation of new technology, the rule will increase the cost of producing 

44 

goods and services. Those costs will be passed onto the small business consumers that purchase them. 

But does that mean that all environmental regulation is bad? No, 

but it does mean that indirect costs must be included in the calculation when analyzing the costs and benefits of new regulatory 

proposals. 

NFIB member Jack Buschur of Buschur Electric in Minster, 

Ohio, for example, recently testified that because of the time and 

financial costs of EPA’s lead renovation and repair rules, which 

took effect in April of 2010, he will no longer bid on residential renovation projects. Because he will no longer bid on these projects, 

Mr. Buschur will not be hiring new workers at his company, which 

has 18 employees, and that is down from 30 employees in 2009. 

NBIB member Hugh Joyce of James River Air Conditioning in 

Richmond projected in testimony that new greenhouse gas regulations will add 2 to 10 percent in consulting costs to his projects. 

This is particularly telling because Mr. Joyce is committed to doing 

business in an environmentally-friendly manner. He is a member 

of the U.S. Green Building Council and conducts LEED-certified 

green housing projects. 

The moratorium on off-shore drilling in the Gulf of Mexico has 

indirectly hurt those small businesses that depend on that industry. It has impacted all small business owners through further dependence on foreign oil and higher gas prices. Energy costs were 

ranked as the second biggest problem small business owners face 

in the NFIB Research Foundation’s most recent Problems and Priorities. 

Other regulatory forums that would help minimum unintended 

consequences of regulation on small business include reforms that 

would strengthen the role of SBA’s Office of Advocacy, increase judicial review within SBREFA, insure agencies focus adequate resources on compliance assistance, and waive fines and penalties for 

small businesses the first time they commit a non-harmful error on 

regulatory paperwork. 

With job creation continuing at recession levels, Congress needs 

to take steps to address the growing regulatory burden on small 

businesses. The proposed reforms in H.R. 527 are a good first step. 

Thank you. 

[The prepared statement of Ms. Harned follows:] 

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Mr. SHIMKUS. Thank you very much. 

Now we would like to recognize Mr. Rogers for 5 minutes. 

STATEMENT OF KEVIN ROGERS 

Mr. ROGERS. Thank you. Good morning. My name is Kevin Rogers. I am a fourth generation farmer from the Phoenix area. My 

family farms over 7,000 acres. We produce cotton, alfalfa, wheat, 

barley and corn silage. I farm with my dad and my brothers and 

my sister and my uncle. I currently serve as President of the Arizona Farm Bureau Federation. I am here on behalf of the American Farm Bureau. I also have served on the USDA Air Quality 

Task Force for the past 10 years. I am pleased to be able to testimony before this subcommittee. 

While there are many issues dealing in agriculture, this committee’s jurisdiction can help us to improve, I wanted to touch on just 

a few of the more serious issues we have in front of us today. 

The first issue is the pending EPA decision on revising the Ambient Air Quality Standard for coarse particulate matter, PM10, otherwise known as farm dust. Unlike the smaller fine particles, 

course particulate matter is primarily naturally occurring and 

made up of dirt and other crustal materials. It occurs while driving 

on unpaved roads, using tractors in the fields, moving livestock 

from pen to pen and pasture to pasture. 

Also, unlike fine particles where the health impacts are well 

studied, EPA says for coarse PM it would be appropriate to consider either retaining or revising the current standard based on the 

science. Even with the lack of data the Clean Air Science Advisory 

Committee, CASAC, recommends that the standard level be reduced. EPA is currently considering this option. Many areas in 

urban America already have difficulty meeting the current standard. My own county, Maricopa County, is currently non-attainment, serious non-attainment, and we are having a hard time 

meeting the current standard we have. 

Just a couple of weeks ago you probably saw on the news the big 

wall of dust that came through out valley, mile high, 50 miles 

across, it swept through Phoenix. We certainly hope that they will 

declare that a naturally-occurring event and give us the exception 

to the standard for that day. 

A recent study shows there will be many more rural areas that 

will not be able to meet a revised standard. This will result in more 

regulation of farming and ranching activities such as restrictive 

speed limits on unpaved roads, restrictions on when and how we 

can work in the fields or move livestock as States attempt to get 

back into the attainment area. 

We favor retaining the current standard, especially where there 

is little or no science to justify the change of it. We support H.R. 

2458 from Mr. Flake that would put a review of the Ambient Air 

Quality Standards on a more reasonable 10-year cycle instead of 

the current 5-year cycle. Too often EPA is revising the standards 

before States have had time to comply with the previous standard. 

H.R. 2458 would correct this situation. 

We also support H.R. 2033 that would exclude naturally-occurring events from Federal regulation unless it causes serious adverse health and welfare affects. 

54 

The second issue that I would like to address is the continuing 

regulation of greenhouse gases by EPA. As we have testified previously before this committee, farmers and ranchers receive a double economic jolt from such regulations. 

First, any costs incurred by utilities, refineries, manufacturers, 

and other large emitters to comply with greenhouse gas regulatory 

requirements will pass onto the consumers those costs of production, namely farmers and ranchers. The costs that will be passed 

down will result in higher fuel and energy costs to grow food and 

fiber. Farmers and ranchers, on the other hand, cannot pass these 

increased costs of production. 

Secondly, farmers and ranchers will also incur direct costs as a 

result of the regulation of greenhouse gases by EPA. For the first 

time any farms and ranch operations will be subject to direct new 

source review, prevention of significant deterioration, construction 

permits, and Title V permits requirements under the Clean Air 

Act. EPA itself has estimated there are over 37,000 farms that will 

emit between 125,000 tons of greenhouse gases per year and thus 

have to attain the Title V permit. Using EPA’s numbers, just the 

expense of obtaining these permits could cost agriculture over $866 

million. 

On the other hand, this costly burdensome regulatory scheme 

will produce very little, if any, environmental benefit. Unless and 

until the countries of the world agree on an international treaty on 

greenhouse gas emissions, unilateral regulation of greenhouse 

gases by EPA will have little environmental effort. The Farm Bureau strongly supports H.R. 910, which passed the House. 

In light of the recent Supreme Court decision in American Electric Power versus Connecticut, we believe additional legislation is 

necessary to clarify that entities cannot be sued just because they 

emit greenhouse gases. The court left open the issue of standing 

and common-law actions in the absence of EPA regulatory authority. Legislation is needed to resolve those issues. 

We thank the subcommittee for its attention to the needs of rural 

America, and I look forward to answering your questions. Thank 

you. 

[The prepared statement of Mr. Rogers follows:] 

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Mr. SHIMKUS. Thank you very much, Mr. Rogers. Thank you all 

for your opening statements, and now I would like to recognize myself for 5 minutes for the first round of questions. 

And I want to start with Mr. Kovacs because you laid out a history of how we got where we are. You also, I think, implied that 

if we just enforce some of the laws on the books this wouldn’t happen. I have been interested in this whole judgment fund issue 

where the environmental groups or concerned citizens can sue a 

Federal agency and then there is a settlement out of court that is 

where the plaintiffs want to go without going through the legislative process, and then we pay the court costs. 

I mean, that sounds pretty crazy to me. Is that the way that 

works? 

Mr. KOVACS. We call it sue and settle, but, yes, the judgment 

fund is part of it. What—it is actually a new twist to the regulatory 

process. Historically you would go through a rule making, you 

would give input to—you would take input, you would propose the 

rule, you would respond to the rule, and that eventually would be 

litigated. 

What is happening now is that the agency is being sued and 

rather than defending itself it is entering into a consent decree and 

as part of the consent decree it agrees to do two things. One is it 

agrees to move forward with regulation that the environmental 

group or group wanted, and two, in many instances it agrees also 

to pay the attorneys’ fees. The attorneys’ fees comes out of the 

judgment fund, and the judgment fund has been around literally 

since the beginning of the Republic but around 1995, it appears 

that it was taken off the books, and it is now considered a permanent, unlimited, non-disclosed fund. And even if you go onto the 

Treasury Department’s Web site, what you find is a lot of computer 

code, but you have no idea who the payments are made to. And 

there have been some attorneys in the United States who have 

done some discovery in very narrow areas, and the numbers are 

significant. They are in the tens and perhaps hundreds of millions 

or more. 

So one of the things that needs to be done if you are going to— 

you have two problems with that process. One is should the agencies be defending itself. It is one thing if the agency thinks that it 

is completely wrong, and that happens, and the agency has the discretion to settle, of course, but when you begin a systematic program of sue and saddle where the agency is doing this on a regular 

basis, and I think we have got, we are up to 16 of these in the last 

several years, this is becoming more of a pattern of—more of a 

practice. 

And then the second part is, is that there is—the agencies are 

unwilling, meaning mainly the Treasury Department, to provide 

any of the information on who is getting the claim. So the government really has no idea. You have no idea who is being paid. 

Mr. SHIMKUS. That is astounding, and I think that will give us 

some focus on something that we should be able to have access to. 

All citizens should know where their tax dollars are going and who 

is making—we are making payments to. 

Ms. Harned, I saw you kind of light up. Do you want to add anything to that? 

69 

Ms. HARNED. No, other than just—— 

Mr. SHIMKUS. I want to go quickly because I got one more question. 

Ms. HARNED. Oh. OK. 

Mr. LIDDELL. I would like to add—— 

Mr. SHIMKUS. Yes, sir. 

Mr. LIDDELL [continuing]. If I may. I think that has implications 

for OIRA’s regulatory review process, too, when it is a sue-and-settle process. I think both in terms of time and substance, it ties 

their hands somewhat on what kinds of review they can do on 

agency rules. 

Are you familiar with that, Mr. Kovacs? No? OK. 

Mr. SHIMKUS. Let me just—is there any truth to the rumor that 

there may be encouragement by the Federal agency, in this case 

the EPA, encouraging this type of process to move a regulation 

faster, and have you, Mr. Kovacs, do you—I have heard that claim. 

Mr. KOVACS. Well, we have heard a lot of claims. The difficulty 

is when you have a non-disclosed, unlimited appropriation and you 

have an agency very willing to not defend its own actions, it invites 

that kind of conduct. Whether or not it is occurring, that is something really Congress is going to have to determine. Some of these 

lawsuits are brought, and they are relatively quickly settled. Others do happen over time. One of the things that we are looking at 

is how many of these exist, because it is not just to—it is not just 

on regulations that are not on the books and someone wants it on 

the books, they are also right now—some of these lawsuits are 

opening up regulations that have been settled for 20 and 30 years 

such as coal ash, ozone—— 

Mr. SHIMKUS. Let me—thank you very much because I want to 

get to Mr. Rogers just for a second. When Administrator Jackson 

was here I put up on the screen the harvesting of soybeans and the 

dust that comes after that, that organic material. I have used that 

quite a bit to talk about the dust regulations to some extent 

where—there are some environmental attacks on me saying that 

that is a bogus claim, that these dust regulations will not hurt agricultural America. Obviously your statement says otherwise. 

Mr. ROGERS. Well, I happen to farm right in the Phoenix area, 

and we have been serious non-attainment for a number of years, 

and those farmers who are impacted there by the urban area truly 

have to farm under a different set of rules and regulations than 

anyone else in the country does, and so as our rural America becomes in a non-attainment area, irregardless of where they are, 

there is different things you have to do because what you do on the 

farm is now under a microscope, and if those monitors trigger, 

wherever the monitors may be located, you will have to change 

your practices to reduce PM10 from your tractor operations. We do 

it every day. 

Mr. SHIMKUS. You either don’t—you either will stop farming or 

you will bring water trailers trailing behind agricultural machines 

to knock the dust down before it gets into the air. Is that true? 

Mr. ROGERS. Well, you have to figure out ways to farm without 

disturbing the soil in any way, and as we have told EPA and as 

we have told our Department of Environmental Quality—— 

70 

Mr. SHIMKUS. I think you did that with a stick. You put a stick 

in the ground—— 

Mr. ROGERS. Yes. 

Mr. SHIMKUS [continuing]. Put a corn kernel in the ground. 

Mr. ROGERS. We tell them sooner or later you have to disturb the 

soil. 

Mr. SHIMKUS. I am way over my time, and I would like to recognize the ranking member, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and I have some questions. I appreciate our panel for being here. 

Mr. Kovacs, you talked about the judgment fund that was created, and I have a lot of years in the State Legislature, and I know 

Congress, that was created because at one time if a business sued 

the Federal Government for anything, they had to come to Congress to be able to get, even though the Judge may have said, OK. 

Federal Government was wrong, you owe this money, they had to 

come to Congress to get permission. We had to pass legislation on 

every judgment, and that is why you have that. 

In the State of Texas we had that problem, too, my first years 

in the ’70s in the legislature. We would have to approve literally 

of every judgment against the State, and frankly I had a lot of 

small businesses and businesses who were looking for assistance 

because they couldn’t. Now, maybe it is being—what is happening 

in the court system is wrong, and we need to look at that, but I 

think attacking the judgment system you may have some of your 

members of the Chamber or the independent business folks or even 

the Farm Bureau who may be concerned that if they want a judgment from a Federal court, that it would be up to Congress to actually pay for it. 

Do you want to respond to that? 

Mr. KOVACS. Oh, sure. I mean, as I said, the judgment fund has 

been around since the beginning of the republic. I mean, when you 

have judgments against you, the United States has to pay. No one 

is arguing that. 

What happened in 1995 is you stopped keeping track of it, and 

that seems to be where the problem is because in—— 

Mr. GREEN. Maybe that is an entitlement we need to look at. 

Mr. KOVACS. Well, it may be, but the difficulty is it is not disclosed, and it is unlimited, and it is permanent, and you have in 

the system now because we didn’t have this at the time, a group— 

groups that would sue and then enter into settlement agreements 

where the agency would agree to pay the attorneys’ fees. There is— 

the agency should be litigating to defend its position. 

Mr. GREEN. And I agree, and I don’t know if our committee has 

jurisdiction over that, you know. The Judiciary Committee probably 

has it but I think it is a problem because, you know, it sounds like 

it is a sweetheart deal, and we may need to address that. 

The other issue is I know it was brought up on sunset legislation, 

and I have been a supporter of sunset legislation, although it has 

never passed both the House and the Senate and—because, again, 

my experience in the legislature where we sunsetted State agencies 

every 10 to 12 years, and I was on the Sunset Commission, and it 

was a terrible job because for a part-time legislature because you 

are actually full time while you are on that commission. 

71 

And Congress, I guess our compromise is we have reauthorizations, and you know, bills we do here all the time we put a 5-year 

reauthorization, 7 years, sometimes 10 years, sometimes Congress 

doesn’t reauthorize them so they end up being a rider on appropriations on a yearly basis. That is, I guess, our compromise but 

I agree that the sunset legislation would be good, although it may 

be a little duplicative of what we do already with reauthorizations. 

As I said in my opening statement the committee has held numerous hearings to examine the regulatory look back process envisioned by the President’s Executive Order of 13563, calls for federations to develop primarily plans. My understanding that EPA has 

drafted such a plan, and it is opened up for public comment. 

My question did each of your organizations provide public comment to the EPA? Did the Chamber of Commerce and—— 

Mr. KOVACS. I am not sure we have yet, but I know we will be. 

Mr. GREEN. OK. 

Ms. HARNED. Yes. NFIB has. 

Mr. GREEN. Have you? Well, that is one of the important things 

about it because even when, you know, you have to be at the table, 

and my, believe me, probably more so than a lot of folks coming 

from my area, we have differences with EPA on a regular basis. 

But we need to make sure we are there. 

Do you think EPA and the other agencies are effectively involving stakeholders in the regulatory review process, and what ways 

could they improve that, their efforts? I mean, EPA is just one 

agency but it is pretty all-encompassing I know from you all’s businesses. 

Mr. KOVACS. Well, I mean, on some of the major regulations, for 

example, like on the comment period for greenhouse gas, an extension of time was asked for, and it was not granted, and that was 

thousands of pages of scientific documents that people were trying 

to review. 

So, you know, one of the things I think you will find is that there 

is a disconnect between what I would call the economically-significant regulations and everything else. And if you look at the 

170,000 regulations that have been adopted by the Federal Government across since 1976, there is only about, roughly about 100 to 

200 each year that are economically significant. A lot of the regulations as you have heard today are—have general support. They are 

actually business practices that people want and need. 

The difficulty, and I can’t stress this enough, is that when Congress began passing these broad statutes and delegating powers to 

the agencies, that was probably workable, but when the courts 

gave the agencies deference, you actually—you got yourself in a position where the law you passed, which was reasonable, once you 

added deference to it became something where they tipped the balance, the Constitutional balance of checks and powers. And that is 

the difficulty you have in today and with a divided government it 

is very difficult to get that power back, and I think that is what 

we are all struggling with. 

Mr. GREEN. And I know I am out of time, Mr. Chairman, but we 

still have access to the court system. If EPA does something that 

is, like you said, that is different from what the law—then the law 

should be interpreted, we still have access to the judicial process, 

72 

but, again, that is a long process, but because I know at least in 

the State of Texas we have a lot of experience in suing EPA but— 

and sometimes coming to agreed settlements, which is, you know, 

kind of dividing of the child, I guess. 

Mr. Chairman, thank you for your time. 

Mr. SHIMKUS. Thank you, and the chair recognizes the gentleman from Pennsylvania, Mr. Pitts, for 5 minutes. 

Mr. PITTS. Thank you, Mr. Chairman, and welcome. Thank you 

to the witnesses, especially to Kirk Liddell from Lancaster, and I 

will start with you, Kirk. 

How does the current regulatory environment in the United 

States prevent NAM members from being what you cite as your 

number one issue in your strategy being the best country in the 

world, the headquarter company, and to attract foreign investment? What specific things from your own company’s experience 

should be enacted into law to make companies want to make their 

base of operations headquartered in the U.S.? 

Mr. LIDDELL. Congressman, there are many, many regulations, of 

course, that affect the cost of doing business in the United States, 

and oftentimes the cost of these same activities outside of the 

United States is less. We, for example, we are primarily an employer. We hire a lot of people, and the cost of complying with various regulations is a true cost of hiring people. We have to—we are 

kind of neutral on this. We take the world as it is, and we recognize that those are costs we have to bear if we have to hire people 

in the United States. 

So we try to find other ways to satisfy those needs. Sometimes 

that is hiring people outside of the United States where we can get 

the work done. We have an office in India, for example, where we 

can do a lot of back office things much less expensively and completely, you know, legally and the like. 

So I think in that case didn’t force us to relocate outside of the 

country, but that is just an example, and I know a lot of the firms, 

the big public firms that deal with securities issues and the like 

are finding a significant extra cost of raising capitol and conducting 

business in the United States and are now, you know, relocating 

outside of the country and the like. 

Mr. PITTS. Besides the tax code if you could prioritize the next 

most important—is regulatory uncertainty number two? What 

would be, you know—— 

Mr. LIDDELL. Well, I don’t have a clear list in my mind. I would 

be happy to get back to you on that—— 

Mr. PITTS. Yes. 

Mr. LIDDELL [continuing]. But I just mentioned the securities, 

the SEC rules and the accounting rules and the like that are, Sarbanes Oxley and the like, that are handicapping U.S. companies, 

you know, vis-a-vis foreign—— 

Mr. SHIMKUS. If the gentleman would yield? 

Mr. PITTS. Yes. 

Mr. SHIMKUS. If you would submit that to us, that list—— 

Mr. LIDDELL. Sort of a priority list of things that are affecting—— 

Mr. SHIMKUS. Right. That would be helpful to us. 

Mr. LIDDELL. I would be happy to do so. 

73 

Mr. PITTS. Thank you. Ms. Harned, many times the Executive 

Branch agencies do economic impacts of their rules, and either do 

not apply them as part of the final regulation consideration or possibly misapply them. How important is the application of this criterion and any rule, and how do we prevent bad outcomes from occurring? 

Ms. HARNED. Right, and that really is the key is all of the frontend work that I know truthfully is frustrating to the regulators because they think that it just makes it harder for them to get a reg 

out, is so critical, and following what we want to see is following 

the letter and the spirit of the law on the front end, making sure 

that all the costs are assessed, making sure that all the stakeholders are brought to the table. 

Like Mr. Green was alluding to, I mean, that continues to be a 

problem quite frankly within different agencies, including the EPA 

with rules that they are more willing to say, oh, this isn’t going to 

have a significant impact because they know once they say that 

there is going to be a lot more work they are going to have to do 

on the front end. 

But the bottom line from our members’ perspective is doing this 

front end work, doing these analyses, making the agencies hold 

their feet to the fire on this is critical because once the regulation 

is out, pulling it back is next to impossible. 

Mr. PITTS. Thank you, and Mr. Kovacs, do you believe that Congress delegates too much regulatory authority, discretion, thereby 

allowing the Executive Branch to write and rewrite Congressional 

intent? 

Mr. KOVACS. Well, I think you have delegated a sufficient 

amount of regulatory authority that the courts even in the most recent, Connecticut v AUP, put a significant amount of the opinion, 

even though it was about Congressional delegation, and once you 

delegate this broad authority to the agencies, they are recognized 

by the courts as the expert, and at that point in time they are writing the law. Yes. 

Mr. SHIMKUS. Would the gentleman yield on that? 

Mr. PITTS. Yes. 

Mr. SHIMKUS. So would you say that since then the courts really 

default to the agency because they assume that they are the experts. So there is really—talking about people could go to court, but 

you already got the courts almost—it is way disproportionate to the 

Federal agency. 

Mr. KOVACS. That is correct. You have—absolutely. You have 

several difficulties there. You, one, you put a relatively low standard in the Administrative Procedure Act as to what the agencies 

had approved. If they can show something in the record, that is 

sufficient for the court to find in their favor. 

Then in the 1980s when courts gave them deference, it literally 

said not only does the agency not have a high burden of proof, but 

we are going to recognize the agencies as the expert. 

So you have really—the structure of vague loss plus the delegation plus deference has put Congress in quite a bind. 

Ms. HARNED. If I may, there is a reform in H.R. 527 that speaks 

to this and speaks to the question that you had asked me, too, 

which is when the Office of Advocacy and an agency are to have 

74 

a disagreement, which does happen with regards especially to economic impact on small business, H.R. 527 would require deference 

to be made to the Office of Advocacy, and that is a support, that 

is a reform that we think would be very helpful in this regard in 

particular. 

Mr. PITTS. Thank you, Mr. Chairman. I yield back. 

Mr. SHIMKUS. Thank you. Very good round of questions. 

Now I would like to recognize Mr. Latta from Ohio, and just as 

an introduction he has really been focused on this issue, especially 

in his manufacturing sector in the State of Ohio. 

So Mr. Latta, you are recognized for 5 minutes. 

Mr. LATTA. Well, thank you very much, Mr. Chairman, and I appreciate this hearing today, and I will let you know right off the 

bat I have worked with everyone sitting at this table with your organizations in my State. I not so long ago had asked NAM to give 

me numbers of members on the Energy and Commerce Committee. 

We represented about 1.7 million manufacturing jobs several 

months ago. The new numbers I got just last week we are down 

to about 1.55 million jobs. 

You know, jobs is the number one issue that this Congress has 

got to be facing, and everything that I talk about is about jobs, because they are fleeing this country, they are fleeing our States, and 

I am worried, because first, I used to be the largest manufacturing 

district in the State of Ohio. I have dropped to number two. Several 

years ago my district was the eighth largest manufacturing district 

in Congress. I also represent the largest agricultural district in the 

State of Ohio. We are large in row crops, and so everything comes 

right down to jobs, jobs, jobs. 

And I was very interested in your testimony that you all had 

talked about today because, you know, when you are talking about 

manufacturing and manufacturing product what is scaring me now 

is when I talk to my manufacturers in my district, this is what 

they are telling me. 

They have come up with a great idea how to make a new pencil, 

and wholesalers say to them, this is fantastic. Now tell me how you 

can make this in China at a cheaper price that we can sell it. Not 

making it here but making it someplace else, even though we have 

got the idea right here in this country. 

And if I could, just to ask a few questions, and I know my time 

is short, but as we are looking I know that—a couple questions I 

would like to ask each of you. 

I have got—my folks that manufacture in my district that when 

I have talked to them and after I have heard from the problems 

they have had with regulators say, why didn’t you contact me, and 

they said they were afraid to. And when the regulators out there 

have got the fear of God in the people that are in this country that 

are supposed to be creating jobs that they don’t even contact their 

elected representatives, there is something wrong. 

So, first, I would like to ask, you know, on that statement, right 

down the line for all of you, you know. Is there a fear that people 

have about speaking up about regulations because of the retribution that they get from those regulators? 

Ms. HARNED. If I could, this is a very big problem that the small 

business owners we represent at NFIB tell us about constantly, 

75 

and what we have seen definitely within the last 2 to 3 years is 

a—or 2 years, I guess, is a big shift and you are seeing it in the 

budget and also in the culture within the agencies to go back to 

this gotcha type of mentality. And it is very, very disheartening to 

our members and really almost can be paralyzing to them when we 

are trying to get them to, you know, even know the rules that do 

the right thing, they feel like they can’t even ask anybody for help 

to know what that would be because of, you know, what microscope 

that might put in front of their business. 

Mr. LIDDELL. I would say in general we are not afraid to contact 

regulators. We do quite a bit, actually, and that is not the issue. 

It is more just do we want to get involved in all that, the time, the 

effort, the, you know, it is oftentimes better just, you know, kind 

of go your own way and keep a low profile and just, you know, 

move on. 

There is some concern with OSHA and some of the other agencies like that that you will—there will be some retribution, but personally that hasn’t been a big issue. But, you know, we are busy 

people. We don’t really have time to spend a lot of time with you 

all and regulators and everybody else. We have a job to do. 

Mr. KOVACS. I take a little bit different or maybe a similar look. 

I don’t know that they are afraid of the regulator. I think they are 

afraid of the process, and let me just give you a quick example. 

If you are a company and you are trying to get an EPA permit, 

you have 40,000 pages of regulations. Any provision on any of those 

40,000 pages will stop you getting a permit, which is why I keep 

on talking all this time about permit streamlining. 

So if you can be stopped by anything and let us—somebody mentioned Title V, Title V of the Clean Air Act, that is merely a paperwork requirement, but once you file that paperwork, anyone in the 

United States under laws passed by Congress can sue you to stop 

your permit. So you have 40,000 pages of problems, any one of 

which you miss is gone, and the second thing is once you file for 

a permit, anyone in the United States can sue you. 

So I think they are afraid of the process, and no one wants to 

put their head up to be visible. They just want to move through. 

Mr. ROGERS. My comment as well, you know, our folks in agriculture would just as soon stay on the farm and continue to grow 

the food and fiber for this country, and when you talk about the 

fear, I think deep down they all assume, well, we got to grow food. 

What are they going to—how can they do that to us, and I think 

it is more of an education issue for them to get involved and understand what could be coming so they do contact their representatives and say, hey, what we do every day is in peril, it is in jeopardy, and we need to reach out to you folks and ask you for help 

to make sure you understand what is going on. 

There is always that fear of retribution when you step up to the 

plate. In Arizona in Maricopa County we actually, when we understood what the Clean Air Act said, that it is a health-based standard, that it doesn’t matter if you only get 8 inches of rain versus 

50 inches of rain, the standard is the same across the board, we 

knew we had to come to the table because EPA has the hammer. 

Ultimately they can come in and FIP you, Federal Implementation 

76 

Plan, which could put us out of business depending on how that 

goes. 

So we came to the table as a community and sat down and negotiated a plan for best management practices so farmers will reach 

out and be educated about what is going on, but I think there is 

a fine line that you bring up. Thank you, sir. 

Mr. LATTA. Well, thank you very much, and my time has expired, 

and I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair recognizes the gentleman from Colorado, Mr. Gardner, 

for 5 minutes. 

Mr. GARDNER. Thank you, Mr. Chairman, and I thank the witnesses for their time and testimony today, and I appreciate the opportunity to learn from you. 

Mr. Rogers, thanks for being here. I am your neighbor to the 

north in Colorado, and this committee has spent a lot of time asking regulators questions about whether or not they will have an 

impact on the economy, whether or not they have taken into account jobs into their analysis, and last week we had a hearing with 

independent agencies, including FERC, where we asked, you know, 

whether or not they take into account their impact on the economy 

and jobs. And the answer was, oh, we certainly do, and then the 

follow up was, all right. Well, do you take into account the jobs 

that are impacting—the jobs that will be impacted when you implement a rule, and that rule then increases the cost of energy, do you 

take into account the jobs impacted by those who have had their 

energy bills go up or on those who have had their energy bills go 

up? And I think the answer was, no, they didn’t take a look at that. 

And so we have had some good opportunities to really learn what 

is happening in this country when it comes to the economy. 

Your testimony talked about the impact that greenhouse gas regulations would have on farming and on agriculture. Your testimony 

goes into statements made before the Energy and Commerce Committee by Administrator Jackson when it comes to agriculture. We 

heard, I heard testimony from the Administrator over and over, she 

said that agriculture is exempt from greenhouse gas regulations. 

Do you believe that to be true? 

Mr. ROGERS. Well, I haven’t seen that specifically in law anywhere where EPA or Congress has exempted us from it, but I think 

as you narrow down the Title V requirements and you narrow 

down what happens when there is a lawsuit brought up and EPA 

is sued for not enforcing the rules and regs that they have and enforcing what Congress has passed over the years, and until they 

specifically come out with a change, you know, if you have got more 

than, you know, 50 head of cattle, depending on what they determine, you could be required to get this permit and—— 

Mr. GARDNER. So 50 head of cattle you could be required to have 

the permit. Can anybody survive with 50 head of cattle? Can you 

make it—— 

Mr. ROGERS. No. 

Mr. GARDNER [continuing]. As a rancher with 50 head of cattle? 

Mr. ROGERS. No, not at all. 

Mr. GARDNER. Can you make it as a family farm operation with 

50 head of cattle? 

77 

Mr. ROGERS. No. It is difficult. 

Mr. GARDNER. If cap and trade had passed, when Cap and Trade 

Bill passed last year, there was conversations that agriculture was 

exempt, if, even if agriculture, if a tractor, if a cow, if your farm 

had been directly exempted from that act, would the consequence 

of cap and trade still have affected and impacted that culture? 

Mr. ROGERS. Certainly. It will be devastating on agriculture as 

well as all the business community. The things that we do, the fertilizers I use, the energy, the diesel fuel, all the inputs that I use 

in agriculture, the prices will skyrocket due to that, and those 

trickle-down effects will be devastating. We have no way to pass 

those costs onto our consumers at all. 

Mr. GARDNER. Do we have any assurance from Lisa Jackson, Administrator Jackson, that agriculture will not be included in future 

greenhouse regulations? I believe the so-called exemption for agriculture expires in 2013. Do we know what happens beyond? 

Mr. ROGERS. I do not know. 

Mr. GARDNER. And so there is a large possibly that we could see 

these regulations applying directly to agriculture including what is 

referenced to in your testimony as a cow tax? 

Mr. ROGERS. That is correct. 

Mr. GARDNER. Thank you. Thank you for your time, and I yield 

back my time. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair now recognizes Mr. Whitfield for 5 minutes. 

Mr. WHITFIELD. I thank you, Mr. Chairman, and thank you for 

being with us today. This is such an interesting topic, and I think 

a vitally important area because as many of you pointed out in 

your testimony these regulatory bodies and particularly EPA and 

the Clean Air Act are issuing more and more and more regulations, 

and it is almost unprecedented of the way that they are moving 

over at EPA. 

And I was delighted that you brought up, Mr. Kovacs, this sue 

and settle because many of us feel like that is precisely what is 

happening, that the courts are making the decisions about environmental policy, and what makes it even worse is that we asked recently for EPA to provide us a list of all the organizations that they 

have been giving grants to, and they were making large sums, they 

have a large sum of money to give grants, and many of those 

grants are going to the environmental groups that then turn 

around and file the lawsuits and then as you say, they enter into 

a consent decree, and then they pay all the legal fees. 

And it is almost like an in-house job here, and it is not the way 

we need to do policy in the United States. And I think your point 

about this judgment fund definitely needs to be looked at because 

we need transparency there. We need to know how much money is 

being spent. We have asked EPA how many lawsuits do they have 

pending against them, and they haven’t been totally direct, but the 

indications are there is somewhere between four and 500 lawsuits 

pending right now against the EPA. 

And as Chairman Shimkus said, we have reason to believe from 

discussions with a lot of different groups that EPA is actually out 

there encouraging these lawsuits, and I might just also add that 

on the TVA lawsuits, Sierra Club filed suit against TVA, and TVA, 

78 

according to its President, was not even allowed to hire its own 

legal counsel to defend itself in that suit, but the solicitor general 

and EPA lawyers defended them, and they agreed in a consent decree to close down 18 coal-powered plants and pay the Sierra Club 

millions of dollars in not only legal fees but also contributions to 

them for—to use in whatever way they wanted to. 

So one—I get so worked up about it, and I need to be asking 

questions, but Mr. Liddell, I have been told that you are an expert 

on the Data Quality Act. We hear many people say, well, the Data 

Quality Act is a way that you can question the models being used 

and calculating costs and benefit analysis. Has your firm used the 

Data Quality Act? 

Mr. LIDDELL. We do not, and I don’t know where you got that 

about me being an expert on that. I don’t feel I am. 

Mr. WHITFIELD. Oh. OK. 

Mr. LIDDELL. So—— 

Mr. WHITFIELD. So but are you familiar with the Data Quality 

Act? Is—are any of you familiar? 

Mr. KOVACS. I am familiar with the Data Quality Act. That is 

probably, even though it was only a few sentences, one of the finest 

laws Congress ever passed. 

Mr. WHITFIELD. Right. 

Mr. KOVACS. It attempted to do something very simple, which is 

to require agencies to use the absolute best data that was useful, 

up to date, and transparent, and it allowed the public to actually 

correct the data if the agency found that it was wrong, and you 

passed it, I believe, in 2001. We litigated it for several years, and 

the courts made the decision that unlike the NEPA, for example, 

where they said anyone has a right to sue, a similar type of statute, the courts ruled that no one has a right to sue, and it is completely between OMB and the agencies as to how they want to require data to enter the system. 

And one of the things that I would suggest is there is an example 

where if there was a private right of action, where when I submit 

data to the agency, they have an obligation to review it, because 

let me tell you. When you—when we as a private party decide that 

we are going to submit data, it—first of all, it is very expensive. 

We have to go out and hire our own scientists, we have to do our 

own studies, we have to develop our own models. Then we have to 

submit it, and for the agency not even to review the data after it 

is submitted, and all we are asking them to do is correct it if it is 

wrong or tell us why you are right. And that is the whole purpose 

of the law, and that has been frustrated since 2003. 

Mr. WHITFIELD. Well, I mean, I think the system is broken, you 

know, whether you have a conservative Administration or a liberal 

Administration, there needs to be more balance in this process because you get the Office of Information and Regulatory Affairs that 

are reviewing these regulations over at OMB, and that is controlled 

by the Administration. The agencies are controlled by whoever is 

in charge of the government at that time, and that it appears that 

there definitely needs to be some independent source to have the 

ability to analyze what is going on in these agencies because no 

one—the models used, there is like a transparency there, and when 

79 

you start calculating the value of a life and the way they determine 

economic value of a life, no one really understands it. 

So would you all agree that there needs to be some independent 

analysis of cost benefits that these agencies make in issuing these 

regulations? 

Mr. KOVACS. I certainly would. 

Mr. LIDDELL. Yes. 

Mr. ROGERS. Yes. 

Ms. HARNED. Yes. 

Mr. WHITFIELD. Well, Mr. Chairman, my time has run out, too, 

but I hope that we would have an opportunity to work with you 

and your organizations and try to develop some legislation to help 

address some of these shortcomings. 

Mr. SHIMKUS. Great. Thank you. I just want to for the record 

let—in that last question you posed that all the panelists agreed 

and said yes just for the record. 

The chair now recognizes the vice-chairman of the subcommittee, 

Mr. Murphy, for 5 minutes. 

Mr. MURPHY. Thank you, Mr. Chairman. I would like to follow 

up on that very question, give all of you a chance to respond to that 

with regard to reviewing these regulations. We—when we just 

dealt with a bill that moved out of the full committee dealing with 

coal ash issues, it was simply to ask members of the President’s 

Cabinet to comment on economic impact or job impact. I was 

amazed at the amount of dispute we had among our committee 

members about whether or not we should even required the Administration to make reference to jobs. 

So given you are from so many different organizations represented here, I wonder if you could comment more on this about 

having independent reviewers review some of these regulatory 

issues and guidelines and comment on what you think the benefits 

of that would be. 

Mr. Kovacs, do you want to start off with that? 

Mr. KOVACS. Sure. The—well, if there is any issue that is important to the institution of Congress it is getting at least some parity 

with agencies, which is something you don’t have now, and in the 

present system the way it is structured is even on your regulatory 

laws like the unfunded mandates where they require this kind of 

an analysis, the way the law is structured is they could give you 

a half a page which says we did everything and everything is fine, 

and that is sufficient for court review. And that is the difficulty, 

but that is the law that you structured. 

But what—because so much of the economy with 170,000 plus 

regulations belongs to the agencies, because they have this deference, and because the courts look at them as the experts, you 

really have no ability at this point in time to really check the agencies. And short of being able to pass a new law which regains this 

kind of authority, you are at a great disadvantage as an institution. 

Mr. MURPHY. Mr. Liddell, could you comment on that? 

Mr. LIDDELL. Well, it is certainly a strong, good idea to have 

independent analysis and certainly be strong and supportive of 

that. I guess some of our frustrations is oftentimes when we do 

kind of like Mr. Kovacs said, we do provide information, well 

thought-out information, information that we have worked have to 

80 

develop. It is still up to the agencies to kind of determine whether 

they are going to, you know, listen to it, think about it, you know, 

give it substantive value, and I am not quite sure that it is so 

much the issue of the quality of the data, it is the willingness of 

the organization, the agency to seriously consider the value and the 

ability to do so. 

You know, one of the things on job impact is, you know, there 

are multiple levels. First, will the agency consider job impact. That 

is important. That was sort of the question number one. And then 

there is another question is can they do that. When I think about 

as a business person all the things we do, all the incentives that 

are created by regulations to reduce jobs, I am not sure that anybody is able to really consider all the unintended consequences and 

the impacts on jobs. So that is an issue, and I am not sure independent analysis would do that. I think some kind of real-world 

pragmatic experience might do that. 

Mr. MURPHY. Let me make sure I understand this. So when it 

comes to analyzing impact on jobs, perhaps those doing the analysis should be people who have created jobs? 

Mr. LIDDELL. Yes. Oddly enough I think—— 

Mr. MURPHY. Well—— 

Mr. LIDDELL [continuing]. People who have sat in the seat of not 

just creating—— 

Mr. MURPHY. Like if you have a problem with your health, go to 

a doctor as opposed to just—OK. Thank you. 

Ms. Harned. 

Ms. HARNED. Yes. No. I think that this is a very interesting idea, 

and really what we see after Congress gets, you know, these procedural protections in place that are really meant to get small business impact, which is obviously our best, our most important thing 

to brief amendments and the Regulatory Flexibility Act, you start 

seeing, and we definitely see this with all the agencies, a check-thebox mentality, like, you know, we go through, and we have done 

that small business impact analysis, and they know how to do it 

just enough to meet their obligation. And I think more oversight 

that Congress can give to ensure that that process was really done 

completely, in particular when you are looking at things like did 

the agency really consider less burdensome alternatives and seriously consider those alternatives and what that could mean for getting the job done from a policy perspective, from their perspective, 

but not hurt, you know, job creators and the economy and leave everybody in the wake. 

So I think that those kinds of issues really do need more Congressional oversight, and that, again, is, I think that particular reform on the less burdensome alternatives is in H.R. 527, which Mr. 

Liddell indicated just was marked up and passed. 

Mr. ROGERS. We could support the independent review. We are 

always looking for ways to reform regulations, and I will bring it 

back to PM10 and the dust issue. All that is done a lot on modeling 

and if they don’t have the research on coarse particulate matters, 

they will make it up because that is what the modeling requires. 

They have to plug in a coefficient somewhere so that they can put 

a number in to decide how to regulate it. So we are all for doing 

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rect, because they have to have them to plug them in to determine 

whether or not we are at attainment or non-attainment. 

Mr. MURPHY. I appreciate that, and Mr. Chairman, you know, as 

you know, this town is often so poisoned by things, and it is not 

a matter that sometimes people look at what a document says but 

who says it that sometimes people decide before they even read it 

if it is of value, and it is oftentimes looked upon not what a regulation does for jobs but what it does for votes. 

I tend to think that is an insult to job makers and workers, too, 

but thank you very much. I appreciate it. 

Mr. SHIMKUS. I thank my friend. I do plan based upon time 

maybe to do a second round just to ask additional questions, but 

before we do that I would like to recognize Mr. Butterfield for 5 

minutes. 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman, and 

thank the witnesses for coming forward today with their testimony. 

I am sensitive to the topic that we are talking about today. I represent, as most of my colleagues know, a largely rural district that 

depends very heavily on agriculture, and we depend also on manufacturing. It is important to me that my constituents continue to 

have the opportunity to produce goods and put bread on the table, 

and sometimes that means examining the flexibility and the timing 

and the efficacy of particular rules. 

Having said that, I am deeply concerned that this committee is 

turning into the ‘‘no regulation committee.’’ We have spent a majority of our hearings and markups not developing new plans in energy and telecom and health care but instead breaking out the 

eraser for any and all Obama administration proposed rules. 

While I support review of these rules, at least some of them, and 

after careful consideration of impacts during these trying economic 

times, these hearings begin to smack of political rabble rousing. 

Let me start with Mr. Rogers, and thank you, Mr. Rogers, for 

your testimony. I have a few questions for you. You state in your 

testimony that 37,000 agriculture facilities will be covered by the 

greenhouse gas rule and will be forced to spend over $20,000 on 

permits. I hope I am restating your testimony. This rule has been 

in effect since January. How many facilities have gone, have had 

to get a permit thus far, if you know? 

Mr. ROGERS. These are the permits here? I don’t have that number right this minute, sir. 

Mr. BUTTERFIELD. Based on our research it would be absolutely 

none. Why have these facilities not had to purchase permits? Do 

you know that? 

Mr. ROGERS. I believe that EPA is still determining what the 

magic number is. I don’t think the final rule is out on what is going 

to be required. They are working with one of the new committees 

they just put together, EPA and Agriculture and Rural Committee, 

to help decipher what is appropriate and what is not appropriate. 

Mr. BUTTERFIELD. Well, under the tailoring rule can you tell me 

when any of these facilities will be subject to a Title V or NSR permit? 

Mr. ROGERS. No, I can’t. It will depend on when EPA determines 

that that regulation will be enforced. 

82 

Mr. BUTTERFIELD. Projected costs are always a complicated subject for rules and regulations. Often the estimates vary widely from 

those produced by advocacy organizations, EPA, and industry 

groups. 

However, I would note a study from 2010, by Resources for the 

Future, which I ask unanimous consent to be added to the record, 

where the researchers found that EPA and other agencies routinely 

overestimate potential costs. In fact, of the 17 rules studied 14 

were found to have costs less, sometimes considerably less, than 

their estimates. 

[The information follows:] 

83 

84 

85 

86 

87 

Mr. BUTTERFIELD. Mr. Kovacs—and I hope I am pronouncing 

that correctly—could it be possible that these rules help drive innovation quicker than a baseline scenario, thus lowering costs below 

the projected amounts? 

Mr. KOVACS. Well, Congressman, there is more than sufficient 

controversy over the cost estimate analysis and the kind of assumptions you use because you can make it come out depending on 

the assumptions any way you want. I can only tell you how, you 

know, when we do a study how we do it and how we do our audits 

and how we do peer review. 

But when you get into a study like that, one of the things that 

is the most important is what are the assumptions that they have 

used. Do they assume that EPA will implement it? Do they assume 

they won’t? Do they assume innovation? Do they assume it won’t? 

And I think on that each regulation is different, and one of the 

things if the agency seriously wanted to address this issue, that 

right up front in the Unfunded Mandates Act, for example, they 

have to do some kind of an analysis of what are the anticipated 

costs and benefits and impact on the society so that as part of the 

rule we can begin that discussion. That generally does not happen. 

So I think there is a lot of room in that area for solid discussion 

among everyone. 

Mr. BUTTERFIELD. This was certainly the case with the Acid Rain 

Program. Is there any other reason as to why it might be lower 

that you could think of? 

Mr. KOVACS. Well, acid rain had a lot of things going on simultaneously. I mean, my recollection is that at the same time you did 

acid rain, you had the Staggers Act, the distinguished chairman of 

this committee, which deregulated the railroads, and you began to 

move low sulfur coal from the west to the east. So you had a few 

factors, and I think if you look at the history books and the ledger 

and articles there is a great debate as to whether it was regulation 

or low sulfur coal and the deregulation of the railroads. 

Mr. BUTTERFIELD. Thank you. We are right on target. 

Thank you, Mr. Chairman. 

Mr. SHIMKUS. And I thank you and I hope my colleagues don’t 

mind since you here I would like to go to a second round, and I 

just want to follow up on that because that is so true on the acid 

rain and the ’92, Clean Air Act is that there was two issues, fuel 

switching and technology, and that is the problem we have with 

the greenhouse gas issue is we don’t have the technology. You 

know, we are—so for in Illinois where we have high sulfur coal, 

that is where I know you have never seen that poster of mine with 

those miners, but they lost their jobs because they fuel switched. 

That is really the debate. They moved low sulfur coal from Montana, and the power plant is still there. The mine across the street 

was closed, so that is a little bit—I would agree with you on that 

analysis. 

I just want to go to Mr. Liddell and Mr. Rogers because they are 

the actual producers, actually job. When you decide to make a decision, either, one, to expand a manufacturing facility or to buy 500 

more acres, don’t you do a cost benefit analysis? 

Mr. LIDDELL. Absolutely. You have to. 

Mr. SHIMKUS. Mr. Rogers? 

88 

Mr. ROGERS. Without a doubt. 

Mr. SHIMKUS. And why do you do that? Why do you do that, Mr. 

Liddell? Why do you do that? 

Mr. LIDDELL. Well, it seems obvious you don’t want to spend 

more than you are going to get in return from an investment, and 

it is critical that you measure all the costs, all the assumptions, all 

the risks, and end up with a high level of confidence that you are 

going to be better off for having made that investment than not or 

else you are not going to go forward. 

Mr. SHIMKUS. All right. Mr. Rogers? 

Mr. ROGERS. And we have to look at commodity prices, do I have 

enough labor, do I have enough equipment, what is going to mean 

to my banker if I increase the size of my farm, can I borrow the 

extra funds for the cost of production of that 500 acres? In order 

to grow 500 acres of cotton, you know, it costs $1,000 an acre so 

there is an extra half million dollars right off the top. 

Mr. SHIMKUS. Our point is is that this is nothing abnormal in the 

business sector, and that is our point. The subcommittee has been 

renamed Environment and the Economy, and the reason why is we 

want to continue to grow on economy, and we are checking upon, 

and we are trying to do that balance between environmental regs 

that are needed, I have stated the Clean Air Act has been very beneficial, but there is an affect on the economy, and that is why your 

testimony is so great today. 

Ms. Harned, I think it was your opening statement you mentioned Barrow-Shimkus letter on NAAQS. Who did that? Mr. 

Liddell? Explain that one more time. I think this is very important. 

This gives you an example how environmental agencies intervene, 

distort the ability of business to plan because—what is going on in 

this situation? 

Mr. LIDDELL. Well, this is the ozone—— 

Mr. SHIMKUS. Yes. 

Mr. LIDDELL [continuing]. Review that EPA has taken on. 

Mr. SHIMKUS. And when were they supposed to—when are they 

supposed to—— 

Mr. LIDDELL. It is a 5-year process. 

Mr. SHIMKUS. Five-year process. And where are we at in that 5 

years? 

Mr. LIDDELL. Well, 2013, would be the normal time for the review. 

Mr. SHIMKUS. So the review is due in 2013, but the agency is 

doing it now. 

Mr. LIDDELL. Correct. 

Mr. SHIMKUS. Why? 

Mr. LIDDELL. Well, I think they have a mission. They want to see 

the standards tightened. 

Mr. SHIMKUS. And what is that effect on jobs in the economy? 

Mr. LIDDELL. Well, we have a pretty good measure on that from 

a study, and, again, you know, subject to some give and take. We 

are looking at, I think it is 7.3 million jobs, as many as 7.3 million 

jobs and about $1 trillion in new regulatory costs annually between 

2020 and 2030. 

Mr. SHIMKUS. So, I mean, that is Exhibit A of numerous exhibits 

of, I mean, you aren’t asking not to do this. 

89 

Mr. LIDDELL. No. 

Mr. SHIMKUS. They should do it by their rules and regs 2 years 

from now, but they are moving it forward. Is this they don’t have 

anything else to do? 

Mr. LIDDELL. Well, and as if they don’t seem to understand what 

is going on in the economy right now. I mean, if you are ever going 

to have an impact on jobs, now is not the time to have a negative 

impact on jobs. 

Mr. SHIMKUS. Yes, and I have taken a lot of notes, of course, I 

am all over the place. I do really appreciate your testimony. It has 

given us some issues. I would also encourage you all specific rifle 

shots of things that we can do. We are very interested in doing 

that, trying to, again, protect public health but also bring some certainty in these uncertain times to keep the economy where it is at 

and actually start growing again. 

And while I have my last 18 seconds left, fortunately we are 

going to a second round of questions because in the back is the people responsible for me being either good or bad if anyone was looking at me as a member of Congress, my mom and dad. So I want 

to recognize them as they walk in. So they are here for the baseball 

game, so with that is there anyone else seeking time to—the chair 

recognizes Mr. Green for 5 minutes. 

Mr. GREEN. Mr. Chairman, I want to recognize your parents. 

Your son and I played basketball together when we were much 

younger in Congress, so now we just spar verbally instead of bumping into each other on the court. 

I get lots of e-mails and requests from my constituents on a program that would be a Federal mandate, and I was wondering if any 

of your agencies or associations have taken a stand on it. 

The E–Verify Program was created trying to deal with Federal 

contractors so we would know at least on the Federal level if someone was on a contract that was paid for by the Federal Government 

that we would make sure that their Social Security numbers are 

correct. 

And I am just getting a number of e-mails requesting we expand 

that. I have some concern because I think we have done studies, 

the GAO or someone, that said, you know, sometimes, you know, 

my name is Gene Green. I have always been known by that, but 

the IRS knows me by Raymond Eugene Green, and that is my Social Security number, that if we applied that E–Verify, what would 

it do to a farming operation or a restaurant or anybody who is a 

member of any of your associations? 

Mr. ROGERS. Mr. Green, it is something I have had to deal with 

in Arizona for the last couple of years is mandatory E–Verify, and 

I will tell you that it is in my opinion as a leader of agricultural 

organization, it is not ready for primetime. It is not ready to go nationwide. It doesn’t specifically — I can run your name and your 

Social Security number through the process, and it says, yes, you 

are good to work, but it could be somebody else that has your information. 

And so that puts me at risk in a couple of lawsuits because if 

I do hire you and come to find out that it is wrong, then I am in 

trouble, but if I don’t hire you, then I am in trouble as well, and 

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ganizationally we don’t think it is good in this economy to put business under more regulations and more scrutiny and turn this program into a program that determines whether I hire you or not. 

In agriculture we are concerned about labor. We have been on 

the Hill for a number of years asking for temporary worker programs. We have to have workers to harvest our crops, and so we 

are concerned that if E–Verify comes down the path without some 

kind of temporary worker program or reform in some way, agriculture will be devastated. 

Mr. GREEN. And that was imposed by the State, not by the Federal Government. 

Mr. ROGERS. Correct. That is correct. So we have had the experience with it where the State imposed that law mandating it, and 

it is practically impossible to hire somebody. 

Mr. SHIMKUS. Would the gentleman yield on that same point? 

Mr. GREEN. Sure. 

Mr. SHIMKUS. If laws were passed to indemnify the employer, 

would that help? In other words, if you have done everything right 

and then you are not held liable to litigation. 

Mr. ROGERS. That would certainly be a step in the right direction. Our problem is there is not enough people who want to come 

work and bale hay at 3:00 in the morning, milk cows all night, and 

cut lettuce every day. 

Mr. SHIMKUS. With 9.2 percent unemployment? 

Mr. ROGERS. That is exactly correct. 

Mr. GREEN. Let me ask the other associations because I only 

have 2 minutes left and did your association take a stand on the 

potential for Federal legislation on E–Verify? 

Mr. LIDDELL. Could I comment as a business person? We are 

very familiar with E–Verify. We hire people all over the country, 

and we are hiring and rehiring and laying off. We got transient employees, transient workforce. 

The problem with us and E–Verify is that kind of the intended 

consequences. The rules haven’t thought through the fact that you 

are going to hire somebody, put them on the job site today, and 

there is time that it take for them to—that they can’t go to work. 

There is extra burden, extra costs associated with it, so it is more 

the mechanics of E–Verify than the theory or the concept of E– 

Verify that is our problem. 

Mr. GREEN. Has the Chamber of Commerce made a determination? 

Mr. KOVACS. Well, I would be very thrilled to have our labor division send you a response for the record. 

Mr. GREEN. OK. Appreciate it. 

Ms. HARNED. Right, and I am going—we will have to get back 

to you on that as well. 

Mr. GREEN. OK. Appreciate it. That was just an example, in this 

case it is a State-imposed regulation, and I know some States are 

doing that, and it can cause problems in just producing a product. 

So—— 

Mr. ROGERS. Well, and we are using the Federal program. I 

mean, Arizona didn’t develop a new program. We are mandated to 

use E–Verify, and it is not very workable right now. 

Mr. GREEN. OK. Thank you, Mr. Chairman. 

91 

Mr. SHIMKUS. Great questions. Thank you. The chair recognizes 

my friend from Kentucky, Mr. Whitfield. 

Mr. WHITFIELD. Thank you very much, and Mr. Kovacs, would 

you mind getting back to us on this Data Quality Act on ways that 

it could be improved, because I don’t have an in-depth understanding of it, but it is my understanding that you really cannot 

utilize that until the rule has become final. And then at that point 

as Ms. Harned said, once a rule becomes final, from a practical 

standpoint, there is not a lot can be done. So if you wouldn’t 

mind—— 

Mr. KOVACS. I would be glad to. 

Mr. WHITFIELD [continuing]. We would really appreciate that. 

Mr. KOVACS. Just one quick point on that. The way the law is 

structured is you should be able to use it not only in—as part of 

the rule-making process but literally at any other place in the 

agency process where they are doing studies whether they be economic or scientific so that you can go in and actually input into the 

study so that the agency gets it right at the end. It is supposed to 

begin in the beginning, not at the—— 

Mr. WHITFIELD. But you have to file a lawsuit. Right? 

Mr. KOVACS. You can file what they call a petition for correction. 

It is just that the agencies really aren’t addressing them at all, and 

the courts have said that we don’t have a right to sue. 

Mr. WHITFIELD. Right. OK. On this National Ambient Air Quality Standard you all have already pointed out that EPA is moving 

in advance of when they are really required to. Do any of you have 

any information right now about what percent of the population 

live in non-attainment areas right now? 

Mr. ROGERS. I just know in Arizona that it is Maricopa County, 

which is the urban area. You know, in Arizona we only have 15 

counties compared to some of your States that have, you know, 

hundreds of counties. 

Mr. WHITFIELD. Right. 

Mr. ROGERS. So it is a monster country, but—and it tends to be 

more of an urban issue. The issue we have is those of us that farm 

in that area get sucked into the regulation, get sucked into the 

clean up, and we have agreed we all need to step up and do our 

fair share to— 

Mr. WHITFIELD. But you are in non-attainment now? 

Mr. ROGERS. That is correct. We are in non-attainment now at 

150, and if the proposal goes through and they change it to either 

65, 75, or 85, all of our data shows the entire State will become 

non-attainment. 

Mr. WHITFIELD. Yes, and I think a big portion of the whole country will be in non-attainment, and then that is going to—as you 

say, Mr. Liddell, it is going to have a real negative impact on job 

creation because everybody is going to be limited in development 

in their area. 

In other comment I would make on how aggressive EPA is being, 

Congress on two or three separate occasions explicitly said no to 

greenhouse gas regulation under the Clean Air Act. One was in 

1990, when the Clean Air Act was last amended. There actually 

was a vote at that time on an amendment about greenhouse gas, 

and that was rejected, and then the U.S. Senate rejected almost 

92 

unanimously the Kyoto Protocol and then there was another vote 

in the House on it. But because of that tailoring rule, you know, 

they expanded that now, and of course, there are lawsuits pending 

on that as well. 

But I for one think that—I know that the Clean Air Act is almost 

sacro-sane but the last time we looked at it in any depth was 1990, 

and I genuinely believe it should be reviewed because a lot of 

things have happened since 1990, and so I would hope that at some 

point down the road that we might get into reviewing the Clean 

Air Act in its entirety. 

And I yield back the balance of my time. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair recognizes the gentleman from Pennsylvania, Mr. Murphy, for 5 minutes. 

Mr. MURPHY. Thank you. Just a couple of quick items here. 

I want to ask about another area, and that is guidance documents. We talked about regulations, but those have some enforcement, but guidance documents as you know are just something 

that various agencies says we think you ought to do this, but it is 

no force on that. 

Can you describe some impact that some of those might have 

upon some job and economic development? Whoever wants to comment on those things. Whoever wants to anything on that. Mr. 

Kovacs? 

Mr. KOVACS. I mean, if you go strictly by the way the courts have 

applied it, that if it has no impact on the rights of a citizen, it is 

truly guidance. The difficulty that we have is if you have 170,000 

regulations, you probably have 400,000 documents or 400,000 guidance documents, and many of the documents can be used as part 

of an inspection so that even though it is only guidance, the question is do you have to comply, and if you don’t comply, the difficulty 

you have is you have to really defend that in court. 

So the guidance puts parameters around it, and theoretically it 

doesn’t have any impact, but in most of the major, in most of the 

regulations or most of the legislation it addresses it. It goes after 

guidance and as well as when John Graham was Administrator of 

OIRA, as part of how he administered, he did put out guidance on 

guidance and how it had to be truly non—it had to be truly not impacting rights, and that seems to be the distinction. If it impacts 

a right, it certainly is a regulation and should go through the process. If it impacts no rights, then it really shouldn’t matter, and you 

should be able to disregard it. 

Unfortunately, in an inspection, for example, you really get put 

in the position of defending yourself. 

Ms. HARNED. Right. 

Mr. MURPHY. I am not sure I am understanding what you are 

saying. Be with you in a second. So that is—so if someone is inspecting a factory, a pharmaceutical company, or something, and 

they have these guidance, and they will ask have you done the following things, and if the owner of that plant says, no, then they 

say, then you have to do them or else they are brought to court. 

They defend—they win the case if it is just guidance, but they still 

have to defend their position. 

Mr. KOVACS. That would be the case. Yes. 

93 

Mr. MURPHY. OK. 

Mr. KOVACS. That—— 

Ms. HARNED. And I have actually seen that when I used to practice law in defending a small business owner at an administrative 

hearing level. We saw, truthfully an inspector overused the guidance against the small business owner, pulling out one of the factors that was in a guidance as something that he shouldn’t have 

done, and he did, and so I have seen that as a practical matter. 

I would also say just more generally, though, small business 

owners really work hard to keep up with the regulations that are 

on the books, so there is a great concern in the small business community that when you have got a guidance material on top that 

that they need to know about and that is, you know, not really 

readily apparent to them. As Mr. Kovacs said, it really is an enforcement area that we see the biggest problems with that and 

small business owners often don’t even know they exist. 

Mr. MURPHY. Thank you. Anyone else want to comment on that 

issue? Yes, Mr.—— 

Mr. LIDDELL. I would make one experience, a risk experience 

that comes to mind. I think, you know, we are as business people 

kind of—we are not looking to fight. We are looking to comply with 

the rules. So, you know, guidance documents to us are the Bible. 

I mean, we follow those, and I can remember one specific thing, 

you know, our board of directors was talking about, you know, 

which course of action should we take, there was a guidance document there, we followed it, you know, and so they almost have at 

least on companies like ours, the impact of a regulation or of law. 

Mr. MURPHY. Thank you. I would like to point out three final 

things, Mr. Chairman. One is I certainly encourage all members of 

this and other committees in Congress to spend some time touring 

offices and factories and farms and in the midst of that tour instead of just photo ops, asking to see what those guidance documents and regulations are and how they go along with it. It is a 

worthwhile thing to do, and it will open the eyes. 

The second thing I would like to point out in relation to the other 

question asked, what about regulations, back in the Herbert Hoover Administration, June, 1930, when Congress passed the SmootHawley Act that imposed 59 percent tariffs on things, at that time 

the American Economic Association, I think it was, sent a thousand 

some petitions to veto the act, and they didn’t, and we know what 

that did, when they did not listen to the independent people. 

And third, I just—so it is unanimous consent, I would like to ask 

to have the—this powerful Subcommittee on the Environment declare this Mr. and Mrs. Shimkus Day. 

Thank you very much. 

Mr. SHIMKUS. If I could just reclaim the 15 seconds remaining 

and ask this question: Should Federal agency guidance documents 

be subject to proposal and comment period like regulations? What 

do you think? 

Mr. KOVACS. Certainly if they have an impact. If the agency is 

anticipating that even as a part of an inspection they have to be 

complied with, they should be subject to regulatory proceedings. 

Mr. SHIMKUS. Mr. Liddell? You don’t care. 

Mr. LIDDELL. Well, we do treat them as—— 

94 

Mr. SHIMKUS. No. I—— 

Mr. LIDDELL. So I would say, yes, they should go through the 

process to the extent the process is a good one. 

Mr. SHIMKUS. Ms. Harned. 

Ms. HARNED. We would support that. 

Mr. SHIMKUS. Mr. Rogers. 

Mr. ROGERS. I would agree. 

Mr. SHIMKUS. Great. Thank you. I really appreciate your time 

this morning, and we will take your comments and put them 

through the mix and see what if we can do with this committee or 

maybe other committees of jurisdiction. Appreciate my colleagues 

for their attendance. Appreciate my mom and dad for being in the 

audience, and with that I will adjourn this hearing. 

[Whereupon, at 10:47 a.m., the subcommittee was adjourned.] 

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