[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
   THE BURDEN THAT NEEDLESS REGULATIONS AND LACK OF COMMON SENSE IN 
          ENFORCEMENT OF REGULATIONS PLACE UPON SMALL BUSINESS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   GOVERNMENT PROGRAMS AND OVERSIGHT

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JULY 27, 1999

                               __________

                           Serial No. 106-24

                               __________

         Printed for the use of the Committee on Small Business






                    U.S. GOVERNMENT PRINTING OFFICE
60-126                      WASHINGTON : 1999





                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

           SUBCOMMITTEE ON GOVERNMENT PROGRAMS AND OVERSIGHT

                 ROSCOE G. BARTLETT, Maryland, Chairman
MARY BONO, California                DANNY K. DAVIS, Illinois
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
RICK HILL, Montana                   CHARLES A. GONZALEZ, Texas
                        Nelson Crowther, Counsel




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 27, 1999....................................     1

                               WITNESSES

Gullo, Jr., Jack A., Mayor, New Windsor, Maryland................     3
Rose, Michael T., National Association of Home Builders..........     6
Boehm, Kenneth F., Chairman, National Legal and Policy Center....    11
Hantman, Alan M., Architect of the Capitol.......................    15

                                APPENDIX

Opening statements:
    Bartlett, Hon. Roscoe G......................................    33
    Davis, Hon. Danny............................................    36
Prepared statements:
    Gullo, Jr., Jack A...........................................    38
    Rose, Michael T..............................................    41
    Boehm, Kenneth F.............................................    50
    Hantman, Alan M..............................................    59


   THE BURDEN THAT NEEDLESS REGULATIONS AND LACK OF COMMON SENSE IN 
         ENFORCEMENT OF REGULATIONS PLACE UPON SMALL BUSINESSES

                              ----------                              


                         TUESDAY, JULY 27, 1999

              House of Representatives,    
        Subcommittee on Government Programs
                                     and Oversight,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Roscoe G. 
Bartlett (chairman of the subcommittee) presiding.
    Chairman Bartlett. Let me call our Subcommittee on 
Government Programs and Oversight to order. Good morning and 
welcome to this hearing of the Subcommittee on Government 
Programs and Oversight of the Committee on Small Business. A 
special welcome to those who have come some distance to 
participate and to attend this hearing.
    An important focus of this hearing is the unnecessary 
burden placed upon small businesses by needless regulations and 
lack of common sense in enforcement of regulations. In previous 
hearings, small businesses from various parts of this nation 
testified to the problems that federal regulations caused them.
    This hearing again provides a national forum for small 
businesses to express their views on whether present federal 
regulatory programs are stimulating or deterring job growth and 
economic development.
    Another and equally important focus of the hearing is the 
fairness with which regulations are enforced by Federal and 
State entities. Have regulatory agencies in the enforcement of 
regulations lost sight of the need to be fair and to use common 
sense? Is there a double standard applied in the enforcement of 
regulations when the violation is caused by government itself?
    In the course of the hearing the Subcommittee will view and 
take testimony concerning the lower step on the East front of 
the Capitol which is in violation of code requirements. If this 
same condition existed with respect to a small business, the 
regulatory agency would have required the small business, at 
great expense, to correct the situation.
    However, since it is the House of Representatives that is 
in violation, no enforcement action has been initiated. 
Selective enforcement such as this graphically illustrates the 
disproportionate regulatory burden that small businesses are 
required to bear.
    Mayor Jay Gullo of New Windsor, Maryland, our first 
witness, who is also the owner of a small business, will tell 
you of his experience with building a wheelchair ramp that was 
found to be a fraction of an inch too short.
    As a former home builder, I was shocked at how grossly out 
of code the House Capitol step is. Unfortunately, my experience 
and those of most small businesses will show the fact that a 
reasonable explanation for the discrepancy wouldn't be 
acceptable if this wasn't the U.S. Capitol building.
    My reason for pointing out the code violation with respect 
to the Capitol step is not to have the step replaced at great 
expense, but for the purpose of bringing reason and fairness to 
the regulatory process.
    I am most appreciative that you have taken time from your 
busy schedules to participate in this hearing. We look forward 
to a lively discussion. Thank you again for being here.
    As testimony to the importance of this hearing, one of the 
associations that we invited to come, in spite of a plethora of 
horror stories, was unable to find a member who was willing to 
come, fearing recriminations from the regulatory agencies.
    This is perhaps the best testimony this morning; that we 
need this hearing and we need changes in the attitude of the 
regulatory agencies.
    [Mr. Bartlett's statement may be found in the appendix.]
    Chairman Bartlett. Let me turn now to our ranking member, 
Mr. Davis, and ask him if he has comments or an opening 
statement this morning.
    Mr. Davis of Illinois. Thank you very much, Mr. Chairman, 
and let me first of all thank you for holding this hearing. I 
think it is essential that we look at government and its 
operation from every vantage point and from every angle with 
the idea of trying to make sure that it is as user-friendly as 
possible and to make sure that it provides for the citizens the 
greatest amount of service and opportunity.
    And so Mr. Chairman, I welcome the opportunity to hear 
testimony from our distinguished panel of witnesses. The debate 
on the program of complying with regulations and dealing with 
regulators is always a major topic of conversation.
    But first, the paperwork burden of the Internal Revenue 
Service was the primary concern because preparing a regular 
payroll is a constant reminder of the numerous rules and 
regulations dealing with tax withholding and reporting.
    But businesses' concerns are not limited solely to 
paperwork issues. Small business owners often fear that they 
will inadvertently fail to comply with some obscure rule and 
that a government inspector will show up, close down the 
business, and drive them into bankruptcy.
    That is why we are here today to take a look at these 
obscure rules and their application. I am sure that many of 
this panel believe with some justification that the government 
is more interested in obtaining penalties than in promoting 
compliance with the law.
    Although I disagree with that, I do believe that we should 
take a valid look at those regulations that lack common sense 
to create proper legislation which contain language to address 
these issues and situations.
    Again, I join you in welcoming the distinguished panel of 
witnesses and look forward to their testimony. And again, I 
thank you, Mr. Chairman, for holding the hearing.
    Chairman Bartlett. Thank you very much. And Mr. Hill is 
also with us. Mr. Hill do you have an opening statement or 
comments? Okay, thank you very much.
    Let me ask now if the witnesses will take their place at 
the table? One of our witnesses is coming but he is handicapped 
and it may be a few minutes before he gets here, but we know 
that he is on his way.
    Our witnesses this morning are Honorable Jay Gullo, Mayor 
of New Windsor. I would especially like to welcome Jay. He is a 
friend, a Mayor in the Congressional District that I have the 
great honor of representing. Welcome to our hearing this 
morning.
    Michael Rose will be joining us shortly from the National 
Association of Homebuilders. Mr. Ken Boehm, Chairman of the 
National Legal and Policy Center. I read your testimony with 
great interest, sir.
    The Legal Services Corporation, which is a major feature of 
your testimony, was instrumental in closing a whole series of 
businesses in our District. There is now no orchard industry in 
Western Maryland thanks to the Legal Services Corporation.
    And I will say sir, that in the past we have tried to get 
orchardists from Western Maryland to come and testify here. 
That has been very difficult because they fear recriminations 
from Legal Services Corporation. This shouldn't be the attitude 
of our citizens and so I look forward to your testimony.
    And Mr. Alan Hantman, the Architect of the Capitol, thank 
you very much for also joining us, sir. And we will turn now to 
Mayor Gullo for his testimony.

         STATEMENT OF JAY GULLO, MAYOR, NEW WINDSOR, MD

    Mr. Gullo. Thank you, Mr. Chairman and members of the 
Committee. It is a pleasure to be here and testify before you. 
What I am going to tell you about are some of the experiences 
that I have had as the Major of a small town in rural Maryland, 
and also as a small business owner. I do not represent that I 
have any special knowledge of regulations or the enforcement of 
regulations, but I do have some interesting experiences where 
those regulations had an impact on me and my community.
    I also want to make it clear that while I will be talking 
primarily about the Americans With Disabilities Act, I do not 
disagree with the overall goal of the Act and the overall 
purposes of the Act. I think it has a noble goal and I think it 
has a worthy place in our society.
    However, what I always find fault with is the enforcement 
of the regulations. We seem to lose something in the 
enforcement. The spirit is carried out at the legislative 
process but when you actually get the Executive to enforce it, 
it doesn't really carry the message to the people.
    The first example I would like to cite is one of the 
successes we have had. A small business and a small town have a 
lot of things in common. They don't have a lot of room and a 
lot of capital to spare, and our small town has about 1,400 
people. We have a budget of about $270,000.
    Our Town Hall where we meet and carry on our meetings is a 
2-story building that was built in about the 1900's. We meet in 
the meeting room which is on the second floor, and obviously at 
the advent of the ADA law that was not able to accommodate the 
requirements.
    And obviously, one of the most important things about 
government and public meetings is having people attend and 
freely being able to attend. So what was suggested to us by the 
inspectors that were coming around to make us comply was that 
we install an elevator.
    Now mind you, the second floor is just one big room. It 
would be an elevator to one room of this building and the cost 
of the elevator was going to be about $100,000, so a little 
less than half of our entire year's budget would be spent on 
this elevator.
    And that is the only solution that we really were given. 
And what we decided was that we couldn't justify spending that 
money yet we did not want to be out of compliance, so we made a 
deal with the Fire Company--it was next door to us--and said, 
can we use your Social Hall?
    We want to have our meetings there once a month and what we 
have to do is set up the chairs and set up the tables and take 
them down. We saved $100,000, we complied with the law, by 
using a little bit of common sense.
    That was my last victory in using common sense in 
government; the two other examples I want to cite where I am 
not so victorious in.
    The second one has to do with the local pizza parlor in our 
community, and if you realize, our community is about 175 years 
old. We have a lot of old buildings, small streets, narrow 
sidewalks, and as all over the country, we want to renovate our 
main streets. We want to revitalize downtown and revitalizing 
downtown means putting businesses into these old buildings.
    So when this pizza parlor was about to open up they had to 
go through the process of upgrading the plumbing and the 
electric and things like that, and the Americans With 
Disabilities Act had to be addressed as well.
    Being on the corner and having no rear entrance to the 
building, only the front entrance, there was the question of, 
how are we going to build a wheelchair ramp into this building 
to make it accessible?
    And after looking at it several different ways it was 
discovered that the length of the ramp and the width of the 
ramp would just not be able to be built because it would block 
not only the view of the traffic at the corner, but it would 
also block pedestrian traffic on the street.
    So a waiver was obtained and they did not have to build the 
wheelchair ramp. However, when they went through their plumbing 
inspection the ADA parts came into that as well and they were 
told that, although they have no wheelchair ramp they would 
have to build their bathrooms, two bathrooms, fully ADA-
compliant so that they would be able to accommodate 
wheelchairs, despite the fact that wheelchairs would not be 
able to be in the building.
    What this meant was, the owner of the pizza parlor lost a 
lot of floor space. There were tables that weren't being able 
to put in because he had to have two fully handicapped-
accessible bathrooms; despite the fact that the building was 
not compliant as you enter.
    The most personal example I have and the one I think is 
particularly relevant today, deals with accessibility into my 
law office. After graduating law school I decided to renovate 
an old carriage house in my home town. It was actually my 
grandfather's barber shop. Again, we had to update it with the 
water, the electric and things like that, and one of the things 
that had to be done was a handicapped-accessible ramp.
    And the office is situated--it's basically six inches above 
the street. There is a 6-inch curb and gutter that had to be 
addressed. And so what we did was, we made on the plans that 
were submitted to the County--in this situation the County is 
the regulatory agency that carries out the ADA law.
    They approved the plans and they were drawn to scale. But 
when we were done and we built this ramp--it was 6-foot ramp, 
supposedly. The curb was 6 inches and the rule for the 
Committee is, you can have one foot of fall for every inch, so 
a 6-inch curb would have to have a 6-foot ramp.
    When we laid the ramp and the inspector came out to see if 
it was in compliance, they measured the ramp and they found the 
ramp was 5 feet 11\3/4\ inches--so one-quarter inch off of the 
6-foot mark--and immediately said that this was not in 
compliance and would have to be torn out and done over.
    Well, we had serious misgivings about the time, about the 
expense of doing this. The contractor was in the middle of this 
whole argument as well, saying that they built it and it was 
substantially into compliance; that the difference was de 
minimis; that the spirit of what was going on--the grade of the 
ramp--was really what the law dictated.
    We had an inspector that did not want to yield. He said 
that if we did not like his decision we could take him to 
court. Well, basically we had to become experts on the ADA law; 
at least as relevant to our ramp. And it took us a month to get 
the necessary information. It took us a month of deciding, and 
eventually we decided it was far cheaper and far quicker to 
tear the ramp up and put a new one in.
    So we spent about a thousand dollars to do that, a month of 
lost time--because at this point in time I did not have a use 
and occupancy permit so I could not practice law out of the 
building--and in the end of it we tore the ramp up, the 
jackhammers came in, and we recreated the ramp to be a quarter-
inch longer.
    And that was basically my introduction into common sense, 
or lack thereof, in government. As I said in the beginning, I 
felt that the purposes were being accomplished but sometimes 
the black and white of the law is not exactly what we need to 
follow. We need people out there that have some discretion and 
have some common sense in enforcing what goes on.
    And we try to apply that in our town government every day 
and we only hope that others we deal with will do the same. 
Thank you.

    [Mr. Gullo's statement may be found in the appendix.]
    Chairman Bartlett. Thank you very much. We will have 
opportunity a little later when we go out to the Capitol steps 
to contrast your experience with the wheelchair ramp, one-
quarter inch in length, with the situation at the Capitol 
steps.
    Mr. Rose, we are happy that you are here. Do you need a few 
moments to organize yourself or are you okay to proceed?
    Mr. Rose. I am fine.
    Chairman Bartlett. You are okay, good. We have already 
introduced you and we are happy that you are here, and proceed 
as you wish.

     STATEMENT OF MICHAEL T. ROSE, NATIONAL ASSOCIATION OF 
                          HOMEBUILDERS

    Mr. rose. Good morning, Mr. Chairman. Thank you very much 
for giving me a couple of seconds to pull myself together.
    My name is Michael T. Rose. I am a home builder and 
developer in the great state of Maryland, and previously I 
served as President of the Maryland Capital Building Industry 
Association, or those of us from Maryland know it used to be 
SMBIA.
    I am a member of the Board of Directors of the National 
Organization on Disabilities and in the past I have served as 
Chairman of the President's Advisory Committee on Housing for 
the Elderly and Handicapped for the U.S. Department of Housing 
and Urban Development, HUD. I thank you for the opportunity to 
come and talk to you today on federal regulations that are 
impacting the home building industry.
    NAHB and its 197,000 member firms and eight million 
employees have long believed that every American should have 
the opportunity to a decent home, as part of the American 
dream. Providing this opportunity is a challenge that home 
builders accept because we care about housing, we care about 
the communities we live in, and we care about our families.
    But we happen to be one of the most heavily regulated 
groups in the nation. Builders know all too well that 
burdensome regulations and excessive enforcement policies serve 
only as barriers to affordable housing.
    Today, on behalf of NAHB, I would like to discuss three 
regulatory issues that have contributed to the increase in 
housing costs, making housing less affordable for thousands of 
American families: Fair Housing Accessibility, Low-Income 
Housing Tax Credit Audits, and Essential Fish Habitat.
    First, I would like to talk about fair housing for a brief 
minute. In 1988, Congress enacted the Fair Housing Amendments 
Act to include ``family status'' and ``disability'' as 
protected classes under the federal Fair Housing Act.
    NAHB supported the amendments believing that affordable 
housing should be accessible to every American. And at the 
time, the cost of compliance was expected to be minimal. In 
fact, Senator Tom Harkin in his floor speech referred to the 
Fair Housing Amendment Act stating, and I quote, ``the bill 
only includes minimal low-cost or no-cost features of adaptive 
design.''
    Senator Ted Kennedy said that it would cost ``twenty-seven 
dollars for studs in the bathroom, accessible light switches, 
and widened doorways,'' which the Senator called ``absolutely 
minimum requirements''.
    In reality, this has not been the case, and let me tell you 
why. When the 1988 amendments were enacted, there was little 
attention devoted to how the new disability requirements would 
be implemented. In 1988, we were expecting to get guidelines 
published immediately.
    When the guidelines weren't published in 1989, the Home 
Builders Association and the disability groups formed a 
coalition and published a book that I have in my hand here, 
that provided guidelines and information, at the same time 
keeping housing affordable.
    It was to determine which is a bigger barrier to affordable 
housing: a $300 a month rent increase to any American, or a 6-
inch curb? This book had a lot of time and a lot of effort put 
into it. It was submitted to HUD. Unfortunately, HUD rejected 
the recommendations from the various disability groups which 
included the American Paralysis Association, and the National 
Organization on Disabilities.
    At that time, Mr. Chairman, I represented the disability 
groups dealing with the home builders, since they felt that I 
would be the most knowledgeable one to understand the codes and 
the different issues.
    The cost now ranges from $1000 to $3000 per unit, and 
sometimes can go as high as $12,000. But the issue here is that 
these guidelines have not been distributed so many builders 
across the country are in the dark.
    As a result, there is no clear guideline on how to build 
units that comply with the law. And HUD does not have the 
authority to approve any building plans that are submitted by 
builders.
    In 1991, HUD issued its fair guidelines. In 1996, it issued 
the manual and, in fact, in the front page of its manual, there 
was a total disclaimer that said that if you follow this you 
are still wrong and it is not guaranteed that it is right, 
because HUD still didn't quite understand what it is. HUD has 
now published another manual two or three years later, and we 
are up to 1999.
    Mr. Chairman, it is necessary to understand that builders 
rely on building codes. They rely on local building and land 
development codes to determine the requirements to follow in 
order to develop land and put up single-family homes or 
apartment buildings.
    When a builder receives a local building permit, he or she 
thinks that the building plan complies with all the necessary 
requirements. Imagine the surprise years after-the-fact, when 
he or she finds out that the building is not in compliance with 
federal law; specifically the Fair Housing Act.
    This is what has happened to builders from Idaho to North 
Carolina. They are being hit with actions from government 
agencies and private fair housing enforcement groups claiming 
that the buildings were not built in compliance with federal 
accessibility requirements, even if these builders have done 
everything they believe they need to do to comply.
    And believe it or not, these private enforcement groups are 
receiving federal funding from HUD to bring such actions 
against the builders. In some cases, these groups, such as the 
one in Idaho, do not even have a disabled person among them. 
They simply get paid for finding buildings that are not in 
compliance with the law.
    In fact, in fiscal year 1999, the Fair Housing Initiatives 
Program, which literally funds organizations to ``crack down on 
housing discrimination,'' received $15 million: $10.5 million 
of which HUD granted for enforcements or bounties, and only 
$4.5 million of which was granted for education and outreach.
    Again, Mr. Chairman, I have to emphasize that builders want 
to provide fair housing for every American, but at what cost? 
As you can see, these costs are tremendous any way you look at 
it.
    Because NAHB believes that Congress did not intend to 
impose excessive regulations in this area, we would like to 
work with Congress to develop legislation that would give 
builders some relief from unreasonable enforcement actions, and 
we are willing to work with HUD to draft guidelines that make 
sense.
    And because the chances of a builder opening up his or her 
mailbox and finding a letter from the Justice Department is far 
greater than finding guidance from HUD on how to comply with 
federal accessibility requirements, we would like to see HUD 
direct funds away from enforcement and more toward education, 
which is woefully inadequate.
    And finally, we believe that HUD should provide incentives 
to State and local governments to adopt the federal 
requirements into their local building codes.
    To resolve these problems, we have been working with 
members of the House and Senate through various means. First, 
Representative Walter Jones introduced H.R. 2437 which provides 
a ``safe harbor'' for developers and owners for certain 
buildings built in compliance with the applicable local 
accessibility requirements.
    Also, we are working in conjunction with Congressional 
Appropriators to re-focus HUD's attention on this issue.
    The next issue is Low-Income Housing Tax Credit Audits. 
Another example of enforcement policies gone awry is the 
Internal Revenue Service's audits of projects that have been 
awarded Low-Income Housing Tax Credits by the states. 
Unfortunately, I can only tell you what is happening in 
generalities because quite honestly, our builders are afraid to 
tell their stories for fear that some of their other projects 
may be audited.
    The Low-Income Housing Tax Credit program is the 
cornerstone of revitalizing our low-income communities. 
Congress created the program in 1986 to provide a limited 
amount of tax credits to each State to help finance the 
building of affordable housing. In order to be awarded the 
housing tax credits, developers have to submit to an 
underwriting process by the state allocating agency at three 
different times.
    These three determinations include an assessment of all the 
sources of financing and the total development costs for the 
project. This assessment is used by the state to calculate the 
minimum amount of credits necessary to fill the funding gap to 
make the project financially feasible. Once the state agency 
issues the final amount of tax credits for a project, the 
developer sells those credits to investors at a discount to 
raise the necessary equity funds to build the project.
    It is similar to the process that you or I go through to 
get a mortgage loan to buy a home. We submit our credit 
history, our sources of income, the asking price for the home, 
etceteras. Once we are approved for the loan, we buy the 
property, and we move into the house, we start making payments. 
The last thing we expect is for our bank to come back to us and 
say, ``well, actually, we miscalculated the amount we can loan 
you. You will now need to come up with additional funds.''
    Yet, that is exactly what the IRS is doing in its audits. 
It is telling developers that the state agency's allocations of 
tax credits is incorrect, and that it is going to retroactively 
recalculate and recapture the tax credits without proving that 
the housing has not been occupied by low-income residents or 
that the costs should not have been incurred. And these are 
funds that go to the Treasury, not back to the housing program 
for the state to re-allocate.
    The IRS does not think that certain portions of the 
developer and professional fees should be considered 
``eligible'' for tax credit equity financing. Yet, this has not 
been the practice in the affordable housing industry, and if 
true, would not produce enough credit equity funds to finance 
most building projects today.
    By excluding portions of developer and professional fees, 
the IRS is creating instability and uncertainty about tax 
credit allocations.
    But if it is to continue to work, the Low-Income Housing 
Tax Credit program must have certainty in its determinations. 
Without reliable allocations, the ability to plan for the 
development of housing with private financing is undermined. 
After all, private capital and capital markets are very 
sensitive to risks and potential risks.
    If the threat of an IRS audit and recapture of tax credits 
is looming over investors' heads, you can bet that they will 
either flee the market or lower the price they pay for the 
credits to cover the increased risks. Either way, it amounts to 
increased costs for the developer and less affordable housing.
    So NAHB would like to work with Congress to develop a 
legislative proposal that does the following three things: (1) 
Increase certainty for determining eligibility basis and credit 
allocations; (2) protect existing credit allocations; and (3) 
provide finality for future credit allocations.
    The next item is Essential Fish Habitat. Finally, Mr. 
Chairman, I would like to discuss the impact of a new federal 
regulation, Essential Fish Habitat, that gives the federal 
government an unprecedented level of control over land use and 
property zoning decisions.
    In 1996, reauthorization of the Magnuson-Stevens Fishery 
Conservation and Management Act--a law designed primarily to 
manage and regulate marine fisheries by the Department of 
Commerce--Congress created an Essential Fish Habitat regulation 
based on the critical habitat model found in the Endangered 
Species Act, or ESA. The intent of this new regulation was to 
``minimize adverse effects on habitat due to fishing.''
    However, the National Marine Fisheries Service is 
interpreting this mandate to extend its reach into non-fishing 
activities such as: land development, home construction, forest 
practices, mining, water supply, and agriculture.
    It is proposing something similar to ESA's critical habitat 
that would cover all fish, including fish that are not 
endangered or threatened. In fact, the National Marine 
Fisheries first attempt to map EFH, it defined EFH so broadly 
that the entire watersheds, more than half of Washington State 
and more than half of Oregon and more than one-third of 
California, are covered.
    So for example, a builder in Washington who wanted to get a 
Section 404 wetlands permit from the Corps of Engineers would 
have to wait for the Corps to consult with the National Marine 
Fisheries to determine if the project will impact Essential 
Fish Habitat before getting the permit.
    If the National Marine Fisheries believes the project would 
harm this, it would recommend to the Corps to approve on the 
condition that the builder modifies the project to include the 
conservation recommendations.
    This includes any development project that requires any 
federal permit, funding, or approval and is within a designated 
habitat of essential fish species.
    And keep in mind, these are not restrictions for species of 
endangered extinction. They are restrictions to protect the 
habitat of all fished species, no matter how abundant.
    As you can see, the permit processing timeline would be 
more lengthy, especially if a builder has to get a biological 
consultant for the larger projects within Essential Fish 
Habitat.
    If all this sounds familiar, it should. This is exactly how 
critical habitat is regulated under ESA. Although the EFH has 
not gone into effect, we can use ESA as our model of what this 
type of regulation could look like down the road.
    Already under ESA, a builder has to jump through any number 
of hoops to get a permit to develop land. In the Seattle 
Metropolitan area, for example, the Fish and Wildlife Service 
listed eight salmon species as endangered, this past spring. 
This has the potential of shutting down this area.
    And I am not talking about home building alone. I am 
talking about specific activities that will affect the economic 
well-being of Washington State, such as timber harvesting, 
commercial fishing, tourism, and any activity that may be 
related to the critical habitat of these salmon.
    Many people have said we should stop eating salmon if they 
are endangered. I think there is something like 350,000 fish 
caught a day and the salmon industry is one of our major 
economic things.
    So, in addition to cumbersome ESA or wetlands 
consultations, a builder would have to endure another, more 
important, duplicative process. What makes matters worse is 
that the National Marine Fisheries may not even have the 
statutory authority to create most of this program. This is 
excessive regulation.
    And what will be the result of longer permitting processes, 
more stringent reviews, greater prohibitions on where we can 
develop, and increased mitigation? Higher housing costs, 
because ultimately, these regulations would require the builder 
to spend more time and money on complying with a requirement 
that has already been fulfilled under ESA.
    Home builders support reasonable measures to protect 
natural habitats, Mr. Chairman, but we would like to work with 
Congress to eliminate the regulation of non-fishing activities 
under the Magnuson-Stevens Act. Let us bring some balance and 
plain old common sense back into the picture.
    Again, thank you for inviting me to testify before you 
today. Home builders just want to build homes and provide 
affordable housing to Americans, but it is definitely becoming 
harder and harder to do so when excessive regulations and the 
threat of enforcement actions prevent us from doing so.
    NAHB is grateful for your interest in bringing to light 
some of these issues, Mr. Chairman, and we value the 
understanding that you, as a former home builder, have of our 
industry. We look forward to working with you to create a more 
balanced approach to the federal regulatory and enforcement 
processes and thank you for the time you have given us today. I 
am happy to answer any questions that you may have.
    [Mr. Rose's statement may be found in the appendix.]
    Chairman Bartlett. Thank you very much for your testimony. 
In a previous life I was a land developer and home builder and 
so I listened to your testimony with great interest.
    As you can hear by the bells something is happening, and 
that something is a vote has been called. So let's take a brief 
recess before we go to our next witness so that we can go to 
vote. We shall return.
    The bells indicate there is only a single vote so within 
about 15 minutes we should be able to return to continue our 
hearing. We will stand in recess momentarily.
    [Recess.]
    Chairman Bartlett. The Subcommittee will reconvene. Thank 
you very much for your patience in our voting delay.
    Mr. Boehm, Chairman, National Legal and Policy Center, 
thank you very much for coming and we look forward to your 
testimony.

STATEMENT OF KENNETH BOEHM, CHAIRMAN, NATIONAL LEGAL AND POLICY 
                             CENTER

    Mr. Boehm. Thank you very much, Mr. Chairman. My name is 
Ken Boehm with the National Legal and Policy Center. We promote 
open, ethical and accountable government, and we act as a 
watchdog on government abuses. And in this role we find lots 
and lots of regulatory abuses that particularly impact small 
businesses.
    Regulatory abuses that I will discuss today are those of 
the Department of Labor and the Legal Services Corporation; two 
regulatory bodies that particularly can negatively impact small 
business owners.
    Each of the regulatory abuses I am going to cite not only 
violate the principles of fairness and common sense, which is 
one of the common denominators of all of what we are hearing 
his morning, but they also are directly contrary to the 
expressed intent of Congress.
    The whole theory behind regulations is: Congress passes a 
law, the regulatory body then puts the law into effect by 
better defining it with regulations. But what they are not 
supposed to do above all else is change the clear meaning of 
the law.
    In the first instance, voluntary carpooling by farm 
workers. This meets the description that Congressman Davis 
mentioned at the top of the hearing about obscure rules that 
can absolutely bankrupt a small business operator. When 
Congress passed the Migrant and Seasonal Worker Protection Act 
they did it to help laborers. They didn't do it to bankrupt 
small farm owners and operators.
    One of the things that they did was say that if you are a 
farm employer, if you are a farm contractor, you have certain 
responsibilities for transporting your labor. But if it is a 
voluntary carpool, the way lots of workers in this country get 
to work--even up here when I worked on Capitol Hill much of our 
staff came in by carpooling--then the reach of the law was 
beyond that.
    In fact, Congress was so intent that voluntary carpools 
were beyond the reach of this law that in their Committee 
report when they passed the law they said specifically:
    ``The Committee intends, however, that voluntary agreements 
between individual workers for the transportation to and from 
their place of employment (``carpooling'') for which they 
receive no fee or other benefit from the employer is not within 
the scope of this section.''
    They were telling the world that if a bunch of workers get 
together and they carpool and they don't get any money from the 
farmer and they don't get any money from the labor contractor, 
the law doesn't reach it.
    Well, by the time the Department of Labor finished their 
regulation interpreting this voluntary carpool exemption, they 
came up with a rule that in many circumstances, almost 
guaranteed that the farmer would be held responsible.
    Here is what they did. They said, any compensation or 
valuable consideration--and ``any'' meaning even de minimis 
amounts--over the amount of the cost of the transportation, 
makes that carpooler automatically a farm laborer and by 
extension, extends the liability to the farmer who is supposed 
to have some control over the farm laborer.
    The net result is, there is a chain reaction of liability 
with often disastrous legal consequences. Suddenly, if a driver 
charges not 30 cents but maybe 50 cents a mile to his fellow 
workers, the driver becomes an unregistered farm labor 
contractor.
    The driver is now transporting workers in violation of 
federal law and it is likely the vehicle doesn't meet the 
strict legal safety and insurance standards, including 
insurance coverage of $100,000 per seat.
    The farmer, who may not even know about this unless he 
questions each of his workers every day as to how they got 
there and what the costs were and the rest of it, suddenly is 
liable, and if there is an accident or something else, that 
farmer can face devastating--not just legal costs but various 
statutory penalties.
    This is an example where Congress says one thing, voluntary 
carpools are outside the reach of the law, and by the time the 
Labor Department gets finished writing their regulation, a tiny 
infraction by a farm worker who may not and probably isn't 
knowledgeable to fine points of the Code of Federal 
Regulations, means that not only is he liable but the farmer is 
liable. A clear case of a regulation doing the exact opposite 
of what Congress intended.
    The Legal Services Corporation all too often targets small 
business. They target them for a variety of reasons, not just 
the fact that there are legitimate complaints of poor people 
against small business, but many times small business can't 
afford the legal fees and will fold without a fight because the 
cost of defending is too high.
    One of the examples, and again it involves in many cases, 
small employers who are farmers, is the alien presence 
requirement. Congress passed a law and has passed it each year 
as part of LSC's appropriation, to say they can only represent 
aliens, non-citizens, if they are present in the United 
States--they have to be here--and are otherwise eligible.
    Legal Services has reinterpreted the phrase, ``the alien is 
present in the United States'' to mean, the alien was present 
in the United States, and has insisted on representing people 
who haven't been in the country for several years. How you can 
misinterpret the meaning of the word ``is'', is difficult to 
explain, although it has sometimes been a problem in other 
context.
    And right now you have, as we sit here today, farmers in 
Kentucky, North Carolina, and other states being sued on behalf 
of people who are residing in Mexico and other places despite 
the clear intent of Congress that the particular client must be 
present, is present in the United States, strikes most people 
as a very common sense requirement.
    It, for example, doesn't mean is present in Mexico or 
Jamaica or some other area. The problem here is that the LSC 
Board and the LSC management decided that they don't want to 
enforce this law that Congress has told them to enforce.
    And so the President of LSC in March of this year wrote a 
letter saying that they were not going to enforce this law and 
this regulation as part of the appropriations law tied to their 
appropriations against any Legal Service's program because they 
may have misinterpreted the meaning of the word ``is''.
    So therefore, so much for Congress passing laws telling a 
program what they can or can't do. The bottom line is, they 
appointed a special commission, there were no representatives 
of small business there, there were not representatives of the 
farm community.
    In fact, the 5-person commission was very, very one-sided, 
held some hearings, and they are about to interpret this 
regulation in a way that is going to hurt people. And it is 
going to hurt poor people here in this country because Congress 
intended the scarce funds to help poor people; even if they are 
not citizens at least they have to be present in the country.
    But because of a misinterpretation of the word ``is'' to 
mean ``was'', you have this entity run by and for lawyers 
turning logic and Congressional mandate on its head.
    Another example: lobbying. Congress said you can't lobby if 
you're in Legal Services. Legal Services all too often lobbied 
against small business by promoting taxes, by promoting more 
regulations, by promoting one-sided and often convoluted 
consumer legislation that hurts small business.
    Congress told them you can only lobby in very limited 
circumstances: either when you are called to testify or when 
you have a client whose very narrow, specific problem can best 
be solved by this lobbying.
    What happened in South Carolina this past year was, a 
business down there saw Legal Services lobbying on some 
legislation that would have hurt that business. They complained 
to the Legal Services Corporation saying, you know, they are 
lobbying on some legislation that hurts us. We didn't know they 
could do that.
    Legal Services investigates, but not much, and they forget 
to even check if they even had a client; one of the clear, 
legal requirements. If you don't have a client what are you 
lobbying for? You are lobbying for what you as a Legal Services 
lawyer might want the law to be, but without a client you don't 
have a case is what Congress has told them, and what their own 
regulation says.
    They dismissed the business' complaint. They said it was 
not well-founded. They dismissed it. The business then, not to 
be thwarted, went to a federal Judge down in South Carolina, in 
a case called RMC v. Legal Services Corporation. They asked the 
federal judge, was this lobbying against the business interests 
illegal or legal?
    The federal Judge looked at it, found that they didn't even 
have a client, the client they claimed they had never talked to 
the lawyer who was doing the lobbying and didn't even have a 
special problem that could be solved by lobbying, so it was 
wrong on every count.
    And the Judge basically threw the book at Legal Services, 
said that what they were doing was in violation of federal law 
and Legal Services Corporation had no rational basis for 
dismissing this valid complaint.
    So once again, the common denominator, as with the 
Department of Labor case, as with the case of the definition of 
the word ``is'', and in this case was, Congress passes a law, 
tells a regulatory body--whether a Department as in Labor or a 
government-funded agency such as in LSC--you can or can't do a 
certain thing, or this is the definition we want you to use.
    And by the time it comes out the other end the regulation 
is either misworded or misinterpreted in a way that it violates 
every kind of common sense, every kind of common usage of 
common words, and the ultimate victim in all these cases are 
small business operators who, as everyone in this room knows, 
very, very frequently don't have a whole lot of money to pay 
for expensive lawsuits.
    And the fact that they have to pay for those lawsuits for a 
regulatory abuse that violates the intent of Congress, is the 
worst part of the scenario that is discussed in these three 
types of violations.
    So Mr. Chairman, I commend you and this Subcommittee for 
having this hearing. Redress of grievances is part of the First 
Amendment. Small businessmen have real grievances when their 
very livelihood is threatened by regulatory abuse as it is in 
these cases.
    Thank you, sir.
    [Mr. Boehm's statement may be found in the appendix.]
    Chairman Bartlett. Thank you very much. And now Mr. 
Hantman, who I would like to note was not the architect when 
the steps were designed, was not the architect when the steps 
were built, so he has inherited the steps. Your testimony, sir.

    STATEMENT OF ALAN HANTMAN, AIA, ARCHITECT OF THE CAPITOL

    Mr. Hantman. Thank you, Mr. Chairman. Thank you for 
inviting my testimony concerning the lowest step of the 
monumental stairs on the East Front, House Wing of the United 
States Capitol.
    May I start by saying that there are significant 
differences in how codes deal with new structures and with work 
on existing structures that are not recognized as historic in 
nature. Historic structures are usually given more leeway than 
other structures and I am here today to present my view as to 
whether the step in question does indeed, constitute a code 
violation, since it is clearly a historic structure.
    I would like to begin with general comments on the 
application of codes to the work of this agency as it 
undertakes projects at the direction of the Congress. By law 
the Congress can of course, impose codes and standards in our 
work.
    No specific building code has been legally applied to our 
projects in light of the practice of the agency to follow 
appropriate national codes in the construction, reconstruction, 
and restoration of the property entrusted to our care. The 
Congress has, through the Congressional Accountability Act, 
required us to comply with OSHA and to the extent that OSHA has 
other related laws we would be legally bound by those as well.
    In new construction projects the agency follows the BOCA 
Building code. I would like to briefly discuss the history of 
the monumental stair replacement and the replication project. 
It was undertaken because of the structural failure of the 
brick foundations and the general wear of the treads after 130 
years since their construction in 1863 as part of the Capitol 
extension designed by the Architect of the Capitol, Thomas U. 
Walter.
    The project design started in 1993 prior to the 
Congressional Accountability Act and was completed in 1996. As 
you noted sir, it began under the supervision of Architect of 
the Capitol, George M. White, and was completed under the 
supervision of William Ensign, Acting Architect after Mr. 
White's retirement in 1995.
    The project was intended to replicate the historic stairs 
as Thomas U. Walter had originally designed them but in a more 
desirable granite material. Consequently, the treads and risers 
were replaced in the exact configuration as the original stairs 
in keeping with historic preservation objectives.
    Most of the lowest riser is seven inches or less except for 
the portion of the Southern and Eastern sections where it 
gradually rises to become ten inches above the sidewalk grade. 
It is important to note that this portion is not with the 
usual, direct path of traffic, either in or out for those 
stairs.
    Although a riser height of greater than seven inches would 
violate the BOCA Code in a newly constructed building, it is 
permitted by BOCA for existing buildings, including historic 
buildings, or work on existing stairs where such work does not 
result in a reduction in safety from the previously existing 
condition.
    There has been no reduction in safety from the previous 
condition in this particular case. In fact, safety has been 
increased because the marble material was changed for a more 
non-slip granite finish material. So the safety has been 
somewhat increased over there.
    Also, BOCA does have a text of permitting the bottom riser 
of steps touching a sloping sidewalk to have a variable riser 
height. Of course, this doesn't in the least mean that the 
riser height over seven inches is to be optimal. It is 
certainly not optimal.
    Although it is not technically a code violation, it needs 
to be changed. It is not an optimal conditional. And my 
predecessors in fact, considered whether it would be feasible 
to avoid this condition by adjustments to the adjacent 
sidewalk.
    This is basically a 6-inch curb now above the street grade 
but an essential element of the final configuration of the 
street, the sidewalk, and the steps was the introduction of a 
curb cut for the access of the disabled. That cut occurred at 
the Southeast corner of the sidewalk.
    Access for the disabled was essential at that location 
because it is a primary photo opportunity for members and their 
constituents. To exclude wheelchair access at that point would 
have violated the American With Disabilities Act, in the 
opinion of the Architects.
    Moreover, the solution of raising the sidewalk to the grade 
to eliminate the riser problem was unacceptable in that it 
would have resulted in a curb height of 10 inches at the exact 
point of desired wheelchair access, which would have reduced 
the safety from the previous condition.
    Another potential solution would have involved raising the 
grade of the East Plaza, essentially the street at that point, 
which would have allowed the sidewalk height to be raised in 
turn.
    The reason the agency rejected the idea at that time was 
because the East Plaza grade was going to be changed as part of 
the future Capitol Visitor's Center Project, which as you know, 
Mr. Chairman, has been delayed. We anticipate that this grade 
change will be accomplished when the Visitor Center is approved 
for construction.
    As you know, Mr. Chairman, I stated earlier that historic 
structures are usually given more leeway than other structures, 
and I had experience before I came here as a former Vice 
President of Rockefeller Center. But since local building code 
officials certainly vary in their interpretations and the rigor 
of their enforcement actions, there are certainly cases where 
interpretations and enforcement actions for any type of 
structure can be unreasonable and unduly burdensome on private 
business and citizens.
    This Committee's call for a degree of common sense is 
certainly appropriate. I would be happy to answer any questions 
you might have, Mr. Chairman.
    [Mr. Hantman's statement may be found in the appendix.]
    Chairman Bartlett. Thank you very much. Let me recognize 
Mr. Hill for his questions and observations.
    Mr. Hill. Thank you, Mr. Chairman. Mr. Hantman, I am not 
sure a 10-inch rise is the right solution or the wrong 
solution. It certainly sounds like the only practical solution 
to the problem that you are dealing with. And I guess I would 
ask for your comment on Mr. Gullo's situation in working with 
an historical structure where he had to tear out a ramp for a 
quarter of an inch tolerance.
    Mr. Hantman. I think Mr. Gullo's comments were really right 
on-target. Clearly, if we have the intent trying to be met, the 
contractor tried to fulfill the code as written--for a quarter 
of an inch, for a half an inch, for an inch, whatever the issue 
is--it certainly in my mind, as a professional, as a reasonable 
person, that it was certainly unreasonable to demand ripping 
out something of that nature.
    Mr. Hill. And a 6-foot long concrete slab, how much will 
that shrink when it cures?
    Mr. Hantman. You are absolutely right. It could have shrunk 
during the curing process.
    Mr. Hill. I guess I am kind of interested in solutions and 
I would like to talk a little bit about that. I guess I would 
probably ask you, Mr. Rose, if you could respond to this.
    First of all, there are soft costs and hard costs in 
construction. Soft costs are the development fees, the design 
fees, the permitting process, the inspection process. Could you 
give me some idea today what portion of the cost of building a 
house is soft costs and what portion are hard costs?
    Mr. Rose. Are we talking about a home or an apartment?
    Mr. Hill. Well, both I guess.
    Mr. Rose. Okay. On a single-family residence today, let us 
start with the profit goals. Most home builders in the United 
States make somewhere between three to five percent profit on 
the sale of a home.
    This can be verified by looking at the publicly traded home 
building companies that try and show their profit as high as 
they possibly can to drive their stock price up--not as much as 
an Internet stock--but they try and drive the price up. And it 
usually runs from three to five percent.
    Land in different parts of the United States typically run 
20 to 22 percent. Unfortunately, those of us in Maryland and 
Washington, D.C. know that that is typically 30 to 35 percent 
of the sales price. A hard construction cost, the bricks and 
sticks and mortar, runs somewhere between 42 to 45 percent in a 
Washington, D.C., New York, L.A. urban environment.
    And then the financing depends on the remaining dollars 
that are left that are a combination of the construction 
financing while the building is being built before it is 
transferred to the buyer, and the dollars spent to assist the 
buyer in obtaining either a VA/FHA or a conventional finance of 
the property.
    So if a home is 42 percent hard and 20 percent land, that 
is 62 percent and 5 percent profit, that's 67 percent. So you 
have 33 percent up for interpretation, and in some areas it is 
even less than that. If the land jumps up in Washington from 
the 20 to the 35 percent, you are down to 18 percent.
    But it is usually extremely well documented, particularly 
if it is in a multi-family situation and it is approved by all 
the local people. You have a superintendent, a project manager, 
customer service, et cetera. And the issue in terms of the low-
income housing tax credit, is that the buildings are approved, 
the tax credits are approved.
    And then ten years later or eight years later say, Mr. 
Hill, if you were an investor in the project, you file to the 
IRS to get your tax cuts. IRS sends back and says no, you can't 
have that. So the investor immediately goes to the syndicator 
and says, Mr. Syndicator, IRS says it is not approved. He says, 
well, it is approved by the state and all the government 
agencies. How can this be reinterpreted?
    Then they go back to the builder who built it in the first 
place and then they spend hundreds of thousands of dollars 
trying to negotiate this settlement with the IRS to prevent the 
apartment building from being closed down, and then the money 
that they get, they take the money and it goes back to the 
Treasury.
    It doesn't go back to the states, it doesn't go back to 
anyone else. And if you had to go back and look at your exact 
records ten years ago----
    Mr. Hill. That would discourage me from making an 
investment, I can tell you that.
    Mr. Rose. And that is the problem, because the investors 
will stop making investments, there will be no more low-income 
housing tax credits, because the investors will be scared to 
death that they are going to get hurt. The middlemen, the 
syndicators, won't want to do it and the builders sure as heck 
don't want to build it.
    Mr. Hill. I was actually kind of headed towards discussing 
those soft costs--design fees, inspection fees, financing fees, 
supervision costs, allocation of overhead--are very time-
sensitive. In other words, if a project takes longer than 
anticipated you lose control of those costs, isn't that right? 
That comes right out of your profit?
    Mr. Rose. Absolutely.
    Mr. Hill. And so when you have to deal with changes in the 
project as the project is moving forward, it can add to those 
costs. In other words, Mr. Gullo is talking about his 
experience with having to delay his construction project a 
month for one situation and two weeks for another. Those add to 
the soft costs dramatically.
    Mr. Rose. Oh, time is the biggest killer of all. If you are 
only making a five percent profit in the first place and if you 
just said it is a $100,000 house and you are making $5,000 
profit and your hard costs are 42 percent, that is $42,000. If 
you have a 10 percent variation that is $4,200 right there. 
That 10 percent variation is a 90-some percent variation of 
profit diminution.
    And that is for--you know, it is a $100,000 house if you 
have a 7\1/8\ percent, 8\1/2\ percent construction loan plus 
points, plus taxes, say it is a 10 percent--that is a 10 
percent interest. That is $10,000 a year divided by five. If 
the project is delayed at all the profit is totally gone and 
you are into a loss situation.
    Mr. Hill. And it seems to me your suggestion of some sort 
of a safe harbor solution with regard to low-income tax 
credits, that also would apply with regard to design. There has 
got to be some way to empower local inspectors to sign off on 
the federal requirements and create some safe harbor that 
people can move forward with their construction and complete 
their project.
    Would you agree with that? Is that one of the solutions?
    Mr. Rose. Yes, I would say that is definitely a solution.
    Mr. Hill. Mr. Boehm, what should Congress do to assure that 
the Legal Services Corporation implements the intent of 
Congress? Going back to this North Carolina case, did the Court 
impose any sanctions on the Legal Services Corporation for 
purposely violating the law?
    Mr. Boehm. No, all they could do was remand it because--
remand it back to Legal Services and say, go and revisit this 
complaint.
    And the reason for that is the Legal Services Corporation 
Act, which was actually passed into law 25 years ago today--it 
is its 25th birthday--under that only one body, the Legal 
Services Corporation, has the regulatory and enforcement 
authority to enforce violations of its rules.
    Congress forces them to do the rules but only LSC can do 
it. So they develop this cavalier attitude if they don't like a 
rule they just will enforce it in a very lax way. And this 
federal Judge, Judge Herlong in South Carolina, told them what 
you did violated all the laws.
    But all he could do is remand it back to them to say, now 
decide it based on the fact that the law says you have to have 
a client, and these folks didn't have a client.
    Mr. Hill. So what should Congress do to make sure that 
Legal--I mean, in essence what you are saying is, is that they 
have oversight over themselves.
    Mr. Boehm. Well, there is some oversight, and there is an 
example that is in my written testimony. I didn't go into it as 
much because it was less small business. When Congress said no 
attorney's fees in 1996, the Legal Services Corporation 
interpreted that to mean they could charge attorney's fees to 
the poor and disabled.
    That was directly contrary to what Congress said and so 
Congressman Hal Rogers who chairs the Appropriations 
Subcommittee that deals with Legal Services, essentially chewed 
them out at the hearing and said, we told you no attorney's 
fees. Now you are charging attorney's fees in cases involving 
the poor and disabled. You are on thin ice. And as a result of 
that tongue lashing they went back and changed it to no 
attorney's fees.
    But the problem is you are dealing with a program with a 
lot of lawyers. They know a loophole when they see one, and you 
can't always get Congress to jump in the way Congressman Rogers 
was able to do in that situation.
    What I would propose since only 5 percent of the legal 
assistance to the poor in this country comes from Legal 
Service's lawyers--the other comes from private lawyers doing 
pro bono, and even that five percent is based on their case 
figures which have now been shown to be as much as two-thirds 
off--that Congress just eliminate the funding but do other 
steps to encourage other pro bono. And that I think would solve 
the problem.
    Mr. Hill. Thank you very much. A very interesting panel. 
Thank you, Mr. Chairman, for holding this hearing and thank you 
for the time.
    Chairman Bartlett. Thank you, very much. Mayor Gullo, thank 
you very much for your testimony. You know, when you tell this 
story to the average American they are just disbelieving. When 
I first heard the story I thought it was a quarter of an inch 
in height, but this is a quarter of an inch in length over a 6-
foot length?
    Mr. Gullo. In length. My understanding--and again, I am not 
an expert in the building area--is that the shorter the length 
would be the more of a percent grade it would be. And so it has 
to make a certain grade to go down that height, and my grade 
had to be a 6-foot ramp. And it was 5 feet 11 inches and three-
quarters, and so therefore there was some percent grade that 
was not being met and that is why we had to redo it.
    Chairman Bartlett. You used the legal term ``de minimis'', 
and this was certainly de minimis if ever there was a de 
minimis. I am not sure--and I was in the building business and 
I have measured a lot of things--I am not sure how precisely 
you can measure the length of a concrete ramp that approaches 
almost asymptomatically both the bottom and the top.
    I am not sure, you know, when you cut off and say, that is 
the bottom of the ramp and that is the top of the ramp. This is 
a poured concrete ramp with the troweling going over the 
existing at the bottom over the existing at the top, and I am 
not sure you can read a rule precisely enough to say that that 
is a quarter of an inch out of spec.
    But this is a great example that illustrates the 
mindlessness of many of these regulators, and the fact that he 
was unbending and that you would rather put in another ramp 
then go through all of the legal costs involved in protesting 
this.
    You know, this just shouldn't happen in America. It just 
shouldn't happen in America.
    Mr. Rose, thank you very much for your testimony. You 
mentioned that if the regulatory agencies approved the plans 
ahead of time, that they make no guarantees that after the 
project is finished that they will in fact, be in compliance. 
Is that what I heard you say?
    Mr. Rose. What I said was that when the law was written in 
1988 Congress told HUD, you must issue guidelines so people 
will know how to build a building. Because we don't tell them 
how to build the buildings you have to interpret. They have no 
way of doing that.
    They did not publish their first set of guidelines until 
'91 because they said it is a very complicated issue and we 
really don't understand the ramifications. And based upon that 
they issued their own book in '96 and the whole inside cover 
was a disclaimer that basically said, if you follow this you 
still haven't met fair housing because we are not exactly sure 
what fair housing is.
    So it opened it up even more so to these groups that are 
suing small businesses and small home builders every day based 
upon projects they built eight years ago. Even if they did it 
according to their own guidelines and publications they still 
could be sued because they themselves, said they did not 
totally understand the issue.
    And it wasn't until 1998, it was just last year, that they 
republished this again and finally agreed to remove the 
disclaimer that said that they were disclaiming everything that 
was in their book.
    Chairman Bartlett. Your story reminded me of a small 
business in Carroll County. I am having trouble remembering the 
name of the proprietor of the business. He is a disabled person 
who had advanced arthritis before he was born, and so he has 
extremely limited movement of his arms and legs.
    But this has not deterred him from being a successful small 
business person. And what he does is to get all of the 
regulatory agencies together for final plan review. And he gets 
them all at one time in the same place and he tells them, this 
is your last opportunity for input. After today, this is the 
way it is going to be built and you are going to have to live 
with the product.
    He came to this because of his experience with a restaurant 
owner who had his plans approved and he was building them, and 
ADA came through and told him, we approved the plans but we are 
sorry. Your bathroom wasn't big enough. You have got to make 
the bathroom bigger. And so he did that; tore out walls which 
were already in and made the bathroom bigger.
    And then the Fire Marshall came through and said, you can't 
do that because when the door of that bathroom is open you 
cannot have proper egress from your building and so you cannot 
do that. So here was the poor restaurant owner caught between 
these two regulatory agencies. And so this young man saw an 
opportunity for a business to avoid this kind of problem in the 
future.
    I noted you said that HUD was supporting--actually helping 
to pay for lawsuits against builders?
    Mr. Rose. HUD has a bounty system that we refer to it as. 
They have $10.5 million a year that they issue to these groups 
to encourage them to sue builders. All you have to do is send a 
letter in to a builder. Like in the case of Idaho, this group 
sent in letters to everybody saying, we feel that your 
buildings don't meet fair housing. Please send us your plans 
and all that kind of stuff.
    And the prior cases that were mentioned is, everyone wants 
to settle the case. It is not worth going to court and spending 
tens of thousands of dollars. So they get money that is settled 
in the case, they get money from HUD to sue in the first case, 
and the investors don't want to build buildings any more, they 
don't want to own the buildings any more.
    It is even so ridiculous that if it is a condominium 
building and each person owns a condominium and they say, we 
don't care that this is a nondisabled person in this unit, we 
want that person to remodel their unit to make it with railings 
or some other--in their interpretation.
    To me, everything should be universal design, which would 
make it handicapped accessibility without railings. But because 
of the way the law is interpreted, everyone thinks railings 
should be there and ugly sinks and all that type of thing.
    As my position on the American Paralysis Association Board, 
unfortunately, many times a year I meet with families of people 
who have just been disabled or put in wheelchairs, and besides 
the trauma of, what are they going to do in the future, they 
are very concerned about their home. What is their home going 
to look like?
    So I usually take them to my house and say look, I have no 
railings, I have, you know, different things that I have done 
that may not meet the letter of the law but it sure allows me 
to get around in my wheelchair.
    And you can make a universal design that is a very 
attractive thing and it is nothing to be fearful of. We have 
enough things just you know, in family relationships today that 
that is something you should not be concerned with.
    Chairman Bartlett. The other day in thinking about our 
history and how we got here as a country, I re-read the 
Declaration of Independence. And when I came to one part of it 
I thought that I was reading some current literature. This was 
one of the reasons that our forefathers felt that they were 
justified in separating themselves from England. And let me 
read this paragraph, this reason.
    ``He''--that was the King then; now it is our government 
and our regulatory agencies--``He has erected a multitude of 
new offices and sent hither, swarms of officers to harass our 
people and eat out their substance.''
    Now, this was grounds for a revolution, in declaring your 
independence. We have kind of gone full circle, haven't we? Let 
me read that again. ``He has erected a multitude of new offices 
and sent hither, swarms of officers''--all of our regulators--
``to harass our people and eat out their substance.'' Which is 
pretty precisely what these regulations and their mindless 
implementation is doing today.
    Yes, Mr. Rose?
    Mr. Rose. I think that is extremely appropriate. The only 
difference is that these swarms of regulators have said that 
there are not even enough of them that they are going to pay 
your neighbor now to turn you in and get fees; which is even 
more frightening a thought with these bounty systems. Which is 
a sad thing to say about our 1999 society.
    Chairman Bartlett. They have a bounty system which 
recompenses neighbors and persons that are not directly 
involved?
    Mr. Rose. Oh, they have zero involvement; no involvement 
whatsoever. I could earn a very good living if I wanted to be 
unscrupulous, without even going to the projects; just getting 
a list of every multi-family project that has been built in 
America and send them a letter. All I have got to do is send 
them letters from posting and I can make millions of dollars. 
No problem whatsoever.
    Chairman Bartlett. Now, was this required by law or was 
this done by the regulators in addition to law?
    Mr. Rose. The law does say that there should be this type 
of thing. It doesn't spell it out exactly the way they are 
interpreting. The law was really intended to take care of more 
of the education process, but in the interpretation of it I 
think it has gone way above and beyond.
    When you spend $10.5 million this year alone to pay for 
lawsuits as opposed to only $4.5 million to educate the 
problem--if you did a survey of the Mayors and the counties and 
the cities and the states that approved the building plans--
which is the main issue.
    A builder has a set of plans and they are going to build an 
apartment project. They take it in. They have the meeting like 
you described the meeting. They have everybody together. They 
have the Zoning people, they have the Park and Planning people, 
they have the Fire Marshall, they have everybody. Does this 
meet all your plan requirements? Everybody says yes, they build 
the building.
    Ten years later they get a thing. It doesn't meet the 
federal fair housing guidelines and everybody says, well we 
were never notified. We never received anything. The inspector 
inspected it the way he thought was right, the permit reviewer 
reviewed it the way he thought it was right, and everybody did 
it the way they thought it was right.
    Now the federal government is now suing--paying money to 
people to sue.
    Chairman Bartlett. You mentioned that compliance with HUD 
regulations has resulted in decisions by IRS that the 
implementation was incorrect and therefore IRS is collecting 
monies?
    Mr. Rose. The Low-Income Housing Tax Credit which was 
passed in 1986, the intent was that the local states would get 
their shares and appropriation of tax credit dollars. They 
would give these tax credit dollars out on a project-by-project 
basis after they went through a 3-step, a multistep review 
process.
    They are approved again, by the states and everybody else. 
Now IRS--and it has been approved by HUD and everybody has 
approved the building. The buildings are built; they have been 
occupied; people have been living in them eight years, ten 
years, seven years.
    They now receive a letter from IRS that says aha, you as an 
investor filed your income tax return. In your income tax 
return you took these low-income housing tax credits that you 
bought that allowed the Fair Housing program to be built. We 
think you got too much credit. We want to review everything 
that everybody else has approved and we, IRS, is going to tell 
you what is right or wrong.
    So they immediately call up the syndicator. The syndicator 
says, how is this possible? This building was built eight years 
ago. The right people are in it, it is approved by all the 
municipalities. In some case they are award-winning projects 
that everyone says is exactly what the community wants. How is 
that possible?
    They say, well we don't know. They call IRS, they call the 
builder, and they end up in a room spending hundreds of 
thousands of dollars trying to settle the lawsuit with IRS and 
giving IRS money plus their own lawyers money. And then that 
money just goes into the Treasury. It doesn't even go back into 
housing to create more low-income housing tax credit in the 
first place. The money just goes in a totally different 
direction.
    Chairman Bartlett. Is the problem that HUD had not cleared 
their requirements with IRS?
    Mr. Rose. I couldn't say that. I think IRS is just changing 
the rules. They were playing football; now they're playing 
basketball. You know, it is an uneven--it is just like the time 
delays that Mr. Hill was talking about. You can't all of a 
sudden change the rules when you are in the middle of the 
process.
    Everybody has approved these programs for years and now all 
of a sudden IRS has a different interpretation of what they 
are. But you know, they are also saying that they are only 
auditing I believe, 400 companies, but they are auditing 400 
development companies that may have 20 projects or 30 or 40 
projects each, so you are getting into thousands of projects.
    And you know, this has been going on for two years and it 
is building and building and building. And I think it is from--
I don't build low-income tax credit projects, but from talking 
to the various people who are in that market they are seriously 
considering just totally getting out of it because their 
investors have had it, the syndicators have had it, and they 
said it is doing what Congress intended it to do but they can't 
fight with IRS. It is impossible.
    Chairman Bartlett. Thank you. Mr. Boehm, you mentioned the 
carpooling situation. Are the environmentalists weighing in on 
this? Clearly, this is an impediment to carpooling. Are the 
environmentalists weighing in on this?
    Mr. Boehm. Well, the regulations came from the Department 
of Labor, so we can only guess who may have had an input or not 
had an input. But at the time they were considering the 
regulation and were taking comment, a lot of the businesses 
looked at the legislative history and they said, wait, Congress 
said this is exempt but the labor folks didn't really hold it 
in high regard what Congress said and came up with that 
regulation anyway. We don't know if there were other folks 
weighing in. At least I don't.
    Chairman Bartlett. I meant weighing in after the decision 
by the Department of Labor. Because this clearly is an 
impediment to carpooling.
    Mr. Boehm. Yes.
    Chairman Bartlett. If you carpool you put yourself at risk, 
depending upon how the IRS wants to look at the costs involved 
there. So what that means is that people not to be put at risk 
will simply not carpool, so this means more cars on the road 
and this means more pollution.
    Mr. Boehm. You are exactly right.
    Chairman Bartlett. I would think that the environmentalists 
should be weighing in on this. You haven't heard them weigh in 
on it?
    Mr. Boehm. I have not. I have not. But you are absolutely 
right; that is the net effect.
    Chairman Bartlett. There is an old saying that birds of a 
feather flock together and it may be that the environmentalists 
are loathe to do battle in this situation.
    Mr. Boehm. I couldn't say, but it puts the farmer in a 
very, very awkward position because he can't go to each one of 
his workers each day and say, who did you carpool with today? 
Did he charge you the right number of cents per mile? how many 
miles did you go?
    And even if he did all that, which would be highly 
impractical, if it is over it doesn't matter with respect to 
their intent because they could still find that the individual 
worker was a labor contractor and therefore the farmer was 
jointly liable because that is how they interpret those 
relationships, and then the farmer is still behind the 8-ball 
legally.
    It is a very misinterpreted regulation with a lot of very 
negative effects.
    Chairman Bartlett. You mentioned the Legal Services 
Corporation. I said in introducing you that I was very familiar 
with what they had done. They I think, with malice 
aforethought, put a whole industry--all the orchard industry in 
Western Maryland--out of business. They did this by 
systematically harassing them.
    They would get the migrant workers to sign a form. The 
migrant worker had no idea what the form was. It could have 
been a blank form that they subsequently filled in as a 
complaint that now resulted in a suit. And our biggest orchard 
there was owned by a wealthy German, and just a little bit of 
this harassment he said, I don't need to do this. I quit.
    So you can go out there now and see his acres and acres of 
apple trees, unpruned, untended. And there was--I don't know if 
it has rotted down yet--but a few years ago there was a very 
large pile of apple crates right out in the open; the picking 
boxes. He just quit and walked off. And there is not now a 
single job in orchards in Western Maryland.
    Mr. Boehm. And not only are you right, Mr. Chairman, our 
National Legal and Policy Center wrote a book, ``Harvest of 
Injustice'' about two years ago that interviewed many of your 
constituents who had previously worked in apple orchards and 
some of the former owners, and it was devastating.
    And unfortunately, it wasn't limited to Western Maryland. 
The sugar cane industry used to employ 10,000 Jamaican workers. 
Now they use equipment because equipment doesn't file frivolous 
lawsuits against the farmers. So the very people that they were 
most trying to help, the workers who depended on those jobs, 
have been the unintended victims of these waves of lawsuits.
    And the real purpose for the lawsuits has been, as many of 
the Legal Services lawyers said is, they didn't like the H2A 
program where people were brought into the country to help with 
the harvest because it ran contrary to the United Farm Workers 
Union because you couldn't organize folks who were already 
getting four or five times what they would make in their home 
country. They didn't want to join a union.
    And so for political reasons they have run these jobs out 
of the country and destroyed some industries and small business 
owners in the process. And hurt the people that ostensibly were 
supposed to be helping.
    Chairman Bartlett. You made an observation which I don't 
think everybody understands and that is, that these migrant 
workers come here because they can work a part of the season 
here and make far more money than they would have made working 
all year back home.
    Mr. Boehm. That is correct. They get paid the prevailing 
wage, they get paid all of their transportation, they get paid 
their housing, and they fight to get into this program at a 
time that, as we all know, there is a real labor shortage in 
this country.
    So it is a win/win situation. It is a win for the American 
consumer who eats the fruits and vegetables picked, and it is a 
win for the foreign workers who get a job that allows them to 
save a lot of money and go back to their home country.
    But it is a lose/lose when the lawsuits start flying 
because then the programs shut down and you have vacant 
orchards as you do in your district.
    Chairman Bartlett. Of course, Americans have benefited from 
increased agricultural productivity. When I was younger the 
general rule of thumb was that you spent 25 percent of your 
income on food. Today that figure is down to about nine or ten 
percent, and food is so cheap today that 2 years ago for the 
first time in our history, more Americans ate meals outside the 
home than in the home, and that disparity is growing.
    I tell people, please don't criticize farmers with your 
mouth full. But what this kind of regulation is going to do is 
to increase the cost of food, and every American is going to 
pay for these excesses in regulation.
    Mr. Hantman, you did a pretty good job of defending the 
indefensible. Let me just look at the regulations here. And 
they have not changed. I remember them as 8\1/4\ inch steps 
because I built houses and that is what it is inside a house. 
If you are outside it is seven inches.
    And the exceptions here for treads and risers, any stairway 
replacing an existing stairway within a space where, because of 
existing construction the pitch or slope cannot be reduced. 
This really wouldn't pertain to what you did there. We will go 
out in a few moments to look at the steps there.
    But there were solutions to your problem that would have 
avoided the violation. You mentioned they could have raised the 
curb, but if you were not going to have an excessive curb 
height then you would have had to have raised the parking area 
there.
    We are only talking about two inches. I suspect that you 
could have sloped that sidewalk, I guess you call it, at the 
bottom of the steps. You might have sloped that the two inches 
to avoid the excess, and I think you would have still been less 
than the one per foot.
    And certainly you could have sloped the 15 or 20 feet of 
the parking area and no one would have known it. Had this been 
a job anywhere other than a government job, that absolutely 
would have been done. Or after the job was completed the 
regulators would have been around, as they did to Mr. Gullo, 
forcing you to tear it out and do it over again.
    You mentioned historic structures and I was reminded of a 
story in New York City with Mother Teresa. And they wanted to 
buy a building for homeless people, many of them dying. And the 
regulators told them that they could not use the building 
unless they put in an elevator.
    And Mother Teresa's people told them, we can't use the 
building if we have to put in an elevator because we can't 
afford it. And the regulators held their ground as they did 
with Mayor Gullo. And so Mother Teresa and her people went 
away. And now there are people dying on the street who might 
have spent their last days and hours in that building.
    Now that was an historic building. It was an old building. 
But the regulators would make no concession for Mother Teresa. 
To the average American this is the ultimate in mindless 
enforcement of the regulations; to prohibit Mother Teresa and 
her people from using a building in New York City to take 
homeless people in off the street so they could die with some 
kind of dignity.
    What do we have to do to correct this situation? Some of 
these agencies flagrantly violate the intent of the law. What 
do we have to do--and by the way, Mr. Boehm, I voted against 
Legal Services Corporation. I denied them all of their money. 
We don't need them.
    If we give some minimal incentives there is a lot of pro 
bono work done now; 95 percent you say, of all of this is pro 
bono. The other five percent can easily be accommodated by a 
tax law that gives some incentive to lawyers to do this kind of 
work. And they will be unlikely to have a political agenda.
    And I think much of the activity of Legal Services 
Corporation is in pursuit of political agendas rather than 
pursuit of the rights of the people that they are supposed to 
be representing. So I did what you would have liked the 
Congress to do. Unfortunately, not enough of us did that.
    Mr. Boehm. Thank you.
    Chairman Bartlett. And we still have Legal Services 
Corporation. But there will be another day and there will be 
another vote and we will see what happens.
    But what can we do to reverse this situation? We don't need 
repetitions of the kinds of horror stories that you tell. And 
by the way, one association couldn't provide a witness today 
because they were concerned for recriminations.
    They wouldn't come and testify. We have not been able to 
get an orchardist from Western Maryland to come and testify as 
to their mistreatment by Legal Services Corporation because 
they are afraid of recriminations.
    Mr. Boehm. Yes, in fact, we have had the same problem. I 
remember that instance and we had the same problem when 
Congressman Gekas had oversight hearings on Legal Services. 
Time and again we would contact people who were really 
victimized in a very abusive way by Legal Services lawyers.
    They were afraid to testify; so much so that Congressman 
Gekas, during the reauthorization hearings a couple of years 
back, twice had to remind the Legal Services program lawyers 
there in the room, that it is against federal law to retaliate 
against a witness.
    One of the farmers who got up to testify from North 
Carolina, Stan Eury, predicted that he would be sued as a 
result of his testimony. And just a matter of a few months 
later he was in fact, sued on some fairly trumped-up charges.
    So what you experienced with your farmers not wanting to 
come out publicly and say it, Congressman Gekas experienced as 
well.
    Chairman Bartlett. What can we do? What should we do?
    Mr. Boehm. Well, getting back to the point, we have no 
shortage of lawyers in this country. We have 900,000 to a 
million lawyers; a lesser number in private practice. Up and 
down my block everybody is a lawyer in this Washington area. 
Most of the money, most of the resources to help poor people 
does not come from Legal Services. At best it is 5 percent. The 
other comes from pro bono, it comes from contingency lawyers.
    What we need to do, I think, is de-lawyerize--to coin a 
phrase--lots and lots of the everyday disputes of poor people. 
We do that by raising the jurisdictional amount of Small Claims 
Court, where people who have a problem that involves a couple 
of hundred dollars--it is futile and against common sense to 
have a group of lawyers fighting over relatively small amounts 
of money.
    And I think what you need to do is to take a lot of steps 
to have mediation, arbitration, for these smaller disputes. The 
problem you run into is that the American Bar Association has a 
vested interest in maintaining all sorts of things. They will 
fight tooth and nail against any other type of professional to 
render any kind of legal assistance.
    Never mind that many countries around the world, those 
exact types of problems are handled by non-lawyers. We have the 
largest per capita lawyer population in the world. Other 
countries, Western countries, countries that make good cars and 
good products who seem to be very, very advanced, have figured 
out you don't need a lawyer to handle every small problem.
    We have it in this country and it is largely because there 
is a vested interest by the bar in keeping things in court. 
They are the biggest proponents of legal services because every 
time a legal services lawyer sues a small businessman that 
small businessman has to go out and hire a lawyer. And so it is 
subsidized litigation and as everybody knows, when you 
subsidize something you get a lot more of it.
    And so they are in favor of increased taxpayer 
subsidization of litigation. The solution I think, is just the 
opposite. You go and take a page from these other countries' 
books. You come up with ways to solve small, everyday 
neighborhood problems without getting lawyers involved.
    Chairman Bartlett. That kind of legislation is tough, 
because about half the Members of Congress are lawyers.
    Mr. Boehm. That is true, and the Bar--I am going from here 
to a Member's office who is being visited today as we speak, by 
a delegation of lawyers saying we should be spending lots more 
for Legal Services. So they do have a vested economic interest.
    On the other hand, poor people and middle class people for 
that matter, have a vested interest in being able to solve 
their problems without having to hire lawyers. If you have a 
$15,000 or $20,000 dispute and you have to go to court, you 
really have a $50,000 dispute depending on--if you have to go 
through trials or if it is in Federal Court. And that is just 
against common sense.
    Chairman Bartlett. It is indeed. Do other members of the 
panel have suggestions as to what we might do? Mayor Gullo?
    Mr. Gullo. Well, being an attorney I have to say that the 
government regulators were not afraid of doing something to an 
attorney when he was remodeling his law practice. I mean, they 
saw the sign right there.
    I guess I would urge more accountability in the government. 
And I say that for two reasons. First of all, if the government 
were more accountable for their mistakes--again, in my 
situation, they approved the plans. They required the plans, 
they reviewed the plans, they approved the plans. They should 
be bound by their decision and they should say okay, these 
plans are what we are going to build.
    And I didn't mention in my testimony but there were other 
things that they made me change similar to what was talked 
about: taking out walls and adding doors after the fact.
    If they were more accountable and I had some recourse 
towards them to say that I am going to take you to Court and 
win, then I am going to be able to recover my costs, my 
attorney's fees. But right now you make an economic decision 
that number one, I have to go to Court. It is not a Small 
Claims matter because you are dealing with the equity 
jurisdiction.
    Number two, my construction loan is already having interest 
on the part of the building I have already paid the contractor. 
And number three, my business isn't productive because I am 
outside the business looking in.
    So there is an interesting principle, at least in Maryland 
law, that the government can't use the estoppel principle. 
Meaning that if you came for a building permit and one of the 
clerks gave you the permit but down the road I found out that 
permit shouldn't have been issued, I am not estopped from 
coming after you, stopping you and making you correct the 
action.
    In the private sector we have that principle; that if I did 
something for you and had a contract with you and I found that, 
you know, you hadn't done something right but I okayed it, I am 
estopped from coming after you for that.
    That doesn't apply in Maryland at least, and I think that 
accountability is one of the things that we really have to look 
for because it levels the playing field. We all play by the 
same rules.
    Chairman Bartlett. Thank you very much. And what you said 
about the lack of accountability is also true. You can get 
approval from a government agency to proceed. You proceed 
consistent with that approval and that does not mean that you 
cannot be challenged by that same agency in the future for not 
being in compliance.
    I guess this needs to be written into law, and I appreciate 
that, because clearly we have to do something. Everybody wants 
a safe workplace, everybody wants safe drinking water, 
everybody wants pure air. There is no disagreement as to the 
objective.
    The only disagreement is to how we get there. And there is 
nobody that I know that really has any fundamental disagreement 
with the intent of the original legislation in all of these 
cases. The problem comes with the writing of the rules.
    And sometimes as Mr. Boehm pointed out, the agencies set 
out to circumvent the law. Their intent is to not abide by the 
law. And they use very creative reasoning to get to where they 
are, redefining what ``is'', is. Quite literally in the one 
case, redefining what ``is'' is, ``is'' became ``was'' in that 
case.
    Well, let us move our hearing and we will adjourn our 
hearing at the Capitol steps, and let us just go from here to 
there. We will have a brief discussion there as to the problem 
there and then we will adjourn our meeting there.
    [Recess.]
    Chairman Bartlett. We were just noting that the existing 
violation here--this step is a full two inches higher than 
code. And in addition to that it is clearly more than three-
sixteenths of an inch different in height than other steps.
    The code says two things. One is that the maximum height of 
a riser outside like this is 7 inches. And the second thing the 
code says is that no two adjacent steps can be more than three-
sixteenths of an inch difference in height. And no two steps in 
a run of steps can be more than three-eighths of an inch 
different in height. And this is a clear violation of both the 
seven inch maximum and the three-sixteenths inch difference.
    It could have been avoided very simply by either increasing 
this slope a little bit or raising the curb and increasing this 
a little, or not increasing the slope here at all but simply 
raising the curb 2 inches and then sloping a little bit out 
here you could lose 2 inches out there very quickly. You would 
never notice it. Nobody would have known that you did it.
    The violation here is clearly I think, an oversight. Nobody 
was paying attention. They didn't have to pay attention because 
the government is not subject to these regulations.
    When we came to Congress, when we came to power in '94, one 
of the first things we did in '95--and this was already about 
to be completed by that time, it was kind of cast in concrete 
if you know what I mean--but the first thing we did was to say 
that Congress was going to be held to the same regulations as 
everybody else. Now that clearly isn't true because were this 
anywhere else in our country that wouldn't be there for all 
this time.
    The Architect said that this wasn't a major travel route, 
but every Congressman that walks from Cannon House Office 
Building--I was there for 6 years--uses these stairs that they 
go up. That is how I first noticed it and it was the first time 
that I did it.
    I was a home builder. I notice steps that are out of code. 
And the first time I took that route I said, this is not right. 
And everybody that comes from Cannon House Office Building goes 
this way up the steps.
    And we had the Chief Compliance Officer here and he says 
yes, it is out of code. What we will do is to put a sign there 
saying, watch your step. My response was, would you let GE do 
that? And he was silent. Clearly, they would not let GE do 
that. If GE had this violation they would have torn it out a 
long time ago.
    That is by the way, a hazard. Many of the things that they 
hang up on in the real world rather than here are not hazards. 
That clearly is a hazard. When you are coming down those steps 
an extra two inches at the bottom is a real jolt if you are 
expecting a step the same size as the steps above. And you 
notice that difference.
    The first step being out is not as bad as others being out 
because you get a rhythm in going up the steps and the reason 
they have the three-sixteenths of an inch is if you are out 
much more than that you are going to be tripping on the steps. 
That is not as true for the bottom step.
    But this is a clear violation of the code and I don't think 
there is any way to rationalize it, that this had to be done, 
because you easily could have raised this. So in effect, it was 
torn out to there. You know, you would have had no problem at 
all getting an inch slope there and no problem at all getting 
another inch slope here. No one would have objected to that or 
hardly known it. And then you wouldn't have been out of 
compliance there at the step.
    But we don't want the step torn out. When Newt Gingrich was 
here he wanted the step torn out. He said, we need to make an 
object lesson of this. We are going to be subject to the same 
rules as everybody else or we will change the rules.
    Now, I would hope that we would change the rules before we 
jackhammer this step out. But what we want to do is just to use 
this as an example. So I mean, nobody has fallen here, and 
thousands of people have gone up and down those steps since 
they have been put in and nobody has fallen there.
    That is a risk. It is clearly a minimal risk because nobody 
has fallen there yet. And what we want is common sense 
application of these laws when the regulations are written and 
when the regulations are enforced. And this wouldn't be 
permitted anywhere else in our part of the world and it 
shouldn't be permitted here.
    What we need to do is to change the regulations so that 
some common sense is used. And Mayor Gullo, this just is so 
different from your experience. He had a 6-foot long ramp that 
was one-quarter of an inch out in its length, not in its 
height. One-quarter of an inch out in its length and he was 
forced to jackhammer it out and put in a new one.
    Now, if you had to do that as a struggling, young, small, 
businessman in New Windsor, Maryland, what are we going to ask 
the U.S. Congress to do here? I mean, if we are going to pass 
these laws that result in these regulations that are having the 
effect they do on the rest of the world, how do we justify this 
and what are we going to do about it?
    What I hope we do about it is, is rewrite the laws so that 
the regulators are going to have some accountability, will have 
to be reasonable in the implementation of the regulation. I 
don't want to see jackhammers in here tomorrow. It is my money 
that built these steps.
    They were built wrong but you know, we can live with it 
after they are built. I would have preferred they were built 
without the violation, but now that they are built I sure don't 
want to use my money and your money in jackhammering the steps 
up. But I want this same kind of rationalization to be applied 
to other situations so that there is no more Mayor Gullos and 
jackhammering up a ramp which is one-quarter of an inch out in 
length.
    I am not sure that I can measure that quarter of an inch 
and I was in the building business. Because that ramp is 
approaching the street level and approaching the threshold at 
the door up there. And it is almost an asymptotic thing. Where 
do you cut off the line? Where does it stop, where does it end? 
And it was mentioned at the hearing that if you pour a 6-foot 
ramp it may shrink a quarter of an inch in curing.
    Well, I want to thank you all very much for coming. Do any 
of the witnesses have any comment relative to this and how this 
might be used to produce good things for the average citizen 
out there?
    Mr. Gullo. I guess, since this is clearly a situation like 
my ramp was, you can notice all the people going up and down 
and no one is falling, there is not a sign here. Maybe the 
regulations are the things that are wrong, and if you can say, 
well look at this situation right here.
    It is not presenting a hazard more than anything else is. 
Maybe we need a little bit of leeway. And you empower the 
inspectors to give you that leeway. They gave the leeway 
because it was the Capitol, but maybe we need to apply it other 
places as well.
    Chairman Bartlett. Well, I want to thank you all very much 
for coming. I want to thank the Architect for accommodating us 
and providing an opportunity for us to come here. And we will 
now adjourn our hearing and we will leave the record open for 
several days. There were members of our Committee who wanted to 
be here and couldn't because of the press of other Committees 
and they may want to ask questions.
    So we will leave the record open for several days. And 
written statements will automatically be put into the record. 
If any of the witnesses want to provide additional information 
just give us a written statement and without objection that 
will be automatically included as a part of the record.
    Well, thank you all very much for coming and our hearing 
will now be in adjournment. Thank you.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]



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