[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




 
                    SMALL BUSINESS REGULATORY ISSUES

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

                               ROUNDTABLE

                               before the

       SUBCOMMITTEE ON REGULATORY REFORM AND PAPERWORK REDUCTION

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                     WASHINGTON, DC, JUNE 21, 2001

                               __________

         Printed for the use of the Committee on Small Business



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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MIKE PENCE, Indiana                  STEPHANIE TUBBS JONES, Ohio
MICHAEL FERGUSON, New Jersey         CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director
                                 ------                                

            Subcommittee on Regulatory Reform and Oversight

                     MIKE PENCE, Indiana, Chairman
LARRY COMBEST, Texas                 ROBERT A. BRADY, Pennsylvania
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
SAM GRAVES, Missouri                 CHARLES A. GONZALEZ, Texas
ROSCOE G. BARTLETT, Maryland         DAVID D. PHELPS, Illinois
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
PAT J. TOOMEY, Pennsylvania          ANIBAL ACEVEDO-VILA, Puerto Rico
                Barry Pineles, Professional Staff Member




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 21, 2001....................................     1

                               WITNESSES

Noah, Jeff, and Krese, Jenny, National Association of 
  Manufacturers..................................................     4
Mucklow, Rosemary, Executive Director, National Meat Association.     7
Sweatt, Loren, Associated General Contractors....................    12
Laird, Betsy, Vice President of Government Relations, 
  International Fanchise Association.............................    15
Green, Rob, National Association Restaurant Association..........    19
Seiffert, Grant, Vice President, TIA.............................    22
Eichelberger, John, National Association of Convenience Stores...    24
Page, Matt, AEA..................................................    28
Kelley, Ty, Food Marketing Institute.............................    29
Fitch, John, National Funeral Directors Association..............    32
Little, Bryan, American Farm Bureau..............................    35

                                APPENDIX

Prepared statements:
    Noah, Jeff, and Krese, Jenny.................................    57
    Mucklow, Rosemary............................................    85
    Sweatt, Loren................................................    88
    Laird, Betsy.................................................    97
    Green, Rob...................................................   103
    Seiffert, Grant..............................................   106
    Eichelberger, John...........................................   115
    Page, Matt...................................................   118
    Kelley, Ty...................................................   122
    Fitch, John..................................................   125
    Little, Bryan................................................   130
Additional material:
    SBLA's prepared statement....................................   135


                    SMALL BUSINESS REGULATORY ISSUES

                        THURSDAY, JUNE 21, 2001

              House of Representatives,    
          Subcommittee on Regulatory Reform
                                     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. Mike Pence 
(chairman of the Subcommittee) presiding.
    Mr. Pence. Thank you so much for coming to this regulatory 
summit. I could not be more delighted with the turnout and with 
the commitment that all of you have shown to assisting us in 
the Regulatory Reform and Oversight Subcommittee of the Small 
Business Committee as we develop what we hope to be a very 
aggressive agenda for this Congress and our subcommittee and 
also develop an agenda that, we hope even beyond the hearings 
process, will be an agenda that we can take to the White House 
and ask the friendly occupants there for administrative relief.
    Let me tell you that this summit, while not formally a 
hearing, is going to have a couple of basic ground rules so 
that we can expedite.
    I also want to indicate that my legislative director, Pat 
Wilson, has informed me that we are expecting our first vote 
this morning between about 10:40 and 10:45. It will be a vote 
on the rule, and so we may have to adjourn briefly for those 
that can accommodate that and we will reconvene immediately 
after that vote if there is not a member here that we can 
switch out with.
    But, basically, a couple of ground rules. I am going to ask 
everyone, as we go around the room, just to introduce yourself 
and your organization and then we will begin the process of 
calling on you for a couple of very brief remarks. I know that 
many of you have prepared written statements for the record, 
know that those will not only be formally added to the record, 
but they will be very carefully reviewed by this chairman and 
also by the staff of this committee.
    This is not a pro forma summit. This is a working session 
and we are going to be taking a very hard look and getting out 
the highlighter and the red ink pen and going through as we 
develop our top 100 examples of regulatory excess.
    We are going to be tearing into those statements that you 
prepare, so feel free, in your presentations, to highlight 
specifically one to three regulations that are particularly 
problematic for your membership.
    If you can keep your remarks to between three and five 
minutes, you will score points with the chair, and I will try 
and be courteous but somewhat strict about holding us to no 
more than five minutes of remarks.
    And then I would like you to kind of hold any questions 
that you might have or dialogue opportunities you might have 
until we have each had a chance to pitch in a little bit.
    Although many of you do not know, I am a freshman member of 
Congress. My background, after practicing law for a number of 
years, was that I spent seven years in talk radio and 
television. I pride myself on getting some of the most boring 
people in the world to talk a lot and to talk to each other, 
present company excluded, but I am really looking forward to a 
dialogue this morning, one between another about issues that 
you may agree on.
    So I encourage you to take notes as other people are 
talking. If you hear someone point out a particular regulatory 
issue that also is of interest to your membership, whether it 
is in your statement or not, we would love you to reflect on 
each others' comments as we go, and then in the discussion 
portion of the summit.
    Finally, Barry Pineles, who is our staff director, has 
suggested that, if you wish to ask a question or comment, turn 
your nameplate on its end and wait to be recognized by the 
chair when we get to that portion and we will try and do that 
in and orderly way.
    Should there be votes and no member is present, in the 
interest of time for your initial presentations, Mr. Pineles 
will handle the meeting while I duck down the hall and jump on 
the train to vote.
    Let me, again, thank you all for being here and for helping 
in this prioritization process. Let me say I really believe 
that part of success in any enterprise is to know the end at 
the beginning, know where we want to go, and just so you know, 
my vision is to truly develop a regulatory agenda. We have not 
quite lighted on what the name of it will be. We understand 
that the term ``D-reg for Dummies'' is probably trademarked, 
but we want to come up with a written document of up to 100 
examples of regulations that wage war on small business 
enterprise in the United States and that are redundant, that 
are costly, that are meaningless, that have no justification 
for their existence, and we want to make those a target.
    And the goal would be, by the end of the 107th Congress, 
either through administrative fiat or through legislative 
action, we want to see how many of those we can run a red line 
through before we get to the end of this Congress.
    With that said, I want to begin on this side of the room 
and we will begin with you and just kind of name, rank, and 
serial number. We will get around and we will start with 
opening comments. Pass the mike.
    Ms. Krese. Jenny Krese with the National Association of 
Manufacturers.
    Mr. Noah. Jeff Noah, National Association of Manufacturers.
    Ms. Mucklow. Rosemary Mucklow with the National Meat 
Association from Oakland, California.
    Ms. Seeger. Arline Seeger with the National Lime 
Association.
    Ms. Sweatt. Loren Sweatt with the Associated General 
Contractors.
    Ms. Campagna. Shannon Campagna, National Beer Wholesalers 
Association.
    Mr. Kirkland. Kerry Kirkland with the National Black 
Chamber of Commerce.
    Ms. Blankenbiller. I am Amy Blankenbiller and I am with the 
American Foundry Society.
    Ms. Kerrigan. Karen Kerrigan with the Small Business 
Survival Committee.
    Mr. Nipper. Joe Nipper with the American Public Power 
Association.
    Mr. Eichberger. John Eichberger with the National 
Association of Convenience Stores.
    Mr. Kelley. Ty Kelley, Food Marketing Institute.
    Mr. Fitch. John Fitch, Funeral Directors Association.
    Ms. Leon. Mary Leon, NFIB.
    Mr. Maher. Kevin Maher with the American Hotel and Lodging 
Association.
    Mr. Greenhaus. Douglas Greenhaus with the National 
Automobile Dealers Association.
    Mr. Little. Bryan Little with the American Farm Bureau 
Federation.
    Ms. Dodge. Sarah Dodge with Petroleum Marketers Association 
of America.
    Mr. Mahorney. I am Bill Mahorney with the American Bus 
Association.
    Mr. Page. I am Matt Page with AEA, formerly the American 
Electronics Association.
    Ms. Phillips. I am Debra Phillips with the American 
Chemistry Council, formerly the Chemical Manufacturers 
Association.
    Mr. Dozier. Damon Dozier, National Small Business United.
    Mr. Seiffert. Grant Seiffert, Telecommunications Industries 
Association.
    Mr. Green. Rob Green, National Restaurant Association.
    Mr. Coratolo. Giovanni Coratolo, U.S. Chamber of Commerce.
    Ms. Laird. I am Betsy Laird with the International 
Franchise Association.
    Mr. Cox. John Cox, National Tooling and Machining 
Association.
    Mr. Herzog. John Herzog, Air Conditioning Contractors of 
America.
    Mr. Hannapel. Jeff Hannapel, National Association of Metal 
Finishers.
    Mr. Luzier. Michael Luzier, National Association of Home 
Builders.
    Mr. Pence. Great. We are going to begin.
    I am going to alternate, just to keep it interesting, for 
very brief introductory remarks and, specifically as I 
suggested earlier, try and focus your remarks on those two or 
three regulations that you think are most deleterious to your 
membership and we are going to be hopefully being able to 
dialogue and discuss those.
    Let us begin with Jeff Noah of the National Association of 
Manufacturers.

STATEMENT OF JEFF NOAH AND JENNY KRESE, NATIONAL ASSOCIATION OF 
                         MANUFACTURERS

    Mr. Noah. I think I will score lots of points because I 
will be real brief, and also, Jenny Krese has got a couple 
comments she is going to make, too.
    But I want to thank you, Congressman, for the opportunity 
to provide the Small Business Committee a list of rules and 
regulations that NAM members find very onerous, to say the 
least. And these rules, I will name three of them, then I will 
go over one that is particularly onerous and then Jenny can 
comment on the other one.
    The ones that we have some strong concerns about are HHS 
privacy regulations regarding patient confidentiality, DOL's 
final rule on claims procedures under ERISA, EPA's rule 
ordering reporting threshold for lead under Toxic Release 
Inventory (TRI) program, and of particular concern is the EPA's 
metal products and machinery proposed rule, which would require 
manufacturers to significantly stop or limit the amount of 
processed water being discharged to sewer systems or any water 
body.
    Companies that are manufacturers or rebuild or maintain 
finished metal products, parts, or machines would have to 
curtail their production, decrease the amount of metals used, 
or install unnecessary and costly product control equipment. 
The MPM rule, as it is called, would cover more than 89,000 
facilities. EPA admits that there are potentially 10,000 
unknown industrial sectors.
    The EPA has not made any justifications for the need for 
this new rule. The EPA has made numerous flaws in its 
regulatory analysis, underestimating cost and grossly 
mischaracterizing the impact of manufacturers on U.S. 
waterways.
    We think it is one of the most expensive environmental 
regulations ever proposed, costing upwards of $1.9 million on 
an annualized basis. And finally, the total cost of compliance, 
for us anyway in terms of our calculations, would be 6.5 
percent of sales.
    So I hope I scored some points by being brief. Jenny will 
talk to you now about the OSHA's proposed recordkeeping regs.
    Ms. Krese. I do not know that I need to say much beyond 
that, but as many of you in this room know, I would be remiss 
not to mention recordkeeping. The NAM has sued OSHA over its 
final rule that was put out January 19th, the day before the 
previous administration left office.
    We have got a number of concerns which we will be 
submitting for the record and for your records and have been 
meeting with OSHA on a fairly regular basis to come to some 
sort of agreement and negotiate out some kind of rulemaking 
that would be good for manufacturers and for the business 
community as a whole.
    We have gotten a lot of support from the business community 
in our efforts with OSHA and we would hope that others would 
join in as well.
    [Mr. Noah's and Ms. Krese's statement may be found in 
appendix.]
    Mr. Pence. Jenny, very quickly, what has been the response 
from the agency up to this point?
    Ms. Krese. Fairly positive, but, with that said, they are 
just overwhelmed by the number of regulations, about 20 of 
them, that they are contending with from the previous 
administration, so this is just one in that group, but our 
initial conversations with them have been quite positive.
    Mr. Wilson. Jenny, I know that the new OSHA--I do not know 
if you all saw that, but the new Assistant Secretary of Labor 
for OSHA was just named and does anybody have an opinion about 
recordkeeping, one way or the other, about what their position 
was or----
    Ms. Krese. The new nominated----
    Mr. Wilson. The new OSHA Administrator. Yes, the nominee.
    Ms. Krese. I do not know his position on recordkeeping.
    Mr. Wilson. Okay.
    Mr. Pence. Thank you.
    Michael Luzier of the National Association of Home 
Builders.

   STATEMENT OF MICHAEL LUZIER, NATIONAL ASSOCIATION OF HOME 
                           BUILDERS.

    Mr. Luzier. Thank you, Congressman. It is a pleasure to be 
here. I want to mention three issues very briefly and then I 
will make a few short remarks.
    First issue that is of very much concern to us is the 
designation of critical habitat under the Endangered Species 
Act. The way we read the statute, the statute requires the 
designation of areas that are essential for the conservation of 
species. It specifically says this is not to include the entire 
occupied range of the species, yet we find that the Department 
of Interior, Fish and Wildlife Service, and National Marine 
Fisheries are either unable or unwilling to make that tough 
decision.
    As an example, in California, the red-legged frog has an 
area designated of over five million square acres. A 
complicating problem with that is that we are unable to get the 
Fish and Wildlife Service, once they have done surveys of where 
individual species exist, to disclose that information.
    As a result, we say we have a duty to avoid take, you have 
data that tells us where these organisms are, it would be 
useful to the landowners and regulated community to know what 
you know about where these species are so that we could fulfill 
our obligations under the Endangered Species Act.
    I forget the total amount of acreage in California alone, 
but there are probably 30 million acres of critical habitat, 
many of which overlay each other. It has resulted in a 
regulatory maze that is impenetrable, so that is a critical 
problem.
    A second area that is of great concern to us is the EPA's 
and the Corps of Engineers' continued efforts to regulate 
isolated waters despite the fact that the Supreme Court has 
told them they do not have the authority to do so, and Solid 
Waste Agency v. Corps of Engineers, 531 U.S. 159 (2001), a 
recent Supreme Court opinion. The Supreme Court said that the 
supposed legal justification for regulating isolated waters, 
the migratory bird rule, is invalid. It does not comport with 
the plain meaning of the Clean Water Act and it does not 
comport with its legislative history.
    This is the way that the Corps of Engineers and EPA have 
said that they will draw this Commerce Clause nexus, that 
migratory birds may fly from one area to another, one state to 
another, and that is sufficient to draw regulatory 
jurisdiction. The Supreme Court said no.
    In January what we found was the EPA and the Corps of 
Engineers issued a legal memo that said that though the Supreme 
Court has said we cannot use the migratory bird rule, there may 
well be other ways to get to these areas through other Commerce 
Clause bases.
    We think none of those make sense in light of the clear 
opinion in the Supreme Court. The key point is what we have 
been encouraging agencies to do, is to embrace what the Supreme 
Court has told them rather than look for ways around it. That 
has been a problem.
    The third area, which is a potential problem but actually 
one that we have a potential to work cooperatively on, is 
forthcoming regulations by EPA under the Clean Water Act for 
effluent limitation guidelines. Effluent limitation guidelines 
are being established by EPA for construction activity 
discharges.
    These, depending on how they are written, literally have 
the potential to impose billions of dollars of housing costs 
across the nation, literally billions.
    Our concern is that the preliminary proposal EPA has made 
about developing the scientific basis is simply inadequate. It 
is almost anecdotal and our view is the Clean Water Act demands 
more than that and more so what we have found is that if, in 
fact, you are going to impose billions of dollars of costs on 
the economy and you expect people to embrace that, they have to 
have confidence that this is, in fact, solving a problem.
    We have proposed to EPA a thorough water monitoring and 
sampling program that we believe the federal government needs 
to do in support of this regulation. We believe it is justified 
in light of the tremendous impacts that may be imposed.
    The technical people at EPA say, ``It kind of makes sense 
to us.'' We met with Governor Whitman. She said she would 
consider it, but simply may not have the budget to do what we 
want.
    Two quick things and I will end. One, we have said if we 
can find a way to do this and do real science, which all the 
agencies say they want to do, but somehow cannot afford to do, 
if we can do real science, we will go out and sell this to our 
members. We will tell the members we are part of the problem 
and we will contribute to it.
    My closing comment is we should keep in mind that, 
according to the states in reporting to Congress pursuant to 
the section 305(b) of the Clean Water Act, construction 
activity discharges are responsible for only one-tenth of one 
percent of the water quality impairment in this nation, so in 
light of the agency's own admission that this is a small 
problem, we think that better information ought to be 
generated.
    Thank you, sir.
    Mr. Pence. Thank you, Michael.
    Has the EPA defined navigable water when you talk about 
regulating isolated waters? Is that----
    Mr. Luzier. There is a long-standing definition or 
understanding of navigable waters under the Clean Water Act. 
What the government is now doing is saying since we cannot 
regulate isolated waters, they are doing a couple of things. 
They are saying let us expand the concept of adjacency. The 
Supreme Court said it is legitimate to regulate wetlands 
adjacent to navigable waters. Now, in many situations, we have 
a lot of property owners who are miles from any truly navigable 
water that are being claimed to be adjacent by virtue of 
ditches and drainage conduits and that kind of thing.
    Mr. Pence. Okay. Very helpful. Thank you very much.
    Rosemary Mucklow.

  STATEMENT OF ROSEMARY MUCKLOW, EXECUTIVE DIRECTOR, NATIONAL 
                        MEAT ASSOCIATION

    Ms. Mucklow. Thank you very much. I appreciate enormously 
being here to talk to you today.
    Regulatory uncertainty is devastating to small business. A 
significant consequence of regulatory uncertainly is 
consolidation and the industry that I represent, the meat 
industry, has undergone substantial consolidation at a highly 
accelerated pace in the last ten years. It has been going in 
that direction for 20 or 30 years, but it has really heated up.
    A small business is faced with uncertainty about what rules 
to follow, whether their business can be profitable and whether 
their line of business has become subject to substantial fines, 
criminal penalties, or other actions exercised by government 
agencies, and, in this case, it is the United States Department 
of Agricultures, as huge incentives to leave the business and 
cash in and leave the money to their family in stocks and 
savings accounts rather than in a going small business. It 
creates a great deal of fear in minds and hearts and souls of 
small business.
    We have had some very serious problems in the last several 
years with the development of major new rules that hold small 
to medium size businesses responsible for microorganisms on 
their meat, on the meat that they bought from somebody else, 
and it was USDA passed and inspected meat. But this small firm, 
because they make it into ground beef, are put high on the 
pedestal and held accountable for what somebody else has sold 
them.
    We cannot regulate microorganisms. They do not understand 
and read the books like people do. The government developed 
this regulation without full advice from its scientific 
advisory panel. They went for two years and did not even meet 
with the microbiology panel and yet they implemented new rules 
that were hugely substantial.
    One small business that USDA closed down in Texas went to 
court. It is unprecedented but the firm got an injunction from 
a district court that required USDA to go back in and inspect 
them.
    What did USDA do? They went back in and they hard-timed him 
until eventually, they put him out of business another way. He 
is now closed. That case is before the 5th Circuit because the 
government lost. They did not like losing and they have 
enormous resources.
    We have another small business that is engaged in 
litigation. The government is on the losing end. You have no 
idea. I mean, the government has such deep pockets that it can 
wind on and on and that small business does not have that kind 
of deep pocket to keep a lawsuit going. It has been very, very 
difficult.
    Because regulatory uncertainty is so devastating to small 
business, USDA needs to treat smallfirms as cooperators rather 
than as adversaries or enemies. Regulation should serve the common 
interest of business and government to provide safe food to consumers, 
rather than to be structured as a contest, or even a war, between the 
government and the industry.
    I have given you a lot more detail. In respect to your 
rules, I decided you did not want me to read all of it.
    [Ms. Mucklow's statement may be found in appendix.]
    Mr. Pence. That is great. Thank you, Rosemary.
    And the one piece of legislation that I am involved in very 
heavily is the Equal Access to Justice Act that, in effect, 
would require the government to pay legal fees in cases the 
likes of which you are referring to.
    Would you see that as real positive for your membership, 
that bill?
    Ms. Mucklow. Yes, but to save that company, it is too late, 
because they finally, when the government put them in the 
newspapers every day and really hoisted them on their petard, 
they really could not tolerate it. Their customers could not 
tolerate it. They could not say we are buying that company's 
meat because the government has controlled the media on it.
    It is highly irresponsible and their science is wrong and 
it was very interesting to hear the Home Builders who just want 
science. They want to know what the science is. The government 
has got a piece of convoluted science. They had not even 
presented that to their expert committee while they were 
developing that regulation and enforcing that rule. There is 
something blatantly wrong that they can just simply choose to 
avoid their scientists.
    Mr. Pence. Thank you, Rosemary.
    Ms. Mucklow. Thank you. I appreciate being here.
    Mr. Wilson. We have heard that before, about the government 
regulators ignoring science.
    Mr. Pence. Yes. More than once.
    Good. Let's go. And I am going to ask, in the interest of 
time, maybe let us shoot for a three minute timetable, and I 
will give you tap when you hit three minutes. If you hit five, 
then I will throw the gavel.
    Jeff Hannapel.

   STATEMENT OF JEFF HANNAPEL, NATIONAL ASSOCIATION OF METAL 
                           FINISHERS

    Mr. Hannapel. Thank you, Chairman Pence. I appreciate the 
opportunity to be here this morning. I am here on behalf of the 
Metal Finishers. They are the folks who make your metal 
products last longer, work better and look better. I am going 
to talk about two EPA regulations that are a problem, the first 
is the proposed MP&M regulations, and echo NAM's.
    This proposed regulation is proposing new limits that lower 
existing limits 50 to 90 percent. These limits are not needed, 
particularly for the metal finishers, who are already covered 
by federal standards. There are, in addition, local limits set 
by POTWs and also, metal finishers have a lot of voluntary 
programs that they are working with as part of EPA's Common 
Sense Initiative and the National Metal Finishing Strategic 
Goals Program.
    In addition, these proposed limits just cannot be met with 
the technology that EPA has used to define the limits. It is in 
essence the same technology that they are using now and was the 
technology for setting the existing regulations and EPA expects 
the 50 to 90 percent reduction in metals using the same 
technology.
    This rule is not justified and EPA has grossly 
overestimated the pounds of pollutants that would be removed as 
a result of this rule. For the metal finishing subcategory, 
EPA's estimates would be about 1200 pounds of pollutants 
removed per facility. Based on many of their sampling and 
analysis errors that we have identified in the administrative 
record, a more realistic total would be about 25 pounds per 
facility of pollutants.
    In addition, the economic impact on the industry is 
significant. EPA's estimates are 10 percent of the industry 
would be forced to close as a result of this rule. Again, EPA 
has made significant errors in its economic impact analysis and 
it as many as half of the metal finishing industry could be 
forced to close as a result of this industry.
    Also, EPA has undertaken a somewhat novel--and even they 
admit it, novel approach to environmental benefits in this rule 
in assessing human health, recreational water quality benefits. 
They have estimated those monetized benefits to be $2.4 
billion. Based on our estimates, it is closer to only $200 
million. And a good example of that is they have taken the 
monetized benefits for avoided cancer risks, 98 percent of that 
was attributable to one chemical and they are not even 
proposing a regulatory limit for that chemical.
    And lastly, the POTWs are vehemently opposed to this rule 
because it does nothing and it imposes a significant burden on 
them.
    Mr. Pence. Thank you, Jeff.
    Arline Seeger of the National Lime Association.
    Welcome.

 STATEMENT OF ARLINE SEEGER WITH THE NATIONAL LIME ASSOCIATION

    Ms. Seeger. I am going to make my remarks in the context of 
a systemic problem that we have been facing with EPA and their 
reluctance to convene small business panels for small 
businesses and that they throw up every trick in the book in 
order to avoid convening panels.
    A panel is supposed to be convened when EPA determines that 
there has been a significant impact on a substantial number of 
small businesses and among the many roadblocks that we have 
encountered in our six-year journey with EPA is the so-called 
mini industry.
    From the outset, EPA knows that in the United States there 
are only 28 lime manufacturers and from at least six years ago 
they know that 12 of them are small businesses. So there are 
those 12 businesses that have been the focus of attention.
    While we have convinced the agency that the annual costs of 
the rule are crippling and so no we have finally gotten to the 
point where we have demonstrated beyond a shadow of a doubt 
that there has been a significant impact, EPA is now saying, 
well, there are only 12 businesses, they have coined the term 
the ``mini industry'' issue, which is very disheartening 
because they have known from the start that we only had 12 
small businesses and so if 12 small businesses could be cast 
aside without a thought, they should have told us that from the 
beginning, because it is the significant impact on a 
substantial number of small businesses.
    Our view is that substantial number should be looked at in 
the context of the industry and since we only have 28 companies 
and 11 are small businesses, all have impacts over 5 percent of 
their revenues from the entity that is being regulated, that of 
course EPA should be convening a panel and they are loathe to 
do so.
    Mr. Pence. Is it your judgment that this policy over the 
long term would be very harmful to the survival of small 
businesses in yours and any other industry where that was 
practiced?
    Ms. Seeger. The industries that only have a handful of 
members are those that are usually quite threatened because the 
larger groups tend to have more sophisticated trade 
associations, sothere are a network of, for example, industrial 
trade associations that have dozens or so members, those are the ones 
that find it particularly difficult to carry on a theme of Rosemary's, 
which is that you are up against the government and you may have a 
staff person or two confronting a very gross overstatement of benefits, 
understatements of costs, mischaracterizations of what the rule is 
going to do. And so it is precisely these people that need to have a 
panel convened.
    Thank you.
    Mr. Pence. And it is Arline.
    Ms. Seeger. Arline.
    Mr. Pence. Great. Arline, that is terrific.
    I want to compliment all the people that have made 
presentations so far. It is precisely what we are hoping for, a 
very focused presentation on things that we can begin to 
tackle.
    John Herzog is next.
    John, thank you for coming.

   STATEMENT OF JOHN HERZOG, AIR CONDITIONING CONTRACTORS OF 
                            AMERICA

    Mr. Herzog. Thank you, Representative Pence, for the 
opportunity. This is going to sound like deja vu to Pat and 
several others in the room because we have been fighting these 
battles for three years, but perhaps they are new to you.
    We have tried legislative solutions to some of these issues 
and we have gotten fairly far in some instances, but it has 
failed because either the administration opposed it or what. 
But what you are doing on the Equal Access to Justice Act 
really crosses many of these areas that we are concerned about 
and that is that under the existing statute the process is 
extremely time consuming and is usually more costly than the 
fees they are paying themselves.
    I think that the only way that you can really stop 
frivolous suits by the government or by others such as in 
salting cases is the loser pay rules which many states have 
passed. And getting into some of these issues, on the salting 
issue, we had an instance, we have a chapter in Indianapolis, 
we were finally able to get the National Labor Relations Board 
to pull off the local union. It was Local 20. But they had 
filed in a period of six years 300 salting cases against--half 
of them were against our chapters, other against others. Those 
are just the ones that were filed.
    In many cases, they had figured out how much it cost to 
defend those cases so they went to the contractor and said for 
blank number of dollars we will go away. So basically what they 
were doing was blackmailing them into paying.
    The local union had set up their apprenticeship program so 
that in the final year, in the last six months of the program, 
they had what they called a youth to youth program and what was 
going on was that they would use those youth for salts. Some 
would be overt salts and some would be below the radar screen 
and the overt salts would go in and they would ask for jobs, 
they would be wearing the union hats so that you knew that they 
were union members. The ones who were non-overt would go in 
just asking for jobs.
    Most of them were not qualified because a lot of these were 
residential contractors, so they were trained through their 
union in commercial work.
    Generally, they would go in and they would falsify their 
records and then after a few weeks they would tell the 
contractor they had falsified their records, they were not 
qualified. They were looking to get fired so they could file 
with NLRB. Those that actually stayed quit anywhere from three 
to four months after they joined. They went back to finish 
their apprenticeship, get a job with a union contractor, et 
cetera.
    So that is one issue that is the overriding concern in 
regulations that seems to affect our folks.
    The other one where that affects also is the equal 
opportunity law where we have had--one of our board members had 
a case filed against him which was without merit, he ended up 
paying for it, and, of course, it cost him time and money and 
he won.
    The other ones that we certainly should mention which is 
currently under hearing by the government is blacklisting which 
has been brought up. They are trying to resurrect the Clinton 
era regulation. Tying in with that, too, is the fact we support 
the idea that the government can debar contractors who 
consistently break the law. Unfortunately, that is not the 
case. They continue to get contracts maybe because they are the 
sole source provider. We are concerned about where a salting 
case can be filed against a contractor and then he could be 
disqualified by a contracting officer.
    The other one that ties in with that is federal bundling 
contracts, which is something that there has been hearings on, 
and then the cash versus accrual accounting, which we have had 
legislation on, but it is still not been decided and that was 
an arbitrary decision of the IRS to go after these small 
businesses.
    Thank you.
    Mr. Pence. Thank you, John.
    A show of hands of people in the room that think the loser 
pays legislation would be beneficial to your membership as a 
priority.
    [Show of hands.]
    Mr. Pence. A fair amount. Good.
    Let's jump next to Loren Sweatt with AGC.
    Welcome.

   STATEMENT OF LOREN SWEATT, ASSOCIATED GENERAL CONTRACTORS

    Ms. Sweatt. Let me say we unequivocally oppose the 
blacklisting regulation. There is absolutely no reason for it 
to be in the Federal Acquisition Regulations. And I have a list 
of other things that we, if I could pass that down, that we are 
concerned about. They had hearings on Monday. The 
Administration has proposed to revoke it and we have been told 
by the procurement professionals that at this time the Bush 
administration has not told them directly what they are going 
to do once they take all of the comments that are out there. So 
we would certainly hope that there is some congressional 
nudging that could go on to make sure that this does get 
completely removed from the Federal Acquisition Regulations.
    The second thing that we are concerned about is definitely 
the cash versus accrual accounting. There are IRS regulations 
on the books that allow construction contractors to use the 
cash method of accounting and the IRS has told construction 
contractors that they do not care that those regulations are on 
the books, they are going to use the accrual method. We have a 
detailed description of why that is harmful to construction 
contractors in our formal statement.
    And then I also wanted to address some of the things that 
the Home Builders were talking about. We are currently on the 
effluent limitation guidelines SBREFA panel with the Home 
Builders and the Associated Builders and Contractors. The only 
reason EPA is going forward with this is that they settled a 
lawsuit with the NRDC and I do not think that they woke up one 
morning and decided that they wanted to regulate us in this 
manner, but we would certainly be happy to share our experience 
on the SBREFA panel in the next couple of months.
    It has already been an eye opener and the first meeting was 
last Thursday. We have had some problems with getting the 
information out of EPA. Our regulatory folks are working on 
doing that. But the most interesting part was my counterpart on 
the regulatory side did not get the e-mails that our folks got 
who were the small entity representatives and she is considered 
a helper on this panel. So I do not know if the Home Builders 
have had that problem, I think ABC is sort of in the same boat 
with us, that they have not communicated very well.
    We are hoping that this process has just hit sort of an 
immediate bump in the road, but in a couple of months we would 
definitely like to come in and talk about how this has worked.
    Thank you.
    [Ms. Sweatt's statement may be found in appendix.]
    Mr. Pence. Thank you. Good to have you here, Loren.
    John Cox is next.
    Welcome.

     STATEMENT OF JOHN COX, NATIONAL TOOLING AND MACHINING 
                          ASSOCIATION

    Mr. Cox. Thank you, Mr. Chairman, for having this 
opportunity. Our association represents small manufacturers and 
we assumed, and I have been borne out with that, that the big, 
larger issues would be raised: recordkeeping, a lot of OSHA 
stuff, EPA, that type of thing that can be applied across the 
board to small business, so we purposely e-mailed some of our 
more--it is a core of people that we rely on that are more 
involved than others, and asked them to specifically pick out 
certain issues that just bugged the hell out of small 
manufacturers and they are in the process of doing that.
    They are not scholars in Federal regulations, so we are 
still in the process and for that reason I would request the 
record remain open for about two weeks that we can submit more 
detailed material and more examples.
    With that, one example that has been cited that we were 
able to track down and find out is, in 29 C.F.R. 1910.242. Our 
companies are required to clean parts and metal of various 
equipment with compressed air. There is actually an OSHA reg 
that says you can do that, but you have to use less than 30 psi 
to do that and then you have to have effective chip guarding 
and personal protective equipment. Well, with this type of 
cleaning, it is not effective unless you use 60 psi, so we are 
looking for things of that nature.
    One of our companies called me and he said that he just had 
a $5000 fine from OSHA because the new machine that he put on 
his floor had the wrong color buttons, the control knobs on it.
    So I am going to--I love to say this--yield the balance of 
my time. [Laughter.]
    And I will get you more written material. Thank you.
    Mr. Pence. Thank you, John.
    And let me say that all submitted statements will made a 
part of the formal record, although I intend to some 
significant reading over the July 4th recess as I am traveling 
in my district, so if there is any opportunity to get those to 
us prior to that, then you will know I will be reading it 
somewhere in a rural county near you.
    The competition is very stiff so far for egregiousness. The 
wrong colored buttons fine now is very close to edging out the 
red legged frogs getting five million square acres. So keep 
those coming.
    John, thank you. A very good presentation.
    Shannon----
    Ms. Campagna. Campagna. Like lasagna.
    Mr. Pence. Campagna. Thank you. That helps.
    Good to have you, Shannon.

   STATEMENT OF SHANNON CAMPAGNA, NATIONAL BEER WHOLESALERS 
                          ASSOCIATION

    Ms. Campagna. Thank you, Mr. Chairman. Thanks for inviting 
us here to participate in this forum. We appreciate it.
    By way of introduction, let me tell you just a little bit 
about the beer wholesaling industry. As set forth by State 
regulation in response to the 21st Amendment to the 
Constitution, beer wholesalers are the middle tier of a three-
tier system within the beer industry. We distribute beer from 
the brewers to the retail locations. Those beer trucks you see 
navigating safely down your hometown streets delivering 
America's beverage to your local grocery store, that is your 
beer wholesaler.
    The average wholesaler has annual sales of around $12 
million, employs 36 people, maintains and operates a fleet of 
12 delivery vehicles and owns a temperature controlled 
warehouse. Most are family owned and operated.
    Regulation is a fact of life for beer wholesalers. We are 
regulated every day by BATF, the FCC, the DOT, NHTSA, EPA, 
OSHA, the IRS and many other agencies. I would like to address 
a couple of ways the subcommittee might be of assistance to the 
industry in regard to our regulatory concerns.
    Commercial driver's license reform is tantamount to 
ergonomics within our industry. Beer is delivered by your local 
wholesaler by truck to bars, restaurants, supermarkets and 
convenience stores. Our drivers generally double as our 
salespeople. Sales, delivery and customer satisfaction is their 
primary responsibility. Driving is secondary. They are in and 
out of their trucks all day, servicing their accounts. In fact, 
they spend the majority of their time with their engines turned 
off and only drive about 25 percent of their work day. Further, 
they only drive within a 100-mile radius of their warehouse, if 
that, and spend the night at home each night with their 
families. They are not long haul interstate truck drivers.
    Currently, however, our drivers are required to have the 
same commercial driver's licenses (CDL) as long haul interstate 
drivers. While MBWA fully supports rigorous testing standards 
for our drivers, it is unduly regulatory and unnecessary to 
require a driver engaged in intrastate commerce where the 
operation of a truck is but a small part of the employee's job 
to the same standards as someone driving an 18-wheeler from 
Maine to California.
    Beer wholesalers have inadvertently found themselves in the 
business of training CDL drivers for the larger trucking 
companies. While not true in every market, our members find 
themselves providing costly training and licensing fees for CDL 
drivers who are then cherry picked from our operations to drive 
for the interstate trucking companies. The cost and burden of 
training drivers is one our members are willing to bear, but 
they are growing weary of training drivers for other companies.
    To this end, Congressman Howard Coble will soon introduce 
the CDL Devolution Act of 2001. This bill would return power to 
the states by allowing states to license intrastate drivers of 
commercial vehicles based on testing standards determined by 
the State. The emphasis is onallowing the states to regulate 
intrastate trucking, not mandating that the power return to the state. 
I submit to the subcommittee that this is exactly the type of 
regulatory relief that helps small businesses: let states decide how 
best to regulate what happens within that state if they so choose.
    Additionally, I will just hit on this one point very 
quickly. I understand ergonomics is not the focus of this 
forum, but I appreciate the subcommittee's role in stopping 
implementation of the ergonomics standards issue during the 
last administration and I would be remiss in my duties if I did 
not also add that recent changes in leadership in the Senate 
and Secretary Chao's announcement of forums to be held in three 
locations around the country are sure signs that this issue is 
not going away.
    I implore the Subcommittee not to let the fox into the 
henhouse by permitting new and equally onerous ergonomics 
regulations to be promulgated. Congress cannot rest on its 
laurels and must be proactive in the debate and formulation of 
fair and legitimate ergonomic standards that protect workers 
while not unduly punishing business.
    That is the end of my comments. I appreciate the 
opportunity to be here. Thank you.
    Mr. Pence. Shannon, thank you very much. I want to 
recognize Congressman Phelps for joining us.
    Thank you for being with us at this summit.
    And with that, I believe Betsy Laird is next on the docket.
    Ms. Laird. I am up. Yes. Thank you.
    Mr. Pence. For three minutes. Thank you.

 STATEMENT OF BETSY LAIRD, INTERNATIONAL FRANCHISE ASSOCIATION

    Ms. Laird. Okay. I will try to talk fast. I am Betsy Laird 
with the International Franchise Association. You recognize 
most of our members, McDonald's, Blockbuster, Holiday Inn, 
Krispie Kreme. Sorry I did not bring any Krispie Kreme donuts 
this morning.
    Many of our members also belong to other organizations 
sitting around the table: Rob Green's organization with the 
Restaurant Association, Kevin Maher, and I would just add that 
we would support some of the views that they are going to 
represent today as well.
    I am here to really talk about a good news story. The FTC 
since 1979 has had in place a very good trade regulation rule 
requiring comprehensive pre-sale disclosure for any company 
that wants to go into franchising, making available to a 
prospective franchisee an enormous amount of information. There 
is probably no other business venture that you have access to 
more information going into it than franchising. There is a 
comprehensive disclosure document required by the FTC. Many 
states also have their own disclosure requirements. The kind of 
information that is required by this regulation are things like 
the litigation history, a list of current and past franchisees 
and how to get a hold of them.
    We believe that the current regulatory scheme that is in 
place at the FTC has worked very well. And to support that, let 
me tell you that franchising has provided 8 million jobs. Every 
year it accounts for a trillion dollars in retail sales and it 
has also created 300,000 different franchise units across the 
country, making available to consumers a quality consistent 
option when they go to either do their dry cleaning or get 
their hair cut or grab a burger.
    We would like to see the subcommittee continue to support 
the work of the FTC. It is in the final stages of streamlining 
this regulation, improving the disclosure rule and our members 
have worked very closely with the FTC and we would hope the 
subcommittee would continue to support its work.
    Secondarily, I wanted to talk about franchising has been 
utilized by 75 different businesses as a way to do business. 
Franchising is not an industry, but it is a way to distribute 
goods and services. We have been contacted by a couple of our 
members with very specific regulatory concerns. One is a recent 
U.S. Postal Service regulation requiring anyone that operates 
their office and has a post office box, say at a Mail Boxes, 
Etc. or some facility like that, to identify it as such instead 
of calling it a suite number. The rationale behind the new reg 
is that it would cut down on mail fraud. Our members believe 
that it is unwarranted and unnecessary, but very expensive to 
small businesses who operate their mail through that fashion.
    Secondarily, I have talked to Barry Pineles about this. 
There is an issue of a midnight proposed rule by the last 
administration, doing away with an exemption in home health 
care for companion services. The current rule exempts employers 
of care giver services in the home from overtime regulations. 
The proposal would now require them to follow the overtime 
regulations. We believe that these regulations--I can submit 
more information about this--were to be implemented, would be 
costly for families and the quality of care would suffer. We 
will submit more information about that.
    Thank you.
    [Ms. Laird's statement may be found in appendix.]
    Mr. Pence. Great. Thank you, Betsy. Appreciate that 
energetic presentation.
    Also, I recognized Mr. Phelps earlier, but I certainly 
would recognize my colleague for any opening statement or any 
comment.
    I know that all of the participants are grateful for your 
participation and attendance.
    I believe, Kerry, you are next for three minutes. Thank 
you.

STATEMENT OF KERRY KIRKLAND, NATIONAL BLACK CHAMBER OF COMMERCE

    Mr. Kirkland. Good morning, Mr. Chairman and Congressman 
Phelps. I just wanted to bring to your attention this morning 
an issue that has been of concern particularly for our members 
over the past several years and that is the certification 
requirements for minority and women as well as small and 
disadvantaged business determinations that is required by the 
federal level, State, and local level.
    Notwithstanding the fact that our members are strongly 
supportive of certification requirements that would minimize 
fronts and frauds, we think that the process has become time 
consuming, burdensome and certainly expensive for our members. 
I mean, we have DOT certifications, LBE certifications, 
Hubzone, 8(a), SDB, along with a host of other certification 
requirements at both the state and local level.
    We think that it is long, long overdue for a national 
uniform certification process that is electronic-based, along 
with arranging some type of reciprocal agreements with state 
and, local jurisdictions, that would accept those 
certifications. This would eliminate the unnecessary paperwork 
on the part of our members.
    Thank you.
    Mr. Pence. Thank you, Kerry. I appreciate your comments.
    Another freshman colleague member of the committee, 
Congressman Langevin is here.
    I do not know if you wanted to make an opening statement or 
any remarks?
    Mr. Langevin. Thank you all for being here today. I look 
forward to your comments.
    Mr. Pence. Thanks for being here, Jim.
    Next on the docket, Giovanni Coratolo.
    The names are not easy in this room. Give me a Smith.
    Giovanni, you are up for up for three minutes. Thank you.

    STATEMENT OF GIOVANNI CORATOLO, U.S. CHAMBER OF COMMERCE

    Mr. Coratolo. Thank you, Mr. Chairman, and thank you, 
Congressmen, for allowing us to be here.
    I, too, would like to highlight the blacklisting regulation 
or the procurement rule that gives sweeping values to the 
procurement officers. There are over $200 billion in government 
sales and contracts that are provided to all businesses. This 
rule that was passed in the waning hours of the last 
administration and would provide blanket discretion for these 
contracting officers to judge what is an undefined 
unsatisfactory record of compliance by a company with any 
federal, state or even foreign law and then disqualify any 
business from competing for a particular government contract, 
based on that judgment.
    Mere allegations of wrongdoing can prevent a business from 
winning a federal contract. If this blacklisting rule goes 
forward, federal contracting officers would be instructed to 
consider anything they deemed credible in evaluating a 
company's record. This would be particularly hard on small 
businesses. No one thinks that GE is going to be precluded from 
obtaining government contracts, but we can see small businesses 
being discriminated against. They are the most easy to sweep 
aside and we have seen that currently in bundling and the 
proclivity of government contracting to go toward larger 
businesses.
    Enough said on blacklisting. Another area that I think is 
good to highlight what I call regulating the regulators. They 
can certainly provide sweeping regulations on our business, 
some of which are not based on sound science. As we know, they 
have tremendous discretion, yet we have to be able to regulate 
the regulators that are controlling our business.
    A lot has been done in the passage of Pub. L. 104-121, 
which was SBREFA, in 1996 which gave us sweeping rights. That 
has to be examined, that has to be expanded. We have seen the 
Congressional Review Act which was part of SBREFA, passed as 
part of SBREFA, have a fantastic effect as far as controlling 
ergo and eliminating that from the horizon. That was very 
important. If SBREFA had not passed through the small business 
efforts, we would have seen the ergonomics regulation in force 
today, which I think we all in this room agree would have had 
devastating effects on small business.
    So regulating the regulators is an important agenda for 
this subcommittee, including IRS as part of SBREFA panel 
process, looking at making these agencies more accountable. The 
Senate has had hearings on SBREFA and the definitions of 
economic impact. We also have to make sure that the Office of 
Advocacy is strengthened, and the Chief Counsel for Advocacy is 
speedily appointed. That agency has been very beneficial to 
regulation and controlling regulation within the 
Administration, you have so many different aspects to 
controlling regulation, that is just one aspect. That is 
certainly not the total answer, but certainly having a Chief 
Counsel or permanent Chief Counsel appointed, having 
legislation that would make consistency and continuity within 
that office I think would be very important.
    I do not want to take any more time, but these different 
aspects to regulation I think are important to focus on and we 
appreciate being able to provide you with this information.
    Mr. Pence. Thank you, Giovanni.
    And--it is behind a glass. Is it Amy?
    Ms. Blankenbiller. Amy.
    Mr. Pence. With the American Foundrymen Society.
    Welcome for three minutes opening comment.

    STATEMENT OF AMY BLANKENBILLER, AMERICAN FOUNDRY SOCIETY

    Ms. Blankenbiller. Mr. Chairman, Congressmen, thank you 
very much for the opportunity to be here.
    I would like to make one correction for the record. The 
American Foundrymen Society has actually come into being 
politically correct and it is now called the American Foundry 
Society.
    Similar to what John Cox was saying, the American Foundry 
Society took the opportunity, rather than looking at some of 
the broader regulations that affect small business on whole, to 
try and identify some regulations that are specifically 
egregious to our membership.
    There are two under the Clean Air Act at EPA that I would 
like to specifically identify. They are both MACT standards, 
maximum achievable control technology standards under the Clean 
Air Act. One is the secondary aluminum MACT standards and the 
second rule is the iron and steel MACT.
    Our industry is the metal casting industry and we take 
molten metal and produce solid products. A wide variety of 
metals, from aluminum, magnesium and zinc to iron and steel.
    Under the secondary aluminum MACT, which would affect the 
smelting industry, they provide us with our raw material in the 
aluminum metal casting sector. EPA did not do their homework 
and they lumped aluminum metal casting facilities into the 
smelting industry sector, which is overregulating the aluminum 
metal casting. We are at the point of having a remedy to this 
situation, but it took us four years, a lawsuit and untold man-
hours and other resources to fight EPA and educate them when 
they chose not to do their homework.
    The second part of this issue with the MACT processes in 
general is the iron and steel MACT and the fact that EPA 
inconsistently applies the discretion allowed under the Clean 
Air Act when they are developing their regulations. And I will 
give you one specific example and that is when you collect 
data, there is always an error band. It is 5 percent give or 
take around that number, similar to polling. And under the 
secondary aluminum MACT, for example, the staff used discretion 
to allow a 5 percent margin of error. Under the iron and steel 
MACT, for example, they are only allowing a 1 percent margin of 
error. That draws in another 250 facilities that are going to 
be affected by the rule and, again, adds cost to the regulatory 
process. So my point with the MACT is the fact that EPA does 
not do their homework and they use their discretion 
inconsistently.
    Another example under the iron and steel MACT for 
inappropriate discretion is that within the metal casting 
industry and in the iron metal casting facilities specifically, 
there are two kinds of air control technologies. There is a wet 
scrubber that is a wet filter and there is a fabric filter, a 
bag house. Forty-nine percent of our industry uses wet 
scrubbers, 51 percent of our industry uses bag houses. Bag 
houses are literally a better control technology but only 
incrementally. EPA is not using their discretion to 
subcategorize bag houses and wet scrubbers, so they are going 
to require 49 percent of our industry to rip out their control 
technology and put in a $1.5 million bag house for questionable 
gains in environmental protection.
    I also wanted to raise one other point that I think is 
interesting within the EPA's analytical processes, that the 
agency has started using the TRI data to do risk analyses and 
they have somevery questionable defaults that they use. For 
example, they automatically assume that if you emit chromium you are 
emitting hexavalent chromium. We have all seen Erin Brockovich, we all 
know how bad hexavalent chromium is, but there is also good chromium 
that is out there and automatically defaulting to bad chromium is going 
to skew the risk analysis and identify an industry sector as being much 
more detrimental to the surrounding neighborhood than it may very well 
be, which takes small businesses like ours, we have 85 percent small 
business membership, a lot of time, resources, money to try and, again, 
go back and help EPA do the homework that they chose not to do.
    Thank you very much for the opportunity to be here.
    Mr. Pence. All written statements will be included, even if 
you want to submit them in a week or two and they will be a 
part of the record of these proceedings.
    Robert Green with the National Restaurant Association.
    Welcome.

   STATEMENT OF ROB GREEN, NATIONAL RESTAURANT ASSOCIATION, 
  ACCOMPANIED BY STEVE GROVER, NATIONAL RESTAURANT ASSOCIATION

    Mr. Green. Thank you, Mr. Chairman, and members of the 
subcommittee. I am also accompanied by Steve Grover, our Vice 
President of Regulatory Affairs, and we are very happy to be 
here on behalf of the National Restaurant Association.
    Three issues on the regulatory side that have concerned our 
industry. Ninety-two percent of restaurants in the United 
States employ 50 or fewer employees, so we have a very large 
small business component. The three issues are the need for 
better federal agency coordination with regard to food safety, 
particularly between the USDA and FDA, the Department of 
Labor's white collar regulations and the Department of Labor's 
teen regulations.
    Dealing with the first issue of the agency coordination, 
the National Restaurant Association has helped to develop 
effective food safety regulations and educational materials 
based upon current science and it is very important that 
improvements in food safety be science-based and coordinated 
between the various federal agencies and industries that will 
implement the changes. We believe that the current FDA system 
of food safety regulation is disjointed, inconsistent and in 
need of a clear food safety focus and the FDA's current system 
makes it almost impossible for small restaurant operators to 
comply with the varying recommendations and regulations.
    One example regards egg safety and storage. New USDA 
proposals require that eggs be maintained at 45 degrees 
Fahrenheit during transport and storage, while FDA recommends 
in its model food code a storage temperature of 41 degrees 
Fahrenheit. It is very difficult for small business restaurant 
to determine which standard is appropriate, which standard is 
effective and it would cost the industry $8 billion--$8 
billion--to change the refrigeration systems for the industry 
and that is just for small refrigeration units. Without making 
light of this, I would like to say I am not ``eggs-
aggerating.'' And that is just one example.
    In addition, the disjointed nature of FDA's agenda makes it 
difficult, if not impossible, for the restaurant industry to 
consistently develop training materials for restaurants that 
are reflective of the varying food regulations established by 
both USDA and FDA. And we also feel it is time to move on from 
the Clinton administration proposals and look forward to the 
Bush administration. There is a lot of talk about existing food 
safety proposals, a lot of it is left over from the Clinton 
administration and we want to see it moved forward to the Bush 
administration.
    Secondly, real briefly, white collar reform. Federal law 
currently requires covered employees be compensated if they 
work over 40 hours a week at time and a half pay. The law also 
provides that certain employees in executive, administrative 
and professional capacities be exempt from these standards 
based on a salary test, and a duties test that is very complex. 
These are known as the white collar regulations. These have not 
been updated since 1954.
    For our industry in particular, the classification of 
restaurant managers and assistant managers is very difficult on 
a unit-by-unit basis and it is a direct result of the 
complexity and the confusion caused by these outdated 
regulations. In the last 46 years, a lot of changes have 
occurred in the industry and we would just like to see DOL move 
forward with aggressively pursuing a new standard.
    Finally, teen labor. We just want to try to encourage 
additional employment of teenagers. Two proposals, one dealing 
with the hours of work requirement for 14 and 15 year olds, 
allow them to work a little bit later in the evening with 
certain restrictions and more, importantly, 14 and 15 year olds 
cooking in certain establishments with restrictions. There is 
an outdated example of snack bars and lunch counters. We would 
like to see it broadened with certain restrictions to allow 
teenagers to cook in certain situation and we will provide a 
written statement.
    Thank you very much.
    [Mr. Green's statement may be found in appendix.]
    Mr. Pence. Thank you, Robert.
    I appreciate everyone's brevity, although I think Kerry 
Kirkland still holds the prize for two sentences forcefully 
presented. I want to acknowledge that and everyone's brevity. 
We are going to get through to everybody and then have time for 
discussion before we break.
    Karen Kerrigan for three minutes from the Small Business 
Survival Committee.

 STATEMENT OF KAREN KERRIGAN, SMALL BUSINESS SURVIVAL COMMITTEE

    Ms. Kerrigan. Thank you. Thank you, Chairman, for having 
this forum and, thank you, Congressman, for inviting us to be 
here today.
    With a membership as diverse as our organization, let me 
just say that this was indeed a challenging endeavor to come up 
with the top two regulatory concerns of small business. 
Depending upon the type of business or industry in which a 
small business is engaged, which state they are in, how labor 
intensive they are, the top regulatory concerns that we catalog 
and receive reflect the range of businesses we represent. And I 
would just like to say many of the specific regulations that 
have already been brought up by the industry specific group 
also reflect what has come in from our membership as well and I 
would like to include all those in a written statement that not 
only represents the views of SBC, but also support the other 
groups as well.
    If you look at it really from a consensus perspective when 
we asked our members about the top regulatory problem, under 
the broadest interpretation of regulatory, we just keep coming 
back to the overly complex IRS tax code. Of course, this top 
concern comes as no surprise to us, will not come as startling 
news to Congress. Small business really has been lamenting the 
complexity of the tax code and the regulatory headaches they 
must endure for many years.
    I guess if I had to drill it down to issues that we 
continue to receive back from our membership on an ongoing 
basis it is the alternative minimum tax, the calculations the 
forms, this is a major problem, as well as the payroll deposit 
rules.
    Secondly, the other--and this is going to be another broad 
concern--is the impact that regulations, federal regulations 
and, indeed, state regulations are having on the cost of health 
care. The medical privacy rule came up and our members feel 
that as Washington continues toregulate the health care 
industry that indeed this is putting the ability of small businesses to 
provide health care for their employees out of reach.
    So those are just two broad issues representing the broad 
membership of SBSC. And, again, as I mentioned, I will submit 
the other specific ones as well that support the group, 
although I will be interested to hear from Bryan Little at the 
Farm Bureau whether the ding dong forms required by USDA are on 
his list.
    Thank you.
    Mr. Pence. I await with anticipation for a definition of 
the ding dong forms.
    Ms. Kerrigan. I was waiting for that as well.
    Mr. Pence. Thank you, Karen.
    I am very provoked by your observation about the Internal 
Revenue Code as a form of government regulation. A show of 
hands, do your membership consider that a part of the 
regulatory burden typically, ordinarily?
    [Show of hands.]
    Mr. Pence. Yes? Okay. Yes. Good. That is a new thought for 
me. I usually segment those. Grant with the Telecommunications 
Industry for three minutes. And let me also introduce 
Congressman Sam Graves, also a member of the subcommittee. Did 
you have an opening statements or any comments you care to 
make?
    Mr. Graves. I have no statement. Thank you.
    Mr. Pence. Well, thank you for being here.
    And to all the members, I know we are extremely grateful 
for your time, as I know you are grateful that all these 
members are here.
    Grant.

  STATEMENT OF GRANT SEIFFERT, TELECOMMUNICATIONS INDUSTRIES 
                          ASSOCIATION

    Mr. Seiffert. Good morning and thank you for having TIA 
here participating in the panel discussion. I would like to 
thank the chairman and the subcommittee for having us.
    T.I.A. represents 1100 companies. Seventy-six percent of 
those are small business companies selling into the carrier 
world. I will mention a few things quickly.
    The Federal Communications Commission (FCC), is a hot topic 
of debate in this town for our industry. It has gone under 
several hearings for FCC reform and reauthorization hearings. 
That has a significant impact on our industry by the 
streamlining process which the path to market of new equipment 
is certified by the FCC engineers. So privatizing the FCC labs 
is critical. It can have an immediate impact on our industry 
and that is slowly going on, but we would like to see that 
speed up if we could have your help on that.
    Export controls for our companies, certain international 
trade is a huge part of our opportunities to grow worldwide. We 
operate in a global economy here and certainly we would support 
the Export Administration Act in lifting restrictions on 
encrypted products and technology.
    And then also we are working with the Pentagon and the 
Department of Defense on spectrum allocation. That is a new 
opportunity for our industry to grow and to harmonize with the 
rest of the world for 3G services and products and that is 
going to be a critical issue. It is not necessarily--we are 
regulated, but we are sort of regulated out of business 
opportunity and future economic benefits for our country.
    So with that, thank you.
    [Mr. Seiffert's statement may be found in appendix.]
    Mr. Pence. Thank you very much, Grant.
    Joe Nipper with the American Public Power.
    Thank you for being here, Joe.

    STATEMENT OF JOE NIPPER WITH THE AMERICAN PUBLIC POWER 
                          ASSOCIATION

    Mr. Nipper. Thank you very much, Mr. Chairman, and members 
of the committee for inviting me here this morning. I represent 
the 2000 publicly owned electric utilities around the country, 
almost all of whom are municipal electric utilities and the 
vast majority of which serve communities of 10,000 people or 
less. I want to mention just two regulations that are affecting 
electricity supply and, of course, energy supply is a focus of 
national attention at the moment.
    One I will mention just briefly is the Federal Energy 
Regulatory Commission's regulations and process for licensing 
and re-licensing hydroelectric projects. The process is 
severely out of whack and is the subject of other pending 
legislation. But there has been little consideration in all of 
that of the impact on very small electric utilities, the 
administrative and financial burden imposed in that process on 
them and their special characteristics.
    But let me focus a little bit more on an EPA regulation, 
the regulations dealing with emissions of nitrogen oxide from 
power plants and their disproportionate adverse impact on small 
utilities. Most of my members purchase electricity at wholesale 
and resell it at retail in their communities. However, many of 
them also have very small generating units in their town, often 
diesel powered generators that they use to meet peak load 
demands in the summer and other times of peak load and for 
reliability purposes as backup supply in case there are 
problems on the system.
    E.P.A. has ignored the special operating characteristics of 
those small backup units which, as I say, operate typically 
only a few days during the year for emergency purpose or to 
meet peak loads and yet they are regulated virtually in the 
same manner as the large base load power plants, particularly 
with regards to NOX emissions, and so we call that 
just to your attention as a regulatory area where EPA has, 
again, not taken into consideration the operating 
characteristics of those small units. They are regulated now on 
what is called the potential to emit, which is, as the name 
implies, the potential level of emissions if they were running 
virtually continuously as large power plants do, but, again, 
since they operate on a very limited basis, we feel that they 
should be afforded some--and because they are owned and 
operated by small entities--should be afforded some additional 
consideration in that regard and to date they have not.
    So we also would like to submit some additional examples 
because as operating utilities we have a number of concerns, 
some of which have been addressed earlier: NAM's comments on 
TRI reporting, for example; OSHA regulations and other 
regulations. We can provide some more information for your 
consideration.
    Mr. Pence. Thank you, Joe.
    Damon Dozier, I cannot see your name plate there, with the 
National Small Business United.
    Good to have you here for three minutes.

   STATEMENT OF DAMON DOZIER, NATIONAL SMALL BUSINESS UNITED

    Mr. Dozier. Thank you, Congressman, and thank you, 
Congressman Graves and Congressman Phelps. My name is Damon 
Dozier and I represent National Small Business United. We have 
about 65,000 members nationwide, which represent a variety of 
small business industry sectors, if you will.
    I sort of feel like the guy who followed the Beatles in 
that a lot of the things here have already been mentioned and, 
you know, some of the thunder has been stolen a bit. But what I 
would like to do is actually echo the comments of Arline 
Seeger, Loren Sweatt and Giovanni Coratolo in terms of 
enforcement of the Small Business Regulatory Enforcement 
Fairness Act.
    Senator Bond has introduced legislation that would actually 
strengthen the act and add additional agencies such as IRS, the 
National Marine Fisheries Service, the Department of Interior 
and some other offices into the scope of that law, but what we 
are particularly concerned about at National Small Business 
United is the rationale used to convene small business 
regulatory enforcement fairness panels.
    For example, EPA uses a cost over sales test and they 
examine an industry and if the regulatory cost is 1 percent 
over a business' sales, then that is sort of their trigger to 
be concerned and if it is 3 percent cost over sales, then they 
will go into a SBREFA panel.
    And, as any teenager could probably tell you, 3 percent 
over sales could be a greater ratio in terms of profits. That 
could actually be 25 percent, 30 percent, even 50 percent of 
your profits when you talk about 3 percent cost over sales. So 
actually the test that EPA and other agencies use to go into 
the SBREFA panel process is flawed and we would encourage this 
body to take a look at actually the process by which EPA 
actually decides which rules will go into panel and which rules 
are not going into panel. And the same thing with OSHA.
    Thank you for your time.
    Mr. Pence. Thank you, Damon, very much.
    Now, John, help me out.
    Mr. Eichberger. Eichberger.
    Mr. Pence. Eichberger. Thank you, John. You are recognized 
for three minutes. We appreciate you being here.

 STATEMENT OF JOHN EICHBERGER WITH THE NATIONAL ASSOCIATION OF 
                       CONVENIENCE STORES

    Mr. Eichberger. Thank you. I am here on behalf of the 
National Association of Convenience Stores and I want to start 
out by echoing the comments made on the recordkeeping rule and 
with NRA's on the white collar working situation.
    The convenience store industry sells approximately 70 
percent of the motor fuels in America. We have two main issues 
we want to bring up with you today. Number one is in January, 
EPA issued a rule requiring a 97 percent reduction in the 
sulphur content of on-road diesel fuel. EPA implement this by a 
phase-in. Starting in 2006, 80 percent of the diesel produced 
for refiners must meet this 15 parts per million sulphur 
content requirement, 100 percent compliance is not until 2010.
    Our concern as marketers is that essentially puts another 
brand of fuel on the market. In order for our members to sell 
both types of diesel fuel, they are going to have to install a 
second temporary underground storage tanks. These tanks can 
cost up to $50,000 to $60,000 to install and within four years 
that tank will become obsolete because the second fuel will be 
off the market. Therefore, you have a problem whether they go 
to put in that type of investment or do they even have the 
physical space to put in a second tank to service both fuels? A 
lot of our members do not. There are other options to choose: 
to service one fuel and that means they have to choose between 
two classes of customers. Either they service those customers 
driving vehicles built after 2007 which have new emission 
technology which require the new fuel or those who drive other 
vehicles. The new fuel is estimated to cost approximately 
anywhere between six and estimates up to 50 cents per gallon 
more than the older fuel. Therefore, there is a cost advantage 
to selling the cheaper fuel, but then you eliminate one class 
of customers. So they are in a situation where either you put 
in the $50,000 temporary investment or you have to choose 
between customers. That is putting them in a really tough 
situation.
    We support a 100 percent implementation. There is 
legislation introduced in the house by Congressmen Bryant and 
Gordon to require 100 percent implementation in 2006. It is 
H.R. 1891 and we fully support that. We have also filed suit 
against the EPA to try and get the court to remand the rule 
back to the agency to revise their rule to take into 
consideration these marketing concerns.
    The other issue we want to bring to your attention is the 
Department of Transportation's hours of operation for 
commercial motor vehicle drivers. Right now, the way this is 
set up, they want to address driver fatigue and we support 
that. But they are trying to put in mandatory on duty/off duty 
rest periods as applied to all drivers. And similar to the beer 
wholesalers, our drivers oftentimes only service one small 
market, they leave from one location, they return to one 
location. They are susceptible traffic congestion, they are 
susceptible to delivery delays. The way this rule is written, 
it applies to them the same way it applies to a driver who 
crosses the country. We would like to see the rule reassessed 
and take into consideration the different characteristics of 
the different classes of drivers and how their operations apply 
to their on duty/off duty time periods.
    Those are the two number one things we wanted to bring to 
your attention today and we have submitted comments for the 
record and if there is anything we can do for you, please let 
us know.
    [Mr. Eichberger's statement may be found in appendix.]
    Mr. Pence. Thank you very much. Good to have NACS here.
    Debra Phillips is next, recognized for three minutes.

    STATEMENT OF DEBRA PHILLIPS, AMERICAN CHEMISTRY COUNCIL

    Ms. Phillips. I am here representing the American Chemistry 
Council, which I think is typically viewed as an organization 
of larger business. However, more than one third of our member 
companies are small, in fact, small businesses. And I would 
like to take the opportunity to bring up two regulatory 
programs that are of particular concerns to our members and 
both of these programs have to do with EPA regulatory 
requirements.
    The first, I think, was touched on by NAM and that is the 
TRI Section 313 reporting requirements. The requirements of 
this program are such that industries must report emissions to 
the air, water, land, et cetera, and while this is a good goal, 
the fact is a lot of the data that is required in the reporting 
is not used. And the data is very labor intensive to gather. 
For example, a current requirement is that companies report 
internal concentrations of chemicals within their facility that 
really has no impact on what is being emitted to the 
environment, yet this is a reporting requirement within this 
program. I feel I can speak fairly intelligently about this 
because I was responsible for this kind of reporting at a small 
chemical facility for about fouryears and I can say that I 
would spend weeks completing the report and that is at the expense of 
taking care of important issues like regulatory and environmental 
compliance at the facility. So we feel like there are opportunities to 
really streamline this program and make the requirements such that the 
important information is reported and extraneous material is not.
    The second program that I think was also mentioned by some 
of the utilities that our members are having issues with is the 
new source review program. This is a program that is getting a 
lot of attention as of late due to energy implications, but it 
is also an issue for some of our smaller companies. The intent 
of this program is to ensure that when new facilities are built 
and when significant modifications are undertaken at existing 
facilities that these projects undergo a stringent review to 
make sure that there are not decreases in air quality 
associated with the projects or new facilities. We agree with 
the program's intent. However, in recent years, the EPA has 
taken to expand that program such that pretty much any 
modification that is taken falls under this program.
    It is of particular interest to our smaller members because 
typically they operate in markets that must change fairly 
quickly. They have to make fast changes due to market demands 
and they are not able to undertake these modifications, many of 
which have a beneficial effect on energy, efficiency, and also 
emissions and they cannot undertake these projects because they 
are triggering this new source review program, which is making 
the projects cost preventive to them being undertaken and I 
will give just a brief example.
    We have a small chemical company that wants to make a 
change to its waste water treatment facility that will increase 
its energy efficiency by 40 percent and decrease its actual 
emissions by 5 percent. It cannot undertake this project 
because it will trigger the new source review program. They 
will have to go through an approximately three-year permitting 
procedure to undertake the project and its cost will be about 
$750,000. The plant currently earns about $1.5 million. So it 
is half of their annual earnings to undertake a project that 
will result in energy efficiency and decreased emissions.
    So we feel like there is some real reform needed in this 
program such that our companies can operate efficiently, 
effectively and are environmentally conscious.
    Thank you.
    Mr. Pence. Thank you, Debra. Good presentation.
    Craig, I think you are next.
    Mr. Brightup. Yes, sir.
    Mr. Pence. Thank you for being here.

   STATEMENT OF CRAIG BRIGHTUP, NATIONAL ROOFING CONTRACTORS 
                          ASSOCIATION

    Mr. Brightup. Thank you, Mr. Pence. My name is Craig 
Brightup. I am with the National Roofing Contractors 
Association and it is nice to see Mr. Phelps again. This 
morning we had a very good roundtable discussion on health 
care. And thank you for the opportunity to talk about some 
other regulatory problems that the industry has.
    N.R.C.A., the National Roofing Contractors Association, has 
about 5000 members. We estimate that about 60 percent of the 
roofing work in this country is performed by our members, 
certainly 60 percent of the commercial roofing work, but all of 
our members are small business people. So if you are going to a 
roofing contractor, the first thing that you need and the first 
area I want to talk about are workers. There is an acute labor 
shortage right now and immigrants comprise more and more of a 
substantial percentage of the workers that are being employed 
by our members.
    The first area, then, in the regulatory realm that we are 
concerned with and having problems with are immigration 
regulations from the Immigration and Naturalization Service. 
Now, I do not know if you have ever had a chance to take a look 
at these or not, but you would really kind of need an Ouija 
board to figure out exactly what you should and should not be 
doing. We have a roofing contractor in Portland, Oregon, one of 
our larger, 130-employees. INS came in, did an audit, said 
congratulations, Mr. Satron, he is the owner of Interstate 
Roofing, in Portland, Oregon, you have done everything right, 
but half of your workforce has to go. Now, that is the kind of 
thing that our members are dealing with and I suspect other 
small businesses that hire workers that are immigrants are 
dealing with.
    We support President Bush's proposal to split the INS into 
two so that one of the agencies helps people, helps small 
business employers and those that wish to follow the rules and 
do things right. Number two, we are a member of the Essential 
Worker Immigration Coalition, which supports, among other 
things, perhaps developing a guest worker program or programs 
similar to what agriculture has so that we can deal with the 
acute labor shortage and do things the right way.
    Now, once you have the workers, you have to get them to the 
job. And I echo the comments made by our friends around the 
table, particularly I heard the National Beer Wholesaler's 
Association complaining about the Federal Motor Carrier Safety 
Regulations. These regulations are intended to deal with trucks 
of a size of 26,000 pounds gross vehicle weight rating. These 
are overland carriers that go from Portland, Maine to Portland, 
Oregon. But roofing contractors are getting nailed on this and, 
believe me, the different things that you have to comply with, 
not just the commercial driver's license or the hours of 
service, there is a lot more going on there than that. They are 
getting nailed for vehicles of 10,000 pounds, between 10,000 
and 20,000 pounds and we would like to address that and fix it.
    Finally, once you get to the job, you may need to tear off 
an old roof. What do you do with the roof tear off? Well, no 
thanks to Superfund, you are highly likely to get nailed in a 
Superfund legal morass which is almost impossible to get out 
of, so we applaud the U.S. House of Representatives for voting 
for H.R. 1831 on May 22d, the Small Business Liability 
Protection Act, by a vote of 419 to nothing. Just very quickly, 
as you know, Mr. Pence, it would exempt any business, 
regardless of size, from Superfund liability if responsible for 
less than 110 gallons of liquid waste or 200 pounds of solid 
waste, but, perhaps more importantly, small businesses are 
defined as having fewer than 100 full-time employees and would 
be protected from lawsuits filed by companies responsible for a 
majority of the waste at the site. Will this cure all of our 
problems? No, but it is a terrific start and the Senate seems 
intent on dealing with a broader, more comprehensive approach 
dealing with brown fields. I hope ultimately that the House is 
able to put pressure to get this done. Four hundred nineteen to 
nothing speaks volumes and we completely support it and 
anything that we can do to get the Senate to move, we would be 
glad to support your efforts.
    Mr. Pence. Thank you very much, Craig.
    And I believe Matt Page is next on the docket for three 
minutes.
    Matt, thank you.

    STATEMENT OF MATT PAGE, AMERICAN ELECTRONICS ASSOCIATION

    Mr. Page. Thank you, Mr. Chairman. Thanks to the 
subcommittee for calling this roundtable together. I represent 
the high tech industry. AA represents semiconductor 
manufacturers, software industry folks, and about 70 percent of 
our members are small business. The issue I want to talk about 
today is involving the IRS and specifically the duplicative 
reporting of stock option compensation.
    Currently, on W-2s, the exercise of non-qualified stock 
options are taxable as wages and they are reported on the W-2 
form in no less than three different areas. Last year, the IRS 
came out with an announcement which is now going to impose on 
employers a new reporting requirement. It is called Code V, and 
is under box 12 on the W-2 form. This is to report separately 
the amount of compensation received upon exercise of non-
statutory stock options.
    Separately, another announcement came out which advised 
employers that the reporting requirement for Code V was going 
to be optional for 2001, but that it was going to become 
mandatory in years after 2001. The reason this is a problem is 
that Code V reporting will have no net tax effect. It is 
already being reported on the W-2 form, as I mentioned, in 
boxes 1, 3 and 5, so accordingly the income is already subject 
to the appropriate income and Social Security taxes. There is 
no net benefit to the employee. Code V reporting would have no 
beneficial impact on employees because stock option 
compensation, again, is already disclosed to them as either 
part of their non-qualified stock option program as part of 
their pay stubs. And also there is no other tax-related purpose 
for this information.
    On the W-2 form, which you are probably all familiar with, 
in box 12, there are actually 18 different items that need to 
be reported in that area. Types of information that are put in 
there are for legitimate compliance purposes such as for the 
proper calculation of Social Security benefits, compliance with 
welfare and pension limitations, or information about non-
taxable fringe benefits not otherwise reported on W-2 forms. 
None of these purposes justify separately reporting income from 
non-statutory stock options.
    What does this mean? It is a needless administrative burden 
and will require companies, particularly smaller ones, to 
redesign their payroll system, again, for no specific tax 
purpose or informational purpose. Treasury may find it more 
convenient to have such information on W-2 forms for their 
statistical and economic models. However, this information can 
be found in other sources, such as SEC filings. In any case, it 
is inappropriate to impose additional costs and burdens on 
employees without demonstrated immediate compliance 
justification.
    There is also a question of whether or not they have the 
legal ability to do this. Let me just state that when the IRS 
went through with this, there was no normal regulatory hearing 
process or request for comments, so essentially there was no 
public input on this new requirement and we would just simply 
recommend that the reporting requirement be withdrawn 
permanently.
    I would echo other comments that have been made about 
SBREFA and the expansion of SBREFA and the Office of Advocacy.
    Thank you.
    [Mr. Page's statement may be found in appendix.]
    Mr. Pence. Thank you very much, Matt.
    I think it was in our subcommittee's first hearing that we 
heard from a number of people in your industry who talked about 
the need to lift the regulatory burden to encourage more 
entrepreneurism and stock options. It came up then, so I 
appreciate you calling our attention to this Code V problem.
    Ty Kelley.
    Mr. Kelley. Correct.
    Mr. Pence. Thank you for being here, Ty.

        STATEMENT OF TY KELLEY, FOOD MARKETING INSTITUTE

    Mr. Kelley. Thank you, Mr. Chairman. I am with the Food 
Marketing Institute. We represent the supermarket industry. We 
sell food and a lot of our members are getting into the 
prescription drug business, like Marsh's out of Indianapolis.
    The regulation that I wanted to bring to your attention 
nobody else around this table has mentioned and it comes from 
the Food and Drug Administration and it relates to the sale and 
distribution of prescription drug products in the United 
States. It is a reg that impacts secondary wholesalers and here 
is the problem. If this rule goes into effect, it is a final 
rule whose enforcement has been stayed, issued in December of 
1999, it will close down 4000 small businesses throughout the 
United States that currently distribute prescription drugs 
throughout this nation.
    Now, how would this reg close down 4000 small businesses?
    Very easily. It imposes a massive paperwork burden on these 
companies because they simply do not purchase prescription drug 
products directly from the manufacturer. In other words, they 
would be required under this FDA rule to obtain the entire 
sales history or pedigree of the product they have purchased, 
but we have a classic Catch-22 situation. The FDA reg requires 
them to get the pedigree, but it does not require the 
manufacturer or the primary wholesaler to provide it. Thus, 
they cannot distribute prescription drugs legally in this 
country.
    What does this mean? It is going to mean less competition, 
higher prices, reduced access to life saving medications, 
especially for folks in rural communities because the secondary 
wholesalers are the primary source of supply to remote 
locations.
    Our interest is very simple. Our members from time to time 
buy from secondary wholesalers and they do for two key reasons: 
one, availability of product when our members need it and, two, 
these secondary wholesalers because of prudent purchasing 
practices can get prescription drugs at lower prices than, say, 
the full like McKesson types.
    We have a solution to this FDA reg and it is going to kick 
in next year. The solution is a bill that has been introduced 
by Joanne Emerson and Marion Berry, H.R. 68. What it does is 
very simple. It provides for reasonable accountability of the 
purchase of these drugs by secondary wholesalers, number one, 
and, number two, it clarifies congressional intent in terms of 
the law that Congress passed back in 1987. And I mention that 
because the regs were issued in 1999, 12 years after Congress 
passed the law. None of this makes any sense. So we can avoid a 
huge problem by enacting into law the Joanne Emerson-Marion 
Berry bill, H.R. 68, and I would urge you to take a look at 
that. We have 45 co-sponsors to date and I have a number of 
materials that I would love to share with the subcommittee.
    Thank you.
    [Mr. Kelley's statement may be found in appendix.]
    Mr. Pence. Thank you, Ty. It is good to have FMI here.
    Let's go to Bill Mahorney with----
    Mr. Mahorney. American Bus Association.
    Mr. Pence [continuing]. The American Bus Association. Thank 
you.
    Mr. Mahorney. Thank you, Mr. Chairman.
    Mr. Pence. I promise our next summit I will bring my 
prescription glasses so that I am notfailing my reading test on 
the back panel.
    Thank you for your patience, Bill. Go ahead.

   STATEMENT OF BILL MAHORNEY, AMERICAN BUSINESS ASSOCIATION

    Mr. Mahorney. Thank you, Mr. Chairman. I represent the 
American Bus Association. We have about 850 operator members, 
such as the Greyhounds of the world, but about 96 percent of 
our membership and of our industry is small businesses that 
operate less than ten motor coaches.
    Three of the issues that we would like to talk about today, 
the first has been mentioned by a couple of other folks is 
hours of service of drivers. Back in May, the Federal Motor 
Carrier Safety Administration proposed sweeping changes that 
would severely limit the time a driver can operate. It was 
supposedly based on sound science. The first mention of motor 
coaches or buses in this proposal was, and I quote, ``For 
purposes of this proposal, the FMCSA has assumed that bus 
drivers operate in ways similar to truck drivers.'' Now, that 
certainly is a problem for us. We do not operate like trucks. 
In fact, the rule lumps a trip from Philadelphia, a three-day 
trip from Philadelphia to D.C. to Baltimore, where the driver 
is operating maybe three or four hours a day, as a long haul 
type 1 driver, which would be the same as someone who is 
carrying something from New York to California, jamming all the 
way. So we have some basic problems with that.
    We estimate it would reduce our ability to provide services 
in rural areas because we would have to cut--the driver's pay 
would be greatly reduced. We estimate about a 30 percent 
reduction in our operations.
    Our biggest problem with it is, though, is our safety 
record has been so good. In 1999, we carried 774 million 
passengers. That is a third more than the airlines. We average 
about five passenger fatalities a year and our hours of service 
violation rate is about a third that of trucks, so we figure we 
are complying with the current rule and we are safe, so we do 
not need any changes. So our goal is to be carved out of that 
rule and continue to operate under the current rules, until 
someone proves to us we have a fatigue problem. And if someone 
proves that to us, we will certainly work with them to try and 
address it.
    The other issues relate to NAFTA. There are three 
rulemakings on the table now that relate to safety monitoring 
and authority of carriers coming into the U.S. Our big concern 
with those is we support NAFTA. We are very much looking 
forward to working in Mexico, even more so than we do now, but 
our concern is the lack of enforcement at the border. We really 
think that border enforcement is critical.
    Our president went to Brownsville, Texas last week and it 
was told to us that there is approximately 350 motor coaches a 
day coming across one of the bridges there, the Los Tomates/
Veterans bridge, but enforcement is only done one day a month, 
so that is quite a gap that we think needs to be addressed. We 
are very concerned about the enforcement of the Federal Motor 
Vehicle Safety Standards which govern the construction of buses 
and we are very concerned with the Federal Motor Carrier Safety 
Regulations which govern hours of service, et cetera, for the 
drivers and making sure that the drivers have the Mexican 
equivalent of a CDL, the licensia federal. So that is something 
that we are looking very much to Congress to maybe step in and 
give some additional money to the appropriate parties to 
enforce at the border.
    There are also a couple other rulemakings regarding small 
passenger vans that we would like to see enacted prior to the 
border opening. There is a proposal on the board that hopefully 
the Federal Motor Carrier Safety Administration will have 
completed.
    The last thing I would like to mention is transit 
competition. Many of our members are facing increased 
competition from publicly subsidized transit agencies, which is 
clearly against the law. Small businesses rely a lot on some of 
these shuttle type services to and from football games and that 
type of thing and we are getting competition that we cannot 
handle. In fact, the Federal Transit Act does prohibit funding 
for charter and sightseeing and also prohibits a recipient from 
providing service if a private company can do it. We have 
brought it up several times with the FTA. It is not really 
enforced very strongly. What we would like to see is maybe a 
clear definition of charter bus service that is not eligible 
for funding and specifically provide that transit agencies may 
not provide regular route service beyond their urban area 
boundaries. So we would like to see a little stronger 
regulation and better enforcement.
    We do have comments to submit as well.
    Thank you.
    Mr. Pence. Bill, thank you. Good presentation.
    I appreciate how people are commenting on what other 
presenters have stated. That is very helpful.
    John Fitch with the National Funeral Directors Association 
for a few minutes.
    John, welcome.

     STATEMENT OF JOHN FITCH, FUNERAL DIRECTORS ASSOCIATION

    Mr. Fitch. Thank you, Mr. Chairman. I will briefly discuss 
some of the key issues that funeral homes are experiencing from 
a regulatory standpoint.
    One major issue that they would like to see is an amendment 
to the federal Fair Labor Standards Act to allow compensation 
time in lieu of overtime for employees. Because of the 
irregular hours that funeral directors work, nights, weekends, 
holidays, a lot of their employees, particularly their licensed 
employees, would like to have comp time to be with their 
families and make up that time and right now that is impossible 
under the Fair Labor Standards Act because licensed funeral 
directors do not meet a lot of the tests for the current 
exemption.
    The second issue that we would like to have the committee 
take a look at is to codify what some of the courts have 
already decided in favor of employers and that is to allow the 
defense of an employee error by an employer for an OSHA 
citation. In essence the defense permits an employer to show 
that he has done everything conceivably and reasonably possible 
to prevent an accident and the employee has disregarded that 
and caused harm or injury, that that should be an employer 
defense under the OSHA law.
    We also believe that OSHA should adopt what the state of 
Maryland has adopted, which is a state plan state, and that is 
a streamlined, simplified review process of informal 
conferences and formal hearings that are purely administrative 
in nature rather than quasi-judicial. In other words, adopt a 
streamlined, easy administrative review process rather than 
having employers go through the federal court system to 
challenge an OSHA citation.
    The other issue we would like to bring to your attention is 
to allow an employer under the OSHA rules to offset any civil 
penalties that may be assessed for an alleged violation of the 
OSHA law, regulations and standards by the documented amount 
spent to correct the condition, retrain employees, or to make 
other corrections or actions to abate the hazard. In other 
words, offset the penalty with corrective action under the OSHA 
law.
    Lastly, unfortunately funeral homes also come under RCRA. 
In many instances, funeral homes use swabs, cotton swabs and 
cotton products to remove certain spots and they may contain 
halogenated compounds, which makes them a hazardous waste, so 
you have these swabs that weuse for your ears and things and 
they may have very few of these, but they are considered a hazardous 
waste, they come under the RCRA rules. Therefore, funeral homes have to 
hire a special hazardous waste hauler to come and pick up these little 
cotton swabs, they have to take them to a certain place. This costs 
them a great deal of money and aggravation and we would like to see 
some kind of reasonable exemption under the RCRA rules for these kinds 
of small situations that otherwise would not be a problem for any 
disposal.
    Thank you very much.
    [Mr. Fitch's statement may be found in appendix.]
    Mr. Pence. Thank you, John. We have been very strongly 
supportive of a bill that I know you are familiar with and 
maybe will be interested in and we will look at putting the 
subcommittee's efforts behind the 90 days to cure provisions 
where employers would not be subject to fines. Again, it is in 
the spirit of getting away from the judicial approach to more 
of an administrative review and cooperative role. Sarah Dodge 
with the Petroleum Marketers Association.
    Welcome and thank you for your patience.

 STATEMENT OF SARAH DODGE, PETROLEUM MARKETERS ASSOCIATION OF 
                            AMERICA

    Ms. Dodge. Thank you. And thank you, Mr. Chairman, for 
holding this forum.
    At P.M.A., we represent about 42 state and regional trade 
associations and about 7800 petroleum marketers nationwide. Our 
members are terminal operators, they deliver fuel, they also 
store fuel and offer it for retail sale.
    By far, our most important priority this year is getting 
the phase-in, as was mentioned earlier, of the EPA diesel 
sulphur rule removed. We have worked hard with Congressman 
Bryant and Congressman Gordon to get a bill introduce and we 
thank you for your co-sponsorship of that bill, H.R. 1891. In 
addition, I think I mentioned to Patrick that Congressman Blunt 
recently put forward an RFG/diesel sulphur proposal and he did 
include that provision as well in that legislation.
    It was already mentioned earlier the cost to industry to 
install a whole new universe of underground storage tanks. 
Obviously, that is a huge concern for our members. But an even 
bigger concern is the possible price spikes and supply problems 
which we anticipate will occur. EIA has also done a study and 
said that that is very likely with the phase-in.
    So we are pleased to say that although during the 
rulemaking almost every industry group, environmental group, 
agency opposed the phase-in, DOE was the only entity that 
supported it. They have now changed their tune and are 
supporting a repeal of the phase-in.
    So we thank you for your support on that and I have a 
number of other issues that I have submitted for the record.
    Thank you.
    Mr. Pence. Very good. Thank you, Sarah.
    And, Mary, I appreciate your patience and very much 
appreciate NFIB sending you to be with us today.

                  STATEMENT OF MARY LEON, NFIB

    Ms. Leon. Thank you, Chairman Pence. I am delighted to be 
here with you today. I think NFIB recognizes that much of what 
you are charged to do is to undo what the previous 
administration did while they were in office and what I want to 
focus on today certainly falls in that category and that has to 
do with the OSHA recordkeeping rule which a number of other 
people around the table have already mentioned.
    Really, the OSHA recordkeeping rule is one of the 
regulations that would threaten small business owners if it 
were to go into effect. The recordkeeping rule will affect 
nearly every small business in the country and significantly 
add to the paperwork burden of small business owners. In 
particular, NFIB is concerned with the provision requiring 
employers to determine and record injuries that occur outside 
the workplace, but are aggravated on the job. The rule 
specifically states ``You must consider an injury or illness to 
be work-related if an event or exposure in the work environment 
either caused or contributed to the resulting condition or 
significantly aggravated a preexisting injury or illness.'' The 
regulation is supposed to be designed to help employers 
recognize workplace hazards and correct hazardous conditions by 
keeping track of work-related injuries and their causes, they 
should not be responsible for recording injuries and illnesses 
that have occurred or were caused outside the workplace.
    One of our NFIB members, Eamonn McGready, who owns Martin 
Imbach, Inc. in Baltimore, Maryland, a marine construction 
company, testified before House Education and Workforce 
Committee last year and he made a very interesting statement. 
He said, ``OSHA seems to want to record every rash or blemish 
that an employee may have at some time during the workday, 
every muscle strain or twinge, every runny nose or respiratory 
infection, every sore shoulder, knee or ankle, even if these 
perceived or real ailments may have occurred as a result of 
weekend gardening or softball.''
    As Jenny Krese has mentioned earlier, the recordkeeping 
rule was finalized, ironically, on Friday, January 19, 2001, 
the last day of the Clinton administration. The Department of 
Labor has pulled the rule back from OMB as a result of 
complaints from our organization and other organizations like 
NAM and it is my understanding that the OMB can deny the 
regulation approval under the Paperwork Reduction Act if it 
determines the rule will produce unnecessary paperwork for 
employers. So we simply urge you to hold hearings on this very 
dangerous regulation for small businesses and to work with OMB 
to deny the regulation's final approval.
    Thank you, Chairman.
    Mr. Pence. Thank you, Mary.
    A show of hands about a level of awareness about that 
particular recordkeeping issue, you are hearing about that from 
your members?
    [Show of hands.]
    Mr. Pence. News to the chairman.
    Bryan Little with American Farm Bureau.
    Thank you for your patience and please proceed.

        STATEMENT OF BRYAN LITTLE, AMERICAN FARM BUREAU

    Mr. Little. Mr. Chairman, one of the good things about 
being one of the last people to get a chance to have your say 
is that an awful lot of my work has already been done for me 
because an awful lot of folks have already mentioned a lot of 
the things I was going to talk about. In recognition of the 
fact that one of the most dangerous places to be is between a 
roomful of people and their lunch, I will try to keep this as 
brief as I can, except to say that Mike did anexcellent job 
talking about our concerns about the Endangered Species Act and 
wetlands regulations. We have all those same problems and his 
discussion of that was a tour de force in describing what our problem 
is with that as well.
    As to the effluent discharge regulations, Mike, welcome to 
our nightmare. They did it to us in January of this year when 
they decreased the number of animal units that their effluent 
guidelines--a farm with the number of animal units applies so 
that about 39,000 farms would have to be permitted now that did 
not have to be permitted before, subjecting a lot of our 
members to the tender mercies of the Environmental Protection 
Agency that did not have to deal with that before, and treating 
them essentially as though they are a point emitter of runoff, 
which does not make a whole lot of sense in an agricultural 
context. And, amazingly, for the first time in more than a 
century, applying these kinds of regulations to a common 
agricultural practice, the spreading of animal manure on a farm 
field as fertilizer. This has been done by farmers for at least 
150 years in this country and all of a sudden EPA thinks this 
is a problem. I am not quite sure why after all this time they 
think it is a problem.
    Shannon, your description about ergonomics problems was 
right on point. A lot of our people have that problem. The only 
problem we have is that it is not supposed to be an 
agricultural regulation and yet an awful lot of what farmers do 
fall under the description that OSHA offered us about what 
ergonomics problems are, so we do not even know whether we 
would have been covered or not if we had ever had to be in 
compliance with it.
    Giovanni, you talked about SBREFA and we would like to see 
the Forest Service and the Fish and Wildlife Service covered by 
that. I can assure you, Mr. Chairman, that the prospect of 
bureaucrats from the Forest Service and Fish and Wildlife 
Service having to sit and listen to farmers and ranchers talk 
about the way they run their agency is something that would 
make a lot of our members' mouths water with anticipation. Even 
though a lot of you have been through those processes before 
and understand that it is maybe not the perfect solution to 
your problems, but at least it is a start because right now 
these agencies are famous for their inability to listen.
    Hours of service--I am sorry, I did not catch your name 
with your dissertation about hours of service, but thousands of 
farmers operate commercial motor vehicles as an incidental 
activity in the operation of their farm businesses and the new 
hours of service regulation that our friends at DOT brought 
forth last year would have been hugely problematic for a lot of 
these people. One of the common features you will find in 
agriculture is that the work needs to be done when the work 
needs to be done. Otherwise, your livelihood for an entire year 
is potentially at stake. And trying to make bureaucrats at the 
Department of Transportation understand this is an incredibly 
high hill to climb.
    Craig, you talked about your problems with INS and I am 
amused that you cited our guest worker program as an example 
you would like to follow. We have been trying to fix ours for 
six years now. So your comments kind of reminded me of the 
bumper sticker you will see on cars from time to time, you 
know, ``Don't follow me, I'm lost.'' You do not want our guest 
worker program or anything like it.
    We have been trying to figure out a way to deal with our 
problem with a huge illegal labor force. At least 60 to 70 
percent of the labor force that works in agricultural at 
various times of the year are people who are fraudulently 
documented. When INS comes to call, we find out that a lot of 
them are illegal. They do not wind up leaving the country and 
the INS does not deport them, they just wind up working for a 
guy down the road or for a packing plant or for a carpet 
factory or furniture factory or something like that. So we have 
this enormous game of musical chairs that goes on every time 
INS does any significant amount of enforcement activity in a 
region. And you do not really serve the underlying enforcement 
need to actually enforce the law, you are just forcing people 
to move around. INS can do a press release and look good in the 
local paper, the folks from the Federation for American 
Immigration Reform think it is wonderful and all you have done 
is you have created a massive headache for employers in that 
area.
    One thing that nobody else mentioned and I will mention 
very quickly is our ongoing concern with the way the 
Environmental Protection Agency regulates the registration and 
use of pesticides which we now in the new politically correct 
age call crop protection chemicals. After the Alar scare in the 
1980s when Meryl Streep suddenly became an authority on the 
effect of a relatively benign chemical like Alar on the bodies 
of young people, we later came to find out that Alar really was 
not all that bad after all, we have had an ongoing problem with 
this issue. We tried legislation in the mid 1990s to get EPA to 
recognize the need to use sound science rather than political 
science when they are figuring out what kind of chemicals ought 
to be registered and that was singularly unsuccessful with the 
last administration. We are making a little more headway with 
the current administration, but there is still a lot of work 
that needs to be done and a lot of this has to do with issues 
of simply the kinds of assumptions the agency makes. They are 
still in the habit of making the most conservative--and this is 
not conservative good, this is conservative bad--assumption 
they can make about how much exposure to something is bad as 
opposed to maybe a more liberal assumption. They will always 
default to the most conservative assumption they can make. What 
that means is that a lot of chemicals that have been used 
commonly in agriculture for years now are in potential danger 
of not being able to be used to perform vital functions that 
will allow you to cultivate and grow a lot of these kinds of 
crops.
    So all these issues are--we feel like we are a very heavily 
regulated industry, even though a lot of people think that we 
are not, and a lot of these issues amazingly we have in common 
with a lot of our colleagues in other industries.
    [Mr. Little's statement may be found in appendix.]
    Mr. Pence. Thank you very much, Bryan.
    Mr. Little. And, by the way, I do not know what dum-dum 
forms are. I thought you were talking about a Form I-9.
    Mr. Pence. It was ding dong forms.
    Mr. Little. I thought you were talking about a Form I-9.
    Mr. Pence. We will have to find that out.
    I think we only have to worry when the EPA has a problem 
with spreading manure in Washington, D.C. That will be a real 
threat to the nation.
    Kevin Maher with----
    Yes, go ahead.
    Mr. Wilson. Bryan, I was chuckling back there when I heard 
Craig Brightup's comments today about the guest worker program. 
I used to be a member of the Essential Worker Immigration 
Coalition and I was chuckling a little bit, Craig, whenever you 
were talking about if only we could be like the ag worker 
program. I think at one time I have had back-to-back meetings 
with the Farm Bureau saying could you please reform the 
temporary worker program and then also from my friends at the 
Hotel and Motel Association about why we need to get a new 
program. So just as a staffer, I thought I would observe that 
we probably could all agree that more paperwork is not 
necessarily the answer to the worker shortage problem.
    Mr. Pence. Before I introduce Kevin Maher, and we have two 
more presenters, let me give you an idea of the lay of the land 
here. We are going to cut loose for lunch here at about a 
quarter after 12 and I am expected over for a vote and have a 
brief meeting. There would be noobligation that you would 
return here at 1:00. I know that Barry Pineles indicated to all of you 
that we would be done by 12:30 or 1:00 and you are all--particularly 
given the caliber of people in this room, I am sure you have 
appointments and commitments.
    If you do not, please know that the chair will reconvene 
more of a dialogue session at 1:00 in this room and we will be 
here from 1:00 to 2:00 to really talk about and knock around in 
a more informal way what have been extraordinarily effective 
presentations.
    And with putting that pressure on you, Kevin, not to blow 
the curve, with American Hotel and Lodging Association you are 
recognized.

     STATEMENT OF KEVIN MAHER, AMERICAN HOTEL AND LODGING 
                          ASSOCIATION

    Mr. Maher. Thank you. I appreciate the opportunity to be 
here and I will be brief.
    I certainly want to echo a few of the issues that have been 
brought up. I do not want to re-plow the field, but the hours 
of service issues, the immigration issues, recordkeeping, comp 
time, flex time, blacklisting are all a concern. Although 
fortunately I did want to talk about one issue that has not 
been brought up yet and I think in my eight years with the 
association the number one issue the largest source of 
confusion and complaints for our members is the Americans with 
Disabilities Act.
    And I am not here to condemn the ADA, we have made 
tremendous strides in the last ten years as a result of this 
act, and we have no sympathy for any lodging property that 
willingly ignores the requirements of the ADA. In fact, there 
are about 40 million disabled travelers in the United States. 
That is a significant market that we cannot ignore.
    But while there are pluses to the ADA, there are also 
problems and I am speaking primarily of Title 3, the public 
accommodations provisions. Essentially, it is a national 
building code and if you want to build a hotel or make an 
extension to your property, you can go to your local commission 
and get your building permits and your water permits and 
whatever permits you need, but you cannot get an ADA permit. 
There is no source you go to get an ADA permit or a 
certification to prove that you do comply or your property does 
comply with the ADA. And that is a concern particularly for 
smaller members that are not able to hire the attorneys that 
they need.
    And we certainly know that what is a disability and what 
our members need to accommodate is an elusive and constantly 
changing target. Courts have been defining and redefining over 
the last few years what is a disability. I have taken phone 
calls from members who tell me that they had a guest checking 
in at that moment at the hotel who has a dog with him and the 
guest is obviously not blind and the hotel has a no dog policy, 
but the guest is claiming that under the ADA they need to be 
allowed to bring in this dog and they want to know does the ADA 
requirement, and it does, and is there any way to prove that 
this is in fact a comfort or service animal as defined in the 
ADA for a disability of a guest. And there really is not. There 
is no way to determine if this is a service animal or if this 
is somebody traveling around with their dog and just claiming 
that it is a comfort animal.
    There is an obvious concern with litigation. There are a 
number of properties that have been hit with drive-by lawsuits, 
certainly you have heard of a number of those, and it is a 
particular concern for the smaller members who cannot afford 
the expensive attorneys that someone like Clint Eastwood can to 
fight these in court. Our members have to settle as quickly as 
they can, do what they can, and they need some help in that 
area.
    A particular concern is the ADAG and the organization that 
begins the process of setting the ADA standards, is undergoing 
changes. They are looking at how they can implement technical 
corrections in the ADA. What that is going to do is that at 
some point it is going to be handed over to our members to 
comply and it is going to start a new round of lawsuits because 
everything is going to change a little bit and our members will 
not know what the new rules are versus what the old rules are 
and attorneys are going to show up saying you are not in 
compliance, here is a lawsuit.
    I will stop right there, that was the one issue I wanted to 
talk about today.
    Thank you very much.
    Mr. Pence. Thank you, Kevin. Appreciate your patience 
today.
    Being new to Washington, terms like ``comfort animal'' and 
``service animal'' are just not part of the world I used to 
live in, so I just appreciate that education.
    Doug Greenhaus with National Automobile Dealers.
    Thank you for being here. Proceed.

STATEMENT OF DOUGLAS GREENHAUS, THE NATIONAL AUTOMOBILE DEALERS 
                          ASSOCIATION

    Mr. Greenhaus. Thank you, Mr. Chairman. It is our pleasure 
to come today to mention a few issues, fortunately none of 
which have been talked about today. That is not, of course, to 
say that we--I think I have heard about at least a dozen issues 
that are equally of concern to our industry, but we do have a 
couple that have not been mentioned, two of which are specific 
to our industry, one of which is a more general nature.
    First is one that is due for compliance July 1st of this 
year, less than a week away, I believe, now and it comes from 
the Gramm-Leach-Bliley Act of 1999. Now, privacy, of course, is 
a big issue. We have heard about the medical privacy issue 
mentioned a couple of times today. Gramm-Leach-Bliley, of 
course, is well intended. We do not question the goals of that 
act. Unfortunately, the way the Federal Trade Commission has 
implemented that rule has left things a little short and our 
members are truly struggling to meet the requirements set out 
in the regulation which is found at 16 C.F.R. 313.
    Any retail business significantly involved in financial 
transactions, and by that I mean everything from running a 
credit report to taking credit applications, doing leasing, it 
would apply, of course, to not only car dealers, to equipment 
sellers, to the sellers of appliances, so it is a fairly 
broadly applicable rule. All of these industry folks are trying 
to struggle to meet this rule. Now, to the agency's credit, 
they are trying to be responsive. They are overwhelmed by the 
difficulty that industry is having. At the same time, they do 
not have the resources perhaps and have not made any attempt to 
issue compliance assistance materials for small business and I 
think it is clear that their rule unduly affects small business 
as compared to large business.
    So what is the solution? I think the solution at this 
point, given the rule is taking effect the first of next month, 
is for your committee perhaps to exercise some oversight 
authority some time later this year and see how it is working 
out, see what impact it has had, see perhaps how in the future 
the rule can be amended to reduce some of the burden that it 
clearly has on small business.
    The next two issues I want to mention are dealership 
specific, so most folks can probably tune out a little bit.
    The first is known as the dealer certification requirement. 
It comes from EPA. It is 40 C.F.R. 85.2108 and it dates from 
1981 and it comes out of the 1977 Clean Air Act amendments. 
Very simply, it is an outdated rule. It does not comport with 
the 1990 Clean Air Act amendments, itdoes not comport with the 
newly issued Clean Air Act rules for motor vehicles and the language 
unfortunately that is mandated by the act, the Clean Air Act, Section 
207(g), just does not make sense any more. It requires that every 
single new car sold in this country or leased have this form provided 
to the customer which the customers do not understand, which the 
dealers do not quite understand and it really is just one of these 
things where you mentioned at the outset you can draw a red line right 
through it. The solution is elimination.
    And lastly the insurance cost information requirement. This 
is a NHTSA rule. It stems from the Motor Vehicle Information 
Cost Savings Act, Section 201(c). It dates back to 1972, 
another outdated rule. Someone mentioned earlier the gap 
between the statute and the regulation of 12 years, the gap 
here was 20 years. The rule was not issued until 1993 and, 
again, it resulted from a lawsuit, Consumers Union v. DOT. The 
agency has no more interest in this rule being on the books 
than we do, the regulated community, and they resisted for some 
20 years, as I have said, to its issuance. But unfortunately it 
is on the books, is it of very little utility, requires that 
insurance cost information, information describing the 
historical collision experience of a given model of vehicles be 
provided in booklet form at the point of sale upon request. To 
my knowledge, I have never run into a dealer who has had a 
request from a single consumer for this information. So it is 
of admitted limited utility, according to the agency. Again, 
the solution is elimination. Unfortunately, it is statutorily 
mandated under Section 201(c) of the Motor Vehicle Information 
Cost Savings Act.
    Mr. Pence. Thank you very much, Doug.
    Lastly, Charles Maresca with Associated Builders and 
Contractors.
    Thank you for your patience, Charles.

     STATEMENT OF CHARLES MARESCA, ASSOCIATED BUILDERS AND 
                          CONTRACTORS

    Mr. Maresca. Thank you, Mr. Chairman. I was going to begin 
by saying I see my time has already expired. We will submit a 
more extensive comment for the record.
    The blacklisting regulations are, of course, a problem. 
Ergonomics, ergonomics particularly in construction a problem. 
Paperwork, paperwork reduction. Sound science, especially with 
regard to EPA and OSHA, sound science and reliable data as 
well. And also small business outreach by EPA and the agencies. 
E.P.A. simply seems unable to find small businesses and when 
they do find them, do not know how to contact them. That is a 
problem that the committee might take a look at.
    We wanted to raise the issue and in two regards. One is 
under the Davis-Bacon Act, the definition that the Department 
of Labor uses for helpers is unnecessarily restrictive. We 
think that that regulation really cuts out a lot of important 
entry-level training opportunities on public works and we think 
that that regulation needs to be looked at.
    On the apprenticeship and training side, we believe that a 
new look, a fresh look at the apprenticeship and training 
regulations would produce regulations that allow for new 
training programs. There is a need in our industry and other 
industries as well for expanded training programs and new 
approaches to training and we think that a new look at those 
regulations would produce new opportunities, not just for 
training programs, but also for entry level workers.
    Mr. Pence. Thank you, Charles. I appreciate your brevity. I 
am happy to inform you that we are already planning a hearing 
on the Wicker bill on apprenticeship and training in this 
subcommittee.
    We will look forward also to discussing, for those of you 
that can reconvene after 1:00, other potential hearings, there 
have been some formal suggestions for hearings, but that is 
kind of the next part of the conversation we would like to 
have.
    Craig, do you have a quick question?
    Mr. Brightup. Mr. Chairman, may I make just one brief 
comment? I am not going to be able to come back and I certainly 
do not want this to sound offensive because I work with 
everybody in this room and we get a lot done, but I wanted to 
get back to the guest worker program. Our association and I 
personally and the Essential Worker Immigration Coalition are 
completely aware of how unhappy the agricultural community is 
with the guest worker program. So when I spoke of that I was 
speaking of the fundamental concept which has at least been 
accepted at its base level of allowing foreign nationals to 
come into this country perform certain jobs.
    And just one other comment on what Bryan had to say about 
the fact that when the INS comes in, like it did with our 
member in Portland, and says half of your workers have to go. 
When our member asked him if this serves no purpose, these 
people are simply going to take jobs with my competitors, the 
INS person, the regional director, said, yes, we know, we call 
this technique reshuffling.
    Thank you.
    Mr. Pence. Thank you, Craig.
    There are a couple of other people that wanted to add to 
the discussion. I am going to go ahead and get off to my vote, 
but Barry will go ahead and hold forth here until 12:30, if 
there are other clarifications for people that cannot be with 
us at 1:00.
    Let me say this has been enormously educational for me and 
I am extremely impressed with the quality of individuals that 
are here and I am very honored by that and know that you have 
provoked the chair to even a more energetic approach to the 
agenda of this subcommittee by your remarks. And those of you 
that can return at 1:00, we will look forward to a more 
informal conversation about all the issues that you have 
raised. But if there are people that want to add who cannot be 
here at 1:00, Barry will take the chair and I will see some of 
you back at 1:00.
    Thank you all very, very much.
    [Applause.]
    Mr. Pineles. Before people leave, Craig, if you can call me 
about a hearing on Mr. Wicker's bill that Mr. Pence mentioned. 
Call me because I would like to arrange a hearing some time in 
July for that. Yes, you, too, Loren. Yes. And Charlie and John. 
If all the construction contractor people can call me about 
that,that would be great.
    Now, I know Rosemary has a plane to catch----
    Ms. Mucklow. I just wanted to thank----
    Mr. Pineles. Rosemary, you need a microphone.
    Ms. Mucklow. Oh, I am sorry. I just wanted to thank both 
Robert Green and Betsy Laird for their industries' concomitant 
commitment to producing safe food. They work very hard to train 
their people to do the most effective job to kill ugly 
organisms, microorganisms. Things like salmonella, e-Coli 
0157H7. We cannot regulate them out of business. We can set up 
systems to destroy them before that food is served to consumers 
and they are excellent partners in accomplishing that activity 
and Betsy and Robert both had comments this morning and that 
really fits.
    Thank you very much. Much better than government 
regulation.
    Mr. Pineles. Jeff or Jenny?
    Ms. Krese. I wanted to add one small point which is 
actually kind of a big point on recordkeeping. As you all know, 
the rule is set to go into effect and to be implemented January 
1, 2002. Of course, further, as you probably are aware, the 
states and companies would need six months to come up to speed 
with the current recordkeeping rule if it is to be implemented 
by January 1, 2002. That six-month deadline starts on July 1st, 
so just in about a week and a half to two weeks. I meant to 
offer this earlier, but if the chairman or anyone on this 
subcommittee, any member on this subcommittee, can weigh in 
with the Department of Labor to just simply ask for a stay of 
the rule for a very short period of time while these issues are 
getting resolved, and they are getting resolved, we feel, 
through our discussions with OSHA, that would be very much 
appreciated. If it is not stayed within the next week or two, 
it will become implemented in January.
    Mr. Wilson. Does anybody know, is there a recordkeeping 
letter going around on the Hill on recollection?
    Ms. Krese. There is not. I have just personally been making 
contact with offices to tell them about it and this roundtable 
was another good opportunity. My gut feeling is that they 
probably will issue a very short stay, but we have not gotten 
that confirmation from them yet. We have written them several 
letters asking for that clarification and we feel that they 
will probably make a decision--well, they have to--in the next 
two weeks, but probably this week.
    Mr. Wilson. That is a really good action point for us to 
take away from this today, Jenny. Perhaps Chairman Pence could 
circulate a letter to all of his colleagues asking them to sign 
a letter on this very point because I think if we had 60 days 
or 90 days to help with the communication that is going on 
between the regulated community and OMB and OSHA, I think that 
would be really helpful, so thanks for bring that up.
    Ms. Krese. We included something in our packet, actually a 
letter we just sent over to the department again this week that 
you can probably gather some information from, but if you need 
anything further, I am happy to help.
    Mr. Wilson. Excellent. Another follow-up on that point, I 
just wanted to say that on the recordkeeping issue, if you have 
statements, if anyone here has a statement, that we do not 
have, we want to make sure that Barry or I have that before you 
leave so we can be sure that that is included in the official 
record of what has transpired today. I just want to add that 
little reminder.
    Thanks, Jenny.
    Mr. Pineles. Does anybody have any comments, other comments 
that they need to break before we break for lunch?
    [No response.]
    Mr. Pineles. Obviously everybody wants to eat lunch before 
we make more comments.
    All right. Well, under the authority granted by the 
chairman to me, I declare this summit in recess until 1:00.
    [Recess.]
    Mr. Pineles. I think we should probably get started. Yes. 
Would people please sit in front of your name tags? That helps 
the court reporter handle what is going on here.
    Since the chairman has not returned, I will take the 
authority he delegated to me to reconvene the regulatory 
submit.
    Let me start off by asking a sort of generic question.
    We have heard lots of different regulatory problems, we 
have heard about Endangered Species Act issues, we have heard 
about Federal Trade Commission lending rules, Federal Motor 
Carrier Safety stuff, EPA issues, OSHA issues.
    Let me ask for the people remaining, without going through 
each individual statute and changing the individual statutes or 
without using the Congressional Review Act, which given the 
changes in the Senate probably will not be happening, what sort 
of process changes can you envision that would apply across the 
board that would help the agencies recognize small business 
problems and not promulgate really problematic regulations?
    Who wants to start? Come on, somebody volunteer.
    Mr. Mahorney. I will. Bill Mahorney, American Bus 
Association. I think probably a theme that is shared by 
everybody in here is economic analysis, proper economic 
analysis. I always think especially with respect to the Federal 
Motor Carrier Safety Administration, they just do not put the 
resources into that area and it is critical for us as small 
businesses. So I would say that is my number one, spending a 
little more time and effort in advance to do regulatory 
analysis.
    Mr. Pineles. Amy.
    Ms. Blankenbiller. To just dovetail on what Bill was 
talking about, I know we have talked privately about these MACT 
standards. Publicly, I raised them again today. You know, time 
and time again we meet with the agency and they say, oh, there 
is only going to be 20 foundries in the United States that are 
going to have to meet the requirements of this particular MACT 
standard, but they put no baseline requirement, so every single 
foundry has to do something to get out of the standard or prove 
that it does not impact them, and we go back and we say your 
economic analysis that it is really not that burdensome or it 
really does not cost that much is completely skewed because 
they are only looking at the 20 or 30 facilities that are 
actually going to have to follow the steps within the 
requirement of changing control technologies or changing 
processes, but they are not accounting for what they have to do 
to determine if it affects them, what they have to do to hire 
some consultants in most facilities when they do not have 
somebody who works there and the steps they have to take to 
keep themselves out, all those monitors, recordkeeping and 
those kinds of things.
    And you go to talk to them and it falls on deaf ears 
because they say, oh, we have a court deadline. Or NRDC is 
going to sue us. And so I think--believe me, I am the last 
person to be on EPA's side, but they get pushed up against a 
wall and at the same time they are getting sued.
    So we are trying to help them with economic analysis and 
they are like but we do not have time or we cannot do it. So 
there is some legitimacy to why they are having problems.
    Ms. Seeger. Barry, is it all right if I follow up on what 
Amy was talking about?
    Mr. Pineles. Sure.
    Ms. Seeger. All right. Do you still have the chair?
    Mr. Pence. Not any more.
    Ms. Seeger. Well, Congressman, we were talking about EPA's 
hazardous air pollutant program and this is one in which EPA 
has to put out over a ten-year period hundreds of rules and 
they have backed into a situation where they have another year 
to go in this ten-year program and they still have 50 rules to 
go. And those 50 that EPA has to finish are rather dreadfully 
written, though when you try to go into the agency and ask to 
have a meeting on how this would decimate small businesses, EPA 
says I do not have time, I do not have time for your.
    When it was a problem of their own making--in our instance 
six years ago, we said half of our folks are small businesses 
and we would like to explain to you some opportunities where 
you might be able to minimize the impact of the rule, and they 
said, well, we do not really know what the rule is going to be 
right now, so that would be a waste of time.
    And so then the rule gets further and further into the mind 
set of the mid-level people that arepreparing it and now we are 
at a point where EPA is saying exactly what they are saying to Amy, 
which is that we are bumping up against this statutory deadline when we 
are supposed to get all of these rules out by a date certain. In this 
instance, it is not the end of the world sort of deadline in that 
basically you just have to get a case-by-case permit, but up front 
early on participation rather than the gaming of the system here, which 
is that EPA will offer up the excuse that we cannot really listen to 
your concerns now, we do not want to convene these panels because they 
take forever, and we are very sorry.
    I do not have the sympathy that Amy has about----
    Ms. Blankenbiller. It is not sympathy.
    Ms. Seeger. Because for years, if you go through and read 
what they have asked the Congress to implement this program, 
they will say they have enough money, but then when you go to 
the program office and ask them to do some differential 
analysis or risk assessment or something just a little bit out 
of the ordinary, they will say, my God, we do not have the 
resources to do that. So they are speaking out of both sides of 
their mouths.
    And with that, I yield the floor.
    Mr. Pence. Let me jump in. I appreciate very much Barry 
getting the conversation going and let me thank you all for 
sticking around. I have an agriculture committee caucus, so I 
will be leaving in about 30 minutes, but I really wanted to 
encourage less formality at this point and feel free to 
interrupt even the chair if you have a thought or a point.
    Maybe we could just start right there, Arline.
    I mean, that seems to me to be a very difficult issue for 
you and for your membership to deal with, if you are going to 
agency officials and they are essentially saying they are 
understaffed or they are incapable of meeting the deadlines?
    Ms. Seeger. They are understaffed and over the course of 
the years it is too early to come talk to us now because we do 
not know what you are going to do, then we have lost our 
contractor money so we are in a holding pattern, and then you 
just learn because you are part of a group that is sort of--
this group analysis that the Small Business Administration 
convenes every two months, that is where we learn that these 
MACTs are about to come out of the agency.
    And so that is the participation--or there has been no 
participation by the small businesses.
    Mr. Pence. See, I would be very interested--and Barry and I 
can talk about this. I think my vision for the subcommittee is 
that we are going to take what we got from this summit and then 
collaborate with the members of the Subcommittee and develop an 
agenda that is really reflective of the priorities that we 
heard here today. But phase one would be let us add definition 
by picking a subject area per hearing. Then the next phase is 
what I like to call the confrontation phase and that is 
bringing administration officials in, and we have been assured 
by the White House a couple of weeks ago that we will have 
access in a cooperative way to very high ranking officials in 
the relevant agencies to come and talk to us about this. But it 
seems to me that tyranny by inefficiency is still tyranny and I 
am very intrigued about Barry possibly developing a series of 
hearings on simply how inefficiency wages war on small 
business.
    Ms. Blankenbiller. Congressman----
    Mr. Pence. Yes, go ahead.
    Ms. Blankenbiller. Sorry. I am the first one to interrupt 
the congressman.
    Mr. Pence. Yes. Please.
    Ms. Blankenbiller. One of the things, while we are being 
more informal and speaking a little more candidly is talking to 
a top ranking official at EPA is going to--it not going to be 
helpful because while----
    Mr. Pence. Who do we need to talk to?
    Ms. Blankenbiller. You need to talk to the mid level people 
at EPA because, for example, in the air office, it took us two 
years, seven letters and I do not know how many phone calls to 
request meetings with top level people at EPA during the time 
we were having problems with the secondary aluminum MACT issue. 
The staff was telling us one thing, as the rule started going 
up the chain of command, political influences were coming down 
from the top, technical expertise or decisions or whatever was 
coming up from the bottom, and they were reaching this log jam.
    Mr. Pence. So you are saying it is more--it could have more 
short-term impact. I mean, is that true around the room? If we 
brought in more mid-level people that have more direct contact 
with your membership in resolving these issues?
    Ms. Blankenbiller. And I would bring them into your office 
and not a hearing because the only way you are going to get 
testimony at EPA--I worked at EPA during Bush 1 is to get it 
approved through the OMB process and all that kind of stuff. 
Even when John Sites testifies, that is official EPA policy 
that goes through OMB. But if you sit down and talk to John 
Sites in your office about some of the problems of managing the 
technical staff, he is going to give you a much more candid 
response to exactly--potentially--and then you can ask the 
higher level officials some of those suggestions.
    Mr. Leiter. One way to accomplish that would be to have a 
briefing. My name is Jeff Leiter. I am counsel for the National 
Association of Convenience Stores.
    Mr. Pence. Oh, hi, Jeff. I did not think you were here 
before.
    Mr. Leiter. I was a back bencher.
    Mr. Pence. Okay. Well, thank you. Thank you.
    Mr. Leiter. John Eichberger had to go back to Alexandria 
and asked me to fill in for the rest of the session. I 
appreciate the opportunity to be here.
    Typically, what I have found, one example has been in the 
underground storage tank area where it is just that detailed 
where they have to bring the staff over to explain to members 
of Congress or their staffs just how the program operates. So 
to the extent, let us say, you had this effluent limitation 
guideline or the MACT issues, having those people come over and 
say, all right, tell us how this works, and then raising these 
kind of questions is probably the proper context.
    Mr. Pence. Are you talking about in a hearing context or 
are you talking about in an informal context?
    Mr. Leiter. No, no. Just an informal session.
    Mr. Pence. Okay.
    Mr. Leiter. Because otherwise, you are not going to get the 
testimony.
    Mr. Pence. That is saying--and you cannot insult a freshman 
member of Congress, so what you are saying is then I say in 
that kind of a meeting, I say, well, gee, that is interesting 
how that is supposed to work because what I am hearing is 
something else.
    Mr. Leiter. Otherwise, the staffer who has been working on 
the science on this for the last two years is either not going 
to be allowed to testify or they are going to write it for him.
    Mr. Pence. Yes. That helps a bunch, actually.
    Mr. Leiter. I kind of liken this to a Whack-a-Mole game 
where there is somebody there that knows what the answer is 
and, you know, people are doing this. And it depends on the 
rule what is going to pop up. They may do the science piece of 
it, but when you get to the economics, let us say, on this 
diesel desulphurization rule where we are talking about having 
to install additionaltanks, the economic analysis says, well, I 
am going to amortize that cost over 10 or 15 years. Number one, I 
cannot get a loan from the bank for that long period of time and the 
IRS depreciation period is five and a half years when I am going to get 
rid of it after four. But they just gloss over that when they do this 
financial side. So that is the particular Whack-a-Mole on that.
    Mr. Pence. Right.
    Mr. Leiter. You go to any other rule, you are going to find 
something else that pops up, it is just a defect.
    Mr. Luzier. Mr. Chairman, Mike Luzier with Home Builders. I 
endorse the comments about the process changes in the economic 
analysis that is done. Endangered species is one even where 
that is done honestly that--we are groping with this right now 
in light of a 5th Circuit opinion which said, Fish and Wildlife 
Service, the way you have been doing economic analysis is 
invalid, go back and do it right, so they have asked us----
    Mr. Pence. Is that the Solid Waste Agency decision?
    Mr. Luzier. No, that is in wetlands. This is an ESA. And it 
is significant, it dovetails to the critical habitat thing. 
Congress clearly said in the ESA economic considerations are 
not relevant when we decide to list a species, it is a purely 
biological decision. And we agree with that as home builders, 
we think that should be a biological decision. What the 
Congress did go and say is when you designate critical habitat, 
though, that is an economic decision and we want to make sure 
that the costs do not outweigh the benefits.
    Well, the Fish and Wildlife Service always says--and there 
are two outs to designating critical habitat, it is either 
indeterminable, which almost all of them are, or it is 
imprudent to do so, which we would think would be the only out 
to say, well, the economic costs outweigh it. We have some very 
good economists and what they are saying is the status of 
economic theory really does not allow us to put an objective 
number on what 20 golden cheek warblers is worth. It is a 
normative decision, it is a value judgment. And what the Fish 
and Wildlife Service is struggling with is saying but we need 
an answer, at what point do the scales tip. We support the 
economic analysis, but it is not going to solve all of the 
problems that are out there.
    One of the things in answering your question or picking up 
on your idea that might be helpful is if we could think of a 
way to force the agencies and applicants, too, to do what they 
say they want to do and that is better science.
    If I could give you one example, EPA is concerned about----
    Mr. Pence. Force the agencies?
    Mr. Luzier. To do better science. Let us do that.
    They say, for example, under the ESA we are only required 
to go with best available data and Congress unfortunately did 
not say but that has to be at least credible data. Many of the 
listings are based on data that would not pass muster at a 
Master's level thesis, yet the Fish and Wildlife Service has an 
ironclad defense: Congress said just give me the best that is 
out there.
    In one case, the petition to list the golden cheek warbler 
was based on a one-paragraph letter from an amateur naturalist. 
And we fought that. There are billion dollar consequences that 
flow from that and it does not seem reasonable to us.
    One of our frustrations, this is my closing point, not to 
dominate, is that as we talk to Governor Whitman about our 
willingness and desire to do this effluent limitation guideline 
process correctly, our president committed, we will go out and 
educate the members that you need to do this. If we are 
impairing water quality, we want to certainly do our share to 
fix it.
    The immediate response is, well, geez, we do not think we 
have the money, yet I can point to probably--if you gave me a 
day, a billion dollars worth of expenditures EPA has made where 
Congress has never mandated them to do anything and it seems to 
me that an administrator of an agency ought to at least attend 
to their statutory obligations before they attend to 
discretionary items. So that is an idea.
    They funded this major smart growth effort out of EPA, 
which has been okay, but it makes it hard for business people 
who are then told we cannot do good science on the listing end, 
but you had better do definitive science on your end when we 
are going to approve a mitigation plan, you had better give us 
more. And so many of our guys feel that there is a certain 
level of disingenuousness to the debate and we would think in a 
multi-billion dollar budget--if it is a million dollars, that 
is not much.
    Last word. There is hope because if we can truly get the 
regulatory discussion down to an honest technical debate, we 
can often make good decisions. I will give you one example of a 
success story.
    When EPA proposed its total maximum daily load regulation 
(TMDL), it was very controversial. One of the requirements they 
were going to impose was that for any impaired level, any 
impaired stream, that our industry was going to have to remove 
one and a half times the amount of pollution it was going to 
pose. We were going to have to correct other people's problems.
    We had our economists and our Ph.D. biologists sit down 
with EPA's economists and they jointly concluded that that cost 
was going to be $5000 per lot. EPA concluded it was not 
justified and eliminated it from the final rule.
    That was because there was an honest effort on both ends to 
get the right answer. We told them if the numbers show that 
this is cost effective, then we should do it. It turned out not 
to be cost effective. I think the difference was when they came 
to the table, they, the EPA, there was not a preordained 
outcome in mind. It was truly saying how do we find the right 
answer? And then when we got the number, we did that. Last 
year, that saved housing consumers $6.5 billion.
    Ms. Blankenbiller. Barry, the other thing I want to add 
into your general question.
    Before you got here, Congressman, he was asking us what 
kind of general ideas do we have to make the process better.
    I would suggest a more limited role for the Office of 
Enforcement or a more cooperative role for the Office of 
Enforcement at EPA. We were in the process of working on the 
iron and steel MACT standards. We had four United States 
foundries that were willing jointly with EPA to test the stacks 
to find out what emissions were there, the levels and what we 
needed to do. The Office of Enforcement, however, said if you 
found one thing out of whack in those we are going to fine you, 
we are going to give you a notice of violation. And we said 
can't we get a waiver? Can't we get a 30-day waiver, a 90-day 
waiver or something because we are trying to get the science 
for you at an operating facility rather than having some 
computer-generated modeling that they use most of the time.
    And they would not do it. So we had to test in a facility 
in Mexico and it is not necessarily representative of the same 
way that we operate in the United States and it makes the data 
not necessarily as good as we could have gotten if we did it in 
the United States, but the Office of Enforcement stood right in 
the way. And we have seen that repeatedly.
    I do not know if you guys have seen it in other industries, 
but we just thought it was absolutely ridiculous when we had 
four facilities willing to do it, but EPA basically said we do 
not want it, we do not want your information.
    Mr. Pence. I am involved with some legislation involving 90 
days to cure with regard toOSHA, but it seems like what I hear 
you saying is how about a different culture in the whole regulatory 
agency structure.
    It is my experience, having grown up in a small business, 
Amy, that there are very few small business people that just 
are not interested in getting it right and if they get it 
wrong, they will fix it, pay the lawyers and pay the fee, 
whatever we need to get it done, but what I heard again and 
again and again today is more like a gotcha game in the 
regulatory state which seems to me to be really antithetical to 
what we want to do in terms of the mission of the original 
legislation, which is to achieve the goals of the legislation 
and not to be collecting fees and fines.
    Mr. Leiter. Since you mentioned legislation, if I could 
just put out a bold suggestion, and it is something that I have 
mentioned in meetings that the small business community has had 
on an ongoing basis with the deputy administrator of EPA, one 
of the continuing refrains we have is, well, we have the 
statute and many times the administration is proposing 
amendments to the statute or it is being reauthorized and they 
are looking to try to fix problems with the statute. And we 
constantly get, well, we do not have any flexibility here to 
deal with a small business issue because of Congress.
    And EPA has made a decent effort, it has not been perfect 
by any means, to do outreach to the small business community. 
The one area I have kept suggesting is the legislative office 
at EPA. If they are developing a proposal to respond on brown 
fields, Superfund, whatever the issue may be, why not have a 
discussion with small business before that legislative language 
comes up here to the Hill?
    Many times then we are having it come up to you or your 
staff and say there is a problem here and to the extent that 
there is deference paid to the agency's expertise, we get some 
bad laws written that then we have problems trying to deal with 
the agency when they have to write the rule. If there is some 
way to encourage the agency, particularly in the legislative 
shop, to have those kind of discussions before they send 
something over here and they can look you straight in the face 
and say, yes, we have talked to a lot of the players, it might 
make things a lot easier.
    Mr. Pence. Doug, you are being awful quiet.
    And, Bill, I do not want to exclude you guys, having waited 
the longest to speak this morning.
    Mr. Greenhaus. Just to pick up on what Jeff was saying, 
again, to be bold, I always thought it would be great if there 
was some way to have a uniform process up here on Capitol Hill 
to review in some fashion--I do not know who would have this 
responsibility--the potential small business impacts of most 
pieces of substantive legislation. Only so many things are 
going to come through your committee and even fewer your 
subcommittee and get a good look at from a small business 
perspective, but if we could have--because it all starts up 
here. The agencies claim their hands are tied and to a large 
degree, unfortunately, they are tied. Not as much as they say, 
but there are certain things that are done up on Capitol Hill 
with respect to time constraints, with respect to substantive 
requirements where perhaps it was not thought completely 
through what the small business impacts would be, almost a 
scoring, if you will, of legislation with respect to its 
potential small business impact, that could be later on when it 
goes down to the agencies.
    Mr. Pence. You made a comment that I thought was one of the 
most provocative things that was said all morning and I wanted 
to ask you to elaborate on it for my benefit and for the 
benefit of the staff, but you said that with regard to dealer 
certification under the EPA that there are regulations that do 
not comply with the current Clean Air Act, but these are 
regulations and certification requirements that your members 
have to meet in addition to other regulations or just--I mean, 
it may sound like a dumb question and it probably is, or maybe 
naive, but----
    Mr. Greenhaus. Just to review quickly, it is a piece of 
paper that is mandated very specifically, I do not know if it 
actually spells out what size it has to be and what font, 
although some of these rules do, believe it or not, but it is a 
form that is handed out to consumers that has language in it 
that is inconsistent with both the 1990 Clean Air Act and with 
the emissions regulations promulgated under that.
    Mr. Pence. So the language in the form is inconsistent.
    Mr. Greenhaus. Information given the consumer is contrary 
to the language of the statute. And it was--originally, it made 
sense, going back to 1977, the so-called tier 1 emission 
standards, but it no longer makes sense. And I think there are 
a lot of these provisions that still exist in the laws and the 
regulations where someone just has not taken them off the 
books.
    Mr. Pence. Okay. Yes. That was very--and then the NHTSA 
rule. The legislation was 1972 and they did not promulgate the 
regulation until 1993?
    Mr. Greenhaus. 1993. Right. And the idea there is that they 
could not find anything that they thought would satisfy the 
intent of the legislation, which was to provide consumers with 
useful information regarding the crash worthiness of motor 
vehicles they were going to buy.
    Mr. Pence. So that lawsuit created a fact circumstance and 
some legal decisions.
    Mr. Greenhaus. Right. And they just grabbed something and 
threw it in just to satisfy the court.
    Mr. Pence. Is there any inherent value in terms of ensuring 
that regulations reflect legislative intent? Does a time table 
or a time limit or deadline for the promulgation of regulations 
make sense? Does it exist?
    Ms. Blankenbiller. They exist. There are time lines, there 
are requirements. I mean, just like the MACT standards.
    Mr. Pence. In the enabling legislation.
    Ms. Blankenbiller. The Clean Air Act specifically 
identifies certain categories that you are going to have an air 
standard promulgated within five years and certain categories 
that are within 10 years and EPA just willy-nilly has a million 
reasons why they do not meet certain things.
    And I will tell you, if anybody asks the EPA to justify 
something, they will. They will figure out a way to do it.
    Mr. Luzier. We have this problem in spades in the Clean 
Water Act and in the Endangered Species Act. One of the down 
sides of hard deadlines in a statute is they provide very easy 
targets for litigation for those that would want to stop 
rational progress. ESA, we have one environmental organization 
called--they have renamed themselves because they were getting 
such bad press, but they were called the Southwest Biodiversity 
Institute or something. All they did was litigation. And the 
only litigation they brought was the statute requires critical 
habitat designated within a year, you are one year past, that 
is it. It is a very easy case for a judge who has a heavy 
docket, geez, we have that in the Clean Water Act, these 
standards were to be out at such and such a time.
    There are often--I do not have a solution, sir, but there 
are often, at least on the Clean Water Act side, legitimate 
reasons why EPA said we need a little bit more time. It was 
very cumbersome, of course, to come back to Congress, open up 
the Clean Water Act with all that is attendant to that. So we 
have thought about that. We see it often in state legislation 
where we often want a permit review deadline. The reason they 
are ineffectual is the agency says, all right, you can either 
get denied or you can give me another month. And being business 
people, we say take your time.
    And so my experience has been under the environmental 
statutes those have hurt us more than they have helped us.
    Ms. Seeger. But in some instances, the deadlines are not as 
draconian as EPA. They only look at the consequences of the 
deadlines from their narrow point of view and, again, this 
hazardous air pollutant program or MACT program, EPA is given a 
certain amount of time to regulate 200 industries, if they fail 
to do it by a date certain, the world does not come to an end, 
though EPA thinks it does, and so that is why they are rushing 
to promulgate bad regulations.
    The statute has what I would call a soft hammer, which is 
that rather than have a rule go out and be in effect, then the 
states on a case-by-case basis make the control technology 
decision in a permit. But EPA is ignoring what I think is a 
rather sensible part of the Clean Air Act, which is to just let 
that hammer fall because EPA in its arrogance thinks that the 
states cannot possibly make control technology decisions and so 
that is why they are going to have lousy rules on the books, 
which was an artifact of their own inefficiency, rather than 
let the statutory scheme take place. So there are times when--
if a hammer is not bad, then it makes some sense because it 
does stop--they are put in there to stop the gamesmanship where 
strong industry groups will come in and just comment a rule to 
death.
    Ms. Blankenbiller. But one thing to elaborate a little bit 
on what Jeff said is that----
    Mr. Pence. We will go right to you next, Bill.
    Ms. Blankenbiller. Oh, I am sorry.
    Mr. Pence. Excuse me, Amy.
    Mr. Mahorney. That is all right.
    Ms. Blankenbiller. Is that the small business community 
does sit down--or at least did during the Clinton 
administration and before that was Bush--on a quarterly basis 
in face-to-face meetings with the deputy administrator and the 
small business representatives, most of us who are here today 
meet with the deputy administrator and have an open forum. You 
can put anything you want to on the agenda. And, personally, in 
the foundry industry, we have put several things on the agenda 
and have seen action because the deputy administrator has it on 
their radar screen and somebody has to be accountable.
    So Jeff just mentioned it and I wanted to let you know what 
that was.
    Mr. Pence. Okay. Thanks.
    Bill.
    Mr. Mahorney. One thing, talking about all these things is 
we in our industry have issues with all these things that are 
even more fundamental. There is not a definition at DOT of what 
a motor coach is. We are bus. Period. So are school buses, so 
are transit buses. So everything starts with bad data to start 
with.
    The National Governors Association accident data that the 
law enforcement officers use on the road, if there is a 
fatality accident, they check bus, we do not know. We do not 
know unless we find out whether it is a school bus, a transit 
bus or a nine to 15-passenger van, which sometimes they 
classify as a bus. So we have even got fundamental issues down 
at that level for basic data that is needed before any of this 
can occur. And I will, to give National Highway Traffic Safety 
Administration some credit, about a year ago they did at our 
urging convene a group to try and come up with these 
definitions and, of course, through the Commercial Vehicle 
Safety Alliance and some other groups that we are involved in, 
we submitted some sample definitions that said here is what we 
understand these things to be, but they still have not moved 
forward and until these fundamental definitions are completed, 
the data is never going to be any good. We can study it 
forever, but unless you have that core fundamental definition, 
it is always going to be a problem and we are always going to 
be shooting at them then.
    Ms. Blankenbiller. But that is just like we heard with the 
transportation of being short haul versus cross-country, that 
is what our problem was under the secondary aluminum MACT. They 
thought aluminum foundries were some other kind of business. 
You have four or five kinds of buses and that is them doing 
their homework.
    Mr. Mahorney. Exactly. It is fundamental.
    Ms. Blankenbiller. Right.
    Mr. Mahorney. Fundamental.
    Ms. Blankenbiller. And we got surprised by the secondary 
aluminum MACT standards because when the advance notice of 
proposed rulemaking was put in the Federal Register, it was for 
a different industry. We never had the idea it would affect us. 
Same thing with different classifications of buses or different 
classifications of delivery system.
    Ms. Seeger. Thank you, Amy.
    I am going to head in the direction of the agricultural 
committee, but I really want to encourage you to stick around. 
Obviously, you have the majority counsel and also the ranking 
member's staff director here and your input is very, very 
valuable. I appreciate you coming back after lunch.
    I want to tell you that I am really looking forward to 
circling the wagons with all the members of the Subcommittee 
and coming up with a real set of goals and an aggressive series 
of hearings and you will be hearing from us about participating 
in those and seeing if we could not get your membership to be 
in and to be a part of that.
    I just want to thank you again and I will yield to Mr. 
Pineles to run the rest of the meeting.
    Mr. Pineles. Thank you. I actually want to follow up on a 
question that Mike had that sort of relates to sort of how 
people do economic analysis and I think this applies both to 
EPA, the Fish and Wildlife Service and lots of other agencies.
    For example, one of the things that I have seen in the past 
with respect to the Fish and Wildlife Service is that they 
claim that the economic impact of designating critical habitat 
really is not the designation of the critical habitat, it is 
the actual listing of the species, so that their economic 
analysis starts from the basis that we are more worried about 
the so-called benefits of whatever we are doing than we are 
worried about the costs. In other words, that their economic 
analysis starts off with a bias.
    Is that something that people around the room see at EPA, 
at Federal Trade Commission or lots of other agencies? In other 
words, they want to analyze what the benefits are and they are 
not so much worried about getting an accurate analysis of what 
the costs are because they are regulators, that is what they 
do.
    Mr. Luzier. That has certainly been our experience, not 
only under the Endangered Species Act or the Clean Water Act, 
many of the technology standards under the Clean Water Act 
require consideration of achievability and costs.
    You probably know, but just to reiterate, that incremental 
approach under the ESA has actually been the way they have 
rendered away the economic analysis. The 5th Circuit just threw 
that out and said that is not the way the ESA is intending this 
to be done. So I think there is an increase certainly in our 
industry and hopefully in the courts there is an increased 
sensitivity to getting a fair assessment of costs.
    Let me go back to my TMDL example. We have had great 
success in that case where we could have an honest discussion 
about what these costs are when there was not a preordained 
outcome in mind.
    Ms. Seeger. We were given a three-quarter page summary of a 
rule in November which has a 25 foot docket, so that is the 
level of small business participation we have had and we have 
been given incrementally spreadsheets that would purport to 
describe the cost, the capital cost, the operating costs, of 
this, that and the other thing. And they were replete with 
errors. And one of the problems is that in the air program, 
anyway, there is no look at, let's say, the lime industry or 
even what preceded it. These default assumptions that EPA says 
in terms of a scrubber being put onto a lime plant may have 
been transferred from a study of a utility two decades ago. So 
their underlying--just their unit cost information is abysmal 
and outdated and you marry that up with a total unfamiliarity 
with how your particular people make their product, and then 
carrying that forward, that is simply cost, unit cost 
information, then you get into the impact analysis, which is a 
much more complicated thing, and EPA will say that, well, 
ideally, we would measure these costs, as one of the speakers 
spoke about this morning, in terms of the profits and whether 
this organization's profits will be able to carry these costs.
    But EPA says that is entirely too complex. Well, they have 
never asked our industry what the profits are, so it might be 
complex, but since they have never even posed the question, 
they are never going to get any expertise in taking a look at 
what probably is the sensible way to do an impact analysis.
    So then they use this sales test approach, but what Damon 
was getting at, even there it is rather perverted because lots 
of small businesses are in more than one line of business. They 
come down through families. And so rather than compare the cost 
of the rule to the part of the business that is being affected, 
the compare it to the revenues of the entire enterprise. And 
they are quite--they are not even ashamed to advance the 
principle that the small portion, the profitable part of the 
business, will continue to subsidize in perpetuity the losing 
part of the business. So they will say that a rule is not 
necessarily going to wipe out this small business because the 
profitable side of the business will subsidize it. So their 
whole methodologies to do impact analyses just do not mirror 
how American businesses operate and that, I think, it would be 
delightful to have EPA explain across the board how they do 
impact analyses.
    Mr. Pineles. We will go to Doug and then we will go to 
Jeff.
    Mr. Greenhaus. To sort of build on what these folks have 
been just mentioning, there is a crying need, in my opinion, 
perhaps spurred on by this Committee and the Subcommittee in 
particular, some uniformity in practice on how these economic 
analyses are done.
    We have the requirements of the law, we have the 
requirements of the executive orders, but because of cultural 
reasons, because of resource reasons, because of just level of 
knowledge reasons, every agency, every office within every 
agency, does a better or worse job at economic analysis than 
the others. And I am very hopeful with this OMB and with this 
OIRA in particular we are going to see some changes, but that 
could very well be relatively temporary, eight years at the 
most, maybe.
    And so I think something more systemic has to be built into 
it. And it is not an easy task. I mean, cultures are not easily 
changed and government cultures in particular, but the 
willingness to do the right thing is the first thing we have to 
see. The willingness to hold themselves up to the highest 
standard of economic analysis and the willingness to be 
accepting of and, in fact, to go out and look for small 
business input is what we have to see built into these low 
level or secondary agency decision makers.
    Mr. Pineles. Jeff.
    Mr. Leiter. I just want to build on that as well. I mean, I 
wrote down two notes. One is if you want to have a witness on 
this, I think probably OMB is the best witness. My experience 
with different agencies in this area of economic analysis is 
that they have to pass muster with the reviewers, at OIRA, 
before the rule is allowed to go forward and really that is 
where the dialogue takes place between the agency and OMB on 
the economic analysis.
    And, as I mentioned a few minutes ago, some of the data 
points that are used to make those analyses, what the discount 
rates are, what interest rates you can borrow at. They do not, 
I do not believe, properly test or discriminate for small 
business in those analyses in terms of what a typical small 
business can do.
    And then secondly is that when they do these analyses, they 
are done in a vacuum. They do not look and say, All right, I 
have five other regulations that are hitting me at the same 
time or I have these other costs that I am looking to bear that 
they may affect and so that it does not take a much more macro 
picture of what the overall regulatory burden is for this 
particular--what it will do to add to their ongoing burden, 
this is what it is going to cost, we amortize it, does the 
benefit exceed it, sure, we will let it go forward.
    So that is another piece to the economic analysis that I 
always have felt has been drastically missing.
    Mr. Pineles. Bill.
    Mr. Mahorney. One of the things that has been a challenge 
for our industry as well when we are talking about any kind of 
research, whether it be economic analysis research or fatigue 
research on the specific operational characteristics of our 
industry, we have actually heard from folks at FMCSA that you 
guys are not enough of a safety problem, why am I going to 
spend any money on you?
    So, of course, you know, our response is, well, then, leave 
us out of the rules.
    But we certainly have no problem with the proper analysis 
being done, but since we operate so much differently, but we do 
not have a separate administration like the transit folks or 
FAA or anybody else who carries passengers, we have a tendency 
to be just lumped in all the time.
    One of the things that we had pushed hard for when the 
Federal Motor Carrier Safety Administration was created was a 
separate office. What we are thinking now is what we probably 
need is a deputy administrator for motor coach or passenger 
carrier issues because as long as we are a part of the trucking 
organization over there, none of these things are ever going to 
happen for us and we do not have any problem with research, we 
will help with it, but we have to have the data and we have to 
have the focus on our own operations to make anything 
meaningful in a regulatory environment.
    Mr. Pineles. Arline.
    Ms. Seeger. I just wanted to follow up on one thing that 
Jeff mentioned and I think it is a great idea to have OMB 
explain their new philosophy and hopefully some rigor in terms 
of how to make these economic impact analyses sensible, but 
there is a whole group of rules that OMB never sees because the 
only rules that go over to OMB are those that are significant 
or, in some instances, there is an agreement that EPA will even 
send over rules that have greater than a $25 million per year 
annual impact. Well, the staff at EPA will always at the 
outset, certainly at the proposed rule stage, understate the 
costs so OMB never sees those rules. So OMB is a nice safeguard 
for those rules that actually get some elevated attention 
because it is a big industry, but there is a lot of the smaller 
industries that do not have that protector.
    Mr. Pineles. Well, unless anybody has any final comments, 
the chairman promised that you would get out by 2:00 and since 
he delegated the responsibility of me taking this home, it is 
2:00 and I will adjourn the regulatory summit and thank 
everybody for staying.
    [Whereupon, at 2:00 p.m., the proceedings were adjourned.]
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