[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




     SMALL BUSINESSES CREATING JOBS AND PROTECTING THE ENVIRONMENT

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

                                HEARING

                               before the

            SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                     WASHINGTON, DC, APRIL 22, 2004

                               __________

                           Serial No. 108-60

                               __________

         Printed for the use of the Committee on Small Business


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

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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           ENI FALEOMAVAEGA, American Samoa
SAM GRAVES, Missouri                 DONNA CHRISTENSEN, Virgin Islands
EDWARD SCHROCK, Virginia             DANNY DAVIS, Illinois
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVEDO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Hawaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL MICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               BRAD MILLER, North Carolina
STEVE KING, Iowa                     [VACANCY]
THADDEUS McCOTTER, Michigan

                  J. Matthew Szymanski, Chief of Staff

                     Phil Eskeland, Policy Director

                  Michael Day, Minority Staff Director

            SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

EDWARD SCHROCK, Virginia, Chairman   [RANKING MEMBER IS VACANT]
ROSCOE BARTLETT, Maryland            DONNA CHRISTENSEN, Virgin Islands
SUE KELLY, New York                  ENI F. H. FALEOMAVAEGA, American 
TRENT FRANKS, Arizona                Samoa
JEB BRADLEY, New Hampshire           ANIBAL ACEVEDO-VILA, Puerto Rico
STEVE KING, Iowa                     ED CASE, Hawaii
THADDEUS McCOTTER, Michigan          DENISE MAJETTE, Georgia

              Rosario Palmieri, Senior Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Lindell, Mr. Craig, President, Aquapoint.........................     4
Seydel, Mr. Scott, President, EvCo Research......................     6
Catron, Mr. Phil, President, NaturaLawn of America...............     8
Clevey, Mr. Mark H., Vice President, Entrepreneurial Development, 
  Small Business Association of Michigan.........................    10
Farland, Dr. William, Deputy Assistant Administrator for Science, 
  Office of Research and Development, U.S. Environmental 
  Protection Agency..............................................    12

                                Appendix

Opening statements:
    Schrock, Hon. Edward L.......................................    33
Prepared statements:
    Lindell, Mr. Craig, President, Aquapoint.....................    35
    Seydel, Mr. Scott, President, EvCo Research..................    46
    Catron, Mr. Phil, President, NaturaLawn of America...........    49
    Clevey, Mr. Mark H., Vice President, Entrepreneurial 
      Development, Small Business Association of Michigan........    54
    Farland, Dr. William, Deputy Assistant Administrator for 
      Science, Office of Research and Development, U.S. 
      Environmental Protection Agency............................    56

                                 (iii)

 
     SMALL BUSINESSES CREATING JOBS AND PROTECTING THE ENVIRONMENT

                              ----------                              


                        THURSDAY, APRIL 22, 2004

                  House of Representatives,
                        Committee on Small Business
            Subcommittee on Regulatory Reform and Oversight
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:30 a.m. in Room 
2360, Rayburn House Office Building, Hon. Ed Schrock, [chairman 
of the Committee] presiding.
    Present: Representatives Graves, Ballance, Kelly, Majette 
and Velazquez.
    Chairman Schrock. Good morning everyone. The hearing will 
come to order.
    Good morning, ladies and gentlemen. We are here today to 
talk about an often overlooked part of Earth Day, which if you 
did not know is today, the private sector's contribution to 
bettering our environment. We also have a reason to celebrate. 
Over 94 percent of our population is served by water systems 
that report no violations of health-based standards. Our air 
quality is equal to or higher than that in Europe. There has 
been a 55 percent decline in the release of toxic emissions 
since 1988, and since 1980, emissions of the six principal air 
pollutants have been cut 48 percent while the economy's GDP 
grew 160 percent, and energy use rose 42 percent.
    Some of those successes have come as a result of 
entrepreneurs in our society. Among the innovative and fast-
growing small business sector, many businesses are dramatically 
increasing the efficiency and productivity of our natural 
resources.
    Whether creating technologies to reduce pollution, increase 
recycling and recovery, or leave a smaller footprint on the 
environment, these job creators are also creating environmental 
benefits. These small businesses have been nicknamed Green 
Gazelles.
    I am pleased to have several of those businesses with us 
today, each of whom deserves special praise for their 
contribution to our economy and to our environment. I truly 
believe that solutions to many of our environmental problems 
will come from entrepreneurs like the three of you who are with 
us today.
    The Environmental Protection Agency has joined us as well 
today,and I thank Dr. Farland for his appearance with us.
    Today, we get to look at EPA's efforts in an area not 
always associated with the agency. We get to examine not EPA's 
command and control approach to regulating businesses, but 
instead we will look at the programs that incentivize 
environmental improvements, provide opportunities for 
partnerships with the agency, and encourage businesses to 
voluntarily make environmental strides.
    I really appreciate you all coming here today, and I look 
forward to your testimony, and then, of course, the question 
and answer period.
    At this time I am delighted to yield to Ms. Velazquez from 
New York.
    Ms. Velazquez. Thank you. Thank you, Mr. Chairman. In 
observance of Earth Day, it is important to recognize the 
contributions that are nation's small businesses have made to 
the environment. It is possible to create federal policies that 
will benefit not only small businesses, but also our 
environment. The two actually go hand in hand, and this hearing 
today remind us of that.
    Small businesses are the number one job creator in this 
country, creating 75 percent of all new jobs added to the U.S. 
economy. A good portion of these jobs result in a safer and 
healthier environment. In fact, small firms produce 2.4 times 
as many innovations as their large competitors, and higher, 39 
percent of high-tech workers such as scientists, engineers, and 
computer workers; in addition, highly innovative, new firms 
create disproportionately greater share of net new jobs than 
those start-up firms with lesser innovation intensity.
    It is our small business sector that is excelling at 
protecting the environment through innovation. Whether it is 
waste management, energy conservation or architectural 
development, Green Gazelles are working to improve the 
environment by finding new advance ways to do just that.
    While the Green Gazelles are fast growing companies, they 
are also the quick producers of innovative new products and 
services that are solving our country's environmental problems. 
A large number of Gazelles are responsible for creating 
technologies to reduce pollution and are increasing recycling 
and recovery.
    Many of these Gazelles have helped to heighten the 
efficiency and productivity of our resources and they are super 
job creators. It is the innovative new ideas brought to the 
marketplace by talented entrepreneurs that result in not only 
more job creation but also in a brighter economic future.
    However, despite the tremendous contributions of these 
companies, they are still facing an array of challenges. This 
unique sector that helps paint the way towards our country's 
environmental health has trouble finding access to capital. 
They support proposals that will make it easier for them to 
raise the money they need to grow, such as providing them with 
the flexibility to retain some of their taxes for financing 
during high growth periods.
    The Gazelles are also in need of access to long-term, low-
interest loans from either public or private sources, and 
understand the benefits of strong 7(a) and 504 lending 
programs. They support tax initiatives that ease the process 
for businesses to purchase new energy-efficient equipment and 
power devices to replace outdated machines.
    They are also behind a federal tax credit for small 
business purchases of environmental friendly products and 
services. Green Gazelles are interested in federal procurement 
policies that will give consideration based on the 
environmental qualities of their products. They need a strong 
environmental protection agency, small business innovation 
research program to provide funds for innovative research on 
environmental problems.
    It is apparent that innovative technologies lead the way to 
more cost-effective environmental protections on job creation 
for our economy. The unique sector of Green Gazelles plays a 
vital role in making this happen, resulting in an improved 
economy and improved quality of life.
    The need for small businesses to respond to environmental 
concerns with new solutions is growing, and we need to 
encourage this process. Our nation's environmental problems can 
be solved by innovative new technologies, most of which are 
created by our nation's small businesses if we help them to 
overcome some of these challenges. We must work to ensure that 
federal policies benefit small businesses in a way that will 
enhance the overall environmental health of our nation.
    I want to thank the small business owners that are here for 
taking time out of their schedule to talk to us, and I look 
forward to hearing their testimony.
    Thank you.
    Chairman Schrock. Thank you, Ms. Velazquez.
    Judge Majette, do you have an opening statement?
    Ms. Majette. Yes. Thank you, Mr. Chairman.
    I would like to take this opportunity to introduce Mr. 
Scott Seydel, CEO and board chairman of EvCo Research and the 
president of Seydel Companies. EvCo research, located in 
Atlanta, Georgia, is a model business, a profitable venture 
that creates wealth and jobs while at the same remaining true 
to its deep sense of social and environmental responsibilities.
    EvCo's natural step sustainable principles contribute to a 
culture in which the success of business correlates to an 
improvement and benefit for all of society.
    The value of EvCo's work is substantial. According to the 
EPA, nearly 95 percent of the 24.2 million tons of plastic 
waste generated each year goes unreclaimed, but EvCO reclaims 
scrape plastic beverage and water bottles, and uses them to 
make a liquid coating that is then used to recoat corrugated 
boxes that can then be recycled six to 12 times.
    I wish for the continued success of EvCo as it works toward 
creating a more sustainable waste management system, and I 
think Mr. Seydel for his leadership of EvCo Research and his 
vision for a bright future for all of America. I look forward 
to hearing his testimony this morning, and I look forward to 
the great--for him continuing the great work that he has begun 
in Atlanta, Georgia.
    Welcome. Thank you.
    Chairman Schrock. Thank you, Judge.
    We thank all of our witnesses for being here. Our first 
witness today is Craig Lindell from Massachusetts, and 
Congressman Barney Frank has agreed to come and introduce Mr. 
Lindell.
    Mr. Frank. Thank you, Mr. Chairman, to you and the ranking 
member for calling this hearing and for the courtesy of letting 
me as a nonmember introduce someone that I am really very proud 
of, proud of in the sense that he comes from the area I am 
privileged to represent. I deserve absolutely no credit for his 
good work, but you know, we sometimes get blamed for things 
that are not our fault, so I do not mind----
    [Laughter.]
    Mr. Frank.--so I do not mind offsetting that sometimes with 
a little reflective glory that is unearned.
    Mr. Lindell is really extraordinarily well suited to be 
make this presentation, as indeed due to the work he has done, 
because he is himself a man with a business background. He 
comes from a family that has had a distinguished background in 
southeastern Massachusetts in the City of New Bedford for some 
time, both in business and even the politics. He has a great 
grandfather who carried the title of senator, which might be of 
interest to my colleague from Georgia.
    And what he has now done is really something that we very 
much appreciate, which is to take his expertise as a 
businessman, and his interest in technology, and put them into 
the service of the community by demonstrating how we can make 
technology work for us, make it pay for itself ultimately.
    But it is also important that we are here, and that we are 
here with EPA, and I think too often people take this notion of 
conflict between the private and public sectors, and I think we 
understand. Unless we are able to work out a series of 
partnerships between the private and public sectors in which 
each makes a contribution that only it can make, we will not 
get anywhere.
    And the notion that the government and the private sector 
are enemies is a great outgrowth of progress, so I am very 
grateful to Mr. Lindell for his own marriage of economic and 
business skills with his environmental concern, and his 
technological achievement, and his really exemplifying for us 
the importance of this. And I thank you for giving all of these 
people a chance to help us form the right policy that is going 
to carry us forward.
    Chairman Schrock. Thank you very much, Congressman.
    Before we begin reviewing testimony from our witnesses, I 
want to remind everyone that we would like each witness to keep 
your oral testimony to five minutes if you can. In front of you 
on the table you will see a box that will kind of let you know 
when your time is up. When it lights yellow, you have one 
minute. And when five minutes has expired a red light appears, 
the trap door opens, and you will know that it is over. So once 
the red light is on the Committee would ask if you could wrap 
up your testimony.
    Mr. Lindell, after that introduction, welcome. The floor is 
yours.

     STATEMENT OF CRAIG LINDELL, AQUAPOINT, NEW BEDFORD, MA

    Mr. Lindell. Thank you, Mr. Chairman.
    Aquapoint is a waste water treatment company in pursuit of 
an infrastructure. Most people are in pursuit of a market. But 
we think that there is an infrastructure out there that will 
literally pay for itself. It is a fairly classic start-up, five 
or six years of losing money, five or six years of breaking 
even, now about a 30 percent annual growth rate for the last 
three or four years. We are expecting to double or triple 
probably in the next couple of years.
    Most of our 17 employees own equity. I actually capped my 
equity in the company at 50 percent. We subcontract all our 
manufacturing. We are trying to be smart business.
    What makes us different is we chose a path contrary to the 
rest of the industry. The reason has to do with Earth Day. We 
now know what a few glimpsed thirty years ago, and that is that 
we have to live within the carrying capacities of the natural 
systems of the planet.
    Infrastructure is no longer about the delivery of water and 
the disposal of waste water. Infrastructure is about integrated 
water resource management. It is about some form of adaptive 
relationship between human communities and the earth's 
supporting systems.
    Each adaptive situation is different. The wastewater we 
treat to irrigate a park is different from the water we 
discharge to the Potomac. An old crab house in the Potomac 
could add treatment and dramatically increase its property 
values. For a supermarket, treatment is a one-year return on 
investment. Every customer becomes a market of one. It is an 
interesting problem.
    Aquapoint is structured--sorry about that. I apologize. I 
got my pages mixed.
    Every customer becomes a market of one. This is why the EPA 
acknowledges the limits of our current regulatory framework are 
at hand, and the complexity of the issues require a change in 
paradigm. That is the Office of Water 2001.
    Mike Leavitt calls it a new sociology enabled by new 
technology. What is critical is that we provide infrastructure, 
an infrastructure flexible and robust enough to maximize the 
potential of economic development and asset appreciation, and 
designed to minimize the impact on natural systems and sustain 
the resources that provide for us, and it has to be affordable. 
There is no money coming out of Washington that I can see. So 
the trick is to design an infrastructure as such.
    The variety of dynamic and changing characteristics between 
the communities and the water resources will require a matrix 
of technology, skills, related products, and services as 
variable and adaptive as conditions the community must address.
    Our current onsite wastewater systems basically are large 
polluter of our groundwater, and central systems are large 
drainage--infiltration is a large drainage of our groundwater 
supply.
    Aquapoint is structured to provide this matrix with 
knowledgeable enterprise partners, and a suite of technologies 
that are modular, flexible, linked, affordable, and readily 
deployable. This is an infrastructure that you can have on a 
just-in-time basis.
    Its adaptive small infrastructure on a just-in-time basis 
and for a fraction of the cost of conventional sewer, and that 
adaptive small infrastructure is now being considered by the 
Water Environment Federation. It is in the process of 
considering the change of the name of one of its--that is not 
for me, is it?
    [Laughter.]
    Chairman Schrock. No, but it is not a bad idea.
    Mr. Lindell. Aquapoint's treatment process is a 
biologically stable, and they are less management-intensive. 
They require less electricity. They produce a fraction of the 
biosolids of conventional technologies. Some counties in the 
south are already zoning for distributed sewer where they know 
they are not going to get money for central sewer.
    Cape Cod has its own regulatory authority because the 
nitrogen levels on Cape Cod are damaging both to its 
groundwater and to its coastal environment. Mobil, Alabama will 
take waste water from an overloaded interceptor and treat it on 
location, and irrigate a park. It is a new EPA project, so 
mainframe systems are going to use distributive systems.
    This is not about Aquapoint, but about what Aquapoint is 
learning in the marketplace. This is about the Green Gazelle 
premise that environmental preservation can be job and capital 
forming. It can be. Our average wage is over $60,000 a year. 
Releasing its potential is important to our economy and the 
natural systems whose limits we are beginning to strain.
    Thank you.
    [Mr. Lindell's statement may be found in the appendix.]
    Chairman Schrock. Thank you, Mr. Lindell.
    Mr. Seydel, you have already been introduced properly by 
the Judge, so the floor is yours. Welcome.

     STATEMENT OF SCOTT SEYDEL, EvCO RESEARCH, ATLANTA, GA

    Mr. Seydel. I have, and I really want to thank the 
Committee for having us here and getting a chance to tell what 
we know about small business and environmental protection, and 
my hat's off to Congresswoman Majette for that introduction. 
She actually gave my remarks before we start here.
    Chairman Schrock. Then we will go right on to Mr. Catron 
then.
    [Laughter.]
    Mr. Seydel. I will go ahead and read them again for the 
record. My wife told me this morning that the way I talk I 
should give a two-and-a-half minute talk because it is going to 
take the whole five minutes to get it across.
    EvCo is a really interesting company that was conceived 
about 10 years ago, and we spent about five years doing a lot 
of very high-level technical research to see what could be done 
using municipal waste as raw materials.
    And Ms. Majette mentioned one of the projects that we work 
with, which is converting plastics that are going into the 
waste stream, mostly bottles and the cup you are drinking out 
of there, and food containers in your refrigerator. And as she 
mentioned, the vast majority of these products are going into 
the dump; not only are they going into the dump, but they are 
largely non-biodegradable, which means they are actually 
blocking the processes that work within our landfills and 
compost to make these materials more valuable as biological 
nutrients.
    So what we have done is basically tried to figure out 
constructive ways that these municipal wastes can be used in a 
way where the energy and the resource that is invested in them 
can be used again to make another product. And we have done 
that very successfully.
    In fact, we have four points that we follow very, very 
closely in our research, and that is, any product that we make, 
first of all, has to be made out of a solid waste, a municipal 
waste that is recovered from the waste stream. The second thing 
is we have to recapture all of the energy and all of the 
resources that have gone into that product to begin with. 
Thirdly, we have to make sure that the product that we produce 
is itself recyclable or compostible or both; and then fourth, 
we do not make a product unless in selling and applying it, it 
solves a major environmental and sustainability problem.
    As a typical example I would mention to you this morning, 
about two billion pounds of paper, of fiber from trees are used 
every year in making food packaging, perishable packaging, 
whether it is cardboard boxes that are full of fish and ice, or 
broccoli and ice, or whether it is cartons that you take your 
pizza home in, or things from the bakery. All of those are non-
recyclable uses of pulp fibers, and most of those fibers are 
virgin fibers.
    In other words, a tree is cut and has 100 days before it 
has been converted into paper, converted from paper into 
corrugated, corrugated into a box filled with chicken and ice, 
shipped to the Kroger store, and gone into the dump. That 
particular box, I think, as Congressman Majette pointed out, is 
usable, the fibers in that box are usable six to 12 times if 
you can recycle it.
    So what we have done is we have made liquids that we can 
put on those boxes that are still water repellent. We have made 
them out of recycled materials, and they replace non-renewable 
petrochemicals that are used in those coatings now, and 
paraffin waxes which we largely import now from places like 
China where they have high paraffin petroleum content.
    So we can right now take that two billion pounds of paper 
out of the waste hopper. There is another six billion pounds 
that are used in things like frozen food containers in your 
refrigerator, even Ben and Jerry's ice cream, we can convert 
those too because all of those can be repulpable and 
recyclable.
    Now we are working on things like replacing copper chrome 
arsenates that are applied to lumber in order that they can be 
used outside to build decking or to build children's play 
grounds. Those poisons have been proven to be carcinogeneses 
and they are in the subterranean waters that are being piped 
back to people for consumption.
    So those have already been banned and within a couple of 
years will be gone. We think we have a solution for replacing 
those products, and again it is made out of recycle materials.
    So that is the EvCo story. You have got something in your 
trash heap that you would like for us to begin to work on, we 
have got a bunch of Ph.D.s down in Atlanta that would like to 
get their hands on it.
    Thank you.
    [Mr. Seydel's statement may be found in the appendix.]
    Chairman Schrock. Great. Thank you very much. Fascinating 
subject. I live in Virginia Beach, and for years and years they 
took everything and took it to the dump. Now every two weeks 
Jude and I put out in front our house a 90-gallon blue 
container on wheels, and we are shocked at how fast that fills 
up every time, and for years and years and years that was going 
into a landfill somewhere, so it is an amazing process, and I 
appreciate what you do.
    Mr. Seydel. We thank you. Those are our raw materials.
    Chairman Schrock. Yes, that is great.
    We are now going to hear from Mr. Phil Catron. Your name is 
very familiar to me. My first chief of staff was named Rob 
Catron from Florida. I guarantee you are not related to him. I 
am not sure you want to be, so you know.
    [Laughter.]
    Mr. Catron. I am not going there.
    Chairman Schrock. No, you are not going there.
    Mr. Catron is the president of NaturLawn of America that is 
headquartered up in Frederick, Maryland. Congressman Roscoe 
Bartlett would love to have been here, but his schedule just 
does not permit that.
    Mr. Catron holds degrees in agronomy from the University of 
Delaware, and plant science and herbicide physiology from 
Rutgers. And we are delighted to have you here. The floor is 
yours.

   STATEMENT OF PHILIP E. CATRON, M.S., CPAg, NATURALAWN OF 
                  AMERICA, INC., FREDERICK, MD

    Mr. Catron. Thank you, Congressman Schrock, and members of 
the Committee. I do appreciate this time very, very much.
    There is a couple of traits that all Gazelles or 
entrepreneurs share in common, and the one that I think you can 
focus in on is that we identify a need, and then try to fill 
that niche. And as you hear from all of us, this is kind of 
where I think all of our businesses are coming from.
    And then on top of that it is sometimes easier to show 
people what you are doing as opposed to try to explain what you 
are doing, and educate them to train or to change their ways.
    So with that said, in 1987, NaturaLawn of America started 
in the basement of my home as an alterative to a chemical lawn 
care company, or a traditional chemical lawn care company, 
which I had been a part of for 10 - 12 years. Not that chemical 
lawn care is bad, there is just an alternative way.
    And so hysterically--hysterically--historically there was--
--
    Chairman Schrock. Leave the hysterics to Congress, right.
    Mr. Catron [continuing] The basic approach to lawn care is 
that one program fit every lawn out there, so whether or not 
you needed material that was applied to the property, it is 
very tantamount to if you cut your finger instead of putting a 
band-aid strictly on the cut, you would wrap your entire body 
in gauze, and that just did not seem to make a lot of sense.
    So promoting that was the green myth concept, that all 
lawns could be 100 percent weed free and green year around, and 
quite frankly, that is a marketing myth. It just does not 
exist. I wish it did, but it does not.
    So we started the company with that in mind, and obviously 
any new start-up reaches or hits some walls, some barriers. 
One, because we were taking a totally different approach to a 
traditional chemical. We wanted to be organic and natural 
biological. There were no products that would compete in the 
scale that we needed to. In other words, it had to be economic, 
but you had to give results.
    And yes, there were 100 percent natural organics out there, 
but they did not fit the economic scale, nor did they fit the 
results.
    So we scientifically blended natural organics with other 
components of synthetic organics to come up with a program of 
an organic-based product line that we have developed on a 
proprietary nature with NaturaLawn of America. That enabled us 
to wean lawns that had been treated chemically for years off of 
the total chemical basis to a closer and closer 100 percent 
natural organic-based program.
    The second hurtle, if you will, was the consumers tend to 
think that if a little is good, a lot is better. We call that 
the glub method. You know, one or two glubs, aaah, put a little 
bit more in there, and then we will try that. So there was an 
educational process that had to be done as well.
    And thirdly, since there were no products, we kind of 
misnamed them or renamed them as organic-based. It was a term 
that had not been around and was not widely accepted, and it 
has now become virtually accepted across the national within 
our industry, which is kind of nice.
    From a consumer's point of view, we did not know how we 
might be accepted, but over the past 17 years we have literally 
grown from a zero customer base to over 45,000 customers across 
the United States. We are operating in 25 states with 74 
locations, and these are all francished locations. We generate 
in excess of $24 million a year and employ over 400 people.
    One of the things that we really zero in on is our mission 
statement. It is based on three simple words: service, focus, 
and innovation, and the innovation is the fun part, and one of 
the things that I would like to introduce you to is that things 
that we are working on for the future that really tie in with, 
I think, EPA, it ties in with USDA, it ties in which all kinds 
of research is our goal is to be 100 percent food-grade 
fertilizer, 100 percent food-grade natural organic fertilizer, 
and we have got some stuff there already.
    And then secondly, we are very heavy into the beneficial 
microbes that are already existing in the soil, and one of our 
latest developments is what we call NP, or no phosphorus. 
States have been basically regulating the use of phosphorus 
because of algae blooms and pond eutrophication. Three years 
ago we introduced a no phosphorus program. We have a 
proprietary microbe system that literally is put on our 
fertilizers that contain no phosphorus. These microbes work in 
the soil, because phosphorus is tied up in the soil, and as the 
plant needs it, it release it from the soil to the plant and 
then shuts down, so there is no excess phosphorus going into 
the soil.
    I will wrap this up by saying over the years we have 
consistently been able to reduce the environmental impact that 
chemicals and pesticides have, and in 2002 alone, our latest 
statistics that came back, we have reduced the use of what we 
would call petroleum-based fertilizers by over 2.5 million 
pounds into the environment, and by synthetic pesticides by 
over a million gallons.
    We are pretty proud of that fact and appreciate the time, 
and the ability to talk to you. Thank you.
    [Mr. Catron's statement may be found in the appendix.]
    Chairman Schrock. Thank you, Mr. Catron. Every day I learn 
a new statement, and I think today it is the glub method, 
right?
    Mr. Catron. Yes.
    Chairman Schrock. That is pretty great.
    Mr. Catron. And we do have a franchise in Virginia Beach.
    Chairman Schrock. Oh, do you? Oh, good. Oh, really?
    Mr. Catron. Yes.
    Chairman Schrock. Okay, I may want to talk to you some 
time. Yes, great. That is why you brought him here, is that 
right? Okay.
    Our next witness today is Mark Clevey. We are glad to have 
you here. Mr. Clevey is the vice president of Entrepreneurial 
Development, and Director of the Green Gazelle Development 
Project at the Small Business Association of Michigan, which I 
believe is in Lansing.
    We are delighted to have you here. The floor is yours.

STATEMENT OF MARK H. CLEVEY, GREEN GAZELLE DEVELOPMENT PROJECT, 
             SMALL BUSINESS ASSOCIATION OF MICHIGAN

    Mr. Clevey. Thank you very much, Congressman Schrock.
    My purpose today is to talk about an economic development 
in Michigan and how we are trying to grow more companies like 
the three you have just heard from. Our goal in this project is 
pretty straightforward.
    We have teamed with the Center for Small Businesses in the 
Environment here in Washington, D.C. to look at barriers to 
growth for Green Gazelles, and let me just take a moment and 
define this so we are all clear on it.
    From our view, a Green Gazelle is a cutting-edge, fast 
growing, small business that researches, develops and 
commercializes break-through environmentally conscious 
technologies. These are the companies in the United States that 
also tend to generate most of the new jobs, most of the new 
wealth, and most of the new technology in the country; so this 
idea of Gazelle is a special thing.
    All small businesses are the background of our economy, but 
Gazelles are ones that are generating the new products and new 
technologies that are going to build the new industries that 
will offset those being offshored or impacted by globalization.
    In Michigan, we lost 185,000 manufacturing jobs in the last 
two years. We are trying to grow green manufacturers as fast as 
we can, and that is the essence of the Green Gazelle project we 
are doing in the state.
    Center for Small Businesses and SBAM, agree on something 
very clear, and that is this: that there will be no transition 
to an environmentally sound economy without Green Gazelles 
leading the way. These companies are the ones who take the 
risks, who will bet their children's college education on the 
deal. They are the risk-takers. They are the ones who bet it 
all. They are the backbone of our economy. They are the ones 
who make this country strong, and they are the ones who are 
leading the charge in the environmental area as well.
    We have put together a program in the state that is a 
dedicated economic development and business development effort 
in collaboration with Michigan State University, a number of 
economic developers, and led by our organization, which is a 
6,000-member small business organization in the state.
    We make our living in our organization by having these 
6,000 members pay us $165 a year in dues, and utilize the 
services and things that we provide. For Green Gazelles that 
includes a very, very dedicated effort into helping these 
companies get access to federal SBIR grants, to develop new 
technologies in collaboration with Michigan State University 
and others, a very dedicated effort in helping them overcome 
barriers to capital access, building business plans that are 
based on not just how they are going to meet their payroll, but 
how they are going to attract investors and take these 
companies public, helping them to get access to not Joe the 
banker, but discounted access to the best patent attorneys and 
best bankers in the state by aggregating them, and we use the 
power of these Green Gazelles to drive down prices and products 
and other things.
    We recently won an award from the U.S. EPA, Energy Star 
Program, for our project that we did that I just want to take a 
moment with.
    Our organization and myself went out and we funded the 
formation of a Michigan interfaith power and light 
organization, which is where new nonprofit made up of religious 
congregations across the state. We sent a team of auditors, 
energy auditors into each of those congregations, and they 
identify energy efficiency products that could be purchased, 
green products that could be purchased, and renewable energy 
opportunities that could be purchased.
    We then take those and aggregate them into a market, and 
then we go out and negotiate discounted and bulk prices from 
Green Gazelles for those kinds of products; energy efficient 
light bulbs would be an example; buying wind power; buying 
recycled materials.
    One of our project just looks at making recycling a cost 
product center--pardon me--a profit center by merging together 
different kinds of recycled materials from smaller 
congregations.
    So we find that we can use our program to stimulate the 
market. We can use our program to bring to the table people who 
are looking for markets, and we use our program as a way to 
facilitate the growth of Green Gazelles that respond to that 
market.
    We are not unique. There are organizations across the 
United States that could be doing what we are doing, and we are 
working for the Center for Small Businesses in the Environment 
to duplicate that. We are working with Jerry Lawson at the EPA 
Energy Star Program to showcase this model and we are working 
with the National Small Business Association here in Washington 
to work with our sister organizations in 23 other states to 
duplicate this model.
    Again, it is a business development model. Our success 
matrix is, is the small Green Gazelles that is being created or 
retained or expanded. That is what we are looking at, expanding 
their network, and basically we do whatever needs to get done 
to help them grow, including capital access barriers, removing 
regulatory barriers, stimulating new markets, and coming to 
Washington and educating people about what is going on.
    Thank you very much.
    [Mr. Clevey's statement may be found in the appendix.]
    Chairman Schrock. Great, and we thank you for doing that. 
Fascinating concepts, especially your work with churches and 
synagogues. Great idea.
    Our last witness today is Dr. William Farland. Dr. Farland 
is the Deputy Assistant Administrator for Science in the Office 
of Research and Development at EPA. Dr. Farland holds a 
doctorate degree from UCLA in cell biology and biochemistry, a 
master's degree in zoology from UCLA, and a bachelor's degree 
from Loyola University in Los Angeles. I know where it is, I 
have been there, that is where my wife is from, so I do not 
know why I stuttered.
    Delighted to have you here, and the floor is yours.

STATEMENT OF WILLIAM H. FARLAND, PH.D., OFFICE OF RESEARCH AND 
       DEVELOPMENT, U.S. ENVIRONMENTAL PROTECTION AGENCY

    Dr. Farland. Thank you, Mr. Chairman.
    Good morning, Mr. Chairman, and members of the Committee. I 
am honored to appear before you today to discuss the U.S. 
Environmental Protection Agency's activities to support 
development and implementation of innovative environmental 
technologies, many of which emphasize support for small 
businesses.
    The U.S. Environmental Protection Agency welcomes the 
interest of the Committee in this vital area. We believe 
innovative technologies lead to more cost-effective 
environmental protection and growth in jobs in the economy. 
More broadly, innovative technology can play an important role 
in moving to a model of environmental protection built on the 
principles of sustainable development, allowing us to achieve 
economic growth, and improve quality of life while protecting 
the environment.
    The EPA strongly encourages actions of the private sector 
to improve environmental protection. Creating or employing 
technologies to reduce pollution at its source, increasing 
recycling and recovery, finding less costly ways to treat or 
remediate pollutants are all ways being developed to lessen 
impacts on the environment. These technologies reduce the cost 
of complying with regulations and make environmentally friendly 
voluntary efforts possible.
    These same activities are also creating new jobs in a 
growing economy. We salute the small businesses, such as Green 
Gazelles, who are leaders in this area. EPA will continue to 
support efforts by the private sector, especially small 
businesses, to implement technology innovations for 
environmental protection.
    The EPA Administrator Michael Leavitt recently identified 
technology as one of the cornerstones of moving to a ``better 
way'' of achieving environmental protection. The development of 
environmental technologies is primarily the role of the private 
sector, and EPA's programs are designed to support private 
development by addressing specific barriers that discourage or 
hold back the development and adoption of these technologies, 
particularly those barriers faced by small businesses.
    The EPA has a number of primary programs that provide such 
support to the public and private sector for the development of 
new cost-effective technologies, and these technology 
development programs managed and coordinated through EPA's 
Office of Research and Development provide a continuum of 
support from early stage research to late stage 
commercialization. They include a number of programs I would 
like to briefly describe.
    The Small Business Innovation Research Program that you 
heard about earlier: While small businesses have historically 
accounted for over half of the innovation in the U.S., they 
often have difficulty getting equity capital for technology 
development. This is a particularly acute problem with regard 
to environmental technologies where regulatory changes can 
quickly change market opportunities and discourage private 
capital providers. I will say more about this program shortly.
    Another program is the Environmental Technology 
Verification Program. For years technology developers have been 
stymied in their efforts to sell new innovative technologies 
because potential buyers are often unwilling to take the risk 
that the technology will not perform as claimed by the 
developer. EPA's ETV Program verifies performance data of 
commercial ready technologies in an effort to encourage use.
    The Superfund Innovative Technology Evaluation or SITE 
Program encouraged the development and application of 
innovative technologies to clean-up at superfund sites. SITE 
focuses on commercial ready technologies, and provides for 
field testing at actual contaminated sites. As reported in the 
SITE report to Congress for Fiscal Year 2001, estimated total 
cost savings of clean-ups from the program are $2.6 billion.
    Another program, National Environmental Technology 
Competition, this NETC program is designed to competitively 
seek the best commercially developed new technologies to cost 
effectively address certain high priority national 
environmental problems, and to support their broad application 
in solving problems.
    For example, using NETC and other resources EPA has 
supported 12 demonstrations of arsenic removal technologies for 
small drinking water systems. Another 16 to 20 demonstrations 
are planned.
    Yet another program, is the Science to Achieve Results 
Grants Program; Research under the Star program, supports only 
universities and nonprofit organizations, but research results 
are widely publicized and broadly available. Many small 
technology development companies are started by or employ 
former academics who patent technologies developed as part of 
their research.
    And finally, I will mention Cooperative Research and 
Development Agreements, these so-called CRADAs can serve many 
purposes, but usually they are intended to transfer 
intellectual property or to cooperate in final development or 
testing to make technology commercially available.
    In some cases these are technologies that EPA developed in 
its laboratories and are being licensed to a private company. 
In others, the private companies use EPA's expertise or 
facilities to complete final testing or development of their 
technology. This opportunity is particularly attractive to 
small- and medium-sized businesses, which comprise the majority 
of EPA's CRADA partners to date.
    I will spend the last minute talking about the SBIR Program 
in more detail. This particular program allows recipients 
(after a rigorous review of their proposals to ensure that the 
projects meet EPA's needs and program priorities, are 
technically sound, and have environmental benefits and broad 
applications) to be funded in an early stage (the so-called 
proof of concept stage) and then perhaps continue through a 
second phase of funding if phase one results are promising.
    As an example of the SBIR approaches, we focused on 
significant portions of the program in pollution prevention and 
hazardous waste minimization. We are requesting green chemistry 
and engineering innovations as alternatives to high priority 
chemicals and environmental challenges ranging from inherently 
benign flame retardants to lead and mercury alternatives to 
green building design. Numerous of these technologies have been 
successfully commercialized and are making significant 
contributions.
    I have provided to the Committee a hard copy of materials 
that are available on our website that are basically a series 
of success stories, these SBIR programs and the good work that 
they are doing, and I can talk about several of those if the 
Committee would like.
    In my written testimony I have also described other 
examples of additional environmental technology activities or 
programs that benefit small businesses. These are available 
through our Environmental Technology Opportunities Portal, a 
one-stop shop that EPA designed to assist small businesses and 
others to find information that supports development and 
application.
    In conclusion, EPA believes that innovative technologies 
are central to achieving better, cheaper, and faster 
environmental protection, the role of small businesses is vital 
in developing and applying those technologies, creating new 
jobs, and enhancing U.S. competitiveness. EPA applauds the 
Green Gazelles and other companies who have demonstrated 
success in this area, and will continue to improve its program 
to enhance the potential of these companies to succeed.
    Thank you.
    [Mr. Farland's statement may be found in the appendix.]
    Chairman Schrock. Thank you, Dr. Farland. I was gently 
reminded that I mispronounced your name. I hate it when people 
mispronounce my name, so I apologize for doing that to you.
    Dr. Farland. You can be sure it is not the first time.
    Chairman Schrock. I will bet, yet.
    For Mr. Lindell, Mr. Seydel and Mr. Catron, you know, our 
economy has clearly been through a difficult period, and it 
appears that we are entering a period of expansion.
    Is your business expanding, and what is your sense of the 
state of the economy based on the businesses you are in? Mr. 
Lindell?
    Mr. Lindell. Our business is expanding. My worry is that--I 
put 1,000 people out of work with jobs going overseas. I am 
trying to figure how to put 1,000 back. I do not think it is 
all that easy, largely because the way the internet is 
changing, the way values--the value propositions that are 
basically penetrating the whole economy.
    I do not know what to do. We are trying to stay a smart 
business. We are trying to stay away from being a commodity, 
and we are trying to solve bitch problems with a matrix of 
products, the only way I know to stay above it. My son is 
looking for a job.
    Chairman Schrock. Okay, good point. Mr. Seydel.
    Mr. Seydel. I also own a few other companies, and one of 
them is in the textile and fashion chemical business, so we 
have----
    Chairman Schrock. We know where you are going to go on that 
one.
    Mr. Seydel [continuing] So you know because----
    Chairman Schrock. Yes.
    Mr. Seydel [continuing] But at the same time we are free 
traders, and we would have preferred to see this happen a 
little bit more gradually, I think. It is unfortunate that the 
export of jobs happened at exactly the same time as this 
recession. But I think it is fair to say that we are 
recovering. We have had to restructure that particular 
business.
    This one that we are talking about today though with EvCo 
will grow very significantly, has grown very significantly, and 
probably will continue to because there are just not too many 
people that have gotten into the trash heap and found out how 
valuable some of these materials are.
    Chairman Schrock. Sure. Mr. Catron.
    Mr. Catron. I think we are actually addressing the problem 
where we do not need to go offshore, and you almost cannot go 
offshore.
    Chairman Schrock. Right.
    Mr. Catron. We have a three-pronged approach because we 
grow by either selling new franchises, and as people get laid 
off or companies down size, we grow in that sector, so we 
reemploy and have them employ other people. Then we provide a 
service to the consumers, so when a new franchise starts, they 
are growing and providing services to the consumer that way, 
and just last year we started a retail line for do-it-yourself 
process.
    So depending on which segment we are addressing, we have 
grown and consistently grow anywhere from 18 to 22 percent a 
year.
    Chairman Schrock. Unless we ship everybody's front yards 
overseas you are still going to be able to do business, are you 
not?
    Mr. Catron. You know, we have a lot of inquiries from 
overseas----
    Chairman Schrock. That is good.
    Mr. Catron [continuing]--that they want our stuff.
    Chairman Schrock. Good.
    Mr. Catron. Which is nice.
    Chairman Schrock. Good, good, better than the other way 
around.
    Mr. Catron. Yes.
    Chairman Schrock. For the three of you again, in addition 
to the recent income tax deductions, expensing for businesses 
rated from 25,000 to 100,000 dollars, what has that done for 
you? Obviously it has helped. In what way? Mr. Lindell?
    Mr. Lindell. We are still in a break-even situation, so we 
are not taking advantage of any of the tax situations, nor do 
we pay taxes at this point. We keep pumping our money back into 
our business and breaking even.
    Chairman Schrock. Mr. Seydel.
    Mr. Seydel. Like I guess most Green Gazelles you will find 
that are in the--headed for an apogee, but not quite there yet. 
We do not--we are not making enough money to be able to profit 
from that.
    Chairman Schrock. Mr. Catron.
    Mr. Catron. I feel like I am in this boat by myself.
    [Laughter.]
    Chairman Schrock. Congratulations.
    Mr. Catron. It is a great thing. I would like to see them 
pump it up more. As S corporations or LLCs, it gives us a 
tremendous way to lower a tax liability where you are 
profitable but the cash is not there simply because of the 
generation of how it works. So by allowing us that deduction, 
believe me, it has helped a great deal in my business.
    Chairman Schrock. Great. Which of you has used any 
government assistance to start or expand your business? And if 
you have, what has been the result?
    Mr. Lindell. I have not used any government assistance.
    Mr. Seydel. We have been helped tremendously by EPA. EPA 
has kind of helped us shepherd this program all the way from 
their waste wise incentive programs with awards, and with 
supervision through their regional offices. So we have counted 
on them significantly. And then within the administration, John 
Howard, who sort of bridges the White House to EPA, has been a 
very significant player for us, including giving us a lot of 
contacts within the industry that have helped us along.
    Chairman Schrock. Great. Mr. Catron.
    Mr. Catron. I would echo that certainly the EPA has been 
very helpful in promoting what we are doing in one way, shape 
or form. We have actually written a chapter on integrated pest 
management for their textbook.
    The SBA has been helpful in that we are approved for SBA 
lending, small business lending. We do not have to go through a 
lot of red tape anymore for a new franchise to get that SBA 
lending, or loan I should say; and just individual state 
regulatory agencies can be very helpful.
    And I am not saying this because you are from Virginia, but 
Virginia was the first state that I am aware of that actually, 
they endorsed our programs for waterway protection, and gave us 
the permission, if you will, to produce and use a certificate 
from the Department of Natural Resources saying that this is a 
good thing, which is nice.
    Chairman Schrock. That is a huge issue at home, I can 
assure you.
    Mr. Catron. Yes.
    Chairman Schrock. I have questions for Mr. Clevey and Dr. 
Farland, but I would like to yield to Ms. Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman.
    This question could be answered either by Mr. Clevey, 
Seydel, Catron or Lindell. You have been very polite not to 
bring this up today, but I ask you to consider these three 
facts.
    First, according to the Bureau of the Census survey small 
firms get about 11 percent of their R&D budgets from federal 
resources. Second, large firms get about 26 percent of their 
R&D budgets from federal sources. And third, small firms have 
consistently been found to be more innovative and more likely 
to take innovations to market than large firms or academics.
    Given these facts and given that the EPA's SBIR program 
currently spent only the statutory minimum on small business 
research, would any of you care to make a suggestion about what 
the EPA should do to their allocation of SBIR of research 
dollars?
    Mr. Seydel. Small businesses are more efficient in the 
application of their funding. We get just as much done with 
half the money. That is what you said.
    Ms. Velazquez. Yes.
    Mr. Clevey. I work very closely with that program, and with 
the SBIR programs at the other agencies. I think there is a 
statutory question about what the limit is, and there is a 
whole series of questions about SBIR and how that money is 
used, the fact that there is no administrative money in that 
allocation, and a number of things.
    I think rather than trying to restructure the SBIR program, 
one of the things that I have recommended----
    Ms. Velazquez. This is not about restructuring.
    Mr. Clevey [continuing] I understand. Is lining up the 
programs, that a grant that is given to a university from EPA 
to work with new technology, there should be some way for that 
technology to roll into an SBIR to get it into the marketplace. 
And a lot of times using the SBIR is a way to leverage 
technology that has been funded someplace else. If those two 
things were connected, we would see a lot more productivity 
rather than funding a research at a university out of one hand 
and funding an SBIR out of another, and these two never 
connect.
    If we just aligned these programs, made it easier for small 
businesses to use SBIR to access technology that has already 
been developed by other funding, I think we would see 
productivity, and we would not have to do major restructuring.
    I am not sure I would say that the money being spent at the 
university to do basic research should be spent in SBIR. It is 
two different kinds of programs. But I do think that that grant 
should not be given to the university unless there is a clear 
path to use the successful results with an SBIR, and quite 
frankly, if it is not, that should be seen in the next review 
process as far as I am concerned.
    Ms. Velazquez. Thank you.
    Dr. Farland, I have heard your testimony and also we have 
been to your website. How much is your budget this year for 
SBIR?
    Dr. Farland. The SBIR budget generally fluctuates between 
$5 million to $7 million. I can give you the figure for 2004. 
It is closer to $5 million in 2004.
    Ms. Velazquez. I am sorry, it is close to?
    Dr. Farland. $5 million in 2004.
    Ms. Velazquez. Five million.
    Okay, your report on the long list of successes in the SBIR 
program are very impressive. Would you say that the SBIR 
program has helped EPA and the country to develop green 
technologies to solve environmental problems?
    Dr. Farland. Yes, absolutely, Ms. Velazquez. We are very 
proud of the work that has been done and the focus of the SBIR 
program in green technologies, particularly green chemistry, 
alternatives to hazardous solvents, and the opportunities that 
we have had to feed some of this research work directly into 
our sustainable development type programs within our pesticides 
and toxics program.
    Ms. Velazquez. We heard from the witnesses that innovative 
small businesses need money for research to solve environmental 
problems. Your research budget is of 2.5 percent----
    Dr. Farland. Yes.
    Ms. Velazquez [continuing] Is the minimum, it is a floor. 
It is the legal minimum you can spend. So if you heard that 
they need more resources, can we count on you to double the 
funds allocated for the program in the year 2005?
    Mr. Catron. I am going to write your answer down here.
    [Laughter.]
    Mr. Catron. Or maybe not.
    [Laughter.]
    Dr. Farland. Congresswoman, I think you know that the EPA's 
research budget covers a lot of different issues, and it is 
something that we need to make very tough decisions about. 
Every year we look carefully at how we expend those resources, 
and we make the best of the budget that we get.
    I cannot suggest to you today that we will double that 
budget. I can tell you that EPA supports small businesses to 
the tune of $1.2 billion.
    Ms. Velazquez. So we are talking about this particular----
    Dr. Farland. This research activity, I understand.
    Ms. Velazquez [continuing] SBIR.
    Dr. Farland. Yes.
    Ms. Velazquez. And we talk about, you know, at a time when 
the economy needs to create jobs, and listening to the success 
of these type of industry in the small business sector, and 
they are saying that they need more money, so.
    Dr. Farland. I understand. I will take that back------.
    Ms. Velazquez. You will be------.
    Chairman Schrock. Mr. Clevey is still waiting to write 
down, right?
    Mr. Catron. Right.
    Ms. Velazquez. Dr. Farland, your Environmental Technology 
Verification Program sounds like a wonderful idea. It should 
really help market this new technology. Of course, only about 
70 percent of the cost is covered. I know that the SBIR 
research award recipients get some help in paying for the 
verification.
    Do you find that a lot of older, small businesses with good 
idea cannot afford it?
    Dr. Farland. I think that that is difficult, but we have 
through the SBIR program looked carefully at the technologies 
that move into phase two, for instance. And for the others 
here, phase one projects get about $70,000 in terms of 
development costs. If they are producing a technology that 
looks very promising, they may move into phase two. There is an 
opportunity for some $225,000. There is also some incentive, if 
they have a private funder, to be able to get some additional 
monies from the EPA to match funding coming from a private 
vendor. And so we think those are good opportunities for us to 
provide.
    Ms. Velazquez. Thank you, and I hope that you go back and 
revisit your budget.
    Chairman Schrock. Thank you, Ms. Velazquez.
    Ms. Kelly.
    Ms. Kelly. Thank you, Mr. Chairman.
    We have got a real problem here because the innovation to 
create a green company, these Green Gazelles is there. The 
problem clearly was pointed out by our ranking member. There is 
not enough money. We have an example sitting right here at the 
table. Two out of the three people are very, very marginal 
sitting at this table.
    I am turning to you, Dr. Farland, because as our ranking 
member, Ms. Velazquez said, how can we help you get more money 
to these people?
    In my own district we have had two plastics manufacturers 
that have been in business, they have struggled along for close 
to 15 years making pseudo-lumber out of totally unusable 
plastic. They are recycling plastics that otherwise would build 
up in landfills, and for which there would be no use. Both of 
these, the OBIX Corporation in Stanford, Connecticut is one. 
There is another one up in Duchess County that I represent. 
Both of these have had to go out of business because they 
cannot get the funding that they need.
    Their products are bought. OBIX and the other one are both 
selling to places like Home Depot and Wal-Mart. It is not that 
they do not have an end user for those products. It is that 
they cannot get the financing.
    Now, the SBA can do some things, but do you have a website, 
for instance, where they people can log on to give them places 
where they can go to get the money?
    I am going to ask you a second question. Is there something 
that we can do legislatively? Everybody that comes to us wants 
money, but legislatively is there a way that we can reconstruct 
what we are doing so that it makes sense to help these people 
get these wonderful ideas, which we truly need, out into 
general use and get them up and moving?
    And if anybody else want to answer these questions after 
Dr. Farland, please feel free.
    Dr. Farland. Congresswoman Kelly, I think--well, both of 
those questions are very good ones. We have recognized that the 
barriers that you see to the funding of some of these programs 
come from the lack of venture capital that is available for 
many of these folks simply because of the small profit margin, 
and the lack of confidence that they can actually produce what 
they say they can produce. They do not have a large track 
record and so on, and the lack of information as to what is out 
there and what is available.
    We have tried to deal with the latter two of those, 
particularly looking at the issue of the website. We were asked 
by Congress to develop a one-stop shop so to speak, and we did 
that this year, and that is the ETOP website that I mentioned, 
and the website is listed in my testimony.
    In addition to that, in terms of what we could do 
legislatively, I mean, certainly the one thing that we 
understand the SBIR program is based on the total funding for 
federal research, and federal research has the ability to 
support technology development, and that technology development 
actually stimulates these types of activities.
    And so I can only suggest at this point that one thing that 
always helps us is supporting the importance of the federal 
research that develops these types of technologies.
    Ms. Kelly. Even if I put a link for the folks in my 
district who are these nascent corporations that are green 
corporations that truly need your support, and I put that on my 
website, would that help them find what they need?
    Dr. Farland. Oh, I think it would. Yes, absolutely. I mean, 
our sense is this--this ETOP website, this web portal that 
connects them to quite a number of different programs has the 
ability to provide them with a resource to go to if they have 
questions, that links them directly to the SBIR solicitations, 
those types of things are all very important sources of 
information for these businesses that are trying to get into 
the market.
    Ms. Kelly. Mr. Clevey, feel free anyone to jump in here. We 
have a problem, we have to try to help you figure out how we 
can solve this problem.
    Mr. Clevey. Let me just say on the SBIR program that 
environmental topics and funding topics show up in multiple 
agencies, not just EPA. And the National Science Foundation, 
for example, under the agile manufacturing topic area has a 
whole group of topics dedicated to environmentally conscious 
manufacturing.
    So I think part of the issue is looking at how 
environmental technologies are showing up across the research 
budget in the United States. And EPA clearly has a role in 
that, but EPA doesn't fund renewable energy technologies. EPA 
is not funding environmentally-conscious manufacturing, and 
these kind of things show up in others.
    So one thing I think that you could do legislatively is 
similar to what has been done in the early phases of homeland 
security and the model that was done with the partnership for 
next generation vehicle, and that is simply ask the agencies to 
identify all of the environmental things that they fund, and 
group those together someplace, and whether it is EPA who 
coordinates it or not, the fact is that environmental 
technologies are funded all over the federal government.
    The transportation budget is funding air quality clean up. 
It does not know it, but I do as a local person who is working 
with our Department of Natural Resources to drag that money out 
of our local Michigan transportation to fund technologies of 
Green Gazelles to bring a new technology into our state that 
allows truckers to shut off their engines so that they can 
sleep for 13 hours without having to run their diesel trucks.
    The funding for that is in the transportation budget. It is 
not--I wish it was in DNR's budget or others, but you know, 
there are pathfinders like myself who figure out how to work 
with these companies. I can give you a whole long list of ways 
that you could make it easier for us to do our job, but the 
bottom line is you are doing quite a lot now if we just simply 
aligned those things, and I think EPA would be a logical place.
    If they look inside the National Science Foundation and see 
projects that relate to the environment, they can simply 
earmark those, and they should be encouraged to do so.
    The partnership for next generation vehicle worked quite 
well that way, and I know, as again in the early phases of 
homeland security President Bush asked all the agencies just go 
through your programs, identify anything that relates to 
homeland security, and you know, list it and broadcast it out, 
and then they started--that actually served as the foundation 
for many of the things that have come now.
    I think that there is quite a lot going on. I would 
encourage you to do that as a beginning. Let us find out where 
the holes are, and then ask how can we fill the holes.
    Ms. Kelly. Mr. Farland. I am sorry.
    Mr. Lindell. I am sorry, no.
    Ms. Kelly. Go ahead.
    Mr. Lindell. May I offer a thought because I do not need 
your money?
    Chairman Schrock. Why are you here?
    [Laughter.]
    Mr. Lindell. I would like to------.
    Chairman Schrock. It is refreshing.
    Ms. Kelly. Everybody who comes wants our money.
    Mr. Lindell. I would like to pick up on Mike Leavitt's 
theme, which is, this is a new sociology enabled by technology. 
We have been spending all of our time talking about technology 
being the innovative piece. What I try to do, and not very well 
I must admit, is to suggest that the innovation can be 
conceptual as well as technological, and there is altogether 
too much focus on technology as being the solution when quite 
simply you can reconceptualize what you are doing, and I will 
give you an example in a second, and be quite dramatic.
    And I will tell you it is in my text, and there is a county 
outside of Atlanta that decided that it was not going to get 
conventional sewer, and so it decided that--but it was going to 
have to double the size of its property because they were going 
to have to put septic systems in all over the place. That was 
going to cut property values in half for developers, so they 
needed a solution.
    Their solution is distributed sewer, and here is what 
happens. The developer goes in and builds the infrastructure 
for the community and gives it to the community. The 
infrastructure is done with technology that is considerably 
less expensive to buy and operate than conventional sewer. In 
that county conventional sewer runs somewhere in the towns that 
have it, the fees are somewhere between 450 and 600 dollars a 
year. In the new formula the fees could be as low as $80 a year 
per home.
    So there is tremendous amount of money in the marketplace 
if it is reconceptualized, and that is where we have difficulty 
getting the message across.
    Ms. Kelly. Dr. Farland, you had one------.
    Dr. Farland. Just a brief follow up, Congressman Kelly.
    On our website you can actually find a listing of 
environmentally relevant SBIR programs that are funded by other 
agencies. This was the type of comment that we were making in 
terms of sharing of information. Those programs are out there 
by year. Again, we can use lots of help in terms of making sure 
that we identify all of them, but the vast majority of them are 
found. If you look for 1993, you will see funding from the 
Department of Defense and the National Science Foundation and 
others that are relevant to environmental problems.
    Ms. Kelly. But Mr. Clevey did not seem to feel that it was 
a complete enough list; is that what you were saying?
    Mr. Clevey. I think it is a good start, and in part, if 
we--one is looking backwards, the other one is looking forward. 
And I think as we start deciding what the agency missions are, 
what kinds of things we are going to be focusing on. I mean, 
the question I think needs to be asked of the National Science 
Foundation, how does your environmentally-conscious 
manufacturing program support the manufacturing goals at EPA? 
That is what I think needs to get done. Let us go forward and 
let us put somebody in charge of stimulating Green Gazelles, 
and asking question. You know, do the programs that we have 
now, do they--you know, do they get in the way of Green 
Gazelles? Do they give priority to Green Gazelles?
    I mean, the bottom line is is if we are going to recharge 
this economy Gazelles are going to have to do it. If we want 
Gazelles to take on the job of environmental issues, then we 
are going to need to encourage them to do that. In many cases 
it is just opening doors, removing the logs from the road.
    I mean, these are entrepreneurs. They will find ways to do 
it. We can make it easier for them, or we can make it harder 
for them.
    Ms. Kelly. Thank you, Mr. Chairman.
    Chairman Schrock. Thank you, Ms. Kelly.
    Judge Majette.
    Ms. Majette. Yes, thank you.
    Well, again, let me thank and congratulate Mr. Seydel for 
truly proving here in the twenty-first century that old saying 
that one man's trash is another man's treasure.
    Mr. Seydel. Thank you.
    Ms. Majette. But I know that many people argue that the 
recycling of plastics has not taken off because there is really 
no economy of scale that has been created in order to make it 
economically or financially viable.
    Manufacturers say that they cannot get a stream of high-
quality material at a reasonable price, and recycling companies 
say that they cannot guarantee such a stream until sales grow 
robust enough to drive down the cost.
    Now, have you found that this to be an obstacle in the 
development of EvCo Research? And on a broader scale, do you 
see that there is or we can create a market for recycling 
plastics and improving that ability to recycle in the coming 
years? And I would suppose that you would agree with me that 
that would be very important given the statistics of the high 
percentage of unreclaimed plastic waste. So if you could 
address those questions.
    Mr. Seydel. Thanks a lot. We are not using it all up yet, 
but we will, and I think there is going to be a problem because 
the collection rate is very low. I know that Senator Jeffords 
has proposed a national deposit law that would presumably bring 
more of the bottles back, because we have 10 deposit states now 
where we collect about 85 percent of the bottles that are 
recollected. And in our own state, Georgia, we collect less 
than 10 percent of the bottles packed because we do not have an 
incentive to collect.
    I think we will need to have an incentive to collect. There 
is a lot of resistance by the people who have to do the 
accounting and the collecting and the returning of these 
bottles to use. It is an expensive process, but I think we will 
get there.
    There have been several studies recently, one by an 
organization called Global Green, and by businessmen, and the 
Environmentalists for Recycling who have shown that the 
California plan for recapturing plastics works quite 
effectively.
    Now, on the use side, as we grow we could easily consume 
all of the plastics that are presently going into the waste 
stream because there are just so many uses for these materials 
when they are economically collected and put back onstream.
    Thank you very much. It is a good question.
    Ms. Majette. Thank you. And for Mr. Lindell, what is that 
county in Georgia that you just talked about?
    Mr. Lindell. Carroll County.
    Ms. Majette. Carroll County. Okay, thank you.
    Mr. Lindell. They are one of eight or nine counties now 
that are zoning for distributive infrastructure.
    Ms. Majette. Thank you.
    And I do not mean to beat up on Dr. Farland, but what do 
you think is the best way in which the EPA can provide more 
support and more resources for these types of businesses and 
other businesses like them?
    What is the number one thing that you think EPA can do or 
that we can do as members of Congress to help these businesses 
continue to grow and thrive?
    Dr. Farland. Again, Congresswoman, I think we have really 
made an effort to pull together quite a number of programs in 
research and development as well as across the agency. You 
heard about Energy Star and a number of those types of programs 
who really are focused on these issues, these environmental 
problems that are looking for solutions. And I think the 
encouragement of the Green Gazelles that you are hearing today 
is something that is going to be extremely important.
    Getting the matches made between the problems, the 
agencies' priority programs, and these individuals, I think is 
something that will be one of the biggest things that you could 
help us to do.
    Our entire program is focused on starting at the beginning 
where someone has an idea, and funding it all the way through 
to the point where we are assisting in commercialization, and I 
think we will continue to do that broad spectrum of work.
    Ms. Majette. Well, is it a matter, though, of connecting 
the dots and getting the information that already exists to 
people, or getting the resources that already exists directed 
to where they can be most effectively needed?
    I mean, because it sounds like everybody kind of knows what 
the problem is, but we have not really put all the different 
pieces of the solution, the big solution together, and I guess 
I more specifically, what is it that we really can do other 
than say, well, we should pull all these things together?
    I mean, what--as a practical matter, what is it that we can 
do short term and maybe long term, but certainly short term so 
that Mr. Seydel and Mr. Lindell would be able to take advantage 
of the tax breaks that currently exist, and we can also bring 
in other Green Gazelles and other potential Green Gazelles to 
do the kind of things that need to be done, and thereby reduce, 
perhaps, the amount of money that is being spent in other ways?
    Dr. Farland. Again, the majority of this work is funded by 
the private sector, but we have the ability to help that, again 
through the sharing of information, through the development 
work that we do, and through the partnerships that we have with 
these Green Gazelles, and I think that is something that we are 
strongly committed to, and will continue to develop.
    Since the SBIR program started, we have funded $88 million 
in terms of these small business incentive-type programs, and 
close to 1,000 contracts that have put this type of technology 
out there.
    Again, just getting the first stage of technology 
development going encourages the private sector to then take up 
the technology and fund it; so we have got to continue to try 
to do that.
    There is always a concern about the federal government 
essentially funding the private sector, and that is something 
that we are challenged on frequently in terms of our program. 
We think we are doing the right thing.
    Ms. Majette. I see my time is up. Thank you.
    Chairman Schrock. Before I go to Mr. Ballance, let me 
follow up on one thing the Judge said and Ms. Velazquez said.
    You gave her a figure of $5 million a little bit ago. Was 
that for the Green Gazelle project?
    Dr. Farland. That was for the SBIR program.
    Chairman Schrock. SBIR program.
    Dr. Farland. In 2004.
    Chairman Schrock. What percentage of the EPA budget is 
that?
    Dr. Farland. Well, I will not do the math right here.
    Chairman Schrock. It is probably so infinitesimal.
    Dr. Farland. The EPA overall budget is about $7 billion.
    Chairman Schrock. Okay. All right. That is my point. I 
mean, it seems to me to double that would not make an--I think 
that is what you were getting to as well. You know, we need to 
put more money in to make sure these guys stay alive and we 
would bring a lot more of then on board. Is that what you're 
indicating?
    Ms. Majette. Yes.
    Chairman Schrock. Yes, that is right. And I think that is 
where she was going with that, and I agree with that. I mean, 
if it is infinitesimal, where does the rest of the budget go, 
because I can think of no better use of money for EPA than to 
help these three men and thousands and thousands of others that 
we would like to create just like that. That was my point.
    Ms. Majette. And the issue of how do we get the information 
out to people.
    Chairman Schrock. Exactly. Yes.
    Ms. Majette. I mean, putting it on a website is fine, and 
certainly my office would love to have a link or be able to 
have a link so that people who come to our website can access 
that information. But everybody does not get their information 
the same way, and I guess what I am suggesting is we have to be 
more--I believe it is imperative for us to be more proactive in 
utilizing other ways of getting that information out there.
    And to the extent that we can partner with you, and perhaps 
even private industry partnering with you to do that, I think 
that will enure to all of our benefit.
    Chairman Schrock. And why should businesses have to go to 
their congressperson's website. I think the government agency 
involved should be so high tech and so responsive that anybody 
could go in there and plug in. I think that is what we are 
getting at too.
    The gentleman from North Carolina, Mr. Ballance.
    Mr. Ballance. Just briefly, I noticed the gentleman in 
large metropolitan--I am from a rural area, North Carolina. Are 
the same opportunities available in rural areas where you do 
not have the same kind of concentration of these recyclables? 
And what about competition, do you have competition in these 
areas?
    Mr. Lindell. We have competition. Essentially these 
technologies work for single-family homes up to several million 
gallons a day. They are ideal for small rural communities. We 
have actually done them. They are ideal for self-help programs, 
and it is just a question of--and I would like to talk to you 
about whatever the county is, because we are actually trying to 
do precisely that is Louden County in Georgia right now.
    Mr. Ballance. Right. Mr. Seydel, what about foreign 
competition?
    Mr. Seydel. I think we are going to give the foreigners 
some good competition. You know, we have this technology that 
we are developing, it is patented in 70 different patent 
conference around the world, so I think we are pretty well set 
to go.
    And we have a plant, by the way, in Greensboro, North 
Carolina where we are recycling vegetable oils from McDonald's 
friers, and turning them into paraffin wax replacements that 
are both biodegradable and of course less expensive. So we 
appreciate North Carolina very much.
    Mr. Ballance. All right. Mr. Chairman, that is all the 
questions I have.
    Chairman Schrock. Thank you, Mr. Ballance.
    Mr. Clevey, you said your testimony that we will not 
transition to an environmentally sound economy without 
businesses like these leading the way, and I agree. What makes 
you so sure that the private sector will lead the way? I hope 
they do, but what proof do you have that that is the case?
    Mr. Clevey. Environmental technologies, for the most part, 
can be an often should be looked at as a productivity 
improvement, and green technologies often outperform existing 
technologies that are based on an oil. We are making plastics 
in Michigan, biodegradable packing materials made out of corn 
and rice hulls in Michigan based on a technology based at 
Michigan State University. Most styrofoam is made out of oil.
    So if we start looking at, you know, taking the green 
products that we have, just recycle material or materials that 
have environmental performance, oftentimes they are more 
expensive simply because they are early stage products. But in 
the larger scheme of things they cost less to produce, they 
cost less to process, and if we truly got to a recycled economy 
our materials cost would drop almost to zero.
    So the opportunity here we see is Gazelles are mining a 
market niche, and they are able to produce products that 
outperform their competitors and oftentimes cost less than 
their performance.
    There are some metrics that you--anyone who is in the 
business of innovation looks at, and certain metrics on the 
kinds of companies that do well, but essentially we just take 
two.
    What percent of annual sales is based on products 
introduced within the previous three years? It tells you a lot 
about the level of technology and innovation and competition 
within a given industry.
    The other one is, how much--what percent of your annual 
sales is invested in new product development? And that tells 
you a lot. In the United States our old industrials, about five 
percent of the annual sales is invested in new product 
development, which means that those companies are often prime 
candidates for offshoring and low wage rates because they 
cannot--their products oftentimes cannot compete based on 
performance.
    Green products and government, these are companies that are 
spending, as you can see, a tremendous amount of time in making 
products that will simply outperform. A lot of the barriers 
they face are artificial barriers that are simply blocking the 
growth of their industries, and all three of them can give you 
those kinds of stories.
    They overcome those because they are good business people, 
and the fact that their products are less expensive, outperform 
their competitors, and do not destroy the environment, which is 
a tax on our economy, and quite frankly, a tax on their 
customers, is a competitive advantage.
    Chairman Schrock. Are federal regulations and is federal 
bureaucracy getting in the way to the point where some business 
just say the heck with it, I could create these things, but 
when I have to deal with the federal government it is just not 
worth the effort?
    Or is it just people are not inclined to go into that sort 
of thing?
    Mr. Clevey. I think it is a combination of things. First of 
all, the private sector, if you are a large corporation and you 
can get an R&D tax credit, yes, you may be investing tax 
credits, but small companies do not get that. Venture 
capitalists and banks do not fund new technology development. 
So oftentimes these companies are forced to, go without, or in 
the cases where they have a program like ours, and we can 
basically write these grants for them, and help them get this 
funding for them, it makes it easier.
    I do not think that there is a company in the environmental 
area that is not very comfortable with working with government 
at the local, state, or federal level.
    Chairman Schrock. Say that again.
    Mr. Clevey. I do not think there is a company in the United 
States that has an environmental product that is not very 
comfortable in dealing with the government----
    Chairman Schrock. Okay.
    Mr. Clevey [continuing] Because this is just a course of 
doing business at all kinds of levels. I think one of the 
concerns I hear is that there is no consistency or purpose 
between the environmental regulations at the local, state and 
federal level. There is a lot of conflicting things.
    There are rules on the books that do not get implemented. 
Phil was telling me about one of his competitors who has a 
contract here to do lawn care service that as far as he is 
concerned does not meet the regulatory guidelines of the 
federal government, and you know, wonders how that company can 
continue to sell their product and get the contract to take 
care of the lawn service right here in Washington.
    So there are barriers. There is all kinds of things that 
the government can and cannot do to support these companies. I 
mean, the good news is are they are going to do this whether 
you help them or not, or whether you are in the way or not. 
From a public policy point of view, because we get an economic 
benefit and environmental benefit by stimulating the growth of 
these kinds of companies, we really should be asking a lot of 
questions about how we can do this.
    An investment tax credit, if I am an investor and I invest 
in a Green Gazelles, I should get an investment tax credit for 
investing in the company. If I am a socially responsible 
investment fund that puts--invests in a mutual fund that 
invests in these kinds of companies even though their returns 
are four percent higher than Standard & Poor's, they are not 
getting any kind of special consideration for investing in 
these kinds of companies.
    If I am a large company, a large durable goods 
manufacturer, and I buy a license to enter into a joint venture 
with a small company, green business, do I get some special 
benefit for doing that?
    If I file a patent, if I am a green company and I file 
patents, can I write those patents off as a cost of doing 
business?
    The SBIR program, for example, does not fund patents. That 
is not an allowable expense under an SBIR program. Well, if you 
are asking a high technology company to invest a couple of 
million dollars of federal research into a new technology, and 
you are not willing to help cover the patent costs, and you 
expect them to go out and get venture capital, well, I do not 
know any venture capitalists that would invest in a company 
where the technology is not protected.
    So by simply saying, yes, you have to spend $70,000 on 
patents for the $100,000 research grant you got, there is some 
logic disconnects here. Yes, there are barriers.
    To answer your question, do Green Gazelles not do these 
programs because they are too hard to do? No, it simply slows 
down how fast they can provide a return on investment back to 
you, and that return on investment is jobs, tax dollars, and 
economic development.
    Chairman Schrock. I was sitting here while you were talking 
and asking why some of these things do not exist to help those, 
and the answer I got was because there is nothing in place to 
do that. Nobody does that. Maybe we have reached a point we 
need to start creating a situation where that does exist to 
incentivize people to do that.
    Mr. Clevey. I think just asking the question again, what do 
we have in place that these Green Gazelles can use, and are 
they connected well. I think EPA has done an outstanding job. 
But to say the environment is EPA's job is, I think, the wrong 
way of looking at this.
    The Department of Energy is--the amount of money that they 
spend on renewable energy versus some of the other things that 
they fund, that would be worth looking at.
    Chairman Schrock. Yes.
    Mr. Clevey. I think the National Science Foundation does an 
outstanding job in funding environmentally-conscious 
manufacturing technologies, and the grants that they go and 
give to companies are directly related at keeping those 
companies more competitive so that they are not forced to make 
the choice of do I have to move.
    In Grand Rapids, we have a company that manufacturers 
refrigerators moved to Mexico because their wage rates were so 
much lower. We could have reduced all of their taxes and taken 
away every single one of their permits, and they still would 
have moved to Mexico.
    Chairman Schrock. I know. I know. I know. I do not know how 
to solve that one.
    Mr. Clevey. Their products make them more competitive. That 
is how you solve it, research and development.
    Chairman Schrock. Mr. Seydel.
    Mr. Seydel. Let me just add one brief comment. I think 
everyone here can see, Congressman, from Mr. Clevey's comments, 
and the people that he represents, and then behind me is Byron 
Kannard, who is the Washington version of Mr. Clevey, these 
people are the connectors for us because we really are so busy 
in our laboratories and in our development cycle it is very 
difficult for us to be able to look into these sort of things.
    I think the federal government could go a long way by 
encouraging these people who are the reason why we are here 
today, and the reason why we get so well connected with 
government agencies. They are the nonprofit organizations that 
are the interface, and frankly, you know, I think a lot of the 
major industries have their own associations and lobbyist 
groups that are here in Washington, but Green Gazelles, 
entrepreneurial people do not have funds for that.
    So I think you could do yourself a really good favor as far 
as connectivity is concerned by fueling these guys so that they 
could go out into the United States and drag these people in. 
Maybe they could say you do not pay any dues right now, and 
then later on if you get successful we would like for you to do 
some payback, sort of like we do with loans to kids going 
through college, you know. Just some kind of advance to sort of 
help them help you make the connection so these people can move 
a lot faster, because listening to some of the things that EPA 
is offering today I can tell I am over there all the time.
    I won their waste wise award for five years, but I did not 
know that some of those programs were going on until I heard 
these two guys talking about it. And if Green Gazelles had not 
brought me here today, I would not have heard it.
    Chairman Schrock. Dr. Farland, why does Mr. Seydel not know 
that?
    Dr. Farland. Well, again, this is one of the barriers I 
think that we have identified; that we need to get that 
information out.
    Chairman Schrock. Why are the barriers there and how do we 
break it down?
    Dr. Farland. Well, we are looking at breaking it down by 
providing those kinds of links through the website, by working 
with Mr. Clevey, with Mr. Kannard and so on to really try to 
make sure that people are aware of all of these programs that 
we are carrying out.
    So this hearing today is a good start.
    Chairman Schrock. Right.
    Dr. Farland. And we will see if we can get people aware of 
this web portal.
    Chairman Schrock. Great. Mr. Lindell.
    Mr. Lindell. Yes, thank you.
    Your comment that we maybe need to create something takes 
me right back to Tracy Meehan's comments that the complexity of 
the issues we face right now is so high that we need a change 
in paradigm. I would suggest that that language is the same.
    Chairman Schrock. It is the same. I am sure of that.
    Mr. Lindell. And that EPA ought to be engaged on that 
basis.
    Chairman Schrock. Yes, the last thing I wanted to do when I 
came here was create anything, because what it does is just 
cause grief to the business world and the people we represent, 
but what we need to create is a system where we can tear down 
some of these barriers to make it easier for you all to do 
business. That was my point, and I agree with that.
    Mr. Lindell. Very true.
    Chairman Schrock. Dr. Farland, in your testimony you said 
that Governor Mike Leavitt believes technology will help us 
move to a better way of achieving environmental protection. Can 
you give us some examples of technology improvements that have 
led to improvements in our environment?
    Dr. Farland. Sure. I had three examples in my written 
testimony that the Committee can take a look at, but let me 
mention one of those, and then two others.
    One of them is a company called Niton, and it is one of 
those that we highlighted in our success stories for SBIR. They 
developed a detector for lead and lead paints. I think you 
understand that lead is a very serious environmental problem 
because of the use of lead paint, because of past history of 
smelters and so on. This particular technology coming out of 
small businesses now used industry-wide because it 
significantly has the ability to reduce the costs associated 
with analyzing for lead in soil, so that's clearly an example 
where there has been a significant advance.
    We developed some research within our own laboratory in 
Cincinnati that dealt with the problem of the indoor 
environment, and that's molds. The ability to actually identify 
hazardous molds through using advanced technology, genomic 
technology, has now been picked up in five different patents, 
and is being marketed, commercialized by a number of companies 
through CRADAs, the type of thing that I described.
    The third example that I would give you would be one 
related to air pollution, and the fact that there are a number 
of extremely good retrofit technologies for diesel that are 
substantially improving the quality of the air and the 
emissions from diesels, taking care of particulate matter and 
sulfur and nitrogen oxides that are problematic.
    Those are all examples of the kinds of technologies that we 
have stimulated and have been applied to very difficult 
environmental problems, and there are many more.
    Again, I hope people will take an opportunity to look at 
these small business success stories. There are about 18 of 
them on the website.
    Chairman Schrock. Do you feel that we have the right 
incentives in place, right incentive programs in place to 
encourage more businesses similar to the businesses you have 
heard talked about here today?
    Dr. Farland. I do. Mr. Schrock, I think you have heard that 
there are significant barriers out there, and we think that we 
have addressed quite a number of those with the six or so 
programs that I have talked about, and we are doing more.
    I have mentioned in my written testimony some of the future 
work that we will be doing with regard to the National 
Environmental Technology Council where our regional people will 
come in and talk about the problems that they are faced with, 
and we will try to make some matches with some of the 
companies, people who can begin to apply technologies to solve 
those problems.
    We have a group of external experts at EPA that will come 
in and give us an opportunity to get their best ideas and what 
types of things will work.
    Chairman Schrock. There are a lot of grant programs out 
there to help folks like the men we have here today. Would 
there be a need for consolidation of some of those programs so 
people would only have to go to a limited number of places, or 
should each one of those be run independently, which, frankly, 
makes it more difficult for businesses to tap into I would 
think?
    Dr. Farland. Right. I guess, just to be clear, Mr. 
Chairman, EPA has just one grants program and that is the Star 
grants program that I talked about. SBIR is primarily 
contracts, but in effect, these are all used to support the 
types of programs we are talking about.
    The various grants and contracts activities that I have 
described and the CRADAs that I have described all target 
different audiences, and different types of technologies, some 
at the very beginning of the process, some later on in the 
process, and so on.
    So I think all of those programs need to come into play as 
we address some of these problems.
    Chairman Schrock. Doctor, I have one unrelated question 
before we are finished here. Your office is working on a metals 
framework assessment.
    Dr. Farland. Yes.
    Chairman Schrock. And I know this assessment has faced 
several delays. Can you give me any kind of a new or final time 
line when this will be completed?
    Dr. Farland. Yes, Mr. Chairman. We have been working on 
this issue for awhile as you know, and again, this is of great 
interest to the small businesses who deal with many of the 
metals----
    Chairman Schrock. Right.
    Dr. Farland [continuing] And metal products that we are 
talking about. That framework is in very good shape. We are 
making the final changes this month. It will go to our science 
policy council early in June. It will be released for a peer 
involvement, an expert involvement workshop which is scheduled 
for the beginning of July, and then it will be reviewed by our 
science advisory board in the September time frame, so we 
should have that framework completed, reviewed, internally and 
externally, and in final form by the end of the year.
    Chairman Schrock. Great, thanks.
    Your presence here today and your testimony and answering 
the questions has been very helpful. I did not choose to have 
this hearing just to pass the time of day to bring you all from 
where you live. We did it because of serious stuff, and the 
three of you who do the business end of it are doing some 
magnificent things, and we need to increase your numbers, many, 
many fold. And if there is a way we in Congress can help the 
government part of this make it easier for you to create more--
expand your business and create more business, that is what we 
want to do, and you have given us a lot of food for thought 
here, and believe me, I am appreciative of everything you do 
and what you said here.
    Before we finish, do you all have any final comments you 
would like to make? Mr. Lindell.
    Mr. Lindell. I have on page 2 of my formal text seven 
recommendations that you might want to consider.
    Chairman Schrock. All right. Maybe I will look at them 
afterwards. On page 2, let me look here a minute.
    Okay, I only see five, but we will go through them. Great, 
thank you.
    Any others? Mr. Clevey.
    Mr. Clevey. I just wanted--the point you made about 
consolidation, I do think that there has been examples in SBIR 
across agencies where there has been some sharing and 
cooperation and things.
    I think it would be worth at least a pilot project to ask 
the question, what are the--you know, the number one 
environmental priorities that we have to deal with, and to ask 
all the SBIR agencies, are you planning on funding anything in 
this area; and if so, simply earmark it, put a star next it, et 
cetera, and if a proposal comes in from anywhere in the United 
States to any agency for that topic area----
    Chairman Schrock. Sure.
    Mr. Clevey [continuing] Somehow it gets--there is an 
interagency group that looks and those and makes some decisions 
about perhaps fast-tracking them, consolidating money.
    One of the problems, I think, I see with the SBIR program 
is it is spread. There is not a lot of money in any one place 
except U.S. Department of Defense. It is spread very thin, and 
there is a lot of redundancy going on in the program. And if we 
are going to trust EPA to set the environmental targets and 
tone for the nation, then the rest of the government should get 
behind it, and that would help a lot.
    Nobody funds research and development for these companies. 
This SBIR program is the beginning. All the other programs that 
EPA has that help to facilitate the commercialization assume 
that the research has been done, and the SBIR is about the only 
source that a small company can go to get that done. It is a 
very, very critical part of this.
    Chairman Schrock. Right, thank you.
    Well, again, thank you all for your testimony, your 
appearance here today. We certainly appreciate it.
    This hearing is adjourned.
    [Whereupon, at 12:07 p.m., the Subcommittee was adjourned.]

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