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




 
     WHAT IS THE BUSH ADMINISTRATION'S RECORD IN REGULATORY REFORM?

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY POLICY, NATURAL
                    RESOURCES AND REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 17, 2004

                               __________

                           Serial No. 108-282

                               __________

       Printed for the use of the Committee on Government Reform


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


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
TODD RUSSELL PLATTS, Pennsylvania    JOHN F. TIERNEY, Massachusetts
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
EDWARD L. SCHROCK, Virginia          STEPHEN F. LYNCH, Massachusetts
JOHN J. DUNCAN, Jr., Tennessee       CHRIS VAN HOLLEN, Maryland
NATHAN DEAL, Georgia                 LINDA T. SANCHEZ, California
CANDICE S. MILLER, Michigan          C.A. ``DUTCH'' RUPPERSBERGER, 
TIM MURPHY, Pennsylvania                 Maryland
MICHAEL R. TURNER, Ohio              ELEANOR HOLMES NORTON, District of 
JOHN R. CARTER, Texas                    Columbia
MARSHA BLACKBURN, Tennessee          JIM COOPER, Tennessee
PATRICK J. TIBERI, Ohio              BETTY McCOLLUM, Minnesota
KATHERINE HARRIS, Florida                        ------
MICHAEL C. BURGESS, Texas            BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs

                     DOUG OSE, California, Chairman
EDWARD L. SCHROCK, Virginia          JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
CHRIS CANNON, Utah                   DENNIS J. KUCINICH, Ohio
NATHAN DEAL, Georgia                 CHRIS VAN HOLLEN, Maryland
CANDICE S. MILLER, Michigan          JIM COOPER, Tennessee
PATRICK J. TIBERI, Ohio

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                   Barbara F. Kahlow, Staff Director
                          Lauren Jacobs, Clerk
                     Krista Boyd, Minority Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 17, 2004................................     1
Statement of:
    Graham, Dr. John D., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget; 
      Stephen L. Johnson, Deputy Administrator, Environmental 
      Protection Agency; Howard M. Radzely, Solicitor, Department 
      of Labor; and Thomas M. Sullivan, Chief Counsel for 
      Advocacy, Small Business Administration....................    16
    Kovacs, William, vice president, Environment, Technology and 
      Regulatory Affairs, U.S. Chamber of Commerce; Todd O. 
      McCracken, president, National Small Business Association; 
      Nancy McKeague, senior vice president, Michigan Health and 
      Hospital Association, representing the Society of Human 
      Resource Management; James L. Gattuso, research fellow in 
      regulatory policy, the Heritage Foundation; Catherine 
      O'Neill, associate professor, Seattle University School of 
      Law, representing the Center for Progressive Regulation; 
      and John A. Paul, supervisor, Regional Air Pollution 
      Control Agency, Dayton, OH, representing the State and 
      Territorial Air Pollution Program Administrators...........    98
Letters, statements, etc., submitted for the record by:
    Graham, Dr. John D., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................    19
    Johnson, Stephen L., Deputy Administrator, Environmental 
      Protection Agency, prepared statement of...................    24
    Kovacs, William, vice president, Environment, Technology and 
      Regulatory Affairs, U.S. Chamber of Commerce, prepared 
      statement of...............................................   100
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio:
        Letter dated February 12, 2004...........................    88
        Prepared statement of....................................    13
    McCracken, Todd O., president, National Small Business 
      Association, prepared statement of.........................   109
    McKeague, Nancy, senior vice president, Michigan Health and 
      Hospital Association, representing the Society of Human 
      Resource Management, prepared statement of.................   115
    O'Neill, Catherine, associate professor, Seattle University 
      School of Law, representing the Center for Progressive 
      Regulation, prepared statement of..........................   133
    Ose, Hon. Doug, a Representative in Congress from the State 
      of California, prepared statement of.......................     4
    Paul, John A., supervisor, Regional Air Pollution Control 
      Agency, Dayton, OH, representing the State and Territorial 
      Air Pollution Program Administrators, prepared statement of   139
    Radzely, Howard M., Solicitor, Department of Labor, prepared 
      statement of...............................................    49
    Sullivan, Thomas M., Chief Counsel for Advocacy, Small 
      Business Administration, prepared statement of.............    66
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts, letter dated July 9, 2004..........   151


     WHAT IS THE BUSH ADMINISTRATION'S RECORD IN REGULATORY REFORM?

                              ----------                              


                      WEDNESDAY, NOVEMBER 17, 2004

                  House of Representatives,
  Subcommittee on Energy Policy, Natural Resources 
                            and Regulatory Affairs,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:12 a.m., in 
room 2154, Rayburn House Office Building, Hon. Doug Ose 
(chairman of the subcommittee) presiding.
    Present: Representatives Ose, Schrock, Tierney, Kucinich, 
and Van Hollen.
    Staff present: Barbara F. Kahlow, staff director; Lauren 
Jacobs, clerk; Megan Taormino, press secretary; Greg Dotson, 
Alexandra Teitz, and Krista Boyd, minority counsels; and 
Cecelia Morton, minority office manager.
    Mr. Ose. Good morning.
    Welcome to today's hearing of the Subcommittee on Energy 
Policy, Natural Resources and Regulatory Affairs. Today's 
subject matter is ``What is the Bush Administration's Record in 
Regulatory Reform?''
    Three years ago, the Small Business Administration 
estimated that, in the year 2000, Americans spent $843 billion 
to comply with Federal regulations. The report concluded, ``Had 
every household received a bill for an equal share, each would 
have owed $8,164.'' The report also found that, in the business 
sector, those hit hardest by Federal regulations are small 
businesses. Regulations add to business costs and decrease 
capital available for investment and job creation.
    As an owner of small businesses, I am especially aware of 
the need to relieve existing regulatory and paperwork burdens. 
This is my twelfth and final hearing as a Government Reform 
subcommittee chairman toward that end. This problem is also 
important to the administration. The fourth point in the 
President's February 2004 6-Point Economic Growth Plan was 
``streamlining regulations and reporting requirements.''
    Heritage scholar James Gattuso, who is with us today, 
analyzed the Bush record. In his September 28, 2004 paper 
entitled ``Reining in the Regulators: How Does President Bush 
Measure Up?,'' he found, ``So far, he has done much better than 
his recent predecessors at limiting the growth of regulations. 
However, he has a much weaker record on eliminating existing 
rules.'' Therefore, reviewing the base of existing rules 
remains a critical component in this matter. As a consequence, 
on September 22nd, Congressman Gresham Barrett introduced, with 
my co-sponsorship, H.R. 5123, ``Major Regulation Cost Review 
Act of 2004.'' This bill would require agencies to review all 
major rules--that is, those imposing cost of $100 million or 
more--within 10 years of issuance, including using a standard 
governmentwide cost-benefit analysis methodology.
    Because of congressional concern about increasing costs and 
incompletely estimated benefits of Federal rules and paperwork, 
in 1996, Congress required the Office of Management and Budget 
to submit its first regulatory accounting report. In 1998, 
Congress changed the report's due date to coincide with the 
President's Budget. In the year 2000, Congress made this a 
permanent annual reporting requirement. Besides requiring a 
regulatory accounting statement and an associated report 
assessing the impacts of Federal rules, Congress has required 
OMB to annually include recommendations for regulatory reform.
    To date, OMB has issued six final regulatory accounting 
reports and one draft report that has not yet been finalized. 
The Clinton administration issued the first three; the Bush 
administration issued the last four. I believe you will see 
over on the chart a recitation of that. The Clinton 
administration's reports only included one recommendation for 
reform, that being electricity restructuring. The Bush 
administration sought public nominations in its 2001, 2002 and 
2004 draft reports. In sum, the result was 71 nominations in 
2001 and 316 nominations in 2002. The number of nominations 
received in 2004 is unknown to us. I believe Chart 2 has a list 
of the nominations that have been received. Two of the four 
agencies with the most rules nominated are with us today, those 
being the Environmental Protection Agency and the Department of 
Labor.
    Today, our hearing will examine the nomination process and 
the reform results to date. We will pay particular attention to 
public nominations affecting small business and several 
existing rules issued or to be issued by EPA and the Department 
of Labor. These include the Toxic Release Inventory, New Source 
Review, and mercury, and the Department of Labor's 
implementation of the Family and Medical Leave Act. This 
subcommittee has previously heard testimony about the burdens 
associated with Toxic Release Inventory and the Family and 
Medical Leave Act.
    I look forward to the testimony of our witnesses. They 
include: Dr. John Graham, who is the Administrator of the 
Office of Information and Regulatory Affairs at OMB; Mr. 
Stephen Johnson, who is the Deputy Administration at EPA; Mr. 
Howard Radzely, who is the Solicitor at the Department of 
Labor.
    Did I pronounce that correctly?
    Mr. Radzely. Close.
    Mr. Ose. Correct me.
    Mr. Radzely. Radzely.
    Mr. Ose. Radzely? All right.
    And, Mr. Thomas Sullivan, who is the Chief Counsel for 
Advocacy at the Small Business administration.
    Our second panel includes Mr. William Kovacs, who is the 
vice president for Environment, Technology and Regulatory 
Affairs at the U.S. Chamber of Commerce; Mr. Todd McCracken, 
president of the National Small Business Association; Ms. Nancy 
McKeague, who is the sSenior vice president for Michigan Health 
and Hospital Association, who will be representing the Society 
for Human Resource Management; Mr. James Gattuso, who is a 
research fellow in regulatory policy at the Heritage 
Foundation; Ms. Catherine O'Neill, who is an associate 
professor at Seattle University School of Law, representing the 
Center for Progressive Regulation; and Mr. John Paul, who is 
the supervisor for the Regional Air Pollution Control Agency in 
Dayton, OH, representing the State and Territorial Air 
Pollution Program Administrators.
    I want to welcome everybody to the hearing today. I do want 
to advise everybody that the caveat by which we were able to be 
moved from 2247 and allowed in here is that we are done by 
12:45 at the latest.
    [The prepared statement of Hon. Doug Ose follows:]

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    Mr. Ose. I am pleased to recognize my friend from 
Massachusetts for the purpose of an opening statement.
    Mr. Tierney. I thank the chairman and the witnesses for 
coming here today to share their information with us.
    Mr. Chairman, before we get started, let me informally say 
that I understand this is probably the last subcommittee 
hearing that you will be chairing before you retire, and I want 
to thank you for the evenhandedness and the fairness with which 
you have conducted yourself in this committee. I know people 
expect things like this to be said at the end of a period, but, 
in fact, in this case it is absolutely true. You have shown 
good leadership here; you have shown evenhandedness; you have 
been fair; you have allowed us to have hearings on issues that 
we thought were important. And, while we disagreed, we 
generally did that respectfully, which I think is important. 
And, if we can impart that on the body at large, maybe things 
would go well on a grander scale. But, I thank you for the work 
that you have done and for your service to your country.
    Mr. Ose. Thank you.
    Mr. Tierney. Thank you.
    Now, this hearing is obviously one on the Bush 
administration's record on regulatory reform. In my opinion, at 
least, I think the administration deserves a failing grade in 
its regulatory efforts. In the name of making regulations more 
flexible, this administration has taken unprecedented steps to 
weaken and dismantle important environmental, health, and 
safety protections.
    Today, I plan to focus on the administration's proposal for 
controlling mercury pollution from power plants. I had asked 
the chairman to hold a hearing on EPA's rulemaking on mercury 
emissions, and, although the subcommittee's schedule didn't 
allow for another hearing to address that issue, I am happy 
that the chairman agreed that this is an important enough issue 
that it needed to be addressed within the context of today's 
hearing.
    The administration's proposed regulation for controlling 
mercury emissions benefits industry, but it fails to protect 
the public health and environment. I think one of the more 
ironic aspects is even the industry representatives within 
EPA's working group made recommendations that were stronger 
than some of the EPA recommendations in terms of controlling 
mercury.
    The administration's proposal and the process that it has 
followed in developing its proposal are fundamentally flawed. I 
think it was probably stated better in an article in the 
Environmental Law Reporter, which indicates that it was an 
``effort to avoid the clear implications of science, law, 
economics, and justice.'' That, in fact, seems to be the case.
    Coal-fired power plants emit tons of mercury pollution into 
our air each year that pollutes our waters and then is absorbed 
by the fish that we eat. According to EPA scientists, 
approximately 630,000 infants are born in the United States 
each year with blood mercury levels at unsafe levels. In fact, 
our children, as well as everybody else in our society, deserve 
the right to live in pollution-free and poison-free 
environments.
    Despite the clear need for strong clean air controls of 
mercury pollution, the EPA issued a proposal last year that was 
shockingly inadequate. The Clean Air Act requires a much larger 
reduction of mercury production in much less time than EPA's 
proposal. It is not surprising that the substance of EPA's 
proposal is so weak, considering that parts of EPA's proposals 
were literally copied from memos prepared by industry 
lobbyists.
    As a part of its rulemaking, EPA is required to analyze the 
effects of a full range of options for controlling emissions. 
EPA's own advisory group recommended that the EPA analyze more 
stringent options than EPA's proposal, but EPA refused to do 
so. In fact, Dr. Graham and I hopefully will discuss that I had 
asked some questions at one of our previous hearings about his 
agency's role in working with the EPA on that, and I, despite 
two runs at that, have not gotten adequate answers yet, and 
hope we can explore that because I want some direct responses, 
as opposed to what I have gotten so far.
    Responding to public criticism on the point, Administrator 
Leavitt promised in March that EPA would conduct more analysis. 
Yet, despite requests from citizens, Members of Congress, 
States, and the EPA's own bipartisan advisory group, it appears 
that EPA has still not performed the required analysis. The Los 
Angeles Times recently quoted one EPA employee as saying, ``We 
get talk but no action from the Administrator.''
    So, Mr. Johnson, I am hopeful that today we will find out 
where EPA is in terms of performing the additional analysis 
promised by the Administrator and where EPA is in terms of 
issuing a strong rule on mercury emissions that complies with 
the mandates of the Clean Air Act.
    It is the administration's responsibility and obligation to 
protect the hundreds of thousands of children being poisoned 
each year by unsafe levels of mercury. This administration must 
implement a strong and protective rule, and I look forward to 
our witnesses' testimony and the questions and answers, Mr. 
Chairman. Thank you.
    Mr. Ose. I thank the gentleman.
    Gentleman from Virginia? Gentleman from Ohio.
    Mr. Kucinich. Thank you very much, Mr. Chairman. I would 
like to echo Mr. Tierney's remarks about your chair's work for 
this country on this committee, and it has been an honor and a 
privilege to work with you.
    I would like to focus my remarks on what are the most 
egregious examples of the administration's efforts to gut our 
environmental and health protections: the weakening of mercury 
and air standards from coal-fired power plants. Mercury 
emissions from coal-fired power plants are the single biggest 
reason our fish consumption advisory specifically for mercury 
contamination in 45 States as of 2003--45 States. The CDC says 
that roughly 8 percent of American women of childbearing age 
have levels of mercury in their bodies that exceed what is 
considered safe for the fetus. A more recent study from the 
University of North Carolina puts the number closer to 20 
percent.
    A review of some of the health effects highlights the need 
to be cautious. Mercury concentrates in certain nerves in the 
body, often at the end of nerves, and alters the nerve cell's 
ability to function. That is why early signs of mercury 
poisoning include numbness and tingling in the extremities. The 
nerve cells are dying. It makes sense, then, that the brain, 
which contains so many more nerves, is where the health damage 
is, and most vulnerable are those whose brains are still 
developing.
    Mercury crosses the placental barrier, which is normally 
supposed to help keep pollutants away from the fetus. In fact, 
some newer studies show that the concentrations in the fetus 
are often higher than the concentrations in the mother. If the 
mother eats enough mercury-contaminated fish, the child could 
suffer from low birth weight, small head circumference, severe 
mental retardation, cerebral palsy, deafness, blindness, and 
seizures.
    The symptoms can occur even when there are no symptoms of 
mercury poisoning in the mother, again because the mercury 
concentrates in the child. If the dosage to the fetus is lower, 
the damage will be subtler and will occur later in the child's 
development. But, the damage can still be profound. Studies 
found deficits on behavioral tests like test of attention, fine 
motor function, language, drawing abilities, and memory that 
were linked to low level mercury exposure in the womb.
    Low level poisoning scenarios especially are insidious. It 
is likely that these health problems may never be noticed, much 
less definitively linked to mercury from coal-fired power 
plants, so we may never know the collective damage that is 
done. These children sometimes become disadvantaged before they 
even take their first breath of air.
    You know, there is no reason for it. The excuse we keep 
hearing from the administration is that technology is not 
adequate to achieve the 90 percent end of pipe mercury 
reductions from coal-fired power plants that the public is 
calling for. Yet, the Public Service Electric and Gas Company 
fully supported a bill in Connecticut that requires a 0.6 lb. 
per trillion btu, or 90 percent control efficiency. PSEG is one 
of the largest electric generating companies in the United 
States, with over 16,000 megawatts of electric generating 
capacity, operating or under development in New Jersey, New 
York, Pennsylvania, Ohio, Indiana, and Connecticut.
    In their testimony, the Connecticut State Legislature, in 
support of the bill, had this to say: ``We consider 
environmental performance to be one indicator of overall 
business performance, and experience has taught us that 
proactive steps to improve environmental performance can often 
lead to better bottom line results.''
    Why are we making environmental protection and profit 
mutually exclusive?
    Mr. Chairman, reducing mercury from power plant stacks, as 
much as technology will allow us to go a long way toward 
correcting the ongoing mercury poisoning of Americans, 
especially those with the least ability to defend themselves, 
our children. One of the biggest power generators in the 
country is on record as saying that not only is the pollution 
reduction technology available, but it is good business to use 
it. I look forward to hearing what the EPA will be doing to 
achieve no less than the best public health protection which 
the American people deserve. Thank you.
    [The prepared statement of Hon. Dennis J. Kucinich 
follows:]

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[GRAPHIC] [TIFF OMITTED] T8899.009

    Mr. Ose. I thank the gentleman.
    Gentleman from Maryland.
    Mr. Van Hollen. Thank you, Mr. Chairman, and thank you for 
conducting this hearing. I will be brief. My colleagues have 
covered some of the issues I wanted to raise, and we will 
obviously have an opportunity during the questioning.
    But, I would want to say, with respect to the mercury 
issue, that we know that 45 States in this country have issued 
warnings with respect to the consumption of fish. In my State 
of Maryland, the Chesapeake Bay has been identified as one of 
those areas where people are told, on the one hand, that fish 
is one of the healthiest things you can eat. On the other hand, 
they are told that pregnant women and young children can't eat 
it, and are advised not to eat it because of the potential on 
brain development and other health issues.
    I think we all agree that we should do something about it. 
The question is should we do everything we can to reduce 
mercury emissions by as much as possible. And, that is where I 
think that so far EPA has been falling far short, both in terms 
of dragging its feet in coming up with a strong response and 
proposal, and to the extent that its proposals seem to me not 
to address the issue as comprehensively and to the extent that 
we are able to do it and still be cost-effective in doing so.
    So I do look forward to pursuing that issue as we go 
through the hearing today. Thank you, Mr. Chairman.
    Mr. Ose. I thank the gentleman for his brevity.
    All right, our typical hearing here is without prejudice; 
we swear in all of our witnesses. We are not making any 
judgment, that is just the standard operating procedure in this 
committee and in this subcommittee.
    Again, I want to remind everybody, not only this panel, but 
the next panel, that we are under a time constraint, that we 
have to be out of here by 12:45. I will proceed to swear these 
witnesses in.
    So, if you would all please rise and raise your right 
hands.
    [Witnesses sworn.]
    Mr. Ose. Let the record show that the witnesses answered in 
the affirmative.
    We are joined on this panel by the four individuals I 
previously introduced. Our first witness on the first panel is 
Dr. John Graham, the Administrator for the Office of 
Information and Regulatory Affairs, the Office of Management 
and Budget.
    Dr. Graham, welcome. We have received your written 
statement; it has been entered into the record; I have read it. 
You are recognized for 5 minutes.

  STATEMENTS OF DR. JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF 
 INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND 
BUDGET; STEPHEN L. JOHNSON, DEPUTY ADMINISTRATOR, ENVIRONMENTAL 
PROTECTION AGENCY; HOWARD M. RADZELY, SOLICITOR, DEPARTMENT OF 
  LABOR; AND THOMAS M. SULLIVAN, CHIEF COUNSEL FOR ADVOCACY, 
                 SMALL BUSINESS ADMINISTRATION

    Mr. Graham. Thank you, Mr. Chairman, and good morning, 
members of the subcommittee. I cannot think of a more 
appropriate topic for this committee than the subject of 
oversight of OMB and the agencies on streamlining the existing 
sea of Federal regulations that burden our economy.
    Before I make a few remarks about the modest progress that 
we have made in the first term of President Bush, I want to 
emphasize the magnitude of the challenge that we are facing.
    Since OMB began to keep records in 1981, there have been 
109,710 final regulations adopted by various Federal agencies. 
And, of these, OMB has received 20,029.
    Sad as it is to say, most of these regulations have never 
been looked at to determine whether they actually accomplished 
the purpose for which they were adopted, or what their actual 
costs and benefits to the public have been. During President 
Bush's first term, we initiated, as the chairman indicated, a 
modest program of public participation in the nomination of 
regulations and guidance documents to be reformed or, if they 
were outmoded, to be rescinded or modernized.
    In the year 2001, OMB received 71 nominations from 33 
public commenters. My staff evaluated these 71 nominations and 
determined that 23 of them should be treated as high priority 
by Federal agencies. Today, I am pleased to report that Federal 
agencies have taken at least some action, a proposed rule or a 
final rule, with regard to 17 of those nominations, or 75 
percent of the priority nominations.
    In the year 2002, OMB again requested public nominations of 
rules that should be modernized or rescinded. We also sought 
rules that needed to be extended or expanded, and in an 
important innovation, we included guidance documents and 
paperwork requirements, as well as rules within that 
solicitation. We also engaged in an extensive outreach effort 
to the public to alert them to the availability of this 
opportunity.
    We received a larger response in 2002 than in 2001, much 
larger than we expected. In fact, we received 316 distinct 
reform nominations from more than 1700 commenters across the 
public. We reviewed these nominations as best we could, given 
the number of them, determined that 109 of them were already 
the subject of agency consideration, and referred 51 of them to 
the independent agencies for their consideration; and that left 
156 nominations that we referred to the cabinet agencies and 
EPA.
    In the year 2002, OMB did not attempt to define high 
priority reforms for two reasons: the sheer volume of the 
reforms exceeded our capacity to evaluate them effectively and, 
second, we felt that the agencies, if they were to set the 
priorities, might take greater ownership in the regulatory 
reform process, rather than being instructed by OMB which are 
the high priorities. We have not yet finished a precise 
accounting of what has happened on these 156, but at the 
subcommittee's request we have made an estimate, and there are 
about 55 of them for which some action, a proposal or a final 
action, has been made, or about 35 percent of the 156.
    We did not request nominations in 2003. As you can tell, we 
and the agencies were still busy with 2002. And, we also 
revamped OMB's regulatory analysis guidelines in the year 2003 
through the same public comment process.
    In February of this year, we again solicited reform 
nominations, but we took a different tac and we took a clear 
focus on the manufacturing sector of the U.S. economy. It is 
the sector that is most heavily regulated, as estimated by the 
burdens on small and medium-sized manufacturers, as well as the 
industry as a whole. We have received, since February, 189 
distinct reform nominations from 41 commenters, and we are in 
the process of evaluating those, and we plan to publish by the 
end of this year a process by which agencies will evaluate and 
make decisions on these nominations.
    Mr. Chairman, in conclusion, we have had a modest, but 
aggressive, effort to try to bring some of these existing 
regulations and guidance documents into public light for 
reform, for modernization, or, where they are no longer 
necessary, for their rescission. I want to remind you, however, 
that the total number of reform nominations we receive should 
not be confused as the total number of meritorious reform 
opportunities. Not all the nominations that we receive are well 
argued from a standpoint of economics, from science, or from 
law; hence, there is a process of agency evaluation that is 
necessary, and we should expect that only a fraction of those 
nominations would actually be acted upon.
    Thank you very much, and I look forward to the questions.
    [The prepared statement of Mr. Graham follows:]

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    Mr. Ose. Thank you, Dr. Graham.
    Our next witness is Mr. Stephen Johnson, who is the Deputy 
Administrator at U.S. Environmental Protection Agency.
    Sir, we have received your testimony, also, in its written 
form, and it has been entered into the record; it has been 
read. You are recognized for 5 minutes to summarize.
    Mr. Johnson. Thank you very much, and good morning, Mr. 
Chairman.
    Mr. Ose. You need to turn the button on there. There you 
go.
    Mr. Johnson. Thank you. Again, good morning, Mr. Chairman, 
Mr. Tierney, and members of the subcommittee. Thank you for the 
opportunity to appear before you today to discuss improvements 
in EPA's regulatory development process and the Agency's 
response to public nominations for regulatory reform. I 
certainly appreciate the chairman's and the subcommittee's 
leadership in promoting regulatory improvements.
    In my first appearance before Congress as President Bush's 
nominee for Deputy Administrator, I stated my belief that the 
best way to fulfill our responsibility to protect public health 
and the environment is to promote transparency in our work and 
base our decisions on sound science. I have maintained that 
focus and I am proud to say that improving our regulatory 
actions and other significant policy decisions continues to be 
a top priority for EPA under Administrator Leavitt's 
leadership.
    Early in her tenure, former EPA Administrator Whitman 
established a task force to examine EPA's regulatory 
development process and to make recommendations for 
improvement. The recommendations from that task force have 
become the basis for significant improvements in EPA's 
decisionmaking and regulatory process. I would like to provide 
a brief update for you on our progress.
    As one of our first steps, the Agency significantly 
strengthened the quality of scientific and policy analysis. We 
appointed a science advisor from EPA's Office of Research and 
Development who has seven full-time employees dedicated to 
supporting the use of science in rulemaking; we appointed an 
economic advisor from EPA's Office of Policy, Economics and 
Innovation; and have added more staff to EPA's National Center 
for Environmental Economics to bolster our economic analyses.
    To ensure that we consider a broader set of regulatory 
options, EPA created a new Regulatory Analysis and Policy 
Division. Its primary responsibility is to ensure that EPA's 
senior management takes all pertinent scientific findings, 
relative benefits and costs, and policy issues into account in 
our decisionmaking. The Agency is also revising our economic 
guidelines to be consistent with OMB's new Circular A-4 
guidance. To further improve our economic analysis and 
consistency with OMB guidance, the Agency is now establishing 
special economic work groups for all economically significant 
rules.
    In addition to these forward-looking improvements, EPA 
takes seriously its responsibility to review and respond to the 
public nominations for regulatory reform. That process includes 
prioritizing all nominations for appropriate attention and 
action. In some cases, we have initiated certain reforms or 
maintained existing efforts to improve an agency program. In 
other instances, we found that no change was needed or that 
statutory constraints would prevent modification.
    I am pleased with EPA's overall track record in responding 
to these nominations. Of the 70 regulatory reform nominations 
received between 2001 and 2002, we consider our response 
complete for 44 nominations. That is 63 percent. I am also 
pleased to note that the latest OMB report on Federal 
regulatory benefits and costs finds that, over the past 10 
years, EPA is responsible for two-thirds to three-fourths of 
the total economic benefits of Federal regulation achieved by 
EPA, USDA, DOE, HHS, HUD, Labor, and DOT combined.
    Now, while we can't yet measure the full range of benefits 
achieved by our programs, the quantifiable benefits alone 
exceed the costs by a factor of between 1\1/2\ to 6. Although 
the reform nomination process has not always resulted in rule 
revisions, it has led us to either confirm our approach, or to 
recognize the need and begin to make revisions.
    I would like to highlight an instance where the process has 
led to a better outcome. Under the Safe Drinking Water Act, EPA 
issued guidance in June 2000 that subjected apartment buildings 
with more than 15 units and submetering systems to the same 
Federal drinking water requirements that govern public water 
systems that sell water. Public comments revealed why this 
decision needed reconsideration. By passing water from a 
regulated public water source to tenants, the apartments were 
not creating any adverse health effects that needed further 
regulation. Nonetheless, it imposed a regulatory burden on 
apartment owners and discouraged water conservation.
    After considering the comments, the Agency issued revised 
guidance that now provide States with flexibility to exclude 
apartment owners from regulation and actually reflects EPA's 
interest in encouraging water conservation. This outcome not 
only demonstrates the value of public involvement in reviewing 
our actions, but serves to illustrate the broader challenge we 
face in reaching consensus in the regulatory arena, for EPA's 
new guidance has now precipitated litigation aimed at limiting 
State discretion in determining the applicability of Federal 
standards. Nonetheless, we strongly believe the process helps 
EPA to identify and resolve problems facing the regulated 
community.
    I have described other examples in my written testimony, 
including those of interest that have been mentioned already 
this morning, including mercury, the New Source Review Program, 
and the Toxic Release Inventory.
    In closing, I would like to say that EPA has taken 
significant steps under this administration to improve the 
quality and credibility of our actions. These include 
strengthening our regulatory development process, investing in 
sound science and analysis, and supporting and responding to 
public input. I believe these actions have created a solid 
foundation for improving our effectiveness and for accelerating 
progress toward our Nation's environmental goals.
    Thank you for the opportunity to testify, and I look 
forward to taking your questions.
    [The prepared statement of Mr. Johnson follows:]

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    Mr. Ose. Thank you, Mr. Johnson. I am appreciative, in 
particular, of the chart that you attached to the end of your 
testimony.
    Our next witness is the Solicitor of Labor at the U.S. 
Department of Labor. That would be Mr. Howard Radzely.
    Sir, welcome. We have received your written statement; it 
has been entered into the record; it has been read. You are 
recognized for 5 minutes.
    Mr. Radzely. Mr. Chairman and distinguished members of the 
subcommittee, thank you for the opportunity to appear before 
you today to discuss the Department of Labor's efforts to 
strengthen worker protections while reducing unnecessary 
regulatory burdens on the economy.
    The Department takes seriously its responsibility to 
protect worker safety and health, retirement security, pay, and 
equal access to jobs and promotions. Over the years, advances 
in safety, health, science, and technology, as well as changes 
in the law, have rendered many Department regulations outdated 
or even unnecessary. As a result, we have adopted, revised, or 
eliminated regulations in an ongoing attempt to protect workers 
without imposing unnecessary and costly burdens on the economy. 
We recognize the economic costs that regulations place on the 
regulated community, and have pursued alternatives to 
rulemaking whenever feasible.
    At the outset, I would like to mention the Department's 
successful effort to streamline our regulatory agenda in such a 
way that it now provides a realistic and manageable number of 
regulatory initiatives, allowing us to focus our attention and 
resources.
    While continuing our commitment to strengthening 
protections for the American work force, we are also trying to 
reduce the regulatory costs and burdens for employers, which 
will help employers to create jobs.
    Our multifaceted approach to regulatory reform, compliance 
assistance, and vigorous enforcement is working. Workplace 
fatalities in 2002 fell to the lowest level in the history of 
the Bureau of Labor Statistics' National Census of Fatal 
Occupational Injuries, and the fatality rate was unchanged in 
the recently released 2003 census. Mining fatalities in 
particular are at their lowest level since 1910, when records 
were first kept.
    In fiscal year 2003, DOL's Wage and Hour Division recovered 
more than $212 million in previously unpaid back wages, the 
largest amount collected in 11 years and a 21 percent increase 
in a single year. And, data released last month by the Employee 
Benefits Security Administration show a record-breaking 121 
percent increase in enforcement results. The Agency protected 
$3.1 billion in retirement, health, and other benefits for 
workers and their families.
    As this subcommittee recognizes, one important regulatory 
tool is the process for addressing the public's reform 
nominations that are included in OMB's annual reports to 
Congress on the costs and benefits of regulations. In 
considering what regulations to promulgate, revise, or 
withdraw, we evaluate many factors, including input from the 
public through the OMB nominations process, stakeholder 
meetings, industry experience, experience with previous 
regulatory initiatives in a given area, as well as possible 
alternatives to regulation.
    OMB's 2001 report to Congress included 16 Labor Department 
nominations, 5 labeled by OMB as priority candidates for 
reform, and the 2002 report included 35, some of which 
overlapped with the earlier nominations. These nominations were 
wide-ranging, including proposals to develop new regulations or 
to revise or rescind regulations and guidance documents.
    After consulting with OMB's Office of Information and 
Regulatory Affairs, we provided OMB with a table describing our 
plans for each referral. As requested by this subcommittee, I 
have included charts with my written testimony that describe 
the status of each of the 2001 and 2002 nominations. The charts 
reflect many actions we have taken that are consistent with the 
public nominations. In some cases, however, agencies decided 
not to take action or could not take action on particular 
nominations for policy reasons or because action would require 
legislation rather than regulation.
    The subcommittee also specifically requested that I discuss 
the Department's plan to address public recommendations having 
to do with the Family and Medical Leave Act. Three of the 2001 
nominations and four of the 2002 nominations address the FMLA. 
Congress also held a number of hearings over the years at which 
stakeholders identified various FMLA issues, many of which were 
also raised by the public nominations. In addition, Federal 
courts, including the U.S. Supreme Court, have invalidated 
several provisions of the FMLA regulations.
    The Department held stakeholder meetings to receive 
informal feedback on how the regulations are working. In 
particular, we invited more than 20 groups, representing 
employees, unions, employers, women's and family advocacy 
groups, elder groups, and others with experience working with 
the regulations to share their views about the rules. The 
Department intends to carefully consider the public's views, 
the court decisions, and our experience in administering the 
regulations before deciding what action, if any, is appropriate 
to take.
    Mr. Chairman, I look forward to responding to any questions 
you or the other members of the subcommittee may have.
    [The prepared statement of Mr. Radzely follows:]

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    Mr. Ose. Thank you. I am also appreciative of the chart you 
attached to the end of your testimony.
    Our fourth witness on the first panel is Mr. Thomas 
Sullivan, who is the Chief Counsel for Advocacy at the U.S. 
Small Business Administration, and in many respects the father 
of this hearing.
    Sir, you are recognized for 5 minutes. We have received 
your testimony; it has been entered into the record and we have 
read it.
    Mr. Sullivan. Thank you, Chairman Ose. Before I begin, I 
want to recognize this as your last hearing as chairman. Your 
commitment to hold government accountable to how it affects the 
taxpayer has helped small businesses throughout the country. 
Thank you.
    The Office of Advocacy is an independent office within the 
SBA; therefore, the comments expressed in the written and oral 
statement do not necessarily reflect the position of the 
administration or the SBA.
    In general, the Office of Advocacy believes that the public 
nomination process is beneficial, and that the process can and 
will be an effective tool for regulatory reform. My office has 
itself participated in this process by representing the views 
of small business regarding needed reforms and by communicating 
these reforms to the Office of Management and Budget in 2002, 
2003 as far as procedural reforms, and then in the 2004 call 
earlier this year.
    Of the 68 total regulatory reform nominations prioritized 
by OMB and the agencies between 2001 and 2003, according to my 
office, 14 can now be considered complete. This number may seem 
low, though, compared to my colleagues' written statements, and 
I should explain why.
    Because my office is charged with independently 
representing the views of small business, I am characterizing 
regulatory reform nominations as implemented or completed as 
viewed by a small business interest who may have commented in 
this process. As such, my office takes a more narrow view of 
whether the specific nomination was addressed. For that reason, 
I have not counted as completed or implemented those reform 
nominations where a decision was made not to move forward or 
reform nominations that are on track in a proposed rule.
    I make the parallel to major league baseball coming to 
Washington, DC. There are some who are very excited about major 
league baseball coming to Washington, DC. There are others who 
remain skeptical, until the first pitch is had, on whether or 
not it actually happens.
    Now, the reforms that have been implemented are 
significant, ranging from revisions to EPA's Clean Air Act New 
Source Review Program to the updating and simplification of the 
Department of Labor's overtime compensation rules. Despite the 
success of this call for reform endeavor, we have a lot of work 
to do for the process to work best. For example, Health and 
Human Services issued an interim final rule a few years ago 
containing standards for the use of patient restraints in 
hospitals. The 1-hour restraint rule is especially burdensome 
for small and rural hospitals because it requires treating 
physicians to make a face-to-face assessment of a patient 
within 1 hour of initiating restraint or seclusion. CMS has 
failed to adequately analyze the impact of its 1 hour restraint 
rule on small entities or to revise the rule to reduce its 
burdens, despite stating its intention to do so in OMB's 2003 
final report to Congress.
    In other cases, implementing small business reform 
recommendations have proven to be a time-consuming endeavor. An 
example is the longstanding effort to reform reporting 
requirements under EPA's Toxic Release Inventory program. This 
program requires facilities, including small businesses, to 
report each year on toxic chemical releases and other waste 
management activities. Since 2001, OMB has received numerous 
nominations for TRI reforms designed to reduce reporting 
burdens that appear to have little corresponding public 
benefit. These reforms include EPA's accepting simplified 
reports, setting higher reporting thresholds in some 
situations, and allowing less frequent reporting where there is 
no significant year-to-year change at a facility.
    Small business stakeholders began pursuing these types of 
TRI reforms as far back as 1992. With the added impetus of this 
public reform nomination process, rulemaking action on these 
reforms is now anticipated to get underway shortly.
    How could this reform nomination process be improved? Well, 
first I think that information should be provided in a 
transparent process, which really is the hallmark of John 
Graham's tenure at OIRA about the status of ongoing rule 
reforms. The annual report and the charts that show agencies 
leadership on these reforms is certainly a step in the right 
direction. There could be more transparency to where they are 
in the pipeline.
    Stakeholder involvement is necessary at every stage in the 
rule reform process. Agencies certainly should take 
consideration of the reform nomination seriously and Congress 
should stay involved in the process.
    In conclusion, from the perspective of small business, the 
public rule reform nomination process is working and it is 
worthwhile. Although the process can be improved, it has the 
potential to be a major tool for improved regulatory analysis 
in the accountability of Federal agencies to the public.
    Thank you for allowing me to present these views.
    [The prepared statement of Mr. Sullivan follows:]

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    Mr. Ose. I thank the gentleman.
    All right, our normal procedure here is that we go through 
a series of 5 minute rounds of questions. So, for instance, it 
would be me first, then Mr. Tierney, then Mr. Schrock, then Mr. 
Kucinich, then Mr. Van Hollen.
    Again, I want to remind everybody of our time constraint 
and the fact that we have a second panel yet. Also, to the 
extent that questions don't get asked, we do have the ability 
to submit them in writing to you, and we would certainly 
appreciate timely responses to those.
    I am going to recognize myself here.
    Dr. Graham, about 2 months ago we notified your office that 
we were going to do this hearing. And, I want to note that Mr. 
Johnson, Mr. Radzely, Mr. Sullivan have attached charts to 
their testimony regarding the specific questions for status 
reports on certain things within their respective agencies, but 
I also note that the written statement you gave us did not have 
such a chart, and I am trying to followup on that. I understand 
that your forthcoming report will include some of the 
information that we would hope to have reflected in that chart. 
I am familiar with the 2003 report to Congress that included 
information up to that time. I am looking for an update since 
that time. When do you expect to be able to give us that 
information?
    Mr. Graham. A perfectly reasonable question. Let me just 
clarify that we were aware several months ago that this hearing 
was scheduled, but the request for the chart details by agency, 
all those years of nominations, status of all of them, we 
received that on November 1st.
    Mr. Ose. OK.
    Mr. Graham. So what is happening is we have been working on 
the final report to Congress, which has a lot of that 
information in it. But, as I look at the November 1st letter, I 
think even when the report comes in, there are going to be few 
areas where we are going to need to supplement that with 
additional material, and we will. But, the real reason is just 
the recalcitrant spirit of the OMB staff.
    Mr. Ose. I can't believe that.
    Mr. Graham. I didn't think you would.
    Mr. Ose. I am interested in even if it is an interim report 
or a draft report or something. I think the word some of the 
witnesses have used today, I am trying to make the process as 
transparent as possible so that if there are things that others 
might look at that list and say, hey, what about this, what 
about that, this would give them a chance to do so, even if it 
is unofficial in nature. So, I come back to my question. 
Recognizing your sworn testimony about the recalcitrance of the 
OMB staff, when do you think we will be able to get this 
information of an interim nature?
    Mr. Graham. Well, you will have the final report to 
Congress certainly by the end of the year, and then once you 
have had a chance to examine that and see whether or not it 
meets the need, then it seems to me we should have some dialog 
on what additional information is required.
    Mr. Ose. What is the current status or in what form is the 
information today? For instance, if I walked over to your 
office with you after this hearing is over at 12:45 p.m., what 
would you be able to show me?
    Mr. Graham. Well, we have a variety of charts, more than 
one, certainly, reflecting all of the agencies of the Federal 
Government, and they are organized by different topic areas. 
But, they don't include some of the specific information that 
is in your November 1st letter, and for us to obtain that 
information will require a data call to a variety of agencies 
beyond SBA, Labor, and EPA. You are receiving, obviously, that 
information from these agencies today. So just to give you a 
concrete example, the independent agencies that we referred 
nominations to, we have not had a data call to them on what has 
happened at the independent agencies. Even within the cabinet 
level agencies, we don't have an updated data call to them. So 
we have some work to do to fill out all the specifics, but we 
have a substantial amount of information in that report that 
does directly address the aspects of the question that you have 
in your November 1st letter.
    Mr. Ose. I am willing, in what time I have remaining, to 
help in any way I can to get this information or to provide 
influence, whatever may be evaporating as quickly as we sit 
here. But to the extent that I can, I would need to see what 
you already have. Would you be willing to provide that to me?
    Mr. Graham. I can check on that. Of course, it is all part 
of the report itself, and it is not going to be that long until 
the report is ready. So, I would ask you to consider the 
possibility of just waiting a few weeks to get the actual full 
report, and then we can discuss that. But I am open to 
persuasion. If it is very important, you have to have this 
information within a couple weeks, we will do our best to get 
you information in a couple weeks.
    Mr. Ose. Well, I was somewhat amused; I felt like I was 
listening to my obituary up here earlier. But, I am afraid that 
after December my obituary becomes real, so to the extent that 
I could get it, again, I want to reiterate that I would be 
willing to help.
    Mr. Graham. Well, I think that the hearing itself has been 
extremely constructive to get these questions out, and we 
appreciate your asking not only OMB, but the agencies for this 
information. That is very constructive and helpful.
    Mr. Ose. Would you forward to me the stuff that you have?
    Mr. Graham. Well, that is a pretty general question. So if 
you could sharpen that up a little bit, I am happy to do the 
best I can.
    Mr. Ose. All right, we will go through a series of 
questions, since my time has expired. But I will refine the 
question sufficiently and we will come back on a second round.
    Mr. Graham. That is fine.
    Mr. Ose. Mr. Tierney.
    Mr. Tierney. Mr. Johnson, just in following up on my 
opening statement, where is EPA in terms of performing the 
additional analysis on the mercury rule that Administrator 
Leavitt promised and has yet to do?
    Mr. Johnson. Let me start by saying, Mr. Tierney, that we 
certainly agree with you that mercury is a toxic material that 
needs to be dealt with and dealt with in as expeditious and 
effective manner as possible. Also, as a reminder to all of us, 
mercury today is not regulated in coal-fired power plants, so 
we will be regulating mercury for the first time in the history 
of the United States.
    We have now received over 500,000 comments on our proposed 
regulation to regulate mercury in coal fired power plants for 
the first time. The more than 500,000 comments we received 
include many, many analyses and a range of assumptions. As you 
are well aware, as with any models, whether they model mercury 
deposition or something else, it is whatever the assumptions 
that go into those models are what really count.
    Where we are today is that we have gone through the more 
than 500,000 comments and we will be, in the next few weeks, 
issuing a Notice of Data Availability, a NODA, as it is 
referred to, which will highlight those analyses and those 
issues which we feel are going to be critical to informing us 
to our ultimate decision on regulating mercury from power 
plants.
    Having said that, I want to also assure you that we intend 
to meet our court deadline of March 15th. So we will be issuing 
this NODA in the next few weeks, there will be a public comment 
period, and based upon those comments and whatever analyses 
that we need to do to make an informed science-based decision, 
that is what we will do.
    Mr. Tierney. You say you are going to meet your court 
deadline. That whole court deadline would seem to be a case 
that was under the assumption that it was going under a whole 
different section of the rulemaking process than the EPA has 
gone under. You're still working just on the cap and the trade 
approach?
    Mr. Johnson. We proposed, as you are probably well aware, 
three options. One option deals with a strict MACT control, 
MACT stands for Maximum Achievable Control Technology, and then 
two cap and trading programs, one under Section 111 of the 
Clean Air Act and the other under Section 112 of the Clean Air 
Act. There are advantages and disadvantages. We certainly see 
the advantages of the cap-and-trade. Given our experience with 
the acid rain program, we believe we can achieve a greater 
reduction in mercury from coal-fired power plants using a cap-
and-trade rather than a MACT approach, again, based upon the 
information that we had at the time that we proposed this rule. 
But, we have proposed these options, and these options are all 
options that we are considering as part of the final 
rulemaking.
    Mr. Tierney. I won't burden everybody by going into it at 
this point in time, but obviously I have some serious concerns 
about the delay, which I don't think benefits anybody that 
needs protection under this rule; also, about the insistence on 
ignoring the advice of people in working groups that have been 
set up to provide that type of assistance on that. So, maybe 
some of the other witnesses will get a little bit further into 
just what has been going on here, but I hope at some point the 
Administrator and EPA realizes that people are serious about 
this and the continued obfuscation isn't really helpful on 
that.
    I will stop at this point, because I want to talk to you at 
a little more length, Dr. Graham. I will just yield back.
    Mr. Ose. Gentleman from Virginia.
    Mr. Schrock. Thank you, Mr. Chairman.
    Dr. Graham and Mr. Sullivan, how many of the 2001 OMB 
deemed high priority and 2002 Agency-accepted nominations were 
intended to benefit small businesses? And, can you quantify any 
results to date in paperwork burden reduction hours or 
regulatory burden financial relief?
    Mr. Graham. I don't have those numbers off the top of my 
head, and I would defer to Tom on the question of their small 
business impact.
    Mr. Sullivan. I am happy to fill in some of the data. 
Although I wasn't at Advocacy for the 2001 nominations and my 
office actually didn't specifically nominate rules under that 
call, my office was very involved in a number of these rules, 
and actually some of them ended up not only achieving their 
original purpose, but also saving small business money. For 
instance, in the Department of Energy air conditioning 
conservation standards, while it was at a 10 percent efficiency 
standard, it was proposed to be raised to 30 percent 
efficiency. Small businesses worked with Department of Energy, 
EPA, Dr. Graham's office through that call and ultimately were 
able to convince the regulators to go to a 20 percent 
efficiency, and we measured a cost savings because of that of 
$130 million for small business.
    Another example is the Department of the Interior National 
Park Service's snowmobile regulations. Again, because of small 
businesses' interaction with the Federal Government to convince 
them of less burdensome alternatives, a 1-year postponement 
saved small entities $15 million.
    Now, both of those examples unfortunately have ended up in 
the courts and the cost savings may just be on paper, not 
realized in the wallets. But, it is an example of how agencies 
were receptive to small business input.
    Last, but certainly not least, Department of Transportation 
proposed changes to the hours of service requirements, and two 
changes, one is exempting some motorcoach businesses and 
another removing the requirement for electronic onboard 
recorders, saved small businesses $180 million in first-year 
compliance costs, and that certainly is a success, although the 
original proposed changes of hours of rest and sleep 
requirements, which continues to be a nomination for reform 
from small entities, is not something that the Department of 
Transportation has decided to act on.
    Mr. Schrock. I am hoping there were more than just those.
    Mr. Sullivan. Those are three. Within the overtime 
regulations, there were two high priority small business 
nominations identified not only by my office, but by a number 
of folks who may be represented on the next panel. Both the 
white collar exemption clarification and the administrative 
staff exemption built into the final overtime regulations 
produced cost savings for small business but we are not able to 
piece out the specific provisions as how they benefit small 
business from a dollars perspective.
    Mr. Schrock. Tom, in your testimony you had some useful 
charts here about your office's nominations, including your top 
30 priority reforms. How many of these total nominations did 
Advocacy submit to OMB in 2001, 2002, and 2004? I know you 
weren't there in 2001. How many were accepted? And, besides 
Labor's overtime rule and EPA's new source review rule, which 
specific regulations or guidance documents were performed to 
date? And one more. I will followup, if you want me to. How 
many of the completed actions were major or economically 
significant rules?
    Mr. Sullivan. Congressman Schrock, I will try my best to 
hit each of these questions. If I don't, I am happy to respond 
to the committee in writing following the hearing.
    In 2001, again, my office did not submit nominations 
specific to the call. In 2002, my office submitted 16 
nominations. Dr. Graham's office then assessed all of the 
comments, worked with my office under a Memorandum of 
Understanding to kind of cull in the high priority. We 
suggested 30 high priority related to small business. Of that, 
in the kind of final cut, 10 were identified as being the 
responsibility and having the stewardship of agency leadership 
to take action. Of those, 2 that related to the overtime rules 
were in fact acted on to the satisfaction of the small 
businesses who commented.
    And, again, the way I described my characterization of 
narrowing down the implementation and successful completion to 
2 of the broad universe is unique to my office's perspective, 
it is not the way that others are characterizing a job as a 
completed action from a decision point on whether or not they 
took action on specific nominations.
    Mr. Schrock. Thank you.
    Thank you, Mr. Chairman. My time is up.
    Mr. Ose. I thank the gentleman.
    Mr. Kucinich.
    Mr. Kucinich. Thank you, Mr. Chairman.
    I have some questions for Mr. Johnson. The administration's 
process for developing mercury rules was so disturbing to five 
EPA employees and several former EPA officials that they felt 
the need to speak out to the media, among them the Los Angeles 
Times. The Times reported, in March 2004, that long-time EPA 
staff revealed they were told by political appointees at the 
EPA not to undertake the required scientific and economic 
analysis of EPA's mercury proposal. While the EPA's decision 
not to listen to its own scientists and advisory panel was 
disturbing in and of itself, it apparently did listen to 
certain industry interests, with language copied verbatim from 
memos prepared by industry lobbyists. EPA officials on the 
administration's mercury rulemaking, former officials such as 
Bruce Buckheit, former Director of EPA's Air Enforcement 
Division, retired last December, said, ``There is 
politicization of the work of the Agency that I have not seen 
before.'' Russell Train, who was head of the EPA during both 
the Nixon and Ford administrations, is quoted as having said, 
``The Agency has strayed from its mission in the past 3 
years.''
    This hearing gives us an opportunity to look into the 
culture of rulemaking relating to the administration's role 
with the industry and industry's role in actually writing 
regulations that benefit the industry and are adverse to public 
health. You, of course, are aware that the industry actually 
wrote the administration's proposed mercury rule in the sense 
that what was published in the Federal Register contained 
numerous paragraphs of verbatim language supplied by two 
separate industry advocates. You are aware of that, are you?
    Mr. Johnson. I am aware that there was that language 
included, yes.
    Mr. Kucinich. Yes, OK.
    Mr. Johnson. After the fact.
    Mr. Kucinich. Now, let me ask you this. The President and 
EPA administrators and other government officials have touted 
the rule that relates to a 70 percent reduction in mercury 
emissions by 2018. That is what was said publicly, but isn't it 
true that the EPA's own models project that mercury emissions 
will not fall by 70 percent until 2025, or even later, 20 years 
from now? Isn't that correct?
    Mr. Johnson. I won't say that it is not correct. What I 
mean by that is, again, it is a model and it depends upon what 
assumptions one uses. What our experience in the cap-and-trade 
program for acid rain is, in fact, that we achieved better 
reductions and faster reductions than what was projected by our 
original model.
    Let me go back to the first comment that you made. In many 
ways, I am unique among the political appointees because I have 
been a career civil servant at EPA and have been at EPA for 24 
years now, and have been involved in a lot of rulemaking. My 
experience in rulemaking is for those rules that are highly 
controversial, highly charged rules, such as mercury, it is not 
surprising that there are differing opinions about the process, 
the assumptions, or what have you; and you have mentioned a 
number. I think the important thing, certainly from my 
perspective as the deputy administrator, is that we, the 
Government, we, the EPA, need to regulate mercury.
    Mr. Kucinich. But, let me ask you something, Mr. Johnson, 
if I may?
    Mr. Johnson. Yes, sir.
    Mr. Kucinich. How can the public have any confidence in EPA 
if it has openly acknowledged that the industry is writing the 
regs?
    Mr. Johnson. The industry did not write the regs, sir. 
There are many comments that the Agency receives during its 
preliminary process in developing regulation. We have 
information from academic institutions, from environmental 
organizations, from the general public.
    Mr. Kucinich. But, it is true that you acknowledge that in 
the rule published in the Federal Register relating to the 
administration's proposed mercury rule, that you have 
paragraphs that are verbatim that were supplied by the 
industry. So, I ask you again how can the public, which is now 
getting all this information about the adverse effects of 
mercury poisoning on themselves and their children, how can 
they have any confidence at all? Tell the people how can they 
have confidence?
    Mr. Johnson. Well, again, one is we have a lot of 
information coming from a variety of sources, and it is not 
unusual that information is put into a proposal. And, this is a 
proposed regulation. The good news is this is an open, 
transparent process. The Agency has laid out what we believe 
the options are for regulating mercury from coal-fired power 
plants for the first time. We have made all of our analyses 
available. As I have just mentioned, we are going to be 
highlighting additional data to help inform our ultimate 
decision on mercury. But, the confidence that the American 
people should have is, yes, that EPA is on watch and we are 
going to be regulating mercury from coal-fired power plants for 
the first time in the history of the United States.
    Mr. Kucinich. Mr. Chairman, I know you have to move on. I 
just think it would be important to resubmit for the record a 
letter that was sent to the EPA by our ranking member, Henry 
Waxman, of the full committee and Tom Allen, which really 
challenges this notion of transparency, because members of this 
committee had to demand of the EPA what is going on with 
respect to the contact between the administration and industry 
advocates. So I thank the Chair.
    [The information referred to follows:]

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    Mr. Ose. I thank the gentleman.
    Before I recognize Mr. Van Hollen and just advise Mr. 
Tierney that we have had a little bit of a change in plans. We 
are being advised by the full committee that our time here is 
limited to 12:15 p.m. So, the plans that evolves here is that 
our questions of this panel and next panel will be limited to 
one round due to the time constraints, and that questions will 
be necessarily submitted to you in writing.
    Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    First, let me just say, Dr. Graham, I agree with you that 
it is obviously important to review regulations to determine 
whether or not they are accomplishing the purpose we set out 
originally to accomplish. And, if they are not accomplishing 
them, we should either get rid of them or revise and modernize 
them to suit the purpose. I think you would also agree that 
where we identify a need for an additional rule to protect the 
public health, we should move forward. And where we identify 
it, we should move forward in the best way and based on the 
best evidence; and that is what leads me to the questions with 
respect to the mercury rulemaking.
    Mr. Johnson, you say in your testimony that EPA is 
interested in ensuring that the proposed mercury rule be based 
on the ``best available information.'' I think that is 
something we would all agree; we should have the best available 
information. But, that is what leads me to my question, because 
best available information, it seems to me, requires exploring 
all the options; and EPA did create a working group. We have 
somebody who is here who is going to testify later, Mr. John 
Paul, who was a co-chair of that working group; he represents 
State and local air pollution control officers. In his 
testimony, he says, ``As part of our report, we recommended 
that EPA analyze through mathematical modeling the mercury 
control levels recommended by the various stakeholders. EPA 
agreed to that recommendation and scheduled a working group 
meeting to review and discuss the modeling results. 
Unfortunately, in April 2003, the working group was informed by 
EPA via e-mail that the modeling was postponed indefinitely. 
Furthermore, the indefinite postponement turned out to be 
permanent.''
    Since then you have had just a series of correspondence 
going back and forth to EPA administrators from Members of 
Congress, from environmental groups, from all other 
stakeholders on this question of why EPA isn't doing the 
modeling of the working group options, the working group that 
was created and established by EPA itself for this purpose. In 
these letters, there are all sorts of statements. In March of 
this year, Administrator Leavitt recognized that the analysis 
was not complete and finished to fix it, saying, in one of his 
responses, ``I want it done well and I want it done right.''
    Nothing has happened since then. We have heard really what 
amounts to a lot of excuses from Assistant Administrator 
Holmstead saying that first we had insufficient resources to 
model mercury because EPA was modeling the clear skies 
proposal.
    I guess my question to you is, having established the 
working group, having received the benefit of the 
recommendations, having, at least at the staff level of the 
EPA, agreed to model the recommendations that were set out, 
does EPA intend, as part of its analysis, to model the 
recommendations of the working group that it established? I 
just want a simple yes or no answer so we can cut through a lot 
of the back and forth.
    Mr. Johnson. Well, I was not there, involved with the 
decision or in the beginning of making that decision to accept 
or not to accept, so I don't know the specifics of what that 
work group did recommend. What I can say is that the 
Administrator has been very public that he will require 
whatever analyses that are necessary to be able to make a sound 
scientific and good public policy decision with regard to 
mercury.
    Mr. Van Hollen. Well, let me just ask you, because we have 
a timetable now.
    Mr. Johnson. Yes, sir.
    Mr. Van Hollen. You have said that EPA intends to move 
forward by the March 15th date, is that right?
    Mr. Johnson. Yes.
    Mr. Van Hollen. OK. We are now in November. It seems to me 
that, if the EPA is going to model these results, it needs to 
make a decision, yes or no. I am simply asking whether or not, 
as of today, as of today, you are the Deputy Administrator, EPA 
intends to model the recommendations of its work group?
    Mr. Johnson. We will be doing whatever modeling is 
necessary to make the decision by March. I don't know----
    Mr. Van Hollen. I am just trying to get on the record. We 
have had all this back and forth. We got a letter in response 
to Mr. Waxman today from a letter he wrote back in June. We 
have everybody here; a lot of people are wondering how to 
interpret all this. I just want a yes or no of whether you are 
going to model those recommendations?
    Mr. Johnson. We will be using models to make our final 
decision. What specific models, what data input and all, that 
is what the public comment process is about. We have 500,000 
pages of comments. We have over multiple analyses on all sides 
of the issues with all kinds of assumptions, and we are going 
to be issuing a Notice of Data Availability to be able to 
highlight the range and the depth and the breadth of those 
kinds of assumptions, because we want to get additional public 
comment to help understand what is fact, what is fiction, what 
is gray, what is white versus black. So that information will 
then help us to make a decision. If we have to do additional 
modeling to make the decision, then we will do additional 
modeling to make the decision.
    We are also mindful of the Administrative Procedure Act 
which, if we come up with a new model that hasn't been used 
before, then, under the Administrative Procedure Act, we have 
to go through a public comment period for that. Those are all 
part of the factors. At this point in time what I can say is 
that we are going out with a Notice of Data Availability, 
highlighting the models, highlighting those issues and the data 
that we have received that we believe are pivotal in making an 
informed judgment; and we want public comment, and public 
comment quickly, so that we can make the best scientifically 
sound decision as well as good public policy decision.
    Mr. Van Hollen. All right.
    Mr. Chairman, if I could just ask how much time would be 
required to model?
    Mr. Ose. Mr. Van Hollen, we are going to have one more 
round.
    Mr. Van Hollen. Oh, we are? OK. I am sorry.
    Mr. Ose. Two minutes each on this panel.
    Mr. Van Hollen. Got you. Thank you.
    Mr. Ose. Dr. Graham, your testimony is that on November 1st 
we sent you a request for a chart indicating the status of each 
nomination from 2001, 2002, and 2004 nominations processes, the 
chart indicating whether a nomination was accepted or rejected; 
and then what was the actual or expected publication dates for 
any proposed or final rules derived from that nomination; and 
whether or not if a reform candidate was only partially 
accepted, please so indicate.
    You have information in your office that perhaps 
incompletely addresses that question, but we don't yet have it 
in our possession. My question is will you send it to us, 
whether complete or incomplete, the information that would be 
responsive to this request, on or before November 30th of this 
year?
    Mr. Graham. November 30th? We certainly can give you a 
partial response, no question. But, for example, the 2004 
information, that is deliberative information. That is not 
coming to you until a report comes out.
    Mr. Ose. All right. That is fine.
    Mr. Graham. For example. Also, there you have an analysis 
of whether what we did was similar to or different than the 
commenter. That is a very substantial body of work. That will 
not be done by November 30th.
    Mr. Ose. All right.
    Mr. Graham. I will give you the best we can get to you by 
November 30th.
    Mr. Ose. I appreciate that.
    Mr. Radzely, what is the timetable for the Department's 
issuance of proposed revisions for the various family leave 
implementing documents, including the non-binding guidance, the 
paperwork requirements, and what I refer to as the other 
regulatory provisions, such as recordkeeping and the like?
    Mr. Radzely. Mr. Chairman, the Department is still 
reviewing the stakeholder comments, the congressional hearings 
on this issue, the OMB nominations, and the court cases to 
determine what, if any, actions to take regarding the 
regulations, and we hope to have a decision some time next year 
as to what, if any, actions to take.
    Mr. Ose. When you say next year, what do you mean? I mean, 
is that January or is that December?
    Mr. Radzely. At this point we are still reviewing the 
volume of material that we have, and we hope to make a decision 
as to whether to take any action at some point next year.
    Mr. Ose. Are you going to wait until you have a final 
decision on all of it before you release any of it, or is it 
going to come out in dribs and drabs?
    Mr. Radzely. We are reviewing all of the nominations that 
we have received and all the comments that we have together, 
and at the point where we decide what, if any, actions to take, 
if there are discreet actions, I presume the Department will 
take them at an appropriate time. But I, at this point, do not 
know what, if any, action we are going to take, so I can't say 
specifically whether it will be one or multiple actions.
    Mr. Ose. All right.
    I am going to exercise a little discretion of the Chair. I 
don't know to whom this question needs to be directed, whether 
it is Dr. Graham or Mr. Johnson, but I know that my friends on 
the other side of the isle have sent letters regarding mercury 
to which they have not received answers. And I have to tell 
you, whether I am on one side of the isle or the other, as near 
as I can tell, under the constitutional oversight provisions 
that we enjoy here, we are entitled to that information. I am 
going to recognize my friend Mr. Tierney to expand on this, but 
this is an issue that, as chairman, I will tell you it has my 
attention.
    Mr. Tierney. Well, Dr. Graham, let me get right to that, 
because the last time you were here I asked you some important 
questions about the mercury rulemaking at EPA. After the 
hearing I sent you a handful of followup questions, which is 
why I was reticent to have followup questions today, because we 
don't have a good track record with this. You did not address 
specifically the responses to my questions. Your initial 
request had about a page and a half of very general comments. I 
wrote to you again on October 15th, asking you to respond. At 7 
last Friday night, this most recent Friday night, somebody 
faxed over a letter that still, in my estimation, fails to 
answer those questions directly. Let me give you an example.
    Through EPA's advisory group, State, industry, and 
environmental stakeholders developed three options for levels 
of mercury controls. The advisory panel recommended that EPA 
perform a modeling analysis of each of these options. Yet, for 
the past year and a half, EPA has failed to conduct this 
analysis. I asked you whether you agree that the 
recommendations for necessary analytical work made by the EPA's 
public advisory group on the mercury rulemaking should be given 
substantial weight. All you responded to me was a general 
statement, ``In any important rulemaking, including its mercury 
regulation, EPA considers a number of important factors. . . . 
All of these factors go into the Agency's decisions regarding 
the appropriate analysis to undertake, for example, in 
considering the input of this working group.''
    I am looking for a specific answer to that question. Has 
OIRA taken a position on whether the EPA should comply with the 
advisory group's recommendations? And, if so, what is the 
position?
    Mr. Graham. Considered, yes. Substantial weight, not 
necessarily.
    Mr. Tierney. I also asked you: ``In the mercury rulemaking, 
does OIRA support analysis of a full range of regulatory 
options for controlling mercury?'' You replied, ``We have 
indeed encouraged EPA to perform a rigorous comparison of the 
cap-and-trade versus MACT alternatives.''
    I wanted to know, and I still want to know, whether OIRA 
supports analysis of a full range of regulatory options, 
including options more stringent than either of EPA's 
proposals. Can I have a clear answer on that?
    Mr. Graham. Well, full range?
    Mr. Tierney. Full range.
    Mr. Graham. OK, the Executive Order 12866 does not require 
a full range of all--what do you mean by that, full range?
    Mr. Tierney. Well, including options that were more 
stringent than either of EPA's proposals.
    Mr. Graham. I think that in the comments that Mr. Johnson 
mentioned there are substantial number of comments and analyses 
done on proposals more stringent and less stringent than the 
proposal. By definition, they will in fact be considered.
    Mr. Tierney. Would you support that they are considered?
    Mr. Graham. They will be considered because they are in the 
public comment process.
    Mr. Tierney. Is part of that the advisory group's 
recommendations?
    Mr. Graham. In your question before you asked me whether I 
was aware of the specifics of the advisory committee 
recommendations, and I told you that I was not. But, ideas and 
models and recommendations are part of the public comment 
process, they will be considered.
    Mr. Tierney. Well, Mr. Johnson, I didn't get that direct 
inference from you in the last round of questions with Mr. Van 
Hollen. Are you willing to be as direct?
    Mr. Johnson. Yes. Yes.
    Mr. Tierney. You will consider and run those models?
    Mr. Johnson. Whatever is in our public comments, we will 
consider all of that.
    Mr. Graham. Mr. Tierney, those models are already run. 
Those are models that were run with the same model that EPA 
uses, but outside parties contracting the model. They have run 
those models and submitted them as part of the public record.
    Mr. Tierney. Well, to date they just don't seem to have 
given much credence or much attention.
    Mr. Johnson. Mr. Tierney, that is why we are putting and 
identifying those models and those analyses as part of our 
Notice of Data Availability, because we now have them, and 
there is a wide range of assumptions and conclusions from those 
model analyses. That is why we want people to look at them, 
comment on them, and particularly focus on those areas of the 
assumptions.
    Mr. Tierney. Well, maybe I am a little cynical, but it 
seems to me that you are trying to kill everybody with an 
overwhelming amount of information to keep delaying this thing, 
and I hope that is not the case. It seems somebody could target 
this and we could get right to the bottom of it and we can get 
some work done here if you listen to your own advisory working 
group and you follow it along and did that. I don't see that 
being done; I see trying to switch from Section 112 to 111. I 
hope not, but it seems like somebody welcoming a lawsuit to 
delay things further under that premise. If you keep enlarging 
the amount of information out there and the work done on this 
thing, we will never get a rule, and kids continue to live in a 
poisoned atmosphere. So, I just hope that is not the case.
    Mr. Graham. Mr. Tierney, the advisory committee does not 
have the authority to require EPA to stay within Section 112 of 
the Clean Air Act.
    Mr. Tierney. I understand that.
    Mr. Graham. The administration supports a market-based 
approach, and we believe the authority exists under 111. That 
is perfectly adequate to guide the policymaking of the 
administration.
    Mr. Tierney. There is a lot of discussion on that, and 
there should be even more.
    Mr. Graham. We are delighted to have it, sir.
    Mr. Tierney. Very few people agree with you on that.
    Mr. Graham. Absolutely.
    Mr. Tierney. You have a fringe group on that area. 
Essentially, this whole thing has gone on for years under the 
premise of Section 112. At the last second this administration 
comes in and takes a pivot and drives the whole thing in a 
different direction.
    Mr. Graham. That is because this administration believes in 
market-based approaches to environmental policy, Mr. Tierney.
    Mr. Tierney. Would that they believed more in science.
    Mr. Graham. We certainly agree that it should be 
implemented with science.
    Mr. Tierney. Then, we would get something done here to stop 
kids from being poisoned.
    I have one last question I want to go over, if I may. In 
your role as Director of OIRA, you have emphasized how 
important it is for agencies to incorporate into rulemaking an 
analysis of the cost the rule will have on those who have to 
comply with it and the benefits of the proposed rule. You have 
not at all been reticent in strongly advising agencies on 
analytical and even science and policy decisions and 
rulemaking. In this case EPA failed to conduct even the most 
basic analysis necessary to understand the cost and benefits of 
various control options.
    Don't you agree that EPA should conduct this analysis as 
recommended by its own advisory panel?
    Mr. Graham. I certainly think they should do benefit 
analysis of the rulemaking, including the benefits to children, 
both the health benefits and long-term economic benefits to 
those children.
    Mr. Tierney. Well, we can only hope that we get some 
action, and relatively soon. Thank you.
    Mr. Ose. Dr. Graham, to followup on Mr. Tierney's 
questions, have you done a prompt letter to EPA regarding that 
particular issue?
    Mr. Graham. Have I yet?
    Mr. Ose. Yes.
    Mr. Graham. No, sir.
    Mr. Ose. OK.
    Mr. Van Hollen for 1 minute.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Dr. Graham, you made a couple comments I wanted to respond 
to. I would put it in the form of a question, but we don't have 
time. I also support market-based approaches to many of these 
issues. I am an original cosponsor of legislation to do that 
with respect to carbon dioxide, as the House cross-file to the 
McCain-Lieberman bill on global warming issues. Where it works, 
the difference here we are talking about is mercury. Mercury is 
listed as a hazardous pollutant under Section 112 of the Clean 
Air Act.
    Now, under cap-and-trade, as you know, one company, one 
generator of pollution can buy the ability to not have to put 
on the pollution control equipment. That means that in the 
immediate surrounding of that area people could be subject to 
pollution from that. The difference is we are dealing with 
mercury, which is described under Section 112 as a hazardous 
pollutant. That is why the cap-and-trade approach is 
questionable under this particular scenario, when it is not 
questionable when you are dealing with pollutants that have 
more of an aggregate global impact and are not necessarily 
toxic at the local level. I think that is why the working group 
specifically recommended against a cap-and-trade approach.
    So, I am for market-based approaches too, where it makes 
sense and where it is in the public health interest, but I am 
not for it when it results in people in the immediate area 
surrounding a power plant being subject to mercury poisoning.
    Mr. Graham. Would you like me to respond? Actually, EPA's 
modeling shows that the largest power plants, the only ones 
that may have sufficient mercury to cause a localized problem, 
in fact have the largest reductions under the cap-and-trade 
program and, hence, provide greater protection for residents 
near those facilities.
    Mr. Van Hollen. That would be great if they decide to 
exercise the option to do the pollution control.
    Mr. Graham. But, that is what the modeling says, that they 
will in fact do that.
    Mr. Van Hollen. Then the only question remaining is 
shouldn't we do--from your earlier response to me it sounds 
like you hadn't, but shouldn't we do all the modeling of all 
the different options, including the options put forward by the 
working group, to make sure--the question is whether there are 
different assumptions in these models, and what assumptions are 
being made. It seems to me that what you are creating, as I 
understand it, by not doing the mathematical modeling of the 
working group, you are creating a suspicion that doesn't have 
to be there, that you are not exercising your full authority to 
examine all available options. So, the question is, OK, model 
it and see what the results are, and then compare your results. 
But, the question is whether all available options, that 
reasonable people can agree or based on some reasonable 
assumptions, have been modeled so we can reach fair 
comparisons.
    Mr. Ose. May I suggest that you follow this line of 
questioning in writing to the witnesses?
    Mr. Van Hollen. Yes. I would be happy to. Thank you. Thank 
you, Mr. Chairman.
    Mr. Ose. I want to thank this panel. I apologize for the 
dilemma of location today. I do appreciate all four of you 
appearing and providing testimony. To the extent that we have 
followup questions, we will forward them to you as quickly as 
possible. And, as always, we appreciate timely responses. The 
record will be open for 10 days on this. Believe me, there are 
additional questions we didn't get to due to time constraints.
    Gentlemen, thank you. You are excused.
    Could we have the second panel gather immediately?
    While we are getting set up for the second panel, I will 
advise everybody that the equipment being arrayed here, the 
setup of that will continue; it is done to facilitate the 
hearing that will commence in this room at 1. If you have any 
complaints about that, you should take it to the chairman of 
the Subcommittee on Energy Policy, Natural Resources and 
Regulatory Affairs.
    OK, before you sit down, let us get you all sworn in. 
Please rise. All six witnesses are at the witness table. Please 
raise your right hands.
    [Witnesses sworn.]
    Mr. Ose. Let the record show all the witnesses answered in 
the affirmative.
    All right, we are going to change the rules here a little 
bit, given our time constraints. We have received each of your 
written statements, and they have been entered into the record. 
We have read each of your written statements. Unfortunately, as 
opposed to the normal 5 minute period of time that you are 
going to have to summarize, we are going to reduce that to 2 
minutes for each of you. Any objections?
    All right, our first witness on the second panel is Mr. 
William Kovacs, who is the vice president for Environment, 
Technology and Regulatory Affairs of the U.S. Chamber of 
Commerce.
    Mr. Kovacs, you are recognized for 2 minutes.

  STATEMENTS OF WILLIAM KOVACS, VICE PRESIDENT, ENVIRONMENT, 
 TECHNOLOGY AND REGULATORY AFFAIRS, U.S. CHAMBER OF COMMERCE; 
     TODD O. MCCRACKEN, PRESIDENT, NATIONAL SMALL BUSINESS 
 ASSOCIATION; NANCY MCKEAGUE, SENIOR VICE PRESIDENT, MICHIGAN 
 HEALTH AND HOSPITAL ASSOCIATION, REPRESENTING THE SOCIETY OF 
HUMAN RESOURCE MANAGEMENT; JAMES L. GATTUSO, RESEARCH FELLOW IN 
REGULATORY POLICY, THE HERITAGE FOUNDATION; CATHERINE O'NEILL, 
    ASSOCIATE PROFESSOR, SEATTLE UNIVERSITY SCHOOL OF LAW, 
REPRESENTING THE CENTER FOR PROGRESSIVE REGULATION; AND JOHN A. 
   PAUL, SUPERVISOR, REGIONAL AIR POLLUTION CONTROL AGENCY, 
    DAYTON, OH, REPRESENTING THE STATE AND TERRITORIAL AIR 
                POLLUTION PROGRAM ADMINISTRATORS

    Mr. Kovacs. Thank you, Mr. Chairman. Without using up too 
much of my time, since this is your last hearing, I want to 
thank you for all of your efforts over the years.
    Mr. Ose. Enough of the obituaries. Get to your subject 
matter.
    Mr. Kovacs. Regulatory reform has been a bipartisan issue 
for 30 years. Presidents Carter, Bush, and Clinton used 
executive orders to move the issue forward and examine 
regulations on a regular basis. This administration has chosen 
to use the regulatory right-to-know, and they have accepted 
public nominations. It has been a fine process for us in the 
sense that it has gotten us to talk to our members, but the 
biggest problem with the process is there are no timely updates 
and it is very difficult to find out where the regulations 
might be in the process. In fact, the Chamber actually 
contacted every single person who nominated a regulation, both 
the business and environmental groups and other non-profits. 
Virtually throughout the entire list of nominations, most, 70 
percent did not know where their regulations were in the 
process and couldn't identify how they were moving through; and 
that is something that I think can be easily corrected.
    You have three tools, very quickly: one, there are the 
executive orders, which really do give the President and the 
agencies the right to go in and examine the regulations; No. 2, 
you have now the public nomination process; and, three, I would 
just like to refresh everyone's recollection, you also have 
Section 610, which was passed as part of the Regulatory Reform 
Act, where every single agency is required to provide a plan 
for how they are going to systematically review regulations, 
and that is something the Congress has had for oversight for 
almost two decades and has never really used.
    So, if we are going to make a difference right now in how 
the regulatory process is reviewed, I would suggest that 
Congress and these hearings show what oversight can do. You 
would get a lot of answers to your questions. Two, you have the 
White House, who could issue an executive order to enforce 
Section 610 and tell the agencies it is serious. And, three, I 
think as part of the OIRA nomination process, they could do 
what is required under 610, and that is to link it to the 
unified agenda. If you have all three of those processes in 
place, you do have a way in which, over a regular basis--and 
that is the key, regular, systematic basis--Congress could ask 
the agencies to undertake the 610 reviews and to undertake the 
nominations; and that way we don't worry, 4 or 5 years later, 
that we didn't get the kind of information we need.
    Thank you.
    [The prepared statement of Mr. Kovacs follows:]

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    Mr. Ose. I thank the gentleman, and for his attempt at kind 
words. I didn't mean to be rude; I have just got to move.
    Mr. McCracken for 2 minutes.
    Mr. McCracken. Thank you very much. I will try to be very 
brief as well, and condense my statements.
    Bottom line, I represent the small business community; I am 
the president of the National Small Business Association. 
Fundamentally, what I think this hearing is about, and what we 
are all trying to achieve, is instead of constantly looking at 
all the new rules coming down the pike, and how to keep them in 
check and how they can be made to be usable and achievable by 
the small business community, it is at least as important, if 
not in some cases more important, to continue to look at what 
is already on the books, to see how they can be revised, 
simplified, and done away with in some cases. That is usable.
    As Mr. Kovacs mentioned, we have had on the books for more 
than 20 years the Section 610 review, which has been almost 
entirely not complied with. That is why we have been pleased, 
the last few years, the administration has adopted this process 
for accepting nominations, so that we can at least begin to do 
some level of review of the regulatory burden that the small 
business community faces.
    So, I am loathe to criticize or to suggest that is a bad 
idea, because it is certainly a big step forward from where we 
have been, but we think there is a lot more than can be done in 
that process. It is clear to the typical juror that perhaps, I 
would think, that the OIRA may need a few more resources. We 
constantly hear how they are overburdened, and it is not hard 
to see that there is some validity to that charge. We also 
think, though, as Mr. Kovacs said, that there is a significant 
role for Congress to play here as well. If Section 610 review 
were coupled with meaningful oversight, particularly by the 
authorizing committees of the agencies, that those various 
agencies report to, I think that we could see an enormous 
impact and sort of get the attention of those agencies.
    The other thing that I would--and these are very brief 
remarks--point to is something that a lot of speakers have hit 
on today, which is the visibility of the process, the ease with 
which we can find out how this review is actually happening. I 
mean, some of that was illustrated earlier in the last panel, 
where even the head of OIRA has a hard time presenting all the 
information that you might expect. Now, how can a citizen or a 
trade group out there that submitted comments expect to know 
what in the world is happening to those comments?
    But, in closing, I really appreciate all that this 
subcommittee has done over the last few years in moving this 
ahead, and we look forward to more work. Thank you very much.
    [The prepared statement of Mr. McCracken follows:]

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    Mr. Ose. I thank the gentleman.
    Our next witness is Ms. Nancy McKeague, senior vice 
president for Michigan Health and Hospital Association.
    Ma'am, you are recognized for 2 minutes.
    Ms. McKeague. I am here specifically to discuss with you 
the Family and Medical Leave Act and the problems which have 
resulted in the workplace for us attempting to abide by the 
regulations. I am assuming, for the sake of brevity, that you 
are familiar with the FMLA. And I would like to tell you that 
our members believe that the FMLA has made an important 
contribution by providing a supportive environment for 
employees and their families in their time of need.
    As the mother of six children, and as someone who has 
personally utilized leave under the FMLA, I support the intent 
of the law. However, the spirit of the law has been undermined 
when the complexities of the statute have left employers 
guessing how best to comply with it, while still leaving 
employees guessing as to what leave is protected under 
interpretations I don't believe Congress ever considered.
    In enacting the FMLA, Congress stated that the term 
``serious health condition'' is not intended to cover short-
term conditions for which treatment and recovery are very 
brief, recognizing that it is expected that such conditions 
will fall within the most modest sick leave policies. The DOL 
regulations as originally developed, however, do not follow 
Congress's intent.
    Unfortunately, the real victims of this confusion are the 
employees themselves. The most prevalent method used by 
employers to cover work during FMLA leave is to assign it 
temporarily to other coworkers. With the FMLA interpretations 
requiring little or no notice, this often results in requiring 
unscheduled overtime by coworkers. Work coverage for 
questionable, unscheduled leave absences has been especially 
challenging in the health care arena, where adequate coverage 
with qualified staff can involve issues as critical as life or 
death. Employee morale issues are also extremely important in 
the hospital setting, and my understanding is that DOL also has 
some public comments on that point.
    I have attached a chart to my testimony, which is also 
displayed here, which I will leave you to take a look at as you 
see fit. But, I would like to note that our compliance involves 
69 regulations and 29 processes, and may require us to process 
up to 17 documents for a single leave situation. The FMLA's 
implementing regulatory interpretations issued by the previous 
administration have left employers and HR professionals 
struggling with management of intermittent leave, 
communications with physicians, and difficult determinations as 
to whether a serious health condition exists within the meaning 
of the FMLA.
    There are additional information and examples of specific 
instances in my written testimony, Mr. Chairman, and I would be 
glad to respond to any questions.
    [The prepared statement of Ms. McKeague follows:]

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    Mr. Ose. I thank the gentlelady. For the record, this is 
your chart over here?
    Ms. McKeague. Yes, sir, it is.
    Mr. Ose. All right.
    Our next witness is Mr. James Gattuso, who is a research 
fellow in Regulatory Policy at the Heritage Foundation.
    Sir, welcome. You are recognized for 2 minutes.
    Mr. Gattuso. Thank you, Mr. Chairman. I want to thank you 
for summarizing some of my points in your opening statements. I 
hope that saves me a few seconds on my statement.
    Mr. Ose. I thank the gentleman for his comment.
    Mr. Gattuso. As you had mentioned in your opening 
statement, the Bush administration, I believe, has done a good 
job at slowing the train of excessive regulation. Many fewer 
new costly regulations are being adopted, saving taxpayers and 
consumers a lot over the past few years.
    However, that train has not been reversed; unnecessary and 
excessive regulations are not being reviewed adequately and 
taken off the books when they need to be. Some numbers on that: 
OIRA has already released numbers looking at the totals on 
cost-benefit analyses by the agencies on the cost of new 
regulations averaging, during the Bush administration, $1.5 
billion per year, which is still a lot, but much less than the 
$5.7 billion or $8.5 billion per year under the two previous 
administrations. So, there is an improvement there.
    My own study looking at major regulations, as reported in 
the GAO data base under the Congressional Review Act, shows 
that the Bush administration has been reporting approximately 
seven major pro-regulatory rules per year during its tenure, as 
opposed to 20 new pro-regulatory major rules under the Clinton 
administration. That is a significant difference.
    However, as I say, the train has not been reversed. It is 
still true that, under both administrations, the number of 
deregulatory actions has only been about a quarter of the total 
number of rulemakings. In other words, the number of actions 
increasing regulation outnumbered the numbers of actions 
decreasing regulation by a factor of 3 to 1, and that is 
relatively constant during both the Bush and the Clinton 
administrations. So, I believe there is clearly work to be done 
to examine and decrease, where appropriate unnecessary 
regulation.
    This committee has already reported legislation in that 
regard which I think will be helpful to improve regulatory 
accounting. I think that is an important step.
    There are a number of other additional steps that should be 
considered. Just very quickly, those include: strengthening 
OIRA. I believe OIRA needs to be the cop on the beat to provide 
independent analysis and review of new regulations. Right now 
OIRA staffers are outnumbered 4300 to 1 by staffers at 
regulatory agencies. I think they need to have a stronger 
presence.
    Congress needs to have a stronger presence. Congress should 
establish its own regulatory analysis office, similar to the 
existing Congressional Budget Office, to provide an independent 
review of regulations.
    There should be a regulatory review office in each 
regulatory agency charged with reviewing, analyzing, and 
considering the costs and benefits of new rules so that 
analysis and that consideration begins in the agencies, not 
when it leaves the agencies. Similarly, there should be a 
designated regulatory czar, an individual in each agency with 
personal responsibility for ensuring that regulatory review and 
analysis remains a focus in each agency.
    And, last, I think independent agencies should be required 
to submit cost-benefit analysis to OIRA. I believe ideally they 
should be subject to the full regulatory process. If that is 
not possible, at the very least, those analyses should be 
submitted to OIRA for non-binding review. Thank you, Mr. 
Chairman.
    Mr. Ose. I thank the gentleman.
    Our next witness is Ms. Catherine O'Neill, who is an 
associate professor at Seattle University School of Law and a 
member scholar for the Center for Progressive Regulation.
    Ma'am, welcome to our subcommittee. You are recognized for 
2 minutes.
    Ms. O'Neill. Thank you, Mr. Chairman and members of the 
committee.
    EPA's mercury rule shows an agency that has wandered far 
afield from a commitment to rational regulation. I would like 
to focus on three points.
    First, there is no question that the science shows that 
mercury poses a grave threat to the health of children and 
other Americans. Second, EPA's rule fails to address mercury 
contamination nationally, and actually increases it locally. 
EPA's preferred option, a cap-and-trade approach, is weak. It 
delays a final cap on emissions until 2018, and, even 2 years 
later, in 2020, EPA's own models, on the most generous 
assumptions, show that emissions will be reduced, at most, 61 
percent.
    Further, the emissions picture would be even worse in some 
regions. EPA's cap-and-trade approach would permit 11 times 
more mercury in the upper Great Lakes States in 2010 than a 
properly conducted MACT approach. This is illustrated by the 
chart on the right and a comparison between the blue line, 
showing cap-and-trade, and the green line, showing the much 
more substantial reductions under a properly conducted MACT for 
the upper Great Lakes States. Even in 2020 we see that cap-and-
trade would permit six times more mercury in this region than 
would a properly conducted MACT approach.
    Of particular concern, EPA's cap-and-trade approach would 
likely beget hot spots. Hot spots are localized areas of 
concentrated mercury emissions and, ultimately, exposure. EPA's 
own models reveal significant hot spots in the upper Great 
Lakes States of Michigan, Minnesota, and Wisconsin. In these 
three States in this region, mercury would decline only 27 
percent by the year 2020, and locally emissions would actually 
increase at 20 out of the 44 facilities located in these three 
States. These hot spots would coincide with a Great Lakes 
population, where even the average person is more likely to eat 
fish caught from local waters.
    Third, EPA's rule is not only weak, it is unjust. Who is 
left unprotected? EPA itself acknowledges that anyone who 
regularly eats fish may not be protected by its rule. This 
includes recreational fishers on lakes and rivers across the 
Nation, it includes low-income families in our urban areas who 
depend on fish for food, and it includes tribal fishers in the 
Great Lakes and elsewhere exercising treaty rights.
    Notably, EPA concedes that those left unprotected by its 
rule are disproportionately tribes, communities of color, and 
low-income communities. Having said this in the Federal 
Register, however, EPA does nothing to address the injustice. 
Instead, EPA instructs these groups, and particularly children 
and women of childbearing age, to reduce or eliminate fish from 
their diets in order to avoid the risks of mercury. Thus, 
rather than take real steps to reduce the risks at the source, 
EPA shifts the burden to those who are exposed and asks them to 
protect themselves. This is not EPA ``on watch,'' but EPA 
asking those at risk to protect themselves.
    This shift introduces its own adverse health effects as 
fish, a staple food, is placed virtually off limits. Consider 
the extraordinary burden on a young girl who must avoid fish 
throughout her childhood until age 20, and then throughout her 
childbearing years to age 49.
    In sum, EPA ought to produce regulations that are 
scientifically defensible, legally supportable, and just. The 
proposed mercury rule fails on all three counts.
    Thank you.
    [The prepared statement of Ms. O'Neill follows:]

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    Mr. Ose. I thank the gentlelady for her testimony.
    Our final witness on the second panel is Mr. John Paul, who 
is the supervisor of the Regional Air Pollution Control Agency 
of Dayton, OH, and vice president of the Association of Local 
Air Pollution Control Officials.
    Sir, welcome to our subcommittee. You are recognized for 2 
minutes.
    Mr. Paul. Thank you, Mr. Chairman.
    I would like to comment today on the regulatory reform 
process and how the mercury rule is an example of how this 
could have gone right, but, in fact, how it went wrong.
    You have heard a lot of comments and testimony with regard 
to what are the proper components of regulatory reform. You 
heard Mr. Sullivan say you need stakeholder involvement. You 
heard Mr. Johnson say you need an open and transparent process.
    The utility MACT working group which I co-chaired fit 
exactly that formula for 18 months and over 14 meetings. We had 
all the stakeholders that were involved; we had State and local 
agencies; we had the utility industry; we had environmental 
groups; we even had equipment vendors. We had great discussions 
of what were the potential issues, what were the different 
stakeholder positions on those issues. However, that process 
broke down, as you heard, in April 2003, when we were scheduled 
to get together to discuss and see the modeling results of the 
stakeholder recommendations as promised by EPA. But, instead, 
we were informed by EPA that meeting was indefinitely 
postponed.
    Now, unfortunately, even as the co-chair of the working 
group, I didn't find out that the working group had in fact 
been disbanded until I read about it in August in the Atlanta 
Journal Constitution paper. So this was a process that had all 
the ingredients of being good reform, but then broke down.
    In the 18 months and the 14 meetings, never once was cap-
and-trade mentioned. Not once. Never once did the 
administration come to us and say this is great that you are 
talking about the different options under Section 112, but our 
preferred approach is Section 111.
    I feel that had this really been the preferred approach, 
and had they really wanted to use the working group that they 
had assembled, that this could have been done, that they could 
have come to us, they could have said devote two meetings to 
discussing this. As important as the modeling was, the 
discussion of the modeling was also important. You have heard 
that also. The assumptions that go into the model, those need 
to be challenged and discussed.
    So I would just say that the mercury rule is an example of 
how reform could be done, but how it was not done. I would also 
add that this is not an isolated event with the administration. 
we have been treated the same way with New Source Review. They 
have an opportunity to talk to the stakeholders and to get all 
of the stakeholders together. State and locals implement the 
rules. We really feel we need to be talking with them about the 
rules so that we can avoid situations where EPA promulgates 
rules and then ends up in court over those rules.
    Thank you very much.
    [The prepared statement of Mr. Paul follows:]

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    Mr. Ose. I thank the gentleman for his testimony.
    We are going to do 2-minute rounds here up on the panel.
    Mr. Gattuso, you served in the Bush 41 administration in 
the Vice President's office, and your research that you have 
done at The Heritage Foundation indicates that little effort or 
progress--I am not clear which--has been spent focusing on 
rules that were in place prior to January 20, 2001. What steps 
do you recommend that the administration take regarding rules 
that were in existence prior to January 20, 2001? Who at the 
White House, for instance, could intervene here? Would OMB 
prompt letters be useful? What is your thinking on this?
    Mr. Gattuso. I think the answer is not really a mechanical 
one. There are lots of mechanisms that should be put in place 
and could help, but the answer really has to be one in terms of 
priority for the administration and for involvement and 
engagement within the agencies themselves. I think the efforts 
to reduce regulatory taxes, as it were, must be a priority of 
the administration and that priority must be communicated by 
the President himself. I think over the last year the President 
has made statements regarding regulatory reform much more 
prominently in his public discussions than he had in the past, 
so it is becoming a priority. That is a very good sign. A more 
active and engaged OIRA, more resources at OIRA also would be 
helpful.
    Mr. Ose. If the burden placed by regulation since January 
20, 2001 is X, whatever X is, what is the burden for rules that 
predate January 20, 2001? In other words, are we nibbling at 
the elephant or are we actually taking a bite out of the 
elephant? I am trying to figure out where we ought to be 
spending our time.
    Mr. Gattuso. Well, I don't have numbers of how much it has 
increased, but----
    Mr. Ose. What is your sense?
    Mr. Gattuso. The number of new regulations that impose new 
burdens have outnumbered the rules that have decreased burdens 
by a factor of about 3 to 1. So there have been, I believe, if 
you look at major rules, several dozen major rules, so you can 
do the math on that.
    Mr. Ose. I didn't state my question very well. We will come 
back to that.
    Mr. Tierney.
    Mr. Tierney. Mr. Paul, it seems to me that there were 
members of industry as part of the group that you were working 
with, am I right?
    Mr. Paul. Yes.
    Mr. Tierney. Isn't it accurate that some of the 
recommendations that came out of that industry group were 
actually stricter or for stricter controls of mercury than the 
recommendations EPA ultimately came forward with?
    Mr. Paul. Yes. The recommendations from industry varied 
between 26 and 31 tons per year of emissions, what is actually 
in the MACT rule as 34 tons per year.
    Mr. Tierney. What further work would your working group 
have done, if you hadn't been disbanded, unbeknownst to you?
    Mr. Paul. The biggest thing we would have done would have 
been to look at the modeling results from the working group 
recommendations. The good thing about that is you had the 
environmentalists at the table, you had the industry at the 
table, and they challenge each other back and forth. So there 
would have been a full venting of those modeling results and 
the assumptions that went into them. That is the biggest thing 
that we would have done.
    Mr. Tierney. Thank you.
    Ms. O'Neill, I look and see the EPA, they set four or five 
guiding principles for going forward with a rule on the coal-
fired utilities. The first one was the final rule that 
concentrated on the need to protect children and pregnant 
women. In your estimation, have they come even close to doing 
that with the two proposals they made?
    Ms. O'Neill. I think that is perhaps the most troubling 
aspect of the EPA's rule. They cite this as one of their 
guiding principles, and yet it utterly fails children and 
women. This is troubling especially in the face of the National 
Academy of Sciences' finding. The National Academy of Sciences, 
as you know, at the direction of Congress, completed a study in 
2000, and they found, ``the risk to children of women who eat 
fish is likely to be sufficient to result in an increase in the 
number of children who have to struggle to keep up in school 
and who may require remedial classes or special education.''
    In the face of this finding, nonetheless, EPA hopes to 
delay real regulation of mercury for an entire decade, again, 
viewed most generously. This threatens an entire generation of 
children. Studies show that currently up to 76 percent of the 
fish samples in the United States are contaminated at levels 
that are not safe for a young child. To the extent that EPA 
asks children and women to curtail their fish consumption, it 
looks to deprive them of a nutritious, healthy source of food 
and other nutrients. And given the widely heralded benefits of 
eating fish, I think this move by EPA is unconscionable. Again, 
it is contrary to the National Academy of Sciences' direct 
recommendation not to address the problem by means of fish 
consumption advisory, but to actually reduce methylmercury in 
fish.
    Mr. Tierney. Thank you.
    Mr. Ose. Gentleman from Virginia.
    Mr. Schrock. Thank you, Mr. Chairman.
    Mr. Kovacs and Mr. McCracken, I am going to ask you the 
same question, one of the same questions I asked of Dr. Graham 
and Mr. Sullivan. How many of the 2001 OMB deemed high priority 
and 2002 agency accepted nominations benefited small 
businesses? And, can you quantify any results to date in 
paperwork burden reduction hours or regulatory burden financial 
relief?
    Mr. Kovacs. That would be a question that, if it was going 
to be addressed at all, I think that the only people with the 
analysis would be SBA's Office of Advocacy, but I can give you 
some general numbers on the regulatory structure.
    Regulations cost the American public about $850 billion 
annually, which is equal to about the entire non-Defense budget 
of the United States. When you get into specific questions such 
as, let us say, health and safety regulations, the burden is 
about 40 percent more on small business than it is on large 
business. In other words, if you look at per employee lost, it 
is about $6,000 for a small business; whereas it is about 
$4,000 for a large business. That is too big of a number, but 
that is about what we have.
    Mr. Schrock. Mr. McCracken.
    Mr. McCracken. I don't have a lot to add to that, in all 
candor. It is very hard to come up with a specific number. 
Almost any regulation affects small business. What is 
operative, of course, is the degree to which it affects how 
many businesses. But, I think probably few people would dispute 
probably the single-most significant regulation that has been 
reformed that has benefited small business directly has been 
the overtime standards.
    Mr. Schrock. Thank you, Mr. Chairman.
    Mr. Ose. Gentleman from Maryland, 2 minutes.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Ms. O'Neill, Dr. Graham, in response to a question I asked, 
said that their modeling had showed that the cap-and-trade 
approach would actually get you more significant reductions in 
mercury than other options they looked at. One of the big 
questions here is compared to what. Could you expound a little 
bit more on your findings with respect to cap-and-trade versus 
MACT?
    Ms. O'Neill. I think there are two parts to the response to 
that question. In the first, if you look at a properly 
constructed MACT--as you know, the administration has proposed 
a MACT approach that is quite lenient; it requires only 29 
percent reductions, as opposed to the typical 90 percent 
reduction. If you compare the cap-and-trade approach to MACT as 
proposed by the administration, then cap-and-trade fares 
decently. However, if you compare cap-and-trade to a legally 
supportable MACT standard, then I think you will find that cap-
and-trade actually fares quite poorly by comparison: you have a 
delay in reductions. You have actually very unambitious 
reductions. It generally imposes weak caps and delays them for 
a very long time.
    The second point of comparison is the hot spots problem. 
With MACT you have a facility-by-facility approach, facility-
by-facility attention to contamination and a guarantee of, 
ideally or typically, 90 percent control, or on that order, at 
the plant. With cap-and-trade, as a result of trading, you may 
have sources that in fact increase their emissions. As my 
analysis of EPA's own models show, this is in fact what you 
have at, as I mentioned, 20 out of 44 facilities in the upper 
Great Lakes. This is a very large number, an astounding number, 
and you have very modest reductions in this region, only 29 
percent. So you have real problems with local hot spots under 
cap-and-trade that simply don't exist under, again, a properly 
conducted MACT.
    Mr. Van Hollen. Thank you.
    Mr. Ose. Second round, 1 minute each.
    Mr. Kovacs, in terms of regulatory burden existing prior to 
January 20, 2001, as compared to OIRA's focus on rules since 
January 20, 2001, where is the greatest burden, is it rules 
that existed before or rules that have been adopted since?
    Mr. Kovacs. This time I am going to slow down and take my 2 
minutes. I don't think anyone really knows. If you look at the 
Section 610 reviews, the agencies are planning to review about 
42 rules out of about 109,000. A lot of the historic rules have 
become actually business standards, so if you wiped out the 
entire regulatory process, you would actually wipe out some 
standards. This is why the 610 process is so important, is that 
the agencies need to sit there and really focus on what are the 
rules that everyone can live with and what are the rules that 
are causing problems, and are out of joint.
    It is just like today I am hearing a lot about mercury and 
NSR, and I don't want to jump into that side of the debate 
because it is really two separate hearings, but the mercury 
rule has been around for a long time. So has NSR. Twenty, 30 
years into the rulemaking process. The mercury rule finally 
came about as a result of the Bush v. Gore decision. A day 
later Carol Browner then decided to make the finding that a 
hazardous air pollutant. That was pursuant to a consent mercury 
is decree. So, we have regulation by litigation in there, which 
is a huge problem. The agencies can't tell you where consent 
decrees are, but they are spawning regulations.
    So, what you need to do is go back to a systematic process, 
and I think that will give you your answers.
    Mr. Ose. Mr. Tierney.
    Mr. Tierney. I think it is stunning, to stay on this 
mercury thing a little bit, that under both of the EPA's 
proposals, they would not require anything to be done beyond 
what has to be done under separate EPA rulemaking to control 
sulfur dioxide and nitrogen oxides before 2018. So essentially 
its idea on mercury is do nothing for that period of time.
    Now, one of the excuses they give for that is that EPS 
claims that there is no commercially available technology to 
control mercury emissions. We have indications that is 
inaccurate and pretty much a red herring.
    Mr. Chairman, I would like to ask unanimous consent to put 
in testimony that was given before the Senate by the Institute 
of Clean Air Companies, which is a trade association for 
pollution control manufacturers.
    Mr. Ose. Without objection.
    [The information referred to follows:]

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    Mr. Tierney. And essentially they indicate that there are a 
growing number of companies that offer commercially available 
mercury control technologies for sale to the electric power 
sector, and that a 50 to 70 percent reduction in current 
mercury emissions is feasible by 2008 or 2010.
    Ms. O'Neill, Mr. Paul, do you think that the clean air 
companies are correct or do you think that the administration 
is correct?
    Mr. Paul. Mr. Chairman, Mr. Tierney, I would agree with 
that, and I would point out that the Department of Energy 
technology development goal is for 50 to 70 percent mercury 
capture by 2005 for bituminous plants; by 2007 for lignite and 
sub-bituminous plants. The longer term goal is to develop 
advanced mercury control technologies that can achieve 90 
percent or greater capture, and that would be commercially 
available by 2010. There is a lot of progress that has been 
made on this. There is progress that is being made every day.
    If they were to stick with a cap-and-trade, if they were to 
set a cap of 90 percent control and put it by 2010, 2012, it 
could be met. So, they could be aggressive on this. They also 
could write a good MACT standard and meet that also.
    Mr. Ose. Ms. O'Neill, do you have anything to add? Briefly.
    Ms. O'Neill. I would just add that sources are achieving 
these levels of control right now. If you look at the average, 
and this is the average of the best performers, they are 
achieving 95 percent removal rates right now. And there have 
been independent studies that have been entered into the record 
during the public comment period that have separately come to 
this same conclusion, that 90 percent control is, in fact, 
achievable.
    Mr. Tierney. Thank you.
    Mr. Ose. Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    I don't mean to keep picking on Mr. Kovacs and Mr. 
McCracken, but another frequent public nomination for 
regulatory and paperwork reform was the EPA's TRI, the Toxic 
Release Inventory. How have the current rules and paperwork 
requirements negatively affected your members, and what factors 
do you think have contributed to EPA's delay in reducing this 
burden on small businesses?
    Mr. Kovacs. Well, you have always got to balance. I mean, 
certainly paperwork, it is what kind of paperwork, it is how 
many forms. My understanding right now is that EPA is really 
moving toward some type of an electronic reporting system, and 
it should cut down on the paperwork, and it puts everything in 
real time. But, people really have to understand what that is 
going to mean in terms of public criticism. I think the biggest 
single problem that the government has is the amount of time 
that is addressed on paperwork, but a lot of that, if you 
really look at it, is the Internal Revenue Code; that is 
probably about 60 percent of all the paperwork.
    So, when you get into these regulatory issues, you have to 
sort of slice and dice and decide, OK, where is the analysis. 
That is why we keep on coming back and saying we need a 
systematic approach rather than an ad hoc approach.
    Mr. Schrock. Mr. McCracken.
    Mr. McCracken. One of the problems with TRI is the kind of 
cliff effect that happens, because a lot of small businesses 
are exempt under a threshold approach, and that has 
dramatically changed recently for some forms of chemicals. We 
had a member who testified before this committee last year who 
was an organ manufacturer who, of course, uses lead in that 
work, and the threshold reporting went from 10,000 to 100 
pounds. He is just over that, so he is caught up in this from 
no regulation to a fairly extensive reporting burden that is 
fairly extensive for him to comply with.
    That needs to be addressed. We hope EPA is working on that, 
but, again, we are not really sure where that fits right now in 
EPA's overall guidance, and that is why we think that there 
needs to be a lot more openness about this process.
    Mr. Schrock. Thank you.
    Thank you, Mr. Chairman.
    Mr. Ose. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Mr. Paul, you stated in your testimony that you first 
learned via e-mail that EPA was going to postpone the working 
group, and that you saw in the Atlantic Journal Constitution 
that it was permanently disbanded. One question is why do you 
think they disbanded the working group? A pretty simple 
question. I don't know if the answer is simple or not.
    The second question relates to a response we received from 
EPA in a letter that Mr. Waxman had sent them, a response we 
received today, that EPA has now raised concerns about its own 
integrated planning model, the IPM, and says that it wants to 
fix those before doing remodeling. Apparently, it now believes 
that some of the assumptions in the IPM model are inconsistent 
with the Agency assumptions with respect to the near-term 
availability of control technology. I wondered if you had any 
comments on this recent development and whether that could have 
been addressed earlier.
    Mr. Paul. Well, that is exactly why the process needs to be 
open and transparent. We don't know why they disbanded the 
working group. We suspect it is because they decided that their 
preferred option was to go with Section 111, and that had never 
been discussed.
    With regard to the modeling assumptions and problems that 
are coming up now, once again, that is exactly the type of 
thing that needs to be discussed with all the stakeholders, so 
that you can have a full conversation about that and challenge 
the different assumptions. A good reform process is open and 
transparent. This one was an open and transparent process for 
18 months, and then it stopped; and then, we got a proposal, a 
preferred approach, something which we believe is very weak.
    Mr. Ose. I thank the gentleman.
    In wrapping up, I want to first thank the witnesses for 
joining us today. We have additional questions that we will be 
submitting to you in writing. We would appreciate timely 
response. The record itself will be left open for 10 days. I 
thank you for joining us today.
    To my friend from Massachusetts, I wish you well. I thank 
you for your leadership here.
    To my friend from Virginia, I wish you well too.
    Mr. Van Hollen, we are going to leave this to you.
    We are adjourned.
    [Note.--Additional information is on file with the 
subcommittee.]
    [Whereupon, at 12:16 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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