[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
   THE IMPACT ON U.S. MANUFACTURING: SPOTLIGHT ON THE ENVIRONMENTAL 
                           PROTECTION AGENCY

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 28, 2005

                               __________

                           Serial No. 109-191

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  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
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
JEAN SCMIDT, Ohio

                    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 Regulatory Affairs

                 CANDICE S. MILLER, Michigan, Chairman
GINNY BROWN-WAITE, Florida           STEPHEN F. LYNCH, Massachusetts
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
LYNN A. WESTMORELAND, Georgia

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                       Ed Schrock, Staff Director
                Rosario Palmieri, Deputy Staff Director
                           Alex Cooper, Clerk
                     Krista Boyd, Minority Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 28, 2005...............................     1
Statement of:
    Mannix, Brian, Associate Administrator, Office of Policy, 
      Economics and Innovation, U.S. Environmental Protection 
      Agency; and Tom Sullivan, Chief Counsel, Office of 
      Advocacy, U.S. Small Business Administration...............     8
        Mannix, Brian............................................     8
        Sullivan, Tom............................................    19
    Wagener, John D., P.E., corporate director of environmental 
      affairs, Mueller Industries, Inc.; Chris Bagley, regulatory 
      compliance manager, Dan Chem Industries, Inc.; B.J. Mason, 
      president, Mid-Atlantic Finishing Corp.; and Scott 
      Slesinger, vice president for governmental affairs, the 
      Environmental Technology Council...........................    47
        Bagley, Chris............................................    56
        Mason, B.J...............................................    65
        Slesinger, Scott.........................................    73
        Wagener, John D..........................................    47
Letters, statements, etc., submitted for the record by:
    Bagley, Chris, regulatory compliance manager, Dan Chem 
      Industries, Inc., prepared statement of....................    58
    Mannix, Brian, Associate Administrator, Office of Policy, 
      Economics and Innovation, U.S. Environmental Protection 
      Agency, prepared statement of..............................    11
    Mason, B.J., president, Mid-Atlantic Finishing Corp., 
      prepared statement of......................................    67
    Miller, Hon. Candice S., a Representative in Congress from 
      the State of Michigan, prepared statement of...............     3
    Slesinger, Scott, vice president for governmental affairs, 
      the Environmental Technology Council, prepared statement of    76
    Sullivan, Tom, Chief Counsel, Office of Advocacy, U.S. Small 
      Business Administration, prepared statement of.............    21
    Wagener, John D., P.E., corporate director of environmental 
      affairs, Mueller Industries, Inc., prepared statement of...    50


   THE IMPACT ON U.S. MANUFACTURING: SPOTLIGHT ON THE ENVIRONMENTAL 
                           PROTECTION AGENCY

                              ----------                              


                     WEDNESDAY, SEPTEMBER 28, 2005

                  House of Representatives,
                Subcommittee on Regulatory Affairs,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Candice Miller 
(chairman of the committee) presiding.
    Present: Representatives Miller, Lynch, Westmoreland, Clay, 
and Van Hollen.
    Staff present: Ed Schrock, staff director; Rosario 
Palmieri, deputy staff director; Erik Glavich, professional 
staff member; Dena Kozanas, counsel; Joe Santiago, detailee; 
Alex Cooper, clerk; Krista Boyd, minority counsel; and Cecelia 
Morton, minority office manager.
    Ms. Miller. Good morning, everyone. I am sorry I am a few 
minutes late here.
    I would like to call the meeting to order. We are here 
today to discuss the overall progress of the Environmental 
Protection Agency in responding to the public's reform 
nominations that were included in the Office of Management and 
Budget's 2005 Report on Regulatory Reform of the U.S. 
Manufacturing Sector. This is actually the third in a series of 
hearings that we have had discussing these regulations and 
policy areas that do have an impact on domestic manufacturing.
    Manufacturing, of course, has widely been acknowledged as a 
critical component of our economy. Manufacturing creates goods, 
but it also creates progress, innovation and economic and human 
prosperity. For many years, hopefully most of us in Government 
have understood that we do not create jobs; rather, the private 
sector creates jobs. The role of Government, of course, has 
been to try to create an environment that attracts business 
investments and encourages job creation.
    The manufacturing industry has come under attack lately, 
unfortunately by the very Government that once held it together 
and tried to help it. Manufacturing in the United States 
provides employment to 14 million people. It provides 13 
percent of the GDP. It is responsible for 62 percent of all 
exports and accounts for 60 percent of all industrial research 
and development spending. More than any other sector, 
manufacturers bear the highest share, the highest burden, of 
Government regulation.
    At $10,175 per employee, domestic manufacturers assume 
almost twice the average cost for all U.S. industries. Very 
small manufacturers, categorized as those that have fewer than 
20 employees, actually bear a cost of almost $22,000 per 
employee, which is twice the average for manufacturing overall.
    The main factor in these dramatic disparities is due to the 
high compliance costs of environmental regulations in many 
cases. Fully three-fourths of the regulatory costs to very 
small manufacturers come from environmental regulations. These 
small manufacturers account for 75 percent of all manufacturing 
firms. Regulatory compliance costs are the equivalent of a 12 
percent excise tax on manufacturing. Such domestically imposed 
costs are harming manufacturing and adding almost 23 percent, 
23 points, actually, to the cost of doing business in the 
United States.
    The high cost of regulation, the increase in the cost of 
health care and the often unwarranted tort litigation have all 
altered the dynamics of domestic manufacturing. These new 
dynamics have hindered the international competitiveness of 
manufacturers and as well have constrained the demand for 
workers in U.S. facilities.
    Now, make no mistake. I believe that I am a defender of 
regulations that protect worker health and safety. I would like 
to think I am a defender of regulations that watch over 
consumers and safeguard our natural resources. In fact, I have 
spent almost three decades in public service. One of my 
principal advocacies has always been protecting our 
environment.
    But I do think that the common standard, the common 
element, always has to be what is actually reasonable. That is 
the purpose of our hearing today. I am eager to have a dialog 
about how best to improve Federal regulations for the benefit 
of all Americans, and in particular, I am hopeful that this 
hearing will have a positive impact on those regulations 
highlighted by OMB that are still outstanding.
    I am very troubled by the adverse effects that some of 
these regulations are having on our ability to remain 
competitive with our key trading partners around the glove. By 
acting on the 42 nominations from the Environmental Protection 
Agency, I do believe that we could be one step closer to 
reducing the costs and burden on domestic manufacturing firms, 
and the savings created by reducing the regulatory burden on 
U.S. manufacturers could be redirected into hiring new workers, 
growing our economy, investing in new equipment, and protecting 
American jobs.
    I do know that by working together, we can do the right 
thing for workers as well as our environment, at the same time 
leveling the playing field and improving the competitiveness of 
American manufacturers.
    [The prepared statement of Hon. Candice S. Miller follows:]

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    [GRAPHIC] [TIFF OMITTED] T0593.002
    
    Ms. Miller. At this time I recognize the ranking member, 
Mr. Lynch.
    Mr. Lynch. Thank you, Chairman Miller. I appreciate it.
    First of all, no one understands more readily than I do the 
importance of the manufacturing industry to the economy. I have 
been employed, prior to coming to Congress, I spent most of my 
adult life working in the manufacturing industry for General 
Motors, for General Dynamics, working the Shell Oil facility 
down in Norco, LA. So I certainly understand the importance of 
the manufacturing industry to the Nation's health and economy.
    I am also very aware that the regulations that are applied 
to manufacturers are also very important to the health of our 
citizens and to our environment. It is important for us to keep 
in mind, as we discuss how environmental regulations affect the 
manufacturing industry, that the duty of Government to protect 
the citizens and the workers in those industries is also a 
noble cause and a primary responsibility.
    Today's hearing will look at how EPA is responding to 
various industry proposals to change environmental regulations. 
We will hear today much about how these EPA regulations are 
affecting industry.
    I would like to take a minute to talk about why, as a 
threshold matter, some of those regulations are in place to 
begin with and why they are so important for industry and for 
the public. One example is the Toxic Release Inventory Program. 
The Toxic Release Inventory Program is one of the country's 
most successful environmental programs. It provides communities 
with information about toxic chemicals released in their 
neighborhoods and held at facilities, stored at facilities in 
their neighborhoods. It holds industry publicly accountable for 
the toxic pollution that it releases.
    The Toxic Release Inventory framework only requires 
companies to report how much of a certain toxic chemical they 
are releasing. It does not require them to actually reduce 
pollution. However, the public notification aspect of this does 
put, I think, a positive pressure on reducing those amounts. It 
can lead to voluntary reductions in pollution, based on public 
scrutiny and the review of these industry practices.
    Last week, EPA announced a proposal to only require 
companies to report their toxic releases every 2 years, rather 
than every year, as they are currently required to do. EPA also 
proposed allowing companies to release up to 5,000 pounds of 
some chemicals, excluding dioxin, thank goodness, without 
having to make public the amount of those chemicals being 
released into the environment.
    I would be very concerned about any changes to the Toxic 
Release Inventory program that would reduce the amount of 
information communities have about toxic releases. The Toxic 
Release Inventory Program was created by the Emergency Planning 
and Community Right to Know Act, because communities have the 
right to know what companies are putting into their air, water 
and land.
    In my own neighborhood and in my own family, when I was a 
State Senator, we had a persistent problem with one of the oil 
storage facilities in my neighborhood. It was first owned by 
White Fuel, which was a subsidiary of Texaco. Later it was 
purchased by Coastal Oil. It is a tank farm, which is a 
subsidiary of El Paso Natural Gas, I believe.
    When I was State Senator, we had a rash of cases of lupus 
in my neighborhood, lupus and scleroderma. One of its victims 
was my cousin, Sean, 32 years old, who passed away from 
complications of lupus. We had a study done by the 
Massachusetts Department of Public Health in which they 
confirmed, we went door to door to families finding out who had 
lupus or scleroderma in their families. The report came back 
that it was a statistically significant number, very high for 
that population. The number of fatalities and the number of 
instances of that disease were remarkably high.
    The problem is that much of that problem is now being 
connected, through investigative work, with oil spills in that 
neighborhood. We have some very old storage facilities. Now the 
oil has seeped underneath houses for blocks and blocks of 
densely populated three-deckers in south Boston. It is a 
growing problem. Now we have detective work that we need to do. 
If we did not have reporting such as is required under TRI, we 
wouldn't be able to find out the connection between the toxic 
releases and the diseases it is now causing.
    Additionally, Toxic Release Inventory data can be essential 
in the event of a disaster such as Hurricane Katrina. Toxic 
Release Inventory data provides easy to access information 
about the chemical plants and petroleum refineries that were 
flooded by the hurricane.
    As I said, I worked at the Shell Oil Refinery in Norco, LA. 
I was onboard the U.S. Iwo Jima last week with the FEMA 
Director down there. They reported that we had 14 offshore oil 
rigs destroyed during the storm. Six of them were still pumping 
oil and gas into the Gulf. This is 18 days after the original 
disaster.
    When I asked how many oil spills on the land-based rigs, 
they said those were not ascertained, but they were in the 
hundreds. The exact number was not ascertained. The number of 
major refineries and oil storage facilities above ground, above 
ground, these are not in vessels, these are not in tanks, were 
in the dozens. Now, all those storage facilities are underwater 
or have been underwater for about 3 weeks. So you see the need 
for that information.
    Some of the suggested changes that are before us here today 
would allow those storage facilities to not report what they 
have onsite, or the quantities they have onsite, so that in an 
event like Katrina or Rita, we would be totally at a loss in 
determining the amount of toxics released into the environment. 
That is a situation we do not want to be in.
    Hurricane Katrina also highlights the importance of some of 
the other environmental protections we will hear about today. 
For example, EPA's spill prevention and counter-measure rule 
requires certain facilities to prepare and implement plans to 
prevent and contain oil spills and to prevent the contamination 
of coastal waterways. EPA has reported at least five major oil 
spills and upwards of a hundred small oil spills.
    By the way, I asked the Admiral down there, how much oil 
are we talking about here that has been spilled because of 
Katrina. And he said, well, at that point, on that Sunday 
afternoon, he said, we have six oil wells still pumping into 
the Gulf, we have hundreds of smaller. He said that the amount 
right now, as of last Sunday morning, was over 10 million 
gallons. I said, well, quantify that for me in terms of other 
spills.
    He said, the Exxon Valdez was 11 million gallons. He said 
that we are at 10 million gallons and still pumping, still 
pumping into the Gulf, still pumping into the coastal waterways 
of Louisiana and Mississippi. So I think it is fair to assess 
that that we have a greater spill right now on the Gulf Coast.
    Another example is EPA's rules on hazardous waste 
management under the Resource Conservation and Recovery Act. We 
will hear from witnesses today how the industry that this 
individual represents is working with Gulf Coast communities to 
clean up hazardous waste left behind by Hurricane Katrina.
    As we can see from the damage caused by the recent 
hurricanes, we should not focus on rolling back environmental 
protections without careful thought. We should look at how 
environmental protections can protect communities, especially 
in the event of a disaster, and how we can ensure that people 
and businesses affected by Hurricanes Katrina and Rita get back 
on their feet without having to face avoidable public health 
and environmental problems.
    I look forward to hearing from Mr. Mannix about EPA's 
efforts in that regard. I want to thank all of the panelists 
here today for helping this subcommittee with its work. I yield 
back.
    Thank you, Chairwoman Miller.
    Ms. Miller. Thank you, Representative Lynch.
    Because we are an oversight committee, and we do have 
subpoena authority, it is our practice to swear in all of our 
witnesses. So if you will please stand and raise your right 
hands.
    [Witnesses sworn.]
    Ms. Miller. Thank you.
    To the witnesses as well, you will see that the little 
black boxes in front of you, there are various lights on them. 
When you see a yellow light, you will know about 4 minutes has 
elapsed, and the red light is for 5 minutes. Although I won't 
hold you to that exactly, just to give you an idea for purposes 
of time.
    The subcommittee first of all is going to hear from Brian 
Mannix. He is the Associate Administrator for Policy, Economics 
and Innovation at the Environmental Protection Agency. Mr. 
Mannix has nearly 30 years of scientific and policy experience, 
including most recently a position as a senior research fellow 
in regulatory studies at the George Mason University.
    Previously, he was also the Director of Science and 
Technology Studies at the Manufacturers Alliance for 
Productivity and Innovation. Mr. Mannix has come full circle 
and returned to the EPA where he began his career in 1977 at 
their Office of Policy and Management. Mr. Mannix, we 
appreciate your appearing today before the hearing, and we look 
forward to your testimony, sir.

STATEMENTS OF BRIAN MANNIX, ASSOCIATE ADMINISTRATOR, OFFICE OF 
POLICY, ECONOMICS AND INNOVATION, U.S. ENVIRONMENTAL PROTECTION 
 AGENCY; AND TOM SULLIVAN, CHIEF COUNSEL, OFFICE OF ADVOCACY, 
               U.S. SMALL BUSINESS ADMINISTRATION

                   STATEMENT OF BRIAN MANNIX

    Mr. Mannix. Thank you, Madam Chairman and members of the 
subcommittee.
    I appreciate the opportunity to appear before you today to 
discuss EPA's regulatory reform efforts included in OMB's 2005 
Report on Regulatory Reform in the Manufacturing Sector. I 
believe the subcommittee will be pleased to hear about the 
significant progress the Agency has made in meeting our 
commitments.
    I noted until recently you were expecting the EPA witness 
at this hearing to be our Deputy Administrator, Marcus Peacock. 
Although he was scheduled to be here, he is leading the 
Agency's response to Hurricanes Katrina and Rita. As you can 
imagine, this is an all-consuming effort. I would like to thank 
the subcommittee for allowing me to be here in his place, and 
for all the earlier work to accommodate Mr. Peacock's schedule.
    If it would please the subcommittee, Madam Chairman, I 
would like to summarize my statement today and request that the 
full written statement be included in the hearing record.
    Ms. Miller. Without objection, so ordered.
    Mr. Mannix. Thank you.
    EPA shares the President's appreciation and the 
subcommittee's appreciation for the key role played by the 
manufacturing sector in sustaining the health of our national 
economy. The Agency is actively pursuing a variety of reforms 
to our regulations that were suggested by the OMB report. The 
manufacturing initiative offers an opportunity for EPA to 
reduce unnecessary and burdensome requirements on our Nation's 
vital manufacturing sector, while accelerating the pace of 
environmental progress.
    As you know, each spring OMB publishes a draft report to 
Congress on the costs and benefits of Federal regulations and 
solicits public comments on the contents of the report and on 
any regulatory actions or guidance documents the public 
believes should be nominated for reform. This year, OMB focused 
the report on regulatory reforms of most interest to the 
manufacturing sector; 189 responses were submitted to OMB from 
41 different commenters, most of which pertained to actions 
being taken by EPA and the Department of Labor. OMB referred 90 
proposed reforms to EPA in December 2004 for our review and 
consideration.
    EPA evaluated the merits of each of the reform nominations, 
considering a variety of factors on a case by case basis. Among 
these factors were: one, whether the action is based on sound 
science; two, whether the action is the most effective way to 
manage for environmental results; and three, whether the same 
or an even better environmental outcome could be achieved 
through a cooperative partnership, rather than command and 
control regulations.
    After considering these and other factors, in January 2005, 
the Agency submitted its reform recommendations to OMB. 
Ultimately, 42 EPA reforms covering a wide range of issues were 
included in OMB's final report.
    Two recently completed actions illustrate the principles 
supporting our selection of reform candidates. Today, EPA is 
announcing a rule streamlining the general pre-treatment 
regulations that establish requirements for local publicly 
owned treatment works [POTWs]. The changes give POTWs greater 
flexibility to oversee the dischargers whose effluent they 
treat, but preserves EPA's backstop authority to ensure that 
the pre-treatment program continues to protect both the POTW 
and the environment. The result will be less paperwork for 
POTWs and the manufacturing sources, since local regulators can 
now eliminate burdensome paperwork requirements without running 
afoul of EPA rules.
    The reforms underway related to the Toxic Release Inventory 
Program also demonstrate the application of the Agency's 
principles. Many people have expressed a concern that TRI 
reporting is unnecessarily burdensome and that the usefulness 
of the resulting data is not commensurate with its costs. Last 
week, EPA announced a proposed rule that will reduce the TRI 
burden by allowing thousands of reporters to use a streamlined 
form.
    In addition, the Agency has notified Congress that it 
intends to initiate a rulemaking to modify required reporting 
frequency from annual to biennial reporting. This would not 
only substantially reduce the burden but also enable EPA and 
the States to use their saved resources to improve the TRI data 
base and conduct additional analyses that would enhance the 
value of the data to the public.
    I would also like to highlight for the subcommittee a few 
important reform actions we expect to complete by the end of 
this year. For instance, the Agency currently plans to issue 
new guidance and propose a rulemaking concerning the Spill 
Prevention, Control and Countermeasures rule. The guidance 
document will provide clarification and compliance assistance 
to facilities subject to that rule.
    It will also propose compliance flexibility for facilities 
that store small amounts of oil while continuing to prevent 
potential discharges. Also by the end of the year, the agency 
intends to issue a proposed rule to promote additional 
recycling in the electroplating industry. I will refer the 
subcommittee to the manufacturing initiative report attached to 
my testimony for additional details and for additional actions 
that we have underway and progress made to date.
    In conclusion, under this administration, EPA has taken 
significant steps to improve the quality and credibility of our 
regulations and guidance documents. The reforms that are 
included in the manufacturing initiative are an important part 
of that improvement process. EPA is committed to implementing 
and completing the reforms outlined in OMB's manufacturing 
initiative. This effort affords us the opportunity to evaluate 
and act on the reforms that promote stewardship and innovation 
and that produce environmental results.
    I expect that the Agency will be totally successful in 
responding to the 2005 manufacturing sector reform initiative. 
Thank you for the opportunity to testify today. I would be 
happy to answer any questions the committee might have.
    [The prepared statement of Mr. Mannix follows:]

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    Ms. Miller. Thank you very much.
    Our next witness is the Honorable Tom Sullivan. Mr. 
Sullivan is the U.S. Small Business Administration's fifth 
Chief Counsel of Advocacy. Upon his confirmation in January 
2002, Mr. Sullivan began opening up channels for small business 
concerns to be heard at the highest levels of Government.
    Prior to his joining the U.S. SBA, Mr. Sullivan had 
established his dedication to small business concerns with the 
NFIB, where he promoted a pro-small business agenda in the 
Nation's courts. In the year 2000, Mr. Sullivan was named by 
Fortune Small Business Magazine as one of the Power 30 most 
influential folks in Washington.
    We certainly thank you, Mr. Sullivan, for joining us today 
and we look forward to your testimony, sir.

                   STATEMENT OF TOM SULLIVAN

    Mr. Sullivan. Thank you, Chairwoman Miller and members of 
the subcommittee. Good morning. It is an honor to appear before 
you today.
    Congress established my office, the Office of Advocacy, to 
advocate the views of small business before agencies in 
Congress. My office is an independent entity within the Small 
Business Administration. The views expressed here and in my 
written statement do not necessarily reflect the position of 
the administration or the SBA.
    My testimony was not circulated for clearance with OMB, but 
upon its submission to this subcommittee, I did share it with 
OMB and EPA as a courtesy. With the Chair's permission, I would 
like to summarize my written statement and ask that it be 
completely entered into the record.
    Ms. Miller. Without objection, so ordered.
    Mr. Sullivan. In 2004, OMB and agencies undertook the 
process designed to reduce the regulatory burden on U.S. 
manufacturers through 76 targeted regulatory reforms. More than 
half of these reforms involved rules issued by the EPA.
    A study released by my office a week ago Monday, done by 
Professor Mark Crain, called the Impact of Regulatory Costs on 
Small Firms, found that in general, small business are 
disproportionately impacted by the total Federal regulatory 
burden. It is a compliment to my office that the Chair cited 
these figures in her opening statement.
    Those figures are revealing in that the overall regulatory 
burden was estimated to exceed $1.1 trillion in 2004. For 
manufacturing firms employing fewer than 20 employees, the 
annual regulatory burden was estimated to be $21,919 per 
employee.
    Looking specifically at environmental costs, the difference 
between small and large manufacturing firms is even more 
dramatic than the overall 45 percent disproportionality. Small 
manufacturing firms, as the Chair noted in the opening 
statement, spend four and a half times more per employee for 
environmental compliance than large businesses do.
    With regard to the manufacturing reform, regulatory reform 
initiative, my office has worked particularly closely with EPA 
on three of their reforms: reporting and paperwork burden in 
the Toxics Release Inventory program; spill prevention, control 
and counter-measure rule, and lead reporting burdens under the 
Toxics Release Inventory.
    EPA's proposed revision to the TRI rule to encourage 
greater use of the simpler form, the equivalent in the tax 
world of the 1040-EZ, was announced last week. That proposal 
will allow Form A to be used for the first time by business 
that handle PBTs but that release none of them to the 
environment. The proposal also allows facilities that use 5,000 
pounds or less of non-PBT materials in a year to use the short 
or simplified form.
    In total, it is estimated that the proposal would provide a 
measure of regulatory relief for about 33 percent of all TRI 
reporters and is anticipated to save about 165,000 hours of 
filing burden each year. At the same time, the proposal ensures 
that the toxic materials management activities of concern to 
the public will continue to be reported through Form R. If 
implemented as proposed, EPA's reform would provide paperwork 
relief to some 8,000 businesses, most of whom are small.
    The TRI reforms have a long history. I am happy to answer 
questions about that history with regard to public comment, in 
particular, small business comment. Most of it is up on my 
office's Web site, that details public input to OMB and EPA for 
over a decade. So we are pleased that EPA is moving forward 
with these reforms.
    These reforms announced last week and some that lay ahead 
are perfect examples of what happens when small businesses 
engage in a constructive dialog with EPA, so that rules can be 
finalized that are sensitive to their economic impact without 
compromising the mission of EPA to protect human health and the 
environment.
    When planned rules are evaluated by my office under the 
Regulatory Flexibility Act, we look for ways to reduce small 
business burdens without compromising the regulatory objectives 
intended by agencies. We believe that EPA's regulatory reform 
efforts can achieve the same result, and they will be extremely 
beneficial for small manufacturing firms.
    Thank you for allowing me to present these views, and I 
would be happy to answer any questions.
    [The prepared statement of Mr. Sullivan follows:]

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    Ms. Miller. Thank you very much, both of you. I think I 
will just pick right up on what Mr. Sullivan was speaking 
about, the TRI. Mr. Mannix, you mentioned that as well.
    It was part of one of our previous hearings, we did talk 
about that particular rule in depth, had some testimony about 
it. So I was particularly pleased, last week, actually, to get 
a phone call from Ms. Nelson saying that you were going to be 
announcing that. She sort of led me through what your 
announcement was going to be.
    One of the options of that particular rule that I think 
small businesses had testified to us previously that they had 
quite a bit of consternation about was restoration of the de 
minimis exemption for the PBT reporters. Could you expand a bit 
on that? Do you have any knowledge of why that was not part of 
the final rule?
    Would you like me to come back to that?
    Mr. Mannix. I would have to get back to you on that, talk 
to Ms. Nelson and get back to the committee on the details of 
that. Because I am not prepared to testify on that. There was a 
substitution of the short form for the long form, there are 
some changing thresholds and then there is the proposed, the 
separate notification to Congress of a future rulemaking action 
to go biennial. But I will get back to you.
    Ms. Miller. If you could, we would appreciate that. The de 
minimis exemption wa something that was talked about, as I say, 
at this committee, and I know we have had quite a bit of 
conversation about it as well. So I would appreciate an answer 
at a later time on that, if you could.
    Also, Mr. Sullivan was mentioning about the SBA study on 
the cost of regulation, the new study that you released there. 
I guess I would ask Mr. Mannix whether or not you are familiar 
with that study, if you have had an opportunity to evaluate it. 
I am taking some notes here, as Mr. Sullivan was explaining, an 
estimate of over $1 trillion in costs, of annual regulatory 
costs. And $22,000 per employee for small businesses, which is 
unbelievably startling, quite frankly.
    I am just wondering whether or not you have had an 
opportunity to evaluate that study, if you agree with the 
findings of it and if you could expand a little bit on what 
your agency might be prepared to do to decrease that $22,000 
number down.
    Mr. Mannix. Yes, Madam Chairman. I have been at EPA 8 days 
now, so I have not had time to review this new study. But as 
you know, I was at the Mercatus Center at George Mason. 
Professor Crain was a colleague. I have seen previous studies, 
and one of the earlier studies came from the Mercatus Center on 
the cost of labor regulation.
    So I am familiar with the series of studies. And I am 
looking forward to seeing this one. Yes, I can assure you that 
at EPA, we will be paying attention to these costs and these 
SBA studies.
    Ms. Miller. I might ask Mr. Sullivan, then, as a follow-up 
to that question, at the beginning of this year, I sort of had 
in my mind that the cost of the regulatory burden for small 
businesses was a little less than $10,000. People talked about 
$7,000 to $8,000. Now we are hearing this number of $22,000 per 
employe, again, unbelievably startling.
    Could you flesh out a bit how the construct of that number 
came about in your study?
    Mr. Sullivan. Certainly. I should explain to the 
subcommittee that it is through this committee's deliberations 
that has improved this study in three successive iterations. 
This is the latest of three, and at each time it is published, 
it gets better from an economic perspective. The last time this 
study was released, this committee actually was critical that 
it was not peer reviewed. For the first time, this past year 
the study released last week was in fact peer reviewed. It is a 
better study, the methodology is better off for it.
    As far as comparing the past costs of regulation, which was 
roughly about $6,975 per employee, with the current, it is a 
little bit of apples and oranges. Because again, the 
methodology is better. And when I say better, it is a little 
bit different.
    I think the easiest way to characterize the growing 
cumulative regulatory burden is a good news/bad news. The good 
news is that there is likely to be a more level playing field 
when you compare the costs borne by small versus large. The bad 
news is that playing field is at a higher altitude, because the 
cumulative regulatory burden is growing.
    Ms. Miller. Perhaps I could ask you both to talk a little 
bit, and Mr. Mannix in particular, even though you are newly 
back to the EPA, about how the EPA in their decisionmaking 
actually does the cost benefit analysis as you are looking at 
some of these rules and regulations of keeping those 
competitive. We have heard studies that have said that the 
structural costs of American manufactured goods are 22, 23 
points higher than any of our foreign competitors, even Canada, 
not just China and Mexico, and much of it due to the regulatory 
burden. How does that impact the decisionmaking as the EPA is 
looking at some of these regulations?
    Mr. Mannix. The EPA uses benefit cost analysis in 
accordance with OMB guidelines in support of its regulatory 
decisions. On major regulations, we do regulatory impact 
analyses. We also comply with the regulatory Flexibility Act 
and SBREFA, Small Business Regulatory Enforcement and Fairness 
Act, to look at impacts on small businesses.
    But beyond that, as you mentioned, there is a concern about 
the cumulative burden of regulations on American manufacturing. 
That is what prompted the manufacturing initiative, the focus 
of the OMB report this past year and the activities we are 
talking about today.
    There are other changes going on at the Commerce 
Department. The staff has been retasked with looking at 
regulations affecting manufacturing and also services. I expect 
to be working with the economists at the Commerce Department to 
see what we can do about ensuring the competitiveness of U.S. 
industry.
    Ms. Miller. Mr. Sullivan, do you have any comment on that?
    Mr. Sullivan. I think Brian Mannix actually summed it up 
very well.
    Ms. Miller. Very well. I would like to recognize the 
ranking member, Representative Lynch.
    Mr. Lynch. Thank you, Madam Chair.
    I have to say right at the outset, Mr. Mannix, I am a 
little surprised. Some of the questions that you were unable to 
answer are pretty central to the inquiry here. If you have only 
been there 8 days, perhaps we should have had someone else 
testify. That is all I am suggesting. We have been preparing 
this for a while.
    The very study that some of these recommendations are based 
upon should be known by someone on your staff. Maybe you could 
refer to other people. But to come up here and say, I have only 
been here 8 days, I can't answer the questions, I will get back 
to you, that is not really the level of cooperation that we are 
expecting.
    I sympathize with your position and I have an utmost 
respect for the Mercatus Center at George Mason, and no doubt 
you are a wonderful reflection of that institution. No 
question. But just in terms of efficiency and being able to 
help the committee with its work, it would have been helpful if 
we had somebody who could really answer some of these 
questions, with all due respect.
    Mr. Mannix. I did check with my staff in the interim. I 
will give you a partial response now, to the best of my 
ability, to the question I was asked. The reason the de minimis 
exemption was not included in the TRI rule is that after 
looking at it and comparing it to the proposal that they have 
also made to shift to biennial reporting, they determined that 
it would be far more effective in terms of lowering the burden 
and yet maintaining the data quality to go with biennial 
reporting.
    So they left out de minimis from the proposed rule that was 
just published in favor of the biennial reporting, which is a 
year away. The law requires a notification to Congress before 
changing the period of reporting.
    So the plan is over the next year to have outreach events, 
to talk to stakeholders, talk to communities, explain what the 
thinking is behind that proposal, and also, since the law 
requires notification to Congress, we expect to hear from 
congressional committees what their views are. So that 
rulemaking will be a year away. We do expect it to be more 
effective than the de minimis proposal that has been discussed.
    Mr. Lynch. Fair enough. One of the proposed changes to the 
Toxic Release Inventory Program announced last week would allow 
companies to use the shorter form, the A form. I have the A 
form and the R form up here. The A form is two pages and the R 
form is five pages. If form A was allowed in those cases, 
companies would be allowed, approximately, according to the 
National Environmental Trust, this would mean that 
approximately 4,400 facilities across the country would no 
longer have to report at least 25 percent of their toxic 
chemicals that they are releasing into the environment.
    You realize, currently under the annual reporting, it goes 
by reporting year. So if I am a company and I am releasing 
4,500 pounds just underneath the 5,000 pound limit, I can do 
that yearly without telling people what I have on my site in 
terms of quantity, whether I am treating it or not, where I am 
shipping it, for what purposes, any recycling efforts, any 
treatment efforts, all of that is omitted on Form R.
    So we are really hiding the ball here for a lot of people. 
We are actually allowing a significant amount of companies to 
conceal what they are actually releasing into the environment 
on an annual basis. It can be, over 1 year it is not a 
significant amount. But if it is an annual accumulation, it can 
be disastrous in some cases where you have companies in 
operation for 10, 20, 30 years.
    So I would just like your response to that. Why would that 
not be a danger? Why would it be necessary to conceal that from 
the public?
    Mr. Mannix. There is no intent to conceal anything from the 
public. There are requirements that a company must meet before 
it is allowed to use Form A in place of Form R.
    Mr. Lynch. What would those be?
    Mr. Mannix. For toxic chemicals, PBT chemicals, persistent 
biocumulative and toxic chemicals, those reporters may use Form 
A but only if they have no releases to the environment. They 
must not exceed a million pounds of manufacture, processing or 
otherwise use for the chemical, and must not exceed 500 pounds 
of recycling, energy recovery or treatment of the chemical.
    Those are thresholds that the agency feels will be 
protective while relieving the burden. They have looked at the 
Form Rs that they have been getting from these companies and 
decided that for those categories, the information, the extra 
information they get on Form R is not useful. So that is the 
basis of the proposal that they have come out with.
    Mr. Lynch. It would also allow expanded use of Form A for 
non-PBTs by changing the maximum annual reportable amount from 
less than 500 pounds to less than 5,000. So we are going from a 
500 pound limit to a 5,000 pound limit, though.
    Mr. Mannix. That is correct. For chemicals that are not 
persistent, biocumulative and toxic, they are raising the 
threshold for reporting.
    Mr. Lynch. In cases like what we are going through with 
Katrina and we want to know what is on the site and how much of 
it is on the site, all of that has escaped. I mean, I have Form 
R here. It is fairly detailed with respect to the amounts, how 
it is stored, how much is actually contaminating onsite 
property. It has a lot of useful information.
    The Form A that you are suggesting that these companies now 
be able to use just says, tell us what the substances are on 
your site.
    Mr. Mannix. The Agency is learning a lot from Katrina and 
Rita. I am sure there will be cases where we think we need to 
collect more information in advance of a disaster so we know 
what is going to happen.
    We have also found a lot of cases where our regulations 
have been getting in the way of the recovery efforts. I am sure 
you are aware of some of those. But those lessons will be 
incorporated into our future decisions.
    Mr. Lynch. OK. Mr. Sullivan, you expressed a fondness for 
the Crain study. I know that the last one you mentioned, it was 
roundly criticized, and I think rightly so. The Crain study 
before, we could not get them to replicate their results, they 
would not release their methodology, how they came up with the 
numbers that they came up with before. It was a total mystery. 
And they couldn't explain it or defend it.
    They refused to quantify the benefit of regulations when 
lives were saved or when people were not exposed to dangerous 
chemicals. That benefit got a zero, zero. There was no value to 
a regulation that prevented toxic substances from coming into 
contact with the citizenry. It got zero in their study.
    The methodology this time, did we talk about the benefit to 
the, is that factored in, the benefit to the environment and to 
the people in the area? Is that at all considered in this 
study?
    Mr. Sullivan. Congressman, Dr. Crain, who at first worked 
with Professor Hopkins on this study, did not actually flesh 
out the benefits. This is a cost impact study. The benefits 
that you are referring to are categorized by law once a year by 
OMB's Office of Information and Regulatory Affairs in an annual 
report on the costs and benefits of regulations.
    The Crain study that my office pays for is very narrow. It 
has its blinders on specific to the regulatory burden. We do 
not estimate costs. When I talk about its constructive 
criticism, Dr. Crain has committed not only to laying out the 
methodology in greater detail in the report, but also certainly 
would be willing to discuss the methodology with this committee 
and anyone else. We had him down here actually last week for 
that specific purpose.
    He is anxious not only in showing folks how the methodology 
is stronger in this study, but he also wants to know how it can 
be even better 4 years from now. I think this committee 
deserves credit for looking into what are some of the glitches 
in the methodology of the report. Because of that in part, the 
report gets better every time. I think one acknowledgement that 
the committee made last time we met was, it may not be the best 
study, but it is the only study that documents the impact, the 
disproportionate impact on small versus large. It is because of 
that has gotten as much attention as it has.
    Mr. Lynch. But the----
    Ms. Miller. Excuse me. The gentleman's time has expired. We 
will come back for a second round of questioning.
    I would like to recognize Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Madam Chairman.
    Mr. Mannix, I apologize for you only being here 8 days. Are 
you the only Associate Administrator at the EPA?
    Mr. Mannix. No, I am not. Several people bear that title. I 
am the Associate Administrator for Policy, Economics and 
Innovation.
    Mr. Westmoreland. I agree with Mr. Lynch, I think it is a 
shame that you had to come here, only being on the job for 8 
days.
    Let me ask you a question. In your testimony, you talk 
about the diesel requirements for off-road and the stringent 
fuel requirements. As I have been questioned about high fuel 
prices and regulations and stuff, I think that the one 
Government agency I point my finger to the most for the high 
price of fuel is the EPA. If people ask me about the high cost 
of manufacturing, I point my finger to the EPA.
    Because I think the EPA is an agency that took legislative 
intent of the Clean Air Act and wrote rules and regulations 
that have put a burden on this country that we are continually 
trying to dig out of when it comes to competing with 
manufacturers across this globe. When it comes to burning all 
the different types of fuels that we have to burn, our 
refineries, and of course, you know, our infrastructure system 
was never set up to carry 50, 60, 70, 80 different types of 
fuels that we make.
    And now we are going to come up with something different 
for the construction business, off-road use of diesel. What 
part sulfur content is in off-road diesel compared to on-road 
diesel now, and will this off-road diesel go to the on-road 
diesel content?
    Mr. Mannix. That is a question I don't know the answer to.
    Mr. Westmoreland. Well, it is in your statement about how 
good it is.
    Mr. Mannix. I will have to get back to you with details on 
the specific content level in diesel regulations. Your general 
point about the variety of fuels is one that the EPA is very 
sensitive to and has been particularly sensitive to in the wake 
of the hurricanes and the constraint on our fuel supply. We 
have put in place several waivers to allow fuels to reach the 
public and reach where they are needed without damaging 
catalytic converters and causing public health problems.
    We are in the process of taking a serious look at the 
effect of EPA's regulations on fuel supply in the short run and 
the long run. At the same time, we have to move forward with 
the regulations and programs that we are charged to pursue to 
protect public health and the environment and help the States 
achieve the National Ambient Air Quality Standards. But we are 
sensitive to that variety of fuels question.
    Mr. Westmoreland. I would like to give you a list of 
questions you can come back with some answers. One of them 
would be, what would you say the total cost has been on the oil 
companies, refineries or whatever, automobile manufacturers and 
others, power plants, the total cost of cleaning the air to the 
point it is now? And how many lives do you think it has saved 
up to this point?
    And the next question is this: How clean is clean? Right 
now, we have a lot of people that have to use oxygen. They 
can't breathe. The way we are going, right now if you hook 
yourself up to a hose in your car, it kills you, carbon 
monoxide poisoning. Pretty soon we will have people that will 
just be able to hook up to their exhaust pipe and breathe it 
rather than oxygen. Because it is going to be cleaner.
    So I think we need to understand how clean we want to get, 
not only for our air but for our water, and at what cost we are 
willing to get to that point and really, how many lives are we 
saving and what is it doing, and would that money be better 
spent scanning everybody for cancer, giving everybody an MRI, 
testing everybody, all women for breast cancer, men for 
prostate, colon cancer, all these other things?
    So I think those are some answers, some real world answers 
that the EPA needs to look at, rather than coming up with 
political answers to real problems.
    Thank you, ma'am.
    Ms. Miller. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Madam Chairman.
    Let me thank both of you for your testimony. I have some 
questions related to the proposed changes to the RCRA rules on 
the transport of handling of hazardous waste, particularly with 
respect to hazardous waste when it is headed to a recycling 
facility. Are you familiar with that rule proposal, Mr. Mannix?
    Mr. Mannix. Only superficially, I am afraid.
    Mr. Van Hollen. OK, well, let me ask you this. Do you know, 
under the proposed rule, how much hazardous waste that is 
currently subject to the reporting and tracking requirements 
under RCRA and the manifest rules that apply, in order to 
protect the public health from hazardous materials, how much of 
that hazardous waste, under your proposal, would no longer be 
subject to that regulation?
    Mr. Mannix. I will have to submit an answer for the record, 
Mr. Van Hollen.
    Mr. Van Hollen. All right. My understanding is it is about 
3 billion pounds of hazardous waste. But I would be interested 
in your information for the record on that.
    Do you know with respect to, do you know the general scheme 
of this proposal that has been made, in other words, what it is 
designed to do?
    Mr. Mannix. In this report, we have a couple of regulations 
in the hazardous waste area. I am not sure which one you are 
referring to.
    Mr. Van Hollen. This is a proposal that has been described 
in 68 Federal Register, pages 61562, actually I think beginning 
61560. And the notice says, ``Today's proposal is deregulatory 
in nature, in that certain recyclable materials that have 
heretofore been subject to hazardous waste regulations would no 
longer be regulated under the Hazardous Waste Regulatory 
System.'' You go on to change the definition of hazardous 
waste, essentially exempt hazardous wastes that are intended to 
be recycled, as I understand it, from many of the RCRA 
regulations with respect to reporting and training of the 
personnel involved in the transport of those kinds of materials 
in order to----
    Mr. Mannix. Yes, I am familiar with that one, and the 
intent is to encourage recycling, so that the waste is not 
disposed of in the environment. Those wastes are generally, for 
example, if they meet a certain threshold, if they have 
valuable metals content above a certain threshold, and if they 
lack contaminants that we would be concerned about, we would 
want to encourage those metals to be recycled, rather than 
disposed of as waste.
    The regulations were getting in the way, and I think we 
will get a better environmental outcome by modifying the 
definition.
    Mr. Van Hollen. There is no doubt that we want to encourage 
recycling. I am not sure why you need to change the definition 
to do that. Can you tell me why it will encourage more 
recycling to eliminate the protections that are currently in 
place regarding the training of personnel, requirements for 
handling of hazardous waste, the information you are supposed 
to keep on the transport of hazardous waste from the generator 
to, in this case, the recycler?
    Those protections are in place to make sure the companies 
are doing and disposing of it as they say they are. Can you 
tell me why that is in the public interest, to eliminate those 
requirements?
    Mr. Mannix. Because those, by discouraging recycling, we 
are encouraging, inadvertently, the regulations are encouraging 
the production of more hazardous waste.
    Mr. Van Hollen. How does it discourage recycling to require 
someone to report where they are transporting the hazardous 
waste and how it is being disposed of in some detail? Doesn't 
that in fact ensure that it is going to the recycler as opposed 
to going somewhere else?
    Mr. Mannix. Well, it may well be recycled onsite. It may 
not be transported. The point is that to treat it as hazardous 
waste raises the cost of both disposing of it as waste and 
recycling it. The recycling process is not, cannot always 
economically be done and comply with all the requirements that 
you are treating, what is essentially a product in process. By 
treating it as a hazardous waste you raise the cost and it 
makes it no longer worthwhile to try to recover those metals.
    We think we will get a better environmental outcome by 
allowing recycling and that we are not reducing protection.
    Mr. Van Hollen. Let me ask you this, I see my time is 
almost up. I can understand making an exemption for recycling 
onsite. I understand, and there is a court case to that effect. 
But we are talking about, as I understand your rule, it is wide 
open. You can be transporting the hazardous waste cross-
country, to any other facility.
    Are you aware of the fact that many of the current 
Superfund sites are in fact recycling sites?
    Mr. Mannix. Yes.
    Mr. Van Hollen. Why wouldn't we therefore want to make sure 
that the hazardous wastes that are generated and disposed of at 
those sites, that we know what is in that waste and we know 
that it is being properly regulated, so we don't create more 
Superfund sites?
    Mr. Mannix. We certainly don't want to create more 
Superfund sites. I believe the rule has protections in it that 
are appropriate for recycled materials, and when hazardous 
wastes are generated and disposed of, the hazardous waste 
definitions and regulations still apply. As I said, our 
expectation is that this will encourage recycling and reduce 
the amount of metals that are being disposed of in the 
environment. So that is the better environmental outcome we are 
seeking.
    Mr. Van Hollen. Madam Chairman, if I could, is it 
appropriate to request that EPA provide us with a list of those 
recycling sites which are now also Superfund sites?
    Ms. Miller. Certainly. We will ask that you respond to the 
committee with that.
    Mr. Van Hollen. Thank you.
    Ms. Miller. I just have one other question, Mr. Mannix, in 
regard to a follow-up to Mr. Van Hollen about recycling. Some 
of the recommendations actually said to change the definition 
of some of the different types, like changing the definition of 
solid waste to make it easier to try to recycle that waste.
    Do you have any comment? Are you knowledgeable about how 
the EPA might be trying to make it easier to recycle waste from 
electroplating operations?
    Mr. Mannix. We did get a request from the electroplating 
industry. We have, and I can't tell you what this stands for, 
but F006 wastewater treatment sludges, which we are trying to 
encourage recycling for. That is one of the major waste streams 
that I was discussing with Mr. Van Hollen. This is part of a 
much larger effort within the agency to look at where our 
regulations are discouraging recycling. It is a theme we have 
heard in many contexts. We are looking at all our programs to 
see where that might be the case and where we can encourage 
materials to go to their highest and best use when that is not 
to be disposed of in the environment.
    Ms. Miller. If you could, perhaps you could get back to me 
with a more specific answer on that. I do have a number of 
electroplating operations in my district. I know they have been 
trying to comply with EPA regulations. In our particular area, 
they are all customers of the Detroit water and sewer system, 
and I know they have been spending tens of thousands of dollars 
to try and comply with EPA regulations about that.
    So if you could get back to me with a more specific answer 
on that, I would be interested.
    Mr. Mannix. I will. And the POTW regulations that are 
announced today will also affect those facilities that are 
connected to publicly owned treatment works.
    Ms. Miller. Thank you.
    Mr. Sullivan.
    Mr. Sullivan. Madam Chair, I think one thing that certainly 
deserves attention here is that EPA's regulatory relief is done 
under the acknowledgement that some of these definitions are 
out of date. The definition of recycling and the definition of 
hazardous waste is out of date. From a small business owner's 
perspective, there is a small company in Connecticut. I had the 
pleasure of meeting with them a few years ago. Here is a small 
company that is taking in computers from all over the United 
States, and trying to do the right thing, trying to make sure 
that metals and other potentially dangerous materials do not 
end up in landfills.
    They were telling me that the laws, the definitions, treat 
them as a polluter. And all of the rules and regulations, the 
RCRA Subtitle C definition that bumps you into the hazardous 
realm, are out of date to discourage those types of companies 
from actually doing the right thing, and quite frankly, turning 
a profit. Because it is less expensive in redoing a circuit 
board, wiping out all of the confidential information and then 
putting that computer back into use. It is much more 
environmentally sound to do that than to just throw them all 
out in a landfill and then start all over again.
    So I think this committee, to put things in a little bit of 
perspective, from the small business owners' perspective that 
come to me all the time, they are frustrated that some of these 
legal terms are out of date and do not reflect the current 
industry practice, nor do they incentivize these companies to 
do the right thing. From an electroplating sludge perspective, 
here is the metals industry that wants to do the right thing, 
but the laws get in the way, because they don't encourage the 
onsite recycling and other technological advances that make 
their processes more environmentally safe.
    Ms. Miller. Thank you. Mr. Lynch.
    Mr. Lynch. Thank you.
    Mr. Sullivan, I want to get right back to the Crain study. 
You understand that, at least in my State, I will give you a 
good example, W.R. Grace, a chemical company in our State. I 
believe that it might have been compliant with the regulations 
at that time, but they released a lot of cancer-causing agents 
into the groundwater about Woburn, MA. We had dozens of kids 
die of, it was near a playground, and we had dozens of kids die 
of cancer as a result of their negligence.
    Now, that was a huge, what in economists terms is called an 
externality. In other words, it was cheaper for W.R. Grace to 
dump their chemicals as a business. But the cost of their 
production was borne by those families and by those kids.
    Now, what you are telling me is that the Crain study 
doesn't take into any costs borne by the families, by those 
kids. You are saying that they put the blinders on. Well, you 
are feeding this information to Congress, and we cannot put the 
blinders on, nor should we.
    So when you say the study is better than it was before, it 
was because there was tremendous room for improvement. But 
until a study is presented here that shows us the costs that 
are shifted from the manufacturing industry onto regular 
families just trying to raise their kids in a clean 
environment, until you quantify that, and it is quantifiable, 
give us an estimate rather than just say, we are not going to 
consider any of it.
    Any proposal that suggested they are informing Congress 
should consider all the costs, a cost benefit analysis that is 
so important to this committee. We want to see the costs to 
everyone, not just costs that are being shifted out of the 
industry that you represent, but the costs that are also now 
being shifted to innocent families because of the relaxation of 
some of these regulations.
    So in fairness, we want the whole picture. We can't put the 
blinders on. You have that luxury, we do not.
    Second----
    Mr. Sullivan. May I respond to that, please?
    Mr. Lynch. Certainly, yes, sir.
    Mr. Sullivan. First of all, your State is also my State. I 
am very happy to have grown up in the Commonwealth of 
Massachusetts. I couldn't agree with you more about taking the 
blinders off. That is why the annual report on the costs and 
benefits coming from the Office of Management and Budget 
provides us with so much value.
    The criticisms of the Crain study ironically, from a 
methodology perspective, weren't on what are characterized by 
economists as social regulation. The criticism was on the 
economic regulation, which is a different part of the report. 
We haven't talked much about it. That methodology was tightened 
by using the OECD survey and information.
    So the criticism of methodology that has come up in the 
past really was not on environmental regulations. To respond to 
the W.R. Grace situation, which is terrible, and also the 
communities affected by spills and other situations, are 
terrible. That is one of the problems about us having our 
blinders on the terms that we are using today. It is the toxics 
release inventory.
    I hear release, I think of Chernobyl. But that is not the 
case. Release, as it is defined legally, within TRI, is about 
the company's own management in-house of their chemicals. And 
also encouraging them to do the right thing, to send them to a 
licensed recycling facility. Small businesses get very 
frustrated about trying to do the right thing, and largely 
doing the right thing, but then be criticized as being 
polluters because they have to fill out all these forms that 
say, I am a polluter, when in fact they are not. They are 
effectively managing their waste.
    So the terminology I think that we get caught in as fellow 
attorneys I think does deserve to have the blinders kind of 
released a little bit and put in the proper context. Because 
the TRI reforms that EPA is showing leadership on will not 
cover up spills. What it will do is encourage more folks to 
effectively manage the waste they have in-house so that they 
become even better corporate citizens.
    Mr. Lynch. Thank you. I do want to say, in the first part, 
the Crain study, if you read the criticisms that I read, it was 
very broadly based about what the Crain Hopkins study 
considered, what they didn't consider, what methodology 
applied, their reluctance to publish the methodology, and also 
the inability of any other scientist to be able to replicate 
the results, an objective one. So there were round criticisms 
of that study.
    Make no mistake, though, we have to agree that by going to 
Form A versus Form R, less information, less information is 
available to the public. That is the plain and simple result of 
this. This is a reduction in reporting, a raising of the 
thresholds in some cases where you had to report 500 pounds 
before, now it's 5,000, you are raising the bar a little bit so 
they don't have to report as quickly. The other thing I want to 
talk about, RCRA, you are entirely right when you say the 
definitions are outdated. Definitions are outdated.
    But the industry proposal that you have put here is not 
about refining definitions. The industry proposal that you have 
supported by OMB is to eliminate, to do away with RCRA 
protections for any hazardous material. It is a blanket 
wipeout. So you are not saying, let's fine-tune this, let's 
fine-tune this, let's change this, OK, we have computers here, 
it is not that. It would wipe out any hazardous material that 
is being recycled.
    Now, a company could say, we have targeted this group of 
substances or this amount of property, I am sorry, amount of 
substance on our property for recycling use, and that would 
take it out from under RCRA regulations. Now, they may be 
legitimate in their intent to do so, but again, it provides 
less information about what is going on on their site, and we 
frankly think that more information to the public is 
beneficial.
    We understand that the byproduct of manufacturing is in 
some cases this pollution. We just want information to be able 
to guide the opinions and the actions of local communities in 
dealing with manufacturing facilities in their midst. That's 
it.
    Mr. Sullivan. I think that the community leaders certainly 
all over the country who many times are small businesses find 
common ground in wanting to be rewarded for doing the right 
thing, and that is to encourage recycling, to encourage 
bringing hazardous materials and substances to licensed 
recycling facilities and so forth.
    I am pleased that we do have common ground in acknowledging 
that many of the terms and laws are out of date. I would be 
happy to work with this committee to make sure that the Crain 
study is even better. We have no, we are not hiding the 
methodology at all, I can assure the Congressman that there is 
nothing to hide in the methodology.
    I can give this committee assurances that while we will be 
focusing still on the cost aspect of it and leave it up to our 
colleagues within individual agencies and OMB to flesh out the 
benefits, we would like the methodology to be even better 4 
years from now.
    Ms. Miller. Mr. Westmoreland.
    Mr. Westmoreland. Thank you.
    Mr. Sullivan, isn't it true that sometimes a lot of these 
forms that small businesses or businesses in general are 
required to fill out are just kept in a file, may not ever be 
looked at and are really used for ammunition for lawsuits?
    Mr. Sullivan. I don't know whether or not they are just 
ammunition for lawsuits. I think that the information that is 
provided in forms, if it is used by EPA to gauge where hot 
spots are, where they can better utilize their enforcement 
resources, then that is one thing.
    But to fill out a form that is either duplicative of other 
information already provided to the Federal Government or 
information that has no contextual value to the State, Federal 
agency or the community, I think is a waste of that business's 
time. That is what we hear more and more.
    I think EPA's reforms saying, let's let more businesses use 
the simple form, in conjunction with saying to all of the 
American public, maybe this information can be better 
contextualized by really stepping back and not just pushing out 
data, but in fact examining that data on a biennial manner and 
see whether or not the communities will have more useful 
information than they currently do.
    I will analogize it to the census. The census, the long 
forms come out every 10 years, the short forms every 5 years. 
Many of you have probably heard from your constituents when 
they get the long form. There is a letter that says, under 
penalty of law, fill this out. It is a tremendous burden.
    But the information used to set your congressional 
districts, to designate educational resources and others is 
valuable. But it is valuable because the Census Bureau steps 
back after assessing those forms and does tremendous things 
with the data. That same type of attention and focus on the 
contextual information needs to be borne in environmental 
reports, which is part of what EPA is setting out to do now.
    Mr. Westmoreland. So basically, the simpler the form in 
reality, it may be a safer form in that it makes the agency 
look closer at the information that is on that form?
    Mr. Sullivan. The simpler form, combined with making sure 
that form for certain filers is filed every other year, so the 
agency has a year and a half to really assess the data and 
contextualize it. Yes, it would likely provide better community 
information.
    Mr. Westmoreland. Thank you.
    Mr. Mannix, let's talk about hazardous waste for a minute. 
When a company has hazardous waste and disposing of it is done 
in different manners, I am assuming some people have a jobber 
that comes by and actually may pick up a 55 gallon barrel or a 
vat or such into another compartment or whatever, once that 
jobber leaves the site, how do you have a record of what he 
does with that hazardous waste?
    Mr. Mannix. I believe we have a manifest system in place 
that allows the agency to track shipments and to determine the 
source and determine the fate.
    Mr. Westmoreland. So you have a manifest system that, the 
jobber comes in, picks it up from XYZ coating facility, and he 
tells them he is going to take this material to a certain 
location or a certain disposal site and dump it. Let's say that 
guy just takes it and stores it in a warehouse. Would 
responsibility fall on the manufacturer or on the jobber or on 
the guy that had the warehouse?
    Mr. Mannix. I am not sure I can answer questions about 
liability in a hypothetical situation. But the manifest system 
allows the agency to find out whether the waste reached its 
destination. The handlers are required to have permits, the 
path can be tracked. There are financial assurance requirements 
to make sure that someone doesn't just walk away from it and go 
bankrupt with no ability to remediate it.
    Mr. Westmoreland. So if the jobber would report to you 
where it was disposed of, and to the place where he picked it 
up, and if he didn't do that, then he would be in trouble, 
correct?
    Mr. Mannix. Yes.
    Mr. Westmoreland. OK. And exactly, and Mr. Sullivan, do you 
all do a cost benefit analysis also? Does EPA, do both of you 
do them independently of each other?
    Mr. Sullivan. Actually, our office relies initially on the 
assessments by EPA. We bring small businesses to the table to 
find out whether or not the cost assessments played themselves 
out in Main Street small business from an accuracy perspective. 
But we rely very much on the analysis done by every agency, 
including EPA.
    Mr. Westmoreland. OK. Mr. Mannix, is that cost benefit 
analysis, is it made public and is your methodology, is it 
pretty much listed out into how you do this?
    Mr. Mannix. We run a transparent process. We do benefit 
cost analyses as appropriate for individual regulations. We 
also periodically do studies of the benefits and costs of say, 
the air programs, to try to get a more global perspective on 
those programs. I am not 100 percent certain to state this 
categorically, but I believe we always include both the 
benefits and the costs.
    Mr. Westmoreland. OK. One last question. Do you have one on 
the off-road diesel initiative?
    Mr. Mannix. If we don't, we will. [Laughter.]
    Mr. Westmoreland. Could I get a copy of it?
    Mr. Mannix. Yes.
    Mr. Westmoreland. Thank you.
    Ms. Miller. Mr. Van Hollen, do you have a second round of 
questions?
    Mr. Van Hollen. I do, thank you, Madam Chairman.
    First of all, Mr. Sullivan, you made the point about the 
computers. I think that is a good one, and I think that to the 
extent the definitions need to be updated to make sure we don't 
have unintended consequences, I think you are going to find 
agreement on that.
    I don't think that is what this EPA or OMB proposal, I 
think it is much more broad than the issue you suggested we 
need to address. It is not a narrowly tailored solution. I 
would just pick up on my colleague, Mr. Westmoreland, what he 
was saying with respect to the manifest.
    Mr. Mannix, I assume you think that is a good idea, to have 
a manifest so that we can track hazardous waste, would you 
agree it is a good system to have?
    Mr. Mannix. Yes.
    Mr. Van Hollen. OK. My understanding is that this new 
proposal with respect to hazardous waste that is being 
transported to a recycling facility would no longer be governed 
by that manifest system, is that your understanding?
    Mr. Mannix. It would not be covered by the same manifest 
system. However, there will be requirements to ensure that the 
material really is being recycled.
    Mr. Van Hollen. Let me ask you this. Why would you put a 
less protective system in place for the transport of the 
materials to make sure that the materials arrived at the 
destination they said they were going to arrive in, the 
recycling place, as opposed to going somewhere else? Mr. 
Westmoreland described, and you responded to his question, 
said, we have this great manifest system. Why do you want to 
throw that out with respect to 3 billion pounds of hazardous 
waste annually being transported to recycling facilities?
    Mr. Mannix. I will give you the economist's answer. With 
the situation Mr. Westmoreland described, where you have 
someone transporting waste that has a negative value, you do 
have to worry quite a lot that waste is going to disappear, and 
that he is going to try to shed the liability associated with 
handling that waste. That is why we have such a strict manifest 
system for waste.
    When you are talking about a product that is being recycled 
that has positive value, you still have to worry about whether 
it gets to its destination and it is being recycled. But there 
is much less concern that someone is going to take this product 
that has value and just dump it into a ditch on the side of the 
highway.
    Mr. Van Hollen. Well, let me just say, and I look forward 
to getting the figures with respect to the recycling facilities 
that are also Superfund sites. But my understanding is that of 
the first 60 filings under RCRA's imminent and substantial 
endangerment authority, of those 60, 20 of them were recycling 
facilities.
    So the suggestion that the recycling facilities always 
somehow do the job of 100 percent transforming the incoming 
hazardous waste into recyclable products, I think is wrong. I 
think there is a significant amount of non-recyclable and in 
some cases hazardous waste that remains. There is an incentive, 
I think, to dump some of this stuff.
    It just seems to me that the current system that has been 
in place with respect to the manifest is something that has 
worked overall well for the protection of the public. While I 
think we can certainly look at ways to improve and modernize 
the system, that seems to me to open up a loophole that is not 
necessary to open up.
    Thank you, Madam Chairman.
    Ms. Miller. Thank you very much.
    We are going to excuse this panel and empanel our next 
group of witnesses. We want to thank both of you gentlemen for 
your time, and Mr. Mannix in particular. You have only been 
back to the Agency for the last 8 days, so it is a sort of 
baptism by fire, I think.
    We are sorry Mr. Peacock was not able to come, but we 
certainly do understand and appreciate his service in the 
horrific hurricane attacks that are happening in the Gulf Coast 
region at this time. Again, thank you very much.
    We will take a quick recess while we get the next panel 
empaneled. Thank you.
    [Recess.]
    Ms. Miller. The committee will come to order.
    If I could ask the witnesses to stand and raise your right 
hands.
    [Witnesses sworn.]
    Ms. Miller. Thank you very much.
    Our first witness the subcommittee will hear from today is 
Mr. John Wagener. Mr. Wagener is the corporate director of 
environmental affairs with Mueller Industries. His 
manufacturing experience is clearly extensive, with involvement 
in chemicals, oil field production, automotive and hot metal 
industries. Mr. Wagener has served on several environmental 
committees, is presently the chairman of the Copper and Brass 
Fabricators Council's environmental committee.
    He is also a professional engineer, registered in five 
States. He is a certified safety professional and is a 
registered environmental manager. He actually comes from the 
city of Port Huron, which is in my congressional district, so 
we appreciate your transiting today to our Nation's Capital and 
look forward to your testimony, Mr. Wagener.

  STATEMENTS OF JOHN D. WAGENER, P.E., CORPORATE DIRECTOR OF 
ENVIRONMENTAL AFFAIRS, MUELLER INDUSTRIES, INC.; CHRIS BAGLEY, 
REGULATORY COMPLIANCE MANAGER, DAN CHEM INDUSTRIES, INC.; B.J. 
   MASON, PRESIDENT, MID-ATLANTIC FINISHING CORP.; AND SCOTT 
    SLESINGER, VICE PRESIDENT FOR GOVERNMENTAL AFFAIRS, THE 
                ENVIRONMENTAL TECHNOLOGY COUNCIL

                  STATEMENT OF JOHN D. WAGENER

    Mr. Wagener. Good morning, Madam Chairman and members of 
the committee. I am John Wagener, corporate director of 
environmental affairs for Mueller Industries.
    Mueller is headquartered in Memphis, TN and operates 24 
manufacturing and distribution facilities in the United States. 
We employ 3,400 Americans and produce copper, brass and 
aluminum products. One of our major facilities is Mueller 
Brass, located in Port Huron, MI, which is in the 10th 
Congressional District, where I grew up and still reside to 
this day and maintain my office. Our Port Huron plant employs 
over 500 people.
    I am also the chairman of the environmental committee of 
the Copper and Brass Fabricators Council. Thank you for 
inviting us to appear before the committee today. Mueller and 
the Council appreciate the committee's review of the Office of 
Management and Budget's Information and Regulatory Affairs 
initiative on unnecessary regulation burdening manufacturers. 
The Regulatory Right to Know Act of 2001 allowed OMB to solicit 
nominations for reform. We submitted and currently have seven 
nominations under consideration. I am here today to briefly 
review just three of them, due to time constraints this 
morning. I have selected these three because they are heavily 
loaded with common sense recommendations, and you have copies 
of the full text discussion.
    I would like to note the improvements in the handling of 
the nominations from the first year in 2002 to more recently in 
2004. In 2002, the nominating party had no opportunity to 
interact with OMB or the agencies. In contrast, for the 2004 
nominations, both the OMB and the agencies have actively sought 
input from us on three of our nominations to clarify what was 
being suggested as a regulatory change and to give us an 
opportunity to work with the agency to resolve any obstacles to 
making the change.
    The first issue I have chosen to talk about is the 
definition of VOCs. That appears in the Clean Air Act, VOC 
stands for volatile organic compounds. Yet the definition EPA 
promulgates has no aspect whatsoever of volatility.
    It does require that the chemical be photochemically 
reactive, and then they go on to define it by exemption. They 
list those chemicals that are exempted. There are 50 chemicals 
and families of chemicals listed as not being a VOC for an air 
contaminant. Presumably, every other organic compound is a VOC.
    To illustrate, I have here a bar of Ivory soap. It is not 
on the exempted list. There was a VOC emitted to the 
atmosphere, a VOC. If you are strong enough, you can do that 
with bowling balls and sawdust, all of which meet the 
definition EPA has promulgated for VOCs.
    I think a VOC ought to have an element of volatility in it 
when they define it. Manufacturers need a definition that 
contains a vapor pressure limit, just as Michigan did until a 
year ago, when EPA forced Michigan to remove the vapor pressure 
limit in Michigan rules. This would both clarify and eliminate 
uncertainty when manufacturers apply for permits. Uncertainty 
is a killer for manufacturing.
    The second issue I would like to discuss is the lead toxic 
release reporting. The TRI is widely looked upon as the mother 
of all environmental reports. A growing expense to 
manufacturers, we have a chart over here that shows some of the 
growing costs of the TRI report. I want to focus on in 2001, 
EPA incorrectly classified lead as a PBT. We have talked a lot 
about TRI and PBT, persistent biocumulative and toxic 
materials.
    This lowered the reporting threshold from the previous 
10,000 pounds processed, not released, processed, to 100 
pounds. Worse yet, it eliminated the de minimis concentration 
threshold of 1 percent. So now, any concentration whatsoever 
has to be considered.
    Lead is ubiquitous. It is a chemical that is found in low 
concentrations everywhere in our environments. It is in this 
drinking water, it is in the ink in the paintings on the wall. 
It is in the brass that is in front of you.
    Let me just show you how ridiculous, pencil, pencil 
sharpener. See that? Now, don't focus on the lead that was in 
that pencil, it is graphite, it is not lead. It is wood. EPA 
has published guidance that shows that wood has a naturally 
occurring lead content of 20 parts per million. What does that 
do? That means we have to track our pencil sharpenings. That is 
ridiculous.
    Let me be clear: it is not the form that is the eight pages 
we are talking about. It is the burden of recordkeeping, 
weighing, measuring and so on that, all due to no de minimis. 
It could have been 20, it is 20, it could have been 1, it could 
have been 1 part per trillion, 1 part per quadrillion. There is 
no relief when there is no de minimis. Everything needs a 
floor. We ask that EPA restore the de minimis concentration and 
remove lead from the PBT consideration.
    The last item of concern is thermal treatment of hazardous 
waste. EPA allows generators currently to treat their hazardous 
waste to reduce volume or toxicity. However, they exclude 
generators from treating it thermally. Where that applies to 
combustion and incineration, there is some logic there.
    Unfortunately, they lump into this the simple evaporation 
of water into this category. That isn't exactly true, because 
EPA does allow the evaporation of water from certain wastewater 
treatment sludges. We feel that manufacturers should be allowed 
to remove the excess water out of extremely dilute hazardous 
waste materials, to give you an example, something that 
contains 20 parts per million lead, the rest all being water is 
treated as hazardous waste. I think we need to allow them to 
reduce the amount of water and it will still be shipped as 
hazardous waste.
    We have met with the agency and they have been talking to 
us on that issue. But we feel a proposal is a long way off.
    [The prepared statement of Mr. Wagener follows:]

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    Ms. Miller. The subcommittee will now hear from Chris 
Bagley. Mr. Bagley is the EH&S manager for DanChem 
Technologies. His experience includes projects supporting many 
different clients in both industry and Government, including 
the EPA. His primary focus has been on multimedia, including 
air emission permitting, wastewater characterization and 
process studies and contaminated site investigations.
    I will ask the witnesses again to please, in the interest 
of time, pay attention to the lights there. Again, when you see 
the yellow light, you know you have about a minute left, and 
the red is your full 5 minutes. We can always enter testimony 
into the record.
    Mr. Bagley.

                   STATEMENT OF CHRIS BAGLEY

    Mr. Bagley. Good morning, Madam Chair and members of the 
subcommittee. Thank you for the invitation to testify on some 
of the regulations highlighted in the recent OMB report to 
Congress on the impact of regulation on U.S. manufacturers.
    My testimony today will focus on the Toxic Release 
Inventory Program, the Oil Spill Prevention, Control and 
Countermeasures regulations and the definition of solid waste 
regulations. My name is Chris Bagley and I am the regulatory 
compliance manager for DanChem Technologies in south central 
Virginia.
    I am testifying on behalf of the Synthetic Organic Chemical 
Manufacturers Association [SOCMA], a trade association 
representing the interests of custom and chemical specialty 
manufacturers, 89 percent of whom are small businesses. I have 
been involved with SOCMA for over 8 years, including a term as 
chair of the environment committee.
    SOCMA has been working with the EPA on resolving each of 
these rulemaking initiatives for at least a decade, with the 
goals of reducing regulatory burden, clarifying uncertainties, 
and most importantly, providing opportunities to recycle 
hazardous waste. While I am encouraged by EPA's recent efforts 
on all three issues, I am here today in the hope that this 
committee will motivate EPA to work quickly toward a final 
resolution. The decade of work by SOCMA and others on each of 
these issues represents countless hours and dollars lost to 
inefficiency and irresolute bureaucracy.
    My testimony today addressing Toxic Release Inventory 
reporting requirements has been amended based upon recently 
received good news from EPA. I believe that the proposed change 
to increase the availability of the simpler Form A report is a 
good one, but EPA's intention to explore alternate year 
reporting has the greatest potential for burden reduction. To 
achieve this, I request the distinguished members of this 
committee to assist EPA wherever possible in implementing 
alternate year reporting to help improve TRI information 
products.
    SOCMA has also worked with EPA to revise the Oil Spill 
Prevention, Control and Countermeasure regulations. It is 
critical that EPA clarify the remaining SPCC issues highlighted 
in our written submission by the end of this October. 
Alternatively, EPA must grant a compliance extension well 
before companies are forced to squander resources in an effort 
to comply with uncertain and unclear requirements. Efforts by a 
regulated entity to revise and certify SPCC plans are neither 
trivial nor inexpensive, on average costing approximately 
$10,000 per facility.
    The definition of solid waste under the Resource 
Conservation and Recovery Act [RCRA], defines what materials 
are hazardous waste. Additional regulations under RCRA strictly 
control all aspects of hazardous waste management, including 
activities such as recycling and recovery. There are a number 
of instances where existing regulations prevent the recycling 
and recovery of valuable materials from waste, one of the very 
activities that RCRA was established to promote.
    The fact that so many stakeholders nominated this 
regulation for the OMB report to Congress reflects the range of 
industries impacted by this rule. It also suggests the volume 
of lost opportunities for resource conservation that could be 
covered by revising the definition of solid waste. To those of 
us in the chemical industry, resource conservation is about 
more than protecting the environment. It is also sound business 
practice.
    Under the EPA's proposed approach, specialty batch chemical 
sites would be severely limited in their hazardous waste 
recycling options, because the proposal restricts recycling to 
the very narrowly defined generating industry. Not 
surprisingly, waste materials from one pharmaceutical plant are 
often considered waste materials by other pharmaceutical 
plants. Thus, no recycling opportunities are provided.
    However, waste materials at a pharmaceutical plant might be 
considered as valuable materials to a pesticide plant, a resin 
plant or an adhesives plant. Our testimony details examples of 
some of the cost savings that can be achieved.
    To facilitate recycling by our chemical manufacturers, 
SOCMA has proposed an industry sector based system in which 
recycling could occur provided certain conditions are present. 
Some example of the conditions we have proposed are, 
notifications to the EPA detailing where the recycled material 
was generated and where it will be re-used, limiting the 
allowable storage time prior to recycling, documentation that 
the material is stored, shipped and managed in a manner to 
prevent a release to the environment and records proving that 
the material was ultimately recycled.
    In conclusion, after working for up to a decade with the 
EPA on these three regulations, we have yet to reach the finish 
line, our many years of efforts facing an uncertain future. 
SOCMA believes that the scrutiny of OMB and the Congress is 
vital to speeding up the work on resolving these issues. We 
must all work together to create regulations that allow 
sustainable business development and protect the environment.
    Madam Chair, I welcome any questions that you or other 
members of the subcommittee may have.
    [The prepared statement of Mr. Bagley follows:]

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    Ms. Miller. Thank you. We appreciate that.
    Our next witness is B.J. Mason. He is the president and 
founder of the Mid-Atlantic Finishing Corp. Mr. Mason founded 
the company in 1976 and it has become a premier national 
service finishing company, providing services to industries 
nationwide.
    Mr. Mason is also a past president of the American 
Electroplaters and Surface Finishing Society. Since Mid-
Atlantic Finishing opened its facility, it has provided its 
perspective to a number of governmental agencies. We certainly 
look forward to your testimony, sir, at this time, Mr. Mason.

                    STATEMENT OF B.J. MASON

    Mr. Mason. You have introduced me, I thank you for being 
here. I would just like to go to my real topic and summarize my 
talk. You have a copy of my speech.
    I want to talk to you today about what was previously 
mentioned with the first panel, and that is RCRA's F006. We in 
the metal finishing industry, particularly electroplaters, we 
produce a by-product of the Clean Water Act called F006. 
Exactly what that is is the removing of metals from our waste 
stream to comply with the Clean Water Act, i.e., metal 
hydroxide.
    When F006 was first characterized, it was full of many, 
many products, such as heavy metals, probably some cadmium, 
some lead and some cyanide. Since the Clean Water Act and since 
many in the metal finishing industry have complied with this 
act and cleaned up our wastewater and our processes that we 
currently do, this product has since changed drastically. We 
did a study, along with EPA in the early 1990's, that showed 
most of the F006 that would be characterized previous to the 
early 1990's. Looking at it today, it is quite different. If it 
was characterized today, it would not be a hazardous waste.
    We have asked EPA back even before and during the common 
sense initiative, which I was a part of, to reevaluate F006 and 
classify it as a non-haz, which means that it was classified as 
a non-hazardous waste, we could encourage people to recycle. It 
is estimated that the average metal finishing plant disposes of 
about $50,000 a year in metals through F006. Most of that 
today, and I am going to tell you my experience in knowing the 
industry as I know it is, some 80 percent of that goes to a 
hazardous waste landfill, which is encapsulized in concrete and 
put in the ground. Thereby, as Mr. Van Hollen is saying, a 
potential site to clean up to get metals out.
    We all buy metals today. We all pay a lot more than we have 
previously. I use a lot of silver in my facility, and the cost 
of silver in the last year has increased about 40 percent. So 
has nickel, chromium, all those metals that we currently are 
putting into the ground. I have to go out the week after I send 
them out for disposal, go buy some more to do it all over 
again.
    What we have asked for is permission to recycle as a non-
hazardous waste, which would allow recycling facilities today 
that will not take hazardous wastes to be more prone to take 
those, and encourage the other metal finishers who currently 
are going to a landfill to go to recycling because there would 
be a cost savings.
    The reason today that I feel, and a lot of our industry 
feels that a lot of people go to the landfill is 
geographically, location and expense. It is a lot more 
expensive to ship a hazardous waste and dispose of it than it 
would be a non-haz. Inasmuch as we have showed by 
characteristic that F006 is not hazardous, we have asked for 
this some 15 years ago and are still waiting for EPA to make a 
decision on this particular product.
    It would be very beneficial to a company like mine that 
spends $50,000 to dispose of metals we have to buy again to 
take that money and put it back into a company like mine in the 
form of health insurance for the employees or maybe even just a 
raise that some of my employees haven't had in the last 6 or 7 
years.
    In conclusion, Madam Chair, I strongly encourage this 
committee to look at this regulation and to know that this 
industry is not against regulating and tracking this product. 
All we want to do is recover the metals that are in there that 
are becoming very valuable and very scarce. Thank you very 
much.

    [The prepared statement of Mr. Mason follows:]

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    Ms. Miller. Thank you. And our final witness is Scott 
Slesinger. He is the vice president for governmental affairs 
with the Environmental Technology Council. He is a veteran of 
Capitol Hill, where he served most recently as a minority 
counsel for environment and energy with the Senate Budget 
Committee. He previously worked as the environmental counsel 
for Senator Lautenberg and negotiated proposals on such topics 
as the Superfund and the RCRA Reform, which included recycled 
battery legislation, and he played a major staff role in the 
successful House-Senate conference of the Safe Drinking Water 
Act.
    I will say that I did not realize Mr. Van Hollen was here, 
I was going to let Mr. Van Hollen introduce. You may add any 
remarks that you have at this time, Mr. Van Hollen.
    Mr. Van Hollen. Thank you very much, Madam Chairman. I am 
sorry I had to step out for something else briefly. Let me just 
welcome Scott Slesinger, who is a constituent and somebody who 
is, I think you can see from his resume, very well versed in 
these issues. I want to thank him for being here and for his 
contributions to our discussions. Thank you very much.
    Ms. Miller. Thank you. The floor is yours, sir.

                  STATEMENT OF SCOTT SLESINGER

    Mr. Slesinger. I want to thank the committee for the 
invitation to appear.
    The ETC represents environmental service companies that 
recycle, treat and dispose of industrial and hazardous waste. 
Many of our companies are working with their Gulf Coast 
customers to clean up the hazardous wastes left behind by 
Hurricane Katrina.
    However, the vast majority of services we provide are for 
the normal processing of chemicals, pharmaceuticals and other 
wastes from American industrial processes. Our facilities are 
stringently regulated under RCRA and TSCA, among other 
environmental health and safety laws.
    Because our expertise is with RCRA and TSCA, I will limit 
my comments to those OMB-endorsed proposals that affect our 
activities. First is the definition of solid waste. OMB states 
that EPA should clarify that a material that is being sent for 
recycling is not subject to regulation as a hazardous waste 
because it is not being discarded.
    OMB is correct that hazardous waste, when recycled, is 
subject to RCRA management standards. This is exactly what 
Congress intended. In 1985, EPA promulgated the regulations 
that applied to the recycling of hazardous waste and the courts 
have upheld those.
    A broad exemption of all hazardous materials that are 
recycled from even the minimum standards for tracking financial 
assurance in safe management would create future Superfund 
sites and fail to adequately protect public health. RCRA has 
established a comprehensive program for managing hazardous 
wastes. A manifest system tracks the shipment of waste from 
cradle to grave, rules and procedures for handling and storing 
waste, recordkeeping, employee training, waste characterization 
and accident prevention plans are required. Facilities that 
treat, store and dispose of waste must obtain State or Federal 
permits and they must provide financial assurance so as not to 
saddle taxpayers with the cleanup burden if they close or have 
accidents.
    Under the industry-recommended and OMB-endorsed proposal, 
none of these RCRA safeguards described above would apply to 
recycled hazardous waste. Without tracking to ensure materials 
reached the recycler, coupled with the fact that the generators 
will probably still be paying the recyclers to take their 
waste, the economic incentive to dump the waste along the road 
will return for the first time since 1976. This is the reason 
most States who have commented on the EPA proposed rule 
rejected it.
    OMB argues that this proposal's goal is to encourage 
recycling rather than disposal. However, our review of the 
economic analysis of the original EPA proposal showed only a 
minuscule increase in recycling. The fact is, recycling, if it 
makes sense, occurs today, removing some costs of regulations 
that will have a marginal increase in recycling but a large 
increase in risk.
    This is really a proposal to encourage unregulated 
recycling of toxic materials rather than recycling carried out 
properly by regulated facilities. EPA's and States' own files 
show numerous sites where recyclers have caused significant 
taxpayer cleanup.
    Why is this proposal so uniformly supported by so many 
waste generators? We believe that the major economic benefit is 
diverting Superfund liabilities from waste generators to State 
and Federal taxpayers. Under current law, if a generator sends 
a waste to a recycling facility that subsequently becomes a 
Superfund site, the Government can seek to recover cleanup from 
both the recycling facility and the waste generators. With the 
industry-endorsed proposed rule, the generators would be able 
to escape liability because the hazardous materials being 
recycled would be considered a commodity instead of a waste.
    All that being said, there certainly are ways that EPA can 
provide exclusions from the full RCRA standards for certain 
types of waste materials that are recycled with conditions that 
are adequately protective. We are certainly interested in 
working with EPA and OMB and generators on this type of 
reasonable regulatory reform.
    The electroplating proposal, F006, is really a subset of 
the definition of solid waste. This sludge typically contains 
levels of cadmium, chromium, cyanide and lead. The industry's 
argument is that if the cost of recycling were lower by 
deregulating the handling, shipping and storing, that there 
would be less landfilling and more recycling.
    A survey of our members demonstrates the recyclable levels 
of F006 are not being landfilled, as the electroplating 
industry has argued, but are already being recycled. If someone 
sends us sludges with recyclable levels of lead, our companies 
will reclaim the metals. Removing this dangerous waste stream 
from regulation for a minuscule or zero increase in recycling 
is offering an economic benefit for one industry which 
transfers the risk to the taxpayer if something goes awry.
    I do not mean by my testimony to discourage reasonable 
efforts to lower regulatory burdens. For instance, we are 
working with our customers, EPA, States and Chairman Davis to 
replace the RCRA paper waste tracking manifest system mentioned 
above with an electronic system. The paper manifest tracking 
hazardous wastes from cradle to grave is the largest continuing 
paperwork burden that EPA places on industry. We want to move 
forward with electronic manifests that would save industry and 
States over $100 million a year. We would appreciate OMB's 
assistance in combatting the bureaucratic obstacles that are 
delaying this worthwhile project.
    Thank you for hearing our views, and I look forward to your 
questions.
    [The prepared statement of Mr. Slesinger follows:]

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    Ms. Miller. Thank you very much.
    I might start with Mr. Mason. I thought it was interesting 
when you were talking about some of the various metals that 
your industry deals with and the unbelievable increase in 
costs. I was taking some notes here, you said silver actually 
had gone up 40 percent, and the chromium, I guess you said, 
some of the other different types of elements that you use in 
your industry.
    Can you talk a little bit about why that has happened in a 
year? How do you get a 40 percent increase in silver in 1 year?
    Mr. Mason. Why I think this is happening is with the 
tremendous growth in the Far East, in China, where they are 
consuming huge amounts of all the metals, they are buying our 
metals, they are buying our scrap. I think it is the fact that 
it is not as plentiful as it was, and there is a whole big, new 
market to sell it in, this gets this to go up, and of course, 
the general economy, everything has gone up.
    So I think that is the biggest reason that the metals have 
increased like that. The silver probably isn't a particularly 
good example, because the silver market and the gold market are 
tied to people who set the number for them, if somebody 
understood that they would be a lot richer than probably 
anybody in this room. That market is very volatile, and I think 
it depends a lot on the currency of the United States versus 
the foreign currency and all that.
    But nickel metal, we do a lot of electronickel plating. We 
have seen that cost go up every bit as much as that. I think it 
is because of the use offshore.
    Ms. Miller. That is interesting, coming from Michigan 
obviously we use a ton of steel, a lot of steel in our State. 
It is the exact analogy with the cost of steel as what you were 
just saying, because of what is happening with the consumption 
in China.
    Mr. Mason. There was a March article, March 2004, in 
National Geographic, about China. I would encourage anybody to 
look at that article on China's growing pains. It just really 
tells everybody how unlevel the playing field is. It is a 
tremendous article for anybody to look at. You can see that 
kind of growth and how we are all suffering from it.
    Ms. Miller. That is again the purpose of this hearing and 
others that we have had, is how we can actually level the 
playing field from some of the regulatory burdens that we have 
that your industry and others are certainly sharing.
    Mr. Wagener, if I could, you mentioned, I think you called 
it the mother of all reporting for the TRI. And of course, 
announced last week by the EPA is a burden reduction rule. 
Could you talk about how you think that might impact, if you 
are familiar with the rule that they issued last week and 
whether that would assist or not your particular business, your 
industry?
    Mr. Wagener. It certainly would, and improve the 
perspective. Let me take an opportunity here to correct what I 
think is a misconception that Mr. Lynch referred to in regard 
to the 5,000 pounds. That is not 5,000 pounds released. That is 
5,000 pounds processed. So you could take copper wire, for 
instance, and change its diameter and that would be processing 
it. You could have zero releases, but you would still have to 
report. So it is not 5,000 pounds of releases that will go 
unreported. It will be reported. It is the processing amount.
    To give you some idea of what I spent last year, filing a 
report, I put in over 200 hours. I had six additional people 
feeding information to me; 200 hours is 10 percent of the year. 
We are tracking all kinds of issues, the PBT issues. Mueller is 
a significant user of lead, brass is typically 2\1/2\ percent 
lead. It is the magic that allows it to be machined cleanly. So 
we process a lot of copper and a lot of lead and of course 
zinc.
    There is something else that I could speak to there, in 
terms of the value of the TRI to the public. I have a very 
parochial view, it is only what happens to me. But in my period 
with Mueller Brass, we have received one phone call from the 
public in regard to our TRI report. So I don't know if that is 
a reflection of how much the public is reading these things, 
but it was from an environmental group in New Jersey.
    A young lady told me that they put these reports out to 
their membership and that she had been reviewing our TRI report 
and saw that we had recorded, she used the term ``released to 
the environment'' of so many million pounds of copper. Well, 
those are skimmings off our melt pot which are recycled. They 
were not released to the environment. But the distinction in 
the report is very vague.
    Then her question to me, remember, brass is 66 percent 
copper, here is her question. She said, we want to know what 
you are doing to get copper out of your product. Bizarre. So I 
went on to explain to her that it is our product. [Laughter.]
    And that the faucet that she gets her drinking water from 
is brass, chrome plated, and if she goes to her basement and 
looks at the plumbing, she will see all these copper tubings 
through which her water flows, a very important product.
    So I am not sure how many of the public environmental 
groups seem to look at it. I had the one phone call. But we put 
a lot of money into producing this report. I hope I have 
addressed your issue a little bit.
    Ms. Miller. Yes, you have, thank you very much.
    Mr. Lynch.
    Mr. Lynch. Thank you.
    Mr. Slesinger, I just have a quick question for you. As I 
understand it, the EPA's proposed change to the definition of 
solid waste under RCRA would allow a company to recycle 
hazardous materials without having to comply with some of the 
current safety requirements, such as tracking the hazardous 
material that has been targeted as being recycled.
    I am curious, under your reading, would this mean that the 
company would, well, let me put it the other way, could a 
company in the process of recycling ship their stuff out of 
State or out of their industry or out of their company for that 
matter, without being tracked?
    Mr. Slesinger. The way the OMB and industry suggested 
proposal reads is that these things would be considered a 
commodity. So if they were sent, for instance, to a RCRA 
facility for disposal, they would be required to be manifest. 
But if it goes to a recycler, unregulated, next door to us, 
even if we are shipping it across the country, it would not 
need a manifest, because it wouldn't be shipping hazardous 
waste and it would therefore be exempt.
    Mr. Lynch. Same material?
    Mr. Slesinger. Exact same material.
    Mr. Lynch. OK. So we are talking about in some cases drums 
of chemicals that would have been classified earlier as 
hazardous waste, but now because they are targeted for 
recycling, they are totally off the screen now.
    Mr. Slesinger. That is the way the proposal reads, yes.
    Mr. Lynch. OK. Can you give some examples of the kinds of 
materials that the EPA and OMB proposals cover, and examples of 
some of the dangers that might be presented in rolling back the 
current tracking requirements and protections that we have 
right now for properly handling waste?
    Mr. Slesinger. Hazardous waste is hazardous because it 
includes chemicals that are those that show up on the Superfund 
chemicals of concern. We are talking about the benzenes, the 
lead, the mercury. These are either contaminants or in some 
cases part of the product. In certain situations, of course, 
lead is a valuable product. If it gets into the air and is 
heated up, it can be a major pollutant.
    So it is all those chemicals that are regulated. But if 
they are, again, sent for recycling under this proposal they 
would not be regulated.
    Mr. Lynch. OK. I did get notice that we have a vote pretty 
soon, so I have one last quick question. That is, you 
mentioned, I didn't mention PCBs before in my remarks, but you 
brought it up in your testimony. You talked about a proposal 
that would increase the amount of PCBs that are allowed to be 
put in landfills.
    In your opinion, what are the safety concerns around that 
change?
    Mr. Slesinger. Right now, EPA lets very small amounts of 
PCBs go into municipal landfills, generally from households 
that may have a little bit left over in the paint they may be 
getting rid of, or under very strict cleanups that I talk about 
in my testimony.
    Under the proposal that OMB has endorsed, all cleanups 
allow levels of 50 parts per million of PCBs into municipal 
landfills. In fact, when EPA had a hearing on this, people 
representing the Superfund sites on the Hudson River and Fox 
River suggested that the sediment from those cleanups also be 
put into municipal landfills if they were under 50 parts per 
million.
    EPA has never done a study to show that putting 50 parts 
per million is safe in a landfill. Arguably, if you spread a 
little bit of PCBs over hundreds of landfills, it is probably 
not an issue. But if we are talking about thousands or tons of 
PCBs going into these landfills, there is no science to say 
that is safe in a regular, municipal landfill with the regular 
garbage we throw out, versus a TSCA regulated landfill that is 
built specifically to hold chemicals such as PCBs.
    Mr. Lynch. OK, thank you. Madam Chair, I yield back.
    Ms. Miller. Thank you. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Madam Chairman.
    Just to followup a little bit, Mr. Slesinger, with respect 
to some of the issues that you have raised, have you had an 
opportunity to discuss these directly with officials at the 
EPA, and if so, what has their response been?
    Mr. Slesinger. We, as I mentioned, are very willing to 
compromise and find some common ground. However, working with 
the agency has been somewhat difficult. I think they see a 
hearing like this, they see that the people working on this 
were called over to the Commerce Department to show how they 
were working on this.
    When we go over to talk to EPA on this, whenever we offer 
anything, they won't even admit that this OMB proposal is the 
leading one on the table. Everything we suggest, their response 
is, ``everything is on the table.'' You know, what time is it, 
``everything is on the table.'' It has really been hard to get 
them to start a dialog. Hopefully, we would urge Members on 
both sides to urge them to do that. I think there is common 
ground.
    We agree with Mr. Mason, F006 in many cases is different 
than it was when it was originally listed. There are ways that 
we could lower some of the burdens on some of these things 
without hurting the environment. But at this point, we have 
been running into a solid wall at EPA and at OMB.
    Mr. Van Hollen. Thank you. Now, when you say that under the 
new definition that you would be able to ship what is currently 
hazardous waste to a recycling facility that is an unregulated 
facility, what do you mean by that? Would there be anything, 
any rules governing the recycling facility?
    Mr. Slesinger. The recycling facility, if when it does its 
recycling leaves a hazardous waste residue, it will be 
regulated to handle that waste properly. However, the generator 
will now no longer be responsible for any of that where he is 
today, and it is a safeguard to make sure the generator finds 
an appropriate recycler who is going to do the right thing, 
because if he doesn't, the generator would then be liable. That 
would go away.
    We think there are ways that we can have these recyclers do 
some things, such as at least financial assurance, to make sure 
that the taxpayers don't get caught with the bill if they fail. 
Training their employees to us seems like a good idea that we 
hope would occur. But when EPA did its economic assessment of 
this proposal, those were the savings. You wouldn't have to 
waste money training your employees or having financial 
assurance or providing a spill protection plan. Maybe some of 
these things you might want to do anyway, but when there is 
going to be price competition, we are afraid there is going to 
be a race to the bottom with no regulatory protection.
    Mr. Van Hollen. All right. Mr. Bagley, as I understand the 
current rules, we are talking about the same material as has 
been testified to, if it is transferred right now to a disposal 
site, it would have to go through all the manifest 
requirements, and under this provision, if it is transferred to 
a recycling facility, it wouldn't have to go through all those 
manifest requirements, is that right? Is that your 
understanding?
    Mr. Bagley. No. Let me see if I can address the 
misconception this way.
    I respectfully disagree with the suggestion that industry 
supports deregulating this material through creation of a 
recycling loophole. The concern over creating new Superfund 
sites is certainly a concern that all of us share. However, 
those Superfund sites were created originally, back in the 
early days of RCRA, as Mr. Slesinger alluded to in his 
testimony. EPA subsequently closed that loophole through 
additional regulations that are still in place today.
    Industry is not looking for a blanket wipeout or for a 
rollback of those regulations. As I presented in my testimony 
today, lost recycling opportunities can be saved by revising 
the definition of solid waste, not by eliminating it, and still 
provide for full documentation of where that material came 
from, where it is going to, what was the final disposition of 
the recycled material and any other material generated as a 
result of that recycling activity.
    Mr. Van Hollen. If I could, just because the light is about 
to move to red, with respect to the manifest information, the 
transfer of the hazardous waste material and all the safeguards 
that are currently in place to make sure that material is 
handled properly and gets to the right destination, which it 
seems to me if we are dealing with the same material for the 
transport of that material, if it going to a recycling site or 
a disposal site, that information should be the same for the 
protection of the public.
    Do you have any objection to keeping the current 
requirements and safeguards for the manifests in place with 
respect to reporting and the transfer of the material to the 
final destination?
    Mr. Bagley. That is a potential option. But under DOT 
regulations, just as if you are shipping, say, virgin MEK 
instead of methyethylketone for recycling, you still have to 
have a bill of lading. So it may be that you can accomplish the 
same thing through other existing regulations. The primary 
purpose or one of the primary purposes of the waste manifest 
being not just verifying that the waste reached its destination 
and was received and disposed of, but also to maintain 
compliance with DOT regulations.
    So there may be some overlap there. I don't think we are 
necessarily objectionable to what you are suggesting, but it 
may turn out that there are other existing regulations that 
will also do the job.
    Mr. Van Hollen. All right. I thank you, Madam Chair.
    Ms. Miller. All right, thank you very much. I certainly 
want to extend our appreciation on behalf of the committee to 
all of the witnesses, the panelists that we have had today. 
Your testimony has been very enlightening. Certainly I think it 
has given us a lot of ideas and insight, suggestions on how we 
might approach the EPA as we spotlight them in this particular 
hearing and the impact that they are having on U.S. 
manufacturing.
    Thank you very much. We will adjourn the hearing.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

                                 
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