[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
ENVIRONMENTAL REGULATIONS, THE ECONOMY, AND JOBS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT AND ECONOMY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
FEBRUARY 15, 2011
__________
Serial No. 112-6
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan HENRY A. WAXMAN, California
Chairman Ranking Member
JOE BARTON, Texas JOHN D. DINGELL, Michigan
Chairman Emeritus Chairman Emeritus
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
ED WHITFIELD, Kentucky EDOLPHUS TOWNS, New York
JOHN SHIMKUS, Illinois FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
MARY BONO MACK, California ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
SUE MYRICK, North Carolina LOIS CAPPS, California
Vice Chair JANE HARMAN, California
JOHN SULLIVAN, Oklahoma JAN SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania CHARLES A. GONZALEZ, Texas
MICHAEL C. BURGESS, Texas JAY INSLEE, Washington
MARSHA BLACKBURN, Tennessee TAMMY BALDWIN, Wisconsin
BRIAN BILBRAY, California MIKE ROSS, Arkansas
CHARLIE BASS, New Hampshire ANTHONY D. WEINER, New York
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
BOB LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi
LEONARD LANCE, New Jersey
BILL CASSIDY, Louisiana
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
MORGAN GRIFFITH, Virginia
_________________________________________________________________
Professional Staff
David McCarthy, Chief Counsel
Jerry Couri, Professional Staff
Peter Kielty, Senior Legislative
Clerk
Jacqueline Cohen, Minority Counsel
Alison Cassady, Minority
Professional Staff
(ii)
Subcommittee on Environment and Economy
JOHN SHIMKUS, Illinois
Chair
TIMOTHY F. MURPHY, Pennsylvania GENE GREEN, Texas
Vice Chair Ranking Member
ED WHITFIELD, Kentucky TAMMY BALDWIN, Wisconsin
JOE PITTS, Pennsylvania G.K. BUTTERFIELD, North Carolina
MARY BONO MACK, California JOHN BARROW, Georgia
JOHN SULLIVAN, Oklahoma DORIS O. MATSUI, California
CHARLIE BASS, New Hampshire FRANK PALLONE, Jr., New Jersey
BOB LATTA, Ohio DIANA DeGETTE, Colorado
CATHY McMORRIS RODGERS, Washington LOIS CAPPS, California
GREGG HARPER, Mississippi
BILL CASSIDY, Louisiana
CORY GARDNER, Colorado
JOE BARTON, Texas
C O N T E N T S
----------
Page
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 4
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 6
Hon. Cory Gardner, a Representative in Congress from the State of
Colorado, prepared statement................................... 7
Hon. Cathy McMorris Rodgers, a Representative in Congress from
the State of Washington, prepared statement.................... 8
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 9
Witnesses
Randall Lutter, visiting scholar, Resources for the Future....... 10
Prepared statement........................................... 13
Answers to submitted questions \1\...........................
Karen Harned, executive director, National Federation of
Independent Business Legal Center.............................. 28
Prepared statement........................................... 30
Answers to submitted questions............................... 191
Christopher DeMuth, D.C. Searle senior fellow, American
Enterprise Institute........................................... 37
Prepared statement........................................... 39
Rena Steinzor, president, Center for Progressive Regulation,
University of Maryland School of Law........................... 51
Prepared statement........................................... 53
Answers to submitted questions \2\...........................
Leonard F. Hopkins, fuel procurement and reliance manager,
Southern Illinois Power Cooperative............................ 91
Prepared statement........................................... 94
Joseph Baird, partner, Baird Hanson LLP.......................... 142
Prepared statement........................................... 144
Answers to submitted questions............................... 195
Marcia Y. Kinter, vice president, Government and Business
Information, Specialty Graphic Imaging Association............. 155
Prepared statement........................................... 157
Answers to submitted questions............................... 208
Wendy Neu, executive vice president, Hugo Neu Corporation........ 162
Prepared statement........................................... 164
Answers to submitted questions............................... 211
Vince Ryan, county attorney, Harris County, Texas................ 170
Prepared statement........................................... 173
----------
\1\ Mr. Lutter did not respond to submitted questions for the
record.
\2\ Ms. Steinzor did not respond to submitted questions for the
record.
ENVIRONMENTAL REGULATIONS, THE ECONOMY, AND JOBS
----------
TUESDAY, FEBRUARY 15, 2011
House of Representatives,
Subcommittee on Environment and Economy,
Committee on Energy and Commerce
Washington, D.C.
The subcommittee met, pursuant to call, at 1:04 p.m., in
room 2322 of the Rayburn House Office Building, Hon. John
Shimkus [Chairman of the Subcommittee] presiding.
Members present: Representatives Shimkus, Murphy,
Whitfield, Pitts, Bono Mack, Bass, Latta, McMorris Rodgers,
Harper, Cassidy, Gardner, Barton, Upton, Green, Butterfield,
Barrow, Pallone, Capps, and Waxman (ex officio).
Staff present: David McCarthy, Counsel; Jerry Couri, Senior
Environment Policy Advisor; Peter Kielty, Senior Legislative
Clerk; Chris Sarley, Senior LA; Alex Yergin, Legislative Clerk;
Elizabeth Lowell, Legislative Clerk; Jacqueline Cohen, Minority
Counsel; Alison Cassady, Minority Professional Staff Member;
Caitlin Haberman, Minority Policy Analyst; and Abigail Pinkele,
Legislative Director, Rep. Green.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. We will call the subcommittee to order. Again,
first of all, apologies for being a few minutes late. We just
finished a vote in the full committee, so people will be
meandering up here. Also, we are supposed to have a recorded
vote around 1:15 to 1:30, so our intent is to start getting the
testimony, opening statements out of the way, and then
hopefully we can move expeditiously.
And I will begin. I would like to welcome everyone to the
first hearing of the Environment and the Economy Subcommittee
for the 112th Congress. I am honored to serve as the chairman
of the subcommittee and excited about the opportunity to work
with members from both sides of the aisle. I particularly want
to welcome and congratulate Mr. Green on being named ranking
member. We have already spoken numerous times. We are friends
from many years, more than we would like to mention, and I have
enjoyed working with him in the past and look forward to doing
so in our future capacities on this subcommittee.
From taking a shower in the morning to turning off the
lights before bed, our daily lives are constantly touched by
environmental regulations under the jurisdiction of this
subcommittee. That might be obvious from its name, but what
might not be so clear is the important nexus with the
``economy'' portion of the title. Due to environmental
regulations, families have to pay higher rates to turn on those
lights or water, and there is also the great impact that these
higher costs have a consequence.
We heard from Timberland last week of forcing jobs overseas
when overbearing regulations stifle the marketplace. It is a
necessary and healthy exercise to review regulations to make
sure congressional intent is being followed and the best
interests of our nations are protected. We cannot just look at
regulations in individual silos.
People don't have the luxury of being able to comply with
regulations in the abstract or singularly. Rather, they must
face all regulations together at the same time. That is why I
think we need to weigh the benefits compared to the collective
burdens placed on businesses trying to navigate through a
struggling economy to keep jobs here at home.
More to the point, while one regulation alone may not close
a business, the cumulative effect could be devastating,
resulting in death by 1,000 cuts. Since 2009, when President
Obama took office, the U.S. Environmental Protection Agency has
finalized 928 rules and proposed 703 others. As we overload the
nation with these proposed and finalized regulations, we need
to ensure that in an effort to do a good thing, our government
is not creating unintended consequences.
According to the U.S. Chamber of Commerce, the problem is
not simply the EPA is issuing a lot of regulations, rather it
is that it has significantly increased the number of major
rules. That is to say rules costing the regulating community
more than $100 million. These regulations typically ensnare
multiple industry sectors and have economy-wide costs usually
measuring in billions or even trillions of dollars, making
their economic impact so widespread that multiple sectors of
the economy must face substantial compliance costs.
This is not sustainable for our economy. Regulating
existing businesses into the ground on the hope that better
ones will come later is irresponsible. Policies like those have
starved free enterprise, bankrupting many larger States. We
must protect jobs that exist now while working to open the
doors for new opportunity to do business in the United States.
It is also no secret that our federal budget problem is
also infringing on the ability of private persons to access
capital to expand their businesses. For this reason, our
regulations should attack the worst problems first, doing so in
a way that avoids broad brushstrokes that insist on expensive
but nonproductive requirements that take resources away from
businesses that would otherwise be growing our economy. There
is a finite pot of resources that the Federal, State, local and
private interests can bring to bear on any particular problem.
Once those resources are committed to a problem, they are gone,
leaving that much less to attack the remaining problems we
face.
Let me be clear. We are not seeking to strip basic public
health and safety protections. Public health should be
protected in a way that encourages all public welfare. A
climate that welcomes development and encourages reinvestment
creates a kind of wealth and fairness that needs to be
encouraged. As chairman of this subcommittee, I work to make
certain any environmental policies deride from this
subcommittee will promote the public welfare as a whole while
sustaining and creating new jobs and growth in our economy by
letting valid, objective and repeatable science drive the
debate.
This is a critical aspect EPA has strayed from in recent
years, and Congress must work with the Administration to
refocus this attention. Today's hearing, Environmental
Regulations: The Economy and Jobs, is a fitting start to this
mission and will provide the subcommittee a solid foundation to
build.
Our first panel will give us a broad view of the economics
regulations and processes issued by EPA to understand where
they are causing exasperate economic problems, or in other
cases, where gaps might exist. Witnesses on the second panel
will give us a direct perspective on EPA regulations that are
affecting small businesses and possible consequences moving
forward.
I particularly would like to welcome Leonard Hopkins from
the Southern Illinois Power Cooperative for being here today.
Through the co-op, Mr. Hopkins helps supply power with
reasonable utility rates to constituents in my district.
Unfortunately a proposed coal combustion residue regulation may
put their ability to serve over 250,000 customers in rural
Illinois in jeopardy.
It is unrealized stresses like these that make it essential
we understand the full spectrum of effects regulations may
have. All of our witnesses here today are valuable to our
understanding, and I would like to thank them all for taking
the time to be here. Their testimony and participation with
questions will help us better understand the jobs and economic
growth and the relationship to our regulatory framework.
[The prepared statement of Mr. Shimkus follows:]
Prepared Statement of Hon. John Shimkus
The subcommittee will now come to order. I'd like to
welcome everyone to the first hearing of the Environment and
the Economy Subcommittee for the 112th Congress. I'm honored to
serve as the Chairman of this subcommittee and excited about
the opportunity to work with members from both sides of the
aisle. I particularly want to welcome and congratulate Mr.
Green on being named our Ranking Member. I have enjoyed working
with him in the past and certainly look forward to doing so in
our capacities on this subcommittee.
From taking a shower in the morning to turning off the
lights before bed, our daily lives are constantly touched by
environmental regulations under the jurisdiction of this
subcommittee. That might be obvious from its name, but what
might not be so clear is the important nexus with ``economy''
portion in the title. Due to environmental regulations families
have to pay higher rates to turn on those lights or water. And,
there is also the grave impact that these higher costs have the
consequence, as we heard from Timberland last week, of forcing
jobs overseas when overbearing regulations stifle the
marketplace.
It is a necessary and healthy exercise to review
regulations to make sure congressional intent is being followed
and the best interests of our nation are protected. We cannot
just look at regulations in individual silos. People don't have
the luxury of being able to comply with regulations in the
abstract or singularly. Rather, they must face all regulations
together at the same time. This is why I think we need to,
weigh the benefits compared to the collective burdens placed on
businesses trying to navigate through a struggling economy to
keep jobs here at home.
More to the point, while one regulation alone may not close
a business, the cumulative effect could be devastating--
resulting in death by one-thousand cuts. Since 2009 when
President Obama took office, the U.S. Environmental Protection
Agency (EPA) has finalized 928 rules and proposed 703 others.
As we overload the Nation with these proposed and finalized
regulations, we need to ensure that in an effort to do a good
thing our government is not creating unintended consequences.
According to the U.S. Chamber of Commerce, ``the problem is
not simply that EPA is issuing a lot of regulations. Rather, it
is that it has significantly increased the number of major
rules, that is to say rules costing the regulated community
more than $100 million. These regulations typically ensnare
multiple industry sectors and have economy-wide costs usually
measuring in billions or even trillions of dollars''--making
their ``economic impact so widespread that multiple sectors of
the economy must face substantial compliance costs.''
This is not sustainable for our economy. Regulating
existing businesses into the ground on the hope that better
ones will come later is irresponsible. Policies like these have
starved free enterprise, bankrupting many large states. We must
protect jobs that exist now while working to open the doors for
new opportunity to do business in the United States.
It is also no secret that our federal budget problem is
also infringing on the ability of private persons to access
capital to expand their businesses. For this reason, our
regulations should attack the worst problems first doing so in
a way that avoids broad brush strokes that insist on expensive,
but non-protective requirements that take resources away from
businesses that would otherwise be growing our economy. There
is a finite pot of resources that federal, state, local, and
private interests can bring to bear on any particular problem.
Once those resources are committed to a problem, they are gone,
leaving that much less to attack the remaining problems we
face.
Let me be clear, we are not seeking to strip basic public
health and safety protections. Public health should be
protected in a way that encourages all public welfare. A
climate that welcomes development and encourages reinvestment
creates the kind of wealth and fairness that needs to be
encouraged.
As Chairman of this subcommittee, I will work to make
certain any environmental policies derived from this
subcommittee will promote the public welfare as a whole while
sustaining and creating new jobs and growth in our economy by
letting valid, objective, and repeatable science drive the
debate. This is a critical aspect EPA has strayed from in
recent years and Congress must work with the Administration to
refocus this attention.
Today's hearing, ``Environmental Regulations, the Economy,
and Jobs'' is a fitting start to this mission and will provide
the subcommittee a solid foundation to build from.
Our first panel will give us a broad view on the economics
of regulations and processes issued by the EPA to understand
where they are causing exasperated economic problems or in
other cases where gaps might exist. Witnesses on the second
panel will give us a direct perspective on EPA regulations that
are affecting small businesses and possible consequences moving
forward.
I particularly would like to welcome Leonard Hopkins from
the Southern Illinois Power Cooperative for being here today.
Through the Co-op Mr. Hopkins helps supply power with
reasonable utility rates to constituents in my district.
Unfortunately the proposed coal combustion residue regulation
may put their ability to serve over 250,000 customers in rural
Illinois in jeopardy. It's unrealized threats like these that
make it essential we understand the full spectrum of effects
regulations may have.
All our witnesses here today our valuable to our
understanding and I'd like to thank all of them for taking the
time to be here. Their testimony and participation with
questions will help us better understand jobs and economic
growth and their relationship to our regulatory framework.
Mr. Shimkus. And with that, I will stop, and I will yield
time to the ranking member Mr. Green from Texas.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman. I want to thank you for
calling the hearing today because we all share an interest in
ensuring appropriate balance between the cost and benefits in
environmental regulation. I would also like to thank all our
witnesses, not only on the first panel, but also for the second
for taking their time to be here today.
I also want to thank Chairman Shimkus for favorably
responding to the request, mine along with Ranking Member
Waxman's written request that two additional minority witnesses
on the second panel, our county attorney for Harris County,
Houston, Texas, Vince Ryan, and Wendy Neu of the Hugo Neu
Corporation.
The addition of these witnesses to today's panels will
present a balance discussion. I hope that for future hearings
this committee will continue to strive for fair and balanced
panels to allow a real examination of the important issues.
I would also like to take a moment to describe some of the
benefits and potential benefits of environmental regulation
that I hear when I meet with companies in green industries,
like Hugo Neu Corporation, which is leading the way on
recycling electronic waste. My staff and I have worked with
many stakeholders in recycling companies such as the one owned
by Wendy Neu as we introduced legislation year and have been
developing revised legislation for electronic waste. It is my
hope that we can have a hearing on the legislation when we
introduce and hear from some of the green businesses that will
welcome the new economic benefit of the new e-waste
regulations.
I also hear about the benefits of environmental regulations
from my constituents who know all too well that environmental
regulation can have significant economic benefits in the form
of avoided cost. For years, I have been working with local
officials in Harris County, Texas to address a significant
threat from a Superfund site near our district, the San Jacinto
Waste Pits.
In the 1960s, a paper mill in our district dumped dioxin
containing waste into a waste pit on a sand bar in the San
Jacinto River. Unfortunately, the Resource Conservation
Recovery Act did not yet pass, and regulations for disposal of
the dioxin waste from paper mills were not yet developed. If
these regulations had been in place, the waste would not have
been dumped where they were, and the Superfund site would not
have to be created. Now that the San Jacinto River has
reclaimed that sandbar, the contamination is widespread and
cleanup will be very costly.
Harris County officials and EPA have been working hard to
ensure that taxpayers don't bear the cost of that cleanup, and
they are continuing to fight. Proper waste regulations could
have avoided these cleanup costs and these litigation costs and
could have protected the people of our district.
With that, I would like to thank the witnesses again for
appearing today, and particularly thank Wendy Neu and Vince
Ryan who are appearing on very short notice. Mr. Ryan is our
Harris County attorney, and his office has worked diligently on
the San Jacinto Waste Pits for several years. And I know the
Houston area and our district particularly appreciate it.
Mr. Chairman, I look forward to working with you, and I
appreciate the first hearing.
Mr. Shimkus. Thank you, Mr. Green. Now I would like to
recognize Chairman Emeritus Barton for 2 minutes.
Mr. Barton. Thank you, Mr. Chairman. I will submit the full
subject for the record. I want to thank our witnesses for
attending today's hearing. Your subcommittee, Mr. Chairman, is
the third subcommittee of the Energy and Commerce Committee to
hold a hearing on the promulgation of the regulations and the
economic impact that those regulations have on our economy. We
have heard from the Environmental Protection Agency and the
Office of Regulatory Affairs of the Obama Administration with
the other two subcommittees.
Today we are going to hear from the private sector and see
how these regulations impact the economies in their parts of
the country. Unemployment is over 9 percent, Mr. Chairman. The
mantra on both sides of the aisle is jobs, jobs, jobs. The
Obama Administration says that they want their regulations to
pass some sort of a cost-benefit analysis. But we know,
especially at the Environmental Protection Agency, that they
tend to pay only lip service to that. So in today's hearing, I
am sure we are going to hear from the private sector how those
regulations impact them, and we are also going to hear probably
some good input on what kind of a cost-benefit and economic
analysis should be done.
With that, Mr. Chairman, I yield back, and I look forward
to your chairmanship of this vital subcommittee.
[The prepared statement of Mr. Barton follows:]
Prepared Statement of Hon. Joe Barton
Thank you Mr. Chairman. Today's hearing marks the third
hearingthis committee has held related to this topic: the lack
of economic impact considered by the Obama Administration and
its agencies when promulgating regulations. The Oversight and
Investigations and the Energy and Power subcommittees held
hearings highlighting the disastrous effects to our economy and
domestic job market brought on by of overly burdensome,
redundant, and rushed regulations. The Administrators from the
Office of Information and Regulatory Affairs and the
Environmental Protection Agency testified and they both assured
us that their agencies and the Obama Administration do not want
to suppress economic growth with unnecessary regulations.
I hear what their saying, but I want them to make me, and
theAmerican public, believe it by what they are doing. With
unemployment at over 9 percent and American companies and jobs
moving overseas at a rapid rate we must do something now to get
our economy growing again. As members of Congress it is our
responsibility to make sure that our small businesses and job
creators are not stifled by overregulation, but are encouraged
and rewarded for being conscientious corporate citizens that
find and maintain the balance between profits and pollution
control, earnings and environmental clean-up, revenues, and
recycling.
I have and will support legislation and regulations that
protect our public's health and environment, but I will not
support legislation and regulations that do more economic harm
than good at little to no benefit to the public. Over the last
2 years, I have sent letters to the EPA, the Department of
Health and Human Services, the Department of the Interior, and
President Obama asking the Administration and its agencies to
review passed and proposed regulations and conduct a cost-
benefit analysis on these regulations. Several of the witnesses
today will emphasize the need for this type of analysis and
explain how new regulations have negatively impacted their
ability to help our economy recover and help the environment. I
look forward to their testimony.
Mr. Shimkus. The gentleman yields back his time. Now, the
chair recognizes the chairman of the Full Committee, Mr. Upton
from Michigan.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you Mr. Chairman. I am sorry I am a
moment late from being downstairs. This is an important
hearing. Your testimony is crucial to helping us understand
what improvements are needed in the regulatory process to
ensure that it allows for economic prosperity.
Somehow we have lost our way. Those small businesses and
manufacturers who should be driving our economic recovery are
choking from burdensome red tape, weathering in an agency-wide
regulatory epidemic that seems bent on accomplishing a single-
minded purpose without regard to fixing the economy and
protecting jobs. Not to mention environmental regs also
substantially raise costs on the public sector, and these costs
are not easily absorbed.
Just this past December, EPA published guidelines for
preparing economic analyses. This document is to govern EPA's
regulatory actions. It states ``regulatory-induced employment
impacts are not in general relevant to the benefit-cost
analysis.'' The bureaucratic insensitivity towards those folks
in Michigan and across the nation who are struggling to make
ends meet is stunning. It is guidelines like this that have
catapulted the country into a perpetual state of soaring
unemployment and economic uncertainty. The time has come to
stop asking the American family, the American small business,
the innovators, and the risk takers to bear any burden and pay
any price.
Many of our constituents who are struggling to compete in
this tough economy say that government regs are like a piano on
their back. Despite executive orders from a number of
presidents calling for economic impact analyses or job impact
analyses, the relief never seems to come. We have to focus the
government on serving the people instead of hamstringing them.
Mr. Chairman, these values and principles should drive the
president in all federal agencies. No one here today is saying
don't regulate. We are simply saying regulate only when the
good it will accomplish clearly outweighs the harm. Today's
hearing is a positive step forward on that journey to help the
executive branch develop a conscience and an understanding
about the impact on the economy and jobs and families for every
regulation it pursues. So let us get going. Thank you. Yield
back.
Mr. Shimkus. The gentleman yields back his time. I now
recognize Mr. Gardner from Colorado for 30 seconds.
Mr. Gardner. Thank you, Mr. Chairman. In the short time
that I have been in this Congress, I have had an incredible
number of people come into my office and talk about the effect
that regulations have or may have on their business. Our
country is still fighting its way out of a recession, and our
government's response many times seems to be adding more
handcuffs than solutions.
We have an obligation to our environment, to our children,
and future generations, but it is time we do so in a common
sense way driven by the interests of the people and not the
special interests.
[The prepared statement of Mr. Gardner follows:]
Prepared Statement of Hon. Cory Gardner
Mr. Chairman, in the short time that I have been in
Congress I have already had an incredible number of employers
come to my office to explain how the government is regulating
them out of business. Those who are not already feeling the
pinch from over-regulation are worried about the vast array of
regulatory proposals. Our country is still fighting its way out
of a recession. And our government's response to the situation
has been to handcuff the very entities that are trying to lead
us out of it.
Today we are here to address environmental regulations in
particular. With Colorado's extensive energy and agriculture
industries, this is an area of great concern to me. This
Committee has a duty to examine sweeping federal rule changes
that have the potential to cripple various sectors of our
economy and negatively affect Colorado businesses and I am
happy to see that we are taking that step today.
EPA has consistently acted to accelerate its rulemaking
processes leading to legally dubious, poorly conceived, and
arbitrary regulations that are not only hurtful to businesses
but often have little to no environmental benefit. The laws
that comprise the basis for many of these new rules have not
changed in years, sometimes decades. The words on the pages
have not changed, and yet EPA is constantlyfinding new
authority under those same laws.
We know that EPA rarely, if ever, does a true cost benefit
analysis of its actions. One that considers job loss and
economic damage. Given that EPA has decided that it does not
need to concern itself with such things, I am encouraged that
Congress has decided to take up the cause and I am proud to be
here today as our committee holds this hearing on behalf of the
hard working Americans who are affected by these policies. I
would like to thank all of the witnesses for being with us, and
I look forward to hearing the witness's answers to many of our
questions on how the government's efforts have affected private
industry.
Thank you, Mr. Chairman. I yield back my time.
Mr. Shimkus. The gentleman's time has expired. To the
chairman emeritus--we only have 30 seconds left. I will give
you a chance to get situated, and then we will recognize Cathy
McMorris Rodgers for 30 seconds right now.
Ms. McMorris Rodgers. Thank you, Mr. Chairman. I thank you
for holding this important hearing, and I thank all the
witnesses for taking time out of their schedules to be here. I
wanted to give a special welcome to Joe Baird, president of the
Northwest Mining Association for being here today.
Despite effective safeguards, the EPA has decided that it
needs to step in and add regulations that will all but certain
drain the mining industry of its capital, making us more
dependent upon other countries for important minerals.
I mentioned on the floor last week this is not what America
is about, and I look forward to hearing from our witnesses on
how we can keep the dream alive.
[The prepared statement of Ms. McMorris Rodgers follows:]
Prepared Statement of Hon. Cathy McMorris Rodgers
Mr. Chairman, I would like to thank you for holding this
important hearing and our witnesses for taking time out of
their schedules to be here today.
I would like to give a special welcome to Joe Baird,
President of the Northwest Mining Association, for being here
today.
Joe's testimony will demonstrate first hand EPA's unbridled
power grab. Despite effective safeguards implemented by states,
the EPA has decided that it needs to step in and add
regulations that will all but certain drain this industry of
its capital--forcing businesses to cut jobs, jobs that could
benefit communities experiencing unemployment rates well above
the national average--and force the only cobalt mine in this
country to close - making us even more dependent upon other
countries for this important mineral.
As disturbing, Mr. Baird's testimony describes the current
statutory and regulatory framework under which mineral
exploration and operation on federal lands must operate. Let me
just read a few of the statutes and regulations: the Clean
Water Act, the Safe Drinking Water Act, the Clean Air Act, the
National Environment Policy Act, the Toxic Substances Control
Act, the Resources Conservation and Recovery Act, the
Endangered Species Act, in addition to a plethora of surface
management regulations issued by BLM and USFS just for mining.
As I mentioned on the floor last week, regulation is not
what this nation is about. America is about entrepreneurialism,
innovation, and preserving the American Dream. I look forward
to hearing from our witnesses as to how we can keep the dream
alive.
I yield back the balance of my time.
Mr. Shimkus. I thank the gentlewoman, and now I recognize
Mr. Waxman for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman. Today's
hearing is entitled Environmental Regulations: The Economy and
Jobs. I think this is a worthy topic for discussion if we do it
right. Unfortunately, I am concerned that today's hearing may
simply be a platform for complaints about our landmark laws
designed to protect taxpayers and the public health.
We will hear complaints about Superfund, The Resources,
Conservation and Recovery Act, The Toxic Substances Control
Act. We will hear complaints about laws outside of this
subcommittee's jurisdiction like the Clean Air Act. The
environmental laws we will discuss today form the cornerstone
of public health protections. Before Superfund and RCRA, there
was Love Canal, a New York neighborhood built atop of thousands
of tons of toxic waste, carelessly disposed of in a ditch.
Before The Safe Drinking Water Act, the American public had
no assurances that the water coming from their tap was free of
cancer-causing chemicals and dangerous bacteria. Today we will
hear precious little about the benefits of protecting the
public health from these toxic exposures. Instead the
subcommittee is likely to focus solely on the economic costs of
environmental regulations. I have no objection to discussing
the economics of environmental regulation, but any fair and
balanced discussion should include both sides of the equation,
the economic benefits as well as the costs.
Environmental regulations protect the economy as well as
society from the devastating cost of pollution. In the absence
of sound regulation, when polluters are allowed to pollute, the
costs of that pollution don't simply disappear. Instead,
innocent parties have to pick up the tab. Our health care
system has to bear the weight of asthmatic children and more
adults with cancer. Businesses have to absorb the costs of
employees who miss work due to chronic illness.
Municipalities have to cover the costs of cleaning up toxic
pollution before it reaches drinking water supplies.
Environmental regulations protect the public from these
impacts. They can also spur economic growth and job creation.
Expenditures for environmental compliance spur investment in
the design, manufacture, installation, and operation of
equipment to reduce pollution.
EPA recently estimated that The Clean Air Act's total
benefit to the economy is projected to hit $2 trillion by 2020,
outweighing costs by 30 to 1.
It is a tenet of our society that we hold people
accountable for their actions and that we offer protection to
those who can't protect themselves. When a coal-burning power
plant fails to invest in new pollution control equipment to
reduce its toxic mercury emissions, it damages the way our
children think and learn. That is why the responsible party, in
this case the coal plant, has an obligation to control its
emissions.
As I have said previously, let us put aside the false and
hyperbolic claims about regulations killing jobs. No one
supports unnecessary or duplicative regulations. But let us
also not hesitate to regulate when needed to protect our
economy and public health.
Thank you, Mr. Chairman. Yield back the time.
Mr. Shimkus. And I thank the gentleman. Now I would ask
unanimous consent that all members of the subcommittee have 5
legislative days to submit opening statements for the record.
Without objection, so ordered.
Now, I would like to welcome our first panel, and you will
be recognized for 5 minutes. Your full statement will be
submitted for the record. If you can do, you know, a brief,
executive summary, and then we will go into questions.
I would like to thank you for coming. I would like to first
recognize Randall Lutter, Ph.D., visiting scholar from
Resources for the Future. Sir, you are recognized for 5
minutes.
STATEMENTS OF RANDALL LUTTER, VISITING SCHOLAR, RESOURCES FOR
THE FUTURE; KAREN HARNED, EXECUTIVE DIRECTOR, NFIB LEGAL
CENTER; CHRISTOPHER DEMUTH, D.C. SEARLE SENIOR FELLOW, AMERICAN
ENTERPRISE INSTITUTE; AND RENA STEINZOR, PRESIDENT, CENTER FOR
PROGRESSIVE REGULATION, UNIVERSITY OF MARYLAND SCHOOL OF LAW
STATEMENT OF RANDALL LUTTER
Mr. Lutter. Thank you very much, Mr. Chairman, honorable
members of the committee. I am pleased to appear today to offer
my views on Environmental Regulation: The Economy and Jobs, an
important topic because both the environment and----
Mr. Shimkus. Sir, if you could just pull your mike down a
little bit further.
Mr. Lutter. Are important to Americans. As an economist, I
believe that careful analysis of the effects of regulations can
help in designing regulations to offer clear net benefits to
Americans and to avoid unnecessary burdens. Careful regulatory
analysis can also help promote both public understanding of
regulatory decisions and accountability for the regulators.
I speak as an economist who has been involved in regulatory
policy for more than 2 decades. I have had the privilege of
serving Democratic and Republican presidents, including
positions at the Federal Office of Management and Budget, the
President's Council of Economic Advisors, and the Food and Drug
Administration. I am currently visiting scholar at Resources
for the Future, a nonprofit, nonpartisan organization that
conducts independent research on environmental energy, natural
resource, and environmental health issues. I have conducted
research at the American Enterprise Institute and the AEI
Brookings Joint Center for Regulatory Studies. I have no
conflicts of interest to report, and I emphasize that the views
I present today are mine alone. RFF takes no institutional
position on legislative, judicial, regulatory, or other public
policy matters.
An important concern these days is employment. The
commissioner of the Federal Bureau of Labor Statistics recently
announced the unemployment rate declined from 9.4 to 9 percent
in January. Nonfarm employment, now about a million over the
low of a year ago, is 7.7 million below the highest level of
the last decade, nearly 138 million jobs. Plus nonfarm
employment needs strong and sustained growth to match levels
seen before the recent recession. Cyclical transit employment
and unemployment are, however, a macroeconomic phenomenon best
addressed through fiscal and monetary policy and sound
financial regulation topics beyond my scope today.
The consensus view among economists about the role of
economic analysis and environmental regulation is that it is an
exceptionally useful framework for consistently organizing
disparate information, and in this way, it can greatly improve
the process and the outcome of policy analysis and
deliberations. This idea has become part of a centralized
process of regulatory review outlined in Executive Order 12866,
which President Clinton issued in '93, replacing an earlier
Executive order of comparable scope signed by President Reagan.
Executive Order 12866 does not mention employment or jobs
in its 12 principles, but it directs agencies to conduct an
assessment including the underlying analysis of costs
anticipated from the regulatory action, such as any adverse
effects on the efficient functioning of the economy including
productivity, employment, and competitiveness.
President Obama's January 18 Executive Order 13563 on
improving regulation and regulatory review reaffirms the
earlier one and mentions the promotion of job creation under
general principles.
I turn to how the Environmental Protection Agency has
analyzed and considered possible effects of its regulations on
employment. I have looked at several regulatory impact analyses
of proposed major rules recently released by the agency and
found a variety of practices. For two regulations, coal
combustion and ozone, EPA provided no information and no
explanation for the lack of analysis. One of these, a proposed
standard for ozone, is very likely to have adverse effects on
local labor markets because of the difficulty of achieving cuts
in emissions of 90 percent or greater. EPA has estimated
positive but statistically insignificant effects on employment
for one regulation, industrial boilers, and modest negative
effects for another, Portland Cement.
Evaluating these different approaches to employment effects
is difficult because ONB's guidance implementing Executive
Order 12866 does so little to clarify how agencies should
assess effects on employment. Recently, however, EPA has
released a new guidance on this issue.
My own recommendations, regulatory agencies first should
issue regulations only where the benefits demonstrably justify
the cost, and they should take full advantage of statutory
authority to use market-based regulatory mechanisms.
In addition, the Office of Management and Budget should
issue an addendum to A4 about how agencies should analyze
effects of regulations on employment, but only after soliciting
and considering public comment and genuinely independent expert
advice. The focus of such guidelines should be on identifying
what employment can be quantified reliably and what
quantifications procedures are appropriate, and the guidelines
should reconsider excluding from benefit-cost analysis the cost
of job losses induced by regulations.
The guidelines should also provide for distributional
analyses of effects on those workers who are at significant
incremental risk of job loss and who would face barriers to
finding another job.
I understand my written testimony will be part of the
record, and I will be, of course, available for questions.
[The prepared statement of Mr. Lutter follows:]
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Mr. Shimkus. Thank you, Dr. Lutter. Now I would like to
recognize Ms. Karen Harned, executive director, NFIB Legal
Center. Welcome, and you have 5 minutes.
STATEMENT OF KAREN HARNED
Ms. Harned. Thank you. Good afternoon, Chairman Shimkus and
Ranking Member Green. NFIB, the Nation's largest small business
advocacy organization, appreciates the opportunity to testify
on the importance of assessing small business impact in the
regulatory process. Overzealous regulation is a perennial cause
of concern for small business owners and is particularly
burdensome in times like these when the Nation's economy
remains sluggish.
According to a recent study, regulation costs the American
economy $1.75 trillion a year. More concerning, small
businesses face an annual regulatory cost of $10,585 per
employee, 36 percent more than the regulatory cost facing
businesses with more than 500 employees. Job growth in America
remains stagnant. Although small businesses create two-thirds
of the net new jobs in this country, the NFIB research
foundation's most recent addition of ``Small Business Economic
Trends'' revealed in the next 3 months, 12 percent of
respondents planned to increase employment, while 8 percent
plan a reduction in workforce.
Small business owners consistently cite government
regulation as one of their primary problems in running their
business. In its most recent addition of SBET, the NFIB
research foundation found that 17 percent of small business
owners describe government regulations and red tape to be their
single most important problem. Only taxes and poor sales were
more commonly cited. In fact, for the past 26 months of the
survey, regulation and red tape has been in the top three of
problems. This is not a recent trend either.
NFIB surveys demonstrate that overzealous government
regulation has ranked in the top 10 of problems facing small
businesses since 1991. Reducing the regulatory burden will go a
long way toward giving entrepreneurs the confidence they need
to expand their workforce in a meaningful way.
Recently, the Administration acknowledged that excessive
and duplicative regulation has a damaging effect on the
American economy. NFIB believes that it has been a long time
coming for small business owners to hear the Administration
emphasis the harmful effects of overregulation on small
business and job creation. We will be watching closely to see
if last month's directive leads to real regulatory reform.
Moreover, NFIB hopes that the president's order causes agencies
to more closely follow the letter and spirit of the
Administrative Procedures Act.
When agencies do not follow the procedures of the APA, they
frequently enact one-size-fits-all rules that are not sensitive
to the unique circumstances of small businesses. An important
tool in the arsenal to ensure that federal regulations are
developed in a way that considers small business impact is the
Small Business Regulatory Enforcement and Fairness Act. SBREFA
requires federal agencies to analyze the impact of proposed of
regulations on small firms and as a result, give small
businesses a voice in the federal rule-making process. SBREFA,
when followed correctly, can be a valuable instrument for
agencies to identify flexible and less burdensome regulatory
alternatives.
SBREFA and its associated processes, such as the Small
Business Advocacy Review Panels, are important ways for
agencies to understand how small businesses fundamentally
operate, how the regulatory burden disproportionately impacts
small business, and how the agency can develop simple and
concise guidance materials.
While SBREFA itself is a good first step, in order for it
to provide the regulatory relief that Congress intended, the
agencies must make good faith efforts to comply with it. By
following the letter and spirit of SBREFA, agencies like EPA
would avoid many of the unnecessary burdens and costs of
regulations small businesses experience.
Unfortunately for small businesses, however, through the
years, a number of EPA regulations have failed to account for
the unique characteristics of small business. For example,
EPA's lead-based paint renovation, repair, and painting rule
has been problematic for small businesses that engage in
renovation and construction work. The rule requires small
businesses to pay for expensive certification and training for
each of their employees. Certification begins at $304 for
renovators and $550 for painting activities or both painting
and renovating. Fees could cost thousands of dollars per firm
depending on the number of employees they have.
Although Superfund was enacted in 1980, NFIB has heard from
members with businesses that have been named as a potentially
responsible party in a third-party lawsuit. They have been
forced to spend thousands of dollars and an excessive amount of
time defending themselves when they did nothing wrong or
illegal or do not have the records to prove their innocence.
When EPA and other agencies follow the procedures for
evaluating small business impact of regulations before they are
promulgated. It is a win-win for the economy, the public, and
small business. Thank you for holding this important hearing. I
look forward to your questions.
[The prepared statement of Ms. Harned follows:]
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Mr. Shimkus. Thank you, Ms. Harned. And for my colleagues,
I am going to try to get both opening statements done prior
votes. I think we can get both in. If I gavel you, it will be
for that, for our ability to hear. But that is just for
information for my colleagues.
Next I would like to recognize Mr. Christopher DeMuth, D.C.
Senior--Searle Senior Fellow, American Enterprise Institute.
Sir, you have 5 minutes. There is a button there.
STATEMENT OF CHRISTOPHER DEMUTH
Mr. DeMuth. Thank you for having me here today, and in
light of the time, I will give a brief opening statement.
Environmental policy and employment policy are two central
concerns. Americans like high levels of clean air and water,
and they like high levels of unemployment. These two values
sometimes clash, and they are clashing today.
To the economists, taking jobs as the metric of the costs
of environmental policy is a little bit crude. It is certainly
important to the elected representative. It is what the general
public cares about, but one could imagine a good environmental
rule that had negative employment effects, and one could
imagine and sometimes sees bad environmental rules that have
positive employment effects.
When we regulate, we are buying something: cleaner air and
water. Just like everything we buy privately, it has a cost,
and the costs can be higher prices, or they can be less good
product quality, or they can be lower employment. The question
of whether it is a good rule or not is a larger one than the
one of employment.
In general, environmental regulation has been a great
success story for America. It has had very large economic
benefits since our first modern statutes were passed in the
early 1980s, but we know now that it has been much less cost
effective than it could have been. We could have gotten much
more environmental improvements for the money we have spent, or
we could have gotten the same amount of environmental
improvements for vastly less money, or a little bit of both.
There is evidence that EPA regulations have been becoming
less cost effective over time, following the huge improvements
that were gained in the 1970s. There is a wide variation in the
effectiveness of different statutes, and we could revise the
statutes to get much more environmental gains and much fewer
costs of the kind the committee is worried about. In my view,
the reasons for the problems that the committee, your
subcommittee is focusing on today are two.
The first is that environmental--that regulatory costs are
off budget. EPA's budget is a tiny sliver of the billions of
dollars of costs that its rules impose. But it does not have
natural incentives to economize on those costs. They are not
costs to the agency. They are costs to the private sector or
municipalities or schools or whatever.
The costs are relatively insensible to the public. They
take the form of higher prices or plants that aren't built or
sometimes plants that are shut down, and as a result, agencies
often go too far. The regulatory agency will get a 90 percent
elimination of some risk or pollution level. It will then want
to go for another 8 percent, and it will then want to go for 1-
and-a-half percent. And it will keep pushing and pushing. The
laws are being made by single purpose agencies operating
largely without a budget constraint, and their incentive will
be to push until the human cry becomes so great, such as from
the Congress that they back off.
The second is the very wide delegations that the Congress
gives in many environmental statutes so that the really tough
choices are made by the agencies. The specialized agency goes
back over a century. EPA is a classic example of it. The
original idea was expertise, and certainly there are many areas
of pollution control that are highly technical and that
technicians could handle better than generalist legislators.
But as the controversies before this committee today
illustrate, these are not merely technical questions. They are
highly important political and economic ones, but we have
gotten ourselves into a situation where the legislator can vote
for clean air and clean water and leave the hard and
contentious decision making to the agencies and then criticize
after the fact. And the agencies will in this situation often
go too far until they are criticized.
There are two proposals, as I understand it, before the
Congress today for general regulatory reform. They are
addressed to the two problems I have identified. Senator Warner
is working on a proposal that would put the agencies on a
budget of the expenditures that their rules force. It is sort
of a pay-go idea where to issue a new regulation, you would
have to eliminate some old ones. That is addressed to the
problem of unbudgeted, off-budget costs. The so-called Reins
Act, introduced by Congressman Jeff Davis and now introduced in
the Senate by Senator DeMint, is the proposal for Congress to
take back some considerable degree of the discretion it has
delegated to the agencies.
My testimony says some good things and identifies some
problems with both approaches. In my view, neither of them
would be as worthwhile as the Congress's returning to many
areas of the environmental statutes where it has delegated too
much and where much more specific standards could resolve some
of the problems that we are facing today. Thank you, sir.
[The prepared statement of Mr. DeMuth follows:]
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Mr. Shimkus. Thank you, Mr. DeMuth. Now I would like to
turn to Ms. Rena Steinzor, president of the Center for
Progressive Regulations, University of Maryland School of Law.
Welcome, and you are recognized for 5 minutes.
STATEMENT OF RENA STEINZOR
Ms. Steinzor. Thank you for the opportunity to testify
today on the mistaken belief that environmental protection
kills jobs. No matter how many times this fatally flawed
argument is repeated, empirical evidence supporting the claim
is scant and not credible. Instead, the evidence shows that
environmental regulations save lives, preserve irreplaceable
natural resources, and not incidentally, create jobs.
In fact, if we pull the camera back and look at the economy
as a whole, the primary cause of the economic recession and its
devastating effect on jobs is underregulation, not
overregulation. Everything from the tarp bailouts to the
underwater mortgage crisis can be traced back to excessive
corporate corner-cutting unchecked by an effective regulatory
system.
Too often regulatory costs are envisioned as putting money
in a pile and setting it on fire. Environmental protections
reduce health care costs, keep families intact and productive,
let workers stay on the job and preserve resources for future
generations. Not incidentally, taking the remedial steps that
they require, especially when capital investments are involved,
creates jobs. Pollution control equipment must be designed,
manufactured, and installed. People must be hired to construct
and operate highly engineered landfills that can safely contain
hazardous waste and treat sewage and drinking water. Even if we
restrict the analysis of regulatory impacts to monetary
investments and do not consider the ethics of preserving life,
health, and nature, the money that is not spent treating
cancers, asthma, or neurological disease can be used in other,
more productive ways.
Two relevant and closely related examples make this case.
As Chairman Emeritus Waxman pointed out, regulations
implementing the Clean Air Act saved 164,300 adult lives in
2010 and will save 237,000 lives by 2020. Costs of compliance
in the year 2020 will be $65 billion, but the regulatory
controls, the benefits of those controls will be $2 trillion.
As we have gotten better at preventing pollutants from
going up and out of the stack, we have created other equally
pressing problems because these pollutants do not vaporize but
rather fall out of the scrubbers into fly and bottom ash.
Utilities generate about 145 million tons of coal ash annually,
more than three times the amount of hazardous chemical waste.
Half of this ash is dumped in so-called surface
impoundments which is a euphemism for an unlined pit in the
ground. The highly toxic heavy metals present in coal include
arsenic, beryllium, chromium, and lead. Burning coal
concentrates these contaminants to dangerous levels.
In the aftermath of a spill in Kingston, Tennessee of one
billion gallons of sludge, coal ash sludge, when an impoundment
run by TBA burst, this spill in sheer volume exceeded the Gulf
oil spill that transfixed us this summer. EPA began a rule
making to compel the safe disposal of coal ash. Electric
utilities have made killing this rule a top priority. If
President Obama succumbs to this pressure or Congress
intervenes, regulatory benefits of $102 billion over the next
several decades could be lost.
If anything, our regulatory system is dangerously weak, and
Congress should focus on reviving it rather than eroding public
protections. The destructive convergence of funding shortfalls,
political attacks, and outmoded legal authority have set the
stage for ineffective enforcement and unsupervised industry
self-regulations. From the Deepwater Horizon spill in the Gulf
of Mexico to the disaster at West Virginia's Big Branch Mine
with the death toll of 29, the signs of regulatory dysfunction
abound.
The latest free-for-all against regulation frames a
fundamental question for Congress. Will we do what we must to
make sure that the environment we leave the next generation of
Americans is clean enough for them to live their lives free of
the health risks from environmental hazards, or will we squeeze
the last penny of monetary profit out of the planet's resources
at the cost of leaving behind a scarred landscape, polluted air
and water, and enough toxics in the food we eat to pose serious
risks to our children and their children?
[The prepared statement of Ms. Steinzor follows:]
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Mr. Shimkus. Thank you, Ms. Steinzor. Now we will recess
the hearing to go cast votes. We have three votes. My
colleagues, I would put on the record that 15 minutes after the
last vote, we will reconvene. I am not sure how you all figure
that out, but that is why you have the staff to help you. But
we will come back 15 minutes after the last vote.
[Recess.]
Mr. Shimkus. I would like to call the hearing back. And I
want to thank my colleagues for coming back expeditiously. That
was a pretty quick turnaround, and now we will go into the 5-
minute questions. Most members are still making their way back
or trying to grab a sandwich. So I am sure that a few more will
show up by the time, but I will recognize myself for 5 minutes.
First I would like for Dr. Lutter--you cited a breathtaking
statement by EPA in June 10. In fact, I have it right here
along with a December statement of EPA analysis. In your
statement in which you are quoting the EPA when it put out a
proposed rule for combustion byproducts under the Resource
Conservation and Recovery Act, the EPA said, and I quote ``the
regulatory impact analysis for this proposed rule does not
include either qualitative or quantitative estimates of
potential effects on economic productivity, economic growth,
employment, job creation, or international competitiveness.''
Do you believe that they--comment on this statement. And do you
believe they should put that as part of the analysis?
Mr. Lutter. First of all, I think they should be commended
for full disclosure, but more importantly, I think they should
have done more analysis on that. And I think what is
interesting is exactly with respect to the employment effects,
that employment is clearly recognized under the executive
order.
As Chris DeMuth has pointed out, employment effects are not
necessarily costs, but it is important, especially in this
environment, for decision makers to be aware of that and also
for the public to be aware of employment effects. And I think a
reasonable economic analysis, especially of a regulation of
that magnitude, should have taken into account employment
effects. I am not a specialist in that rule, but that rule is a
rule of several billion dollars.
Mr. Shimkus. Thank you. Ms. Harned, in--I don't even know--
my first term or my second term, I worked with NFIB closely to
get liability relief for small businesses and Superfund
obligations as being one of the primary responsible parties,
then went after the smaller guys who weren't really involved
other than they used municipal landfill, in this case like
everyone else. But, of course, two industries used it with
hazardous material, and then they got pulled in.
It is under your belief that regulations should have an
analysis of economic impact on jobs, wouldn't you agree?
Ms. Harned. Yes, and the Superfund example, I think, is a
good one of that and just also the key that NFIB has seen with
our members and regulation generally which is when you talk
about unintended consequences, typically you are talking about
what happens with the regulation to the members I represent,
the small business owners I represent. And I don't think when--
I would assume when Superfund was enacted, nobody thought that
we were going to have members letting us know that they spent
$43,000 to get them out of litigation that they shouldn't even
have been in to begin with.
And so doing that work on the front end can help prevent
those unintended consequences and can help make sure that small
business owners have the certainty they need going forward so
that they can hire.
Mr. Shimkus. And we may follow up on a whole separate
Superfund hearing because of the cost of litigation versus the
cost of recovery. Some of the States do a much better job
because they are not tied into the morass of litigation.
Dr. DeMuth, do less expensive environment federal
regulations necessarily mean less environmental protection?
Mr. DeMuth. No, it is easy to posit a case where a stricter
rule will result in less pollution, but we have a lot of cases
where EPA has found ways to reduce the costs of its regulation
that have actually increased the effectiveness.
One example would be the lead phase-down regulations,
which, in addition to--which accelerated the withdrawal of lead
additives from the gasoline supply. At the time it put those
rules in place, it put in place a trading system so that
gasoline refiners had more refining capacity, could substitute
lead at a faster rate than those with lesser, and make trades
among themselves. That has been a pretty well-studied example
of how we reduced the cost of compliance and greatly
accelerated the removal of lead from the gasoline supply by
harnessing market incentives to the EPA rules.
Mr. Shimkus. And I think my clock got all messed up, so I
don't know how much time, and I want to be respectful of my
colleagues. I just want to make sure we put in the record the
guidelines for preparing economic analysis by the EPA December
2010, just this statement. I don't want to put the whole--in
9.2.3.3 Impacts on Employment, I quote ``regulatory-induced
employment impacts are not in general relevant for a benefit-
cost analysis. For most situation, employment impacts should
not be included in the formal benefit-cost analysis.'' And I
think that is part of the reason why we are having this hearing
because many of us will say it should.
And then I would like to now--my time has expired. I would
like to recognize my colleague, Mr. Green from Texas.
Mr. Green. Thank you, Mr. Chairman. Mr. Lutter, you also
said that you had worked at OMB.
Mr. Lutter. Yes, sir.
Mr. Green. It seems like I recall having dealt with over
the last many years with agencies and their regulations, that
oftentimes their regulations are submitted to OMB for whether
it be cost-benefit analysis or comment before it actually takes
effect. Is that true?
Mr. Lutter. That has been the case for many years, yes,
sir.
Mr. Green. OK, do you know if OMB does any cost-benefit
analysis that may be separate from the individual agency?
Mr. Lutter. Well, historically it doesn't. It offers
comment on the agency's economic analyses, their benefit-cost
analyses and other related analyses, all required by the
Executive Order. Those comments are typically taken seriously
by the agency that then revises the economic analysis to
reflect OMB comments. But there is not a separate OMB analysis
except to improve the analysis of the agency.
Mr. Green. But there is an analysis. There is an oversight
of the agency, whether it be EPA or Department of Labor or any
other agency, that OMB would actually look at their economic
analysis?
Mr. Lutter. There is oversight. The magnitude of the
changes depends on the circumstances.
Mr. Green. OK, I appreciate that. Thank you. We have heard
from our Republican colleagues that regulations designed to
protect the environment and public health may cost too much,
and they all have been ignored by the other side of the
equation, and costs are not taking action to protect the
environment and public health.
Last year, the Office of Management Budget estimated the
major federal regulations over the last 10 years costs between
$43 and $55 billion. Ms. Steinzor, does that cost tell the
whole story?
Ms. Steinzor. No, thank you for asking that question. It
doesn't because it ignores the benefits of regulation, and that
is a very important part of this equation. Regulation does help
create jobs because the money is being channeled back into the
economy. It is not being destroyed. So that is one of the
reasons why we are emphasizing competitive energy policies that
will put us ahead in global competition because forcing us to
stop using polluting materials will be very helpful.
Mr. Green. OK, I appreciate that. Mr. Lutter, do you agree
that the balanced discussion of the cost of regulations should
include a discussion of the benefits too?
Mr. Lutter. Yes.
Mr. Green. OK, OMB estimated that the economic benefits of
major regulations over the last 10 years found tremendous
benefits up to $616 billion. The benefits oftentimes outweigh
to cost 3 to 1 and sometimes as much as 12 to 1, but these hard
numbers don't tell, I think, the human side of the story.
And I think Mr. DeMuth talked about the reasonableness of
taking lead out of gasoline, and there was a reasonable
regulation to be able to trade and to deal with it. I don't
think any of us would want to go back to what--because there
are a lot of countries in the world who still have lead in
their gasoline. But that was probably one that ultimately paid
off much better.
And frankly it sounds like from your testimony, it was more
workable than some of the ones we may see again through lots of
different administrations.
Ms. Steinzor, it may be tempting for some to rely on a
clinical cost estimate to form and justify policy. Do you think
it makes sense to rely on analytical tools alone, or do we need
to remain cognizant of the other principles of our society,
like fairness and justice and equity?
Ms. Steinzor. Yes, sir, and I actually think that Congress
did a terrific job on that when it wrote the Clean Air Act and
the Resource Conversation and Recovery Act and the Safe
Drinking Water Act and the Toxic Substances Control Act. All of
those statutes talk about protecting human health and the
environment with an adequate margin of safety. Those are the
kind of phrases that you used, and I would just--until you
change your instructions to the agencies, that is what they are
going to be following.
Mr. Green. OK, thank you. One last question in my last 20
seconds. Typically agency rules, industries have the right to
go to the courthouse and file, whether it be the NFIB or
individual affected industries. Don't you think that is also a
check, and I guess let me ask Ms. Harned if the NFIB actually
ever filed in court representing a certain part of the industry
on some regulation you thought was maybe not proper?
Ms. Harned. Why, we have done that on several occasions
with EPA, Army Corps of Engineers, and I think a couple of
other agencies. All of these issues that we were raising were,
checking the administration for not following Small Business
Regulatory Enforcement and Fairness Act. The good thing is we
have that as a tool. The bad news is in the case where we--the
court agreed with us, the appeals court ultimately agreed with
us, our members never saw any relief. They just told the
agency, don't do it again, basically. So the rule never got----
Mr. Green. Did the agency overrule that--did the court
overrule the agency?
Ms. Harned. They did not provide--they did not tell the
agency to go back and fix the problem. They just said don't do
it again. So I guess my point is they acknowledged that the
agency didn't follow its procedures and that that was in
violation of the law, but they did not go back and fix the
issue that we were complaining about fundamentally, which was a
streamline process that had been taken away from small business
owners for permitting.
Mr. Shimkus. Gentleman's time has expired. I would just
weigh in in that there are litigation costs that have to then
be borne by the small business to even go through that process.
Mr. Barton. Like to yield 5 minutes to my colleague from
Kentucky, Mr. Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman, and thank you all
very much for your testimony today. One of the things about
this that bothers me the most is, and some of you touched on in
your testimony, and that is that Congress does seem to be
ceding more and more authority to regulatory bodies,
particularly by writing pieces of legislation that are very
vague. And it lends itself to interpretations by the way that
people want to interpret it.
An example of that, I think Mr. DeMuth pointed this out in
his testimony, was on the Tarp legislation. We thought they
were going to be buying toxic assets with some of these public
funds. Instead, they were making equity investments in
financial firms, and so I am assuming that most of you would
agree with me that Congress may be ceding too much authority to
regulatory bodies. Would you agree with that, Mr. Lutter?
Mr. Lutter. I think it is very helpful for regulatory
bodies to have fairly precise instructions about what is
congressional intent. It facilitates a more technical decision
rather than an unfettered policy one, which is best left with
elected representatives.
Mr. Whitfield. What about your, Ms. Harned?
Ms. Harned. Yes, I think this is a continuing concern, and
I do agree, the health care law is a good example of this as
well that we are seeing right now that is impacting our
members. And it is really the agencies that are going to----
Mr. Whitfield. Might I also say that we didn't have an
opportunity to offer one amendment on the floor on that bill.
Mr. DeMuth, do you have a----
Mr. DeMuth. Yes, I agree, sir. If you look across the range
of EPA's organic statutes, I would say that those that have
been the most contentious and have lead to the greatest
problems have been those that given them very, very wide
discretion.
And the ones that have been most successful, I think the
classic case is the automobile emissions standards. They were
basically written on the hill, and they have been very
effective. There hasn't been that much litigation.
Mr. Whitfield. Right.
Mr. DeMuth. Everybody respects them. Congress spoke.
Mr. Whitfield. Right.
Mr. DeMuth. And it reflected--I mean they were
controversial at the time. The automobile manufacturers didn't
like them, but Congress made a considered decision that this
was something that was important. And I think that applying
that approach much more broadly across RICRA, TASKA, the
Superfund Program, and the Clean Water and Air Acts would be
very beneficial.
Mr. Whitfield. What about your, Ms. Steinzor? Do you agree
with my statement?
Ms. Steinzor. I agree that the laws should be specific. I
actually would observe that the environmental laws are pretty
specific. I worked for the committee many years ago, and we
rewrote Superfund. And I actually have counted the pages. It
went from 50 pages to 400 pages. So very, very specific
instructions.
Mr. Whitfield. Yes. Well, I think most people certainly in
my district agree and feel very strongly that they are losing
jobs because of regulations. We had a plant close last week,
and they specifically--the owner of the plant said I am closing
this because of environmental regulations, and 200 jobs were
lost right there.
Now, one of the things that I am totally puzzled about is
we look at these formulas about benefits versus cost, benefits
versus cost. And, Ms. Steinzor, in your testimony, you talk
about the benefits, for example, of the Clean Air Act. By 2020,
the benefits will be $2 trillion annually. Now, Mr. DeMuth, you
and Mr. Ginsberg wrote a law journal article one time at the
University of Michigan in which you looked at formulas used to
determine benefits, cost-benefit analysis, and you were, I
believe, critical of some of these formulas being used. Would
you explain briefly why? I mean it is so frustrating when
somebody says the benefit is too--I mean you say that a life
lost would be $84,000 or whatever. Could you just comment
briefly on the formulas used to calculate these benefits?
Mr. DeMuth. I think that the approaches to calculating
benefits have become more specific over time and better, but
that they involve enormously large room for subjective
judgment.
Professor Steinzor and also Administrative Jackson last
week cited a figure of 650,000 lives saved per year from EPA
regulations. I regard that as preposterous, intellectually
embarrassing. They think it is reasonable. What they do is they
take the amount of pollution in America in 1970, and they take
GDP in 1970 and they take GDP today, and they multiple it by
the pollution in 1970. Now, we probably would be saving that
many lives, but you know what? We wouldn't be able to see each
other if pollution had increased that much. And then they take
credit for all of the difference.
So you can see a lot of very poor procedures, and this is
the administrative EPA talking before an important
congressional committee. So you can see that the opportunity
for exaggeration is still immense.
Mr. Shimkus. The gentleman's time has expired. The ranking
member asked if we could allow Ms. Steinzor to, because some of
her testimony was questioned, a brief response. So I am going
to ask unanimous consent that we allow Ms. Steinzor to respond
for a minute. Without objection. Ms. Steinzor.
Ms. Steinzor. Thank you. The estimates of benefits that are
made under things like the Clean Air Act and other statutes are
very low because we assume, for example, that if a child is
brought to an emergency room with an asthma attack, that that
attack is worth $363. I don't even think they let you through
the door or give you a plastic ID bracelet for $363. And the
cost of a nonfatal heart attack in a person under the age of 24
is $83,000. So unless you actually die of your heart attack,
that is all the amount of money we think it is worth to prevent
having you exposed to air pollution that can make your heart
disease worse or give you--worsen your asthma.
So these benefits--I would disagree with Mr. DeMuth. These
benefits are likely to be much, much higher than what EPA says
they are.
Mr. Shimkus. And thank you, ma'am. Now, I would like to
recognize Congressman Joe Pitts from Pittsville for 5 minutes.
Pennsylvania.
Mr. Pitts. Thank you, Mr. Chairman. Mr. DeMuth, in your
written testimony, you state ``on the cost side, these include
higher prices, the loss of many good things outside the realms
of environmental quality and employment such as the quality and
reliability of some products and services.''
Could you please give us some examples of quality and
reliability losses? And does this affect the ability of
businesses to access capital to either comply with more
burdensome requirements or to simultaneously comply and hire--
expand their businesses?
Mr. DeMuth. The costs could certainly take the form of
those you suggest. I had in mind more kind of direct and
obvious things. Sometimes installing pollution control gear
simply raises cost. Sometimes it lowers the utility of a
product. The hardware that we use to control pollution on cars
degrades the performance of the car. We have all gotten used to
it, and pollution has gone down enormously. But the performance
of cars in terms of miles per gallon is less than it would have
been otherwise.
A good example for people in the Washington area,
especially those that have experienced power outages in the
past couple of weeks, is the reliability of our power system.
The Clean Air Act through--I mean people on the staff will--who
are down in the weeds will understand this. The Clean Air Act
discourages plant modernization in the electric power business
because of a curious anomaly in the Act where if you try to--
you may have a lot of good reasons for renovating your plant.
If you renovate the plant, it will reduce pollution and make
the power supply much more reliable. But you will trip yourself
into so much more stringent regulations.
And so power companies tend to defer and delay, and EPA has
been trying to fix this for 20 years. It is something that I
would recommend to legislators to fix. It hasn't been able to
do it, and I think that the effect on keeping our power grid up
to date through keeping the generating facilities up to date
has been very substantial.
Mr. Pitts. Thank you. Ms. Harned, you say that small
businesses spend 36 percent more per employee to comply with
environmental regulations than larger businesses, while small
businesses provide two-thirds of the new jobs. Does this mean
that the Small Business Regulatory Enforcement and Fairness Act
simply does not work?
Ms. Harned. Well, it works when it is followed again the
letter and the spirit of it. What we have noticed is when the
Act was first introduced, there was more of blatant
noncompliance, I think, than you would find today 20 years
later, though that still occurs. I think what you see though is
ways to do the end run around it, to maybe not certify a rule
that otherwise would be certified to have a more in-depth small
business analysis.
And our view of the world is, look, once these regs are on
the books, they are on the books. And getting them off has
proven to be very difficult if not impossible. Why not do your
homework on the front end and make sure that you use the tools
that are given to you through the law to solicit small business
impact and really understand how a law--how a regulation is
going to work before implementing it? I know it takes time on
the front end, but it is much better to do it that way than
have to clean up a mess later like you saw in Superfund and
other things like that.
Mr. Pitts. Thank you. Mr. Lutter, finally, do you believe
that the creation of new enforcement and compliance jobs
related to the issuance of a new rule should be given
substantial weight in the net jobs calculation?
Mr. Lutter. I have concerns about it, net jobs
calculations, even though I understand its appeal to many
parties. I have tried to articulate a preference for a
conventional calculation of benefits being shown to justify
cost as a basis for issuing a regulation.
I think, having said that, there is a variety of effects on
employment that are also legitimate to consider in that
benefit-cost calculation. And my survey indicates that some
analyses for some regs are not doing that. I think with respect
to employment--or, I am sorry, enforcement jobs themselves, if
there is an enforcement job in the regulatory agency and that
function is now required to ensure compliance with the rule,
then that job is a cost of the rule and ought be considered as
such.
Similarly, if there is an enforcement compliance officer in
the regulated industry that now is not otherwise hired and that
person's sole function is to ensure that they are complying
with red tape, that is also a cost.
Mr. Pitts. Thank you.
Mr. Shimkus. Gentleman's time has expired. The chair now
recognizes the gentlelady from California, Ms. Capps.
Ms. Capps. Thank you, Mr. Chairman. I would like to turn to
Mr. DeMuth. Thank you for the testimony, each of you. Mr.
DeMuth, your testimony suggests that environmental regulations
are no longer as cost effective as they once were because the
marginal benefits have decreased. Essentially you are
suggesting we have kind of already largely solved the problem
of pollution. I wish that were true. The Centers for Disease
Control has found that chemical exposures in this country are
everywhere, and we see the public health impacts of those
exposures.
According to the CDC, 90 percent of people tested have BPA
in their bodies. Nearly every person tested had toxic fire
retardants in their blood, and autism rates are rising at an
alarming pace. California, for example, where we have a lot of
pollution, autism rates have grown sevenfold in recent years.
Last year, the president's cancer panel released a report
focused on the link between environmental exposures and cancer.
As they noted in 2009, one-and-a-half million Americans were
diagnosed with cancer and 562,000 died from the disease. The
panel concluded that reform of the Toxic Substances Control Act
is--and they laid quotes around this--``critically needed.''
Mr. DeMuth, are these experts and scientists wrong to say
that we need to be doing more to address environmental
exposures to harmful chemicals?
Mr. DeMuth. I don't think they are wrong, and I don't think
you are wrong. And I am sorry that--I think you may have
misinterpreted what I said. I said that I thought that EPA
regulations were becoming less cost effective over time. I
didn't say there was no pollution left. I didn't say there was
nothing left to do.
To take your CDC case, one of the pollutants, toxic
pollutants people have been most concerned about has been
mercury. The CDC measures of mercury, for example, women 15 to
40, their conventional categories, the measured amounts have
been below their reference rates since about 2000 and----
Ms. Capps. I don't want to cut you off, but I want to move
on because I have other questions. But we will agree----
Mr. DeMuth. If you look at mercury regulations that EPA is
dealing with, the amount of additional mercury being subtracted
is extraordinarily small at high costs, and that compares----
Ms. Capps. Well, that is not the same with every kind of
chemical though, but I----
Mr. DeMuth. No, that is an example of what I had----
Ms. Capps. That is what you were driving at?
Mr. DeMuth. Yes.
Ms. Capps. OK, but you do agree that we need to do more, we
need to be doing more to address environmental exposures----
Mr. DeMuth. Of course.
Mrs. Capps [continuing]. To harmful chemicals. Do you agree
that we should reform TSKA, for example?
Mr. DeMuth. I think that would be highly worthwhile.
Ms. Capps. OK, so I can see that----
Mr. DeMuth. We might, you know, I am not--what I would want
to do with the Act, you know, I am not sure, and I don't know
what the various proposals are.
Ms. Capps. Let me turn then to Ms. Steinzor, and I
appreciate very much----
Mr. DeMuth. OK.
Mrs. Capps [continuing]. Your answering my question.
Mr. DeMuth. Thank you.
Ms. Capps. Ms. Steinzor, what do you think? Do you think we
need to be doing more to address environmental exposures to
harmful chemicals?
Ms. Steinzor. Yes, we need to be doing a lot more, and to
use your example of the Toxic Substances Control Act, we have--
many people don't realize this, but we don't test chemicals
before they are put on the market in this country and----
Ms. Capps. You wait and see what happens.
Ms. Steinzor. We wait and see what happens, and people are
basically human guinea pigs when that goes on. And a very big
need to revise TSKA in that way.
Ms. Capps. Well, some of my colleagues, we hear a lot from
them about the failures of the current regulatory system. They
suggest that the failure is a result of staffers at the
agencies running amok. I don't think that is the case, but
instead of pointing fingers at staffers in agencies, there
might be some other reasons. What are some of the examples that
you would give to why we are not continuing in the path the way
we should?
Ms. Steinzor. The agencies are drastically underfunded. EPA
hasn't had a raise in constant dollars in its funding since
1984, and you have passed a series of laws thousands of pages
long since that time that give them all sorts of new
responsibilities. And they just simply can't keep up with the
very important mandates that Congress has given them.
Ms. Capps. I appreciate that. You know, Mr. Chairman, I
wish we lived in a world where EPA had worked itself out of a
job. Someday perhaps we will be able to do that, but cancer
patients and parents of autistic children nationwide know that
we are not there yet. Scientists nationwide know that to
achieve the goal of getting rid of pollution, we are going to
need to strengthen the Environmental Protection Agency's
authority, not take away essential EPA tools. And with that, I
will yield back.
Mr. Shimkus. I thank the gentlelady, and I would like to
yield to the gentleman, Congressman Bass, for 5 minutes.
Mr. Bass. Thank you very much, Mr. Chairman, and I am most
apologetic for coming in late. If there are any questions that
have already been addressed, you just say so, and I can take a
look at it in the record. I have two questions. Dr. Lutter, you
make a good case in your testimony that analysis of regulatory
action should indicate that the action will have clear net
benefits and no, if you will, unnecessary, underlined, burdens.
And you argue that this discipline will promote public
understanding and accountability for legislators.
Will the result of that kind of policy be fewer regulations
or better regulations in your opinion, fewer new regulations?
Mr. Lutter. Thank you. I think it is--the result will be an
improvement in regulation, which would be measured both by the
quantity and the quality. I think of this really as analysis
has two functions to perform.
One is it has a function to let the regulators at the
regulatory agency and the White House know about the intended
effects so that they know when they are regulating what are the
best estimates available to them about the consequences of
their regulatory decision, surely for public health and safety,
also for cost. But especially in this constrained environment,
on unemployment. I think that is something that is fair for
them to be informed of.
But also with respect to public accountability. I think
then the question is is there information being given to
Congress and to the public about what the government knows
about the consequences of its regulatory decisions and provided
that the analysis is carefully done to meet credible standards.
And I think the public accountability function can be helped by
more credible analysis of regs.
Mr. Bass. All right, Dr. DeMuth, do you think that the
Administrative Procedures Act and regulatory reviews are being
used in assessing the true needs and appropriate burdens for
federal regulations and making appropriate adjustments when
required?
Mr. DeMuth. Congressman, I am afraid I don't have a very
helpful answer to that. The Administrative Procedure Act
basically requires the agencies to make decisions that comport
with the statutes and to follow certain procedures for notice
and comment. And then it has a fallback saying that decisions
can't be arbitrary or capricious. I think that is basically a
pretty good structure.
There is a lot of talk in Washington these days about the
quite surprising growth in the use of a technique called
interim final rules. A lot of agency rules in the past year, I
think because the agencies are swamped in part because Congress
gave them a lot of new business to do in some big statutes last
year, and they are resulting to interim final where they just
announce what they are going to do. There is no notice and
comment at all.
That was intended as sort of an emergency procedure where
here is our interim final, but now we are going to have a rule-
making proceeding. But in a lot of cases, it appears that the
interim final rules are really going to be the final final
rules. So that, I think, suggests some problems with the APA
that might be addressed.
Mr. Bass. Do you think that there was any significant
discretion on the part of the agencies in the amount of rule
making, understanding that the Congress may have burdened them
with new requirements, but could they have taken a different
route that might have resulted in a lighter regulatory burden?
Mr. DeMuth. Yes, sir. That is a pervasive effect, a
pervasive phenomenon. There are lots of statutes in the
environmental area and many others as well that give the
agencies very, very wide discretion in making hard tradeoffs
between various goods and the single purpose agency, whether it
is the EPA or the FDA or whatever, is always going to favor the
goods that you all in Congress instructed it to promote. That
is its job, but when you give it a lot of discretion, you can
expect the agency to push and sometimes go too far.
Mr. Bass. Thank you, Mr. Chairman.
Mr. Shimkus. I thank the gentleman. The chair now
recognizes the gentleman from Ohio, Mr. Latta, for 5 minutes.
Mr. Latta. Thank you, Mr. Chairman. Appreciate the time and
thanks to our panelists for being with us today. A lot of
questions and just kind of get a little background of where I
am coming from. I represent the largest manufacturing district
in the State of Ohio, 2\1/2\ years ago was the ninth largest in
Congress. And I am not going to tell you where we are today and
what has happened.
But, you know, no one out there in my district or across
Ohio or across this country doesn't want to say that we don't
want clean air or clean water. But, you know, if I could start
with Mr. DeMuth, going back to page three of your testimony,
which I found interesting. Again you are talking about your
percentages that are out there and where things have gone. And
you were talking about the '70s and the '80s. You said in both
cases, the single-purpose agency having achieved say a 90
percent reduction in risk or pollution will then wish to tackle
another 8 percent and then on.
And so, I would just like to start with that because I have
communities in my district that draw water from--we have a lot
of rivers. But EPA standards are getting to such a point that
the parent companies of these plants that are located in these
communities are saying if your cost goes up anymore, we are
going to pull you. And so I found your testimony interesting
because that is going on in our area right now.
And I just wandered if you could comment on what you have
seen also nationally.
Mr. DeMuth. What did you say I could comment on?
Mr. Latta. If you--nationally. If you could comment on
that, if you have seen other statistics nationally on that.
Mr. DeMuth. I wish I could be more helpful. I mean there
are a lot of--there is a lot of evidence such as the kind that
you cite. When I was working on these matters in the
government, I would see a lot of them. I think that there are
many EPA rules that are very sensible and well crafted, but the
general tendency is to push much too hard.
And it is a--one of the best things that has been written
on the subject is by Justice Breyer of the Supreme Court when
he was an academic. He wrote a book called ``Squaring the
Vicious Circle'' and he pointed out that single purpose expert
agencies, without a budget on compliance costs, will try to go
all the way to 100 percent. And as the costs get higher and
higher, you get more cases such as those in your district. And
they will essentially push until they get somebody pushing
back, which is what is happening today.
Mr. Latta. Thank you. Pardon me. Ms. Harned, Ms. Steinzor
said a little bit ago that regulations create jobs. Do you
agree with that?
Ms. Harned. That has not been the experience of our
members. They consistently cite regulations as one of the
reasons, over the last 26 months, in fact, one of the top three
reasons they are not hiring in this economy.
Mr. Latta. Let me ask you this. Have you heard of any of
your other NFIB members out there have situations like this?
Again when I am home, I go through maybe two to three to four
plants a day, and they are either very small or very large. But
I was in one place. It was kind of disconcerting because the
gentleman said that, after I heard him talking about some
situation here with the EPA, I said well what was it that the
EPA said when you talked to them? He said well, here is the
problem. He said he told him that if he had to implement all
these regulations, that they are going to put him out of
business. And the comment back to him from the regulator was we
don't care.
Ms. Harned. Right, and I feel like that is very much the
sense that we get from our members, from the regulators, and
also the concern that it is--they are always--the concern that
it is a gotcha mentality on enforcement and that you really
can't win. If they come in your place of business, there is so
much on the books, they are bound to find something. And that
really is not what helps public health and safety anyway. You
want be having more of a partnership approach.
This worked really well, truthfully, and the last probably
9 years with OSHA where they were really working with small
business owners to help them understand their obligations.
Compliance assistance was very much a focus at that agency from
2000 to 2008, and as a result, you saw injuries go down. I mean
we have proof to show that you can get positive benefits for
the public by having more of a cooperative approach with the
regulators instead of a gotcha mentality.
Mr. Latta. Thank you. And, Mr. Lutter, on page 7 of your
testimony, I found something also interesting because I tell
you with my district, I see it all the time. You cited a study
from a Michael Greenstone. He is now with MIT talking about the
question of comparing counties that were and were not in
attainment under the Clean Air Act. And I know of a situation
in my district where contiguous counties to a larger county
were all placed on a nonattainment because of the one county
being just--artificial line is how they drew it, and everybody
fell into it, even though the other counties were not in the
situation of being nonattainment.
But I know that you say on page eight then, of your
testimony, that these estimates probably overstate the national
loss of activity due to nonattainment designations. But I can
see that jobs are being moved because of this nonattainment.
And just wondered if you could comment again on that.
Mr. Lutter. Well, this is actually a very interesting study
that you cite precisely because it is one of the most careful,
comprehensive, authoritative. Its ``Journal of Political
Economy'' reviews of what in many ways is a cornerstone of the
Clean Air Act. And though that has been extensively studied,
one question is just, retrospectively, if you look at the
nonattainment versus the attainment counties, what does it do?
And the answer is you get these large adverse effects on
employment in the nonattainment counties.
The author, quite appropriately, says, well, there is this
risk of a certain amount of shifting of jobs to the attainment
counties, which could be interpreted as the result of two
things. One is the regulations are less onerous there, and the
other one, of course, is the air quality is better so maybe
people are moving for that reason as well.
What I think is interesting is the extent to which that
analysis may speak to current dilemmas because, as I pointed
out, one of the regulations that I looked at is also the Ozone
National Ambient Air Quality Standard, and that has been
repeatedly--I know it is not within the jurisdiction of this
committee, but it has been repeatedly revised. And it is
interesting how, as an illustration, as Chris DeMuth pointed,
it points to more and more increasingly stringent options being
considered and adopted by the regulatory agency even at the
detriment of cost and compliance costs.
Mr. Latta. Thank you, Mr. Chairman. Yield back.
Mr. Shimkus. The gentleman's time has expired. Chair
recognizes the gentleman from Mississippi, Mr. Harper, for 5
minutes.
Mr. Harper. Thank you, Mr. Chairman, and I appreciate each
of you being here and shedding some light on this. And I can
only tell you that I can't find a business or an industry in my
district that thinks that they are under-regulated. And so we
have to deal with those issues on a regular basis, and trying
to find that proper balance is something that I hope we can do
in this Congress.
And the question I would have for you, Mr. DeMuth, is are
you concerned about proposing the use of performance standards,
that you are actually encouraging the Federal Government to
dictate the means of production or investment in manufacturing
in this country?
Mr. DeMuth. A performance standard, in my understanding, is
a standard that says this is the amount of pollution we are
going to permit. And I generally think that that is superior to
a technology standard that says this is the way you are going
to manufacture tires or this is, you know. So in general, I
think that performance standards involve less dictation to
businesses about how they will meet pollution obligations and
have more flexibility.
There are cases where I think that the advantages of
performance standards outweigh this, but in many, many more
cases than we permit today, I would think that moving to
performance standards would be a step in the right direction.
Mr. Harper. When you are looking at the environment
standards or statutes that are in place, what comes to the top
of your list of what most needs to be reformed? If you had to
identify a couple that you think are definitely in need.
Mr. DeMuth. I would say in the jurisdiction of this
committee, the RIKRA and Superfund statutes, I think that they
have produced some good--RIKRA has definitely produced some
good things. Together, I think they have been woefully
inefficient. I think probably the worst environmental statute
is outside of your jurisdiction, and that is the National
Ambient Air Quality Standards portion of the Clean Air Act with
all of the State implementation plans.
There is an enormous amount of waste and inefficiency
simply in the administration of this program. And if you
compare it to automobile pollution standards, what Congress has
done directly in the acid rain and ozone standards, where we
had Congress itself making a decision, reflecting the consensus
of our representatives as to what the standard was going to be
and how fast we were going to pursue it, I think those have
been much more effective.
And if you go back to 1970, you can see why people were
interested in this State implementation plan approach, but it
has become a bureaucratic quagmire, and it is not doing
anything good for the economy or the environment. It could be
doing much more.
Mr. Harper. And I would love to have your take on how you
view the large federal deficits and amount of federal spending,
what impact you are seeing that have in your view on businesses
in this country.
Mr. DeMuth. I think that it is a powerful suppressant to
business investment because it creates the idea that our
national government itself will be at risk, that our borrowing
will be downgraded. These are things that a lot of
businesspeople take seriously, and it leaves them, like
consumers, wondering about our future and making them much less
likely to make large capital investments.
Mr. Harper. Thank you. Yield back.
Mr. Shimkus. Gentleman yields back his time. The chair
recognizes the gentleman from Louisiana, Mr. Cassidy, for 5
minutes.
Mr. Cassidy. Ms. Steinzor, am I pronouncing that correctly?
I came in late.
Ms. Steinzor. Yes.
Mr. Cassidy. You know a heck of a lot more than I do about
this, and I am actually going to explore the theoretical, which
is not under our jurisdiction. I am going to speak about Clean
Air Act, but I am just interested in picking your brain because
I kind of agree with these folks. So I learn, if you will, from
you whom I may agree or disagree.
Clearly the elephant in the room of our economy is whether
or not CO2 and greenhouse gases are going to be
regulated. An incredible concern in my district from Baton
Rouge, Louisiana. Lots of people with good jobs and good
benefits are employed in these industries.
As I read about the cap-and-trade bill, one thing that they
said was almost inevitable, there would be carbon leakage.
People would just move their carbon-intensive enterprises to
another country, losing the jobs, just shipping the jobs
overseas but still emitting the greenhouse gas.
Just accepting for the sake of argument that this is a
concern, you know, and then I think I recently saw a big steel
plant out of Spain who relocated, just shut down. When I asked
why, they said well, heck, they just sold their credits. It was
easier for them to move their carbon intensive or energy
intensive enterprise elsewhere than to put up with the
regulations. And I am thinking as I look at Spain's fiscal
mess, wow, maybe this contributed to the fiscal mess.
So in the theoretical, where a regulation or a regulatory
environment comes in and says thou shalt, and the easiest way
to comply is to say adios and to move down to some place where
they speak Spanish or Chinese or you name it, regulation
doesn't kill jobs in that regard? You follow what I am saying?
I mean it just seems like there is this exodus of jobs related
to this sort of regulation.
So again it is not under our jurisdiction, but I figured
that could be the basis of, if you will, a theoretical
conversation.
Ms. Steinzor. I would point to perhaps the most devastating
event in your State, which would be the Deepwater Horizon
spill.
Mr. Cassidy. Now, if I may, I think you point out correctly
that the problems there is not the absence of regulation but a
dysfunctional regulatory environment. And I would also point
out that ongoing, we have a job moratorium now because they
can't, although with resources, they can't pull their
regulatory environment together. So a lot of people who depend
upon these jobs for their mortgages can't get work.
I am sorry. That just touches a button in me because I know
so many families that are connected by this kind of heavy hand
of government destroying their ability to work and support
their families. I am sorry. Continue.
Ms. Steinzor. Well, I have a lot of compassion for those
people too, and I would suggest to you that the entity that
cost them the jobs was British Petroleum in cooperation with
Transocean and Halliburton.
Mr. Cassidy. Now, that is to imply though that the other
actors out there, Chevron, Exxon, Mobile, you name it, are
doing the same sort of bad behavior as BP. There is no evidence
for that. Indeed the National Academy of Engineers said that
the problems of the Macando Well were identifiable and fixable
and that the moratorium would not appreciably increase safety.
So we have thousands of people out of work because one bad
actor is--that is being ascribed to everybody else.
Ms. Steinzor. Well, I think the moratorium was lifted, but
I think what my point was, and the oil spill commission
certainly concluded this, that there are systemic problems
throughout the whole industry, but if we were to just look at
British Petroleum in isolation, it had profits of $19 and $17
billion.
Mr. Cassidy. I am not putting--now, believe me, we can
agree. I knew we would have common ground. We can put BP on the
dock, and we are going to both be in agreement. My concern
isn't about----
Ms. Steinzor. But that is----
Mr. Cassidy. Yes, BP as a bad actor, about the fact that
good actors are now being penalized because the regulatory
environment can't--and people are losing jobs. I mean job--they
got rigs moving to the coast of Africa with the jobs that go
with it. Because the regulatory will not get off bottom center
to allow good actors to again begin to work.
Now, to me that just seems a total kind of tyranny of the
regulator.
Ms. Steinzor. Well, again we have 55 inspectors in the Gulf
of Mexico to inspect 3,500 oil rigs and production platforms.
So I am not going to lay a bet that there won't be another
spill, but if we look at countries that don't have any
regulation, they do pay an incredible price. I mean there is an
article in the British medical journal ``The Lancet''----
Mr. Cassidy. I am not at all--excuse me. Just because I
have limited time. I am not saying don't regulate. I am just
saying the tyranny of the regulator right now who always shifts
it so that you can never quite get your permit. And the people
who depend upon those jobs don't have their jobs with the
salary and the benefits.
Ms. Steinzor. I guess what I am trying to say is that I
don't think those 55 inspectors are feeling particularly
tyrannical and that the big economic cost to Louisiana was
unregulated industry that really was careless, negligent, was
making outrageous profits and squandered the economic and
natural health of the whole Louisiana coast.
Mr. Cassidy. If I may say, I would say it was not--it was a
single actor, BP. If I may finish. It was a single actor called
BP, and again as according to the president's own handpicked
council of engineers, this was not a--the problems were fixable
and definite. And lastly, it is not the 55 frankly. It is
Brownwich and Salazar. So at some point, they become the
translator of someone who decides to otherwise squash an
industry. Thank you.
Mr. Shimkus. The gentleman's time has expired. We want to
thank the first panel for their testimony. You may get
questions in writing from members as a follow-up. We would ask
if you do, to respond, and we do appreciate your testimony.
Since I had to start this thing so quick so we could get done,
the way this hearing was set up was to talk to the economists
big picture. Second panel deals with case studies from
individuals. So that is how this was set up, and we appreciate
you coming.
And now we will ask for the second panel to be seated. We
would like to thank the second panel for joining us. Because I
have time, I will introduce you all at one time, and then we
will start from my right to left for the 5-minute testimonies.
Joining us on the second panel will be Leonard F. Hopkins,
fuel procurement and reliance manager from Southern Illinois
Power Cooperative, serves portions of my congressional
district, which I said in my opening statement. And we are
happy to have you here.
Mr. Joseph Baird is a partner in Baird Hanson Limited
Liability Partnership. Ms. Marcie Kinter, vice-president,
Government and Business Information, Specialty Graphic Imaging
Association. We have--not in order--Wendy K. Neu, executive
vice-president, Hugo Neu Corporation, and chairperson of We
Recycle. And last but not least the Honorable Vince Ryan,
Harris County attorney.
Welcome, and we will start with Mr. Hopkins with your 5-
minute testimony. Again your entire testimony will be submitted
for the record. Executive summary within the 5 minutes as close
as possible. And welcome.
STATEMENT OF LEONARD F. HOPKINS, FUEL PROCUREMENT AND RELIANCE
MANAGER, SOUTHERN ILLINOIS POWER COOPERATIVE; JOSEPH BAIRD,
PARTNER, BAIRD HANSON LLP; MARCIA Y. KINTER, VICE PRESIDENT,
GOVERNMENT & BUSINESS INFORMATION, SPECIALTY GRAPHIC IMAGING
ASSOCIATION; WENDY NEU, EXECUTIVE VICE PRESIDENT, HUGO NEU
CORPORATION; AND VINCE RYAN, COUNTY ATTORNEY, HARRIS COUNTY,
TEXAS
STATEMENT OF LEONARD F. HOPKINS
Mr. Hopkins. Thank you very much. Good afternoon. My name
is Leonard Hopkins, as stated, and I serve as the fuel and
compliance manager for Southern Illinois Power Cooperative. I
am honored to have the privilege to appear before you today.
Southern Illinois Power is generation and transmission
cooperative serving approximately 250,000 people and businesses
located in the southern-most counties of Illinois. We are a
not-for-profit corporation and are owned directly by our
members. SIPC operates one power generation station south of
Marion, Illinois which utilizes two coal-fired boilers to
generate power for its members.
When each of these boilers was built, they were equipped
with state-of-the-art pollution control equipment that would
allow them to burn Illinois bituminous coal and meet all
environmental regulations. We continue to comply with such
regulations today.
The coal combustion residue regulation being proposed by
EPA poses a serious threat, excuse me, to the economic survival
of the cooperative for which I work. My comments will focus on
the effects EPA's decision could have on Southern Illinois
Power. I believe these comments also reflect the sentiments of
many of our nation's electric cooperatives. Southern Illinois
Power Cooperative has been utilizing its coal combustion
byproducts in beneficial ways for over 20 years. Roof shingle
sand, abrasive products, mine reclamation, cement, and
fertilizer blends are all example of ways our coal combustion
residues are recycled into beneficial products for society.
Southern Illinois Power is concerned that placing the label
of hazardous on coal combustion residue will place the same
stigma on all coal combustion byproducts and effectively end
the possibility of recycling such materials. In the litigious
society of today, manufacturers and end users will flee from
any recycled product that is remotely related to hazardous
waste. Such an action would remove these recycled products from
the marketplace, and the recovery of replacement materials
would require increased emissions of carbon dioxide and other
pollutants.
Further, small virtually unavoidable spills of ash at power
plants could be considered illegal disposal of hazardous
material and could cause the plant to be in a constant state of
noncompliance. Shipments to hazardous waste landfills in the
country could increase tenfold as such hazardous waste
landfills might be completely filled in only 2 years. The
barriers to compliance associated with such an action could
conceivably drive coal-fired power generators like Southern
Illinois Power out of business.
Southern Illinois Power Cooperative is a small generation
and transmission system and defined as a small business by the
U.S. Small Business Administration. By regulation, cooperatives
are not allowed to maintain large capital reserves.
When the cost of running our business suddenly increases
like it would under the subtitle C option, we must go directly
to our lenders. There is no cash cushion to mitigate these
increases, and the cost of new loans would be shared by each
co-op member owner in the form of higher electricity rates.
SIPC conservatively estimates the subtitle C option would cost
its members a minimum of an additional $11 million per year,
which is about 25 percent of our current annual fuel budget,
and we serve an area of the State that has up to 15 percent
unemployment.
In cases where businesses like SIPC are affected, EPA is
obliged to pursue the least costly approach in order to
mitigate impacts on facilities that can least afford them.
Moreover, Congress made clear in enacting the Bevel Amendment,
under which this decision is being made, that EPA should avoid
the subtitle C option if at all possible.
Under the subtitle D option, EPA can promulgate federal
regulations specifically designed for CCR disposal units. These
regulations would be directly enforceable by the States and the
public under RIKRA citizen supervision, and violators would be
subject to significant civil penalties. Excuse me. EPA would
also retain its imminent and substantial endangerment authority
to take action against any CCR units that pose risk to human
health or the environment.
The D prime option would enable EPA to establish an
environmentally protected program without crippling CCR
beneficial use and imposing unnecessary costs on power plants,
threatening jobs and increasing electricity costs.
In conclusion, Southern Illinois Power agrees with many
others who are already on record as opposing the subtitle C
approach. This list includes a bipartisan group of 165 House
members and 45 U.S. senators in the 111th Congress, virtually
all the States, other federal agencies, municipal and local
governments, CCR marketers and beneficial users, unions, and
many other third parties who have maintained that regulating
CCRs under RIKRA's hazardous waste program is simply regulatory
overkill and would cripple the CCR beneficial use industry.
We respectfully suggest there is no reason to pursue this
approach when the subtitle D prime option offers the same
degree of protection without the attendant risks and burdens of
subtitle C.
Thank you again for the opportunity to express the views of
a small cooperative regarding a proposed regulation that will
have lasting effects on the lives and livelihoods of our
members. Thank you.
[The prepared statement of Mr. Hopkins follows:]
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Mr. Shimkus. Thank you, Mr. Hopkins, and I recognize Mr.
Baird for 5 minutes. Let us get your microphone set.
STATEMENT OF JOSEPH BAIRD
Mr. Baird. That will help. I am Joe Baird, a partner in
Baird Hanson Williams, a mineral resource firm in Boise, Idaho.
I am also president of the Northwest Mining Association. Today
I am representing the Idaho Cobalt Project of the Formation
Capital Corporation, U.S.
But the problem we now seek to address is not unique to
formation. It is a problem for any mining company operating or
hoping to operate on federal lands. And by showing up here
today, we were hoping to alert the Congress and the executive
branch to a developing duplication of--a true duplication of
environmental regulatory burdens that are already managed by
longstanding programs of the BLM and the Forest Service
governing exactly the same subject matter and covering the same
technical issues as an EPA regulatory initiative.
Now, just quickly on the Cobalt Project, it is a project
that is at the end of permitting, and it is--it will consist of
an underground mine and a floatation mill that uses simple
physical separation of ore from country rock, eliminating the
need to use aggressive chemicals for the milling.
The project footprint is only about 135 acres, and it is
located within a traditional cobalt mining district. And to the
extent possible, the project will backfill workings with
cemented paste tailings and development rock and use dry stack
tailings for surface storage to eliminate the need for a
tailings bond. Project will produce about 185 direct jobs, $8.2
million in annual payroll, $8.8 million in taxes annually for a
minimum of 10 years and will importantly be the only source of
super alloy cobalt in the U.S. Super alloy grade cobalt is a
critical component of all jet engines and many green
applications including hybrid cars, solar cells, and wind
turbines.
Currently all U.S. needs are met by importation primarily
from a single foreign company. Formation is very proud of the
fact that the Forest Service approval of the final environment
impact statement has not been challenged. We have written our
verbal understandings with the Shoshone Bannock Nations, the
Nez Perce Nation, the Idaho Conservation League, Boulder White
Clouds Council, Earth Works, and Western Mining Action Project.
We were and are grateful for those constructive discussions.
Yet even with all of these favorable attributes, the
project took 7 years to permit, and that is simply too long.
Today, we are not even going to try to deal with those
permitting issues, but we are trying to head off something
coming at us or coming at the industry as a whole.
For decades, mines on federal lands have been subject to
strict, site-specific reclamation financial assurance
requirements of the Forest Service or the BLM. The Cobalt
Project is on land managed by the Forest Service, but EPA is
developing its own financial assurance requirements for all
hard rock mines, including those already subject to financial
assurances of the BLM and the Forest Service.
If EPA proceeds as they are currently planning, it would
end up causing financial assurances to be bonded, to be cash
bonded actually, beyond what the Forest Service or the BLM
determines is actually needed to protect the environment. The
debt capital requirement would unnecessarily force termination
of many existing mines, jobs, public and private revenue
streams, and hamper creation of new mines supplying strategic
and base metals and materials necessary to sustain U.S.
manufacturing jobs.
Implicit in EPA's position is that Forest Service BLM
programs are managed so incompetently that as a class mines on
Forest Service or BLM lands constitute a degree and duration of
risk that EPA must--that causes EPA to must duplicate the long
established Forest Service and BLM programs.
Yet in 1999, the National Research Council of the National
Academy of Science as responding to Congress found that
existing Forest Service BLM framework to be ``generally
effective in protecting the environment'' and more importantly
even for this purpose that ``improvements in the implementation
of existing regulations prevent the greatest opportunity for
improving environmental protection,'' meaning that let us work
with the existing structure as opposed to creating whole new
programs out there.
So just to wrap up, the Idaho cobalt project and many other
mines existing in future are critical to the survival and the
revival of the U.S. manufacturing sector, which depends on
mining products as feed stock. Mining and manufacturing produce
some of the best paid jobs and best tax revenue streams in the
entire economy.
Permitting of hard rock mines in the U.S. is already a long
and costly process particularly when compared to our business
competitors in the world. So please don't force us to do the
same thing twice with two different departments and end up
having to pay reclamation bonds twice over. Thank you very much
for your time.
[The prepared statement of Mr. Baird follows:]
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Mr. Shimkus. Thank you, Mr. Baird. Now I would like to
recognize Ms. Kinter for 5 minutes.
STATEMENT OF MARCIA Y. KINTER
Ms. Kinter. Thank you. Good afternoon. My name is Marci
Kinter, and I am the vice president of Government and Business
Information for the Specialty Graphic Imaging Association, or
SGIA.
Thank you for the opportunity to address you this afternoon
regarding a timely industry concern. Specifically I am here
today to address a misguided interpretation of the byproducts
exemption included in the Toxic Substance Control Act's
inventory update law. This proposed interpretation offered by
the EPA Office of Chemical Safety and Pollution Prevention will
impose a significant reporting burden on the struggling U.S.
manufacturing sector, without providing additional health,
safety, or environment benefit beyond that already provided
under existing EPA and OSHA regulations.
It is vital that you remind EPA of congressional intent to
exempt most byproducts from the reporting requirements under
the TSKA inventory update rule or IUR. Your interest in this
matter is timely as the rule that I am here to discuss is
currently undergoing interagency review.
SGIA represents the interests of those facilities that
produce a wide array of products using either the screen
printing or digital imaging print platform. Products such as
all types of signage, the membrane switch on your microwave
oven, the defrost pattern on your car's rear window to--and we
are most known for our message on our T-shirts that we provide
to everyone when you are wearing them. That is the industry
sector that I represent.
Currently there are over 25,000 screen and digital printing
facilities operating in the U.S. And the screen and digital
print community is comprised of small businesses. The average
facility size ranges from 50 to 40 employees. As you know, the
cost of regulatory compliance poses a significantly higher
burden on the small business community.
The TSKA inventory update rule requires the reporting of
extensive data concerning the manufacturing, processing, and
use of chemical substances. I am not here today to discuss the
benefits or burdens of the entire TSKA inventory update rule.
Instead, I would like to focus on a specific aspect, EPA's
misinterpretation of the byproduct exemption under the proposed
amendments to the IUR.
In the proposed rule, EPA's misguided interpretation says
that waste byproducts generated during the manufacturing of
items, like these T-shirts, are new chemicals if the
manufacturer does the right thing by sending these waste
byproducts by recycling rather than disposing of them. To say
we were shocked to discover that the proposed TSKA IUR would
have an actual regulatory impact was surprising as we are
printers and not chemical manufacturers.
While we use chemicals, including inks and solvents, we
certainly do not consider ourselves to be chemical
manufacturers. At the end of the day, the final product that
moves out the door is the printed product, such as this T-
shirt, not a chemical product. Under EPA's interpretation,
sending our waste byproducts, such as spent solvents and inks
for recycling, would be considered by EPA to be the
manufacturing of a new chemical for commercial purposes,
subjecting us to registration reporting of our waste byproducts
under TSKA.
Our companies are already regulated by both OSHA for worker
exposures as well as U.S. EPA for proper handling and disposal.
EPA's misguided interpretation will not only affect those
facilities represented by SGIA. Manufacturers of all sorts will
now be burdened by reporting their waste byproducts as new
chemicals.
Every manufacturing sector that has opted to send their
waste byproducts out of recycling rather than disposal will be
saddled with this recording keeping and recording burden. There
is still time to take action, but we need your help. We believe
that the interpretation offered by the U.S. EPA regarding the
reporting of byproducts is not what Congress intended. The
waste byproducts offered by the U.S. product manufacturing
community are already regulated by U.S. EPA, and the proposal
would only increase the regulator burden with no discernable
environmental benefit.
Thank you again for the opportunity to appear before you
today, and I would be happy to answer any questions you might
have on this critical industry topic.
[The prepared statement of Ms. Kinter follows:]
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Mr. Shimkus. Thank you, Ms. Kinter, and before I move to
Ms. Neu, I was asked by the ranking member, and so without
objection, I would like to recognize him for a minute to do an
introduction of the two Democrat-sponsored witness.
Mr. Green. Thank you, Mr. Chairman. I will be brief. I
mainly want to thank both Ms. Neu and Mr. Ryan on short notice
for coming here to provide your expertise on the side of what
sometimes is good about recycling requirements. So but again,
thank you all on short notice. I was telling the chairman I
know how much it costs to fly from Houston to D.C. and
hopefully you got a better rate than I did. So on short notice
but welcome.
Mr. Shimkus. I too want to welcome you also, and now I
recognize Ms. Neu for 5 minutes.
STATEMENT OF WENDY NEU
Ms. Neu. Good afternoon. My name is Wendy Neu. I am an
owner and executive vice president of Hugo Neu Corporation. We
are a diversified U.S.-based company that has owned and managed
industrial and commercial business assets in excess of $500
million. As well, we have employed up to 1,100 workers at a
time in a business that has had export sales in excess of $2
billion in a single year.
As an executive of a mid-sized business with hundreds of
millions of dollars at stake in industrial and commercial
business assets, it is clear to me that from my industry,
regulations promulgated and enforced by the EPA have been and
remain essential to the growth, diversification and
sustainability of recycling operations, both for the company
and for its employees.
Let me provide you with an example of how strong EPA
regulations would allow Hugo Neu to more successfully compete
globally. It is a policy approach that would level the playing
field for American business in a way that creates U.S. jobs.
Also, it removes the disadvantages my business now suffers from
in competing with companies that don't meet environmental
standards and choose to export toxic e-waste to developing
countries.
It ought not to go unnoticed that the GAO itself has
suggested current regulations regarding e-waste are woefully
narrow in scope. One of the industrial operations we own
focuses on recycling of used and obsolete post-consumer and
commercial electronic equipment, which is commonly referred to
as e-waste. The name of our company which processes this e-
waste is We Recycle. It is based in Mount Vernon, New York.
Like communities throughout our Nation, Mount Vernon, with a
population of approximately 38,000 people is desperate for jobs
with living wage. I am proud to report that my company does pay
a living wage.
The employees who work at our company are focused on
repairing or otherwise recycling e-waste. The technology we
have developed allows us to recover high value clean streams of
commodities. These commodities are then sold to the best
industrial consumers domestically or are exported to industrial
consumers around the world.
But Hugo Neu Corporation could be doing more, recycling
more and hiring more workers if we did not have to compete
against the low-road actors in our industry. Unfortunately,
inadequate and insufficient regulation by the EPA are stifling
the growth of my environmentally responsible business and
cutting off a potential for job growth.
Jobs that could be developed at e-waste recycling
businesses around the country such as mine are now being
exported to China, southeast Asia, and countries in Africa,
precisely because the EPA does not effectively limit the export
of hazardous electronic waste by unscrupulous collectors in the
United States.
Every single country in the OECD, other than the United
States, limits the export of e-waste to these countries. They
wisely preserve jobs in their countries and limit the spread of
toxic waste. If other industrialized countries can do it to
create an advantage for their businesses and their workers,
then it seems to me that the U.S. Congress ought to do no less
for American workers and American business.
I cannot overstate the reality that to cut EPA funding will
hurt our business. It is the existence of current EPA
regulatory guidance, such as that which now discourages the
dumping of at least some e-waste in landfills that has helped
our business to grow.
EPA regulations add economic value to our investment
because we are a recognized, environmentally responsible
company adhering to high standards and known to be well
managed.
Our business customers have confidence in our ability to
recycle e-waste responsibly. Of course, as I said earlier, much
more can and should be done. Indeed, this point was made in a
September 17, 2008 Government Accountability Office Report
which said this ``EPA could amend RIKRA regulations to cover
exports of used electronics where risks exist to human health
or the environment when reclaimed for reuse or recycling,'' an
action that, if implemented, could bring U.S. export controls
more in line with those of other industrialized countries.
The current limited and, in my view, inadequate approach by
the EPA needs to be replaced with regulations that will level
the playing field for responsible recyclers like my company. A
failure by Congress to do so is a choice, from the perspective
of my business, to favor a policy that curbs jobs growth,
stifles business expansion, and tilts the playing field in a
way that advantages low-road recyclers and costs American jobs.
Thank you.
[The prepared statement of Ms. Neu follows:]
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Mr. Shimkus. Thank you. Now, I would like to recognize the
Honorable Mr. Ryan from--the attorney from the county in Texas,
and you are recognized for 5 minutes.
STATEMENT OF VINCE RYAN
Mr. Ryan. Thank you very much.
Mr. Shimkus. Inspect your microphone for me. There is a
button at the bottom of it.
Mr. Ryan. Now it is even greener. Well, that is very
appropriate, isn't it? Goes from a very light green to a green
green. And may I say again thank you very much for allowing me
to appear today and talk about a success story working with the
EPA.
I am Vince Ryan, the Harris County attorney. Harris County,
Texas is the third most populous county in the U.S. and home to
the Nation's largest petrochemical complex and the port of
Houston, which is ranked first in the U.S. in foreign, water-
borne tonnage. With a strong industrial base, Harris County has
fared better than some of the region of the U.S. in these
economic hard times. With property taxes declining, which is
the basic revenue source for local governments in Texas. Our
local government of Harris County also faces a significant
budgetary shortfall, yet we understand that providing healthy
communities in which our residents can work and strive towards
a better quality of life with cleaner air and water quality
remain a high priority.
Let me add, I have been county attorney since January 1 of
2009, but before that, I was a Houston City council member.
Before that, I was an assistant county attorney, actually the
first assistant in that office. So my experience spans almost
30 years dealing with these issues in Harris County and for
Harris County. I am here today in my capacity as the elected
county attorney, but also representing Harris County government
as spoken through the commissioner's court, which is the
governing body generally of Harris County government.
And we are sincerely grateful for the work the EPA and EPA
region six are doing to end the severe contamination of
Galveston Bay, San Sell Bay, and waterways leading to both by
the San Jacinto dioxin waste pits. And we urge the EPA, with
congressional support, to continue using appropriate and
forceful measures where necessary to achieve effective
solutions for this site and quite frankly similar sites
throughout not just Texas, but the United States. And we urge
this committee and Congress to support these efforts.
A little bit of history. Congressmember Green and
congressmember Ted Poe who I have known since he was an
assistant district attorney and when he was a district judge in
Harris County. Both asked the EPA to look into this matter and
take it under consideration. On March 19, 2008, the San Jacinto
River waste pits Superfund site was listed on the national
priorities list. The site with waste ponds and surface
impoundments built in the 1960s for the disposal of pulp and
paper mill waste is located in a marsh partially submerged on
the western bank of the San Jacinto River in Harris County,
Texas immediately north of Interstate Highway 10 and a bridge
over the San Jacinto River.
High dioxin concentrations have been documented at the
site. Sediment water and fish and crab tissue samples collected
in the surrounding areas have also been found to have highly
elevated levels of dioxin. According to the EPA and our own
verification, exposures to dioxin can cause a number of adverse
health effects in humans, including cancer, skin disorders,
severe reproductive and developmental problems, and damage to
the immune and hormonal systems.
May I add this bay area is much like the Chesapeake Bay
here that each and every member and their staffs are familiar
with. It is surrounded by populated areas, and the day that I
first visited after taking office this site, Terry O'Rourke, my
first assistant, who is sitting back of me, and I were with
some other people. They were working people on a day off with
their families fishing while the kids were swimming within feet
of the emanating dioxins from this site that had been used for
years as a dumping ground in public waters for these types of
waste within minutes, I might add, even though there were signs
saying don't swim, signs saying don't fish, people were doing
it there.
The EPA identified two responsible parties: International
Paper Company and McGuiness Industrial Maintenance Corporation,
a subsidiary of Waste Management. Now, this other side of the
story we have heard quite a bit today this afternoon. These are
two major corporate citizens with significant resources, and I
am sure every member and staff member here, I was--quite
frankly, when I first got involved with this specific issue, we
looked at the EPA and saw this snakelike structure of process
to get to clean up a site that for years had been known by the
public and these two corporate responsible parties of polluting
and poisoning people throughout that area.
I am a native Houstonian, grew up in the area. I have been
with people fishing all through this area. I never knew of it
until in 2009, I had taken office, and we were approached with
this.
Harris County government has also become very involved. We,
of course, in Texas have a very divided government at the
county level, much like the federal level with different
elected employment officials. But first we all have come
together to say we have got to help the EPA as they try to
solve this problem as quickly as possible.
With unique abilities, Harris County has really been active
in environmental issues since about 1953 and have accelerated
over the time. Again understanding that the industry, the
petrochemical industry is a vital part of our economic
centrality to really the economy of the United States and to a
great extent the world based upon the economies that we have.
Luckily, under even the Superfund's law and working with
the EPA, soon there was a critical component which required
work to begin. This again EPA working with these corporate
responsible parties and to be completed within a short
timeframe. Here the actual agreed order of consent was signed
on May 2010, and the design choice was outlined.
Mr. Shimkus. You are already a minute and a half over time.
So you can wrap it up.
Mr. Ryan. Let me just say things are moving, but they are
moving more slowly than we would like. The EPA has been very
aggressive on this, and we log them and urge your support on
areas, especially where clear definition of responsibility is
apparent.
[The prepared statement of Mr. Ryan follows:]
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Mr. Shimkus. I thank you. I now will recognize myself for 5
minutes for questions. I am going to go pretty quick because
there is a lot I want to put on the table. So again thank you
all for coming.
And first of all, I want to put on the record we are not
here debating to eliminate the EPA or stop the work when there
is toxicity and there is damage to human health. That obviously
is not the proposal. The whole purpose of the hearing is: can
we be smart and make sure the rules are important enough in
protecting human health while we are protecting jobs? And this
new Congress has a focus on job creation.
So with that, I don't have a piece of Illinois bituminous
coal. I do have one in my office. That didn't get brought down.
Mr. Hopkins, why is that important that you burn Illinois
bituminous coal?
Mr. Hopkins. Well, I am from an area----
Mr. Shimkus. Quickly now. Quickly.
Mr. Hopkins [continuing]. That mines Illinois coal, so we
serve our members by using their product to create electricity
for them.
Mr. Shimkus. The coal found in Illinois is what type of
coal?
Mr. Hopkins. It is Illinois bituminous coal.
Mr. Shimkus. So a co-op is different, and really co-ops
should be, my friends on the other side, these are agencies
that you ought to love because you are not-for-profit. Is that
correct?
Mr. Hopkins. That is correct.
Mr. Shimkus. Your board members are highly salaried. Is
that right?
Mr. Hopkins. Our board members are poorly paid.
Mr. Shimkus. Poorly paid, volunteers. Just smally
compensated. And the owners of the co-op are?
Mr. Hopkins. The owners of the cooperatives are their
members that they serve.
Mr. Shimkus. So every time we do something that may affect
a regulatory burden, as you said in your testimony, say there
is a new capital expansion, you cannot carry a large capital
fund for future expansions. You have to go where?
Mr. Hopkins. We have to go out and look for a loan for the
money, and we go to our rate payers, our member owners to pay
that bill for that loan.
Mr. Shimkus. OK, and I will just hold this up. The same
picture. They have seen that at least 6 years. These are
Illinois coal miners.
Mr. Hopkins. Illinois coal miners.
Mr. Shimkus. Mining bituminous coal, and because of many
companies didn't do--you did it out of complying with the needs
to create electricity for your members, but also protect coal
miners' jobs. But you did the capital expense to a scrubber,
correct?
Mr. Hopkins. That is correct. We installed a scrubber in
1978.
Mr. Shimkus. And the companies that did not do scrubbers,
guess what they did to these miners. They fired them. OK, that
is the effect of regulations, and we want to applaud you for
doing the right thing. Let me--I want to hold us this. You know
what this is, Mr. Hopkins? Can you see this?
Mr. Hopkins. Looks like a clean slate or a blank piece of
paper.
Mr. Shimkus. No, actually it is----
Mr. Hopkins. Wall board. I am sorry.
Mr. Shimkus. And what is in the middle?
Mr. Hopkins. That would be calcium sulfate or gypsum.
Mr. Shimkus. And where do we get gypsum from?
Mr. Hopkins. You need to get it naturally from the ground,
or you can get it from a FGD on a coal-fired power plant, which
we produce 95 percent pure gypsum.
Mr. Shimkus. Would this be part of the coal ash debate?
Mr. Hopkins. It is.
Mr. Shimkus. And this is found in everybody's home?
Mr. Hopkins. Yes, sir.
Mr. Shimkus. The particle boards for most people or the
wall boards for most people that have been accused of being
toxic came from where?
Mr. Hopkins. Most of them came from overseas.
Mr. Shimkus. Came from China. So in this debate, if the EPA
is successful in regulating coal ash as a toxic, will you be
able to sell gypsum to the person who produces the wall board?
Mr. Hopkins. We are concerned that the homeowner would not
be interested in buying any product that would remotely be
related to hazardous waste.
Mr. Shimkus. And so then the homebuilders would have to get
a different product? OK, my time is brief. I want to go to Mr.
Baird. Duplicate regulation, the administration is trying to
send signals that they want to be smart on regulatory so they
don't duplicate. Aren't you in a Catch-22 on duplication of
regulations?
Mr. Baird. Yes, sir.
Mr. Shimkus. The Forest Service and EPA?
Mr. Baird. Yes, sir.
Mr. Shimkus. How many jobs would this cobalt mine create?
Mr. Baird. It will create directly 185 jobs.
Mr. Shimkus. What is the employment rate of the surrounding
area?
Mr. Baird. Well, the two counties that would benefit have
just over 12 percent for Lemhi and just over 14 percent for
Shoshone.
Mr. Shimkus. What would be the tax benefit to the area,
just the local property tax?
Mr. Baird. Annual? Well, it is not just the property tax,
but the number for all taxes----
Mr. Shimkus. OK, the income tax and the employment.
Mr. Baird [continuing]. Is $8.8 million per year.
Mr. Shimkus. And what is cobalt used for?
Mr. Baird. It is used for many high technology purposes,
but the biggest single one is for jet engines.
Mr. Shimkus. Is it also used in what people would define as
green manufacturing?
Mr. Baird. It is critical to the Toyota Prius battery. It
is also critical for wind power.
Mr. Shimkus. Where do we get cobalt right now?
Mr. Baird. Right now, the bulk of the super alloy cobalt,
because there are two different types, comes from one plant in
Norway.
Mr. Shimkus. Overseas. We import the product. And I am
going to take the prerogative of the chair just to make the
point for Ms. Kinter because you are a printer.
Ms. Kinter. Yes.
Mr. Shimkus. You use ink.
Ms. Kinter. Yes.
Mr. Shimkus. If you take that ink to a recycler, you fall
under TASKA and have to file additional paperwork. Is that
correct?
Ms. Kinter. Correct, sir.
Mr. Shimkus. Which is pretty burdensome for a small
business.
Ms. Kinter. Yes, sir.
Mr. Shimkus. OK, I wish I had more time. I don't. I will
yield 5 minutes to the ranking member from Texas.
Mr. Green. Thank you, Mr. Chairman. I am going to try to
move quickly too. Mr. Hopkins, I have been a co-op member, and
it started under FDR to bring power to very rural areas, and
that is where so many in Texas get our power because, you know,
a for-profit company can't make any money out there because it
is so large, but I appreciate it.
It sounds like you give a great example. EPA could have
regulated, and I assume, in response to what happened in
Tennessee with the coal ash, this is EPA's solution. But they
could have gone under Title D instead of Title C.
Mr. Hopkins. That is correct, sir. The option for either is
in their regulations.
Mr. Green. Obviously you have a problem, and I would sit
down with your members of Congress, because I know that is what
I would do with my industry. And like I said, I believe in co-
ops. They are really a good program. I sold the property, so I
am not a member anymore. But it was really a good system where
you could get it.
Mr. Baird, again you have almost the same situation. The
Forest Service leased you the land, and they gave you your
insurance requirements, or the--and now EPA is adding to your
requirements.
Mr. Baird. That is essentially correct, actually by direct
duplication. They are going to be causing, or at least they are
looking at right now--this is not out yet, but they are looking
at putting together hard rock mine financial assurances that
will apply to all mines, even if you are already regulated and
bonded with the Forest Service or the BLM.
Mr. Green. Well, it sounds like this Congress and maybe
previous Congress should have said, OK, we have all these
federal agencies. You ought to just speak with one voice, and
you ought to get your act together before you put it on the
private sector, and that makes sense. That doesn't mean we
don't need regulations because I also understand what our
country, because we know rare earth and precious metals, we
need to mine them in our own country.
Mr. Baird. Yes, sir.
Mr. Green. We shouldn't--Norway is a great place to visit,
and I would rather import something from Norway than China, but
so much of the other rare earth we get from China, and we need
to develop that. So I think there is a solution to that one.
Ms. Minter--I have to admit--I am sorry, Kinter.
Ms. Kinter. That is OK.
Mr. Green. In an earlier life, I managed a printing
company. We printed a daily newspaper, and I agree that under
OSHA because our problem was is that we finished cleaning our
plates we would recycle the solvent. And it ought to be the
same regulation under EPA that you would do for OSHA. It would
seem like it would because that solvent though is a hazardous
chemical, and in my experience from literally the '60s through
1990, when I left there, we had problems with some of the
printers actually dumping it out in the street or in the--and
there was a way that you needed to track it, whether it be
through OSHA or through EPA.
Ms. Kinter. Correct, and I will say, sir, that the U.S.
EPA's hazardous waste regulations do a marvelous job of
requiring our companies to manifest our hazardous waste as it
goes out the door. So the waste is definitely being tracked,
but through our efforts when we are trying to encourage the
printers to use either low-level hazardous waste or even non-
hazardous products to reduce worker exposure. These are the
products that are going to get caught in the Catch-22 and look
toward duplicative reporting because these are the chemicals
that are being sent offsite for recycling or even disposed of
as liquid nonhazardous waste correctly that are now going to be
considered new chemicals and then subject to even more
reporting under----
Mr. Green. And that is where I agree with you. Once it is a
byproduct of your production.
Ms. Kinter. Correct.
Mr. Green. And once you send it to an approved recycler,
that should take care of it.
Ms. Kinter. Correct.
Mr. Green. And so I think there are things that we could
probably do on at least the three cases that have come up that
I think is reasonable, and that is why I am glad you are here,
because that is our job is to make the Federal Government work.
And granted it is a tough job every day, and it is 24/7, but I
agree with you.
Ms. Kinter. Thank you.
Mr. Green. Let me go to Ms. Neu. You have been--as you
know, I have been working on legislation now a number of years
to set federal regulations for electronic waste. How is your
business affected by the lack of a federal e-waste regulation?
Because I assume you work in a number of other states.
Ms. Neu. We actually work in New York and Connecticut at
the moment but are planning to expand hopefully into the middle
region of the country. The fact that much, probably close to 80
percent is what is estimated of e-waste is exported to
developing countries. So in that regard, we are competing with
brokers, dealers, who are literally just filling a container up
with electronic waste, no processing, no segregation of
materials, and shipping it overseas for recycling. So that is
one of our challenges.
Mr. Green. I only have a few seconds left.
Ms. Neu. Sure.
Mr. Green. And I think you made the case that we need some
type of national standard instead of state-by-state----
Ms. Neu. Exactly.
Mr. Green [continuing]. Both for industry but also to make
the recycling efficient.
Ms. Neu. Right.
Mr. Green. Mr. Ryan, I hate to call you Mr. Ryan. We have
known each other for so many years. Vince, one, I appreciate
what you have done, and I was frustrated, and I think Ted Poe
and I were both frustrated originally with EPA. But now we are
seeing some progress, and I don't think it would have happened
without an elected official and a local community providing a
lot of the information that you were that actually helped our
regional EPA office.
So there is a reason to have EPA, and sometimes we--it
actually will benefit because coming from a very industrial
area, every industry along the channel is getting blamed for
the high dioxin level in the water, but we couldn't find it
until we found out that, 40 or 50 years ago, that was dumped
there.
And we ended up--and so all my other plants were really
happy because they said we were getting a black eye because of
what happened before we had an EPA, and so there is good reason
to have reasonable environmental oversight because it can help
industry at the same time.
Mr. Ryan. But I would agree with you that now we have got
supposed first in the Nation a community awareness program
going on where we are educating both the industry and the
public about this particular site, but also the greater issues
involved. How many other of these sites are--they were known to
the industry, I might add. It was known it was a pollution site
but not to the extent that we discovered.
Mr. Shimkus. The gentleman's time is up. And as Ted Poe
would say, and that is just the way it is. Well, in this case,
Congressman Poe would want it changed. Ms. Neu, can you give
the Committee a credible universally accepted source? You keep
quoting the 80 percent of export? And if you could--not right
now, but if you would follow up with the committee so we can
figure out----
Ms. Neu. Absolutely.
Mr. Shimkus [continuing]. And do analysis on that. Now, I
would like to recognize Mr. Gardner for 5 minutes from
Colorado.
Mr. Gardner. Thank you, Mr. Chairman. My district in
Colorado represents an area that is energy rich, a lot of
agriculture opportunities, clean energy opportunities. We have
it all. We have wind power. We have oil and gas development. We
have solar companies doing great things.
It is interesting to see, over the past several years,
farmers on the Eastern Plains who used to have people that
would come by and collect their used oil and pay them to
collect their used oil so that they could recycle it. And now
the farmer themselves are paying to have somebody, the same
person, now the farmer is paying to have them collect it. So
they used to receive money for their spent oil. Now they are
paying to have somebody pick up their spent oil, and in a lot
of areas, it is because of increasing regulations.
But as you have heard from so many people on the committee,
regulations aren't a bad thing if they are done right and done
with a common sense point of view. And so hearing from many of
you talk today, a quick question for Ms. Kinter. Your
testimony, you talk a lot about--you talk about reporting
requirements in your testimony, and your members are already
required to file reports for chemicals they have onsite under
the Toxic Release Inventory. Are they--they are not--are they
opposed to the reporting requirements?
Ms. Kinter. No, they are not opposed to reporting
requirements. What we are opposed to is the duplication of the
reporting requirements because even under the TRI, they ask us
to report for recycling.
Mr. Gardner. So, the information that concerns byproducts
which is required to report--your members are required to
report, is that available under other reporting requirements
under federal law?
Ms. Kinter. It is already currently available.
Mr. Gardner. And are you concerned that the proposed IUR's
compliance timeline--are you concerned about that as it relates
to your members?
Ms. Kinter. Certainly. We are looking at a timeline where
the rule will be going final in May, and the first reporting
period goes into effect in June of this year for actual
information from last year. And if you have a group of
manufacturers that has no idea that they had to even start
collecting data from last year in order to report for this
year, you can see that 30 days to put this information in
place, to really start doing your inventory, and then even to
look at reporting it over their Internet option, which is the
only way that they are going to accept reports. EPA will only
accept reports.
Mr. Gardner. How much time are your members spending on
reporting of this kind?
Ms. Kinter. I would have to hazard a guess that, based on
all reporting, and I am lumping all the regulatory reporting
together because they really don't segregate by specific
statute, you are looking at anywhere from 8 hours a week for a
small business, and that is including OSHA, and that is TRI
reporting.
And I should emphasize it is not just the reporting, but it
is the record keeping because a lot of these records are
already kept, or--because they also have to do record keeping
for their air, for their water, for their waste, for their
recycling. It is all very, as we know, just media specific. And
so it is very difficult for them to understand why now I am
going to tell them that their recycling is no longer recycling.
It is really a new chemical, and under that, you have to
gather all this other information. And by the way, if it is a
new chemical, we may have to consider do you need to develop a
material safety data sheet to send it offsite because you are
considered now a chemical in commerce. And this is layer upon
layer of regulatory burden to a small business whose real goal
is to produce a T-shirt to put out into the market at the end
of the day.
Mr. Gardner. Ms. Neu, are you familiar with some of the e-
recycling programs the various States have?
Ms. Neu. The legislation that has been passed?
Mr. Gardner. Right.
Ms. Neu. Yes, somewhat.
Mr. Gardner. Is there a State in your opinion that is
leading the rest?
Ms. Neu. I think it is hard to say at this point in time
because the legislation is relatively new. We just passed a law
in New York which is not being implemented until June. So we
really haven't seen all the results come in, but I think there
is some very good legislation out there in many States that
will increase the volume of e-waste.
Mr. Gardner. Thank you. Mr. Chairman, I yield back my time.
Mr. Shimkus. Gentleman yields back his time. Chair now
recognizes the gentleman from North Carolina, Mr. Butterfield.
Mr. Butterfield. Thank you, Mr. Chairman. If the chair
would agree, I would like to yield to the gentleman from New
Jersey in the interest of his schedule.
Mr. Shimkus. Without objection, I would be happy to
recognize the former chairman of the House subcommittee, which
I served so honorably under as ranking member.
Mr. Pallone. And your friend.
Mr. Shimkus. And my friend.
Mr. Pallone. Well, thank you, and I want to thank my
colleague from North Carolina for giving me the time and remind
the chairman that he and I chaired the recycling caucus. Don't
you still chair?
Mr. Shimkus. I still do, yes.
Mr. Pallone. That is what I thought.
Mr. Shimkus. Do you?
Mr. Pallone. Yes, I am the Democrat. You didn't know that?
Mr. Shimkus. We love caucuses here.
Mr. Pallone. I am sorry. I just wanted to take an
opportunity--first of all, I wanted to say hello to Wendy Neu,
who is a long-time friend, and it was really great to have her
here. I actually--I was actually in my office listening to your
testimony while I was doing something else, so I did hear what
you had to say, Wendy, even though I wasn't here. And I
apologize.
But what I wanted to mention is that the purpose of this
hearing today obviously is to, and I appreciate the chairman
convening it because we are concentrating on the numerous
benefits to the economy that stem from some of our environment
regulation, and I think of the Superfund and the Brownfields
Program.
I often say, Mr. Chairman, that Brownfields was the only
legislation in the--and I don't say it in a bad way, but it was
the only legislation under George Bush, the only environmental
legislation or new authorized program that actually he was
supportive of. And I think--I know I was the Democratic
sponsor, and one of your predecessors was the Republican
sponsors of the bill. So it was very bipartisan.
And Wendy, Ms.-- I am going to call her Wendy, has been
involved over the years in the Brownfields Program as well as
what you testified about today. So I just wanted to ask you,
you know, about your company, which I am familiar with, has
redeveloped several Brownfield sites in New Jersey as well as
other States. Can you just tell us the impact of that on the
economy, jobs, what it meant in terms of reuse of those
properties? Because I am very proud of Brownfields, and I just
wanted you to comment on it if you would.
Ms. Neu. Yes, there have been many opportunities as a
result of the Brownfields legislation, and because we are a
company that generally exports commodities, we are often
located in industrial areas and waterfront areas, which are
very much Brownfield sites, particularly in New Jersey and New
York.
So it has been very helpful to us to have these sites to be
able to position ourselves in strategic locations, which
otherwise would not be available land for development. So yes,
that has been--but I also want to thank both of you for being
such good friends to the recycling community. You have been
working with us for a very long time, and we really appreciate
that.
Mr. Pallone. Well, thank you. You know, it was Paul
Gilmore.
Ms. Neu. Yes.
Mr. Pallone. It was Paul Gilmore and I that sponsored the
federal Brownfields going back to the early '90s, I think, and
President Bush had a signing ceremony in Philadelphia that he
invited us to, and I couldn't go. I remember specifically. I
wasn't even able to go.
But if I could just mention, again it has always been very
bipartisan. It has always been something that we have been able
to get support from. I think at the time when we started the
authorization, our former governor, Republican governor
Christie Whitman was the governor and then was the EPA
administrator at the time as well.
And I have just found in my district, Mr. Chairman, in
particular, but I know it is all over the State and the country
that what happens is, these old industrial sites are basically
redeveloped, and then they become new industries or new
commercial properties that not only are increased ratables and
tax dollars into the communities, but create a lot of jobs in
every case.
And a lot of what has been done has been assessment also,
and oftentimes they attract private developers that come in and
also help with the cleanup, so I just wanted to mention that as
one of the things that I know that you have been involved with
too.
You were talking about the Hugo Neu site, the scrap yard,
right, before?
Ms. Neu. Yes, recycling facility in Jersey City, yes.
Mr. Pallone. The recycling facility, all right. Thank you.
I yield back.
Mr. Shimkus. The gentleman yields back his time. The chair
now recognizes the gentleman from Pennsylvania, Mr. Pitts.
Mr. Pitts. Thank you, Mr. Chairman. Mr. Hopkins, in your
testimony, you state that you believe your comments also
reflect the sentiments of many electric cooperatives. If other
small business cooperatives face similar threats to closing
their doors, what would taking that many coal-fired generating
units offline at once mean for the reliability of electric
service throughout the Nation?
Mr. Hopkins. Well, certainly I am not an expert on the grid
as a whole across the Nation, but taking that many coal-fired
utilities off the grid could lead to shortages and certainly
would lead to increased price of electricity. In particular,
for those co-op coal-fired utilities, they would be forced to
buy power off the grid at these higher prices.
Mr. Pitts. Now, if you were able to stay in operation, your
estimates say it would cost members an additional $11 million
or 25 percent of your annual fuel budget. With such a
significant increase to your operating budget, how much of that
cost would be passed on to the users in the form of rate
increases?
Mr. Hopkins. All of that money would be passed along to our
rate payers and our members.
Mr. Pitts. Mr. Baird, you quoted the president's recent
executive order in which he said he is firmly committed to
eliminating excessive and unjustified burdens on small
businesses and to ensure that regulations are designed with
careful consideration of their effects.
In your view, is the regulation that you testified about
today an excessive and unjustified burden?
Mr. Baird. Yes, sir, but to be fair to EPA, it is a program
that is developing. It is not an actual regulation yet, but,
yes, it would certainly be excessive and burdensome.
Mr. Pitts. Do you think it was designed with careful
consideration as to its effects on you?
Mr. Baird. I do not, sir.
Mr. Pitts. Are you hopeful that this administration will
cancel it?
Mr. Baird. I am. I am actually very hopeful that once there
is light placed on this and people understand this is truly
just a duplication of something that is already addressed on
federal lands, by the BLM or the Forest Service, I think we
will get this taken care of but the earlier the better.
Mr. Pitts. Mr. Hopkins, what is your opinion on that? Are
you hopeful that----
Mr. Hopkins. That doesn't apply to our business.
Mr. Pitts. OK.
Mr. Hopkins. Federal lands.
Mr. Pitts. What about Ms. Kinter?
Ms. Kinter. I am sorry. Could you repeat the question
again?
Mr. Pitts. Yes, are you hopeful that the administration,
this administration, will cancel it?
Ms. Kinter. Yes, very hopeful, sir.
Mr. Pitts. OK, Ms. Kinter, you believe that this new
regulatory burden on your small main street printing business
will not increase environmental protection. Then why, in your
opinion, is EPA persisting with it?
Ms. Kinter. We really don't know. That is a very good
question. We were very surprised to learn that our recycling
products that our members are sending out the door for
legitimate recycling are now considered chemical feedstock for
new chemicals. And so we are not really quite sure what their
rationale is behind the adoption of this interpretation of
byproduct.
Mr. Pitts. Ms. Neu, you testified that cutting EPA funding
to do its work will hurt our businesses and our economy more
generally is the quote. Do you believe it is government's job
more broadly to create economic winners and losers?
Ms. Neu. Well, I think by virtue of any action, we are
creating winners and losers, and I fear that any significant
cutbacks in EPA will result in very little or no enforcement,
which is something that really is of great concern to us. That
is what levels the playing field. It is not necessarily new
rules, new regulations. It is sometimes just a matter of
enforcing existing rules and regulations across the board.
Mr. Pitts. Since your business model is based upon
investment, does out-of-control spending by the Federal
Government hurt your access to capital?
Ms. Neu. Well, I am not sure that I am in a position to
answer that question, but I must say that I think that access
to capital is a serious concern today for many businesses. And
so I would have to agree with you on that.
Mr. Pitts. Thank you, Mr. Chairman.
Mr. Shimkus. The gentleman's time has expired. The chair
now recognizes the gentleman from North Carolina, Mr.
Butterfield, for 5 minutes.
Mr. Butterfield. Thank you very much, Mr. Chairman, and
thank all of the witnesses for your testimony today. Mr.
Chairman, I have been looking forward to working with you. I
have joined this committee voluntarily because I think we need
a better conversation in this country about environmental
policy. As we talk about deficit reduction and other great
issues facing our country, we cannot lose sight on this
important issue.
To protect the environment, we must have rules. There is no
question about that. We must have not unreasonable rules, but
we must have what I call common sense rules. History has
clearly demonstrated that the American economy has thrived, has
actually thrived under common sense rules that protect our
environment.
Since the establishment of the Clean Air Act in 1970, GDP
has grown by more than 200 percent. If anything, the major
economic stumbles have been caused by unsustainable bubbles
created by unchecked bad players and a lack of clear and
enforceable boundaries, not by common sense rules that seek to
preserve our air, water, and quality of life.
And so I support the president's environmental goals, and I
support the Environmental Protection Agency. And I look forward
to a good robust debate as we continue this process.
Let me address in the time that I have remaining very
briefly to Mr. Baird. Mr. Baird, I am told by my staff that
according to EPA, the hard rock mining industry has
contaminated 3,400 miles of streams and 440,000 acres of land.
Does that seem to be a true statement?
Mr. Baird. I honestly have no idea what those numbers are
based on.
Mr. Butterfield. Well, the EPA, and I am depending on this
data, it says that 3,400 miles of streams and 440,000 acres of
land have been contaminated. Would you agree that contamination
from hard rock mining should be prevented, or if it----
Mr. Baird. Yes, sir.
Mr. Butterfield [continuing]. Occurs, it needs to be
cleaned up?
Mr. Baird. Yes, sir, absolutely, but most of what they are
talking about there are historic practices that have not been
used in many, many years.
Mr. Butterfield. I am also told that the Federal Government
has spent $2.5 billion over the last 10 years cleaning up
abandoned hard rock mines. Would you agree or disagree?
Mr. Baird. That is probably true. Again of historic
operations using practices that are no longer used anymore and
could not be done without permitting, without bonding, without
all of the issues.
Mr. Butterfield. Well, $2.5 billion is a lot of money. Do
you think it is appropriate for the taxpayers to be on the hook
to clean up contamination caused by mining?
Mr. Baird. No, sir.
Mr. Butterfield. So you think it should be the
responsibility of the effected industry to do the cleanup?
Mr. Baird. Of the PRP, of the people who caused it? Yes,
sir, I do.
Mr. Butterfield. All right, Mr. Chairman, I yield back.
Mr. Shimkus. Gentleman yields back. The chair now
recognizes the gentleman from New Hampshire, Mr. Bass, for 5
minutes.
Mr. Bass. Thank you, Mr. Chairman. I want to thank you and
the ranking member for calling this very interesting panel,
interesting in that we are not really being presented with
conflicting stories here. There are solutions available to all
three of the matters that are brought up by the three witnesses
who testified as to problems that they have with respect to
redundancy and regulation, overly burdensome regulation, and
unnecessary regulation, I guess we would say in the case of the
fly ash issue.
And I would hope that the subcommittee could move forward
with some sort of action with the EPA to correct all three of
these issues, and there may be a dozen or so more that exist
that we ought to be looking into.
I also appreciate Mr. Ryan's testimony about the critical
nature that EPA--critical role, rather, that EPA has played
since its inception in the early '70s to protect human lives,
the reduce the instances of environmentally caused illnesses,
and to create, in many instances, a reasonable balance between
unfettered industrial expansion and overregulation. But there
are instances where it hasn't worked out, and we have seen
three examples of that today.
So although I do not have any specific questions for any of
you, I believe that the testimony is pretty clear that we don't
need to double regulate hard rock mining on federal lands, that
fly ash from coal plants is an important recyclable commodity,
that there ought to be some reasonable review of recycling of
materials that have already been properly qualified as
certified, that we need some sort of a debate over a federal
standard for e-waste, and that an area where there is a heavy
industrial development, that there needs to be very careful
monitoring.
And I guess I would suggest that this has been informative
and interesting, but it needs to be followed up by some action
on the part of this subcommittee to correct these problems that
can be agreed to in a bipartisan manner, and we can get that
legislation moving. And I want to commend the chairman again
for having this subcommittee meeting because we should have
another one next week or two weeks from now, bring in three
more people that are having issues. And that is how we correct
these problems before they are uncorrectable.
So with that, I will yield back to the chair.
Mr. Shimkus. The gentleman yields back his time, and just
in response, I think the gentleman from New Hampshire raises a
great issue. Again the intent of today's hearing was to address
problems, and really if you are just having a hearing to
identify good and bad on both sides, and then ways that you can
address, in essence, duplication or maybe things that are
designed or stated as hazardous that aren't hazardous and
trying to get clarification.
I would encourage my colleagues on both sides of the aisle
as they go throughout their districts and meet with
constituencies to raise concerns, and we could very well
continue on this as we try to craft legislation to address
these concerns.
I would now like to recognize----
Mr. Green. If you would just yield.
Mr. Shimkus. I yield.
Mr. Green. And I agree. In fact, that is what we were
talking here. Maybe our committee on these three cases, and
frankly we do this kind of work in our offices all the time
with our constituents. But I think it would be much better if
it showed--sitting down with EPA and the various agencies,
saying the Federal Government ought to speak with one voice,
and don't give us two hoops to jump through when you can do
one, particularly when we need the power, we need the cobalt.
And obviously we believe in freedom of speech, we need printed
material.
But I think that can then--I am really--the chairman and I
will work with the members on both sides to see if we can do
some problem solving.
Mr. Shimkus. And now I would like to yield to Mr. Harper
from Mississippi for 5 minutes.
Mr. Harper. Thank you, Mr. Chairman, and I appreciate
everyone taking time to be here and shed some light on what has
become a very difficult issue for us, and that is the balance
of regulation and how to do this in a way that it still allows
business to do its job. And I can't think of an industry or
business in my district that believes that they are under-
regulated, whether that is on the State or federal level.
We have a clean coal plant that is being built in east
Mississippi in my district that will sequester the carbon and
use that for tertiary recovery in wells. And so, we have some
things that are going on that I think are very important to
look at it.
And, Mr. Hopkins, I understand that in another life you
were perhaps an environmental regulator at the State level. Is
that correct?
Mr. Hopkins. Yes, sir, that is correct. I was a field
engineer for the Illinois EPA for 6 years, and I was the
regional manager for the land division of Illinois, yes.
Mr. Harper. Well, with your expertise in that and what you
are doing now in your business, what is the solution to the
coal ash? What do you do? And you are not saying for it to be
unregulated. What is a common sense approach that will work?
Mr. Hopkins. Well, sir, I think the congressman from North
Carolina hit the nail on the head. What we need is reasonable
regulations. We don't need to go overboard and cause products
like coal ash to become a hazardous waste when they could be
recycled beneficially.
Mr. Harper. Ms. Kinter, I had a question. Why do you think
that the EPA is reaching the conclusion that you are a chemical
manufacturer subject to inventory update rule? How did they get
there?
Ms. Kinter. I think when they look at the fact that we
recycle chemicals, and then when you look at what happens with
the chemicals similar to what we have heard with the coal ash
where they are actually manufactured into new products, and
which is the beneficial reuse where you want to encourage your
industry to actually, rather than dispose of it as a hazardous
waste, to look for ways to reuse that product.
Then they look at it as we are gaining a commercial benefit
somehow from that, but in all my discussions with my members
about, well, do you gain a commercial benefit from doing this?
They say no, we have the pleasure of paying for them to take it
off our hands, and it is made into whatever the recycling
facility does with it. But we don't receive any monetary
remuneration for recycling our chemicals. We actually pay
someone else to take them offsite and to the recycling
facility.
Mr. Harper. So what should happen?
Ms. Kinter. I think what should happen basically is that
they, U.S. EPA, withdraws its interpretation that product
manufacturers who happen to recycle are subject to the TASKA
IUR update reporting. It is as simple as that. I believe the
information is captured by TRI as well as a lot of the other
state reporting mechanisms.
Mr. Harper. You know I would be curious to know your
members' experience with involved reporting requirements like
those under Europe's chemical registration and management law
known as Reach. Has the economic burden forced them to consider
closing or relocating? And what impact has that really had?
Ms. Kinter. That is an interesting question. I have started
to look into that, and I can provide you more information once
I have a fuller picture. But what we are seeing is that those
chemical manufacturers over in Europe that are supplying what
we could consider a specialty chemical are, in fact, having to
cease production because of the costs associated with the Reach
registration. It is a very interesting dilemma over there.
But I would be happy to provide you with more details as
they become clearer to me.
Mr. Harper. Thank you, Ms. Kinter. Question that I have on
the hard rock mines because we get a lot of rare materials that
are needed for many items from that. Is there a concern or risk
that we are not going to have access to those in the future?
Mr. Baird. That is absolutely true. I forget who on the
Committee brought up the rare earths is a critical matter
followed only then by super alloy cobalt in terms of making
sure that we have enough, and it is not in such limited supply
that the price ends up being cost prohibitive for use in all
the manufacturing products that we need.
Mr. Harper. Yield back.
Mr. Shimkus. The gentleman yields back his time. Before I
adjourn this hearing, I was struck by an article in ``The Wall
Street Journal'' today. I have been following this recycled
cooking oil from places like McDonald's that has been used.
People use it and they drive cars with it. And they clean it
up.
Well, the story at the end of the article, here is a guy
quoting ``if I go to Costco, I can buy a pallet of vegetable
oil'' note to Mr. Sobovaro, one of Colorado greaser on the
legal fight ``explain to me why that it is considered a
hazardous material if it is touches a chicken wing.''
So, that is really the issue. Here you have a guy who is
taking recycled oil to drive a vehicle, and it is just oil, it
is just cooking oil. And if bought the same amount of oil at
bulk, it is not a hazardous material, but if he takes it from a
restaurant, and if he is using it from a restaurant, then it is
not going into a landfill. I think that is part of the issue of
jobs, common sense, and bringing back some semblance of, again,
common sense, which maybe we will move on legislation based
upon a lot of the hearing here.
We appreciate your time and your effort, thank you for
that. And I will say the hearing is adjourned.
[Whereupon, at 4:26 p.m., the subcommittee was adjourned.]
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