[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
                 REGULATORY IMPEDIMENTS TO JOB CREATION

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 10, 2011

                               __________

                           Serial No. 112-16

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 10, 2011................................     1
Statement of:
    Gattuso, James, senior research fellow in regulatory policy, 
      the Heritage Foundation; Sidney Shapiro, Center for 
      Progressive Reform; Karen Kerrigan, president and CEO, 
      Small Business and Entrepreneurship Council; and Jerry 
      Ellig, senior research fellow, Mercatus Center, George 
      Mason University...........................................   161
        Ellig, Jerry.............................................   195
        Gattuso, James...........................................   161
        Kerrigan, Karen..........................................   184
        Shapiro, Sidney..........................................   169
    Timmons, Jay, CEO, National Association of Manufacturers; Tom 
      Nassif, president and CEO, Western Growers Association; 
      Harry Alford, CEO, Black Chamber of Commerce; Michael J. 
      Fredrich, president, MCM Composites, LLC; and Jack Buschur, 
      Buschur Electric...........................................     9
        Alford, Harry............................................    36
        Buschur, Jack............................................    50
        Fredrich, Michael J......................................    42
        Nassif, Tom..............................................    26
        Timmons, Jay.............................................     9
Letters, statements, etc., submitted for the record by:
    Alford, Harry, CEO, Black Chamber of Commerce, prepared 
      statement of...............................................    38
    Amash, Hon. Justin, a Representative in Congress from the 
      State of Michigan, prepared statement of...................   284
    Braley, Hon. Bruce L., a Representative in Congress from the 
      State of Iowa, prepared statement of.......................   290
    Burton, Hon. Dan, a Representative in Congress from the State 
      of Indiana, prepared statement of..........................   281
    Buschur, Jack, Buschur Electric, prepared statement of.......    52
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............   288
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland:
    Letter dated February 10, 2011...............................     4
        Letter from Mr. Stewart..................................    59
        Prepared statement of....................................     7
        Various prepared statements..............................   264
    Ellig, Jerry, senior research fellow, Mercatus Center, George 
      Mason University, prepared statement of....................   198
    Fredrich, Michael J., president, MCM Composites, LLC, 
      prepared statement of......................................    44
    Gattuso, James, senior research fellow in regulatory policy, 
      the Heritage Foundation, prepared statement of.............   163
    Issa, Hon. Darrell E., a Representative in Congress from the 
      State of California, information concerning regulations by 
      agency.....................................................    63
    Kerrigan, Karen, president and CEO, Small Business and 
      Entrepreneurship Council, prepared statement of............   186
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................   287
    Maloney, Hon. Carolyn B., a Representative in Congress from 
      the State of New York, letter dated February 8, 2011.......    94
    Nassif, Tom, president and CEO, Western Growers Association, 
      prepared statement of......................................    28
    Shapiro, Sidney, Center for Progressive Reform, prepared 
      statement of...............................................   171
    Spierer, Hon. Jackie, a Representative in Congress from the 
      State of California:
        Article dated December 8, 2010...........................   145
        February 2011 Ceres report...............................   112
    Timmons, Jay, CEO, National Association of Manufacturers, 
      prepared statement of......................................    12
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of Maryland, prepared statement of...................   285
    Turner, Hon. Michael R., a Representative in Congress from 
      the State of Ohio, prepared statement of...................   282


                 REGULATORY IMPEDIMENTS TO JOB CREATION

                              ----------                              


                      THURSDAY, FEBRUARY 10, 2011

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:50 a.m., in 
room 2167, Rayburn House Office Building, Hon. Darrell E. Issa 
(chairman of the committee) presiding.
    Present: Representatives Issa, Burton, Mica, Turner, 
McHenry, Jordan, Mack, Walberg, Lankford, Amash, Buerkle, 
Gosar, Labrador, Meehan, DesJarlais, Gowdy, Ross, Guinta, 
Farenthold, Kelly, Cummings, Towns, Maloney, Norton, Kucinich, 
Tierney, Clay, Lynch, Connolly, Quigley, Welch, Yarmuth, and 
Speier.
    Staff present: Ali Ahmad, deputy press secretary; Kurt 
Bardella, deputy communications director and spokesman; Brien 
A. Beattie, Tyler Grimm, Ryan M. Hambleton, and Kristin L. 
Nelson, professional staff members; Michael R. Bebeau and Gwen 
D. Luzansky, assistant clerks; Robert Borden, general counsel; 
Molly Boyl, parliamentarian; Lawrence J. Brady, staff director; 
Joseph A. Brazauskas, Hudson T. Hollister, Sery E. Kim, and 
Jessica L. Laux, counsels; Sharon Casey, senior assistant 
clerk; Katelyn E. Christ, research analyst; Benjamin Stroud 
Cole, policy advisor and investigative analyst; Drew Colliatie 
and Kate Dunbar, staff assistants; John Cuaderes, deputy staff 
director; Adam P. Fromm, director of Member liaison and floor 
operations; Linda Good, chief clerk; Peter Haller, senior 
counsel; Frederick Hill, director of communications; 
Christopher Hixon, deputy chief counsel, oversight; Seamus 
Kraft, director of digital strategy and press secretary; Justin 
LoFranco and Cheyenne Steel, press assistants; Mark D. Marin, 
senior professional staff member; Kristina M. Moore, senior 
counsel; Laura L. Rush, deputy chief clerk; Krista Boyd and 
Brian Quinn, minority counsels; Carla Hultberg, minority chief 
clerk; Lucinda Lessley, minority policy director; Dave Rapallo, 
minority staff director; Suzanne Sachsman Grooms, minority 
chief counsel; Mark Stephenson, minority senior policy advisor/
legislative director; Eddie Walker, minority technology 
director; and Alex Wolf, minority professional staff member.
    Chairman Issa. The committee will come to order.
    I look forward to the hearing today and the witnesses 
fostering a vigorous discussion. This hearing is intended to be 
a listening session. We are not just saying we want to hear 
from you, we are going to quickly get to you as quickly as 
possible. I want to be very brief in my opening remarks.
    This is the, as most people know, the week of the hundredth 
anniversary of Ronald Reagan's birth, so I think it is 
appropriate that we remind us that regulatory impediments to 
job creation are not a new phenomenon or a new challenge for 
America. To quote Ronald Reagan, ``now, so there will be no 
misunderstanding, It is not my intention to do away with 
government; it is, rather, to make it work, work with us, not 
over us; to stand by our side, not ride on our back. Government 
can, and must, provide opportunity, not smother it; foster 
productivity, not stifle it.''
    There is nothing more important than putting today's 
hearing in the perspective that what was said more than 30 
years ago by Ronald Reagan is true today, and we hope to find a 
way to have regulatory reform keep America safe, while at the 
same time giving Americans opportunities to get competitive 
jobs here and in export around the world.
    With that, I yield to the ranking member for his opening 
comments.
    Mr. Cummings. Thank you very much, Mr. Chairman, and thank 
you for this hearing. In my district there are portions of the 
district where unemployment is probably somewhere around 20, 25 
percent, so there is no one who is more concerned about the 
creation of jobs than I am. And, as you know, I fully support a 
comprehensive, and I emphasize comprehensive, review of 
regulations to make them effective and efficient.
    Like every Memberm of Congress, we were elected to create 
jobs. No doubt about it. But we also swore an oath to protect 
the health and safety and welfare of the American people. In my 
opinion, an effective regulatory review should include several 
basic elements: it should examine both costs and benefits, 
develop conclusions based on solid data, facts, statistics, and 
seek input from a wide variety of sources.
    I think President Obama took a good first step last month 
when he issued an executive order requiring agencies to examine 
the costs and benefits of regulations to the overall economy, 
to small businesses, and to American workers and families. 
Unfortunately, the approach adopted by the committee to date 
falls short of this standard, and I believe we need to take 
three key steps to be most effective and efficient.
    First, we need to expand the scope of our inquiry to 
include the benefits of regulation, as well as the costs. We 
cannot do a legitimate cost-benefit analysis by collecting 
information about the costs alone. We also need to expand the 
groups we are seeking input from beyond those who want the 
repeal of regulations.
    For example, no letters were sent to the Council of 
Institutional Investors, which supported financial protections 
in the Wall Street reform bill, or to the American Businesses 
for Clean Energy, which represents more than 60,000 small and 
large U.S. companies and believes reducing pollution is a 
``wise investment for long-term economic growth.''
    Second, we need to base our conclusions on facts instead of 
rhetoric. The country lost 8 million jobs during this recession 
primarily because the financial industry was inadequately 
regulated for decades, not because of over-regulation.
    Third, we need to separate genuine reform proposals from 
self-serving advocacy. Many corporations that submitted 
responses to the committee had skyrocketing profits over the 
past 2 years. For example, ConocoPhillips profits increased 
from $4.4 billion to $11.4 billion; Boeing profits increased 
from $1.3 billion to $3.3 billion; American Express profits 
increased from $2.1 billion to $4 billion; Chevron's profits 
increased from $10\1/2\ billion to $19 billion. That is just 
over the last 2 years. Yet, a lot of the responses we received 
had nothing to do with creating jobs.
    Companies proposed repealing the following, they wanted to 
repeal these, Mr. Chairman: requiring CEOs to disclose their 
compensation; they wanted to repeal this, give shareholders 
greater input on executive pay and golden parachutes; they 
wanted to repeal allowing the return of bonuses when corporate 
earnings are inflated.
    And this is one that you are interested in, Mr. Chairman. 
They wanted to repeal this, encouraging whistleblowers to 
report abuses to the SEC. And they wanted to do something else. 
They wanted to repeal requiring all companies to disclose 
payments to foreign governments.
    The bottom line is this: we all, and I emphasize that, we 
all support a balanced review of regulations. But this 
committee won't be effective if its work is incomplete, 
highlights only costs, ignores the benefits, and puts corporate 
interests above the health, safety, and welfare of the American 
people.
    To conclude, Mr. Chairman, I ask that we focus not just on 
regulations, but on broad bipartisan initiatives to promote 
economic growth. On January 26th the president of the U.S. 
Chamber of Commerce, Thomas Donahue, and the AFL-CIO head, 
Richard Trumka, issued a rare joint statement. They applauded 
President Obama's proposal in the State of the Union to create 
jobs by investing in our Nation's infrastructure.
    I ask unanimous consent to place into the record a letter I 
sent this morning requesting that our next hearing focus on 
this bipartisan proposal and asking that we invite the Chamber 
and the AFL-CIO and the Transportation Secretary LaHood to 
testify before this committee about creating jobs. By working 
together, we can help create jobs while protecting the health, 
safety, and welfare of all Americans.
    And with that, Mr. Chairman, I yield back.
    [The information referred to follows:]

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    Chairman Issa. And I ask unanimous consent. Any objections?
    [No response.]
    Chairman Issa. Then your statement will be placed in the 
record.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]

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    Chairman Issa. I thank the gentleman.
    Members will have 7 days to submit opening statements, 
including extraneous material, for the record.
    We will now recognize our first panel. Mr. Harry Alford is 
president and CEO of the National Black Chamber of Commerce, an 
association representing 95,000 black-owned businesses and 
dedicated to the economic empowerment of the African-American 
communities.
    Mr. Michael Fredrich is president of MCM Composites, LLC, 
limited liability corporation, I trust, in your State, a not to 
large conglomerate, if you will, doing custom thermal set 
molding shop in Manitowoc, WI that employs 60 workers and has 
been in business for 30 years.
    Mr. Jack Buschur is president of Buschur Electric, a full-
service electrical contractor located in Minster, and I think 
that is Mr. Jordan's, Ohio that serves residential, commercial, 
industrial, institutional, and farm markets.
    Mr. Jay Timmons is president and CEO of the National 
Association of Manufacturers, which represents manufacturers in 
every industrial sector in all 50 States.
    And Ambassador Tom Nassif is president and CEO of the 
Western Growers Association, an agricultural trade association 
with 3,000 members who grow, pack, and ship 90 percent of the 
fresh vegetables and 70 percent of the fresh fruit in Arizona 
and California.
    I thank the gentlemen and I ask that you all rise. As is 
the rule of this committee, all witnesses are required to be 
sworn in. Would you please raise your right hands?
    [Witnesses sworn.]
    Chairman Issa. Let the record show they all answered in the 
affirmative. Please be seated.
    I will eventually get to where I can do that by heart.
    We want to allow time for all the Members here today to ask 
questions after they have listened to you, so I would ask that 
all witnesses try to limit, regardless of the length of their 
opening statement in writing, to 5 minutes. Your entire 
statement will be placed in the record when, as my predecessor, 
Mr. Towns, would say, in America we all know that green means 
go, yellow means caution, and red means stop. So please observe 
that.
    Mr. Timmons.

    STATEMENTS OF JAY TIMMONS, CEO, NATIONAL ASSOCIATION OF 
 MANUFACTURERS; TOM NASSIF, PRESIDENT AND CEO, WESTERN GROWERS 
  ASSOCIATION; HARRY ALFORD, CEO, BLACK CHAMBER OF COMMERCE; 
 MICHAEL J. FREDRICH, PRESIDENT, MCM COMPOSITES, LLC; AND JACK 
                   BUSCHUR, BUSCHUR ELECTRIC

                    STATEMENT OF JAY TIMMONS

    Mr. Timmons. Chairman Issa, Ranking Member Cummings, and 
members of the committee, the National Association of 
Manufacturers is the largest manufacturing trade association in 
the United States and we represent 11,000 companies, 90 percent 
of which are small and medium sized enterprises, and we have 12 
million Americans that we represent who are employed in 
manufacturing.
    Manufacturing means jobs. This year, in January, 
manufacturing added 49,000 jobs, the most in a single month 
since August 1998. In 2010, the United States finished with a 
net gain of 136,00 manufacturing jobs. These are positive 
developments, indeed, but last year's employment gains still 
represented a return of just 6.2 percent of the 2.2 million 
manufacturing jobs that were lost during the past recession. 
And even for our member companies who are investing and 
expanding, regulatory uncertainty and costs discourage the 
addition of new employees.
    We must always remember that manufacturers in the United 
States face fierce competition from countries around the world. 
Every million dollars or, what is more likely, billion dollars 
of new regulatory costs that the Federal Government imposes on 
a manufacturer in California or in Maryland has a negative 
impact on their competitiveness.
    My written testimony goes into some detail, so please allow 
me to just highlight a few examples. For example, OSHA, last 
year, proposed a new plan to regulate workplace noise. Even if 
earplugs effectively protected employees from hearing loss, 
OSHA wanted companies to install new equipment and structures. 
In short, rather than spending thousands of dollars annually on 
hearing protection that actually worked, OSHA would have forced 
companies to spend millions of dollars to achieve the same 
results. One of our larger member companies estimated that 
their costs would have reached $1 billion nationally, a billion 
dollars that could be more productively used for research and 
development, capital investment, or jobs.
    Now, thankfully, OSHA has withdrawn that particular plan in 
response to strong opposition from employers, but in another 
example, more than any other agency, the Environmental 
Protection Agency alarms manufacturers. Just 2 years after the 
EPA imposed extremely stringent limits on ground level ozone 
emissions, the agency proposed even more drastic rules. 
According to a recent study by the Manufacturers Alliance, 
making the current standard more stringent would cost 7.3 
million jobs by 2020 and add $1 trillion in new regulatory 
burdens between 2020 and 2030. Many cities and counties in our 
Nation would instantaneously be in violation of the 
requirements of the Clean Air Act, choking off economic growth 
in countless communities nationwide.
    Another example: the EPA has targeted critical equipment 
for manufacturers, the industrial boiler, for new emission 
limits that are harsh, inflexible, and potentially 
unattainable. According to a study by the Council of Industrial 
Boiler Owners, for every $1 billion spent on complying with 
these so-called Boiler MACT rules, 16,000 jobs would be put at 
risk and the U.S. gross domestic product could fall by $1.2 
billion. Manufacturers of chemical, pulp, and paper products 
would be especially hit hard.
    And finally, of course, there is the extraordinary proposal 
by the EPA to regulate greenhouse gas emissions. The EPA wants 
to ease into this new regime by limiting CO50 
emissions from refineries and powerplants.
    Mr. Chairman, some people believe that massively higher 
energy costs are a good thing, but manufacturers, who use a 
third of the electricity generated in this country, tend to 
believe otherwise. We understand that higher costs are passed 
on to consumers and higher costs makes the United States a less 
attractive place to do business. Jobs disappear; communities 
suffer. Our analysis of the Waxman-Markey cap-and-trade bill 
from the last Congress projected a half trillion dollar decline 
in GDP through 2030 and the loss of 2 million jobs.
    Manufacturers welcome President Obama's recent Executive 
order calling for a review of agency regulations for their 
costs and effectiveness. We appreciate the administration's 
recognition of the impact of regulations on jobs, the economy, 
and small business. The next step must be to act on this 
recognition, to withdraw or modify burdensome regulations.
    There is not one of us sitting here today who doesn't want 
to expand private sector employment to create good jobs for 
every worker who wants one. Any differences that we may have 
had is really in approach and in perspective. Today I give you 
the perspective of manufacturers, the men and women responsible 
for 12 million jobs in the United States, the employers who 
want to do more but who operate in the real world of unceasing 
global competition. For America and its manufacturers to 
succeed in this world, these regulatory burdens must be 
replaced by realism and their costs replaced by common sense.
    I thank you very much, Mr. Chairman and members of the 
committee.
    [The prepared statement of Mr. Timmons follows:]

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    Chairman Issa. I thank the gentleman.
    Before I introduce or ask Mr. Nassif to speak, I think full 
disclosure is in order. Ambassador Nassif is a deacon in my 
church. He was the Ambassador to Morocco and he is in fact a 
personal friend, so I hope that won't diminish the 70 percent 
of fresh fruits and vegetables that he represents and the 
thousands of growers.
    Ambassador.

                    STATEMENT OF TOM NASSIF

    Mr. Nassif. I hope that introduction didn't set me up for 
failure.
    Chairman Issa. You can turn the mic on after you finish 
ripping me back, please, Ambassador. [Laughter.]
    Mr. Nassif. Good morning, Mr. Chairman, Ranking Member 
Cummings, and members of the committee. Thank you for the 
opportunity to appear before you today. In fact, our members 
produce about one-half of all the fresh produce that is grown 
annually in the United States.
    Today, American agricultural production represents a $300 
billion market, but we find ourselves in a regulatory 
environment that is stifling job creation and economic 
opportunity. Regulations are promulgated without benefit of the 
best available science and experience. Significant stakeholder 
engagement is lacking.
    As a result, current requirements are often inflexible and 
impractical. These include the Clean Water Act requirements of 
redundant pesticide permits, water quality standards which 
cannot be met, clean air restrictions on particulate matter 
like dust, Endangered Species Act requirements, and actions 
taken by the National Labor Relations Board and the Department 
of Labor, which has introduced uncertainty into our business 
models, constraining our ability to invest in our businesses, 
our communities, and to increasing the size of our work force.
    And when one out of every nine foreign capital dollars 
invested goes toward meeting regulatory requirements, which in 
some cases cannot be met, the picture of the regulatory burden 
becomes clear. This morning I would like to highlight just two 
examples. The first involves implementation of the Endangered 
Species Act.
    California water needs are largely met by State and Federal 
pumps operating in the San Sacramento-San Joaquin Delta. 
Litigation under the Endangered Species Act alleged that pumps 
harmed federally protected fish species, including salmon and a 
1-inch fish known as the Delta Smelt. In 2008, the Fish and 
Wildlife Service, the National Marine Fisheries Service, were 
compelled to develop new biological opinions governing the 
pumps.
    As a result, water delivered to farms and cities were 
severely restricted during one of California's most severe 
droughts. The results were devastating. In 2009, only 10 
percent of the Federal water allocations were delivered. Nearly 
500,000 acres of farmland were fallowed. Economic harm is 
estimated between $340 and $370 million. The number of jobs 
lost runs into the thousands and several San Joaquin Valley 
farm communities suffered unemployment of 40 percent.
    Water users turned to the Federal Court. In May 2010, the 
court repeatedly criticized the National Marine Fisheries 
Service's salmon biological opinion as unsupported by 
reasonable explanation, simply indefensible, inexplicable, and 
not rational nor scientifically justified. In a separate ruling 
on the Delta Smelt biological opinion, the court held that the 
Fish and Wildlife Service did not comply with the National 
Environmental Policy Act, which required the Service to 
consider the impact of its regulations on the human 
environment, and that the specific restrictions on pumping 
operations were not adequately justified by generally 
recognized scientific principles.
    Agencies implementing the ESA must consider the impact of 
their decisions not only on species, but also upon the economy, 
employment, and communities. We ask this committee and others 
to increase their oversight of ESA implementation and to focus 
especially on the quality of the scientific data used to 
justify regulatory decisions and the degree to which the 
agencies meaningfully engage those economically impacted.
    Next I would like to raise concerns about the H-2A guest 
worker program. This program represents the only avenue for 
legally employing foreign agricultural workers in the United 
States. The process is unnecessarily complicated and labor 
intensive. Approvals are often issued late, notwithstanding 
statutory deadlines. The delay is compounded by Department of 
Labor's continuous demands for wording modifications, which 
often inconsistently apply or misapply the regulations. 
Compounded by visa processing delays, by DHS, and visa 
appointment delays by the U.S. consulates, lengthy delays in 
the arrival of guest workers are commonplace and costly. Even 
brief delays can be disastrous to producers of perishable 
agricultural commodities.
    We are especially concerned about the tremendous increase 
in minor technical violations, people work violations being 
imposed by the Department of Labor. The program is so 
complicated many well-intended employers unintentionally commit 
technical violations. Nevertheless, the Department of Labor 
imposes maximum penalties without regard to the seriousness of 
the infraction, the size of the employer, or the employer's 
good faith and mitigation efforts. Such penalties, some 
approaching $500,000, are beyond most farmers' ability to pay 
and could force them out of business.
    While employers who violate the law should be punished, the 
punishment should be reasonable and proportionate. The fines 
imposed by the Department of Labor are unnecessarily punitive 
and have the effect of discouraging farmers from using the 
program. In fact, today H-2A makes up only 2 to 4 percent of 
the agricultural work force. We ask this committee to examine 
the Department of Labor's administration of this program and 
its effect on the agricultural industry, culminating in a 
departmental report to this committee identifying the H-2A 
program problems and solutions.
    We acknowledge the need and value of regulations. We merely 
ask that they be fair, reasonable, and in accordance with the 
facts and sound science.
    Thank you very much.
    [The prepared statement of Mr. Nassif follows:]

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    Chairman Issa. I thank the gentleman.
    Mr. Alford.

                   STATEMENT OF HARRY ALFORD

    Mr. Alford. Thank you, Mr. Chairman, Ranking Member 
Cummings. You have my written testimony. I am going to give 
examples, also, of some problems.
    BP is the outlier of the oil industry. The oil moratorium 
in the Gulf hurts the entire U.S. oil industry. But BP is the 
only violator of these OSHA, EPA, and Mineral and Mines 
Management violations. If you take all of the violations, the 
fines, the penalties of the U.S. oil industry combined, it 
would be a fraction of what BP does in violations. Deaths, 
injuries, fines by the many millions of dollars are attributed 
to BP.
    As a result of the oil moratorium, 20,000 oil jobs are 
gone; 150,000 related jobs with small businesses and supply 
chain oil industry are gone. BP is the outlier, not the U.S. 
oil industry. We need to remove this oil embargo. We can put an 
embargo on BP; they are the ones who are doing it.
    Second, net neutrality. The Internet has been robust and 
has been successful. It is probably the greatest invention 
since the telephone. But now the FCC wants to regulate it. It 
wants to put its claws into the Internet and seize the billions 
of dollars that the telecoms invest in the Internet and to 
spread its borders and increase more jobs. The FCC will stop 
the Internet in its tracks from any further growth if this net 
neutrality is implemented.
    The gainful employment rule by the Department of Education, 
which wants to take away financial aid from for-profit colleges 
and schools. Forty percent of the students of these for-profit 
schools are minorities. How can small businesses have an 
educated work force if they eliminate 40 percent of the jobs of 
the educations, degrees that would go to these future 
employees? The gainful employment rule is there simply because 
for-profit schools are non-union, and they want to strike a 
blow against non-union schools, but also hurt the students.
    Four, project labor agreements. These are union-only 
construction jobs. President Bush put a ban on project labor 
agreements because unions discriminate, discriminated in a Jim 
Crow fashion. President Obama has reinstated project labor 
agreements. So when you put a project labor agreement on a 
project, you are saying whites only; no Hispanics, no blacks, 
no females. The Department of Labor has these statistics, but 
they won't release them to the public, and I ask this committee 
to subpoena the Bureau of Labor Statistics, the racial 
demographics of construction unions. You get beyond general 
labor and cement, and you will see Jim Crow discrimination. The 
Congressional Black Caucus should be very interested in this.
    But when you get to electrical workers, carpenters, 
roofers, iron workers, it is dismal. So if you have a project 
labor agreement, you are saying no blacks and Hispanics 
allowed. The Washington baseball stadium is a beautiful example 
of that, if you study that. But if you get those statistics 
from the Bureau of Labor Statistics, it will show.
    Department of Defense. Major contractors play a game and 
the Department of Defense is in cahoots with it. One, a floor 
corporation has a contract, a log cap 4 contract, which is for 
Iraq, Afghanistan; multi-billion dollar contract. Haliburton 
had it before them. They will list and negotiate with black and 
Hispanic contractors to work on these projects. They will do 
the scope of work, list it there, and then the SBA will look at 
that report and say this is fine. Disabled veterans, minority 
businesses, women businesses, fine. The only problem is when 
floor gets the contract, they will never, never utilize those 
people. It's a game and the SBA has no juice to make them. So 
we have all this false hope going on.
    Lockheed is another example. Then I will end. Lockheed had 
one of my members who did the scope of work, did all the 
agreements, went and got the contract. They actually moved 
their offices and changed their phone numbers from them. He 
couldn't even find them afterwards. He complained to the 
Department of Defense, complained to the SBA; they did nothing.
    So if you could go back and just get that floor and examine 
that and do an audit on that, I would appreciate it. Thank you, 
sir.
    [The prepared statement of Mr. Alford follows:]

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    Chairman Issa. I thank the gentleman.
    Mr. Fredrich.

                STATEMENT OF MICHAEL J. FREDRICH

    Mr. Fredrich. Can you hear me?
    Chairman Issa. Yes, we hear you. All these mics have one 
thing in common, and that is in order to not pick up background 
noise, you have to get close; and that is how they were 
designed. So please give us a little indulgence.
    Mr. Fredrich. OK. Our company was started in 1983. I bought 
it in 2001. We actually closed 1 month after 9/11. When I 
bought it, I took all the cash I had, which was $600,000, and I 
borrowed $5 million. I personally guaranteed it and I 
collateralized that with my home. So I crossed the financial 
rubicon. There is no going back for me; this is either going to 
work or not work. If it doesn't work, I start over at the age 
of 59.
    From a macro point of view, most of our customers, and our 
customers include big industrial companies like Rockwell, 
Eaton, Boeing, DRS, which is a defense contractor. All of these 
companies have global sourcing departments and their mission is 
to buy components at the cheapest price they can. And most of 
these large companies don't make these components, they buy 
them. Boeing, for example, they don't make their engines. They 
build the aircraft, but all the components that go in there 
somebody else makes, and it is small companies like ours that 
make those components.
    So what happens when we become not competitive? I will give 
you a good example: Kohler Engines. We used to sell 1.2 million 
head covers to Kohler Engines for their engines, 1.2 million. 
We did that for years and we sold them for $1.43, and today we 
make none. They still use them, but those are all sourced in 
Mexico for $1.18, which doesn't sound like much, you know, a 
few pennies, but that is the kind of margin that companies like 
ours work on. There isn't a big margin, and the whole point 
behind that is regulation. If you believe the numbers are not--
you know, the SBA says it is $1\1/2\ trillion, The Heritage 
Foundation says $1 trillion cost of regulation. Somebody has to 
pay for that. Somebody. And that trickles down or trickles up 
from whomever we use for services, whomever we buy raw material 
from.
    So the point on a macro basis is that burden is there, and 
we can't compete. We are competing, but it is difficult to 
compete if we increase that burden. We ought to focus on 
lowering it.
    I have 2 minutes. I want to make three points on three 
different areas.
    Healthcare. The 1099s. There is a requirement in the 
healthcare, and this is a common topic. We sent out this year, 
we just did it, 11 1099s. We have 375 vendors. It took us 3 
hours to send out 11 1099s, and if you extrapolate that to 375, 
it is 2 weeks worth of work. That is about a $2,500 cost for us 
just to send out 1099s, which produces no value in our company. 
And it may not seem like a lot to you, but $2,500 is meaningful 
to me, and it is meaningful to everybody that works at our 
place. That is one issue.
    The Medicare part of the healthcare plan has a 3 percent 
tax on individuals that make over $200,000. I wish somebody in 
Washington would please educate Members of Congress that small 
businesses are organized as subchapter S corporations, LLCs, or 
LLPs. They all pay taxes at the personal level. So when you 
raise taxes on the so-called rich, you are raising taxes on 
small companies that are organized in that manner. So this 3.8 
percent that is in there is a direct tax on our company if it 
comes to be.
    The employee mandate. We have 60 employees and we are 
hiring more. I think we will be at 70 by the end of the year. 
If this goes through, this mandate goes through, we will have 
49 employees and we will not have more, because we are not 
going to be subject to this law. We are just not going to do 
it.
    OK, I am not getting through all my goodies here.
    EPA, we talked about the EPA, that is an issue. But the 
OSHA thing I want to comment on. For some reason this I2P2 
thing, there is an implication that companies do not properly 
provide a safe work environment. We have a great incentive to 
do that. I don't know if you have ever heard of worker's 
compensation insurance, but we are required to carry it; it 
costs more for us than our healthcare. So we have a strong 
incentive to have a safe and productive workplace.
    Sorry for going over here.
    [The prepared statement of Mr. Fredrich follows:]

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    Chairman Issa. I thank the gentleman. I realize that much 
of this will be covered in Q&A afterwards.
    Mr. Buschur.

                   STATEMENT OF JACK BUSCHUR

    Mr. Buschur. Good morning, Chairman Issa and members of the 
committee. I would like to thank you for giving me the 
opportunity today to speak with you regarding the impact that 
the regulations have had on small businesses. I am the owner of 
Buschur Electric. We are a small electrical contracting 
business in Minster, OH. Currently we have 18 employees. We are 
down from 30 employees in 2009. My business works on 
commercial, industrial, institutional, and residential 
properties.
    There are three specific regulatory issues I want to bring 
to the committee's attention today: the EPA lead RRP rule, 
project labor agreements, and prevailing wage rules. All three 
of these regulatory burdens have had a negative impact on small 
businesses and our ability to create new jobs.
    In 2008, the EPA finalized a rule requiring firms to be 
certified and their employees trained on lead-safe practices 
during home renovations on homes built before 1978. The EPA 
eventually revoked its flexible opt-out rule and required all 
home renovations in pre-1978 homes to follow lead-safe 
practices, thus increasing the cost of renovations for 
homeowners even those with no at-risk individuals. Such 
inflexible standards have the effect of driving down demand for 
renovation services or worse; homeowners could seek to have 
renovations performed by unlicensed underground contractors, 
which increase the safety risk to everyone.
    I first found out about this burdensome rule on a recent 
project of ours. An inspector from OSHA informed the project's 
general contractor that all subs were required to have on-the-
job training in order to be in compliance with the RRP rule. I 
had to have two of my employees go through a 7-hour certified 
training course onsite.
    In addition, the general contractor had to arrange 
expensive training and testing, including a respirator 
clearance exam, a lead assessment by a certified professional, 
which cost the general contractor $1,260 a day for 3 days. The 
overall cost to the general contractor was approximately 
$10,000. We eventually learned that we in fact did not need to 
be certified or trained to do the work because the 
concentration of lead dust at the work site was not high to 
pose a risk to anyone.
    As I witnessed the amount of time and money the general 
contractor exhausted in effort to be compliant, I decided that 
my business would not become an RRP compliant company. The 
expenses are outrageous, the amount of paperwork is far too 
burdensome and the exposure liability is too great for my 
business to take on.
    I am also very concerned about two labor regulations that 
also adversely impact small business: project labor agreements 
[PLAs], and prevailing wage. The Federal Government's 
insistence on PLAs makes it much more difficult for a business 
like mine to bid on projects. Typical PLAs are pre-hire 
contracts that require projects be awarded only to contractors 
and subcontractors that agree to certain pro-union rules. The 
use of project labor agreements is a discriminatory tactic that 
prevents non-union construction companies from working on 
government construction projects. When you consider the fact 
that the construction industry currently has an unemployment 
rate of over 20 percent, it makes no sense to impose PLAs or 
other regulations that serve as impediments to job creation.
    We have not personally been directly affected by PLAs over 
the past couple of years, as the projects have either been too 
large or too far out of our area. However, I am very concerned 
that if a right-size project with a PLA does come up for bid in 
our area, we will be unable to compete for the work, making it 
even harder for our company to get back on its economic feet.
    Another area that has adverse impact on small business job 
creation is the prevailing wage rules. With a slow economy, the 
last couple of years we have been forced to perform prevailing 
wage work in order to survive. These projects--unfortunately, 
we have seven of them going on right now--create a lot of 
additional recordkeeping.
    At the time a prevailing wage project is awarded, my firm 
has to issue employee notification forms to employees on the 
job advising the wage rate and applicable fringe benefits paid 
per hour. Then every week we have to perform time-intensive 
reporting requirements such as certifying payroll reports for 
each prevailing wage job and for the payment of fringe benefits 
to certified retirement plans.
    And typically all this work has to be duplicated because at 
the end of the project we will be harassed by unions requesting 
an audit on our company, that we did not follow the rules, so 
we just have to double all the time spent and effort on these 
paperwork requirements and then go through the hearing process. 
We have been involved in two of those and have come out clean, 
but it is still extremely expensive and it is a very large 
inconvenience.
    I would like to thank the committee for the opportunity to 
share my concerns with you and I urge the committee to take a 
hard look at how the regulatory environment can stifle small 
business job creation and growth. Thank you.
    [The prepared statement of Mr. Buschur follows:]

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    Chairman Issa. I thank the gentleman.
    I now recognize myself for 5 minutes for questions.
    Mr. Buschur, Mr. Alford really talked in terms of the same 
thing you were, the project labor agreements, the fact that our 
mandating that only unions need apply in the trades, often 
creates a situation in which many of the businesses that he 
represents are effectively locked out of the process. Now, you 
don't look like a black minority owned business, so I am not 
sure he was talking about you, but in a sense isn't that beyond 
just a regulatory impediment? Isn't it simply the Federal 
Government agreeing and demanding that something cost more, and 
then paying more?
    And my point to it is, it is a self-inflicted wound. 
Government may cost 15 or 20 percent more, but other than 
locking out Mr. Alford's people, locking you out of the 
process, since we are willing to pay for all this bureaucracy 
and waste and excess overhead, isn't it in fact not losing a 
job, but creating just simply ineffective jobs?
    Mr. Buschur. Well, in my opinion, sir, the----
    Chairman Issa. My tongue is in my cheek, you understand.
    Mr. Buschur. Please?
    Chairman Issa. My tongue is in my cheek on that question.
    Mr. Buschur. We had a good example in the State of Ohio. 
The Ohio School for the Deaf and Blind bid a project out in two 
manners, one with a PLA and one without a PLA. The project that 
was bid without the PLA came in 22 percent lower and had six 
times as many bidders as the job with the PLA. That is clearly 
documented; it was public bid opening, the numbers were read.
    I guess taking my business hat off and being a taxpayer, I 
asked the question why. Why would you exclude 85 percent of our 
construction market and our members, and not allow them to bid 
on these projects? It just makes no sense to us that this goes 
on, because those 85 percent contractors are performing work on 
other projects that are not government related on a daily basis 
without PLAs and are very successful at it, and are saving 
customers money.
    Chairman Issa. Obviously, from this part of the dais, I 
agree, and particularly when I look at needing to crank more 
than 22 percent of the cost out of government if we are going 
to balance the budget.
    Let me go on to a line of questioning. As a former small 
business man, I guess a current small business man, still LLCs 
and LLPs, I have a question which hopefully each of you can 
relate. The regulatory cost overall for companies with more 
than 500 employees is rated in this one trillion as about 
$7,635. But for companies under 500 it is estimated to be about 
$10,585 per employee.
    Now, when I look at that and I look at the figure of one 
trillion into a $17 trillion economy, it looks to me like 
between 5 and 10 percent is the cost of regulations overall. So 
I am going to ask each of you a targeted question. Let's assume 
that we could get rid of just 2 percent of that 10 percent on 
the back of each of your businesses. What would happen if you 
could, each of you, whether it is avocados from California, or 
your services on molded products and thermal set products, or 
your contracting, what if you could shave 2 or 3 percent off? 
Not the whole 10 percent. What happens if you shave 3 percent 
off of your cost of doing business, what does it do to your 
typical winning or not winning a bid? Mr. Buschur.
    Mr. Buschur. Well, I guess in our situation, whether it is 
1 percent, 2 percent, whatever we can take off our overhead 
account is going to make us more competitive. An example, we 
had our general superintendent retire the middle of last year 
and we did not replace him; we are doing the work with my vice 
president and myself. We didn't have the funds, nor could we be 
competitive if we put that back online. Right now I have a girl 
that spends about 30 hours a week taking care of prevailing 
wage reports.
    Chairman Issa. OK, let me get to everyone, because my time 
is expiring. And I will start with Mr. Timmons and come back to 
Mr. Fredrich.
    For a national manufacturer competing globally, what does 2 
or 3 percent do if they can lower the price of their overall 
product by that amount?
    Mr. Timmons. Well, Mr. Chairman, overall, it is 18 percent 
more expensive to do business in the United States than it is 
in a country that is a developed economy. So any amount off of 
that 18 percent allows us to be more competitive. By the way, 
that 18 percent is derived from the cost of regulation, also 
energy and tort cost; it does not include labor.
    Chairman Issa. Right. I realize it ripples through.
    Mr. Timmons. So every percentage decrease in the cost of 
doing business allows a manufacturer to reinvest money into its 
company, it allows it to expand it, it allows it to create 
jobs, which is our ultimate goal.
    Chairman Issa. And I am using the hypothetical number. You 
can use your own numbers.
    Mr. Nassif, assuming that you get water, what does that do 
for avocados and other products competing against Mexico and 
the rest of the world?
    Mr. Nassif. Well, clearly, if we have the adequate water 
supply, we are going to be able to be more productive on the 
land, and the more you can produce per acre, the less water you 
use and the less fertilizers and insecticides and pesticides 
you use. In our industry, we are not price makers, we are price 
takers, so the retail buyers and the food service buyers tell 
us how much they are going to pay.
    Obviously, if we can cut a couple percentage points, that 
helps us to be more competitive. But because we are in a global 
market, we are not competing against the other State, 
necessarily, or the farmer next door, we are competing against 
the world, and in the world they don't have the same regulatory 
burdens we have. Therefore, even if 2 percent were cut, they 
could still look to another country like China or Mexico or 
anywhere in the southern hemisphere and find a lower price. So 
then we have to compete on quality and food safety.
    Chairman Issa. OK.
    Quickly, Mr. Alford.
    Mr. Alford. Same question?
    Chairman Issa. Just the same genre. If we reduce this down 
to the portion that Mr. Cummings and I might be able to provide 
in regulatory relief, knowing you are not going to get all 
$10,000 per employee off, what do those pieces of two or $3,000 
per employee, what does that do for the businesses you 
represent, and then for Mr. Fredrich, and we will have to wrap 
up?
    Mr. Alford. It certainly makes it more competitive, makes 
them more competitive. They would win more contracts, and 
winning more contracts from that property would invest back 
into the company to grow or add jobs.
    Chairman Issa. Mr. Fredrich.
    Mr. Fredrich. I will give you a specific. We are bidding 
right now on a water pump cover for Volkswagen. We don't sell 
it directly to Volkswagen; we sell it to a company called 
Bocar. Bocar is located in Mexico. That contract will be 
awarded on 1 or 2 percent on the price of that, and I think we 
are going to get it, I do, because we are very close. But as 
you burden--and that, by the way, in terms of jobs, that is 
five jobs, five full-time jobs to fulfill that contract. If we 
get it, five new jobs; we don't get it, Mexico.
    Chairman Issa. Thank you.
    I now recognize the gentleman from Maryland, and I would 
ask unanimous consent he be allowed to have two additional 
minutes.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    I want to thank all of you for your testimony. I don't 
think it has been unreasonable. I think that you have 
highlighted a number of things. And I too know what it is, Mr. 
Fredrich, to run a small business; I ran a small law firm for 
20 years. I also know the struggles that small businesses go 
through. So I want to thank all of you.
    As I listened to you, particularly you, Mr. Timmons, I 
could not help but--and perhaps this will be the subject for 
another hearing--but when I think about what I think it was--
well, one of you talked about Mexico. Was it you, Mr Fredrich? 
And I wonder when those jobs go to Mexico, I wonder what 
Mexico's standards are with regard to, for example, child 
labor; with regard to, for example, pollution, things of that 
nature.
    And perhaps it might be a good idea, Mr. Chairman, if we 
begin to look at those things too, because America is better 
than that. We are better. We set a high standard for the world. 
So that leads me to talk about a witness that is not here 
today, and I wish he was. His name is Stanley Stewart and he 
goes by the nickname of Goose. He is not from my district, he 
is not from the inner city of Baltimore; he is from West 
Virginia. And he was one of the few coal miners to survive the 
explosion in the Upper Big Branch Mine in West Virginia.
    Mr. Stewart wrote to the committee to support a proposed 
regulation to require mining companies to create refuge 
alternatives during emergencies. I ask unanimous consent that 
his letter be placed into the record and I would like to read 
from it now.
    Chairman Issa. Without objection, so ordered.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    [The information referred to follows:]

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    Mr. Cummings. First, Mr. Stewart described the tragedy that 
cost him 29 friends that day, and this is what he said. He 
said, I had to stack their bodies and cover them with blankets. 
I can still see their faces covered in layers of soot so black 
that I couldn't tell one man from another. Mr. Stewart went on 
to describe why refuge alternatives are necessary, and he said 
this: Had they been in place during the Sego disaster, those 
men would have lived. There is no more miserable place to die, 
in my opinion, than a coal mine. The coal operators can make 
tremendous amounts of money and still ensure safety of the men 
and women who mine the coal for their profit. I am just one man 
whose opinion is against many corporate and industry experts. 
But I am a man who has seen things that no man should ever see.
    Mr. Stewart concluded his letter by saying this: These 
regulations that some say should be disregarded in place to 
ensure the safety of millions of Americans. Regulations do not 
cut into profit, they protect the people who work to create a 
profit for a company.
    Mr. Chairman, I have said it repeatedly that, for this 
committee, we cannot focus on just the cost of regulations, we 
must also focus on the benefits and the health and the welfare 
of American people, and I know that these gentlemen share it.
    As I listened to you, Mr Fredrich, I could not help but 
think back to my days in the Maryland legislature. I was the 
expert for 15 years on workman's compensation, and I know the 
cost of workman's comp. So we have a lot of things that go into 
why some jobs do not stay here in America. So the question then 
becomes, at some point, what will our standard be? Will we bend 
to a lower standard, where children are being exploited, for 
example, so that we can make more profit? I don't know.
    But let me go to you, Mr. Alford. I just want to set the 
record straight. You said that BP was the only company cited 
for OSHA violations?
    Mr. Alford. No, sir.
    Mr. Cummings. All right. What did you say?
    Mr. Alford. I said if you take the U.S. oil industry and 
their violations combined, it would only be a fraction of the 
total of BP's fines.
    Mr. Cummings. All right, I want to make it clear, on 
October 9, 2009, OSHA cited ConocoPhillips for repeat workplace 
safety and health hazards. On that date, OSHA cited Conoco for 
three repeat violations and four serious citations. June 2010 
OSHA cited the firm Infinium, a joint venture between Shell and 
Exxon, for 22 workplace safety violations, including exposing 
employees to chemical hazards.
    And I am just going to stop there, but that is why I 
wanted--and I think the chairman will agree that we have to 
hear the whole story.
    Mr. Alford. Sir----
    Mr. Cummings. I have another question for you, sir.
    Mr. Alford. OK.
    Mr. Cummings. I would like to ask all the witnesses this. 
In the State of the Union, the President proposed an initiative 
to promote economic growth by modernizing the Nation's 
infrastructure. On January 26th, the U.S. Chamber of Commerce 
and the AFL-CIO issued a joint statement supporting this 
proposal. It is rare when these two groups agree, but this is 
what they said: ``Whether it is building roads, bridges, high 
speed, broadband, energy systems, schools, these projects not 
only create jobs and demand for business, they are an 
investment in building the modern infrastructure our country 
needs to compete in a global society.''
    So, Mr. Alford, since your organization works closely with 
the U.S. Chamber of Commerce, do you not?
    Mr. Alford. I am on the board of the U.S. Chamber of 
Commerce, sir.
    Mr. Cummings. So I assume that you would support these 
proposals, would you not?
    Mr. Alford. It depends on the particular proposal. I don't 
want project labor agreements. That is certain. Nor does the 
U.S. Chamber.
    Mr. Cummings. So we are talking about--you sit on the 
board? Did that come before you, by the way, I am just curious, 
as a board member?
    Mr. Alford. Let me clarify something, please, on the U.S. 
Chamber.
    Mr. Cummings. Sure.
    Mr. Alford. What the President has done, they were talking 
about high speed rails. The U.S. Chamber agreed with AFL-CIO 
that the Nation needs high speed rails. It was not a broad, 
general statement saying all the infrastructure should go 
together or, as you put it, we are in concert with the AFL-CIO. 
We are not. We don't believe in card check, we don't believe in 
project labor agreements. We don't believe in a lot of things.
    Mr. Cummings. Well, as my time runs out, I want to thank 
you for what you just said, but I am just reading from the 
joint statement. It says whether it is building roads, bridges, 
high speed, high speed, broadband, energy systems, schools, 
these projects not only create jobs and demand for business, 
they are an investment in building the modern infrastructure 
our country needs to compete in a global society.
    I see my time has run out, and I want to thank the chairman 
for the additional 2 minutes.
    Chairman Issa. You are most welcome.
    I would ask unanimous consent that Appendix 1 from our 
preliminary staff report on all of the submissions be placed in 
the record at this time so that there is a complete list of all 
the complaints, not one of which was about mine safety. Without 
objection, so ordered.
    [The information referred to follows:]

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    Chairman Issa. I now recognize one of our two chairmen of 
this committee present here today, Mr. Burton of Indiana.
    Mr. Burton. Thank you, Mr. Chairman. First of all, I would 
like to just briefly respond to my good friend from Baltimore, 
for whom I have great respect.
    There is no question that we must have some regulation, 
because we do have tragedies that occur because we haven't 
really paid enough attention to them. But the other side of 
that coin is, we must be competitive if we are going to get 
market share in the world. Right now our trade deficit is huge, 
and one of the reasons that we have such a huge deficit trade 
deficit is in many areas we cannot be competitive because 
regulation is strangling the private sector. So we have to be 
very careful, when we regulate something, that we don't put 
ourselves in a noncompetitive situation, while at the same time 
being concerned about the people that are in the work force.
    One of the things that concerns me is something that may 
come down the road. We have been watching in Egypt and the 
Middle East the problems over there, and we know that could 
explode into a situation where the Persian Gulf and the Suez 
Canal might, might, down the road, be blocked, and we get about 
30 percent of our energy from there. We get about 20 percent of 
our energy from Venezuela or thereabouts. So we are dependent 
on foreign energy.
    In the last session of Congress, we blocked the cap-and-
trade regulation, and we did that because we felt it would put 
us in an uncompetitive situation. I would like to get your 
opinion about this because right now we understand the 
Department of Energy and the Environmental Protection Agencies 
are talking about passing a regulation which would parallel the 
cap-and-trade that did not pass the last session of Congress. 
In other words, they are going to try to circumvent the 
Congress of the United States and put this into effect.
    So I would like to know, based upon your experience with 
regulation, what would that do to the private sector and 
production in this country, and how would it affect our 
competition worldwide. Any one of you can answer. Yes, sir.
    Mr. Alford. I will start off with that. It would transfer 
private industry to overseas. We would see a mass exodus of 
firms going abroad because it costs too much to do business in 
the United States. There would also be a transfer of wealth 
going from the United States elsewhere. There is a national 
security problem with this, too, in that the United States, 
which is No. 1 in the world today, would probably fall to No. 
5, 6, 7, or 8. If we fall to No. 8, then we create more enemies 
who see us as being vulnerable. This is cap-and-trade coming 
through the back door. We defeated it already; the American 
people don't want it, and we need to check EPA.
    Mr. Burton. I talked to one of my companies that 
manufactures and does a lot of business overseas, and they told 
me that if cap-and-trade passed, the electric bill, the energy 
they need to generate their product, would go up $100,000 a 
month.
    Mr. Fredrich, you do business in other countries. How would 
this affect your company if we had to add the cost of cap-and-
trade to your business?
    Mr. Fredrich. We have a situation in Manitowoc where the 
city, the city of Manitowoc owns the public utility, and they 
actually generate power; they have a power plant and they use 
coal to fire the boilers. Our monthly electric bill is about 
between $22,000 and $25,000. Without question, we are pushing 
$30,000 if something like that happens; it would be like 
$10,000 a month, $120,000 a year for what? For what? We would 
buy the same amount of electricity; we produce the same 
product. It is just now we have another burden of $120,000.
    Mr. Burton. What would that do to your competitive 
situation? You mentioned Mexico a while ago and you were within 
a few cents of getting a contract. What would that do to 
business like that you would get?
    Mr. Fredrich. It kills you. It kills you, because we cannot 
compete on wages, nor do we want to compete on wages. But we 
can compete on efficiency and the productive use of capital. 
And the projects that we bid on are so tight, 1 and 2 percent, 
so to the extent that we are 2 percent off, we don't get the 
business.
    Mr. Burton. Let me just end up, Mr. Chairman, by saying 
that the gentleman, Mr. Fredrich, just mentioned a while ago 
that the health care bill would cut his employment from 60 to 
49. So you are looking at maybe a 10, 12, 14 percent reduction 
in employment if the health care bill goes into effect, so I 
think that is another thing that we ought to throw into this 
regulatory mix and issue.
    Chairman Issa. I thank the gentleman.
    We now recognize the other chairman of this committee, Mr. 
Towns.
    Mr. Towns. Thank you very much. Let me thank you, Mr. 
Chairman, of course, and the ranking member for having this 
hearing.
    Let me just sort of go down the line. When agencies propose 
new regulations, there is a public comment period. Just go down 
the line. I want to know whether or not you participated in 
that comment period. Starting with you, Mr. Timmons, and just 
go right down the line.
    Mr. Timmons. Sure. Thank you, Congressman. Yes, we often 
participate in the comment period, and not just as an 
association, but our members oftentimes provide comments as 
well.
    Mr. Towns. Was there a response? Did they respond back to 
you?
    Mr. Timmons. It depends on the agency.
    Mr. Towns. Depends on the agency?
    Mr. Timmons. Sure. Sometimes the comment period is so 
truncated that there really isn't enough time for meaningful 
dialog or for response. Oftentimes the comment period is about 
60 days, and because of the massive amount of comments they 
receive, it is hard for them to respond to all of the input 
that they receive.
    Mr. Towns. Mr. Nassif.
    Mr. Nassif. As far as agriculture is concerned, we try to 
respond to any proposed regulations rulemaking that goes out on 
any matter that is related to agriculture, and sometimes those 
are just that are related to business as a whole. We have 
generally gotten very good responses from the Department of 
Agriculture in this way, but a lot of the agencies have not 
been responsive or limited in their response.
    The problem is that the comments we make are, in most 
cases, not included in the final draft of the regulations, and 
we have to go up and argue specifically because most of the 
time agriculture is forgotten when we are making regulations, 
just like health care. No one even considered it, agriculture, 
the fact that we have a temporary migrant work force, in 
promulgating health care legislation. So we have to fight very 
hard to be heard on those matters.
    Mr. Towns. Mr. Alford.
    Mr. Alford. Probably we have done 40 comments in the last 
year, mainly to the SBA, FCC, Department of Interior, EPA. I 
can't recall ever getting any feedback from any of them.
    Mr. Towns. So you feel that basically whatever your 
comments are are totally ignored?
    Mr. Alford. I don't think they are ignored.
    Mr. Towns. What do you think?
    Mr. Alford. They talk about it and move on. Their mind is 
set, basically.
    Mr. Towns. OK.
    Mr. Alford. You know, comments that differ from their 
opinion are rarely effective or make a difference. But we do 
comment.
    Mr. Towns. Mr. Fredrich.
    Mr. Fredrich. I am actually too busy to keep track of that 
stuff. I really am. Fortunately, we have other entities like 
SBE Council, and if something comes up that they think will 
affect a manufacturer, they will always call and say, Mike, you 
are on the front line of the free market system, what is this 
going to do to you, and I will give them an answer. So I always 
comment.
    Mr. Towns. You feel that it makes a difference, whether you 
do or don't?
    Mr. Fredrich. Yes, I think it does. That is why I am here 
today. I paid out of my own pocket to be in front of the 
committee, and I absolutely do think it makes a difference.
    Mr. Towns. Mr. Buschur.
    Mr. Buschur. I am kind of in the same boat. As small as we 
are, I don't have the time or resources to followup on all 
those types of things, but I do comment on a regular basis back 
to our trade organizations, such as the NFIB or the Associated 
Builders and Contractors or the chambers, any time these issues 
come up and they pose something in front of us. And I have full 
confidence in those organizations that they do bring the 
message back to the proper chambers and followup with those 
types of issues.
    Mr. Towns. Let me ask you this before my time runs out. Are 
there any areas that you feel that we should really push in 
terms of regulations? Yes, Mr. Fredrich. And be brief, because 
I am running out of time.
    Mr. Fredrich. I will be very brief. Tort reform. It is a 
burden on every producing company in this country and it is 
skimming wealth.
    Mr. Towns. Mr. Buschur.
    Mr. Buschur. Project labor agreements.
    Mr. Towns. Project labor. OK.
    Mr. Alford.
    Mr. Alford. I agree with both those answers. They are 
equally important.
    Mr. Towns. Mr. Nassif.
    Mr. Nassif. I would say making sure that regulations are--
--
    Mr. Towns. I am sorry, I am having trouble hearing you. 
Push your button.
    Mr. Nassif. I would say that making sure that the 
regulatory process engages good sound science and peer review 
and engages the stakeholders in these conversations so they 
understand the real world side of business.
    Mr. Towns. Thank you.
    Mr. Timmons.
    Mr. Timmons. Mr. Towns, I would echo all of those 
statements and say that there are a number of regulations that 
need to have some very thorough review to make sure that they 
do apply sound science principles.
    I did want to get back to your first question, though, 
because I think there is an example of how the process has 
worked, at least from our vantage point, and that is the OSHA 
noise proposal that I mentioned earlier. There were a number of 
employer comments that came back and OSHA did withdraw that 
proposal because, frankly, it didn't make sense. That said, the 
fact that the proposal was promulgated in the first place gives 
us pause, so we are interested, obviously, in how the 
regulatory process is undertaken at various levels of agencies. 
So I did want to comment that it sometimes does work when 
comments are made and when there is a large outcry from the 
employer community.
    Mr. Towns. Thank you very much.
    Mr. Chairman, as I yield back, I am very interested in 
creating jobs. My area has high unemployment. But I am also 
concerned about throwing the baby out with the bath water. I am 
concerned about that too. So I yield back.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Arizona, Mr. Gosar, for 
5 minutes.
    Mr. Gosar. Gentlemen, coming from an area in Arizona that 
has huge unemployment needs from Native Americans all the way 
through the private sector, let me ask you the question. Of all 
the regulatory burdens and agencies, which one is least based 
on sound science?
    Mr. Timmons. Well, I will start. I am not sure that I want 
to handicap that, Congressman, but I will say that because the 
EPA is promulgating probably more regulations than any other 
agency impacting manufacturers, we find ourselves contesting a 
lot of the measurements that are used as they draft their 
regulations. So that is the one agency that I think we find 
ourselves trying to monitor the most closely.
    Mr. Nassif. For agriculture, I would say, in addition to 
the EPA, that it is really the Department of the Interior and 
how they enforce things like defining the Endangered Species 
Act. We find, as I testified, that in many cases they come up 
with their own scientific results, which, when they are 
challenged by peer review or when they are challenged in court, 
they are found to be based on poor science, and they need to 
redo the science. So I think what happens is they develop a 
certain intellectual bias toward a certain position. For 
example, if they work in there, perhaps they are more biased 
toward wildlife than they are toward the economy or the human 
environment. And that is where we run into problems, because we 
don't have that blend of interests.
    Mr. Alford. I would say the EPA. We have been engaged with 
the EPA on issues since 1996 and we have gone from global 
warming, then the winters came and the hurricanes came back; 
now it is climate change. But it is the same dog and pony show. 
Senator Inhofe is going to put out a book called The Hoax, and 
I am anxiously awaiting its release.
    Mr. Fredrich. EPA, without question. Two examples. Wind 
farms. Wind farms are an absolute example of 21st century 
silliness. And ethanol. Ethanol. In coming from Wisconsin, we 
have lots of farms. Why we produce corn to convert into 
ethanol, which reduces gas mileage on automobiles, I will never 
understand.
    Mr. Buschur. I also would agree the EPA. I can't say I am 
directly affected. The industry we work for, the customers we 
have are directly affected and, therefore, it does hold them 
back from expanding or moving forward with projects that they 
would like to add to their business base simply because of 
unreasonable and unachievable regulations.
    Mr. Gosar. Second question. How much time do you spend in 
trying to adhere to the regulatory burden in your businesses?
    Mr. Timmons. Well, we have 11,000 members, Congressman, and 
I can't give you an average, but it could be anywhere from 
hours to days. And I would defer to some of the individuals who 
are running companies directly.
    Mr. Nassif. I would say that at least 10 percent or more of 
the time is spent just trying to comply with the regulatory 
burdens, because that is about the cost of complying with them.
    Mr. Alford. It is a big trouble. Ninety-eight percent of 
our members are very small businesses with limited accounting 
and legal support, and many times they get fined and get in 
trouble for being late or inaccurate with their reporting.
    Mr. Fredrich. I will give you a real life example: EEOC 
complaints. We had two of them. One was from a Hispanic woman 
who claimed that we terminated her because she was Hispanic, 
and another one was from a white male who claimed we terminated 
him because he wasn't an American. Now, each of those two 
cases, both of which were not valid and we ended up winning, 
took at least 1 week of my time, my personal time, to just 
complete a response to those and getting all the information 
and responding to the EEOC and their documentation requests. 
And for the price of a 44 cent stamp you can file one of those 
and we have to respond to it.
    Mr. Buschur. I would say in my business we are probably 
looking at at least 20 percent. But, most importantly, these 
regulations are so in-depth and so large that we have to pay 
outsiders, whether it is attorneys or business organizations or 
what, to really critique these regulations and advise us as to 
what we can and what we cannot do, and that takes money away 
from my company being able to expand or hire additional people; 
I am spending it on the attorneys or business groups helping us 
trying to understand the regulations.
    Chairman Issa. I thank the gentleman.
    We now go to the gentlelady from New York, Mrs. Maloney, 
for her questions. You are recognized for 5 minutes.
    Mrs. Maloney. Thank you very much, and I thank all the 
panelists for coming and your testimony. I would like to direct 
my questions to Mr. Timmons.
    In your written report, on page 13, you express concerns 
about the Consumer Product Safety Commission's product safety 
information data base, and I would just like to add that this 
data base will provide public access to critically important 
information for consumer safety, and my hope is that this 
committee will review this regulation and listen to Mr. 
Timmons' concerns and input.
    However, before we can go forward, we really need to talk 
about other people who should be part of this discussion, and 
that is the consumers that benefit from this data base, and I 
would like to speak about Michelle Witty, who wrote to this 
committee and told us about waking up one morning, on December 
12, 1997, and finding her son, Tyler Jonathan, strangled to 
death in a drop-side crib. She said that she continued to go to 
stores for years and they were selling this crib and saying it 
was their No. 1 safety product. Then she inquired about whether 
or not they knew that children had died in it, and they would 
say of course we wouldn't sell it if we knew that children had 
died in this crib. Unfortunately, many other children died in 
this crib.
    Another woman who is missing from the discussion today is 
Lisa Olney. Lisa's 13-month-old daughter Ellie died in a poorly 
constructed designed portable play yard, and she wrote to this 
committee and said that it took 9 months for the Consumer 
Product Safety Commission to release the story of her 
daughter's death, and she wonders how many other stories are 
sitting in in-boxes and not getting out to the public.
    So I believe their stories are important and I ask 
unanimous consent to place it in the record.
    Chairman Issa. Without objection, so ordered.
    [The information referred to follows:]

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    Mrs. Maloney. Thank you.
    Mr. Timmons, my question to you is when we review this 
regulation and talk about it and go into further discussion on 
it, do you agree that testimony from consumers such as Michelle 
Witty and Lisa Olney should be part of the discussion? OK, 
thank you very much.
    Mr. Timmons. I think those are very important points of 
information, Congresswoman. I have a 1-year-old daughter 
myself, so I am very acutely aware of----
    Mrs. Maloney. Thank you. Thank you.
    Mr. Timmons [continuing]. Some of these issues, and I think 
it is important. We support the data base. We just want to make 
sure it is done in a----
    Mrs. Maloney. Thank you. Thank you. And I also would like 
to place in the record testimony from the Kids in Danger. This 
is a not-for-profit dedicated to protecting children from 
faulty consumer products. It was founded by parents who found 
their son dead in a portable crib, and they want to work to get 
the information out.
    I relay these stories because these regulations affect real 
people and has real significant benefits in protecting 
consumers and people in our society that cannot be measured by 
merely a cost profit side or a tally sheet. It is there to 
protect people and it should be part of the discussion and part 
of the decisions.
    These mothers, Mr. Chairman, and these families deserve an 
investigation and consideration that looks at both the costs 
and the benefits of these regulations, and many of these 
regulations, such as the Consumer Product Safety Commission's 
data base, are there to inform constituents, inform consumers, 
and really make our country safer for our children. So I wanted 
to make sure that was part of the discussion. I thank you.
    Mr. Timmons. Thank you, Congresswoman. Clearly, we support 
product safety; it is very important for the brand reputation 
of our manufacturers. We have supported additional resources 
for the CPSC and we look forward to working on a data base that 
makes sense for all concerned.
    Mrs. Maloney. Thank you.
    Chairman Issa. The gentleman from Pennsylvania, Mr. Meehan, 
is recognized for 5 minutes.
    Mr. Meehan. Thank you, Mr. Chairman.
    Mr. Timmons, let me ask you a question right from the 
outset, please. The President issued regulations from the 
administration stressing the importance of giving 60 days 
notice and comment. We have heard some questions about this 
issue and we have heard a lot about EPA. What has your 
experience been with EPA's abiding by that regulation, that 
request?
    Mr. Timmons. Sixty days oftentimes is not adequate, first 
and foremost. But the experience of manufacturers with the EPA 
has not been a particularly harmonious one and, in all candor, 
it hasn't just occurred in this administration; the last 
administration was very difficult to have meaningful 
conversations with. I was chief of staff of a State government 
in the 1990's, and one of the things that we attempted to do 
was to have a collaborative relationship with our regulating 
agencies, our environmental permitting and regulating agency, 
with the business community because we all agreed that we 
wanted cleaner air and cleaner water, and we found that the 
best way to achieve that was to work together to achieve those 
goals.
    Now, it didn't always work and sometimes businesses had 
issues that could not be resolved in a collaborative way, but 
we did find that, when we worked together, we were able to 
resolve issues quickly and achieve goals that did not harm the 
economic competitiveness of our State, and we would like to see 
that be the case with EPA. We are happy to see the President's 
regulatory Executive order. It doesn't apply, necessarily, to 
the EPA, but we think it is a step in the right direction.
    Mr. Meehan. Well, if you could help me, to the extent that 
you can, by asking some of your constituencies to give us a 
record on that, because I know the issue arose today, and in 
preparation for this I have a letter from Charles Drevna, who 
is the president of the National Petroleum and Refiners 
Association, and I am quoting his language: In relation to 
chemicals regulation, there has been little transparency into 
the regulatory process in the EPA in recent years. For example, 
EPA no longer holds public meetings when crafting regulations. 
In the past they routinely held public meetings.
    So I know this is an issue. I have two refineries, 2,000 
direct jobs in my backyard. We keep talking about sending jobs 
overseas. We are competing with refineries overseas, and it is 
cheaper for them to send oil refined from Nigeria into my 
backyard than it is for my refineries to do that, and those 
2,000 jobs are teetering on the line by virtue of these EPA 
policies.
    As I have talked to the folks down here, we are getting so 
many mixed messages. One, you talked about working together. 
They are giving regulations for greenhouse gases but vague 
guidelines. You talked about BACT, which is the best available 
control technology. They are delaying any kind of 
interpretation on this and then opening the company to the 
extent that they put in something that could be litigated 
later; that it wasn't the best available technology and it will 
require the company not only just to litigate this, but they 
can lose the benefit of the investment that they have already 
made.
    Mr. Timmons. Well, that is an example of a regulatory 
process that really doesn't make sense, and one of the things 
that we have advocated as the National Association of 
Manufacturers is that, as I mentioned before, it is 18 percent 
more expensive to do business here in the United States. Part 
of the reason for that is our regulatory burden. And we believe 
that our goal and the goal of policymakers should be that this 
is the best country in the world in which to headquarter a 
corporation, that it is the best country in the world in which 
to practice research and development, and that we need to be, 
obviously, the best country in the world in which to 
manufacture so that we can export our products.
    The only way to do that is to have lower costs for 
manufacturers, including regulatory burdens, and common sense 
regulatory processes that don't have manufacturers saying it 
doesn't make sense to do business in this country anymore.
    I know that Boeing is one of your constituents as well, 
Congressman, and every day they have to spend a tremendous 
amount of their resources trying to ensure that they comply 
with regulations and they spend an enormous amount of resources 
in doing that.
    Mr. Meehan. You used the language common sense----
    Mr. Timmons. Yes.
    Mr. Meehan [continuing]. And it is something that we all 
care about----
    Mr. Timmons. We do.
    Mr. Meehan [continuing]. Quality, to be sure; we need to 
focus on it. But CAA regulations right now, in my very 
refineries, are requiring the facilities to install advanced 
technologies. But by virtue of doing that they are going to use 
more energy than they currently do for the process, then they 
are going to be penalized for the greenhouse gas that is 
associated with the very technologies that they are being 
required to put in by the EPA. Where is the common sense in 
that process that the result of that means that those jobs are 
going to be competing with the Nigerian oil that doesn't have 
the same requirement that is going to take that market away 
from the workers in my district?
    Mr. Timmons. Yes. I don't think you would see me defending 
that as a common sense move.
    Mr. Meehan. May I just ask one last question, Mr. Chairman? 
Winners and losers. They have picked two industries when they 
decided EPA----
    Mr. Timmons. So far.
    Mr. Meehan [continuing]. Refineries, when they were 
required to do the new source performance standards. How can 
agencies pick winners and losers in the private market with 
regard to which regulations----
    Chairman Issa. The gentleman can answer briefly.
    Mr. Timmons. Well, I think the bottom line, Congressman, is 
they shouldn't, and the free market should be allowed to 
determine who is going to succeed in our economy, and by so 
doing I think we will end up creating long-term economic 
growth.
    Chairman Issa. Thank you.
    The gentleman from Cleveland, OH, Mr. Kucinich, for 5 
minutes.
    Mr. Kucinich. Thank you, Mr. Chairman.
    In a recent letter in the Wall Street Journal, a group of 
powerful utility companies, including Pacific Gas & Electric, 
Exelon Corp., and Constellation Energy Group, stated that, in 
their experience, ``regulations can yield important economic 
benefits, including job creation, while maintaining 
reliability.'' As we are looking for innovative ways to create 
more jobs, we should consider that regulations can create jobs.
    According to the economist Evan Goldstein, ``The one 
comprehensive estimate available suggests that in 1992 just 
under 4 million jobs were directly or indirectly related to 
pollution abatement and environmental protection in the United 
States.'' In addition, a report issued this week by Serius and 
the Political Economy Research Institute found that certain EPA 
rules proposed under the Clean Air Act ``will lead to a net job 
gain'' in 36 eastern States evaluated and studied. The report 
also finds that between 2010 and 2015 capital investments in 
pollution controls and new power generation will result in 1.46 
million jobs.
    Mr. Timmons, in your testimony you express concern about 
the high cost of pollution abatement. I understand that these 
costs are difficult for a company, especially a small one, but 
there are studies now that say that the ultimate effect is a 
net increase in jobs. Would you dispute that as a possibility?
    Mr. Timmons. Well, I would say that when we evaluated the 
cap-and-trade bill from the last Congress, our study was a net 
study and it showed a 2 million job loss.
    Mr. Kucinich. What about these other studies? Do you 
dispute that these studies have any validity at all?
    Mr. Timmons. Well, I can tell you what our study said.
    Mr. Kucinich. But what about these other studies? Do you 
look at any other study or do you only know your study?
    Mr. Timmons. I haven't seen those particular studies.
    Mr. Kucinich. OK. Well, would you be interested in those 
studies?
    Mr. Timmons. Send them along; I would love to see them.
    Mr. Kucinich. Good. I will.
    A 2009 study conducted by the Center for American Progress 
found that, compared to overall spending in the economy, on a 
per dollar basis, spending on environmental protection and 
cleanup employs more than twice as many workers in 
construction, 11 percent versus 4 percent, and 25 percent more 
in manufacturing, 20 percent versus 16 percent. This year, the 
Bureau of Labor Statistics 2011 Employment Survey Data shows 
that the manufacturing sector added 49,000 jobs in January, up 
from 9,000 in January of last year.
    I bring this up because I think it is important that we 
have a serious discussion about job creation while factoring in 
studies that are available that show that, in some cases, 
regulations can create jobs. And I don't think we can have a 
serious debate about the cost of regulations, including EPA 
regulations, without acknowledging their positive impact.
    There is another element here that doesn't get much 
discussion, and that is when we are talking about the benefits 
of regulation and the positive effect, job-creating effects of 
regulation, I think if you are looking at the cost of 
regulations, you need to monetize the benefits of regulation, 
particularly with respect to public health, because if an 
industry is creating pollution that ruins someone's health, 
that, in effect, is a payment that individual person is making 
to that industry with their health. That is a cost shifted on 
to the society.
    So I hope that as we get into this discussion about 
regulation, we take a broader view about cost-benefit, and I 
yield back the balance of my time. Thank you.
    Chairman Issa. I thank the gentleman.
    The Chair now recognizes Mr. Gowdy for 5 minutes.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Mr. Fredrich, how are you?
    Mr. Fredrich. Dandy.
    Mr. Gowdy. If my information is correct, your company was 
able to come back from the brink. Can you tell us how you 
accomplished that; whether government was helpful or not 
helpful? Tell us about your odyssey back.
    Mr. Fredrich. Well, the government was helpful in putting 
us to the brink, but not helpful in getting us out. I dispute 
this whole financial regulation issue about why the financial 
sector crashed. I mean, it was bad loans that were made which 
ultimately triggered this whole thing, and that is what caused 
a problem for us in 2009. We were running 2 days a week, 3 days 
a week. Our salaried people found out what it was like to get 
paid for 2 days a week and not their full salary.
    But it was just sheer, the ability to cut back our internal 
costs, and we did it on the backs of everybody, including 
myself. I still haven't raised my draw back to where it was in 
2008 because I can't afford it. So everybody felt the pain. But 
it was all labor. And, really, when you want to cut something 
in a hurry, that is what you have to cut; there is no way 
around that. And what you cannot cut is what we are talking 
about here today, which is burden, regulatory burden. That is a 
fixed cost. It is so fixed that you can't even identify it to 
cut it.
    So we did it through guts. Guts. And we didn't lose any 
people. The economy was so bad that we didn't have people leave 
and go somewhere else; there was nowhere to go. So, 
fortunately, we kept our core group together.
    Mr. Gowdy. Well, thank you and we commend you.
    Mr. Timmons, I come from a State, South Carolina, that 
while we have a lot of manufacturing jobs, we have lost a lot 
of manufacturing jobs, and particularly in the upstate of South 
Carolina. Can you give me some specific examples of 
particularly pernicious regulations that are impacting the 
manufacturing sector? I know about tax, I know about 
litigation. Help me with the regulatory side. What can we 
change to help create manufacturing jobs or keep the ones we 
have in the upstate of South Carolina?
    Mr. Timmons. I think the most important thing we can do at 
this juncture is to ensure that additional regulations that are 
costly do not get imposed on manufacturers, because, as I have 
stated earlier and you have just mentioned as well, the overall 
cost of doing business in the United States is 18 percent more 
expensive than it is among our major trading partners and 
developed economies. That cost does not include the cost of 
labor because we believe that a higher standard of living is 
desirable. It does include, however, in addition to energy cost 
and tort cost, it does include regulatory costs as well.
    I welcome the President's Executive order because it asks 
all agencies to look at the regulatory burden overall and 
evaluate each existing regulation's impacting on jobs and the 
economy, and I think that study will help us determine exactly 
where changes can be made. When I was in State government, one 
of the things that we chose to do was to evaluate, literally, 
each and every regulation. It was the State of Virginia and we 
were constantly competing against the State of South Carolina 
to see who could be the most competitive, and we chose to look 
at every regulation on the books, and 75 percent of our 
regulations over this 3 year period were either amended or 
eliminated so as to make the economic environment more 
conducive in Virginia for investment.
    So I think the first step is this Executive order, and we 
will see what that produces. I have indicated several 
regulations that we have concerns with in my written testimony. 
I would be happy to provide another copy of that, but it is a 
rather lengthy list, and we can also get you some specific 
costs.
    Mr. Gowdy. I only have 30 seconds. Let me ask you more 
questions. My constituents are in one accord that regulations 
are stifling their ability to create jobs. They are about 
equally divided on whether or not those are unintended 
consequences or whether it is part of a broader scheme to get 
through regulatory mechanisms which you cannot get through 
legislative mechanisms. What is your judgment on that? Are 
these unintended consequences or is this getting through 
regulation which you can't get in elections?
    Mr. Timmons. There are many regulations on the books that 
have come about through the regulatory process and not through 
congressional action, that is for sure. The Environmental 
Protection Agency has a proposal to regulate greenhouse gases. 
That clearly did not make it through the legislative process, 
and it would be an example of legislating through regulation.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    The gentleman from Chicago, Mr. Quigley.
    Mr. Quigley. Thank you, Mr. Chairman. Mr. Chairman, in the 
112th Congress, this is now my third meeting already that I 
have participated in regarding regulation, and I appreciate 
that because regulation is important. We are starting to see 
themes in these meetings, though, that regulation is important, 
but it is a process and there is a balance involved, and I too, 
Mr. Chairman, agree with the President's Executive order and 
his movement toward a balanced approach.
    I just think the tenor and tone comes across so differently 
across the aisle that we need to try to strike a more subtle 
balance. I defy anyone in this room to not think about 
regulation the next time they get on a commuter airliner. How 
much sleep did that pilot get last night? And if you come to my 
hometown, Chicago, I defy you not to think about regulation 
when you drink tap water. We have now found chromium not in the 
lake, but in the tap water three times what most people 
consider to be a healthy level. And if you don't want to think 
about it now or then, think about it in the morning when you 
have your eggs. A million cases of salmonella.
    So I understand the balance you are talking about because 
jobs are at stake, but you have to recognize lives are at 
stake. The only thing I have learned in these three meetings 
has reinforced with me it is a complicated world now. I think 
people yearn for a day gone by when things weren't so 
complicated. But we weren't flying then; we weren't trying to 
go into space; we didn't have nuclear reactors; and we didn't 
have the chemical industry, which has many benefits. We didn't 
have those back then. So we are trying to strike this balance 
and it is a process, and it doesn't work and we are not always 
in agreement. And I am glad Mr. Kucinich brought out the energy 
companies that are in favor of the global warming, as you call 
it, regulations that are being discussed.
    But let me just go back in history, Mr. Timmons, to point 
out--and I understand we all don't get it right. You recall in 
1990 we passed the Clean Air Act amendments under George H.W. 
Bush and the National Association of Manufacturers said at the 
time, ``We will have, when this passes, the dubious distinction 
of moving the United States toward the status of a second class 
industrial power by the end of the century.'' The Business 
Roundtable Commission did a study on that law and said that we 
are going to lose at least 200,000 jobs, and perhaps as many as 
2 million. Four years later, only 2,363 displaced workers, all 
of them coal miners, applied for aid in the belief their 
unemployment had been caused by the act.
    Looking back on the first 10 years of the Nation's 
experience with the 1990 program, the agency found a total loss 
of 4,000 coal miner jobs. The great majority of the losses, it 
was concluded, were the result of mechanization and 
productivity increases, not regulation.
    So I understand what if they had been right is important, 
but I at least give some benefit to those attempting to 
regulate, because we could also have a panel here talking about 
lives lost on any sort of industry as a result of not 
regulating appropriately.
    Mr. Timmons. So I have been on the job 1 month, so I am 
hoping that you won't ask me to talk in detail about those 1990 
comments. But what I can say, Congressman, is we are not 
disputing that regulation can be beneficial. That is not really 
the issue, as I see it, at hand. I think the issue is making 
sure that regulations make sense, making sure that they are 
balanced, and, frankly, making sure that regulating agencies 
don't overreach.
    There is a cost of doing business. I have talked about the 
18 percent. Some of that cost we understand is going to be 
necessary, but we should always have a very careful review of 
every regulation to any thoughtful analysis is going to include 
all benefits, but also all costs. So I am not sitting here 
saying that we should only look at cost. I can't imagine any 
manufacturer would say that either.
    But I do think that we have to--as Members of Congress, you 
have so many competing demands that you have to deal with. The 
prism that we need to look through as an association is the 
prism of jobs, and creating jobs for Americans and ensuring 
that every American who wants a job has the ability to get a 
job. And the way we do that is by growing our enterprises, by 
investing capital into new facilities and providing more 
opportunities. So that is the prism that I am going to look at 
things through, and I am sure that there are prisms that others 
look through, and I want to work with those folks in making 
sure that we have meaningful regulations that make economic 
sense and that are not overly burdensome.
    Mr. Quigley. Toward all those ends, I look forward to 
working with you.
    Mr. Timmons. Thank you.
    Mr. Nassif. If I could just make a comment on that. In many 
cases it is not the regulation which is so problematic; in some 
cases it is. But for us it is the action of the regulators in 
interpreting and implementing the regulations, and that is 
where I think we need the government oversight.
    Chairman Issa. I thank the gentleman.
    The Chair recognizes the gentleman from Florida, Mr. Ross.
    Mr. Ross. Thank you, Mr. Chairman.
    Mr. Timmons, as I was a kid growing up, I remember that 
manufacturing was the muscle that drove the American economy; 
that we were No. 1 in this country producing natural resources 
but, more importantly, manufacturing here and doing a wonderful 
job at it.
    My father, when I grew up, was in a tile manufacturing 
plant in Florida. The home base in my hometown was called 
Florida Tile. Florida Tile no longer exists in the State of 
Florida as a manufacturer, and the reason is for a myriad of 
reasons, whether it be regulations, whether it be taxes, 
whether it be the labor market. But it did have to do with 
exports; trying to compete globally.
    And I notice that the Manufacturing Association has 
indicated that the export control regulations have adversely 
impacted manufacturing in the United States. How would you 
recommend that we address that and what could be done to 
modernize this so that we can have a balance with our export 
control regulations?
    Mr. Timmons. I appreciate your story, Mr. Ross. I have a 
similar story. My grandfather stood in line for 6 months during 
the Great Depression to get a job at a manufacturing facility. 
He finally was offered that job because the managers there were 
just sick and tired of seeing him, so his persistence paid off. 
But his goal was the goal of manufacturers today, and that was 
to provide a better quality of life for his family, and he gave 
me many opportunities, he gave my family many opportunities 
that so many others didn't.
    As far as export controls, our goal is to--and this is 
another area, by the way, where the administration has been 
working very cooperatively with the manufacturing sector, but 
there have been some bumps in the road, and it is really in 
terms of implementation, trying to ensure that there are not 
multiple lists that have to be reviewed, but one list; that 
there are not multiple processes or multiple permitting 
processes for the same product being exported, just being able 
to have one permit that can carry the day for the future.
    So it is really more of a process question; it is not so 
much the goal. The goal obviously is to make sure that we have 
an export policy that makes sense and protects our national 
security, but on items that, frankly, don't have that much of a 
national security concern or that are being produced by other 
countries around the world and those countries are freely 
exporting that product, we really need to ensure that American 
businesses have the ability to export those products very 
quickly and without a lot of paperwork.
    Mr. Ross. Thank you.
    Mr. Alford, in your opening remarks you hit on something 
that kind of struck a chord with me, and it had to do with 
gainful employment rules. When you talk about gainful 
employment rules, it is interesting coming from the chamber's 
perspective because that is something that is impacted by the 
Department of Education, not a traditional regulation that 
would impact industry. But it also impacts employers who are 
seeking to find educated high school laborers that cannot get 
their education because the government prevents them from 
getting funding to do that because of these gainful employment 
rules. Could you expand on that a little bit and tell me more 
of how we can change that?
    Mr. Alford. Yes. And the funny thing is, not really funny, 
but the Federal Government took over Sallie Mae student loans 
and here we are, the Federal Government is saying we are going 
to deny your students student loans because the payback record 
in the last few years is not as good as the students at Harvard 
or Ohio State and what have you. These are inner city kids, 
they are disadvantaged; they are broke, they are poor. Of 
course their credit is not going to be as pristine as an upper 
middle-class person would be. You should expect that. There is 
a risk factor. Tack on a little more interest, cover your risk.
    But don't deny them the right to finance their education. 
Many, it is their last chance. It is their last chance. They 
can go get a job at one of the members of National Association 
of Manufacturers or they can sell cocaine. One or the other, 
they are going to make a living, so why not encourage them to 
get educated and to live a gainful life? This rule is mean and 
cruel. And what I really like about it, we put out an ad in the 
Washington Post with Reverend Jesse Jackson, who we and he 
don't always agree on many things, but Reverend Jesse Jackson 
and Congressman Alcee Hastings. It is just common sense when 
you look at this thing.
    Mr. Ross. I agree.
    One quick question I want to ask Mr. Buschur; I have 6 
seconds. In 1978 you started your business. You have maintained 
it for 43 years. Would you do it all over again, knowing what 
the regulatory environment is today?
    Mr. Buschur. No, sir, I would not.
    Mr. Ross. Thank you.
    Mr. Buschur. No, sir, I would not. I discussed it earlier.
    Mr. Ross. Thank you.
    Chairman Issa. The gentleman from Kentucky, who has been 
very patient, Mr. Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman. We are very patient 
in Kentucky.
    I will throw out a question which is somewhat rhetorical, 
but I would like to hear your answer. There was obviously not a 
lot of love lost with the EPA and this panel. Do any of you 
want to see the EPA eliminated? Anyone want to see the Clean 
Air Act repealed? OK. Just wanted to get that on the record. It 
shows that no one indicated either one of those.
    I need to set the record straight a little bit, at least 
offer a different perspective on the impact of Waxman-Markey. I 
come from a district, Mr. Fredrich, probably more reliant on 
coal-generated electricity than yours. Ninety-two percent of 
the power in Kentucky is generated by coal; we take a lot of it 
out of the ground. I also happen to have in my district the 
consumer products division of General Electric, a large 
manufacturing facility, Mr. Timmons, one of your most esteemed 
members; two Ford manufacturing facilities; and we also are the 
global hub of UPS.
    And during the debate on Waxman-Markey, after the bill was 
modified in such a way that the actual permits for emitting 
carbon dioxide would not cost anything, we would give them out, 
I went to the people at Ford, the people at GE, UPS. The people 
at GE were very enthusiastic about the bill, they supported it; 
the people at Ford were very enthusiastic about it, they 
supported the bill; and UPS was neutral on the bill.
    I talked to the University of Louisville, city government, 
Jefferson County public school system, which is 100,000 
students, all of them big users of electricity. Not one of them 
opposed the bill, they were fine with it. Then I went to our 
Kentucky energy cabinet, asked them what they thought. They 
said ``we think this bill, if enacted, will create tens of 
thousands of new jobs.'' We asked our local power company what 
the impact on consumers would be, and they said we believe 
that--and this was 2009, of course--we believe that if a 
consumer does nothing else, so they don't make any energy 
efficiencies, they don't insulate, they don't replace their 
light bulbs, they don't do anything, that the cost will be $15 
a month per household in 2019, 10 years later, so $180 a year.
    So I just wanted to get a different perspective on the 
impact of that legislation, because the reason EPA is acting 
now is because the Congress failed to act and the Supreme Court 
mandated that the Clean Air Act be respected. I just wanted to 
get that on the record.
    Mr. Fredrich, you talked about and, Mr. Alford, you echoed 
that one of your primary priorities would be tort reform?
    Mr. Fredrich. Correct.
    Mr. Yarmuth. What would you like to see us do?
    Mr. Fredrich. Loser pays. That simple.
    Mr. Yarmuth. Loser pays.
    Mr. Alford, is that----
    Mr. Alford. Yes. And a good example would be Mississippi. 
Governor Halee Barber helped enact some anti-tort reform--not 
anti-tort, but tort reform in Mississippi and the result has 
been a big growth in business in Mississippi. Companies are 
moving to Mississippi.
    Mr. Yarmuth. And that was a State-implemented rule and the 
Federal Government has never been involved in tort law in 220 
years, isn't that correct, 230 years? I mean, it has always 
been a State matter. So you would want to see us in Congress 
enact a national law in that area, is that what you are saying, 
Mr. Fredrich?
    Mr. Fredrich. Yes.
    Mr. Yarmuth. OK. And what would you do to someone who, 
because, obviously, when a big company, whether it is General 
Electric or Ford, I am sure they never do anything wrong, but 
large companies have access to incredible legal resources and 
an average citizen--we heard about babies in cribs; we know 
that this has happened--how would they get access to adequate 
legal help when they actually are damaged severely?
    Mr. Fredrich. Well, they would continue to get access if 
the case was valid. But right now there are cases filed that 
are filed only for the sake of shaking somebody down because it 
is cheaper to pay than to carry it through to trial.
    Mr. Yarmuth. Well, it is a shame that Mr. Braley isn't 
here, because he would have a wonderful conversation on that 
score.
    Just before I close my time, would you make any comment, 
Mr. Timmons, Mr. Alford? Has your organization or any of yours 
ever advocated some alternative approach to dealing with carbon 
emissions, or you just don't think that is a legitimate need?
    Mr. Timmons. Well, actually, yes, we have. And I do think 
that the story of manufacturing is a great one, because since 
1990 energy consumption by manufacturers, by the industrial 
sector, has only increased 1 percent. That has been achieved 
through efficiency measures, and those measures are some that 
we support. We believe, generally speaking, at the 30,000 foot 
level, that it makes more sense to incent the private sector to 
conserve and to become more energy efficient, and we think that 
is a more effective method of achieving our mutual goals of 
cleaner air and a cleaner environment than penalties are. So 
the brief answer to your question is yes, we do think that 
there are things that we can do.
    Mr. Yarmuth. OK, my time is up.
    Chairman Issa. I thank the gentleman.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Chairman Issa. I now recognize the gentleman from New 
Hampshire, Mr. Guinta, and would ask him if he would yield to 
me for 10 seconds.
    Mr. Guinta. Of course I would.
    Chairman Issa. I thank the gentleman.
    I might note for the record that Ketam cases, the seven or 
800 people who have been sued simply because they failed to 
remove a patent that was expired off their product that has led 
to those cases costing millions of dollars, that is a tort 
case, it is clearly Federal. We do have a big stake in tort 
reform.
    Yield back.
    Mr. Guinta. Thank you very much, Mr. Chairman. To add to 
that point, I would say two things. First, in my State of New 
Hampshire, to show the fact that there is a bipartisan 
willingness to address these liability and tort issues, I would 
like the committee and these members to know that with regard 
to liability caps, New Hampshire, in a bipartisan way, passed 
those liability caps to ensure that we could have productive 
employers and job creation in the State of New Hampshire.
    Second, I would note that the President of the United 
States, in his State of the Union Address, addressed the need 
for medical liability reform. I would argue that we need to 
expand that into having thoughtful discussions in a bipartisan 
way to ensure that employers in our country, small business 
owners in our country can be more productive.
    What I am hearing today is that you want to be empowered to 
create more jobs, to have greater certainty for your business 
plans, and to pass on, maybe in your circumstance, sir, a 
company that you created from the ground up; and I commend that 
and I appreciate that, and I think that we ought to inspire 
that in our Nation.
    I want to go back to PLAs. I know that it has been 
discussed quite a bit, but in New Hampshire we have a $35 
million project that has been held up for over 2 years because 
of the PLA issue. It is a Job Corps Center. A Job Corps Center 
has the ability to do two things: not only employ several 
hundred people, but it takes up to 500 people a year in New 
Hampshire, who otherwise wouldn't be on the path to get a 
standard high school education, and give them a skill supported 
by some of the members of your association, who would put in 
high tech equipment, in this circumstance some defense-related 
equipment, who can then be productive members of society. I 
think that is important. And what is holding that up is the 
PLA. And I hopeful that, in working with the Department of 
Labor, we can address that particular issue.
    So you do have support. I think the country has support. My 
hope is that we look at this in a more common sense way and try 
to level the playing field, and I think that is the point that 
you were trying to make. If you want to just comment on that.
    Mr. Buschur. Yes. Yes, it is. I hear a lot of discussion 
about the safety issues and the environment and things like 
that, and I guess in our industry those issues are extremely 
important to us. I look at a project labor agreement. It does 
nothing with any of that; all it does is eliminate 85 percent 
of the work force from being able to work on those projects. 
And history has shown it raises the cost of the project 
anywhere from 18 to 22 percent, and typically that is always 
taxpayers' money. It is not private funds, it is the taxpayers 
that are footing this bill for an unreasonable regulation.
    Mr. Guinta. I would add to that municipalities. For 
example, for every million dollars they bond, it costs them 
about $100,000 a year. So if you think about a $5 to $10 
million project, what that impact would be to a local taxpayer; 
and that is something that we should always consider.
    Second, relative to OSHA, in 1970 OSHA was established for 
many reasons, but one of their prime objectives was to educate. 
This is an organization, I believe, that has moved from 
educating, which is, in my view, a partnership with employers, 
to nothing more than a gotcha agency. And I don't think anybody 
here at the table wants to be unsafe. I think all of you have a 
responsibility to be safe and I think you take that seriously. 
What I would like to see in the reform, regulatory-wise, OSHA 
be returned more to an education-based organization who can 
help both employer and employee for safety in the workplace.
    And I would ask Mr. Timmons if you would just comment on 
that, please.
    Mr. Timmons. I think you are exactly right that partnership 
should be paramount. If partnerships don't work, then there is 
the legislative process and, if necessary, the regulatory 
process. But when businesses and government and regulatory 
agencies work together for a common goal, which is to make us 
more competitive to create jobs, everyone ends up succeeding 
most of the time.
    Mr. Guinta. Thank you, sir.
    Thank you, Mr. Chairman.
    Chairman Issa. I now recognize the gentlelady from 
California, Ms. Speier, for 5 minutes.
    Ms. Speier. Thank you, Mr. Chairman, and thank you all for 
your participation in this hearing. Let me say at the outset, 
Mr. Chairman, that I want to join with you in scrubbing our 
bureaucracy of outdated regulations. Unfortunately, I don't 
think that we have had that opportunity here to kind of 
pinpoint what some of those regulations are. If you would like 
to provide for us in the committee those kinds of outdated 
regulations that may be 10, 20, 30 years old that have no 
relevance anymore, I am certain that many of us would like to 
look at it.
    I would also like to add, Mr. Chairman, that the hearing 
title has an inbred bias: how do regulations block private 
sector job growth. I would have recommended that it would have 
been preferable to say how do regulations affect private sector 
job growth. And let me start by submitting for the record the 
Ceres report, which I ask all of you to read, which basically 
suggests that the EPA air pollution rules will generate 1\1/2\ 
million new jobs and that this group is not some Hoboken 
nonprofit; it is a coalition of investors, environmental 
groups, and other public interest organizations, a group of 95 
institutional investors and financial firms from the United 
States and Europe managing nearly $10 trillion in assets.
    Chairman Issa. Without objection, so ordered, with a 
reserve from the people of Hoboken.
    Ms. Speier. OK.
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    Ms. Speier. Next, Mr. Chairman, I would like to submit for 
the record a Wall Street Journal letter to the editor that was 
signed by the chairman and president and CEO of PG&E Corp., 
Calpine, and many others, and in that Wall Street Journal 
article they say, contrary to claims that the EPA's agenda will 
have negative economic consequences, our companies' experience 
complying with air quality regulations demonstrates that 
regulations can yield important economic benefits, including 
job creation, while maintaining reliability. That too I would 
like to----
    Chairman Issa. Without objection, if it is delivered to the 
desk, it will be included.
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    Ms. Speier. And finally I would like to submit to the 
committee and for the record letters from Chrysler, Ford, and 
General Motors, all of whom recommend that they embrace the 
greenhouse gas and fuel economy announcements by the EPA, 
again, I think a reflection that America's businesses are 
interested in cleaning the air, making sure it is safe for all 
Americans, and creating jobs as well.
    Having said that, let me start off by saying eight people 
in my district died in an explosion in September, fathers and 
sons, mothers and daughters, a horrific incident that 
underscored the problem we have in this country relative to 
regulations, because, as more and more is being discovered by 
the National Transportation Safety Board--and, I might add, 
they better not get defunded or reduced funding in this 
continuing resolution--what we are finding is that a specific 
utility gamed the system so that they would not be subject to 
greater regulation and the kind of assessment necessary to test 
a particular pipe.
    So I think that when we look at regulation, we have to look 
at it in the context of is it saving lives; is it protecting 
Americans; is it cleaning the air; is it cleaning the water. 
And when we can answer those questions yes, we have to be 
willing to step up to the plate.
    The truth of the matter is that Germany has a tougher cap-
and-trade law than was being considered by this Congress, and 
while our exports have been reduced in the last 10 years, the 
exports as a percentage of market share in Germany have 
increased.
    So having said all of that, Mr. Chairman, I do have a 
question, and it is for Mr. Fredrich. You indicated, Mr. 
Fredrich, that with the health care reform legislation you 
would actually be reducing the number of jobs in your company, 
is that correct?
    Mr. Fredrich. Yes. We will lower it to whatever is under 
the limit.
    Ms. Speier. All right. So you would go from 62 to 49 
intentionally so that you would not be subject to health care 
reform, is that correct?
    Mr. Fredrich. Correct. That is correct.
    Ms. Speier. Now, you do not offer health insurance to your 
employees now, I gather?
    Mr. Fredrich. Yes, we do.
    Ms. Speier. And what do you offer?
    Mr. Fredrich. We offer a high deductible HSA.
    Ms. Speier. So that is a savings account.
    Mr. Fredrich. Health savings account.
    Ms. Speier. So they get how many thousands of dollars a 
year?
    Mr. Fredrich. What do you mean they get?
    Ms. Speier. Do you put money into their health savings 
account?
    Mr. Fredrich. No.
    Ms. Speier. So you really don't provide any money from the 
company in terms of making sure that your employees are 
insured.
    Mr. Fredrich. Sure we do. Our monthly premium for family 
coverage is $1,000, and we pay 70 percent of it.
    Ms. Speier. So you pay 70 percent.
    Mr. Fredrich. Of the premium.
    Ms. Speier. Of the premium. So is it a catastrophic policy? 
I am trying to understand.
    Mr. Fredrich. No. No, it is actually a very good policy 
because for normal things like annual checkups or mammograms or 
colonoscopies, it pays 100 percent with no deductible at all. 
But what it eliminates is people going to the emergency room 
because they have a cold, which is just a very expensive way. 
What it does try and do is put some consumerism into purchasing 
medical services, and I feel that is the problem with the 
system right now; it is a third-party payor system where people 
don't even ask what it costs. The last time you went to the 
doctor, did you ask how much does this cost?
    Ms. Speier. Well, I actually----
    Chairman Issa. The gentlelady's time has expired.
    Mr. Fredrich. Oh.
    Ms. Speier. Thank you, Mr. Chairman.
    Chairman Issa. I thank you.
    The gentleman from Texas, Mr. Farenthold.
    Mr. Farenthold. Thank you very much, Mr. Chairman.
    I wanted to followup on a couple of things that I heard 
earlier. I was a small business owner before I came to 
Congress. I think the fourth employee I hired was an employee 
to help me deal with paperwork; and I was in a service industry 
that isn't that highly regulated. So it starts as simple as 
filling out the forms for your first employee and meeting your 
tax returns, so I understand it gets in the way of doing what 
you are passionate about, building what you want to build or 
serving the people you want to serve.
    We have heard several people say that regulations actually 
create jobs. I ponder how many of those are bureaucrats and 
lawyers, or how many of those just add to the cost of doing 
business. But my real question was, Mr. Timmons, I think you 
said it is 18 percent more expensive to open a factory in the 
United States, is that an accurate number?
    Mr. Timmons. To do business in the United States, yes.
    Mr. Farenthold. Does it have to be exactly equal or are 
your members willing to pay a slightly higher cost to----
    Mr. Timmons. To do business in the United States of 
America? Absolutely. The question really is where is that sweet 
spot. I can't answer that. Every company has to make that 
decision on their own. But what we do know is that we have lost 
manufacturing jobs. It wasn't just during this last recession; 
it has been over the last 12, 14 years. And what we are seeing 
is manufacturers looking at other industrialized nations and 
other emerging economies and saying it makes more sense 
economically----
    Mr. Farenthold. And so as you look at, for instance, 
environmental regulations, you go over to Mexico, China, 
wherever you go that don't have the same regulations, and it 
gets into the same air we breathe anyway.
    Mr. Timmons. Or they have the same outcome, but their 
regulations are perhaps administered in a different way and are 
less costly to administer. I do want to point out, and I have 
said this several times, but that 18 percent number does not 
include the cost of labor. We believe that it makes sense to 
pay employees more in the United States because we believe in a 
higher standard of living here.
    Mr. Farenthold. And, Mr. Nassif, I think you hit on 
something that I wanted to talk a little bit more about too, 
and I would appreciate the rest of the panel's input on this. 
You look at some companies in the travel and entertainment 
industry. Their employees are basically threatened with getting 
fired if they say no to a customer. When you are dealing with a 
Federal agency, do you find that the attitude is we are from 
the Government, we are here to help you, how can we find a way 
for you to come into compliance with these regulations, or it 
is just a you are out of compliance with this regulation, you 
are shut down? Whoever wants to take that.
    Mr. Nassif. Each regulatory agency handles it differently. 
As I say, when we are dealing with the Department of 
Agriculture, we have a very close relationship and they have a 
very strong understanding of what our needs are, so there is 
always a nice honest dialog. When we are dealing with agencies 
like the Department of Labor, there is no such thing as we are 
your friend, we are here to help you. We are here to regulate 
you, we are here to enforce things, and we are here to punish 
you if you make even technical violations.
    Mr. Alford. That is one of my best bar jokes. You know, 
where are you from? I am from Washington, DC, and I have come 
to help you. It is guaranteed laughter there. But we are for 
regulations, good regulations. We are not against regulations; 
we are against onerous, nonsensical, punitive regulations that 
do not end up in a solution manner. And if we were to evaluate 
all our regulations, pare out the bad regulations, keep the 
good regulations, we would be a better country and we would be 
without 70 percent of the regulations.
    Mr. Buschur. Congressman, the example I cited about the 
lead paint ruling by the EPA, we had acquired all the necessary 
permits for that particular project, State permits, local 
permits, everything required was onsite, in place, and the 
actual field inspector walked on the job site and said I think 
this falls underneath the lead RRP rule and needs to be 
investigated.
    At that point we had no comeback to an OSHA inspector to 
say, no, we don't think so, all the permits, everything is in 
place. He saw the paperwork, he signed the paperwork. But he 
also stopped the job. The general contractor, as I explained, 
had to spend approximately $10,000 in suits and gear and 
training, stopped the job, slowed the job down down the road, 
and we find out that the OSHA inspector was wrong.
    Mr. Farenthold. Well, thank you very much. It is almost 
lunchtime, so I will yield back the short amount of time I have 
left.
    Chairman Issa. All of us thank you.
    We now recognize the gentleman from Massachusetts, Mr. 
Tierney, for 5 minutes.
    Mr. Tierney. Thank you, Mr. Chairman.
    This is all very interesting. I think that what we 
established early on is everybody here believes in a balanced 
economy. We think that there has to be capitalism, but there 
has to have some regulation. We want the regulation to be fair, 
we want it to be about necessary things, we want it to be 
balanced. So we have just spent a couple hours and we will 
probably spend a couple more beating that dead horse around and 
around. But to the extent that we are all here to talk about 
hyperbole, these over-the-top allegations that regulations are 
just, in and of themselves, bad or whatever, I don't think it 
makes a lot of sense.
    We had an economic collapse in 2007 that was right on the 
heels of probably what was an era known mostly for its 
excessive deregulation. So that didn't work very well, and 
particularly with respect to the financial services of Wall 
Street, but it was broader than that. And now here we are 
looking at business. In the third quarter of 2010, U.S. 
corporate profits were $1.66 trillion, trillion dollars, up 60 
percent. So if we are talking about, oh my God, over-regulation 
the last 2 years, somebody is going to have to explain to me 
how, in spite of all that onerous regulation and the dearth of 
jobs and corporate success, they managed to make a 60 percent 
increase and $1.66 trillion.
    So I think what we want to do is weed out the hyperbole, 
get down to it. If we want to have hearings on specific 
regulations that we think are onerous or bad, let's have the 
hearings. I mean, I come from a community that can tell you 
story after story about the fishing regulations from NOAA. So I 
am not opposed at all to looking at those regulations, and we 
passed regulations and laws that we proposed to deal with what 
we think was excessive enforcement, excessive application and 
bad regulations. So that is what this committee should be 
about, not this general hyperbole about all regulations, and 
somebody supposedly likes regulations and somebody doesn't. It 
amounts to a bunch of nonsense.
    But just to make a point on some of this, the talking 
points that we get from some industries on an area that I 
happen to know something about that on that, and I don't want 
to seem like, Mr. Alford, I am coming at you, but you were the 
loudest and the most aggressive about this, and I want to maybe 
give you some information that apparently you don't have, 
because it seems to me you were getting the private college 
talking points back to us.
    You made a point about student loans not being taken away 
from Sallie Mae and groups like that. We saved $60 billion in 
taxpayer money, $60 billion. And what do we do with it? Besides 
paying down some on the debt, which is a problem that we all 
have, we increased Pell Grants for students who needed to have 
access to college; we reduced the interest rates on student 
loans for students that need to be able to get through school; 
we had an increase-based repayment program so that now students 
can get out of school and have a set amount of money they pay 
down their loans, knowing that it won't be a barrier to entry 
and that it can be a way for them to take a job that they want 
when they get out and to stay going on that; and we put money 
into community colleges so that they can cooperate with 
industry and labor and the work force investment board's public 
sector to make sure people have the skills and education ready 
to take jobs. Maybe we should have a hearing about that and go 
forward.
    But you talked also, Mr. Alford, about the student loan 
default regulations and private for-profits, so let me tell you 
a little bit of information we have had on hearings in the 
Education Committee and the information that comes from that. 
It is set up to protect students from taking on unsustainable 
debt. It is a debt that they can't repay. It is to protect the 
taxpayers from high loan default rates.
    The Higher Education Act specifically put in a provision, 
and we wrote it, so we know, career education programs that 
receive Federal aid must prepare students for a gainful 
employment in a recognized occupation. Now, regulation doesn't 
just target the for-profits; it applies to all of the 
institutions. It doesn't affect students' ability to get a 
loan; it talks about the universities and the colleges. 
Students, they are held accountable for life. If they get a 
loan to an institution that doesn't provide them with the 
education or skills to get a job, they can't shake it. It 
affects whether they can buy a house; it affects whether or not 
they ever have to go into bankruptcy, which is very difficult 
for them. It affects every decision they make, their credit 
rating and so on down the line.
    Colleges, however, aren't generally held accountable at 
all. So this regulation doesn't even target the whole college; 
it just targets those programs within the college that have a 
very low repayment rate and a very high debt burden to those 
students. The college eligibility for student aid is tied to a 
specific credit default rate. You might want to know that the 
Cohort default rate for for-profits is the highest; it is 
double the national average, it is 25 percent of the students 
that go to those institutions default on that. Private not-for-
profits is 7.6 percent, and the public is only 10.8 percent. 
For-profits enroll 1 out of every 10 students, but they get $1 
out of every $4 in Federal aid.
    So this is all about protecting the taxpayers' money and 
protecting those students who end up with a big debt and no job 
in a place that they can get it on that.
    Now, in 2007, 92 percent of the undergraduates in the for-
profits borrowed----
    Chairman Issa. The gentleman's time has expired. Is there a 
question?
    Mr. Tierney. No, there is not a question. There is an 
educational process going on here since we were talking about 
the education, and maybe a suggestion to the chairman that 
instead of all this hyperbole, we talk about specific 
regulations that might be a problem that we can all agree on 
ought to be addressed. But I am happy to yield back.
    Chairman Issa. I thank the gentleman.
    We will now recognize the gentleman from Pennsylvania who, 
for 57 years, he and his family have been small business 
people; I think that comes out to be since 5 years old he has 
been a small businessman, for 5 minutes, Mr. Kelly.
    Mr. Kelly. Thank you, Mr. Chairman. First of all, I want to 
thank all the panel for being here. It is interesting to get a 
lesson from people that are running a business. It is $1\1/2\ 
trillion in the red each year, year after year, and I am sure 
you are going to take that home and really learn from that.
    But for people who really do have skin in the game and 
people who do survive by doing it on both knees and looking 
into the abyss, I have done it myself and I know how close we 
come each day to not having our businesses anymore, so would 
you please, if you could, just take a few minutes. Because the 
true trick is not pulling a rabbit out of the hat, it is 
putting the rabbit in the hat to begin with. And I think that 
this body needs to understand that where small business comes 
from, where business comes from is not from government, it is 
from the private sector.
    Mr. Buschur, I know what you are going through; I go 
through the same thing. My business is down over 35 percent. 
Mr. Fredrich, I understand what it is like to look into the 
abyss, I have done it many times myself. The magic hours, the 
bewitching hours, which most Members of Congress have never had 
to face because they don't sign the front of these checks, is 
between 2 and 4 a.m., when your body may be fatigued, but your 
mind won't let you sleep.
    So, if you could, just walk us through some of the things 
that you have had to do to keep your businesses open, keep jobs 
alive in your community, and what you have had to do. So each 
of you if you could just take a few minutes and maybe educate 
us on what we need to hear and what the country has to hear 
from the people who truly do lead this country, and that is the 
small business people.
    Mr. Buschur. I guess one of my largest experiences last 
year was in order for my company to bid public work and 
continue to receive bonding, because of the previous year being 
extremely poor, I had to financially put additional six figure 
dollars into the business so I could secure bonding, which, 
again, allowed us to bid those jobs but prevented us from 
replacing trucks, from replacing bending equipment, things like 
that we should have to be more efficient and be on top of our 
game.
    It has just been a real tough battle to survive the 
problems and the regulations being slapped on us. In all 
honesty, I respect what is being said and I am not anti-safety 
or anti anything like that; I just think it needs to be done as 
a team, and not as someone telling you here is what you are 
going to do and here is what you have to do, and there is no 
explanation for reasons why.
    Mr. Fredrich. Well, you will laugh when you hear this, but 
one of the things that I have done is I built, well, I call it 
the penthouse in our plant. I live 70 miles from our facility; 
our facility is in Manitowoc and I live in Fond du Lac. So I 
leave on Monday morning from home and I stay in our plant every 
night, Monday, Tuesday, Wednesday, and Thursday night; then I 
go home on Fridays. I used to stay in the fashionable Comfort 
Inn, but that is $70 a night and that adds up, so now I am 
living large; I have a bed, I have a recliner, I have a 36-inch 
flat screen TV, and I sleep in the plant with my dog.
    Monetarily, the hardest thing for any business is cash-
flow. When you run out of cash-flow, you are dead; you can't go 
anywhere. And I would hear talking about the recovery, we need 
to get the banks to lend money so companies can make payroll 
and hire people. If you have to borrow money to make your 
payroll, you are dead, usually. Maybe there are rare occasions, 
but you are dead.
    So there have been times when I have had--and when we first 
started, I said we closed our business 1 month after 9/11 and 
we went into a recession, and we almost went out of business; 
and we would have had we not been with a privately held bank 
who knew us. He knew us as people and we weren't going to run 
away from it; and we never missed an interest payment or a 
principal payment, but we lost money. And there were many times 
when I would have to write a check on my personal savings to 
cover payroll. Had to do it.
    Or I would have to pay a supplier, because there are some 
suppliers, you guys don't know this, but there are some 
suppliers which can kill you and others which you can push off. 
We always push off like attorneys and accountants and those 
guys, because they are not going to get anything from us anyway 
unless we stay in business. But raw material suppliers? No, 
can't do it. You have to pay your taxes, you have to pay all 
your employment taxes. You don't do that, you go to jail. And 
we can't print any money like you guys; we can't turn on the 
press----
    Mr. Kelly. Not all you guys, OK?
    Mr. Fredrich. OK, some of you.
    Mr. Kelly. I am with you.
    Mr. Fredrich. Anyway, so it is--and somebody asked the 
question would you do it all over again. You said no. I would. 
I love it. I absolutely love it. It is like a great rush every 
day. It is full of, full of frustration, but I love it, and I 
wouldn't do anything else.
    Mr. Kelly. Well, God bless you for what you are doing. I 
understand. I have 110 people that rely on me to make sure that 
every 2 weeks they can cash a check, so I am with you.
    Chairman Issa. I thank the gentleman.
    We now recognize the very affable, happy gentleman from 
Missouri, Mr. Clay.
    Mr. Clay. Thank you, Mr. Chairman, and thanks for 
conducting this hearing. You know, I think it is important that 
our committee's work be based on fact rather than rhetoric. 
Recently there have been many statements asserting that over-
regulation has resulted in massive job losses. But, in fact, it 
was deficient and sometimes nonexistent regulation of the 
financial sector that resulted in the financial collapse and 
loss of more than 8 million jobs. Alan Greenspan testified 
before this committee in 2008 about regulation. Here is what he 
said: ``I made a mistake in presuming that the self-interest of 
organizations, specifically banks and others, were such that 
they were best capable of protecting their own shareholders and 
their equity in their firms.'' That is why it is so important 
that Congress passed the Wall Street reform bill last year to 
increase transparency and accountability.
    Now, a lot of the letters that the committee received from 
major companies criticized the Wall Street reform bill, but the 
provisions they criticized had little to do with jobs, and let 
me give you a few examples. The companies complained about 
having to disclose CEO compensation; they complained about 
having to return bonuses when corporate earnings were inflated; 
and they complained about requiring all companies to disclose 
payments to foreign governments.
    This is a panel-wide question. You know, these provisions 
are all about disclosure and transparency, so let's start with 
Mr. Buschur. Do you think disclosing CEO compensation prevents 
a company from creating jobs?
    Mr. Buschur. I am not sure, sir, it would prevent a company 
from creating jobs. I assume you are talking public companies, 
not private companies?
    Mr. Clay. Public companies.
    Mr. Buschur. Public companies? As a stockholder of public 
companies, I think I have that right to have that disclosure, 
and I wouldn't be objectionable to it, and I can't see what 
harm it would do.
    Mr. Clay. OK.
    What about you, Mr. Fredrich? Does disclosing CEO 
compensation----
    Mr. Fredrich. I think it is no one's business. It is 
already disclosed to the Internal Revenue Service. And what I 
do with my company, since I take 100 percent of the risk, is my 
business, not anybody else's. And you made one point which I 
must ask you about, returning bonuses related to overstated 
earnings.
    Mr. Clay. Yes.
    Mr. Fredrich. Fannie Mae had that situation, overstated 
earnings. Bonuses were paid. Were they returned?
    Mr. Clay. Well, they were caught, weren't they?
    Mr. Fredrich. They were not returned.
    Mr. Clay. They were caught, weren't they?
    How about you, Mr. Alford?
    Mr. Alford. I have no problems with it, sir. I think it is 
rather snoopy, but I have no problems with it.
    Mr. Clay. OK.
    How about you, Mr. Nassif?
    Mr. Nassif. Our business is as an association, we are not 
for-profit, but we run several for-profit corporations. I 
believe that people who are involved in public corporations 
should disclose all compensation; people in government should 
disclose all compensation; people who are taking Federal funds 
based upon needs may need to disclose that same compensation 
because they need to justify the need for the loan.
    Mr. Clay. Thank you for your response.
    Mr. Timmons.
    Mr. Timmons. Yes, Mr. Clay. All the issues that you brought 
up are not ones that were addressed in our letter, and you also 
talked about the financial services reform legislation. 
Obviously, that is not the industry that we represent, so we 
did not oppose or support that legislation. I think that 
arguments can be made on both sides of the question, on the 
question that you asked specifically, and one thing that I 
think is very important is that any regulatory requirements not 
create a situation where a political argument could be made or 
a populist argument could be made against a company and take 
the company off of its mission to create the products that they 
are trying to create. And sometimes I think that type of 
information can cause that.
    Mr. Clay. Mr. Timmons, since we are on the subject of job 
creation, what are your thoughts and NAM's on the outsourcing 
of American jobs?
    Mr. Timmons. One of the points that I made earlier, sir, 
was that it is 18 percent more expensive to do business in the 
United States when you don't factor in the cost of labor, but 
you are looking at the cost of regulation, you are looking at 
the cost of energy in this country, and you are looking at tort 
costs. And what we see is that many companies are having to 
make very painful decisions to locate elsewhere not only to be 
closer to their customer base, but to be able to compete and 
succeed in a very competitive international marketplace. We 
want jobs to be created here in this country; that is why we 
exist. We want to see manufacturing flourish in the United 
States and we want it to continue to grow and to be a vital 
part of economic growth and job creation here.
    Mr. Clay. And that is why you fought so hard in closing tax 
incentives, to stop outsourcing? Your association has fought 
hard to stop tax incentives----
    Mr. Timmons. To stop what?
    Mr. Clay [continuing]. For outsourcing. For outsourcing 
jobs.
    Mr. Timmons. What specific piece of legislation are you 
talking about?
    Mr. Clay. Well, last year you opposed the payroll tax 
holiday and then----
    Mr. Timmons. I am not sure that is correct, sir.
    Mr. Clay. Yes you did.
    Mr. Timmons. But I would be happy to----
    Mr. Clay. You fought closing tax incentives to stop 
outsourcing of American jobs.
    Mr. Timmons. We may have some disagreements on exactly what 
issue you are talking about,----
    Mr. Clay. OK, well----
    Mr. Timmons [continuing]. But I would be happy to talk to 
you afterwards.
    Mr. Clay. Yes. I will share it with you.
    Mr. Timmons. Thank you.
    Mr. Clay. Thank you.
    I yield back.
    Chairman Issa. Would the gentleman yield? Were the 
gentleman's questions on pay compensation? I have the actual 
report. Are you speaking to the two letters that came in from 
American Express and the Business Roundtable, out of over 300 
letters, that referred to the golden parachute compensation and 
the pay ratio in the Dodd-Frank bill? Are those the items you 
were referring to?
    Mr. Clay. Yes.
    Chairman Issa. OK, so it is two out of three hundred and 
some letters, 2,000 pages. OK, I thank the gentleman.
    We now recognize the gentleman from Michigan, Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman, and thank you to the 
panelists for being here. Appreciate your candidness, 
appreciate your willingness to come and deal with these issues 
of concern.
    Mr. Timmons, I thank you for your testimony. It is clear 
that we both share some key concerns over how OSHA is carrying 
out its regulatory responsibilities and how it can be dealt 
with, particularly as subcommittee chair for work force 
protections on the Education and Workforce Committee. I am 
interested in your comments. I will be hosting or conducting a 
hearing next week investigating OSHA's particular regulatory 
agenda and its impact on job creation, so I appreciate in your 
testimony you pointing out how a single company could be 
burdened with a $1 billion price tag for compliance costs with 
the proposed noise regulation.
    Could you describe in more detail, if possible, what 
administrative or engineering controls your members would have 
to create in order to comply with that noise proposal?
    Mr. Timmons. I think each company looks at what they would 
have to do, so I can't say specifically. But what I can say is 
that--and I was in one of our companies just about a month ago, 
and they were not aware of this particular regulation that was 
being considered, and they have noise abatement procedures, the 
little foam earplugs you have probably seen, and they actually 
have a medical facility on campus to ensure that--well, for 
many reasons, but one of the things that facility does is to 
make sure that those devices are working appropriately. I don't 
know what the cost of those are, but they are probably less 
than a quarter a day per worker.
    And when I asked that particular company what they would 
have to do to get their noise level down to about 90 decibels, 
which is, I believe, what the regulation was calling for, that 
is also about the sound of a flute being played over a 
prolonged period of time, they nearly hit the floor when they 
started thinking about it and what they would have to do, and 
whether technology even existed to be able to do that.
    So it was a stark realization on their part that the 
investment they would have to make would be very severe, would 
make them less competitive and potentially cost jobs. But I can 
try to get you some specific information on the components and 
what those components would be for representative manufacturing 
facilities.
    Mr. Walberg. I would appreciate that. Thank you.
    Mr. Fredrich, thank you for your testimony and thank you 
for using your dime to come on out here; I appreciate it.
    Mr. Fredrich. You are welcome.
    Mr. Walberg. I assume that your employee lead compliance 
efforts are effective in preventing injuries and illnesses. 
Could you expand on the steps you take to ensure employee 
safety?
    Mr. Fredrich. We have a safety committee and it is, I 
think, 8 or 10 people from all over our plant. We have some 
management people, people who run machines, supervisors, and 
what we do every month is we walk around the plant, 65,000 
square feet, and we look for problems. We look for areas that 
could cause an injury. Then we document those and then we give 
any changes or the fixes that are required to our maintenance 
people, and that is their first priority to fix that.
    In addition to that, once a quarter our worker's comp 
carrier comes into our plant. Somebody mentioned OSHA being 
more of an educator. Well, the worker's comp carriers do the 
same thing. I mean, they are an educator, and it is always good 
to have somebody else look at your plant, because they see 
things that you overlook. It always happens.
    Mr. Walberg. And you do this voluntarily, what you are 
telling us?
    Mr. Fredrich. Oh, absolutely. Yes. The last thing we want 
to do is have somebody hurt. I mean, the worst thing that 
happened to us was we had one fellow cut two fingers off, and 
he did it by wrapping a rubber band around a safety switch on a 
press. So he circumvented the safety mechanism and he cut his 
fingers off. I mean, that was bad, but I don't know what you do 
to protect yourself against something like that.
    But it is a big cost for us and we have a strong, strong 
incentive to reduce that cost because it literally costs more 
than our health insurance. And we have the ability to manage 
it, and that is the key; we can manage it and we can reduce our 
rating. You are familiar with the MOD ratings for 
manufacturers. Our MOD rating is .93. If we can get that down 
to 0.7 or 0.6, then our premium is down and we save money, and 
we can only do that by having a safe environment.
    Mr. Walberg. Do you pay out incentives? Do you pay out 
incentives for----
    Mr. Fredrich. We do. Absolutely. If we don't have a work-
related injury, a loss time injury, we pay $15 a month cash to 
everybody. If we do have a work-related injury, it kind of 
starts over; you start at zero, then it goes to $5, then $10, 
and then $15.
    Mr. Walberg. Thank you.
    And thanks for the extended time.
    Chairman Issa. I thank the gentleman.
    The very patient gentleman from Oklahoma, Mr. Lankford, for 
5 minutes.
    Mr. Lankford. Thank you, Mr. Chairman.
    Since it is lunchtime, let me start by talking about food 
and fiber. Can we do that? And let's talk about an agriculture 
question. Mr. Nassif, thank you for being here and, for all of 
you, thank you for being here.
    Would you guess, and just give me a ballpark guess, based 
on the regulations that are coming down and that had been 
coming down onto the agricultural industry, on the effect it 
would have on the cost of food and also the number of jobs that 
are affected, based on the regulations that have happened? And 
you can pick any time period, the last 10 years, 5 years, 
whatever it may be.
    Mr. Nassif. Well, clearly, the cost of adhering to the 
regulations limits the amount of capital that is available for 
investment in technology, in conservation, in the environment, 
and in adding more jobs to the work force. Because agriculture 
is so diverse, there is no way to say what it is for 
agriculture. I represent the fresh produce people. We grow 
fresh fruits, vegetables, and tree nuts like almonds and 
walnuts; and each of those industries is different. We have 
about 300 different commodities that we represent. Each 
commodity is different.
    And the effect on regulations and the profitability is 
different depending on what growing region you are from and 
what the climate is during that particular growing region. But 
I think the thing people have to understand is that for the 
growers the margin of profit may be 2 percent, so there is not 
a lot of room for that. And as I stated earlier, we don't set 
prices, so the more cost we have added, the less likely we are 
going to be competitive, which means that the retailers and the 
food service companies are less likely to buy our products.
    Mr. Lankford. So would you say that the regulatory 
environment is increasing the number of jobs in agriculture or 
decreasing the number of jobs in agriculture?
    Mr. Nassif. Only administrative jobs.
    Mr. Lankford. OK. So if you had the choice of hiring 
another compliance officer or hiring another person to actually 
handle product, which would you choose?
    Mr. Nassif. Well, we would much rather hire people to 
handle product, but sometimes we are forced to do the other.
    Mr. Lankford. Right. Jobs are being created, but they are 
in compliance officers, basically fulfilling regulatory 
requirements, is what you are saying on that.
    Mr. Nassif. Yes. Big increase in employment in that sector.
    Mr. Lankford. OK.
    Just as a random question for everybody, if you had to, 
right now, make a decision based on the regulatory environment, 
to hire a person or to put a robot in that place to do it, it 
is an interesting thought to think. If you could just avoid all 
the regulations, not have to deal with all the regulations, I 
am just going to put a robot in that spot to do that same job, 
would there be a tendency among anyone to say it is almost 
safer to put a robot there than it is a person, because then I 
wouldn't have all the OSHA requirements, all the additional 
stuff that is added to it as well?
    Mr. Nassif. I think there is certainly a move toward 
increased technology because of the problems created by the 
regulatory burdens in hiring more people, so it is a 
disincentive to hire those people and an incentive to do more 
technology and----
    Mr. Lankford. Just to do it in mechanized so I don't have 
to deal with all that regulation.
    Mr. Nassif. Yes.
    Mr. Lankford. Were you going to say something as well, Mr. 
Fredrich, or someone else?
    Mr. Fredrich. We are installing a robot right now.
    Mr. Lankford. OK. And that is somewhat just to avoid all 
the regulatory requirements that are there. Obviously, you have 
a one-time purchase for that person, then you don't have to 
deal with all the long-term costs and things with that, or is 
there some other reason for that?
    Mr. Fredrich. Productivity.
    Mr. Lankford. OK.
    Mr. Fredrich. It is productivity.
    Mr. Lankford. OK.
    Mr. Fredrich. But, you know, if we didn't have the robot, 
we would have to have two people on one press, so now we have 
one. But, you know, we don't get rid of that person; we 
hopefully have another job for him.
    Mr. Lankford. Right.
    Mr. Timmons. Productivity gives you the ability to enhance 
your operations elsewhere and hopefully hire more people.
    Mr. Lankford. Hopefully so. Let me ask something of you. 
The predictability of the regulations that are coming. I would 
assume you don't wake up every morning, read the newspaper, and 
then go read the government Web site to find out new 
regulations are coming onboard; you have trade agencies and 
such that are helping you take care of that. Is there a 
predictable schedule that you can look at and say I know every 
6 months or every year I am going to get some new list, or do 
they seem to come all the time? And anyone can respond to that.
    Mr. Alford. With this administration, it is lightning speed 
and always a surprising group or mass of new regulations. It is 
wild. It is a runaway freight train.
    Mr. Lankford. Would it help you to have some sort of 
predictability to say new regulations come out at a certain 
moment, and that way you are not having to worry about every 
day the rules are changing on me or the rumor the rules are 
changing?
    Mr. Alford. That would be very helpful, sir.
    Mr. Lankford. OK. For anyone else would that be helpful to 
you, to have some sort of predictability?
    Mr. Buschur. It would be tremendously helpful. In our 
industry, in the construction industry, we are fighting the 
same issues; there are rules and regulations coming out every 
day that you hope you are within the guidelines of, but there 
is no way you can practically keep up with what is happening at 
the speed it is happening right now.
    Mr. Lankford. OK. And you are dealing with both State 
regulations, I assume, and also Federal regulations. Do you 
deal with Federal regulations that the State and the Federal 
are in conflict or they are trying to regulate the same thing 
or the same practice?
    Mr. Buschur. Absolutely.
    Mr. Lankford. Anyone else dealing with that as well?
    Mr. Nassif. Yes, we are.
    Mr. Lankford. OK.
    Mr. Timmons. Sure, you always deal with that. On your 
question of certainty, let's look at the EPA regulations that 
were set 5 years ago, or 2 years ago, pardon me, and they were 
supposed to be in effect for a number of years, and the agency 
decided to reopen those regulations.
    I think that is another thing to look at. If a regulation 
is set, it needs to be set, because, from the manufacturing 
sector, we try to align our businesses with the regulatory 
regime that we know. Now, if we are trying to look at every 
regulation and see what makes sense from a competitiveness 
standpoint, and we are going to increase competitiveness, then 
that makes sense. But if it is just simply to increase the 
regulatory threshold, that really doesn't make sense and it 
harms our ability to respond appropriately to the regulatory 
regime.
    Mr. Lankford. Terrific. Thank you.
    Mr. Nassif. When I became president of Western Growers, one 
of the things I vowed to do was to be more proactive and not so 
reactive, because that is what agriculture had been. I can tell 
you I failed at that miserably, because there is so much to 
have to react to, so many new rules and regulations constantly, 
from across the board, State, Federal, local regulations, that 
it is impossible to be as proactive as is necessary to achieve 
the economic goals of an association.
    Mr. Lankford. Terrific. Thank you. Thank you very much, 
gentlemen.
    Chairman Issa. I thank the gentleman.
    I now recognize the ranking member.
    Mr. Cummings. I want to thank the chairman for yielding. 
Mr. Chairman, I just would like to correct the record on an 
important issue.
    Earlier in the hearing we heard about a letter from Stanley 
``Goose'' Stewart, a coal miner injured in the Upper Branch 
Mine in West Virginia. His letter was very compelling and he 
argued in favor of greater regulation of coal mining companies. 
The chairman, you made a statement, and I want to just clarify 
it. You said that mine safety was not raised in any of the 
responses the committee received. In support of this statement 
you entered into the record the appendix of the report your 
staff prepared for today's hearing.
    Mr. Chairman, the fact is that one of the witnesses here 
today, the Mercatus Center, did criticize the proposed mining 
regulation in its submission to the committee. In addition, the 
appendix you entered into the record states on page 82 that the 
Business Roundtable also raised concerns with rules that 
require mining companies to disclose information about mine 
safety and health standards. So Mr. Stewart's letter was right 
on point.
    And just for clarification sake, Mr. Chairman, you were 
talking to Congressman Lacy Clay and you mentioned that there 
were 2 of the 300 responses from the Business Roundtable that 
represents--but we want to keep in mind that they represent 
more than--and I think this was with regard to compensation, 
executive compensation. They represent 13 million employees, $6 
trillion in annual revenue, and member companies comprise 
nearly one-third of the total value of the U.S. stock market. 
So just wanted to just for clarification sake.
    Chairman Issa. I thank the gentleman.
    Mr. Cummings. Appreciate it.
    Chairman Issa. And I will be brief in my closing here. 
Mercatus we will hear from later. The Business Roundtable, I 
guess maybe I missed the fact that was the group the President 
asked for for input from. But having said that, just briefly, 
Mr. Fredrich, are you ISO 9001, 9002? Do you subscribe to that?
    Mr. Fredrich. Yes. We were first certified in 2003 and then 
re-certified in 2009.
    Chairman Issa. And that allows you to sell in Europe 
without the Europeans inspecting you because a voluntary 
standard of quality and so on? You are certified, basically, so 
that they don't come and secondarily inspect you the way so 
often other agencies here in the United States do, is that 
correct?
    Mr. Fredrich. The toughest inspections we have are from 
customers. Customers will send in their quality people and they 
will give us a really good exam. But then we also have internal 
audits and then we have the external quality audit.
    Chairman Issa. Mr. Timmons, sort of right in the mainstream 
of NAM, Boiler MACT, M-A-C-T, isn't it true that the EPA 
finding that it was an unachievable goal, asked for additional 
time, went to the court basically because of their failed 
regulatory policy? They made it a rule, then went to the 
Federal court trying to delay it, and eventually have been told 
no; essentially fix your own problem, we are not going to delay 
implementation of a bad law that currently can't be achieved, 
is my understanding? Isn't that true?
    Mr. Timmons. That is correct.
    Chairman Issa. OK. So perhaps how do regulations block 
private sector job creation may not be the best, but it 
certainly seems that there is one or more that are real 
impediments to job creation in each of your industries.
    I want to thank all of you for being here today. We have a 
second panel that is going to start promptly at quarter to 1. I 
would keep you all here for round after round. I suspect that 
the specifics that you have been able to give here today could 
be enhanced many times fold. None of it was hyperbole; all of 
it was in fact what I thought were good responses to real 
questions when they were given. And for the small businesses 
that came here on their own dime and make sacrifices every day 
to make sure their employees are safe, have health care, and 
they get paychecks before you do, thank you again.
    We stand in recess until 12:45.
    [Recess.]
    Chairman Issa. The hearing will now reconvene. I would like 
to recognize our second panel of witnesses and thank you for 
your patience. Hopefully, it was as educational for you on the 
first panel as it was for the rest of us.
    Our first witness, Mr. James Gattuso is a senior research 
fellow at Heritage Foundation, a research and education 
institution whose mission is to formulate and promote 
conservative public policies.
    Mr. Sidney Shapiro is associate dean for research and 
development at Wake Forest University School of Law and vice 
president of the Center for Progressive Regulation.
    Ms. Karen Kerrigan is the president of the Small Business 
and Entrepreneurship Council, an advocacy and research 
organization with over 100,000 dedicated members protecting 
over 100,000 small businesses and promoting entrepreneurship.
    Dr. Jerry Ellig is senior research fellow at Mercatus 
Center at George Mason University, a research center dedicated 
to using market-oriented ideas to bridge the gap between 
academic ideas and the real world.
    Pursuant to the rules, all witnesses will be sworn in 
before testifying. Would you please rise, raise your right 
hands?
    [Witnesses sworn.]
    Chairman Issa. Let the record indicate all responded in the 
affirmative.
    Mr. Gattuso, as you may have heard on the first round, 5 
minutes for your opening statements. We realize your opening 
statements are much more thorough, and they will be included in 
the record fully. I won't cut you off exactly at 5 minutes, but 
I will start circling my fingers. Please.
    Mr. Gattuso. I will do my best.
    Chairman Issa. Thank you.

    STATEMENTS OF JAMES GATTUSO, SENIOR RESEARCH FELLOW IN 
  REGULATORY POLICY, THE HERITAGE FOUNDATION; SIDNEY SHAPIRO, 
 CENTER FOR PROGRESSIVE REFORM; KAREN KERRIGAN, PRESIDENT AND 
  CEO, SMALL BUSINESS AND ENTREPRENEURSHIP COUNCIL; AND JERRY 
 ELLIG, SENIOR RESEARCH FELLOW, MERCATUS CENTER, GEORGE MASON 
                           UNIVERSITY

                   STATEMENT OF JAMES GATTUSO

    Mr. Gattuso. Chairman Issa, Ranking Member Cummings and 
members of the committee, thank you for the opportunity to 
testify today on this important topic.
    The American people deserve a regulatory system that works 
for them, not against them; a regulatory system that protects 
and improves their health, safety, environment, and well being, 
and improves the performance of the economy without imposing 
unacceptable or unreasonable costs on society. Regulatory 
policies that recognize the private sector and private markets 
are the best engine for economic growth. These words come from 
Executive Order 12866, issued in 1993 by President Bill 
Clinton. The statement concludes that the regulatory system 
falls short of these goals. That is truer today than it was 18 
years ago.
    From the lighting in their homes to the volume of their 
television sets to the cars they buy, Americans today are 
facing an unprecedented tide of red tape in their lives; red 
tape that is increasing prices, reducing innovation, and 
destroying jobs.
    Last fiscal year, the number and cost of new regulations 
imposed by Federal agencies reached unprecedented levels. Based 
upon reports from the Government Accountability Office, in 
fiscal year 2010 alone, some 43 major new rules increasing 
regulatory burdens were issued by Federal agencies. That is 
higher than any other year on record. The total annual cost for 
these rules, based on estimates by the regulators themselves, 
tops $26\1/2\ billion, the highest level since at least 1981, 
the earliest date for which records are available. Many more on 
the way.
    The costs imposed by these rules vary as much as the 
regulations themselves. One cost, perhaps surprisingly to many, 
can be in terms of decreased safety. Several Members mentioned 
safety concerns, as they should, in the discussion during the 
first panel, and certainly many, many regulations are essential 
to preserving safety. But we shouldn't forget that safety can 
also be decreased by regulations; it can be a cost. I point 
specifically to cafe rules, fuel economy rules that have forced 
Americans into smaller, less safe vehicles, causing many 
deaths; and even airline safety, where specifically such rules 
as child safety seats have induced Americans to drive rather 
than fly, moving them to a less safe mode of transportation.
    Our specific subject here today is the cost in terms of 
jobs. You have heard from many other witnesses how many jobs 
may be destroyed or not created because of particular 
regulations. But no businessman needs an academic study to know 
how regulations affect their bottom line and can stop them from 
hiring new workers.
    A couple of points I want to stress, though. First, 
economic studies can only capture effects on existing 
industries, or at least predictable industries and 
technologies. The dogs that don't bark are not counted. New 
technologies that are stunted, new products that are never 
brought to market, and ideas that never are acted upon don't 
make it into the statistics that these are real costs of 
regulation.
    Also, I want to point out that regulations can create jobs 
as well as eliminate them, but this is not always a good thing. 
For instance, a new regulation can, and in fact usually does, 
create more demand for lawyers, lobbyists, and even regulators 
themselves. This may increase the job rolls, but is not an 
increase in wealth or prosperity for society.
    For the same reason, policymakers should be wary of claims 
about new rules creating green jobs. Green jobs can be 
productive, can increase wealth in society, but not if those 
jobs are based on artificial mandates or restrictions that are 
not otherwise justified. If they are justified only in terms of 
creating the job, they add nothing to prosperity, so that is 
something for policymakers to watch out for.
    The bottom line: it is critical that policymakers increase 
scrutiny of new and existing rules to ensure that each is 
necessary and that costs are minimized. President Obama has 
recognized this and has taken a welcomed first step toward 
reform by announcing that he and his administration would look 
harder at existing rules that are already in the books. I am a 
little bit concerned, however, that review is not stringent 
enough.
    In fact, if you look at the language of the Executive order 
issued by the President, it only asks agencies to come up with 
a preliminary plan for regulations to review, rather than to 
come up with actions directly. It is a very small first step. 
And the fact that it does not include independent agencies, 
which are some of the primary producers of new regulations and 
regulations on the books, is a matter of concern and a loophole 
in this review.
    Let me just say, to followup, I am encouraged by the 
actions of this committee and the work in focusing attention on 
this important problem and in identifying and asking for 
information from businesses who are affected by regulation and 
by the public in getting information.
    Last, I have several legislative proposals I think the 
committee should look at. Let me just list them. I think the 
Congress should be required to approve all new rules in order 
to increase accountability; I think that there should be a 
regulatory impact statement prepared by a new congressional 
regulation office to allow Congress to get more information 
about rules; and, last, there should be a sunset period for all 
rules after, say, 5 or 6 years, in order to ensure that they 
are doing their job and that bad rules are taken off the books.
    With that, again, I want to thank you for the opportunity 
to testify today.
    [The prepared statement of Mr. Gattuso follows:]

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    Chairman Issa. I thank the gentleman.
    Mr. Shapiro.

                  STATEMENT OF SIDNEY SHAPIRO

    Mr. Shapiro. Thank you, Mr. Chairman.
    Regulatory critics contend the cost of regulation has kept 
the U.S. business community from participating more fully in 
our Nation's economic recovery. Upon examination, however, it 
turns out that a focus on regulatory costs is a flawed way to 
examine the usefulness and necessity of government regulation, 
or to determine whether or not regulatory costs are hindering 
the Nation's economic recovery.
    The focus on regulatory costs is misguided for four 
reasons. First, as we heard discussed in the last panel this 
morning, the cost of regulation in isolation proves nothing 
because it ignores the benefits the regulation brings to the 
public and the economy. The best measure of this is the OMB 
report submitted annually to Congress. The last one, covering 
the last 10 years of major Federal regulations, found total 
benefits of between $128 and $616 billion and costs of no more 
than $43 to $55 billion.
    Now, this finding refers to aggregate net benefits, which 
means that some individual regulations may not have benefits 
that exceed costs. But, in our experience, this result usually 
results from the difficulty of monetizing regulatory benefits 
rather than the lack of any such benefits.
    Second, retrospective studies show that industry estimates 
of regulatory costs submitted to agencies for purposes of 
rulemaking are often too high. This result should not be 
surprising; regulated entities have strong incentives to 
overstate potential costs to regulators and to Congress. As 
Representative Quigley pointed out, the National Association of 
Manufacturers had dire predictions for the Clean Air Act, none 
of which were borne out.
    Third, a recent study on regulatory costs authored by 
Nicole and Mark Crane for the SBA Office of Advocacy, which 
claims regulation had an annual cost of $1.75 trillion in 2008, 
is unreliable evidence concerning regulatory costs. I discuss 
this study in detail in my written testimony. Let me mention 
only one problem. About 70 percent of the regulatory costs 
estimated by Crane and Crane are based largely on a decidedly 
unusual data source for economists, public opinion polling, the 
results of which Crane and Crane massage into a massive, but 
unsupported, estimate of the costs of economic regulation.
    Because Crane and Crane have refused to make their 
underlying data or calculations public, apparently even 
withholding them from the Small Business Administration office 
that contracted for the study, it is difficult to know 
precisely how they arrived at the result that economic 
regulation has a cost of $1.2 trillion. Nevertheless, based on 
what we know, we should be wary of their claim. As mentioned, 
their estimate of economic regulatory costs is based on the 
results of public opinion polling, specifically, polls 
concerning the business climate of countries that has been 
collected in a World Bank report. The authors of the World Bank 
report warned that its results should not be used for exactly 
the type of extrapolations made by Crane and Crane because 
their underlying data are too crude.
    Finally, like any spending, the costs of regulation 
generate economic activity because the money is spent on goods 
and services, thereby generating jobs. As also pointed out this 
morning, the literature does not support the conclusion that 
regulation regards economic recovery. In my written testimony I 
describe some of the study's findings that regulation does not 
lead to a net job loss. One of these studies, by Resources for 
the Future, concludes that the claim that regulatory spending, 
``reduces employment in heavily polluting industries is not 
supported by the data.'' I might note that this includes 
petroleum refining, which was discussed this morning as being 
disadvantaged by regulation.
    I would also like to point out that studies by Evan 
Goldstein, also mentioned this morning talking about pollution 
havens and why jobs are sent overseas, Dr. Goldstein found that 
the large amount of the percentage of difference in costs 
between manufacturing jobs here and in places like India and 
China are related to wages, and that only maybe 1 or 2 percent 
of the difference in costs between manufacturing abroad and 
manufacturing here can be related to regulation.
    So I thank you for the opportunity to testify. Although it 
is clear that regulated entities do not always like regulation, 
this does not mean that regulation is the cause or even a 
contributor for economic and unemployment woes. The evidence to 
back up this claim is simply not there.
    [The prepared statement of Mr. Shapiro follows:]

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    Chairman Issa. I thank the gentleman.
    Ms. Kerrigan.

                  STATEMENT OF KAREN KERRIGAN

    Ms. Kerrigan. Good afternoon, Chairman Issa, Ranking Member 
Cummings, and members of the committee. We appreciate the 
opportunity to be part of this hearing today and we thank you 
for your leadership in drawing attention to the issue of 
regulatory impediments to job creation.
    Over the past several years, the regulatory pendulum has 
swung in a direction that is of great concern to small 
businesses. During the most challenging period of the 
recession, where business owners were experiencing very weak 
sales, tight credit, along with other competitive business 
pressures, Washington churned out an array of costly policies 
that served to compound the poor competence and outlook that 
was so pervasive in the small business community. The fear 
associated with economic stability, along with a highly active 
government where such actions create uncertainty and new costs, 
has not been conducive to investment and job creation.
    Now, with some improvement in the economy, there are signs 
the business outlook is also improving, somewhat. Certainly, 
the new tone and recent initiatives from the White House, 
including the new regulatory strategy, is a welcome sign, but 
we must remember that the regulatory agencies will remain 
highly active and in areas with economy-wide impact. For 
example, they are at work implementing the new health care law, 
which many small business owners are concerned about with 
respect to its cost.
    There are other significant regulations and activities 
underway at the EPA, the Department of Labor, and other 
agencies. So given the fact that existing regulatory 
initiatives are in motion and small businesses remain concerned 
about their costs, they will also remain skittish about hiring. 
They have real concerns about direct and indirect costs 
associated with these regulations that are currently in the 
pipeline.
    I have noted in my testimony the specific concerns about 
the new health care law, the Affordable Care Act, both the 
known and the unknowns that will impact hiring decisions in the 
short- and long-term. With respect to the cost of energy, 
business owners are worried about gas and electricity prices. 
Along with new EPA regulations that will raise prices, they see 
what is occurring with offshore drilling bans, delayed permits, 
and how various players in our energy industry are being 
affected by the Federal Government switching course on 
production projects, which will affect the supply and price of 
energy. I also would mention that this will affect the many 
small players that operate in the energy industry and the 
thousands of small businesses whose livelihoods are dependent 
upon a vibrant energy sector.
    Over at the Department of Labor there is a departure away 
from helping businesses comply with the law toward an approach 
that seems more focused on generating complaints and grievances 
and collecting penalties and fines. The Department's new Plan/
Protect/Prevent regulatory initiatives has the potential to add 
vast amount of paperwork and time-consuming work for small 
businesses.
    So as a small business owner, you will not only continue to 
look at the uncertainty of the economy; you are also looking at 
new regulation and costs that will permeate your entire 
business: labor, energy, financial services, the costs and 
availability of credit and capital, the costs of raw materials 
and supplies, health coverage, and a boatload of new paperwork. 
And this is on top of a regulatory framework that is already 
burdensome for small businesses. And make no mistake, small 
businesses are disproportionately impacted by regulation. This 
has been documented by the fine work and the peer reviewed work 
of the Small Business Office of Advocacy, showing that the per 
employee cost of regulation for small business is 36 percent 
higher than for larger firms.
    The cumulative cost of regulation is putting U.S. 
businesses at a competitive disadvantage. Particularly in this 
tough economic period, it is deterring job creation. President 
Obama wants to make the United States the best place in the 
world to do business, and we do share that goal. But the United 
States will not maintain or improve its status under the 
current regulatory approach. So we look forward to working with 
the committee and Congress on solutions to improve the 
regulatory system and help small businesses do what they do 
best, and that is to innovative, add value, and create jobs. 
Thank you.
    [The prepared statement of Ms. Kerrigan follows:]

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    Chairman Issa. Thank you.
    Mr. Ellig.

                    STATEMENT OF JERRY ELLIG

    Mr. Ellig. Thank you, Chairman Issa, Ranking Member 
Cummings, members of the committee. Thank you for the 
opportunity to testify today. My name is Jerry Ellig. I am a 
senior research fellow at the Mercatus Center at George Mason 
University. I have also served in two out of three branches of 
the U.S. Government; I was a senior economist at the Joint 
Economic Committee on Capitol Hill some years ago and served as 
a deputy director of the Office of Policy Planning at the 
Federal Trade Commission.
    I don't envy the members of this committee or staff of this 
committee trying to grapple with this issue. You have recently 
received about 2,000 pages of submissions in response to 
Chairman Issa's initial requests, and it looks like more is on 
the way via the Web site. You have already heard a lot of 
conflicting claims, and you are going to hear more conflicting 
claims. You are going to hear conflicting claims from advocates 
who say that regulation is all benefit and no cost, and you are 
going to hear claims from people who say that regulation is all 
cost and no benefit. Particularly the committee staff, I want 
to say, having been in government, I have walked a mile in your 
moccasins and I feel your pain.
    You have heard a lot of conflicting claims. You will hear 
more. Well, as Senator Daniel Patrick Moynihan was reputed to 
have said, everybody is entitled to his own opinion, but not to 
his own facts. So how do we actually get the facts about the 
effects of regulation, both the benefit side and the cost side? 
How do we get a better grip on what regulation produces that we 
like and also the things we have to give up in order to get 
that?
    Well, the Federal Government already has a longstanding 
method for doing this; it is laid out in President Executive 
orders. President Obama's recent Executive order reiterated and 
reaffirmed these standards for assessing the effects of 
regulations. It is also laid out in guidance from the Office of 
Management and Budget in a document called Circular A-4. 
Presidents of both parties have issued these executive orders, 
laid out procedures for agencies to analyze regulations, laid 
out processes for regulatory review. And this has been going on 
for decades, so this is not new.
    A good regulatory impact analysis, which is what these 
documents are about, a good regulatory impact analysis gives us 
answers to questions like what outcomes of direct value to the 
public does the regulation produce. Not just compliance, not 
just enforcement, but what actual results that the public 
benefits from are produced. What failure of the private market 
or failure of previous policy or other systemic problem is the 
regulation likely to solve? Systemic problems, not just are 
there a few anecdotes or are there a few bad actors that could 
be dealt with on a case-by-case basis. What are the alternative 
solutions? Because regulation is rarely a yes/no, on/off 
switch; there are alternative ways to do things that we should 
be looking at. And, finally, what are the pros and cons of the 
alternatives or, in economic jargon, costs and benefits?
    These are the kinds of things that people are arguing about 
in front of this hearing and this creates kind of a puzzle 
because if Federal regulatory agencies are already supposed to 
be assessing the effects of regulation, why do businesses, why 
do advocacy organizations, why do other kinds of interested 
parties feel like they have to come to Congress for redress? 
Why didn't the agency sort this all out when they issued the 
regulations? Part of the answer, I think, is that agencies 
often don't do the kind of comprehensive, high-quality analysis 
that fully identifies all of a regulation's effects. Experience 
shows that it takes more than words and an executive order to 
get good analysis done or for good analysis to get used when 
agencies issue regulations.
    Since 2008, some of my colleagues and I at the Mercatus 
Center have had a project that we call the Regulatory Report 
Card, where we assess the quality of analysis that Federal 
agencies do when they issue regulations and the extent to which 
the agencies claim to use that when they make their decisions. 
This is a project on assessing the quality and completeness of 
the analysis, not a project on evaluating whether we like or 
don't like the regulations. Our criteria are drawn from 
Executive Order 12866, OMB Circulate A-4. Essentially the 
question we are trying to answer is how well are agencies doing 
the things that presidents have been telling them to do for 
more than 30 years. Those are our criteria.
    We found some reasonably good analyses. We found a lot more 
that are seriously incomplete. If these analyses were student 
papers, the best grade would be a B-, the average would be an 
F. I don't think that is good enough to guide decisions that 
affect our health, that affect our safety, and affect our 
economy.
    Here are some of the common problems we find. A lot of 
times, believe it or not, regulations don't do a good job of 
explaining what outcomes the regulation is supposed to produce. 
A lot of times we find that there is rarely an explanation or 
evidence of the existence of market failure or a systemic 
problem; the agency just says, well, Congress passed this law 
and told us to issue this regulation, so this is what we are 
going to do. In about half of the cases, the agencies don't 
identify alternative regulatory options or they don't give them 
anything more than cursory analysis. And only a minority of 
these analyses offer a really comprehensive look at costs and 
benefits or explain how the regulation actually affected a 
decision the agency made.
    Now, we also find a lot of best practices that could 
substantially improve regulatory analysis if they were more 
widely shared. Clearly, the knowledge of how to do good 
regulatory analysis exists and is spread throughout the Federal 
Government. The problem is the incentives. There are 
institutional incentives that reduce agencies' incentive to 
produce good analysis and also reduce agency incentive to use 
the analysis when they do it.
    I have a lot of ideas in my written testimony for reforms 
that could help solve this problem. A few possible ideas: 
require the agencies to actually explain how they use their 
analysis in the Federal Register notice when they propose 
regulations; require agencies to publish the analysis before 
they write the regulation and make decisions, instead of 
writing the analysis after they wrote the regulation; requiring 
them to publish the data and the models so that independent 
scholars or other outside folks who are interested could do 
their own analysis as a quality check on what the agency did.
    Now, I have a lot of other ideas in my written testimony. 
The common----
    Chairman Issa. In the Q&A we will give you plenty of 
opportunity to talk about them.
    Mr. Ellig. Oh, OK. No, don't worry, I wasn't going to give 
you another list. The bottom line is this, that in order to get 
good regulatory analysis and get it used, we need institutional 
reforms that will put teeth in the executive order.
    [The prepared statement of Mr. Ellig follows:]

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    Chairman Issa. Thank you. I now recognize myself for 5 
minutes.
    Mr. Gattuso, in your opening statement you talked about 
President Obama's latest executive order. I have a concern. As 
I understand the executive order, it doesn't cover independent 
agencies. Is that correct?
    Mr. Gattuso. That is correct.
    Chairman Issa. So FCC, SEC. I mean, the list is----
    Mr. Gattuso. The Consumer----
    Chairman Issa. What, two-thirds of government regulations 
are in independent agencies. If you leave the EPA out, maybe 
more than that?
    Mr. Gattuso. In terms of actually calculated cost, EPA is 
by far the largest, but a lot of the independent agencies, 
especially at the FCC, do not calculate costs, do not do a 
cost-benefit analysis, but it is the Federal Communications 
Commission, the Federal Trade Commission, the Securities and 
Exchange Commission. So it is a long list.
    Chairman Issa. The industry that I came from, the 
electronics industry, FCC was king. And I didn't get to say 
this in the first round, but maybe because we have such a 
scholarly round, the FCC's failure to supply bandwidth 
solutions for more data capability that the market wants, that 
Mr. Cummings wants, that my constituent want, is that an 
impediment? I mean, are those some of the impediments where we 
see the FCC passing rules, but we don't see them using their 
assets to provide the expansion of the economy?
    Mr. Gattuso. It certainly is an impediment. The FCC 
actually has improved its policies over the past decade or so, 
allowing more flexible use of spectrum, but there is a lot 
still to be done. If I mention also in independent agencies 
that some reports have shed that the President is unable, 
legally, to involve the independent agencies in his review.
    Chairman Issa. So what you are saying is the President 
can't, but we could?
    Mr. Gattuso. No, what I am saying is that those reports are 
wrong.
    Chairman Issa. Oh.
    Mr. Gattuso. In 1991----
    Chairman Issa. So he could and we could require this.
    Mr. Gattuso. In fact, it has been done before. In 1992, 
while President Bush had a regulatory review and moratorium in 
which every independent agency participated, all that was 
required was for the president to ask the chairman of each 
agency to participate. Everyone said yes. And I think President 
Obama could get the same result if he were to ask.
    Chairman Issa. Thank you. The earlier panel talked about a 
particular new regulation in EPA, a Boiler MACT, M-A-C-T. How 
often do you, in your analysis, see regulations where they 
create a regulation, then have to go to the court to try to 
delay it because in fact it can't be implemented like that one, 
where I guess in 3 days it is going to become law without there 
actually being technology to make it work, and they have 
admitted that in their own statements? Is that something that 
you see in other areas?
    Mr. Gattuso. I can't think of a case where that has 
happened before. I am sure it has, but I think it would be 
extremely rare for an agency to reverse itself that 
significantly.
    Chairman Issa. But they haven't reversed themselves; they 
have just gone to the court for relief from their own rule.
    Mr. Gattuso. That is true, although they reversed 
themselves in the sense that they apparently did think the rule 
was justified and now they are having second thoughts.
    Chairman Issa. Well, I am going to ask a specific question 
to Mr Shapiro. You are on record as saying, about cost-benefit 
analysis, ``it is neither sound in theory nor useful in 
practice.''
    Now, when the President wants a cost-benefit analysis, does 
that mean that you disagree with President Obama when he is 
looking for regulatory relief that looks at cost-benefit, or is 
it in your testimony today basically that you want to figure 
out when something is a law, if it has a benefit, then you 
should do a cost-benefit, but if you are going to make it, you 
shouldn't consider it? I am a little confused because it 
appears as though basically you are very happy not having cost-
benefit when they put the regulation on, and then when industry 
says it is costing us billions or millions, etc., that, as you 
said, they ``exaggerate,'' that basically they have to prove 
that it is killing them or you don't want the regulation 
removed. Did I understand that correctly, Mr. Shapiro?
    Mr. Shapiro. I am not quite sure of your understanding, but 
perhaps----
    Chairman Issa. But you have said cost-benefit analysis in 
that quote----
    Mr. Shapiro. Of course.
    Chairman Issa [continuing]. Is not a useful practice, and 
yet the President thinks it is; Democrats here on the dais 
thought it should be.
    Ms. Kerrigan, should we in fact have a cost-benefit 
analysis----
    Mr. Shapiro. Excuse me, Mr. Chairman, may I answer the 
question?
    Chairman Issa. Well, you didn't seem to be interested in 
answering it, but I will come back to you.
    Ms. Kerrigan, should we in fact, as a body, make sure that 
there is a cost-benefit analysis done by government, open to 
scrutiny before regulation occurs, as Mr. Ellig had suggested?
    Ms. Kerrigan. Oh, absolutely. And I think that is 
particularly important for small businesses, because there is a 
disproportionate impact on small businesses and I think that 
rigorous analysis needs to be done. So it is vitally important 
and it would of tremendous value to small businesses and the 
business communities if the agencies were required to do that.
    Chairman Issa. Thank you.
    My time has expired, but I don't want to short-change Mr. 
Shapiro. Would you answer whether you still stand behind your 
2009 White Paper, January, in which you said the problem with, 
so on and so on, cost-benefit analysis is neither sound in 
theory nor useful in practice? Do you still stand behind that?
    Mr. Shapiro. I do. What we were talking about----
    Chairman Issa. Thank you.
    I now recognize the ranking member.
    Mr. Cummings. In courtesy to you, and I apologize for the 
chairman, I would like to hear your answer to his question.
    Mr. Shapiro. Thank you. If you look at al the major laws 
that involve the protection of people and the environment, with 
only two exceptions that I know about, Congress does not 
require that a regulation pass a cost-benefit test in order to 
implement the regulation. There is very good reason for that: 
in all of these laws Congress wanted to be protective; it 
wanted to protect the American people and the environment to 
the extent that was practicable and reasonable, and it has 
therefore set the laws in having this aspirational goal.
    Now, that doesn't mean we shouldn't be interested in cost-
benefit analysis, because we should analyze the efficiency 
costs of this aspirational goal, and that is what we do in 
cost-benefit analysis. Unfortunately, it is difficult to apply 
cost-benefit analysis because many, many of the benefits are 
difficult to monetize.
    So while you have heard proposals here today that we should 
have additional analysis, we should study these things more, I 
don't object to that except for the caveat that we recognize 
going in of the great difficulty of monetizing the value of the 
benefits. What is a life worth? What is a fish worth? We can 
talk about it, but there are really severe limitations in using 
the methodology.
    Mr. Cummings. Let me ask you this. It is interesting. These 
regulations have been put forth by both Republican and 
Democratic administrations, and as a former small business 
person, I sympathize, I really do, with small business, and any 
business that has to go through some of these things. But as I 
listen to what you just said, is it your theory, I want to make 
sure I am saying this right, when the government puts forth 
these regulations, are you saying that they are more concerned 
about the general protection of the public? Is that what you 
are trying to say?
    Mr. Shapiro. Yes, that is correct. Many, although not all, 
of these regulations basically work as technology-based 
regulations. So what Congress has said to the agencies is we 
want to do the best we can to protect the American public 
taking costs into account, so what we would like you to do is 
go out and find the best available technology which would not 
cause severe financial dislocation for an industry, and we want 
you to require them to use the best available technology to 
protect the public. That is essentially how many of these laws 
work.
    Mr. Cummings. All right, let me ask you this. A little bit 
earlier I described how some of the major corporations we heard 
from had skyrocketing profits over the last 2 years. For 
example, Chevron's profits soared from $10\1/2\ billion in 2009 
to $19 billion in 2010, and ConocoPhillips' profits went from 
$4.4 billion to $11.4 billion, more than doubling in a year. 
But when we looked at the responses, a lot of these companies 
wanted to repeal corporate transparency provisions in the Wall 
Street reform bill, and these seem to have nothing to do with 
job creation. Let me ask you about one example.
    The first regulation identified by ConocoPhillips was a 
requirement that all companies and other resource extraction 
issuers disclose their payments to foreign governments to 
access oil, gas, and minerals. Senator Richard Lugar, a well 
respected Republican, good friend, was one of the primary 
proponents of this provision and he said, the essential issue 
at stake is a citizen's right to hold its government to 
account. We cannot force foreign governments to treat their 
citizens as we hope, but this amendment would make it much more 
difficult to hide the truth.
    So my first question is why would ConocoPhillips want to 
keep their payments to foreign governments secret? And as I 
understand the point of today's hearing, we are trying to 
identify regulations that impair job creation, so here is my 
second question. If we agree with ConocoPhillips and repeal 
this provision, would that create any jobs in America? Mr. 
Shapiro?
    Mr. Shapiro. I think this shows the reason why we need to 
broaden our focus beyond regulatory costs. This is a regulatory 
cost to those companies, so besides whatever embarrassment 
might come out of revealing this information, there are 
paperwork and other costs to the company. And there could be a 
debate over whether that is necessary, as you have heard 
before, but in order to evaluate whether that is necessary, we 
have to look at the broader picture of the benefits as well as 
the costs, benefits which are monetized or not.
    Mr. Cummings. Thank you.
    Chairman Issa. In order to be fair, I am going to try and 
do a little quick second round.
    I am from the private sector, so maybe I see things 
differently. Mr. Shapiro, I took your yes, you still stand by 
it for an answer, so I was glad that the ranking member allowed 
you to elaborate.
    Mr. Shapiro. Of course.
    Chairman Issa. But let me understand this. You think it is 
a good idea for a U.S.-flagged business to disclose what it 
pays, remembering we are one of the few countries in the world 
that does not allow, if you will, bribes. We make it a crime to 
pay a commission to somebody to get a deal. But the details of 
a contract, let's say in Kazakhstan or, you know, you name the 
country, if the details have to be made public by a U.S.-
flagged company while BP, which is not U.S.-flagged, or a 
Russian company doesn't, then, if I understand, you think it is 
just fine for that legal but private transaction to be made 
available to their competitors while the other isn't, meaning 
they always know what price they have to beat from us, while in 
fact we don't know what price they are paying. And, meantime, 
the French, the Russians, and all the others, on top of we 
don't know what they are paying, are able to pay bribes with 
impunity. You really think that naively on global business, is 
that correct?
    Mr. Shapiro. Mr. Chairman, I was trying to make a broader 
point. My area of academic specialty----
    Chairman Issa. OK, so in this particular case you are not 
speaking to those kinds of issues, you are thinking more 
broadly of regulatory compliance, is that right?
    Mr. Shapiro. I think we need to have the conversation that 
the chairman indicated he would like to have, and that is 
looking at both benefits and costs.
    Chairman Issa. OK. Because I am very concerned that the 
ranking member has repeatedly, throughout this hearing, talked 
about Chevron and Conoco and other companies. I guess what he 
misses is the vast majority of these large increases occurred 
in their outside-the-U.S. operations. They are growing very 
fast on profits made by buying overseas and selling overseas, 
and then those look like profits in the United States, while in 
fact in the first panel, and I think we are hearing it broadly 
in the second panel, we realize that American jobs are not 
being created through American mining, manufacture, and 
agriculture, and we are here today, and I would like to have 
everyone make a closing statement as to this, we are here 
because it appears as though part of the impediment to U.S. job 
creations--not U.S. profits by doing business globally and 
making in China and selling to Europe, but U.S. jobs, those 
kinds of jobs we all grew up being proud of, working at the 
auto, steel, and rubber plants, working at the stamping 
operation, those are jobs are the jobs we think may be 
disappearing.
    Go down the panel. And this is a fairly simple question, 
although you can elaborate. Do you believe there is any 
credence to looking for at least one impediment to U.S. job 
creation here? Is that frivolous or in fact are we on the right 
track to try to get those mining, agriculture, and 
manufacturing jobs back in America?
    Mr. Gattuso. I think you are definitely on the right track. 
There are costs. Now, that does not mean that every regulation 
is bad. That does not mean that no regulations are needed. But 
there are many that are bad; there are many that are necessary 
and many that are harmful. It is not an easy task to identify 
those, but that is what makes the project more important. 
Frankly, it is the easiest thing in the world for an agency to 
come up with a new regulation, to get it through, and certainly 
all the incentives for an agency head or agency staffer are to 
expand their jurisdiction.
    Chairman Issa. Thank you.
    Mr. Gattuso. We need to be vigilant to make sure that bias 
is overcome.
    Chairman Issa. Thank you.
    Mr. Shapiro, to that question.
    Mr. Shapiro. This is an important aspect of congressional 
oversight, and I think everyone appreciates that you are doing 
it, but we also need to look at the evidence. Stephen Meyer of 
MIT has done two studies; he compared economic performance in 
States with strict environmental regulation and economic 
performance in States with lesser environmental regulation, and 
he found that States with stronger environmental regulation had 
little difference in economic performance from those States 
with weaker standards. There was an intervening recession, so 
he went back and did it again to see whether the recession made 
a difference, and he concluded the results were the same; 
stronger environmental standards have not limited the relative 
pace of economic growth and development among the States over 
the past 20 years.
    Chairman Issa. Thank you.
    Ms. Kerrigan.
    Ms. Kerrigan. I think we are definitely on the right track. 
I do think we need to be looking at this. Labor and capital is 
highly mobile in our global economy. I have traveled around the 
world, working with governments and business leaders and 
business associations in developing and emerging countries who 
are looking at what they can do to make their economies more 
competitive, what they can do to attract investment to help 
their small business sector. So there are other countries out 
there that know that they need to work on their internal 
processes in order to attract investment and it is very 
competitive and, quite frankly, they do want to eat our lunch. 
So I think it is important that we do, yes, absolutely.
    Chairman Issa. Thank you.
    Mr. Ellig.
    Mr. Ellig. Two points On the cost side, regulatory 
uncertainty, there is evidence that uncertainty does deter 
business investment, which may deter job creation. My 
colleague, Dr. Richard Williams, 27-year veteran of the Food 
and Drug Administration, made that point in his submission in 
response to your request.
    Second, the broader point is regulation reallocates 
resources. We get more of some things as a result of 
regulation; we get less of other things. The less of other 
things is the cost side. That may show up as lower employment 
than we would otherwise have; that may show up as lower wages; 
that may show up as higher prices for consumers; or it may show 
up as less investment if we regard regulation as something that 
just comes out of profit. That is the cost of saying, well, we 
will take it out of profit; we have less incentives for 
investment. Typically, those effects will be different for 
different industries and for different types of regulation, 
which is why it is so hard to generalize.
    Chairman Issa. I thank the gentleman.
    And I note the attendance of the gentlelady from New York. 
I apologize for not catching you earlier, Ms. Buerkle, for 5 
minutes.
    Ms. Buerkle. Thank you, Mr. Chairman. Since the beginning 
of the formation of this committee and my membership on it, our 
chairman has charged us to go out and begin a conversation with 
all entities, businesses, small businesses, large businesses, 
and our constituents to talk with them and listen to their 
concerns regarding regulations and how these regulations impede 
their success and how those regulations really snuff out the 
entrepreneurial spirit that has made this country the great 
Nation that she is. So I am delighted to be here today and have 
the opportunity to greet all of you today, and I thank you for 
being here.
    My first question is a general question, and I will start 
with Mr. Gattuso, but then if anyone else would like to 
comment, I would certainly welcome that. At his State of the 
Union address, we heard the President speak about regulations 
and the need to get regulations under control so that we do not 
impede jobs and getting this economy back on track. I would 
like to hear from you whether or not you think that is a 
serious initiative that is going to be taken or what your 
thoughts are about that.
    Mr. Gattuso. I would like to think that it is a serious 
initiative and I would welcome a serious initiative along those 
lines. I have considerable concerns, however, from what 
actually has been done so far. The Executive order released by 
the President, issued by the President only calls for 
preliminary plans for a review of regulation sometime in the 
future, it is not the governmentwide review that he has stated 
it was; it does not apply to independent agencies, who are some 
of the largest producers of regulations; and it seems each time 
he talks about this initiative there is less and less on why we 
need to review regulations and more on defending regulations. 
So the tenor of the initiative seems to be perhaps fading 
already, which is a matter of great concern.
    Just to cap it off, I was very disappointed in his speech 
to the U.S. Chamber, where he seemed to rely upon cajoling 
business to hire, to claim moral imperatives, appeals to 
patriotism, basically job owning, as opposed to real policy 
change. He even went so far in actually a humorous note and 
said he wish he had brought a fruit cake over to the Chamber of 
Commerce when he moved into the neighborhood to welcome them 
and establish a friendship. And that is good, we should have 
good relations between different factions in politics, but 
fruit cakes won't do it. We need more than fruit cake economics 
to get this problem solved.
    Ms. Buerkle. Thank you. Would any other members like to 
answer? Yes, sir.
    Mr. Shapiro. Thank you for this opportunity to answer your 
question. I think the President is seriously interested in 
this, but he also feels the responsibility to do it in a 
balanced way; that these regulations and these laws are 
important because they also protect people and they protect the 
environment. And at least regarding some of the aspects of 
that, we also need to move ahead. Agencies have limited 
resources, and to the extent they are pulled off on look-backs, 
of course, that also limits their ability to go forward.
    Finally, I think the President knows, to the extent we have 
done these look-backs in the past, we have generally found that 
costs are less than projected at the time and benefits are 
about the same as we thought. There have been very few look-
backs that have found that we are chasing after problems that 
are really not serious societal problems.
    Ms. Buerkle. Just if I could comment on your response. I 
think that everyone on the committee is very concerned and 
interested in always maintaining the balance between public 
safety and safety in the job place, or whatever the issue is, 
but also the need to get this economy back on track and create 
jobs, so thank you.
    Ms. Kerrigan. I think time will tell. We are hopeful and we 
will take part in the initiative with the White House. The key, 
though, is that the initiative, the spirit of the initiative, 
also going to be implemented with the existing regulations that 
are moving through the system right now. With the new health 
care, the financial service overhaul laws, some of the things 
that are moving through the Department of Labor right now; not 
only just to look back, but are we in fact looking at the costs 
on small business and what we can do to--if they are going to 
move forward with these regulations, are they taking small 
businesses into account; you know, will they be exempted, is 
there going to be an alternative that perhaps makes it easier 
and less burdensome for them to comply?
    But with these initiatives it is a lot of time, energy, and 
passion that is going to be needed from the White House and, 
again, time will tell. We will see.
    Ms. Buerkle. Thank you. I believe we are out of time, 
unless I can----
    Mr. McHenry [presiding]. I appreciate. The gentlelady's 
time has expired.
    Ms. Buerkle. Thank you.
    Mr. McHenry. With that, I recognize the ranking member of 
the committee, Mr. Cummings, of Maryland.
    Mr. Cummings. Thank you very much.
    I want to thank the witnesses for excellent testimony. As I 
was sitting here, I could not help but think about 40 years 
ago, when I sat as an employee of Bethlehem Steel in Baltimore, 
and it was interesting back then that we spent a whole day just 
on safety regulations before we could do anything. But there 
was something that makes me feel very emotional as I am sitting 
here, and I did not realize the significance of it then, but I 
understand it now.
    At the end of the day, if you blew your nose, matter of 
fact, if you were on the premises for an hour and you blew your 
nose, black stuff would come out. Not trying to ruin your 
lunch, but that meant that we were inhaling. We were making a 
decent salary, Mr. Shapiro and Ms. Kerrigan. We had a summer 
job, which we really needed, one of the highest paying jobs 
that we could get, really, as a student, after my eleventh 
grade and twelfth grade year.
    But we were also inhaling stuff that would kill us. And it 
was even more evident and I have evidence of that because a lot 
of the gentlemen that I worked with, who were making a lot of 
money, died early. They are dead. They are no longer there for 
their children; didn't even get a chance to see many of their 
grandchildren. They are dead. And I think that what we have to 
constantly keep in mind is this whole balancing act.
    Mr. Shapiro, I think you said something that I haven't 
heard any other witness talk about, and that is it sounds like 
you were saying that when these regulations are made, the 
government bends on the side of protecting human life, bends 
toward human safety and the welfare of people. I think that is 
what you are saying. And this keeps going on in my mind when I 
think of Bethlehem Steel and I think about those people who are 
dead and I think about the ones who called me when I was in 
college to tell me that they were suffering from cancer and all 
kinds of problems because of what they inhaled. So I think that 
later on, when things came around and OSHA began to look at 
some of that, I think they began to require certain other 
things like a mask, like a simple mask over one's face.
    So regulations do have a significant role to play with 
regard to life and death situations, so I just want us to 
always keep that in mind. Some people want to try to make it 
look as if it is one side or the other. I think it is a 
balancing act. It really is. No one wants to overburden 
business, but it is one thing to have a job; it is another 
thing to be able to go home at the end of the day and not be 
shipped off in a coffin. That is real. So I think we have to 
maintain that.
    Now, let me go back to something else. We were talking 
about Conoco, and I want to make it clear, Mr. Shapiro, that 
Senator Lugar is no wacko. He is a brilliant man who I admire 
tremendously; well respected Republican. He said, when he was 
talking about this provision, he said the essential issue at 
stake is a citizen's right to hold his government to account. 
We cannot force foreign governments to treat their citizens as 
we would hope, but this amendment would make it much more 
difficult to hide the truth.
    You can comment on that in a minute, but I need to get one 
thing in, Mr. Chairman, before I do that. I want to get some 
letters in real quick. I ask unanimous consent to enter into 
the record three additional letters we received for this 
hearing. These letters are from Robert and Susan Serigliano, 
who lost their son Bobby when he was suffocated by a drop-side 
crib; another letter from the majority of Small Business 
Advocacy Organization that supports the Patient Protection and 
Affordable Care Act; and, finally, the Main Street Alliance, an 
organization that represents small businesses and supports the 
Patient Protection and Affordable Care Act. I ask that they be 
part of the record, Mr. Chairman.
    Mr. McHenry. Without objection.
    [The information referred to follows:]

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    Mr. Cummings. I see I still have 21 seconds. Mr. Shapiro, 
do you want to comment very quickly, because I have run out of 
time, just about?
    Mr. Shapiro. Representative Cummings, there is a very good 
reason that the agencies bend toward the protection of people, 
trying to prevent injuries, cancers, so on and so forth: that 
is what Congress told them to do in the OSHA act and these 
other laws.
    Mr. Cummings. Thank you very much.
    Mr. McHenry. I thank the ranking member and I recognize 
myself for 5 minutes.
    Ms. Kerrigan, so in terms of small business, you say in 
your testimony that small businesses, first, they are important 
to the American economy, and I agree, and I think most 
Americans, middle America agrees as well. But you stated that 
small businesses bear a regulatory burden that is greater than 
a large business. Explain that. Just flesh that out for me.
    Ms. Kerrigan. Well, it is quite simple, and it is common 
sense that when a new regulation is imposed on a business, 
whether it is a new tax requirement, a new reporting 
requirement, when there is compliance involved, that they just 
do not have the scale to spread the costs around, and they many 
of them don't an accounting department or they don't have a 
compliance person or they don't have a vice president of 
safety.
    So it is the business owner, it falls on them to deal with 
that new regulation. They may have to hire a consultant, 
perhaps bring on an accountant as a consultant or perhaps give 
them more hours or what have you. They just do not have, they 
can't absorb those costs as easily as a large enterprise, so 
that is the spirit behind, in 1980, the Regulatory Flex Act, 
that there was the common sense premise that regulation does 
have a disproportionate impact on small business and, 
therefore, the agencies do need to take that into account in 
terms of their regulatory actions.
    Mr. McHenry. Thank you. Thank you.
    Mr. Ellig, the Mercatus Institute does a report card of 
this regulatory burden. Can you mention that?
    Mr. Ellig. Oh, yes, sure. Our project is essentially 
looking at the quality of analysis that Federal agencies do 
when they issue regulations, and then looking at to what extent 
do they actually seem to use it in making decisions. And we are 
not trying to suggest that agencies ought to be in a 
straightjacket, where they have some quantitative formula, that 
they can only issue a regulation if the monetized benefits 
exceed the monetized costs, but, rather, we are looking for 
whether agencies actually seriously considered regulatory 
alternatives. Did they actually define the problem they are 
trying to solve and explain the barrier that gets in the way of 
achieving whatever it is the regulation is supposed to achieve? 
Did they demonstrate that this problem exists and so forth. So 
that is the kind of thing we are looking at.
    Mr. McHenry. Thank you. Thank you.
    With that, I yield the balance of my time to my colleague 
from New York.
    Ms. Buerkle. Thank you, Mr. Chairman.
    Mr. Ellig, this question is for you. In your written 
testimony you mention that interviews with agency economists 
often reveal that they faced pressure to modify their analysis 
of the regulations in order to support decisions that were 
already made. I wonder if you can expound on that for the 
committee and just tell us what agencies you were referring to.
    Mr. Ellig. Oh, sure. That is based on a study. There was a 
series of structured interviews of Federal economists in 
various health and safety agencies that was actually conducted 
by one of my colleagues, Dr. Richard Williams, shortly after he 
left the FDA, and that was one of the generalizations that he 
drew from his interviews.
    Personally, I have heard stories of agency economists 
saying that they were told things like, on a Friday, come back 
and put more benefits in this analysis or don't bother showing 
up for work on Monday. And I think among economists who do this 
kind of thing for a living in Federal agencies it is well known 
that they are going to get some pressure to come up with an 
analysis that supports whatever the agency has decided to do, 
whether it is an increase in regulation or a decrease in 
regulation.
    Ms. Buerkle. Thank you.
    Mr. Chairman, I yield back.
    Mr. McHenry. Thank you. I certainly appreciate it and I 
certainly appreciate the chairman giving me the opportunity to 
sit in the chair. It is a mighty big chair for a guy my size.
    With that, there are no more questions today, so, with 
that, the committee stands adjourned.
    [Whereupon, at 1:46 p.m., the committee was adjourned.]
    [The prepared statements of Hon. Dan Burton, Hon Michael R. 
Turner, Hon. Justin Amash, Hon. Edolphus Towns, Hon. Dennis J. 
Kucinich, Hon. Gerald E. Connolly, and Hon. Bruce L. Braley 
follow:]

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