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




 
  ASSESSING THE IMPACT OF GREENHOUSE GAS REGULATIONS ON SMALL BUSINESS

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

                                HEARING

                               before the

                  SUBCOMMITTEE ON REGULATORY AFFAIRS,
               STIMULUS OVERSIGHT AND GOVERNMENT SPENDING

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 6, 2011

                               __________

                           Serial No. 112-24

                               __________

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

 Subcommittee on Regulatory Affairs, Stimulus Oversight and Government 
                                Spending

                       JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice    DENNIS J. KUCINICH, Ohio, Ranking 
    Chairwoman                           Minority Member
CONNIE MACK, Florida                 JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 6, 2011....................................     1
Statement of:
    Rajkovacz, Joe, director of regulatory affairs, owner-
      operator, Independent Drivers Association; David Kreutzer, 
      Ph.D., research fellow in energy economics and climate 
      change, the Heritage Foundation; David D. Doniger, policy 
      director, Climate Center, Natural Resources Defense 
      Council; and Keith Holman, deputy executive director, 
      National Lime Association..................................     8
        Doniger, David D.........................................    24
        Holman, Keith............................................    40
        Kreutzer, David, Ph.D....................................    16
        Rajkovacz, Joe...........................................     8
    Rodgers, Claudia, Deputy Chief Counsel, Office of Advocacy, 
      U.S. Small Business Administration; and Gina McCarthy, 
      Assistant Administrator for the Office of Air and 
      Radiation, U.S. Environmental Protection Agency............    75
        McCarthy, Gina...........................................   129
        Rodgers, Claudia.........................................    75
Letters, statements, etc., submitted for the record by:
    Doniger, David D., policy director, Climate Center, Natural 
      Resources Defense Council, prepared statement of...........    26
    Holman, Keith, deputy executive director, National Lime 
      Association, prepared statement of.........................    42
    Jordan, Hon. Jim, a Representative in Congress from the State 
      of Ohio, prepared statement of.............................     4
    Kreutzer, David, Ph.D., research fellow in energy economics 
      and climate change, the Heritage Foundation, prepared 
      statement of...............................................    18
    McCarthy, Gina, Assistant Administrator for the Office of Air 
      and Radiation, U.S. Environmental Protection Agency, 
      prepared statement of......................................   130
    Rajkovacz, Joe, director of regulatory affairs, owner-
      operator, Independent Drivers Association, prepared 
      statement of...............................................    11
    Rodgers, Claudia, Deputy Chief Counsel, Office of Advocacy, 
      U.S. Small Business Administration, prepared statement of..    77
    Speier, Hon. Jackie, a Representative in Congress from the 
      State of California, letter dated April 6, 2011............    58


  ASSESSING THE IMPACT OF GREENHOUSE GAS REGULATIONS ON SMALL BUSINESS

                              ----------                              


                        WEDNESDAY, APRIL 6, 2011

                  House of Representatives,
      Subcommittee on Regulatory Affairs, Stimulus 
                 Oversight and Government Spending,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 1:39 p.m., in 
room 2154, Rayburn House Office Building, Hon. Jim Jordan 
(chairman of the subcommittee) presiding.
    Present: Representatives Jordan, Buerkle, DesJarlais, 
Kucinich, and Speier.
    Also present: Representative Issa.
    Staff present: Ali Ahmad, deputy press secretary; Michael 
R. Bebeau, assistant clerk; Molly Boyl, parliamentarian; 
Lawrence J. Brady, staff director; Benjamin Stroud Cole, policy 
advisor and investigative analyst; Adam P. Fromm, director of 
Member liaison and floor operations; Ryan M. Hambleton and 
Kristin L. Nelson, professional staff members; Justin LoFranco, 
press assistant; Mark D. Marin, senior professional staff 
member; Kristina M. Moore, senior counsel; Laura L. Rush, 
deputy chief clerk; Walker Hanson, legal intern; Noelle 
Turbitt, intern; Kevin Corbin, minority staff assistant; Ashley 
Etienne, minority director of communications; Carla Hultberg, 
minority chief clerk; Mark Stephenson, minority senior policy 
advisor/legislative director; and Alex Wolf, minority 
professional staff member.
    Mr. Jordan. The hearing on Assessing the Impact of EPA 
Greenhouse Gas Regulations on Small Business will come to 
order. And I apologize to our witnesses; I was in the Capitol 
in an important meeting. There are lots of important meetings 
going on this week. We want to get started because we are going 
to have to recess for a Republican conference, so let's get 
rolling.
    Today's hearing marks the third occasion for this committee 
to consider the regulatory burdens facing America's job 
creators. Thus far we have learned a great deal from the 
private sector employers in the manufacturing and construction 
industries about the harm that two Federal regulatory agencies 
in particular are doing to their businesses. Together, the EPA 
and the Occupational Safety and Health Administration, with 
their joint army of more than 20,000 regulators, receive a 
combined $11 billion in taxpayer dollars to fulfill their 
statutory responsibility, but it has never been the goal of 
Federal regulation to stifle economic growth. At least it is 
not supposed to be.
    As was detailed in a report to released by Chairman Issa in 
February, hundreds of job creators have identified scores of 
regulations from these two agencies that hinder their ability 
to expand and offer good paying jobs to millions of out-of-work 
Americans. Today we will focus our oversight on the 
Environmental Protection Agency and specifically development, 
implementation, and the effect of EPA's greenhouse gas 
regulations on small businesses.
    Under the current regime, the EPA has emerged as the chief 
enforcer of the Administration's agenda for environmental law. 
On both sides of the aisle, Republicans and Democrats recognize 
the ``glorious mess'' of EPA's rulemaking. Whether by 
hamstringing recovery efforts in the wake of the Gulf oil spill 
or unilaterally redefining the Agency's authority under the 
Clean Air Act, the EPA has nurtured the distinct impression 
among American job creators that this Administration is out of 
touch with the real world harm that the agenda causes.
    Even worse, the committee has reason to believe that in 
addition to its bureaucratic disregard for struggling 
industries that were hardest hit by economic downturn, the EPA 
appears to have broken the law in a rush to issue sweeping new 
rules for greenhouse gas emissions. Regulated industries, 
understandably, feel left out of the process and confined to an 
environment of job killing uncertainty while EPA crafts a whole 
new regulatory superstructure that touches every area of our 
national life, all of this despite the presence of numerous 
promises before and after his election that regulations in this 
Administration would be crafted with careful consideration of 
their cumulative effect on small business.
    The growth and sustainability of small business are 
critical to the success of the American economy, which is why 
this committee will continue to be in place, a place where men 
and women, entrepreneurs and investors can come for a fair 
hearing about their concerns. The American people deserve a 
responsive government that listens to them and works for them. 
Small business specifically warrant out attentive ear, as they 
employ more than half of all private sector workers and 
represent more than 99 percent of all employer firms in the 
United States.
    Yet, these businesses carry an increasingly 
disproportionate share of the American regulatory burden. One 
recent study revealed that the annual regulatory cost to small 
business is nearly $3,000 more per employee than the cost to 
larger firms. The same study found that compliance with 
environmental regulations in particular cost small business and 
small business owners four times more than firms with more than 
500 employees.
    It is disconcerting, therefore, to learn how far the EPA 
has fallen short of the present stated goals. By adding to this 
already intense regulatory burden, the Administration has 
executed a strategy that destroys jobs, rather than creates 
them. With prolonged unemployment that we have not seen in 
decades, the folly of this agenda is not difficult to see.
    Today we will hear from those affected by EPA's regulation 
of greenhouse gases and we will hear from the EPA and Small 
Business Administration. I want to thank these witnesses for 
their presence today.
    I now turn to my friend and the ranking member, the 
distinguished gentleman from Ohio, Mr. Kucinich.
    [The prepared statement of Hon. Jim Jordan follows:]

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    [GRAPHIC] [TIFF OMITTED] T7721.002
    
    Mr. Kucinich. Thank you very much, Mr. Chairman. I just 
wanted you and the witnesses to know I just have to step 
outside briefly at 2 for a meeting that I had scheduled before 
this committee hearing was scheduled, but I am pleased to be 
here with you and with our chairman and the other members of 
the committee. Thank you for holding this important hearing.
    Today we are here to discuss the impact of greenhouse gas 
regulations on small businesses. America's small businesses are 
the lifeblood of this country's economy. Competition, 
innovation, and the entrepreneurial spirit have driven 
Americans to prosperity, and it is our job in Congress to 
ensure that we facilitate and promote an environment of 
economic opportunity. It is also our job to protect the well 
being of American citizens, with the bottom line of providing 
the highest quality of life reach in every person.
    Based on actual results and future projections, it is clear 
that the Clean Air Act strikes a balance between economic 
growth and keeping each and every one of us healthy. By 2020, 
for every taxpayer dollar invested in the Clean Air Act, there 
will be an estimated $30 in return in benefits. In the year 
2010 alone, the Clean Air Act prevented over 160,000 deaths, 
over 3 million lost school days, and 13 million days of lost 
work. These numbers are illustrative of the benefits to both 
businesses and public health facilitated by the Clean Air Act.
    The regulation of greenhouse gases under the Clean Air Act 
is imperative to protecting public health and welfare. The 
threat posed by climate change is based on peer-reviewed, 
accurate, and concrete science. The threat is real, and 
preventative steps are necessary. The EPA's regulation of 
greenhouse gases under the Clean Air Act is a measured common 
sense approach to mitigating climate change that protects not 
only public health and welfare, but protects businesses as 
well.
    Opponents of greenhouse gas regulation claim that small 
entities will be overly burdened by costly and unattainable 
emission standards. However, the EPA's implementation of the 
tailoring rule is a small business conscious method of 
protecting public health and this country's employers and 
employees. The tailoring rule, by setting a greenhouse gas 
emission threshold, exempts 95 percent of all stationary source 
of greenhouse gas emissions. Essentially, the tailoring rule 
lifts a regulatory burden off of small businesses.
    In written testimony provided for today's hearing, the 
Small Business Majority, a representative of U.S. businesses, 
states that, ``Some will claim that a variety of small 
businesses, everything from bookstores to diners and plumbers, 
would be impacted by greenhouse gas standards. This simply 
isn't the case.''
    Further, as described in the Small Business Majority's 
testimony, a significant number of small business owners 
welcome measures to reduce environmental pollution. Now, this 
sentiment simply cannot be ignored. As I have said at this 
subcommittee's past two meetings, we can't have a productive 
discussion about the impact of regulations without considering 
both cost and benefits. For example, when we talk about the new 
tailpipe emission standards, we cannot simply discuss a 
potential increase in the sticker price of a vehicle. The 
proposed standards for heavy- and medium-duty trucks, despite a 
marginal increase in sticker price, are projected to save over 
$74,000 over the life of the truck and save over 500 million 
barrels of oil.
    You want to talk economic impact? Multiply that roughly 
with the price of oil bouncing back and forth over $100, and 
you could have savings that you could measure, do the math, $50 
billion. Multiply this times all the trucks on the road and the 
reduced fuel consumption, and greenhouse gas pollutant 
emissions can help achieve energy independence while improving 
our public health.
    Mr. Chairman, I look forward to having a well rounded 
discussion about greenhouse gas emission standards, their costs 
and their benefits, with today's witnesses. I yield back.
    Mr. Jordan. I thank the gentleman.
    Members have 7 days to submit opening statements. Oh, no, 
no, no, we have an opening statement. I forgot we have the 
chairman here. The chairman of the full committee the gentleman 
from California is recognized.
    Mr. Issa. Thank you very much, Mr. Chairman, and I will be 
brief.
    The ranking member wisely said that cost and benefit need 
to be evaluated, but as we will hear today, and this committee 
has found in its studies, cost and benefit are not part of the 
EPA's mandate or consideration. If they were, many of the 
regulations that they have created would not have been created. 
Ultimately, they simply say we are only looking at the 
environment, we are not looking at the cost. If cost 
effectiveness, least cost to the system, greatest pollution 
reduction at the least price were part of the mandate, we would 
all applaud it.
    In addition, the EPA has no limits. This committee has 
discovered that in fact a natural occurring gas that will 
continue to be produced in huge amounts in other countries is 
in fact being regulated. Any coal not consumed in this country 
will be shipped to another country. The most high-polluting 
coal in the world is burned in China. These and other realities 
cause us to, A, have more of this gas than we would otherwise 
have if our goal really was to reduce the gas on a global 
basis, but, B, and most importantly, when you look at farmers 
in Iowa who find themselves being fined because dust from corn 
husks get in the air on their farm, and other kinds of 
nonsensical things not intended in the EPA's original mandate 
regulations continue to be produced, you have to wonder why 
didn't Congress set limits.
    Last, but not least, this committee has repeatedly seen and 
now becomes convinced that the EPA and other environmental 
organizations are in fact inviting litigation, settling, and 
using that litigation in order to justify new regulations. This 
practice of being sued, settling, and then in fact producing 
new rules is an area that clearly has to stop. Congress exempts 
itself from civil lawsuits over its policies for a reason. The 
EPA, on the other hand, and other organizations seem to welcome 
those because they lead to the same end that they want, but 
make it faster.
    Last, Mr. Chairman, this committee is more and more, 
through that AmericanJobCreators.com awareness program, we are 
finding that rules that have not been made, but used under the 
form of guidance and guidelines and so on, are basically 
threatened as rules, so eventually they become rules after, in 
fact, compliance is reached by a long threat. These and other 
impediments to job creation are something this committee is 
dedicated to. Of course, on both sides of the aisle, we want 
clean air and clean water, but we also want the funds created 
by a successful economy that pay for that clean air and clean 
water.
    Last weekend I was on a bipartisan CODEL to Egypt. The Nile 
is very pretty, but there is not enough money to deliver the 
kind of health standards in Egypt that we have here today. That 
is a goal that America has to be cognizant of. If we do not 
have a successful economy, there will not be money for the 
regulators to have the dream they now mandate without a clear 
course toward it.
    With that, Mr. Chairman, I thank you for this important 
hearing and yield back.
    Mr. Jordan. I thank the gentleman.
    We want to welcome our first panel of witnesses. We have, 
first, Dr. David Kreutzer, a research fellow in energy 
economics and climate change at the Heritage Foundation. In his 
position, he researches how energy and climate change 
legislation will affect economic activity in the national, 
local, and at the industry level.
    We have Mr. Joe Rajkovacz, the director of regulatory 
affairs at the Owner-Operator Independent Drivers Association, 
and has been involved in the trucking industry over 30 years as 
both an employee driver and owner and operator.
    We have Mr. David Doniger. He is the policy director of the 
Climate Center at the Natural Resources Defense Council. We 
welcome you to the committee.
    And Mr. Keith Holman is deputy executive director at the 
National Lime Association and represented small businesses on 
environmental regulatory issues for many years.
    It's pursuant to the rules of the committee, all witnesses 
are sworn in, so if you would just stand and raise your right 
hands.
    [Witnesses sworn.]
    Mr. Jordan. Let the record show that each of the four 
witnesses answered in the affirmative.
    We are going to try to limit everyone's testimony to 5 
minutes. We do have a Republican conference that starts in 9 
minutes, but they never start on time, so we are going to try 
to get through all five of you, and then we will probably 
recess and then try to come back for questions. And I 
apologize, but we want to at least get your testimony. So let's 
get started, and we are going to go right down the line. Mr. 
Rajkovacz.

 STATEMENTS OF JOE RAJKOVACZ, DIRECTOR OF REGULATORY AFFAIRS, 
OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION; DAVID KREUTZER, 
PH.D., RESEARCH FELLOW IN ENERGY ECONOMICS AND CLIMATE CHANGE, 
  THE HERITAGE FOUNDATION; DAVID D. DONIGER, POLICY DIRECTOR, 
 CLIMATE CENTER, NATURAL RESOURCES DEFENSE COUNCIL; AND KEITH 
  HOLMAN, DEPUTY EXECUTIVE DIRECTOR, NATIONAL LIME ASSOCIATION

                   STATEMENT OF JOE RAJKOVACZ

    Mr. Rajkovacz. Chairman Jordan, Ranking Member Kucinich, 
good afternoon and thank you for allowing me to testify on 
behalf of small-business truckers concerning EPA's efforts to 
regulate greenhouse gas emissions.
    OOIDA represents the interest of small business trucking 
professionals and professional drivers. We currently have more 
than 153,000 members collectively who own and operate 
approximately 200,000 heavy-duty trucks nationwide. Any 
regulation adopted affecting the trucking industry has a 
dramatic effect on small-business truckers.
    The main issue as we see it is all about process: how 
regulations are adopted; whether the process is open, 
transparent, includes all of the stakeholders; and if the 
justifications have properly taken into account all the 
variables necessary to avoid a one-size-fits-all regulatory 
system that may disproportionately benefit some stakeholders at 
the expense of others. In this context, EPA's proposed GHG 
regulations for new heavy-duty trucks can be viewed as having 
thrown small business concerns under the bus.
    Small-business truckers cannot be portrayed as unconcerned 
about air quality and fuel mileage improvement. Between EPA's 
stepped up emission standards on diesel engines beginning in 
2004 and continuing through 2007 and 2010 model years, today's 
diesel engines are more than 90 percent cleaner than just a 
decade ago. On top of that, EPA mandates truckers must use 
ultra-low sulfur diesel, and in California specialty diesel 
blends. All of this has come with a significant price increase 
on new trucks and at the fuel pump.
    Additionally, since small-business truckers operate in a 
hyper-competitive marketplace, managing their No. 1 expense, 
fuel, is imperative for their survival. Those who don't are 
quickly culled from the market, as evident by the recent record 
bankruptcies in the trucking industry.
    In spite of all the success in reducing emissions, 
government agencies still want to regulate further, at a time 
when small-business truckers are still trying to collect their 
breath after the worst economic contraction since the Great 
Depression.
    When EPA embarked on this regulatory process, the White 
House instructed the Agency to work with all stakeholders, with 
specific direction to partner with the California Air Resources 
Board in crafting GHG rules. I suppose this was because many 
think CARB is an environmental trailblazer. However, many of us 
in the small business community recognize CARB's record as one 
that does not account for the concerns of small businesses.
    Indeed, CARB's history of engagement with small business 
can be viewed as nothing more than checking off the box. Their 
supposed leadership on regulating trucking GHG emissions has 
not been without significant controversy within the trucking 
community because they have resulted in high cost limited 
benefits to all but the largest trucking fleets. Yet, they are 
driving EPA's regulatory process on GHG emissions regulation of 
trucks.
    From the Hien Tran affair to Dr. Enstrom's dismissal at 
UCLA for questioning CARB's PM mortality studies, CARB cutting 
by half the original diesel emissions mortality estimates, to 
the admission I recently received from CARB which shows air 
regulating transportation refrigeration units on trailers 
without any studies or scientific foundation, their actions are 
leaving the small business community breathlessly questioning 
the agency's commitment to accuracy and wondering about their 
disproportionate influence on EPA's rulemaking, especially when 
EPA is ignoring our small business concerns.
    Based on the attention small businesses have received as 
job creators, the small-business trucking community had hoped 
for more from EPA. However, we have only seen more of the same: 
shut out, ignored, and likely forced to live with bad public 
policy. Owner-operators and small-business truckers operate 
widely diverse trucking operations. Categorizing all trucking 
into a one-size-fits-all regulatory regimen will likely lead to 
those same entities keeping their older equipment longer, 
reduce new truck sales, and fail to fully realize the stated 
goals of regulating GHG.
    Owner-operators and small-business truckers should not have 
rules crafted that needlessly drive up their operational costs 
simply because their business model has been ignored by 
regulatory agencies when promulgating rules.
    I thank you again for this opportunity and I look forward 
to answering any questions.
    [The prepared statement of Mr. Rajkovacz follows:]

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    Mr. Jordan. We thank you.
    Doctor.

               STATEMENT OF DAVID KREUTZER, PH.D.

    Mr. Kreutzer. My name is David Kreutzer. I am research 
fellow in energy economics and climate change at the Heritage 
Foundation. The views I express in this testimony are my own 
and should not be construed as representing any official 
position of The Heritage Foundation.
    Chairman Jordan and Ranking Member Kucinich and 
distinguished members of the subcommittee, thank you for giving 
me this opportunity to address the question of the economic 
impact of carbon dioxide regulation. I would like to make 
several points regarding this impact. First, forcing cuts in 
CO2 emissions reduces access to affordable energy.
    The United States gets 85 percent of its energy from fossil 
fuels, and CO2 is an unavoidable byproduct of using 
fossil fuels. Though substitutes exist, they are more expensive 
and cannot be turned on and off as needed.
    In my written testimony there is a chart that compares that 
cost of coal-fired electricity to wind and solar power after 
these renewable costs have been adjusted for necessary backup 
power and for the long transmission distances. We see that wind 
and solar power are 80 percent to 280 percent more costly than 
coal. These higher costs will not help consumers and they will 
not help businesses of any size.
    It should be noted that if recent low prices of natural gas 
continue, gas-fired electricity should have costs comparable to 
that of coal.
    The second point is CO2 restrictions will have a 
costly impact on the economy, regardless of the mechanism used 
to force the cuts. There are no free lunches.
    Imagine a misguided policy to dramatically restrict the 
consumption of dairy products by way of a $3 million per gallon 
tax on milk. Perhaps one very rich milk lover will buy one 
gallon of dairy products per year. This will raise $3 million, 
a minor amount by Washington standards. However, it will 
devastate the dairy industry, imposing much higher costs than 
the tax revenue, and it is that higher cost that is the focus 
of the economic impact. The loss of jobs and income at the 
farm, at the processing plants, and at the retailers, that is 
the economic impact of such a policy.
    A cap-and-trade program that issues an allowance for a 
single gallon of milk per year would have the same devastating 
impacts on the economy and the dairy industry as the $3 million 
per gallon tax, so they are two equivalent ways of doing the 
same damage.
    In a similar vein, regulations that cut milk consumption to 
a single gallon, however they are devised, would also have the 
same devastating impact on the dairy industry and the overall 
economy.
    So it is with CO2. Whatever policy is used to 
cut CO2 also cuts access to affordable fossil fuels 
and imposes similar economic losses.
    At The Heritage Foundation, our analysis of the Waxman-
Markey cap-and-trade bill concluded that it would have cut 
national income by over $9 trillion and cut employment by 
nearly 2\1/2\ million jobs by 2035. A regulatory regime that 
targets similar CO2 cuts will have a similarly large 
economic impact.
    My third point is that regulatory mandates do not create 
free efficiency. Markets provide efficiency when and where it 
makes sense. Car advertisements tout their miles per gallon 
because consumers care about saving money. Appliance 
manufacturers pay to meet Energy Star standards because 
consumers care about saving money. But forcing consumers to buy 
products they wouldn't choose under the guise of saving them 
money either will not save them money overall or will force 
them to make costly and inconvenient lifestyle changes. Let me 
give a personal example to illustrate how mandated energy 
efficiency standards may not only be counterproductive, but 
also very annoying.
    My old 1993 Maytag dishwasher used to use 9 gallons of hot 
water and take about an hour and 15 minutes to clean the 
dishes. Since then, efficiency mandates forced a reduction in 
hot water use, so the newer model uses 7 gallons of hot water, 
but takes at least an hour and 50 minutes to clean the dishes. 
The combined cost of the 2 gallons of water saved in both the 
purchase, water and sewer rate, plus the heating it up, is less 
than a dime; and that is in Arlington, where we have pretty 
high water rates.
    Perhaps for some the tradeoff of 35 minutes for 10 cents is 
worth it. If so, they can buy the dishwasher that takes 2 
hours. Or they could have used the 7 gallon cycle that was 
already available on my 1993 model dishwasher. For my wife and 
me, the 10 cents isn't worth it, but it is no longer a choice 
we get to make.
    Businesses large and small are constantly making choices 
over the products and processes that give them the best results 
for the money they spend. These firms were hoveled when 
regulations, however well intentioned, forced unwanted choices 
on them. When these engines of economic growth are hoveled, 
income and employment suffer as well.
    Thank you.
    [The prepared statement of Mr. Kreutzer follows:]

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    Mr. Jordan. Thank you, Doctor.
    Mr. Doniger.

                 STATEMENT OF DAVID D. DONIGER

    Mr. Doniger. Thank you, Mr. Chairman. The other witnesses 
that you are hearing today are pursuing, I think, a false story 
line that demonizes the Environmental Protection Agency and the 
amount of steps it is taking to reduce carbon pollution.
    The EPA is doing just what Congress told the Agency to do 
when it wrote the Clean Air Act. Congress gave EPA the duty to 
keep abreast of science and to act when that science shows 
pollution is endangering our health and welfare. The 
endangerment finding is backed by solid authority. America's 
own most authoritative scientific body, the National Academy of 
Sciences, said this in 2010: Some scientific conclusions or 
theories have been so thoroughly examined and tested and 
supported by so many independent observations and results that 
their likelihood of being subsequently found wrong is 
vanishingly small. Such conclusions and theories are then 
regarded as settled facts. This is the case for the conclusion 
that the earth system is warming and that much of the warming 
is likely due to human activities.
    Congress has never done what you are about to do on the 
floor today, which is to repeal an expert agency's formal 
scientific finding of the threat to health and welfare, and 
politicians don't prosper long when they put themselves in the 
position of denying modern science. Repealing the scientific 
endangerment finding would be like repealing the Surgeon 
General's finding that tobacco smoke causes cancer.
    H.R. 910 will harm the health and the pocketbook of 
millions of Americans. It is bad policy and it is deeply 
unpopular.
    The Clean Air Act's critics get the economics of 
environmental safeguards completely backward. Over the past 40 
years, the American economy has tripled in size, while we have 
cut some forms of pollution by more than 60 percent. The Clean 
Air Act doesn't demand the impossible; it requires only 
pollution controls that are achievable and affordable.
    EPA has taken great care to protect American families and 
American small businesses. In fact, EPA set carbon pollution 
standards for new cars, SUVs and over-the-road trucks, the 
kinds of cars that small businesses buy, and diesel and saved 
billions of dollars for American families and small businesses 
by cutting their gasoline and diesel fuel bills $3,000 a 
vehicle, $7,400 a vehicle for the second round of standards if 
EPA is allowed to set those, and that is with gas prices at 
$2.61. I would like to have that back again. The figures will 
be somewhat bigger with today's gas prices.
    Lobbyists for some of America's biggest polluters are 
falsely claiming that the Clean Air Act's carbon requirements 
will fall on millions of apartments, office buildings, farms, 
churches. The truth is otherwise. EPA has exempted all small 
sources of carbon pollution from permit requirements. Instead, 
directly in line with congressional intent, EPA has focused the 
permit requirements on the largest, new and expanded sources of 
carbon pollution, such as power plants, oil refineries, and 
other big polluters.
    EPA has been sued by dozens of trade associations, 
companies, and right-leaning advocacy groups. But when put to 
the test of proving their claims, they fail; the courts have 
found no merit in their claims of harm. This is no surprise 
because the court challenges, like lobbyists who come up here 
on the Hill, are seeking not relief for the small-fries, but 
special favors for big polluters; power plants, oil refineries, 
and the like. These pollution giants can't complain to the 
courts about being harmed by EPA's exemption of all the smaller 
sources. Their attempt to hide behind the skirts of small 
businesses should fare no better here on the Hill.
    Congressmen deny science at their peril. Likewise, they buy 
into phony story lines about burdens on small businesses at 
their peril. As I have mentioned, large majorities of the 
American people support the Clean Air Act and want EPA to do 
its job to control air pollution. They specifically want EPA to 
do its job to control carbon air pollution. I have appended the 
polling data to my testimony. It is food for thought and I 
welcome questions.
    [The prepared statement of Mr. Doniger follows:]

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    Mr. Jordan. Thank you, Mr. Doniger.
    Unfortunately, Mr. Holman, we are going to have to have you 
wait, and it is going to be a while, and I do apologize. They 
just called votes 9 minutes ago. We have 6 minutes left in this 
vote, so we have to go vote, so we are going to recess. But it 
may be a while. I am guessing in the 3:15, 3:30, 3:40 range. So 
with this series of votes going to take a while, I need to stop 
by the Republican conference, and either myself or--I have not 
talked to the gentlelady from New York yet--Ms. Buerkle will be 
back to get things rolling around 3:30. So we are going to 
stand in recess.
    [Recess.]
    Ms. Buerkle [presiding]. Good afternoon. We will resume our 
hearing. I apologize for the delay for all of you.
    Mr. Holman, you are now recognized for your opening speech.

                   STATEMENT OF KEITH HOLMAN

    Mr. Holman. Thank you. Ms. Buerkle, sitting in for Chairman 
Jordan and members of the subcommittee, good afternoon and 
thank you for giving me the opportunity to testify today. My 
name is Keith Holman and I am the deputy director of the 
National Lime Association.
    NLA is the trade association for manufacturers of calcium 
oxide and calcium hydroxide, commonly known as lime. So just to 
clear up any misconceptions, we are not the green little citrus 
fruit and we are not associated with Lyme Disease.
    For the lime industry, particularly our smaller companies, 
EPA's greenhouse gas rules are having a big impact. Lime plants 
generate CO2 emissions both from the fuel that they 
use and from what you could call the roasting process that 
converts limestone into lime. All lime plants are now subject 
to greenhouse gas permitting requirements when they are 
modified. So even though the GHG rules took effect only 3 
months ago, we are already seeing a chilling effect on plants 
to modernize or expand lime plants because of great uncertainty 
surrounding GHG permitting.
    The U.S. lime industry is comprised of some 20 companies 
operating about 50 commercial lime plants. Nearly half of NLA's 
members are small businesses. These small lime companies face 
intense competition and they are particularly sensitive to 
increases in regulatory costs. For this reason, when EPA 
planned a Clean Air Act rulemaking back in 2002 that would 
impose stringent new requirements on lime plants, NLA was able 
to persuade EPA to convene what is known as a small business 
advocacy review panel under the Regulatory Flexibility Act. NLA 
wanted EPA to have the opportunity to meet with small lime 
companies, understand their needs, and design the rule with 
those needs in mind.
    EPA convened the lime panel in January 2002. Seven of the 
nine lime companies potentially affected by the rule 
participated in the panel process. These small lime companies 
met with EPA twice, including a face-to-face meeting in 
Washington, DC. The companies were able to talk directly to 
EPA, as well as with representatives of the Office of Advocacy 
and with the White House Office of Management and Budget.
    Because of the panel process, the final rule was tough, but 
something that our small lime plants could live with. Several 
improvements to the rule were only made possible because small 
lime companies were able to meet face-to-face with EPA and 
provide critical information. Not surprisingly, when EPA 
announced in 2008 that it planned to regulate GHGs under the 
Clean Air Act, many industries, including the lime industry, 
wanted EPA to convene a panel. However, instead of convening a 
panel, EPA simply chose to have a public outreach meeting, and 
only after it had proposed three rules under GHG program: the 
first the endangerment finding, the vehicle tailpipe rule, and 
the so-called tailoring rule. EPA argued that it was not 
required to conduct a panel for these rulemakings.
    Whether or not EPA could legally choose not to convene a 
panel, it was clearly wrong not to do so. EPA held the panel 
meeting in November 2009, well after the three GHG rules had 
been proposed. The meeting was, in reality, little more than 
EPA giving attendees a broad brush overview of the proposed 
rules. NLA and the other trade associations that were present 
had virtually no opportunity to have a dialog with the Agency 
about the actual design of the rules.
    NLA followed up the meeting with written comments to EPA 
about the design of the tailoring rule. The tailoring rule 
proposed to defer GHG permitting requirements for plants that 
had GHG emissions below a certain threshold. Because there is 
no known way to avoid generating CO2 when limestone 
is heated and converted into lime, NLA asked that EPA consider 
excluding these process-related GHG emissions from counting 
against the tailoring rules applicability thresholds. EPA's 
single paragraph response failed to meaningfully respond to 
EPA's request.
    EPA's reliance on the public outreach approach as a 
substitute for the panel process is wrong for several reasons. 
In bypassing the panel process, EPA lost its best chance to 
meet with actual small businesses face-to-face and exchange 
information with them. The panel process also establishes a 
context for EPA advocacy and OMB to meet, discuss the issues, 
and reach consensus on flexible solutions. The public outreach 
approach taken by EPA does not and cannot take the place of a 
panel.
    Many of the implementation difficulties now facing EPA, the 
States, and industry might have been avoided if EPA had taken 
the time to listen to small business before writing its GHG 
rules. Now the lime industry as a whole is reluctant to expand 
or modernize its plants until the permitting uncertainties 
caused by these GHG rules have been resolved.
    Thank you for the opportunity to testify today. I would be 
happy to answer any questions you have.
    [The prepared statement of Mr. Holman follows:]

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    Ms. Buerkle. Thank you, Mr. Holman.
    At this time, without objection, I would like to enter into 
the record testimony from the National Association of 
Homebuilders, the Farm Bureau Federation, and the Small 
Business and Entrepreneurship Council. Without objection, so 
ordered.
    At this point, I am going to yield myself 5 minutes and see 
if some of the other subcommittee members join us.
    Mr. Rajkovacz, in your testimony, you mentioned the EPA 
taking a one-size-fits-all approach, and I wonder if you could 
expand upon that a little bit.
    Mr. Rajkovacz. Yes. We fundamentally believe without having 
included small-business motor carriers, owner-operators in the 
discussion--and when I say they didn't include it, within their 
regulatory impact analysis, they specifically stated that the 
rulemaking would not have a significant economic impact on a 
substantial number of small entities.
    And as we started looking at that, we were aware that they 
were talking with large motor carrier interest, and this gets 
to the heart of the problem in terms of looking at the trucking 
industry. The industry is predominantly dominated by small-
business motor carriers. Nearly 96 percent of motor carriers 
operate registered motor carriers in this country have 20 or 
fewer trucks that they operate.
    And yet, when you go and talk to the largest of the large, 
who have very homogenous streamlined operational models, they 
run one truck, one type of trailer, it fails to take into 
account the multiple dual purpose uses that small businesses 
actually engage in. We have many members that operate a couple 
of trailers. They may one day pull a drive-in trailer, for 
instance, where aerodynamic technologies would be appropriate 
and work. We don't deny that these technologies will work where 
appropriate, but the next day they are pulling a flatbed or 
drop-deck, and in that now that technology is working against 
them.
    Ms. Buerkle. Thank you.
    Mr. Doniger, in your comments earlier, before we adjourned, 
you made the statement that you hoped that Members of Congress 
wouldn't fall prey to the phony story lines of small businesses 
when it comes to EPA burdens placed on them. Could you expand? 
What were you referring to?
    Mr. Doniger. If I may, I was referring to a phony story 
line about small businesses that is generally told by others, 
by lobbyists for larger entities, and the common story line is 
that EPA's regulations affect apartment houses, hotdog stands, 
donut shops, small entities; and they don't. There is a 
specific exemption, as I am explained and I am sure you will 
hear from EPA, and as Mr. Kucinich explained, that the permit 
requirements don't apply to 95 percent of the sources in the 
country, don't apply to the kinds of sources that emit less 
than 75,000 tons a year of carbon pollution; and, as a result, 
this story line that millions of tiny sources are being roped 
into a government bureaucracy is the very opposite of what is 
true.
    Ms. Buerkle. Thank you. I have about a minute and a half 
left, and I would like to give each of the other three members 
of the panel the opportunity to respond to that.
    Mr. Kreutzer. Well, if the tailoring rule is followed and 
allowed, it would provide an exemption for some small emitters 
of CO2 for a few years. Even the EPA says that 
eventually it is going to cover entities requiring, just for 
Title 5 permits, 6 million new entities will have to be 
permitted. So the tailoring rule is just putting it off for a 
few years.
    Ms. Buerkle. Thank you.
    Go ahead.
    Mr. Rajkovacz. As far as affecting small businesses, if 
EPA's rulemaking goes through in its current form, there are 
millions, literally millions of trucks that operate interstate 
commerce in this country. As I stated, most of them are small 
businesses. That means eventually this rule affects millions of 
small businesses.
    Ms. Buerkle. Thank you.
    Mr. Holman.
    Mr. Holman. Yes, I would agree that the tailoring rule is 
only a partial temporary solution for small businesses, and we 
don't know what EPA is going to do at the end of the period of 
deferral, which will end in a few years. We also don't know if 
EPA is interested in writing other programs that are going to 
apply to small businesses, so we are in a very comprehensive 
and wide-reaching regulatory program in the climate arena, and 
certainly from the standpoint of looking at what the impacts 
are of that program, EPA has done not a particularly good job.
    Ms. Buerkle. Thank you.
    At this time I am pleased to recognize our chairman from 
Ohio, I yield you 5 minutes.
    Mr. Jordan. I thank the gentlelady. I didn't know if the 
ranking member was in the room. Well, I will ask a few 
questions; I think Dennis will be fine, and we will give him, 
if he wants, a little longer time. We will be happy to do that.
    Let me again thank you all for being here, and I apologize, 
all my notes are at Ann Marie's desk, but let me just do a 
couple things.
    Dr. Kreutzer, talk to me a little bit more about the cap-
and-trade bill and what EPA may be doing and how that relates. 
You mentioned it some in your testimony, but if you can 
elaborate on that, I would appreciate that. Then I do have a 
question for Mr. Holman and then a general question, I think.
    Mr. Kreutzer. If you cut CO2 emissions, if you 
force them to be reduced, you are going to cut fossil fuel use. 
Fossil fuel is the affordable energy right now. Fifty percent 
of our electricity comes from coal, 20 percent from natural 
gas, and in my written testimony I did a cost comparison 
showing that the renewables are 80 to 280 percent more 
expensive. That restricts economic activity. It means consumers 
have less money to spend on other things once they have paid 
their utility bills; it means producers have higher costs of 
production.
    So if you have consumers with less money and you have to 
have higher cost products, they are going to buy less of it; 
you need fewer people to make that, so employment goes down as 
well. It doesn't matter if it is a tax; it doesn't matter if it 
is a cap; it doesn't matter if you come up with a complex set 
of regulations to force the same reduction. You are going to 
have those costs. With regulations even more costly, because 
you have the compliance of the administrative costs as well, 
the 6 million permits that the EPA said they would have to 
issue for Title 5 permits.
    Mr. Jordan. Thank you.
    Mr. Rajkovacz, is that pretty close?
    Mr. Rajkovacz. Yes.
    Mr. Jordan. Let me ask you this. This came up in a hearing 
we had in this room a couple weeks ago. We had a Mr. Michaels 
from OSHA and I asked him this question. In the course of the 
hearing, I guess I sort of picked up on this and asked him this 
general question, and I would like your thoughts as to how you 
see the small business folks that you work with, how they might 
feel about this.
    I asked the gentleman the question, I said, Mr. Michaels, 
would you agree with me that, in the vast majority of cases, 
employers care pretty deeply about their employees? They invest 
time in training them; they are the key to their success, 
making a profit; they know them, they may live in the same 
community? There are always exceptions, but I asked him 
wouldn't you agree that in most situations employers care 
deeply about the well-being of their employees; and I was 
struck by the gentleman's response. He said I would like to 
think so. And it just struck me that sometimes we have this 
attitude amongst Federal employees, who are supposed to, I 
understand, regulate business, but also probably educate and 
help them, and yet they have this attitude that somehow the 
employer is the bad guy.
    Have you picked up on any of that in your dealings with the 
Federal Government, whether it be EPA, OSHA, or any other 
agency?
    Mr. Rajkovacz. Trucking is actually, I would argue, one of 
the most heavily regulated enterprises in the United States. 
Others might have a different opinion. I have been dealing with 
roughly 15 different Federal rulemakings just in the last 4 
months; it is somewhat overwhelming for a lot of us in the 
industry to keep up with it.
    It depends. A lot of times you do develop relationships 
with different people and agencies, and that is a very 
important thing, working with these folks and developing 
relationships. But when you don't have a lot of contact with an 
agency, you are an outsider, and it is really tough to crack 
that egg.
    Mr. Jordan. Let me ask you another question. This came out 
in a hearing a few weeks back. In the full committee we had one 
of the freshmen, Congressman Guinta from New Hampshire, he 
asked five business owners, he said, if you knew--and most of 
these guys started their business 25, 30 years ago; all very 
successful. He said if you knew then what you know now, would 
you have started, relative to regulation. If you knew back then 
all the things you would have to deal with, I think he 
mentioned 15 was the number of different regulators you have to 
deal with, agencies you have to deal with, if you knew then 
what you know now, would you have started your business, and 
every single one of them said they wouldn't have done it, would 
not have done it. Has that been the experience with some of the 
folks that you deal with?
    Mr. Rajkovacz. What I hear from our members is they are 
basically on regulatory overload. I said 15 rulemakings in the 
last 4 months, and they are major rulemakings that will change 
the industry's productivity. People are generally fed up with 
what they think is an over-regulated environment. It is 
oftentimes under the guise of safety, and where that is 
appropriate, obviously----
    Mr. Jordan. I didn't get to my question, Mr. Holman, but I 
will have another round and I will get to that one next time. 
Thank you.
    Ms. Buerkle. Thank you, Mr. Jordan.
    I now yield 5 minutes to Mr. Kucinich.
    Mr. Kucinich. Thank you very much, Madam Chair.
    Dr. Kreutzer, I read your testimony. I was particularly 
interested in the chart with the high cost of renewable energy 
systems, where you chart the monthly and annual costs, and my 
part in this discussion about regulation has always been that 
you can assign costs, but if you want to get a clear picture 
you have to look at costs and benefits simultaneously; 
otherwise, we are not really understanding the societal impact.
    And when I look at coal, in particular, I don't think that 
anyone could argue that coal, the use of coal and the burning 
of coal and the after effects on the environment of coal, does 
have adverse environmental impact. In a way, the sulfur dioxide 
byproducts can exacerbate pulmonary problems, it is well 
recognized; asthma, emphysema. The sulfur dioxide, when it 
travels over many miles, as we know this in the Midwest, that 
coal burning plants in the Midwest end up with the condensate 
polluting rivers and lakes in the Northeast, and we have a 
price of beautification there. You could actually monetize the 
costs to adverse health and the adverse impact on the 
environment.
    I just wanted to share that thought with you because I 
think it is really important that when we are in a discussion, 
the essence of which is what does this cost, and your chart, 
taken within its own context, you don't make the argument, but 
when you look at the cost of that technology, there is an 
expense that is offloaded onto the society. I just wanted to 
share that with you.
    Mr. Kreutzer. I agree. And I don't think anybody here is 
talking about undoing the Clean Air Act back to 1966. What I am 
addressing is carbon dioxide regulation. We already have an 
extraordinary amount--maybe we need more; I am not here to 
debate that--regulation for sulfur dioxide and other criterion 
pollutants. If you want to look at the impact of carbon dioxide 
on a cost-benefit, I think some of the estimates have been 
exaggerated. But if you take the estimates of the social cost 
of carbon, add that to the coal cost, that is about 2 cents per 
kilowatt hour, it is still much cheaper than wind or solar. It 
changes the number some; it doesn't flip any of them around.
    So we want to look at the costs and benefits. What benefit 
in terms of global warming mitigation do you get from this? 
Even with a full-blown Waxman-Markey cap-and-trade----
    Mr. Kucinich. Do you think there is such a thing as global 
warming?
    Mr. Kreutzer. Do I think? Yes, the world is warmer. Yes.
    Mr. Kucinich. I just have a few minutes left and I am going 
to have to go on.
    Mr. Kreutzer. OK.
    Mr. Kucinich. But I thank you.
    I would just like to submit for the record, Mr. Chairman, a 
study that shows, in terms of benefits and costs, that the 
proposed rules that we have been promoting would avoid up to 
17,000 premature deaths, 4,500 cases of chronic bronchitis, 
1,100 non-fatal heart attacks. These are the benefits of 
focusing on protecting clean air. So I would just like to put 
this into the record.
    In the minute that I have left, I just want to ask Mr. 
Doniger, can you explain how the tailoring rule works to 
prevent harm to small businesses?
    Mr. Doniger. Yes, thank you. As I said in my testimony and 
in response to Ms. Buerkle, the purpose of the tailoring rule 
is to focus the permit requirement, the requirement that big 
new plants and big expanded plants examine whether they have 
the opportunity to control pollution at an affordable and 
achievable cost, it limits this requirement to very big sources 
and it excludes the 95, maybe 97, 99 percent of the so-called 6 
million sources that Mr. Kreutzer and others keep saying would 
be subject to Clean Air Act requirements. It just will not be 
so.
    Mr. Kucinich. My time has expired, but the Chair has just 
said that he is going to ask one more question and he has been 
kind enough to let me ask another question. I have a followup 
to ask of you, Mr. Doniger.
    So I would go back to the Chair. Thank you, Mr. Chairman.
    Mr. Jordan. [Remarks made off microphone.]
    Mr. Kucinich. That would be great, if I could.
    Mr. Doniger, we know that these exemptions are expected to 
be reconsidered by the EPA in 2013. Do you think the EPA is 
going to keep this exemption for small sources of greenhouse 
gas emissions?
    Mr. Doniger. Yes, I do. I see no reason why they would take 
that exemption away.
    Mr. Kucinich. Well, could you clarify just once more, do 
any of the current greenhouse gas permitting regulations burden 
small sources of greenhouse gas emissions?
    Mr. Doniger. No, they don't, and the one thing that is in 
place that actually helps small businesses so far are these 
standards for vehicles, both light-duty and heavy-duty, that 
will save thousands of dollars for small businesses to buy cars 
and trucks.
    Mr. Kucinich. So, bottom line, what is the impact of the 
current greenhouse gas regulations on small businesses?
    Mr. Doniger. It is probably helpful to small businesses as 
a whole.
    Mr. Kucinich. Thank you.
    Mr. Jordan [presiding]. Mr. Holman, would you like to maybe 
pick up where these guys just left off? Let me start with you 
by asking this. You were a former Assistant Chief Counsel of 
Energy and Environment at the SBA Office of Advocacy, is that 
right?
    Mr. Holman. That is correct.
    Mr. Jordan. And you authored the comments that SBA 
submitted to the EPA in 2009 that expressed concern about the 
EPA's endangerment finding and greenhouse gas tailoring rule, 
is that right?
    Mr. Holman. Yes, the comments in 2008 and 2009.
    Mr. Jordan. Both 2008 and 2009. Good. So in your former 
capacity can you give us some insight into the discussion that 
just took place and the impact that this stuff will have on 
small business?
    Mr. Holman. Well, I can----
    Mr. Jordan. It seems to me you are pretty darned uniquely 
positioned to comment on the conversation we just heard.
    Mr. Holman. Well, I guess I appreciate that comment. You 
know, there was a lot of discussion between the Office of 
Advocacy and EPA on the tailoring rule and there is no doubt 
that the tailoring rule is a help to many small businesses 
because it does delay the permitting requirements that would 
otherwise be falling on small businesses the way it has fallen 
on the lime industry even now.
    And I can first address what are those impacts that are 
falling on us and on some other smalls, and that ultimately 
will fall on all small businesses, potentially, and that is 
uncertainty because of GHG permitting. So imagine that you are 
required to comply with GHG permitting and you want to do some 
sort of modernization or expansion of your plan. What it is 
going to mean is that you have to go to get a permit to do that 
expansion, and in that process of getting that permit, it could 
be that every aspect of your operations will wind up being 
looked at by EPA or a State under what is known as best 
available control technology review.
    The concern by most of the industrial sources, and even 
some of the small ones, is that process could wind up requiring 
you to install non-related things, things that have nothing to 
do with emissions but have to do with energy efficiency or some 
other improvement in your plant that would be very expensive. 
And it has a chilling effect because imagine you go to a bank 
and you say you want to get financing for a project that I am 
going to do at my facility. Well, when do you have to put it 
in? I don't know. What is it going to be? I'm not sure because 
EPA can't really tell me what it is; we will only know at the 
end of the process, and even then we might not know because 
that is subject to being challenged in court and potentially 
being changed.
    So there is a lot of uncertainty just in terms of this 
process is not cut and dried. Unlike the BACT process that has 
existed for criteria pollutants for 35 years, we are in a 
totally new arena here when it comes to greenhouse gases. 
Nobody knows exactly what is going to be required. So when you 
say what is the magnitude of this impact on smalls, at the 
moment we don't really know; it is very open-ended, and that 
has uncertainty which, as you know, business people hate.
    From the standpoint of the Office of Advocacy, we wanted a 
tailoring rule or something that would at least temporarily 
soften the blow, which the tailoring rule does that, but not 
for everybody; certainly not for the lime industry, bricks, 
small utilities, municipal utilities, rural electric 
cooperatives, foundries. There are a number of businesses that 
are not going to be entirely shielded by the tailoring rule.
    Mr. Jordan. So when you put this together and you gave your 
comments and recommendations to the EPA, and yet you just 
talked about entities who are, you think, impacted in a 
negative way, did you think EPA followed your comments? Did 
they follow the statutory requirements they were supposed to 
follow? Did they listen? Talk about that process.
    Mr. Holman. Speaking from my own perspective as an 
individual, my sense was that EPA was in a rush to get this 
rule completed. We wanted very much to have, as I mentioned in 
my testimony, we wanted EPA to stop or to slow down, consider 
what the impacts were going to be on smalls, and try to come up 
with a way to design the rule so that it would protect them. 
EPA was not really interested in alternatives, was not really 
interested in listening to what the smalls had to say other 
than----
    Mr. Jordan. That is what I want to be clear on. My 
understanding is the law requires them to give serious 
consideration, due diligence to your recommendation. Is that 
accurate?
    Mr. Holman. That is correct.
    Mr. Jordan. And do you think that took place? That is the 
question.
    Mr. Holman. We were not satisfied that took place, which is 
why we wrote four public letters to the EPA saying you must do 
a panel before you proceed with these rulemakings.
    Mr. Jordan. So in your role as advocate for small business 
in front of the EPA, they did not follow, in your mind, what 
the law requires them to follow.
    Mr. Holman. It was our belief that EPA did not follow the 
Regulatory Flexibility Act. They certified the rule and went 
with what they considered to be a compromise under Section 
609(c) of the Regulatory Flexibility Act.
    Mr. Jordan. Had that ever been done before?
    Mr. Holman. No, it had never been done before.
    Mr. Jordan. So didn't follow normal practice, took an 
action never done before on an issue that you told them was 
going to impact small business owners in a negative way. Is 
that accurate?
    Mr. Holman. We told them at least four times.
    Mr. Jordan. Four times you told them?
    Mr. Holman. In public documents.
    Mr. Jordan. OK. Thank you, Mr. Holman, I appreciate that.
    We have one more round for Ms. Buerkle.
    Ms. Buerkle. Thank you, Mr. Chairman.
    Dr. Kreutzer, you had started to answer a question about 
global warming and I have a feeling you didn't finish your 
answer, and I wonder if you could just expand on that.
    Mr. Kreutzer. I think I was responding to Congressman 
Kucinich asking me if I believed in global warming, and I said, 
yes, we are warming. The question, though, is more than are we 
having warming and is it caused by human-made emissions. We are 
looking at a set of regulations, and if we are going to do 
cost-benefit, we need to look at what is the cost of the 
regulation compared to how much benefit you get from reduced 
global warming. That is the problem with CO2, if 
there is one.
    And climatologists looked at the Waxman-Markey bill, which 
was more comprehensive than the current EPA regulations. Their 
estimates were that by 2050, if you use the largest sensitivity 
of temperature to CO2, the high end, the maximum 
change moderation from Waxman-Markey, that is, how much 
difference would Waxman-Markey make, thousands of a degree in 
2050, maybe a few tenths of a degree in 2100. This will have 
less impact than that. So we can't compare the cost here to 
stopping tsunamis; we have to compare the cost here to actually 
what impact it will have on moderating world temperatures, and 
it is pretty minimal; in 50 years not even measurable.
    Ms. Buerkle. Thank you. In your testimony you talk about 
the cost of cap-and-trade.
    Mr. Kreutzer. Yes.
    Ms. Buerkle. And the cost to our GDP, as well as a number 
of employees. Can you comment in general, not specific to that 
legislation, but what regulations are doing? Our country has 
had 20-plus months of unemployment hovering at 9 to 10 percent, 
so we are concerned about that. We want to get government out 
of the way so businesses can succeed. Can you shed some light 
on that?
    Mr. Kreutzer. We haven't done an estimate on the impact of 
the most recent regulations. We are working on ones for the 
projected EPA regulations. But one of the things that happens 
when you have an environment where you say we might impose 
this, we might impose this, it makes it very difficult to make 
investment.
    Now, some on the other side would say that is why we need 
to have the regulations, but that is when you say we know for 
certain it is going to be really bad. When there is some 
uncertainty that is really bad, you still don't want to invest; 
but when it comes to horrible, that is even worse. OK, so, yes, 
we have a problem where to make investments in power industry, 
to build the power plants we are going to need for firms that 
are in energy-intensive industries are reluctant to go forward 
if they think the regulations are going to be burdensome.
    Ms. Buerkle. And I just want to go back to your previous 
answer to the first question I asked you. Is there in your 
opinion, what is the connection between the CO2 
emission and global warming?
    Mr. Kreutzer. I am not a scientist; I am an economist, so 
this is close to a man-on-the-street interview now. There will 
be some warming from manmade emissions, probably. There are 
some models that show some offsetting. But the CO2, 
by itself, if it doubles, will lead to a degree and a half of 
warming.
    The argument is all about are there feedback loops. The 
models have lots of them. The data so far, when we look at the 
last 15 years, we don't have accelerating warming; the 1999 
level has been pretty flat. So we don't know for sure what it 
is. But, more importantly, let's say it is the 4\1/2\ degrees C 
that they are talking about at the high end of the IPCC model. 
What does any of this regulation do? If all it does is impose 
costs and make us feel like we are doing something but we are 
not, then we are getting the warming anyway, and unemployment 
and lower income. So whether you believe IPCC or not, this is 
not a solution.
    Ms. Buerkle. Thank you very much.
    I yield back.
    Mr. Jordan. I thank the gentlelady.
    The gentlewoman from California, do you wish to ask this 
panel some questions? You are welcome to.
    Ms. Speier. Thank you, Mr. Chairman.
    Maybe California really is on another planet, but we did 
pass A.B. 32. There was an effort to repeal that; it failed 
miserably. And Californians recognize that we all have a 
responsibility to be stewards of this planet. Having said that, 
small business in California has spoken up very strongly in 
favor of A.B. 32, which would limit greenhouse gases.
    Mr. Chairman, for the record, I would like to submit a 
letter and document from the Small Business Majority that 
basically says the following: Our research has continually 
shown that the Clean Air Act is good for small business. The 
report we released in October of last year found that the 
benefits of the law have far outweighed the costs. The Office 
of Management and Budget predicts that the total economic 
benefits of the Clean Air Act to be more than four to eight 
times the cost of the compliance. Our report also found that 
the law has spurred important technological innovations such as 
the catalytic converter, and exports of these and other 
environmental technologies were valued at $30 billion in 2004. 
These are encouraging numbers and cannot be ignored.
    Furthermore--without objection?
    Mr. Jordan. Without objection.
    [The information referred to follows:]

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    Ms. Speier. Furthermore, I am amused because when the Clean 
Air Act, in 1990, was being considered, Ford Motor Co. claimed 
that, ``We just do not have the technology to comply.'' And yet 
look where we are today. Ford Motor Co., Chevrolet, every one 
of the auto manufacturers are embracing all of the clean air 
standards and creating electric cars and hybrid cars, and the 
public is embracing them as well.
    So I guess my question to you, Mr. Doniger, is there some 
level of exaggeration going on here?
    Mr. Doniger. Thank you, Congresswoman. It seems as though, 
wherever we are in time, the regulations of the past are 
embraced and the regulations of the future are treated like 
Armageddon; and then we move on a little bit more in time and 
those regulations become embraced because, as your examples 
show, the benefits are proven, the economic costs turn out to 
be much smaller than were forecasted by lobbyists up here, and 
life goes on. The economy of the United States has tripled in 
size since 1970, while we have been able to cut the emissions 
of most pollutants by 60 percent or more. So we can do these 
two things at once.
    I would just call your attention to a study by three 
economists. Roger Bezdek is the first name. I would be happy to 
supply this for the record. And if I may recite just one 
paragraph of his findings: Contrary to conventional wisdom, 
environmental protection, economic growth, and jobs creation 
are complimentary and compatible. Investments in environmental 
protection create jobs and displace jobs, but the net effect on 
employment is positive. Second, environmental protection has 
grown rapidly to become a major sales generating, job creating 
industry: $300 billion a year and 5 million jobs in 2003.
    Most of the 5 million jobs created are standard jobs for 
accountants, engineers, computer analysts, clerks, factory 
workers, etc., and the classic environmental job, environmental 
engineer, ecologist, etc., constitutes only a small portion of 
the jobs created. Most of the persons employed in the jobs 
created may not even realize that they owe their livelihood to 
protecting the environment.
    So this is a big business and it is a big contribution to 
our economy, and our economy grows because we protect our 
environment.
    Ms. Speier. Thank you, Mr. Doniger. One final question, and 
this has probably been addressed already earlier in the 
hearing, but this is supposed to be focusing in on small 
business and the impacts on small business. The EPA tailoring 
rule, which has come forward, would suggest that you have to 
spew out 75,000 tons a year to be subject to any kind of 
regulation by EPA. Are most small businesses spewing out 75,000 
tons?
    Mr. Doniger. No, they are not. Virtually all of the 
buildings, the small businesses that own those buildings are 
untouched by this regulation. Now, several of the people here 
have suggested, well, that may not be true in the future. Well, 
if Congress was going to do something that would be 
constructive and help create the regulatory certainty we need, 
it would be to lock in the tailoring rule the way it is now and 
take away any uncertainty about how it develops in the future.
    And that uncertainty exists only because there is a limit 
on how long EPA is allowed to make an exemption under the court 
doctrines that EPA is using to justify these exemptions; and 
Congress, of course, can make those exemptions permanent. If 
you lock in the tailoring rule, we will have the certainty, the 
focus on the big pollution sources, get the technology on them 
and leave the small-fries alone.
    Ms. Speier. Thank you. My time has expired.
    Mr. Jordan. I thank the gentlelady.
    Mr. Doniger, let me just followup, then, real quick. Which 
is it? Earlier you said that more regulation has been good, it 
has added to the economy, it has been growth, and now you are 
saying they should lock in the tailoring rule to take away any 
uncertainty and not expand it. I mean, which way is it?
    Mr. Doniger. The way it is, Congressman----
    Mr. Jordan. I mean, your premise to the first question of 
hers was more regulation is good.
    Mr. Doniger. Not all more regulation, sir.
    Mr. Jordan. Oh, so it isn't all. So some regulation could 
be bad.
    Mr. Doniger. Of course.
    Mr. Jordan. OK. But that is not what you said. You said 
regulation is good, it added to the economy, it was wonderful.
    Mr. Doniger. I said the regulation that we--the greenhouse 
gas safeguards that EPA is putting in place are a net plus----
    Mr. Jordan. I think you said regulations in the past have 
been embraced as the good stuff, but all the future ones 
everyone always says they are bad, and you said that is not the 
case, it is good. So you made this general statement that 
regulation was good for business, good for the economy, and now 
you are saying, no, we should limit the tailoring rule, 
shouldn't expand it, we have to take away any uncertainty out 
there. I just want to know which way is it.
    Mr. Doniger. I am sure we can work out which of the 
positive economic growth promoting, health promoting 
regulations and which are not helpful. I am here to present the 
case that what is being done now makes perfect common sense, 
and what EPA has done is to make sure that the small businesses 
are not burdened by the kinds of regulations that don't make 
sense.
    Mr. Jordan. Any further questions for the first panel?
    [No response.]
    Mr. Jordan. I want to thank you all for joining us today. 
We do need to move on. And I apologize for the schedule. As I 
said earlier, it is just one of those weeks around Congress.
    We will get ready for our second panel and we will move 
through that as quickly as we possibly can.
    Thank you all.
    As soon as we get you situated here, we will start it here. 
OK, we are pleased to welcome our second panel of witnesses.
    We have The Honorable Gina McCarthy, who is the Assistant 
Administrator at the U.S. Environmental Agency. Welcome, Ms. 
McCarthy.
    And we also have Ms. Claudia Rodgers, who is the Deputy 
Chief Counsel at the Small Business Administration's Office of 
Advocacy.
    If you were here for the first panel, we have a practice 
here. Please rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Jordan. Let the record show both witnesses answered in 
the affirmative.
    And we will go right down the row here. Ms. Rodgers, you 
are up first. Go right ahead.

STATEMENTS OF CLAUDIA RODGERS, DEPUTY CHIEF COUNSEL, OFFICE OF 
    ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION; AND GINA 
  MCCARTHY, ASSISTANT ADMINISTRATOR FOR THE OFFICE OF AIR AND 
        RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

                  STATEMENT OF CLAUDIA RODGERS

    Ms. Rodgers. Mr. Chairman, ranking member, members of the 
subcommittee, my name is Claudia Rodgers and I am Deputy Chief 
Counsel for the Office of Advocacy at the U.S. Small Business 
Administration. I am pleased to have the opportunity to appear 
before this committee on behalf of Chief Counsel Dr. Winslow 
Sargeant.
    In the interest of time, I will summarize my prepared 
testimony and ask that my full statement be included in the 
record. Because Advocacy is an independent body within SBA, my 
testimony does not necessarily reflect the position of the 
administration or the SBA.
    Congress established the Office of Advocacy to represent 
the views of small entities before Federal agencies and 
Congress. The Office of Advocacy is charged with oversight of 
agency compliance with the Regulatory Flexibility Act. The RFA, 
as amended by the Small Business Regulatory Enforcement 
Fairness Act, gives small entities a voice in the Federal 
rulemaking process. For all rules that are expected to have a 
significant economic impact on a substantial number of small 
entities, EPA must conduct SBREFA panels to assess the impact 
of the proposed rule on small entities and to consider less 
burdensome alternatives.
    Advocacy and EPA have a long and productive working 
relationship. Since SBREFA was signed into law in 1996, EPA has 
conducted nearly 40 SBREFA panels to assess the impact of 
proposed rules on small entities and to consider less 
burdensome alternatives. These panels allow for small business 
to give direct feedback on the potential cost of the proposed 
rules and to suggest and develop less burdensome alternatives. 
Final panel reports must be signed by the Chief Counsel for 
Advocacy, the Administrator of the Office of Information and 
Regulatory Affairs, and the Administrator of the EPA. In 15 
years of SBREFA panels, Advocacy has found that the panel 
process is a useful way for small businesses to provide 
valuable input into the rulemaking process. In short, the panel 
process works.
    SBREFA panels have saved billions of dollars for small 
businesses due to changes and improvements that were made to 
proposed rules, while still allowing EPA to achieve their 
statutory objective. While Advocacy does occasionally have 
disagreements with EPA on procedure and policy, we are also 
very proud of the work we have done with EPA to improve 
regulations and reduce the burdens on small businesses. We 
currently have five SBREFA panels underway on EPA rules, and we 
will continue to work with EPA in a constructive way to make 
sure the RFA and SBREFA are being followed and the impacts of 
regulations on small businesses are being taken into account.
    With respect to regulation of greenhouse gases, Advocacy 
disagrees with EPA on whether the impacts on small businesses 
were properly considered. Advocacy has been clear and 
consistent in its public comment letters and other 
communications with EPA about our positions on these issues. We 
believe EPA should have held SBREFA panels and conducted 
thorough RFA analysis to explore potential impacts of 
greenhouse gas regulations on small entities. In 4 years of 
greenhouse gas regulatory activity, EPA has not evaluated the 
economic effects that its initial endangerment finding and 
mobile source emission standards have had on small businesses.
    Advocacy does not challenge EPA's authority to implement 
the Clean Air Act; however, we do believe a more thorough 
analysis was needed, including SBREFA panels, to fully consider 
the impacts greenhouse gas regulation would have on small 
businesses. These concerns were noted in Advocacy's four public 
comment letters, attached to my testimony.
    In 2008, when EPA issued an advanced notice of proposed 
rulemaking indicating it might regulate greenhouse gases, 
Advocacy filed public comments asking EPA to hold SBREFA panels 
on any greenhouse gas regulation to ensure the effects of small 
entities could be considered.
    When EPA issued its endangerment finding in 2009, Advocacy 
again filed public comments advising EPA to conduct SBREFA 
panels to explore potential impacts of greenhouse gas 
regulations on small entities.
    In EPA's subsequent proposed regulation of motor vehicle 
greenhouse gas emissions standards and the proposed tailoring 
rule, EPA again certified under the RFA that such standards 
would have no significant impact on a substantial number of 
small entities. EPA did acknowledge some of the potential 
burdens on small businesses and established a phased in 
compliance program with the tailoring rule. This action led to 
significant cost savings for small businesses and EPA deserves 
credit for its implementation. However, Advocacy believes EPA 
should have done a SBREFA panel, which would have better 
reflected the views of small businesses and improved the rule.
    In conclusion, while EPA has expressed its desire to reach 
out to small entities and has provided temporary relief to 
small businesses, Advocacy remains concerned that EPA has not 
fully complied with both the spirit and the requirements of the 
RFA on the greenhouse gas rules. EPA did conduct public 
outreach; however, public outreach is not a substitute for the 
concrete feedback agencies get from small businesses during the 
panel process.
    We look forward to continuing to work with EPA on these and 
other important regulations. Thank you for the opportunity to 
address such an important issue for small business. I 
appreciate your work in the Office of Advocacy and I am happy 
to answer any questions you may have.
    [The prepared statement of Ms. Rodgers follows:]

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    Mr. Jordan. Thank you, Ms. Rodgers.
    Ms. McCarthy.

                   STATEMENT OF GINA MCCARTHY

    Ms. McCarthy. Chairman Jordan, Ranking Member Kucinich, and 
members of the subcommittee, I want to thank you for inviting 
me here today, and I am honored to be sitting here with Ms. 
Rodgers.
    I hear repeatedly from members that small business 
constituents are very concerned about EPA updating its Clean 
Air Act programs to address greenhouse gases. But when I listen 
to the concerns, I am most struck by the fact that what they 
think we are doing bears little or no relationship to what we 
are actually doing. I appreciate today's opportunity to try to 
set that record straight.
    The Agency is taking a common sense approach to meet our 
Clean Air Act obligations to reduce carbon pollution. Our focus 
now is not on small sources at all, but on the largest 
polluters. Perhaps the most repeated misinformation about 
greenhouse gas regulation and small businesses relates to 
greenhouse gas air permits. Contrary to the most commonly heard 
claims, small sources are not currently covered by the 
permitting program. EPA adopted regulations last year that 
exempt small sources for at least the next 5 years, and we 
cannot include them absent a future rulemaking with public 
comment that would do so.
    I know some of your constituents are concerned about what 
has been called a cow tax. Well, let me reassure you that the 
Agency has no intention or desire to impose taxes on cows, 
pigs, chickens, or any other livestock. And while we routinely 
hear concerns that our greenhouse gas standards will cause 
incredible increases in gas prices and electricity rates, none 
of these estimates are actually based on the analysis of our 
programs. Instead, they are based on studies, and many of them 
are severely flawed, of economy-wide cap-and-trade programs 
that bear absolutely no relationship to EPA's actions.
    In sharp contrast to these concerns, the only greenhouse 
gas standard EPA has issued under its existing Clean Air Act 
authority will save small businesses money. The average 
American purchasing a new passenger vehicle that meets our 
greenhouse gas standards would net savings of $3,000. Our 
proposed standards for medium- and heavy-duty vehicles would 
net operators of semitrucks savings of up to $74,000 over the 
truck's useful life.
    Misconceptions about the effects of EPA programs are 
unfortunately no surprise. Over the last 40 years, similar 
unsupported claims have been made nearly every time EPA has 
taken significant steps to protect the American public. In the 
1970's we were told that by using the Clean Air Act to phase in 
catalytic converters for new cars and trucks, that entire 
industries might collapse. Instead, the requirement gave birth 
to a global market for catalytic converters and enthroned 
American manufacturers at the pinnacle of that market.
    In the 1980's, people claimed that the proposed Clean Air 
Act amendments would cause a quiet death for businesses across 
the country, but instead the U.S. economy actually grew by 64 
percent, even as the implementation of Clean Air Act amendments 
cut acid rain pollution in half.
    In the 1990's, when we took steps to phaseout chemicals 
that deplete the ozone layer, a refrigeration industry 
representative testified that we would see shutdowns of 
refrigeration equipment in supermarkets and air conditioners in 
large office buildings, hotels, and hospitals. None of that 
happened. Instead, the phase-out happened 5 years faster and 
cost 30 percent less.
    EPA is using the same Clean Air Act tools that we have been 
using for these past 40 years to protect public health to now 
address the public health threat that is posed by carbon 
pollution. These Clean Air Act tools have proven their worth 
over and over in these years to improve public health. In fact, 
Clean Air Act programs adopted since 1990 are expected to 
provide $2 trillion in benefits in 2020 alone, over $30 in 
benefits for every dollar spent. Just last year these programs 
are estimated to have reduced premature mortality equivalent to 
saving over 160,000 lives and to have enhanced productivity by 
preventing 13 million lost work days.
    I will close with a statement by the Small Business 
Majority and the Main Street Alliance: Any step to delay or 
limit EPA's ability to regulate greenhouse gases and other 
pollution has negative implications for many businesses, 
whether they are large or small. It would hamper the growth of 
the clean energy sector of the economy, a sector that a 
majority of small business owners view as essential to their 
ability to compete.
    Thank you, Mr. Chairman, and I look forward to your 
questions.
    [The prepared statement of Ms. McCarthy follows:]

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    Mr. Jordan. Thank you both for your testimony and your 
time.
    I am going to let the ranking member go because he has to 
run to another meeting, and then we will finish up.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    Ms. McCarthy, in a hearing about the impacts of greenhouse 
gas regulations, I think it is important to discuss the reason 
why these regulations exist. In his written testimony, Mr. 
Doniger cited the National Academy of Sciences, which 
concluded, ``Climate change is occurring. It is caused largely 
by human activities and poses significant risks for, and in 
many cases already affecting, a broad range of human and 
natural systems.'' The National Academy of Sciences continued 
to explain that the scientific basis for reaching this 
conclusion has ``been so thoroughly examined and tested and 
supported by so many independent observations and results that 
the likelihood of them subsequently being found to be wrong is 
vanishingly small. Such conclusions and theories are then 
regarded as settled facts.''
    Now, Ms. McCarthy, as you know, the National Academy of 
Sciences is far from the only organization that has reached 
legitimate compelling scientific conclusions that illustrate 
the real danger caused by climate change. Entities, including 
the World Health Organization, International Monetary Fund, and 
the U.S. Global Change Research Program, a program mandated by 
Congress to integrate climate change, Federal research, all 
definitively identified climate change a real danger.
    Ms. McCarthy, do you agree that the science that provides 
the impetus for greenhouse gas regulation is indisputable? And 
if you do, why?
    Ms. McCarthy. I do, Mr. Kucinich, and that is because the 
best available peer-reviewed science that we have found 
indicates that greenhouse gas emissions threaten the health and 
welfare of the American people. That is what the Administrator 
said in making her endangerment finding. It is backed not just 
by EPA research, but by the full breadth of all of the agencies 
in the Federal Government who address these types of issues, 
including the National Academy of Sciences, including NASA, 
including NOAA. All of the agencies that we rely on to provide 
the best science to this country and internationally have told 
us that the simple fact is that greenhouse gases are 
endangering public health and the environment, and it is time 
to take action now to reduce those pollutants.
    Mr. Kucinich. Well, did the EPA allow for comments from 
private industry, including small businesses on the greenhouse 
gas endangerment finding?
    Ms. McCarthy. We did. It went through a rulemaking process. 
It was one of the most thorough of the agencies. We had more 
than 350,000 comments, which we addressed individually. We had 
11 volumes of response to comment on this rule. We believe we 
did the most thorough job that the Agency could and that the 
science is indisputable.
    Mr. Kucinich. So what do you say, then, to the small 
businesses who are continuing to express concern that EPA is 
not paying attention to them and EPA is endangering their 
businesses? What do you say to them?
    Ms. McCarthy. I would tell them that the EPA understands 
that our obligation under the Clean Air Act is to regulate 
greenhouse gases and that they pose a substantial public health 
problem. I would tell them that we are taking reasonable common 
sense steps to address greenhouse gases under the Clean Air Act 
in the way that Congress intended, in a way that protects the 
interest of the small businesses, in a way that will continue 
to allow the economy to grow, to continue to allow jobs to 
happen. We are doing the same thing to regulate greenhouse 
gases as we have successfully done with other pollutants under 
the Clean Air Act, and we will look at the economic impacts. We 
have done that; we will continue to do that. We will act 
deliberately and smart and use a common sense approach.
    Mr. Kucinich. You heard the testimony of the witnesses in 
the previous panel, did you not?
    Ms. McCarthy. I did.
    Mr. Kucinich. I think we have to be concerned about small 
business communicating their difficulties, and I know Mr. 
Doniger's testimony is that most of the small businesses, that 
the rules would not necessarily apply to them. But I think for 
those to whom they do apply, they are looking for some words 
from you that would indicate that you are trying to do 
everything you can to make sure people can stay in business, at 
the same time trying to protect the environment. Is that a fair 
characterization?
    Ms. McCarthy. That is correct.
    Mr. Kucinich. OK.
    I want to thank the chairman for indulging me with this 
opportunity to go first. Thank you. Yield back.
    Mr. Jordan. You bet. I appreciate the gentleman. Thank you.
    Ms. Rodgers, the SBREFA Act has been around for about 15 
years, is that right?
    Ms. Rodgers. Since 1980, 30 years.
    Mr. Jordan. Thirty years. OK.
    Ms. Rodgers. I'm sorry, the RFA is 30 years; SBREFA has 
been 1996.
    Mr. Jordan. 1996. About 15 years. That is what I have. And 
how many SBREFA panels have you been involved with with the EPA 
in that timeframe?
    Ms. Rodgers. The Office of Advocacy has been involved with 
nearly 40, I think we are up to about 38 now.
    Mr. Jordan. And I think in your testimony isn't it true you 
said you had like five underway right now?
    Ms. Rodgers. Yes, five currently.
    Mr. Jordan. OK. And you believe these have been positive?
    Ms. Rodgers. Yes. Overall, actually EPA is one of the 
better actors in terms of compliance with the RFA in general. 
When we were developing a training program back in 2002, we had 
to go to agencies to find out those who do it best to help us 
develop the program, and we went to EPA.
    Mr. Jordan. So you have a good relationship, good track 
record with EPA in all these except the one that is at issue 
today, is that right?
    Ms. Rodgers. Yes, we are concerned about the greenhouse gas 
regulations.
    Mr. Jordan. So the normal process was not done with the 
greenhouse gas issue and its effect on small business. All the 
other times have been fine, when you recommended, when you went 
through it, except for this one particular one.
    Ms. Rodgers. We felt that the Office of Advocacy, yes, felt 
that, taken as a whole or separately, the greenhouse gas 
regulations clearly had a significant economic impact on the a 
substantial number of small entities and, therefore, a SBREFA 
panel should have been held.
    Mr. Jordan. And is this a notable exception or is this the 
only exception to when you suggested you move in this way and 
go through the process that the law spells out? Is this a 
notable exception, is this one of a few that has been done this 
way or is this the only one that has been done this way?
    Ms. Rodgers. It is one of a few. However, certainly over 
the years, over 15 years and 40 panels, we are bound to have 
disagreements over their certifications on some rules. But it 
is really one of the very few.
    Mr. Jordan. OK, so when Ms. McCarthy answered the ranking 
member's questions about there was a process that was 
undertaken with small business owners, it wasn't the normal 
process.
    Ms. Rodgers. Correct.
    Mr. Jordan. OK.
    Ms. McCarthy, why?
    Ms. McCarthy. Mr. Jordan, I would just disagree with the 
characterization that it wasn't a normal process. I would 
emphasize that EPA certainly follows both the letter and the 
spirit of the RFA as it has been amended by SBREFA----
    Mr. Jordan. Just hang on 1 second. Ms. Rodgers just 
testified that it has been a great relationship, you have 
worked things out----
    Ms. McCarthy. It has.
    Mr. Jordan [continuing]. The process has been followed 
almost all the time. And yet here we have a pretty important 
rule.
    Ms. McCarthy. We do.
    Mr. Jordan. Clean Air Act, greenhouse gas, pretty important 
stuff that they think is going to have a real impact on small 
business. It would seem to me you would want to follow the 
standard procedure and go through what has been the custom and 
the practice. So why not in this situation?
    Ms. McCarthy. We did follow the appropriate procedure. I 
thin where we disagree is that the tailoring rule, which seems 
to be the issue at hand, is a burden reduction rule.
    Mr. Jordan. This is important. You keep saying you followed 
the normal procedure, but Ms. Rodgers says out of the ordinary; 
the gentleman before, I assume you saw where Mr. Holman talked 
and said out of the ordinary, not the normal process.
    Ms. McCarthy. There are a variety of ways to comply with 
the law. EPA generally goes above and beyond, and we always 
meet both the letter and the spirit of the law. In this 
instance we made a decision that we did not need to convene a 
panel because the tailoring rule was a deregulation rule. In 
fact, it reduced the burden for 6 million small businesses to 
have to deal with greenhouse gas permitting, and in that 
instance we did not convene a panel.
    Now, we did get comment from SBA indicating that they 
thought we should. I believe the disagreement is one that we 
have had in the past before. In particular----
    Mr. Jordan. You believe or do you know?
    Ms. McCarthy. Oh, I do know, yes.
    Mr. Jordan. OK.
    Ms. McCarthy. Let me explain when that happened. And that 
had to do with the ozone and fine particles standards that we 
issued in 1997. At that point in time, SBA also indicated to us 
that we should convene a panel. We indicated that rule was not 
subject to a panel requirement. That was actually taken to 
court. The D.C. Circuit said that SBA's interpretation of the 
RFA doesn't carry any more weight than EPA's, and they 
disagreed with SBA and found that our interpretation of the RFS 
was persuasive. We actually won that case, and we have never 
ever lost a case.
    Mr. Jordan. OK.
    Ms. Rodgers, did you suggest a panel be convened for the 
tailoring rule and the endangerment finding and the light duty 
truck rule?
    Ms. Rodgers. Yes, we did, Congressman.
    Mr. Jordan. So all three.
    And, Ms. McCarthy, you declined to do it for each of those?
    Ms. McCarthy. Well, we explained each of those rules, and I 
can go through them if you would like, but we still believe we 
took the appropriate action under the law.
    Mr. Jordan. Because you talked about the tailoring rule; I 
didn't hear you talk about the other two. So three times.
    Ms. McCarthy. I can talk about the endangerment finding.
    Mr. Jordan. Endangerment finding, OK.
    Ms. McCarthy. EPA looks at cost and looks at getting SBREFA 
panels----
    Mr. Jordan. Well, let's cut to the chase here. Why not on 
something this important, something of this magnitude, why not 
do the standard practice? Why go through this? To cite this 
decision and that and here is why, why not just do what the 
advocacy group that is in the law and follow the process that 
is designed to be followed?
    Ms. McCarthy. We did follow the process that is designed to 
be followed. What I would indicate to you is that----
    Mr. Jordan. Well, again, we have the advocates for small 
business, both of them saying you didn't.
    Ms. McCarthy. I would disagree, respectfully.
    Mr. Jordan. OK.
    I will yield to the Chair of the full committee, the 
gentleman from California. Excuse me.
    Mr. Issa. You should take Ms. Speier.
    Mr. Jordan. I apologize, Mr. Chairman, I am going to insult 
you twice in 30 seconds.
    Mr. Issa. Ladies first, please.
    Mr. Jordan. I didn't see the gentlelady walk in from 
California. California is going to get covered nonetheless, one 
way or the other.
    Ms. Speier. Thank you, Mr. Chairman, and thank you, Mr. 
Chairman. I would have yielded, but I have constituents who are 
waiting in the wings to talk with me, so I would like to take 
my opportunity now.
    Ms. Rodgers, Chairman Issa circulated a Dear Colleague 
letter to House members yesterday, I believe, that cites a 
September 2010 report issued by the SBA Office of Advocacy, 
authored by Crain and Crain. The report estimated the annual 
cost of regulation was more than $1.75 trillion. That is kind 
of a staggering figure.
    And yet in February of this year Professor Sid Shapiro and 
Ruth Ruttenberg released a critique of the Crain and Crain 
study, called Setting the Record Straight. The Shapiro-
Ruttenberg report found that the Crain and Crain report had 
``severe flaws.'' One of these flaws in the study was that they 
looked at costs of regulation without looking at the benefits.
    I think you can make the case if you look at the cost of 
running Congress, it is staggering. But some would argue that 
there is some benefit associated with running Congress. In any 
case Ms. Rodgers, unless you all want to retire or resign at 
this point in time.
    In any case, Ms. Rodgers, did the SBA Office of Advocacy 
contract with Nicole Crain and Mark Crain, and they did they 
ask the authors to evaluate the benefits of regulation or only 
the costs?
    Ms. Rodgers. Thank you, Congresswoman. We did not ask them 
to evaluate the benefits as well, and the reason is this: This 
is the fourth in a series of studies we have done on the same 
issue, which is the cost of regulations and the impact of those 
regulations on small businesses. The purpose of the study is 
not to show regulations are bad and not to show that all 
regulations are over-burdensome for small business. The purpose 
was to show that small businesses feel the effect of 
regulations differently than large businesses.
    And the reason that was done for the cost, and not the 
benefits, because the costs were what affect small businesses 
most and it is what the Regulatory Flexibility Act requires our 
office to oversee, which asks agencies to review the cost of 
their----
    Ms. Speier. All right. How much did that study cost?
    Ms. Rodgers. Oh, I don't know that answer. I will have to 
get back to you.
    Ms. Speier. Would you please provide that to the committee?
    Ms. Rodgers. I would be happy to, yes.
    Ms. Speier. Another flaw in the study identified by Shapiro 
and Ruttenberg was that the SBA's Office of Advocacy never had 
access to the underlying data used in the report; a little 
astonishing to me. If you can't look at the underlying data, 
then garbage in, garbage out is the way I look at things.
    Ms. Rodgers, does your office have the data used in the 
Crain and Crain study? If so, would you please make that data 
available to us?
    Ms. Rodgers. I will check and see if our office has the 
data and make it available to you. I do know, I am told that it 
is available through Crain and Crain on their Web site or 
through their Web site, that they have made it available. When 
we contract out studies, our office is not required to ask for 
that data and make it publicly available----
    Ms. Speier. Well, let me suggest to you that from a public 
perspective, if you are using taxpayer funds, we deserve to 
have the underlying data so we can in fact determine whether or 
not it is accurate.
    Ms. McCarthy, if EPA funded a study, would the Agency 
expect to have access to the underlying data?
    Ms. McCarthy. The Agency would not only have access to it, 
the public would.
    Ms. Speier. All right. I think that makes sense.
    In addition, Shapiro and Ruttenberg, one of the peer 
reviewers, Richard Williams, from the Mercatus Center, raised 
concerns that the report's regulatory quality index may not 
measure what the authors say it measures; and even if it does, 
it may overstate the cost of regulation when used in 
conjunction with other measures.
    Ms. Rodgers, what, if anything, was done to address this 
concern that was raised during the peer review process?
    Ms. Rodgers. We did have the document, the study peer 
reviewed, and it came back with actually excellent reviews 
during the peer review process. This is, as I mentioned, one in 
four studies. Crain has been involved, the author has been 
involved in many of our studies previously which have not had--
and used the exact same methodology--have not had complaints 
before then. We have done it in 1995, 2001, 2005, and 2010. So 
it is basically the same methodology, a new version of the same 
study with an updated cost on how these costs are affecting 
small businesses.
    Ms. Speier. Ms. McCarthy, do you have any concerns with the 
peer review process used to evaluate the Crain and Crain study?
    Ms. McCarthy. I do, and I am glad you asked that. As far as 
I know, the study was reviewed by two individuals. The sum 
total of one of the individual's comments was, ``I looked it 
over and it's terrific. Nothing to add. Congrats.'' If this is 
the quality of the peer review of that study, then I would 
suggest to you it is a study that EPA could certainly not put 
its weight behind.
    EPA is required to do peer review analysis of its studies; 
it is required to have our studies have analytic consistency, 
rigor, real peer review, transparency. The last report that EPA 
went out and contracted for and worked through was peer 
reviewed by 34 economists and technical individuals. We had a 
thorough public comment process. What I have here holding is a 
double-sided copy of just their last comments that they 
submitted to us during the peer review process.
    Two individuals does not make a substantive peer review 
process, when we have repeatedly asked for the underlying data 
and have not been provided it by Crain and Crain or by the SBA.
    Ms. Speier. Thank you.
    Mr. Chairman, I know my time has expired, but I would just 
like to suggest to all of us that taxpayer funds should be 
spent on studies that really give us good data, and certainly 
the data should be available to us and to the taxpayers of this 
country. So I would hope that as we look at ways of making sure 
that government operates effectively, that we require that 
moving forward. Thank you.
    Mr. Jordan. I thank the lady. She makes a good suggestion.
    Following up on that, Ms. McCarthy, in the closing of your 
testimony you say, I will close with a statement by the Small 
Business Majority, and you quote the ability to regulate 
greenhouse gases should not be limited. Do you know how many 
members, what the membership is in the Small Business Majority? 
Do you know that number?
    Ms. McCarthy. I am sorry, I do not.
    Mr. Jordan. Well, according to a New York Times story July 
8, 2009, Small Business Majority has no membership. Its 
founder, Mr. John Arensmeyer, says it can no longer objectively 
represent small business if it had membership. So while the 
gentlelady from California's point is good, the close of your 
testimony cites a group, at least according to the New York 
Times, that has no membership and yet portrays itself as an 
organization representing small business. So I think both 
points are well taken and you should make sure in your 
testimony to quote from a source that actually might reflect 
something of the interest of small business.
    With that, I would yield to the chairman of the full 
committee.
    Mr. Issa. Thank you, Mr. Chairman. And I am sorry that my 
colleague from California left. Let me just make something 
clear for the record.
    Ms. Rodgers, Ms. McCarthy, you are both working for 
departments headed by President Obama, political appointees, 
right?
    Ms. Rodgers. Yes.
    Mr. Issa. So when she sort of implies that one side of your 
two positions must be good and the other is ill-conceived and 
doesn't care about the same things that we all saw President 
Obama elected for, at least, Ms. Rodgers, I suspect you object 
to some idea that you don't care to get it right or that 
somehow your mandate is different in some way. Wouldn't that be 
true?
    Ms. Rodgers. Yes, Congressman, I would absolutely object. 
Small businesses care about clean air and care about the 
environment, so we want to make that point as well.
    Mr. Issa. Let me ask you both a question. Isn't it true you 
could both be right, that Ms. McCarthy, with a mandate to 
essentially have the cleanest possible air and water, can in 
fact, in good conscience, make every effort to be as pure as 
possible? We used to say driven snow, but I have seen what it 
looks like when it melts, so I won't go there.
    And isn't it possible, Ms. Rodgers, that you, when you go 
out and you get a study that shows $1.75 trillion, that you are 
not saying that you can save all of it and still have the level 
of clean air and clean water the American people expect? 
Couldn't you both be right?
    Ms. Rodgers. I would absolutely agree.
    Mr. Issa. Now, Ms. McCarthy, wouldn't you agree that 
somewhere in $1.75 trillion, if that is an accurate number, 
that some of that should be reviewed and reconsidered to see if 
in fact changes could save much of that burden and free up 
those dollars for other uses, even if they are uses to help 
clean the environment; that not every regulation has 
accomplished what you wanted it to in a sound science way? 
Wouldn't you agree?
    Ms. McCarthy. We are in the process now of complying with 
the President's Executive order and doing a review of our 
regulations.
    Mr. Issa. But I actually was looking at the conclusion. 
Wouldn't you conclude that there has to be something there that 
you could re-look at that would help get burden off the backs 
of small business, and maybe even not small business; that, in 
fact, on a tradeoff of cost-benefit is not the best regulation 
out there?
    Ms. McCarthy. Mr. Issa, I would suggest to you that we 
continually look at those issues and we are working with the--
--
    Mr. Issa. OK, then maybe you can explain something to me. 
In Boiler MACT you have a standard that can't be adhered to, 
and you have gone to the courts asking them to give you relief, 
and they have said we can't relieve you from your stupidity; go 
to Congress. Now, isn't that slightly vulgar, but pretty much 
the exact truth; that you have something that does not exist, 
you have created a rule that cannot presently be done, you have 
gone to the courts trying to get temporary relief in hopes that 
some day it will be able to be complied with, rather than 
saying what is it that exists that can be complied with? 
Wouldn't that be a fair characterization?
    Ms. McCarthy. I don't believe so, no.
    Mr. Issa. OK, what part of it was inaccurate? Tell me in 
specificity?
    Ms. McCarthy. The specific issue is the Boiler MACT rule 
went through a public process----
    Mr. Issa. No, I am looking at the outcome. Is the science 
attainable today according to----
    Ms. McCarthy. Yes.
    Mr. Issa. It is? Then why did you ask the court for relief?
    Ms. McCarthy. Because we believed that it deserved 
reconsideration because some of the legal underpinnings during 
the public comment process, because of comments we heard from 
industry, many of them small businesses, we made substantial 
changes from proposal to final which warranted additional legal 
underpinnings through a public comment process.
    Mr. Issa. So why----
    Ms. McCarthy. We will do that.
    Mr. Issa. Why wouldn't you just pull the rule?
    Ms. McCarthy. There was no need to do that and we were 
under a court order to deliver a final rule within a given 
point in time, which we did.
    Mr. Issa. So now we have something for which you have asked 
the court for relief and they can't give you relief.
    Ms. McCarthy. No. What we intend to do is reconsider the 
rule in due time. We will respond appropriately; it will be 
legally sound. And it is already scientifically credible.
    Mr. Issa. But not currently available.
    Ms. McCarthy. Oh, it is actually a final rule.
    Mr. Issa. No, no. I am talking about the actual technology.
    Ms. McCarthy. Oh, no, I am sorry. I believe that the 
requirements in the rule are achievable.
    Mr. Issa. Well, thank you, I appreciate your having that 
opinion under oath. The mandate for these impacts, last year--
and it has probably been brought up, but I will just bring it 
up again. Last year I sent the Administrator, Administrator 
Jackson, a letter requesting EPA suspend finalization of its 
greenhouse gas proposals until after the Agency complied with 
the Office of Advocacy demand.
    You sent me back a response on February 4th, informing me 
that the Agency's decision was to move forward. At that time, 
you indicated that your outreach under 609(c) fully satisfied 
EPA's obligation to assess the impact and actions on small 
business. Do you still stand behind that?
    Ms. McCarthy. Yes.
    Mr. Issa. Ms. Rodgers, do you think that they have really 
lived up to the spirit of that?
    Ms. Rodgers. Unfortunately, no, we don't. Section 609(c) of 
the RFA does allow an agency to reach out to small businesses, 
but we don't feel that this relieves them of their duty to hold 
a SBREFA panel. And as I said in my testimony, outreach to 
small business is not the same thing as a SBREFA panel.
    And the advantages of a panel that you don't get from 
outreach are at the pre-proposal stage you have the three 
member panel, our office, EPA, and the Office of Information 
and Regulatory Affairs at the White House; and at the end of 
the process you end with a panel report that has the 
recommendations from actual small businesses on various 
alternatives that get put into the document.
    Mr. Issa. I had another question to this round, if I can, 
since I think we have a little time here.
    Section 317 of the Clean Air Act requires EPA to complete 
an economic impact assessment for any regulations propagated 
under Section 202 of the act, which applies to the car rule. 
Did EPA conduct a Section 317 economic impact assessment before 
any of its greenhouse gas rulings were made?
    Ms. McCarthy. It did conduct a regulatory impact assessment 
associated with the light duty vehicle rule.
    Mr. Issa. If so, did the analysis assess the following, 
which are required by statute: the cost of compliance?
    Ms. McCarthy. Yes.
    Mr. Issa. The potential inflationary or recessionary 
effects?
    Ms. McCarthy. I believe so.
    Mr. Issa. The effects on competition with respect to small 
business?
    Ms. McCarthy. The rule exempted small business, Mr. Issa, 
so we probably did not need to go into much detail there.
    Mr. Issa. Do you intend on always exempting small business?
    Ms. McCarthy. No. When it is appropriate we do.
    Mr. Issa. No, no. Do you expect that this rule will never 
change; that in some future time you wouldn't do it?
    Ms. McCarthy. If the rule changes, we will have to go 
through a rulemaking process----
    Mr. Issa. So you carved out small business in order to 
essentially keep yourself from having to do that assessment or 
that assessment simply wasn't necessary and that was never part 
of the consideration?
    Ms. McCarthy. That was obviously part of the regulatory 
impact assessment, was to look at all costs. What I am 
explaining to you is that we did not----
    Mr. Issa. The reason I asked the question is you don't 
exempt anybody without a reason. Obviously we don't want clean 
air and clean water only for big companies; we want clean air 
and clean water. So in your decision to exempt small business, 
wouldn't you need a cost reason to do so?
    Ms. McCarthy. Actually, we did provide a thorough 
assessment of why it was appropriate to exempt. Cost was part 
of the consideration; lead time was part of the consideration. 
Because you are asking significant improvements in cars, and 
many of the smaller manufacturers would not be able to produce 
and comply with the rules in the same way that large industries 
or large manufacturers were able to do that.
    Mr. Issa. OK. The next test was the effects on consumer 
cost. Did you take that into consideration?
    Ms. McCarthy. Yes, we did.
    Mr. Issa. The effects on energy use, did you take that into 
effect?
    Ms. McCarthy. Yes, we did.
    Mr. Issa. To the extent that EPA has conducted any economic 
impact analysis, I respectfully request that you provide that 
to the committee. Are you prepared to do that?
    Ms. McCarthy. Oh, we certainly will.
    Mr. Issa. OK. I would very much appreciate it. That, in our 
opinion, has been requested previously and is long overdue.
    I am getting head shaking. Christina, am I wrong? We have 
requested that?
    [Remarks made off microphone.]
    Mr. Issa. OK, I think if you look through the series of 
letters, you will find that was certainly something we had 
expectation of getting; we haven't gotten. But I appreciate 
your willingness to give it to us today and yield back.
    Thank you, Chairman.
    Ms. McCarthy. It is part of the rulemaking. That is public 
information and is in the docket.
    Mr. Jordan. I thank the Chair.
    Ms. McCarthy. And it is on the Web site.
    Mr. Jordan. I just have one other question and will be 
happy to yield back if the chairman has anything additional.
    In your testimony, Ms. Rodgers, you indicated that the 
panels work.
    Ms. Rodgers. Yes.
    Mr. Jordan. The panels work and you feel like you have a 
good relationship with Ms. McCarthy and anyone and everyone 
else that you work with there. It is a process that makes sense 
and that has been effective.
    Ms. McCarthy, would you agree with Ms. Rodgers' testimony, 
what she said in her testimony, that these panels work and that 
it is a good process?
    Ms. McCarthy. Our relationship works very well. I would 
submit to you that we both are extremely concerned that EPA get 
appropriate information and feedback on small businesses and 
impacts to small businesses relative to those that we are 
regulating through a rule, yes.
    Mr. Jordan. But to the specific question, the SBREFA panels 
work? The process works.
    Ms. McCarthy. It has worked very well, yes.
    Mr. Jordan. OK. Now, so I come back to what I asked you 
earlier. A rule of this magnitude, in light of the debate that 
took place in the U.S. Congress dealing with cap-and-trade, 
this issue that has been front and center for the American 
people, a process that you both indicate works, why didn't you 
follow it for something, again, of this magnitude, of this 
importance, with the debate the way it is, with the concerns 
expressed by small business owners in front of this committee 
today? Look, I understand hindsight is 20/20 and all that, but 
if you had it to do over again would you have convened a panel 
and went through the normal process?
    Ms. McCarthy. Let me explain to you, if I----
    Mr. Jordan. Can you answer that question? If you had it to 
do over again?
    Ms. McCarthy. No, I would not. I would do it exactly the 
same way.
    Mr. Jordan. OK.
    Ms. McCarthy. And that is because these panels are designed 
to address issues relative to a rulemaking that sets a standard 
or establishes a requirement on a business sector, a small 
business entity. They are asked specific questions like what is 
the reporting and recordkeeping and compliance; what are the 
Federal rules that might duplicate it; what alternatives do you 
have to the proposed rule? We did not enjoin a panel because 
the rules that you are talking about did not immediately or 
directly regulate small business.
    Mr. Jordan. Wait a minute.
    Ms. McCarthy. So there was no way in which we could apply 
this rule----
    Mr. Jordan. You just said you had a great relationship. Ms. 
Rodgers is an intelligent lady. The folks who work for her are 
intelligent people. They suggested that you do it. So you may 
not have thought it was absolutely necessary, but why not do 
it, again, when they are saying this makes sense to do and 
business owners were saying it makes sense to do? We have heard 
testimony of the concerns they have. Why not just do it? Why 
not be safe rather than sorry?
    Ms. McCarthy. On the tailoring rule we did a voluntary 
program where we had an outreach with 23 SERs. We had a panel; 
we got their input. What we are not agreeing to is that this 
rule, and there was a requirement for panels to be developed 
when we have a rule like the endangerment finding that isn't 
directly regulating small businesses like the tailoring rule--
--
    Mr. Jordan. Ms. Rodgers----
    Ms. McCarthy [continuing]. That is de-regulating small 
businesses. It doesn't mean we don't appreciate the input of 
small business, and we try to get that input into the process.
    Mr. Jordan. Ms. Rodgers, you understood, when you suggested 
the panel, that the EPA could in fact take the route that they 
took? You understood that? You didn't think it would happen 
because it was out of the norm.
    Ms. Rodgers. Exactly.
    Mr. Jordan. Yet you still said this was important to have 
this panel. Give me why you were so focused and why you have 
expressed comments after the fact why it was important to have 
that panel.
    Ms. Rodgers. I would be happy to. One of the reasons the 
endangerment finding, no, did not directly regulate small 
businesses; however, it did set the greenhouse gas regulations 
in motion. The foreseeable impacts of this rule on small 
businesses certainly were there. The next rule to come about 
was the vehicle emissions rule, of course. They were regulating 
large automobile manufacturers.
    However, just by beginning that process and starting to 
regulate greenhouse gases under the Clean Air Act on one part 
of the Clean Air Act automatically triggered the greenhouse gas 
regulation or regulating greenhouse gases under the entire 
Clean Air Act, thereby subjecting small businesses to 
permitting requirements under the Clean Air Act.
    Mr. Jordan. So you could foresee what was coming. Why 
couldn't they?
    Ms. Rodgers. I can't answer that question, but what I can 
say is by not----
    Mr. Jordan. And it was clear. Your team who suggested this, 
was there any disagreement? Was it unanimous, we need to move 
with this panel?
    Ms. Rodgers. It was unanimous.
    Mr. Jordan. So it was strong. You had to do this.
    Ms. Rodgers. Yes.
    Mr. Jordan. You could foresee what was coming.
    Ms. Rodgers. Yes, we could.
    Mr. Jordan. And you have proved right, based on the 
testimony we got from the first panel.
    Ms. Rodgers. We think we have, yes.
    Mr. Jordan. Yes. And yet they just couldn't see it.
    Ms. Rodgers. Unfortunately, no.
    Mr. Jordan. OK.
    I see we have no further questions for the panel. I want to 
thank you both for attending. Again, I want to apologize for 
the schedule. We look forward to visiting again.
    We are adjourned.
    [Whereupon, at 5:05 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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