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





    REGULATORY IMPEDIMENTS TO JOB CREATION IN THE NORTHEAST--PART II

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

                                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 20, 2011

                               __________

                           Serial No. 112-35

                               __________

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 20, 2011...................................     1
Statement of:
    Glazier, Travis..............................................    62
    Gostin, Jud, president and chief executive officer, Sensis 
      Corp.; and Robert Simpson, president, Centerstate CEO......     6
        Gostin, Jud..............................................     6
        Simpson, Robert..........................................    13
    MacMurray, Orrin.............................................    56
    Reeves, Andrew, owner, Reeves Farms; Nancy Hourigan, owner, 
      Hourigan's Dairy Farm; and Tom DeMarree, owner, DeMarree 
      Orchards...................................................    22
        DeMarree, Tom............................................    45
        Hourigan, Nancy..........................................    37
        Reeves, Andrew...........................................    22
    Squires, Thomas..............................................    66
Letters, statements, etc., submitted for the record by:
    Buerkle, Hon. Ann Marie, a Representative in Congress from 
      the State of New York, prepared statement of...............     4
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............    75
    DeMarree, Tom, owner, DeMarree Orchards, prepared statement 
      of.........................................................    47
    Glazier, Travis, prepared statement of.......................    64
    Gostin, Jud, president and chief executive officer, Sensis 
      Corp., prepared statement of...............................     8
    Hourigan, Nancy, owner, Hourigan's Dairy Farm, prepared 
      statement of...............................................    40
    MacMurray, Orrin, prepared statement of......................    59
    Reeves, Andrew, owner, Reeves Farms, prepared statement of...    27
    Simpson, Robert, president, Centerstate CEO, prepared 
      statement of...............................................    15
    Squires, Thomas, prepared statement of.......................    68

 
    REGULATORY IMPEDIMENTS TO JOB CREATION IN THE NORTHEAST--PART II

                              ----------                              


                       WEDNESDAY, APRIL 20, 2011

                  House of Representatives,
      Subcommittee on Regulatory Affairs, Stimulus 
                 Oversight and Government Spending,
              Committee on Oversight and Government Reform,
                                                      Syracuse, NY.
    The subcommittee met, pursuant to notice, at 3 p.m., at 
2610 South Salina Street, South Side Innovation Center, 
Syracuse, NY, Hon. Anne Marie Buerkle presiding.
    Present: Representatives Buerkle and Kelly.
    Staff present: Joseph A. Brazauskas, counsel; Sharon Casey, 
senior assistant clerk; Gwen D'Luzansky, assistant clerk; Adam 
P. Fromm, director of Member services and committee operations; 
and Cecelia Thomas, minority counsel.
    Ms. Buerkle. The committee hearing will come to order.
    Good afternoon everyone and welcome to the hearing and we 
represent the Oversight and Government Reform Committee.
    Today's hearing is going to be on the Regulatory 
Impediments to Job Creation in the Northeast. So I welcome all 
of you here today and thank you to our panel of witnesses.
    We will have three panels throughout the course of the 
hearing, so this is, I think, a very exciting opportunity for 
my colleague, Mr. Kelly, and myself to hear the concerns and 
hear the regulations and hear what businesses in agriculture 
and even government municipalities are going through in order 
to comply with the sometimes onerous and sometimes very 
unrealistic government regulations.
    Before we begin today, I know that many of you saw the Post 
Standard this morning. I would just ask all of you to join me 
in a moment of silence. As you saw the three soldiers from Fort 
Drum were killed in action in Afghanistan. They were fathers 
and husbands and sons, and we sit here today and we enjoy the 
freedom to come together to discuss the American way and 
American dream and how to preserve it. And it is because of the 
duty and the service and sacrifice that our military provides 
for this Nation. So if we could just remember them in a moment 
of silence.
    And to all the veterans in the room today, on behalf of my 
colleague, Mr. Kelly, and myself, thank you for your service to 
this Nation. We are a great Nation and it is because of the 
service and the sacrifices of our military.
    [Moment of silence.]
    Ms. Buerkle. Thank you.
    At this time I would like to introduce sitting here on the 
panel with me another Member of Congress, my good friend and 
colleague, also a freshman this year in Congress, Mike Kelly 
from Pennsylvania.
    Mike's district is about seven counties and it stretches 
from Erie, in the far northwestern corner, to just north of 
Pittsburgh. So I'm delighted that he is here with me today to 
hear your testimony. Mike sits also on the Oversight and 
Government Reform Committee with me.
    So it's a pleasure to have you with me here today. Thank 
you very much.
    Mr. Kelly. Thank you.
    Ms. Buerkle. When we have our full committee hearings in 
Washington, DC, our chairman, Darrell Issa, begins every 
meeting with the reading of the mission statement of the 
Oversight and Government Reform, and I'd like to read that to 
you all today. I'd like you to understand what this committee 
is about and how--what our goals are and what our mission 
statement is.
    Oversight Committee Mission Statement: We exist to secure 
two fundamental principles.
    First, Americans have a right to know that the money 
Washington takes from them is well spent.
    And second, Americans deserve an efficient, effective 
government that works for them.
    Our duty on the Oversight and Government Reform Committee 
is to protect these rights. Our solemn responsibility is to 
hold government accountable to the taxpayers because taxpayers 
have a right to know what they get from their government.
    We will work tirelessly in partnership with citizen 
watchdogs to deliver the facts to the American people and to 
bring genuine reform to the Federal bureaucracy.
    This is the mission of the Oversight and Government Reform 
Committee.
    Thank you all for coming here today. I think that this is 
an exciting day for us in upstate New York. Today we will 
continue an effort that my subcommittee and the Oversight and 
Government Reform Committee have been examining since the 
beginning of this year.
    Our committee has focused on the regulatory impediments to 
job creation. We've heard from job creators across the country 
about how the Federal Government stifles job creation. And 
today we'll focus on the issues which affect job creation in 
upstate New York.
    The strength of the economy and unemployment are on the 
minds of most Americans. The nationwide unemployment rate 
hovers at about 9 percent. That unemployment figure doesn't 
even reflect the millions who have given up looking for work. 
The rate is approximately the same in the State of New York; 
8,000 of our neighbors received unemployment extension benefits 
during the month of March. This is unacceptable and we must 
create more jobs and turn this economy around for all New 
Yorkers.
    It is only appropriate that we are holding this hearing at 
the South Side Innovation Center, which is an incubator for 
small business job creation. Here Bob Herz and his staff help 
entrepreneurial businesses to get business off the ground and 
help people help themselves.
    I want to thank Bob and all his staff here for hosting this 
event and for all of their efforts that they have done--thank 
you Bob--to make this afternoons's hearing happen.
    This afternoon we will hear from local job creators in 
business and agriculture that conduct business right here in 
upstate New York. Our witnesses are construction workers, 
dairy, apple, berry farmers, defense contractors and others 
that employ many of the local community and provide the 
necessary goods and services to our region.
    As we attempt to recover our economy and put people of the 
region back to work, we must begin to understand that the 
regulations these industries face on a daily basis threaten 
their attempt to survive. Industry faces an enormous amount of 
regulations from many Federal agencies. This committee has 
heard from job creators about regulations from the 
Environmental Protection Agency, the Department of Labor, 
Occupational Safety and Health Administration and the Food and 
Drug Administration.
    The cumulative impacts of regulations from all of these 
agencies is particularly harmful because of the difficulty of 
the implementation and the tremendous cost of compliance it 
places on a business or a farm. These costs negatively impact 
important job growth. These regulations are a hidden tax on 
businesses.
    Worse yet, last week the EPA testified before a different 
house subcommittee and admitted that the EPA ignores the 
affects on jobs of the regulations they issue.
    Local governments and municipalities are struggling to deal 
with the state of the economy in continuing to provide 
essential services to constituents while dealing with the 
Federal bureaucracy. The practice of the Federal Government 
pushing unfunded mandates down to the States leaves local 
municipalities under intense pressure to make budgets work. 
These local governments already have major budgetary 
constraints and struggle to provide basic services for their 
constituents.
    Moreover, regulations that range from health care to street 
sign replacement pile on even more cost to local governments 
together with those unfunded mandates. This hearing will allow 
businesses, farmers and local governments from New York to 
provide Congress with an opportunity to hear how Federal 
agencies affect their ability to create jobs and provide for 
their communities.
    It's important that you're here today; it's important that 
we're here today so we can listen to you, listen to your 
concerns as the business as business and as agriculture and as 
municipalities. We have said over and over again that the 
government cannot create jobs. It is the private sector. The 
private sector is the backbone of our economy. They are the job 
creators, and the role of the government should be to create an 
environment so businesses can succeed.
    So we are delighted to be here today and we're honored to 
have all of you here today. We are looking forward to hearing 
the testimony and to get started with our hearing. Thank you so 
much.
    [The prepared statement of Hon. Ann Marie Buerkle follows:]




    
    Ms. Buerkle. I would now yield time to Mr. Kelly for his 
opening statement.
    Mr. Kelly. Thanks, Ms. Buerkle. It is a pleasure to be 
here.
    First of all, it's really a privilege for me to be able to 
travel. I'm here from northwest Pennsylvania to be here with 
Ms. Buerkle. We've been in Congress now almost 100 days, and 
it's good to be here.
    I'm especially happy to be here at South Side Innovations 
Center. It's an incubator. And when Margaret Belte was showing 
me through, I got to tell you, this is the place where 
businesses start. And when we talk about America, we talk about 
businesses that were started in a garage or in somebody's 
basement, more important, somebody's head, and they were able 
to move it forward. There's no other place in the world you can 
do it except for here.
    One thing that we're starting to realize, and I think that 
as we go through these exercises, there was a movie out years 
ago called Ground Hog Day and what it was, it was the 
continuing frustration of figuring out how this all works. I 
got to tell you, from a guy who comes from the private sector--
I'm an automobile dealer in my real life. I don't know how in 
the world we've gotten to where we are. And more importantly, 
if we don't change it--and this is not about Republicans or 
Democrats--this is about Americans. If we can't get this 
settled and get it backed off and make sure that the No. 1--the 
competitive nature that we have isn't some external factor, but 
actually our own government that makes it impossible for us to 
succeed, then we have failed mightily.
    So I'm glad to be here. We do want to listen to you; we 
have to hear what you have to say; and we have to take the 
message back to Washington and we have to be able to articulate 
it the same way you do with passion and intensity to get it 
fixed.
    So again, I applaud you for being here.
    Ms. Buerkle, thanks so much. It's always a pleasure to be 
here with you.
    And we're interested in what you have to say. Thanks so 
much.
    Ms. Buerkle. At this time, for the record, other Members 
have 7 days to submit testimony for the record and any other 
extraneous material that they would like to submit.
    We will now welcome our first panel of witnesses this 
morning.
    First we have Mr. Jud Gostin, who is the chairman and CEO 
of Sensis. Good afternoon and welcome.
    Mr. Robert Simpson is the president for CenterState Corp. 
for Economic Opportunity.
    Thank you very much for being here.
    It is the--pursuant to committee rules, all witnesses must 
be sworn in. So if I could ask you to stand and raise your 
right hands.
    Panel I consisting of members Jud Gostin and Robert 
Simpson.
    [Witnesses sworn.]
    Ms. Buerkle. Let the record reflect that all witnesses have 
answered in the affirmative.
    Thank you.
    When we have our big hearings in Washington, DC, we 
generally ask our panelists to limit their testimony to 5 
minutes, however, we have a little bit more leeway here today.
    So at this time I'd ask Mr. Gostin to begin with his 
opening statement.

    STATEMENTS OF JUD GOSTIN, PRESIDENT AND CHIEF EXECUTIVE 
     OFFICER, SENSIS CORP.; AND ROBERT SIMPSON, PRESIDENT, 
                        CENTERSTATE CEO

                    STATEMENT OF JUD GOSTIN

    Mr. Gostin. Thank you Vice Chairwoman Buerkle, 
Representative Kelly. Thank you for the opportunity to speak 
today. I'm Jud Gostin, CEO of Sensis Corp., an aerospace and 
defense firm located in East Syracuse, New York.
    We started with five employees in 1985 and now employ 600 
people, including about 450 engineers and computer scientists. 
Although we sell globally, approximately three-quarters of our 
revenues are from contracts with the U.S. Government, notably 
the FAA and Department of Defense.
    Air Traffic Systems is the larger of our two divisions and 
has a laudable track record of deploying innovative systems and 
design concepts to the FAA and NASA. We are a leading supplier 
of surveillance and automation products and improve the safety, 
efficiency and capacity of air travel.
    Two of our large FAA programs ASDE-X and Runway Status 
Lights, have been cited by the NTSB for their effectiveness and 
improving runway safety. Our Aerobahn product provides the FAA 
airlines and airport authorities with a collaborative 
decisionmaking tool which, by a conservative estimate, saves 
each airline user $5 million per year per airport in just 
reduced taxi time and carbon footprint.
    Defense and Security Systems, our other division, is 
executing two state-of-the-art expeditionary ground-based radar 
development programs for the Air Force and Marine Corps, both 
with a potential to transition into significant production 
contracts.
    We are also leveraging Federal contracts along with our own 
R&D funding to develop a family of very small sensors and 
information-processing products to enhance the safety of our 
war fighters and the security of our borders.
    In that most jobs in our country are created by small and 
medium-sized companies, from a job-creation perspective the 
most onerous regulations are those that slow down the 
activities of the such companies.
    Under Secretary of Defense, Ashton Carter, included the 
following guidance to defense acquisition professionals in a 
recent memo: Increase dynamics in the small business role in 
defense marketplace competition.
    Small businesses have repeatedly demonstrated their 
contribution to leading the Nation in innovation and driving 
the economy by their example of hiring 65 percent of all new 
jobs and holding more patents than all of the Nation's 
universities and large corporations combined.
    The reality is that the government's de facto acquisition 
practices favor large and small companies to the disadvantage 
of medium-sized companies like Sensis. These are companies with 
annual revenues between $100 million and $1 billion.
    Large companies receive many new contracts as non-competed 
follow-ons to existing ones. While small companies receive 
significant contract loading via SBIR, Small Business 
Innovation Research Grants, and have a variety of other 
practices that are designated in statute to promote small 
business.
    Medium-sized companies typically do not have enough of a 
contract base to attract a sustaining level of follow-on awards 
and are too big to be eligible for SBIR awards. And yet, these 
companies are not only a primary source of job creation, 
they're also an exceedingly viable, all be it underutilized 
contributor to the effectiveness of government procurements.
    A number of medium-sized companies possess a combination of 
attributes rarely exhibited by large companies. Not only 
exceptional development production and life cycle support 
competence, but also a high degree of innovation, 
responsiveness and agility.
    Medium-sized companies are less limited by preconceptions 
of what can't be done and are not encumbered by excess overhead 
structure, bureaucracy and dated infrastructure. They are also 
fully capable of leading major acquisitions. Sensis' standout 
record as a prime contractor on major FAA and DoD programs is a 
case in point. By virtue of these attributes, medium-sized 
companies can provide the government with significant cost and 
schedule savings and it is hard to remember a time when these 
savings were needed more.
    Here are some recommendations for regulatory changes that 
would promote job creation in medium-sized companies.
    Require substantial programs to begin with a competitive 
prototyping phase and encourage the inclusion of medium-sized 
businesses as prime-contracted candidates.
    Enforce regulations that reduce the acquisition 
redirections and delays that have a disproportionate impact on 
medium-sized businesses.
    Develop fast-track versions of government oversight 
agencies, like DCAA, DCMA and the Earned Value Management 
Center that are not well matched to the pace and scale of 
medium-sized companies.
    Enforce small and medium-sized business set-aside goals.
    Institute a Medium-Sized Business Innovation Development, 
MBID, program analogous to the SBIR program to provide timely, 
ample funding for high-payoff development efforts.
    Review and modify source selection criteria to eliminate 
biases against medium-sized firms.
    Recognizing that medium-sized companies competing for large 
contracts may not have an abundance of relevant past 
performance data, modify proposal evaluation criteria to 
penalize poor past performance more than a lack of data.
    Thank you for the opportunity to testify today on these 
very important issues. I would enjoy discussing any of my 
suggestions in more detail with you.
    Ms. Buerkle. Thank you very much.
    [The prepared statement of Mr. Gostin follows:]




    
    Ms. Buerkle. Mr. Simpson.

                  STATEMENT OF ROBERT SIMPSON

    Mr. Simpson. Thank you very much, Congresswoman and 
Congressman Kelly for the opportunity to be here today.
    I am Rob Simpson, president of CenterState CEO.
    We are the region's leading business and economic 
development organization representing over 2,000 members, 
ranging from sole proprietors and consulting companies, to 
service-sector retail companies, to our region's largest and 
finest employers like Mr. Gostin sitting next to me.
    We, in our efforts to understand how best we can serve our 
members, regularly poll those members of the business community 
and try to gauge from them some common themes that stand out in 
their ability to do business with the Federal Government. There 
are three issues that seem to be coming to mind more and more 
frequently over the course of the last several months. I'd like 
to speak briefly to each of them.
    The first is immigration; second being issues as they 
relate to international trade, and third and final, relate to 
procurement something that Jud was talking about a moment ago.
    Let's start with immigration, and I'll share a couple 
examples. While many border States face different immigration 
issues, here in New York State, immigration issues for our 
business community have really been some of the stringent 
immigration rules in the United States have been a hindrance to 
our ability to grow and compete as a region.
    We have the third-largest concentration of higher education 
students in the country. We have over 140,000 students here in 
this region. A number of those students, many of those 
students, especially at schools like Syracuse University and 
Cornell, are international students who come with F-1 Visas, 
who have the ability to stay and work in the United States for 
1 year's time before we send them home to compete with U.S. 
companies working for international businesses in their home 
country.
    We'd love to find a way to hold onto more of those 
students. Frankly, many of those students want to be here in 
the United States. They bring with them unique skills and 
expertise that can help New York companies and U.S. companies 
be competitive. And we really believe there's fertile ground 
here to loosen those regulations and allow the United States to 
be the destination of choice for the smartest and brightest and 
most talented people all over the world. That's something that 
the business community would benefit from a great deal.
    Second, we have many institutions, health care institutions 
here, in our region that are critically important employers. We 
have, unfortunately, a situation in the United States where J-1 
graduate medical Visas are allocated across the country on a 
very rigid basis. Every State in the Nation, whether it's North 
Dakota or New York, gets 30 of these J-1 Visas. That obviously 
doesn't play to the favor of many of our larger industrial 
States like Pennsylvania and New York here in the northeast. 
We'd love to find a new methodology that would allow our health 
care institutions to find and train the best doctors, to 
provide the highest-quality health care to our individuals, and 
also use that as a way of a jumping-off point to continue to 
grow our health care sector, which increasingly provides 
opportunities for international health care delivery in a place 
where we can grow our regional economy.
    Finally, we have, on the immigration front, we have a 
number of local companies who really have been impacted by 
their ability to bring in workers from other countries from 
their other plants around the world who have many multi-
national corporations here with headquarters. One company, 
INFICON, who has done a significant amount of work with a 
subsidiary in South Korea who's wanted to bring some of those 
partners over to the United States in order to help them 
deliver on a project for a major company, Samsung, a client of 
theirs, Samsung down in Texas, they've run into significant 
obstacles bringing those folks from South Korea to the United 
States and, were therefore unable to fulfill their current 
obligations to their customer which put that business in 
jeopardy here in the United States. This is another area where 
we could use some support from the Federal Government.
    I guess the second, main issue, as it relates to trade, we 
realize--I think there's an increasing awareness in this region 
that 87 percent of the global growth over the next 5 years will 
come from international markets. Ninety-five percent of the 
world's consumers are outside of the United States.
    Things like the South Korea Free Trade Agreement provide a 
real and robust economic opportunity for our regional 
businesses, particularly here in New York and in places like 
Pennsylvania where agriculture is a really important component 
of our region's economy.
    And finally, procurement. You know, the U.S. Government 
spends over $425 billion a year on procuring goods and 
services. They are the largest procurement agency in the entire 
United States. It is extremely difficult for small businesses 
to get listed with the GSA as preferred providers for 
procurement. Anything that can be done to ease that would be 
greatly appreciated by our small business members.
    Ms. Buerkle. Thank you very much.
    Mr. Simpson. Thank you Congresswoman.
    [The prepared statement of Mr. Simpson follows:]




    
    Ms. Buerkle. Did we have a third panelist? He's not going 
to join us.
    OK. Thank you.
    Mr. Gostin, I'm going to yield myself 5 minutes and start 
to ask questions and then I'll ask my colleague to do so.
    In your testimony you talk about the non-competed follow-
ons to disadvantage the medium-sized companies. Can you expand 
upon that a little bit and help us to understand what that 
means?
    Mr. Gostin. Often we will describe products and services to 
the government that appeals, you know, it's a good solution to 
a compelling problem. And they'd love to fund the developmental 
production of it. It's a good thing to do. And their response 
to us is, ``Gosh, I wish we had a contract vehicle. If we only 
had a contract vehicle, we could add this work statement onto 
that.''
    Without having that, somehow we have to figure out another 
a way and often there is no other easy way.
    And as a small business, medium-sized business, that's a 
fairly typical response for us. You know, I don't know of a 
contract vehicle you can use, but as a big business, with just 
a large number of contracts, that's not nearly so much a 
problem.
    Now, these are not--I'm not suggesting for a minute that 
these follow-on contracts are not worthwhile, they're not cost 
effective. They often are all of those things. It's just that 
it is, in fact, a big disadvantage to a small company not to 
have that rapid capability to respond.
    Ms. Buerkle. And who are you dealing with? Would that be 
the Department of Defense when they say----
    Mr. Gostin. I'm thinking mostly of the Department of 
Defense. It's also the FAA, but it's primarily the Department 
of Defense for us at this point in time.
    Ms. Buerkle. Mr. Simpson, can you just explain for me a 
little bit. You mentioned it, and I'm not really that familiar 
with it--is it the J-1 graduate medical education and how that 
works.
    Mr. Gostin. Yeah. We've been spending quite a bit of time 
talking with the folks at SUNY Upstate Medical University over 
this issue recently.
    Apparently what happens is there are 30 of these Visas that 
are made available to each State. Those Visas--each State then 
distributes those available Visas to a number of the medical 
institutions and health care institutions within the State that 
essentially allow them to bring in a medical professional--
graduate medical professional or medical professional from 
overseas to train and to work in their hospital. Typically 
these are specialty providers and they typically tend to be 
specialties for which, frankly--that are medical institutions 
have a hard time filling here in the United States.
    Unfortunately, when New York State and North Dakota receive 
the same level of Visa, it puts States like ours at a 
competitive disadvantage. I wouldn't advocate for taking a 
single J-1 Visa away the State of North Dakota, but I would 
think that it might be in the best interest of our country to 
expand the number of Visas that are made available or at a 
minimum provide the States with some additional flexibility 
when and where they have a critical shortage in a specialized 
profession that they would like to recruit internationally to 
give them the flexibility they need to do that recruitment.
    Ms. Buerkle. Do you know who administers the J-1 program.
    Mr. Simpson. I believe it's Customs and Immigration, but I 
will find the answer for you, Congresswoman.
    Ms. Buerkle. And has this formula has been in place for----
    Mr. Simpson. My understanding it's been in place for about 
a decade, that the rules prior to that were even more onerous I 
think on many of the medical institutions. I think what they're 
seeking at this point is just a continued refinement to the law 
to make it a little bit more workable.
    Ms. Buerkle. Thank you.
    I'll yield to Mr. Kelly.
    Mr. Kelly. Mr. Gostin, I think it's important--and one of 
the things we found by holding these hearings--we're able to 
expose some of the practices of the government and how 
difficult it is to get some of these contracts.
    When you talk about the SBIR awards, if you could, and I 
know it's a lengthy process, but for the sake of the people 
that don't go through this every day--and I know you have to in 
order to survive--just kind of walk us through it as quickly as 
you can, the difficulty of trying to get those contracts.
    Mr. Gostin. Well, SBIR contracts are--I think you need to 
have fewer than either 450 or 500 people in order to be 
eligible for SBIR contract, and they're multi-phased contracts.
    First phase is probably nowadays--I date myself if I said 
50,000. It's probably 100,000 right now--in which you get to do 
some concept development. There's a second phase which is 
substantially more than that where you actually get to do some 
real development. And there's a third phase where you could 
take it into the commercial--into the commercial world.
    That's a very important part of the contract loading for 
small businesses. And it's a great thing, because it spurs 
innovation, spurs new ideas. The government puts out a document 
saying, ``Here are some tough problems. Anybody got a creative 
solutions,'' and small businesses respond.
    The problem with being above 450, 500, you're not eligible 
for that, which means that medium-sized companies, which not 
only have the innovation and responsiveness and agility and 
entrepreneurship of small companies, but they also have the 
critical mass to actually do substantial programs, much more so 
than small companies can do.
    Can't get those good ideas--can't get contracts for those 
good ideas. So if there was an analogous program, what I would 
call, Medium-Sized Business Innovation Development as opposed 
to Small Business Innovation Research, the government could get 
access to good ideas for medium business that they really want.
    And it would benefit the war fighters. It would benefit the 
people that fly. It would benefit all the users who are looking 
for quick responses and innovative responses, low cost, cost-
effective responses to difficult problems.
    Mr. Kelly. One of the things we find is that a lot of these 
standards, the bar's being set by people who've never actually 
done what you do, they've never been involved in a business or 
creating a business.
    So my question is they come up with exclusionary criteria, 
do you ever have a chance to weigh in? Do they ever invite you 
to the table to sit down and say, ``You know what? Help us get 
through this because obviously we're intent on you becoming 
successful, or to America being successful. What could we do to 
eliminate some of this?''
    Because again, I go back to the American public, I don't 
think understands the biggest problem we have right now is not 
external competition. It's an internal problem and we limit 
ourselves to what could do.
    So if you could, I mean, are you ever invited to 
participate in any type of a panel discussion about how that 
would be fixed?
    Mr. Gostin. On occasion, yes, I am.
    This particular idea, when I have described this, the 
senior members of the State Department, senior members of OSD, 
their response has been universally positive. But it's a matter 
of law in this case, because the SBIR program, it's a U.S. law.
    There's no way that the Department of Defense could enact 
this by themselves. So it just becomes more difficult.
    Here's a situation where to make this happen, Congress, the 
Department of Defense and contractors like myself, have to get 
together and agree that it's a really good idea and try to make 
something happen.
    None of it is easy. We're not often asked to testify on how 
do we improve the system.
    Mr. Kelly. Well, I know none it is easy. But you know what? 
All of us working together would get it fixed.
    I don't like the fact that there's very little sharing of 
data; there's very little data analysis; there's very little 
group think on how to fix these things. So I find that 
discouraging. I know the Congresswoman and I, we've talked on 
the floor. I don't know how we got to where we are, but we 
better find a way to get out of it soon, because we're really 
hurting folks like you.
    Mr. Gostin. It's not easy. If it were, I'd feel bad. I hear 
you.
    Mr. Kelly. We'll get there. We'll get there. This is the 
only place in the world we can fix it, so we'll get that done.
    Mr. Simpson, a little bit on the course agreement, and if 
you could, kind of expand a little bit on the opportunities 
that await American businesses if we're able to put together, 
not only free, but fair trade agreements. And the other side of 
that, if we're going to have rules, we've got to make sure that 
we are the people that enforce them. We don't let people game 
us.
    Mr. Simpson. Sure. I think that's absolutely right. You 
know, part of the challenge, specifically when you are talking 
about the Koreas, a couple of major industry sectors where 
there's real market opportunity for U.S. businesses are in the 
automotive sector, high-technology sector and the agricultural 
sector. These are, frankly, three areas that play to our 
region's strengths here in upstate New York. I think they play 
to the strengths of the northeast United States.
    We have watched our market share with Korean trade decline 
over the last of the decade. Unfortunately, what that does is 
it costs U.S. business and it has cost us jobs. Growing our, 
sort of world view, and our ability to do business 
internationally has to be, from our perspective, one of the 
fundamental strategies that we pursue as a Nation if we want to 
be competitive globally in the long-term.
    So we see, you know, there are opportunities for folks 
here, like our furniture manufacturers. We have a world 
renowned furniture manufacturer in Stickley Co. that's very 
interested in doing increased business in Korea, companies like 
Nixon Gear that do automotive work. Across the board a number 
of our dairy manufacturers and agricultural producers are also 
very interested in that market opportunity.
    Mr. Kelly. Well, I was looking in your notes. It says, 
``Over the last 10 years the United States has dropped from 
being a top exporter to Korea with one-fifth of Korean imports 
now being in third place with less than 10 percent market 
share.''
    This is an observation on my own. I know there's a--Hyundai 
and Kia made substantial investments in West Point, Georgia and 
Montgomery, Alabama. And in fact, half the cars sold in this 
country are actually--Hyundai and Kia are actually produced 
locally.
    And I think one of the challenges we have is marketing the 
idea. We no longer work within the confines of our country, the 
United States. We work in the entire globe. The market is huge. 
And when you said 95 percent, 95 percent, of the market is 
outside----
    Mr. Simpson [continuing]. Of all the consumers in the 
world, they're outside the United States. Eighty percent of the 
growth that economists predict is going to happen over the next 
5 years is outside U.S. borders.
    That's where the markets are. And from a business 
standpoint, you know, we've been fortunate in this country to 
be able to sustain ourselves on domestic consumption for a very 
long time. I think, as we have seen over the course of the last 
3\1/2\ years, those days, while they may not be forever behind 
us, those days are changing. And I think it behooves us as a 
country to adapt rapidly and to encourage, as you said, fair-
trade agreements with companies with whom we should be doing 
increased business.
    Mr. Kelly. And we do know the way out of this economic mess 
we're in right now, we can't do it internally. We have to do it 
using the whole world as our market. And we can compete. It's 
not a matter of our lack of will to compete or our lack of 
ability to compete or intellectually not being able to compete.
    My observation from being at these meetings is we have 
absolutely put ourselves in such a bad place, we limit 
ourselves and our ability to compete in the world. So I'm with 
you on this, and we are trying to get the Korean Trade 
Agreement through. We also have more with Columbia and Panama. 
I know there's some concerns with Columbia and Panama, and I 
know there's also some concerns with the Korean agreement. But 
I think if we can get that message out and market it the right 
way so people understand the upside for the United States, 
where the true gains are, because we will get people back to 
work doing what they do best and that is taking care of their 
families and taking care of their communities.
    So thank you very much.
    Mr. Simpson. Thank you.
    Mr. Kelly. And I yield back.
    Ms. Buerkle. I just want to comment, Mr. Gostin, if you 
could, you're talking a program that would be analogous to SBIR 
for medium-sized businesses. Have you thought about what that 
looks like or is that something you could provide us with 
information on.
    Mr. Gostin. I'd be glad to do that, Congresswoman.
    Ms. Buerkle. Thank you on behalf of the Oversight and 
Government Reform Committee. I want thank you both for being 
here today and sharing your testimony.
    I know I speak for my colleague Mr. Kelly, we'd like to be 
partners with the job creators and with businesses. We'd like 
to work with you and not put up obstacles. So although there 
are many right now, many obstacles, many regulations, many 
situations that businesses face in upstate New York, we'd like 
to work with you to begin to solve these problems, these 
issues, so we can get our economy, not just in upstate New York 
but across New York and across the country, get it back on 
track and do what's right for the American people.
    A lot of these hearings and the purpose of this Oversight 
and Government Reform Committee is to help restore the America 
dream, to give entrepreneurs who are willing to take that risk 
to spend money to create a dream to empower them to be 
successful and not to impede their success.
    So on behalf of our committee, thank you both for being 
here today and we appreciate your testimony today.
    At this time we are going to welcome our second panel of 
witnesses.
    First is Mr. Andrew Reeves who is the owner of Reeves 
Farms. Welcome and thank you for being here today.
    Nancy Hourigan is the owner of Hourigan's Dairy Farm. 
Welcome and thank you for coming this afternoon.
    Mr. Tom DeMarree is the owner of DeMarree Fruit Farm, thank 
you very much for being here.
    As is the custom of the committee, we'll ask you to please 
stand and be sworn in.
    Panel II, consisting of three members: Andrew Reeves, Nancy 
Hourigan, and Tom DeMarree.
    [Witnesses sworn.]
    Ms. Buerkle. Please let the record reflect that the 
witnesses answered in the affirmative. Thank you.
    Again, we'll have each panelist give their opening 
statement and then we'll take some time to ask questions.
    Mr. Reeves, if you would start? Thank you.

    STATEMENTS OF ANDREW REEVES, OWNER, REEVES FARMS; NANCY 
   HOURIGAN, OWNER, HOURIGAN'S DAIRY FARM; AND TOM DEMARREE, 
                    OWNER, DEMARREE ORCHARDS

                   STATEMENT OF ANDREW REEVES

    Mr. Reeves. Thank you.
    Distinguished members of the Committee on Oversight and 
Government Reform Subcommittee on Regulatory Affairs, Stimulus 
Oversight and Government Spending. Thank you for the 
opportunity to testify at today's hearing.
    Ms. Buerkle. If I could interrupt. Can you just move the 
mic a little closer so everyone can hear your testimony.
    Mr. Reeves. Is this any better?
    Ms. Buerkle. That's better. Thank you.
    Mr. Reeves. Agriculture is the largest industry in New 
York. It may be the largest industry left in the United States. 
In order for agriculture to continue to thrive, there must be a 
stream-lined process to bring in seasonal, temporary labor when 
necessary. The H-2A program is supposed to be a tool for the 
American farmers put in place by Congress to expedite a legal-
temporary work force. This program is supposed to allow farmers 
to develop a good business plan which ensures a plentiful 
supply of top-quality produce, without having to worry about a 
work force. All other businesses are able to grow and shrink 
markets and production depending on demand. If a worker leaves 
for any reason, 10 others are always ready to fill the void 
immediately. These businesses are based on these variables.
    If you hire an American recruit for temporary labor, they 
will be looking for another job with benefits and full-time, 
not seasonal status. Once another opportunity becomes 
available, they leave or don't show up for work 1 day. As a 
result, you must spend and average of $650 per worker and begin 
a 10-12 week process to replace them with the H-2A program. The 
H-2A program should extend the same freedoms to American 
farmers as Congress originally intended. They should be able to 
expedite legal foreign workers after exhausting all legal, 
local employment opportunities and options in the existing 
State. If an H-2A certifications has been granted in a 
neighboring State, this would mean the neighboring States have 
a shortage of eligible farm workers.
    I believe to have me advertise in these neighboring States 
and continue the recruiting process throughout half the life 
cycle of my contract period is ridiculous. For my farm not to 
be able to ask for experience when hiring is ridiculous. For me 
not to be able ask for production standards without a challenge 
from New York or the USDOL is ridiculous. Any other business 
would not and could not operate in the parameters now set by 
the present H-2A law.
    The next problem that needs changing with the program is 
the length of the process. We used to be able to send an 
application to the State and Chicago for processing at the same 
time. Now we send one out to the State first, and once they 
finish their process, we then have the necessary order number 
to now move on to Chicago with a different form. Many times the 
State will approve something which the USDOL will reject. An 
example is Work Production Standards. New York State will allow 
them but the USDOL won't. They get rejected and thrown back, 
where either an appeal is necessary, or you remove the 
standards and move on. If you appeal, you have an 82 percent 
success rate, but you now have put your process behind 
schedule. If you choose to appeal, the USDOL no longer has to 
certify your order within 30 days of your date of need. New 
York State will not let me advertise asking for a resume, but 
the USDOL says I can.
    After we have survived everything to this point, we now 
have to keep records of all applicants who have requested an 
interview or job. We also must document this for future audits 
and accept all applicants throughout half the term of the work 
contract. Because the job posting goes on a national site, we 
are bombarded with applications such as a fishing camp cook 
with a degree in geography wanting to bop in and work for the 
month of May on his way to Alaska in June, but he must know 
more about the free housing first.
    How about the family of Eastern Europeans asking if they 
can move the whole family here? How about the LPN wanting a job 
because she lost her license and needs a job, however, she 
won't work weekends. How about the lady from Manila? How about 
the kid from Auburn wanting a job loading? How about Burrell 
asking, what do I mean by a resume? These are some of the 
examples of resumes I deal with. How about the Ph.D. from 
California who lost his job and applied? Dr. Cool is his email 
handle. These are all lawsuits and possible litigations looming 
on the horizon because our present system encourages it.
    Now, if everything is fine, we have 30 days or less to 
finish the process. We now move from overnight replies from 
government to snail mail. Homeland Security claims to turn your 
petition request around in 3 to 4 days. This is not true. If 
you over-night your I-129 to California, they stamp it on the 
day they receive it or the day after. A received letter with a 
next-day stamp on it comes to you after the check has cleared. 
Usually the process, with no problems, takes 12 to 14 days from 
beginning to end. We now have 15 to 18 days left. Under the old 
process we could block schedule groups when the order had a WAC 
number. Now we must wait until the acceptance comes.
    Next we must pay for Visas before we can schedule 
interviews. We must email a request to CSC in order to get 
permission to access a site to schedule interviews. This takes 
5 days if you make no mistakes in the requesting process. If 
you make a mistake, you will be notified within 5 days of the 
mistake and you redo it. In 5 more days you will receive access 
or another problem. The site will let you the electronically 
schedule or just fill out the spreadsheet and email it. I 
suggest email. The electronic system is on its third 
spreadsheet and if there is a specific problem, you'll receive 
a specific direction back with email scheduling. With the 
electronic system, you'll receive an error list, without a clue 
of where to begin. There's no direction as to how the system 
works. You attempt to understand and operate it. If you fail or 
have a problem, forget it. You will receive an email answer 
which will never answer the question you asked.
    I had a problem with an order which 18 emails were not 
answered and 11 calls were not returned. One day during lunch I 
found another CSC branch with names and numbers. The human 
resources manager from another division was able to make proper 
contact to their other division for me. He was amazed how it 
took four calls to resolve the issue, so he thought. When my 
workers interviewed, it still required a call to the Nuevo 
Laredo Consulate to inform them the order scheduled and farm 
names were wrong. They, as usual, were very helpful.
    The next issue I have with the H-2A program is its AEWR's 
of $10.25 per-hour wage rate. This is a 15 percent increase in 
the labor cost from the program revamped during the past 
administration. The rate went up in these times from $10.16. 
This is an unrealistic wage for the workers considered 
unskilled and not requiring any previous experience or work 
standards.
    We pay for Visas, we pay for food and travel both ways. We 
take workers to the store. We must guarantee at least three-
quarters of the total hours in the contract, we must provide 
housing and utilities at no additional cost. No taxes or Social 
Security are deducted.
    Many portions of their jobs offer them an opportunity to 
earn even more when performing piecework. When your slower 
workers are guaranteed a minimum of $10.25 per hour for 
piecework, your faster workers make considerably more because 
your production minimum standards are based on the slower 
workers. This is a reason we quit growing green and yellow 
beans, reduced acreage of peas, quit growing snow peas, and 
wouldn't raise blueberries if they weren't organic and bring us 
a higher price.
    Lack of consistency is my final complaint with the program. 
I can send an I-129 with only one copy and get an acceptance. I 
have had a customer do the same and he was sent an approval 
requested and to send another copy and $404 with another form 
or they may not be able to schedule appointments at the 
Consulate.
    I have used production standards and have had customers 
denied standards. I have been told to hire Puerto Ricans and I 
have asked them to interview or submit a resume. I recently 
talked to a large orchard producer from Virginia. Their farm 
hires 178 H-2A workers. Last year they were forced to use a 
Puerto Rican labor force because of problems with the H-2A in 
Jamaica. I have the same labor-reporting system as this grower. 
My vendor verified the orchard production was half last year of 
other years. This farmer was asking me if there is any way 
around the Puerto Rican labor situation. He said if he has to 
use Puerto Rican workers this year, he will have an auction. 
How can you expect to tell a business owner how he has to run 
his business? No other business suffers these restrictions.
    Now I'll briefly review areas I believe need change. Bullet 
form is easiest.
    Apply to State and USDOL at the same time.
    Allow standards and experience to be included in the job 
requirements.
    Revamp the recruitment process. Why advertise in a State 
which already has been approved for H-2A workers.
    Reduce the recruitment period until the time the H-2A 
workers arrive on the farm.
    If the number of workers on an order are reduced because of 
referrals, these slots should remain open so the farmer can 
fall back on them if the referral workers don't work out or 
leave.
    Introduce a form of arbitration to resolve issues. Legal 
service attorneys constantly look for areas to litigate.
    The 30-day rule from the U.S. Department of Labor is not 
adequate. It encourages farmers to lie about their need date 
because the process cannot be completed within the 30-day 
period.
    Allow a farm to select where he gets his work force. Every 
other business has that freedom.
    Speed up the Homeland Security Process or make them tell 
the truth. USDOL and Department of State believe in this 3 to 4 
day turnaround.
    Reduce the wage to a realistic level. The Bush order was 
the best system thus far.
    Repair the mess created by the new interview scheduling 
procedure. It was introduced before it was ready, and I 
guarantee it wasn't developed by CSC. They have always been a 
great company to work with.
    We must include the dairy industry. AgJobs is a deadon 
arrival proposal. The changes have morphed it into a bad deal 
for agriculture.
    Strive for more consistency across the board. State and 
USDOL, State Health Department, Homeland Security and 
Department of State.
    Let the H-2A workers pay their own Visa fee. This is 
nonrefundable, and they should have some ``skin in the game.''
    I have aired my grievances and hope I was able to shed 
light on the problems of H-2A. AgJobs is not the answer here 
either. Labor unions and legal service groups have killed the 
good in this bill already. I will not endorse any program with 
amnesty attached. The Amnesty Act of 1987 was another example 
of it not working. The workers moved up the ladder and left a 
vacuum which was filled with the millions of undocumented 
workers in the United States. Most of the workers I recruit 
once spent time illegally in the United States. I have 
convinced them to go back and enter the legal H-2A program. I 
have convinced not less than 10 farms to convert to legal H-2A 
workers. These people should remain at the front of the line.
    What we now ask for is a program to be developed which will 
partner with today's agricultural industry and finally address 
the H-2A needs of our dairy industry also.
    We need to work this out together for the salvation of the 
industry this country was built with. Let's once and for all do 
this together once and do it right. Leave the unions and the 
legal service ambulance chasers on the sidelines.
    We owe this to an industry already bombarded with new EPA 
and DEC regulations every year. We also have the Traceback and 
Food Safety Requirements whose costs are all the burden of the 
farmers presently. We are at a point of losing our producers if 
something isn't done.
    Washington needs to become proactive with this issue. Four 
different programs in 3 years are confusing the lack of 
continuity necessary for Agribusiness to develop and maintain a 
long-term business plan.
    Thank you very much for your time and the invitation.
    Ms. Buerkle. Thank you, Mr. Reeves.
    [The prepared statement of Mr. Reeves follows:]




    
    Ms. Buerkle. Ms. Hourigan.

                  STATEMENT OF NANCY HOURIGAN

    Ms. Hourigan. Thank you for inviting me to testify before 
you today.
    My name is Nancy Hourigan and I'm a member of the Onondaga 
County Farm Bureau and on the board of directors of the New 
York Agricultural Land Trust. My husband John and I and my son 
Matt work about 8,000 acres of land in Onondaga County and 
operate a dairy farm.
    My family and I are proud of our farm and the time and hard 
work that we have put into the operation to make it successful 
and to keep it growing.
    Our heritage and our roots are in the community and our 
farm, and we want to see this business succeed at what is our 
core mission--producing healthy, local milk for our neighbors 
and fellow citizens of New York State. Our milk is sold to 
Byrne Dairy; doesn't get much more local than that.
    But the family farm has changed significantly over the 
years. As we have had to grow in order to keep up with ever 
escalating regulatory burdens and a price we receive for our 
milk is at the mercy of global market conditions, even though 
our cost factors are particularly influenced by being in a 
State like New York, where all businesses face an unreasonable 
high cost of taxes, energy and labor and regulatory compliance.
    While I can and will expand upon some specific topics that 
are of concern to me, the single biggest point I want to make 
at this hearing is that the amount of actual time that I and my 
family have to spend complying with various Federal regulations 
and that has escalated to the point where I spend more time in 
an office and on a computer and filing paperwork than I ever 
did working with the cows, the crops and the personnel on the 
farm.
    Each and every day I spend filing paperwork to comply with 
various Federal regulations, and each and every new piece of 
paper I have to put up on my central-posting area on the farm 
has a cost to it that is profound and can never be recouped. 
The cost is my time and my husband's time. No amount of cows or 
cropland added to the farm to ensure our financial stability 
will enable us to recoup that time that we have to spend filing 
ever increasing paperwork with various agencies.
    I do not believe that each Federal agency that we deal with 
has a comprehensive understanding of what it is like to try to 
farm in this environment. I have to meet mandates from the U.S. 
Department of Labor, wage and hour paperwork, the Homeland 
Security Office, I-9 Forms, U.S. Department of Agriculture, 
conservation and sanitation issues, the U.S. Department of 
Transportation, DOT truck numbers, hours of service 
regulations, the EPA for nutrient management issues, as well as 
a various State compliance issues.
    While President Obama discussed this issue in his State of 
the Union speech in January, I can tell you that on the farm 
itself, we have not felt much, if any, impact from a lessoning 
of governmental regulations and paperwork.
    Clearly we need to have government engaged in ensuring 
safety for consumers in the food they purchase, the roads they 
travel on and the environment. However, the current emphasis on 
simply putting more and more regulations and paperwork on farms 
and small businesses like mine, is out of control. I will never 
regain the time I lost and continue to lose in making sure that 
I'm complying with everything that I have to file.
    So how can the Federal Government help New York State farm 
families like myself? First and foremost, just stop imposing 
new mandates. Follow the spirit of the Regulatory Review 
Commission that President Obama discussed and actually 
implement the recommendation to reduce the amount of time that 
I spend filing paperwork.
    Second, I would also like to suggest that the Federal 
Government wrap up its activity in redirecting farmland 
protection dollars to New York State. As stated, I serve on the 
board of directors of the New York Agricultural Land Trust. It 
is clear to me that with the vulnerability of New York's 
farmland to development made more acute by the barriers placed 
on farmers by the cost of complying with regulatory mandates, 
the existing funds from U.S. Department of Agriculture have not 
been directed to New York State as they have been to other 
States where farmland is not so acutely in danger of being lost 
to parking lots and housing developments.
    When farmland is conserved in the local community not only 
does the land provide wildlife, habitat and improved water 
quality, it also ensures that a locally produced food supply is 
secured and a family farm can remain with the land.
    I would strongly suggest that the formula that drives the 
allocation of funds to the various States be reviewed with an 
eye toward ensuring that farm land that is particularly 
vulnerable, especially on Long Island, in the city of Syracuse 
and the Hudson River receive a priority.
    Third, I would like to discuss one issue with the EPA that 
has me very concerned because of the precedent-setting nature 
of the agency's actions.
    A section of Onondaga County is located in the Chesapeake 
Bay watershed. My farm is not located within that watershed, 
but the issue is very important to me as my family is connected 
to other farm families who are in the watershed and rely on our 
farm to provide cow feed and to do custom work and planting for 
them that allows their farms to prosper and grow.
    While I'm certainly not opposed to improving water quality 
in the Chesapeake Bay, it strikes me as odd that all the 
environmental stewardship practices that I have put in place on 
my farm and other neighbors have put on their farm were not 
originally recognized in the EPA's overly zealous desire to 
clean up the bay by imposing strict regulations on agriculture.
    On my farm alone we have spent tens of thousands of dollars 
constructing a nutrient management storage facility and we are 
a partner in a community digester whereby waste from our farm 
and several other farms will help generate energy for county 
facilities.
    As a family farmer, I and my neighbors care about the 
environment that we leave for our children. We are not going to 
tolerate sloppy behavior, nor are we going to fail to do what's 
right on our farms to protect the environment even when such 
practices are expensive to implement and are not paid for by 
the consumer dollar. However, the EPA's overreach on this issue 
is frightening to me and my fellow farmers as with one single 
regulation originally proposed in the draft TMDL, the EPA was 
willing to sacrifice over 900 farms in the Chesapeake Bay 
watershed.
    I am pleased that the State DEC and EPA, in consultation 
with New York farm bureaus and others, came to an agreement to 
accept New York's watershed implementation plan, but I realize 
this plan may still impose significant regulatory burdens on 
some smaller family farms. So I need to urge you to continue to 
work for conservation dollars in the next farm bill cycle for 
the on-the-farm environmental stewardship measures.
    But the main point I want to make is that knowing that the 
Federal Government can act this precipitously and unfairly and 
jeopardize my own and my neighbor's farm operation by issuing 
one poorly thought out regulation, makes me lose sleep at night 
and question long-term ability of my family to keep our farm in 
operation for the next generation.
    The last issue I want to discuss is the need for realistic 
and not clogged with paperwork guestworker program that you 
have already heard about from Mr. Reeves.
    Thank you for the opportunity to speak with you today and 
present testimony from the farmers perspective of the serious 
and ever increasing Federal barriers to growth.
    I appreciate you taking the time to listen to me and your 
consideration of my own time as a farm family business in New 
York State to try to reduce the time I spend in compliance 
costs.
    Ms. Buerkle. Thank you very much.
    [The prepared statement of Ms. Hourigan follows:]




    
    Ms. Buerkle. Mr. DeMarree.

                   STATEMENT OF TOM DEMARREE

    Mr. DeMarree. Good afternoon. I appreciate being given the 
opportunity to discuss apple industry labor concerns. Thank you 
for your attention.
    I'm Tom DeMarree and I own and operate a 200-acre fruit 
farm in the Town of Williamson, Wayne County. I'm also the 
current president of the New York State Horticultural Society 
and past board member of the New York Apple Association.
    We grow over 100,000 bushels of apples as well as 
processing peaches and a few other stone fruits. We also own 
and operate cold storages on our farm. Six people work full-
time or part-time on our farm and an additional 29 people 
depend on the seasonal work available through our farm to 
support their families.
    According to the New York State orchard survey, over 42,000 
commercial acres of apples in the State, and in the past 20 
years growers have renewed this acreage of 3 to 4 percent per 
year. More than 65 percent of the New York apple acreage is in 
the seven counties of the south shore of Lake Ontario. In the 
past 4 years most of the fresh apple growers in these counties 
have been replanting it at a rate of 500 to 1,300 trees per 
acre which costs between $6,500 and $13,000 an acre.
    This means that apple growers in these counties over the 
past 4 years have invested around $46 million in new apple 
orchards alone. Twice this amount is likely to have been 
invested on farm machinery, equipment, labor, housing and other 
real estate improvements as well as apple storages, packing 
lines and other cooperative marketing facilities over the same 
period.
    Our own operation has invested hundreds of thousand of 
dollars in capital improvements over the past 4 years. We spend 
over $5,000 an acre annually growing, harvesting and delivering 
our fruit, 80 percent of which benefits the local economy.
    This is our sixth year using H-2A program. Securing H-2A 
labor is expensive and increasingly fraught with government red 
tape and stress. The U.S. Department of Labor and New York 
State Department of Labor in Albany are attempting to make this 
program so difficult that no one will choose to use it. 
Growers, however, have almost no choice but to use this program 
if they wish to secure legal employees skilled enough to 
perform the required work efficiently and on time.
    The Labor Department tells growers what they must put on 
the work orders, limiting the experience requirements requiring 
employers to tolerate employees missing up to 5 consecutive 
days of work without notifying the employer in advance. How are 
growers supposed to harvest each apple variety at an optimum 
quality when the workers can miss work without notifying the 
employer.
    The Department of Labor in Albany has also been requiring 
referrals to Puerto Ricans to be interviewed within 10 days 
when these referred persons often have no experience working on 
a fruit farm. Growers should not have to argue with or petition 
DOL employees with no practical experience in operating a fruit 
farm about the experience required for fruit farm employees in 
a business producing perishable crops.
    Thousands of dollars were lost in New York fruit farms in 
our local economies last year because of delays in securing 
farm labor. Fruit was picked late and had a lower quality plus 
a lower value. The failures to secure labor or the loss of 
skilled labor during critical planting, crop protection or 
harvesting operation results in financial losses that are not 
only jeopardizing the farm business but also the local economy. 
Losses in apple quality jeopardize both year-round and part-
time employees' income.
    Fruit growers need employees familiar with their particular 
varieties and the market requirements those farms are 
attempting to meet to secure the best possible price for each 
variety of fruit. Fruit growers do not want to train new 
employees annually. They want to retain trained employees. 
Untrained employees make expensive mistakes that today's 
businesses cannot afford. Workers also prefer to work with the 
same farm year after year.
    As time goes on there are fewer skilled people who are 
willing to move from place to place every 6 to 10 weeks to 
harvest crops as they mature. Given a choice, most people would 
prefer to earn a living in one place in a clean, dry 
environment that does not require continuous physical labor.
    I know that these issues are difficult and controversial at 
times, but growers must have some assurance that they will have 
a consistent, skilled labor work force available to them that 
will be willing to retain trained workers.
    Congresswoman Slaughter has been recently working as a 
strong advocate on behalf of growers in contacting the Labor 
Department to solve some of these problems. I would urge you to 
contact her office to work with her to get the H-2A program to 
be more responsive to their needs.
    Thank you very much for your time.
    Ms. Buerkle. Thank you very much.
    [The prepared statement of Mr. DeMarree follows:]




    
    Ms. Buerkle. And thank you to all of our panelists.
    I sit here and I listen to your testimonies and I shake my 
head and wonder how did we get to this point where you're 
subject to both the State as well as the Federal regulations. 
And I want you to know that we were sympathetic here, and we 
would like to work with you.
    The issue that is recurring and recurring, and I hear from 
both the agricultural as well as the dairy industry, is this H-
2A program. And I would like to ask all of you if you could 
imagine what the perfect H-2A program would look like, if you 
could tell us what that would mean to you and what would an 
ideal H-2A program look like.
    Mr. Reeves. Well, to me it would be able to, at the same 
time, apply to the State and the Federal Government, same form. 
They virtually ask for the same information. It's a Federal 
program, so I think the Federal Department of Labor, U.S. 
Department of Labor, should supercede anything regulated by New 
York State. And at the same time, Homeland Security would be 
your next step. If the process takes 12 to 14 days, then let's 
give more than 30 days to process from beginning to end and not 
lie about it.
    What I have to do--I shouldn't say this--but I'll tell you 
what I have to do. If I need workers on the first of March, I 
have to turn around and say I need them on the middle of 
February, first of February, because if everything goes well, 
there's no way with the new system from the time I get a 
certification out of Chicago to the time I interview my 
workers, that I can do it in 30 days. And in my presentation 
you'll see a day breakdown on it: It's going to take 12, 14 
days for Homeland Security. I'm going to spend the next 5 
days--this is if I'm sitting in my chair. And as soon as I get 
a notification, I'm on the computer and going to work with 
scheduling appointments. You know, there's no day in between. 
It's overnight stuff, everything else.
    Next thing I do is go to CSE say, ``Hey, I want to be on 
scheduled appointments.''
    So what do they do? Five days later, if I ask them 
properly--you know, if I miss one number or something like 
that, in 5 days they'll tell me, ``Hey, you missed a number.''
    So then I redo it again with the number, then again in 5 
days they'll say, ``OK now you can schedule.''
    What I need top to bottom is a program developed with the 
farmer's input. The people that have to work with it, that have 
to make it work, we're left away from the table. I went to 
seminar in December in Atlanta on the new program. The guy that 
developed this new program for the Department of State didn't 
want to hear anything from anyone. This was his deal; he knew 
what he was doing; and this is the way all the concepts are 
going be.
    To sit there in the room, we had State, we had Homeland 
Security there, we had Department of Labor there. The 
representatives of the Consulates and the Department of State 
and the Department of Labor couldn't believe it when I sat up 
and said, ``What do you mean it takes 3, 4 days for Homeland 
Security to process? It takes 12 days to 2 weeks.''
    Here's two Federal branches that said, ``No, it doesn't. 
It's 3 to 4 days.''
    I said, ``They cheat on their stamp on the form. That's how 
it's 3 to 4 days. But it's a 12 to 14-day process.''
    And you've got two Federal agencies that are all working 
together with this that are unaware of it.
    Ms. Buerkle. You mentioned in your testimony about the Bush 
administration. Was there a different set of standards and now 
it's changed? You mentioned you were in a conference about the 
change.
    Mr. Reeves. The changes. Three days before President Bush 
left office, he did an executive order that changed H-2A. He 
rolled back the wage. There were some pluses or minuses to it 
but it was still best program yet. He streamlined the 
referrals.
    When you have to advertise State applications, he made it 
where when they hit your farm, you don't have to take any more 
applications and keep a record of them, because all this period 
of time, like 75 days up to that point, his administration felt 
was adequate time to look for referrals in U.S. workers. And 
that was changed--actually, that was changed 3 days before he 
left office and there's been three other changes back and forth 
since that one. So in 3 years we've had four changes.
    And the funny thing is, if you're a farmer, how do you turn 
around and say, ``Well, I'm going to H-2A this year. But what's 
the law going to be?''
    When I was down in Atlanta in December, the only thing we 
were handed out was the agenda for the meeting. There was not 
any handout--the program south of the border had changed; the 
forms north of the border had changed; not one agent or farmer 
was given anything but agenda for the meeting because here it 
was December 6th and they didn't have this program ready to 
launch January 1st, but yet January 10th it took effect. I 
mean, that's just ridiculous.
    Ms. Buerkle. Have you received any specifics since the 
January 10th implementation?
    Mr. Reeves. My brothers will tell you that I've lived in my 
living room on the computer trying to find rules and 
regulations on where do I get the spreadsheet; how do I get the 
spreadsheet.
    The spreadsheet had--it's on it's third copy now--the first 
one I wanted to schedule 22 workers, and I called CSC and said, 
``Your spreadsheet won't work. It's not formatted properly to 
take more than 17 workers, because 5 of the 22 that it would 
take, were formatted properly.''
    They told me, ``You don't know what you're talking about. 
Cut and paste and come right down through the country names,'' 
that they had there.
    So I cut and paste 33 on there, and did it electronically, 
and it crashed in the system. And it took--it took 18 emails, 
11 calls, and the problem was, they said, ``Well, once the 
system ate them up, we can't sort them out.''
    And so this was a 2\1/2\ week process that should have been 
3 days. But at least now they have a spreadsheet that is pretty 
much working. But it's the third one since January.
    Ms. Buerkle. Thank you. I'm way over my 5 minutes.
    Mr. Kelly, I'll yield to you. Thank you.
    Mr. Kelly. Thank you. You can take as much time as you 
want. Really we need to hear you for as long as you want to go 
because I know how frustrating it is.
    I'm trying to understand. I'm going to ask Ms. Hourigan, 
what's the reason for the EPA? Is there anybody finding 
anything that the EPA does that makes sense to any of us?
    Now, we all have State DEPs that should have the primacy 
over how--I would like to think that the local folks know a lot 
more about what the local issues are than somebody in 
Washington, DC, that's never been here and doesn't understand 
what it is that you do, that any of you do.
    So if you can, this EPA issue is huge. It is huge, and it's 
shutting down America as we go across the board. I just wish--
listen, I wish we could tell you it's only in agriculture. I 
spent 2 days with health care providers. Their problem is they 
can't see any reason to stay in the business. You talk to 
people in the banking business, their regulations are so 
onerous, they're afraid to lend money to anyone because they 
don't know who's going to come in and shut them down.
    If this is the United States of America and we're more 
worried about internal conflict and internal regulation than 
outside? I mean, we've got a real problem. Tell me on this EPA 
thing, this is absolutely incredible, and I don't think the 
American public has any idea. You know, they ride down the 
interstate and see these beautiful farms and say, ``God, I'd 
love to do that. That's got to be fun.''
    Just from listening to you folks, I mean, at some point 
there's an old saying, don't worry about the mule, just load 
the wagon. I think the mule is about ready to unhitch itself.
    Ms. Hourigan. The only thing I can say, is all three of us 
here we do what we do because we just like to be farmers. 
Bottom line. And we've all been pulled away from what we like 
to do because of these regulations and the paperwork.
    And I'm sure his brothers are ticked at him a little bit 
because he's not out there with them physically with the people 
that are working. I'm sure hoping you're listening and you can 
find answers for us, because I certainly don't understand it 
all. It's just evolved in the last 10 to 20 years to such a 
critical mass of paperwork and regulations, and we just can't 
farm anymore.
    Mr. Kelly. Let me ask you something. Because Ms. Buerkle 
asks this question all the time. If you knew then what you knew 
now, would you be doing what you're doing?
    Ms. Hourigan. Well, you can see I'm not the youngest one 
here.
    Mr. Kelly. Me either.
    Ms. Hourigan. We're starting to question if this is any fun 
anymore. And when my husband says it's not any fun anymore to 
farm, that's serious.
    Mr. Reeves. That's a key phrase that I've heard from more 
farmers in the last 2 or 3 years. My brothers and I say the 
same thing. The fun is out of agriculture. I mean it used to be 
with seasonal business you could go on vacation in the winter. 
There is none of this any longer. You're just bogged down with 
regulations. We had DEC the other day, going through the DEC 
audit--that's another deal that's necessary. You know, it's an 
absolute necessary thing, but also a lot of the regulations 
that they are requiring of you, are absolutely absurd.
    You know, on your sprayer you've got to have a label in a 
bag, on the sprayer, not only in the cab, because if you drive 
across the road and a car or something hits you, they have to 
be able to see what's in that tank. And--but every time they're 
telling you about these regulations and these changes, they're 
also reminding you what the fine is going to be if you don't do 
it. They seem more fine oriented than they are production 
oriented.
    That's difficult for the agricultural mind to understand. 
We're not into, ``Do this or you're going to get fined.'' We're 
into, ``Let's take the proactive approach and let's get this 
done.''
    Mr. DeMarree. I think there's an awful lot of regulation 
coming both from Washington and New York State combined. It 
doesn't matter which government you're referring to.
    I've been in the business 30 years. Thirty years ago we 
could farm and not necessarily do anything that we are doing 
differently than what we are today, but we have to certify; we 
have to fill out forms; we have to follow regulations. It isn't 
changing anything that we're really, truly doing other than 
we're spending time filling out forms to tell somebody else in 
Albany or Washington what it is that we're doing. It's the same 
practices. The same thing we are doing. We're not doing 
anything different. We aren't improving anything. There's no 
improvements to our fruit, or dairy, or vegetables or whatever. 
But we're just having to spend more and more and more of my 
time, my wife's time, in following paperwork, following rules, 
doing things, doing things that somebody else says that we have 
to do that isn't changing anything. It isn't improving how the 
fruit is grown, how the vegetables are grown or how the milk is 
produced. It isn't different. It hasn't changed in 30 years. 
It's the same, but yet we're spending--I'm spending 10 hours a 
week just doing forms and reading new rules and regulations.
    Albany just came down with a new set of rules that you have 
to follow a new form every time that there's a change in an 
employee status. If an employee works--has a work agreement 
with us, it says they're going to work 45 hours. We worked 48 
hours last week. I have to get new paperwork and fill out a new 
form because his hours changed. That's how crazy the system has 
gotten to be because somewhere along the line somebody got 
taken advantage of. Probably.
    I won't say that isn't the way that it should be, but when 
you start making everybody try to solve problems because of one 
incident, the world is going to come to a stop because you 
can't regulate everything--every problem, every issue out of 
reality. So----
    Mr. Kelly. I appreciate your testimony, because I find it 
absolutely intriguing that a business that runs somewhere 
between a trillion three and a trillion five a year in the red 
has the audacity to come in and tell you how to run your 
business.
    My question really comes down to have any of these people 
that come in and set the bar--I asked the last group this--the 
people that set the standards, have any of them actually ever 
done anything in agricultural, actually been in farming?
    Mr. DeMarree. Absolutely not.
    Mr. Kelly. So this is a software program that somebody puts 
on their laptop and tells you what you are going to do.
    Mr. DeMarree. Absolutely. As was said a few minutes ago, 
the H-2A that we're using to have labor that's legal and that I 
can sleep at night knowing I'll have a work force there 
tomorrow, that ISSA isn't going to come in and take them away 
because I thought they were legal. They showed me documents 
that I determined to be legal, but they weren't, they can come 
in and take my work force away and my crop will fall on the 
ground and I'll have no recourse. This is the program that I am 
using so I can sleep at night knowing that I can get a cropped 
picked of apples, and yet we have all kinds of problems trying 
to secure a legal work force.
    And nobody wants to hear when you try to talk to somebody, 
as what's been said, nobody wants to hear what your problem is. 
Absolutely nobody wants to hear what your problem is. They know 
better in the agencies that you're dealing with than what I do 
when I'm trying to do my job. That's a very frustrating thing.
    And we spend more time right now on organizations, as you 
can tell from the people sitting here, we spend a lot of time 
in organizations trying to just to keep a toe in the door in 
trying to keep some of this regulation at bay and nobody wants 
to hear us.
    Mr. Kelly. Do you ever have an audience with any of these 
folks, this alphabet soup of people that show up, whether it's 
EPA, DEP, whoever it is, any of them ever give you the audience 
to sit down and discuss with you what your problems are and 
what the comment fixes would be from the people that actually 
do it? No.
    So other than seeing Ms. Buerkle and myself, you really 
wouldn't have a chance to talk to a government that pretty much 
dictates how you're going to run your business.
    Mr. DeMarree. I've been to Washington in the last Congress, 
and the organization that I'm president of has been to 
Washington this year. And I've been there last year and talked 
about these same issues. And it's just the same thing over and 
over and over again. We keep asking for relief and don't get 
anywhere.
    Every time--virtually every time they make a program 
different, they make it more difficult. They don't make it 
easier. They make it more difficult, because the mindset is 
that we're going to put--we're going to reduce the unemployment 
rate so we're not going to allow foreign nationals to come in 
and work in this country. That's the mindset of what's going on 
with this program. That's where the whole problem with this 
program is, that the mindset is we don't want that program 
because we want to put U.S. citizens to work.
    My business, and everybody's business, is a short window of 
time that we need people. I can't hire somebody for 6 to 8 
weeks or 10 weeks, put on 30 employees for 8 to 10 weeks, and 
then tell them that they can't work anymore because I don't 
have anything else for them to do. Who's going to come to work 
for me 10 weeks, work 40 to 50 hours a week depending on how 
the week goes, and then tell them at the end of 8 to 10 weeks, 
``I'm sorry. I don't have any work for you.''
    How do I hire somebody that's only going to work for me 8 
to 10 weeks a year. That's my business; that's what I'm in; 
that's what I have to face. That's why this program gives me 
that opportunity to try to bring somebody in that isn't out of 
a country--that has people that are willing to work. And yet 
nobody wants to seem to help us make that system work, at least 
reasonably well for us.
    Thank you.
    Mr. Reeves. Food safety is a big issue. And we're deep into 
the food safety with daily deliveries, fresh produce all the 
while. Fortunately this year, we're able get 100 percent return 
workers from Mexico. What this does, and people don't 
understand it, the U.S. Department of Labor, State doesn't, 
this is critical because our food-safety program has standards. 
Everything we harvest in the field has a written standard that 
has to be followed and inspected twice a year. Our workers 
return, they know the standard. It's the same thing. They 
follow the procedure. We go through the inspections. We do a 
great job of food safety.
    This is why it's critical to have continuity in your work 
force and not have to--imagine having the same workers as last 
year and have to jump through all these hoops to try to get 
them back and hope you get them back, and it's all tied in with 
everything else. The food safety issue--wildlife. I have to 
monitor wildlife in our fields on a daily basis and keep a log. 
If I see a goose, I have to document where I saw it and how I 
chased it off. Same with the deer. These are the food safety 
requirements that Wal-Mart, Price Chopper and Wegmans--it's 
good. They're looking out for the consumer. And we don't mind 
that, but there has to be somewhere, someone on our side.
    And a lot of it is our own fault. I think laborer--myself 
is the biggest issue in agriculture. No. 2 is perception. And, 
you know, the news media is as guilty as anyone else. Look at 
an agricultural commercial on television. Green Giant and 
here's five guys picking sweet corn in peach boxes. Here's a 
Stouffer's commercial--I think it's Stouffers. Here's a guy 
growing peppers on the other side of the fence is a dairy farm. 
Now, isn't that ridiculous? You can't have anywhere near 
anything. And we tolerate it.
    Pick Right, here's a company that's owned by a farmer. He's 
got an old John Deer 430 cultivating in the field and says, 
``That's my business manager as soon as he gets finished 
plowing.''
    I wrote him a letter stating, ``This is bad for 
agriculture. We're high tech. We're an industry to be reckoned 
with. We've got to stop this.''
    He sent me a certificate for a 12-ounce bag of frozen 
veggies. But we're our own worst enemy. We are high tech. I'm 
proud of what I do for a living.
    I've worked in industry. Nothing is as challenging as 
agriculture is. You do all this and deal with the weather 
besides. We need to do a better job of advertising the 
technology in our business, the education it takes to run a 
business like this, and run it successfully, and we need to 
pound it into the media also. Get out there on the farm and do 
a story. Follow through one of these audits in the field on 
food safety. Look at what we're doing in agriculture and we 
should not any longer tolerate these commercials that degrade 
agriculture and farmers and make us look like a bunch of 
country hicks, because no one is going to be successful in 
farming any longer if they don't have an education and they 
don't have the ability to put two and two together and take a 
proactive approach for the future.
    Mr. DeMarree. I would just say ditto. I mean, it's exactly 
how so many of us feel in agriculture today, that we're the 
Green Acres generation back with the pitch forks and bib 
overhauls and riding around. You know, that's the perception 
that we work against--well, in the media, but also in the 
regulatory agencies that we deal with--is that the mindset is 
that agriculture in this country is run by a bunch of 
hillbillies. Pardon me to the reference for anybody who takes 
offense to it. But that's exactly how it's felt, that when, as 
I said in my statement, when somebody else sitting at a desk in 
Albany or in Washington can tell me how to fill out and what I 
have to put in my work order and what a work order can and 
cannot have in it, and is telling me that my business will 
operate because of what this work order has in it, how am I 
going to survive?
    I can tell you the generation working my farm is the last 
generation that's going to work that farm.
    Ms. Hourigan. I'll end by saying--and I told you our milk 
is sold to a Byrne Dairy, which is a local business--I'm really 
glad these two guys are still in business because I appreciate 
local food. And I'm glad to know where it's coming from and how 
it's produced. And I hope all the rest of you do the same.
    Mr. Kelly. I'm going to finish up and turn it back over.
    Keep your passion and don't give it up because I'm telling 
you, the way we'll fix it is by staying on message and not 
getting distracted. I know it's hard to do and I know that 
every day you wonder why I keep doing this and how much longer 
can I do it. Just keep in mind, if we don't get it fixed here, 
there's no other place in the world it can be fixed. Let's just 
make sure we stay on target. We'll get this fixed. It's going 
to take a lot of fight from all of us.
    Thank you for being here. I appreciate your bravery for 
being here and taking the time out of what you do every day to 
spend it with us. Thank you.
    Ms. Buerkle. Thank you, Mr. Kelly.
    And I would like to thank all of you as well. I, too, would 
like to echo Mr. Kelly's comments. If you quit, they win. And 
so this is about preserving all that you've worked for.
    We want you to know how much we appreciate your efforts and 
for you to be here today and take time off your busy schedules. 
We'd like to work with you and continue this dialog, we would 
like to take your message to Washington, which we will.
    I failed to introduce--we have members from the Oversight 
Government Reform Staff, so they're listening and working with 
us as well. So we will take this message to Washington. It 
won't stop here in this room. We want to encourage you, and 
please work with us and dialog with us, and let's continue to 
get this job done.
    Thank you all very much for being here.
    At this time we are going to welcome our third panel of 
witnesses.
    First we have Orrin MacMurray of C&S Companies. Welcome and 
thank you for being here.
    Mr. Travis Glazier is the director of Intergovernmental 
Relations of Onondaga County. Thank you for being here.
    And Mr. Thomas Squires is the administrator of Cayuga 
County. Thank you very much for being here.
    As is complying with the rules of the committee, I would 
ask you all to stand and be sworn in before your testimony.
    Panel III, Orrin MacMurray, Travis Glazier and Thomas 
Squires.
    [Witnesses sworn.]
    Ms. Buerkle. Please let the record reflect that the 
witnesses have all answered in the affirmative.
    Thank you very much. Please be seated.
    At this time we will open up our hearing to all of you to 
give your opening remarks, and I will start with Mr. MacMurray.

                  STATEMENT OF ORRIN MACMURRAY

    Mr. MacMurray. Thank you very much, Vice Chairwoman Buerkle 
and Representative Kelly. Appreciate this opportunity.
    I'm Orrin MacMurray. I'm the chairman of the C&S Companies. 
We're a 500-person architectural, engineering and construction 
company. We have 14 offices around the United States.
    And the activities of the Federal Government, as it relates 
to both legislation and regulation, have a significant impact 
on our business and our ability to create jobs here and 
elsewhere.
    I'd like to give you about six examples of things that do 
have a direct impact on our ability to grow business.
    The first relates to government competition with the 
private sector. Various Presidential memoranda and Federal 
agency guidance documents over the last year or so have 
indicated a preference on the part of the Federal Government to 
begin to remove commercially available services that have 
historically been performed by private industries creating jobs 
in the private sector into the government sector. This is 
harmful to the private sector, especially to firms such as the 
C&S Companies and it places a heavy and needless burden on the 
taxpayers who are looking for ways, in fact, to reduce the size 
and the expense of government much more so than to expand and 
increase it.
    It's a threat to our economy a couple other ways, 
specifically as it relates to professional services. The 
specialized and innovative design capabilities that are 
available in the private sector are important to meeting 
government's needs. Life-cycle costs can be higher when work is 
performed entirely in-house by the government. A recent study 
performed in the State of New York comparing the services of 
private design professionals to government professionals showed 
a 15 percent savings in using private professionals for that 
purpose.
    And it certainly can be argued strongly that designing and 
constructing the infrastructure that we need to support our 
economy in this country and maintain the standard of living 
that we have, is certainly not inherently governmental such as 
other functions of the Federal Government are.
    Another example is the way overhead is calculated. The 
Federal Government promulgates Federal regulations under the 
Federal Acquisitions Regulation, specifically FAR, and that's 
used by individuals that provide services to the government for 
calculating fees that could potentially cost--that could be 
potentially charged to government.
    Unfortunately, these regulations, although they are 
national in nature and scope, they're interpreted differently 
by different States, and what this creates is a situation where 
firms like C&S that operate in most of the States across the 
country are required to go through multiple audits in order to 
satisfy each individual State government that we're complying 
with the Federal Acquisition Regulations, as opposed to having 
one cognizant audit, one calculation and one audible amount for 
our company that would be accepted across the country for work 
performed that is either performed directly for the Federal 
Government or for States and local government with Federal 
funds.
    This creates extra work for the government, it creates 
extra work for business and it consumes dollars that we could 
be putting toward hiring people and putting them to work and 
being more productive.
    The third example is the 3 percent withholding mandate that 
was put into place under Public Law 109-222. This creates a new 
requirement that will be effective in January 2012 where 3 
percent of the gross amount of billings to any government that 
contracts out $100 million or more for goods and services on an 
annual basis will be withheld as effectively as a withholding 
tax or a withholding against an income tax obligation.
    First of all, in our business 3 percent is frequently our 
total profit, if that, not to mention the amount that we owe in 
taxes. It creates a tremendous unfair burden on business.
    First of all, we will lose the use of those funds and 
provide the Federal Government with an interest-free loan for 
between a year and 2 years while we go through the 
reimbursement process.
    And second, it will create tremendous infrastructure cost, 
and I mean, government infrastructure cost to maintain and to 
administer this system.
    This bill was scored, I am told, at about an $11 billion 
savings in 1 year. The Department of Defense has indicated that 
in the first 5 years of implementing this legislation it will 
cost that department alone $17 billion in order to implement 
it. I find it very difficult to see the logic in a 1-year 
savings of $11 billion being justified by then spending $17 
billion in just one department and that doesn't include the 
costs that will be required in the State of Pennsylvania or in 
the State of New York in order to collect all this money and 
forward it on to the Federal Government. Who's going to pay to 
hire those staff? Who's going to pay for the computer programs 
that will be necessary to track this? Who's going to develop 
the paperwork and administrative infrastructure that's 
necessary to save $11 billion in 1 year so that we can all 
spend hundreds of billions of dollars in the future years. It 
just baffles.
    Another area that we could use some relief is in the 
Securities and Exchange Commission area, the Dodd-Frank Wall 
Street Reform and Consumer Protection Act created a need or 
established a requirement for municipal advisors to register. 
Engineers were carved out of this requirement, consulting 
engineers that work for government. Now the SEC is writing 
regulations that will reapply this regulation to consulting 
engineering businesses that provide services to counties and 
cities and towns throughout our country. Effectively it's part 
of any consulting engineer's job to cost out alternatives, to 
do cash-flow analysis, to provide financial analysis of those 
things that they design and oversee the construction of--and 
construction contractors do the same.
    Improving the environment is another area. There have been 
numerous commissions, the latest of which was authorized under 
SAFETEA LU, the previous surface transportation legislation 
that has come back and recommended streamlining of 
environmental permitting processes. So you were talking earlier 
about the EPA, the EPA has a very valid mission and needs to 
make sure that we're paying attention to natural resources 
nationwide. But the reality is that when we have to do a draft 
Environmental Impact Statement, a final Environmental Impact 
Statement where you have to have State regulatory review, city 
regulatory, town regulatory review, national review, we are 
superimposing review on review on review to the point where 
we're so buried in review that it takes 7 to 10 years to build 
a bridge over a creek out in the country that should take us 18 
months to 2 years to design and construct and simultaneously go 
through the permitting process. We are burying ourselves in 
administrative costs and in delays that drive the cost up as 
well.
    The last item I wanted to mention is immigration reform. 
You have already heard other speakers so I will be brief. We 
have 65,000 H1-Bs authorized nationally. C&S employs hundreds 
of engineers and scientists. We need access to those that 
graduate from colleges with engineering and scientific degrees 
in this country that are not necessarily U.S. residents and 
citizens. We need the availability of those people so that we 
can create additional jobs, more economic activity and compete 
in a global marketplace, which is definitely what we have in 
the world we have today.
    So thanks for conducting these hearings and thank you for 
listening to my comments. I'd be happy to answer any questions 
that you have.
    Ms. Buerkle. Thank you very much.
    [The prepared statement of Mr. MacMurray follows:]




    
    Ms. Buerkle. Mr. Glazier.

                  STATEMENT OF TRAVIS GLAZIER

    Mr. Glazier. Madam Chair, Representative Kelly, thank you 
very much.
    Thank you for the opportunity--sorry. By the way, I'm 
speaking on behalf of Deputy County Executive Matt Millea, who 
was not able to be here. He's the Deputy County Executive in 
charge of fiscal services for Onondaga County.
    Thank you for the opportunity to appear before you, the 
committee, today. I thought this would be a good opportunity to 
discuss the impacts of Federal mandates in our municipality, 
specifically how Federal mandates that provide a one-size-fits-
all approach have created waste and inefficiency in the use of 
tax dollars and drives up property taxes.
    Onondaga County has strived to provide a clean, healthy, 
safe place to live. As with many historic urban areas, our 
county and city have had to deal with the challenges of 
environmental cleanup, aging infrastructure and a decreased 
population base to support these needs. Despite these 
challenges, we have made monumental strides toward cleaning up 
our lakes and modernizing our infrastructure for wastewater 
treatment. However, despite all of these efforts, Onondaga 
County continues to fight an uphill battle. This is due, in 
part, because of Federal mandates that fail to take into 
account an analysis of costs and benefits tied to mandatory 
regulatory actions, and that can result in scarce tax dollars 
being spent on compliance measures that are neither effective 
nor equitable.
    One example of this concerns the Federal Government's 
apparent efforts to pursue uniform national nutrient control 
standards for surface waters across the county. Reliance on 
approaches that do not account for varying ecological 
conditions on nutrient pollution in different water bodies, and 
the use of one-size-fits-all technology approaches to address 
nutrient pollution problems can result in major public 
expenditures with little or no improvement in water quality.
    Site-specific factors, the cost of controls and current 
economic conditions call for approaches other than mechanical 
application of outdated command and control methods. Onondaga 
County and the city of Syracuse, like many communities across 
the country, support an aging infrastructure system. The 
combined sewer system that leads to sewer overflows here in 
Syracuse has been in place for over a century, and as a result, 
would be excessively costly to completely replace.
    To address this challenge Onondaga County has taken a lead 
role in implementing an innovative and balanced approach to 
combined sewer overflows that combines elements of traditional 
gray infrastructure, as well as a more practical and cost 
effective green technology, or green infrastructure, that 
captures the rain wastewater where it falls, rather than 
constructing large treatment plants that cost a lot to build 
and operate.
    The challenges we face in applying this innovative and 
cost-effective approach to combine sewer overflows is that the 
regulatory community is geared toward decades old, traditional 
technology approaches, and can be somewhat inflexible and 
resistant to integrating these new innovative approaches into 
practical compliance schedules, design approvals and compliance 
monitoring methods. Regulatory guidance documents and 
compliance criteria haven't been written for the new green 
technologies, and this inhibits the pursuit of more cost-
effective approaches to these widespread challenges.
    Another example is the EPA needs to establish a National 
Sanitary Sewer Overflow wet-weather policy that incorporates 
cost effective and realistic wet-weather related standards. 
SSOs are overflows of sanitary sewers resulting from a number 
of factors, including significant wet weather events such as 
heavy rains and rapid melting snow pack or a combination of the 
two. Currently, there are no EPA approved national wet-weather 
SSO standards. This has left wastewater collection systems such 
as the county's vulnerable to enforcement actions following 
record setting wet-weather events that exceed approved design 
standards, even after the district has expended millions of 
dollars to construct the projects, whose design has been 
approved by the permitting authority.
    In Onondaga County, wastewater treatment is supported by 
usages fees. The costs of penalties for noncompliance and 
infrastructure improvements drive up these user fees. These 
user fees, combined with the excessive property tax burden in 
our region, have created an unfriendly business environment.
    From the perspective of a local municipality there is no 
local control over these mandates. While in Onondaga County 
there has been in a monumental effort to mitigate the issues 
around CSOs and ensuring clean water, the residents are still 
penalized for situations that are the result of circumstances 
out of their control.
    In closing, there are significant benefits to Federal 
regulation. However, instituting more practical assessment of 
the cost effectiveness of regulatory measures would relieve 
some of the unnecessary burdens that are the result of outcomes 
which are far beyond the scope of fiscal possibility. Proper 
recognition of the fiscal limitations that exist in the goals 
set forth in these mandates, coupled with greater flexibility 
in the implementation of solutions by local stakeholders, will 
promote a more competitive business environment.
    Thank you very much for the opportunity to speak before the 
committee.
    Ms. Buerkle. Thank you very much, Mr. Glazier.
    [The prepared statement of Mr. Glazier follows:]




    Ms. Buerkle. Mr. Squires.

                  STATEMENT OF THOMAS SQUIRES

    Mr. Squires. Madam Chair, Representative Kelly. Thank you 
for the opportunity to appear before you today, and I'd like to 
especially thank you for conducting this hearing in Central New 
York here locally. That's a great honor certainly for all our 
community here in Central New York. So thank you.
    I'd like to take a few minutes and give you some examples 
of how Federal action, regulation and inaction hinder Cayuga 
County in hiring employees, cost us revenue and increase our 
costs.
    We receive millions of dollars in Federal aid, primarily in 
the area of health and human services. All of these grants come 
with specific accountability and reporting requirements, 
requirements that cause staff to take time away from the core 
program to fulfill. The Temporary Assistance for Needy Families 
[TANF] program is a good poster child of this phenomenon.
    Due to Federal regulation, the district staff spends a huge 
amount of their time on meeting Federal requirements for 
employability reporting. To be eligible for Federal TANF 
dollars, we must count, track and report for every TANF adult 
the time spent in countable work activity. We have coding 
requirements and monthly work verification reporting. This is 
labor intensive and could result in State and local penalties 
if not done. These requirements take away from work we could be 
doing with the clients, it eats up valuable staff time, takes 
resources away from the community for no more than reporting to 
the government.
    The Federal Government also has strict requirements in 
place to entitle counties to be eligible for Title IV-E 
reimbursement for child welfare costs. There's a complex set of 
eligibility criteria that must be met. If all criteria and 
documents are not found, there is loss of funding based on 
Federal audits.
    Costs associated with child welfare are huge expenses for 
the county. Due to the complexity of the requirements, we had 
to dedicate staff to function as our eligibility team. Again, a 
lessening of the requirements will enable counties to dedicate 
much needed resources to the clients.
    To be sure, requirements are needed to protect the 
taxpayers. We respectfully ask that your committee look at 
decreasing the requirements for all Federal programs so their 
staff may spend more time delivering the program services that 
the taxpayers pay for.
    Many times the Federal Government pushes mandates down to 
the States and in turn down to the counties. Many times these 
mandates aren't as applicable and should not apply to the 
counties because we're much smaller than cities and States. 
Along these lines is the Prison Rape Elimination Act. While 
noble in title, this act is filtered down to local jails and 
requires additional documentation, investigation and reporting 
that, frankly, is not necessary at the county level. It may be 
appropriate for larger facilities, but in our case will 
probably require adding an additional staff position to fulfill 
requirements that we don't believe should apply to us anyway.
    In some counties, Indian Nations have been allowed to sell 
tobacco products and gasoline exempt from sales taxes. In our 
county the cost is measured in the millions of dollars, as well 
as lost jobs and commerce to businesses that comply with the 
sales tax law. The Cayuga Indian Nation has applied to the 
Bureau of Indian Affairs for land in Seneca and Cayuga counties 
to be taken into Federal trust. These counties and the State of 
New York have repeatedly and vehemently opposed these trust 
applications, because their approval would impose a sovereign 
Indian reservation on the counties, which would mean not only 
land coming off the school, town and county tax rolls, but the 
uncontestable opening of Class II electronic bingo parlors thus 
bringing gambling to counties that do not want it. It would 
also totally remove local jurisdiction over the lands placed in 
trust. House bill H.R. 1231 would allow any federally 
recognized Indian tribes to be granted land in trust. The 
Cayuga Indian Nation was not federally recognized in 1934 and 
would not be eligible to have land placed into trust, except 
for a provision in the bill called the Carcieri Fix. We 
strongly urge all Members of the House to oppose this Carcieri 
Fix provision in the bill.
    I'd like to mention briefly unemployment. Somewhat 
regularly, Cayuga County decides to not hire when the position 
may be temporary or seasonal in nature. There is a local cost 
to unemployment. The decision to not hire is always driven by 
our desire to avoid the cost of unemployment. In some of these 
cases, the position may have the potential to turn into a 
permanent position. Unfortunately, too many times we aren't 
able to go down that road to explore that option. I would urge 
the committee to change the eligibility requirement for 
unemployment, or decrease the local share to allow us to put 
more people to work.
    In closing, I would like to thank again the committee for 
giving me the opportunity to be here today. On behalf of Cayuga 
County, I thank you for all the support from the Federal 
Government and ask that you continue your hard work in finding 
ways to reduce the Federal impediments to the efficient 
operation of local government. Thank you and I will be happy to 
answer any questions.
    [The prepared statement of Mr. Squires follows:]




    Ms. Buerkle. Thank you all very much, and thank you for 
your testimony this afternoon.
    It's interesting, because this morning we had a hearing 
over in Monroe County, in Irondequoit, and we heard from Monroe 
County and the county executive and we also heard from the 
sheriff of Wayne County who many of their issues were very 
similar to yours.
    But the interesting part--and we even heard it from the 
panel that preceded you--these rules and these regulations are 
made without the players being at the table. And these unfunded 
mandates create such a burden on the counties and the local 
governments and the taxpayers without them having any say in 
how those programs are going to be executed. We got onto the 
topic of Medicaid in Monroe County this morning, which is a 
separate hearing.
    My first question is to Mr. MacMurray. I'd like to have you 
explain to us this SEC registration municipal advisors. Are you 
saying pursuant to Dodd-Frank that engineering firms are now 
going to be treated as if they were financial advisors?
    Mr. MacMurray. The Dodd-Frank indicated in Section 975 that 
they were exempting engineers providing engineering advice. 
That was because Congress recognized in the preparation of 
legislation that what was targeted here were financial 
advisors, people that are advising on bank financing, people 
that are advising municipalities on bonding, on what types of 
financial structured deals should be used for public 
infrastructure. That, of course, is not the practice of 
engineering and construction companies. That's the practice of 
banks; that's the practice of financial folks.
    So Congress specifically carved out the engineering and 
construction industry. What's happening is that in the 
rulemaking that's going on now, that the SEC is putting in 
place, is they're kind of expanding the definition or 
redefining much of what consulting engineers do for 
municipalities all over the country. They're redefining that 
now in terms that would require that we all--we in the 
consulting engineering business--obtain these municipal advisor 
staff certifications.
    So it's just another example of--I think it's an example of 
two things: One of the Congress being wise and carving it out, 
but it's also an example of how, even when Congress is wise and 
makes sure that something is appropriate, that when it comes to 
rulemaking, it can get bifurcated.
    Ms. Buerkle. And I think that illustrates the issue that 
we've had with the Health Care Bill, as well as with Dodd-
Frank, is the legislation was then handed over to the 
regulators and regulators came up with their interpretation of 
the law.
    Mr. MacMurray. It may not always be consistent. It's like 
another example is the 1099 situation, which I'd like to thank 
both of you for your vote in support of appeal of that 
requirement. In fact, while we're on that, I would hope that 
you would sign onto H.R. 674, that's to repeal legislation for 
the 3 percent issue that I mentioned earlier too.
    Yes. There are situations that need to be addressed after 
legislation has been passed. Sometimes there's things that come 
to light and we need to deal with that.
    Ms. Buerkle. Thank you. I yield 5 minutes to Mr. Kelly.
    Mr. Kelly. Mr. MacMurray, tell me about this 3 percent and 
why you don't get paid interest on it? The government holds it 
and you don't get paid interest? How long do they hold it?
    Mr. MacMurray. Effectively it's analogous to having 
withholding out of my paycheck for my income tax in the 
following year. So effectively it's the same sort of thing. 
What's being proposed here, though, is unfair on a number of 
levels.
    First of all, if we provide services to the Federal 
Government and it costs about $100,000, the Federal Government 
says, well, about 20 to 30 percent of that has to be 
subcontracted to minority disadvantaged business or to service 
connected disabled business. There are a number of programs.
    So right off the bat, we might take, say, $20,000 or 
$30,000 off of that amount that a company like C&S is actually 
going to self perform.
    Then there are some services that can't be performed by our 
company, so we turn around and possibly subcontract another 
$5,000 or $10,000 of work. So the actual work that we would do 
might be in the neighborhood of $60,000 or $70,000, in my 
example, out of a $100,000 contract.
    Now, if we are lucky, and we make the average profit on 
this type of work nationally, that's going to be someplace in 
the 5 to 10 percent range. So if we take, say, $60,000 and 
suppose we made 5 percent on that, that's $3,000. That's $3,000 
in profit. Our income tax obligation for that $3,000 might be 
20 percent, 30 percent, depending on what corporate rate we're 
paying. So it could conceivably be $1,000 in my example.
    Well, what the Federal Government--this law will require us 
to have $3,000 deducted right off the top and the Federal 
Government will then hold those $3,000 until we file our income 
tax and get that refund, which will be at least a year, and 
depending on when the services were provided, if they were 
provided at the end of tax year--you follow me? Or at the 
beginning of a tax year, it could almost be 2 years before you 
get the money back.
    And, of course, under the Federal Acquisition Regulations, 
to make things even worse, if we do go out and borrow that 
money so we can meet payroll and pay our light bill, the 
Federal Acquisition Act [FAR], does not allow us to calculate 
interest as an eligible overhead expense, so there's no way we 
can recover that interest on that money. So effectively that 
comes out of our pocket. So in order to meet payroll and pay 
our employees and potentially add additional jobs, it's just 
another rock being thrown under the wheel.
    Mr. Kelly. So your cost of operation is affected by this. 
So is this something when you do a government contract, you 
have to actually bid it higher than you would normally bid it 
to a normal entity to cover that 3 percent, because effectively 
your cost of operation, you know, the gross versus the net--I 
understand completely--you have to somehow recoup that.
    Mr. MacMurray. We have to try.
    Mr. Kelly. Or you walk away from the business.
    Mr. MacMurray. We have to try or we have to make a decision 
that we can't work on that particular work with the Federal 
Government. And that's going to hurt the government, hurt our 
taxpayers because there's going to be less competition and 
that's not an attractive alternative either.
    Mr. Kelly. Mr. Glazier, I want to ask you real quick, 
because I come from a community that's aging also. And when we 
talk about this problem that we have with storm and we have 
wastewater and everything else.
    Look it, is there any type of remedial program? Because 
what I see is that the property transfer from people who own 
those houses--usually they're seniors. In order for them--
there's some point in their life where they're going to sell 
where they live and they're going to move into another 
lifestyle. That has to be fixed, usually, before they can sell 
the house, does it not, if there's a problem where the 
downspouts are tied in?
    Mr. Glazier. Yeah. In fact, in Onondaga County we've just 
begun a proactive downspout program, and I'm coming up short 
with the name of the program, but the program is going to go 
deal specifically with that. We have added a local law that 
when houses are sold, there's an inspection to ensure for 
specifically that purpose.
    Mr. Kelly. In my community, it averages somewhere between 
$12,000 and $15,000 to fix this. These are homes that are being 
sold for $30,000, $35,000. So a senior, really, someone who's 
worked all their life, paid their taxes, lived within their 
means, have been good stewards of the community, are put in a 
position they really can't get out of the homes they live in 
because of this regulation.
    What bothers me is I know we have these ideas that we think 
are going to be really great, but the unintended consequences 
really put people in a position where they can't, at this point 
in their life, actually move from where they've been because 
some of this over regulation. And I know it's important. I 
know. But it makes me scratch my head. Why are we doing this to 
the people that are most vulnerable that can't make the 
adjustment?
    Mr. Glazier. Well, I think from our perspective, one of the 
main criticisms we have is that--there's--everything is 
regulation and measurement as opposed to helping to try and 
find ways as we're trying to proactively attempting to do, 
which is try and mitigate the issue where it begins.
    Because of the stringency of the current Federal 
regulations there isn't real recognition of that effort. You 
know, they just sit at the end of the spout and measure and 
because of that we are, you know, we're making leaps and bounds 
as far as the situation we're in and the dates and the age of 
our physical infrastructure that deals with this, but we're 
still measured by the antiquated system.
    Mr. Kelly. I know, it is. It's frustrating.
    And just final, Mr. Squires, because I see this only in 
government. Is the cost of running a program have--it's totally 
irrelevant as to what the cost-benefit analysis is.
    Have you seen any of these programs that make sense to you 
from a cost-benefit analysis, because in private business if 
the end product doesn't justify what you're doing, you either 
don't do it or you just go out of business. So I'm trying to 
understand the cost overruns of these, and it's always absorbed 
by the taxpayer.
    Do you have any input into any of these programs?
    Mr. Squires. We don't. We don't have a lot of input as far 
as the regulations, requirements and accountability and 
reporting and all that sort of stuff. I think you're right with 
the point you're driving at is that the cost of the program 
becomes so enormously expensive compared to the actual benefit 
that it flows to the intended beneficiaries of the program.
    It's frustrating for us when we have a whole pile of 
regulation reporting and tracking and so forth and information 
that needs to be given, and it costs us employees, it costs 
dedicated staff to do that.
    Chair Buerkle referenced earlier that government should not 
be the driver of jobs, and I absolutely agree with that. That 
being said, there are going to be jobs that are paid for and 
come from the government. It's frustrating when we have to 
increase the number of jobs that government pays for that we 
tax people for, for things that--we wonder if it's just jobs 
that put together a bunch of data that sit on someone else's 
desk and they check off on their checklist and say, ``OK, we 
got it. Things must be fine.'' That's not the reality of the 
situation.
    What we wonder sometimes is if we got less money from the 
Federal Government, the State government, passed through the 
State government, if we got a little less for the program and 
were relieved of a lot of the reporting requirements and a lot 
of the tracking and a lot of the administrative requirements, I 
think we would be further ahead because we would have fewer 
people on our payroll that we're taxing the taxpayers for and 
we would end up giving more benefit to the intended 
beneficiaries.
    Mr. Kelly. Thank you.
    Ms. Buerkle. Just to give an illustration of your cost-
benefit analysis, we spoke recently to a school superintendent 
and he received a Federal grant of $40,000 and he said in order 
to comply with all of the strings attached of the $40,000, it 
was going to cost him close to $200,000 to administer that 
regulation--or that grant. So the cost-benefit analysis is 
certainly something that needs to be done more.
    I have one last question because it came up this morning in 
Irondequoit, Mr. Squires. The Prison Rape Elimination Act. I 
asked Sheriff Virts over in Wayne County if it was his 
understanding that there was any way for the county jails, the 
smaller entities, to opt out of this law. He did not think so.
    Mr. Squires. I don't think so. I spoke to our sheriff, 
Sheriff Dave Gould in Cayuga County and this is something that 
he's looking at. Our interpretation is it absolutely applies to 
us. We're a small facility. We're not a State facility.
    Incidents happen in jails, you know, violence and so forth. 
We think the staff that we have and the procedures and 
processes in place to address those issues are sufficient for 
our facility. They're appropriate. We're a well-run facility. 
So this is another layer of bureaucracy and administration that 
we have to pay for and we estimate it's going to be a position 
that will be dedicated almost full-time to these kinds of 
regulations.
    Again, taxing people for positions that, in our view, 
aren't productive and give no benefit to the taxpayers we have 
been taxing.
    Ms. Buerkle. Have you been able to affix any cost to this 
law when it goes into effect?
    Mr. Squires. We think it's more work that can be absorbed 
by current staff, and we're talking about adding a staff 
position to do that. So the total cost including fringes would 
be somewhere in the ballpark I'm going to guess $50,000, 
$60,000. There may be other work that staff person could take 
on, but that's the additional cost that comes from this act.
    Ms. Buerkle. Thank you.
    Do you have any further questions?
    Mr. Kelly. No.
    Ms. Buerkle. I want to thank all of you for being here this 
afternoon and sharing your testimony with us.
    Your input is so important to us as were the two previous 
panels and the three earlier today. It's so important that 
Congress hears from you all. And I want you to know that we 
will take your testimony, take the information that you have 
given to us, and bring it back to the full Oversight and 
Government Reform Committee and let them know. We'll share with 
them the concerns and the regulations and even the impediments 
that the Federal Government puts up.
    So thank you all very much for being here today.
    Thank you to those who sat through this hearing and 
participated today. I think it's good for us to hear from the 
community, from the job creators.
    At this time we will adjourn the meeting. The committee is 
adjourned. Thank you all very much.
    [Whereupon, at 5:15 p.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]





                                 
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