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

    REGULATORY CHAOS: FINDING LEGISLATIVE SOLUTIONS TO BENEFIT JOBS AND THE
                                    ECONOMY

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

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON ENVIRONMENT AND THE ECONOMY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 14, 2011

                                   __________

                               Serial No. 112-74

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    HENRY A. WAXMAN, California
      Chairman Emeritus                    Ranking Member
    CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
    MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
      Vice Chairman                      DIANA DeGETTE, Colorado
    JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
    BRIAN P. BILBRAY, California         JAY INSLEE, Washington
    CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
    PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
    STEVE SCALISE, Louisiana             JIM MATHESON, Utah
    ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
    CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
    GREGG HARPER, Mississippi            DORIS O. MATSUI, California
    LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin
    BILL CASSIDY, Louisiana              Islands
    BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                     7_____

                  Subcommittee on Environment and the Economy

                             JOHN SHIMKUS, Illinois
                                     Chairman
    TIM MURPHY, Pennsylvania             GENE GREEN, Texas
      Vice Chairman                        Ranking Member
    ED WHITFIELD, Kentucky               TAMMY BALDWIN, Wisconsin
    JOSEPH R. PITTS, Pennsylvania        G.K. BUTTERFIELD, North Carolina
    MARY BONO MACK, California           JOHN BARROW, Georgia
    JOHN SULLIVAN, Oklahoma              DORIS O. MATSUI, California
    CHARLES F. BASS, New Hampshire       FRANK PALLONE, Jr., New Jersey
    ROBERT E. LATTA, Ohio                DIANA DeGETTE, Colorado
    CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
    GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
    BILL CASSIDY, Louisiana              HENRY A. WAXMAN, California (ex
    CORY GARDNER, Colorado                   officio)
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. John Shimkus, a Representative in Congress from the State of
      Illinois, opening statement....................................     1
        Prepared statement...........................................     3
    Hon. Gene Green, a Representative in Congress from the State of
      Texas, opening statement.......................................     6
    Hon. Tim Murphy, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     7

                                   Witnesses

    William L. Kovacs, Senior Vice President, Environment, Technology
      and Regulatory Affairs, U.S. Chamber of Commerce...............     8
        Prepared statement...........................................    11
    W. Kirk Liddell, President and CEO, IREX Corporation, on behalf
      of National Association of Manufacturers.......................    28
        Prepared statement...........................................    30
    Karen R. Harned, Executive Director, Small Business Legal Center,
      National Federation of Independent Business....................    43
        Prepared statement...........................................    45
    Kevin Rogers, President, Arizona Farm Bureau, on behalf of
      American Farm Bureau Federation................................    53
        Prepared statement...........................................    55

                               Submitted Material

    Study, dated March 5, 2010, ``How Accurate Are Regulatory Cost
      Estimates?,'' by Resources for the Future, submitted by Mr.
      Butterfield....................................................    83

    REGULATORY CHAOS: FINDING LEGISLATIVE SOLUTIONS TO BENEFIT JOBS AND THE
                                    ECONOMY

                                  ----------

                            THURSDAY, JULY 14, 2011

                      House of Representatives,
           Subcommittee on Environment and the Economy,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:08 a.m., in
    room 2322 of the Rayburn House Office Building, Hon. John
    Shimkus (chairman of the subcommittee) presiding.
        Members present: Representatives Shimkus, Murphy,
    Whitfield, Pitts, Latta, McMorris Rodgers, Cassidy, Gardner,
    Barton, Green, Butterfield, Barrow, and Waxman (ex officio).
        Staff present: Charlotte Baker, Press Secretary; Jerry
    Couri, Professional Staff Member, Environment; Heidi King,
    Chief Economist; Dave McCarthy, Chief Counsel, Environment and
    the Economy; Carly McWilliams, Legislative Clerk; Tina
    Richards, Counsel, Environment and the Economy; Chris Sarley,
    Policy Coordinator, Environment and the Economy; Alison
    Cassady, Democratic Senior Professional Staff Member; Greg
    Dotson, Democratic Energy and Environment Staff Director;
    Caitlin Haberman, Democratic Policy Analyst; and Alexandra
    Teitz, Democratic Senior Counsel, Environment and Energy.
        Mr. Shimkus. The committee will come to order. We want to
    welcome you all here. I would like to recognize myself for the
    first 5-minute opening statement.

      OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        From our first hearing of this Congress we have continued
    to focus on the impact that Federal regulations can have on the
    economy, particularly on job prospects.
        We have heard from Administration officials speaking for
    the White House, Department of Energy, the Environmental
    Protection Agency, and even the Department of Homeland
    Security. We have asked them, did you take economic impacts
    into account when you proposed these regulations? Did you
    perform a job impact analysis? Are you concerned as much about
    protecting existing jobs, particularly in the manufacturing and
    energy sectors, as the President claims to be about creating
    new jobs in the so-called green economy?
        The problem for many of the people who send us here to find
    solutions is not the green economy. It is the red ink economy.
    Family debt, unemployment, collapsed home values, mortgages
    underwater. These are real life problems we are challenged to
    solve.
        And witness after witness before the subcommittee has
    traced the root of many of their challenges to the burden of
    Federal regulations that drive up cost of doing business while
    adding no economic value. That is not to say that all
    regulations are bad. I am thankful for the many good and
    important Federal regulations.
        For example, every time I take a flight home to my family I
    am thankful for the Federal aviation regulations that keep
    planes flying safely from one place to another. When you step
    outside this building and take a deep breath, even on a hot
    summer day, you can thank Federal and State regulations for the
    improvement in air quality over the past 10 or 20 years. I
    don't want the ranking member of the full committee to faint on
    that statement, but we all know that that is true.
        And just yesterday this committee overwhelmingly reported
    on a bill to set up an innovative new regime that balances
    State management and Federal standards to ensure safe handling
    of coal ash whether it is recycled or disposed of as waste.
        But then we hear the horror stories about other
    regulations. We have heard from witnesses about EPA proposals
    to impose needless new burdens on hard rock mining that
    duplicate what other Federal and State agencies already have on
    the books and which could put some facilities out of business.
    We hear about proposed restrictions on recyclers that could
    actually discourage beneficial reuse from fly ash to printer
    ink.
        Enough of the problems. We are not psychologists. We need
    solutions to prevent the issues that have us in this
    predicament. Today we will hear from the small business sector,
    the farm community, the manufacturers, and other business
    voices. We hope our witnesses will bring along some suggestions
    to make things better.
        How can we guide the Federal Government toward good
    regulations? How can we make sure that the benefits really do
    outweigh the economic costs? Can we be sensitive to impacts on
    job opportunities?
        We will also ask, are there any laws on the books that can
    become a model regulatory approach? If so, what is it, and what
    other steps can Congress take to ensure the Administration only
    proposes regulatory action that serve the people instead of
    harming them?
        And just an aside, when we travel back to our districts
    every week and we hear from our farmers and our small
    manufacturers and the small businesses, we hear this concern
    everywhere we go. This hearing is an attempt to put a national
    voice and bring forth the concerns that we are hearing at home
    at a national level. So I appreciate you all attending. I look
    forward to the hearing.
        [The prepared statement of Mr. Shimkus follows:]

        [GRAPHIC] [TIFF OMITTED] T2862.001

        [GRAPHIC] [TIFF OMITTED] T2862.002

        [GRAPHIC] [TIFF OMITTED] T2862.003

        Mr. Shimkus. And now I would like to yield to the ranking
    member of the subcommittee, Mr. Green from Texas.

       OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Green. Thank you, Mr. Chairman, for calling this
    hearing because we all share an interest in sharing the
    appropriate balance between cost and benefits in environmental
    regulation. This committee has held numerous hearings, examined
    the regulatory look back process envisioned by the President's
    January Executive Order. Executive Order 13563 calls for
    Federal agencies to develop preliminary plans for periodically
    reviewing existing regulations to determine whether any should
    be modified, streamlined, expanded, or repelled.
        Well, I certainly share my colleague's concern about
    certain regulations, and I do not believe that all regulations
    or even the process of reviewing regulations are overly
    burdensome and hurts the economy. By focusing on regulatory
    cost of business we sometimes risk ignoring the real, very real
    human costs of unchecked pollution and the costs that these
    burdens place on the economy as a whole.
        I will give you an example. For years I have worked with
    local officials in Harris County, I have a very urban
    industrial district in East Houston, Harris County, Texas, to
    address a significant threat from a superfund site that is in
    our area. The San Jacinto Waste Pits in the 1960s, a paper mill
    that actually was in our district, dumped dioxin contained
    waste in a waste pit in a sandbar in the San Jacinto River.
    Unfortunately, the resource recovery, Resource Conservation
    Recovery Act had not been passed and neither had the EPA in--
    until 1969. Regulations of disposal of dioxin waste from paper
    mills were not yet developed.
        If these regulations had been placed, the waste would not
    have been dumped where they were, and the superfund site would
    not have been created. Now that the San Jacinto River has
    reclaimed that sandbar, these vessels were below water,
    examinations widespread and cleanup will be very costly.
        Harris County officials and the EPA have been working hard
    to ensure that taxpayers don't bear the cost of that cleanup,
    and they are continuing the fight. Proper waste regulations
    could have avoided these cleanup costs and these litigation
    costs and could have protected the people in my district.
    Examples like this demonstrate why it is so important to review
    the laws and regulations to ensure we protect public health,
    the environment, and the economy.
        OMB estimated that the economic benefits of major
    regulations over the last 10 years have found tremendous
    benefits up to $616 billion. The benefits outweighed the cost
    by three to one and by as much as 12 to one in some cases. The
    economic benefits of environmental regulation offer reflected
    avoided costs, costs associated with treated asthma attacks,
    costs associated with educating children with developmental
    delays, costs associated with lost work or productivity due to
    pollution and illnesses.
        So while I agree we should carefully examine the
    regulations to be sure we are not inadvertently harming jobs,
    not all regulations are the enemy. They do protect the public
    and to save the Federal Government money, and I yield back my
    time.
        Mr. Shimkus. The gentleman yields back his time.
        The chair recognizes the vice-chairman of the subcommittee,
    Mr. Murphy from Pennsylvania.
        Mr. Murphy. Thank you, Mr. Chairman. By the way, we do have
    a psychologist on the committee.
        Mr. Shimkus. And it is not me.

       OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Murphy. While deliberations are continuing to deal with
    our $14.3 trillion deficit or debt, America is concerned where
    we are going. June unemployment at 9.2 percent and the growth
    of only 18,000 jobs translates to a meager 360 jobs per State.
    Let us keep in mind that one way to balance America's budget,
    one very important way to deal with America's debt is to grow
    jobs. For each 1 percent decline in unemployment it is $90
    billion to $200 billion per year in Federal revenue. That is a
    decrease in unemployment compensation, that is an increase in
    Federal revenues, that is one and a half million jobs for every
    1 percent decline in unemployment.
        Well we can't grow jobs, and we saddle job creators with
    $1.75 trillion in regulatory costs according to numbers from
    the Small Business Administration. As we look at these issues
    of how to deal with a wide range of energy sources, I want to
    highlight another way we can create jobs.
        Instead of sending $129 billion a year to OPEC for foreign
    aid to buy their oil, let us drill and use our own. A bill I
    introduced, H.R. 1861, the Infrastructure Jobs and Energy
    Independence Act, would yield between $2.2 trillion and $3.7
    trillion over a 30-year period in new Federal revenues, but it
    is not from raising taxes. It is just using the standard
    royalties and lease agreements that come from this, and it is
    not borrowing from China. This bill leads to 1.2 million jobs
    annually. It is jobs for the roughnecks, the steelworkers, the
    electrician and laborers who work on these rigs. It is jobs for
    those who take the oil and refine it into gasoline. It is jobs
    for those who build all the infrastructure as this bill also
    provides the money needed to begin to build, rebuild our roads,
    bridges, locks, dams, water and sewer projects, and it funds
    nuclear power plants and the cleaning up of our coal-fired
    power plants.
        So with our leaders over at the White House arguing over
    how to take care of the debt, let us not forget Americans are
    saying, grow more jobs to grow more taxpayers, not finding ways
    of increasing taxes and not finding ways of increasing
    regulations that move our jobs into submission.
        And with that I yield back.
        Mr. Shimkus. The gentleman yields back his time.
        Seeing no other members on the minority side I would now
    like to turn to the panel and welcome you for coming. I will do
    an overall introduction of the table, and then we will go
    individually. At the first--at our panel is Mr. William Kovacs,
    Senior Vice President, Environment, Technology, and Regulatory
    Affairs for the U.S. Chamber of Commerce. Welcome.
        Kirk Liddell, President and CEO of IREX Corporation on
    behalf of the National Association of Manufacturers. Karen
    Harned, Executive Director of National Federation of
    Independent Business Legal Center, and Kevin Rogers, President
    of the Arizona Farm Bureau Federation and on behalf of the
    American Farm Bureau Federation.
        So welcome. I would like to now recognize Mr. Kovacs, your
    full statement is submitted for the record. You have 5 minutes
    for an opening statement. As you can see, we may not be that
    pressed for time, so you don't have to kill yourself, and we
    will be very patient with the clock here. So you are recognized
    for 5 minutes.

        STATEMENTS OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT,
     ENVIRONMENT, TECHNOLOGY, AND REGULATORY AFFAIRS, U.S. CHAMBER
         OF COMMERCE; W. KIRK LIDDELL, PRESIDENT AND CEO, IREX
           CORPORATION, ON BEHALF OF NATIONAL ASSOCIATION OF
       MANUFACTURERS; KAREN R. HARNED, EXECUTIVE DIRECTOR, SMALL
       BUSINESS LEGAL CENTER, NATIONAL FEDERATION OF INDEPENDENT
      BUSINESS; AND KEVIN ROGERS, PRESIDENT, ARIZONA FARM BUREAU
        FEDERATION, ON BEHALF OF AMERICAN FARM BUREAU FEDERATION

                     STATEMENT OF WILLIAM L. KOVACS

        Mr. Kovacs. Thank you very much, Mr. Chairman and Ranking
    Member Green and members of the committee. I would like to
    spend the first minute of my 5 minutes on how we got here into
    this regulatory chaos and then go into some solutions.
        Congress has been dealing with what they--what you might
    call regulatory chaos since 1946. I mean, we have been trying
    to get control of the agencies when you passed the
    Administrative Procedure Act, which really was the first time
    you required the agencies to be somewhat transparent, and you
    involved the public.
        But, unfortunately, over the years one of the things that
    happened after this and within its structure is that Congress
    passed vague laws that required the agencies to fill in the
    blanks, and as the agencies began to fill in the blanks, one of
    the things that happened was the courts began in the 1980s to
    award deference to the agencies. So you had an agency that was,
    one, filling in the blanks, and now the courts were looking at
    them as the experts, and this literally allowed them to go from
    filling in the blanks to writing legislation. And this
    combination of delegation and deference really has tipped the
    constitutional scales to the Executive Branch.
        Now, Congress has tried very, very hard, both Republicans
    and Democrats, to gain control over the agencies. In the '80s
    you passed the Regulatory Flexibility Act, unfunded mandates,
    Information Quality Act later on, data access, paperwork
    reduction, and in all of your environmental bills you have some
    of the best jobs analysis provisions in the entire body of the
    U.S. Codes. You have done what you need. I think the conclusion
    is best summed up when CBO and GAO concluded in several studies
    that the agencies are literally masters at manipulating the
    regulatory process. So as you talk about cost benefit or
    finding out what the $100 million threshold is, they know how
    to do the system better than you will ever know how to do the
    system.
        So what is it that we can do, because I think that is
    really where you want to go. There are some issues that would
    hopefully be bipartisan. The first is in very simple terms you
    require the agencies to do just what Congress has asked them to
    do for years. I mean, if you look, let us just take Section 321
    of the Clean Air Act. Between Section 321, which requires
    continuing jobs analysis for all major regulations, which you
    haven't gotten in 30 years, that is just besides the point,
    Section 312 and 317, which requires both the cost benefit and
    an economic assessment, all of which Congress has in there.
    They are all mandated on the agencies, so this isn't a
    discretionary. This isn't something discretionary. Congress
    needs to start with that, and frankly, even with the
    President's Executive Order, had they decided instead of just
    doing an Executive Order, had they demanded that the agencies
    implement what Congress has passed, I think we would be further
    ahead.
        Another statute that is really an excellent statute is
    unfunded mandates. There are two provisions in unfunded
    mandates relating to major Federal actions, which are very
    significant. One is that actually for every major role, the
    agency that is over $100 million, the agency actually has to
    identify a reasonable number of regulatory alternatives, and it
    must, under Congress's rule, select the least costly and the
    least burdensome approach to it. And if they don't, then the
    head of the agency must state why they selected a more
    expensive approach. That is generally honored in the breech or
    not even observed. UMRA also requires before the publication of
    the rural statement of anticipated costs and benefits that
    impact the national economy.
        So a lot of what Congress is trying to do today on jobs is
    there, and then you have the Information Quality Act, which is
    perhaps one of the most significant transparency acts that
    Congress has ever passed, and there you have a requirement that
    the agencies actually use the most up-to-date data, that they
    use peer reviews data based on sound, whether it be science or
    economics. So you have four acts.
        The second issue is permit streamlining. This is an issue
    that Congress has agreed upon many times in the last several
    years. We did this report called Project No Project, and we
    just examined the number of permits that were not being issued
    in the year 2010 for energy-based facilities, and there were
    351, but the key is that by denying those 351 facilities'
    permits, there was--we failed to capture about $1.1 trillion in
    economic activity for our GDP, and we failed to capture--and we
    lost the ability to create 1.9 million jobs annually during the
    construction period.
        So this--not giving a permit is significant, and the key
    point in this is that Congress in I think it was 2006, passed
    the Permit Streamlining Provisions to safely move the Highway
    Infrastructure Bill, bipartisan, and then the Stimulus Act you
    had two very different senators, Senator Barrasso and Senator
    Boxer, coming to an agreement that if you are going to get
    projects into commerce, you were going to have to do something
    with the permitting process, and they used--and I will stop
    after this. And they used as part of that, they required the
    most expeditious route possible for addressing NEPA, and that
    was a categorical exclusion. The Administration was able to use
    that simple provision over 180,000 times for 220,000 projects.
        So Congress can come to grips with this, and they have
    shown they can. It is just a question of going back and
    enforcing the laws, I think, that you have already got on the
    books.
        [The prepared statement of Mr. Kovacs follows:]

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        Mr. Shimkus. Thank you very much.
        Now I would like to recognize Mr. Liddell for 5 minutes.
    Sir, welcome.

                      STATEMENT OF W. KIRK LIDDELL

        Mr. Liddell. Thank you. Thank you, Chairman Shimkus,
    Ranking Member----
        Mr. Shimkus. If you would just hold--we are going to get
    you all set up there.
        Mr. Liddell. Yes. Got to push the button.
        Mr. Shimkus. Yes. Thank you.
        Mr. Liddell. Well, thank you for the opportunity to testify
    before you today about reform of the regulatory system and job
    creation.
        My name is Kirk Liddell. I am the President and CEO of IREX
    Corporation based in Lancaster, Pennsylvania, Congressman
    Pitts' area. We are very proud of Congressman Pitts. We are a
    specialty contracting business. Although we are based in
    Lancaster, we have operations throughout the United States and
    Canada. Today we employ approximately 1,500 individuals, many
    of whom are building trades union members, and that is down
    from about 2,500, 2,700 in our peak at 2008. So we are down
    about 1,000 employees. I serve as a board member of the
    National Association of Manufacturers. I am a member of their
    executive committee, and I am here today testifying on their
    behalf.
        Manufacturers provide good, high-paying jobs, and yet we
    have lost about 2.2 million manufacturing jobs in this economy
    since the recession, since December of 2009. We have, in fact,
    generated about 250,000 net new jobs, but the last couple of
    months that slowed. We have definitely slowed the job creation
    over the last few months, and to regain momentum and return to
    net manufacturing job gains we do need improved economic
    conditions and improved government policies.
        And the deluge in regulation the past couple of years has
    not helped us, has not helped us in our effort to create jobs
    and to improve the economy. Unnecessary or cost ineffective
    regulations dampen economic growth and hold down job creation.
    Regulatory change and uncertainty impose high costs on
    businesses, especially small business, disproportionately small
    businesses, and of course, most manufacturers are small
    businesses.
        Unintended adverse consequence of government regulations
    are also a huge problem and a growing problem. A current
    example is the EPA's accelerated recondition--reconsideration
    of the already stringent and costly ozone air quality standard.
    The Manufacturers' Alliance studied this one proposal and
    concluded that it could cost as many as 7.3 million jobs and
    add up to $1 trillion in new regulatory costs annually between
    2020 and 2030.
        And on behalf of manufacturers I thank Chairman Shimkus,
    Representative Barrow, and several other members of this
    subcommittee for sending a letter to EPA Administrator Lisa
    Jackson in late June, urging the EPA to defer its
    reconsideration until 2013, which is the normal 5-year
    reconsideration timeframe. And I would encourage other members
    of this subcommittee to join that effort.
        Now, at a broader level there are a number of powerful and
    potentially bipartisan regulatory reforms to choose from. One
    would be an easy one, I believe, would be for Congress to
    confirm the authority of OMB's Office of Regulatory Analysis to
    review the regulations issued by independent regulatory
    agencies and to ensure their adherence to strong analytical
    requirements.
        We do applaud the President's recent request to independent
    agencies that they conclude retrospective regulatory reviews of
    their own regulations. We believe giving him the formal
    authority to do so would compliment this voluntary request and
    importantly be a positive sign of seriousness about regulatory
    reform.
        Another helpful reform would be strengthening the
    Regulatory Flexibility Act to ensure that agencies engage in
    thoughtful analysis, of proposed rules, and their economic
    impact on small businesses. Most manufacturers, as I said, are
    small businesses, and an agency should not be permitted to view
    the law as a mere formality. I would urge the subcommittee's
    support of H.R. 527, the Regulatory Flexibility Improvements
    Act, which was favorably recorded out of both the Judiciary and
    Small Business Committees.
        Congress pays an important role within the regulatory
    process but does not have a group of analysts who develop their
    own cost estimates of proposed or final regulations. OMB has
    OIRA to review regulations, and Congress, perhaps through the
    Congressional Budget Office, should have a parallel office that
    analyzes and reviews the impact of significant regulatory
    initiatives.
        To truly build a culture of continuous improvement and
    thoughtful, retrospective review of regulations, the existing
    regulations should automatically sunset unless they are
    fervently shown to have strong continued justification.
        In my written statement I concluded additional broad-based
    regulatory reform examples for your consideration. I appreciate
    the opportunity to provide testimony today on behalf of
    manufacturers. I applaud you for holding today's hearing, and I
    would be happy to respond to any questions you have.
        [The prepared statement of Mr. Liddell follows:]

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        Mr. Shimkus. Thank you very much.
        And now I would like to recognize Ms. Karen Harned from the
    Executive Director, National Federation of Independent Business
    Legal Center. Welcome. You have 5 minutes.

                      STATEMENT OF KAREN R. HARNED

        Ms. Harned. Thank you. Good morning, Chairman Shimkus and
    Ranking Member Green.
        NFIB, the Nation's largest small business advocacy
    organization, commends the subcommittee for examining
    legislative solutions like those proposed in H.R. 527, which
    would grow the economy by reducing overly-burdensome
    regulations. The NFIB Research Foundation's Problems and
    Priorities, has found unreasonable government regulations to be
    a top ten problem for small businesses for the last 2 decades.
        Job growth in America remains at recession levels. Small
    businesses create two-thirds of the net new jobs in this
    country, yet those with less than 20 employees have shed more
    jobs than they have created every quarter but one since the
    second quarter of 2007, according to the Bureau of Labor
    Statistics. Moreover, for the first 6 months of 2011, 17
    percent of small businesses responding to the NFIB Research
    Foundation's Small Business Economic Trends cite regulation as
    their single most important problem. Reducing the regulatory
    burden would go a long way toward giving entrepreneurs the
    confidence that they need to expand their workforce.
        NFIB does believes that Congress must take actions like
    those proposed in H.R. 527 to level that playing field. One key
    reform would expand the Small Business Regulatory Enforcement
    and Fairness Act and its Small Business Advocacy Review Panels
    to all agencies, including independent agencies. In so doing,
    regulators would be in a better position to understand how
    small businesses fundamentally operate, how the regulatory
    burden disproportionately impacts them, and how the agency can
    develop simple and concise guidance materials.
        In reality, small business owners are not walking the halls
    of Federal agencies lobbying about the impact of proposed
    regulation on their business. Despite great strides in
    regulatory reform, too often small business owners find out
    about a regulation after it has taken affect. Expanding SBAR
    panels and SBREFA requirements to other agencies would help
    regulators learn the potential impact of regulations on small
    business before they are promulgated. It also would help alert
    small business owners to new regulatory proposals in the first
    instance.
        Regulatory agencies often proclaim indirect benefits for
    regulatory proposals, but they decline to analyze and make
    publicly available the indirect costs to consumers, such as
    higher energy costs, jobs lost, and higher prices. The indirect
    cost of environmental regulations is particularly problematic.
    It is hard to imagine a new environmental regulation that does
    not indirectly impact small business. Whether a regulation
    mandates a new manufacturing process, sets lower emission
    limits, or requires implementation of new technology, the rule
    will increase the cost of producing goods and services. Those
    costs will be passed onto the small business consumers that
    purchase them.
        But does that mean that all environmental regulation is
    bad? No, but it does mean that indirect costs must be included
    in the calculation when analyzing the costs and benefits of new
    regulatory proposals.
        NFIB member Jack Buschur of Buschur Electric in Minster,
    Ohio, for example, recently testified that because of the time
    and financial costs of EPA's lead renovation and repair rules,
    which took effect in April of 2010, he will no longer bid on
    residential renovation projects. Because he will no longer bid
    on these projects, Mr. Buschur will not be hiring new workers
    at his company, which has 18 employees, and that is down from
    30 employees in 2009.
        NBIB member Hugh Joyce of James River Air Conditioning in
    Richmond projected in testimony that new greenhouse gas
    regulations will add 2 to 10 percent in consulting costs to his
    projects. This is particularly telling because Mr. Joyce is
    committed to doing business in an environmentally-friendly
    manner. He is a member of the U.S. Green Building Council and
    conducts LEED-certified green housing projects.
        The moratorium on off-shore drilling in the Gulf of Mexico
    has indirectly hurt those small businesses that depend on that
    industry. It has impacted all small business owners through
    further dependence on foreign oil and higher gas prices. Energy
    costs were ranked as the second biggest problem small business
    owners face in the NFIB Research Foundation's most recent
    Problems and Priorities.
        Other regulatory forums that would help minimum unintended
    consequences of regulation on small business include reforms
    that would strengthen the role of SBA's Office of Advocacy,
    increase judicial review within SBREFA, insure agencies focus
    adequate resources on compliance assistance, and waive fines
    and penalties for small businesses the first time they commit a
    non-harmful error on regulatory paperwork.
        With job creation continuing at recession levels, Congress
    needs to take steps to address the growing regulatory burden on
    small businesses. The proposed reforms in H.R. 527 are a good
    first step.
        Thank you.
        [The prepared statement of Ms. Harned follows:]

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        Mr. Shimkus. Thank you very much.
        Now we would like to recognize Mr. Rogers for 5 minutes.

                       STATEMENT OF KEVIN ROGERS

        Mr. Rogers. Thank you. Good morning. My name is Kevin
    Rogers. I am a fourth generation farmer from the Phoenix area.
    My family farms over 7,000 acres. We produce cotton, alfalfa,
    wheat, barley and corn silage. I farm with my dad and my
    brothers and my sister and my uncle. I currently serve as
    President of the Arizona Farm Bureau Federation. I am here on
    behalf of the American Farm Bureau. I also have served on the
    USDA Air Quality Task Force for the past 10 years. I am pleased
    to be able to testimony before this subcommittee.
        While there are many issues dealing in agriculture, this
    committee's jurisdiction can help us to improve, I wanted to
    touch on just a few of the more serious issues we have in front
    of us today.
        The first issue is the pending EPA decision on revising the
    Ambient Air Quality Standard for coarse particulate matter,
    PM10, otherwise known as farm dust. Unlike the smaller fine
    particles, course particulate matter is primarily naturally
    occurring and made up of dirt and other crustal materials. It
    occurs while driving on unpaved roads, using tractors in the
    fields, moving livestock from pen to pen and pasture to
    pasture.
        Also, unlike fine particles where the health impacts are
    well studied, EPA says for coarse PM it would be appropriate to
    consider either retaining or revising the current standard
    based on the science. Even with the lack of data the Clean Air
    Science Advisory Committee, CASAC, recommends that the standard
    level be reduced. EPA is currently considering this option.
    Many areas in urban America already have difficulty meeting the
    current standard. My own county, Maricopa County, is currently
    non-attainment, serious non-attainment, and we are having a
    hard time meeting the current standard we have.
        Just a couple of weeks ago you probably saw on the news the
    big wall of dust that came through out valley, mile high, 50
    miles across, it swept through Phoenix. We certainly hope that
    they will declare that a naturally-occurring event and give us
    the exception to the standard for that day.
        A recent study shows there will be many more rural areas
    that will not be able to meet a revised standard. This will
    result in more regulation of farming and ranching activities
    such as restrictive speed limits on unpaved roads, restrictions
    on when and how we can work in the fields or move livestock as
    States attempt to get back into the attainment area.
        We favor retaining the current standard, especially where
    there is little or no science to justify the change of it. We
    support H.R. 2458 from Mr. Flake that would put a review of the
    Ambient Air Quality Standards on a more reasonable 10-year
    cycle instead of the current 5-year cycle. Too often EPA is
    revising the standards before States have had time to comply
    with the previous standard. H.R. 2458 would correct this
    situation.
        We also support H.R. 2033 that would exclude naturally-
    occurring events from Federal regulation unless it causes
    serious adverse health and welfare affects.
        The second issue that I would like to address is the
    continuing regulation of greenhouse gases by EPA. As we have
    testified previously before this committee, farmers and
    ranchers receive a double economic jolt from such regulations.
        First, any costs incurred by utilities, refineries,
    manufacturers, and other large emitters to comply with
    greenhouse gas regulatory requirements will pass onto the
    consumers those costs of production, namely farmers and
    ranchers. The costs that will be passed down will result in
    higher fuel and energy costs to grow food and fiber. Farmers
    and ranchers, on the other hand, cannot pass these increased
    costs of production.
        Secondly, farmers and ranchers will also incur direct costs
    as a result of the regulation of greenhouse gases by EPA. For
    the first time any farms and ranch operations will be subject
    to direct new source review, prevention of significant
    deterioration, construction permits, and Title V permits
    requirements under the Clean Air Act. EPA itself has estimated
    there are over 37,000 farms that will emit between 125,000 tons
    of greenhouse gases per year and thus have to attain the Title
    V permit. Using EPA's numbers, just the expense of obtaining
    these permits could cost agriculture over $866 million.
        On the other hand, this costly burdensome regulatory scheme
    will produce very little, if any, environmental benefit. Unless
    and until the countries of the world agree on an international
    treaty on greenhouse gas emissions, unilateral regulation of
    greenhouse gases by EPA will have little environmental effort.
    The Farm Bureau strongly supports H.R. 910, which passed the
    House.
        In light of the recent Supreme Court decision in American
    Electric Power versus Connecticut, we believe additional
    legislation is necessary to clarify that entities cannot be
    sued just because they emit greenhouse gases. The court left
    open the issue of standing and common-law actions in the
    absence of EPA regulatory authority. Legislation is needed to
    resolve those issues.
        We thank the subcommittee for its attention to the needs of
    rural America, and I look forward to answering your questions.
    Thank you.
        [The prepared statement of Mr. Rogers follows:]

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        Mr. Shimkus. Thank you very much, Mr. Rogers. Thank you all
    for your opening statements, and now I would like to recognize
    myself for 5 minutes for the first round of questions.
        And I want to start with Mr. Kovacs because you laid out a
    history of how we got where we are. You also, I think, implied
    that if we just enforce some of the laws on the books this
    wouldn't happen. I have been interested in this whole judgment
    fund issue where the environmental groups or concerned citizens
    can sue a Federal agency and then there is a settlement out of
    court that is where the plaintiffs want to go without going
    through the legislative process, and then we pay the court
    costs.
        I mean, that sounds pretty crazy to me. Is that the way
    that works?
        Mr. Kovacs. We call it sue and settle, but, yes, the
    judgment fund is part of it. What--it is actually a new twist
    to the regulatory process. Historically you would go through a
    rule making, you would give input to--you would take input, you
    would propose the rule, you would respond to the rule, and that
    eventually would be litigated.
        What is happening now is that the agency is being sued and
    rather than defending itself it is entering into a consent
    decree and as part of the consent decree it agrees to do two
    things. One is it agrees to move forward with regulation that
    the environmental group or group wanted, and two, in many
    instances it agrees also to pay the attorneys' fees. The
    attorneys' fees comes out of the judgment fund, and the
    judgment fund has been around literally since the beginning of
    the Republic but around 1995, it appears that it was taken off
    the books, and it is now considered a permanent, unlimited,
    non-disclosed fund. And even if you go onto the Treasury
    Department's Web site, what you find is a lot of computer code,
    but you have no idea who the payments are made to. And there
    have been some attorneys in the United States who have done
    some discovery in very narrow areas, and the numbers are
    significant. They are in the tens and perhaps hundreds of
    millions or more.
        So one of the things that needs to be done if you are going
    to--you have two problems with that process. One is should the
    agencies be defending itself. It is one thing if the agency
    thinks that it is completely wrong, and that happens, and the
    agency has the discretion to settle, of course, but when you
    begin a systematic program of sue and saddle where the agency
    is doing this on a regular basis, and I think we have got, we
    are up to 16 of these in the last several years, this is
    becoming more of a pattern of--more of a practice.
        And then the second part is, is that there is--the agencies
    are unwilling, meaning mainly the Treasury Department, to
    provide any of the information on who is getting the claim. So
    the government really has no idea. You have no idea who is
    being paid.
        Mr. Shimkus. That is astounding, and I think that will give
    us some focus on something that we should be able to have
    access to. All citizens should know where their tax dollars are
    going and who is making--we are making payments to.
        Ms. Harned, I saw you kind of light up. Do you want to add
    anything to that?
        Ms. Harned. No, other than just----
        Mr. Shimkus. I want to go quickly because I got one more
    question.
        Ms. Harned. Oh. OK.
        Mr. Liddell. I would like to add----
        Mr. Shimkus. Yes, sir.
        Mr. Liddell [continuing]. If I may. I think that has
    implications for OIRA's regulatory review process, too, when it
    is a sue-and-settle process. I think both in terms of time and
    substance, it ties their hands somewhat on what kinds of review
    they can do on agency rules.
        Are you familiar with that, Mr. Kovacs? No? OK.
        Mr. Shimkus. Let me just--is there any truth to the rumor
    that there may be encouragement by the Federal agency, in this
    case the EPA, encouraging this type of process to move a
    regulation faster, and have you, Mr. Kovacs, do you--I have
    heard that claim.
        Mr. Kovacs. Well, we have heard a lot of claims. The
    difficulty is when you have a non-disclosed, unlimited
    appropriation and you have an agency very willing to not defend
    its own actions, it invites that kind of conduct. Whether or
    not it is occurring, that is something really Congress is going
    to have to determine. Some of these lawsuits are brought, and
    they are relatively quickly settled. Others do happen over
    time. One of the things that we are looking at is how many of
    these exist, because it is not just to--it is not just on
    regulations that are not on the books and someone wants it on
    the books, they are also right now--some of these lawsuits are
    opening up regulations that have been settled for 20 and 30
    years such as coal ash, ozone----
        Mr. Shimkus. Let me--thank you very much because I want to
    get to Mr. Rogers just for a second. When Administrator Jackson
    was here I put up on the screen the harvesting of soybeans and
    the dust that comes after that, that organic material. I have
    used that quite a bit to talk about the dust regulations to
    some extent where--there are some environmental attacks on me
    saying that that is a bogus claim, that these dust regulations
    will not hurt agricultural America. Obviously your statement
    says otherwise.
        Mr. Rogers. Well, I happen to farm right in the Phoenix
    area, and we have been serious non-attainment for a number of
    years, and those farmers who are impacted there by the urban
    area truly have to farm under a different set of rules and
    regulations than anyone else in the country does, and so as our
    rural America becomes in a non-attainment area, irregardless of
    where they are, there is different things you have to do
    because what you do on the farm is now under a microscope, and
    if those monitors trigger, wherever the monitors may be
    located, you will have to change your practices to reduce PM10
    from your tractor operations. We do it every day.
        Mr. Shimkus. You either don't--you either will stop farming
    or you will bring water trailers trailing behind agricultural
    machines to knock the dust down before it gets into the air. Is
    that true?
        Mr. Rogers. Well, you have to figure out ways to farm
    without disturbing the soil in any way, and as we have told EPA
    and as we have told our Department of Environmental Quality----
        Mr. Shimkus. I think you did that with a stick. You put a
    stick in the ground----
        Mr. Rogers. Yes.
        Mr. Shimkus [continuing]. Put a corn kernel in the ground.
        Mr. Rogers. We tell them sooner or later you have to
    disturb the soil.
        Mr. Shimkus. I am way over my time, and I would like to
    recognize the ranking member, Mr. Green, for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman, and I have some
    questions. I appreciate our panel for being here.
        Mr. Kovacs, you talked about the judgment fund that was
    created, and I have a lot of years in the State Legislature,
    and I know Congress, that was created because at one time if a
    business sued the Federal Government for anything, they had to
    come to Congress to be able to get, even though the Judge may
    have said, OK. Federal Government was wrong, you owe this
    money, they had to come to Congress to get permission. We had
    to pass legislation on every judgment, and that is why you have
    that.
        In the State of Texas we had that problem, too, my first
    years in the '70s in the legislature. We would have to approve
    literally of every judgment against the State, and frankly I
    had a lot of small businesses and businesses who were looking
    for assistance because they couldn't. Now, maybe it is being--
    what is happening in the court system is wrong, and we need to
    look at that, but I think attacking the judgment system you may
    have some of your members of the Chamber or the independent
    business folks or even the Farm Bureau who may be concerned
    that if they want a judgment from a Federal court, that it
    would be up to Congress to actually pay for it.
        Do you want to respond to that?
        Mr. Kovacs. Oh, sure. I mean, as I said, the judgment fund
    has been around since the beginning of the republic. I mean,
    when you have judgments against you, the United States has to
    pay. No one is arguing that.
        What happened in 1995 is you stopped keeping track of it,
    and that seems to be where the problem is because in----
        Mr. Green. Maybe that is an entitlement we need to look at.
        Mr. Kovacs. Well, it may be, but the difficulty is it is
    not disclosed, and it is unlimited, and it is permanent, and
    you have in the system now because we didn't have this at the
    time, a group--groups that would sue and then enter into
    settlement agreements where the agency would agree to pay the
    attorneys' fees. There is--the agency should be litigating to
    defend its position.
        Mr. Green. And I agree, and I don't know if our committee
    has jurisdiction over that, you know. The Judiciary Committee
    probably has it but I think it is a problem because, you know,
    it sounds like it is a sweetheart deal, and we may need to
    address that.
        The other issue is I know it was brought up on sunset
    legislation, and I have been a supporter of sunset legislation,
    although it has never passed both the House and the Senate
    and--because, again, my experience in the legislature where we
    sunsetted State agencies every 10 to 12 years, and I was on the
    Sunset Commission, and it was a terrible job because for a
    part-time legislature because you are actually full time while
    you are on that commission.
        And Congress, I guess our compromise is we have
    reauthorizations, and you know, bills we do here all the time
    we put a 5-year reauthorization, 7 years, sometimes 10 years,
    sometimes Congress doesn't reauthorize them so they end up
    being a rider on appropriations on a yearly basis. That is, I
    guess, our compromise but I agree that the sunset legislation
    would be good, although it may be a little duplicative of what
    we do already with reauthorizations.
        As I said in my opening statement the committee has held
    numerous hearings to examine the regulatory look back process
    envisioned by the President's Executive Order of 13563, calls
    for federations to develop primarily plans. My understanding
    that EPA has drafted such a plan, and it is opened up for
    public comment.
        My question did each of your organizations provide public
    comment to the EPA? Did the Chamber of Commerce and----
        Mr. Kovacs. I am not sure we have yet, but I know we will
    be.
        Mr. Green. OK.
        Ms. Harned. Yes. NFIB has.
        Mr. Green. Have you? Well, that is one of the important
    things about it because even when, you know, you have to be at
    the table, and my, believe me, probably more so than a lot of
    folks coming from my area, we have differences with EPA on a
    regular basis. But we need to make sure we are there.
        Do you think EPA and the other agencies are effectively
    involving stakeholders in the regulatory review process, and
    what ways could they improve that, their efforts? I mean, EPA
    is just one agency but it is pretty all-encompassing I know
    from you all's businesses.
        Mr. Kovacs. Well, I mean, on some of the major regulations,
    for example, like on the comment period for greenhouse gas, an
    extension of time was asked for, and it was not granted, and
    that was thousands of pages of scientific documents that people
    were trying to review.
        So, you know, one of the things I think you will find is
    that there is a disconnect between what I would call the
    economically-significant regulations and everything else. And
    if you look at the 170,000 regulations that have been adopted
    by the Federal Government across since 1976, there is only
    about, roughly about 100 to 200 each year that are economically
    significant. A lot of the regulations as you have heard today
    are--have general support. They are actually business practices
    that people want and need.
        The difficulty, and I can't stress this enough, is that
    when Congress began passing these broad statutes and delegating
    powers to the agencies, that was probably workable, but when
    the courts gave the agencies deference, you actually--you got
    yourself in a position where the law you passed, which was
    reasonable, once you added deference to it became something
    where they tipped the balance, the Constitutional balance of
    checks and powers. And that is the difficulty you have in today
    and with a divided government it is very difficult to get that
    power back, and I think that is what we are all struggling
    with.
        Mr. Green. And I know I am out of time, Mr. Chairman, but
    we still have access to the court system. If EPA does something
    that is, like you said, that is different from what the law--
    then the law should be interpreted, we still have access to the
    judicial process, but, again, that is a long process, but
    because I know at least in the State of Texas we have a lot of
    experience in suing EPA but--and sometimes coming to agreed
    settlements, which is, you know, kind of dividing of the child,
    I guess.
        Mr. Chairman, thank you for your time.
        Mr. Shimkus. Thank you, and the chair recognizes the
    gentleman from Pennsylvania, Mr. Pitts, for 5 minutes.
        Mr. Pitts. Thank you, Mr. Chairman, and welcome. Thank you
    to the witnesses, especially to Kirk Liddell from Lancaster,
    and I will start with you, Kirk.
        How does the current regulatory environment in the United
    States prevent NAM members from being what you cite as your
    number one issue in your strategy being the best country in the
    world, the headquarter company, and to attract foreign
    investment? What specific things from your own company's
    experience should be enacted into law to make companies want to
    make their base of operations headquartered in the U.S.?
        Mr. Liddell. Congressman, there are many, many regulations,
    of course, that affect the cost of doing business in the United
    States, and oftentimes the cost of these same activities
    outside of the United States is less. We, for example, we are
    primarily an employer. We hire a lot of people, and the cost of
    complying with various regulations is a true cost of hiring
    people. We have to--we are kind of neutral on this. We take the
    world as it is, and we recognize that those are costs we have
    to bear if we have to hire people in the United States.
        So we try to find other ways to satisfy those needs.
    Sometimes that is hiring people outside of the United States
    where we can get the work done. We have an office in India, for
    example, where we can do a lot of back office things much less
    expensively and completely, you know, legally and the like.
        So I think in that case didn't force us to relocate outside
    of the country, but that is just an example, and I know a lot
    of the firms, the big public firms that deal with securities
    issues and the like are finding a significant extra cost of
    raising capitol and conducting business in the United States
    and are now, you know, relocating outside of the country and
    the like.
        Mr. Pitts. Besides the tax code if you could prioritize the
    next most important--is regulatory uncertainty number two? What
    would be, you know----
        Mr. Liddell. Well, I don't have a clear list in my mind. I
    would be happy to get back to you on that----
        Mr. Pitts. Yes.
        Mr. Liddell [continuing]. But I just mentioned the
    securities, the SEC rules and the accounting rules and the like
    that are, Sarbanes Oxley and the like, that are handicapping
    U.S. companies, you know, vis-a-vis foreign----
        Mr. Shimkus. If the gentleman would yield?
        Mr. Pitts. Yes.
        Mr. Shimkus. If you would submit that to us, that list----
        Mr. Liddell. Sort of a priority list of things that are
    affecting----
        Mr. Shimkus. Right. That would be helpful to us.
        Mr. Liddell. I would be happy to do so.
        Mr. Pitts. Thank you. Ms. Harned, many times the Executive
    Branch agencies do economic impacts of their rules, and either
    do not apply them as part of the final regulation consideration
    or possibly misapply them. How important is the application of
    this criterion and any rule, and how do we prevent bad outcomes
    from occurring?
        Ms. Harned. Right, and that really is the key is all of the
    front-end work that I know truthfully is frustrating to the
    regulators because they think that it just makes it harder for
    them to get a reg out, is so critical, and following what we
    want to see is following the letter and the spirit of the law
    on the front end, making sure that all the costs are assessed,
    making sure that all the stakeholders are brought to the table.
        Like Mr. Green was alluding to, I mean, that continues to
    be a problem quite frankly within different agencies, including
    the EPA with rules that they are more willing to say, oh, this
    isn't going to have a significant impact because they know once
    they say that there is going to be a lot more work they are
    going to have to do on the front end.
        But the bottom line from our members' perspective is doing
    this front end work, doing these analyses, making the agencies
    hold their feet to the fire on this is critical because once
    the regulation is out, pulling it back is next to impossible.
        Mr. Pitts. Thank you, and Mr. Kovacs, do you believe that
    Congress delegates too much regulatory authority, discretion,
    thereby allowing the Executive Branch to write and rewrite
    Congressional intent?
        Mr. Kovacs. Well, I think you have delegated a sufficient
    amount of regulatory authority that the courts even in the most
    recent, Connecticut v AUP, put a significant amount of the
    opinion, even though it was about Congressional delegation, and
    once you delegate this broad authority to the agencies, they
    are recognized by the courts as the expert, and at that point
    in time they are writing the law. Yes.
        Mr. Shimkus. Would the gentleman yield on that?
        Mr. Pitts. Yes.
        Mr. Shimkus. So would you say that since then the courts
    really default to the agency because they assume that they are
    the experts. So there is really--talking about people could go
    to court, but you already got the courts almost--it is way
    disproportionate to the Federal agency.
        Mr. Kovacs. That is correct. You have--absolutely. You have
    several difficulties there. You, one, you put a relatively low
    standard in the Administrative Procedure Act as to what the
    agencies had approved. If they can show something in the
    record, that is sufficient for the court to find in their
    favor.
        Then in the 1980s when courts gave them deference, it
    literally said not only does the agency not have a high burden
    of proof, but we are going to recognize the agencies as the
    expert.
        So you have really--the structure of vague loss plus the
    delegation plus deference has put Congress in quite a bind.
        Ms. Harned. If I may, there is a reform in H.R. 527 that
    speaks to this and speaks to the question that you had asked
    me, too, which is when the Office of Advocacy and an agency are
    to have a disagreement, which does happen with regards
    especially to economic impact on small business, H.R. 527 would
    require deference to be made to the Office of Advocacy, and
    that is a support, that is a reform that we think would be very
    helpful in this regard in particular.
        Mr. Pitts. Thank you, Mr. Chairman. I yield back.
        Mr. Shimkus. Thank you. Very good round of questions.
        Now I would like to recognize Mr. Latta from Ohio, and just
    as an introduction he has really been focused on this issue,
    especially in his manufacturing sector in the State of Ohio.
        So Mr. Latta, you are recognized for 5 minutes.
        Mr. Latta. Well, thank you very much, Mr. Chairman, and I
    appreciate this hearing today, and I will let you know right
    off the bat I have worked with everyone sitting at this table
    with your organizations in my State. I not so long ago had
    asked NAM to give me numbers of members on the Energy and
    Commerce Committee. We represented about 1.7 million
    manufacturing jobs several months ago. The new numbers I got
    just last week we are down to about 1.55 million jobs.
        You know, jobs is the number one issue that this Congress
    has got to be facing, and everything that I talk about is about
    jobs, because they are fleeing this country, they are fleeing
    our States, and I am worried, because first, I used to be the
    largest manufacturing district in the State of Ohio. I have
    dropped to number two. Several years ago my district was the
    eighth largest manufacturing district in Congress. I also
    represent the largest agricultural district in the State of
    Ohio. We are large in row crops, and so everything comes right
    down to jobs, jobs, jobs.
        And I was very interested in your testimony that you all
    had talked about today because, you know, when you are talking
    about manufacturing and manufacturing product what is scaring
    me now is when I talk to my manufacturers in my district, this
    is what they are telling me.
        They have come up with a great idea how to make a new
    pencil, and wholesalers say to them, this is fantastic. Now
    tell me how you can make this in China at a cheaper price that
    we can sell it. Not making it here but making it someplace
    else, even though we have got the idea right here in this
    country.
        And if I could, just to ask a few questions, and I know my
    time is short, but as we are looking I know that--a couple
    questions I would like to ask each of you.
        I have got--my folks that manufacture in my district that
    when I have talked to them and after I have heard from the
    problems they have had with regulators say, why didn't you
    contact me, and they said they were afraid to. And when the
    regulators out there have got the fear of God in the people
    that are in this country that are supposed to be creating jobs
    that they don't even contact their elected representatives,
    there is something wrong.
        So, first, I would like to ask, you know, on that
    statement, right down the line for all of you, you know. Is
    there a fear that people have about speaking up about
    regulations because of the retribution that they get from those
    regulators?
        Ms. Harned. If I could, this is a very big problem that the
    small business owners we represent at NFIB tell us about
    constantly, and what we have seen definitely within the last 2
    to 3 years is a--or 2 years, I guess, is a big shift and you
    are seeing it in the budget and also in the culture within the
    agencies to go back to this gotcha type of mentality. And it is
    very, very disheartening to our members and really almost can
    be paralyzing to them when we are trying to get them to, you
    know, even know the rules that do the right thing, they feel
    like they can't even ask anybody for help to know what that
    would be because of, you know, what microscope that might put
    in front of their business.
        Mr. Liddell. I would say in general we are not afraid to
    contact regulators. We do quite a bit, actually, and that is
    not the issue. It is more just do we want to get involved in
    all that, the time, the effort, the, you know, it is oftentimes
    better just, you know, kind of go your own way and keep a low
    profile and just, you know, move on.
        There is some concern with OSHA and some of the other
    agencies like that that you will--there will be some
    retribution, but personally that hasn't been a big issue. But,
    you know, we are busy people. We don't really have time to
    spend a lot of time with you all and regulators and everybody
    else. We have a job to do.
        Mr. Kovacs. I take a little bit different or maybe a
    similar look. I don't know that they are afraid of the
    regulator. I think they are afraid of the process, and let me
    just give you a quick example.
        If you are a company and you are trying to get an EPA
    permit, you have 40,000 pages of regulations. Any provision on
    any of those 40,000 pages will stop you getting a permit, which
    is why I keep on talking all this time about permit
    streamlining.
        So if you can be stopped by anything and let us--somebody
    mentioned Title V, Title V of the Clean Air Act, that is merely
    a paperwork requirement, but once you file that paperwork,
    anyone in the United States under laws passed by Congress can
    sue you to stop your permit. So you have 40,000 pages of
    problems, any one of which you miss is gone, and the second
    thing is once you file for a permit, anyone in the United
    States can sue you.
        So I think they are afraid of the process, and no one wants
    to put their head up to be visible. They just want to move
    through.
        Mr. Rogers. My comment as well, you know, our folks in
    agriculture would just as soon stay on the farm and continue to
    grow the food and fiber for this country, and when you talk
    about the fear, I think deep down they all assume, well, we got
    to grow food. What are they going to--how can they do that to
    us, and I think it is more of an education issue for them to
    get involved and understand what could be coming so they do
    contact their representatives and say, hey, what we do every
    day is in peril, it is in jeopardy, and we need to reach out to
    you folks and ask you for help to make sure you understand what
    is going on.
        There is always that fear of retribution when you step up
    to the plate. In Arizona in Maricopa County we actually, when
    we understood what the Clean Air Act said, that it is a health-
    based standard, that it doesn't matter if you only get 8 inches
    of rain versus 50 inches of rain, the standard is the same
    across the board, we knew we had to come to the table because
    EPA has the hammer. Ultimately they can come in and FIP you,
    Federal Implementation Plan, which could put us out of business
    depending on how that goes.
        So we came to the table as a community and sat down and
    negotiated a plan for best management practices so farmers will
    reach out and be educated about what is going on, but I think
    there is a fine line that you bring up. Thank you, sir.
        Mr. Latta. Well, thank you very much, and my time has
    expired, and I yield back.
        Mr. Shimkus. The gentleman yields back his time.
        The chair recognizes the gentleman from Colorado, Mr.
    Gardner, for 5 minutes.
        Mr. Gardner. Thank you, Mr. Chairman, and I thank the
    witnesses for their time and testimony today, and I appreciate
    the opportunity to learn from you.
        Mr. Rogers, thanks for being here. I am your neighbor to
    the north in Colorado, and this committee has spent a lot of
    time asking regulators questions about whether or not they will
    have an impact on the economy, whether or not they have taken
    into account jobs into their analysis, and last week we had a
    hearing with independent agencies, including FERC, where we
    asked, you know, whether or not they take into account their
    impact on the economy and jobs. And the answer was, oh, we
    certainly do, and then the follow up was, all right. Well, do
    you take into account the jobs that are impacting--the jobs
    that will be impacted when you implement a rule, and that rule
    then increases the cost of energy, do you take into account the
    jobs impacted by those who have had their energy bills go up or
    on those who have had their energy bills go up? And I think the
    answer was, no, they didn't take a look at that.
        And so we have had some good opportunities to really learn
    what is happening in this country when it comes to the economy.
        Your testimony talked about the impact that greenhouse gas
    regulations would have on farming and on agriculture. Your
    testimony goes into statements made before the Energy and
    Commerce Committee by Administrator Jackson when it comes to
    agriculture. We heard, I heard testimony from the Administrator
    over and over, she said that agriculture is exempt from
    greenhouse gas regulations.
        Do you believe that to be true?
        Mr. Rogers. Well, I haven't seen that specifically in law
    anywhere where EPA or Congress has exempted us from it, but I
    think as you narrow down the Title V requirements and you
    narrow down what happens when there is a lawsuit brought up and
    EPA is sued for not enforcing the rules and regs that they have
    and enforcing what Congress has passed over the years, and
    until they specifically come out with a change, you know, if
    you have got more than, you know, 50 head of cattle, depending
    on what they determine, you could be required to get this
    permit and----
        Mr. Gardner. So 50 head of cattle you could be required to
    have the permit. Can anybody survive with 50 head of cattle?
    Can you make it----
        Mr. Rogers. No.
        Mr. Gardner [continuing]. As a rancher with 50 head of
    cattle?
        Mr. Rogers. No, not at all.
        Mr. Gardner. Can you make it as a family farm operation
    with 50 head of cattle?
        Mr. Rogers. No. It is difficult.
        Mr. Gardner. If cap and trade had passed, when Cap and
    Trade Bill passed last year, there was conversations that
    agriculture was exempt, if, even if agriculture, if a tractor,
    if a cow, if your farm had been directly exempted from that
    act, would the consequence of cap and trade still have affected
    and impacted that culture?
        Mr. Rogers. Certainly. It will be devastating on
    agriculture as well as all the business community. The things
    that we do, the fertilizers I use, the energy, the diesel fuel,
    all the inputs that I use in agriculture, the prices will
    skyrocket due to that, and those trickle-down effects will be
    devastating. We have no way to pass those costs onto our
    consumers at all.
        Mr. Gardner. Do we have any assurance from Lisa Jackson,
    Administrator Jackson, that agriculture will not be included in
    future greenhouse regulations? I believe the so-called
    exemption for agriculture expires in 2013. Do we know what
    happens beyond?
        Mr. Rogers. I do not know.
        Mr. Gardner. And so there is a large possibly that we could
    see these regulations applying directly to agriculture
    including what is referenced to in your testimony as a cow tax?
        Mr. Rogers. That is correct.
        Mr. Gardner. Thank you. Thank you for your time, and I
    yield back my time.
        Mr. Shimkus. The gentleman yields back his time.
        The chair now recognizes Mr. Whitfield for 5 minutes.
        Mr. Whitfield. I thank you, Mr. Chairman, and thank you for
    being with us today. This is such an interesting topic, and I
    think a vitally important area because as many of you pointed
    out in your testimony these regulatory bodies and particularly
    EPA and the Clean Air Act are issuing more and more and more
    regulations, and it is almost unprecedented of the way that
    they are moving over at EPA.
        And I was delighted that you brought up, Mr. Kovacs, this
    sue and settle because many of us feel like that is precisely
    what is happening, that the courts are making the decisions
    about environmental policy, and what makes it even worse is
    that we asked recently for EPA to provide us a list of all the
    organizations that they have been giving grants to, and they
    were making large sums, they have a large sum of money to give
    grants, and many of those grants are going to the environmental
    groups that then turn around and file the lawsuits and then as
    you say, they enter into a consent decree, and then they pay
    all the legal fees.
        And it is almost like an in-house job here, and it is not
    the way we need to do policy in the United States. And I think
    your point about this judgment fund definitely needs to be
    looked at because we need transparency there. We need to know
    how much money is being spent. We have asked EPA how many
    lawsuits do they have pending against them, and they haven't
    been totally direct, but the indications are there is somewhere
    between four and 500 lawsuits pending right now against the
    EPA.
        And as Chairman Shimkus said, we have reason to believe
    from discussions with a lot of different groups that EPA is
    actually out there encouraging these lawsuits, and I might just
    also add that on the TVA lawsuits, Sierra Club filed suit
    against TVA, and TVA, according to its President, was not even
    allowed to hire its own legal counsel to defend itself in that
    suit, but the solicitor general and EPA lawyers defended them,
    and they agreed in a consent decree to close down 18 coal-
    powered plants and pay the Sierra Club millions of dollars in
    not only legal fees but also contributions to them for--to use
    in whatever way they wanted to.
        So one--I get so worked up about it, and I need to be
    asking questions, but Mr. Liddell, I have been told that you
    are an expert on the Data Quality Act. We hear many people say,
    well, the Data Quality Act is a way that you can question the
    models being used and calculating costs and benefit analysis.
    Has your firm used the Data Quality Act?
        Mr. Liddell. We do not, and I don't know where you got that
    about me being an expert on that. I don't feel I am.
        Mr. Whitfield. Oh. OK.
        Mr. Liddell. So----
        Mr. Whitfield. So but are you familiar with the Data
    Quality Act? Is--are any of you familiar?
        Mr. Kovacs. I am familiar with the Data Quality Act. That
    is probably, even though it was only a few sentences, one of
    the finest laws Congress ever passed.
        Mr. Whitfield. Right.
        Mr. Kovacs. It attempted to do something very simple, which
    is to require agencies to use the absolute best data that was
    useful, up to date, and transparent, and it allowed the public
    to actually correct the data if the agency found that it was
    wrong, and you passed it, I believe, in 2001. We litigated it
    for several years, and the courts made the decision that unlike
    the NEPA, for example, where they said anyone has a right to
    sue, a similar type of statute, the courts ruled that no one
    has a right to sue, and it is completely between OMB and the
    agencies as to how they want to require data to enter the
    system.
        And one of the things that I would suggest is there is an
    example where if there was a private right of action, where
    when I submit data to the agency, they have an obligation to
    review it, because let me tell you. When you--when we as a
    private party decide that we are going to submit data, it--
    first of all, it is very expensive. We have to go out and hire
    our own scientists, we have to do our own studies, we have to
    develop our own models. Then we have to submit it, and for the
    agency not even to review the data after it is submitted, and
    all we are asking them to do is correct it if it is wrong or
    tell us why you are right. And that is the whole purpose of the
    law, and that has been frustrated since 2003.
        Mr. Whitfield. Well, I mean, I think the system is broken,
    you know, whether you have a conservative Administration or a
    liberal Administration, there needs to be more balance in this
    process because you get the Office of Information and
    Regulatory Affairs that are reviewing these regulations over at
    OMB, and that is controlled by the Administration. The agencies
    are controlled by whoever is in charge of the government at
    that time, and that it appears that there definitely needs to
    be some independent source to have the ability to analyze what
    is going on in these agencies because no one--the models used,
    there is like a transparency there, and when you start
    calculating the value of a life and the way they determine
    economic value of a life, no one really understands it.
        So would you all agree that there needs to be some
    independent analysis of cost benefits that these agencies make
    in issuing these regulations?
        Mr. Kovacs. I certainly would.
        Mr. Liddell. Yes.
        Mr. Rogers. Yes.
        Ms. Harned. Yes.
        Mr. Whitfield. Well, Mr. Chairman, my time has run out,
    too, but I hope that we would have an opportunity to work with
    you and your organizations and try to develop some legislation
    to help address some of these shortcomings.
        Mr. Shimkus. Great. Thank you. I just want to for the
    record let--in that last question you posed that all the
    panelists agreed and said yes just for the record.
        The chair now recognizes the vice-chairman of the
    subcommittee, Mr. Murphy, for 5 minutes.
        Mr. Murphy. Thank you, Mr. Chairman. I would like to follow
    up on that very question, give all of you a chance to respond
    to that with regard to reviewing these regulations. We--when we
    just dealt with a bill that moved out of the full committee
    dealing with coal ash issues, it was simply to ask members of
    the President's Cabinet to comment on economic impact or job
    impact. I was amazed at the amount of dispute we had among our
    committee members about whether or not we should even required
    the Administration to make reference to jobs.
        So given you are from so many different organizations
    represented here, I wonder if you could comment more on this
    about having independent reviewers review some of these
    regulatory issues and guidelines and comment on what you think
    the benefits of that would be.
        Mr. Kovacs, do you want to start off with that?
        Mr. Kovacs. Sure. The--well, if there is any issue that is
    important to the institution of Congress it is getting at least
    some parity with agencies, which is something you don't have
    now, and in the present system the way it is structured is even
    on your regulatory laws like the unfunded mandates where they
    require this kind of an analysis, the way the law is structured
    is they could give you a half a page which says we did
    everything and everything is fine, and that is sufficient for
    court review. And that is the difficulty, but that is the law
    that you structured.
        But what--because so much of the economy with 170,000 plus
    regulations belongs to the agencies, because they have this
    deference, and because the courts look at them as the experts,
    you really have no ability at this point in time to really
    check the agencies. And short of being able to pass a new law
    which regains this kind of authority, you are at a great
    disadvantage as an institution.
        Mr. Murphy. Mr. Liddell, could you comment on that?
        Mr. Liddell. Well, it is certainly a strong, good idea to
    have independent analysis and certainly be strong and
    supportive of that. I guess some of our frustrations is
    oftentimes when we do kind of like Mr. Kovacs said, we do
    provide information, well thought-out information, information
    that we have worked have to develop. It is still up to the
    agencies to kind of determine whether they are going to, you
    know, listen to it, think about it, you know, give it
    substantive value, and I am not quite sure that it is so much
    the issue of the quality of the data, it is the willingness of
    the organization, the agency to seriously consider the value
    and the ability to do so.
        You know, one of the things on job impact is, you know,
    there are multiple levels. First, will the agency consider job
    impact. That is important. That was sort of the question number
    one. And then there is another question is can they do that.
    When I think about as a business person all the things we do,
    all the incentives that are created by regulations to reduce
    jobs, I am not sure that anybody is able to really consider all
    the unintended consequences and the impacts on jobs. So that is
    an issue, and I am not sure independent analysis would do that.
    I think some kind of real-world pragmatic experience might do
    that.
        Mr. Murphy. Let me make sure I understand this. So when it
    comes to analyzing impact on jobs, perhaps those doing the
    analysis should be people who have created jobs?
        Mr. Liddell. Yes. Oddly enough I think----
        Mr. Murphy. Well----
        Mr. Liddell [continuing]. People who have sat in the seat
    of not just creating----
        Mr. Murphy. Like if you have a problem with your health, go
    to a doctor as opposed to just--OK. Thank you.
        Ms. Harned.
        Ms. Harned. Yes. No. I think that this is a very
    interesting idea, and really what we see after Congress gets,
    you know, these procedural protections in place that are really
    meant to get small business impact, which is obviously our
    best, our most important thing to brief amendments and the
    Regulatory Flexibility Act, you start seeing, and we definitely
    see this with all the agencies, a check-the-box mentality,
    like, you know, we go through, and we have done that small
    business impact analysis, and they know how to do it just
    enough to meet their obligation. And I think more oversight
    that Congress can give to ensure that that process was really
    done completely, in particular when you are looking at things
    like did the agency really consider less burdensome
    alternatives and seriously consider those alternatives and what
    that could mean for getting the job done from a policy
    perspective, from their perspective, but not hurt, you know,
    job creators and the economy and leave everybody in the wake.
        So I think that those kinds of issues really do need more
    Congressional oversight, and that, again, is, I think that
    particular reform on the less burdensome alternatives is in
    H.R. 527, which Mr. Liddell indicated just was marked up and
    passed.
        Mr. Rogers. We could support the independent review. We are
    always looking for ways to reform regulations, and I will bring
    it back to PM10 and the dust issue. All that is done a lot on
    modeling and if they don't have the research on coarse
    particulate matters, they will make it up because that is what
    the modeling requires. They have to plug in a coefficient
    somewhere so that they can put a number in to decide how to
    regulate it. So we are all for doing more research and marking
    sure that the models they use are correct, because they have to
    have them to plug them in to determine whether or not we are at
    attainment or non-attainment.
        Mr. Murphy. I appreciate that, and Mr. Chairman, you know,
    as you know, this town is often so poisoned by things, and it
    is not a matter that sometimes people look at what a document
    says but who says it that sometimes people decide before they
    even read it if it is of value, and it is oftentimes looked
    upon not what a regulation does for jobs but what it does for
    votes.
        I tend to think that is an insult to job makers and
    workers, too, but thank you very much. I appreciate it.
        Mr. Shimkus. I thank my friend. I do plan based upon time
    maybe to do a second round just to ask additional questions,
    but before we do that I would like to recognize Mr. Butterfield
    for 5 minutes.
        Mr. Butterfield. Thank you very much, Mr. Chairman, and
    thank the witnesses for coming forward today with their
    testimony.
        I am sensitive to the topic that we are talking about
    today. I represent, as most of my colleagues know, a largely
    rural district that depends very heavily on agriculture, and we
    depend also on manufacturing. It is important to me that my
    constituents continue to have the opportunity to produce goods
    and put bread on the table, and sometimes that means examining
    the flexibility and the timing and the efficacy of particular
    rules.
        Having said that, I am deeply concerned that this committee
    is turning into the ``no regulation committee.'' We have spent
    a majority of our hearings and markups not developing new plans
    in energy and telecom and health care but instead breaking out
    the eraser for any and all Obama administration proposed rules.
        While I support review of these rules, at least some of
    them, and after careful consideration of impacts during these
    trying economic times, these hearings begin to smack of
    political rabble rousing.
        Let me start with Mr. Rogers, and thank you, Mr. Rogers,
    for your testimony. I have a few questions for you. You state
    in your testimony that 37,000 agriculture facilities will be
    covered by the greenhouse gas rule and will be forced to spend
    over $20,000 on permits. I hope I am restating your testimony.
    This rule has been in effect since January. How many facilities
    have gone, have had to get a permit thus far, if you know?
        Mr. Rogers. These are the permits here? I don't have that
    number right this minute, sir.
        Mr. Butterfield. Based on our research it would be
    absolutely none. Why have these facilities not had to purchase
    permits? Do you know that?
        Mr. Rogers. I believe that EPA is still determining what
    the magic number is. I don't think the final rule is out on
    what is going to be required. They are working with one of the
    new committees they just put together, EPA and Agriculture and
    Rural Committee, to help decipher what is appropriate and what
    is not appropriate.
        Mr. Butterfield. Well, under the tailoring rule can you
    tell me when any of these facilities will be subject to a Title
    V or NSR permit?
        Mr. Rogers. No, I can't. It will depend on when EPA
    determines that that regulation will be enforced.
        Mr. Butterfield. Projected costs are always a complicated
    subject for rules and regulations. Often the estimates vary
    widely from those produced by advocacy organizations, EPA, and
    industry groups.
        However, I would note a study from 2010, by Resources for
    the Future, which I ask unanimous consent to be added to the
    record, where the researchers found that EPA and other agencies
    routinely overestimate potential costs. In fact, of the 17
    rules studied 14 were found to have costs less, sometimes
    considerably less, than their estimates.
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        Mr. Butterfield. Mr. Kovacs--and I hope I am pronouncing
    that correctly--could it be possible that these rules help
    drive innovation quicker than a baseline scenario, thus
    lowering costs below the projected amounts?
        Mr. Kovacs. Well, Congressman, there is more than
    sufficient controversy over the cost estimate analysis and the
    kind of assumptions you use because you can make it come out
    depending on the assumptions any way you want. I can only tell
    you how, you know, when we do a study how we do it and how we
    do our audits and how we do peer review.
        But when you get into a study like that, one of the things
    that is the most important is what are the assumptions that
    they have used. Do they assume that EPA will implement it? Do
    they assume they won't? Do they assume innovation? Do they
    assume it won't? And I think on that each regulation is
    different, and one of the things if the agency seriously wanted
    to address this issue, that right up front in the Unfunded
    Mandates Act, for example, they have to do some kind of an
    analysis of what are the anticipated costs and benefits and
    impact on the society so that as part of the rule we can begin
    that discussion. That generally does not happen.
        So I think there is a lot of room in that area for solid
    discussion among everyone.
        Mr. Butterfield. This was certainly the case with the Acid
    Rain Program. Is there any other reason as to why it might be
    lower that you could think of?
        Mr. Kovacs. Well, acid rain had a lot of things going on
    simultaneously. I mean, my recollection is that at the same
    time you did acid rain, you had the Staggers Act, the
    distinguished chairman of this committee, which deregulated the
    railroads, and you began to move low sulfur coal from the west
    to the east. So you had a few factors, and I think if you look
    at the history books and the ledger and articles there is a
    great debate as to whether it was regulation or low sulfur coal
    and the deregulation of the railroads.
        Mr. Butterfield. Thank you. We are right on target.
        Thank you, Mr. Chairman.
        Mr. Shimkus. And I thank you and I hope my colleagues don't
    mind since you here I would like to go to a second round, and I
    just want to follow up on that because that is so true on the
    acid rain and the '92, Clean Air Act is that there was two
    issues, fuel switching and technology, and that is the problem
    we have with the greenhouse gas issue is we don't have the
    technology. You know, we are--so for in Illinois where we have
    high sulfur coal, that is where I know you have never seen that
    poster of mine with those miners, but they lost their jobs
    because they fuel switched. That is really the debate. They
    moved low sulfur coal from Montana, and the power plant is
    still there. The mine across the street was closed, so that is
    a little bit--I would agree with you on that analysis.
        I just want to go to Mr. Liddell and Mr. Rogers because
    they are the actual producers, actually job. When you decide to
    make a decision, either, one, to expand a manufacturing
    facility or to buy 500 more acres, don't you do a cost benefit
    analysis?
        Mr. Liddell. Absolutely. You have to.
        Mr. Shimkus. Mr. Rogers?
        Mr. Rogers. Without a doubt.
        Mr. Shimkus. And why do you do that? Why do you do that,
    Mr. Liddell? Why do you do that?
        Mr. Liddell. Well, it seems obvious you don't want to spend
    more than you are going to get in return from an investment,
    and it is critical that you measure all the costs, all the
    assumptions, all the risks, and end up with a high level of
    confidence that you are going to be better off for having made
    that investment than not or else you are not going to go
    forward.
        Mr. Shimkus. All right. Mr. Rogers?
        Mr. Rogers. And we have to look at commodity prices, do I
    have enough labor, do I have enough equipment, what is going to
    mean to my banker if I increase the size of my farm, can I
    borrow the extra funds for the cost of production of that 500
    acres? In order to grow 500 acres of cotton, you know, it costs
    $1,000 an acre so there is an extra half million dollars right
    off the top.
        Mr. Shimkus. Our point is is that this is nothing abnormal
    in the business sector, and that is our point. The subcommittee
    has been renamed Environment and the Economy, and the reason
    why is we want to continue to grow on economy, and we are
    checking upon, and we are trying to do that balance between
    environmental regs that are needed, I have stated the Clean Air
    Act has been very beneficial, but there is an affect on the
    economy, and that is why your testimony is so great today.
        Ms. Harned, I think it was your opening statement you
    mentioned Barrow-Shimkus letter on NAAQS. Who did that? Mr.
    Liddell? Explain that one more time. I think this is very
    important. This gives you an example how environmental agencies
    intervene, distort the ability of business to plan because--
    what is going on in this situation?
        Mr. Liddell. Well, this is the ozone----
        Mr. Shimkus. Yes.
        Mr. Liddell [continuing]. Review that EPA has taken on.
        Mr. Shimkus. And when were they supposed to--when are they
    supposed to----
        Mr. Liddell. It is a 5-year process.
        Mr. Shimkus. Five-year process. And where are we at in that
    5 years?
        Mr. Liddell. Well, 2013, would be the normal time for the
    review.
        Mr. Shimkus. So the review is due in 2013, but the agency
    is doing it now.
        Mr. Liddell. Correct.
        Mr. Shimkus. Why?
        Mr. Liddell. Well, I think they have a mission. They want
    to see the standards tightened.
        Mr. Shimkus. And what is that effect on jobs in the
    economy?
        Mr. Liddell. Well, we have a pretty good measure on that
    from a study, and, again, you know, subject to some give and
    take. We are looking at, I think it is 7.3 million jobs, as
    many as 7.3 million jobs and about $1 trillion in new
    regulatory costs annually between 2020 and 2030.
        Mr. Shimkus. So, I mean, that is Exhibit A of numerous
    exhibits of, I mean, you aren't asking not to do this.
        Mr. Liddell. No.
        Mr. Shimkus. They should do it by their rules and regs 2
    years from now, but they are moving it forward. Is this they
    don't have anything else to do?
        Mr. Liddell. Well, and as if they don't seem to understand
    what is going on in the economy right now. I mean, if you are
    ever going to have an impact on jobs, now is not the time to
    have a negative impact on jobs.
        Mr. Shimkus. Yes, and I have taken a lot of notes, of
    course, I am all over the place. I do really appreciate your
    testimony. It has given us some issues. I would also encourage
    you all specific rifle shots of things that we can do. We are
    very interested in doing that, trying to, again, protect public
    health but also bring some certainty in these uncertain times
    to keep the economy where it is at and actually start growing
    again.
        And while I have my last 18 seconds left, fortunately we
    are going to a second round of questions because in the back is
    the people responsible for me being either good or bad if
    anyone was looking at me as a member of Congress, my mom and
    dad. So I want to recognize them as they walk in. So they are
    here for the baseball game, so with that is there anyone else
    seeking time to--the chair recognizes Mr. Green for 5 minutes.
        Mr. Green. Mr. Chairman, I want to recognize your parents.
    Your son and I played basketball together when we were much
    younger in Congress, so now we just spar verbally instead of
    bumping into each other on the court.
        I get lots of e-mails and requests from my constituents on
    a program that would be a Federal mandate, and I was wondering
    if any of your agencies or associations have taken a stand on
    it.
        The E-Verify Program was created trying to deal with
    Federal contractors so we would know at least on the Federal
    level if someone was on a contract that was paid for by the
    Federal Government that we would make sure that their Social
    Security numbers are correct.
        And I am just getting a number of e-mails requesting we
    expand that. I have some concern because I think we have done
    studies, the GAO or someone, that said, you know, sometimes,
    you know, my name is Gene Green. I have always been known by
    that, but the IRS knows me by Raymond Eugene Green, and that is
    my Social Security number, that if we applied that E-Verify,
    what would it do to a farming operation or a restaurant or
    anybody who is a member of any of your associations?
        Mr. Rogers. Mr. Green, it is something I have had to deal
    with in Arizona for the last couple of years is mandatory E-
    Verify, and I will tell you that it is in my opinion as a
    leader of agricultural organization, it is not ready for
    primetime. It is not ready to go nationwide. It doesn't
    specifically -- I can run your name and your Social Security
    number through the process, and it says, yes, you are good to
    work, but it could be somebody else that has your information.
        And so that puts me at risk in a couple of lawsuits because
    if I do hire you and come to find out that it is wrong, then I
    am in trouble, but if I don't hire you, then I am in trouble as
    well, and so we understand technology is coming and needs to be
    there. Organizationally we don't think it is good in this
    economy to put business under more regulations and more
    scrutiny and turn this program into a program that determines
    whether I hire you or not.
        In agriculture we are concerned about labor. We have been
    on the Hill for a number of years asking for temporary worker
    programs. We have to have workers to harvest our crops, and so
    we are concerned that if E-Verify comes down the path without
    some kind of temporary worker program or reform in some way,
    agriculture will be devastated.
        Mr. Green. And that was imposed by the State, not by the
    Federal Government.
        Mr. Rogers. Correct. That is correct. So we have had the
    experience with it where the State imposed that law mandating
    it, and it is practically impossible to hire somebody.
        Mr. Shimkus. Would the gentleman yield on that same point?
        Mr. Green. Sure.
        Mr. Shimkus. If laws were passed to indemnify the employer,
    would that help? In other words, if you have done everything
    right and then you are not held liable to litigation.
        Mr. Rogers. That would certainly be a step in the right
    direction. Our problem is there is not enough people who want
    to come work and bale hay at 3:00 in the morning, milk cows all
    night, and cut lettuce every day.
        Mr. Shimkus. With 9.2 percent unemployment?
        Mr. Rogers. That is exactly correct.
        Mr. Green. Let me ask the other associations because I only
    have 2 minutes left and did your association take a stand on
    the potential for Federal legislation on E-Verify?
        Mr. Liddell. Could I comment as a business person? We are
    very familiar with E-Verify. We hire people all over the
    country, and we are hiring and rehiring and laying off. We got
    transient employees, transient workforce.
        The problem with us and E-Verify is that kind of the
    intended consequences. The rules haven't thought through the
    fact that you are going to hire somebody, put them on the job
    site today, and there is time that it take for them to--that
    they can't go to work. There is extra burden, extra costs
    associated with it, so it is more the mechanics of E-Verify
    than the theory or the concept of E-Verify that is our problem.
        Mr. Green. Has the Chamber of Commerce made a
    determination?
        Mr. Kovacs. Well, I would be very thrilled to have our
    labor division send you a response for the record.
        Mr. Green. OK. Appreciate it.
        Ms. Harned. Right, and I am going--we will have to get back
    to you on that as well.
        Mr. Green. OK. Appreciate it. That was just an example, in
    this case it is a State-imposed regulation, and I know some
    States are doing that, and it can cause problems in just
    producing a product. So----
        Mr. Rogers. Well, and we are using the Federal program. I
    mean, Arizona didn't develop a new program. We are mandated to
    use E-Verify, and it is not very workable right now.
        Mr. Green. OK. Thank you, Mr. Chairman.
        Mr. Shimkus. Great questions. Thank you. The chair
    recognizes my friend from Kentucky, Mr. Whitfield.
        Mr. Whitfield. Thank you very much, and Mr. Kovacs, would
    you mind getting back to us on this Data Quality Act on ways
    that it could be improved, because I don't have an in-depth
    understanding of it, but it is my understanding that you really
    cannot utilize that until the rule has become final. And then
    at that point as Ms. Harned said, once a rule becomes final,
    from a practical standpoint, there is not a lot can be done. So
    if you wouldn't mind----
        Mr. Kovacs. I would be glad to.
        Mr. Whitfield [continuing]. We would really appreciate
    that.
        Mr. Kovacs. Just one quick point on that. The way the law
    is structured is you should be able to use it not only in--as
    part of the rule-making process but literally at any other
    place in the agency process where they are doing studies
    whether they be economic or scientific so that you can go in
    and actually input into the study so that the agency gets it
    right at the end. It is supposed to begin in the beginning, not
    at the----
        Mr. Whitfield. But you have to file a lawsuit. Right?
        Mr. Kovacs. You can file what they call a petition for
    correction. It is just that the agencies really aren't
    addressing them at all, and the courts have said that we don't
    have a right to sue.
        Mr. Whitfield. Right. OK. On this National Ambient Air
    Quality Standard you all have already pointed out that EPA is
    moving in advance of when they are really required to. Do any
    of you have any information right now about what percent of the
    population live in non-attainment areas right now?
        Mr. Rogers. I just know in Arizona that it is Maricopa
    County, which is the urban area. You know, in Arizona we only
    have 15 counties compared to some of your States that have, you
    know, hundreds of counties.
        Mr. Whitfield. Right.
        Mr. Rogers. So it is a monster country, but--and it tends
    to be more of an urban issue. The issue we have is those of us
    that farm in that area get sucked into the regulation, get
    sucked into the clean up, and we have agreed we all need to
    step up and do our fair share to--
        Mr. Whitfield. But you are in non-attainment now?
        Mr. Rogers. That is correct. We are in non-attainment now
    at 150, and if the proposal goes through and they change it to
    either 65, 75, or 85, all of our data shows the entire State
    will become non-attainment.
        Mr. Whitfield. Yes, and I think a big portion of the whole
    country will be in non-attainment, and then that is going to--
    as you say, Mr. Liddell, it is going to have a real negative
    impact on job creation because everybody is going to be limited
    in development in their area.
        In other comment I would make on how aggressive EPA is
    being, Congress on two or three separate occasions explicitly
    said no to greenhouse gas regulation under the Clean Air Act.
    One was in 1990, when the Clean Air Act was last amended. There
    actually was a vote at that time on an amendment about
    greenhouse gas, and that was rejected, and then the U.S. Senate
    rejected almost unanimously the Kyoto Protocol and then there
    was another vote in the House on it. But because of that
    tailoring rule, you know, they expanded that now, and of
    course, there are lawsuits pending on that as well.
        But I for one think that--I know that the Clean Air Act is
    almost sacro-sane but the last time we looked at it in any
    depth was 1990, and I genuinely believe it should be reviewed
    because a lot of things have happened since 1990, and so I
    would hope that at some point down the road that we might get
    into reviewing the Clean Air Act in its entirety.
        And I yield back the balance of my time.
        Mr. Shimkus. The gentleman yields back his time.
        The chair recognizes the gentleman from Pennsylvania, Mr.
    Murphy, for 5 minutes.
        Mr. Murphy. Thank you. Just a couple of quick items here.
        I want to ask about another area, and that is guidance
    documents. We talked about regulations, but those have some
    enforcement, but guidance documents as you know are just
    something that various agencies says we think you ought to do
    this, but it is no force on that.
        Can you describe some impact that some of those might have
    upon some job and economic development? Whoever wants to
    comment on those things. Whoever wants to anything on that. Mr.
    Kovacs?
        Mr. Kovacs. I mean, if you go strictly by the way the
    courts have applied it, that if it has no impact on the rights
    of a citizen, it is truly guidance. The difficulty that we have
    is if you have 170,000 regulations, you probably have 400,000
    documents or 400,000 guidance documents, and many of the
    documents can be used as part of an inspection so that even
    though it is only guidance, the question is do you have to
    comply, and if you don't comply, the difficulty you have is you
    have to really defend that in court.
        So the guidance puts parameters around it, and
    theoretically it doesn't have any impact, but in most of the
    major, in most of the regulations or most of the legislation it
    addresses it. It goes after guidance and as well as when John
    Graham was Administrator of OIRA, as part of how he
    administered, he did put out guidance on guidance and how it
    had to be truly non--it had to be truly not impacting rights,
    and that seems to be the distinction. If it impacts a right, it
    certainly is a regulation and should go through the process. If
    it impacts no rights, then it really shouldn't matter, and you
    should be able to disregard it.
        Unfortunately, in an inspection, for example, you really
    get put in the position of defending yourself.
        Ms. Harned. Right.
        Mr. Murphy. I am not sure I am understanding what you are
    saying. Be with you in a second. So that is--so if someone is
    inspecting a factory, a pharmaceutical company, or something,
    and they have these guidance, and they will ask have you done
    the following things, and if the owner of that plant says, no,
    then they say, then you have to do them or else they are
    brought to court. They defend--they win the case if it is just
    guidance, but they still have to defend their position.
        Mr. Kovacs. That would be the case. Yes.
        Mr. Murphy. OK.
        Mr. Kovacs. That----
        Ms. Harned. And I have actually seen that when I used to
    practice law in defending a small business owner at an
    administrative hearing level. We saw, truthfully an inspector
    overused the guidance against the small business owner, pulling
    out one of the factors that was in a guidance as something that
    he shouldn't have done, and he did, and so I have seen that as
    a practical matter.
        I would also say just more generally, though, small
    business owners really work hard to keep up with the
    regulations that are on the books, so there is a great concern
    in the small business community that when you have got a
    guidance material on top that that they need to know about and
    that is, you know, not really readily apparent to them. As Mr.
    Kovacs said, it really is an enforcement area that we see the
    biggest problems with that and small business owners often
    don't even know they exist.
        Mr. Murphy. Thank you. Anyone else want to comment on that
    issue? Yes, Mr.----
        Mr. Liddell. I would make one experience, a risk experience
    that comes to mind. I think, you know, we are as business
    people kind of--we are not looking to fight. We are looking to
    comply with the rules. So, you know, guidance documents to us
    are the Bible. I mean, we follow those, and I can remember one
    specific thing, you know, our board of directors was talking
    about, you know, which course of action should we take, there
    was a guidance document there, we followed it, you know, and so
    they almost have at least on companies like ours, the impact of
    a regulation or of law.
        Mr. Murphy. Thank you. I would like to point out three
    final things, Mr. Chairman. One is I certainly encourage all
    members of this and other committees in Congress to spend some
    time touring offices and factories and farms and in the midst
    of that tour instead of just photo ops, asking to see what
    those guidance documents and regulations are and how they go
    along with it. It is a worthwhile thing to do, and it will open
    the eyes.
        The second thing I would like to point out in relation to
    the other question asked, what about regulations, back in the
    Herbert Hoover Administration, June, 1930, when Congress passed
    the Smoot-Hawley Act that imposed 59 percent tariffs on things,
    at that time the American Economic Association, I think it was,
    sent a thousand some petitions to veto the act, and they
    didn't, and we know what that did, when they did not listen to
    the independent people.
        And third, I just--so it is unanimous consent, I would like
    to ask to have the--this powerful Subcommittee on the
    Environment declare this Mr. and Mrs. Shimkus Day.
        Thank you very much.
        Mr. Shimkus. If I could just reclaim the 15 seconds
    remaining and ask this question: Should Federal agency guidance
    documents be subject to proposal and comment period like
    regulations? What do you think?
        Mr. Kovacs. Certainly if they have an impact. If the agency
    is anticipating that even as a part of an inspection they have
    to be complied with, they should be subject to regulatory
    proceedings.
        Mr. Shimkus. Mr. Liddell? You don't care.
        Mr. Liddell. Well, we do treat them as----
        Mr. Shimkus. No. I----
        Mr. Liddell. So I would say, yes, they should go through
    the process to the extent the process is a good one.
        Mr. Shimkus. Ms. Harned.
        Ms. Harned. We would support that.
        Mr. Shimkus. Mr. Rogers.
        Mr. Rogers. I would agree.
        Mr. Shimkus. Great. Thank you. I really appreciate your
    time this morning, and we will take your comments and put them
    through the mix and see what if we can do with this committee
    or maybe other committees of jurisdiction. Appreciate my
    colleagues for their attendance. Appreciate my mom and dad for
    being in the audience, and with that I will adjourn this
    hearing.
        [Whereupon, at 10:47 a.m., the subcommittee was adjourned.]