[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:]

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    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.]

                                 
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