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




 
   TENNESSEE JOB CREATION: DO FEDERAL GOVERNMENT REGULATIONS HELP OR 
                HINDER TENNESSEE'S ECONOMIC DEVELOPMENT?

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             June 18, 2012

                               __________

                           Serial No. 112-156

                               __________

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


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



                  U.S. GOVERNMENT PRINTING OFFICE
75-304                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

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

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


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 18, 2012....................................     1

                               WITNESSSES

The Honorable Bill Haslam, Governor, State of Tennessee
    Oral Statement...............................................     7
    Written Statement............................................    10
The Honorable Lamar Alexander, A U.S. Senator from the State of 
  Tennessee
    Oral Statement...............................................    13
    Written Statement............................................    15
The Honorable Bob Corker, A U.S. Senator from the State of 
  Tennessee
    Oral Statement...............................................    17
Mr. William F. Hagerty, IV, Commissioner, Tennessee Department of 
  Economic and Community Development
    Oral Statement...............................................    19
    Written Statement............................................    22
Mr. Mark Faulkner, Owner, Vireo Systems, Inc. On Behalf of The 
  National Federation of Independent Business
    Oral Statement...............................................    35
    Written Statement............................................    38
Mr. H. Grady Payne, Chief Executive Officer, Conner Industries, 
  Inc.
    Oral Statement...............................................    42
    Written Statement............................................    44
Mr. Scott Cocanougher, Chief Executive Officer, First Community 
  Bank of Bedford County
    Oral Statement...............................................    47
    Written Statement............................................    49
Mr. Bob Bedell, Sales Unit Manager, Coca-Cola Bottling Company 
  Consolidated on Behalf of The Beverage Association of Tennessee
    Oral Statement...............................................    51
    Written Statement............................................    53


   TENNESSEE JOB CREATION: DO FEDERAL GOVERNMENT REGULATIONS HELP OR 
                HINDER TENNESSEE'S ECONOMIC DEVELOPMENT?

                              ----------                              


                         Monday, June 18, 2012

                  House of Representatives,
               Committee on Oversight and Government Reform
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 9:05 a.m., in S102 
Business and Aerospace Building, Middle Tennessee State 
University, 1301 East Main Street, Murfreesboro, Tennessee, 
Hon. Darrell Issa [Chairman of the Committee] presiding.
    Present: Representatives Issa and DesJarlais.
    Also Present: Mrs. Black and Mrs. Blackburn.
    Staff Present: Sharon Casey, Senior Assistant Clerk; John 
Cuaderes, Deputy Staff Director; Kristin L. Nelson, Counsel and 
Cheyenne Steel, Deputy Press Secretary.
    Chairman Issa. You know, Bob, before we lost the gavel, I 
took it for granted. Once I got it back, it has been a whole 
different world.
    [Laughter.]
    Mr. DesJarlais. Mr. Chairman, I ask unanimous consent that 
our colleagues from Tennessee, Mrs. Blackburn from the Seventh 
District and Mrs. Black from the Sixth District, be allowed to 
participate in today's hearing and ask questions of the 
witnesses.
    Chairman Issa. Without objection, so ordered.
    I want to thank everyone in the audience for being here, 
before we begin. Further, this is a regular federal 
congressional hearing, so all the normal rules apply. The only 
difference is you all did not have to drive as far.
    So with that, the hearing will come to order.
    This hearing is entitled ``Tennessee Job Creation: Do 
Federal Government Regulations Help or Hinder Tennessee's 
Economic Development?'' Now knowing the answer to that, I will 
go on anyway.
    [Laughter.]
    Chairman Issa. The Oversight and Government Reform 
Committee exists to secure two fundamental principles. First, 
Americans have a right to know the money Washington takes from 
them is well spent. And second, Americans deserve an efficient, 
effective government that works for them. Our duty on the 
Oversight and Government Reform Committee is to protect these 
rights. Our solemn responsibility is to hold government 
accountable to taxpayers, because taxpayers have a right to 
know what they get from their government. It is our job to work 
tirelessly in partnership with citizen watchdogs to deliver the 
facts to the American people and bring genuine reform to the 
federal bureaucracy.
    I am pleased today to be here in Tennessee, mostly because 
Dr. DesJarlais has asked me to be here and pushed on this 
schedule for more than a year; but also because since joining 
the Committee, he has gone around his District and asked job 
creators where the problems were coming from Washington. And 
that is the basis for today's hearing.
    We understand that we are in the Volunteer State, and there 
have been many successful job stories here. Your Governor 
continues a tradition that Senator Lamar Alexander did before 
him. The fact is that whether it is Senator Corker or my two 
colleagues here, Marsha Blackburn and Diane Black, we 
understand that in fact government has to be reined in, that 
the good intentions of our predecessors and good law, laws 
designed to protect clean air, clean water and in fact improve 
the quality of life and the safety for all Americans have to be 
protected. At the same time, we cannot regulate ourselves into 
unemployment.
    The national unemployment rate stands at 8.2 percent. It 
was falling, it is now rising. Here in Tennessee, it has risen 
also from about 7.8 to 7.9 percent. This in a state that 
welcomes business, that has in fact been attracting new 
companies including perhaps some from my home state.
    I periodically have the opportunity to call one of my old 
friends and mentors who used to live within my congressional 
district and who was Ronald Reagan's economic advisor, a 
gentleman named Art Laffer. Art Laffer is now a resident of 
Tennessee and he rubs it in every time I talk to him. He left 
California because California's regulations? No. He was a 
financial manager and a member of a board. He left for the 
simple reason that our state taxed its way right out of 
successful people like him wanting to remain in that state.
    But he too understands, as most of here on the dias do, 
that regulations and red tape can often add no value, they only 
add cost. And cost is passed on in products. And if those 
products, like those produced here in Tennessee, in fact 
compete in a world market, they either will not sell in America 
or often will not sell to the rest of the world as we once did. 
Our export sector is healthy in areas such as raw copper ore, 
areas such as raw coal, but less and less are we productively 
able to export our finished products. Even Boeing, a company 
that is renown for being the largest exporter from America 
finds itself often unable to compete.
    This Committee went to Charleston, South Carolina 
specifically for Boeing some months ago, because Boeing needed 
a plant in a state that was right-to-work that could guarantee 
delivery to customers around the world who wanted Boeing to 
match Airbus' must-deliver, will-deliver policy. Fortunately, 
that has ended well. But today, we look here in Tennessee at 
some critical areas including, on our second panel, 
agriculture. As we know, crops can be grown overseas, but farms 
cannot move overseas. A job not producing food in America will 
mean that America does not feed itself, it will mean that in 
fact the jobs are lost here in America. So whether it is mining 
or agriculture, the 112th Congress has been about learning 
about the areas in which we need to make changes, going over 
those that are going the wrong way under this administration 
and in fact those who have gone the wrong way under previous 
administrations.
    Our goal at this point is to make sure that the next 
administration, the next Congress, has ample warning of the 
areas that have been hurting job creators and that in fact we 
push back on as many as 106 new major rules that have been made 
just in the last three years which cost over $46 billion to 
taxpayers. And I know that in Washington, $46 billion seems 
just like a rounding error; unless you do it over ten years, it 
doesn't add up to real money.
    But we know, in the private sector, that a few dollars or a 
few pennies, perhaps just the increase in the cost of 
healthcare under Obamacare or the increased cost of regulations 
under Dodd-Frank, can in fact make the difference between a 
successful business and one that is beat out by foreign 
competition.
    We are here today to hear from our first panel, without a 
doubt the most blue-ribbon panel we have had in our seven 
hearings in the field; but also to hear from our second panel 
of job creators.
    With that, I would like to once again thank my colleague, 
Dr. Scott DesJarlais, for insisting that we come here, for 
being patient as we were able to make it work within our two 
schedules, and also for our two guests to the Committee, who 
have taken time to be here to meet with job creators.
    With that, I would recognize Dr. DesJarlais for his opening 
statement.
    Mr. DesJarlais. Thank you, Mr. Chairman, and a special 
thanks to MTSU for this wonderful facility and hosting this 
venue, and a special thanks to our distinguished panel for 
making this fit your schedules. I know it has been very 
difficult.
    Chairman Issa, I would like to thank you for holding this 
field hearing and welcome to the great State of Tennessee. I am 
extremely grateful to be a member of the House Oversight 
Committee and Government Reform, and I want to thank you 
personally for your leadership of this Committee and your 
dedication to upholding the principles of what our Committee 
should be doing on behalf of the citizens of this country.
    I know that we have a tradition of repeating our mission 
statement at the commencement of each of our hearings, but I 
wanted to reiterate one of these core principles in my opening 
statement because I believe it strikes at the core of what we 
are highlighting in this field hearing. Americans deserve and 
efficient and effective government that works for them.
    Mr. Chairman, that quote is simple, straight-forward and to 
the point, and just about all of us would agree with it, 
regardless of party or affiliation. Yet, I think we have 
discovered that in many instances, the reality of what is 
happening today is that this idea of an efficient, effective 
government that should work for us is actually working against 
us.
    One of the primary reasons I chose to run for Congress two 
years ago is that I discovered that people had lost faith in 
the federal government. As a private practice physician in a 
small community, I was seeing folks from all walks of life and 
the tone of their conversation had changed. For years, I would 
look forward to talking to patients about their families, their 
children, grandchildren, their jobs, their hobbies and other 
interests. But recently, I began to notice a change in the 
topics of discussion. More and more folks were talking about 
lost jobs, uncertain futures for their children, and crushing 
debt awaiting future generations. And in almost all of these 
cases, people were showing frustration that their government 
and their elected officials were not only failing to listen to 
their concerns but were also incapable of solving our current 
problems. Finding myself agreeing with their concerns, I chose 
to get involved. From the campaign to my 18 months on the job 
as a United States Congressman, I have made it a point to reach 
out and visit people on the ground, with the lifeblood of our 
economy--the job creators.
    This Committee as a whole has focused on the subject, and I 
initiated my own Tennessee job creator's tour. Throughout the 
Fourth Congressional District of Tennessee, I visited employers 
large and small with over 40 visits, from small family-owned 
businesses to major multi-national corporations with factories 
and plants in Tennessee. I wanted to get first-hand information 
on what is working and what is not in Washington.
    Of course, one of the over-reaching themes of these visits 
focused on the interference from Washington and from the 
federal government. The topics were varied, from tax and 
paperwork compliance to regulatory burdens requiring more 
administrative time, and legal costs, to the fear and 
uncertainty of new regulations and proposed rules. The 
narrative often led to a similar conclusion, the federal 
government is either directly or indirectly getting in the way 
of creating more jobs, or has created an environment of fear 
and uncertainty that is keeping businesses from expanding, 
hiring new personnel or taking those entrepreneurial risks that 
have been a linchpin of our economic engine for so many years.
    There are many representatives with us today who were part 
of these stops. I was humbled at the reception that I received 
and most appreciative for the feedback that was allowed to me 
to make decisions with my debate and votes in the House.
    We have a distinguished set of panelists before us today, 
government leaders who also bring successful private sector 
experience. We will hear from them directly as to what they 
have brought from their private experience and transferred into 
a perspective that should be followed by all of our elected 
officials in Washington.
    We will focus on what Tennessee is doing to create and 
attract jobs and lessons that can be learned from their 
proactive, flexible approaches. And we will hear from a panel 
of witnesses representing large and small businesses both in 
the Fourth District and from other parts of our great state. 
They will highlight some of their stories and their concerns, 
and I look forward to their testimony and answers to our 
questions.
    Mr. Chairman, I again thank you for your desire to hear 
first hand from our people here in Tennessee. I think you can 
see from the distinguished witnesses on the panels, not to 
mention the desire of my colleagues from the Tennessee 
congressional delegation to spend time here today with us on 
the panel, that there has been a keen interest to explore this 
topic as much as possible. I am proud of this Tennessee job 
creator's tour and I look forward to continuing to build on it 
with this hearing.
    Chairman Issa. Thank you.
    Mrs. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I want to welcome 
you to Tennessee. We are absolutely thrilled that you are here 
and want to make certain that you go home with plenty of good 
barbecue, and glad you enjoyed----
    Chairman Issa. I have got to come back, you keep telling me 
to come down to Nashville but it is always about music and 
food, not about field hearings.
    [Laughter.]
    Mrs. Blackburn. Actually, Mary Bono Mack and I are going to 
do one later this year. I vice chair Commerce, Manufacturing 
and Trade. As we look at this very important issue, we are 
going to be doing some more work in the field.
    I want to commend Scott DesJarlais. Congressman DesJarlais 
has done a fabulous job as a freshman, and the fact that he has 
worked so hard and so diligently to get this field hearing in 
place is exemplary work.
    I want to thank all of the witnesses for coming before us. 
I have the opportunity to talk with you each regularly about 
what I think is so important to our state, and it is jobs, it 
is the economy. There is an equation that I use regularly that 
I say sums it all up. You know, when the President says that 
jobs is all about math, I say yes, Mr. President, there is an 
equation that works, it is called less regulation plus less 
litigation plus less taxation equals more innovation and job 
creation. It is an equation you can take to the bank, it works 
every single time. And certainly for our Tennessee businesses, 
Governor, you are to be commended for keeping the focus on what 
we can do to grow businesses that are here.
    Commissioner Hagerty is doing a stellar job and yes, 
indeed, Mr. Chairman, we are recruiting lots of your 
constituents. They are becoming our constituents here in 
Tennessee and we welcome them with good old southern 
hospitality and are delighted to see those companies and those 
jobs choosing to say Tennessee is the place where we want to 
be. You mentioned Mr. Laffer. Indeed, the fact that we had a 
state income tax battle in this state, I was fortunate to lead 
that fight, Diane was a big part of that fight. But leading 
that fight, that is what caused Tennessee to come to his 
attention. And the fact that we had citizens and businesses 
that were willing to take a stand and say no, we are not going 
to have a state income tax in this state and we are going to 
focus on being a business-friendly state. You all have done a 
great job with that, Governor, and we appreciate the attention 
that is there.
    Welcome to everyone. We want to get rid of some of this 
80,000 pages of new regulation and 4000 new regulations.
    And with that, I yield back my time.
    Chairman Issa. Thank you. And now due to the miracle of 
redistricting, we are in two Members' districts, depending upon 
last Congress, next Congress. We recognize our host for today, 
Mrs. Black.
    Mrs. Black. Well, thank you, Mr. Issa, Chairman Issa. We 
appreciate your coming here. I know that our schedules are busy 
and we really appreciate your coming to the district. I want to 
thank my colleague, Scott DesJarlais, for putting all this 
together and helping to raise the awareness of what is so 
important. The number one issue, jobs, jobs, jobs.
    Thank you so much for our blue ribbon panel as you said. It 
is really an honor to have our great leaders both at the state 
level and also at the national level here today. So thank you.
    Over the last 18 months, I have led 12 job task force 
meetings and visited businesses, small, medium and large, in 
all 15 of my counties in the Sixth Congressional District. And 
while each business and community faces its own unique 
challenges, in this tough economy, the over-arching message has 
been the same--federal regulatory burdens and the constant 
growth of bureaucratic red tape are stifling our job creation. 
And as a small business owner myself for many years, I know 
first hand how economically destructive and frustrating over-
regulation can be to one's own business and the local economy.
    Since President Obama has taken office in 2009, the 
acceleration of new regulations and economically significant 
regulations have been staggering and stifling to our economy. 
In his first three years in office, President Obama has 
finalized 620 economically significant rules, and each of these 
rules has at least a $100 million impact annually. His record 
of regulations gets even worse when you consider how many more 
rules have been mandated by the Dodd-Frank Act and of the 
Obamacare, and these are still regulations that are being 
written and they are in the progress, not being finalized.
    Thus far, one of the most aggressive regulatory bodies of 
the administration has been the EPA, the Environmental 
Protection Agency, with boiler MACT, national ambient air 
quality standards, utility MACT, green gas regulations, just to 
name a few. And this avalanche of new regulations is driving up 
the costs and killing jobs.
    In Rutherford County, the EPA boiler MACT regulation is 
already having a devastating impact on our businesses such as 
the International Paper Company, which I visited, and they just 
talked how much this is going to impact them. They are frozen 
by the uncertainty and the new compliance cost. And the final 
boiler MACT rules could likely cost $14 billion--and yes, that 
is billion, not million--in capital for the manufacturing 
sector, plus billions more in annual operating costs with very 
minimal environmental effects.
    Rolling back the costly and unnecessary regulations is 
imperative to jump start our economy and provide certainty for 
our job creators.
    I look forward to hearing from both panels on their 
experience of how we can help to address these issues in 
Washington and help create conditions for a robust economic 
recovery.
    And I yield back my time. Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentlelady.
    When I said we had a blue ribbon panel, obviously I was not 
being just complimentary. I do not do that, if you have seen us 
in Washington. To have the Governor of the state, the Honorable 
Bill Haslam, who is also a former mayor here and somebody who 
understands from his family business what it takes to create 
jobs, is truly an honor. And I guess you are welcoming me to 
your state, but I am welcoming you to the Committee.
    My friend, Lamar Alexander, who has for so many years, both 
when he attracted companies such as Nissan and others during 
his tenure before becoming a U.S. Senator in 2003, and now as a 
member of the leadership of the Senate. It is an honor to be in 
your state.
    And Senator Corker, my staff helped get you elected, we 
believe in you.
    [Laughter.]
    Chairman Issa. You have not let us down. But also, in your 
time as mayor, you come with a variety of insight that we 
wanted to hear here today before we get to the current business 
creators.
    And Mr. Hagerty, this is the first time that I have met 
you, but your credentials also as a job creator, somebody that 
was helping in the private equity and banking industry before 
becoming the head of the Department of Economic and Community 
Development in 2011, makes your testimony well worthwhile.
    I would let you know, as the Senators would let you know, 
that your entire written statements will all be placed in the 
record, so you can use your five minutes in any way that you 
wish. Governor, I must admit that if you go a little over, I am 
not going to stop you, but members of the House being able to 
gavel a Senator for speaking too long is something we cannot 
resist.
    [Laughter.]
    Chairman Issa. With that, pursuant to our rules, would you 
please all rise to take the oath, and raise your right hands.
    [Witnesses sworn.]
    Chairman Issa. Let the record reflect that all witnesses 
answered in the affirmative. Please have a seat.
    I have already belabored the whole point on the five 
minutes, but Governor, you are recognized.

                    STATEMENTS OF WITNESSES

             STATEMENT OF THE HONORABLE BILL HASLAM

    Governor Haslam. Thank you, Mr. Chairman, and welcome to 
Tennessee. I join all of our congressional colleagues in 
welcoming you. We appreciate the work you do. And I will also 
make a note, speaking on behalf of the State, we are incredibly 
proud of our congressional delegation. We are biased, but we 
tend to think we have the very best in the country.
    Chairman Issa. I am proud of them too.
    Governor Haslam. They are terrific. They work hard up there 
and down here, they all do. And I appreciate that.
    Let me just start, I loved the Committee's mission 
statement about that the government owes the people to give 
effective service for their tax dollar.
    In Tennessee, we think there are two kinds of taxes. There 
is the income tax or sales tax or business tax that you pay. 
There is also a tax when government does not give you effective 
service for the dollar you pay. You give a dollar's worth of 
taxes, but you only get 60 cents of service in return. And that 
tax is as onerous as anything there is. So we focused here on 
trying to be the very best-managed state in the country. It is 
what we think our obligation is to the people who pay taxes.
    But within that, our biggest mission is to try to be the 
number one location in the entire southeast for high quality 
jobs. And so we spend a lot of time talking about that and we 
think we have made some great headway. Here is what we believe 
in Tennessee, that government does not create jobs. We can 
create the environment for them but we do not create jobs. 
Capital is always going to go where it can get the very best 
return, that is just the nature of capital, it does not know 
boundaries.
    So my big idea for this morning is to have Congress think 
about using the states as--states have been called the 
laboratories for democracy by the founders, but think of that 
in terms of job creation as well. You have 50 laboratories out 
there doing things very differently in terms of their approach 
to regulation and taxation and job creation. So what are the 
places that are having success, now I realize it is not an 
equal gain, some people have more natural resources or better 
climate or more history of capital, et cetera. But taking all 
that into account, you really can see the states that are 
making progress. And I would argue it is the states that do 
understand it is about giving capital, getting the very best 
return it can and that is where jobs are being created.
    Over the past year and a half that we have been in office, 
Commissioner Hagerty and I have been touring the state and the 
country talking with people. And we have taken very seriously 
that mission to do that and you are going to hear more from 
Commissioner Hagerty, so I will not steal a lot of his thunder. 
But suffice it to say there are states where the recruiting is 
a little better than other places and you were nice enough to 
mention that maybe your state is one of those. And we literally 
can go into states and we spend more time in states that are 
higher taxes and higher regulation because more companies are 
becoming frustrated.
    Chairman Issa. You have been to California?
    Governor Haslam. I have been there once or twice, yeah. And 
we really appreciate the hospitality.
    But that would be my point. If Congress would look and see 
what is working in these laboratories out there and see what is 
the lesson for us as a country. There has been a lot of 
discussion recently about whether the private sector was doing 
fine and whether the public sector needed more stimulus. Well, 
I would just say this, since we have been in office, the state 
has lost over a billion dollars in federal funding when the 
stimulus plan ran out. And yet, we have not cut teachers, we 
have kept our K-12 funding increasing, all the things that the 
states are supposedly, you know, in a hard spot on. We have 
done that while cutting taxes even.
    So my point would be those states who are managing their 
states well, doing the right things to bring in business, 
increase revenue, we are not seeing that same kind of need. And 
again, I would say that is a model for what we encourage the 
federal government to look at doing.
    When Commissioner Hagerty and I toured the state, we talked 
with businesses all over about federal and state regulations. 
Most of the feedback that came to us was from federal 
regulations. But in the process, we looked at our state, 
everything, from top to bottom, reviewed every department, to 
make certain we were being as customer-friendly as we can. I 
think the federal government can do that exact same thing. Our 
model is to keep taxes low, as Congresswoman Blackburn said, to 
work hard at education, preparing our teachers to make certain 
in K-12 that we have the very best people speaking in front of 
the classroom every day. And then to address other things. 
Recently, we have cut out the estate or the inheritance tax in 
Tennessee. We visited a farm, the Luckey family, well-named, in 
west Tennessee. Farm had been in their family for over 100 
years and the gentleman who is running the farm now said I do 
not want to sell this or even a piece of it, it would be like 
selling one of my kids. But if I passed away right now, we 
would have to. And his father, who is 85 and could not get out 
of the car because he had oxygen on, called me over to the car 
and said, ``Governor, I really appreciate you doing this.'' We 
are actually phasing it out over four years. He said, ``If you 
could pick up the pace a little, I would very much appreciate 
it.''
    [Laughter.]
    Governor Haslam. So we think we have the right model here. 
We are excited about being part of what you are doing. The 
purpose of this hearing we could not applaud more. We are in a 
competitive world, we know that as a state, we know that as a 
country. And we salute what you are trying to do here.
    Thank you.
    Chairman Issa. I was recently in New Hampshire for one of 
these field hearings and there they live free, but I guess here 
it will be cheaper to die than it used to be.
    Governor Haslam. Right. I have made that point a couple of 
times.
    Chairman Issa. Senator Alexander.
    [Prepared statement of Governor Haslam follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.001
    
    [GRAPHIC] [TIFF OMITTED] T5304.002
    
    [GRAPHIC] [TIFF OMITTED] T5304.003
    
           STATEMENT OF THE HONORABLE LAMAR ALEXANDER

    Senator Alexander. Thanks, Mr. Chairman.
    I have been in New Hampshire myself some time ago.
    [Laughter.]
    Chairman Issa. Lamar, I went after the primary though.
    Senator Alexander. Darrell, we are delighted to have you 
here. And Scott DesJarlais has been a real workhorse in putting 
this together. I am delighted to be a part of it. It is a treat 
to work with Marsha Blackburn and Diane Black in Washington, 
and it is an honor really to serve with Bob Corker and to watch 
Bill Haslam with Bill Hagerty, as Governor of Tennessee.
    It is good to be at Middle Tennessee State University, a 
tremendous campus.
    During the last three years, the Obama administration has 
produced an avalanche of regulations that have thrown a big wet 
blanket over the American economy and made it more difficult 
and more expensive to create private sector jobs. The most 
conspicuous examples are the Dodd-Frank Act and the healthcare 
law, which was a historic mistake in my judgment.
    But let me just mention quickly three specific examples of 
how federal regulations are hurting job creation in Tennessee. 
The first is the NLRB's attack on the right-to-work law. Nissan 
is in this county. It came here first because of our central 
location; but second, because every state north of us does not 
have a right-to-work law and we do. So when the National Labor 
Relations Board told Boeing it could not go to South Carolina 
because presumptively it was moving from a non-right-to-work 
state to a right-to-work state, that sends a chill through 
every auto supplier who might be thinking about doing the same 
thing. And they may not have the money and the determination to 
fight the NLRB in the same way. So that makes it harder to 
create jobs in Tennessee, an attack on a right-to-work law.
    Second, the healthcare law is taxes and mandates. I met not 
long ago with the CEOs of all the big chain restaurant 
companies in America. Other than government, they are the 
largest employer of young people and low income people. One of 
them, my friend Sandy Bell, head of Ruby Tuesdays in Maryville, 
told me that the cost of complying with the healthcare law 
would more than equal the entire profit his company would make 
in that year. So what is he doing? He is not investing in new 
jobs in the United States. A bigger restaurant company told me 
their goal was to run their store with 90 employees; because of 
the cost of the healthcare act, they are going to do it with 70 
employees. That is not a good way to create jobs.
    A third is the Medicaid mandates on the states. As a former 
Governor, I am very sensitive to this but I know that Governor 
Haslam is doing all he can to have Tennessee have more college 
graduates. Yet when Medicaid mandates make it harder for him to 
put the money he wants to into Middle Tennessee State 
University, what happens? The quality is not as good, the 
tuition goes up, it is harder for people to graduate from 
college. So that is the effect of Medicaid mandates on the 
State of Tennessee.
    I agree with Representative Black, perhaps the worst 
offender of this avalanche of regulations is the Environmental 
Protection Agency. It has become a happy hunting ground for 
goofy regulations. And we can list them--boiler MACT, I am sure 
you will hear from the President of the Farm Bureau about 
regulating dust on farms, changing the Clean Water Act so that 
you are regulating puddles of water. But as the late William 
Buckley used to say, even a stopped clock is right twice a day. 
And there are two of their regulations that I support because 
they help make it easier to create jobs in Tennessee. They are 
the clean air regulations. We have a big clean air problem in 
our state. We have done a lot of good work on it, but when 
Nissan came to this county, the first thing it had to do was 
get an air quality permit from the State Air Quality Board, and 
if it could not get it, it would have gone to Cartersville, 
Georgia. Fortunately, local leaders have been working to clean 
up the air.
    Chattanooga in 1959 had the dirtiest air in the country and 
local leaders, including Senator Corker, worked hard to clean 
that up. So by the time Volkswagen was looking for a site, 
Volkswagen came to Chattanooga. But if our air had not been 
clean, Nissan would be in Cartersville, Georgia and the 
Volkswagen site would be a vacant lot. We cannot stop now, 
especially stopping dirty air blowing in from other states.
    But overall, this avalanche of regulations has been a big 
wet blanket on our economy and the best thing we could do as 
elected officials is to lift that wet blanket from the economy 
and free it to create more jobs and the way to start with that 
would be to repeal the misguided healthcare law and the Dodd-
Frank Act.
    Chairman Issa. Thank you, Senator.
    Senator Corker.
    [Prepared statement of Senator Alexander follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.004
    
    [GRAPHIC] [TIFF OMITTED] T5304.005
    
             STATEMENT OF THE HONORABLE BOB CORKER

    Senator Corker. Mr. Chairman, thank you for being here.
    I was thinking as we were driving over today that so many 
of the companies around the country today are having their 
board meetings in Washington, and being on the Banking 
Committee and having had the background that I have, I am asked 
often, as I am sure you are, to present to these boards who 
come to Washington for their board meetings, which speaks, I 
think to the unhealthy situation that exists in our country 
where so much of Washington is affecting what they are doing. 
So I thank you so much for coming to Tennessee and being out 
here with people who are creating jobs in Tennessee. We are 
importing jobs, as the Governor mentioned, due to the 
outstanding job he and those before him have done, and 
exporting products. So we are proud of our state, we are 
especially proud of the three Congressmen who sit with you, who 
I love serving with and I think do an outstanding job. And as 
you can imagine, tremendous pleasure for me to serve with Lamar 
Alexander, who is one of the best that exists in the Senate and 
of course to be able to do so with Bill and Bill.
    I do want to mention that I know there has been a lot of 
discussion today about regulations and I think both Governor 
Haslam and Senator Alexander have done an excellent job in 
talking about those. I still believe the biggest issue that 
faces our nation as it relates to job creation is the issue of 
us in Washington not solving the fiscal issues that we have. I 
think if you talk with the business folks here, they will tell 
you that the uncertainty of whether we are going to be able to 
come together and solve this fiscal issue is the biggest 
impediment to job creation.
    As I meet with these board members, as I know you do, 
Chairman--and for what it is worth, for those of you in the 
audience, I have been on panels with Chairman Issa here but 
also around the world in other places, and the way he conducts 
himself causes people to listen to him in many, many places, 
not just here in our country. But I think we both listen to 
corporate boards as they talk about the fact that they are 
unwilling to invest in capital and they are unwilling to invest 
in people because they are concerned about whether we in 
Congress are going to have the ability to come together and 
deal with this fiscal issue. And I think in spite of our 
frustration with the many regulations that we are dealing 
with--and again, I applaud this tremendously and you have a 
wonderful panel coming after us--that still is the biggest 
issue as it relates to job creation in our nation.
    I think all of us know at the end of this year, we have 
another issue, which is the tax issue, the fiscal cliff is 
coming at the end of the year, which, by the way, people on 
both sides of the aisle understand is a problem and becoming 
more of a problem, but the overall insolvency of our country is 
the biggest.
    I want to add just a little detail to what Senator 
Alexander mentioned earlier, and that is as I travel the state, 
I was highly involved, as you were, in the financial regulatory 
legislation that took place. I do not think any of us here at 
Middle Tennessee--by the way, the largest university in the 
state now--supported that legislation. But as I travel the 
state, in counties that especially depend on their local 
community banks, the banks that have leaders that are in their 
Kiwanis Club, their Lions Club, their Rotary Club, these 
leaders tell me that in many cases now they have more 
compliance officers than they have lenders. And some people 
think that is a great way to create jobs, is to create 
regulations that cause people to hire compliance officers.
    But I think what we have seen and what Washington does so 
often is we create a one-size-fits-all piece of legislation, a 
piece of legislation that is intended to deal with some of the 
complexities of organizations like J.P. Morgan or Bank of 
America or CitiBank or Wells Fargo. And what we do is cause 
these same rural community banks to have to comply with those 
regulations, and it is absolutely stifling credit. In many 
cases, these banks have no idea what the examiner in charge is 
going to do in their particular entity. As a matter of fact, 
one bank might have an examiner in charge that comes in and 
talks with him about one thing. Another institution has another 
examiner in charge who is totally different, who comes in and 
so it is not just the regulatory over-burden that is taking 
place, it is also the lack of consistency that is really 
creating a lot of fear.
    And what happens is when many of the small businesses that 
are represented in this room go to an institution like this, 
they are more fearful about whether they are going to be in 
business than they are being able to create jobs in their own 
community, more focused on creating jobs in their own 
community.
    So I do hope--and by the way for what it is worth, I think 
most people in Washington are beginning to understand that 
Dodd-Frank missed the mark and I hope that during this next 
Congress, we will peel away these things that I absolutely know 
are hurting job creation, especially in some of the places that 
are not major metropolitan areas.
    I will second what Lamar mentioned about the healthcare 
bill. I do not think there is any question, especially people 
who have the ability to not hire people for a full 40-hour 
week--what we are seeing with numbers of companies around our 
state is that if they can cause an employee to work under 30 
hours as they move ahead, that is what they are doing. And so 
you have major employers who have had people working with them 
for years, decades, and they have become very important to 
their institutions, but as they look at the healthcare bill 
beginning to be implemented, what they are doing is focusing on 
ways of reducing those hours below 30, so they will not have to 
comply. I think all of us know that that is not a good thing 
for our state.
    For what it is worth on that note, candidly, I think there 
are people on both sides of the aisle that understand that this 
is not workable. I do not know of a thinking person on either 
side of the aisle that believes this bill can work as it is 
laid out. And I certainly look forward to working with you and 
others to make sure that we rectify many of the problems that 
are being created.
    And, of course, Lamar mentioned the EPA. There is no 
question you are going to have people from the agriculture 
community and others that can speak specifically to that. But 
all of us have heard horror stories about the EPA and the kind 
of inflictions that it is creating on business.
    So I thank you so much for being here. I know everybody 
wants to get to the meat and that is the panel of folks who 
actually create jobs, but all of us are committed to creating 
an environment. We know it is the environment, as our Governor 
said so well, that we all need to focus on that allows those in 
the private sector to create jobs. And I thank you for 
ensuring, through this field hearing, that we continue our 
focus on that.
    Chairman Issa. Thank you, Senator.
    Mr. Hagerty, you have been on the job for more than a year 
trying to create jobs. Do you want to tell us about it in five 
minutes?

              STATEMENT OF WILLIAM F. HAGERTY, IV

    Mr. Hagerty. That is correct, Mr. Chairman. It has been my 
great pleasure to come into Governor Haslam's administration at 
the outset in January of 2011. And I cannot tell you what a 
great honor it has been to serve with each of the leaders to my 
left here and also with each of your congressional colleagues. 
Congressman Blackburn, Congressman Black, Congressman 
DesJarlais are in regular contact with my office and certainly 
Senator Alexander, Senator Corker stay in close touch, and 
Governor Haslam could not be a better leader of our state as we 
move forward in the effort to create jobs. Their advice, their 
guidance and their support really has made a big difference in 
terms of our success.
    I also think it might be helpful to give you a taste of 
some of the success we have had here in Tennessee, to put some 
matters in context, then I would like to go into some 
specifics, if I might.
    But to put things in context, when Governor Haslam came 
into office in 2011, he set some very specific goals for our 
department. He mentioned the fact that we have had significant 
cuts in terms of our federal money coming to the State and he 
also mentioned that he has been able to maintain priorities 
like teachers and schools and delivering substantive services 
that we need. But at the same time, he challenged every member 
of his cabinet to undertake a top-to-bottom review. We reduced 
the size of my department by 42 percent as a result of that 
effort and in 2011, we had the second best year of job creation 
in history in 2011, only surpassed in 2007 at the peak of the 
bubble.
    And I would like to say this, in January of 2011, when 
Governor Haslam came into office, Tennessee was at a 9.5 
percent unemployment rate while the national average was nine 
percent. Today, we stand at 7.9 percent while the national 
average is at eight--sorry, at 8.2. What we have done is we 
have moved our unemployment rate 1.6 percent, 1.6 percent 
improvement while the national average has improved only eight-
tenths of a percent. Tennessee has improved at twice the 
national average and that is due in no small part to the 
leadership here in this room and the leadership of Governor 
Haslam.
    Our department had to reorganize the way we do business. We 
put people in the field in nine different regions. We have 
explicit outreach to entrepreneurs and to investors. We manage 
two venture capital programs now in the state, constantly 
reaching out to entrepreneurs. We have launched nine 
accelerators in each of our regions and last year, we reached 
out to more than 2000 companies here in the state of Tennessee. 
We conducted meetings with over 700 stakeholders in economic 
development. And this year, in 2012, we are moving that pace 
ahead at an even higher rate. We have undertaken 12 regional 
roundtables now focused on rural economic development. We think 
our job is to try to get out and understand what is happening, 
just as you are, at the state level, how we can help businesses 
thrive and grow.
    One of the things that Governor Haslam challenged us to do 
was to undertake a regulatory review last year. Our department 
organized a working group led by my Assistant Commissioner Paul 
Fassbender. Commissioner Fassbender led a series of 12 
roundtables across the state, all focused on opportunities to 
improve the regulatory climate for Tennessee businesses. The 
group identified existing federal and state regulations that 
negatively impact business in this state and Commissioner 
Fassbender's team delivered a report to the Governor last year 
with several recommendations. As the Governor said, the 
majority of our issues were federal regulations. What I would 
like to do is touch on the four primary areas and we can get to 
specifics in questioning.
    The number one area of concern amongst the businesses that 
we met with and interviewed was the new healthcare legislation, 
the Patient Protection and Affordable Healthcare Act. That 
uncertainty that the Act creates, and the example that Senator 
Alexander mentioned with restaurant owners, it permeates our 
entire state. Every business owner is concerned about the cost 
and the uncertainty of what is happening with that legislation. 
As it gets batted around through the judicial system, as we 
wait for an answer later this month from the Supreme Court, 
there is a great chilling effect that this regulatory burden 
has created in the State of Tennessee.
    A second federal issue that creates a tremendous amount of 
concern is the one that Senator Alexander mentioned, that is 
the National Labor Relations Board activity. The Boeing 
decision could not have had a more chilling effect on companies 
looking at the State of Tennessee. As companies who are in 
states that have union activities, they look at right-to-work 
states as a very desirable location. But many of those 
companies are stifled or frozen in terms of their inability to 
move forward. We need clarity on that matter. Certainly we are 
not a regulatory agent, my department, but we hear a lot of 
feedback from businesses in terms of the constraints that the 
NLRB decisions have imposed upon us.
    Third, as Senator Corker mentioned, the Dodd-Frank reforms 
have had a tremendous chilling effect on community banking. 
Tennessee is mostly a rural state, community banking is the 
lifeblood of our state. And community bankers tell us that the 
regulatory and compliance costs are exceeding their ability to 
manage their business. They are not certain what the law means 
for them, but they feel imperiled as they undertake lending 
decisions and as they look at their cost structure, they see it 
increasingly challenged by the ramifications of this law.
    And fourth, and as has broadly been discussed, the EPA 
regulations have a tremendous negative effect in our state. Our 
Tennessee Department of Environment and Conservation does an 
excellent job of trying to help businesses comply with these 
regulations, but many companies told us through our regulatory 
review that the regulations have become so unduly burdensome 
that they have a very great concern about their ability to 
expand and to grow.
    Overall, Tennessee is blessed with a wonderful business 
climate. We have great leadership, we have a great 
entrepreneurial spirit in this state and we are very optimistic 
here that we are going to continue to expand and grow. But we 
very much appreciate you being here today to listen to our 
problems and to work with us, work with Governor Haslam and 
everybody in our state to try to help continue to make 
Tennessee the place that it can be.
    Thank you.
    [Prepared statement of Mr. Hagerty follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.006
    
    [GRAPHIC] [TIFF OMITTED] T5304.007
    
    [GRAPHIC] [TIFF OMITTED] T5304.008
    
    [GRAPHIC] [TIFF OMITTED] T5304.009
    
    Chairman Issa. Thank you.
    Governor, this is a successful state, so we will stick 
strictly to the federal problems, but I must tell you that I 
did not give Rick Perry any credit for taking jobs from 
California, so I will not give you very much either.
    Governor Haslam. Is this the fish-in-a-bill analogy, or 
what are we doing?
    Chairman Issa. Yeah, pretty much. I was a Romney supporter 
early on, so I maybe was disingenuous a little bit.
    But, Governor, you mentioned what you have dealt with post-
stimulus. The stimulus was $800 billion roughly spread over two 
years, more than half of it going to essentially state and 
local employees.
    Governor Haslam. Right.
    Chairman Issa. A lot of teachers, no question at all. And 
you have had to deal with that. But for about a decade, we have 
been on a stimulus pace, in other words, large deficits. We 
have a trillion dollars a year deficit right now. Now a 
trillion dollars a year of deficit spending is, by definition, 
a trillion dollar stimulus every single year.
    Governor Haslam. Right.
    Chairman Issa. We borrow the money and spend what we are 
not taxing for. Job creation is important. Can you do a better 
job if over time the federal government cuts back the portions 
that essentially go to Washington and come back or come from 
China and go to the states--can you adjust to where over time 
states are more self-reliant and less money comes to the states 
if it is phased in as a matter of policy, recognizing that, 
particularly in the case of Medicaid there is a federal-state 
match, highway there is a federal-state match? Is this 
something you would like to have or would you prefer that we, 
in order to continue this kind of circular money, increase 
taxes at the federal level, basically take it from your 
stockholders?
    Governor Haslam. I would make two comments. Number one, 
when the President talks about we need to provide more to the 
public sector, what he is really saying to the people in 
Tennessee is you have managed your budget well, you have made 
the cuts that you need to, we have a surplus this year, which 
we will wisely invest next year, but other states have not; and 
so we would like the people of Tennessee to pay more taxes so 
that the other states which have fundamental structures of 
their state government that do not work, their costs have 
gotten too high just fundamentally, but we would like the 
people of Tennessee to make up that difference because the 
people in these other states have budgets that do not balance. 
So it does feel like it is just basically wrong for my 
shareholders, who have been disciplined.
    The second comment I would make to your question would be 
this--like I said, when the stimulus plan money ran out, we saw 
that coming, it was right when we were transitioning in and our 
predecessor did quite frankly a good job of laying out a road 
map and we took that and changed that but made it work. But I 
actually go back to his comments, my predecessor Democrat, but 
back when the recession happened, state revenues fell off, he 
said we can make the adjustments here now. We will take the 
federal money if they send it, but we are prepared and can make 
the adjustments in Tennessee. And I feel like that.
    But the last thing is this, you talked about Medicaid. I am 
with those folks who said if you will just block grant the 
money to states for Medicaid, give us much more authority over 
how we use that, trust us to make decisions. I think there is a 
sense that the federal government says we cannot trust states 
to do the right thing. I will say it is really interesting, and 
I will stop with this, the current Obama administration really 
I thought in some ways took the right steps when they ended--or 
gave waivers to states with No Child Left Behind. It was not 
the perfect approach I would like, but they did say states if 
you will show us how you will do it the Tennessee way, then we 
will give you a waiver from the requirements for No Child Left 
Behind. I would submit for the administration that is a great 
road map for how to do it in other ways, to do that in 
Medicaid. Let us put the basic parameters and then let you run 
the program. I guarantee you every state will run it better 
than the federal government. The closer to home government is, 
the better. That is just a truth and it always will be.
    Chairman Issa. Mr. Hagerty, you particularly mentioned some 
of the challenges for the community banks. Would you 
particularly feel that we, the Senators with you and the House 
Members, need to reopen Dodd-Frank specifically as to 
recognizing that these non-international, non-credit default 
swap entities who simply bring in dollars from the community 
and send them back out to the community should be under a 
different standard, if you will, a much closer standard to what 
had done well for so long before the meltdown in 2008?
    Mr. Hagerty. Mr. Chairman, our agency is not a regulatory 
agency with specific expertise on banking, so I can only offer 
you general comments.
    Chairman Issa. But you do come from that background.
    Mr. Hagerty. I do, I can offer you some general comments. 
If I think about the response that we have gotten from the 
field and from community banks in particular, Dodd-Frank has 
been imposed upon them in a one-size-fits-all perspective. That 
is great for J.P. Morgan, they have got 100 lawyers on staff, 
maybe more. Same for many of these other international banks 
that do business in the United States. That is not the case for 
rural Tennessee community banks. They do not have the overhead. 
This is absolutely diverting attention that needs to be paid to 
businesses the compliance activity, it is diverting capital 
that needs to be invested in more lending, more loan officers 
the compliance activity; and frankly, I think it is having a 
significant effect, curtailing lending into an area where we 
need it the most. So anything that you could do to ease the 
burden on those sized community banks and not impose a one-
size-fits-all on them, seems to me to fit squarely into the 
area where the community banks would benefit from some type of 
change or redress.
    Chairman Issa. If I could just ask one quick followup. Our 
Committee in the House has voted out unanimously something 
called the Data Act. It is designed to have all recipients of 
federal dollars report in a format that is completely, if you 
will, data searchable, similar to the way you reported the 
stimulus act. As a matter of fact, it is taken from the way 
that recovery board went.
    If that bill becomes law, which of course depends on the 
Senate--that must be why I am asking this question----
    [Laughter.]
    Chairman Issa. --you would have transparency for all the 
dollars passing through, back and forth, not just from your 
state, but every other state. Would that be helpful if the 
federal government standardized a system so that you really 
would be able to use the money flowing in and out, being able 
to see where it is, including, for example, Medicaid, you would 
be able to see every entity that was ever barred from Medicaid 
on a national basis and so on.
    Mr. Hagerty. Real short answer--yes.
    Chairman Issa. Thank you. I just needed to ask that one, 
for some reason.
    Scott.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    Chairman Issa. Mr. DesJarlais is recognized for five 
minutes.
    Mr. DesJarlais. Senator Corker, you started your own 
business, you were a job creator prior to being Mayor of 
Chattanooga and becoming Senator. Do you think that you would 
be willing to start that company in today's regulatory 
environment?
    Senator Corker. Well, I like swimming upstream, so you 
know, I would say I would. I will tell you though that many of 
my friends who have now, later in life, attempted to go out in 
business are finding it much more difficult. And I do not think 
there is any question about that. And I think it has been 
building for a long, long time. I just think as our country has 
continued to evolve rule on top of rule--you know, one of the 
things that we do well, and I say that euphemistically, we pass 
a lot of laws, but what we do not do is repeal laws underneath 
them. And so we end up building a lot of bureaucratic issues 
and I know Governor Haslam even has to peel back and deal with 
that here in the state of Tennessee.
    So I would just say this; number one, thank you for having 
this hearing; thanks for all the work you did in creating this; 
thanks for your focus on regulation. You too are a job creator 
and have been a job creator.
    It is no doubt more difficult in today's society with all 
the things that have been mentioned here to create a business. 
And as a country, we need to be moving in exactly the opposite 
direction.
    Mr. DesJarlais. Thank you, sir.
    Senator Alexander, the Oversight Committee has voted 
multiple regulatory reform bills out of the Committee to help 
curb burdensome and costly regulations and some of these bills 
should be going to the House floor soon. Can you help move 
regulatory reform through the Senate?
    Senator Alexander. Yes.
    [Laughter.]
    Mr. DesJarlais. Will you?
    Senator Alexander. I could do a lot more if we had more 
Republican Senators, just to be very blunt about it.
    One I have thought a lot about--Senator Corker just said 
something that I think is worth pausing on. The problem is you 
have all these pressures for more regulations. I mean this not 
necessarily an evil force or a Democratic force or a Republican 
force, it is just a natural force. You come in every two years 
and you forget about all this stuff you have already done.
    For example, when we were reauthorizing the higher 
education bill, here we are at a university, I worked on it for 
a year and a half and voted against it. Why? Because the higher 
education regulations today are as tall as I am, and the new 
bill would double the size of it. And the President of Stanford 
said that seven cents out of every dollar the university spent 
is complying with regulations. So how do you stop that?
    I think the best structural way to develop a countervailing 
force is a two-year budget. Does not sound very sexy, does not 
sound very glamorous, but the idea would be every other year we 
would pass our budget for two years, which states do. And then 
in the odd numbered year, we would devote our entire time to 
oversight and repealing laws and repealing regulations that 
have become unnecessary. We could sunset more laws and 
regulations, we could start over again. And I think if we had 
that pressure going in the other direction, every other year--
one year to consider what laws and appropriations need to be 
passed, the next year the main focus being what could we get 
rid of. I think that we create a countervailing force and would 
do a lot for regulatory reform. The answer to your question is 
yes, and that is one example of how I would like to try to do 
it.
    Mr. DesJarlais. Thank you, Senator.
    Governor, I applaud one of your mission statements when you 
became Governor and that was to focus on improving Tennessee's 
education. One of our attendees at our roundtable breakfast 
this morning, Jim Greene, from Richland LLC, brought up the 
point that he has had for months, if not up to a year now, 
multiple job positions available but does not have skilled 
labor to match those jobs. What are you doing in the state to 
help bridge that gap?
    Governor Haslam. That is probably the thing we are focused 
on the most. It begins obviously with K-12 education. Tennessee 
has made some big strides recently, over the last three or four 
years, with kind of the Tennessee Diploma Project, requiring 
higher standards. Our ten-year reform law I think will make 
certain that we only have the very best teachers standing in 
front of the classroom.
    But then I think what you will see, and let us turn our 
focus to now, what is our role in post-secondary education in 
terms for preparing that workforce, we do hear whether it be a 
manufacturer, whether it be a Volkswagen or IT professionals in 
middle Tennessee, and I can go--or truck drivers, all across 
the board, employers who say I have got jobs to fill, I just do 
not have the people with the right training to fill them. And 
so we are beginning to focus on that. How do we help, again, 
post-secondary education of all types--technical centers to 
four year schools to Ph.D. programs--to prepare those 
graduates. And I think the good news is, I think our 
institutions of higher ed are understanding that and they are 
starting to focus not just on enrolling students but graduating 
them and making sure those graduates are prepared in the right 
way.
    Mr. DesJarlais. Thank you, Governor.
    My time has expired.
    Chairman Issa. I thank the gentleman.
    Mrs. Blackburn.
    Mrs. Blackburn. Thank you. I appreciate that and appreciate 
so much that you all are giving us this time this morning.
    Governor and Commissioner, I want to start with the two of 
you. I appreciated what you had to say about having Tennessee 
be customer friendly. I think that is so important. And much of 
the emphasis has been reshaping the interaction between 
government and the citizens. And you all have done a stellar 
job of that.
    So what I would like to get on the record is just a little 
bit from each of you, a minute or so, about your process and 
what lessons the federal government could learn. Because, 
Commissioner Hagerty, the fact that you have reduced your 
department by 42 percent, the fact that every department in the 
state is reducing, employee counts are going down, square 
footage that you use is being reduced. We need to be looking at 
this at the federal level and indeed the states are the labs 
for innovation.
    Governor.
    Governor Haslam. When I came into office, we literally 
asked all 22 agencies to do a top-to-bottom review, which 
basically said this, if you were starting that department all 
over again, would you set it up the same way you have now. And 
when people were honest, they said no, we would not. And so we 
began to make those changes and we morphed that effort into 
what we call customer-focused government to say, okay, what is 
the best way to set it up for the lowest price, which is what 
taxpayers pay, and that gives the best service. We have made 
dramatic changes, everything from Bill restructuring his 
department to looking at how we lease office space when the 
state needs it, to how we use vehicles in the state. All of 
that, as Lamar said, sometimes real government is not real sexy 
or exciting but it is finding a way to save $100,000 in a $30 
billion budget that if you save enough of them, it can make a 
real difference. So we focused on both the cost side and then 
on our customer response time. Everything from how long does it 
take--if a child is up for adoption in Tennessee, how long does 
it take us to find a family or to find a foster family to how 
long does it take you to get a driver's license. All those 
things we do, we want to see if we can do them faster, better 
and cheaper.
    Mrs. Blackburn. The superman way.
    Mr. Hagerty.
    Mr. Hagerty. Thank you very much, Representative Blackburn, 
for the question. It really gets to the insight Governor Haslam 
brought to our administration with his private sector 
background. And it was very simple. He challenged each of us to 
question our departments and say is this function, is this 
activity, is this structure something we should be doing as a 
state. And if the answer to that question were yes, then it was 
are we doing it the best way, are we going about it the best 
way.
    We took that sort of approach, a very simple and straight-
forward approach, and really looked at our department at least, 
and I can speak from specific experience, like you would a 
business. There were a number of activities that just needed to 
be repositioned and restructured and moved to a place where 
people could be more efficient.
    I mentioned we did a 42 percent reduction of the staff, the 
number of positions. But of the remaining positions, I turned 
50 percent of those over. We brought in a lot of new blood and 
we have been knocking the ball out of the park.
    We called on over 2000 businesses last year. We implemented 
that measure in July and so that really was half a year of 
activity that we captured. We are going to be way beyond that 
this year. We are out touching the customer, as Governor Haslam 
wants us to, we are there with them every day now. Whatever 
they need to expand and grow, we are doing our best to help get 
these burdens out of their way.
    So I think that sort of fresh approach that Governor Haslam 
brought has made all the difference in the world in our state.
    Mrs. Blackburn. Thank you.
    Senator Corker and Senator Alexander, you each have 
mentioned federal agencies and regulations as being a problem. 
And Mr. Chairman, I want to, at this point, give my website, 
because at Energy and Commerce we handle the EPA. I am also on 
the Healthcare Subcommittee, we are handling a lot of what will 
be next in healthcare. And it is blackburn.house.gov and people 
can follow us on Facebook and Twitter and we tweet out the 
links to the hearings that we are doing on these issues.
    Senator Corker, you mentioned something about access to 
capital. I hear a lot about that and just very briefly from the 
two of you, when you are across the state meeting, what do you 
hear from people? I hear frustration, but I do not know if 
there are other agencies that you mentioned that they are 
having frustrations with that you would like to add to the 
record.
    Senator Corker. And you are talking about on the access to 
capital component or just in general?
    Mrs. Blackburn. In general.
    Senator Corker. I do think that the most direct, aside from 
the big picture of us not dealing with the fiscal issues and 
just the concerns that that creates, I mean if people want to 
build a wall around where they are because they are concerned 
about, you know, what we are not going to do and where the 
country is going from the standpoint of solvency, but I think 
the most direct really is going out into these smaller 
communities and them going down to see their loan officer and 
candidly the loan officer being concerned. Dodd-Frank was put 
in place, as you well know, and the speed that it was put in 
place, to create certainty.
    Mrs. Blackburn. Uh-huh.
    Senator Corker. And what has happened is it has done just 
the opposite. There are--there was a 2400 page bill, the 
rules--what happened was Congress did not do its job, it punted 
all of the decisions to the regulators. And so it will take at 
least three years for all of the regulations to come out. In 
the interim, the local financial institutions, because they do 
not know the rules of the road, are withholding capital. And so 
I do think that is one of the most direct issues.
    These other things--credit clout, some of the things with 
NLRB, people just do not know, it is sort of a fog. But I think 
from the standpoint of a direct issue, and possibly it is 
because I am on the Banking Committee and people talk with me 
more directly, it is this issue of really not being able to get 
the capital.
    I borrowed a little money, I had $8000 when I went in 
business and as time went on, I borrowed a little bit of money, 
not much, $12,000. But I think the difficulties of that today 
are far different than they were at that time. And I think a 
lot of it is again, because of that uncertainty.
    Mrs. Blackburn. Senator, anything to add?
    Senator Alexander. Marsha, what you are making me think 
about, a few years ago when I walked across Tennessee to be 
Governor, I had a lot of time to think out there walking by 
myself. And one of the things I thought about was would it not 
be great if in the State of Tennessee, if you wanted to start a 
business you could call up the state government and say send me 
two pieces of paper that have everything on it that I need to 
fill out in order to go into business. Of course, I never got 
that done. I would like to see it done for the federal 
government, but maybe we could do it piece by piece.
    We could start with the forms you have to fill out when you 
buy a car or get a mortgage on your house. They are absolutely 
absurd. What happens today is you go in and they are that thick 
[indicating] and the bank or the car dealer has it all worked 
out on the computer, so you sign a bunch of pages without know 
what is in it and then they run it through the computer and it 
is that thick and you go on and you are not warned of anything, 
because you have not really understood it.
    I think if we took the consumer protections that were 
really important for a car or a mortgage and put them on one 
page, that we would protect the consumers a lot better, we 
would have a lot more loans, and we would have--to reverse Bob 
Corker's statement, we would have more people making loans than 
complying with federal regulations.
    Mrs. Blackburn. Thank you. I yield back.
    Chairman Issa. Thank you.
    Mrs. Black.
    You know, feel free to applaud as long as it is quick.
    [Laughter.]
    Mrs. Black. Thank you, Mr. Chairman. And I so appreciate 
all of you being here today.
    You know, we keep talking about uncertainty. I think, just 
as you have just said, Senator Alexander, there are some really 
just common sense ways to boil all this down and to get us back 
under control.
    So let me go to--actually, Senator Corker, I want to ask 
you first, because I am interested, you have a bill that is the 
Global Investment American Jobs Act, where you in that bill 
help to identify some of those outdated barriers. And what I 
want to do is have you talk a little bit about that to show 
that not only are we recognizing the issues, we are listening 
to our job creators, but that we are also thinking about ways 
that we can find solutions. So if you can talk a little bit 
about that.
    Senator Corker. Sure. You know, our state, because of the 
great leadership of Bill Haslam and Bill Hagerty and people 
before them, Governor Alexander when he was here, it has been a 
magnet for investment and, you know, one of the things we like 
to encourage is even more foreign direct investment. I mean, 
you know, we do not differentiate in the State of Tennessee 
between jobs at Springhill and jobs at Nissan or jobs at 
Volkswagen. All of them to us are Tennessee jobs, they are 
American jobs and we would like for them to be here. So I have 
co-sponsored a bill--I think we are speaking of the same bill--
with Senator Kerry, it is a bipartisan piece of legislation, to 
really break down--look at the barriers that keep foreign 
direct investment from occurring here. I know California has 
been the tremendous beneficiary in years past, maybe not today, 
of----
    Chairman Issa. Well, they have got to get to America on 
their way to Tennessee.
    Senator Corker. That is exactly right.
    [Laughter.]
    Senator Corker. That is right. I could say that a little 
differently, but I will not out of courtesy. They have got to 
go through California to get to America, that is for sure.
    [Laughter.]
    Senator Corker. But the fact is----
    Chairman Issa. The gentleman is not in order.
    Senator Corker. The fact is that, look, we want to see 
investment in our country. We know in Tennessee we have the 
best workforce you could possibly imagine, we have the best 
environment you can possibly imagine, and yet we have barriers 
for foreign investment and we want to break those down and make 
sure we continue to create even more jobs here.
    Thank you for the question. And thanks for your great 
service.
    Mrs. Black. You are welcome, and thank you because barriers 
are absolutely--the uncertainty of the barriers are absolutely 
what are keeping our job creators. I was visiting with Boeing 
not too long ago, and they said uncertainty creates paralysis 
and the retraction of our businesses from growing because of 
that uncertainty and breaking those barriers down.
    I want to go to you, Commissioner Hagerty, because you also 
did a study to take a look at what some of those federal and 
state regulations were that were negatively impacting our 
businesses, which are also barriers. Can you talk a little bit 
about what you found there and share that with us?
    Mr. Hagerty. I would be happy to provide a copy of the 
survey.
    Mrs. Black. That would be great.
    Mr. Hagerty. And again, we are not a regulatory body, but 
we reached out and asked questions to the business community. 
And I would just like to summarize that in the broadest sense, 
uncertainty, as has been mentioned by each of my panelists 
here, each of the leaders that are to my left, has been the 
over-arching concern, whether it is uncertainty driven by the 
NLRB, it is uncertainty with the healthcare legislation, it is 
uncertainty from Dodd-Frank. EPA, for example, just creates a 
stifling amount of uncertainty. That has been the over-arching 
theme. It is uncertainty, cost and the whole burden of 
compliance.
    And I think that the Tennessee business people that we 
spoke with feel stifled and feel very concerned that they just 
cannot tell which way things are coming from Washington. And I 
wish I could be more specific, and indeed I could go through 
specific examples, but they all roll up to this one common 
theme of uncertainty.
    Mrs. Black. Well, I appreciate what you have done in your 
work and if you can share it with us, this is a good piece of 
information for us to take back. All of our committees deal 
with issues of job creation, so that would be good information 
for us all to be able to use as we talk about it in our various 
committees.
    Governor Haslam, why don't I go to you. One of the things 
that you did not mention that was a shining star this last year 
in the legislative session is what happened with the--I cannot 
believe I just lost my train of thought there--with the----
    Governor Haslam. Tort reform?
    Mrs. Black. --with the lawsuits.
    Governor Haslam. Okay.
    Mrs. Black. And tort reform, so if you could just talk 
about tort reform.
    Governor Haslam. You know, back to the predictability that 
Commissioner Hagerty was talking about, businesses want to 
know, tell us the rules, tell us what is coming and let me know 
that. And I think what we tried to do is provide a more 
predictable business environment. Again, we do not think 
government creates jobs, but we can create the environment 
where that can happen and the tort reform bill that put a cap 
on damages I think for businesses helped to define that. It 
also helped to define okay, where a lawsuit could happen, under 
what circumstances. So I think again, most people--there was a 
lot of people who questioned that, said oh, that does not 
really feel like that will create jobs, but I know of three 
companies, two or three companies, who have said I was not 
considering Tennessee, but now it is on our list of places. 
That is just anecdotally that I know of. So I do think again 
that is part of setting the environment right.
    Mrs. Black. Tort reform has been talked about a lot here in 
the State of Tennessee over the years when I was in service 
here and I congratulate you and commend you for listening to 
our job creators, because we did hear that consistently, that 
lawsuits are very difficult for our job creators.
    Governor Haslam. Right.
    Mrs. Black. And maybe that is not one that always rises to 
the top in the discussion, but certainly it is one that we have 
to look at very closely to see what that does for our job 
creators.
    Thank you and I yield back my time.
    Chairman Issa. Thank you.
    I want to thank our panel of witnesses.
    Since each one of you mentioned NLRB more than once, I will 
tell you that after Boeing came to a union settlement out in 
Everett, Washington and suddenly their problem in South 
Carolina went away, our Committee has not given up on getting 
to the bottom of whether or not there was a wink and a nod, 
because there is no logical reason to pursue them for 
wrongdoing and then give it up because they sign a new union 
contract that apparently fit the administration. So we do 
oversight and we do oversight even after someone says oh, no, 
it is okay, we have settled that. So we will get to the bottom 
of it to make sure that never again will that technique be used 
to coerce some sort of an agreement.
    Again, I want to thank our panel. Senators, Governor and 
Mr. Hagerty, we are pleased to have you, but this is not a 
typical field hearing, so the level of participation, we very 
much appreciate.
    And with that, we will take a short recess to set up the 
next panel. Thank you.
    [Recess.]
    Chairman Issa. The hearing will come back to order.
    We are now joined by our second panel of witnesses. Mr. 
Mark Faulkner is owner of Vireo----
    Mr. DesJarlais. Vireo.
    Chairman Issa. Oh, Vireo. Okay, I do actually know that 
name. It just looks hard to spell. --Systems, a small 
manufacturing plant that produces various chemical compounds. 
He is testifying on behalf though of an organization we respect 
a great deal in Washington, the National Federation of 
Independent Business. Mr. Grady Payne, a returning witness to 
the Oversight Committee, is CEO of Conner Industries, a lumber 
and assembled wood products supply company, which has a plant 
in Fayetteville, Tennessee. And Mr. Scott Cocanougher?
    Mr. Cocanougher. Very good.
    Chairman Issa. CEO of First Community Bank of Bedford 
County. And of course we talked a great deal on the first panel 
about the plight of community banks after Dodd-Frank. And Mr. 
Bob Bedell is the Unit Sales Manager for Coca-Cola, a small but 
meaningful company that we have heard about before.
    [Laughter.]
    Chairman Issa. Actually a worldwide leader in beverage. He 
is testifying on behalf of the Beverage Association of 
Tennessee.
    Gentlemen, you saw on the first panel, pursuant to our 
rules, would you please rise and take the oath? Raise your 
right hands.
    [Witnesses sworn.]
    Chairman Issa. Let the record reflect that all witnesses 
answered in the affirmative. Please be seated.
    Now I have noted that none of you are governors or 
senators, so that red light means stop. Please stay within your 
five minutes, to allow time for questioning. And your entire 
opening statements plus additional things that come from you 
will allowed to be placed into the record so that we have a 
full understanding.
    Mr. Faulkner.

                   STATEMENT OF MARK FAULKNER

    Mr. Faulkner. Very good. Chairman Issa and Members of the 
Committee, thank you very much. I appreciate the opportunity to 
testify on the federal regulatory climate and its effects on my 
business. As you mentioned, I own Vireo Systems. We are a small 
manufacturing plant that produces chemical compounds, and I 
currently have 22 employees.
    And although this is an over-simplification, current 
interactions with regulatory agencies boil down to a process of 
audit, review and critique, issuance of fines and then 
potentially the engagement of some combination of hindrance, 
threats, seizing of property, et cetera, all in an adversarial 
manner. Most times, the agencies do succeed in collecting money 
from businesses because most owners are simply very scared of 
the authorities. They can declare us guilty, assess huge fines, 
and we are left to have to try and prove ourselves innocent--
guilty until proven innocent. But most small businesses do not 
have the financial resources or time to defend ourselves and we 
know the punitive powers that the agencies wield.
    We know that job growth in America remains stagnant and for 
small businesses, government requirements are the most 
significant problem facing us after taxes and demand for our 
products. Reducing the regulatory burden is a step the 
government could take that would go a long way towards giving 
entrepreneurs the confidence that they need to expand and hire 
more people.
    I personally have held off hiring people over the past year 
because I do not know how a recent OSHA audit may hit us in the 
way of fines, fines for things that have been safe and within 
codes for years. I could add at least six new jobs to my 
payroll right now, but I am unwilling or actually unable to do 
so because the budget that I have for payroll may be needed to 
pay for fines for somewhat dubious regulations or regulatory 
interpretations.
    So simply stated, government regulations are stopping me 
from creating new jobs. And while a few jobs at our little 
business may be small potatoes, if that is multiplied across 
the nation by thousands of small businesses, it adds up to a 
serious squelching of economic activity and job creation.
    As I just mentioned, I am currently undergoing an audit 
with OSHA and this and other agency experiences have made me 
think that the main goal of the various agencies has become to 
target businesses for fines that support their departments in 
what feels like a government shakedown. Agencies like OSHA 
assess fines for alleged compliance infractions, but then also 
they will end up suggesting that they will reduce the fines if 
we agree to rapid payment and skip any appeals processes or 
legal challenges. Basically it is a pay now or risk paying more 
later if you fight the charges and want to try and introduce 
some due process into the situation.
    After one particular DOT audit, it was alleged that a 
torque wrench at my facility was not calibrated correctly even 
though the wrench was working fine and we had never had any 
leaks in using it to tighten container lids. Regardless, to 
make sure, I bought a new one for $40 so that there was no 
question, but the DOT auditor wanted to fine me about $5000 for 
this. I refused, saying that it was ridiculous. After going 
through a few rounds of DOT employees and managers offering to 
cut the fines, which made me feel like I was living ``Let's 
Make a Deal,'' they insisted that if I did not take the reduced 
fines offered on the table, I would be forced to pay the 
original amount. I finally threatened to get my attorney 
involved and they eventually agreed to just have me pay $200 to 
get the situation put to bed. I felt like it was a case of 
attempted government extortion.
    It seems as though regulators need to justify their 
existence and generate some of their own job survival revenue. 
And I believe that Congress should mandate a change in the 
culture of those agencies from policing to education, because 
most businesses want to be safe and in compliance. So for any 
first time offenses, rather than punitive fines, if the small 
business is showing good faith and good faith efforts, then the 
department should be limited to giving supportive guidance and 
warnings and only resort to fines if the business does not 
resolve issues and if legal action finds them guilty of 
repeated non-compliance. Agencies should be tough on businesses 
that blatantly ignore regulations, but they should not treat 
every small business as a bad actor.
    Right now, there is none of our American tradition of 
checks and balances against growing agency power. Congress can 
help this situation by holding federal agencies accountable. I 
hope Congress will seriously consider the reforms that I 
included in my written testimony and specifically Congress 
should expand the Small Business Reg Enforcement and Fairness 
Act to include additional agencies, and require all agencies to 
include indirect costs as economic analysis for rule. And then 
also strengthen the U.S. Small Business Administration's Office 
of Advocacy to be able to fight on behalf of small business.
    Thank you and I will look forward to any questions.
    Chairman Issa. Thank you.
    Mr. Payne.
    [Prepared statement of Mr. Faulkner follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.010
    
    [GRAPHIC] [TIFF OMITTED] T5304.011
    
    [GRAPHIC] [TIFF OMITTED] T5304.012
    
    [GRAPHIC] [TIFF OMITTED] T5304.013
    
                  STATEMENT OF H. GRADY PAYNE

    Mr. Payne. Yes. Thank you, Mr. Chairman and Members of the 
Committee for this opportunity.
    I am Grady Payne, CEO for Conner Industries headquartered 
in Fort Worth, Texas. We have plants in eight states including 
the plant in Fayetteville, Tennessee. We supply cut lumber and 
assembled wood products to manufacturing companies for their 
shipping and crating needs as well as logistics and supply 
training management services.
    Our company was started in 1981 with five people. Today, 31 
years later, we have got over 450 people in 11 plant locations. 
Over 120 of our people have been with us more than five years 
and over 22 have been with us over 15 years. Our locations 
operate in distinct markets and each location employs fewer 
than 50 people.
    In each of our markets, we compete against companies with 
fewer than 50 people and companies importing crating products 
into our markets. These companies will not be subject to the 
penalties and mandates imposed under the Obamacare law.
    According to the SBA, we are a small business, but not so 
by the Affordable Care Act. We are caught in a no man's land 
between assistance and exemptions for small business and 
waivers for large corporations and other powerful entities.
    We started our medical plan in the 1990s and offered 
coverage to all employees. Most of our production people opted 
out due to the cost of the programs. To meet federal 
discrimination rules, we were forced to redesign our plans and 
that redesign is what we are working on today.
    We offer a fully insured plan to about 140 employees and we 
struggle every year to keep 75 percent participation in the 
plan. The company pays approximately 55 percent of the total 
premium cost. The new discrimination rules created by the law 
forces us immediately into a self-insured alternative or face 
fines of up to $500,000 under the law. The IRS has delayed 
enforcement of this new non-discrimination testing until 
regulations can be written. However, our plan could be tested 
as early as next year. Without changes we may be forced to drop 
our plan completely prior to state-based exchanges becoming 
available. The mandate to us may be 2013, not 2014.
    In 2014, we do face some other difficult choices. One 
option is to expand coverage to all our employees and pay the 
full premium cost. This additional cost to us will be 
$1,750,000 or more, over and above the $750,000 we spend today 
in premiums.
    On the other end of our options, we discontinue all 
policies and pay a non-tax deductible penalty of $2000 for each 
of our employees at a cost to us that will be well over a 
million dollars, and again, it is not tax deductible.
    Other available options with employee participation are 
projected to cost upwards to a million and a quarter in 
additional cost.
    The impact of this law will cost our company over a million 
dollars, no matter which option we take. Some of the extra cash 
cost, if not all of it, will be penalties and not tax 
deductible. Today, these costs could significantly impact the 
company's financial strength and stability. We have been a very 
blessed company, profitable even through these hard times in 
the past few years. We have had to make many sacrifices in pay, 
bonus programs and people. We have no tax loopholes, our 
company is a taxpayer; and no, the private sector strapped with 
this law and continued new rules and regulations is not doing 
fine.
    We are a company caught in the middle. As the law stands 
now, our 30-year business is at risk of being legislated out of 
existence. How can this be? Our lives are in this company. We 
have done a good job for our customers, our employees and all 
of our families. This law has taken a problem and made it a 
potential fatal blow--jobs versus insurance.
    We understand the goal of getting everyone medical coverage 
and agree that it is a worthy goal. But the massive cost hits 
us right between the eyes. We are too small to get favorable 
group rates and self-insurance contracts and too large, by 
statute, to be exempt even though each of our profit centers 
are less than 50 employees. There has to be a more equitable 
way to achieve this goal than to cripple a small business like 
ours.
    Our current capital expansion and business development 
plans are and will be stopped by this law because expansion and 
hiring requires cash. The impact of the law robs us for needed 
growth capital. Our goals turn from hire and grow to cut and 
survive.
    Our Tennessee plant was started as an expansion plant in 
2007 and today has 48 employees. This law may force us to close 
our expansion locations as the new cost and penalties may not 
be able to be absorbed. Men and women working hard and 
providing for their families today may be faced with going home 
with no job in a difficult job market and fearing how they are 
going to face their families and meet their needs. A man 
without work carries a sense of shame and feeling of failure to 
his wife and children. The family may have subsidized 
insurance, but the job he knows may be gone.
    I and managers feel the burden. Our people depend on us. 
This law mandates a cost that is difficult to overcome. No new 
efficiency can offset the big cost. I work with men like Adolfo 
and Ricky, brothers who started their careers with us in high 
school; and today, after 21 years, have both advanced to 
leadership roles. They are married and have young children and 
like all our people do a great job and are proud of our 
company. These men and many others like them and their families 
deserve the jobs they have, they have earned them. This federal 
mandate that was not well-thought-out could destroy these men's 
lives, careers and plans. I pray something might be done that 
these working families may not see and feel the pain caused by 
such a reckless legislation.
    I thank all of you for your service to our great nation and 
allowing me to plead the case of Conner Industries and our 
people.
    Chairman Issa. Thank you.
    Mr.Cocanougher.
    [Prepared statement of Mr. Payne follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.014
    
    [GRAPHIC] [TIFF OMITTED] T5304.015
    
    [GRAPHIC] [TIFF OMITTED] T5304.016
    
                 STATEMENT OF SCOTT COCANOUGHER

    Mr. Cocanougher. Thank you for allowing me to come down and 
speak to you all today and taking your time to come down.
    My name is Scott Cocanougher, I am the CEO of First 
Community Bank of Bedford County, which is located in 
Shelbyville, Tennessee. We are about a $320 million bank that 
serves Bedford and Moore Counties. We also own a mortgage 
company that services Tennessee and its surrounding states.
    Although we have identified and taken some losses on loans 
made in the development and construction industry, we have set 
aside sufficient funds to cover those losses and any losses in 
the future, while also returning a good return to our 
shareholders.
    Before I get started, I do want to say that I wish Senator 
Corker and Commissioner Hagerty were back here because they 
pretty well took the thunder out of my speech today. And I do 
want to let you know that we do have a good working 
relationship with the FDIC and State regulators that examine 
us. We are a conservative run bank and over the past 24 years, 
we have assisted our community through local projects, sports 
teams, and by simply being a good neighbor, which I think is 
important in community banking. We also have financed small 
businesses and are there to watch them grow and develop.
    I want to let you know that over the last few years, we 
have been financing a different type of business, one that 
started with two employees in the late 1980s, grew to four 
employees in 2005-2006 and now has eight employees. It does not 
sell a product, nor does it earn a profit, but it does provide 
a valuable product to the bank. That small business is our 
compliance department within our bank. It performs feats of 
nature never seen before, including creating interest rate risk 
shock analysis on loan portfolios as well as investment and 
deposit portfolios, keeping logs on complaints received no 
matter how small or trivial. One of those is whenever somebody 
calls in and complains about an ATM card that does not work and 
when we do the investigation, find out it is because they did 
not have any money in their account. Or maybe they lost their 
PIN number, or maybe when a loan officer calls a customer, they 
call and complain because that loan officer was not nice when 
he told me I was past due.
    And my personal favorite is the Suspicious Activity Report, 
classified as a SAR, which essentially turns normal, everyday 
bankers into police officers by having them assist in capturing 
criminals by reporting suspicious activities of our customers' 
bank accounts, check writing habits, and the use of cash. We 
log in that information, create reports for instances of 
suspicious activities and submit it electronically where it is 
then stored in case a law enforcement agency needs it in the 
future. They can then look at it and find some background and 
see if anybody is moving, hiding, or laundering funds. Just 
this compliance requirement takes two full time employees at my 
institution.
    Meeting these compliance requirements continually drains 
our bank of the ability to produce new products or services for 
our customers that will serve their needs and in the end earn a 
profit for the bank, and those customers. We have 69 employees, 
of those eight work in the compliance department. As Senator 
Corker said, they do outnumber our lenders. As of yesterday, we 
had seven lenders in our bank. We have one more person working 
in our compliance department than we do lending. Each one of 
these regulations affect our daily operations and although we 
do have eight people that work in the compliance department, 
the other 61 spend approximately 10 percent of their day 
gathering information, completing paperwork to assist the 
compliance department.
    Because of the Dodd-Frank Act, which has been mentioned 
several times today, my bank is looking forward to the 
opportunity of hiring over the next couple of years seven 
additional officers, bringing our total to 15. Once again, we 
have seven lenders at our bank.
    As for the businesses we serve, as you will hear from these 
gentlemen here, they too are struggling. They too feel the same 
effects of over-regulation and the uncertainties in the market, 
and uncertainty of what will come out of Washington. Are 
businesses in the community hiring people right now or do they 
plan to hire in the future? No, they do not. Are regulatory 
burdens on banks and mom and pop businesses affecting the 
ability to make loans to people and create jobs? Yes, they are.
    It is not actually the rules and regulations a lot of 
times, it is the interpretation of the rules. I just mentioned 
the SARs, the Suspicious Activity Reports. We have examiners 
come in and basically say that a bank our size should have X 
number of Suspicious Activity Reports monthly on a basis and 
that we are behind that particular number, and gave us 
information on how to look deeper into those things and find 
things that are suspicious nature so we can report. So yes, we 
are now filling out Suspicious Activity Reports on things that 
I am not sure are actually suspicious activities, but we are 
meeting the examiners' goals.
    You know, whenever we can get rid of these things and 
getting out with our customers and helping them find ways to 
increase revenues, decrease costs and produce a better product, 
when we have the time, resources, and staff to do these things, 
I believe the country stands a better chance of creating 
opportunities for jobs than just sitting behind our desk and 
filling out reports. When we can cut down on regulations and 
have time to spend with customers, I look forward to being 
there with that new startup business and watching it grow and 
prosper. That is why I got in this business, is to help people.
    Thank you.
    Chairman Issa. Thank you.
    Mr. Bedell.
    [Prepared statement of Mr. Cocanougher follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.017
    
    [GRAPHIC] [TIFF OMITTED] T5304.018
    
                    STATEMENT OF BOB BEDELL

    Mr. Bedell. Mr. Chairman, Committee Members, I am Bob 
Bedell, Sales Unit Manager for Coke Consolidated, representing 
the Beverage Association of Tennessee. We appreciate the 
opportunity to appear before the Committee today.
    Coke Consolidated is the local Coke bottler here in middle 
Tennessee; however, we do business in ten other states 
employing 6000 people including 700 in five facilities right 
here in Tennessee. Those include 440 workers at a nearby sales 
center here in LaVergne and then we have got 120 in our 
production facility in Nashville.
    Nationally, the industry provides 227,000 jobs paying $18 
billion in wages and $900 million in charitable contributions. 
We have a long history of good corporate citizen and we are the 
companies people turn to first when they need a product 
donation for their charity or community event. We are usually 
the first ones on the scene in a national disaster to provide 
potable water. We are proud of the relationship we have with 
our consumers and the communities we serve.
    In recent years, we have become the scapegoat on the issue 
of obesity. While this indeed is a serious health issue, 
singling out one type of food or beverage for blame is not an 
effective way to seek a solution.
    Our industry is a leader in innovation. We provide a wide 
variety of choices to consumers so they can decide what best 
fits their lifestyle. We clearly post the number of calories on 
our product so our consumers know what they are consuming. We 
put it right on the front of all of our packages. We did this 
after another successful program in schools where we removed 
the full calorie drinks from the schools, because we realize 
schools are places where kids do not have their parents to help 
guide their choices. This resulted in an 88 percent drop in 
beverage calories from schools, and in fact, regular soft drink 
consumption is now down 39 percent over the last decade. That 
is according to the CDC. Yet obesity rates continue to rise.
    In spite of all this, we were shocked to learn that our own 
tax dollars are being used against us in the form of CDC grants 
under the guise of obesity prevention. Incredibly, the CDC has 
funded advertisements in communities across the nation not only 
demonizing our industry, but urging people not to drink our 
beverages. The ads are inaccurate and they are over the top. 
They lead the viewer into believing soft drink consumption will 
cause diabetes and make people sick. Language such as ``Are you 
pouring on the pounds?'' and ``Do you know what your kids are 
drinking?'' and ``Don't get smacked by fat.'' The fact is that 
all calories matter, not just those from beverages.
    Even the New York Times looked into these grants and 
uncovered a string of emails between the state's public health 
officials who argued about the appropriateness of targeting one 
element of the diet. Included in that exchange was a comment 
from one official, ``Well, what can we get away with?'' I 
repeat--``What can we get away with?'' That was the kind of 
conversation that was going on.
    On behalf of the 227,000 men and women who work hard every 
day in this industry, I can assure you we take issue with these 
irresponsible and contrived attacks on our products. We agree, 
obesity is a serious issue and have taken steps to provide 
consumers with the options and information they need to make 
the appropriate choices. We also have a history of supporting 
programs and initiatives which promote physical activity and 
healthy lifestyles.
    A simplistic approach of targeting one industry for a 
complicated issue like obesity simply will not work, and 
taxpayer funded ads attacking our products is unacceptable. For 
this reason, we wholeheartedly support Congressman DesJarlais' 
bill Protecting Foods and Beverages from Government Attack Act 
that would stop these ads from running. H.R. 3848 would not 
stop other prevention efforts, if that is how Congress chooses 
to spend taxpayer money, but it would stop these inappropriate 
ads that unfairly target a vibrant industry and in an effort to 
suppress sales which will kill jobs.
    We thank you for your time and attention and we appreciate 
the opportunity to participate in this morning's hearing.
    Thank you.
    [Prepared statement of Mr. Bedell follows:]

    [GRAPHIC] [TIFF OMITTED] T5304.019
    
    [GRAPHIC] [TIFF OMITTED] T5304.020
    
    [GRAPHIC] [TIFF OMITTED] T5304.021
    
    Chairman Issa. Thank you. I will ask a few brief questions.
    One of them, Mr. Bedell, I think the product in front of 
you says Zero on it. Does that tell me the amount of calories?
    Mr. Bedell. That is exactly right, Chairman.
    [Laughter.]
    Chairman Issa. So is it not true that in the beverage 
industry roughly half of your sales of soft drinks in fact are 
zero calorie or near zero calorie beverages?
    Mr. Bedell. It is getting very close to that, yes.
    Chairman Issa. And next to it, I notice that you have a 
container of water. Coca-Cola is also in the water business, 
are they not?
    Mr. Bedell. That is correct, Dasani water.
    Chairman Issa. So let us see, you can buy water, you can 
buy no calorie or you can buy calorie sodas and it is your 
fault if people get fat. That is the theory of government.
    Mr. Bedell. You summed it up very well.
    Chairman Issa. These are the people that brought us a 
convention in Las Vegas.
    Mr. Bedell. Yes, yes. We believe the consumer has a choice 
and therefore we make products available for those consumers to 
have a choice. We find even locally where we have pulled out of 
schools, the folks that have really suffered are all the 
sports, the band, all the different functions that used to get 
that money from the vending.
    Chairman Issa. Just on a personal note, I am a little heavy 
and I drink diet sodas. My wife is light and she does not like 
sugar-free, so she drinks the sugary ones. I am not sure the 
correlation is not reverse in my case. I think it is the no 
calorie that has been hurting my diet, but that is a separate 
point.
    Mr. Bedell. Well, we appreciate both of you.
    Chairman Issa. Mr. Cocanougher, do you have any credit 
default swaps?
    Mr. Cocanougher. No, we do not.
    Chairman Issa. International banking activities including 
complex instruments all over the world?
    Mr. Cocanougher. We send some wires out, but no lending or 
deposits, no.
    Chairman Issa. So what part of the crisis in 2008 did you 
participate in as a bank?
    Mr. Cocanougher. We had the word ``bank'' on the name of 
our building.
    Chairman Issa. So in fact, Dodd-Frank regulated you without 
an actual tragedy that you participated in or were subject to.
    Mr. Cocanougher. I would agree with that, yes.
    Chairman Issa. Well, do not feel bad. In Washington, we 
closed Pennsylvania Avenue because an airplane landed on the 
south side of the White House. It is the same kind of thinking 
that, you know, any tragedy, any emergency is a good excuse to 
do something you wanted to do anyway. Not that I have an 
opinion on that.
    [Laughter.]
    Chairman Issa. Let me go through one round. I was a 
manufacturer for a number of years. Mr. Bedell, Coca-Cola, I 
believe you would be an ISO 9002 for your quality and safety 
standards, your company observes a set of internal safety and 
quality standards and it includes how you do your bottling, the 
whole quality circle, how you deal with defects and so on. Now 
you do not get that from the government, do you?
    Mr. Bedell. No.
    Chairman Issa. So the whole question of quality, how you 
treat your customers globally, Coca-Cola worldwide, is in fact 
voluntary standards with you paying for people who not only 
help you learn how to do it, but come in and do the evaluation 
and they pass or fail your facilities for whether you meet 
these high global standards, is that right?
    Mr. Bedell. Yes.
    Chairman Issa. Mr. Faulkner, similar?
    Mr. Faulkner. Yes. We are actually ISO certified. When we 
were accredited, we were one of the smallest in the country 
because we only had six people at that point.
    Chairman Issa. So you go through this whole process of 
globally accepted standards, ones that are rigorous, ones that 
you actually pay to go through. Just one kind of a question for 
all of you, do they come in and fine you if you do not meet the 
standard on a test?
    Mr. Faulkner. No, it is a cooperative, supportive 
educational activity.
    Chairman Issa. But you can flunk.
    Mr. Faulkner. Absolutely.
    Chairman Issa. And if you come up with a major defect in 
some part of your quality or some sort of a problem related to 
a set of standards that the world has bought into and improve 
every year, what happens?
    Mr. Faulkner. We would be warned on it to fix it and we 
would be given a very specific amount of time in which to fix 
it. We would be re-audited or held accountable for having done 
so. And if we did not, we would be decertified.
    Chairman Issa. Mr. Payne, similar situation in your 
experience in business?
    Mr. Payne. Yes. We are not ISO certified, we are ISO 
compliant and we comply with Sigma and a lot of our customers 
force us to, but same kind of thing.
    Chairman Issa. And your customers rely on that, 
particularly when you are ISO or other standards. So do you 
advertise it?
    Mr. Payne. Uh-huh.
    Chairman Issa. It is important to you and in fact, you pay 
to make sure that your company does it. And we could add, of 
course, the Better Business Bureau and other organizations like 
that. Should we take back to Washington that in fact 
Washington's problem is we do not think like the very entities 
that mostly ensure quality and delivery and predictability, and 
that if government regulators--and I think you said this in 
your opening statement very well--government regulators need to 
in fact go to ISO 9000 type training, find out what it is like 
to actually come with a set of standards, test to those 
standards and if you fail those standards, be part of the 
remediation of those standards.
    Mr. Faulkner. Correct.
    Chairman Issa. You would all agree that that is what I 
should take back?
    Mr. Bedell. Yes. We have very high standards for quality 
for our brands. And with ISO, all that does is add cost.
    Chairman Issa. Well, thank you very much. As a former 
businessman, I wanted to hear that things had not changed in my 
12 years in government.
    Mr. DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    With all due respect to our prior panel, this is the kind 
of thing that people need to hear. I think listening to each 
and every one of you, there was a chilling tale of how the 
federal bureaucracy can over-burden businesses. And we can just 
go down the line. Mr. Faulkner, the ``Let's Make a Deal,'' you 
pay this fine now and we will let you off easy or we can do it 
the hard way. That unfortunately is not a story that I have 
only heard once. I have heard any number of people with MSHA, 
OSHA and other regulatory agencies tell that same tale of being 
strong-armed, basically you cooperate and we can make this less 
painful on you. And that is clearly no way to create jobs and 
businesses.
    And Mr. Payne, basically what your company is facing is 
saying we have all these employees that have been with us for 
an awful long time, a lot of them are like family, they are 
happy here, but yet we are going to have to turn them away when 
it comes to providing healthcare, one of the things people look 
to. In essence, you are going to say that the government, you 
know, not necessarily can do a better job providing healthcare, 
but they are going to have to turn to the government. And it 
kind of makes me wonder about the healthcare law intent, when 
we were told that if you like your insurance, you can keep it. 
Clearly companies like yours show that it is just not feasible 
from a cost standpoint to continue to pay for health insurance 
rather than just pay the fines that the government asks you to 
pay. And we will get back to that.
    Mr. Cocanougher, you are asked to police people and anyone 
sitting in the room is sitting here thinking about their habits 
being investigated by people in the bank that are hired to just 
watch whether or not your cash expenditures or the way you 
write checks is inappropriate. That ought to make everyone just 
wonder a little bit about where this government is heading in 
terms of our personal rights and freedoms.
    And Mr. Bedell, first of all, thanks for the kind words 
even though I am drinking a competitor over here.
    Chairman Issa. You did not have to point that out.
    Mr. Bedell. We will get you fixed, for sure.
    [Laughter.]
    Mr. DesJarlais. How demoralized do your workers feel when 
this current administration puts out stimulus money in the name 
of job creation and then your workers see ads on TV attacking 
the very product that they produce and count on for their 
livelihood?
    Mr. Bedell. It is outrageous, it is very demoralizing. It 
is just wrong.
    Mr. DesJarlais. And these are FDA approved products. You 
are a leader in putting the facts out there and people being 
responsible, helping schools educate on physical activity, 
clearly labeling your products but yet taxpayers, and the very 
workers that pay taxes for your company are paying taxes for 
ads to attack their own job.
    Mr. Bedell. That is exactly right.
    Mr. DesJarlais. Okay. Well, clearly that is not right.
    And Mr. Payne, it sounds like when 2014 rolls around, you 
do not have a good option when it comes to the healthcare law. 
You know, I had the pleasure of visiting you down in 
Fayetteville and a great bunch of folks there and I know you 
want their healthcare to continue. But you do not have a good 
option, do you, with this current law?
    Mr. Payne. No, we really do not. There is not a good 
option, we are in the middle size that it just hits us wrong.
    Mr. DesJarlais. And it kind of shows a failure in planning 
because a small company is labeled as one with 50 employees or 
less and a large company is 500 employees or more. But under 
this law, you are kind of stuck in between and there was not 
really a provision or a thought out plan for that.
    Mr. Payne. You are exactly right.
    Mr. DesJarlais. So you can either pay a $3000 penalty for a 
higher number or a $2000 penalty for the 50 or less, but either 
way, it is cheaper for you to turn these people back to the 
federal exchanges.
    Mr. Payne. Unfortunately that is right.
    Mr. DesJarlais. Mr. Faulkner, just--I mean if you want to 
elaborate a little bit more, how does that feel to have a 
regulatory agency come in and levy a fine that makes absolutely 
no sense. You go out and clearly do the right thing. How does 
that make you feel about our federal government?
    Mr. Faulkner. Certainly not that it is by and for and of 
the people. We, in 37 years of manufacturing over at the plant, 
have never had a workers comp claim. We are hellions on safety 
and for them to come in and treat us as if we are either 
ignorant or malicious or that we do not care about safety. We 
are small enough that we cannot afford not to be intensely 
concerned about safety because any accident, any situation is 
too expensive for us to shoulder. Prevention is what keeps us 
in business. And they come in and have us doing things or 
threaten to force us to do things that honestly make no sense. 
You know, put up railings in places where people never go and 
are not allowed to go. Sprinkle buildings that were built to 
code that were not needed to be sprinkled. Any one of a number 
of things, but it clearly shows that they are out of touch and 
really that their motivation is less about safety and is more 
about parasitic department survival.
    Mr. DesJarlais. And I know my time has expired, but Mr. 
Cocanougher----
    Chairman Issa. But go ahead anyway.
    Mr. DesJarlais. Thank you, Mr. Chairman. If you will yield 
an additional 30 seconds.
    I had some community bankers say an interesting comment to 
me as well as home healthcare companies, that if the government 
would just leave the status quo alone, we can deal with it. But 
the changes occur so rapidly in terms of compliance, you are 
constantly having to hire new people. It is almost like we have 
been beaten down to the point that we will just accept what we 
have now if they just will not change it any further.
    Have you had a similar experience?
    Mr. Cocanougher. I think you are correct there. And as we 
shared earlier today, we have a lot of banks now that are doing 
merger and acquisitions and it is not merger and acquisitions 
because of capital, because of bad loans or otherwise. They are 
merging because they cannot afford the compliance departments 
they have and by merging two groups to get to a certain size, 
they can afford to be in business. So what you wind up with is 
less banks, probably eliminating departments within the merger 
of those banks, and making less employees.
    But yes, if we could just have some certainty about the 
rules that are there and interpret them the same from one 
meeting to the next, it would make a great deal of difference. 
Right now, whenever you have an examiner come in, they 
interpret a rule differently than the one that came in before 
that interpreted it differently than the one that came before 
that. And it is very difficult to hit that moving target.
    Mr. DesJarlais. Thank you, Mr. Chairman, for your generous 
extension of time and I yield back.
    Chairman Issa. I thank the gentleman. I thank you for 
bringing us here to Tennessee.
    Mrs. Blackburn.
    Mrs. Blackburn. Thank you.
    We are so appreciative that each of you would take your 
time to be here and to talk with us, because you are doing this 
on your own dime. And we appreciate that you are investing in 
that, I think it shows why so many of us believe that the men 
and women who are participating in the free enterprise sector 
every day get up, go to work, create these jobs, they are a big 
part of the answer. They are not the problem.
    Congressman DesJarlais mentioned some of the listening 
sessions that he has done. We have also followed that format in 
our congressional district and spent the past two years holding 
listening sessions with our job creators that are out there, 
large and small.
    Last week, I was over in Arkansas with one of our 
colleagues and in Charleston, South Carolina with another of 
our colleagues doing similar job creating, and I have got to 
tell you, we hear these stories everywhere we go--the cost of 
compliance, the cost of uncertainty, the cost of the over-reach 
of federal regulations. So I thank you for adding to what is 
becoming volumes of information from our job creators about 
what is wrong with the federal government structure right now.
    Mr. Faulkner, I have got to tell you, I love your idea of 
mandating change on the agencies. I do think that that is the 
way to go and I think that is one thing we need to do.
    Mr. Cocanougher, I want to come with you, I want to be sure 
that my note I made is correct. You have got two full time 
employees that are dedicating to looking at suspicious activity 
and then you estimate that 10 percent of every day of your 
other employees is spent gathering information or filling out 
paperwork and----
    Mr. Cocanougher. I would say that is correct.
    Mrs. Blackburn. So you have got three-quarters of an hour--
three-quarters of your workday if you have got an eight-hour 
workday, that would be about three-quarters of an hour that is 
spent with nothing but doing compliance.
    Mr. Cocanougher. My wife would tell you that she would 
yearn for me to have an eight-hour day, but yes, 10 percent 
would be correct.
    Mrs. Blackburn. All right, that is what I wanted to verify.
    Mr. Payne, welcome, I am glad to see a Texan back in 
Tennessee. You all would not be in existence if not for us.
    [Laughter.]
    Mr. Payne. Glad to be here.
    Mrs. Blackburn. So I just want to remind you of that good 
fact and I say that lovingly.
    Chairman Issa. Now if they had only treated Davy Crockett 
as kindly when he left.
    [Laughter.]
    Mrs. Blackburn. Right. We could all benefit by listening to 
some Davy Crockett, reading some of those remarks that he made.
    But being married to a Fort Worth, Texan now for I guess 38 
years is how long we have been married, I appreciate and I love 
that pioneer spirit that all you Texans bring to bear.
    I appreciate what you are saying about you are into cut and 
survive right now. And we want to see you move to grow and 
expand. And you talked specifically about the healthcare law. 
Now I want you to articulate for me, kind of go through just a 
brief summary what your steps would be if this goes into 
existence and you feel like it is going to legislate you out of 
business. What are you going to have to do, because you are now 
at 450 employees, with 11 plant locations. We like that we have 
got one of those here. If it goes into effect, what do you fear 
would happen to Conner Industries within a couple of years?
    Mr. Payne. Well, there are several things that could 
happen. You know, we are working on our budgets to try to see 
where money could come from and what our options are. Obviously 
one of the options is to cancel all the policies and pay the 
penalty. What we fear there is there is not enough capital 
retention from profits after the penalties to keep our 
covenants alive in the banks. You have to make money to be able 
to sustain financing. And today, we do not have a financing 
problem.
    You know, one thing that we are looking at is everybody in 
the company taking a little bit of percentage of the cost which 
would hit a lot of our key people. You average it out and 
everybody takes a certain amount of the hit. That is one option 
we have got.
    The other option is we tend to try to add new locations 
about every other year and that is what we have done, that is 
where our 11 locations have come from. So we always have one to 
two, maybe even three that we call expansion locations that are 
in growing modes and it takes several years to develop those 
markets to where they can actually be self-sustaining and 
profitable. And we may have to take some of those down, which 
would also result in overhead cutbacks in Forth Worth, maybe 
sell off some individual locations. The model will be 
different. I cannot tell you exactly what it looks like, none 
of them are very good alternatives.
    You know, to answer your question, there is a lot of 
variables that could go in there and none of them are really 
very good options.
    Mrs. Blackburn. Thank you. My time has expired, I yield 
back.
    Chairman Issa. Thank you.
    Mrs. Black, we have saved the best for last. The floor is 
yours.
    Mrs. Black. Thank you, Mr. Chairman.
    The stories are great. I was just writing down as you were 
telling the stories. Mr. Faulkner was talking about OSHA and 
what they are doing to impact his business and his lack of 
ability to be able to grow because of all the things you have 
to do to comply with.
    Then I hear Mr. Payne talk about Obamacare.
    Mr. Cocanougher, you talked about the Dodd-Frank Act and in 
particular SAR. And as I read your testimony here, I wrote 
``crazy'' out beside it because I thought I cannot believe that 
we are actually doing this. We are, the government--I do not 
want to say us here on this panel, but it is good to know what 
you are dealing with so we can go back and make a difference.
    And then Mr. Bedell, you talk about us using our own 
taxpayer dollars, the dollars that you are paying and your 
company is paying, to actually come back and lobby against 
yourself--just crazy again. I guess crazy is the word here that 
is the word of the day when we hear these stories.
    I want to go back, Mr. Faulkner, to what you said about 
this would be so much more effective if it were an education 
process that really helps you as job creators to do your job 
better. If they came in with the mentality and we flip that 
mentality from it trying to penalize you for something to 
trying to help you do it better. So I am going to take that 
back with me because I think as we take a look--obviously we 
need to have agencies where there is oversight, where we are 
making sure everyone is abiding by the rules. But if we change 
the perspective on that from being education from being 
penalties, I think we would be doing a benefit both to society 
and also to you as job creators.
    And then, Mr. Cocanougher, I think it was you that said 
about the interpretation of the rules. So obviously when those 
rules were written, unlike here at the state level where rules 
always come back to the governing body to be looked at and made 
sure that they are abiding by whatever the intent was, we do 
not do that at the federal government. So if there is a way 
that we can get more involved in making sure that the rules are 
the rules that reach the intent of whatever the legislation 
was, I would say that Chairman Issa and his committee comes the 
closest to doing that. But it is not done on a regular basis.
    I use this term of the Barney Fife syndrome. I think all 
the things you have talked about are the kinds of things that 
as Barney Fife shot himself in the foot, that we are shooting 
ourselves in the foot right here in the United States. We are 
either driving you out of business, as Mr. Payne talked about, 
or we are driving people offshore because they do not have to 
abide by these same crazy regulations if they go offshore.
    So what we are hearing the President say this last week or 
so is that the private sector is doing fine, and I would just 
like to----
    Chairman Issa. Just fine.
    Mrs. Black. Just fine. The private sector is doing just 
fine. I would like each of you to talk about how you feel that 
statement either applies--how you agreed with or did not agree 
with that statement.
    Mr. Faulkner.
    Mr. Faulkner. I would say that we are doing fine in spite 
of the burdens that are being put on us. And it makes me 
excited to think if we had some of these shackles taken off, 
some of the burdens taken off, how much better we could do and 
what a restoration to America as the leading economic engine of 
the globe could be.
    Mrs. Black. Mr. Payne.
    Mr. Payne. Well, one thing about the downturn in the 
market, it did force companies, and ours is one of them, to 
look internally and restructure ourselves into a more 
profitable and efficient company. And we have done that. We are 
in good shape. The uncertainties of Obamacare is something that 
to us really is a cloud hanging there and we do not know really 
what it is going to do. We also share a lot of the same things 
that some of the other guys--OSHA and a few of these others--
are giving us problems. So we deal with that. But the killer is 
the big one for us.
    Mr. Faulkner. Can I just say that it is really a testimony 
to the American worker and the spirit that in spite of all of 
this craziness, we are buckling up under it and trying to work.
    Mrs. Black. Mr. Cocanougher.
    Mr. Cocanougher. I would like to know what the bar was for 
doing fine. Like you said, compared to what? I subscribe and 
read on a daily basis three to four economists a day and I am 
not sure I see that in the numbers they produce. When you have 
got negative production, you have unemployment going up and not 
down, and I do not think that 8.2 is a real number. I think it 
is probably closer to 12 to 13 percent unemployment. I do not 
see how that is fine. I would say a lot of times when people 
say how are you doing, it is fine. Well, fine is not really a 
good answer.
    [Laughter.]
    Mrs. Black. Mr. Bedell.
    Mr. Bedell. I think Mr. Cocanougher just summed it up, but 
we need the federal government to back out and get out of the 
way so we can take care of business. And that would be a big, 
big change that would be very positive.
    Mrs. Black. Thank you and I yield back my time.
    Chairman Issa. I want to thank all of you for your 
testimony today and I want to take a privilege of the chair 
first to thank the audience for your participation quietly 
throughout these proceedings.
    And I think I would like to close by paraphrasing Ronald 
Reagan who I understand told the story one time about the 
stagecoach that flipped over. And the crew that came to find 
the stagecoach down in the gully realized that there was a 
whimpering and it was a dog from the stagecoach. And it was 
very badly damaged and nearly dead and the person took out his 
revolver and put it out of its misery.
    Then he went on and realized that there was another noise 
and it was sadly a horse and had two broken legs and there was 
nothing they could do, so he put it out of its misery.
    Then, thank goodness, he found the stagecoach driver, he 
was trapped and they got him out, he had a broken leg and they 
asked him how he was and he said, ``just fine.''
    [Laughter.]
    Chairman Issa. You know, the American spirit is we always 
say we are doing just fine, particularly if it will keep us 
from being shot.
    Thank you, we stand adjourned.
    [Whereupon, at 11:25 a.m., the Committee was adjourned.]

                                 
