[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]



 
                   TANGLED IN RED TAPE: NEW CHALLENGES FOR 
                               SMALL MANUFACTURERS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             MARCH 18, 2015

                               __________

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            Small Business Committee Document Number 114-006
              Available via the GPO Website: www.fdsys.gov
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                        TOM RICE, South Carolina
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAAZQUEZ, New York, Ranking Member
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts

                   Kevin Fitzpatrick, Staff Director
            Stephen Dennis, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velaazquez............................................     2

                               WITNESSES

Ms. Cynthia Reichard, Executive Vice President, Arylessence, 
  Inc., Marietta, GA, testifying on behalf of the International 
  Fragrance Association of North America.........................     5
Ms. Janis Herschkowitz, President & CEO, PRL, Inc., Cornwall, PA, 
  testifying on behalf of the American Foundry Society...........     6
Mr. Viktor Anderson, P.E., Director of Engineering, Structural 
  Concepts, Muskegon, MI, testifying on behalf of the Air-
  Conditioning, Hearing nd Refrigeration Institute...............     8
Mr. James Goodwin, Senior Policy Analyst, The Center for 
  Progressive Reform, The Center for Progressive Reform, 
  Washington, DC.................................................    10

                                APPENDIX

Prepared Statements:
    Ms. Cynthia Reichard, Executive Vice President, Arylessence, 
      Inc., Marietta, GA, testifying on behalf of the 
      International Fragrance Association of North America.......    29
    Ms. Janis Herschkowitz, President & CEO, PRL, Inc., Cornwall, 
      PA, testifying on behalf of the American Foundry Society...    36
    Mr. Viktor Anderson, P.E., Director of Engineering, 
      Structural Concepts, Muskegon, MI, testifying on behalf of 
      the Air-Conditioning, Hearing and Refrigeration Institute..    51
    Mr. James Goodwin, Senior Policy Analyst, The Center for 
      Progressive Reform, Washington, DC.........................    56
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.


      TANGLED IN RED TAPE: NEW CHALLENGES FOR SMALL MANUFACTURERS

                              ----------                              


                       WEDNESDAY, MARCH 18, 2015

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Huelskamp, Hardy, 
Radewagen, Velaazquez, Huizenga, Adams and Lawrence.
    Chairman CHABOT. Good morning. The hearing will come to 
order.
    Over the next hour or so, we are going to talk about 
federal regulations and our small manufacturers. Regulations 
are not just words on paper; they impact the way millions of 
Americans try to earn a living every day. We have always been a 
nation of makers and builders. That is why American 
manufacturers, including, and especially small manufacturers, 
are critically important to the American economy. The term 
``Made in the USA'' is a source of pride for so many people. It 
is a reminder that if we want, we can build our own future. 
These days, unfortunately, a lot of people feel they cannot 
build their own future. It is not for lack of ideas; it is 
oftentimes because of the burden of federal regulations. I look 
forward to hearings like this one because it gives us the 
chance to hear from real people about the real life impact of 
regulations.
    In a survey by the National Association of Manufacturers 
last year, 88 percent of manufacturers said federal regulations 
were a significant challenge. When the National Federation of 
Independent Business (NFIB) surveyed its members, they 
overwhelmingly responded that ``government requirements and red 
tape are the biggest problems they face.'' These are 
regulations that came out of the Federal Government in the last 
month alone. February. The shortest month of the year. How can 
we expect our small businesses to focus on creating jobs and 
bringing new ideas to life when odds are something in these 
pages will have a substantially negative impact on them? And 
even worse, they likely had no input at all in what these 
regulations say.
    Let me say at the outset, I am not against all federal 
regulations. I am against dumb federal regulations. That is, 
for example, why I hope the Senate will soon take up the Small 
Business Regulatory Flexibility Improvements Act. We passed 
that bill in the House recently to bring our regulatory system 
into the 21st century and stop putting small businesses at a 
competitive disadvantage. The regulatory burdens currently fall 
most heavily on small businesses, particularly manufacturers 
like those who are with us today because they have to pay for 
compliance costs just like their larger competitors but with 
only a fraction of the resources. The Small Business Regulatory 
Flexibility Improvements Act would give small businesses the 
input in the regulatory process they should have had all along. 
That input cannot come soon enough.
    One of the best things about being a member of Congress is 
that we get to see many perspectives. We talk to small business 
owners and employees like our witnesses today and we get to see 
how other countries approach their regulatory process. While 
many of our international economic competitors are making way 
for innovative cutting-edge reforms, the United States has 
changed little about the way it regulates since the 1980s. If 
we want to remain a global economic leader, we have to 
modernize. We have to make the small businesses that provide 
livelihoods for about half of all American families a part of 
the solution, not the biggest loser in an economy that 
desperately needs them to succeed.
    Ms. Reichard, Ms. Herschkowitz, and Mr. Anderson, thank you 
for taking what I know is very valuable time away from your 
workplaces today to share your stories with us, and Mr. 
Goodwin, I look forward to hearing your thoughts on the 
difficulties your fellow witnesses face.
    With that, I yield to the ranking member, Ms. Velaazquez.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman. And welcome to all 
the witnesses.
    Recent economic data makes clear that small businesses 
continue to be a driving force in our economy. Small firms 
added 191,000 workers to their payrolls in the first two months 
of this year. We must continue fostering this type of growth. 
The regulatory process is important to our nation's small 
businesses in many ways. How regulations are formulated and 
approved can affect entrepreneurs' bottom lines very directly. 
This is especially true in the manufacturing sector, which is 
the focus of many worker protection, environmental, and energy 
regulations authorized by Congress. Did you hear me well? Those 
regulations are authorized by Congress. It is not a cabinet 
member who is sitting there and out of the air decides to enact 
regulation. We, members of Congress, we pass legislation, and 
that is the basis of those regulations.
    In that regard, this committee has taken an active role in 
ensuring more companies' needs are taken into account during 
the federal rulemaking process. I think it would be safe to say 
that in some instances, agencies have endeavored to examine how 
new regulations impact small firms. Unfortunately, in other 
cases, agencies have sidestepped their statutory responsibility 
to weigh how new rules will impact small entities and consider 
policy alternatives that might prevent economic harm. It is 
important we continue our work to ensure agencies pay close 
attention to small companies' needs. Lacking the economies of 
scale enjoyed by the larger competitors, small businesses often 
face higher compliance costs. Overall, when it comes to the 
regulatory environment, the challenge is balancing the benefits 
of important worker protections, environmental safeguards, and 
consumer safety measures against economic consequences. Too 
often, this debate is framed in a strictly either/or context, 
meaning we must choose between harming small businesses and 
preserving important protections that keep workers and 
consumers safe. Instead of taking that tact, it seems a better 
option is focusing on regulating in a thoughtful manner that is 
sensitive to the burden imposed on small companies.
    The regulatory review process that Congress and the 
president have updated is meant to achieve that goal, taking 
small firms' needs into account. In that regard, it is my hope 
we can learn more about how mechanisms, like regulatory 
flexibility and the Small Business Regulatory Enforcement Act 
are minimizing the regulatory impact on small companies. 
Likewise, there may be other ways that federal agencies can 
lessen small business compliance costs. Whether it is through 
technical assistance, legal advice or other steps, I would hope 
this sort of proactive thinking can also be part of the 
discussion.
    All of us share the goals of protecting workers, preserving 
our environment, and keeping consumers safe. Additionally, none 
of us want these protections to hurt small companies or impede 
job growth, and by working together, I think we can achieve 
both goals.
    With that, I yield back the balance of my time and again, I 
welcome all the witnesses, and I thank you for being here.
    Chairman CHABOT. Thank you very much.
    If Committee members have an opening statement prepared, I 
would ask that they be submitted for the record.
    And I will take just a moment to refer to our timing and 
lighting system here. Each witness gets five minutes, as I am 
sure you know. The green light will be on for four minutes. The 
yellow light will come on to let you know you have got a minute 
to kind of wrap up. The red light will come on and we would ask 
you to wrap up your testimony as close to that time as 
possible. We will give you a little bit of flexibility but not 
a whole not.
    And I would now like to introduce our panel, or at least 
portions of it, and a couple other members will also introduce 
other members.
    Our first witness is Cynthia Reichard. She is executive 
vice president of Arylessence. I want to make sure I pronounce 
it. Arylessence. And it is a flavor and fragrance company in 
Marietta, Georgia. Arylessence was founded by Ms. Reichard's 
uncle in 1977, and it is a family-owned and operated small 
business. She leads the company's teams of perfumers, 
evaluators, and marketing experts to develop innovative ideas 
for signature fragrances. Ms. Reichard is actively involved in 
several industry trade associations and is testifying on behalf 
of the International Fragrance Association of North America, 
and we welcome you here this morning.
    Our next witness will be Janis Herschkowitz. She is the 
president and CEO of PRL, Inc., in Lebanon County, 
Pennsylvania. PRL makes and supplies high quality metal 
castings for the defense, nuclear, and petrochemical 
industries. PRL was founded in 1972, when Ms. Herschkowitz's 
father purchased a small company with 13 employees. She became 
the president of PRL in 1989. Ms. Herschkowitz is testifying on 
behalf of the American Foundry Society, and we thank you for 
being here today as well.
    I would now like to turn to my colleague from Michigan, Mr. 
Huizenga, to introduce our next witness. I do that all the 
time, and I apologize.
    Mr. HUIZENGA. That is all right, Mr. Chairman. Well, we 
know that everybody from Ohio has got a thing against Michigan 
anyway. We will see what happens in the tournament here.
    Well, I do deeply appreciate the opportunity to come here 
and be here with this Committee today, and I appreciate you 
holding this important hearing. Additionally, I appreciate you 
allowing me to introduce my friend, Viktor Anderson, who is an 
engineer with a company called Structural Concepts, which is 
located in Norton Shores, Muskegon area, in my district, along 
Lake Michigan.
    Structural Concepts is an innovative manufacturer that has 
been operating for 43 years. I have had a number of chances, 
opportunities to go in and meet with them and kind of keep 
appraised of what is going on. And Structural Concepts is a 
market leader in energy-efficient, temperature-controlled food 
cases for florists, supermarkets, and food service retailers. 
Little companies you may have heard of, like one from Seattle 
called Starbucks, they are main suppliers for them. They have 
developed the industry's most energy-efficient and lowest life-
cycle cost refrigerated food display cases, and I know that we 
have all seen and experienced and interacted with their 
products or the products of someone like them.
    And because of newly proposed regulations, actually, not 
legislation implemented by Congress or passed by Congress, but 
in fact, regulations proposed and developed by EPA and the DOE, 
which are in conflict with each other, Structural Concepts' 
ability to produce their most self-contained equipment is in 
jeopardy.
    I look forward to having Viktor and the other witnesses 
share more about the challenges facing small businesses as they 
are holding Washington, D.C. bureaucrats accountable so 
employers like Structural Concepts and the others can grow, 
thrive, and create jobs in communities across this country. So 
again, Mr. Chairman, I appreciate the opportunity to be here 
with you, and Viktor, welcome.
    Chairman CHABOT. Thank you very much.
    Now I will yield to the ranking member so she can introduce 
our next witness.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman.
    I present to the committee Mr. James Goodwin. He is a 
senior policy analyst for the Center for Progressive Reform 
where he provides counsel on regulatory matters with a focus on 
environmental and energy policy. Prior to joining the center in 
2008, he worked at the Environmental Law Institute. He is a 
published author with articles on environmental law and policy, 
appearing in the Michigan Journal of Public Affairs and the New 
England Law Review. He graduated Magnum Cum Laude from the 
University of Maryland School of Law, and also the University 
of Maryland School of Public Policy where he graduated as 
valedictorian.
    Welcome, and thank you for being here today.
    Chairman CHABOT. Thank you very much for that introduction.
    And we will now go to our witnesses and we will begin with 
you, Ms. Reichard, and you are recognized for five minutes.

   STATEMENTS OF CYNTHIA REICHARD, EXECUTIVE VICE PRESIDENT, 
 ARYLESSENCE, INC.; JANIS HERSCHKOWITZ, PRESIDENT & CEO, PRL, 
INC.; VIKTOR ANDERSON, P.E. DIRECTOR OF ENGINEERING, STRUCTURAL 
CONCEPTS; JAMES GOODWIN, SENIOR POLICY ANALYST, THE CENTER FOR 
                       PROGRESSIVE REFORM

                 STATEMENT OF CYNTHIA REICHARD

    Ms. REICHARD. Thank you. Good morning. My thanks to 
Chairman Chabot, Ranking Member Velaazquez, and the members of 
the Small Business Committee for inviting me to testify.
    My name is Cynthia Reichard. I am the executive vice 
president of Arylessence, and we are a Georgia-based 
manufacturer that works in partnership with consumer product 
companies to develop fragrances that transform products into 
winning brands and consumers into passionate fans.
    I can unequivocally state that Arylessence is hindered by 
increasing regulatory burdens. Today, I will focus on one in 
particular administered by OSHA. I am proud to say that we are 
a family-owned and operated small business. As you said, my 
uncle founded Arylessence in 1997. He had a dream. He borrowed 
against everything he owned and opened with three employees. We 
now have 120, supplying 1,000 manufacturers in the U.S. and 
abroad. We care deeply about our employees. We train and 
promote from within. We provide excellent benefits, tuition 
reimbursement, and offer onsite educational and fitness 
programs.
    I am also proud to speak for the International Fragrance 
Association North America (IFANA), which represents the 
fragrance supplier industry in the U.S. Like all IFANA members, 
Arylessence sources ingredients from around the globe and 
crafts unique formulations incorporated into everything from 
perfumes and lotions to candles and cleaning products. In the 
U.S., IFANA's members market more than 90 percent of all 
scents, and support more than 240,000 American small 
businesses.
    Creating a fragrance is a marriage of art and science. We 
work with thousands of ingredients, like natural essential 
oils, such as lavender and rose, and manmade ingredients 
developed from sustainable raw materials. We, and our clients, 
face extensive regulations across agencies, including EPA, 
OSHA, FDA, DEA, DOT, and FAA. Plus, all of the state and local 
regulations. We have the equivalent of six full-time employees 
who are dedicated solely to regulatory compliance. Ever-
increasing burdens raise the cost of doing business in the 
U.S., limiting reimbursement in our company and our employees. 
In 2008, we planed to expand by building a large R&D facility 
and hiring 50 more. Due to the economy, the effect of increased 
taxes and costly compliance with regulations, we have delayed 
many of these plans.
    Today, I want to share our experiences in complying with 
OSHA's hazard communications standard, OSHA's interpretation of 
the globally-harmonized system for classification and labeling 
of chemicals or GHS. It began as a U.N. harmonization 
initiative billed as a cost-saving device that would provide 
consistency and ensure workers clearly understand the materials 
they are in contact with. In 2011, the Obama administration 
estimated it would realize 585 million in annualized savings 
for employers.
    In truth, GHS is the opposite. It is neither global, nor 
harmonized. And it has taken us three years to implement and 
cost us over half a million hard dollars in untold labor hours, 
all without safety benefits to employees.
    Complying is complex and requires extensive operational 
changes. Manufacturers and distributors must identify and 
classify chemicals based on a complicated GHS hierarchy. All of 
this information must be included on safety data sheets (SDS) 
and labels which must be affixed to workplace products. Labels 
must include color pictograms, and informational symbols, and 
signal words, and lengthy hazard statements.
    OSHA's different treatment of samples is problematic for 
industry. Canada and the EU allowed for small package 
exemptions. Despite pleas from manufacturers, OSHA did not, 
resulting in a costly and incredibly burdensome process.
    When asked to create a rose sence--I think, Arylessence 
typically sends two to five samples to a potential client, all 
containing different ingredients. Unlike industries that ship 
in large sample quantities, ours sends extremely small half-
ounce bottles. Now, rather than requiring a SDS only on 
products purchased, each small sample must include the complex 
labeling and safety data communications. Arylessence sends 
10,000 samples per year, requiring thousands of safety data 
sheets and labels for half-ounce samples that may never be 
sold.
    In addition, OSHA has issued no guidance as to how labels 
are to be affixed to small packaging. Without this label 
attached to this bottle, we are going to be subjected to severe 
OSHA fines. This is just one example of how small businesses 
like ours continue to struggle due to the increasing costs of 
unnecessary regulations. Regulation without representation 
needs to be replaced with clear understanding of the impacts 
and proactive solutions that do not unfairly disadvantage small 
firms.
    Thank you for the opportunity to testify.
    Chairman CHABOT. Thank you very much.
    Ms. Herschkowitz, you are recognized for five minutes.

                STATEMENT OF JANIS HERSCHKOWITZ

    Ms. HERSCHKOWITZ. Thank you, Chairman Chabot, Ranking 
Member Velaazquez, and members of the Committee. Thank you for 
the opportunity to testify before you to discuss regulatory 
burdens impacting the U.S. metal casting industry.
    I am Jan Herschkowitz, president of PRL, Inc., which is a 
holding company of a foundry and upgrading facility and two 
machine shops. My family moved to the States from Bolivia in 
1971 to live the American dream. In 1972, my father purchased a 
small company with 13 employees, which he quickly expanded. 
After leaving Zenith Electronics, I became president following 
his death in 1989. PRL currently has four manufacturing 
locations and is a proud supplier of high specification 
castings for the military, nuclear, and energy sectors. Our 
foundry, which is our smallest company, only has 13 employees. 
I am very proud of our highly-skilled workforce who play a 
critical role in our nation's defense and their dedication to 
quality is reflected in our customer base which includes 
Northrop Grumman, Curtis Wright, and PSE&G. I am testifying 
before you today as upcoming proposed regulations, although 
well intended, are so threatening that I fear it may jeopardize 
the future of the U.S. foundry industry.
    I am here on behalf of the American Foundry Society, our 
industry's trade association, comprised of more than 7,500 
members, over 80 percent of U.S. metal casters and small 
businesses employing 100 workers or less. Again, over 80 
percent of foundries employee 100 workers or less, with Ohio 
having the most foundries in the country. Over 90 percent of 
all manufactured goods and capital equipment are in some way 
dependent on castings. Our military utilizes metal castings in 
all sectors, including submarines, tanks, and other components, 
making the need for domestic production vital for our national 
defense.
    Metal casters are the world's original recyclers as we make 
new castings by remelting scrap metal and recycling the 
majority of the sand that we use. AFS members are highly 
committed to protecting their employees and implementing sound 
safety policies. PRL's culture is one of safety first as the 
risks of pouring molten metal are taken very seriously by every 
coworker, and we continually invest in safety equipment, 
consultants, and training.
    I will only discuss a few regulations that will impact us 
as my submitted testimony reviews the regulations in detail. 
Our biggest concern is OSHA's proposed crystalline silica rule, 
which would create a massive and complicated new regulatory 
structure for the control of silica. Under this ``one size fits 
all'' rule, it would ban dry sweeping and compressed air usage. 
Like all foundries, we manually clean out all of our mold using 
a small compressed air hose and we use dry vacs to keep our 
foundry clean. This is standard practice. Under this proposal, 
we would no longer be allowed to use dry sweeping and our only 
alternative would be to use wet vacuuming. As a foundry person, 
you know you never, ever want to introduce water into a foundry 
environment as an explosion could occur and lives would be at 
stake, yet this regulation requires it. It dismisses the use of 
personal protective equipment as a primary approach to 
protecting employees. Many employers have invested in clean air 
respirators, which are utilized where there is a substantial 
increased risk of silica exposure. Unfortunately, OSHA's 
proposal measures the air outside of the respirator, which is 
not indicative of what the coworker is inhaling.
    Expected cost of compliance for just the dust collection 
systems required are estimated at million dollars. This does 
not even include the cost of engineering time; obtaining new 
permits, which may not even be granted; administrative costs; 
and new ventilation and cleaning systems. Under this 
regulation, there is also no guarantee that the lower standard 
can be met, and there is uncertainty that it can even be 
properly measured. The estimated cost of this regulation by 
OSHA for the foundry industry is 43 million, while outside 
analysts estimate the cost to be over 2.2 billion annually. 
Obviously, the impact on small business was not properly taken 
into account.
    Foundries are also concerned with new regulations that the 
EPA is imposing on utilities. In order to compete in a global 
marketplace, U.S. foundries need adequate and affordable 
electric power. EPA has proposed two regulations to limit 
carbon emissions on new and existing power plants and have 
proposed an ozone regulation that could be the most expensive 
rule ever imposed. Our concern is that these costly regulations 
will hit foundries the hardest, increasing our energy costs and 
driving us offshore. We would like to see the OMB and other 
federal agencies also take into account the cumulative impact 
of all the regulations.
    In closing, keep in mind that the United States has the 
cleanest, safest, and most efficient foundries in the world. 
Adding more regulations which may not be verifiable and perhaps 
cost prohibitive will force some of our foundries to shut down 
and products will be taken offshore. This will have the 
unintended consequences of increasing world pollution, 
rewarding countries with unsafe work practices at the expense 
of diminishing our country's own economic growth and putting 
our national defense at stake.
    Thank you again for this opportunity, and I would gladly 
answer any questions.
    Chairman CHABOT. Thank you very much.
    Mr. Anderson, you are recognized for five minutes.

                  STATEMENT OF VIKTOR ANDERSON

    Mr. ANDERSON. Thank you, Congressman Huizenga for that kind 
introduction, and thank you, Chairman Chabot, Ranking Member 
Velaazquez, and members of this Committee. I appreciate the 
opportunity to testify today on behalf of Structural Concepts 
Corporation and the HRI.
    Structural Concepts was founded in 1972 and is located in 
Muskegon, Michigan. We manufacture commercial refrigerated 
equipment. Basically, we make the refrigerated merchandiser or 
display that you would find at your local grocery store or 
restaurant. Our products ensure that food is stored safely and 
is accessible in all corners of our country, from mom and pop 
shops to the largest supermarket chains.
    Like so many small businesses across the country, 
Structural Concepts is deeply rooted in our community. Our 
friends, our neighbors, and our town depend on jobs we provide. 
Unfortunately, small businesses like ours are facing 
significant new regulatory burdens from federal agencies, and 
that is why I am here today.
    First, it is important for me to tell you that my company 
is not anti-regulation. Like many of our fellow HRI members, we 
consider ourselves to be concerned citizens, responsible 
neighbors, and leading innovators. We have complied fully with 
previous regulations, and even exceeded our obligations. What I 
am here to talk about, however, is the burden of conflicting 
regulations on businesses like mine and the need for regulatory 
certainty. President Obama talked about this burden in 
Executive Order 13563 when he required federal agencies to 
tailor regulations to impose the least burden on society, 
taking into account among other things the cost of cumulative 
regulations. My hope is that this hearing can help illuminate 
the need for federal agencies to live up to this obligation.
    In 2009, DOE finalized energy efficiency standards for 
commercial refrigeration equipment. Our industry was required 
to come into compliance in 2012. Over those three years, we 
developed energy-efficient solutions, engineered them into 400-
plus refrigerated display cases, and tested them for energy 
consumption while still upholding our most important 
regulations pertaining to food and product safety. To 
accomplish all this, we had to dedicate thousands of 
engineering and testing hours that would otherwise be used for 
customization or developing products to increase sales and grow 
our company. We had to increase our capacity, accuracy, and 
throughput of our test labs. We had to develop new 
manufacturing processes and supply chains to produce our own 
condenser units. In the end, we reduced the carbon footprint of 
our entire self-contained product offering by approximately 50 
percent. We felt proud of this fact that we complied with the 
new DOE energy levels, and in most cases, went above and 
beyond.
    Unfortunately, we soon found out that was not enough. Last 
year, only two years after the compliance deadline for the old 
rules, DOE again updated its standard with more stringent 
energy efficiency criteria. The new standards, which have to be 
met by 2017, obviate many of the investments that were made to 
comply with the 2012 rule. Quite simply, after making huge 
investments based on regulatory reality, DOE moved the 
goalposts.
    To make matters worse, the EPA proposed a rule last year 
that will take away the current refrigerant used in all of our 
self-contained refrigerated systems on January 1, 2016. That is 
only nine months away. The alternative refrigerants EPA 
proposed were either too flammable and limited the amount of 
refrigerant we could use in each system, or they increased the 
energy consumption in our application. If finalized, EPA's 
proposal would have significantly raised energy consumption of 
all of our products and violated the new DOE energy 
regulations.
    After we submitted comments to the EPA, the agencies 
offered up alternative refrigerant we could use, our 450A. 
Although this is much better than the previous alternatives, it 
still has its challenges. Production of the new refrigerant and 
regulatory approval of compressors can take years to implement. 
All of our systems will again need to be redesigned and tested 
to see how the new refrigerant impacts energy efficiency.
    Here is our primary problem. DOE is requiring us to comply 
with new energy standards on January 1, 2017. EPA is proposing 
compliance with their new rule on January 1, 2016. While it is 
possible the EPA's compliance date will slip, DOE is mandated 
to review energy levels every five years. This means that in 
2022, we may have to review our product yet again.
    My point is this. If DOE and EPA do not coordinate their 
efforts, we could potentially be redesigning our product every 
two to three years for 12 or more years in a row at great 
expense. Combining the compliance burdens associated with these 
two rules could devastate our industry.
    My purpose today is to draw the Committee's attention to 
the regulatory burdens faced by small businesses everywhere. 
The regulations I just described both specifically designed to 
address the commercial refrigeration industry will not only 
increase our costs but will force Structural Concepts to reduce 
the number of products manufactured, throw uncertainty into the 
current and future products offered, and overall result in 
reduced employment. We are not a large corporation with a 
plethora of resources to redirect towards the review, testing, 
and compliance of new rules. We are a small, innovative 
manufacturer that makes refrigerated display cases, hardly the 
nexus point of the nation's energy and environmental policy 
battles.
    Our company and thousands of companies like ours across the 
nation make a big difference in the stability of the economic 
recovery which has only just begun to take hold. Again, we are 
not anti-regulation. We are simply asking federal agencies to 
consider the impacts of cumulative regulations on businesses 
like ours and live up to the guidelines articulated in 
President Obama's executive order.
    Thank you very much for the opportunity to be here today, 
and I look forward to answering questions.
    Chairman CHABOT. Thank you very much.
    Mr. Goodwin, you are recognized for five minutes.

                   STATEMENT OF JAMES GOODWIN

    Mr. GOODWIN. Thank you.
    Mr. Chairman, Ranking Member Velaazquez, and members of 
this Committee, I appreciate the opportunity to testify today 
on why ensuring a robust regulatory system is both necessary to 
and consistent with a strong economy in which smaller 
manufacturers can thrive and prosper.
    In my testimony today I will make three points. One, 
regulations are essential for safeguarding the public. Two, 
regulations can and do provide important economic benefits for 
smaller businesses, including those in the manufacturing 
sector. And three, the SBA Office of Advocacy appears to be 
working against the interests of smaller businesses and 
requires enhanced oversight from this Committee.
    Based on these three points, I will conclude by proposing 
an alternative approach to balancing strong public safeguards 
with the unique interests of real smaller businesses.
    Point one. Over the past four decades, U.S. regulatory 
agencies have achieved remarkable success in establishing 
safeguards that protect people and the environment against 
unacceptable risks, but serious hazard remain. By addressing 
these hazards, Americans would be even better protected.
    A case in point is OSHA's pending rule to protect workers 
against harmful silica exposures. Roughly two million U.S. 
workers toil in workplaces with silica levels high enough to 
threaten their health. OSHA estimates that thousands of workers 
die every year because of silica exposures that are within the 
current legal limits which were set more than 40 years ago. 
These workers suffer just the same whether they work for 
smaller businesses or larger ones. Once in place, OSHA's 
pending silica rule is expected to save up to 700 lives and 
prevent up to 1,600 cases of a deadly lung disease called 
silicosis every year. And these protections cannot come a 
moment too soon.
    This rulemaking has been in the works for over 18 years 
now, and the cost of these unnecessary delays has been 
thousands of deaths and debilitating illnesses that were not 
prevented but should have been.
    Point two. The economic benefits of regulation of 
businesses can be significant but are all too often overlooked. 
Here are just four types of these benefits. First and foremost, 
smaller businesses receive a significant productivity dividend 
when their workers and their workers' families are healthy and 
safe. Second, regulations can help to create new markets and 
opportunities for entrepreneurs. Third, regulations can even 
spur businesses to revolutionize their production processes in 
ways that lead to greater productivity and profitability. In my 
written testimony, I discuss in detail how OSHA's 1978 cotton 
dust rule has precisely this kind of effect. Fourth, as recent 
episodes illustrate, when industrial-scale catastrophe results 
from a failure to regulate adequately, the attendant costs tend 
to fall disproportionately on smaller businesses.
    Here I can speak from personal experience. My uncle in 
Alabama has struggled to keep the doors open to our family's 
decades-old restaurant supply company after the 2010 BP oil 
spill as the resulting downturn in tourism has obliterated much 
of the company's customer base. Stronger regulations that are 
necessary for preventing these catastrophes or for minimizing 
their harmful effects with us deliver particularly large 
benefits to many small businesses like his that might otherwise 
be caught in harm's way.
    Point three. In a recent GAO report, the GAO raised serious 
concerns about the Office of Advocacy's job performance. Among 
other things, the report describes how the GAO could find no 
evidence that the Office of Advocacy ever interacts with 
smaller businesses in the course of conducting its duties, such 
as developing comment letters on pending rulemakings. Yet, 
investigative work by my organization and by the Center for 
Effective Government has found copious evidence of 
communications between the Office of Advocacy staff and large 
trade associations that are dominated by their large business 
members. The bottom line is that smaller businesses continue to 
lack a voice in government, while the larger businesses they 
compete against have their already large voice amplified on the 
taxpayers' dime.
    In the brief time I have remaining, I would like to make a 
modest plea that we hit the target on this ongoing regulatory 
debate so that we can chart a new path forward. Moving forward 
means finding ways to help smaller businesses meet the 
regulatory obligations and to do so in ways that will not 
undermine their ability to compete with larger firms in their 
industry.
    Over the years, Congress has taken some small steps towards 
enhanced compliance assistance for smaller businesses. With 
some creative thinking, these efforts can and should be 
expanded. I will highlight just a few potential creative 
solutions here. First, providing monetary assistance in the 
form of grants or subsidized loans to truly small businesses so 
they can be at higher regulatory standards. Second, expanding 
existing regulatory compliance assistance programs. And third, 
partnering small businesses to promote beneficial synergies on 
regulatory compliance.
    Thank you. I would be pleased to answer any questions that 
you might have.
    Chairman CHABOT. Thank you very much. I appreciate your 
testimony. I appreciate the testimony of all the witnesses, and 
Ms. Reichard, I will go to you first, if that would be okay.
    You mentioned in your testimony about Canada and the 
European Union providing an exemption for labeling for small 
bottles while OSHA did not. How does this put the United States 
manufacturers like yourself at an economic disadvantage when 
you are trying to compete in international markets?
    Ms. REICHARD. Okay. From an economic disadvantage 
standpoint, our competitors do not have to also provide the 
same labeling. The process of producing that labeling for us 
means that we have had to buy new printers that are very 
expensive. We have had to make all that investment. We have to 
take the labor cost to produce all of those labels. And because 
OSHA gave no guidance, we have had to figure out a way to 
properly attach those labels to our product. And I can show you 
for us what that looks like. We have had to take our bottle, 
produce our printed material--in color now--and have the labor 
to fold it into four squares so that it fits into this 
chemically impervious pouch and attach it, each one, 10,000 of 
those products per year, and our competitors do not have to do 
so.
    Chairman CHABOT. Thank you.
    Ms. REICHARD. It is a complete disadvantage for us.
    Chairman CHABOT. Thank you very much.
    Ms. Herschkowitz, let me return to you. You talked about 
the silica rule. If that rule were finalized--you mentioned 
about the significant cost to you and the fact that it is 
arguable whether safety would be improved; in fact, in many 
instances, it might be just the opposite effect. If that rule 
went into effect, how would that impact your ability to grow, 
create more jobs? And I also noted, when Mr. Goodwin was 
talking about the silica rule, you seemed to cringe a little 
bit. And so if you would like to comment on that I would be 
happy to hear your----
    Ms. HERSCHKOWITZ. Absolutely. And again, this is a ``one 
size fits all'' rule. And we have 13 employees in our foundry. 
We pour one heat a day, and we are now being lumped in with the 
Bethlehem Steels of the world and all those other companies to 
be able to have to comply. We currently have three dust 
collection systems--one over our furnaces and we have what is 
called an AOD refining vessel which collects all the dust. We 
are also putting in a heat exchanger, which is going to get rid 
of some of the small fines and also get us a better quality 
casting.
    So we have a very strong safety program. We have employees 
internally. We have a Safety Committee. We have safety leaders. 
Anybody can stop a heat at any time if they feel that it is 
unsafe. They have OSHA masks that are qualified. We also have a 
clean air mask at the cost of, I think it was $10,000 in the 
powder burning area to be able to do that. So I do feel that 
our foundry environment is very, very safe and there is very 
little risk of silicosis. But realize that it is still a 
foundry. And if we were to implement this, if the four dust 
collection systems that we have already invested in, whether or 
not you can get a used one because foundry dust collection 
systems have to be much stronger. So if we could get a used 
one, maybe we would be looking at half a million dollars. And 
if not, it would be up to a million dollars.
    Now, realize this is a 13-person foundry with revenue of 
just over $4 million. So it becomes very, very difficult. And 
introducing water into a foundry process is terrible. As soon 
as you put water into molten metal you get a huge explosion. So 
if this regulation is passed, I am going to face the conundrum 
of whether or not we even adhere to it. Are you better off 
risking the lives of your employees to meet a regulation? I do 
not think so. I am very proud of our employees. They are very 
highly skilled, and I just very much fear that it could also 
not impact the foundry, but the foundry provides castings for 
our other employees. We have a total of 150 employees and all 
their jobs would be in jeopardy.
    Chairman CHABOT. Thank you. And the government should not 
put you in that position, in my opinion.
    Ms. HERSCHKOWITZ. Thank you.
    Chairman CHABOT. I have got little more than half a minute 
left. So Mr. Anderson, let me turn to you quickly.
    Do you have an estimate of how much time and money it will 
take for your company to reengineer its products to comply with 
the new energy conservation standard? And did anybody from the 
Department of Energy reach out to you to find out how it was 
going to affect a business like yours?
    Mr. ANDERSON. Yes. We were reached out to by a consulting 
company called Navigant Consulting early on. What we have 
invested, we probably--we have had thousands of manhours into 
it. So four engineers, four technicians working for nine months 
to comply with the 2009 rule. The 2017 rule is going to be 
slightly different where it is somewhat less of a leap since 
the last rule, but the problem lies in that we are gridlocked 
because the EPA now is requiring a new refrigerant. Or they 
actually took our refrigerant away. So we actually have no 
certainty on whether or not or what to engineer. So as far as 
how much will it cost, I guess it depends on--we might not even 
have the opportunity to do it.
    Chairman CHABOT. For what it is worth, that is the same 
thing I have been hearing from the heating and air conditioning 
folks in my district as well, and they are very concerned about 
it.
    My time is expired. I will now yield to the ranking member 
for five minutes.
    Ms. VELAAZQUEZ. Thank you, Mr. Chairman.
    Mr. Goodwin, many observers have noted the massive amount 
of statutory and presidentially-issued requirements and hurdles 
that agencies are subject to in the regulatory process. Some 
have even suggested that this has resulted in the ossification 
of the rulemaking process. To this point, research had found 
that it takes an average of 10 years for OSHA to develop and 
promulgate a health or safety standard. Do you believe that the 
regulatory process itself has become so overly burdened that it 
is in effect ossified?
    Mr. GOODWIN. Yes, I do share that view. Agencies do work 
under a large welter of procedural requirements that they have 
to satisfy during the rule-making process. I think a lot of 
these sprouted from good ideas but they have reached this point 
where they become duplicative and ultimately counterproductive 
so that they distract agencies from considering what is really 
important when developing a rulemaking and sort of send them 
off on these wild goose chases that ultimately do not lead to 
better regulatory solutions for the folks they are trying to 
protect or the small businesses that are ultimately subject to 
them.
    Ms. VELAAZQUEZ. Can you please explain how many 
regulations, and you mentioned it in your statement, benefit 
businesses, both big and small, especially when it comes to 
increasing the productivity of their employees? Can you 
elaborate on that?
    Mr. GOODWIN. Sure. You know, I think one of the best 
examples I have seen is a couple of years ago I was looking at 
the Regulatory Flexibility Act reviews that OSHA does on its 
existing regulations and there was this really interesting case 
study about OSHA's cotton dust rule. And what it found was that 
this rule directed the textile industry to institute new 
processes in manufacturing, and it reduced the workers' 
instances of this lung disease called brown lung disease. But 
what they also found--by 99 percent. It was by all accounts 
just a huge public health victory. But what they also found was 
this really interesting economic side benefit. Prior to the 
rule's implementation, the industry's productivity gain was 
increasing year over year by 2.5 percent. After the rule's 
implementation, their productivity gains were increasing by 3.5 
percent, and that was because this rule largely led these 
industries to sort of revolutionize their manufacturing 
processes and it was a win-win for workers. It was a win for 
the manufacturers and their productivity gains led to more 
profitability and increased employment rates.
    Ms. VELAAZQUEZ. Can you discuss your perspective as to how 
fuel standard regulations have been a real driver when it comes 
to the development of advanced technologies, energy 
technologies, and how have rules such as these contributed to 
the U.S. standing globally?
    Mr. GOODWIN. Sure. You know, as we tackle climate change, 
one of the simplest ways, the cheapest ways of reducing our 
global climate footprint is to adopt energy-efficient products. 
It is unavoidable. And what regulation can do is sort of help 
us move along that path in a more predictable, ultimately 
cheaper way I would say because the process will be smoother. 
And I think energy efficiency regulations in particular can 
help there by specifying clear rules of the road for everybody. 
And the manufacturers in the U.S. that are subject to them will 
ultimately be better positioned to manufacture the best, 
cheapest, most effective energy-efficient products, not only 
for folks at home, but also, ultimately, for markets abroad. 
And you know the manufacturers of these products in China and 
stuff, they are working hard on developing these products and 
they want to sell them to us.
    Ms. VELAAZQUEZ. Thank you.
    Mr. GOODWIN. I think we should sell them to them.
    Ms. VELAAZQUEZ. Mr. Anderson, the Department of Energy 
estimated that the commercial refrigeration rule will result in 
substantial energy savings to customers, many of which include 
small businesses, like restaurants, grocers, and convenience 
stores. However, there are significant costs on the other side 
of the equation to small manufacturers like yourself, as well 
as transitional costs to consumers. How do you propose that we 
best balance these costs and benefits in the rule-making 
process?
    Mr. ANDERSON. Well, as far as balancing the costs, for 
small manufacturers, I would like to ask DOE--I would like to 
have DOE make some changes as far as the 2017 rule and ask 
Congress to create a bill to actually remove the 2017 
restrictions, change the timeframe in between the intervals for 
when we have to redesign our product. Right now we have to 
redesign every five years. That does not give us any breathing 
room.
    Now there are cumulative regulations with the EPA. So the 
EPA is throwing in that we have to change our refrigerants. I 
am not off the subject. So we have to take into account what 
the energy efficiency will be with a new refrigerant. So they 
need to have a coordinated effort at some point in time. Right 
now we will be out of business if we are supposed to use R450A 
on January 1, 2016.
    What I suggest is that some type of bill be written so that 
in 2022, when the DOE needs to have their next revision of the 
standards, that they couple that with the EPA's proposal, and 
whatever refrigerant they may come up in between then, that way 
we can work on a supply chain, we can work on all the new 
innovations within the same amount of timeframe that we can 
have a good efficient product.
    Chairman CHABOT. Thank you.
    Ms. VELAAZQUEZ. Thank you.
    Chairman CHABOT. Thank you. The gentlelady's time is 
expired.
    If the ranking member is okay with it, I am going to yield 
to the gentleman from Michigan who is not on this Committee, 
but we would extend the same courtesy to members on the 
democratic side if you would like to do that in the future.
    The gentleman from Michigan is recognized for five minutes.
    Mr. HUIZENGA. Mr. Chairman, I deeply appreciate that, and 
my other colleagues that are on the Committee, allowing me to 
sneak out of our other hearing and come here.
    I just want to get this straight. We just heard that in 
battling our climate footprint, having regulations in conflict 
like this, help move along in a more predictable and cheaper 
way American business, there are clear rules of the road, and 
that your employees have become more productive as you have 
been trying to build your businesses. I am just curious what 
your response is to that. And if we can start with Ms. 
Reichard.
    Ms. REICHARD. Okay. So we are more productive at less cost, 
et cetera. I do not think regulations actually accomplish that. 
Let me say that we support strong health and safety regulations 
based on sound science that protect consumers.
    Mr. HUIZENGA. And by the way, if I can just jump in.
    Ms. REICHARD. Yeah, sure.
    Mr. HUIZENGA. It is kind of sad that everybody----
    Ms. REICHARD. I know. It is sarcasm.
    Mr. HUIZENGA.--has to put this disclaimer in.
    Okay. You are looking at the grandson of a man who was part 
of the original sit-down strikes with Oldsmobile in Flint, 
Michigan. All right? My family is directly tied to those first 
needs of safety and concern for employees. We are well beyond 
the discussion about safety for employees when we are talking 
about the EPA and DOE not getting on the same sheet of music 
here and as you are dealing with your regulations. But please, 
quickly go ahead.
    Ms. REICHARD. Right. So we are not asking for regulations 
to be eased in regard to health and safety; we are asking for 
them to be worked on in partnership with industry so that they 
do not end up being unnecessarily burdensome and complex. A 
more complex program does not always compute to a better 
program, understanding that nothing has changed in regard to 
the materials that we are delivering or that our workers are 
handling. It is simply more complicated, and now they have to 
be trained. They have got a lot more training. They have to be 
using different systems. We have taken perfectly good printers, 
and I am a huge advocate for sustainability, and we have had to 
throw them away. They have been obsolete.
    Mr. HUIZENGA. There is a little bit of irony there.
    Ms. REICHARD. So nothing good has come out of this 
particular regulation as far as health and safety goes.
    Mr. HUIZENGA. Ms. Herschkowitz?
    Ms. HERSCHKOWITZ. Congressman, first, I would submit to you 
that we never would have won World War II had we had--I will 
start over. Congressman, I would submit to you we never would 
have won World War II had we had half these regulations in 
place.
    But having said that, we are in a global marketplace. A 
friend of mine was recently in a foundry in China and they were 
pouring molten metal without shoes. And he asked them, ``How 
can they not have on safety equipment?'' And the response was, 
``There are 20 people that want that particular job.'' So we 
have to absorb that. We have to----
    Mr. HUIZENGA. It is an unlevel playing field.
    Ms. HERSCHKOWITZ. It is a very unlevel playing field. And 
what we are doing is we are pushing jobs to China. We are 
pushing jobs to India where they do not have these regulations.
    Mr. HUIZENGA. And Mr. Anderson, I am assuming that hiring 
consultants to figure out the labyrinth of new federal 
regulations is not exactly viewed as job growth; correct?
    Mr. ANDERSON. No, it is not. We wear many hats in our 
company. I wear a lot of hats myself. It is not easy reading 
through 6,000 pages of regulatory rules of that stack over 
there.
    Mr. HUIZENGA. And again, this was just February. And by the 
way, February, there was a federal holiday, so thank the Lord, 
because there would be another stack on top of here.
    Mr. ANDERSON. Yeah, we absorb all the cost of regulatory, 
so as far as reducing the costs or making us more competitive, 
regulations do not do that for Structural Concepts. And to 
increase energy efficiency in our product, we typically have to 
go to the next technical component. Take it from a fluorescent 
light to an LED light, and we have to wait for that lifecycle 
curve for the cost to come down. And with the speed at which 
all this stuff is coming at us, that lifecycle cost gets pushed 
into our product. It will come down and it has come down, but 
we still have to absorb a lot of that cost in the meantime.
    Mr. HUIZENGA. Mr. Chairman, coming from industrial states 
like Ohio and Michigan, and even that little place called 
Indiana down below us I think, the states and the people that 
come from states that build things understand what it means to 
have a supply chain. And I think so often these regulations do 
not reflect that reality. And I am sure all three of you have 
dealt with that.
    And I know, going to Structural Concepts, that has been 
expressed explicitly. It is not just good enough to have a 
product to use; you then have to have people that are going to 
manufacture it. You are then going to have the people that are 
going to be supplying it. And you have to have critical mass on 
it. You have to then reengineer all of your equipment. Is that 
not, and maybe just in closing you can touch on that. And 
again, thank you.
    Mr. ANDERSON. Yeah, for 2017, or even the EPA, we will have 
to go through and look at every single refrigeration component 
in each of our 400--or actually, probably 600 models now. That 
is no small chore. Machine-size compartments can change. The 
physical cabinets inside can change dimensions, so we will have 
to change the whole product structure potentially. It is not an 
easy task to accomplish this.
    Chairman CHABOT. Thank you very much. The gentleman's time 
is expired.
    The gentlelady from North Carolina, Ms. Adams, is 
recognized for five minutes.
    Ms. ADAMS. Thank you, Mr. Chair. And thank you to all of 
you who testified today.
    Mr. Goodwin, during your testimony you touched on some very 
troubling tales regarding the Small Business Administration's 
Office of Advocacy Works and the apparent lack of input from 
actual small businesses in the decisions that are made. This 
office is meant to serve as a voice for small businesses within 
the Federal Government, and obviously it is necessary to ensure 
that the office carries out this directive. But more 
importantly, we must ensure that small businesses have adequate 
representation. In your opinion, what are some steps that can 
be taken to ensure that the SBA Office of Advocacy Works is 
listening and speaking for real small businesses?
    Mr. GOODWIN. Well, I would echo a lot of the 
recommendations that were made in the GAO report, and they 
called upon the Office of Advocacy to do a better job 
documenting their outreach efforts in developing 
recommendations that they include in their comment letters. So 
I think just greater transparency would go a long way because 
if people know who they are talking to, then they will be much 
more strongly encouraged to talk to small businesses. So I 
think that is a big part of it.
    I think a big part of it would be certain agencies have to 
do something known as--or I call them SBREFA panels. Under 
SBREFA, they have to do panels where they discuss rules before 
they are formally proposed, and they could take steps to make 
sure that actual small businesses are participating in those 
panels rather than representatives of large trade associations.
    Ms. ADAMS. Okay. And do you think it is important to see 
that not only small businesses have a voice but also that small 
communities within small businesses, such as black, women, 
minority-owned business, have guaranteed representation within 
this office?
    Mr. GOODWIN. You know, I have not really thought about 
minority representation but it certainly would make sense. I 
think it is important to have, I mean, in particular to have 
small businesses. I mean, if their statutory mission is to 
serve as a voice of small businesses, then they should at least 
be listening to the voices of small businesses. And from what I 
have seen and from what the GAO has seen, that is just not 
happening. Instead what we are seeing is emails between the 
Office of Advocacy staff and these lobbyists for large trade 
associations. At the very minimum, that needs to change.
    Ms. ADAMS. All right, the black and the minority-owned 
business voices matter as well. Thank you for our comment.
    Mr. GOODWIN. I do not disagree.
    Ms. ADAMS. You spoke of some ways that we can avoid an 
either/or mentality when it comes to protecting the public and 
empowering small businesses. One was to partner small 
businesses to promote beneficial synergies on regulatory 
compliance. So can you expand just a little bit upon what it 
would look like and how it would benefit small businesses in 
meeting regulation standards?
    Mr. GOODWIN. Sure. You know, I was just trying to think of 
creative solutions for how regulatory compliance, you know, 
which nobody likes, could be turned into a plus for folks. And 
I know that the Small Business Administration, which is 
distinct from the Office of Advocacy, runs contract programs in 
connection with government services. So building off those 
contracting programs, perhaps a program could be designed where 
the SBA would identify the kinds of small businesses that might 
provide compliance assistance, so things like small law firms, 
small accounting firms, that sort of thing, engineering 
consultant firms, that sort of thing. And then they could be 
partnered up with small businesses in this way where, you know, 
one small business's compliance provides business for another 
small business. Everybody wins.
    Ms. ADAMS. Okay. You also spoke about how regulatory 
benefits exceed regulatory costs by almost eight to one, 
reducing the burden to not only small businesses but the 
American public in general. So can you speak more to the 
savings that can be achieved by regulatory regulation 
compliance, for instance, lost workdays, less hospital visits, 
et cetera?
    Mr. GOODWIN. Sure. One thing that is worth emphasizing on 
that eight-to-one cost benefit analysis is that it is highly 
skewed away from benefits and in favor of costs. So that 
probably understates it a great deal. But taking on your 
question, one of the big costs that the Clean Air Act has been 
able to address over the last 20 years or so is reducing missed 
workdays, reduced activity days, missed school days. If a kid 
is sick, his parents have to take time off. All these sorts of 
things are important benefits of these public health 
regulations that save society a lot of money and do a lot of 
good for business as well.
    Ms. ADAMS. Thank you. I think I am just about out of time. 
I yield back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    I will now yield five minutes to the gentleman from Kansas, 
Mr. Huelskamp.
    Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate your 
technical language. It was either stupid or dumb regulation.
    Chairman CHABOT. Dumb.
    Mr. HUELSKAMP. Dumb. And for the record, with unanimous 
consent, I am opposed to ``dumb'' regulations as well.
    But ma'am, if I might, can you hold up your bottle and the 
big sheet? And as you understand the regulations, these are 
coming--and I did not catch, which agency is requiring this?
    Ms. REICHARD. This is the GSH regulation out of OSHA.
    Mr. HUELSKAMP. Okay. OSHA is requiring that. How did they 
tell you to wrap that around the bottle?
    Ms. REICHARD. That is an excellent question. There is 
actually no guidance given from OSHA in regard to applying this 
label to this bottle.
    Mr. HUELSKAMP. Okay.
    Ms. REICHARD. So every single company has had to adopt 
their own avenue for accomplishing that. Some companies wrap--

    Mr. HUELSKAMP. And what would OSHA--what would they fine 
you if you did not comply with some mysterious regulation?
    Ms. REICHARD. Well, OSHA files--I cannot answer that 
question because OSHA files are typically done on a basis where 
they do an analysis of each individual time that it happened 
and how many times you shipped. It would be a lot of money.
    Mr. HUELSKAMP. And what is toxic in that bottle?
    Ms. REICHARD. Pardon me?
    Mr. HUELSKAMP. What is toxic in that bottle?
    Ms. REICHARD. There is nothing toxic in that bottle.
    Mr. HUELSKAMP. There is nothing toxic in that bottle?
    Ms. REICHARD. No, there is nothing toxic in this bottle.
    Mr. HUELSKAMP. Okay. I want to clarify that.
    I had a letter from a manufacturer, National Association of 
Manufacturers member. I was at, at least in their community 
last week and they had an OSHA inspection, and this is a little 
sticker on a shift knob on a forklift, and it is a $1.41 
sticker, and they received about an $800 fine, multiplied by 
two. But OSHA had been by the facility numerous times and they 
did not see it missing, I guess, until this time. Before they 
left the facility, OSHA had--they had actually put the sticker 
on the gearshift, but that was not good enough. So I would take 
an exception with Mr. Goodwin's comment that nobody likes 
regulatory compliance. From what I understand for OSHA, they 
love regulatory compliance.
    Ms. REICHARD. Yes.
    Mr. HUELSKAMP. And from what I hear from my manufacturers 
and the other businesses subjected to this compliance, to quote 
my manufacturers, ``I have never been through an inspection 
when issued citations were directly related to the actual 
hazards we work with.''
    Ms. REICHARD. Exactly.
    Mr. HUELSKAMP. And the whole issue here is to reduce 
hazards. From what I hear from OSHA and other numerous 
agencies, it is not about the hazards; it is about the 
enforcement.
    Ms. REICHARD. Yes.
    Mr. HUELSKAMP. And so you run in these crazy situations 
where you have the administration as you indicated, going after 
raising our costs of electricity, and the end result is we 
drive your business offshores. And we drive them to other 
countries, like China, that have a much lower standard. And so 
no new coal-fired power plants, but they build them every day 
in China. The end result is we worry about global pollution 
supposedly, but the end result is we make that happen.
    But I wanted to ask Mr. Goodwin, if I could, an issue is 
the Waters of the U.S. Rule, and I see the Center for 
Progressive Reform has been strongly in favor of that rule. Is 
that still your position?
    Mr. GOODWIN. Yes, sir.
    Mr. HUELSKAMP. Okay. And I would say I totally disagree 
with that position. If you want to create uncertainty in the 
agricultural industries, small manufacturing industries, 
construction industry, the industries here, every industry is 
using some type of water. It is going to be devastating, not 
because of the impact but because we do not know what it is. No 
one knows. And it might create tremendous jobs in Washington, 
D.C., and creates jobs for think tanks, but at the end of the 
day, you folks have to comply.
    Who here--and Mr. Anderson might read the Federal Register. 
I am sorry you have to do that, but what about you two ladies? 
Who regularly reads the Federal Register in your shops?
    Ms. REICHARD. We cannot actually spend the time reading the 
Federal Register. Our company spends over $750,000 a year 
belonging to different trade associations. I heard some 
comments in regard to trade associations should not be able to 
call on SBA, and I thoroughly disagree with that. Small 
businesses lack resources. We have to band together in order to 
be able to afford the cost to analyze all of these bills that 
are coming out of Washington, D.C., and we have to band 
together to have the bandwidth, for lack of a better word, to 
approach Washington, D.C., to try to work with the agencies, to 
create better regulations that are not too complex, that 
actually improve safety and health and wellness of the 
employees they are working for every day.
    Mr. HUELSKAMP. Yes, Janis?
    Ms. HERSCHKOWITZ. We rely on our trade association, the 
American Foundry Society. We also have an outside safety 
consultant who is available 24/7 that we can call at any time 
if any of our plants have a concern.
    Mr. HUELSKAMP. Is he paid for by the government, I guess? 
Of course not. Of course not. And that is my concern because 
these regulations--I think Mr. Goodwin even agreed with that--
they hit harder on small businesses than the big guys.
    Ms. HERSCHKOWITZ. Oh, my gosh, yes.
    Mr. HUELSKAMP. And you will see many of the larger 
companies, they actually lobby in favor of these regulations 
because they fear competition from the small businesses.
    Ms. HERSCHKOWITZ. Interesting.
    Mr. HUELSKAMP. And I have seen that again and again. And so 
I appreciate your testimony, and continue to do that. I would 
also appreciate you, if based on your testimony, you do get 
harassment back from your regulatory agencies. I am certain the 
chairman--I definitely would like to know about that. I have 
members, I have constituents that are afraid to tell me and let 
me make public about outrageous actions by agencies because 
they fear the harassment and regulatory retaliation. And there 
is no room for that. So I yield back, Mr. Chairman.
    Chairman CHABOT. Thank you. The gentleman's time is 
expired.
    The gentlelady from Michigan, Ms. Lawrence, is recognized 
for five minutes.
    Ms. LAWRENCE. Thank you, Chairman, and Ranking Member.
    I wanted to say hello to Mr. Anderson. I am from Michigan, 
and I am really glad to see a Michigander her.
    As you know, I represent the state of Michigan, which ranks 
among the top five states in manufacturing employment. I 
strongly believe that manufacturers are the backbone of this 
nation's economy. And as we grow manufacturing, we always see 
an uptick in our economy.
    But I also strongly believe in the efficient use of energy 
and reducing waste. Both of these efforts have generated 
billions of dollars in savings for Michiganders. So what I want 
to talk to you about is the Department of Energy, the DOE's 
revision of energy conservation standards for commercial 
refrigeration equipment, which is your industry; correct?
    Mr. ANDERSON. Correct.
    Ms. LAWRENCE. Can you briefly walk me through and make me 
understand or explain the real impact your company obtained by 
complying with the 2012 DOE rule, and then secondly, the impact 
that the DOE's justification, or what you felt was the 
justification in issuing a new rule in 2014?
    Mr. ANDERSON. Yes. The 2012 rule, Structural Concepts, we 
embraced that rule. We are a company that strives to make our 
product more efficient. So we went above and beyond what was 
required by the standards. Sometimes we went probably, in some 
cases, 15 percent below what was required, maybe even more in 
some equipment classes. That took us three years to do. First, 
you had to develop all the concepts and components that would 
achieve this energy efficiency. Then you had to review the 
current product to see how you could engineer that in to each 
refrigerated display case. And then you physically had to do 
it. Once you got it, you had to build the case, and then you 
had to test it and verify it. So there was a lot of time, a lot 
of money spent on building equipment, building test labs to 
achieve all that.
    Self-contained, we do make the most efficient refrigeration 
self-contained open display case in the U.S., we believe. So 
when 2017 came along, they took another 20 percent out. In most 
cases we can still achieve that energy with minimal 
engineering, so it will not affect us that much. But we still 
have to review every single model. We still have to go through 
all the bills and review what is in it, review the energy, and 
our remote units, they are self-contained, and remote is a 
machine room compartment that is separated from the display 
case. Remote units, those suffer the most. So to comply with 
the 2017 rule, we will have to switch as a standard to across-
the-board LED lights in all of our product. So fluorescent 
lights will go away in 2017 as the rule stands.
    So reviewing every single, all 600 models, will put another 
burden on us, and it will actually eliminate another product in 
the United States of, at least for us, the fluorescent light 
bulb.
    Ms. LAWRENCE. Do you agree that the three years it took for 
you to comply and verify that you are now realizing a reduction 
in energy costs, so there has been a savings to you?
    Mr. ANDERSON. There has been a savings to our customers in 
terms of lifecycle costs.
    Ms. LAWRENCE. But to you as an industry?
    Mr. ANDERSON. To us as an industry, we as an industry have 
reduced the energy costs in the United States; yes.
    Ms. LAWRENCE. Okay.
    Mr. Goodwin, frankly, the burden on small manufacturing 
caused by overregulation is a term that we hear far outweighs 
the burden that agencies face in complying with rulemaking 
requirements. Do you agree with that?
    Mr. GOODWIN. So the question is that the cost that 
regulations impose on small businesses are greater than the 
costs----
    Ms. LAWRENCE. Of rulemaking?
    Mr. GOODWIN. Sure. Yeah, I guess. Yeah, of course. I have 
never thought about the question, but yeah, of course.
    Ms. LAWRENCE. Okay.
    But what are the costs to our environment, our economy in 
that continually challenging current energy efficient standards 
and improving them?
    Chairman CHABOT. The gentlelady's time is expired but you 
can answer the question.
    Ms. LAWRENCE. Thank you.
    Mr. GOODWIN. Thank you.
    The cost of not complying with some of these regulations, 
the cost of inaction or the cost of delay can be huge, you 
know, in terms of regulations to address climate change, 
obviously. Well, not obviously, but they are, I mean, it could 
mean the difference between avoiding the worst consequences of 
climate change or not. For something like a workplace health 
and safety standard, the inaction on certain standards could 
mean the difference between hundreds or even thousands of lives 
saved or illnesses prevented every year. So, I mean, they are 
huge; yeah.
    Ms. LAWRENCE. Thank you, Mr. Chairman. I yield my time.
    Chairman CHABOT. Thank you very much. The gentlelady's time 
is expired.
    The gentlelady from American Samoa, Ms. Radewagen, who is 
the chair of the Subcommittee on Health and Technology, is 
recognized for five minutes.
    Ms. RADEWAGEN. Thank you, Mr. Chairman.
    My question is for all three small manufacturer witnesses--
Ms. Reichard, Ms. Herschkowitz, and Mr. Anderson. What could 
the Federal Government do to make it easier for your companies 
to grow, remain competitive, and create new jobs?
    Ms. REICHARD. Okay. Well, I will agree with Mr. Goodwin at 
the end of the table, that a SBREFA panel would have absolutely 
been beneficial in this process. The panel certainly would have 
revealed the reality that there would be no cost savings in a 
nonharmonized system and could have brought to life proactive 
solutions that industry could have provided to actually benefit 
worker safety. Some of the best ideas come from our workers or 
they come from consumers. Why should industry not be at the 
table?
    Ms. RADEWAGEN. Ms. Herschkowitz?
    Ms. HERSCHKOWITZ. I agree also, a SBREFA panel. Getting 
more input upfront because this regulation with the silica 
obviously you do not introduce water into that environment. As 
I said earlier, you should not have ``one size fits all'' 
regulations. It should be consistent across the board, and it 
should also look at the regulations where these jobs might be 
going, which are not even close to what we are being able to do 
now. And you should make sure that the existing regulations are 
in place and are being adhered to before we add on more, which 
I do not think is the case with the silica sand. Thank you.
    Mr. ANDERSON. I kind of mentioned it before, but the EPA 
for us--the EPA and the DOE need to have a coordinated front 
for us to be able to efficiently move forward with energy 
efficiency and environmental protection.
    The other thing that could be done is a more in-depth 
look--and this is specifically for the DOE--of equipment--there 
are 49 equipment classes, and I am of the belief that there was 
not a deep enough look or, nor they based some of their 
validation on one data point. I have been in the industry for 
23 years. I have grown up in test labs. I am a hands-on guy. I 
do not see how the Department of Energy can come up with a 
standard based on calculations and validate that with one 
point. I do not care how good of an engineer you are. Yeah, it 
boggles my mind.
    Ms. RADEWAGEN. Thank you. I yield back. Thank you, Mr. 
Chairman.
    Chairman CHABOT. The gentlelady yields back.
    The gentleman from Nevada, Mr. Hardy, who is chair of the 
Subcommittee on Investigations, Oversight, and Regulations is 
recognized for five minutes.
    Mr. HARDY. Thank you, Mr. Chairman.
    This conversation really gets me. I have a million 
questions to ask being a former business owner myself.
    I am going to go to Ms. Herschkowitz first, and talk about 
the silica sand.
    Ms. HERSCHKOWITZ. Okay.
    Mr. HARDY. In my industry, we are unable to have a confined 
space, so we have to provide a uniform any time we have to do 
any sandblasting with silica sands. So we provide a uniform, do 
such. But where you are having to do full intakes, do you think 
it is fair that all I can do is with a uniform and there is no 
shop that I am in, do you think that I should be required to do 
the same that you are and all industry and have the same 
requirements you do in the manufacturing end to have full-blown 
evacuation systems, I guess? Or whatever you are having to do?
    Ms. HERSCHKOWITZ. Well, it would be ludicrous but I think 
that Congress should be able to do that to see how difficult it 
is. But the one thing about the silica sand is with the 
respirators, for instance, when you said about sandblasting, we 
have respirators where the person--and it cost $10,000 a piece 
two years ago to be able to put them in and it is $5,000 a year 
to maintain--but somebody that goes into a sandblasting 
facility actually puts on this respirator and they are 
breathing clean air.
    Mr. HARDY. I will interrupt you right there. I understand 
where you are at.
    What I am trying to get to with this situation, there are 
different applications all over this country of how we do it.
    Ms. HERSCHKOWITZ. Right.
    Mr. HARDY. We do bridges, all kinds of projects. Before you 
can pour concrete, you have to evacuate any rust on that, which 
you have to go through that system.
    Ms. HERSCHKOWITZ. Sure. Sure.
    Mr. HARDY. Or we have heavy-duty equipment. We have to 
clean parts. It cannot be done in a shop, so you are out in the 
desert.
    So my comment is, when regulators come up with these 
ideals, the desert southwest, which is California, Nevada, 
Utah, New Mexico, Arizona. You can go on and on and on. Major 
pockets of recreation areas that are nothing more than silica 
sand. We play on them. We go to our beaches. We play on them.
    Ms. HERSCHKOWITZ. Correct.
    Mr. HARDY. Should there be a regulation there to force 
people to have to stay off that? Because I believe that silica 
sand is probably more dangerous from the environmental side, 
from our use of recreation, than it is----
    Ms. HERSCHKOWITZ. Yeah, it would be ludicrous. Absolutely 
not.
    Mr. HARDY. So let us force all our businesses back down to 
California or down to New Mexico or Mexico or someplace else. 
Is that not what you feel like is happening to you sometimes?
    Ms. HERSCHKOWITZ. Exactly. We get our wedron sand out of 
the Midwest, which is the cleanest, roundest sand that you can 
have, and that is what we utilize.
    Mr. HARDY. All over the desert southwest. Sand dunes just 
drift.
    Ms. HERSCHKOWITZ. Absolutely.
    Mr. HARDY. From spot to spot.
    Ms. HERSCHKOWITZ. And we have this better sand trucked in 
from Chicago area.
    Mr. HARDY. I want to hurry and change gears before I lose 
my time.
    Ms. HERSCHKOWITZ. Okay.
    Mr. HARDY. Okay. As a small businessperson, I have found 
over the years that what made my success as a business 
competing against another was utilizing my employees to come up 
with a better mousetrap, to constantly talk about safety issues 
and things like that, and try to implement those OSHA 
regulations, but also make sure that we were even safer than 
what OSHA did. Would you say that most businesses strive to do 
that because that is a competitive environment; we do it 
naturally on our own?
    Ms. HERSCHKOWITZ. Absolutely.
    Mr. HARDY. All three of you can answer that.
    Ms. HERSCHKOWITZ. You want to protect the welfare of your 
employees. And we have huddles. We can bring up safety ideas. 
We have safety committees with managers and hourlies. Yes.
    Mr. HARDY. Anybody else want to address that?
    Mr. ANDERSON. Yes. We are a continuously-improving 
environment, and we look for innovation, and we are fierce 
competitors when it comes to reducing energy and complying to 
regulatory.
    Mr. HARDY. Thank you. And I think that is the way things 
should be done. And we just talked about it just a second ago. 
Thank Ms. Radewagen for that comment. But that is what I 
believe needs to happen from the Federal Government side. The 
Federal Government continues to try to grow its overreach of us 
instead of working with the departments or the businesses to 
find out how they can do a better job. I think business would 
like to work to make sure it is a safe environment, but do you 
believe you also continue to have accidents no matter how many 
safety regulations you have got? What my comment is there is 
can we regulate people against their own stupidity, so to 
speak?
    Ms. HERSCHKOWITZ. No, you cannot.
    Mr. HARDY. Thank you very much. I yield back.
    Chairman CHABOT. Okay. The gentleman yields back.
    We will go to a brief second round, and I will yield to the 
ranking member if she has any questions.
    Ms. VELAAZQUEZ. I take offense when people say that it is 
stupidity. I can't look in the eyes of the children of my 
sister-in-law who is dying of asbestos exposure and tell her 
that regulations are stupid or are dumb. Even if it means 
saving one life. When you look at West Virginia, or the BP oil 
spill and the impact that it had----
    So Ms. Reichard----
    Chairman CHABOT. Will the gentlelady yield for just one 
second?
    Ms. VELAAZQUEZ. Sure.
    Chairman CHABOT. Okay. I think just to clarify on behalf of 
a number of my colleagues, I think what we were referring to is 
we are not against regulations; we are against dumb 
regulations.
    Ms. VELAAZQUEZ. I understand.
    Chairman CHABOT. That does not mean all regulations are 
dumb. Thank you for yielding.
    Ms. VELAAZQUEZ. But what I am saying is the lessons that we 
have learned from the past have told us that even when it means 
saving one life--and let me just say that I am very proud that 
workers in America wear shoes and masks.
    Ms. HERSCHKOWITZ. So am I.
    Ms. VELAAZQUEZ. I do not want them like in China.
    Ms. HERSCHKOWITZ. I agree.
    If I could just----
    Ms. VELAAZQUEZ. Ms. Reichard?
    Ms. REICHARD. Sure.
    Ms. VELAAZQUEZ. I am at that age where I get prescription 
drugs almost every month, and I am very happy when I go to the 
pharmacy to get my prescription drugs and see prints or 
instructions or do's and dont's that are written in a label or 
papers because the print does not fit the small package, the 
small bottle. So what is the difference between that? When you 
go to the pharmacy, you would like to get as much information 
as you need to have in order to make sure that you follow the 
prescription instructions. What is the difference between what 
is required from pharma or the pharmacy industry and the fact 
that you need to add that label to your little bottle?
    Ms. REICHARD. Sure.
    Well, first and foremost, the difference between 
pharmaceuticals and fragrance ingredients is extreme.
    Ms. VELAAZQUEZ. Yeah, but the fact is that the label and 
the information that is required because it does not fit on the 
label, it has to be printed.
    Ms. REICHARD. Before we had the new GHS program, we were 
already providing appropriate labeling information our 
products. What I am saying is now the information that we are 
providing is much more complex, and that complexity is 
unnecessary in our particular case. You know, there is a crisis 
of misinformation and scientific misunderstanding in this 
country regarding chemicals and toxicity, and the chemicals 
that we have, as they are being used, are not toxic. So having 
to provide this extensive toxicity information is just 
distracting. It does not provide for additional health and 
safety information.
    Ms. VELAAZUEZ. And so you have the scientific information 
that says that none of the ingredients or elements in that 
little bottle could cause reactions, allergy reactions?
    Ms. REICHARD. Let me expand on that. It is important to 
know that everything is made of chemicals, and anything can be 
toxic at a certain level. But as we use them, they are not 
toxic. Oxygen and water can be--either if you do not have 
enough of them it is a problem; if you have too much of them it 
can be deadly. In order for an ingredient to affect a human or 
its toxicity to be determined. You cannot just look at the 
presence of a chemical. So labeling based just upon a 
presence----
    Ms. VELAAZQUEZ. I hear you. I hear you, and I do not have 
much time.
    Ms. REICHARD.--is not beneficial.
    Ms. VELAAZQUEZ. All I can say is that I have not heard 
anyone saying that they are allergic to water or oxygen.
    I yield back. Thank you, Mr. Chairman.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    As far as, the ranking member is clearly very passionate 
about safety, and I would agree with her on that, and I think 
we all are on this Committee on both sides of the aisle. Mr. 
Huizenga mentioned that his grandfather had been one of the 
strikers on one of the issues on the auto lines when they were 
striking relative to safety issues, and so I think we all feel 
that way.
    Just to give some of the panel members an opportunity to 
respond to some of the concerns that were raised, I would ask 
Ms. Herschkowitz first if you would like to----
    Ms. HERSCHKOWITZ. Yeah. I appreciate that, Mr. Chairman.
    I just wanted to clarify. Our company is not advocating 
that we do not wear shoes or protective masks. We spend over 
$100,000 a year on safety to make sure that our employees are 
safe. We are always looking for ways to improve upon. My intent 
on saying that was only to give an analogy as to the other 
countries that we are competing against. But it is safety first 
at our place, and I just wanted to make that clarification. I 
care very much about our employees.
    Chairman CHABOT. Thank you very much.
    Ms. HERSCHKOWITZ. Thank you.
    Chairman CHABOT. Ms. Reichard?
    Ms. REICHARD. In addition, I would like to respond and say 
that the fragrance industry absolutely provides all the 
information regarding potential fragrance allergies and that is 
part of our process. So that information is included within our 
information.
    Chairman CHABOT. Thank you very much.
    I want to thank all the witnesses for their participation 
today.
    I have a couple more to respond. Mr. Goodwin, did you want 
to say something? Go ahead, and then I will go to Mr. Anderson. 
I am going to give this side the opportunity to close.
    Go ahead, Mr. Goodwin.
    Mr. GOODWIN. You know, I guess just building off what was 
just discussed, that is why we like small businesses, because 
they do--one of the many great things that they do is they are 
closer to their customers, they are closer to their employees. 
So ultimately, they are the ones that are in compliance. They 
are the ones that are going above and beyond what regulations 
as of them, and that is great. And, you know, there is nothing 
you can criticize about that, obviously.
    What I would say is that what regulations can do is they 
level the playing field. They make sure that those businesses 
that are not so upstanding can be held to account, and they 
ultimately level the playing field. You know, I think that is 
just one of the additional benefits that regulations can 
provide for small businesses.
    Chairman CHABOT. Thank you.
    Mr. Anderson?
    Mr. ANDERSON. Yes. Safety is our primary concern at 
Structural Concepts. I do not think that anybody in this room 
would want to pull a tuna fish sandwich out of one of our cases 
that were made so energy-efficient that it could not hold 
temperature anymore. So what would Structural Concepts do? We 
would have to obsolete that product.
    I failed to mention that we comply to the FDA food code for 
41 degrees. We use regulatory UL standards to make sure that 
our product is mechanically and electrically safe so our 
customers do not get shocked, do not have shelves fall on them, 
so on and so forth. Now the DOE is obviously pushing for 
energy, so we have to balance that, and the EPA is pushing for 
new refrigerants. We have to balance that as well. So we have 
four regulations that we have to comply to on our product and 
balance all of those. And safety is the highest.
    Chairman CHABOT. Thank you very much.
    And I am almost out of time myself. I would just conclude 
that mention that we, certainly on both sides, we have heard 
the testimony of all the witnesses. I think all four of you did 
a very commendable job, and thank you for coming and telling us 
what you are dealing with.
    We passed legislation in the House recently, the Regulatory 
Flexibility Improvements Act, and in general, what that would 
do is it would require when the federal regulators, the 
agencies that write all these regulations that one month down 
there, when they write these regulations, they have to reach 
out to small businesses who are going to be dramatically 
impacted by these regulations, and get some input. You know, 
how they might adversely, both directly and indirectly, impact 
your businesses because you are, after all, the job creators. 
You create seven out of 10 jobs in the new economy, and we 
ought not to be making your ability to grow and prosper and 
creates jobs for more people more difficult. And I think that 
is evidence down there that oftentimes we do. And that is not 
to say there are not important safety regulations that you 
should have to follow. My analysis is that in general, the vast 
majority of businesses do try to follow the regulations. You 
look out for your safety. You are not the bad guys.
    So anyway, all members will have five legislative days 
should they want to revise or extend their remarks.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you very much.
    [Whereupon, at 12:35 p.m., the Committee was adjourned.]
                            A P P E N D I X

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

    Good Morning. My thanks to Chairman Chabot, Ranking Member 
Velaazquez and the members of the Small Business Committee for 
inviting me to testify today on the regulatory challenges that 
small businesses like mine face.

    My name is Cynthia Reichard, and I am the Executive Vice 
President of Arylessence. Arylessence is a leading and 
creatively driven U.S.-based fragrance and flavor company. We 
work in close partnership with our clients which include major 
consumer product and cosmetic companies to develop 
strategically inspired fragrances and flavors that transform 
our client's products into winning brands and consumers into 
passionate, loyal fans.

    On behalf of Arylessence, I commend the efforts made by the 
Committee to alleviate burdensome regulations that 
significantly hinder innovation and growth, particularly for 
small businesses.

    Mr. Chairman and members of the committee, I can 
unequivocally say that Arylessence has been hindered by 
unintended regulatory burdens. I would like to discuss a few of 
these with you today and focus on one in particular that my 
company and other fragrance houses continue to struggle with 
that is administered by the Occupational Safety & Health 
Administration (OSHA).

    First, let me provide some background information on our 
company and the broader fragrance industry. Arylessence is a 
flavor and fragrance company that was founded in 1977 by my 
uncle. I am proud to say that we, like the majority of 
companies within our industry, are a family-owned and operated 
small business. When my uncle founded the company thirty eight 
years ago, he had a dream. He took out a mortgage on his house 
and a loan on his car, borrowed money from friends, and opened 
up shop with three employees. I am proud to say that 
Arylessence now has 120 full-time employees, 3 part-time 
employees and many contract employees at our headquarters in 
Marietta, Georgia. We develop and ship fragrances to over 1000 
different manufacturers in the U.S. and across the globe. As a 
family-owned company, Arylessence cares deeply about its 
employees: we train and promote from within, offer excellent 
benefit programs at minimal costs, provide tuition 
reimbursement, and offer financial education, nutrition 
education, and on-site exercise programs.

    I am proud to be here representing not only my company, but 
also the International Fragrance Association of North America 
or IFRA North America. IFRA North America is the principal 
trade association for the fragrance supplier industry in the 
U.S. and Canada. Like all IFRA North America members, 
Arylessence sources ingredients from around the globe and 
crafts unique fragrance formulations that are incorporated into 
a variety of consumer products including fine fragrances, 
personal care products such as lotions, soaps and shampoos, 
household and institutional cleaning products, and home care 
products including candles and air fresheners, just to name a 
few. Collectively, IFRA's North America's members comprise a 
$1.6 billion industry responsible for more than 90 percent of 
all scents marketed in the U.S. and Canada. The fragrance 
industry directly supports more than 720,000 jobs and an 
additional 240,000 small businesses in the U.S. alone.

    You may not have ever thought about how scent plays an 
important role in the purchase of products, however, 75 percent 
of human emotions can be triggered by our sense of smell. Our 
sense of smell is critical to our well-being, and scent alone 
is a key consumer purchase driver.

    Creating a fragrance requires a marriage of art and 
science. We deal extensively with thousands of different 
ingredients including natural materials such as essential oils 
like lavender and rose oils as well as man-made materials 
developed in laboratories and sourced from a variety of 
sustainable raw materials. As such, we--and our clients--face 
extensive regulations across several agencies including EPA, 
OSHA, FDA, DEA, DOT, and FAA. It's important to point out that 
these are just the federal regulations and that this list of 
acronyms does not include the myriad of extensive state and 
municipal regulations of which we must be prepared to comply.

    The impact of complying with these regulations continues to 
raise the cost of doing business in the United States. Quite 
frankly, the cost associated with complying with the current 
regulatory landscape can effectively bar new companies from 
entering our industry today. These ever increasing burdens 
limit our reinvestment in our company and our ability to take 
even better care of our employees who have worked so hard to 
help us be where we are today.

    Arylessence employs the equivalent of six full-time 
employees whose job functions are dedicated solely to 
regulatory and compliance issues. In addition, we are currently 
in the process of hiring an additional regulatory professional 
to ensure our ability to track and comply with all of the 
different regulations our industry and our clients industries 
face.

    When the state of Georgia's unemployment rate more than 
doubled to over 10%, we worked hard to ensure that we did not 
have to lay off a single person within our workforce. Although 
it meant making difficult choices for our business, we are 
proud of the job security that we were able to afford our 
employees and their families.

    While I can give you many examples of how existing laws and 
regulations have impacted our operations I will focus on one in 
particular. In 2008 we planned to purchase land and expand our 
operations by building a large new facility for research and 
development and hiring an additional 50 employees. As a result 
of the economic downturn and further exacerbated by costly 
compliance with new laws and regulations taking effect, we have 
delayed many of those plans for several years. Despite an 
improving economy, regulatory and compliance costs continue to 
limit our capital resources, and, unfortunately, our 
expansionary plans have been reduced and many of them remain in 
the planning stage today. Just think about how many jobs would 
have been created by that expansion and how this is happening 
across the USA.

    The bottom line is that there are far too many regulations 
that impose far too heavy a burden on American small businesses 
like Arylessence.

    In the last five years, our company has been facing some of 
the most economically significant laws and regulations. In 
particular we have faced rising health insurance premiums under 
the Affordable Care Act, higher income taxation rates and a 
variety of rules and regulations administered by the 
Occupational Safety & Health Agency (OSHA).

    Impact of the Affordable Care Act

    Ninety-six percent of small businesses have faced rising 
health insurance premiums in the wake of the Affordable Care 
Act, and Arylessence is no different. Between 2012 and 2014 we 
experienced an average 13.6% annual increase in our health 
insurance premiums. For 2015, our provider has given us a 
premium increase of 41 percent. These increases have been 
discouraging and are detrimental to our bottom line. We are 
continuing to look at options and regrettably we are now in the 
position of having to pass some of these additional costs on to 
our employees.

    Rising Income Tax Rates

    Also like many small businesses, Arylessence has had to pay 
higher taxes. We are an S-Corporation and our income tax rate 
was raised from 35% to 39.6% to fund the Affordable Care Act. 
In 2014, our Federal tax bill alone increased exponentially. 
Think about how many people that would employ or how much 
equipment that would buy.

    OSHA & The Globally Harmonized System of Classification & 
Labeling

    Today I would like to focus my testimony and share our 
experience in complying with the OSHA's regulation known as the 
Hazard Communication Standard. This standard is OSHA's 
interpretation of the Globally Harmonized System of 
Classification and Labeling of Chemicals (GHS). An experience, 
that serves as an example of a burdensome regulation that has 
not resulted in safer workplaces. In fact, it has caused 
significant cost increases for our company.

    GHS began as an international initiative to standardize the 
labeling and classification of hazardous chemicals in the 
workplace. GHS was billed and sold to the industry as a cost 
saving device that would make it easier for companies to 
exchange information globally. But the truth is the exact 
opposite: it has cost Arylessence significant amounts of money 
without adding any safety to consumers or employees.

    In order to comply with GHS, a manufacturer or distributor 
must identify the chemicals present in their product shipments, 
and classify the risk of those chemicals based on a hierarchy 
established by GHS.

    All of this information must be included on safety data 
sheets or ``SDSs'' and labels which must be affixed to product 
containers in the workplace. The labels must include color 
pictograms and a number of other informational elements 
including symbols, signal words, and lengthy hazard statements.

    This is a complicated set of forms that required us to 
adjust our operations to comply.

    Prior to GHS, most countries had their own individual 
regulations addressing the handling of chemicals in the 
workplace. With the increase in global commerce, the United 
Nations began a new initiative, known as GHS, which aimed to 
ensure consistency and predictability for all companies that 
were operating globally and so that workers would have a clear 
understanding of what materials they were in contact with. The 
objective behind the regulation was reflected in its name; a 
Globally Harmonized System of the classification and labeling 
of chemicals.

    OSHA adopted GHS in March of 2012 and unfortunately, like 
many other countries, interpreted the regulation in a unique 
way resulting in nonconformity with the global system. OSHA is 
currently in the latter part of the implementation phase.

    Though there are many examples where OSHA deviated from 
GHS, one of the most difficult issues for my company, and the 
fragrance industry in particular, is the treatment of small or 
sample sized products. Despite the pleas of manufacturers to 
OSHA and even though other jurisdictions including Canada and 
the European Union allowed for an exemption for small bottles, 
OSHA elected to not give any special consideration. The result 
is a new, arduous, costly and incredibly burdensome process 
that has not increased safety and has hindered commerce.

    In creating a fragrance for a customer, such as a 
honeysuckle scent for a hand lotion, Arylessence may ship a 
batch of 2-5 samples of honeysuckle fragrances to a potential 
customer. Each fragrance will be unique and contain different 
ingredients.

    Unlike many industries that ship samples of chemical 
products in large containers, the fragrance industry typically 
deals in extremely small quantities. For example, the sample 
fragrances that are shipped generally measure 0.5-1.0 ounces 
and are contained in small vials.

    Now, under the new GHS regulation, rather than requiring a 
safety data sheets on only those products purchased, each 
individual sample, no matter how small, must include a label 
and safety data sheet in order to comply with GHS.

    On average, Arylessence sends out 10,000 samples per year, 
each of them a unique mixture of ingredients. And now, under 
the new regulation, on an annual basis we need to create 10,000 
unique safety data sheets and labels for even half ounce 
samples of fragrances. And since the research and development 
of scents is done for no cost to our clients in the hopes of 
securing a production contract--this represents added cost that 
cannot be directly passed on to our customers.

    Adding to these new costs is the fact that OSHA has issued 
no guidance in regard to how the labels must be affixed to 
small packaging or containers. We must fasten these labels to 
half and one-ounce bottles. The practicality of this is almost 
impossible and we have received no guidance from OSHA other 
than it must be done. Despite our pleas, OSHA has not provided 
an exemption on this issue like other jurisdictions. If we do 
not affix the label on this vial we will be out of compliance 
and are subject to facing severe fines from OSHA.

    Additionally, there are significant implementation problems 
that OSHA has refused to address.

    The computer technology to comply with this law did not 
exist when the implementation dates were announced. The 
industry is required to comply with GHS by June 1st of this 
year. By not phasing in the requirements, Arylessence has had 
to develop and implement new computer systems, purchase and 
install new printing devices, and must simultaneously get 
information from suppliers, complete the analysis to fill out 
the datasheets and labels, and send it along to our customers 
who also have the same compliance date.

    GHS was sold to the industry as a cost savings initiative. 
In 2011, the Obama Administration estimated that GHS 
implementation would realize $585 million in annualized savings 
for employers. In our experience, compliance with GHS has thus 
far taken us three years to implement and cost our small 
business well over $500,000 and untold labor hours to 
implement.

    The new GHS data sheet requirements have forced us to 
purchase databases of chemical ingredients. However, the 
information in these databases was not compatible with GHS 
formatting and so we had to marry the databases with our own 
proprietary software, which required a $200,000 investment.

    In addition, we had had to retool all of our hardware and 
documentation to meet the new GHS formats. Labeling has been a 
long-standing requirement for companies who deal with 
chemicals, and Arylessence previously invested in the requisite 
printing equipment, training, and supplies. Our equipment was 
effectively obsolete when the new regulations forced us to 
purchase new printers with enhanced color capabilities. The 
average cost of one of these industry-grade printers--capable 
of thousands of GHS labels per year is over $20,000. We require 
five. This is happening across the country.

    Arylessence and other members of IFRA North America have 
invested significant time and money literally reinventing the 
wheel to comply with GHS regulations, and yet, there is no 
clear solution in sight for many U.S. manufacturers with a 
looming implementation deadline of June 1, 2015.

    Conclusion

    Mr. Chairman, members of the committee, over the past eight 
years I have witnessed a shift in our industry. Associations 
like IFRA North America used to focus more resources on 
building business opportunities, networking, and raising 
awareness of this unique industry, but today they must largely 
focus on regulatory and policy issues.

    Small businesses like ours continue to struggle despite a 
more positive economic outlook. This is largely due to the cost 
of increasing regulations: regulations like GHS that do not, in 
fact, result in safer workplaces, harmonized communications nor 
enhanced commerce.

    U.S. manufacturers simply need an environment conducive to 
growing and creating jobs. We need economic stability, 
certainty and predictability and common-sense regulations that 
don't unfairly disadvantaged small firms.

    Arylessence along with all IFRA North America members 
follow the highest safety and environmental standards for 
fragrance manufacturing and fragrance ingredients. We are proud 
of this commitment and we are happy to comply with common sense 
regulations that ensure the safety of the environment, our 
employees, and our customers.

    Arylessence and IFRANA stand ready to work with you in 
helping to support legislation that insures regulation without 
representation is replaced with understanding of impacts and 
proactive solutions.

    Thank you again for this opportunity to share my 
experiences with the committee; I am happy to answer any 
questions you may have.

    About Arylessence

    Arylessence develops, creates and manufactures flavors and 
fragrances for a vast array of products including perfume and 
cologne, cleaning products, candles, shampoos, detergents, and 
lip balms. Our inventions are not sold directly to the 
consumer, but rather to an institutional or consumer product 
company where they are incorporated into the final product.

    Arylessence was founded in 1977 and is a family-owned and 
operated small business. We have 120 full-time employees at our 
headquarters in Marietta, Georgia, and we provide products to 
over 1000 different customers in the U.S. and worldwide.

    About IFRA North America

    IFRA North America represents over 90% of all fragrances 
developed and sold in the United States and Canada. Their 
member companies create and manufacture fragrances and scents 
for home care, personal care, home design and industrial and 
institutional products, all of which are marketed by consumer 
goods companies. IFRA North America also represents companies 
that supply fragrance ingredients, such as essential oils and 
other raw materials, used in perfumery and fragrance mixtures.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

    Chairman Chabot, Ranking Member Velaazquez and members of 
the Committee, thank you for the opportunity to testify before 
you today to discuss significant concerns regarding growing 
regulatory burdens and a mounting wave of upcoming regulations 
that will face my company and the U.S. metalcasting industry. 
As you know, the burden of regulation falls disproportionately 
on manufacturers, particularly on small manufacturers because 
compliance costs typically are not affected by economies of 
scale.

    My name is Janis Herschkowitz, President and CEO of PRL 
Inc. PRL is a holding company for three subsidiaries, which 
includes a foundry, an upgrading facility and two machine 
shops. I am a second generation Pennsylvania small business 
metalcaster employing over 150 team members in Lebanon County, 
Pennsylvania. My mom, sister, and I are the sole owners of our 
business.

    Metal castings have applications in virtually every capital 
and consumer good and are truly the foundation for all other 
manufacturing. I am testifying on behalf of the American 
Foundry Society (AFS), our industry's major trade and technical 
association, which is comprised of more than 7,500 individual 
members in every state in the country. Our industry is 
dominated by small businesses, with over 80 percent of U.S. 
metalcasters employing 100 workers or less. In fact, many are 
still family-owned, like mine, and oftentimes, simply don't 
have the sales revenue or resources to implement a whole host 
of new regulations.

    My family moved to the States from Bolivia in 1971 for 
political reasons to live the American dream. In 1972, my 
father purchased a small company with 13 employees whose 
primary function was to x-ray and upgrade castings for the 
nuclear power industry. He expanded the core of his business 
and purchased two machine shops. Following his death in 1989, I 
became President and went on to open a new company, which was a 
foundry. This was considered a bold decision at the time, 
particularly since the number of foundries in the U.S. has been 
steadily declining. The foundry was the final piece of the 
puzzle which allowed PRL to provide our customers with full 
vertical integration capabilities.

    Today our foundry pours both ferrous and non-ferrous alloys 
to product metal castings ranging in weight from 10 to 12,000 
pounds for the military, nuclear, energy, petro-chemical and 
commercial sectors.

    Due to size limitations, I was unable to bring any of the 
castings we produce. However, I have several pictures which are 
attached to my written testimony [Attachment A]. I also brought 
a small valve block that we machined out of a piece of bar 
stock for the military. Our companies are proud suppliers of 
high specification castings for many industries. As an example 
we manufacture high specification finished machined pump and 
valve bodies used in nuclear submarines and power plants around 
the world. We have a highly skilled workforce, and we play a 
critical role in our nation's defense. Our team's dedication to 
quality is reflected in our customer base which includes such 
important suppliers as Northrop-Grumman, Curtiss-Wright, 
Electric Boat, and PSEG.

    Under my leadership PRL has overcome many challenges 
including opening a foundry, being highly leveraged while 
losing the majority of our customers due to defense cuts, and 
surviving the onslaught of foreign out sourcing. I know 
firsthand the challenges of trying to meet a payroll and the 
stress of having to borrow money to keep the doors open.

    In order to compete in the global marketplace, our 
companies have continually invested in our employees, and in 
new equipment and technology. We provide good paying life 
sustaining jobs and a strong benefit plan to our employees, who 
are highly skilled in their craft and are the main reason PRL 
is successful today.

    As an increasingly critical and growing supplier for our 
national defense, we are cautiously looking to expand our 
operations for the future. The fact is there are very few 
foundries remaining in the U.S. who are able to meet the high 
specifications standards required by our nation's military. 
However, we are reluctant to invest too much in our businesses, 
given our concerns over new and upcoming costly federal 
regulations which I highlight below.

    We are already trying to cope with a significant increase 
in health care costs and now we are looking at additional 
regulations, which if imposed could easily cost us over one and 
half million dollars to implement with absolutely no guarantee 
that it will be effective. Of particular concern is our small 
foundry which only employs 13 people. The bulk of the 
regulations would hit our small foundry the hardest, and to put 
it bluntly as a small business owner we would need to determine 
if it is even worth the cost of compliance. This is tragic. Our 
company operates off of a credit line, and in order try to be 
in compliance we would have to attain a capital equipment loan, 
which we would much rather invest in purchasing new production 
equipment, which would create new jobs.

    U.S. Foundry Industry is Critical to the U.S. Economy

    The U.S. metalcasting industry is the sixth largest 
industry in America and the second largest supplier of castings 
in the world, after China. U.S. metalcasters ship cast products 
valued at more than $20 billion annually and directly employ 
over 200,000 people.

    Today, there are 1,965 operating casting facilities, which 
is down from 2,170 five years ago and, 3,200 plants in 1991. 
This reduction can be attributed to the recession, 
technological advances, foreign competition and tightening of 
federal, state and local regulations. Nearly 600 foundries 
produce iron and steel castings, while another 1,400 make 
aluminum, brass and bronze castings.

    More than 90% of all manufactured goods and capital 
equipment use metal castings as engineered components or rely 
on castings for their manufacture. The industry produces both 
simple and complex components of infinite variety. From key 
components for aircraft carriers and automobiles to home 
appliances and surgical equipment, cast metal products are 
integral to our economy and our way of life.

    The foundry industry is vital to the automotive and 
transportation sectors. In fact, automobiles, trucks, rail 
cars, and other transportation equipment utilize 38% of all 
castings produced in the U.S. These types of castings include 
engine blocks, crankshafts, camshafts, cylinder heads, brake 
drums or calipers, intake manifolds, transmission housings, 
differential casings, U-joints, suspension parts, flywheels, 
engine mount brackets, front-wheel steering knuckles, hydraulic 
valves, and a multitude of other castings.

    Foundries are also the mainstay of national defense. All 
sectors of the U.S. military are reliant on metal castings for 
submarines, jet fighters, ships, tanks, trucks, weapon systems 
and other vital components.

    The industry is widely dispersed throughout the country, 
with the highest geographic concentration of facilities located 
in Ohio, Alabama, Pennsylvania, Indiana, Illinois, Michigan, 
California, Texas, and Wisconsin. In fact, Ohio is the leading 
metalcasting state in the nation.

    Metalcasters are experts in making new, engineered 
components by re-melting old ones. Discarded appliances, sewer 
grates, water meters, automobiles, and other metal objects once 
destined for the landfill are valuable materials to our 
industry. In fact, our industry uses scrap metal for 85% of its 
feedstock for iron and steel castings. This practice results in 
the diversion of 15 to 20 million tons of material from 
disposal in domestic landfills every year.

    Challenges Confronting PRL Inc & US Foundries

    Manufacturers rely on a stable, balanced and common-sense 
regulatory environment to create jobs and fuel economic growth. 
However, the burden of unnecessarily costly rules weighs 
heavily on their ability to grow and create jobs. Federal 
regulation is estimated to cost more than $2 trillion annually.

    The burden of regulation falls disproportionately on small 
businesses and manufacturers. Dollars spent by manufacturers on 
regulatory compliance for unnecessarily cumbersome or 
duplicative regulations are dollars not spent on capital 
investment or hiring new employees.

    Today, the metalcasting industry continues to face major 
roadblocks--by both the most intense global competition in our 
history and the increasing costs associated with new and 
upcoming federal regulations and other actions, including 
executive orders, by our government. American metalcasters need 
sound policies in taxation, energy, labor, trade, health care, 
education, infrastructure and, most certainly, regulation.

    Highlighted below are some upcoming regulations that will 
significantly impact PRL and the foundry industry:

    U.S. Department of Labor--Occupational Safety & Health 
Administration

    AFS members, including our company, are highly committed to 
protecting their employees and developing and implementing 
sound policies that advance health and safety. AFS provides 
critical information and tools for its members to continuously 
improve their safety performance including in-plant 
consultation and safety courses. AFS publishes over 60 Health 
and Safety guides specific to the foundry industry. In 
addition, the association conducts an annual Safety Boot Camp 
and Environmental, Health and Safety Conference, as well as 
webinars on a variety of key foundry safety topics.

    Our culture is one of ``SAFETY FIRST''. PRL has a Safety 
Manager as well as Safety Leaders at each location. The provide 
safety and health training for all employees on an ongoing 
bases. We have a safety committee, which is certified by the 
State of Pennsylvania, with representatives from every level of 
our organization, recommendations are encouraged and taken 
seriously, and more experienced workers are tasked with 
mentoring our younger co-workers. We send our personnel to 
outside safety conferences, including AFS' Safety Boot Camp, 
and have a contract with an outside safety consultant who is 
available 24/7 to answer any questions which may arise. PRL has 
also brings in outside safety consultants as needed, including 
experts from Indiana University of Pennsylvania.

    However, of significant concern to the foundry industry is 
the Occupational Safety and Health Administration's (OSHA) 
proposed crystalline silica rulemaking.\1\ In 2013, OSHA 
proposed a comprehensive and complicated new regulatory 
structure for the control of crystalline silica. Silica 
(quartz), one of the most common minerals on earth, has a 
critical role in a wide spectrum of the economy, including 
construction, energy, foundries and manufacturing, consumer 
goods, agriculture, transportation, and technology. The U.S. 
foundry industry uses and recycles millions of tons of silica 
sand per year to produce critical metal castings.
---------------------------------------------------------------------------
    \1\ U.S. Occupational Safety and Health Administration's proposed 
rule Occupational Exposure to Respirable Crystalline Silica, Sept. 13, 
2013, Docket No. OSHA-2010-0034.

    The proposed rule is potentially the most far-reaching 
regulatory initiative ever proposed. It would sharply reduce, 
by half, the existing permissible exposure limit (PEL) for 
crystalline silica. Not only will this require most foundries 
to spend an estimated million dollars on additional dust 
collection systems, but there is no guarantee that this 
standard can even be met. In addition to the significantly 
reduced PEL, OSHA's proposal includes requirements for 
regulated areas or written access control plans, prohibitions 
on work practices, medical surveillance, mandates extensive and 
costly engineering controls respiratory protection, training 
---------------------------------------------------------------------------
and hazard communication, and recordkeeping.

    Key Foundry Concerns with OSHA's Proposed Silica 
Rulemaking:

     Prohibits Certain Work Practices Which Contradicts 
Existing Industry Safety Practices.

            OSHA bands dry sweeping, compressed air and 
        employee rotation as control methods. For many 
        foundries, compressed air is the only feasible method 
        to clean complex castings, particularly when the parts 
        are going to support our nation's defense. Wet 
        vacuuming can damage equipment and create a significant 
        explosion, which risks lives. Every foundry person 
        knows you never introduce water in to a foundry 
        environment, and yet this regulation requires it!

            Dismisses the use of personal protective equipment 
        (PPE) as a primary approach to protecting employees; 
        instead, relies on the outdated ``hierarchy of 
        controls'' that emphasizes much more costly, 
        disruptive, and often less effective, engineering and 
        work practice controls.

     Underestimates and/or Completely Omits Cost of 
Equipment & Processes.

    A number of pieces of equipment and system costs, such as a 
new dust collector, which can easily run over $1 million to 
install, were not accounted for by OSHA. Other examples 
include:

                   Cleaning--professional cleaning 
                would cost $1 per square foot of facility, plus 
                $400 million a year for downtime.

                   Ventilation--OSHA calculates annual 
                cost of ventilation at $5.33 per cubic feet per 
                minute (CFM) vs. the foundry experience of more 
                than $20 per CFM, and completely omits 
                engineering, air modeling and permitting costs.

            OSHA failed to consider the effects of compliance 
        on current EPA regulations. Many foundries will be 
        forced to redesign and install new ventilation systems. 
        This will trigger a large number of foundries to make 
        changes to their air permits, which can take at least a 
        year to obtain from their states. OSHA's proposal 
        provides just one year to come into compliance with the 
        rule. In the case of PRL, if the permit cannot be 
        attained we could conceivably be forced to shut down 
        and over 150 hardworking co-workers would lose their 
        jobs.

     Is Not Technologically or Economically Feasible.

            Dust control, especially at the low exposure levels 
        OSHA is recommending, is challenging and complex. The 
        sharply reduced PEL presents enormous feasibility 
        challenges. Foundries will have to exhaust all feasible 
        engineering and work practice controls to meet the new 
        reduced PEL. There is not a one-size-fits all solution 
        that is guaranteed to work. Some foundries may spend 
        millions of dollars retrofitting and/or rebuilding in 
        order to implement the various types of engineering 
        controls (essentially trial and error) while attempting 
        to comply with the standard. [Currently, protective 
        equipment (e.g., respirators) or other measure may be 
        used to keep workers' exposure below the PEL whenever 
        engineering controls are not feasible.]

            There are certain operations, such as grinding and 
        knock-off/sorting, where no matter how much is spent on 
        controls, consistent compliance will not be achieved.

     Utilizes Outdated SBREFA Report.

            OSHA declined to conduct a second small business 
        panel review under the Small Business Regulatory 
        Enforcement Fairness Act (SBREFA), choosing to let 
        stand the outdated 2003 report. Reliance on a report 
        that solicited input on a different proposal a decade 
        ago is simply not adequate outreach to the affected 
        stakeholders. Furthermore, it raises serious concerns 
        that OSHA has not used the best available data or 
        techniques to quantify the costs and/or benefits of the 
        rulemaking. As a member of both AFS and National 
        Federation of Independent Business, I worked hard to 
        get this law passed, and now to see its original intent 
        being totally disregarded is disheartening at best.

     Fails to Examine the Adequacy of the Supply of 
Occupational Health Professionals.

            There will be a need for a large number of 
        industrial hygienists and labs in order for the 
        impacted sectors to comply with the proposed 
        regulation. There is a significant risk that the lack 
        of available service providers or the resulting 
        escalation in cost of their services will render 
        compliance with the proposed rule within the schedule 
        proposed by OSHA technically and economically 
        infeasible. OSHA's proposal would require employers to 
        achieve complete compliance with the proposed PEL 
        within one year of the effective date of a final rule. 
        Exposure assessment would be required within six months 
        of the effective date despite the fact that OSHA's 
        proposed laboratory testing standards have two years to 
        come into compliance.

     Drastically Understates Costs to Comply--Exceeds 
9% of Foundry Industry's Revenue.

            OSHA's estimated cost of the engineering/ancillary 
        costs for the foundry industry is $43 million. Economic 
        analysts estimate the cost to be more than $2.2 billion 
        annually. This represents 9.9% of the foundry 
        industry's revenue and 276% of its profits.

            Assumes the cost to comply with a new 50 PEL is the 
        same as it is to reach the current 100 PEL. At these 
        lower levels, it will be even more challenging and 
        costly.

            Economic impact will disproportionately affect 
        small foundries, since the majority of the industry 
        employs less than 100 employees.

            These substantial costs for this rule alone make 
        the foundry industry one of the most heavily impacted 
        industry sectors among all those affected by the rule. 
        As currently proposed, OSHA's rule will likely force 
        some foundries to close, shift production offshore, and 
        impact the long-term productivity, profitability and 
        competitive structure of the metalcasting industry.

    An economic analysis performed by engineering and economic 
experts estimate that the annual compliance costs of the rule 
will likely reach over $5.5 billion for all industry sectors--
manufacturing, construction, transportation, defense, and high-
tech industries. Before moving to impose billions in costs on 
critical U.S. economic sectors, which OSHA estimates to employ 
about two million people, OSHA should significantly revise or 
abandon this rulemaking in favor of a more logical, data driven 
approach to OSHA's goals. Significant progress has been made in 
preventing silica-related diseases under existing regulations, 
making proposed changes unnecessary.

    OSHA has two immediate, effective means, to improve upon 
current protective practices, which it dismisses in the 
proposed regulation: (1) providing compliance assistance for 
current exposure limits, for which OSHA documents a roughly 30% 
non-compliance rate across all impacted industries; and, (2) 
supporting new technology and policies favoring effective, 
comfortable, respirators and clean filtered air helmets, which 
provide full protection but are not favored by OSHA's outdated 
``hierarchy of control'' policy. Unfortunately, the Agency 
prejudged this issue by announcing in the Federal Register that 
it would not consider changing that policy, no matter how 
effective, efficient and economical the protective devices.\2\
---------------------------------------------------------------------------
    \2\ 78 FR 56274, 78: ``OSHA would like to draw attention to one 
possible modification to the proposed rule, involving methods of 
compliance, that the Agency would not consider to be a legitimate 
regulatory alternative: To permit the use of respiratory protection as 
an alternative to engineering and work practice controls as a primary 
means to achieve the PEL.''

    The Regulatory Flexibility Act (RFA) requires federal 
agencies take into account the small business economic impact 
during the rulemaking process. The goal of the RFA was to 
create a process by which the needs and priorities of small 
business are better taken into account early in the rulemaking 
process in an effort to eliminate a one-size-fits-all approach 
in drafting new regulations. It is clear that OSHA has 
disregarded the RFA's requirements as Congress intended and 
issued a one-size-fits-all silica proposal and failed to 
consider the costs of this comprehensive rulemaking on small 
business. AFS strongly supports the chairman's bill, the Small 
Business Regulatory Flexibility Improvements Act of 2015 (HR 
527), which would close these RFA loopholes and ensure that all 
federal agencies appropriately consider the impact of their 
---------------------------------------------------------------------------
rules on small businesses.

    There are number of other U.S. Department of Labor and OSHA 
regulations that have been issued recently which I highlight in 
Attachment B which will impact foundries and other key industry 
sectors.

    U.S. Environmental Protection Agency

    We are alarmed by a wave of new regulations that the U.S. 
Environmental Protection Agency (EPA) is imposing on the 
utility sector, despite greenhouse-gas emissions falling 
significantly in the U.S. As an energy-intensive industry, 
metalcasters are troubled by the increased electricity costs 
and reliability issues that will likely result from these new 
regulations.

    U.S. foundries cannot produce castings without adequate and 
affordable supplies of natural gas and electricity. For many 
metalcasters, energy is a key expense, only behind raw 
materials and labor in terms of costs of doing business. 
Melting is the most energy-intensive operation in metal casting 
operations, accounting for about 55% of the total energy use. 
Compared to other foundry sectors, energy costs are highest in 
iron foundries, since the melt temperature is much higher for 
this metal.

    Continued access to affordable energy sources help 
foundries better compete against growing global competition and 
allow us to keep and create more jobs.

    Unfortunately, over the last two years, there are numerous 
specific examples of regulations and proposed rules by EPA that 
have a particularly burdensome impact on our industry, with 
little regard for their impact on job creation and the 
manufacturing supply chain. There also seems to be no 
recognition of the cumulative impact of these regulations. I 
have highlighted just three EPA proposed regulations in my 
testimony, but have attached a much more detailed list of the 
regulations developed by EPA in recent years that will directly 
or indirectly impact the foundry industry, as well as the 
entire manufacturing sector. [See Attachment B.]

    In June of 2013, President Obama issued an executive 
memorandum directing the EPA to promulgate regulations to limit 
carbon emissions from both new and existing power plants. The 
memorandum called for the EPA to propose two regulations: a 
regulation for new power plants, and a similar regulation for 
existing power plants.

    These proposed regulations are the first among a suite of 
follow-on rules that would impact many industries twice--both 
as electricity customers and as industries next in line for 
subsequent regulations. It is critical that the Obama 
Administration adopt a more reasonable approach, promoting 
policies that support a true all-of-the-above energy strategy 
and allow manufacturers the flexibility to continue unlocking 
solutions for a sustainable economy and environment.

     EPA's Proposed Rule for New Power Plants

    The proposed regulation bans the construction of new coal-
fired power plants unless they are equipped with a technology 
known as carbon capture and sequestration (CCS). CCS is a 
promising system that would capture, transport and then store 
carbon underground. However, CCS is prohibitively expensive and 
not in use at a single commercial-scale power plant in the 
country. Given this restriction, the practical impact of the 
EPA's proposed regulation for new power plants will be to block 
construction of coal-fired power plants in this country. A 
final regulation is expected this summer.

     EPA's Proposed Clean Power Plan

    In June 2014, EPA proposed a new rule to cut carbon dioxide 
emissions by a total of 30% from existing power plants by 2030 
compared with 2005 levels. Unlike the new power plants 
regulation, the existing power plants regulation will impact 
plants that are already supplying electricity to homes and 
businesses throughout the country. The United States relies on 
fossil fuels for about 68 percent of the electricity that keeps 
the lights on in our homes and businesses. Quite simply, our 
country cannot operate without electricity from fossil fuels. 
Yet, this regulation threatens to shut down many of the plants 
that produce this low-cost, reliable electricity. For 
consumers, foundries and other manufacturers that could mean 
sharply higher electricity prices for everyone. Second, the 
steady stream of electricity that we depend on will be 
threatened.

    Since state laws allow the electric providers to pass all 
energy and environmental compliance costs through to the 
consumer, we expect our energy prices to increase 
substantially. Even a $0.01/kWh increase in the cost of 
electricity imposes additional costs of nearly $9 billion per 
year on domestic manufacturing facilities. A final regulation 
is expected to be issued in the summer of 2015 and will require 
states to issue implementation plans to meet the EPA's 
requirements by 2016.

    These GHG regulations have great potential to be 
devastating economically, increasing energy costs for every 
sector of the economy, and driving up the costs of goods and 
services.

     EPA's Ozone National Ambient Air Quality Standards

    The other proposed rule I want to mention is EPA's National 
Ambient Air Quality Standard (NAAQS) for ground-level ozone. In 
March 2008, the EPA lowered the 8-hour primary NAAQS for ozone 
to its current level of 75 parts per billion (ppb). In November 
2014, the EPA proposed lowering the ozone standard to a range 
between 65 to 70 ppb. By court order, the Agency must finalize 
the standard by October 1, 2015.

    Key Problems with the Proposed Ozone Rule:

    1. Will Affect Much of the Country - Lowering the standard 
from 75 ppb to a range of 65 to 70 ppb could cause large parts 
of the country to fall into nonattainment. Counties and areas 
classified as nonattainment can suffer stringent penalties; 
including: (a) EPA overriding states on permitting decisions; 
(b) new facilities and major modifications having to install 
the most effective emission reduction technologies without 
consideration of cost; and (c) federally supported highway and 
transportation projects being suspended.

    2. Has Significant Economic Consequences - According to a 
February 2015 economic study undertaken by the National 
Association of Manufacturers, a 65 ppb standard could reduce 
U.S. GDP by $140 billion, result in 1.4 million fewer jobs, and 
cost the average U.S. household $830 in lost consumption - each 
year from 2017 to 2040. That would mean a total of $1.7 
trillion in lost U.S. GDP during that time period.

    3. May Be Impossible to Achieve Compliance - According to 
EPA's Clean Air Scientific Advisory Committee (CASAC), EPA ``is 
not clear as to how background estimates might impact the 
primary and secondary standards and whether these impacts may 
differ regionally. Also, EPA does not consider the impact of 
international border pollution; ozone and other pollutants are 
transported to the U.S. from other countries, thereby causing 
states and counties to be nonattainment.

    4. Current Standard Not Fully Implemented - EPA's 2008 
ozone standard (75 ppb) still has not been fully implemented. 
States did not even find out which of their counties would be 
designated as nonattainment under the 2008 standard until April 
2012. Additionally, EPA did not finalize the necessary 
implementation regulations and guidance for the 2008 standard 
until just recently in February 2015. States are committing 
time and money to meet the 2008 ozone standard. Yet if EPA 
moves forward with its proposal to further reduce the ozone 
standard it fails to give states a chance to meet the current 
ozone where states already have limited resources for 
implantation. At this time, AFS believes EPA should retain the 
current standard. Yet EPA now wants to move the goal posts in 
the middle of the game.

    Regulatory Reform Needed

    AFS believes there is an appropriate role for regulation, 
but regulations promulgated without an analysis of the impact 
on the economy, in particular small businesses, and the impact 
on jobs, including how multiple regulations compound those 
impacts, can have quite the opposite effect. If manufacturing 
is to continue to make a significant contribution to the 
economic recovery, including the creation and maintenance of 
well-paying jobs, it is imperative that we have an accurate 
understanding of the impact of these proposed regulations. The 
full regulatory burden on any particular sector can only be 
known if that cumulative impact is assessed.

    The lack of cumulative-impact assessments is a fundamental 
shortcoming in the way government agencies develop and evaluate 
proposed rules. That shortcoming creates regulatory tunnel 
vision. It puts innovation, investment, and jobs at risk.

    AFS and its members have a keen interest in getting 
regulations right. So the compounding effect of those 
compliance costs diminish the resources available to make 
meaningful long-term investments that create jobs, promote 
innovation, and solidify our competitive position.

    The Federal regulatory process and analysis of regulations 
can be improved. We would like to see OMB and the individual 
agencies update their respective economic impact analysis 
guidance to require cumulative impact of multiple regulatory 
actions, particularly on small business. We would like to see 
agencies identify and catalogue the sectors impacted by a new 
regulation and even extend that approach into the paperwork 
burden.

    Agencies should seek input from the affected regulated 
community before developing a proposed regulation. It does to 
the win-win that is possible from an early engagement, so that 
the public, the government, and the regulated community all 
benefit.

    AFS would also like to see Federal agencies consider the 
regulatory-induced employment changes as either a cost or a 
benefit in their assessment and not consider them some indirect 
cost that is not routinely assessed. If our regulatory agencies 
are capable of assessing the cumulative benefit of their 
regulatory programs, surely they are capable of assessing the 
cumulative burden.

    Conclusion

    PRL understands and supports the need for reasonable 
regulations to protect the environment, worker safety and 
health. To continue manufacturing momentum and promote hiring, 
the nation needs not just improved economic conditions, but 
also government policies more attuned to the realities of 
global competition. The key is to find the balance between 
ensuring a safe and healthy workplace and allowing that 
workplace to compete in order to be able to continue to provide 
employment; that is where the current U.S. regulatory process 
is lacking. My fear for the industry is that we may lack the 
ability to meet many of these regulations which will force more 
foundries to shut down. This will not only cost the U.S. jobs, 
but could threaten our nation's military supplier base, and 
would ironically cause more pollution in the world!

    The cumulative burden of a variety of new and proposed 
standards is nearing a tipping point. More than ever, it is 
critically important that we regulate only that which requires 
regulation, and only after a thorough vetting of potential 
benefits, impacts and costs of that regulation on businesses, 
particularly small businesses, as well as the manufacturing 
supply chain. Pro-growth policies will make our nation a more 
competitive place to do business.

    In this current economy, it is clear that cost-ineffective 
regulations and increases in taxes dampen economic growth and 
will continue to hold down job creation. For some foundries, it 
will be the final stake in their coffin. Thank you again for 
the opportunity to appear before you today. I would be happy to 
respond to any questions.

    Attachment A - Example of Castings Manufactured by PRL Inc.

    Attachment B - Key Regulations Impacting the Foundry 
Industry

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                      Statement of Viktor Anderson


                    Structural Concepts Corporation


                 U.S. House Committee on Small Business


                             March 18, 2015


    Mr. Chairman and Members of this Committee, I appreciate 
the opportunity to testify today on behalf of Structural 
Concepts Corporation and the Air Conditioning, Heating, and 
Refrigeration Institute (AHRI). Structural Concepts was founded 
in 1972, is located in Muskegon, Michigan and is a manufacturer 
of both remote and self-contained commercial refrigeration 
equipment. In terms that are likely more familiar to you, we 
are a company that makes the refrigerated merchandiser or 
display that you would find at your local grocery store or 
restaurant. Our products ensure that food is stored safety and 
is accessible in all corners of our country, from mom and pop 
bodegas to the largest supermarket chains.

    AHRI is the trade association representing manufacturers of 
HVACR and water heating equipment. AHRI's 315 member companies 
manufacture quality, efficient, and innovative residential and 
commercial air conditioning, space heating, water heating, and 
commercial refrigeration equipment and components for sale in 
North America and around the world, and they account for more 
than 90 percent of HVACR and water heating residential and 
commercial equipment manufactured and sold in North America.

    Like so many small businesses across the country, 
Structural Concepts is deeply rooted in our community. Our 
friends, our neighbors and our town depend on the jobs we 
provide. Unfortunately, as suggested by the title of today's 
hearing, small businesses like ours are facing significant new 
regulatory burdens from federal agencies. The agencies often 
show little regard for the impact new requirements can have on 
our business' ability to stay afloat and continue creating 
these quality jobs.

    Today, I would like to draw the Committee's attention to 
two recent regulations (one finalized, one proposed) that will 
have a particularly deleterious impact on Structural Concepts 
and our employees:

          (1) the U.S. Department of Energy's (DOE) revision to 
        energy conservation standards for commercial 
        refrigeration equipment, and

          (2) the U.S. Environmental Protection Agency's (EPA) 
        change of listing status for certain refrigerant 
        substitutes under the Significant New Alternatives 
        Policy (or SNAP) Program.

    Taken together, these two regulations will severely impact 
Structural Concepts' ability to retain our current level of 
employees and to economically produce cost-effective, energy 
efficient and environmentally friendly refrigeration products.

    Executive Order 13563

    In 2011, like other companies across the Nation, we were 
heartened by President Obama's issuance of Executive Order 
13563, which was designed to improve regulations and regulatory 
review across the Federal government. President Obama directed 
each Federal agency to ``propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its 
costs'' and to ``tailor its regulations to impose the least 
burden on society...taking into account, among other things, 
``the costs of cumulative regulations''. Concurrently, he 
issued a memorandum on ``Regulatory Flexibility, Small 
Business, and Job Creation'' that directed agencies to comply 
with an existing law, the Regulatory Flexibility Act. As you 
know, the RFA requires agencies to examine the impacts of 
regulations on small businesses and seriously consider how to 
reduce regulatory burdens through flexible approaches such as 
extending compliance deadlines, simplifying reporting and 
compliance requirements, or providing different requirements 
for small firms.

    Unfortunately for Structural Concepts and many others, 
Federal agencies have simply not abided by these extremely 
important principles in their rulemakings. For example, under 
the Regulatory Flexibility Act review, the final rule for 
Energy Conservation Standards for Commercial Refrigeration 
Equipment clearly states that ``the average small manufacturer 
is expected to face capital conversion costs that are nearly 
five times typical annual capital expenditures.'' While capital 
conversion costs for large manufacturers are predicted to be 49 
percent of annual capital expenditures, the review clearly 
states, ``an average small manufacturer's conversion costs are 
expected to be 278 percent of annual capital expenditures.'' 
Despite the resulting difficulty in obtaining credit, increases 
in component costs and disadvantageous rise in sale prices, the 
DOE did not truly examine any alternative approaches to reduce 
the significant economic impacts on small businesses.

    As a result, small businesses like ours are burdened by 
multiple regulations that either contradict each other, have a 
high level of difficulty or are simply physically impossible to 
comply with in the given amount of time. We simply do not have 
resources to mount legal challenges and are therefore largely 
left to shoulder the resulting economic burden placed on our 
industry.

    DOE's Energy Conservation Standards for Commercial 
Refrigeration Equipment

    As part of its energy efficiency rulemaking program, DOE 
promulgated energy conservation standards for commercial 
refrigeration equipment. In 2009, DOE issued an initial set of 
standards with a compliance date for industry of 2012. Between 
2009 and 2012, Structural Concepts expended a significant 
amount of resources to comply with DOE's rules. Thousands of 
hours of research and development, engineering, testing, supply 
chain and manufacturing work went into this effort. For 
example, we scaled up an existing technology to eliminate 99% 
of the electric condensate pans used to remove meltwater from 
the defrost cycle. This alone accounted for a 30-40% energy 
reduction in our self-contained equipment. We improved the 
efficiency of our heat exchangers by enlarging them and using 
rifled tubing. We incorporated energy efficient compressors and 
motors. This all had to be developed first with initial 
verification through R&D testing. Then the implementation work 
began. All this new technology had to be engineered into over 
400 existing models. Condensing units had to be developed for 
multiple product lines. Machine compartments needed to be 
either resized or reconfigured. Refrigeration systems for each 
case had to be rebalanced and it doesn't stop there. The two 
most important regulations to Structural Concepts had to be re-
approved for all of our products. These would be product and 
food safety regulations that ensure we continue to maintain the 
health and well-being of our customers and end users. This was 
done through the compliance with Underwriters Laboratory and 
National Sanitation Foundation standards. In addition to safety 
testing, additional energy testing was also performed for DOE 
compliance.

    To accomplish all of this we had to dedicate several 
engineers that would otherwise be customizing or developing 
products to increase sales and grow our company. We had to 
increase our capacity, accuracy and throughput of our test 
labs. We had to develop new manufacturing processes and supply 
chains to produce our own condensing units. In the end, we 
reduced our energy/carbon footprint of our entire self-
contained product offering by approximately 50%. We felt proud 
of the fact that we complied with the new DOE energy levels and 
in most cases went above and beyond, only to find out it wasn't 
enough. Last year, only two years after the compliance deadline 
for the old rules, DOE again issued even more stringent energy 
efficiency criteria. Unfortunately, the new standards, which 
have to be met by 2017, obviate many of the investments that 
were made to comply with the 2012 rule. Quite simply, DOE is 
not giving small businesses the Structural Concepts time to 
breathe between one rulemaking and the next.

    In developing their final rule, DOE employed questionable 
assumptions about the feasibility and economic viability of 
several technological options that were included in the 
standards-setting process. In some cases, DOE went so far as to 
require energy savings in excess of Energy Star levels, which 
is supposed to be a designation for products that go above-and-
beyond industry norms. They verified their new energy levels in 
some cases with only a single data point. There are so many 
configurations for each equipment class I don't know how they 
justified this. On the other hand, we, as manufactures, are 
required to have multiple data points if we want to use an 
alternative efficiency determination method (AEDM) to minimize 
the testing burden. DOE seems to be setting standards that 
utilize all of the most efficient technology in existence all 
at once, something we refer to as ``max-tech.'' Forcing our 
entire industry to adopt max-tech in a few short years is an 
extremely expensive way of incentivizing savings that will 
probably backfire. In fact, DOE's demands are so onerous that 
many industry participants have decided their best recourse is 
to file a lawsuit against the agency's final rule.

    To comply with DOE's new 2017 standards, Structural 
Concepts will again have to re-engineer many of our product 
components and cabinet designs, conduct new rounds of tests 
mentioned above, and potentially revamp our manufacturing 
processes. All of these activities will again sap resources 
that would otherwise be used towards innovation and product 
development, and will result in an increased price for our 
customers.

    EPA's Change of Listing for Certain Substitutes Under the 
SNAP Program

    The EPA's SNAP program is the agency's regulatory apparatus 
for phasing out ozone-depleting chemicals. The EPA proposed a 
rule last year that will take away the current refrigerant used 
in all of refrigerated systems on January 1st, 2016 (9 months 
from now). The alternative refrigerants they proposed are both 
highly flammable and, therefore, limited in the amount useable 
in each system. Ironically, many are actually less energy 
inefficient when used in our applications. The result they 
would have significantly raised the energy consumption and 
caused noncompliance to the DOE regulations. In fact, 60 
percent of the display cases that we manufacture would not have 
complied with EPA's new rules until they approved a new 
refrigerant. EPA approved the use of R450A, the day after 
comments were due.

    To make matters worse, R450A still has its challenges. The 
supply chain for this refrigerant will take time to develop. 
Production for the new gas will have to be scaled up. 
Compressors will have to be tested for safety and reliability. 
In some applications, the physical size of the compressor will 
increase to achieve the same refrigeration effect. This will 
require the machine compartment of each model to be reviewed 
for redesign. This of course is after each refrigeration system 
for all models are redesigned for balance. Again, all of the 
safety testing will need to be redone along with energy usage 
verification at great expense. In our response to EPA, 
Structural Concepts informed EPA that the agency's proposed 
rule would result in more than half of our employees being 
permanently laid-off.

    Herein lies a new problem. When are we supposed to do all 
of this work? The DOE is requiring us to comply with the new 
energy levels on January 1st, 2017. The EPA is proposing 
compliance to their new rules on January 1st, 2016. (Again, 
only 9 months away). Let's assume that for obvious reasons that 
date will be extended out. Will we be required to comply with 
the new EPA rules in 2018? 2019? Currently we need to re-
engineer our entire product offering to meet new energy levels 
by 2017. Then will we need to do it all over again a year or 
two later? The DOE is mandated to review energy levels every 
five years. This means that in 2022 we have to review our 
product yet again.

    My point is, if the DOE and EPA do not coordinate their 
efforts, we could potentially be redesigning our product every 
two to three years for more than 12 years in a row. When DOE 
determined that its new energy efficiency standards were 
feasible, the agency did not account for EPA's new restrictions 
on allowable refrigerants. Combined, the two rules will 
devastate our industry. Agency rules, as currently finalized, 
will operate at cross-purposes to one another and fail to 
accomplish their aims; all while reducing economically 
productive activity in our sector.

    The aggregate effect of the regulatory burdens being placed 
on the commercial refrigeration industry will not be limited to 
damage suffered by Structural Concepts. By increasing the cost 
of display cases and other refrigeration technology that so 
many Americans depend on for their groceries, the 
Administration risks increasingly placing fresh food out of 
reach for the average consumer. Many of the grocers who use our 
display cases are also small businesses, who can ill-afford the 
additional cost of more expensive refrigeration units. 
Furthermore if certain equipment classes are made obsolete due 
to technical and timely infeasibility, the billions of dollars 
of product not sold through this equipment will have a major 
economic impact on both major corporations and small mom and 
pop retailers.

    Conclusion

    My purpose here today is to draw the Committee's attention 
to the undue burdens faced by small businesses everywhere by 
the unrealistic rules that federal agencies promulgate without 
adequate regard for practicality. The reality of these 
regulations, both specifically designed to address the 
commercial refrigeration industry, will not only increase our 
costs, but will force Structural Concepts to reduce the number 
of products manufactured, throw uncertainty into the current 
and future products offered and, overall, result in reduced 
employment. We are not a large corporation with a plethora of 
resources to redirect towards the review, testing and 
compliance of new rules. We are a small innovative manufacturer 
that makes refrigerated display cases, hardly the nexus point 
of the Nation's energy and environmental policy battles. Our 
company and thousands of companies like ours across the Nation, 
make a big difference in the stability of the nascent economic 
recovery which has only just begun to take hold. With its 
never-ending wave of new rules and ever-more-strigent 
standards, the Administration is threatening our ability to do 
business and provide critical products to American consumers.

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