[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
H.R. 985, CONCRETE MASONRY PRODUCTS
RESEARCH, EDUCATION, AND PROMOTION ACT OF 2015
=======================================================================
HEARING
BEFORE THE
SUBCOMITTEE ON COMMERCE, MANUFACTURING, AND TRADE
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JULY 10, 2015
__________
Serial No. 114-65
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_________
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Missouri JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Commerce, Manufacturing, and Trade
MICHAEL C. BURGESS, Texas
Chairman
JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey Ranking Member
Vice Chairman YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee JOSEPH P. KENNEDY, III,
GREGG HARPER, Mississippi Massachusetts
BRETT GUTHRIE, Kentucky TONY CARDENAS, California
PETE OLSON, Texas BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida FRANK PALLONE, Jr., New Jersey (ex
SUSAN W. BROOKS, Indiana officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 1
Prepared statement........................................... 2
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 3
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 4
Witnesses
Ellen Herbst, Chief Financial Officer and Assistant Secretary for
Administration, U.S. Department of Commerce.................... 5
Prepared statement........................................... 8
Answers to submitted questions...............................
Franklin Rusco, Director, Natural Resources and Environment--
Energy Issues, U.S. Government Accountability Office........... 10
Prepared statement........................................... 12
Answers to submitted questions...............................
Major Ogilvie, General Manager, Ready Mix USA, LLC............... 37
Prepared statement........................................... 40
Answers to submitted questions...............................
Kate Offringa, President, Vinyl Siding Institute Incorporated.... 43
Prepared statement........................................... 46
Answers to submitted questions...............................
Kent Waide, President, Ruby Concrete Company..................... 51
Prepared statement........................................... 53
Answers to submitted questions...............................
Submitted material
Statement of the Mason Contractors Association of Greater Chicago 66
Statement of Back Brook Masonry.................................. 69
Statement of Featherlite Building Products and Acme Brick Company 72
Statement of the National Association of Homebuilders............ 75
H.R. 985, CONCRETE MASONRY PRODUCTS RESEARCH, EDUCATION, AND PROMOTION
ACT OF 2015
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FRIDAY, JULY 10, 2015
House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:00 a.m., in
room 2123, Rayburn House Office Building, Hon. Michael C.
Burgess, M.D., (chairman of the subcommittee) presiding.
Present: Representatives Burgess, Lance, Blackburn, Harper,
Guthrie, Pompeo, Kinzinger, Bilirakis, Brooks, Mullin,
Schakowsky, Cardenas, and Welch.
Staff Present: Graham Dufault, Counsel, CMT; Melissa
Froelich, Counsel, CMT; Kirby Howard, Legislative Clerk; Paul
Nagle, Chief Counsel, CMT; Olivia Trusty, Professional Staff,
CMT; Michelle Ash, Minority Chief Counsel, Commerce,
Manufacturing, and Trade; Lisa Goldman, Minority Counsel; and
Adam Lowenstein, Minority Policy Analyst.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. The subcommittee on Commerce, Manufacturing,
and Trade will come to order. The chair will recognize himself
for 5 minutes for the purposes of an opening statement.
And good morning, and I want to welcome everyone to today's
hearing on Representative Guthrie's bipartisan legislation,
H.R. 985, the Concrete Masonry Products Research, Education,
and Promotion Act of the 2015. This measure authorizes the
establishment of a national checkoff program for concrete
masonry products and directs the Department of Commerce to
provide administrative oversight support throughout the
implementation of the program.
Many of us are familiar with the advertisements from
checkoff programs that support agricultural commodities, such
as ``Beef. It's What's for Dinner'' and ``The Incredible,
Edible Egg.'' A unique component of these programs is that they
are established at the request of a particular industry and are
financed by that industry as well. Manufacturers and producers
of a commodity agree to pay an assessment, which is then pooled
to support a more efficient, coordinated marketing approach
aimed at strengthening the market position of the commodity in
the United States and in foreign markets.
In addition to marketing and advertising expenditures,
these funds are also used to finance research and development
ventures that help advance modern product lines and other
innovative uses of the commodity in question.
Today's hearing on H.R. 985 will give the subcommittee an
opportunity to examine the status of the concrete masonry
products industry in the United States and abroad and to learn
about the effectiveness of past and current research,
educational, and promotional activities taken by the industry.
The hearing will give us an opportunity to examine the
potential benefits from the advancement of concrete masonry
products in the marketplace. We will also examine the potential
impact on other industries competing in the building material
space.
Additionally, I look forward to understanding how the
Department of Commerce would fulfill its administrative and
oversight role. I want to thank Representative Guthrie for the
efforts to create this bipartisan bill that seeks to grow the
economy, create jobs, and protect consumers.
I would ask witnesses for their indulgence this morning as
we actually--the full committee has legislation on the floor of
the full House this morning and some members may be in and out
during the amendment process on the Cures bill. So I thank the
witnesses in advance for their testimony and look forward to an
engaging discussion on this legislation.
And I would be happy to yield to Mr. Guthrie if he has
comments he wishes to make this morning.
[The prepared statement of Mr. Burgess follows:]
Prepared statement of Hon. Michael C. Burgess
Good morning. I want to welcome everyone to today's hearing
on Representative Guthrie's bipartisan legislation, H.R. 985,
the ``Concrete Masonry Products, Research, Education, and
Promotion Act of 2015.'' This measure authorizes the
establishment of a national ``check-off'' program for concrete
masonry products and directs the Department of Commerce to
provide administrative and oversight support throughout the
implementation of the program.
Many of us are familiar with advertisements from check-off
programs that support agricultural commodities, such as ``Beef.
It's What's for Dinner'' or ``The Incredible Edible Egg.''
A unique component of these programs is that they are
established at the request of a particular industry and are
financed by that industry too. Manufacturers and producers of a
commodity agree to pay an assessment, which is pooled together
to support a more efficient, coordinated marketing approach
aimed at strengthening the market position of the commodity in
the United States and in foreign markets. In addition to
marketing and advertising expenditures, those funds are also
used to finance research and development ventures that help
advance modern product lines and other innovative uses of the
commodity.
Today's hearing on H.R. 985 will give us an opportunity to
examine the status of the concrete masonry products industry in
the United States and abroad, and learn about the effectiveness
of past and current research, educational, and promotional
activities undertaken by the industry. The hearing will give us
an opportunity to examine the potential benefits from the
advancement of concrete masonry products in the marketplace. We
will also examine the potential impact on other industries
competing in the building materials space.
Additionally, I look forward to understanding how the
Department of Commerce would fulfill its administrative and
oversight role.
I thank Representative Guthrie for his leadership on this
issue and his efforts to create a bipartisan bill that seeks to
grow the economy, create jobs, and protect consumers. I would
ask the witnesses for their indulgence this morning as we have
a very important Cures bill on the floor and many of our
Members will be in and out. I thank the witnesses for their
testimonies and I look forward to engaging discussion on this
legislation.
Mr. Guthrie. Thank you, Mr. Chairman. Thank you for having
this hearing. And I want to thank everybody for being here
today and am pleased to support H.R. 985.
This an issue that my colleagues and I have worked on for 3
years, and I would especially like to thank my friend from
Florida, Congresswoman Kathy Castor, who has worked very hard
on this effort. The bill is truly bipartisan, with over 160
cosponsors.
I am sure that just about every member of this
subcommittee, maybe every Member of Congress has heard from
concrete mason producers or contractors in their respective
districts. Most of these businesses are small, locally owned,
and so they are greatly entwined with their communities and
would stand to benefit greatly from this program.
H.R. 985 is a bipartisan approach to creating a commodity
research and education program and will allow for nationwide
cooperation and accelerated job growth. By allowing block
producers to pool their resources, these local manufacturers
will have a way to improve their products, resulting in
increased energy efficiency and safety and increased marketing
options.
I want to thank the subcommittee chairman for bringing this
important legislation before the subcommittee, and I encourage
my colleagues to support this bill. And I yield back to the
chairman.
Mr. Burgess. The chair thanks the gentleman. The gentleman
yields back.
The chair recognizes the subcommittee ranking member, Ms.
Schakowsky of Illinois, for 5 minutes for an opening statement,
please.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman, for holding this
hearing on H.R. 985, the Concrete Masonry Products Research,
Education, and Promotion Act. I look forward to hearing from
our witnesses on this legislation.
Let me apologize at this point. I am going to leave for a
very short time to go to the floor on an amendment that I am
proposing.
Commodity checkoffs have been used for decades to support
the sales and improvement of many products. So far, all of
those programs have been overseen by the USDA or Department of
Energy, from ``Got Milk'' to cotton, ``The Fabric of Our
Lives.'' We are all familiar with these programs and the
products they promote.
With the creation of softwood lumber checkoff, other
building industries, like hardwood lumber natural stone, have
made efforts to create their own checkoff program, seeking
parity with other building materials. H.R. 985 would create a
concrete masonry checkoff program at the Department of
Commerce.
Over the past few years I have heard regularly from the
concrete masonry industry contractors, workers, and my
colleagues about the importance of a checkoff program. Just
yesterday I met with a constituent named Jim O'Connor, who has
worked tirelessly to advance this bill. Advocates stress that a
checkoff would support jobs, improve the quality of concrete
products, and reduce adverse environmental impacts of concrete
production. I am very interested in pursuing these goals, and I
look forward to hearing from the industry representatives about
how this legislation would get us there.
I also want to make sure that the Commerce Department,
which has never managed a checkoff, has the resources and know-
how to oversee this kind of program. I want to learn from the
Government Accountability Office about the pitfalls of check-
offs and how those can be avoided. And I want to understand the
perspective of those representing other building materials. I
look forward to hearing the testimony of our nonconcrete
industry witnesses today to better understand those issues.
I think we all share the same objectives: To grow jobs,
improve the quality and safety of the building materials we
use, and heighten consumer awareness. I want to make sure that
this legislation is successful in leveraging all of those
benefits while limiting any negative impacts that might be
anticipated. I know that my colleagues share that goal.
Again, I look forward to hearing from our witnesses, and I
yield back the balance of my time.
Mr. Burgess. The chair thanks the gentlelady. The
gentlelady yields back.
The chair recognizes the vice chair of the full committee,
Ms. Blackburn, for the purpose of an opening statement.
You are recognized.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman. And I want to
thank our witnesses for being here and giving their time.
Checkoff programs, we all know how they have worked. We are
curious about expanding this to the concrete industry and how
this is going to work to help with jobs growth and with
industry development.
Now, interestingly enough, when I was in the state senate
in Tennessee in the late 1990s I worked with a group in the
concrete industry in our state to help found the Center of
Excellence at Middle Tennessee State University. And it was the
first such center that we had in the south, and it has been so
highly successful. I was pleased to serve as the graduation
speaker for the first graduating class from the Concrete
Industry Management program.
We continue to see the benefits of this. And I think, as
you look at the advancement in this industry, the safety of
materials, the options in concrete in these materials, that
having a checkoff program works just hand in glove with what we
see from the MTSU program.
So I welcome you all. I am going to have a couple of
questions for you. As the gentlelady from Illinois said, we
have legislation from this committee on the floor this morning,
so we are going to be up and down. So we ask for your
understanding in that.
Mr. Chairman, I yield back.
Mr. Burgess. The gentlelady yields back. The chair thanks
the gentlelady.
Seeing no other members seeking time for an opening
statement, that will conclude opening statements. The chair
would remind members that, pursuant to committee rules, all
members' opening statement will be made part of the record.
I now want to thank our witnesses for being here today and
taking the time to testify before the subcommittee. Again,
today's subcommittee hearing will consist of two panels.
Witnesses on each panel will have the opportunity to give an
opening statement of 5 minutes, followed by a round of
questions from members. Once we conclude with questions on the
first panel, we will take a brief recess to set up for the
second panel.
Our first panel today consists of two witnesses, Ms. Ellen
Herbst, the Chief Financial Officer and Assistant Secretary for
Administration, the United States Department of Commerce.
Good morning. Thank you for being here.
And Mr. Franklin Rusco, Director, Natural Resources and
Environment Energy-Issues at the United States Government
Accountability Office office.
We will begin our first panel with Ms. Herbst. You are
recognized for 5 minutes for an opening statement, please.
STATEMENTS OF ELLEN HERBST, CHIEF FINANCIAL OFFICER AND
ASSISTANT SECRETARY FOR ADMINISTRATION, U.S. DEPARTMENT OF
COMMERCE; AND FRANKLIN RUSCO, DIRECTOR, NATURAL RESOURCES AND
ENVIRONMENT-ENERGY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
STATEMENT OF ELLEN HERBST
Ms. Herbst. Thank you. And good morning, Chairman Burgess,
Ranking Member Schakowsky, and members of the committee. Thank
you for inviting me to testify today on proposed legislation to
establish a commodity research and promotion program, also
known as a checkoff program, for concrete masonry products.
I am Ellen Herbst. I am the Department's CFO and Assistant
Secretary for Administration. I oversee the establishment and
execution of departmental policies and procedures for
administrative functions affecting program operations in
Commerce's operating units. In my role, I seek to strengthen
the Department's capacity to achieve its objectives, maximize
return on program investments, and deliver quality and timely
service.
As part of the administration's economic team, the
Secretary of Commerce serves as the voice of all U.S. business.
The Department of Commerce promotes job creation, economic
growth, sustainable development, and improved standards of
living for all Americans by working in partnership with
businesses, universities, communities, and our Nation's
workers.
The Department's ``Open for Business'' Agenda is a bold
strategic plan and policy blueprint focused on expanding trade
and investment, unleashing government data for economic
benefit, spurring innovation, protecting the environment, and
executing these priorities with operational excellence as
careful stewards of taxpayer dollars.
Our bureaus are hard at work every day on behalf of
American businesses and workers. For example, the International
Trade Administration is charged with promoting the export of
U.S. goods and services in foreign markets and ensuring fair
trade and compliance with trade laws and agreements. Through
its administration of the patent and trademark laws, the U.S.
Patent and Trademark Office protection enables the protection
of new ideas and spurs innovation, creativity, and the
development of new technology globally.
The Economic Development Administration plays a critical
role in fostering regional economic development efforts in
communities across the Nation. And finally, with a varied
research portfolio, world class facilities, national networks,
and international partnerships on standard and technology, the
National Institute of Standards and Technology works to support
U.S. Industry and innovation.
As we understand the bill, H.R. 985 would establish the
Concrete Masonry Products Board upon approval of a referendum
by producers of masonry products made from concrete. The Board
would develop research and education programs, as well as
programs to promote concrete masonry products in domestic and
foreign markets. Funding for those activities would be derived
from mandatory assessments on manufacturers based on the number
of masonry units sold each year.
The bill directs the Secretary of Commerce to organize and
hold the initial referendum, produce an order, appoint the
Board, and then would require the Secretary of Commerce to
assume an ongoing oversight and enforcement role.
While the Department supports the efforts of the masonry
industry to coordinate research, education, and promotion
activities for the industry, we have identified a number of
questions or challenges to implementation of this program
within the Commerce Department.
First, although the legislation provides that the cost of
the Department's activities in carrying out this program are
intended to be reimbursed using assessments collected by the
Board, it is unclear to us at this point how that process would
work in practice.
In addition, the Department does not currently have the
expertise, staff, or resources to establish and administer a
checkoff program. Such a program office would need to be
established and located within one of the Department's
operating units. There are no bureaus within the Department
that currently administer a commodity checkoff or similar
program, nor does such a program fit within the current
mandates or mission of our operating units. And the oversight
and enforcement responsibilities proposed by the bill, as we
understand them, would be quite extensive.
So, an option would be for the concrete masonry industry to
organize voluntarily cooperative arrangements to encourage
generic marketing, education, and research activities.
We also note that other competing construction material
producers might oppose the creation of such a program that
could be viewed as unfairly favoring one type of construction
material over another. This could led to requests from other
competing construction material producers to establish their
own checkoff program, resulting in an expanding number of
checkoff programs that would be administered and housed within
the Department of Commerce.
I appreciate the committee's time and attention. I
appreciate the invitation. And I welcome any questions. Thank
you.
[The prepared statement of Ms. Herbst follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The chair thanks the gentlelady. The
gentlelady yields back.
The chair recognizes Mr. Rusco 5 minutes for your opening
statement, please.
STATEMENT OF FRANKLIN RUSCO
Mr. Rusco. Thank you, Mr. Chairman, Ranking Member
Schakowsky, and members of the subcommittee. Thank you for the
opportunity to discuss GAO's prior work on checkoff programs,
and particularly some observations from two such programs, the
Propane Education and Research Council, or PERC, and the
National Oil Heat Research Alliance, or NORA.
There are currently more than 20 checkoff programs for
agricultural commodities. These programs allow industries to
set aside a fraction of the wholesale price of these
commodities to be used by the programs for a variety of
purposes. Checkoff programs are typically geared toward
increasing the success of the industries that fund them through
activities including research and development, consumer
education, and promotion of U.S. products, domestically and
abroad.
For agricultural commodity checkoff programs, USDA's
Agricultural Marketing Service has administrative and oversight
responsibilities and is reimbursed by the program's producer-
contributor boards for these functions.
Authorizing language for checkoff programs varies, but
frequently contains guidance about the prioritization of
activities performed by the programs. For example, Congress may
specify a minimum proportion of program funds that go to
research and development, consumer education, or other
functions. Authorizing language may also prohibit certain
activities, such as lobbying.
In 2010, GAO evaluated two such programs, PERC and NORA,
that were authorized by Congress in the Propane Act of 1996 and
the Oil Heat Act of 2000. These acts authorized certain
activities, including research and development, safety
training, and consumer education, and placed restrictions on
other activities, including certain lobbying activities.
Under the authorizing statutes, DOE and Commerce were given
certain authority to implement the programs. Congress also
specified key procedural, administrative, and spending
requirements to administer these programs. PERC's authority
does not sunset, but NORA's has and was most recently
reauthorized in 2014.
Our evaluation of PERC and NORA found that some PERC and
NORA activities appeared to meet the requirements of the acts,
but certain other activities, such as activities involving
Congress or politically affiliated entities, raised issues
about whether they were covered by the acts' specific lobbying
restrictions. We also found that neither act provided guidance
on what constitutes influencing legislation or elections, which
made it unclear if PERC or NORA was meeting the intent of
Congress.
In addition, Congress had not specified what proportions of
program funds would go to the three key activities. For
example, PERC and NORA each spent a relatively small share of
funds on research and development, 8 and 6 percent,
respectively, despite the fact that research and development
had been a key area of congressional interest as the two laws
were debated prior to enactment. Because the acts lacked
specific guidance in these areas, it was unclear whether the
programs were doing what Congress intended.
Finally, we found that Federal oversight of PERC and NORA
by DOE, as called for in the acts, was limited compared to the
oversight of agricultural checkoff programs by the Agricultural
Marketing Service.
Based on these findings, we suggested that, prior to
reauthorizing NORA, Congress may wish to: one, specify any
prioritization of activities that Congress intends to be
undertaken; two, specify a Federal oversight role by requiring
DOE to monitor and oversee the expenditures of the PERC and
NORA funds; and three, to establish a specific enforcement
mechanism and authorize DOE to refer any potential violations
of law to appropriate enforcement entities.
In its reauthorization of NORA in 2014, Congress took
actions consistent with all three suggestions, thereby creating
greater accountability and oversight for NORA. PERC, which does
not sunset, however, has not been subject to these changes to
date.
I hope these observations are useful as you consider the
Concrete Masonry Products Research, Education, and Promotion
Act of 2015. GAO does offer assistance with legislative
language, if that is desirable. We have some of our general
counsel who are very versed on these programs and would be
happy to help if we can.
Thank you. I will be happy to answer any questions you may
have.
[The prepared statement of Mr. Rusco follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The chair thanks the gentleman. The gentleman
yields back.
We will move on to the question part of our hearing. I will
recognize myself first for 5 minutes for the purpose of
questions.
Mr. Rusco, let me stay with you, because on PERC and NORA,
the two checkoff programs that you used as your examples, both
within the Department of Energy, is that correct?
Mr. Rusco. Yes.
Mr. Burgess. So the money that is collected, where does
that money physically go? Does it stay in the Department of
Energy? Does it go to the Federal Treasury? Where does it
actually end up?
Mr. Rusco. So as far as the money that reimburses for
oversight, I don't know the answer to that. I can find that out
for you in the case of DOE.
In the case of the Agricultural Marketing Service, that
money I believe goes directly to fund the FTEs that are used
for that oversight and administrative activity.
Mr. Burgess. OK. Then that funding for full-time
equivalents for that activity, is that subject to an
appropriation by Congress or is that just a pass-through that
happens in the agency without Congress being involved?
Mr. Rusco. I believe that it is the latter. And I will get
back and verify that.
Mr. Burgess. Yes, I would very much appreciate to
understand what the actual flow of the dollars through the
agencies is.
Ms. Herbst, thank you for your testimony. If I heard you
correctly, I think it did voice some questions about--you are
not currently doing this type of activity. Is that correct?
Ms. Herbst. That is correct.
Mr. Burgess. Let me just ask you this, it is a little bit
out of left field and I apologize for it, but does the
Department of Commerce--you are the Chief Financial Officer, is
that correct?--do you prepare a spending plan every year which
is submitted to the Committee on Appropriations?
Ms. Herbst. Yes, we do.
Mr. Burgess. Would you have that available for the
committee, not necessarily this morning, but could you make
that available to us so we could look at the spending plan that
you submitted for this past year?
Ms. Herbst. Certainly.
Mr. Burgess. How do you see this activity fitting into the
spending plan as it is on going, as it is being administered
this year? And what I am particularly interested in is the same
questions I was asking Mr. Rusco, what happens to the dollars
that are collected? Are they simply disbursed by the agency or
are you required to come back to the appropriations committee
for the allocation of those dollars?
Ms. Herbst. Thank you for that question. Since we don't
currently administer a checkoff program, I am not familiar with
the answer to that question, but we could certainly also look
into that for our particular Department's appropriations rules
and get back to you on that.
Mr. Burgess. Well, my interest in this is more than just
cursory or even academic. In other instances, and having
nothing to do with the checkoff program, but in other instances
and other agencies it does seem that there are moneys collected
that are then disbursed for activities that doesn't go through
the appropriations process, and this bothers me because of our
constitutional obligation that any funds that go to the
Treasury need to be disbursed through an appropriations
process.
And I want us to be sure, if we are indeed going to set up
a new program, from a new de novo program, I want to be certain
that it is done correctly and in accordance with all of the
principles that the Founders laid down for us in the
Constitution so that the people are protected by the separation
of powers that was intended by the Founders.
And obviously, Ms. Herbst, you do voice some concerns. Let
me just ask you, has the agency had any discussion about this
as to whether or not your agency is prepared to handle the
collection and disbursement of money in a checkoff program?
Ms. Herbst. First, I want to make clear, we don't have a
policy position on the bill. So our discussion of it has been
around how you would administer the program, should it become
law.
As we understand it, our role would be in implementation,
helping to set up the program and set up the Board and the
program. And then it would be oversight and compliance and
enforcement for our understanding of the bill. That generally
would require expertise from our legal staff, financial staff,
internal control staff. And while we haven't put together a
detailed approach or plan yet, we believe it would include the
need to have a program person who was familiar with the
industry and promotion in the industry and so forth. So with
have had that level of conversation.
Mr. Burgess. Very well. I thank you for that answer. My
time has expired. I may have one follow-up question for you
before we finish.
Mr. Cardenas, I recognize you for 5 minutes for questions,
please.
Mr. Cardenas. Thank you, Mr. Chairman. I appreciate the
opportunity to have this dialogue before the public.
In this 2010 report on the propane and oil heat checkoff
programs, known as PERC and NORA, respectively, the GAO made
some recommendations to Congress to improve accountability and
oversight of the programs.
Mr. Rusco, the GAO recommended that Congress specify the
priority of the activities that should be undertaken by the
Board. Was the recommendation followed for either PERC or NORA
as far as you are concerned?
Mr. Rusco. Yes. For NORA, when NORA was reauthorized in
2014, Congress did specify that a greater proportion of the
funds collected be spent on research and development, among
other things.
Mr. Cardenas. And so far has that adjustment seemed to
prove--the follow-through on that adjustment, is it happening
or is it too early to tell?
Mr. Rusco. It is too early and we have not been asked to
review it yet. So if we do, we will make that determination.
Mr. Cardenas. OK. Do you think the concrete masonry
checkoff program could be better if this bill clearly specified
the priorities of the program?
Mr. Rusco. I think we are neutral on that. It is the intent
of Congress that if the Congress does intend for there to be
specific guidelines, then it probably needs to be laid out
explicitly. What we found was that with PERC and NORA they
spent over half of their money on consumer education. And
within that bucket, there were a lot of activities that we
thought might not even fit the definition of that.
Mr. Cardenas. OK. Mr. Rusco and also Ms. Herbst, some have
suggested that this bill specify that research on ways to
improve concrete masonry products and training for builders and
developers should be priorities for the Board. Do you support
the inclusion of a provision that would clarify that research
and development and training are priorities for the program?
Mr. Rusco. Again, we are neutral about what Congress'
intent for the program is, but if that is to support that, then
it might be prudent to state that explicitly.
Mr. Cardenas. So basically, if we write language in
legislation and our intent is not written in that legislation,
then that would give fungibility for any organization to not
have to follow the intent. So basically do you agree that if
that is the legislative intent of Congress, the we should in
fact put it in the bill?
Mr. Rusco. It is what we found was missing in PERC and
NORA. And then when Congress did reauthorize it, NORA, they did
include that kind of specification.
Mr. Cardenas. OK. So the question is to both of you, along
those same lines for PERC and NORA, the GAO recommended that
Congress specify the proportion of the assessment funds that
should be spent on each activity. This bill, however, does not
include such a provision, at least at this time. Do you support
including this kind of language if that is the intent of
Congress?
Mr. Rusco. If it is the intent of Congress that there be
certain proportions, then it would ensure greater certainty
that that was actually done if that was included.
Mr. Cardenas. So in other words, if an organization is
provided with opportunities and responsibilities, but if those
responsibilities are not specific, then they in fact are not
doing anything wrong if left to their own interpretations,
correct?
Mr. Rusco. That is correct.
Mr. Cardenas. OK. So being with what has gone on with PERC
and NORA, and there are some criticisms of that flexibility and
that not following the supposed intent as some people have
described, we should be more prescriptive in this bill, if in
fact we want the actual outlay and the actual activities to be
more in line with what the intent is.
Mr. Rusco. That is certainly what we found in the case of
PERC and NORA.
Mr. Cardenas. OK. So again, absent specific language, for
example, even PERC and NORA aren't necessarily doing anything
wrong per se, if one cannot point to specific legislative
language that is prescriptive?
Mr. Rusco. That is correct. We found that it was unclear
whether what they were doing was actually meeting the intent of
Congress because the language was not----
Mr. Cardenas. In my 18 years of legislating I can agree
that if we are not prescriptive as legislators and we write
legislation, then we can't blame anybody for not following
through with the intent if the intent is left out of the
language.
Thank you very much, I yield back.
Mr. Lance [presiding]. Thank you very much.
The chair recognizes Mr. Harper.
Mr. Harper. Thank you, Mr. Chairman.
Thank you both for being here.
And, Mr. Rusco, if I could ask you a question. You just
discussed that Congress should consider specifying the
prioritization of activities it wants to be when you undertake
a checkoff program. Is there a danger in being too specific to
the point that we could limit the flexibility of a checkoff
program to respond quickly and effectively to changes in the
marketplace?
Mr. Rusco. I think some checkoff programs provide ranges of
proportions to be spent, so they are not rigidly specific.
Mr. Harper. Can you get too specific, though, that limits
that flexibility?
Mr. Rusco. I would imagine that that is possible, yes.
Mr. Harper. I will yield back in the interest of time, Mr.
Chairman.
Mr. Lance. Thank you very much.
Ms. Castor, you are recognized.
Ms. Castor. Well, thank you very much. Thank you for
calling this hearing. And welcome to the witnesses.
And, Ms. Herbst, I am a cosponsor of the bill, along with
my colleague Mr. Guthrie. And I want to thank you for
expressing your general support. The Department of Commerce
mission is to help American businesses, and a lot of these
businesses are spread out all across the country. And my
interest has been in, because this is an industry-driven
initiative, it is going to be voluntary, but I hear the message
from GAO and from Commerce on the need for specifics.
I note that in the bill it does provide certain caps that
hopefully will address concerns raised by GAO. It says that 50
percent of the assessments paid by a manufacturer must be spent
on promotion, research, or education programs in the
manufacturer's geographic area. A lot of those terms are
defined in the bill for greater specificity.
In addition, the statute prohibits the use of assessment
funds to influence legislation or governmental action, which
addresses a concern of the GAO as well in the other cases. And
after the program's creation, administrative expenses are
capped, cannot exceed 10 percent of the Board's income.
Mr. Rusco, is that the type of caps on expenditures and a
little more specificity that you are recommending generally?
Mr. Rusco. I think when we looked at H.R. 985 in the
context of what we found with PERC and NORA with regard to the
specificity, the language was more similar to PERC and NORA
than dissimilar. Let me put this a different way. There was
less specificity in the original NORA authorization than there
was in the reauthorization.
Ms. Castor. And then in the other law, the Congress--there
was no reauthorization, so the Congress has not addressed that.
Mr. Rusco. That is correct, that remains the same.
With respect to the other two things you recommended, the
way that 985 is currently written with the provision that
Commerce will review within 30 days certain activities and
spending plans of the program, if they don't review it within
30 days then it is deemed to have been approved. That is very
similar also to what the original PERC and NORA language was
and it is different than what the NORA reauthorization language
is, which required DOE to perform administrative and oversight
activities. Because prior to that, for some 13 years DOE had
not performed any of those oversight or administrative
activities.
Ms. Castor. Right. Well, thank you very much for your
input. I think that is very helpful.
And I yield back the balance of my time.
Mr. Lance. Thank you very much.
The chair recognizes Mr. Guthrie.
Mr. Guthrie. Thank you very much.
And I appreciate the panelists for being here. I appreciate
working with my friend from Florida, Ms. Castor. Mr. Whitfield
was here earlier, I think he will be here a little later. He
has a constituent testifying in the next panel. So I appreciate
that.
And as I stated earlier, this bill is important for small
manufacturers of concrete block. And I would point out the
nature of the product is it has heavy, it is hard to transport
over long distances, and in turn it makes it difficult to get
bigger. So it is a lot of small businesses in a lot of our
communities, as a lot of us have learned over the last couple
years.
So an R&D program, it is difficult for a single business to
establish a big R&D program, so it is important. And I know the
Commerce Department, what they do is move forward. So I
appreciate your being here. And I completely sympathize and
understand that the questions when you are asked to get
involved in a program you haven't been involved in before, I
think it is fair to say we have not done this, there are a lot
of questions that we want answers to, but I think working
together we can make that happen.
And I know that other agencies or other departments, the
Department of Energy being one, has stood up boards in this
kind of, and so there are examples of other successful
departments doing this. I am sure the Department of Commerce
would be willing, if this moves forward and the President signs
it, to work with those agencies to make sure we move forward.
If you would like to comment on that.
Ms. Herbst. Yes, thank you. We would definitely be willing
to learn more, understand more, work with the committee and
with other agencies who with done this before to ensure that we
discharge our responsibility as well.
Mr. Guthrie. And I am sure the Department of Commerce also
has other citizens advisory boards or those type of boards that
are probably not a checkoff board, obviously not a checkoff
board, as you stated.
Ms. Herbst. That is correct.
Mr. Guthrie. But you have certainly worked in the area with
other boards and moving forward.
Ms. Herbst. That is correct.
Mr. Guthrie. As I said, I certainly sympathize and
understand your questions, and I think all of us working
together can make this move forward.
And on to Mr. Rusco. Energy took the lead in--I think
actually the other one was Commerce and Energy, but Energy took
the lead in setting up the program. I was just wondering if
your research could provide any insights into how the oversight
role was fleshed out between the two departments.
Mr. Rusco. So I think that initially there wasn't much
either between Commerce and DOE or a collaboration between
them. They were just kind of passing on. Since 2014, with the
requirement that DOE set up enforcement and oversight
activities, we have not looked at the program since then. So I
can't really comment on how that is going.
Mr. Guthrie. You mentioned the need for oversight and
expenditure of funds, and I understand the burden that this
could put on a department. Would a third-party auditor kind of
requirement move forward, would that be something that you
would see would be beneficial, to take some effort off the
agency?
Mr. Rusco. Yes, that is another thing we recommended and I
believe was included in the 2014 reauthorization, was the setup
of a third-party entity to essentially monitor spending of all
the widespread state and other recipients of those funds and
make sure that the funds were spent on activities that had been
approved. And then that entity would then report to the
oversight entity and therefore take some of pressure off that.
Mr. Guthrie. Well, thank you. I really appreciate both of
you being here thank you today, and I appreciate it.
And I yield back.
Mr. Burgess [presiding]. The chair thanks the gentleman.
The gentleman yields back.
The chair recognizes the gentleman from Florida, Mr.
Bilirakis, 5 minutes for questions, please.
Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
Mr. Rusco, the organizational structure and activities of
the checkoff program vary. Based on GAO's observations of
checkoff programs, is there a certain organizational structure
that has generated more success than others?
Mr. Rusco. I don't think we have looked at that question in
particular. So we have not tried to compare all the different
models and see how well they perform. Really our observations
are just specifically about PERC and NORA and how some of the
language in their authorizing acts allowed--well, created some
uncertainty about whether the spending was being done according
to Congress' intent.
Mr. Bilirakis. Last question. Are there recommendations
that GAO has offered to agencies overseeing checkoff programs
in the past that provide guidance on how to detect
noncompliance with these programs?
Mr. Rusco. We have done work over the years, over many
years, looking at checkoff programs and have made
recommendations over time. The recommendations that we made in
this most recent report in 2010 were actually matters for
congressional consideration before reauthorization rather than
recommendations to the agency. But we had in a previous report
recommended that DOE do more with its oversight role and they
had disagreed with that and not implemented that
recommendation.
Mr. Bilirakis. OK. Thank you very much.
I yield back, Mr. Chairman.
Mr. Burgess. The chair thanks the gentleman. The gentleman
yields back.
The chair recognizes Ms. Brooks from Indiana for 5 minutes
for questions, please.
Mrs. Brooks. Thank you, Mr. Chairman.
Prior to coming to Congress, I was at Ivy Tech Community
College in administration, and at that time I focused and led
the school's strategies aimed at workforce development. One of
my greatest interests both then and now was creating a trained
and well-educated workforce by providing them with the tools
and the experiences they need to grow and succeed. And I know
how much the masonry industry affects the State of Indiana.
Wells Concrete Masonry has operated in the Fishers
community for over 20 years, and in Pendleton, Indiana, it has
benefited from Swackhamer Masonry, present since 1970s.
Masonries are vital to revitalizing both the residential,
public, and commercial development of our State and country.
Unfortunately, the recent downturn in the masonry industry has
hit hard.
In 2013, USA Today ranked block masonry as number 5 on
their list of top 10 disappearing jobs in the USA. It is
essential for the future of our infrastructure and our economy
that we reverse this trend. That is why I am proud to be a
cosponsor of this bill. By providing the masonry industry the
ability to raise funding necessary to support research,
education, and promotion, companies will have the needed
resources to successfully develop, implement and manage
programs needed to increase sales and expand markets.
The bill makes strides toward a more prosperous America for
Hoosiers, and I am glad we are holding this hearing today, Mr.
Chairman, so we can learn more about it.
With that said, Mr. Rusco, I would like to ask you, based
on GAO's research, how have Federal agencies overseeing
checkoff programs validated or verified the eligibility of
producers or manufacturers to participate in such programs?
Mr. Rusco. Most of that work would have been related to
agricultural checkoff programs. And I don't have a very
comprehensive list of that, of all the work we have done there.
I could answer that question for the record, if you wish.
Mrs. Brooks. I would be, because we often, when we think
about checkoff programs, we typically do think of it with
respect to agriculture products. And so I do think that would
be helpful to know and I also think helpful to know with
respect to this industry how it would be done.
Do Federal agencies, if you know, that have overseen
checkoff programs, do you know if they have an employee on hand
with subject matter expertise on the affected commodity to help
with the oversight and implementation or do you know much about
that? And if not, could we please receive some information at a
later time?
Mr. Rusco. For the agricultural products, the Agricultural
Marketing Service has staff that are specifically designated as
administrative and oversight personnel for those programs. They
are reimbursed by the programs. They develop expertise and
knowledge about the programs and the industries over time. So
that body has a great deal of expertise and specific knowledge
about the industries and I think can provide very thoughtful
oversight and administration. But it takes some time to develop
that.
Mrs. Brooks. Well, I certainly hope that we learn from the
work of previous checkoff programs to advance it.
So with that, I yield back. Thank you.
Mr. Burgess. The chair thanks the gentlelady. The
gentlelady yield back.
I believe we are going to have two follow-ups, one from Mr.
Cardenas, you are recognized for 5 minutes for your follow-up.
Mr. Cardenas. Thank you very much, Mr. Chairman.
I just wanted to take the opportunity to commend a business
that is right in the middle of the largest populated county in
the country, which is Angelus Block in LA County. It just so
happens that it is in Sun Valley in my district. And it is
serendipitous that that is where my father used to take me when
he used to buy his block when we used to make block walls
around the neighborhood where I used to work with my father.
But I just wanted to give a shout-out to the Antonini
family, who it has been in their family for generations. And
they happen to be the largest manufacturer and supplier of
concrete masonry units in all of southern California. And it
was just wonderful to have the opportunity when I was a little
kid to look up to my father and the former father-owner of the
business and listen to them transact and for them to continue
to serve the community for generations now and for me to be
able to give service back to them by being hopefully a
conscientious Member of Congress trying to figure out how we
are going to make this legislation good, and hopefully we can
bring it to fruition so that the industry could get the
representation it is asking for.
So I just wanted to say thank you to Angelus Block for
their generations of work. And with all due respect, it is not
lost on me that when you look at the concrete jungle of Los
Angeles with 10 million people, that is a lot of masonry over
the decades that they have been one of the suppliers of.
So I yield back. Thank you very much, Mr. Chairman.
Mr. Burgess. The chair thanks the gentleman.
The gentleman yield back.
I recognize myself for 5 minutes for follow-up.
Along that same line, I would recognize the contributions
of Acme Brick in north Texas. Certainly the best thing to have
around your house, as I have known growing up, and every house
I have lived in, in Denton County, Texas, has been indeed built
out of Acme Brick.
Ms. Herbst, I wanted to ask you, in your prepared testimony
you reference the International Trade Administration. Is that
part of the Department of Commerce?
Ms. Herbst. Yes, it is.
Mr. Burgess. And you note that it is charged with promoting
the export of United States goods and services in foreign
markets and ensuring fair trading and compliance with trade
laws and agreements. Is that correct?
Ms. Herbst. That is correct, yes.
Mr. Burgess. So if this checkoff program were to proceed
and if the moneys were to actually go out, are there
precautions that you must take or that the Department must take
in order to ensure that this is all done in compliance with the
World Trade Organization, such that these checkoff moneys are
not seen as subsidies that would unfairly put our companies
that are competing with other companies overseas?
Ms. Herbst. That would be correct. We are responsible for
ensuring that we don't do anything that would put our companies
in conflict with international law, yes.
Mr. Burgess. And then is the converse true? Are you also
charged with looking at materials that may be subsidized by
other countries that are then unfairly sold in our markets in
this country?
Ms. Herbst. Yes, the International Trade Administration
does have an enforcement responsibility, particularly when
companies bring forward and ask us to investigate a potential
case of a dumping.
Mr. Burgess. Let me just, and this is really unrelated to
what we are talking about this morning, but again, I so rarely
get a chance to talk to someone from the Department of Commerce
I want to use the time wisely.
It came to my attention in the district that there are
people who manufacture and install granite countertops in
housing and apartments, but builders can actually buy the
finished and assembled product from a Chinese source cheaper
than they can purchase the materials and build it. So the
competitive balance therefore goes to the foreign company.
And their question to me is, is someone looking out for
their best interest if a builder can simply buy a prefinished
granite counter top from a Chinese source and there is no way
that the guy who buys the slab and then employs the person to
cut it and put it together, there is no way that they can be
competitive other than of course obviously the superior quality
of workmanship that exists with every trade in north Texas and
Denton County in particular. Is that something your office
would be in charge of?
Ms. Herbst. Yes. I could offer that if we could work
perhaps with your staff and follow up on that with them, we
would welcome that.
Mr. Burgess. I would welcome that. I would like that very
much.
That concludes my question. Is there any follow-up question
from either side of the dais? If, not that will conclude the
questions for this panel. I want to thank both of you for
participating today. And we are going to take the briefest of
recesses while we set up for the next panel. Thank you very
much.
[Recess.]
Mr. Burgess. The subcommittee will come back to order. And
I do want to thank you all for your patience. Thank you for the
quick turnover on the panel. We do want to try to get through
as much as we can, because there will be votes on the floor.
And if possible, if we can conclude and not have to hold you
over, that would be my goal.
But I do want us to move into our second panel. We will
follow the same format of the first panel. Each witness will
have 5 minutes for an opening statement, and then you will have
questions from the members.
For our second panel I want to welcome the following
witnesses: Mr. Major Ogilvie, the general manager for Ready Mix
USA; Ms. Kate Offringa, president of the Vinyl Siding
Institute; and Mr. Keith Waide, president of Ruby Concrete
Company.
We will begin our second panel opening statements with Mr.
Ogilvie. You are recognized for 5 minutes for an opening
statement, please.
STATEMENTS OF MAJOR OGILVIE, GENERAL MANAGER, READY MIX USA,
LLC; KENT WAIDE, PRESIDENT, RUBY CONCRETE COMPANY; AND KATE
OFFRINGA, PRESIDENT, VINYL SIDING INSTITUTE INCORPORATED
STATEMENT OF MAJOR OGILVIE
Mr. Ogilvie. Good morning. My name is Major Ogilvie. I work
in Birmingham, Alabama with the USA Family of Companies. We are
a CEMEX Company providing building materials to the
construction industries. I am involved in many parts of our
business, primarily in our concrete masonry operations, but
also with our cement, aggregate, ready-mix, and other
manufactured concrete products.
Previously, I served as a general manager for our concrete
masonry business, Block USA. Today I am here to testify as a
representative of our U.S. concrete masonry industry.
In October 2010, and after 2 years of study by members of
our industry to determine the best way to better and more
consistently fund important initiatives for our success in the
future, I was honored to be asked to lead our industry's effort
to pursue the creation of a commodity checkoff program to
support much-needed research, education, and promotion efforts
for our products. And I am honored to be with you today and to
address the merits of H.R. 985.
I would like to thank Chairman Burgess and Representative
Schakowsky for their role in making this hearing possible. And
I would like to thank the lead sponsors of the bill,
Representative Brett Guthrie and Representative Kathy Castor,
for their leadership.
Let me outline the nature of our industry and the role that
our product plays in construction. Concrete masonry is not just
an American industry, it is truly a local industry. Concrete
masonry manufacturing plants are located in every State and
territory in the U.S.
While the marketplace continues to be challenging today,
the vast majority of our some 350 U.S. Concrete masonry-
producing companies remain as they have more than 100 years, as
family-owned operations. Well over 90 percent of these
companies are classified as small businesses, with annual plant
sales revenue of concrete masonry products in the $2 million to
$3 million range. It was for industries like ours that
commodity checkoff programs were originally created, and this
legislation does not change the bid process, the method our
products are sold in the marketplace.
The jobs created by our domestic concrete masonry companies
are not outsourced overseas. All our plants are truly local
businesses that support high-paying local jobs and generate tax
revenues for our cities, counties, and states. The concrete
products we manufacture are used directly in the construction
of local schools, homes, hospitals, hotels, apartments, office
buildings, shopping centers, and municipal buildings, mostly
within a 75-mile radius due to the weight and the
transportation cost. And our local impact goes well beyond the
manufacturing plant. Also within a 75-mile radius, we create
local jobs and revenues for our raw material suppliers, as well
as our craft workers, the masons who install our products in
the wall.
Like other segments of the construction industry, business
has been slow to rebound. Over the past 7 to 9 years, many
plants have closed their doors and others are still fighting to
return of profitability. A national study--thank you, Mrs.
Brooks--by CNBC says our industry is still among the 10 worst
hardest hit by the construction downturn. Demand for our
products has declined and is still soft, layoffs in our
industry hit hard, directly affecting our local economies.
So how do we turn it around? That is why we are here today.
We believe this program will spur and stimulate jobs as well as
create new innovations in our industry, which will help both
our construction industry partners and ultimately the American
consumer.
The public will benefit from successful implementation of
this program through the construction more energy-efficient,
more durable, more cost-effective, and stronger buildings. Like
many of you, I have personally seen the impact of natural
disasters and the devastation to homes and structures from the
2011 Alabama tornadoes. Research and education coming from this
checkoff program will help minimize the impact on communities
from these events and reduce economic losses by helping
designers, owners, and builders to make better use of concrete
masonry attributes.
Our industry has worked hard to share the need for this
legislation to our local congressional representatives. Over
the last 2 years, hundreds of our industry members, including
our suppliers and customers, have traveled to Washington to
tell their story, meeting with over 500 House and Senate
offices. We have hosted over 50 Members of Congress and staff
with plant tours in their districts. Our efforts resulted in
267 cosponsors during the 113th Congress, and so far in the
114th we have over 160. Our support is very bipartisan.
Thank you for considering H.R. 985 and its ability to
enable our industry to help ourselves, to create new high-wage
jobs here at home, and ultimately improve our communities.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Ogilvie follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The chair thanks the gentleman. The gentleman
yields back.
Ms. Offringa is recognized for 5 minutes for an opening
statement please.
STATEMENT OF KATE OFFRINGA
Ms. Offringa. Thank you very much.
Mr. Chairman, Ranking Member Schakowsky, members of the
committee, thank you for the opportunity to testify today at
this hearing on H.R. 985. My name is Kate Offringa.
I have the honor to serve as president of the Vinyl Siding
Institute here in Washington. We are the trade association for
manufacturers of vinyl and other polymeric siding and suppliers
to our industry. Vinyl siding manufacturing is a $2 billion
industry that provides quality manufacturing jobs in this
country. Further, our industry is an important part of the
overall vinyl industry in the United States, a $54.5 billion
industry with nearly 3,000 vinyl-producing facilities, 350,000
employees, 70 percent of whose products go into buildings and
construction.
On behalf of our association's 44 member companies, I want
to convey the Vinyl Siding Institute's opposition to H.R. 985.
We oppose this bill for four primary reasons. And, again, I
appreciate the opportunity to elaborate. Those are: One,
concrete masonry industry is free to do collect research,
education, and promotion of its products through its multiple
trade associations; two, Federal sponsorship of a checkoff
program amounts, in our view, to a subsidy for the concrete
masonry industry; three, this bill would create a nonlevel
playing field for competitive products like those manufactured
by the companies that I represent; and, four, creation of a
checkoff program for the concrete masonry industry will set a
precedent, encouraging manufacturers of all sorts of products
in our sector to seek similar assistance from the Federal
Government.
If you would, please allow me to address each of these
points in turn. One, the concrete masonry industry, being free
to do collective research through its trade associations: H.R.
985 is a bill designed, and I quote from the text, ``to enable
concrete masonry product manufacturers to establish, finance,
and carry out a coordinated program of research, education, and
promotion to improve, maintain, and develop markets for
concrete masonry products.'' To quote further from the notice
for this hearing, the intent is boosting overall sales and
production of a particular good without reference to a specific
brand.
Mr. Chairman, members of the committee, I respectfully
submit that that is the role of a trade association simply and
well stated. We understand that the bill was introduced at the
request of the masonry industry in part because many firms in
that industry do not belong to organizations that contribute to
concrete masonry research. Free-ridership is a problem common
to trade associations in every industry. The challenge is upon
us, as associations, to show value to our members and encourage
their participation. The free-ridership problem is not unique
to the concrete masonry industry and does not, in our view,
warrant government intervention.
Number two, Federal sponsorship of a checkoff program
amounts, in our view, to a subsidy for the concrete masonry
industry. As stated, the intent of H.R. 985 is to provide a
federally sponsored mechanism that will assess the concrete
masonry industry for funds to conduct research and promotion
for its products. As competitors to that industry, my member
companies oppose this bill, which will, if enacted, provide the
concrete masonry industry with substantial, federally sponsored
advantage over the research and promotion activities of our
industry, thus providing the concrete masonry industry with an
unfair, competitive advantage, in our view, over the products
and systems of our industry.
The report accompanying S. 429, an identical bill
considered by the Senate in the last Congress, stated that the
cost of the Federal Government to oversee the proposed checkoff
program would be $4 million a year. That sum is greater than
the annul budgets of many trade associations, including the
Vinyl Siding Institute. And while H.R. 985, as drafted,
provides for Department of Commerce recovery of administrative
costs from the industry assessment, we do not believe that the
total cost to the government can be recovered efficiently or
effectively and are, therefore, concerned that this program
would not be cost-neutral to the American taxpayer.
And I would add that even if total cost recovery of
government administrative expenses was achieved, the government
sponsorship of the program appears, in our view, to be a seal
of approval for the concrete masonry industry and, thereby,
constitutes an advantage for them in our view.
Number three, this bill would create a nonlevel playing
field for competitive products like those manufactured by the
companies I represent. We understand that checkoff programs are
common in the agriculture industry. And we would like to draw a
distinction for you between that industry and the building
products industry as it applies to this argument. In the eyes
of consumers, beef is generally beef and milk is generally milk
with no obvious differentiation between producers. That ensures
the ease with which research and promotional programs can be
funded and implemented without causing competitive disadvantage
to any producer. That is not the situation for the buildings
products industry.
There is a host of differences between concrete masonry and
other cementitious siding products, vinyl siding, and other
types of cladding for buildings. The inherent differences in
our products create real competition between our categories
within the broader building products industry. Federally backed
promotion of one type of building product over another would
amount to the Federal Government picking a winner in the eyes
of the consumer is our concern. We believe the market should do
that.
Finally, number four, creation of a checkoff program for
the concrete masonry industry will set a precedent, encouraging
manufacturers of all sorts of products in building construction
to seek similar assistance from the Federal Government. That is
a slippery slope.
In conclusion, the Vinyl Siding Institute and its members
oppose H.R. 985 for the subsidized advantage it would give one
competitor above all others. We ask that you consider the
adverse effect passage and enactment of this bill would have on
our industry. And we urge you to reflect on the dangerous
precedent the legislation would set that could lead to any
number of industries requesting similar checkoff programs.
Thank you, once again, for the opportunity be heard today.
And I would be happy to address any questions you have for me
at the appropriate time.
[The prepared statement of Ms. Offringa follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The chair thanks the gentlelady.
The chair recognizes Mr. Waide for 5 minutes for your
opening statement please.
STATEMENT OF KENT WAIDE
Mr. Waide. Good morning. It is a privilege to testify in
front of this subcommittee today on behalf of my company and
others like mine. My name is Kent Waide. And I represent Ruby
Concrete Company of Madisonville, Kentucky.
I believe our company is like many others within the
concrete masonry industry. We are family owned, and we are
small. It began in 1869 and has been family operated for 146
years. We currently have three generations from our family
working at Ruby Concrete Company. And our business is
recognized as one of the oldest in Kentucky. I am proud of the
role our company has played in our region's history. We supply
the masonry products used to build our local schools, fire
stations, home centers, grocery stores, and other facilities
that our community uses every day. We have also supplied public
works projects, including roads, bridges, courthouses, and
judicial centers. In addition, our products were used to build
barracks for the 101st Airborne Division at Fort Campbell.
We employ 16 people directly and create jobs both upstream
for our vendors and downstream to our customers. Our business
is small, innovative, resourceful, and aggressive. During the
construction recession, we reinvested our capital to create one
of the most modern concrete products plants in the U.S. The
construction materials industry is changing however.
Companies like mine struggle to compete with other building
materials that have different demographics. We welcome
competition. But we seek a mechanism to level the playing field
for our commodity industry. If we manage our resources wisely,
Ruby Concrete can invest in modern equipment and support our
employees. But a company of my size simply does not have the
resources to educate, research, and promote our commodity
products throughout a broad-based market. We belong to
associations that perform good work on our behalf.
But I believe a commodity checkoff program is necessary if
we are to collectively invest more fairly and support growth
that will benefit all of us in the industry. Many of you know
our product as a gray cinderblock. But it is actually a very
versatile design tool. Producers like mine use a wide range of
natural, manufactured, and recycled aggregates that are readily
found throughout the country. Concrete blocks are strong enough
to support tall buildings and protect families from flying
debris in hurricanes and tornadoes. They are noncombustible and
prevent the spread of fires in buildings. They also survive
forest fires.
Reinforced concrete masonry protects people and assets in
earthquakes and wind events. It also shields against explosions
and bullets, which is why our military uses concrete masonry to
build mock cities in order to train soldiers in urban assault
and terrorism defense. Concrete masonry is environmentally
friendly. It does not rot or mold. And it is not subject to
termites.
It has terrific thermal mass properties that reduce the
amount of insulation needed to meet energy codes. It can be
made in a rainbow of colors to allow creative designs that
integrate texture and imagination. For example, our company was
commissioned by a university to produce a purple concrete block
that was used to build a signature wall on the campus of the
school with their certain colors.
These properties, design qualities, and uses resulted
through many years of work and testing. We have learned from
each other and built on shared knowledge. But the old system of
learning and communicating is ineffective in today's world.
Technology, speed, and resources are necessary for our industry
to advance. And we currently cannot keep up. We are losing
ground. We are losing producers. And we are losing local jobs.
I have spoken with many concrete block producers across the
country. And we agree that our industry needs a new approach to
support education and research that fosters new technologies
and broad-based promotion. Our industry will leverage the
outcomes of these investments to support the construction of
high-performance, more sustainable, and cost-effective building
solutions. That is why we urge the committee to pass the
Concrete Masonry Research, Education, and Promotion Act, H.R.
985. Thank you for your time. And I look forward to addressing
your questions.
[The prepared statement of Mr. Waide follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The chair thanks the gentleman.
And that concludes the opening statements of our second
panel.
I am going to yield to Mr. Guthrie first, 5 minutes for
your questions, please.
Mr. Guthrie. Thank you, Mr. Chairman, for yielding. I
appreciate that very much. I appreciate all three of you being
here to testify, particularly Mr. Waide from our beloved
Commonwealth. Welcome to Washington today.
My first question is for Mr. Ogilvie and Mr. Waide. Isn't
it true that the bidding and building process associated with
concrete masonry construction would limit the impact on the
resulting costs of the building?
Mr. Ogilvie. I would agree with that statement, that
between the building process or the bid process and other costs
associated with building any structure would basically
eliminate the assessment up charge. The assessment by design is
designed to be so tiny as to not affect the overall cost of a
building. And so we would not see that as a----
Mr. Guthrie. I will just ask you a follow-up and then you
both can answer. I know that you have been active in D.C. quite
a bit on this issue. So your customers obviously know you have
been here talking about assessments on the industry and so
forth. Has your customers reacted to this with concern like,
Major, you are up there doing this; is it going to add cost to
us? What are your customers saying about it is my question.
Mr. Ogilvie. They have. They recognize the need that our
small industry has. And just like Kent was expanding on at the
end of his testimony, we have got to do something for our
industry to help transform it and get it into a modern
technology that meets the marketplace needs. We absolutely have
got to do that. Our customers recognize that. Our suppliers
recognize that. We have enjoyed great support from both our
suppliers and our masonry contractors coming up and telling our
story to Members of Congress.
Mr. Guthrie. Thank you.
Mr. Waide?
Mr. Waide. Representative Guthrie, I would concur with Mr.
Ogilvie in that it truly is recognized as a job bill in that
our customers need support in the education and research of
this commodity product so that they can continue to build their
businesses, and we can work together to do that.
Mr. Guthrie. OK. In the text of the bill, we talk about
funding research in your industry. Could either of you two
elaborate on the kind of research that will be, that you
envision would be used by the industry?
Mr. Waide. I would be glad to address that. One example is
actually going on at the University of Louisville right now.
And they have a center there that is focusing on the benefits
of thermal mass which I addressed in my statement regarding
energy codes. Concrete masonry has terrific thermal mass
properties that when used correctly and designed correctly can
create a much more environmentally friendly building. And with
all the LEEDs credits that are being sought after in the design
community, that could add to the benefits of the buildings
today.
Mr. Guthrie. Do you have a comment on that, Mr. Ogilvie?
Mr. Ogilvie. Mine are for in the marketplace,
Representative. We have needs to help our customers, the
designers, the builders, the developers, realize the values of
our products. One of those and some of the low-hanging fruit of
investments we will make, design software in the marketplace
today, this is an item that would be $3 million, $4 million, $5
million to purchase and would take that amount to implement
over the course of time. But during the outreach of our
industry's effort, we have learned that software today is out
of date. So one of the low-hanging investments we would make
early on is investing in updating our software because we have
found that in the marketplace, because we don't have updated
software, the economics against our products are working
against us in a pretty significant way.
Mr. Guthrie. I understand that construction practices are
different throughout the country. We have a vast continental
country. What you build in Florida, what you build in
Birmingham, what you build in our mountains, it might be
different if you are on the coast of Florida versus in our
beautiful mountains. So how does this bill ensure that the
funding raised will support local initiatives given that we
have vast differences?
Mr. Ogilvie. Well, as it was pointed out a little bit
earlier, in the act, in the bill, 50 percent of it has to be
spent in the region that it is raised in. So that will
guarantee that. In looking at the investment model we are
putting together, the regional requests will be held first,
followed by our state, regional, and national. They will be
done in that order so as to give the state, the local area, the
top priority for the best investment, which, in our business,
states, the demographics of states are very important.
Mr. Guthrie. Thank you.
My time has expired. I yield back.
Thank you for your testimony.
Mr. Burgess. The chair thanks the gentleman.
The gentleman yields back.
The chair recognizes Ms. Schakowsky for 5 minutes for
questions please.
Ms. Schakowsky. I think people listening to this debate
would wonder how much of taxpayer dollars are involved in this
legislation. And so I wonder, Mr. Ogilvie, in promoting
concrete blocks and promoting your industry, are there taxpayer
dollars, or is the industry providing the funding for the
promotion?
Mr. Ogilvie. Well, good question. First of all, as the
legislation states, we are responsible for all the costs of the
government, both administrative and personnel. We believe that
the legislation, just because of the nature of our industry,
meaning very concentrated in a local standpoint, will create
additional economic activity, which will increase the tax
revenue, both--for all layers of government, city, county,
state and Federal. So we believe it will be a tax advantage, a
tax increase as far as tax receipts go.
Ms. Schakowsky. I think that is really important for people
to understand that the taxpayer is not on the hook for
promoting your industry.
And, Ms. Offringa, do you see anything in this legislation
that would prohibit yours from asking for the same kind of
program?
Ms. Offringa. No. I don't.
Ms. Schakowsky. So we actually have heard from a number of
building material industries that they may want to seek that. I
just, I think it is important also to make the point that this
is not to the exclusion of, but it is focused on an industry
that has done a lot of homework and a lot of organizing and a
lot of thought into a piece of legislation. And we may very
well see others that, that come forward.
Ms. Offringa. I agree with you. Thank you.
Ms. Schakowsky. Actually, that is all I really have to say.
So I am going to yield back my time. Thank you.
Mr. Burgess. The gentlelady yields back.
The chair thanks the gentlelady. The chair recognizes Mr.
Harper from Mississippi, 5 minutes for questions please.
Mr. Harper. Thank you, Mr. Chairman.
Thanks to each of you for being here. And, of course, Major
Ogilvie, it is good to see you again and reflect on all the
years I watched you as the all-American running back at
Alabama, two national championships and two MVPs and lots of
big plays and pretty special deal there. You will have to tell
us some Bear Bryant stories later.
Hey, you'll remember the first time I saw you a couple
years ago, I said, Number 42 right off the bat. So remember
that. So we are glad to have each of you here.
Mr. Ogilvie. Thank you.
Mr. Harper. Mr. Waide, how would you address concerns that
the assessment will disproportionately impact smaller concrete
masonry producers?
Mr. Waide. In disproportionately impacting them----
Mr. Harper. Do you think there is a problem, there will be
a problem for the smaller concrete masonry producers with this
assessment? Do you think it is something that they will be able
to manage?
Mr. Waide. Everyone will be able to manage this. The
amounts that we are looking at as far as the assessment is
concerned, as Mr. Ogilvie pointed out, is very small in
relation to the product costs and/or price. So it is not
onerous in any way.
Mr. Harper. Thank you.
Ms. Offringa, if I could ask you a question, I am looking
at your Web site, it lists all of your siding competitors to
vinyl. I didn't see concrete masonry on that list. So why,
today, is it a primary competition concern?
Ms. Offringa. Thank you. That is a very good question. I
appreciate the opportunity to clarify that. Our concern is that
while this program is designed for concrete masonry and the
product you see there, that the promotional efforts will spill
over into general promotion of cement and cementitious
products. And fiber cement cladding is a major competitive
threat to vinyl siding. And a big concern of ours is the
spillover effect where a program designed to promote concrete
block could end up promoting concrete and other cementitious
products generally speaking.
Mr. Harper. If I could ask if either Mr. Waide or Mr.
Ogilvie have a response or care to respond to that competition
issue? Or shall I move on?
Mr. Ogilvie. I can speak specific. I can't speak to other
potential checkoffs or checkoffs in general, I can only speak
to ours. What our checkoff will cover, concrete masonry
checkoff, concrete block. It would not relate with any, with
competition within this industry if that was your question.
Mr. Harper. OK. Thank you.
In the interest of time, Mr. Chairman, I am going to yield
back.
Mr. Burgess. The chair thanks the gentleman. The chair
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
for questions please.
Ms. Castor. I want to thank you, Mr. Chairman and Ranking
Member Schakowsky for holding this hearing today. You are
responding to local small businesses all across the country
that oftentimes don't have a big voice here in Washington. So I
want to thank you for taking the time for this committee
hearing today. And I would also like to thank my colleague and
cosponsor Brett Guthrie. He is a good friend. He has been a
pleasure to work with on this bill and his staff as well.
Representative Guthrie and I have introduced this bill together
for the last two Congresses. And I am really pleased that we
have garnered so much bipartisan support.
Last Congress, we had 267 cosponsors. And this year we
already have 159 cosponsors, including almost 30 of our Energy
and Commerce colleagues. This bill is an industry-driven bill
that will give concrete masonry businesses the opportunity to
decide whether or not they want to institute a commodity
checkoff initiative. If approved, it allows the concrete block
industry to assess itself to pay for research and advertising
at no cost to taxpayers.
The concrete masonry industry is made up of primarily
small, local businesses. Most block producers are small and
local due to the huge weight of concrete block and the high
cost of transportation. That is why they are so spread out all
across the country. And virtually every congressional district
is home to at least one producer and multiple masonry
contractors.
One of the reasons this bill and this initiative got my
attention is that we are seeing an increase in the number of
extreme weather events all across the country. And in my home
State of Florida and throughout the entire Gulf Coast, we are
particularly sensitive to tropical storms and hurricanes. Mr.
Ogilvie, you mentioned the tornadoes in Alabama. You don't have
to look back in the news pages or news reports to see reports
of fires, floods. And I think that promotion of this industry
is very important to making sure our structures are sturdy,
that they can withstand the increasing intensity of these
extreme weather events. Mr. Ogilvie, can you elaborate on the
role concrete masonry could play in creating a more resilient
construction environment? And how could this bill allow the
concrete industry to better research and advertise products
that can better withstand volatile weather conditions?
Mr. Ogilvie. Thank you, Representative Castor.
That is a big subject for us that requires, particularly on
the research and the education part, resilient construction and
the benefits that it can. That is a gigantic play for this
industry, one of the areas that we will work toward and
continue to work toward with this concrete masonry checkoff
program. Wind resistance is a true value of our product. It
offers the highest wind resistance towards tornadoes or
hurricanes of products that are out there. And we will work
more to not only conduct that research that will be required
but also work within the colleges, the universities to educate
the designers and the designers coming out in the marketplace
to help us further resilient construction.
Ms. Castor. In my home state we have had a real crisis
after the active hurricane season of 2004 relating to property
insurance. And I also see this initiative as a benefit for
homeowners and commercial property owners all across the
country. If they have sturdier structures, over time, they are
going to be able to access property insurance at more
affordable levels.
Mr. Waide, do you have a comment on how we can promote
resilience and stronger structures through this concrete
checkoff initiative?
Mr. Waide. I think you have pointed out the major areas,
not only through the building side but also through insurance
and that type. But the biggest thing that this is going to do
is allow us to innovate and create stronger properties in our
product, as well as be able to communicate that to the design
community and integrate that into standard building practices.
We have manufactured concrete blocks in some ways the same way
for a long, long time. But technology has advanced to the point
where we want to take advantage of that. And we feel like if we
can get the funding to be able to do the research and put that
technology to work for our industry, we can create better
products that create better buildings. And, in turn, it is
better for the consumer and for all of us.
Ms. Castor. Thank you very much.
And thank you again, Mr. Chairman, for calling this
hearing.
Mr. Burgess. The chair thanks the gentlelady.
The gentlelady yields back.
The chair recognizes the gentlelady from Indiana, Mrs.
Brooks, 5 minutes for questions please.
Mrs. Brooks. Thank you Mr. Chairman. I am going to turn the
attention back to the jobs in the industry.
And, Mr. Ogilvie, do you know how many jobs are supported
by the concrete masonry products industry today roughly?
Mr. Ogilvie. Yes, ma'am. The Department of Commerce does
not distinguish between brick and block when they do their
census. And these are 2012 numbers. But there are roughly,
within brick and block operations, about 15,000 to 18,000 were
the numbers that we looked at and we can estimate. And that is
2012 numbers.
Mrs. Brooks. And do you have any sense as to whether or not
you expect the number to grow with the establishment of a
checkoff program? How will a checkoff program assist with job
creation?
Mr. Ogilvie. Yes, ma'am. Number one, this downturn, this
recession has hit our industry particularly hard because we are
family businesses and to strive through that has been
particularly difficult. We don't have access to large public
capital. But the recession is not going to fix the challenge,
the transformation that we see as an industry we need. We need
to modernize our industry, be able to get up to transform it
with new innovations, as Kent said. But we need to be able to
transform it, like I was sharing a little bit earlier, with
design software that helps our product be more competitive in
the marketplace but also bring it up to code and allow us to
change codes sooner than we have been able to do so in the past
because the design codes, the design systems that are out there
are penalizing our product in a wall system. This block is
$1.20, $1.45 nationwide. And we are talking about a penny
assessment and enough that will help us to put a design system
that in the wall, this is anywhere from $12 to $15. We could
save 100, 200 times that with updated design systems alone. Did
that make sense?
Mrs. Brooks. And thank you for bringing that block for
demonstrative purposes today. It is helpful.
Mr. Waide, can you share with us what are the main
challenges facing the growth of the concrete masonry industry
today? What are kind of the biggest challenges that you see
that will serve as obstacles, that do serve as obstacles, you
know, to strengthen your position in the market?
Mr. Waide. Well, we have got a good product that is time
tested. The problem that we face as producers is that I,
individually, cannot put the resources in to innovate and
research in ways to improve the product and put it in the
marketplace today in a viable way. So that is why we seek the
checkoff program so that we are not individually trying to do
that, that we collectively, as an industry, can use technology
for our benefit.
Mrs. Brooks. Can you explain, though, how an improved
product through R&D and through checkoff, can you explain how
you believe that could increase job creation in the future and
increase the strength of your industry and how we can connect
those?
Mr. Waide. Again, through technology, I can learn how to
build a better block. And in that process, I can communicate
with designers who are seeking those better performing building
products. And if they are looking at and specify that product,
then I create jobs because I am feeding the building industry
with what they are needing, what they are wanting.
Mrs. Brooks. Thank you.
I yield back.
Mr. Burgess. The chair thanks the gentlelady. The
gentlelady yields back.
The chair recognizes the gentleman from Oklahoma, Mr.
Mullin, 5 minutes for your questions please.
Mr. Mullin. I was just fixing to tell Mrs. Brooks she was
using some big fancy words to describe a cinderblock a while
ago. I have absolutely busted out numerous of those and
actually installed a lot of them too. And I do appreciate
bringing a visual aid. That is what we call that.
Mrs. Brooks. I am a lawyer.
Mr. Mullin. That helps explain that. I know. We understand.
I am a plumber.
Anyway, Ms. Offringa, I was wanting to kind of visit with
you just a little bit. As a business owner, I mean, I have
competition that enters in every day. We have companies ranging
from plumbing all the way to banking and even a restaurant,
which that is a whole animal in itself. And competition is
something that comes in the market every single day. And as a
business owner, if I am concerned that someone is going to get
the competitive edge, it is not that I go out and I try to keep
that competitive edge from happening; I go out and make myself
stronger.
So I am kind of more interested in your perspective on why
we are trying to incentivize safety. What is a better product?
What is a better way to do things? Is there a better option out
there? How can we increase safety? How can we save money for
the consumer? If your product is out there and it is able to
compete, it is able to compete, but there is always going to be
a need for your product. And so I guess I am kind of trying to
get your point of view of how do you think this is going to put
you at a negative disadvantage?
Ms. Offringa. Thank you for your question.
We are not afraid of competition. That is what we do, the
industry I represent, and keep doing it. And that is the
American way.
But our position is that a government-backed checkoff
program would appear to be a seal of approval on a particular
type of product in the buildings industry and have spillover
effect, as I said, to other types of cementitious products
that----
Mr. Mullin. But isn't that a far reach? You are assuming
something that we don't even know. That is not even the point
of this legislation.
Ms. Offringa. Well, the position we are taking on it is
they are free as an industry to do all those things, and they
should do them. They should strengthen their industry and do
R&D and promote their products. They should do them. And they
are free to do them through their trade associations. And that
is what we do.
Mr. Mullin. But we have helped, as a government body, we
have helped a lot of industries innovate. We have also hindered
a lot too. I get that. But we, this is kind of a step that we
try, we tried to, supposedly, create an atmosphere in
Washington, D.C., which this is kind of counterproductive, but
we are supposed to be creating an atmosphere for entrepreneurs
to thrive, an opportunity for them to build, to succeed.
Lately, through regulations, you have probably heard me rant on
this before, we haven't. But this is one that we are.
And I understand where the association is taking a stand.
But I am having a hard time agreeing because I have been in
construction my whole life. This is something that I could
understand a point of view if it wasn't just making an
assumption. And you are assuming that this is going to put the
industry at a negative advantage. But can you see the positive
in it too?
Ms. Offringa. Well, those are our concerns. We are happy to
compete on a level playing field.
Mr. Mullin. No, I am not saying, I am saying can you see
the positives? You, personally, can you see the positives in
this?
Ms. Offringa. Of government-sponsored programs that----
Mr. Mullin. No, I am talking about specifically what we are
talking about here today.
Ms. Offringa. I understand checkoff programs and what they
accomplish in the agriculture industry. And I think there is a
difference when you start to apply them to manufactured
products. And that would be something new for the Department of
Commerce. We have concerns about the impact and how it would
work out. But if it is something that you decide to do, then we
think that lots of other industries are going to come ask you
for the same thing.
Mr. Mullin. Let me ask you, is there a way we can help your
industry? Because I am all about creating an atmosphere for
industries to thrive in. Is there a way that we can help your
industry then?
Ms. Offringa. Well, if this is a successful program, maybe
we will be back next year and have a different conversation
then about these types of promotional----
Mr. Mullin. Which is my point. It is OK so often that we,
that we help as long as we are helping me but not others. And
if there was an opportunity that came along for us to help you,
you would be OK with that. But what if these guys here want to
oppose that? Do you understand my point? We are here to help.
And we want to create an equal playing field. I am not wanting
to pick winners and losers. So if an opportunity comes up, Ms.
Offringa, come to my office. Let's see how we can work with
you, OK?
Ms. Offringa. Thank you.
Mr. Mullin. Thank you. I yield back.
Mr. Burgess. The chair thanks the gentleman.
And the chair will recognize himself for 5 minutes for
questions.
And I do want to thank all of our members who have stayed
with us this morning and heard from a very informative panel.
I want to thank Mr. Mullin for educating me about gas cans.
Over the Fourth of July holiday, I had the opportunity to buy a
new gas can and found that I was unable to work the new nozzle
that is required by the CPSC. So when he referenced the fact
that sometimes we actually work at cross purposes to the
advancement of industry, I feel your pain or I felt your pain.
So I got the nozzle off the old gas can that had a hole in it
and switched out. And it just leaked a little bit. And I am
sure I probably damaged the ozone layer more than the CPSC
intended for me to.
Mr. Mullin, I wonder too if you would introduce your guest
to the committee.
Mr. Mullin. I am very privileged today to have my second
oldest child, which I have five, my second oldest child would
be Andrew. As adults, so often we get busy in our world, and we
don't actually show our kids what we are doing. This job, as we
all know, takes us away from our family all the time. And the
last thing I want to do is have my kids grow up thinking this
took me away from them. So I appreciate the chairman for
allowing me to have him in the hearing today because if you
ever want me see cry like a baby, get me talking about my kids.
Mr. Burgess. It is so understood. I appreciate the
opportunity to, perhaps, do that some day.
And, Mr. Mullin, I might further ask as we get to the
conclusion of our hearing today, if Andrew would like to take
the chair and adjourn the subcommittee as we conclude. That
would allow him to actually participate in the hearing.
Before we get to that, though, I do have just a few
observations. Ms. Offringa, it seems like I learned at a very
young age from my mother that if you build a better mouse trap,
the world will beat a path to your door. Was she correct about
that? That we make a better product and people are going to
want our product? If I understood your testimony correct, you
are concerned that we may interfere with the mousetrap school
of economics that was related to me by my mother. Am I
understanding your concern correctly? We are talking about
tilting the competitive advantage to a product that is not
vinyl siding and doing that with a government program. I will
be honest with you, I share that concern. I do have to wonder
if that is the correct place and function for the Federal
Government to be involved.
I guess the question I would have to the other witnesses
is, what prevents a voluntary program? And, yes, you are free
to take money from your members and use that to the advancement
of your product. I guess the ``trade association'' was the term
of art that is used. What prevents that from happening now?
What is it about your industry that makes that not a viable
strategy?
Mr. Waide. Thank you for the question. Our industry has
worked for many years in trying to voluntarily put together
innovation and advancements. The problem with our industry is
that, as it has been well stated, there is a bunch of us that
are spread out. And so it is hard to collaborate and get
together, even through associations, to do that.
But, more importantly, the dollars that it takes in order
to accomplish meaningful innovation and research is not
something that we can do just individually or just a few of us.
It needs to be a collaboration of all of us. And the checkoff
program is well established, not necessarily in this
department, but it is well established. And it meets the needs
of other commodity industries. And we feel like we fit well
within the guidelines of that.
Mr. Burgess. Yes, sir. I'm sorry. Major, please.
Mr. Ogilvie. I am going to give you more of the history.
First of all, we studied voluntary checkoff programs. I am
going back to 2008, 2009. We studied grants. We actually came
up here and met with a number of Congresses. But the seed was
that we recognize as an industry we needed to be able to better
fund, with all the transformation, all the needs going on in
the construction industry, for concrete block to remain
competitive and a viable product. So we studied those very
quickly between grants and voluntary--voluntary can help you in
a short-term issue, topic type thing. But in terms of the long-
term need that our industry felt like we need to move our
product into the future, we didn't feel like voluntary programs
were an effective way to do that. That is based on the history
and study of voluntary programs that have been in place.
Mr. Burgess. And I appreciate that. And I get the fact that
your industry is widely dispersed over geographic areas. Your
products are heavy. They are hard to transport.
Mr. Ogilvie. Right.
Mr. Burgess. But it also seems in the day of the Internet
that some of those problems are, perhaps, manageable. And I
don't know. These are just observations. I always worry about
setting up a new government program. So I do share some of the
concerns that were expressed today.
And, Ms. Offringa, you used the word ``subsidy.'' And you
heard me talk to our Commerce witness about the concern, if a
subsidy could be seen as an unfair competitive advantage and
whether that would get us into difficulties with the World
Trade Organization. I guess my only other observation is if we
set up a checkoff program, I hope that Commerce is prepared to
do the necessary oversight to make certain that other
industries are not adversely affected and that certainly we
remain in compliance with all of our obligations under the
World Trade Organization.
Seeing that there are no further members wishing to ask
questions, I do want to thank all of our witnesses for
participation in today's hearing.
Before we conclude, I would like to include the following
documents to be submitted for the record with unanimous
consent: A statement for the record on behalf of the Mason
Contractors Association of Greater Chicago; a statement for the
record on behalf of Back Brook Masonry; a joint statement for
the record on behalf of Featherlite Building Products and the
Acme Brick Company; and a letter from the National Association
of Homebuilders.
[The information appears at the conclusion of the hearing.]
Mr. Burgess. Pursuant to committee rules, I will remind
members that they have 10 business days to submit additional
questions for the record. I ask the witnesses to submit their
responses within 10 business days of receipt of the questions.
I do advise members that there is a vote on the floor.
Mr. Andrew Mullin, if you will take the chair and read the
last sentence that I have underlined there and then strike that
gavel very hard.
Mr. Andrew Mullin. Without objection, the subcommittee is
adjourned.
[Whereupon, at 10:45 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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