[Congressional Record Volume 140, Number 58 (Thursday, May 12, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 12, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]


                              {time}  1750
 
                      REDUCING THE REGULATORY MAZE

  The SPEAKER pro tempore (Mr. Sawyer). Under the Speaker's announced 
policy of February 11, 1994, the gentleman from Texas [Mr. DeLay] is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. DeLAY. Mr. Speaker, as chairman of the Republican Research Task 
Force on Competitiveness, I am pleased to run the opening lap of the 
third annual Republican regulatory relay.
  Our country is faced with a huge and growing bureaucracy of 
overzealous regulators who ignore cost-benefit analysis and whose 
primary concern is validating their own existence.
  Since 1992, Members of Congress have run laps on the House floor to 
bring attention to the multitude of unnecessary and ill-conceived 
regulations that are forced down the throats of American businesses and 
American consumers. Last year, President Clinton and Vice President Al 
Gore brought stacks of regulations out on the White House lawn to 
promote their reinventing government effort which was intended to 
reduce the regulatory maze within the Federal Government.
  I would much rather fight to ease the regulatory burden faced by 
small businesses all across America which are the job-creating engines 
of our economy rather than to make Federal pencil-pushers' jobs easier.
  At its best, the process makes no sense, and at its worst, regulators 
classify their children's teeth as toxic waste, they force banks to 
make teller machines accessible to blind drivers, they dictate that 
hard hats must be disinfected before each use, and they require 
employers to inform employees about the hazards of coming in contact 
with Joy dishwashing liquid.

                              {time}  1800

  Since reaching a low point in 1968, the cost of regulatory 
compliance, the number of rules reviewed by the White House's office of 
information and regulatory affairs, the number of Federal Register 
pages and employment at Federal regulatory agencies all have been 
steadily increasing. In fact, President Clinton's first year saw the 
most regulatory activity since President Carter's last. The page total 
for 1993 of the Federal Register was 69,608 pages, the third highest 
total of all time. A not surprising increase in the number of 
regulatory bureaucrats corresponds with this proliferation of 
regulation.
  While from 1988 to 1992 regulatory staffing increased by over 20 
percent to almost 125,000 employees, under President Clinton the 
largest number of Federal bureaucrats ever, 128,615 people were called 
for to run his Federal regulatory apparatus. The direct costs of 
Federal regulations are estimated to be about $500 billion a year. Now 
if you take into account the indirect costs and include State and local 
regulation, the regulatory burden is anywhere from $810 billion to $1.7 
trillion dollars per year. That is a staggering $8,400 to $17,000 per 
household per year.
  As you can see, the costs of Federal regulation are only going to 
continue to escalate throughout this decade. A typical American 
business must fulfill provisions of the Clean Air and Clean Water Acts, 
provide a minimum standard of living for workers, engage in recycling, 
carry an expensive insurance policy against product liability, ferret 
out illegal aliens, provide costly packages of medical benefits to 
employees which may have to include acupuncture, wigs, pastoral 
services, and drug treatment.
  They have to provide special accommodations to disabled employees and 
promote equal opportunity as determined by race, sex and sexual 
activity.
  Listed here, in the Record, there will be 100 forms and booklets of 
information that a typical business has to sort through and fill out to 
comply with Federal rules and regulations. This list does not even 
include many of the regulations contained in the Clean Air Act 
amendments of 1990 or the recently passed Family and Medical Leave Act. 
The Small Business Administration estimated that small business owners 
spend almost a billion hours a year just filling out Government forms 
at an annual cost of $100 million dollars. Imagine what a boost that 
kind of money would be to the economy.
  Let me just outline, Mr. Speaker, some of the kinds of horror stories 
that are happening all over this country.
  The Department of Transportation repeatedly considered promulgating 
new hazardous material regulations for the shipping of butter and salad 
oil. The plan, which has apparently been dropped but picked up again by 
the Department of Commerce and other departments, would have required 
24 hours, 24 hours of classroom and field training for workers who 
responded to spill emergencies of butter and salad oil.
  John Shuler, a Montana rancher, was repeatedly fined $4,000 for 
violating the Endangered Species Act. What was Mr. Shuler's crime? He 
shot and killed a grizzly bear that had charged after him on his own 
property.
  O.C. Mills and his son Carey run a small contracting business in 
Florida. Recently, they were both thrown into prison for putting 19 
loads of sand on two waterfront properties they wished to develop. 
Despite initial approval of their development project by Florida's 
environmental regulators, then headed by the current EPA administrator, 
Administrator Carol Browner, the Millses were convicted of wetlands 
violations shortly after the project began.

  John McCurdy, who is an owner of a very small herring smoke house, 
recently had a run-in with the FDA. Despite producing over 54 million 
filets over 20 years without one single reported case of food 
poisoning, the FDA told McCurdy he would have to change his methods. 
Unfortunately, that would have required $75,000 worth of new equipment. 
Facing the hopeless choice between installing equipment he could not 
afford or fighting a legal battle with the FDA, Mr. McCurdy chose the 
only other alternative, he closed his business and laid off his 22 
employees.
  Carol Roberts is a self-employed knitter who does all her work at 
home. She produces sweaters, hats, and mittens and sells them to 
retailers for a small profit that helps support her family. But all 
this could change if the AFL-CIO and the Labor Department get their 
way. Union officials are now pushing to reinstate a ban on at-home 
garment work that was removed in the 1980's. If the law goes back into 
effect, home garment workers like Carol Roberts would be considered 
criminals in the eyes of the law.
  Robert M. Cox was the former vice president of the Gilbert Spruance 
Co., a small paint company from Pennsylvania. In 1984, a nightmare 
began for his company when they were notified that a former waste 
hauler for Mr. Cox's company had apparently dumped waste illegally in 
New Jersey. Despite the fact that Mr. Cox's company had no knowledge of 
or connection to the waste hauler's illegal activity, the Gilbert 
Spruance Co. was asked to foot a substantial part of the cleanup costs, 
ranging from $175,000 to $1.3 million dollars. Years of legal wrangling 
and work with Government agencies, administrators and legislators, Mr. 
Cox's company finally had to declare bankruptcy and sell all of their 
assets. As Mr. Cox, a self-described environmentalist, asked:

       Why doesn't the system allow an environmentally sensitive 
     paint company to coexist with Superfund? Why does our system 
     create so much inertia that the lawyers and administrators 
     get rich off a manufacturing company that has been trying to 
     do the correct thing all along?

  I could go on and on and on. I have pages after pages after pages of 
horror stories like these that we find happening in our Government all 
the time.
  This month the regulatory relay is focusing on the dry cleaning 
industry whose experience with Government regulations is indicative of 
the larger trend of increased difficulty in starting up and maintaining 
a very small business.
  Their plight is eloquently described in a paper called ``Taken to the 
Clearners: A Case Study of the Overregulation of American Small 
Business.'' That was recently published by the Cato Institute and 
written by Jonathan Adler, a policy analyst at the Competitive 
Enterprise Institute. The paper points out that according to the 
International Fabric Care Institute, the typical dry cleaning outlet is 
a very small family-owned business that employees an average of 5 
people and grosses an average of $200,000 per year. The estimated 
profit per firm is only $10,000 annually, clearly a very limited amount 
with which to absorb additional regulatory costs. In 1990, the average 
profit for a dry cleaner was 0.43 percent.
  Because of their small size dry cleaners are extremely vulnerable to 
the costs of regulation, even those seemingly benign requirements such 
as filing a hazardous waste report. This rule can require as many as 60 
hours to fulfill, a significant burden on a dry cleaning business whose 
employees put in no more than 200 man-hours per week.

                              {time}  1810

  And that is just one regulation. Operators of small businesses face 
regulatory hurdles at every turn. The CATO paper states that for dry 
cleaners, that means clean air regulations governing perchloroethylene 
[perc] emissions and hazardous waste regulations governing the disposal 
of chemicals. Occupational safety regulations cover exposure to 
cleaning solvents and require demanding precautions in the handling of 
garments worn in hospitals and dental offices. Governments at all 
levels have imposed exacting liability standards that threaten the 
existence of many dry cleaning establishments. Additionally, dry 
cleaners are subject to the labor codes, wage laws, and tax rules that 
affect all small businesses nationwide.
  While many regulations are well-intended, the lack of reliable cost/
benefit analysis means that their implementation often results in 
ridiculous situations. For example:
  In southern California, a dry cleaner was fined $250 for failing to 
post a listing of employee injuries that had occurred during the last 
12 months. The problem is, the dry cleaner had no employee injuries to 
report. In effect, the business was fined for failing to post a blank 
piece of paper.
  Because of regulations covering the disposal of so-called hazardous 
wastes, the costs of disposing spent cartridge filters and other 
process waste have skyrocketed. A new filter cartridge can be purchased 
in San Antonio, TX, for $18.75, but its disposal costs $21.
  In Virginia, a dry cleaner is required to submit monthly retail sales 
tax forms to the State even though the store sells no taxable items. 
Failure to file the tax forms would result in fines, even though not 
filing would save time and money for both the business and the 
government.
  Other times, regulators cause serious damage in their enforcement of 
regulations. At a press conference we held yesterday kicking off the 
Relay, Bill Griggs, vice president and manager of Wayside Cleaners in 
Portsmouth, VA, spoke of the ordeal he had to go through after the 
Virginia Department of Labor and Industry showed up unannounced for an 
occupational safety and health inspection. As a result of the DLI's 3-
day inspection--during which Mr. Griggs was unable to spend time 
tending to his business, talking to customers, or overseeing 
operations, Wayside Cleaners was found potentially liable for $30,000 
in fines. Four months later and after plea-bargaining, Mr. Griggs 
received a 32-page DLI citation and a reduced fine of $13,200. Among 
his ``serious'' violations:
  Smoking was ``permitted in flammable or combustible liquid storage 
areas.'' In point of fact, smoking was not allowed in the work area, 
but was allowed in a bathroom located behind the dry cleaning area. The 
bathroom was fully enclosed and separated from the work area by a 
cement wall and a fully closing door.
  Wayside failed to provide an ``educational program'' complete with 
documentation of annual training for all employees on the operation of 
portable fire extinguishers to be used in case of an emergency. 
Employers are required to have such programs for emergency equipment 
and workplace hazards, such as cleaning solvents, and provide 
documentation that all workers participated.
  One of Wayside's approximately 100 electrical outlets was found to 
have reversed polarity.
  It is amazing to me that this situation exists for the dry cleaning 
industry.
  The EPA classifies perc as a hazardous waste when discarded or 
otherwise disposed of. In addition, existing EPA regulations classify 
any wastes that are ``mixed with'' or ``derived from'' perc as 
hazardous. Under that definition, used perc and filter cartridges that 
contain minute amounts of perc are classified as ``hazardous wastes.'' 
By the EPA's own admission, ``A regulated hazardous waste handler must 
do hundreds of things correctly to fully comply with the regulations, 
yet doing only one thing wrong makes the handler a violator.'' In the 
case of the typical dry cleaner, that means storing hazardous wastes in 
properly marked containers and keeping detailed records of the use, 
transportation, and disposal of the wastes.
  Because of the complexity of the hazardous waste regulations--the EPA 
has acknowledged that ``the definitions of `solid waste' and `hazardous 
waste' are exceedingly difficult to understand even for the most 
experienced staff''--most dry cleaners contract with certified 
hazardous waste disposal firms to ensure regulatory compliance. 
SafetyKleen provides those services for most dry cleaners. Because 
Safety-Kleen is also required to comply with the regulations governing 
the handling, treatment, and disposal of hazardous waste, the costs of 
disposal are inflated. Dry cleaners will thus spend as much as $2,000 
or more disposing of cartridges and other ``hazardous'' materials. The 
regulations have inflated the costs of disposal so much that in some 
parts of the country it costs more to dispose of a filter cartridge 
than it does to purchase one new.
  The paperwork burden imposed by the hazardous waste regulations is 
substantial. Numerous forms and permit applications are typically 
required for proper perc handling and disposal. Among those is the 
EPA's five-volume National Survey of Hazardous Waste Generators, the 
first volume of which contains over 80 pages of instructions on how to 
fill out the remaining volumes. ``They even sent instructions on how to 
read the instructions,'' according to Gerald Levine, associate director 
of the Neighborhood Cleaners Association. Such monstrous documents 
could intimidate any small business owner, let alone a recent immigrant 
who might not have complete control of the language. The EPA's ``1991 
Hazardous Waste Report'' required an estimated average of 19 hours--
nearly half of a work week--to complete, according to the EPA. Dry 
cleaners interviewed for this study suggested that the actual time 
required is significantly greater. The EPA's ``Hazardous Waste Report'' 
is in addition to whatever State requirements are in place. In some 
States, it may cost over $800 simply to obtain hazardous waste permits 
from local agencies. The hazardous waste regulations are yet another 
layer in the government burdens threatening to smother small business 
in America.
  Let me break right now because I see that my colleague, the gentleman 
from Florida [Mr. Mica], has come to the floor to participate in this 
special order and this regulatory relay.
  The gentleman from Florida is well known for his championing the risk 
assessment issue here on the floor of the House and is credited with 
bringing this issue to the attention of the House of Representatives. 
In fact, he has sent back to the drawing boards the bill that raises 
the EPA to a department-level agency because the Clinton administration 
refuses to support the implementation of risk assessments before they 
impose regulations on small businesses in this country, and I am glad 
to yield to the gentleman from Florida and compliment him on the great 
work that he performs.

                              {time}  1820

  Mr. MICA. Mr. Speaker, I thank the gentleman for yielding and would 
like to also commend the gentleman from Texas for his tremendous 
leadership in bringing before not only the Congress but also before the 
American people the cost and the effect of Government regulation and, 
in fact, how it is affecting business and in particular how it is 
affecting one small business, a mom-and-pop business, the dry cleaning 
business.
  Mr. Speaker, I come from a family of people who for 3 generations, 
going on almost the fourth generation, have been in the dry cleaning 
business still in Upstate New York, in Binghamton, NY, and our family 
always made a good living through this particular business activity, 
and I was stunned to find out as we heard yesterday in the press 
conference that we held the amount of regulation, the cost of doing 
business, the imposition on the Federal and State level of burdensome 
regulatory practices that are putting these folks out of business and 
really scaring folks.
  In that regard, we do not really pay attention to what government 
regulations are costing us, but just for example, I would like to point 
out that environmental regulations cost over $150 billion each year, 
and this translates into $1,500 cost per household, so this has a 
direct cost. When you go and pick up your dry cleaning, you might be 
interested to know that probably the greatest single factor in increase 
in cost is government regulation and the additional burdens and laws 
and rules that these people that are trying to conduct business in a 
reasonable manner find oppressive and they must pass this cost on to 
the consumer.
  Federal regulations cost $510 billion in paperwork alone each year. 
The cost is staggering. Yesterday we had stacked up the regulations 
that have been pumped out and rules and Federal Register and compliance 
that goes on and on. In fact, it is interesting that the single 
greatest increase in local government taxes today is government 
regulations, and this is passed on to the local taxpayer, the home 
owner, and it is also passed on in the form of consumer goods and 
services like the dry cleaning industry provides.
  Environmental and other regulation can increase start-up costs for a 
single dry cleaner as much as $138,000, just start-up cost. Imagine how 
this is transferred again in the cost of goods and services.
  Mr. DeLAY. Mr. Speaker, if I could interrupt the gentleman there, 
that is such a poignant point. What the gentleman is saying is for 
anybody who wants to start up a dry cleaning business, it is going to 
cost them, up-front cost, they have to have in-pocket $138,000 before 
they even open their doors.
  Mr. MICA. That is just the cost of regulation imposed, additional 
regulation.
  When my family started the business 70 or 80 years ago, we took this 
laundry and dry cleaning and it was done in a very simple fashion. This 
is the cost of compliance today just to start up, not the cost of 
staying in business.
  Mr. Speaker, in 1991, the National Federation of Independent 
Businesses determined that opening a new dry cleaner requires filling 
out and complying with almost 100 forms and manuals. We say yesterday 
in this press conference the number of manuals that are required and 
regulations that these individuals must comply with. Really one of the 
most interesting things I have heard is a plea from a small dry 
cleaner, a gentleman by the name of Bill O'Hannon who appeared at our 
press conference, and he has been in the business in Woodbridge, VA, 
for the past 20 years. This gentleman described how he is trying to 
comply with hazardous waste disposal which is now costing him over 
$4,000 a year in government regulations and compliance.
  He talked about Superfund. He said that under this law, the Federal 
Government can seize anything he owns, even though he has never 
committed a crime or violated a law, and he said that this is something 
that must be wrong with our society when even drug dealers have more 
rights than dry cleaners. That will always stick in my mind.
  He went on to tell us again compliance for installing just new 
equipment and revising his new equipment was $12,000 to comply with 
meeting new Federal standards and that he has been told that the 
business will not be able to obtain a loan through a bank anymore 
because of questions raised in the regulatory process about the conduct 
of their business.
  Mr. O'Hannon went on to tell us that the average dry cleaner will 
have to spend $13,000 to comply with another additional government 
regulation that has been imposed, not to mention OSHA regulations that 
have been imposed on him. Under OSHA, dry cleaners are required to have 
a written communications plan, hazardous communication plans, employee 
training programs and copies of materials available. He said the cost 
for compliance in this is over $500 per year.

  When Mr. O'Hannon went into complaining about this, he found that 
even the agency that is requiring this in Washington does not comply 
with its own standards or posting.
  For employee protection, dry cleaners must have respirators on hand 
in case of an emergency, according to new regulation, another $500. In 
1989, OSHA issued lockout/tagout, and to comply with this particular 
standard and regulation, the cost is $2,500 per year. The list goes on 
and on.
  But what was really most shocking was the last statement that Mr. 
O'Hannon made, again this gentleman struggling to stay in business, and 
I want to quote him here as I conclude. He said:

       My greatest fear is that the dream of starting your own 
     business is dying in this country, that the fire inside of us 
     that calls us to risk everything to be our own boss is 
     fading. I saw in USA-Today this week that the fastest growing 
     job sector in this country was `temporary employment.'

  ``Temporary employment?'' Mr. O'Hannon asked, ``What does that say 
about my future? What does that say about the future of business? What 
does that say about the future of America?''
  So, ladies and gentleman and my colleagues, when we see that Federal 
regulations are, in fact, taking us to the dry cleaners, when they are 
the greatest source of cost for that service today, when they impose 
these needless and burdersome regulatory compliance issues on small 
business, when they generate $510 billion worth of needless paperwork 
each year, and when they are the source of the greatest single increase 
of local and property taxes and State and local taxes to you, the 
taxpayer, the consumer, something is wrong.
  So we are asking that you contact your legislator, that you contact 
your Member of Congress and express that you are interested in looking 
at the risk involved in adopting regulations, that you want to see the 
cost and the benefit before we go off helter-skelter and force small 
businesses, dry cleaners, mom-and-pop operations out of business, 
before we extinguish the American dream.
  Mr. DeLAY. Mr. Speaker, the gentleman has presented to the American 
people through the special orders in a very eloquent way the problem of 
not just the dry cleaning industry but the problem small businesses all 
across this country are having by onerous regulations, and the worst 
part about it, and it does have a lot of do with businesses, but the 
worst part about it is what we are doing to our families in driving up 
the cost of living and driving up the standard of living of families in 
this country.
  Right now if we take all the taxes charged by State, local and 
Federal governments and add to it these costs, because the businesses 
do not pay these costs, they either go out of business or pass the 
costs on to the consumer, families of four on the average are paying 
over 53 percent of their annual income to the cost of government and it 
is going up. It is not going down. It is going up, and it is going to 
get even worse.

                              {time}  1830

  That is what we are trying to do here. The message of the relay is 
this: The system for drafting, evaluating, approving and promulgating 
rules, must be overhauled. The lack of an effective regulatory review 
process to weigh costs and benefits is wrecking havoc on our economy, 
resulting in lost jobs, lost productivity, and lost competitiveness.
  We must establish a system of cost-benefit analysis, pass the 
Paperwork Reduction Act, strengthen the Regulatory Flexibility Act, and 
provide protections for whistle-blowers, whose firms are being abused 
by overzealous regulators.
  Last year, I introduced H.R. 1817, the Private Sector Whistle-Blowers 
Protection Act, as a response to the unmistakable reluctance of 
businesses and individuals to go on record with the regulatory abuses 
to which they felt they had been subjected. They feared with that angry 
regulators would retaliate by doing anything, from holding up permits 
to levying fines. Of course, agencies denied that such abuse of power 
takes place, and the experience of my constituents argues otherwise.

  My bill makes retaliation by agencies a prohibited regulatory 
practice, which would result in a $25,000 fine for each violation. As 
our constituents struggle daily to comply with an unending array of 
regulatory requirements, at the very least they should feel free to 
speak openly about regulatory actions taken against them that they 
believe to be unfair.
  Further, if Federal or state regulators are taking retaliatory action 
for such openness by our constituents, they ought to be held 
accountable. Nonetheless, the means to every end of improving the 
general welfare cannot, nor should it, be accomplished by regulation. 
There are many cases where existing market forces are much more 
effective than regulation. A regulation disrupts market dynamics by 
adding costs to those necessarily associated with providing a good or 
service.
  Hidden though they may be, these added costs are taxes. I want to 
emphasize that point. When the Government forces business to divert 
resources in ways they would not otherwise, a tax is being levied upon 
those businesses as surely as if the money had been collected by the 
IRS. Higher costs to businesses means less growth and fewer jobs.
  Politically, however, it is much easier to levy $20 million in 
regulatory costs than it is to levy $20 million in increased tax 
revenues. Waiting In the wings for Congressional approval are 
additional health care mandates, tougher workplace safety requirements, 
and a whole host of stringent environmental regulations.
  I was very pleased when earlier this year the House rejected the bill 
elevating the Environmental Protection Agency to a cabinet level, a 
bill which has huge regulatory ramifications, because of the amendment 
of the gentleman from Florida [Mr. Mica] requiring the EPA to conduct a 
cost-benefit analysis of any rules it proposes, was not allowed to be 
offered by the Democrat leadership of this House. I was very encouraged 
by this, and intend to continue to fight at every opportunity to force 
the Government to do the one thing it can do to help the small business 
people of America. It has got to get out of the way.
  This is the first of many months of laps of the Republican Regulatory 
Relay. Next month we will highlight another industry that is being over 
burdened by regulations of this Government. Next month we will 
highlight more horror stories that are going on in the country today, 
and next month and the following months we will try to convince the 
American people that, yes, is some cases regulations are important. But 
what we have now is a Government that is running amuck, that we have 
regulators and legislators that are running amuck, and the effect it is 
having on our families and the incomes of our families are devastating, 
and we hope to prove these points to our colleagues so that we can do 
something about it in the future.
  The SPEAKER pro tempore (Mr. Sawyer). Under the Speaker's announced 
policy of February 11, 1994, the gentleman from New York [Mr. Owens] is 
recognized for 60 minutes as the designee of the majority leader.
  [Mr. OWENS addressed the House. His remarks will appear hereafter in 
the Extensions of Remarks.]

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