[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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