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

ASSESSING THE CUMULATIVE IMPACT OF REGULATION ON U.S. MANUFACTURERS

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

HEARING

before the

SUBCOMMITTEE ON REGULATORY AFFAIRS,
STIMULUS OVERSIGHT AND GOVERNMENT SPENDING

of the

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

MARCH 9, 2011

__________

Serial No. 112-41

__________

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

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

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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

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

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

Subcommittee on Regulatory Affairs, Stimulus Oversight and Government
Spending

JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice DENNIS J. KUCINICH, Ohio, Ranking
Chairwoman Minority Member
CONNIE MACK, Florida JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania

C O N T E N T S

----------
Page
Hearing held on March 9, 2011.................................... 1
Statement of:
Harman, Donna A., CEO, American Forest and Paper Association;
Aris Papadopoulos, CEO and chairman, Portland Cement
Association, Titan America LLC; Michael P. Walls, vice
president, regulatory and technical affairs, American
Chemistry Council; Michael Kamnikar, senior vice president
of marketing and business development, incoming president,
Forging Industry Association, Ellwood Group; Bernard
``Terry'' Schimmel, vice president, technical services,
Boral Bricks, Inc.; and David C. Foerter, executive
director, Institute of Clean Air Companies................. 30
Foerter, David C......................................... 81
Harman, Donna A.......................................... 30
Kamnikar, Michael........................................ 64
Papadopoulos, Aris....................................... 39
Schimmel, Bernard ``Terry''.............................. 74
Walls, Michael P......................................... 45
Letters, statements, etc., submitted for the record by:
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 12
Foerter, David C., executive director, Institute of Clean Air
Companies, prepared statement of........................... 83
Harman, Donna A., CEO, American Forest and Paper Association,
prepared statement of...................................... 33
Jordan, Hon. Jim, a Representative in Congress from the State
of Ohio:
Prepared statement of.................................... 4
Various prepared statements.............................. 15
Kamnikar, Michael, senior vice president of marketing and
business development, incoming president, Forging Industry
Association, Ellwood Group, prepared statement of.......... 66
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio:
Article dated August 9, 2010............................. 94
Pulp & Paperworkers' Resource Council map................ 90
Papadopoulos, Aris, CEO and chairman, Portland Cement
Association, Titan America LLC, prepared statement of...... 41
Schimmel, Bernard ``Terry'', vice president, technical
services, Boral Bricks, Inc., prepared statement of........ 76
Walls, Michael P., vice president, regulatory and technical
affairs, American Chemistry Council, prepared statement of. 47

ASSESSING THE CUMULATIVE IMPACT OF REGULATION ON U.S. MANUFACTURERS

----------

WEDNESDAY, MARCH 9, 2011

House of Representatives,
Subcommittee on Regulatory Affairs, Stimulus
Oversight and Government Spending,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:35 a.m., in
room 2154, Rayburn House Office Building, Hon. Jim Jordan
(chairman of the subcommittee) presiding.
Present: Representatives Jordan, Buerkle, Labrador, Guinta,
Kelly, Issa (ex officio), Kucinich, and Cummings (ex officio).
Staff present: Molly Boyl, parliamentarian; Joseph A.
Brazauskas, counsel; Kate Dunbar, staff assistant; Adam P.
Fromm, director of Member services and committee operations;
Ryan M. Hambleton, professional staff member; Frederick Hill,
director of communications and senior policy advisor;
Christopher Hixon, deputy chief counsel, oversight; Justin
LoFranco, press assistant; Mark D. Marin, senior professional
staff member; Kristina M. Moore, senior counsel; Krista Boyd
and Brian Quinn, minority counsels; Cecelia Thomas, minority
counsel/deputy clerk; and Alex Wolf, minority professional
staff member.
Mr. Jordan. The committee will come to order.
We exist to secure two fundamental principles: First,
Americans have a right to know that the money Washington takes
from them is well-spent; and, second, Americans deserve an
efficient, effective government that works for them. Our duty
on the Oversight and Government Reform Committee is to protect
these rights.
Our responsibility is to hold government accountable to
taxpayers because taxpayers have a right to know what they get
from their government. We will work tirelessly in this
partnership with citizen watchdogs to deliver the facts to the
American people, to bring genuine reform to the Federal
bureaucracy. This is the mission of the Oversight and
Government Reform committee.
I want to thank all our witnesses for being here with us
this day. I will do a quick opening statement, and then my
friend and colleague and ranking member, Mr. Kucinich, will
have an opening statement, and then we will get right to your
testimony.
We do have the Australian Prime Minister on the floor at
11, so we want to get through as much as we can prior to
adjourning for that.
Thank you all for coming today.
Last month, the Oversight and Government Reform Committee
held a hearing entitled, ``Regulatory Impediments to Job
Creation.'' This hearing was the result of a committee effort
to learn about which regulations were standing in the way of
job creation. We heard from many employers and industries from
across the Nation.
As chairman of this subcommittee, I am especially looking
forward to continue this work, examining the effects of
regulations on American job creators. This subcommittee has
jurisdiction over the regulatory process, and we recognize that
job creators do not live in a world where they are only subject
to one regulation issued by one agency. In the real world,
outside the Beltway, job creators are subject to numerous
regulations and compliance obligations enforced by a virtual
alphabet soup of Federal agencies. As we attempt to get our
economy going again and get people back to work, it is crucial
that we all start to think about the numerous burdens and
mandates that we are putting on the private sector.
On January 21, 2011, President Obama issued Executive Order
13563 directing agencies to, ``take into account the cost of
cumulative regulations.'' I applaud this commonsense plan.
Today's hearing will examine whether the government has begun
to follow this directive and what Congress can do to help
implement it.
I believe we should start by first looking at the bedrock
of our economy, the manufacturing sector. U.S. manufacturing is
the industry hit the hardest by regulatory costs. With per-firm
costs at approximately $688,000, half-a-million dollars greater
than the national average cost for other industries. Moreover,
small manufacturers bear a proportionately larger regulatory
burden, with an estimated cost of $26,000 per employee--more
than double the burden that is faced by larger manufacturers.
While the Oversight Committee was collecting information
from job creators about the regulatory burdens they faced, it
quickly became obvious which agency was the number-one concern
to them: the Environmental Protection Agency. This hearing will
provide Congress with an opportunity to understand how all the
regulations in the pipeline at EPA, in addition to the ones
already in existence, impact a critically important part of our
economy.
I would like to take a moment to say how disappointed I am
that the EPA chose not to send a witness to this hearing. The
reason given was that their witness would not be scheduled to
testify alone on the first panel.
I think this subcommittee has been very fair in offering to
seat their witness alone on a second panel that would be
guaranteed to start at 10:30 sharp this morning. However, that
offer was rejected. It is too bad that the EPA not only refuses
to sit at a witness table with some of the very people that
they are regulating, but also refused to wait and listen to the
rest of the witnesses' testimony.
Also, in contract to the EPA, our other witnesses here
today have agreed to take time out of their schedules and
provide their testimony to us without a list of demands. EPA's
behavior is the type that gives people throughout the country
the impression that their government is aloof and not listening
to them.
Despite EPA's lack of participation, I still think we can
have a productive and informative hearing. The panel we have
here today can speak very well to the cumulative impact of
government regulations. This information, straight from the
people affected, is invaluable.
In fact, the committee even has a Web site,
americanjobcreators.com, where any American can log in and tell
us their story. We are listening, and we want to hear what you
have to say.
With that, I would yield 5 minutes to the ranking member,
Mr. Kucinich.
[The prepared statement of Hon. Jim Jordan follows:]

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Mr. Kucinich. I thank you very much, Mr. Chairman.
And the chair and I have had discussions about the
witnesses, and I am hopeful that in the future we will be able
to work out our differences with a commonsense approach.
I want to state for the record, there is a longstanding
precedent in Congress of putting administration witnesses first
on their own panel. And there have been exceptions, but the
committee has allowed witnesses from Republican and Democratic
administrations to testify first on their own panel.
Now, I certainly respect the prerogative of this chair, and
I respect the prerogative of the chair of the full committee.
And we don't need to be at loggerheads about things like the
sequence of witnesses. We have things that are much more
serious to get into here. And I have every confidence, given
our relationship, Mr. Chairman, that we will work it out down
the line.
I want to thank you for holding the hearing. I fully----
Mr. Jordan. Would the gentleman yield?
Mr. Kucinich. Of course I would.
Mr. Jordan. Just for 10 seconds. The gentleman is right;
the precedence has been for the administration to have the
first panel witness. We thought, in light of the economic
situation, in light of the concern we all have, regardless of
party, about the regulatory burden, that it made sense to hear
from the people who faced these regulations and then have the
administration have their complete panel to themselves, talk,
and then follow back up with the same people.
We thought that would be a better way for Members of
Congress and the public to get information, and that is why we
chose the approach we did. As I indicated, unfortunately, the
EPA decided not to send a witness.
Mr. Kucinich. Well, again, Mr. Chairman, you know, I think
that if you and I had had an opportunity prior to this moment
right here to work this out, I think we probably could have
found a way to get the EPA participating.
I certainly think that it is a good idea for them to hear
witnesses testify, particularly those who are subject to the
EPA regulations. It makes sense. It can actually help you be a
better regulator, to hear what people have to say.
I fully support having a discussion about the impact of
regulations on industry, and I want to know if there are
regulations that are unnecessarily burdensome on this country's
manufacturers.
I also know that regulations are creating jobs and the
regulations are saving lives. And, in order to have a truly
productive conversation about regulations that yield real
results, we cannot focus solely on cost. The cost must be
weighed against benefits.
This year, the Office of Management and Budget estimated
that, from 2000 to 2010, Federal regulations resulted in a
financial benefit of $136 billion to $651 billion, with a cost
of $44 billion to $62 billion. That is a 2:1 benefit-to-cost
ratio using OMB's lowest estimations and greater than a 10:1
benefit-to-cost ratio based on OMB's highest estimations.
EPA's air pollution rules alone account for 60 to 85
percent of these benefits. That means that in a 10-year period
from 2000 to 2010, during both a Democrat and Republican White
House, EPA regulations have resulted in anywhere from $81.7
billion in benefits to a remarkable $550.4 billion in benefits.
These kinds of regulations also have a positive effect on
job creation. A 2008 study found that environment protection as
an industry generated $300 billion in sales in 2003 and
provided 5 million jobs.
Many of the regulations identified as burdensome by today's
witnesses fall under the umbrella of the Clean Air Act. I think
that we are going to hear a lot today about the cost of the
Clean Air Act, so I want to take a minute to talk about its
benefits.
EPA's most recent estimate of the total financial benefit
of the Clean Air Act is $1.3 trillion. This figure dwarfs the
estimated cost at $53 billion. That is a ratio of about 26:1.
By 2020, the financial benefit of the Clean Air Act is expected
to skyrocket to an astounding $2 trillion, while the proportion
of costs increases marginally to $65 billion, a ratio of 32:1.
In this same report, the EPA went on to say, ``It is
extremely unlikely the cost of the 1990 Clean Air Act
amendments programs would exceed their benefits, under any
reasonable combination of alternative assumptions of methods,
even if one were to adopt the extreme assumption that air
pollution no effect on premature mortality or that avoiding
such effects has no value.''
In 2003 alone, EPA estimates that the Clean Air Act
standards on only particulate matter and ozone pollution have
prevented 160,000 premature deaths, 130,000 cases of acute
myocardial infarction, 1.7 million cases of asthma
exacerbation, 86,000 hospital admissions, 86,000 emergency-room
visits, 3.2 million lost schooldays, and 13 million lost
workdays.
We don't want to emulate what is happening in India and
China. We don't want to turn the clock back to the 19th
century, when the absence of regulation led to pollution of our
air and water, exploitation of our natural resources, and
destruction of our environment.
So, Mr. Chairman, as we sit here today and talk about the
impact of regulations, let's be careful not to forget that
premature deaths, heart attack, asthma, lost schooldays, and
lost workdays are also results that we want to avoid.
I thank the chair.
Mr. Jordan. I thank the gentleman.
Our ranking member of the full committee, the distinguished
gentleman from Maryland, would like to make an opening
statement.
Mr. Cummings. I will be very brief. Thank you very much Mr,
Chairman, and thank you for your courtesy.
Chairman Jordan, Ranking Member Kucinich, this is a very
important hearing.
At last month's full committee hearing on the impact of
regulations on job creation, I said in my opening remarks that
effective regulatory review should include several elements: an
examination of the costs and benefits, conclusions based on
solid data, and input from a variety of sources.
I support a comprehensive review of the impact of
regulations, but I stand firm in my belief that any assessment
of cumulative impact must take into account the benefits of
those regulations and not just the costs. We are better than
that.
I am also mindful that there are costs associated with the
lack of regulation, as well. The 2008 financial collapse and
subsequent loss of 8 million jobs taught us that much. As a
matter of fact, just held a hearing in my district--this
committee held a hearing in my district yesterday, where we
have seen a loss in Baltimore city of $1\1/2\ billion with
regard to real estate and foreclosures because of this
financial collapse, lack of regulation.
At a time when creating jobs is our top priority here in
Congress, I believe we must consider that regulation has the
potential to actually create jobs, as Mr. Kucinich just said. A
February 2011 report issued by Ceres and the Political Economy
Research Institute concluded that EPA's Clean Air Transport and
the boiler MACT rules will strengthen our economy and grow
jobs. Specifically, the report estimates that, over the next 5
years, 1\1/2\ million jobs will be both directly and indirectly
created by these two rules. This includes jobs in steel
manufacturing, catalyst system manufacturing, and control
system manufacturing. This is in addition to the substantial
public health benefits from cleaner air. EPA estimates that the
benefits of the Clean Air Act are projected to exceed the costs
by a factor of more than 30 to 1 by 2020.
I am reminded, when I talk about this, of when I worked as
a high school student at Bethlehem Steel. And when you would go
on the yard of Bethlehem Steel, if you blew your nose, what
came out was red or black after being there for an hour. Thank
God some OSHA rules have come about where you now have to wear
masks. Because people want to go to work, they want jobs, but
they want to come home safely to their families and not be
shipped to them in a coffin.
In November 2010, the World Resources Institute concluded
that EPA's greenhouse gas rules will drive innovation and lead
to energy savings for manufacturers. The institute found that
for refineries, glass manufacturers, and others, investments in
efficiency technologies would offset most, if not all, current
environmental costs combined.
In December 2010, several business organizations
representing 60,000 firms across the country wrote to President
Obama and Members of Congress, urging us to support the EPA and
the Clean Air Act.
In addition, in a December Wall Street Journal letter to
the editor titled, ``We're OK with the EPA's New Air Quality
Regulations,'' eight leading utility companies explained that
EPA air quality regulations carry economic benefits, including
job creation.
Finally, Mr. Chairman, I continue to hope that we will
conduct responsible evaluations of regulations consistent with
the President's recent Executive order. However, any discussion
on the cumulative effect of regulation must include the
positive impact regulation has on our economy and on our
families and on our constituents and the benefit it holds for
individuals and businesses alike.
I thank all of our panelists for being here today, and I
look forward to hearing from you on how we can improve
regulations to make America safer.
And I wanted to be very clear, Mr. Chairman, on this side
of aisle, we are concerned about a balanced approach to this.
We realize that there are regulations that are probably
outdated. But we must be very, very careful, because
regulations were, after all, put forth to make sure that the
American people's health, safety, and welfare are protected.
And that includes every single person in these great United
States of America.
Again, Mr. Chairman, I thank you for your courtesy, and I
yield back.
[The prepared statement of Hon. Elijah E. Cummings
follows:]

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Mr. Jordan. I thank the gentleman.
Members have 7 days to submit opening statements and
extraneous material for the record.
[The information referred to follows:]

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Mr. Jordan. We welcome our panel of witnesses today.
First, we have Ms. Donna Harman. She is CEO of the American
Forest and Paper Association.
Mr. Aris Papadopoulos--close, right? That is one of those
fun names to say. It is like ``Sheboygan,'' like, you know, one
of those fun names to say. He is the CEO and chairman of
Portland Cement Association. We appreciate you being with us
today.
Mr. Michael Walls is the vice president of regulatory and
technical affairs for the American Chemistry Council.
Mr. Michael Kamnikar is senior vice president of marketing
and business development and incoming president of the Forging
Industry Association.
And Mr. Terry Schimmel is vice president of technical
services at Boral Bricks, Inc.
And David Foerter is the executive director of the
Institute of Clean Air Companies.
It is the practice of the committee to swear all witnesses
in, so if you would please rise and raise your right hands.
[Witnesses sworn.]
Mr. Jordan. Let the record reflect that all the witnesses
answered in the affirmative.
Thank you. And you can be seated.
In order to allow time for discussion, we would like for
you to limit your comments to 5 minutes. There should be some
lights somewhere that you can see.
Do we have those?
I don't know where our lighting system is. I will give you
a little tap or something.
Oh, you have it in front of you. We can't see it because
your names are there. OK, great, so you know when it gets
close. It is sort of like the traffic signals we are all used
to.
So now let's recognize Ms. Harman for 5 minutes.

STATEMENTS OF DONNA A. HARMAN, CEO, AMERICAN FOREST AND PAPER
ASSOCIATION; ARIS PAPADOPOULOS, CEO AND CHAIRMAN, PORTLAND
CEMENT ASSOCIATION, TITAN AMERICA LLC; MICHAEL P. WALLS, VICE
PRESIDENT, REGULATORY AND TECHNICAL AFFAIRS, AMERICAN CHEMISTRY
COUNCIL; MICHAEL KAMNIKAR, SENIOR VICE PRESIDENT OF MARKETING
AND BUSINESS DEVELOPMENT, INCOMING PRESIDENT, FORGING INDUSTRY
ASSOCIATION, ELLWOOD GROUP; BERNARD ``TERRY'' SCHIMMEL, VICE
PRESIDENT, TECHNICAL SERVICES, BORAL BRICKS, INC.; AND DAVID C.
FOERTER, EXECUTIVE DIRECTOR, INSTITUTE OF CLEAN AIR COMPANIES

STATEMENT OF DONNA A. HARMAN

Ms. Harman. Thank you, Mr. Chairman. I appreciate the
opportunity to be here with you and with the other members of
the subcommittee. My name is Donna Harman. I am the president
and CEO of the American Forest and Paper Association. And the
issue that you have brought before us today, to look at the
challenges presented by the cumulative impact of the EPA
regulations on manufacturers, is, in our view, very timely and
extremely important.
Many of the laws and, now, regulations that come from them
were enacted decades ago, and they have contributed to
significant improvements in air and water quality. The forest-
products manufacturing supply chain is heavily regulated, and
we will continue to adapt to well-reasoned regulations that are
both affordable and achievable.
But we can not respond to regulations in a vacuum.
Businesses in our sector must consider the global competitive
environment in which they operate. They must compete for
capital globally, and they need to have the time to build new
regulatory requirements into their capital planning process.
They must also be able to rely on government, so once a
regulation is in place, it will not be selectively enforced or
changed within a short timeframe.
Paper and wood products manufacturers are facing over 20
major regulations from EPA's Clean Air Act program alone. The
pace and volume of regulation is not sustainable for the
Agency, the States, or the companies that are required to meet
them or the Congress whose obligation it is to provide
oversight.
I would like to call your attention to the chart that was
included with my testimony and on the screen that gives you
just an idea of the regulations that are currently under the
Clean Air Act, in the pipeline, that affect the forest-products
industry.
Mr. Kucinich. Excuse me, Mr. Chairman. Do you have a copy
of that so we can look at it?
Mr. Jordan. We will provide copies for all Members. Thank
you.
Ms. Harman. And I believe it was attached to my testimony,
as well.
Mr. Jordan. OK.
Ms. Harman. The forest-products industry, like many other
manufacturing industries, has been hit hard by the economic
crisis. Since 2006, when the housing and economic crisis began,
the forest-products industry has lost 31 percent of its work
force, nearly 400,000 high-paying jobs, largely in small, rural
communities that can barely afford to lose them.
The closure of a mill in a rural community, in a small
town, has an enormous ripple effect when that mill is the
largest employer and a major contributor to the local tax base
and to the community programs. In many cases, without these
facilities, these communities die.
Government regulations that are not cost-effective can
exacerbate what is already a bad situation. AF&PA recently
commissioned a study by Fischer International to assess the
jobs impact of the cumulative burden of the largest pending and
expected EPA regulations. The study concluded that several
upcoming Clean Air rules would cause 62 mills to close and
result in a direct loss of nearly 27,000 paper-industry jobs.
If supplier jobs and jobs associated with the re-spending of
worker incomes are included, the total job losses would reach
nearly 114,000.
These results did not even include the boiler MACT rule,
which I would like to talk about now.
Boiler MACT is just one of many rules adding to the
cumulative burden. EPA's boiler MACT rule will require more
than 90 percent of boilers to make significant changes. And
these changes are on top of the changes and the capital they
previously invested during the past decade to comply with the
2004 boiler MACT rule. For the forest-products industry alone,
our initial estimate of the capital cost of the final rule is
about $3 billion and $11 billion for all manufacturing, plus
the operating costs.
Unfortunately, as our technical experts delve deeper, their
concerns about achievability and cost have grown. For example,
the carbon monoxide limits for some biomass boilers actually
became more stringent. Burning wet biomass will be particularly
challenging even with the combustion improvements EPA assumes
necessary to meet the more stringent requirements.
While Congress authorized EPA to adopt a health-based
approach, they determined that they would not do so in the rule
that was just recently released. We believe, if they were to do
that, that we could reduce the capital costs required to meet
this rule without any impact on human health.
I want to just, in my remaining time, mention two other
rules: the Pulp and Paper MACT and residual-risk rules.
The Pulp and Paper MACT rule is intended to be a one-time
rule. EPA concluded that rule about 10 years ago. We have
implemented that rule. We have made significant changes and
gotten a lot of environmental improvement as a result of it.
Now they are talking about a redo. That is an example of the
Agency going further than is necessary, overregulating and
overcontrolling when it is not necessary to protect health.
The last rule I would like to mention briefly is the
National Ambient Air Quality Standards. I think others will
also mention this rule. This rule is another rule that,
collectively, will cost the forest-products industry alone over
$8 billion.
Your look at these and other rules today is critically
important because jobs are at stake. Investment in making our
facilities internationally competitive and securing their
future is really what is at stake.
So thank you for taking the time to delve into and
understand these issues. And I would love to answer your
questions as followup after the other witnesses.
[The prepared statement of Ms. Harman follows:]

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Mr. Jordan. Sure. Thank you, Ms. Harman.
Mr. Papadopoulos.

STATEMENT OF ARIS PAPADOPOULOS

Mr. Papadopoulos. Mr. Chairman and congressional committee
members, my name is Aris Papadopoulos. I serve as CEO of Titan
America, a heavy construction material producer in eight
States, employing over 2,000 Americans. I presently chair the
Portland Cement Association that represents 97 percent of U.S.
cement capacity, with nearly 100 manufacturing plants in 36
States and distribution in all 50.
Cement is to concrete what nails are to wood. Without it,
our bridges, roads, dams, schools, and hospitals would be
rubbles of rock. At $6\1/2\ billion combined revenue, we are a
relatively small industry, but without us the entire trillion-
dollar construction economy would come to a halt. Without
cement, our already-deteriorating infrastructure would degrade
to unsafe levels, along with our communities and quality of
life.
The great recession has hit our industry very hard. Cement
demand has dropped in half. Profitability has been wiped out.
Yet we sought neither handouts nor bailouts. We cut costs,
which, sadly, included more than 4,000 jobs. What remain are
15,000 well-paying jobs with average compensation of $75,000
and a high representation of minorities. But today these jobs
are in jeopardy, and the spillover could affect millions
employed in the construction sector.
Not only did the Stimulus Act fail to raise construction
demand, but, at our weakest moment, this government's EPA,
whose budget, by the way, was enriched 33 percent through the
same act, launched an unprecedented regulatory attack against
our industry.
This is not a static but a dynamic industry. In its
century-long history, cement manufacturers have demonstrated
their commitment to continuous improvement in environment
stewardship. In the decade prior to this recession, it invested
tens of billions of dollars in modernizing and expanding
facilities with state-of-the-art technology that were win-win
for both economics and environment. Today our industry is one
of the largest recyclers of industrial and urban byproducts
that would otherwise be landfilled.
Yet the current EPA has switched from win-win to win-lose.
There should be no doubt that win-lose will lead to lose-lose.
Other strategic materials, such as rare earths, once a vital
U.S. industry but now controlled by China, are living proof
that overregulation leads to offshoring.
This is not a choice between environment and economy,
because the two go hand-in-hand, and when economic vitality
suffers, so does environmental sustainability. Without
strategic materials like cement, economic vitality cannot be
sustained.
Without time to get technical, I would like to note that
for one compound, mercury, EPA imposed standards 5 to 12 times
stricter than those in Germany. The irony is that this rule
won't even help the environment, as 80 percent of the mercury
found in the United States originates from offshore. EPA has
justified these rules with incomprehensible computer models,
but they lack any empirical proof or field evidence.
Our economic study of EPA's rules concludes that two rules
alone impose a compliance burden of $5.4 billion in the next 4
years, equal to 85 percent of this industry's total annual
sales. They also increase production costs by 20 percent. One
rule, NESHAP, will force almost 20 percent of U.S. plants to
shutdown in 3 years. The industry could lose 25 percent, or an
additional 4,000 jobs, by 2015. Assuming economic recovery
through 2025, this reduced domestic cement capacity will force
the United States to depend on foreign imports for 56 percent
of its needs.
We conclude that, in totality, these rules make investing
in the United States unattractive compared to overseas. In the
end, neither the economy nor the environment win: American jobs
and investment are lost; the same emittants reach Americans in
even greater quantities from offshore; dependence on foreign
cement follows the road of dependence on foreign energy. And
with cement more cumbersome to import than oil, shortages and
price volatility will become more common. This could hurt the
entire construction economy, with impacts on infrastructure,
housing, commerce, and jobs.
This industry is committed to its longstanding spirit and
practice of continuous improvement and environmental
stewardship, but we need a government that we can work with in
a win-win, constructive manner.
Unfortunately, we feel that industries like ours are
getting caught in the crossfire of the major assault against
coal by global-warming forces in this country. Immediate action
is needed to rescind these regulations when we are in the midst
of one of the worst economic crises before they prolong or
worsen the harm, and place a near-term moratorium on more
rules. Congress needs to step up and take back legislative
ownership if we are to revive private-sector confidence that
will retain and create good jobs for Americans and restore
economic prosperity.
We also need Congress to undertake broader legislative
reform that will return EPA to its original purpose, strengthen
standards of justification for rules, consider cross-border
economic and environmental impacts, approach industry with win-
win rather than win-lose frameworks, objectively inform rather
than panic the public, and reduce wasteful environmental
litigation.
Thank you for this opportunity to testify. I would be happy
to answer any of your questions.
[The prepared statement of Mr. Papadopoulos follows:]

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Mr. Jordan. Thank you.
Mr. Walls.

STATEMENT OF MICHAEL P. WALLS

Mr. Walls. Thank you, Mr. Chairman. Good morning to you and
members of the subcommittee. I am Mike Walls, the vice
president of regulatory and technical affairs at the American
Chemistry Council.
Earlier this year, both the leadership of this subcommittee
and President Obama called for an examination of existing rules
to ensure that they don't create an undue burden on American
businesses. We strongly support that effort.
We believe there is an appropriate role for regulation in
encouraging behavior. Efficient and effective regulation can
help markets function. Regulation can help address important
public-policy objectives. But regulations promulgated without
an analysis of the impact on the economy and the impact on
jobs, including how multiple regulations compound those
impacts, can have quite the opposite effect.
If manufacturing is to make a significant contribution to
economic recovery, including the creation and maintenance of
well-paying jobs, it is imperative that we have an accurate
understanding of the impact of these proposed regulations. The
full regulatory burden on any particular sector can only be
known if that cumulative impact is assessed.
Now, the lack of cumulative-impact assessments is a
fundamental shortcoming in the way government agencies develop
and evaluate proposed rules. That shortcoming creates
regulatory tunnel vision. It puts innovation, investment, and
jobs at risk.
Now, ACC and its members have a keen interest in getting
regulations right. Our industry is arguably America's most
highly regulated industry. There is no aspect of chemical
manufacture, distribution, user disposal that isn't regulated
by one or more Federal, State, or local requirements.
Now, while we understand that substantial benefits can flow
from regulation, our industry also understands that very
regulation can translate to fewer American jobs, a less
competitive economic position, and reduced innovative capacity.
Now, a quick example is useful. Our industry stands right
now on the cusp of the most significant energy and feedstock
development in a generation. The market changes that are
occurring as a result of the vast shale gas formations around
the country have the potential to put our industry and our
economy in a significantly improved global competitive
position. The game-changing nature of shale gas can bring
billions in new capital investment, thousands of new jobs, and
more than $100 billion in additional economic output and
Federal, State, and local tax revenue--just flowing from those
shale gas activities and the downstream uses of it. But that
game-changing development could be impacted severely if
regulatory barriers minimize the ability to capitalize on the
opportunity.
Now, ACC has analyzed the impact of regulatory burdens
across eight major regulatory programs at EPA and at other
agencies. That suite of regulations alone could impose a
cumulative burden on our industry of over $15 billion between
2011 and 2020, with undiscounted annualized costs as high as
$2.7 billion a year in the out-years.
Now, we are not saying that those rules, collectively or
individually, would eliminate any potential jobs-creating
investment. But we are saying that those costs, those burdens,
are very relevant to the market decisions about where and when
investments are made. So the compounding effect of those
compliance costs diminish the resources available to make
meaningful long-term investments that create jobs, promote
innovation, and solidify our competitive position.
The Federal regulatory process and analysis of regulations
can be improved. We would like to see OMB and the individual
agencies update their respective economic impact analysis
guidance to require cumulative impact of multiple regulatory
actions. We would like to see agencies identify and catalogue
the sectors impacted by a new regulation and even extend that
approach into the paperwork burden.
Agencies should seek impact from the affected regulated
community before developing a proposed regulation. It goes to
the win-win that is possible from an early engagement, so that
the public, the government, and the regulated community all
benefit.
We would also like to see Federal agencies consider the
regulatory-induced employment changes as either a cost or a
benefit in their assessment and not consider them some indirect
cost that is not routinely assessed.
Mr. Chairman, CCC supports the efforts to ensure that
cumulative impact of Federal regulatory programs is considered
as new regulatory requirements are considered.
And I will just leave you with one final thought. If our
regulatory agencies are capable of assessing the cumulative
benefit of their regulatory programs, surely they are capable
of assessing the cumulative burden.
Thank you.
[The prepared statement of Mr. Walls follows:]

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Mr. Jordan. Thank you. Great point.
Mr. Kamnikar.

STATEMENT OF MICHAEL KAMNIKAR

Mr. Kamnikar. Thank you, Chairman Jordan, ranking members,
and members of the subcommittee. Thanks for the opportunity to
testify today.
I am Mike Kamnikar of the Ellwood Group, and our company
produces specialty steel for other forgers and open- and
closed-die forgeries. I am also the incoming president of the
Forging Industry Association, with operations from member
companies in 38 States.
The modern forging process is capital-intensive, and most
forging companies are small businesses. Forging is one of
oldest known metal-working processes, where metal is pressed or
pounded or squeezed under great pressure to make high-
performance parts. In a nutshell, nothing that moves on land or
in the air or on the sea can move without forgings.
Mr. Chairman, U.S. manufacturers need a regulatory system
that works. Appropriate regulations that improve health,
safety, and the environment are a necessary part of doing
business in the United States. However, when the regulatory
process produces new regulations that do not provide additional
benefits for the attendant costs and the regulatory community
has little to no opportunity to participate in the process, the
system is broke.
FIA believes there are two overall problems with the
regulatory process. First, there is a lack of understanding of
the manufacturing supply chain and effects of regulations on
that supply chain. You cannot build a wind turbine with wind
energy. Said another way, you cannot regulate, say, the power
generation or automotive industry and not have an effect on the
suppliers in that supply chain.
Second, there is a lack of transparency and sufficient
stakeholder involvement in the regulatory process. When
agencies bypass the Administrative Procedures Act or allow only
brief public comment periods on complex, technical regulatory
changes, we get ill-conceived regulations with unintended or
unexpected consequences, and we undermine the integrity and the
public's confidence in the rulemaking process.
Many FIA members are small and rely on the FIA to assess
the potential impact of our government action on their
operations and to weigh in on their action on our behalf. But
the FIA does not have technical experts on all subjects at all
times, so we need the time to consult with member companies of
all sizes on proposed government regulation, including
determining when specialized expertise may be needed.
I would like to highlight three examples of current and
proposed regulations from my written testimony.
The first example involves EPA's regulation of greenhouse
gas emissions under the Clean Air Act. Most forging work is
done at 2,300 degrees Fahrenheit, and subsequent heat treatment
is done at temperatures up to 1,900 degrees F and using natural
gas, electric, or induction furnaces. There are no alternative
technologies available.
EPA's decision to start regulating greenhouse gas emissions
with large stationary sources means forgers will only have to
worry about the potential effect of these regulations on their
suppliers. Our company makes steel for the forgers, and we make
forgings ourselves.
So how much will our electricity costs rise, and what will
be the effect on other raw materials? When suppliers are
regulated, we are very concerned that we will be pushed into a
regulatory system merely because we use natural gas or make
critical components.
The second example involves an EPA proposal for metal-
working facilities to be considered in the development of the
financial responsibility requirements under the Superfund law.
The proposal also required that the entire metal-working
industry be examined to determine if they should be subject to
these requirements.
These types of financial assurance mechanisms for potential
Superfund liability can be very expensive and extremely
difficult to obtain for most metal-working companies, which are
small- and medium-size and pose little risk, and we also carry
insurance.
Finally, I would be remiss if I didn't mention the forging
industry's concern with OSHA's recent proposal to reinterpret
the definition of ``feasible'' as it related to engineering and
administrative controls to reduce overall noise in the
workplace. Fortunately, as we know, that was withdrawn.
Last, it is critically important that we regulate only that
which requires regulation and only after a thorough vetting of
the potential benefits, impacts, and costs to that regulation.
Thank you.
[The prepared statement of Mr. Kamnikar follows:]

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Mr. Jordan. Thank you, Mr. Kamnikar. We appreciate that.
We are also pleased to be joined by the chairman of the
full committee, Mr. Issa. Pleasure having you with us today.
Mr. Schimmel.

STATEMENT OF BERNARD ``TERRY'' SCHIMMEL

Mr. Schimmel. Good morning, Chairman Jordan, Ranking Member
Kucinich, and subcommittee members. Thank you for the privilege
of testifying about the cumulative impact of regulation on a
small, essentially U.S. industry, the clay-brick industry.
My name is Terry Schimmel, and I am vice president of
technical services at Boral Bricks. Boral is one of the largest
brick manufacturers, with 22 manufacturing plants and 55
distribution centers across 11 States. I have been in the brick
business for 39 years, and my responsibilities include
oversight of emission control equipment for Boral's U.S. plants
in compliance with environmental, health, and safety
regulations.
Boral's energy-efficient brick kilns have reduced energy
usage 15 percent over the past 5 years. It is only one example
of our commitment to environmental stewardship. We take these
steps voluntarily, without government mandates, but we are
concerned about future viability, given the tremendous hit the
industry has taken and the rising number of regulations.
At full production, Boral employs approximately 2,000
Americans. Today, nearly 1,100 of Boral's U.S. jobs, or 55
percent, have been temporarily or permanently lost due to the
construction recession. According to the most recent census,
brick production nationwide has dropped 66 percent since 2005,
reaching the lowest level in 3 decades. Approximately 9,000
direct brick manufacturing jobs and 86,000 indirect brick jobs
have been lost since 2006.
Brick industry business is only very slowly beginning to
pick up, but there is no end to the escalation of the cost of
doing business due to the regulations that derive no
commensurate benefit to the environment, health, and safety. We
believe responsible, reasonable regulations can be developed to
protect both environmental and health, but the number of
rulemakings in the pipeline and their anticipated mandates
jeopardize brick jobs and our recovery.
Our greatest concern: EPA is currently redeveloping a
Maximum Achievable Control Technology rule for clay brick and
tile. The key word is ``redeveloping,'' as the industry
recently spent more than $100 million in capital costs alone to
come in compliance with the original act rule that was
finalized in 2003. Boral spent more than $12 million to install
mandated control devices to meet the 2006 compliance date.
While the U.S. district court vacated the original MACT
rule in 2007, more than a year after the compliance date, most
States continue to enforce MACT limits as part of existing
Title V permits. The result is that the brick industry has
spent approximately $170 million in cumulative ongoing
compliance costs for these controls since 2002, due to the now-
vacated MACT.
EPA now is using the reduced emission levels achieved by
kilns with control devices installed for the vacated rule to
calculate an even more stringent baseline for all kilns. The
technology to meet the final standard may not even exist if EPA
cherry-picks data to establish a standard that no real-world
brick kiln has actually achieved. The EPA's cost estimate of
the revised MACT is approximately $188 million per year, a
staggering 20 percent cost-of-sales ratio for one rule.
Congress provided flexibility in the Clean Air Act to allow
reasonable rules. As Borel and the brick industry continue to
work with the EPA, we appreciate the Agency's willingness to
discuss a health-based compliance approach. We are hopeful it
could ensure that controls are installed when needed to protect
the environment, rather than mandated controls that are
unnecessary due to an imperfect data base.
EPA could use its discretion under the Clean Air Act to
find alternative solutions to avoid unnecessary job-loss and
expenditures that provide little to no benefit to the
environment.
Our second big concern is OSHA's proposed crystalline
silica rule that is expected to substantially decrease the
permissible exposure limit across general industry.
Worker safety is vitally important to Borel. However,
decades of scientific studies demonstrate that the risk from
exposure to silica from quartz in brick clays and shale are not
the same as risks from quartz used in other industrial
settings. Silicosis caused by crystalline silica is essentially
nonexistent in brick manufacturing workers. But because OSHA
undertook the peer-reviewed process without providing an
opportunity for industry input, this brick-specific evidence
may not be reflected in the proposed rule.
The current PEL protects brick workers, and any reduction
for the brick manufacturing industry would impose cost burdens
for non-demonstrated health benefits. These two issues alone
could overwhelm the industry; taken together with EPA's
greenhouse gas regulations, however, that could encompass
numerous brick kilns in the coming years and its tightening of
National Ambient Air Quality Standards, the burden is
unsustainable.
Given the important progress the Federal agencies have
helped guide to protect the environment and safety, future
steps should independently demonstrate reasonable costs for
potential improvements. Congressional oversight should ensure
maximum benefit per dollar invested for the regulatory
compliance to prevent small, historical U.S. industries, like
brick, from being regulated out of existence.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Mr. Schimmel follows:]

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Mr. Jordan. Thank you.
Mr. Foerter.

STATEMENT OF DAVID C. FOERTER

Mr. Foerter. Thank you, Mr. Chairman, members of the
subcommittee, for the invitation to share another industry
perspective in the hearing on how regulations and requirements
create real jobs in the American economy. I am David Foerter,
the executive director of the Institute of Clean Air Companies
[ICAC].
Today we would like to briefly highlight the fact that
investments and efforts to clean the air we breathe creates
real jobs for real people in the U.S. economy, and it saves
lives. In these brief comments, I hope to impart a few
realities from the perspective of a mature manufacturing
industry.
For more than 50 years, the Institute has been the
nonprofit national trade association of companies working to
equip stationary sources--generally power and large industrial
facilities--with air pollution control and measurement
technologies. The Institute's members count to about 100
companies, leading manufacturers in both measurement and
control. We believe, and history affirms, that equipping these
sources ensures industrial progress while cleaning the air we
breathe.
Here are a few realities I would like to highlight today.
We know that investments in clean air technologies result in
substantial returns in avoided health costs for the American
public. We know that these same investments are plowed back
into the U.S. economy as real jobs in my industry and many
related industries. We know that many of the business interests
testifying at these hearings also provide materials that are
used in the manufacture of equipment in the air pollution
control industry, and, as such, there is an innate need and
desire to work toward sustainable solutions.
I find that these realities can be distilled down into a
rather simple formula: The Clean Air Act spurs investments
which creates jobs, improved health, and a modernized and more
sustainable fleet. The formula has worked well for 40 years,
and this is something we need now more than ever.
The principal function of clean air requirements is to
clean the air we breathe. We, therefore, are heartened that a
renewed interest in jobs has reintroduced one of the most
amazing aspects of air pollution and control technologies:
Simply, for every dollar spent, as much as $40 comes back as
avoided health costs. This fact has withstood the test of time,
and it is a testimonial to the value of the Clean Air Act, the
technology innovations in our industry, and the combined
efforts of industries to clean the air while ensuring
industrial progress.
It is important not to lose focus that the safeguards are
there to create cleaner air for all of us, helping to save
lives and avoid or reduce illness. Fortunately, these
safeguards are a win-win. To comply with them, companies will
need to undertake construction projects. That means jobs in
areas that are currently facing challenging times.
The clean air investments spurred by regulations and
requirements create real jobs while satisfying their principal
goal of healthy air. Most air pollution equipment for large
sources is constructed or fabricated onsite and requires high
levels of engineering and design, labor, and depends on
component equipment and materials. This means jobs for skilled
craft labor, such as boilermakers, and new upstream and
downstream employment and economic benefits for a variety of
industries and communities where they are located.
For example, building this equipment requires construction
materials such as steel plate, alloy steel, fabricated steel
components, structural steel, and concrete. In addition, these
projects require engineered equipment and specialty materials
such as slurry pumps, fans, motors, and catalysts. And to
sustain operation of these systems, reagents such as urea,
anomia, limestone, Trona, and activated carbon are needed, as
well as other consumables such as fabric filters used for
particulate removal.
While the focus of installing controls is on our industry,
we rely on many other industries and employers to get the job
done. And that is just what we have been doing with tremendous
success for several decades: getting the job done where and
when needed most.
As an industry, ICAC offers constructive comment on almost
every major requirement that is out there. And these comments
are part of the public record, and they demonstrate what we
believe is constructive insight on how industries can make
changes and still serve industrial progress.
A similar story exists for industrial sources, where we
were looking at: The Clean Air Act spurs investments which
create jobs, improved health, and a modernized fleet. We are at
a juncture where necessary upgrades are long overdue, and an
experienced work force is fully available to complete the
effort.
In addition, the U.S. Environmental Protection Agency
finalized a rule for the industrial boilermaker sector that is
significantly less stringent and at a lower cost than was
proposed last year. This is something we need now to get
America back on the job and protect public health.
The reality is that my industry works constructively to
help other industries comply with regulatory requirements.We
are highly competitive, and we are looking at many technology
solutions, not just one, often offering a suite of solutions.
In closing, President Obama's Executive order on January
18th characterized a regulatory system that ``protects public
health, welfare, safety, and our environment while promoting
economic growth, innovation, competitiveness, and job
creation.'' I hope that I have been clear that is shared vision
within my industry, where, for more than 50 years, the members
have existed, prospered, innovated, and made a significant
contribution to the U.S. economy.
I look forward to continued efforts that create real jobs,
for real people, and real health benefits. Thank you.
[The prepared statement of Mr. Foerter follows:]

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Mr. Jordan. Thank you, Mr. Foerter.
If we all stick to our 5 minutes, I think we can all get a
round of questions in before the joint session.
Mr. Kamnikar, you mentioned in your testimony many of your
members of your association are small-business owners. In our
previous full committee hearing, we had a number of small-
business owners there. And one of our, I believe, freshman
Members asked what I thought was just the most compelling
question. They asked each of those small-business owners, if
you knew then what you know now, would you have started? And it
was amazing to me that every single witness that day said they
would not have started their business if they knew then what
they are faced with now on the regulatory front.
And so, tell me, was that an anomaly or would that be
consistent with the members in your respective associations?
And we will start with Mr. Kamnikar.
Mr. Kamnikar. Yeah, I would say that is an accurate
assessment. Most of our small member companies are family
owned, third-, fourth-generation, so when the businesses got
established, it was quite different than it is today.
Mr. Jordan. Uh-huh.
Ms. Harman.
Ms. Harman. Many of our businesses, too, our small
businesses. We also represent large businesses who have----
Mr. Jordan. Sure. Sure.
Ms. Harman [continuing]. Been in business for over 100
years.
I think the most striking thing that they would tell you
that is most difficult is that they begin a project or a
proposal under one set of rules only to have those rules later
changed.
Boiler MACT is an excellent example, where they invested
millions of dollars to comply with the 2004 rule, and complied
with that by the deadline of 2007, only to find now that they
have to invest another $3 billion, you know, a mere few years
later, 4 years later. It is not sustainable.
And they would tell you that it has a real impact on their
capital decisions, whether to invest that capital here, invest
it overseas, or not invest at all. And the not investing it at
all is probably the biggest economic and environmental problem
that we face today.
Mr. Jordan. Before we go to Mr. Papadopoulos, let me--you
made me think of a--we have this Web site, americanjobcreators,
and we have several responses from our State. The ranking
member and I have the privilege of representing folks in Ohio.
And one comes to us from a gentleman from Mina, Ohio, close to
Mr. Kucinich's district. He says, ``A wise man once told me
that the human mind can accept good news, can accommodate bad
news, but can never get comfortable with uncertainty.'' And
that is a huge impediment.
And I think in your testimony, Mr. Papadopoulos, you talked
about Congress reclaiming its responsibility over this area. So
talk to me a little bit more about the uncertainty; and the
first question I asked, do your members in your association,
would they echo what others have said that, if they knew then
what they know now, they wouldn't have started their business?
Mr. Papadopoulos. Congressman, first let me start by
talking about myself, because over the last 20 years I have
encouraged and sold to my own parent company to invest in the
United States, and it has been $1 billion to $2 billion. And I
find it very difficult today to make that argument, you know.
You know, I heard Mr. Foerter talk about win-win, but win-
win for who? Win-win for the companies selling this equipment?
Yes. This, you know, control equipment. Win-win for the
environmental activists? What about a win-win for the companies
that have to gain a return on investment? I don't see that in
today's U.S. environment.
And it saddens me as an American citizen, more than
anything else. I see other countries getting ahead of us, I see
we have world-class companies here in the United States. We
have the best environment here in the United States; we breathe
the best air. And yet we are pushing our own world-class
companies to the brink. You know, we are not going to be
breathing our own air, we are going to be breathing other
countries' air, the way we are going, without the jobs, without
the investment.
That is, to me, the sad big picture. And I have difficulty
convincing, in today's world, today's environment, why the
United States is the best place to keep pouring money, with
this regulatory, you know, situation.
Mr. Jordan. Mr. Walls.
Mr. Walls. Mr. Chairman, the member companies of the
American Chemistry Council operate in a globally, very
intensely competitive industry. It is that regulatory
uncertainty that is the primary determinant in whether or not
they are making investments here or elsewhere around the world.
I will just go back to my example on shale gas.
Mr. Jordan. Shale gas, right.
Mr. Walls. That, you know, again, is the type of game-
changing development here that is going make us more
competitive. We have folks in our industry saying that this
development alone could put a whole new lease on life in this
industry. We want to capitalize on that opportunity and reduce
the uncertainties that are out there.
Mr. Jordan. Great.
Mr. Schimmel, I apologize, you have 15 seconds because we
have to stick to the 5 minutes so everyone gets in.
Mr. Schimmel. I guess in answer to your question, Boral, of
course, is internationally traded, and we have a responsibility
to return shareholder value. And I would think that, were they
to make additional acquisitions in the United States, they
would have to think twice about the regulatory burden imposed
by these rules.
Mr. Jordan. Yeah.
I recognize the ranking member, Mr. Kucinich.
Mr. Kucinich. Thank you very much, Mr. Chairman.
I was listening to Ms. Harman's testimony on how the
industry has to consider the global competitive environment.
And I had a visit a couple weeks ago from the Pulp and
Paperworkers' Resource Council, and they provided me with a lot
of information that would be interesting for this committee.
And I am going to submit it. This is a chart here that shows
the closed saw mills and paper mills, 1989 to 2003, most of
them after 1993, I might mention; and also shows the closed saw
mills and paper mills, 2004 to 2007.
And as I look at all these closures, it is pretty stunning.
Then they showed me a map of how many have gone to other
countries, notably China. OK?
Now, it is a very interesting point here when I am
listening to this discussion, because I think you are
mentioning one part of the equation but it is only, frankly, a
small part of the equation, because we are looking at trade
agreements that were absent workers' rights--the right to
organize, the right to collective bargaining, the right to
strike, right to decent wages and benefits--human rights--
prohibitions on child labor, slave labor, prison labor--and
environmental quality principles, protection of air and water.
Those weren't in our trade agreements in NAFTA. And we look
at the U.S. paper mill shutdowns; we see how many shutdowns
occurred right after and NAFTA. And then after China trade, the
shutdowns skyrocketed.
Now, I am going to submit this for the record because I
think that----
Ms. Buerkle [presiding]. No objection.
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Mr. Kucinich. Thank you.
I think that we have to consider the global competitive
environment, and we certainly don't want our air quality
standards or our labor standards to be reduced to a point where
we become like countries that are less democratic. Because in
order to have a political democracy, you have to have an
economic democracy.
I also want to put into the record a news story out of the
Guardian, U.K., which shows that China--China--this is last
year--ordered a polluting and unsafe factory shut down,
including, I might add, in China they shut down some of their
older paper mills, 279 to be exact, because the Premier of
China was concerned about making sure the energy efficiency of
all of his industries could be increased. So China gets the
connection now between upgrading and energy efficiency, and
that it also means paying attention to the environment.
So, for the record.
Ms. Buerkle. Without objection.
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Mr. Kucinich. Now, Mr. Foerter, I wanted to ask you, in
your written testimony you state that each dollar spent on air
pollution control technologies produces $40 in health savings.
Can you explain how that occurs?
Mr. Foerter. The types of pollutants that we are talking
about in many cases are going to be sulfur dioxide, oxides of
nitrogen. Sulfur dioxide is--we are looking at an acid rain
program. That is the big pollutant in that group. The oxides of
nitrogen, that is frozen and transported into ozone, which gets
into the lungs.
The others are these hazardous air pollutants, which are a
lot of metals that come from that. So even, I think, looking at
the most recent industrial boiler MACT, those numbers come out
to be very close to that $40.
Mr. Kucinich. Well, you are telling us that EPA regulations
actually create jobs and support industry. The figures I have
seen from OMB, from the EPA, and from numerous private studies
support your claims that environmental protections like the
Clean Air Act have a positive impact on the economy.
In fact, a 2008 study from the Journal of Environmental
Management entitled, ``Environmental Protection, the Economy,
and Jobs: A National and Regional Analysis,'' states that,
``Contrary to general public perception and public policy
understanding, since the late 1960's protection of the
environment has grown rapidly, to become a major sales-
generating, profit-making, job-creating industry.''
Mr. Foerter, is that assessment consistent with what you
have observed?
Mr. Foerter. That is correct. The costs of controls are
much less. In fact, when we actually do the implementation of
the rules, they often are much less than they are even
projected in the EPA rulemakings.
Mr. Kucinich. Well, the authors of that 2008 study state
that environmental protection, as an industry, generated $300
billion per year in sales in 2003, created 5 million jobs.
The authors went on to state, ``Most of the 5 million jobs
created are standard jobs for accountants, engineers, computer
analysts, clerks, factory workers. And the classic
environmental jobs--environmental engineers, ecologists, etc.--
constitute only a small portion of the jobs created. Most of
the persons employed in these jobs created may not even realize
that they owe their livelihood to protecting the environment.''
Mr. Foerter, that sounds good, and it sounds like good,
well-paying, middle-class jobs. Are these the kind of jobs that
you have seen created in the industry?
Mr. Foerter. These are. And we are talking about companies
that actually do the IT work, the financial investments. I
mean, we do bidding on the projects, as well as going into the
engineering design, which are some of the ones I talked about
in my testimony.
Mr. Kucinich. Thank you, sir.
Thank you.
Ms. Buerkle. Thank you, Mr. Kucinich.
I guess I will yield myself 5 minutes.
Good morning to all of you, and welcome.
First, I want to thank Mr. Chairman for holding this
particularly timely meeting.
As we make jobs and the economy a priority here in this
Congress, what is becoming more and more apparent to us--and I
am sure you all have recognized this for a long time--is the
crushing regulations that you all face. And it makes doing
business in this country extremely difficult. We would like to
change that. Our chairman, Mr. Issa, has charged us with going
out and finding out the ways that these regulations are
standing in the way of success. And so that is what we are
doing here this morning.
I think we can all agree that all of these regulations
really represent a hidden tax on businesses and the cost of
doing business. And I would like to get into the cost of
compliance in a few minutes.
I think that we can agree, as was mentioned earlier, that
the stimulus failed, because the government can't create jobs.
And so, I want to thank all of you this morning for being the
job creators in our country and for keeping our economy--you
all are the ones that can get this economy back on track. So we
need to work with you to figure out how we get the government
out of your way.
I also want to comment that, not only have I heard from
businesses throughout the hearings that we have conducted, you
hear from not-for-profits, you hear from schools that the costs
of these regulations don't even make sense, and it just impairs
and impedes their success.
So I look forward to hearing from all of you this morning.
I guess I want to go back to my colleague Mr. Kucinich's
comments about the costs and the cost-benefit. I think I would
like to hear from all of you, if you wouldn't mind. Can you
just tell me, in each of your industries, if you can give me a
figure for the cost of compliance, the cost of regulations
within your various industries?
Ms. Harman.
Ms. Harman. In multiple billions of dollars, between the
capital costs plus the operating and maintenance costs that are
ongoing. It is not just the cost of initially complying with
the regulation; it is the day-in, day-out costs.
It is also the cost of projects that can't go forward
because they can't make it through the regulatory red tape. A
lot of these projects are energy efficiency improvement
projects. Some of them are mill modernization projects. They
are projects that will secure the future of the mill so that
our mills can actually buy the technology that Mr. Foerter is
talking about. But if those mills close, they can't buy that
technology and they can't create those jobs.
Ms. Buerkle. Thank you.
Mr. Papadopoulos.
Mr. Papadopoulos. Let me just say, from the international
experience I have, that today it costs in the United States in
our industry twice as much to build capacity than it does, not
in China--I am not using that as a role model--but even in the
EU. We have gone to such an extreme in that count.
So, you know, I know we don't want to go back to where we
were 30 years ago; that we know. But I think we have reached
the point of diminishing returns. We have reached the point
where we do have a healthy environment. We do have a world-
class industry. And we can't accept that. We want to just keep
pushing ourselves when others need to catch up with us,
because, as I mentioned before, you know, we are going to be
breathing other people's emittants. It is not going to be our
own.
Ms. Buerkle. Thank you.
Mr. Papadopoulos. And that is something that, you know,
should occupy us.
Ms. Buerkle. Mr. Walls.
Mr. Walls. Our situation is similar to that of the forest
and paper industry, not only in terms of the billions of
dollars our industry spends in direct compliance costs, but we
also experience a number of indirect costs as a result of those
regulatory requirements.
One of those indirect costs, frankly, is in jobs. Our
industry now employs about 780,000 Americans. That is down from
a high of almost a million. In the mid-2000's, when natural gas
prices spiked over a 5-year period, we lost 140,000 jobs. Year
on year, between February 2010 to February 2011, we lost
another 15,000 jobs. I am not saying that the regulations
themselves are the sole cause of those jobs being lost, but
they are one of the impacts we are seeing from the additional
regulatory burden being proposed.
Boiler MACT is an excellent example. In the original
proposal that came from EPA, they would establish emissions
limitations that could not be met by the existing technology.
If the technology isn't there to meet the emission limitations,
what job is going to be created to create the equipment to then
meet the standard?
Ms. Buerkle. Thank you.
Mr. Kamnikar.
Mr. Kamnikar. I have made six trips to China and three
trips to India in the last 5 years to benchmark against
industries that we compete with. The point is--and Congressman
Kucinich made a long list of achievements that all of us,
across the table, have achieved in terms of safety and in the
environment. And if we just put a moratorium on where we are
today, it would take 20 years, if ever, for the industries in
China and India to catch up.
Ms. Buerkle. Thank you.
I apologize, Mr. Schimmel. We are out of time.
I yield back to the chairman.
Mr. Jordan [presiding]. Well, we will recognize the ranking
member.
Mr. Cummings. Thank you very much.
I want to thank all of you for your outstanding testimony.
As I sat here, I could not help but think and go back to
something that the chairman of the subcommittee said when he
was talking about that we had some witnesses--and, Mr.
Chairman, forgive me, it may have been another hearing that I
was in. I think we are talking about the same hearing. And when
people were asked, would they start their businesses again,
there was one person--the reason why I remember this is because
he was the one person who said, ``You know what? Although I'm
concerned about regulations, I would start my business again
because I'm so honored to have the opportunities that I have to
conduct a business in the United States of America.'' I will
never forget that as long as I live.
You know, as I hear the complaints and concerns, I am
just--I guess maybe I come from a different world. You know, in
Baltimore, if you look at the obituary page, you know, most
people, as in most places, most people die from one or two
things. The first thing I read in the morning is the obituary
page. It is either cancer or heart disease.
And there are some communities in Baltimore, where I come
from, a particular area called Fairfield, where the chemical
industry had a lot of plants and they were pumping out all
kinds of stuff years ago. And there came a point in time when
they pretty much said that, after years and years of people
living in that environment, said, you know, nobody should be
living in this environment. And a lot of those people found
themselves getting cancer and suffering greatly.
And I am not trying to paint these industries in a negative
way. What I am trying to say is that we must always have
balance. And I appreciate that each and every one of you, I
think, each and every one of you talked about the fact that
there is definitely--regulations are important for the safety,
health, and welfare of our people. And so often I think we get
confused, thinking that, on this side of the aisle, all we want
is regulate, regulate, regulate. No, that is not what we are
saying. We are saying that we want to get rid of regulations
that make no sense. And I think all of you have made cases for
some of those regulations that need to go. But, at the same
time, we want to make sure that there is balance. When we get
away from balance, then we have a problem in this Nation. When
we get away from balance in our family decisions, we have
problems. And that is the key.
And one of you--well, several of you talked about
uncertainty. And, certainly, in the United States of America,
in a democracy, you are going to have uncertainty no matter how
you look at it. When you change administrations, you are going
to have uncertainty. A lot of the regulations that you are
talking about, that you are complaining about came under a
Republican administration; some came under Democrat. Folks
changed because that is part of the price that we pay in living
in a democracy: uncertainty, changes of policy, and what have
you.
And so, I think we have to--when we look at all of this, we
have to ask the question--and I think Mr. Kucinich hit on it
pretty hard. Somebody said a moment ago that it would take them
20 years--I think it was--who said that?--20 years to catch up
with us. I think it was Mr. Kamnikar. Yeah, that is true, but
we are better than that. This is America. This is the United
States of America. We are better than that.
And I have seen over and over again, I think we can--when
we don't have the balance that I am talking about, we can get
caught up in a culture of mediocrity. And while we think we are
ahead of the game, if we get caught up in that culture of
mediocrity long enough we will be behind the game.
We want our people to have good health. We want people to
be able to have safe jobs. I want your son, who may want to do
like I did and have a tough job at Bethlehem Steel, to be able
to go there, and when he blows his nose, he doesn't blow out
soot. I want that. I want that desperately.
At the same time, I want you all to make the money so that
he can have a job. And so that is where the balance comes from.
There is nobody--we want job-creating opportunities. We want
you all to be successful. But, at the same time, we want to
safeguard our citizens.
Unfortunately, there are a lot of people who don't even
know the environments that they are walking into. And so we
have to speak for them. If we don't speak for them, nobody else
will. Somebody has to say, wait a minute, let's make sure that
these regulations are fair.
And so, I think the President is right. I think he hit the
right balance. I think there are Members on both sides of the
aisle who have said the President has hit the right balance.
Now what we have to do is we have to go through these
regulations, we have to look at them carefully, make sure that
industry is able to thrive and survive.
But let's keep one thing in mind: We are so fortunate to
have companies operating in this country. It is an honor, as
the gentleman said. I didn't say it; he said it. It is an honor
to have the opportunity that we have here. And so, I don't want
us to take that for granted.
And, with that, Mr. Chairman, I yield back.
Ms. Buerkle [presiding]. Thank you----
Mr. Cummings. I'm sorry--Madam Chairlady.
Ms. Buerkle. Thank you.
I would like to now recognize the gentleman from
Pennsylvania, Mr. Mike Kelly.
Mr. Kelly. Thank you, ma'am.
I am going to yield to Mr. Issa.
Mr. Issa. I thank the gentleman. I am a little surprised.
I will be brief. And I apologize; we have two hearings of
this committee going on, so I am going back and forth.
Mr. Kamnikar, I believe that when you were talking about
the demands to the forging industry, in a sense, isn't the
greatest demand, by far, the greatest challenge, simply the
energy? I mean, when you get past capital costs, doesn't it
really boil down to, no matter how effectively you use energy,
if your competitors in other countries can get their energy
source significantly less expensively, you will be outgunned in
the international market? Isn't that true?
Mr. Kamnikar. It is quite clear. And regulating greenhouse
gases in the way that has been outlined will effectively put
many of our suppliers and many forgers out of business, because
the energy, either electricity or the natural gas, will not--it
will become cost-prohibitive throughout the supply chain.
Mr. Issa. And, Mr. Foerter, now, I know there is a whole
industry of green jobs and green energy and so on. But isn't it
true today that, if you use green energy, let's just say all of
it, by definition, on an unsubsidized basis, you are paying
dramatically more for this energy? There is no, ``alternative
energy'' industry that can provide, on an unsubsidized basis,
competition with the base fuels of coal, oil, and natural gas?
Isn't that true?
Mr. Foerter. Well, I would be unqualified to talk about
renewables, like solar and wind. But what we do is we clean up
mostly the fossil fuels. So, basically, we keep coal operating,
keep oil, natural gas, as it comes into the mix.
Mr. Issa. Right. And even after you clean up coal, it is
still in the neighborhood of 7 cents a kilowatt, dramatically
less than any of the, if you will, new renewable fuels.
Mr. Foerter. Yeah, we have actually seen, while these air
pollution control requirements have gone in place for coal-
fired utilities, the cost of electricity has actually gone
down.
Mr. Issa. So, for Mr. Schimmel, it is interesting that you
are sort of involved in the brick-making business, because I
was in Hanoi some time back and I got to observe how they make
bricks. Now, they are totally supportive of Kyoto and all the
other protocols. They take pure, just plain coal and they burn
it, high-sulfur coal, and the tops of every leaf are black.
Literally, you can see your way back 1,000 years into how you
would make bricks.
When we look at the amount of BTUs you use, and, thus, the
amount of carbon you put in, even if you were using a source
fuel of coal, wouldn't it be true that you would probably use
1/20th the fuel that is used in an open-hearth-type brick
production?
Mr. Schimmel. I would say that is probably approximately
correct. I have been to Malaysia and seen some of the slope
kills that you probably are referencing, where they burn waste
wood.
You know, traditionally, in the 1970's, the U.S. brick
industry was around 4,000 BTUs a pound. Now we are down to
about 1,200. And in Boral, at least, as well as some of our
competitors, we use landfill gas, we use wood waste, natural
gas, some coal.
But, yes, the industry, as a whole, has changed its
technology substantially over the years. And periodic kilns,
although there are a few of them still in existence, most of
them are automated, computer-controlled tunnel kilns that are
highly efficient.
Mr. Issa. So, in a sense, every time an American operation
shuts down and most overseas locations, particularly in the
developing world, take their place, you are going to have a
larger carbon footprint, rather than a smaller carbon
footprint. Isn't that what the industry has found?
Mr. Schimmel. I think that is traditionally true. Some of
the European technology, of course, is probably on par with
where we are. But, certainly, if we go to China and some of
those other less energy-savvy countries----
Mr. Issa. Well, you know, it is funny you mention Europe,
because we will be going to France to visit the nuclear
reprocessing facility that allows France to have all its entire
base load coming from nuclear with zero emissions, because they
are willing to use a source of fuel that costs less than 6
cents a kilowatt hour after all the costs of disposal. So,
hopefully, that will be a lesson learned, is that we should
copy the Europeans in at least one item--well, two if you count
dark chocolate.
Ms. Harman, the general health of the forest industry in
North America is considered to be good. But if you take Canada
out, how good is it? How good is the ability to get the source
material and to work with the pulp in the United States versus
Canada versus most of your competitor countries?
Ms. Harman. Well, the U.S. forest-products industry is
highly competitive. And we are competitive because we have made
very difficult decisions, because we have right-sized our
business. That means downsizing, unfortunately. EPA rules and
regulations have been a contributing factor in that. Some of
the high energy costs that affected the chemical industry have
also affected us.
An interesting comment that you raised earlier about
renewable energy, I would offer to you that the forest-products
industry is one place where, on an unsubsidized basis, we can
produce renewable energy as a byproduct of our manufacturing
process. And we can do it very cost-effectively. And, in fact,
it is a large portion of our energy, which is why the biomass
rules in the boiler MACT regulation so negatively affect our
industry.
Mr. Issa. Well, thank you. And I commend you for that work.
And I think we are all well-aware that you have been an
industry in which nothing goes to waste.
I yield back.
Ms. Buerkle. Thank you, Mr. Chairman.
I would like to now yield 4 minutes to Chairman Issa.
Mr. Issa. Which I will yield to the gentleman from
Pennsylvania. Thank you.
I owe you.
Mr. Kelly. Well, I am going to thank the gentleman from
California for yielding back. And, Madam Chairman, thank you,
as we continue to do things the proper way.
First of all, I want to thank all of you from being here. I
come from the private industry also. And there is an old adage
that is out there, and it goes something like this: ``Don't
worry about the mule. Just load the wagon.'' And I think we are
at a point where the mule is about ready to walk away from the
harness himself.
And it is really great that we are concerned about clean
air and we are concerned about clean water and we are concerned
about the health of our workers--and I would suggest this: That
is not just one party's concern. All of us are concerned about
that. It is the cumulative effect of all these regulations that
keep building and building and building to where it is going to
break.
Now, I am somewhat of an athlete, not a great one, but one
sport that always interested me was golf. And what interested
me about golf is a guy like me, who is a lousy golfer, can beat
a guy who is really good. It is called a handicap.
Now, we have continued to handicap you--and now I am part
of this government--to handicap you and handicap you and
handicap you. So I think you are about ready to walk away from
the harness.
But, in particular--first of all, Mr. Kamnikar, thanks for
being here. In the district, you know, we have so many people
in the business, and I want to congratulate you on becoming the
president of the organization.
But the effect of these cumulative regulations, if you
could just walk us through. Because a lot of us have never
signed the front half of a check and have absolutely no idea of
the unintended consequences of all these costs, if you could,
just kind of walk us through, for an example, something like
ITAR and how difficult it makes it for somebody who makes roll
bearings to go through that type of regulation, and the cost
involved.
Because, at the end of the day, it is the cost that
concerns me, and our ability to compete in the global market.
We have handicapped ourselves to the point where we are
forfeiting the ability to compete.
If you could, sir.
Ms. Buerkle. Excuse me. If I could just interrupt. The
House rules are requiring that we adjourn this meeting.
However, if you would like to take 30 seconds to answer Mr.
Kelly's question, and then we will adjourn.
Mr. Kamnikar. It is difficult to answer. I would simply say
this, and I think this is true of everybody on the panel. We
have done a lot to get to where we are today, and the
uncertainty, the possibility of further regulation is what we
are most concerned about.
And I go back to my point about competing with the Chinese
and Indians. It will take them a very long to get where we are
today, but while they continue to operate, they have a very big
advantage over us. We will take our chances against them, but
let's not regulate us even more.
Ms. Buerkle. Thank you.
Again, I apologize for the time constraints this morning. I
would like to thank all of our guests here for taking time out
of your busy schedules to appear before us, give us your
testimony.
The meeting will stand adjourned.
Thank you so much.
[Whereupon, at 11:57 a.m., the subcommittee was adjourned.]