[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IMPEDIMENTS TO JOB CREATION IN MICHIGAN
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HEARING
before the
SUBCOMMITTEE ON GOVERNMENT OPERATIONS
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
MAY 6, 2014
__________
Serial No. 113-117
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia PETER WELCH, Vermont
THOMAS MASSIE, Kentucky TONY CARDENAS, California
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan Vacancy
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Operations
JOHN L. MICA, Florida, Chairman
TIM WALBERG, Michigan GERALD E. CONNOLLY, Virginia
MICHAEL R. TURNER, Ohio Ranking Minority Member
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
THOMAS MASSIE, Kentucky MARK POCAN, Wisconsin
MARK MEADOWS, North Carolina
C O N T E N T S
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Page
Hearing held on May 6, 2014...................................... 1
WITNESSES
Mr. Chris Fisher, President and CEO, Associated Builders and
Contractors of Michigan
Oral Statement............................................... 5
Written Statement............................................ 7
Ms. Janet Kaboth, President and CEO, Whitacre Greer Company
Oral Statement............................................... 10
Written Statement............................................ 13
Mr. Michael Lenahan, President, Resource Recovery Corporation of
West Michigan
Oral Statement............................................... 16
Written Statement............................................ 19
Mr. Richard Kligman, President, Superb Custom Homes
Oral Statement............................................... 22
Written Statement............................................ 25
APPENDIX
The Dodd-Frank Act: A Regulatory Impediment to Job Creation by
James E. Tompert, Esq., submitted by Mr. Lenahan............... 56
Comments of Thomas J. Slavin, CIH, CSP, CSHM, CPEA on Proposed
OSHA Rule for Occupational Exposure to Respirable Crystalline
Silica, submitted by Rep. Mica................................. 67
IMPEDIMENTS TO JOB CREATION IN MICHIGAN
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Tuesday, May 6, 2014
House of Representatives
Subcommittee on Government Operations
Committee on Oversight and Government Reform
Washington, D.C.
The subcommittee met, pursuant to call, at 9:05 a.m., in
Plymouth Township Hall, 9955 N. Haggerty Road, Hon. John L.
Mica [chairman of the subcommittee] presiding.
Present: Representatives Mica and Bentivolio.
Staff Present: Mark D. Marin, Deputy Staff Director for
Oversight; Katy Rother, Counsel; Sarah Vance, Assistant Clerk.
Mr. Mica. Good morning. I would like to call this hearing
of the United States House of Representatives Committee on
Oversight and Government Reform hearing to order. This morning
we have the subcommittee field hearing of the Government
Operations Subcommittee. I would like to welcome everyone. We
are here at the request of my colleague, the gentleman from
Michigan, Mr. Bentivolio, and this is one in a series of
hearings we are holding around the country.
The responsibility of the Oversight and Government Reform
Committee is to secure several fundamental principles. First,
Americans have the right to know that the money the government
takes from them is well spent. And second, Americans deserve an
efficient and effective government that works for them. The
Oversight and Government Reform Committee is to ensure that
these rights and responsibilities of the government are upheld.
It is absolutely essential in our system to have
accountability. We have committees that have jurisdiction for
creating different government programs. We have committees that
appropriate and fund programs. Our particular responsibility is
overseeing how those programs are working, how they operate and
function in the best interests of the American people, and how
their funds are spent.
It is also good to be here in Plymouth. I want to thank the
township for hosting us in this beautiful facility. I thank
Congressman Bentivolio for inviting us and participating today
in this hearing.
I might tell folks that this is probably the first
congressional hearing that has been held in Plymouth. Maybe
there have been others; I don't know about them. This is the
first I know of.
This is not a town hall forum. We do have a very formal
schedule, and that is the order of our business. A complete
record of this hearing is made. It will also be transcribed,
and it is for official purposes. So those who have been invited
to testify this morning will do so. They will do so also under
oath. We will introduce that panel shortly.
The order of business is I will give an opening statement.
I will yield to Mr. Bentivolio for his opening statement. We
will also keep the record open. We don't have our full
subcommittee membership with us today, but members will be
entitled for a designated number of days to submit statements
for the record.
I might say, too, for the public and officials and others
who are attending, if you would like to participate in
contributing to the hearing, you are welcome to ask through
your representative, in this case Mr. Bentivolio, that your
statement be submitted for the record. It would have to be done
through a member of Congress.
So that is the order of business we will conduct ourselves
in. And again, I thank people for attending. Thank you for the
invitation. Good to be with you here.
The first thing that I want to do is, again, talk about why
we are here and what the subject is. Today I think it is
important that we look at not just the laws that are passed in
Washington, but laws creating agencies impact us in that the
agencies produce regulations, and that is their authority under
law.
In addition to the laws that we pass, we are now seeing the
proliferation of rules and regulations coming out of agencies
at an unprecedented pace. Those regulations do have very
serious impact on the creation of jobs, the expansion of the
economy, and also the ability for people to live and realize
the American Dream because they all have an impact, a cost, and
specifically we will see in this hearing some consequences in
what happens in expanding jobs.
According to the Congressional Research Service, between
2009 and 2012 the Obama Administration finalized more than
13,000 regulations. Last year alone, more than 3,500 new
regulations were added to the books. By the Administration's
own estimates, major regulations issued in 2012 added almost
$20 billion in annual costs to the American economy.
Annually, Federal regulations cost the American economy a
staggering $1.8 trillion. As the Competitive Enterprise
Institute puts it, if it were a country, the U.S. regulations
would account and be responsible for that particular activity
being the 10th largest economy in the world.
The growing regulatory state is particularly a concern for
small business. According to the United States Chamber of
Commerce, almost 45 percent of small businesses identify over-
regulation and economic uncertainty as their most significant
challenges.
According to the National Federation of Independent
Businesses, government regulations are the single most
important problem facing small businesses. Oftentimes people
think that big corporations are the primary employers in the
United States. In fact, it is small business that is the
biggest employer, and also the biggest job creator.
So there is a concern, and that concern is warranted about
the proliferation of these regulations. Last year, Federal
agencies published proposed and final rules that, by the
Administration's own estimates, would cost the American economy
$112 billion.
In the Obama Administration, Federal regulators have
finalized rules that, in total, cost the economy again almost
half-a-trillion dollars.
So these are some of the facts that we want to make certain
are part of the record. We are going to hear from several
witnesses today. We have four witnesses, and I will introduce
them shortly.
I also want to pay attention and recognition to Mr. Lewis
K. Uhler, who is President of the National Tax Limitation
Committee. I met him just a few minutes ago. He has come all
the way from California to attend this hearing, and his
organization, the National Tax Limitation Committee, focuses on
some of the issues like we are discussing here today.
So it is nice to see folks from Plymouth, from Michigan,
all the way from California who are concerned about the
direction of regulations and the cost of doing business and
making America go and grow. So, I am very pleased to welcome
him and all of you again.
I thank Mr. Bentivolio, and I will yield now to the
gentleman from Michigan for an opening statement.
Mr. Bentivolio. Good morning. I want to start by thanking
the chairman for holding this hearing in the wonderful 11th
District of Michigan and for the opportunity to hear directly
from business leaders about how the Federal Government is
impacting the business environment. Thank you to the witnesses
who are here to speak with us today.
We are speaking about Federal regulations today because
Federal regulations have the potential to significantly impact
businesses and communities. The impact of regulations is often
good. In my lifetime, the need for appropriate regulation has
been made apparent from damage to our homes, families, and
environment from a handful of bad actors.
Not far from here, industrial pollution led to multiple
fires on the Cuyahoga River in Ohio. In the 1970s, the nation
was shocked by the tragedy of ineffective toxic chemical
disposal at Love Canal in New York. Importantly, as a nation,
we acted.
In the 1960s, we passed the Clean Air Act and the National
Environmental Policy Act. In the 1970s, we passed the Clean
Water Act and the Occupational Health and Safety Act. When
faced with serious concerns, we put in place many appropriate
and effective regulations that protect our families, our
workers, and our environment because clean water, healthy
children, and safe work environments are important to all of
us.
But it is also important that we strike a balance.
Affordable homes, steady employment, and the ability to provide
for our families are important. Regulating for the sake of
regulating only harms our families and our workers. As I walk
around our community, I see ``For Sale'' and ``For Lease''
signs instead of ``Help Wanted'' signs.
Unemployment in Michigan has been above the national
average for more than a decade. According to the Heritage
Institute, EPA regulations are expected to cost the nation more
than 600,000 jobs by 2023. Michigan will lose more than 15,000
jobs in the manufacturing industry alone. The manufacturing
industry faces some of the highest regulatory burdens in our
nation, and the 11th Congressional District has the second-
highest number of manufacturing jobs. We can't afford these
regulations. We can't afford to lose jobs because the EPA
doesn't know when to quit.
Last year, the EPA proposed three regulations that, in
total, will cost the economy more than $50 billion. If we keep
going like this, we will regulate America out of business.
Currently, there are many proposed Federal regulations
that, if finalized, will threaten the survival of many Michigan
small businesses, which will result in job losses. Today we
will hear from those business leaders who are on the front
lines, drowning in the sea of new and potential regulations. I
look forward to the perspectives of those with real experience
and knowledge about the impact of Federal action.
Thank you, and I yield back.
Mr. Mica. I thank the gentleman.
The next order of business will be I am going to introduce
our witnesses.
Before I do that, I want to state for the record that
members may have 7 days to submit opening statements for the
record.
Without objection, so ordered.
And again, I welcome our witnesses who volunteered. We
didn't have to subpoena any of you today, which is good. Thank
you for being part of our hearing today. In just a minute I
will swear you in and you will be sworn before the committee.
I don't know if anyone has testified before, but we ask you
to try to limit your presentation and testimony to 5 minutes,
an oral presentation to the subcommittee. If you have lengthy
material or additional information you would like to be made
part of the record, we will be glad to do that through
requests. That is sort of the rules of procedure.
Today we have Mr. Chris Fisher. He is President and CEO of
the Associated Builders and Contractors of Michigan.
Welcome.
We have Ms. Janet Kaboth. She is the President and CEO of
Whitacre Greer Company.
We have Mr. Lenahan, President of the Resource Recovery
Corporation of West Michigan.
Our fourth and final witness is a constituent of Mr.
Bentivolio, and I will defer to him to introduce that witness.
Mr. Bentivolio. Thank you.
It is my honor to welcome Mr. Richard Kligman here today in
his capacity as President of Superb Custom Homes.
Thank you for being here today, all of you.
Mr. Mica. Thank you, Mr. Bentivolio.
Now, if our witnesses will rise, please, raise your right
hand.
[Witnesses sworn.]
Mr. Mica. Let the record reflect that all of the witnesses
answered in the affirmative.
Again, I welcome each of you, good to have you participate.
As I said, if you have a long statement, we will ensure that
through request it is in its entirety will be part of the
record, but we would like you to try to summarize in 5 minutes.
That will give us a chance to go through everyone. We will hold
the questions until afterwards. Then Mr. Bentivolio and I will
submit some questions for your response.
So, we will start first with Mr. Fisher. He is President
and CEO of Associated Builders and Contractors of Michigan.
Welcome, sir, and you are recognized.
WITNESS STATEMENTS
STATEMENT OF CHRIS FISHER
Mr. Fisher. Thank you, Chairman Mica. Welcome to Michigan,
and thank you for the invitation to be here today. My name is
Chris Fisher with ABC of Michigan. We are a statewide trade
association working in partnership with chapters representing
firms who perform work in the commercial and industrial
construction sectors of our state.
Today I would like to focus on a few labor issues by
drawing a contrast between what states like Michigan have been
doing on the state level by enacting commonsense reforms and
contrast that a little bit with what we are seeing in the
Federal Government, where we have seen a rather onerous and
one-sided, big-labor-driven agenda that is clearly not working.
I will begin by taking, for example, in 2009, when
President Obama issued Executive Order 13502 to encourage
Federal agencies to require what is called a Project Labor
Agreement, or PLA, on Federally-funded construction projects.
Very simply, a PLA is a special interest handout designed to
only award construction contracts to unionized contractors and
their unionized workforce. There is nothing wrong with
unionized companies getting a contract, but it is wrong when
you have a special interest monopoly that denies that open
competition and gives everybody a fair shot.
So PLAs commit the expense of two important things that
this committee and Congress should be very concerned about,
equal opportunity and fiscal accountability. PLAs deny U.S.
businesses and workers equal opportunity by prohibiting the
85.9 percent of the United States workforce that chooses not to
be affiliated with a union from accessing work opportunities
for public construction projects that are funded by their own
tax dollars.
PLAs also then discourage fiscal accountability because
when you erode the competitive bid process like this, the
ability for public procurement to reap the benefits of fair and
open competition is diminished. The result, as studies have
found, is that public construction costs escalate by as much as
10 to 20 percent on these projects that are subject to PLAs.
Now, what we would suggest is that instead the Federal
Government needs to follow the lead of Michigan and some 20
other states that have eliminated union-based favoritism in
contracting by treating all workers and businesses, union and
non-union alike, with the dignity that they deserve. This
committee has jurisdiction over legislation introduced by
Representative Andy Harris from Maryland, H.R. 436, the
Government Neutrality in Contracting Act, which would prevent
the Federal Government from further engaging in these unfair
and costly procurement practices.
Simply put, it is wrong to rip off taxpayers while denying
citizens because of their labor status the opportunity that
they deserve to work on public projects.
PLAs are not the only example of Federal regulations run
amok. The out-of-control National Labor Relations Board, or
NLRB, has continually pursued a one-sided agenda instead of
doing what its core purpose is, which is maintaining a balanced
approach on behalf of both labor and management.
The latest issue of concern is the NLRB's proposed ambush
election rule. This rule is aimed to dramatically shorten the
amount of time between when a union files a representation
petition and when an election takes place to as few as 10 days.
The harmful impact of this is that it therefore limits the
ability of workers to gather information and facts as they
weigh the important decision surrounding whether or not their
company should be unionized or not.
The National Labor Relations Board shouldn't be
discouraging workers to get the facts necessary to make an
important decision. Contrast this with states such as Michigan,
where we have instead passed pro-worker reforms that enable
workers to gather the information they need to make these
decisions. Michigan passed Right To Work recently, and indeed
we support the ability of workers to gather the information
they need to make a decision and not be forced to join a union
as a condition of employment.
Finally, OSHA is likewise a concern. Take, for example,
OSHA stating that non-union workers are able to now--or that
union officials are able to do worksite inspections for
companies that are potentially targeted. Having an organizer, a
community organizer on a job site raises questions about the
actual intent of that union organizer. And, for that matter, it
raises questions about what is OSHA doing in this arena to
begin with. It is not germane to its cause of workplace safety.
Here in Michigan, however, we have agreements with OSHA and
partnerships with OSHA where we work cooperatively to promote
worker health and safety, and indeed this is the way we should
do things federally.
So, Mr. Chair, these are just a few examples of some of the
issues that we are seeing on the regulatory labor end of
things. What we are doing in Michigan is working, and we
encourage the Federal Government to do the same. We have gained
construction jobs every year over the past three years in
Michigan. Construction worker incomes have increased year after
year after year, and we think that the states are laying down a
pretty good framework for the Federal Government to follow, and
we would encourage this committee and others to act.
So, with that, I would be happy to answer any questions
later on, Mr. Chair, and thank you.
[Prepared statement of Mr. Fisher follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Thank you, Mr. Fisher.
Let me recognize Janet Kaboth. She is the President and CEO
of Whitacre Greer Company.
Welcome, and you are recognized.
STATEMENT OF JANET KABOTH
Ms. Kaboth. Thank you very much for the opportunity to come
today. My name is Janet Whitacre Kaboth. I work for a company
called Whitacre Greer, and we have been manufacturing clay
products in northeastern Ohio since 1916. The company currently
is owned by my brother, my sister and myself, and we are the
fourth generation of my family to own and operate the company.
I am here on behalf of my company and my industry. The many
peaks and valleys of the brick industry is well demonstrated by
the clay products industry here in Michigan, where in 1911
there were as many as 138 clay product manufacturing
facilities. Currently there are seven, with only one brick
plant. What has happened here has happened all over the
country.
Whitacre Greer is a small niche product manufacturer that
produces fire brick for the inside of masonry fireplaces and
paving brick. You have probably walked on our paving brick in
places like Pennsylvania Avenue in D.C., Greenfield Village
here in Michigan, and Joe DiMaggio Children's Hospital in
Hollywood, Florida.
Our mission is to modernize our facility in order to
succeed for the next 100 years. We have just begun the second
of several phases in this modernization process.
Our industry is committed to doing the right thing for our
employees, vendors, customers, and communities. However, as we
continue to struggle to come out of the Great Recession, we
need to be sure our limited resources are being used on the
most important issues that will provide some benefit for every
dollar spent.
Today I am going to talk about two upcoming regulations,
the air toxic standard being developed by EPA, known as the
Brick MACT, and the proposed revisions to the silica
Permissible Exposure Limit, or PEL, being considered by OSHA.
Compliance with either of these regulations threaten the
continued existence of many small companies in our industry.
Compliance with both of these rules at the same time will
devastate our already-depleted industry.
This leads to my constant question regarding the regulatory
development process: Is anyone looking at the cumulative cost
of these regulations on an industry? If these regulations would
save lives of our workers or our neighbors, it would be worth
it. However, in both cases, the regulatory authority has data
that show the benefit of these regulations is minimal or non-
existent for the brick industry.
The Brick MACT, which will be proposed in August, was
originally promulgated in 2003. Our industry complied in 2006
by installing 80 of the 100 controls now in existence at a cost
of over $100 million in capital and operating costs. But in
2007 the courts vacated the rule. Now the EPA is using the
performance of these new controls to establish even lower
limits for the upcoming rule. For many brick companies, this
would require them to replace the controls installed to comply
with the first MACT.
We have used EPA's own air dispersion models and actual
stack parameters to clearly demonstrate that even under the
worst conditions, 99 percent of our emissions would be less
than 40 percent of what EPA considers safe, and most would be
less than 10 percent. We have spoken with EPA about this data
but have received no feedback as of yet. We hope EPA is
considering this health-based approach. However, the EPA has
indicated the potential that even if they consider the health-
based approach, control of the remaining 1 percent of emissions
could still cost our industry essentially the same as
controlling the other 99 percent.
EPA's estimates put the potential cost of this regulation
at more than $188 million per year. That represents 22 percent
of our gross industry revenue in 2012. Whitacre Greer's share
of that cost is estimated to be $5 million, which is 50 percent
of our current net worth.
In September of last year, OSHA proposed provisions to the
current PEL for silica. This reduction was proposed as a one-
size-fits-all type of regulation that is typical for OSHA. OSHA
estimates costs for this rule to average $38,000 per year,
annualized over a 10-year period, for a brick plant. This is 15
to 18 times greater than OSHA's estimate for the average cost
in general industry. Industry experts estimate that OSHA is
underestimating this cost by as much as 20 to 50 times.
OSHA has been provided a significant set of studies
conducted over the last 75 or more years demonstrating that the
silica found in the brick industry has a different effect on
the body compared to silica in other industries. OSHA
acknowledges separately the reduced incident rate of our
industry and the much higher cost. However, they do not put
those two pieces of data together to consider our industry
separately. For each brick plant to comply will require an
investment of $906,000 in the first year. This is the amount of
cash that I need for compliance; therefore, the amount that is
important to me, as opposed to the annualized amount.
Practically speaking, compliance with both these
regulations would require me to obtain a loan for $6 million to
add equipment that would not reduce our costs, improve our
product, increase our sales, or provide any health benefits for
our employees or our neighbors. It would be impossible for us
to obtain a loan of this size that would not provide us with
any benefits at all in the current banking environment.
The cost of compliance with both regulations at the same
time would put us out of business, and we are probably not the
only brick company in this situation.
In both cases, EPA and OSHA have the flexibilities to meet
their obligations without destroying our industry. We just
don't know how to make them use those flexibilities, to take
the time to do it right, not just do it quickly, and avoid a
one-size-fits-all approach that will destroy an industry.
I would like to think that after 100 years of providing
good employment, paying taxes, and being a responsible
corporate entity, that someone in our government could look at
the cumulative effect of regulatory compliance and help us
protect our workers, our neighbors, and our environment, but
still allow us to exist.
Thank you.
[Prepared statement of Ms. Kaboth follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Thank you for your testimony.
We will now go to Mr. Michael Lenahan. He is the President
of Resource Recovery Corporation of West Michigan.
Welcome, sir, and you are recognized.
STATEMENT OF MICHAEL LENAHAN
Mr. Lenahan. Thank you, Chairman Mica and Representative
Bentivolio, for inviting me here today. My name is Michael
Lenahan, and I am testifying on behalf of the American Foundry
Society. The American Foundry Society is the predominant trade
association of the metal casting industry in North America.
Foundries manufacture engineered parts called castings, which
are made by pouring molten metal into a mold. Most of the time
these molds are made out of sand. Examples of metal castings
that you may be familiar with are engine blocks, manhole
covers, artificial knee joints, and the Liberty Bell.
The U.S. foundry industry employs approximately a quarter
of a million people, but 80 percent of those foundries employ
100 people or less. We are comprised primarily of small
businesses. Many of the companies that supply foundries are
also small businesses, and I run one of those businesses.
My testimony today really boils down to one thing and one
thing only: anything that takes time away from the efficiency
of managing a small business can be crippling. Small businesses
simply do not have the resources to dedicate to tasks that are
non-productive.
In order for any business to thrive, there must be time for
the management of that business to do three things: one, focus
on enhancing what they do well; two, improve productivity;
three, expand offerings and grow the business. When management
has time to look ahead and focus on improvement, they typically
increase productivity and expand. This often results in the
hiring of more employees. When management does not have time to
focus on these things, they mark time and wait for the next
crisis. For many businesses, the next crisis is addressing the
latest regulation. Regulations and, more specifically,
regulatory changes or new regulations consume massive
quantities of managerial time and resources.
From my viewpoint, there are five major problems that I see
with Federal regulations. One, there are far too many new
regulations. Two, many new regulations or modifications to
regulations appear to be created or modified with minimal or no
thought as to how they will impact a business. Three, many
regulations are improperly conceived or misapplied and provide
little to no measurable benefit. Four, new regulations have a
cost, a cost that is often ignored or dramatically understated
by those writing the new regulations. Five, new regulations
create uncertainty, which limits a business in their ability to
plan.
I have three brief examples that I would like to reference
as part of my testimony today as to how regulations impact
small business and job creation.
The first example highlights OSHA's new Crystalline Silica
Standard. I am submitting a copy of the foundry industry
testimony given at the March 28, 2014 hearing with OSHA and the
U.S. Department of Labor. In the interest of time, I would like
to briefly explain in layman's terms the basics of this new
rule.
This new rule will reduce the permissible exposure limit
for silica from 100 micrograms per cubic meter to 50 micrograms
per cubic meter. What does 50 micrograms per cubic meter look
like? Take a packet of artificial sweetener and distribute it
across a football field at the height of 13 feet. That is what
that looks like.
As mentioned, foundries utilize sand, primarily made of
silica, to make the molds which define the shape of the
castings they produce. A foundry of this football field area
size could be utilizing upwards of 10,000 tons of sand in
annual production. As a reference point, it would take 400 semi
dump trucks lined up bumper to bumper for approximately four
miles.
OSHA's new silica rule would require all foundries not
meeting the 50 microgram standard to put in engineered
controls, basically massive high-quality filtration equipment,
within the facility to get the foundry into compliance. On the
surface, this may seem like an acceptable idea until you dig a
little deeper.
First, the vast majority of experts on the subject believe
foundries will fail to meet the standard even if they use the
best technology money can buy. Second, to provide some
perspective, the level of cleanliness required to meet the new
standard is more stringent than what the National Aviation and
Space Administration, NASA, requires for silica in one of their
laboratory clean rooms. Lastly, the new rule does not allow
employers to provide workers with personal protective devices
until after it proves that the installed engineering controls
cannot meet the standard. In other words, this regulation says
spend the money on extremely expensive engineering controls
whether they work or not, and only after you prove it does not
work can you distribute personal protective equipment to your
employees.
The logic behind this approach is flawed at the most basic
levels. How many successful strategic initiatives involve
choosing the most expensive and most likely option to fail
first? This would be like forcing a public school district to
purchase jet airplanes to transport school children because
statistics show it is a safer mode of transportation than
buses. Practical application of this idea would be more costly
and not as safe. Eventually they would go back to buses, but
only after they broke the bank on buying airplanes.
This may sound like a ridiculous comparison. However, you
will see in the executive summary of the attached testimony
that this is not the most effective way to protect workers. You
will also see that OSHA has omitted some costs and grossly
underestimated the overall cost to implement this new rule, $44
million per year versus $2.2 billion.
I think I am running out of time here, but I will make
quick mention of NSPS Subpart UUU, which is the rule that was
never intended to be applied to the foundry industry. This
rule, we know it was not meant to be applied to the foundry
industry because we got to the author at EPA and he said it was
never meant to be applied. So we spent time chasing our tails
on a rule that was never meant to be applied to us, spent money
with attorneys, spent money working together as an industry,
and it is for something that will never gain any environmental
benefit, nor was it meant to be applied to us.
Thank you for your time.
[Prepared statement of Mr. Lenahan follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Thank you for your testimony.
We will now turn to Mr. Kligman. He is the President of
Superb Custom Homes.
Welcome, and you are recognized, sir.
STATEMENT OF RICHARD KLIGMAN
Mr. Kligman. Thank you, Chairman Mica and Congressman
Bentivolio. On behalf of more than 140,000 members of the
National Association of Home Builders, my name is Richard
Kligman, and I am a builder from Plymouth, Michigan and serve
as President of Superb Custom Homes.
Housing services are a great example of an industry that
would benefit from smarter and more sensible regulation.
According to a study concluded by the NAHB, government
regulations account for 25 percent of the price of a single-
family home. NAHB economists recently performed an analysis
looking at the number of households in Michigan that would no
longer qualify for a mortgage due to compliance with the latest
building codes. New building codes would increase the
incremental construction cost for a typical residence by
$2,532. The base price of a typical new one-story home in
Michigan is $121,040. Two-thousand-five-hundred-and-thirty-two
dollars may not seem like a lot in the big picture, but the
study indicates that 31,106 Michigan households would be priced
out and denied the opportunity of home ownership.
I believe this example illustrates just how impactful over-
regulation can be, as many of the regulations being discussed
will be significantly more costly to implement than $2,500. The
bottom line is unnecessary regulatory costs hurt real people
right here in Michigan. I would like to highlight a few of
those regulations that are of concern.
``Waters of the United States'' proposed rule. The
Environmental Protection Agency and the U.S. Army Corps of
Engineers recently proposed a rule redefining the scope of
waters protected under the Clean Water Act. The proposed rule
falls well short of providing the clarity and certainty our
industry seeks. This rule will increase Federal regulatory
power over private property and will lead to increased
litigation, permitting requirements, and lengthy delays for any
business trying to comply.
These changes will not improve water quality, as much of
the rule improperly encompasses water features that are already
regulated at the state level. The proposed rule establishes
broader definitions of existing regulatory categories such as
tributaries, and regulates new areas that are not
jurisdictional under current regulations. For any small
business trying to comply with the law, the last thing it needs
is a set of new, vague, and convoluted definitions that only
provide another layer of uncertainty.
OSHA crystalline silica rulemaking. OSHA's proposed rule to
control crystalline silica is the most far-reaching regulatory
initiative ever proposed for the construction industry.
Crystalline silica is a basic component of soil, sand, and
granite, and is found in numerous building materials.
OSHA is proposing an 80 percent reduction in the
permissible exposure limit, PEL, for respirable silica dust.
OSHA has not explained how a drastically lower PEL will
effectively reduce the number of silica-related illnesses and
deaths.
NAHB believes OSHA should withdraw the proposed silica
regulation until it can demonstrate that the proposal is
technologically justified, economically feasible, and that it
can be applied and understood in the real world of residential
construction. OSHA's proposal describes control methods that
will ultimately cost the industry $3 billion annually.
Federal involvement in local building energy codes.
Building energy codes such as the International Energy
Conservation Code, IECC, are used across the country to
establish minimum standards for building energy efficiency. The
codes are developed by private entities but then adopted by
state and local governments. The Department of Energy
participates in this process. While they do not develop the
codes themselves, they are authorized to provide technical
assistance.
NAHB has serious concerns that this has been broadly
interpreted to allow DOE to advocate for or against certain
proposals. Homebuyers are willing to pay more for lower utility
costs, but according to our data, buyers need a 14 percent
return on investment, which corresponds to a seven-year
payback. The 2012 version of the IECC has such significant cost
increases it would take the average family 13.3 years just to
break even on required mandates. For half of the State of
Michigan, the payback period is actually 16.1 years.
Some companies and advocacy groups are now pushing Michigan
to adopt this onerous and expensive code because it benefits
their business, treating certain products favorably. The Home
Builders Association of Michigan is trying to find a reasonable
solution.
OSHA's fall protection standard. OSHA changed its
residential construction fall protection regulation. OSHA
rescinded its interim fall protection guidelines, which set out
a temporary policy that allowed employers engaged in certain
residential construction activities to use alternative
procedures instead of conventional fall protection such as
guardrail systems, safety net systems, and personal fall arrest
systems for any work that is conducted six feet or more above
lower levels.
OSHA has not provided specific guidance regarding how it
will interpret this standard or how builders are expected to
comply in determining when the use of conventional fall
protection is considered infeasible or its use creates a
greater hazard. Builders have little assurance that their
actions will meet OSHA's requirements and could be saddled with
costly fines or citations even though they are making good-
faith efforts to comply.
OSHA's fall protection regulation should be reviewed under
Executive Order 13563, Improving Regulation and Regulatory
Review, to help make it more effective and less burdensome for
small businesses, exactly as envisioned by the President.
In conclusion, I appreciate the opportunity to share the
thoughts of my trade association, the National Association of
Home Builders, on Federal regulations impacting small
businesses and job creation in Michigan. NAHB is not against
appropriate, balanced regulation. Our members understand that
regulation is needed--for example, to protect the nation's
water supply and limit a child's exposure to lead paint.
Regulations that are workable and sensible, where the rules
are easily understood and applied, could be the type generally
supported by our industry. Unfortunately, our industry is
participating in several rulemaking processes, some of which I
have highlighted, where agencies avoid well-established
policies of the Administration Procedures Act and neglect the
safeguards of the Regulatory Flexibility Act in the interest of
promulgating rules for self-serving political gain.
Thank you.
[Prepared statement of Mr. Kligman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Well, I thank you, and I thank all of our
witnesses. Interesting testimony.
It was interesting to start with Mr. Fisher, and he talked
about Executive Order 13502, and we just ended up with Mr.
Kligman, who was talking about Executive Order 13563, 61
executive orders in-between we didn't even get to hear about.
Interesting testimony today, and some tough consequences
proposed by some of these regulations.
What I thought I would do is I am going to go through some
of the testimony that was provided by each of you, a few
questions.
First, Mr. Fisher, the project labor agreement provision
that you talked about, you said that Michigan had eliminated
that. When did Michigan eliminate that?
Mr. Fisher. Michigan, Mr. Chair, eliminated the ability to
have a government-mandated PLA in 2011 with the Fair and Open
Competition Act. What it simply states is that all workers,
union and non-union alike, that you can't be discriminating
against based on your decision to affiliate or not affiliate
with a labor union, and it meant that all workers have the
opportunity to access work opportunities on public construction
projects.
Before, you would have a special-interest-driven mandate
that would state that only a contractor that is signatory to a
PLA, which is a form of a collective bargaining agreement,
would be able to perform that work.
Mr. Mica. Now, is that only on state projects?
Mr. Fisher. It would be state, local ----
Mr. Mica. Because you are still subject to the Federal
edict.
Mr. Fisher. But unfortunately, we can't get out from under
the Federal edict, and that is the problem.
Mr. Mica. Right.
Mr. Fisher. Is this Federal regulation ----
Mr. Mica. So one solution might be, where a state does
allow by state law the elimination of the project labor
agreement requirement, that they be allowed to proceed with
implementation of the Federal. Would that be a possible
solution?
Mr. Fisher. That would be a possible solution. However,
here in Wayne County, in the county to the north, Macomb
County, where there is the Selfridge Air Force Base, for
example, if there is a Federal contract there, that is
completely under the jurisdiction of the Federal Government, or
an interstate highway that is under the jurisdiction of the
Federal Government, the Federal Government can still
discriminate against workers and businesses in a local area
based on labor affiliation.
So we also think that the Federal Government should, in
fact, enact a fair and open competition law to, again, protect
taxpayers and workers so that everybody could have an equal
opportunity to pursue work in their communities.
Mr. Mica. You said the disparity could be 10 to 20 percent.
Do you have any anecdotal information as to the effect of
Michigan's provision?
Mr. Fisher. I do, in fact. I think one great example is in
the shadow of the state capital in Michigan, in Lansing, a new
city market was built subject to a PLA. It wasn't necessarily
an expensive city market project. I think from start to finish
it was about $3 million. It was let out to bid under a project
labor agreement, and the result was that the project came in
entirely out of budget, to the tune of, I believe, 25 percent
over budget, and the city market wasn't able to be built until
they re-bid the entire project, opened up the bidding process,
allowed everybody to participate, and then once you had the
benefits of fair and open competition, and only then, was the
project able to be on budget and finally get completed.
Mr. Mica. Aside from the labor issue that you mentioned,
you talked a bit about OSHA, and we have heard some others
refer to OSHA and their overreach. How can we ensure protection
of workers without some of the Federal interference through
OSHA? You said you have what sounded like a fairly good
relationship and cited some of it as a model. How does that
work? Are you just getting volunteer cooperation with OSHA, or
is this something that can be a template for others to adopt? I
have never heard of this before. Maybe you can explain it
better.
Mr. Fisher. Yes, I would be happy to, Mr. Chair. Michigan,
under OSHA, is what is called a delegated state, and OSHA does
have a provision that allows a state to handle the health and
safety functions of OSHA, to administer it under the belief
that government that is closest to home can govern best, that
federally we don't need to necessarily be as hands-on if a
state is able to, as long as they comport with all of OSHA
requirements. Michigan is one of the states that is able to do
that.
Mr. Mica. So is the state enforcing the OSHA requirements?
Mr. Fisher. Correct.
Mr. Mica. Okay.
Mr. Fisher. So what we have been able to do by having a
partnership that is closer to home, closer to the Michigan-
based construction industry, is form alliances. We are right
now in the process of forming an ABC and OSHA alliance, and it
is geared towards that key, core role of OSHA, which is to
promote worker health and safety and use a fact-based approach
to methods that actually work.
Mr. Mica. Is this done just by an agreement with the state
and OSHA?
Mr. Fisher. Yes.
Mr. Mica. Okay. I am not that aware. Everyone thinks all
the members of Congress know all the programs, but this
delegation authority is under law. Is it just certain
designated states by law, or can any state ----
Mr. Fisher. A state applies to Federal OSHA and is able to
do so, and Michigan ----
Mr. Mica. Okay. And do you know how many states participate
on this basis?
Mr. Fisher. I would be happy to get that to you. I don't
know.
Mr. Mica. Okay. I think that would be interesting. Maybe
the staff could add that in the record.
Mr. Mica. But that is an interesting concept. I don't see
why it couldn't be further applied. If Michigan can do it,
certainly it could be a model for other states. I don't know
how many others do that, devolving to the states some of this
responsibility. A lot of what we do at the Federal level is
duplicative, not only in enforcement and regulation but a whole
host of areas, permitting, where we could be much more
efficient.
But thank you for bringing that to light and to the
committee. We can look at that, too, and maybe consider
expanding some of those provisions in future law.
Okay, Ms. Kaboth. You produce those bricks that we walk on?
Ms. Kaboth. I do. Not alone, though. But, yes, we do.
Mr. Mica. That is interesting. You talked about, again,
some of the regulations, the cost to you would be $6 million,
with no apparent benefit. What would happen if they force you
to do this?
Ms. Kaboth. Well, we would have to close.
Mr. Mica. How many people do you employ?
Ms. Kaboth. We employ 80 people.
Mr. Mica. Eighty people? And you have been in business it
sounds like a long time?
Ms. Kaboth. Yes, since 1916. We are getting ready for our
100th anniversary.
Mr. Mica. That is great.
Ms. Kaboth. Most brick companies are like us. It is not an
industry that most people want to join because the capital
costs are very great, the return is really not wonderful. Most
of the companies are long-time family-owned businesses like
ours.
Mr. Mica. Is there a lot of competition in the industry?
Ms. Kaboth. There is. However, that is why we specialize in
the niche markets. That is the only reason why we are even
still here. We don't have the resources to compete with the big
companies, so we stick with the paving brick, the fire brick
for fireplaces, a place where we have been able to thrive. We
do a lot of custom work.
Mr. Mica. Now, will that just narrow the competition by you
going out of business, or is there foreign competition? Are
there other sources for ----
Ms. Kaboth. There is no foreign competition, really. Brick
is too heavy to import. The costs would be much too high for
the freight. If we would be gone, it would reduce the choices
for a lot of places. We are a very high-end, customized
product, and we supply a lot of universities and colleges. So
they would just have to find someone potentially who could do
what we do, and there aren't many left.
Mr. Mica. And the silica rule you talked about was the same
one that everyone is talking about?
Ms. Kaboth. Yes.
Mr. Mica. There is nothing different, it's just the
difference in the impact on each of you, and particularly
devastating to your operations.
Ms. Kaboth. Well, and it is not just for the cost. I have
been with Whitacre Greer for 35 years, and we have never had
one person be ill from silica. I mean, that is part of our
industry statement, that we have studies for over 75 years that
our employees just don't get silicosis. So it is ridiculous to
have a rule that is just so expensive that isn't going to help
anybody.
Mr. Mica. Have you employed other means of protection of
the workers?
Ms. Kaboth. We do. We have a number of things we do to
reduce the dust overall in our facilities, and most facilities
are very good at that. But to get to the level that OSHA is
requesting is, to be honest, almost impossible, even with the
engineering controls and everything else they want you to do.
Mr. Mica. Mr. Lenahan, was it you who testified about the
amount that is allowed in a space laboratory, I guess it was?
Mr. Lenahan. Yes. Actually, the standard is cleaner than
the NASA clean room, which is a reference point I think we all
think of, a clean room and how clean that environment would be.
And to have an industrial plant that handles tens of thousands
of tons of material ----
Mr. Mica. When these rules come out and you have an
opportunity to be heard on them, do you feel that is adequate?
Are they listening? Has there been opportunity, do you think,
to be heard?
Mr. Lenahan. I can answer that if no one wants to step in.
Mr. Mica. Go ahead.
Mr. Lenahan. The second rule that I mentioned there was
Subpart UUU, which was an A rule. It was never meant to be
applied to the foundry industry. We were not given an
opportunity to provide information on the rule because ----
Mr. Mica. Even though you were impacted, were you noticed?
Mr. Lenahan. No.
Mr. Mica. You were not?
Mr. Lenahan. No.
Mr. Mica. Okay.
Mr. Lenahan. And that was one of the dilemmas. We wound up
going back to EPA. We said we were never--this was never meant
to apply to us and we never had an opportunity during comment
period, never were identified, and then when we got to the
author of the rule he said, no, you guys never should have been
included in this rule. This was for industrial sand production,
not for foundries.
Mr. Mica. And you are not currently under that mandate, or
are you?
Mr. Lenahan. We are. It is actually one of those things --
--
Mr. Mica. Even though they said that you weren't noticed
and it wasn't intended to apply, they have made no exception?
Mr. Lenahan. That is correct. The right hand a lot of times
does not know what the left hand is doing.
Mr. Mica. Sounds typical in Washington.
Mr. Lenahan. And the enforcement arm of EPA--I want to be
delicate in how I say this, but I don't think they are really
concerned about that sometimes. We have an ability or a
capability to enforce on this whether it was meant to apply to
you or not and, doggone it, we might just do that.
Mr. Mica. Now, had you written your members of Congress on
this issue? You have?
Mr. Lenahan. Yes.
Mr. Mica. And the senators, too?
Mr. Lenahan. Yes, and I go typically to Washington, D.C. at
least once a year as part of a contingent from the metal
casting industry, and this was a Hill issue last year at our
government affairs conference.
Mr. Mica. And how does that affect you in competition or
price or whatever? What is the impact?
Mr. Lenahan. Unlike my colleague to the right, we are
impacted heavily by offshore competition. Metal casting
facilities since I entered the industry in 1987, there were
5,000 domestic foundries, and now there are about 1,900. The
reason for most of that is because regulations have pushed the
foundries outside of the U.S.
Mr. Mica. And, of course, all of them are complying with
these high standards when they manufacture or produce foundry
activities outside the United States?
Mr. Lenahan. Absolutely ----
Mr. Mica. Are products coming in very well manufactured and
adhered to with the highest standards?
Mr. Lenahan. We don't see that, and I will give you one
real quick example. A friend of mine was grilling in his
backyard and dropped a cast iron piece of his grill and it
broke on the ground, and we knew that the grill parts came from
China. He is a metallurgist, and he knew immediately what the
problem was. He took the grill sample in to the spectrometer at
the foundry, shot it, and found there was 40 times the amount
of arsenic in that cast iron grill than there was in the
domestic castings we were making onshore. So we see things like
cast iron skillets that are made offshore, as compared to lodge
manufacturing ----
Mr. Mica. So we have no control over those products that
are coming in.
Mr. Lenahan. There are no controls.
Mr. Mica. What is the biggest competition? Is it China?
Mr. Lenahan. China is probably still the largest
competition. Probably what concerns me more than anything on
that is that we make a lot of military parts, and we can't be
dependent upon a country that may or may not be friendly at the
moment to manufacture some of those parts.
Mr. Mica. Foreign source.
Mr. Lenahan. One of my customers made all the engine blocks
for the landing craft that landed on the beaches in Normandy.
If we didn't have those guys back during World War II, we might
all be speaking German right now.
Mr. Mica. So 1,900 left out of over 5,000?
Mr. Lenahan. That is just in ----
Mr. Mica. Probably the employment would be pretty
significant. Maybe we lost 30,000, 50,000 jobs?
Mr. Lenahan. I would say closer to 350,000 jobs.
Mr. Mica. Oh, wow. So a very significant impact. It seems
like there should be some way we could require certification of
some of those products that were produced under the same
standards. We are just talking now about certain and limited
standards. If we got into some of the labor requirements and
other regulatory regimes that we impose, we probably couldn't
import much of anything from those countries. Would you say?
Mr. Lenahan. I think the biggest thing that our folks tell
us is we want predictability in what we can expect down the
line. We don't have any problem competing on a level playing
field.
Mr. Mica. But it is not level.
Mr. Lenahan. It is not level. When currency is under-valued
by 40 percent, they are pegging their currency to our currency,
we know it is not level. When we see castings coming into the
United States that are cheaper than what the raw materials
cost, we know it is not level. We know there is supplementing
going on there.
Mr. Mica. So you have gone from 5,000 to 1,900 foundries.
Are we continuing to see the decline, or do you think the worst
is over?
Mr. Lenahan. There is a little bit of stabilization, and I
think one thing to remember is the guys who are running these
businesses now, they are the cream of the crop. They are
bright, smart, solid business people. They have had to be to
survive. The next round of attrition will come with the new
silica rule. There will be people who will pack up their tents.
They are small businesses. They are going to say ``I can spend
my money to fight something that is not going to work, or I can
pack up my tent and protect my family.'' I think we will lose a
bunch of businesses that way.
Mr. Mica. Well, you point out the difficulty of surviving.
I mean, we are here close to Detroit, and we have seen how
competition in manufacturing has driven a lot of business
overseas, almost caused the collapse of some of our businesses,
particularly in the automotive industry over the years. But
there are survivors, 1,900 in your business. I was very pleased
to drive by the Ford operations on my way in and seeing that
they are also surviving. But it is very tough, especially when
you have the rules and regs stacked against you.
Mr. Lenahan. If I could make one other brief comment?
Mr. Mica. Yes.
Mr. Lenahan. People assume that our industry is a dirty
industry, heavy industry, and we are not. Our plant runs on
renewable energy to actually clean the foundry sands, to
repurpose them, and the foundries that we work with today, what
is leaving their back door is being recycled at a rate of over
90 percent. So anything that they are discarding is going out
at 90, 95 percent. The best households in the United States
with regard to recycling are 20, 25 percent. So I think that is
something also to remember.
These are jobs that are important. They are actually green
jobs. A lot of the products that we are making are from
recycled materials also. That washing machine you put on your
front lawn to discard, that is being re-melted and repurposed
into a casting.
Mr. Mica. Very good.
Mr. Kligman, you talked about the new avenue the
Administration is taking to change the definition of Federal
involvement in water and the definition of wetlands and its
impact. That is kind of interesting because I chaired the
Transportation Committee and served as the Republican leader
for a number of years, always trying to keep this at bay.
People don't understand the significance of unraveling the
current definition, which only gives the Federal Government
authority over navigable bodies of water. It would unravel all
kinds of rulings, interpretations, and dramatically expand the
involvement of the Federal Government, probably put a lot of
your folks out of business.
What are you all doing to weigh in on this with the
Administration? The route they are taking now is the regulatory
route, and we haven't been able to do anything in Congress. But
what actions are you taking? I know you are testifying today.
Mr. Kligman. Yes, sir, and I can have our staff provide you
with ----
Mr. Mica. Have you written in on the rule, the proposed
rule?
Mr. Kligman. I don't have specific knowledge on that. I do
have Forcewall, who is our legislative affairs representative.
If you are interested in ----
Mr. Mica. I would like to know, and I would like to know if
you have submitted either to the Secretary and to your
representatives.
The problem we have is there are so many new people in
Congress, too, who don't understand the implications of this
change. They have gone down the avenue of trying to change this
legislatively, and it failed. Now they are coming in the back
door through regulation.
But the consequences are pretty dramatic. You get the
Federal Government into this area, it is not just a question of
them having a new regulatory regime and an expansion of it, but
you are changing years and years of law, litigation, rulings,
which would all unravel, and you would put all kinds of real
estate at risk in the future.
But I appreciate your being with us, but I think it is
important that you and every state organization, and even
individuals, weigh in on this, because you are going to get
slammed pretty hard if this goes into effect.
I think we have now carried probably 168 bills that are
just sitting in the Senate. They won't move any of them, and
some of them, when they pass these regulations, the only way to
undo them--well, there are two ways. One is through the
Congress passing a law. Well, we can pass all we want in the
House, and they sit in the Senate and nothing happens.
The second is through court, and they very cleverly--I
don't know if you watched this. They packed the Federal
District Court of Appeals in Washington. Part of the reason
that we had this brouhaha in the Senate about going to 51 votes
rather than 60 votes for approval of some of the appointments
was directed at packing the District Court of Appeals. It had a
4-4 sort of balanced approach of judges, and the Obama
Administration, the President added three new judges there to
pack the court. So if you can't pass a law to overturn the
regulation, your recourse as an organization, an individual,
even folks in Congress could go to court. But most regulations
are promulgated from the Federal level in Washington, and your
venue of recourse is the Federal District Court of Appeals. So
once you pack that, which they have done, they have succeeded
in negating the 60-vote rule. They have appointed the three
judges. Now you have no other recourse because they cut off
your judicial recourse.
So we are reaching a pretty serious situation in trying to
stem the tide of some of these rules. This one is particularly
ominous for the future of real estate building, a whole host of
areas that could be very dramatically impacted. So I would just
encourage you, and if you do have something you could provide
to the committee in what you have done, I would like to see a
copy of that, because we can also use that, and hopefully you
are contacting your senators, too.
Mr. Kligman. Sir, if I may?
Mr. Mica. Yes.
Mr. Kligman. On your point, on a practical basis as well,
if you had a ditch, for example, that filled up with spring
rains here in Michigan for a month or two months a year, that
could be categorized as a tributary.
Mr. Mica. Well, I have heard everything--a puddle in the
backyard, pools.
Mr. Kligman. Right. And then the permitting involved, and
the time and exposure, it is not manageable.
Mr. Mica. Well, again, it is the responsibility of Congress
to try to change the law, but the votes aren't there right now.
Again, we don't have recourse through the courts.
You talked about the impact of $2,500 per home and actually
pricing 3,100 people in Michigan out of that. Can you elaborate
a little bit more?
Mr. Kligman. Well, we can provide the study for your
review. But as costs are impacted nationwide, but particularly
here in Michigan where we had such a prolonged downturn in the
economy and it was devastating to the housing industry as well,
the consumers are still very sensitive to cost. We, as a small
volume builder, I still feel tremendous downward pressure on
pricing from the consumers. And as we have costs going up, the
question is who is willing to absorb them. If the consumer is
not, then it either prices them out of the home or as a
business person I have to make a choice of saying, okay, I am
going to absorb that cost. But if I don't have margins and my
risk goes up, I can hire fewer people, create less job
opportunities. So there is a direct correlation with cost and
affordability, opportunities for people and job creation.
Mr. Mica. If you could provide us a little bit more detail
----
Mr. Kligman. Certainly.
Mr. Mica.--for the record on the basis of your estimates
there.
Then finally, I think you talked about the OSHA Fall
Protection Rule 13563. Now, has that gone into effect?
Mr. Kligman. The standard is now being in effect. Yes, sir.
Mr. Mica. And that is anything over 6 foot?
Mr. Kligman. Six foot from the lower level. And where it
becomes impractical, I can give you just a couple of quick
examples. If you had a low-pitched garage roof, your personal
fall protection system requires you to tie off over your head.
You can be standing at the edge of the roof and not have
anything over your head with a low-pitched roof. So the code
would require that you build a guardrail around the perimeter,
and the cost and time involved to do that would be greater and
more expensive than the tear-off for the roof. So again, the
consumer is negatively impacted with that.
Mr. Mica. Well-intended idea, but from a practical
implementation ----
Mr. Kligman. But on a practical level ----
Mr. Mica.--it is costly.
Mr. Kligman. Yes, sir.
Mr. Mica. It is not that effective.
Mr. Kligman. Yes. And trusses, as well. You know, you need
a tie-off point. OSHA is suggesting that you assemble all the
trusses on the ground and get a large crane to carry it up, and
that is not typical on residential construction. I have a 40-
foot-wide lot I am building a house on right now. I don't have
physical room to assemble trusses on the ground. And even if I
could get the crane and the client was willing to pay for that
extra fee. So there are times when it is just not practical.
Mr. Mica. All right. I appreciate your testimony.
I want to yield now to Mr. Bentivolio.
Mr. Bentivolio. Thank you very much, Mr. Chairman.
Mr. Kligman, I want to clarify. If you order trusses--I am
pitching this. I used to be in the home-building business. So
you have trusses. The crew will lift them up, or you will have
a crane lift one at a time. You will set them in place. You
will put stringers to hold them in place and straighten them
horizontal; correct?
Mr. Kligman. Correct.
Mr. Bentivolio. Twenty-four inches on center, 18 inches on
center, something like that. So right now, though, you are
telling me, if I understand this correctly, you have to lift up
all those trusses to ----
Mr. Kligman. To comply, they are requiring a tie-off point,
and you don't have that to start. So they are saying assemble
it down and bring it all up in one ----
Mr. Bentivolio. You get pre-made trusses, right?
Mr. Kligman. Correct, and there is conventional frame as
well. But for a pre-made example, correct.
Mr. Bentivolio. Okay. So the pre-made trusses are already
assembled. You put them up one at a time?
Mr. Kligman. Correct. But even to start and to be working
up there, you are not able to meet the requirements at that
point. So it is kind of a chicken-and-egg kind of scenario. So
with strict conformance, even despite trying to make best
efforts, there is risk that you are not conforming, and some of
their solutions or proposed solutions aren't practical for our
industry and are very cost prohibitive.
Mr. Bentivolio. So what would you do in conventional
framing? You put the ridge board up and then you ----
Mr. Kligman. Really, again, it comes back to a challenge of
compliance at inception, at commencement, and it becomes very
difficult to comply under certain circumstances.
And again, the association and my company as well, we are
all in favor of safety, and it is important, and our trades
feel the same. However, we are trying to be practical in that
approach as well.
Mr. Bentivolio. Mr. Lenahan, correct?
Mr. Lenahan. Yes.
Mr. Bentivolio. You said there were 5,000 foundries in the
United States, and we have quite a few small foundries here in
Michigan, especially in the 11th Congressional District and on
Haggerty Road. There are a couple of companies that have a
small foundry for making prototypes; correct?
Mr. Lenahan. I am not familiar with that particular
operation. But the 5,000 number is what there were domestically
in 1987. Now there are about 1,900.
Mr. Bentivolio. And what concerns me is a personal
experience. A military vehicle, an N-270 rocket launcher
transmission was manufactured in a foreign country, and they
delivered the transmissions to be installed in these vehicles,
and then after I think it was less than 25 miles in travel time
the transmission failed, and we knew it was going to fail
before they replaced them. They said it was made from cheap
steel.
What is the difference between--I don't understand. What is
cheap steel versus American-made, Michigan-type steel?
Mr. Lenahan. If you picture any kind of molten metal, it is
made with speck, almost like a cake mix. So there are certain
elements in the metal that add strength. I have seen other
examples where brake rotors, for example ----
Mr. Bentivolio. Brake ----
Mr. Lenahan. Brake rotors on your car that keeps your car
from stopping, when those are not made to a certain
specification, if they are made from the wrong flavor, for
example, of iron or steel, whatever, but in the brake rotors
case iron, the brake, due to the coefficient of friction, will
not stop, and we have seen brake rotors that have come over
that have been counterfeited with a company name in Wisconsin
that would not actually stop a vehicle. So we see problems like
that as well. That is not something that has been seen just
once.
Mr. Bentivolio. And those foundries, those small foundries
that make prototypes and some of our parts, actually are
encased--that heating thing is encased with a fire brick that
your company makes. Is that right?
Ms. Kaboth. We used to, yes.
Mr. Bentivolio. I am trying to look at this from a national
defense point of view, because this used to be the arsenal of
democracy. Welcome to Michigan. This used to be, and it really
concerns me. We have lost a lot of machinists in the last 10
years because of the recession. We are not training people for
these very important jobs, because once you make a casting and
the sand comes out and you re-use that sand--is that correct?
Mr. Lenahan. Correct.
Mr. Bentivolio. Okay. But once the casting is made, you
then send it to a machinist.
Mr. Lenahan. Usually, yes.
Mr. Bentivolio. And he has specific requirements and
specifications he has to machine that down, and we are losing
those, too. So we are actually not only losing, because of
these regulations that are forcing businesses out of business--
our national defense becomes at risk, right?
Mr. Lenahan. That is correct.
Mr. Bentivolio. Very good.
Mr. Lenahan. And those are not businesses that you can just
start up in 30 or 60 days.
Mr. Bentivolio. Right. It is a lot of money to invest in a
foundry.
Mr. Lenahan. Not to mention permitting.
Mr. Bentivolio. Not to mention ----
Mr. Lenahan. Permitting, back to regulations again.
Mr. Bentivolio. The uncertainty associated with Obamacare
is a concern for many people across the country. What are you
hearing from your employees and members of your business
community?
Can we start one at a time?
Mr. Fisher, would you like to begin?
Mr. Fisher. I would be more than happy to, Congressman. The
Affordable Care Act, Obamacare, has been a detriment. In our
industry, we are in the process of conducting a statewide
survey on that very issue. And, in fact, most of our member
companies have responded that it is having a negative effect
not only on their companies, but I think it is important to
remember that there is a trickle-down effect, if you will.
So in the construction industry, we build for clients, and
when asked has Obamacare affected your clients, nearly 100
percent of our membership have responded yes, it is affecting
their client base. So that, therefore, by affecting their
client base, it means that those companies are maybe not able
to expand as they would like. But it also means that our
companies in the construction industry are likewise not able to
access some work opportunities, and it is all because, again,
of Federal regulations.
So we are seeing it, and I think it is important to
remember that it affects more than just what is on the surface
and that there is this domino effect as well from Obamacare, as
well as any other regulation that it has.
Mr. Bentivolio. Ms. Kaboth?
Ms. Kaboth. So far, we have not had a direct result or a
direct impact from Obamacare. However, I expect one in a few
years in the price of our medical insurance. We provide very
good insurance for all of our employees. We pay 90 percent,
they pay 10 percent, and our rates so far have not gone up.
However, I don't believe that the mandate has been in effect
long enough for it to really affect our rates. Now, in the next
two to three years, I expect our rates to go up dramatically,
and that will seriously impact our operating costs, but how
much is anybody's guess at this point.
Mr. Bentivolio. Uncertainty again.
Ms. Kaboth. Yes.
Mr. Bentivolio. Mr. Lenahan?
Mr. Lenahan. Over the last four years, the cost to cover an
employee and his family or her family, $800 per month to $1,777
per month, and that is with the reduction on the co-pay for
pharmacy, from $20 to $40 per prescription. So, a substantial
increase, and that impacts our ability to hire people.
Mr. Kligman. And personally as a small-volume company, we
subcontract the majority of our work. So I don't have as
profound an effect personally. However, speaking with some of
our suppliers and subcontractors that have direct employees, we
are seeing similar feedback to what people have testified to,
that either they are increasing their deductible amount, which
is a burden on the employee, or they are taking additional
costs on the prescription side.
Mr. Bentivolio. Can we talk a little bit about the
uncertainty? A lot of people don't seem to understand it. When
I talk to my constituents, they may be employed, but for a
business owner, we often are asked to provide a business plan,
and those business plans require forecasting for the next three
years, right? Am I correct? In a business plan. So how does
that uncertainty affect your business plan for the next three
years when it comes to these regulations, as well as some of
the additional burdens placed on businesses, both small and
large? That uncertainty, how does that really affect you? Can
you talk a little bit about that, that uncertainty?
Mr. Kligman. Mine personally, I look at our positioning of
land acquisition, commencement of inventory homes if we don't
have a custom buyer at that time, and without a clear path
looking forward, or at least some sense of improvement and
continuity and not restrictive burdens and greater impact to
cost, it is difficult to make those investments. It is a high-
risk, highly leveraged business, and high exposure, and without
the ability to comfortably forecast returns and to make hiring
decisions, to generate job opportunities for all of the
suppliers and subcontractors that impact housing, uncertainty
is a huge weight.
Mr. Bentivolio. Do you build spec homes primarily?
Mr. Kligman. We do.
Mr. Bentivolio. So you build them in a subdivision? You
build maybe two or three models?
Mr. Kligman. That was prior to the downturn when we were
more geared as a subdivision builder. We would buy large groups
of lots, put up a model and several inventory. We have gone
through our inventory in the subdivisions. We are now kind of
acquiring vacant land or tear-downs on an as-come basis because
our market was so devastated there weren't new developments
being put in, and as we kind of bled out the existing
inventory, now we are in a little bit of a holding pattern
which, again, negatively impacts the current supply-demand
curve.
Mr. Bentivolio. And you build for a specific price point,
right?
Mr. Kligman. A range, but yes. It tends to be more the
upper end for our company personally.
Mr. Bentivolio. And if I understood you correctly, you said
$2,500 for ----
Mr. Kligman. For a $121,000 home.
Mr. Bentivolio. It adds $2,500, which is quite a bit of a
down-payment to somebody.
Mr. Kligman. It is.
Mr. Bentivolio. Very good.
Mr. Fisher, you mentioned the NLRB's ambush election rule.
Are you aware of any other instance where a Federal regulation
requires a company to provide private information about
employees to a separate private organization?
Mr. Fisher. No, and I thank you, Mr. Chair, for bringing
that up. For brevity's sake, I didn't highlight that aspect.
Indeed, this requires--the NLRB is requiring employers to hand
over personal information about their workforce and their
workers. This includes emails, other type of contact
information, and it doesn't necessarily have to be a company
email, even a private email. And one has to question why is
this even being promoted.
Well, it is clear that the Federal Government is doing this
because there are entities out there that want employee
information for any number of purposes, in this case probably
to try to contact those employees to try to encourage them to
make a decision one way or the other when it comes to labor
organizing. It is very rare. It is unprecedented.
I would also add that not only are they doing this, the
Federal Government or the NLRB has yet to even provide a
justification as to why this proposed rule is being proposed,
which brings up significant concerns about proper promulgation
of any rule at the Federal level.
Mr. Bentivolio. So if I understand this, you just said that
the Federal Government is requiring you to turn over private
emails, employee information; correct?
Mr. Fisher. Yes, sir.
Mr. Bentivolio. We can't get that from them on some other
things.
Mr. Fisher. Without a justification as to why it is being
proposed.
Mr. Bentivolio. Say that again?
Mr. Fisher. Without providing a justification as to why
this proposal even exists in the first place.
Mr. Bentivolio. It seems to be a problem. The government
can get from us all the information about our lives, but we
can't get simple emails on other issues that this committee is
dealing with.
Can we talk about what role do acquisition land development
and home construction loans have on the home-building industry?
Can you elaborate a little more on that, Mr. Kligman?
Mr. Kligman. Absolutely. So, from a personal example, our
company used to have a revolving line of credit with several
different lending institutions, and as we either financed for
our buyers or built inventory homes, we would cycle through and
create productivity.
That has effectively gone away. That leaves the option of
either if you have the ability to finance out-of-pocket to
produce and create jobs and work and opportunity, great, but
the majority of the builders don't, and therefore they are
forced to either be forced out of the game or look at
alternative lending solutions, private investors, and
effectively you are paying premiums, higher points, higher
interest rates, and effectively acquiring a partner in the
project where margins are already compressed, and it creates
greater challenge and high risk.
Mr. Bentivolio. I remember some time ago in that business
actually teaching school. We had asked my students to go out
and do some research on all the various departments that a
builder has to associate with or come in contact with before
they even begin building a home. You might help me out here.
Not only do you have to secure a building permit, you have to
get a land use permit; correct?
Mr. Kligman. That is correct.
Mr. Bentivolio. In some communities, they want to know the
R factor for windows.
Mr. Kligman. Energy calculations, soil erosion permitting.
Yes, there is quite a variety.
Mr. Bentivolio. Okay. So if you put a 2-by-4 exterior wall,
you put four inches of insulation, the R value is 11 I think?
Mr. Kligman. Correct.
Mr. Bentivolio. It is 11. And that has been like that for
how long?
Mr. Kligman. I am a third-generation builder, so as long as
I have been involved.
Mr. Bentivolio. As long as I remember, too. If you go 2-by-
6, it is R19?
Mr. Kligman. You can increase the R value depending on
that.
Mr. Bentivolio. So here we have something we have been
doing traditionally, or builders have been doing traditionally
for three generations of builders, and the government now wants
you to fill out a form, and they are a couple of pages long, if
I am not mistaken.
Mr. Kligman. They are, and they have limited the options of
creating the same net result by using alternative methods,
increasing the efficiency of your furnaces if the window R
value--so different efficiency products that you can
effectively choose. There are companies that are trying to
legislate their products into the industry and force change so
that it benefits their company, which again creates a burden on
the consumer and forces people out of housing opportunities.
Mr. Bentivolio. And also, the homebuyer could buy a less
expensive home if they didn't have to buy all this energy
efficient ----
Mr. Kligman. Correct.
Mr. Bentivolio. And over a period of time if they want to
improve the efficiency of their home, and as their finances
permit, they can improve their situation; correct?
Mr. Kligman. Correct. And with the current code having a
13-year payback, that is quite a bit longer than the average
consumer is going to stay in their home and ever see the value
of that.
Mr. Bentivolio. And can you talk about some of the other
paperwork? I know it was about this thick a pile, and a lot of
different agencies, right?
Mr. Kligman. Yes. And the different municipalities will
have subcontracted out to agencies just to manage that, which
again drives up permitting costs. Mr. Lenahan had communicated
earlier sometimes the left hand doesn't talk to the right hand.
In government we see that in our governmental agencies just to
process a permit where there is no accountability for
coordination of the different agencies that are managing that
process. The length of time to process is extended, which
impacts cost and increases uncertainty as well.
Mr. Bentivolio. Very good.
Mr. Chairman, do you have more questions?
Mr. Mica. Thank you.
Let me go to Mr. Kligman again. The lead renovation repair
painting rule, EPA has issued a requirement on a certified EPA
renovator and that work must be conducted by an EPA-certified
firm. Now, that probably is well intended, and any renovations
to a house built before 1978 must comply.
I am told that the practical implications are quite
different because the biggest percentage of folks are not using
qualified individuals. What is happening as a result of that
rule from your experience? Could you tell us?
Mr. Kligman. Sure, and that is a great question. So the
majority of the homes constructed before 1978, over 38 million,
88 percent of those homes do not have the targeted at-risk
group that this rule was written for, which is pregnant women
with children under 6. So the purpose of that rule is to
protect that group. The majority of the homes prior to that
time do not have that, and EPA removed the opt-out ability for
a homeowner to say I am not in this target group, I don't feel
I am at undue risk, and I choose to forego the expense and cost
associated with going through this process.
What effectively happens is if I provide a proposal and I
am following the regulations, there is a cost impact to that
that is significant, not only in dollars but in time as well to
manage that, and there were people that aren't as committed to
that, or the homeowners will choose to pull their own permits
and try and do it themselves and circumvent the regulation, or
they will pull their own permit and try to bring in a
contractor on the back end and it penalizes the companies that
are trying to accommodate a rule that doesn't really add value
to the consumer.
Mr. Mica. I have some information that a survey conducted
by the National Association of Remodeling Industry shows that
77 percent of the homeowners are avoiding the rule by either
doing the work on their own or hiring non-certified contractor
fly-by-night operators or underground contractors. So that is
pretty much the case?
Mr. Kligman. I believe it is.
Mr. Mica. The practical effects of some of these rules and
regulations don't have the results they intended, it appears.
Regarding the OSHA silica proposed rule, there are several
of you that have spoken to this. Any suggestions for OSHA on
how to improve the rulemaking process?
I guess Mr. Lenahan is--contact people that may be
affected?
Mr. Lenahan. I would be glad to comment on that. I think
forming alliances is a great idea with industry and regulatory
folks. We have had alliances in the past that have produced
good results, not an OSHA example but a U.S. EPA example. The
U.S. EPA eliminated a sector strategies program several years
back where industry and agency could get together and talk
about, hey, this is a rule that is going to kill us, and here
is why it is going to kill us, and there were people from the
agency that would actually sit down. They would come out here
to the facilities. They would take a look at what you were
doing to gain an understanding, and then they would take that
back to D.C. and explain that this is why this is bad.
I think it did a couple of things. I think it helped
transfer information that was good, but it also let the folks
at the agency know that we weren't the bad guys, and then we
saw them the other way also.
What we have now is really much more of a command and
control relationship with OSHA and EPA, and I think we need to
get back to where we actually are working together. None of us
here, employers, want to do anything but protect our workers.
They are our most valuable asset. They are our friends. They
are our neighbors. They are our community members. We want them
all to go home every day. We want them to lead good lives. It
is irritating or frustrating when you feel that people don't
understand that.
Mr. Mica. Does anyone else want to comment?
Mr. Fisher?
Mr. Fisher. Yes, Mr. Chairman. I would just add that one
thing that we have seen that is frustrating is that there is
not always a demonstration of need that is fully articulated,
or even fully researched. There needs to be a demonstration of
need.
Whenever OSHA promulgates a rule, it needs to--the
decision-making process needs to be fact based and science
based. It can't simply be based on picking winners or losers
because there is a group that you may want to support for
something, again, that is not germane to employee health or
safety. There are regulations in which there could be special
interests that profit or something like that, and we need to
make sure we avoid that.
And then I would just add, and it was hinted upon, is
having that cooperative approach, working together, as opposed
to a sometimes hostile approach. In other words, the carrot
versus the stick we think seems to work very well because you
have all stakeholders who are at the table who can really work
together for the benefit of that core purpose of OSHA, which is
health and safety, fact based, science based.
Mr. Mica. Ms. Kaboth?
Ms. Kaboth. I would just like to add I agree with both
gentlemen. It would be nice to see more individualized effort
by OSHA for every industry. Instead of just making a sweeping
pronouncement saying everybody has to cut their exposure by
half, to look at each industry and say, okay, what do we need
to do here that really will improve things. That kind of
cooperative effort I think would be very well received by
business in general.
Mr. Mica. Very good.
At the conclusion here, I will first yield to Mr.
Bentivolio to see if he has any final questions or a statement.
And also to our witnesses, if there is anything that we haven't
questioned you on or that you would like to bring up before
this part of the hearing.
Mr. Bentivolio, did you have any other questions or
comments?
Mr. Bentivolio. Mr. Fisher, you mentioned that OSHA allows
union representatives to accompany OSHA inspectors on work
sites. How do business owners feel about this relationship
between government agency and unions?
Mr. Fisher. Yes. Thank you, Mr. Chairman. In February of
2013, an interpretation letter by OSHA stated that for
enforcement action, that now a union representative or a
community organizer could come onto the job site of the
company, a company that is potentially subject to unionization,
to participate in that walk-through, in that inspection, or
even in jobsite sanctions. If you have a union organizer that
is attempting to infiltrate a company and interfere with the
employee-employer relationship, it draws a distinct and
definite concern about what the actual intentions of that
person accompanying the OSHA inspector are, and it can
certainly be disruptive, and there is no need for it.
OSHA, since the 1970s, has never done this, and suddenly
there is this rule of interpretation that allows for this
unprecedented interference. Again, the actual intentions do
come into question when this occurs.
Mr. Bentivolio. Intimidation.
Regulations sometimes make no sense. Thousands of jobs
lost, homes priced out of the market or beyond the reach of
some people because of some regulations or additional paperwork
to comply with regulations that builders have been doing for
three generations. I don't understand why people, when they see
a 2-by-4 wall, they should be asking what is the insulation in
the walls, right? But they don't see that, do they? And you
have to go through--let's see. If you have a wetland in the
back, even if it is temporary during construction, you have to
put up an erosion fence?
Mr. Kligman. There is soil erosion and soil protection and
fence protection requirements depending on wetlands, and
sometimes it has to be delineated because again for short
periods of time it may not be defined as a wetland but an
inspector will say ``I want you to hire an expert and prove
it.''
Mr. Bentivolio. Do you know all the regulations for home
building?
Mr. Kligman. No, I don't.
Mr. Bentivolio. Do you have any idea how many regulations
there are for home building?
Mr. Kligman. I can't speak to that. One of our members is
very active in the codes, but he has brought in the code book
that used to be used and the stack that is used now. I will
speak from my perspective as a professional. Unless that were
your full-time focus, to just study the codes, as opposed to
being a business person and creating job opportunities and
providing services to consumers--and we have a long tradition
of very happy homeowners--it is impossible.
Mr. Bentivolio. And for the record, when he said what the
regulations used to be, he held his thumb and ----
Mr. Kligman. He actually had an old code book.
Mr. Bentivolio. Maybe three-eighths thick, three-eighths of
an inch to stack, and I think you signified about a foot-and-a-
half high, right?
Mr. Kligman. It is significant.
Mr. Bentivolio. I think that is it. I would like to thank
all the witnesses for coming today and offering your testimony.
Mr. Mica. Well, thank you again, Mr. Bentivolio, for
inviting us to Plymouth, Michigan, and for the opportunity to
conduct this hearing and hear from these witnesses.
I had one sort of general last question for all of you. In
2013, the Office of Information and Regulatory Affairs, office
of the OMB, the Office of Management and Budget, they released
a draft report discussing the benefits and costs of Federal
regulations, and they found in part that burdensome regulations
can impose significant costs on business. In the report it
stated--and let me quote from it--``If they are not carefully
designed, regulations can also impose significant costs on
businesses, potentially dampening economic competition and
capital investment.''
That release and that statement said what it just said. I
would like to ask you, do you feel that this Administration has
pursued and adopted regulations that are carefully designed, or
do you feel that they harm the economic competition and capital
investment?
We will go right down the pike, just for the record.
Mr. Fisher. I will take a stab at that, Mr. Chair. I don't
think that they have been carefully designed in particular.
When a Federal agency is in the process of promulgating a rule
without providing justification for that rule, there is
absolutely no room for that, and it is burdensome.
You stated in your opening comments that EPA regulations
have a $50 billion, with a B, price tag, just for EPA alone. To
put that into perspective, that is more than the entire
operating budget of the State of Michigan, and that is $50
billion worth of economic activity, $50 billion worth of
potential growth and job creation that is not otherwise being
put into the economy.
So there is a price tag, and it can be detrimental, and we
do have to be absolutely careful and deliberate about what we
do to make sure that regulations are sensible and needed.
Thank you, Mr. Chairman.
Mr. Mica. Again, the general question, Ms. Kaboth.
Ms. Kaboth. I listen often to politicians say we need to
get more manufacturing jobs. However, all the regulations that
I have had to comply with since I became president in 2005 are
all designed to put me out of business. The regulations don't
want you to manufacture. Nobody wants you near them. Obviously,
I have to believe what I have to comply with. But I would say,
yes, that the policies ----
Mr. Mica. You said 2005.
Ms. Kaboth. 2005. Sorry.
Mr. Mica. Well, that transcends several administrations.
Has it gotten better or worse?
Ms. Kaboth. It has gotten worse, it definitely has gotten
worse. Well, they have gotten a lot more expensive to comply
with. There were many early on that were just a matter--and for
us, we don't have nearly the paperwork as you have with
building a house because we don't add on very often. It is too
expensive and we can't afford it. But there were more
regulations, but they weren't as damaging.
Mr. Mica. And didn't potentially put you out of business?
Ms. Kaboth. Right.
Mr. Mica. Mr. Lenahan?
Mr. Lenahan. I would say look at the data, and the data
shows that four of the top five years for regulation generation
have happened under the Obama Administration. One of the five
is under the Bush Administration.
Mr. Mica. They seem to be coming out day and night.
Mr. Lenahan. The data would reflect that.
Mr. Mica. Mr. Kligman?
Mr. Kligman. I echo the sentiments, and it does seem that
there is a disconnect between the promulgation of some of these
rules and the practical application and nature and the impact
and detriment to job growth and the economy and opportunity.
Mr. Mica. Well, I want to thank all of our four witnesses.
Again, Mr. Bentivolio, he is a great breath of fresh air in
Congress. He comes from a business background.
I am not an attorney. Actually, I was a developer. In the
days I did projects, I could go into city hall in the morning,
get the permit in the afternoon. Now I think the last project I
was involved in it took six months to do the permitting, and it
just went on and on. So it has gotten pretty tough to do
business, stay in business.
And then the practical application. You see the lead, well-
intended regs, but then the consequences, people find a way to
avoid that cost and maybe endanger themselves. We may be
endangering more people the way we are doing this.
It is interesting, too, to see that nobody seems like they
are trying to avoid compliance. It is just a matter of a
cooperative and directed effort and something that can be built
on common sense, and also looking at the final results, which
is so important that you want to achieve. Particularly, I will
use Mr. Lenahan's foundry quote in many future speeches when he
testified today that we have gone from 5,000 to 1,900 in many
of those jobs. Activity and employment and economic
opportunities have gone beyond our shores. That is very
sobering. I was way underestimating. He said 350,000 jobs. That
is a serious impact.
I saw the jobs report this past week. We went down in
numbers to 6.3, but then I saw almost a million people left the
workforce. We have fewer people actually working than we have
had in 25 years, something like that, a phenomenal decrease,
which makes us less competitive, a less skilled workforce and
many people becoming more reliant on the government either in
retirement or--and then some of the things that have passed
that have encouraged part-time rather than full employment.
People are struggling now with two and three jobs. They are not
sure of their employment. If the brick factory goes down, that
is 80 people and a century of conducting honest and productive
business. Very sad.
As I drove in I saw a lot of vacant properties, which is
maybe back to do another hearing on those. But you become
concerned when you see the decline in good-paying jobs,
employment, expansion of businesses, too many of them boarded
up or closed down.
I have learned some things here hopefully we can take back.
Mr. Bentivolio is on the Small Business Committee, which is so
important to this community, the state, and the country, and
trying to keep those folks in business and employing people and
expanding.
But again, very informative, a fairly brief hearing. But we
will make this part of the record. If there is additional
information that we will submit either from witnesses, we may
have additional questions we will submit to you, or additional
information, and if you have constituents and others that want
to submit things.
Without objection, the record will be kept open for a
period of 7 legislative days.
There being no further business before the Subcommittee on
Government Operations, this hearing is adjourned. Thank you.
[Whereupon, at 10:50 a.m., the subcommittee was adjourned.]
APPENDIX
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Material Submitted for the Hearing Record
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