[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
                  H.R. 985, CONCRETE MASONRY PRODUCTS
             RESEARCH, EDUCATION, AND PROMOTION ACT OF 2015

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

                                HEARING

                               BEFORE THE

           SUBCOMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 10, 2015

                               __________

                           Serial No. 114-65
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                            
                           
                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                        
                        
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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Missouri               JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
           Subcommittee on Commerce, Manufacturing, and Trade

                       MICHAEL C. BURGESS, Texas
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee          JOSEPH P. KENNEDY, III, 
GREGG HARPER, Mississippi                Massachusetts
BRETT GUTHRIE, Kentucky              TONY CARDENAS, California
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida            FRANK PALLONE, Jr., New Jersey (ex 
SUSAN W. BROOKS, Indiana                 officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)




  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     2
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     3
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     4

                               Witnesses

Ellen Herbst, Chief Financial Officer and Assistant Secretary for 
  Administration, U.S. Department of Commerce....................     5
    Prepared statement...........................................     8
    Answers to submitted questions...............................
Franklin Rusco, Director, Natural Resources and Environment--
  Energy Issues, U.S. Government Accountability Office...........    10
    Prepared statement...........................................    12
    Answers to submitted questions...............................
Major Ogilvie, General Manager, Ready Mix USA, LLC...............    37
    Prepared statement...........................................    40
    Answers to submitted questions...............................
Kate Offringa, President, Vinyl Siding Institute Incorporated....    43
    Prepared statement...........................................    46
    Answers to submitted questions...............................
Kent Waide, President, Ruby Concrete Company.....................    51
    Prepared statement...........................................    53
    Answers to submitted questions...............................

                           Submitted material

Statement of the Mason Contractors Association of Greater Chicago    66
Statement of Back Brook Masonry..................................    69
Statement of Featherlite Building Products and Acme Brick Company    72
Statement of the National Association of Homebuilders............    75



H.R. 985, CONCRETE MASONRY PRODUCTS RESEARCH, EDUCATION, AND PROMOTION 
                              ACT OF 2015

                              ----------                              


                         FRIDAY, JULY 10, 2015

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
room 2123, Rayburn House Office Building, Hon. Michael C. 
Burgess, M.D., (chairman of the subcommittee) presiding.
    Present: Representatives Burgess, Lance, Blackburn, Harper, 
Guthrie, Pompeo, Kinzinger, Bilirakis, Brooks, Mullin, 
Schakowsky, Cardenas, and Welch.
    Staff Present: Graham Dufault, Counsel, CMT; Melissa 
Froelich, Counsel, CMT; Kirby Howard, Legislative Clerk; Paul 
Nagle, Chief Counsel, CMT; Olivia Trusty, Professional Staff, 
CMT; Michelle Ash, Minority Chief Counsel, Commerce, 
Manufacturing, and Trade; Lisa Goldman, Minority Counsel; and 
Adam Lowenstein, Minority Policy Analyst.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. The subcommittee on Commerce, Manufacturing, 
and Trade will come to order. The chair will recognize himself 
for 5 minutes for the purposes of an opening statement.
    And good morning, and I want to welcome everyone to today's 
hearing on Representative Guthrie's bipartisan legislation, 
H.R. 985, the Concrete Masonry Products Research, Education, 
and Promotion Act of the 2015. This measure authorizes the 
establishment of a national checkoff program for concrete 
masonry products and directs the Department of Commerce to 
provide administrative oversight support throughout the 
implementation of the program.
    Many of us are familiar with the advertisements from 
checkoff programs that support agricultural commodities, such 
as ``Beef. It's What's for Dinner'' and ``The Incredible, 
Edible Egg.'' A unique component of these programs is that they 
are established at the request of a particular industry and are 
financed by that industry as well. Manufacturers and producers 
of a commodity agree to pay an assessment, which is then pooled 
to support a more efficient, coordinated marketing approach 
aimed at strengthening the market position of the commodity in 
the United States and in foreign markets.
    In addition to marketing and advertising expenditures, 
these funds are also used to finance research and development 
ventures that help advance modern product lines and other 
innovative uses of the commodity in question.
    Today's hearing on H.R. 985 will give the subcommittee an 
opportunity to examine the status of the concrete masonry 
products industry in the United States and abroad and to learn 
about the effectiveness of past and current research, 
educational, and promotional activities taken by the industry. 
The hearing will give us an opportunity to examine the 
potential benefits from the advancement of concrete masonry 
products in the marketplace. We will also examine the potential 
impact on other industries competing in the building material 
space.
    Additionally, I look forward to understanding how the 
Department of Commerce would fulfill its administrative and 
oversight role. I want to thank Representative Guthrie for the 
efforts to create this bipartisan bill that seeks to grow the 
economy, create jobs, and protect consumers.
    I would ask witnesses for their indulgence this morning as 
we actually--the full committee has legislation on the floor of 
the full House this morning and some members may be in and out 
during the amendment process on the Cures bill. So I thank the 
witnesses in advance for their testimony and look forward to an 
engaging discussion on this legislation.
    And I would be happy to yield to Mr. Guthrie if he has 
comments he wishes to make this morning.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    Good morning. I want to welcome everyone to today's hearing 
on Representative Guthrie's bipartisan legislation, H.R. 985, 
the ``Concrete Masonry Products, Research, Education, and 
Promotion Act of 2015.'' This measure authorizes the 
establishment of a national ``check-off'' program for concrete 
masonry products and directs the Department of Commerce to 
provide administrative and oversight support throughout the 
implementation of the program.
    Many of us are familiar with advertisements from check-off 
programs that support agricultural commodities, such as ``Beef. 
It's What's for Dinner'' or ``The Incredible Edible Egg.''
    A unique component of these programs is that they are 
established at the request of a particular industry and are 
financed by that industry too. Manufacturers and producers of a 
commodity agree to pay an assessment, which is pooled together 
to support a more efficient, coordinated marketing approach 
aimed at strengthening the market position of the commodity in 
the United States and in foreign markets. In addition to 
marketing and advertising expenditures, those funds are also 
used to finance research and development ventures that help 
advance modern product lines and other innovative uses of the 
commodity.
    Today's hearing on H.R. 985 will give us an opportunity to 
examine the status of the concrete masonry products industry in 
the United States and abroad, and learn about the effectiveness 
of past and current research, educational, and promotional 
activities undertaken by the industry. The hearing will give us 
an opportunity to examine the potential benefits from the 
advancement of concrete masonry products in the marketplace. We 
will also examine the potential impact on other industries 
competing in the building materials space.
    Additionally, I look forward to understanding how the 
Department of Commerce would fulfill its administrative and 
oversight role.
    I thank Representative Guthrie for his leadership on this 
issue and his efforts to create a bipartisan bill that seeks to 
grow the economy, create jobs, and protect consumers. I would 
ask the witnesses for their indulgence this morning as we have 
a very important Cures bill on the floor and many of our 
Members will be in and out. I thank the witnesses for their 
testimonies and I look forward to engaging discussion on this 
legislation.

    Mr. Guthrie. Thank you, Mr. Chairman. Thank you for having 
this hearing. And I want to thank everybody for being here 
today and am pleased to support H.R. 985.
    This an issue that my colleagues and I have worked on for 3 
years, and I would especially like to thank my friend from 
Florida, Congresswoman Kathy Castor, who has worked very hard 
on this effort. The bill is truly bipartisan, with over 160 
cosponsors.
    I am sure that just about every member of this 
subcommittee, maybe every Member of Congress has heard from 
concrete mason producers or contractors in their respective 
districts. Most of these businesses are small, locally owned, 
and so they are greatly entwined with their communities and 
would stand to benefit greatly from this program.
    H.R. 985 is a bipartisan approach to creating a commodity 
research and education program and will allow for nationwide 
cooperation and accelerated job growth. By allowing block 
producers to pool their resources, these local manufacturers 
will have a way to improve their products, resulting in 
increased energy efficiency and safety and increased marketing 
options.
    I want to thank the subcommittee chairman for bringing this 
important legislation before the subcommittee, and I encourage 
my colleagues to support this bill. And I yield back to the 
chairman.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes the subcommittee ranking member, Ms. 
Schakowsky of Illinois, for 5 minutes for an opening statement, 
please.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman, for holding this 
hearing on H.R. 985, the Concrete Masonry Products Research, 
Education, and Promotion Act. I look forward to hearing from 
our witnesses on this legislation.
    Let me apologize at this point. I am going to leave for a 
very short time to go to the floor on an amendment that I am 
proposing.
    Commodity checkoffs have been used for decades to support 
the sales and improvement of many products. So far, all of 
those programs have been overseen by the USDA or Department of 
Energy, from ``Got Milk'' to cotton, ``The Fabric of Our 
Lives.'' We are all familiar with these programs and the 
products they promote.
    With the creation of softwood lumber checkoff, other 
building industries, like hardwood lumber natural stone, have 
made efforts to create their own checkoff program, seeking 
parity with other building materials. H.R. 985 would create a 
concrete masonry checkoff program at the Department of 
Commerce.
    Over the past few years I have heard regularly from the 
concrete masonry industry contractors, workers, and my 
colleagues about the importance of a checkoff program. Just 
yesterday I met with a constituent named Jim O'Connor, who has 
worked tirelessly to advance this bill. Advocates stress that a 
checkoff would support jobs, improve the quality of concrete 
products, and reduce adverse environmental impacts of concrete 
production. I am very interested in pursuing these goals, and I 
look forward to hearing from the industry representatives about 
how this legislation would get us there.
    I also want to make sure that the Commerce Department, 
which has never managed a checkoff, has the resources and know-
how to oversee this kind of program. I want to learn from the 
Government Accountability Office about the pitfalls of check-
offs and how those can be avoided. And I want to understand the 
perspective of those representing other building materials. I 
look forward to hearing the testimony of our nonconcrete 
industry witnesses today to better understand those issues.
    I think we all share the same objectives: To grow jobs, 
improve the quality and safety of the building materials we 
use, and heighten consumer awareness. I want to make sure that 
this legislation is successful in leveraging all of those 
benefits while limiting any negative impacts that might be 
anticipated. I know that my colleagues share that goal.
    Again, I look forward to hearing from our witnesses, and I 
yield back the balance of my time.
    Mr. Burgess. The chair thanks the gentlelady. The 
gentlelady yields back.
    The chair recognizes the vice chair of the full committee, 
Ms. Blackburn, for the purpose of an opening statement.
    You are recognized.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. And I want to 
thank our witnesses for being here and giving their time.
    Checkoff programs, we all know how they have worked. We are 
curious about expanding this to the concrete industry and how 
this is going to work to help with jobs growth and with 
industry development.
    Now, interestingly enough, when I was in the state senate 
in Tennessee in the late 1990s I worked with a group in the 
concrete industry in our state to help found the Center of 
Excellence at Middle Tennessee State University. And it was the 
first such center that we had in the south, and it has been so 
highly successful. I was pleased to serve as the graduation 
speaker for the first graduating class from the Concrete 
Industry Management program.
    We continue to see the benefits of this. And I think, as 
you look at the advancement in this industry, the safety of 
materials, the options in concrete in these materials, that 
having a checkoff program works just hand in glove with what we 
see from the MTSU program.
    So I welcome you all. I am going to have a couple of 
questions for you. As the gentlelady from Illinois said, we 
have legislation from this committee on the floor this morning, 
so we are going to be up and down. So we ask for your 
understanding in that.
    Mr. Chairman, I yield back.
    Mr. Burgess. The gentlelady yields back. The chair thanks 
the gentlelady.
    Seeing no other members seeking time for an opening 
statement, that will conclude opening statements. The chair 
would remind members that, pursuant to committee rules, all 
members' opening statement will be made part of the record.
    I now want to thank our witnesses for being here today and 
taking the time to testify before the subcommittee. Again, 
today's subcommittee hearing will consist of two panels. 
Witnesses on each panel will have the opportunity to give an 
opening statement of 5 minutes, followed by a round of 
questions from members. Once we conclude with questions on the 
first panel, we will take a brief recess to set up for the 
second panel.
    Our first panel today consists of two witnesses, Ms. Ellen 
Herbst, the Chief Financial Officer and Assistant Secretary for 
Administration, the United States Department of Commerce.
    Good morning. Thank you for being here.
    And Mr. Franklin Rusco, Director, Natural Resources and 
Environment Energy-Issues at the United States Government 
Accountability Office office.
    We will begin our first panel with Ms. Herbst. You are 
recognized for 5 minutes for an opening statement, please.

    STATEMENTS OF ELLEN HERBST, CHIEF FINANCIAL OFFICER AND 
  ASSISTANT SECRETARY FOR ADMINISTRATION, U.S. DEPARTMENT OF 
 COMMERCE; AND FRANKLIN RUSCO, DIRECTOR, NATURAL RESOURCES AND 
   ENVIRONMENT-ENERGY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

                   STATEMENT OF ELLEN HERBST

    Ms. Herbst. Thank you. And good morning, Chairman Burgess, 
Ranking Member Schakowsky, and members of the committee. Thank 
you for inviting me to testify today on proposed legislation to 
establish a commodity research and promotion program, also 
known as a checkoff program, for concrete masonry products.
    I am Ellen Herbst. I am the Department's CFO and Assistant 
Secretary for Administration. I oversee the establishment and 
execution of departmental policies and procedures for 
administrative functions affecting program operations in 
Commerce's operating units. In my role, I seek to strengthen 
the Department's capacity to achieve its objectives, maximize 
return on program investments, and deliver quality and timely 
service.
    As part of the administration's economic team, the 
Secretary of Commerce serves as the voice of all U.S. business. 
The Department of Commerce promotes job creation, economic 
growth, sustainable development, and improved standards of 
living for all Americans by working in partnership with 
businesses, universities, communities, and our Nation's 
workers.
    The Department's ``Open for Business'' Agenda is a bold 
strategic plan and policy blueprint focused on expanding trade 
and investment, unleashing government data for economic 
benefit, spurring innovation, protecting the environment, and 
executing these priorities with operational excellence as 
careful stewards of taxpayer dollars.
    Our bureaus are hard at work every day on behalf of 
American businesses and workers. For example, the International 
Trade Administration is charged with promoting the export of 
U.S. goods and services in foreign markets and ensuring fair 
trade and compliance with trade laws and agreements. Through 
its administration of the patent and trademark laws, the U.S. 
Patent and Trademark Office protection enables the protection 
of new ideas and spurs innovation, creativity, and the 
development of new technology globally.
    The Economic Development Administration plays a critical 
role in fostering regional economic development efforts in 
communities across the Nation. And finally, with a varied 
research portfolio, world class facilities, national networks, 
and international partnerships on standard and technology, the 
National Institute of Standards and Technology works to support 
U.S. Industry and innovation.
    As we understand the bill, H.R. 985 would establish the 
Concrete Masonry Products Board upon approval of a referendum 
by producers of masonry products made from concrete. The Board 
would develop research and education programs, as well as 
programs to promote concrete masonry products in domestic and 
foreign markets. Funding for those activities would be derived 
from mandatory assessments on manufacturers based on the number 
of masonry units sold each year.
    The bill directs the Secretary of Commerce to organize and 
hold the initial referendum, produce an order, appoint the 
Board, and then would require the Secretary of Commerce to 
assume an ongoing oversight and enforcement role.
    While the Department supports the efforts of the masonry 
industry to coordinate research, education, and promotion 
activities for the industry, we have identified a number of 
questions or challenges to implementation of this program 
within the Commerce Department.
    First, although the legislation provides that the cost of 
the Department's activities in carrying out this program are 
intended to be reimbursed using assessments collected by the 
Board, it is unclear to us at this point how that process would 
work in practice.
    In addition, the Department does not currently have the 
expertise, staff, or resources to establish and administer a 
checkoff program. Such a program office would need to be 
established and located within one of the Department's 
operating units. There are no bureaus within the Department 
that currently administer a commodity checkoff or similar 
program, nor does such a program fit within the current 
mandates or mission of our operating units. And the oversight 
and enforcement responsibilities proposed by the bill, as we 
understand them, would be quite extensive.
    So, an option would be for the concrete masonry industry to 
organize voluntarily cooperative arrangements to encourage 
generic marketing, education, and research activities.
    We also note that other competing construction material 
producers might oppose the creation of such a program that 
could be viewed as unfairly favoring one type of construction 
material over another. This could led to requests from other 
competing construction material producers to establish their 
own checkoff program, resulting in an expanding number of 
checkoff programs that would be administered and housed within 
the Department of Commerce.
    I appreciate the committee's time and attention. I 
appreciate the invitation. And I welcome any questions. Thank 
you.
    [The prepared statement of Ms. Herbst follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    
    Mr. Burgess. The chair thanks the gentlelady. The 
gentlelady yields back.
    The chair recognizes Mr. Rusco 5 minutes for your opening 
statement, please.

                  STATEMENT OF FRANKLIN RUSCO

    Mr. Rusco. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, and members of the subcommittee. Thank you for the 
opportunity to discuss GAO's prior work on checkoff programs, 
and particularly some observations from two such programs, the 
Propane Education and Research Council, or PERC, and the 
National Oil Heat Research Alliance, or NORA.
    There are currently more than 20 checkoff programs for 
agricultural commodities. These programs allow industries to 
set aside a fraction of the wholesale price of these 
commodities to be used by the programs for a variety of 
purposes. Checkoff programs are typically geared toward 
increasing the success of the industries that fund them through 
activities including research and development, consumer 
education, and promotion of U.S. products, domestically and 
abroad.
    For agricultural commodity checkoff programs, USDA's 
Agricultural Marketing Service has administrative and oversight 
responsibilities and is reimbursed by the program's producer-
contributor boards for these functions.
    Authorizing language for checkoff programs varies, but 
frequently contains guidance about the prioritization of 
activities performed by the programs. For example, Congress may 
specify a minimum proportion of program funds that go to 
research and development, consumer education, or other 
functions. Authorizing language may also prohibit certain 
activities, such as lobbying.
    In 2010, GAO evaluated two such programs, PERC and NORA, 
that were authorized by Congress in the Propane Act of 1996 and 
the Oil Heat Act of 2000. These acts authorized certain 
activities, including research and development, safety 
training, and consumer education, and placed restrictions on 
other activities, including certain lobbying activities.
    Under the authorizing statutes, DOE and Commerce were given 
certain authority to implement the programs. Congress also 
specified key procedural, administrative, and spending 
requirements to administer these programs. PERC's authority 
does not sunset, but NORA's has and was most recently 
reauthorized in 2014.
    Our evaluation of PERC and NORA found that some PERC and 
NORA activities appeared to meet the requirements of the acts, 
but certain other activities, such as activities involving 
Congress or politically affiliated entities, raised issues 
about whether they were covered by the acts' specific lobbying 
restrictions. We also found that neither act provided guidance 
on what constitutes influencing legislation or elections, which 
made it unclear if PERC or NORA was meeting the intent of 
Congress.
    In addition, Congress had not specified what proportions of 
program funds would go to the three key activities. For 
example, PERC and NORA each spent a relatively small share of 
funds on research and development, 8 and 6 percent, 
respectively, despite the fact that research and development 
had been a key area of congressional interest as the two laws 
were debated prior to enactment. Because the acts lacked 
specific guidance in these areas, it was unclear whether the 
programs were doing what Congress intended.
    Finally, we found that Federal oversight of PERC and NORA 
by DOE, as called for in the acts, was limited compared to the 
oversight of agricultural checkoff programs by the Agricultural 
Marketing Service.
    Based on these findings, we suggested that, prior to 
reauthorizing NORA, Congress may wish to: one, specify any 
prioritization of activities that Congress intends to be 
undertaken; two, specify a Federal oversight role by requiring 
DOE to monitor and oversee the expenditures of the PERC and 
NORA funds; and three, to establish a specific enforcement 
mechanism and authorize DOE to refer any potential violations 
of law to appropriate enforcement entities.
    In its reauthorization of NORA in 2014, Congress took 
actions consistent with all three suggestions, thereby creating 
greater accountability and oversight for NORA. PERC, which does 
not sunset, however, has not been subject to these changes to 
date.
    I hope these observations are useful as you consider the 
Concrete Masonry Products Research, Education, and Promotion 
Act of 2015. GAO does offer assistance with legislative 
language, if that is desirable. We have some of our general 
counsel who are very versed on these programs and would be 
happy to help if we can.
    Thank you. I will be happy to answer any questions you may 
have.
    [The prepared statement of Mr. Rusco follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
    
    
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    We will move on to the question part of our hearing. I will 
recognize myself first for 5 minutes for the purpose of 
questions.
    Mr. Rusco, let me stay with you, because on PERC and NORA, 
the two checkoff programs that you used as your examples, both 
within the Department of Energy, is that correct?
    Mr. Rusco. Yes.
    Mr. Burgess. So the money that is collected, where does 
that money physically go? Does it stay in the Department of 
Energy? Does it go to the Federal Treasury? Where does it 
actually end up?
    Mr. Rusco. So as far as the money that reimburses for 
oversight, I don't know the answer to that. I can find that out 
for you in the case of DOE.
    In the case of the Agricultural Marketing Service, that 
money I believe goes directly to fund the FTEs that are used 
for that oversight and administrative activity.
    Mr. Burgess. OK. Then that funding for full-time 
equivalents for that activity, is that subject to an 
appropriation by Congress or is that just a pass-through that 
happens in the agency without Congress being involved?
    Mr. Rusco. I believe that it is the latter. And I will get 
back and verify that.
    Mr. Burgess. Yes, I would very much appreciate to 
understand what the actual flow of the dollars through the 
agencies is.
    Ms. Herbst, thank you for your testimony. If I heard you 
correctly, I think it did voice some questions about--you are 
not currently doing this type of activity. Is that correct?
    Ms. Herbst. That is correct.
    Mr. Burgess. Let me just ask you this, it is a little bit 
out of left field and I apologize for it, but does the 
Department of Commerce--you are the Chief Financial Officer, is 
that correct?--do you prepare a spending plan every year which 
is submitted to the Committee on Appropriations?
    Ms. Herbst. Yes, we do.
    Mr. Burgess. Would you have that available for the 
committee, not necessarily this morning, but could you make 
that available to us so we could look at the spending plan that 
you submitted for this past year?
    Ms. Herbst. Certainly.
    Mr. Burgess. How do you see this activity fitting into the 
spending plan as it is on going, as it is being administered 
this year? And what I am particularly interested in is the same 
questions I was asking Mr. Rusco, what happens to the dollars 
that are collected? Are they simply disbursed by the agency or 
are you required to come back to the appropriations committee 
for the allocation of those dollars?
    Ms. Herbst. Thank you for that question. Since we don't 
currently administer a checkoff program, I am not familiar with 
the answer to that question, but we could certainly also look 
into that for our particular Department's appropriations rules 
and get back to you on that.
    Mr. Burgess. Well, my interest in this is more than just 
cursory or even academic. In other instances, and having 
nothing to do with the checkoff program, but in other instances 
and other agencies it does seem that there are moneys collected 
that are then disbursed for activities that doesn't go through 
the appropriations process, and this bothers me because of our 
constitutional obligation that any funds that go to the 
Treasury need to be disbursed through an appropriations 
process.
    And I want us to be sure, if we are indeed going to set up 
a new program, from a new de novo program, I want to be certain 
that it is done correctly and in accordance with all of the 
principles that the Founders laid down for us in the 
Constitution so that the people are protected by the separation 
of powers that was intended by the Founders.
    And obviously, Ms. Herbst, you do voice some concerns. Let 
me just ask you, has the agency had any discussion about this 
as to whether or not your agency is prepared to handle the 
collection and disbursement of money in a checkoff program?
    Ms. Herbst. First, I want to make clear, we don't have a 
policy position on the bill. So our discussion of it has been 
around how you would administer the program, should it become 
law.
    As we understand it, our role would be in implementation, 
helping to set up the program and set up the Board and the 
program. And then it would be oversight and compliance and 
enforcement for our understanding of the bill. That generally 
would require expertise from our legal staff, financial staff, 
internal control staff. And while we haven't put together a 
detailed approach or plan yet, we believe it would include the 
need to have a program person who was familiar with the 
industry and promotion in the industry and so forth. So with 
have had that level of conversation.
    Mr. Burgess. Very well. I thank you for that answer. My 
time has expired. I may have one follow-up question for you 
before we finish.
    Mr. Cardenas, I recognize you for 5 minutes for questions, 
please.
    Mr. Cardenas. Thank you, Mr. Chairman. I appreciate the 
opportunity to have this dialogue before the public.
    In this 2010 report on the propane and oil heat checkoff 
programs, known as PERC and NORA, respectively, the GAO made 
some recommendations to Congress to improve accountability and 
oversight of the programs.
    Mr. Rusco, the GAO recommended that Congress specify the 
priority of the activities that should be undertaken by the 
Board. Was the recommendation followed for either PERC or NORA 
as far as you are concerned?
    Mr. Rusco. Yes. For NORA, when NORA was reauthorized in 
2014, Congress did specify that a greater proportion of the 
funds collected be spent on research and development, among 
other things.
    Mr. Cardenas. And so far has that adjustment seemed to 
prove--the follow-through on that adjustment, is it happening 
or is it too early to tell?
    Mr. Rusco. It is too early and we have not been asked to 
review it yet. So if we do, we will make that determination.
    Mr. Cardenas. OK. Do you think the concrete masonry 
checkoff program could be better if this bill clearly specified 
the priorities of the program?
    Mr. Rusco. I think we are neutral on that. It is the intent 
of Congress that if the Congress does intend for there to be 
specific guidelines, then it probably needs to be laid out 
explicitly. What we found was that with PERC and NORA they 
spent over half of their money on consumer education. And 
within that bucket, there were a lot of activities that we 
thought might not even fit the definition of that.
    Mr. Cardenas. OK. Mr. Rusco and also Ms. Herbst, some have 
suggested that this bill specify that research on ways to 
improve concrete masonry products and training for builders and 
developers should be priorities for the Board. Do you support 
the inclusion of a provision that would clarify that research 
and development and training are priorities for the program?
    Mr. Rusco. Again, we are neutral about what Congress' 
intent for the program is, but if that is to support that, then 
it might be prudent to state that explicitly.
    Mr. Cardenas. So basically, if we write language in 
legislation and our intent is not written in that legislation, 
then that would give fungibility for any organization to not 
have to follow the intent. So basically do you agree that if 
that is the legislative intent of Congress, the we should in 
fact put it in the bill?
    Mr. Rusco. It is what we found was missing in PERC and 
NORA. And then when Congress did reauthorize it, NORA, they did 
include that kind of specification.
    Mr. Cardenas. OK. So the question is to both of you, along 
those same lines for PERC and NORA, the GAO recommended that 
Congress specify the proportion of the assessment funds that 
should be spent on each activity. This bill, however, does not 
include such a provision, at least at this time. Do you support 
including this kind of language if that is the intent of 
Congress?
    Mr. Rusco. If it is the intent of Congress that there be 
certain proportions, then it would ensure greater certainty 
that that was actually done if that was included.
    Mr. Cardenas. So in other words, if an organization is 
provided with opportunities and responsibilities, but if those 
responsibilities are not specific, then they in fact are not 
doing anything wrong if left to their own interpretations, 
correct?
    Mr. Rusco. That is correct.
    Mr. Cardenas. OK. So being with what has gone on with PERC 
and NORA, and there are some criticisms of that flexibility and 
that not following the supposed intent as some people have 
described, we should be more prescriptive in this bill, if in 
fact we want the actual outlay and the actual activities to be 
more in line with what the intent is.
    Mr. Rusco. That is certainly what we found in the case of 
PERC and NORA.
    Mr. Cardenas. OK. So again, absent specific language, for 
example, even PERC and NORA aren't necessarily doing anything 
wrong per se, if one cannot point to specific legislative 
language that is prescriptive?
    Mr. Rusco. That is correct. We found that it was unclear 
whether what they were doing was actually meeting the intent of 
Congress because the language was not----
    Mr. Cardenas. In my 18 years of legislating I can agree 
that if we are not prescriptive as legislators and we write 
legislation, then we can't blame anybody for not following 
through with the intent if the intent is left out of the 
language.
    Thank you very much, I yield back.
    Mr. Lance [presiding]. Thank you very much.
    The chair recognizes Mr. Harper.
    Mr. Harper. Thank you, Mr. Chairman.
    Thank you both for being here.
    And, Mr. Rusco, if I could ask you a question. You just 
discussed that Congress should consider specifying the 
prioritization of activities it wants to be when you undertake 
a checkoff program. Is there a danger in being too specific to 
the point that we could limit the flexibility of a checkoff 
program to respond quickly and effectively to changes in the 
marketplace?
    Mr. Rusco. I think some checkoff programs provide ranges of 
proportions to be spent, so they are not rigidly specific.
    Mr. Harper. Can you get too specific, though, that limits 
that flexibility?
    Mr. Rusco. I would imagine that that is possible, yes.
    Mr. Harper. I will yield back in the interest of time, Mr. 
Chairman.
    Mr. Lance. Thank you very much.
    Ms. Castor, you are recognized.
    Ms. Castor. Well, thank you very much. Thank you for 
calling this hearing. And welcome to the witnesses.
    And, Ms. Herbst, I am a cosponsor of the bill, along with 
my colleague Mr. Guthrie. And I want to thank you for 
expressing your general support. The Department of Commerce 
mission is to help American businesses, and a lot of these 
businesses are spread out all across the country. And my 
interest has been in, because this is an industry-driven 
initiative, it is going to be voluntary, but I hear the message 
from GAO and from Commerce on the need for specifics.
    I note that in the bill it does provide certain caps that 
hopefully will address concerns raised by GAO. It says that 50 
percent of the assessments paid by a manufacturer must be spent 
on promotion, research, or education programs in the 
manufacturer's geographic area. A lot of those terms are 
defined in the bill for greater specificity.
    In addition, the statute prohibits the use of assessment 
funds to influence legislation or governmental action, which 
addresses a concern of the GAO as well in the other cases. And 
after the program's creation, administrative expenses are 
capped, cannot exceed 10 percent of the Board's income.
    Mr. Rusco, is that the type of caps on expenditures and a 
little more specificity that you are recommending generally?
    Mr. Rusco. I think when we looked at H.R. 985 in the 
context of what we found with PERC and NORA with regard to the 
specificity, the language was more similar to PERC and NORA 
than dissimilar. Let me put this a different way. There was 
less specificity in the original NORA authorization than there 
was in the reauthorization.
    Ms. Castor. And then in the other law, the Congress--there 
was no reauthorization, so the Congress has not addressed that.
    Mr. Rusco. That is correct, that remains the same.
    With respect to the other two things you recommended, the 
way that 985 is currently written with the provision that 
Commerce will review within 30 days certain activities and 
spending plans of the program, if they don't review it within 
30 days then it is deemed to have been approved. That is very 
similar also to what the original PERC and NORA language was 
and it is different than what the NORA reauthorization language 
is, which required DOE to perform administrative and oversight 
activities. Because prior to that, for some 13 years DOE had 
not performed any of those oversight or administrative 
activities.
    Ms. Castor. Right. Well, thank you very much for your 
input. I think that is very helpful.
    And I yield back the balance of my time.
    Mr. Lance. Thank you very much.
    The chair recognizes Mr. Guthrie.
    Mr. Guthrie. Thank you very much.
    And I appreciate the panelists for being here. I appreciate 
working with my friend from Florida, Ms. Castor. Mr. Whitfield 
was here earlier, I think he will be here a little later. He 
has a constituent testifying in the next panel. So I appreciate 
that.
    And as I stated earlier, this bill is important for small 
manufacturers of concrete block. And I would point out the 
nature of the product is it has heavy, it is hard to transport 
over long distances, and in turn it makes it difficult to get 
bigger. So it is a lot of small businesses in a lot of our 
communities, as a lot of us have learned over the last couple 
years.
    So an R&D program, it is difficult for a single business to 
establish a big R&D program, so it is important. And I know the 
Commerce Department, what they do is move forward. So I 
appreciate your being here. And I completely sympathize and 
understand that the questions when you are asked to get 
involved in a program you haven't been involved in before, I 
think it is fair to say we have not done this, there are a lot 
of questions that we want answers to, but I think working 
together we can make that happen.
    And I know that other agencies or other departments, the 
Department of Energy being one, has stood up boards in this 
kind of, and so there are examples of other successful 
departments doing this. I am sure the Department of Commerce 
would be willing, if this moves forward and the President signs 
it, to work with those agencies to make sure we move forward. 
If you would like to comment on that.
    Ms. Herbst. Yes, thank you. We would definitely be willing 
to learn more, understand more, work with the committee and 
with other agencies who with done this before to ensure that we 
discharge our responsibility as well.
    Mr. Guthrie. And I am sure the Department of Commerce also 
has other citizens advisory boards or those type of boards that 
are probably not a checkoff board, obviously not a checkoff 
board, as you stated.
    Ms. Herbst. That is correct.
    Mr. Guthrie. But you have certainly worked in the area with 
other boards and moving forward.
    Ms. Herbst. That is correct.
    Mr. Guthrie. As I said, I certainly sympathize and 
understand your questions, and I think all of us working 
together can make this move forward.
    And on to Mr. Rusco. Energy took the lead in--I think 
actually the other one was Commerce and Energy, but Energy took 
the lead in setting up the program. I was just wondering if 
your research could provide any insights into how the oversight 
role was fleshed out between the two departments.
    Mr. Rusco. So I think that initially there wasn't much 
either between Commerce and DOE or a collaboration between 
them. They were just kind of passing on. Since 2014, with the 
requirement that DOE set up enforcement and oversight 
activities, we have not looked at the program since then. So I 
can't really comment on how that is going.
    Mr. Guthrie. You mentioned the need for oversight and 
expenditure of funds, and I understand the burden that this 
could put on a department. Would a third-party auditor kind of 
requirement move forward, would that be something that you 
would see would be beneficial, to take some effort off the 
agency?
    Mr. Rusco. Yes, that is another thing we recommended and I 
believe was included in the 2014 reauthorization, was the setup 
of a third-party entity to essentially monitor spending of all 
the widespread state and other recipients of those funds and 
make sure that the funds were spent on activities that had been 
approved. And then that entity would then report to the 
oversight entity and therefore take some of pressure off that.
    Mr. Guthrie. Well, thank you. I really appreciate both of 
you being here thank you today, and I appreciate it.
    And I yield back.
    Mr. Burgess [presiding]. The chair thanks the gentleman. 
The gentleman yields back.
    The chair recognizes the gentleman from Florida, Mr. 
Bilirakis, 5 minutes for questions, please.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
    Mr. Rusco, the organizational structure and activities of 
the checkoff program vary. Based on GAO's observations of 
checkoff programs, is there a certain organizational structure 
that has generated more success than others?
    Mr. Rusco. I don't think we have looked at that question in 
particular. So we have not tried to compare all the different 
models and see how well they perform. Really our observations 
are just specifically about PERC and NORA and how some of the 
language in their authorizing acts allowed--well, created some 
uncertainty about whether the spending was being done according 
to Congress' intent.
    Mr. Bilirakis. Last question. Are there recommendations 
that GAO has offered to agencies overseeing checkoff programs 
in the past that provide guidance on how to detect 
noncompliance with these programs?
    Mr. Rusco. We have done work over the years, over many 
years, looking at checkoff programs and have made 
recommendations over time. The recommendations that we made in 
this most recent report in 2010 were actually matters for 
congressional consideration before reauthorization rather than 
recommendations to the agency. But we had in a previous report 
recommended that DOE do more with its oversight role and they 
had disagreed with that and not implemented that 
recommendation.
    Mr. Bilirakis. OK. Thank you very much.
    I yield back, Mr. Chairman.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes Ms. Brooks from Indiana for 5 minutes 
for questions, please.
    Mrs. Brooks. Thank you, Mr. Chairman.
    Prior to coming to Congress, I was at Ivy Tech Community 
College in administration, and at that time I focused and led 
the school's strategies aimed at workforce development. One of 
my greatest interests both then and now was creating a trained 
and well-educated workforce by providing them with the tools 
and the experiences they need to grow and succeed. And I know 
how much the masonry industry affects the State of Indiana.
    Wells Concrete Masonry has operated in the Fishers 
community for over 20 years, and in Pendleton, Indiana, it has 
benefited from Swackhamer Masonry, present since 1970s. 
Masonries are vital to revitalizing both the residential, 
public, and commercial development of our State and country. 
Unfortunately, the recent downturn in the masonry industry has 
hit hard.
    In 2013, USA Today ranked block masonry as number 5 on 
their list of top 10 disappearing jobs in the USA. It is 
essential for the future of our infrastructure and our economy 
that we reverse this trend. That is why I am proud to be a 
cosponsor of this bill. By providing the masonry industry the 
ability to raise funding necessary to support research, 
education, and promotion, companies will have the needed 
resources to successfully develop, implement and manage 
programs needed to increase sales and expand markets.
    The bill makes strides toward a more prosperous America for 
Hoosiers, and I am glad we are holding this hearing today, Mr. 
Chairman, so we can learn more about it.
    With that said, Mr. Rusco, I would like to ask you, based 
on GAO's research, how have Federal agencies overseeing 
checkoff programs validated or verified the eligibility of 
producers or manufacturers to participate in such programs?
    Mr. Rusco. Most of that work would have been related to 
agricultural checkoff programs. And I don't have a very 
comprehensive list of that, of all the work we have done there. 
I could answer that question for the record, if you wish.
    Mrs. Brooks. I would be, because we often, when we think 
about checkoff programs, we typically do think of it with 
respect to agriculture products. And so I do think that would 
be helpful to know and I also think helpful to know with 
respect to this industry how it would be done.
    Do Federal agencies, if you know, that have overseen 
checkoff programs, do you know if they have an employee on hand 
with subject matter expertise on the affected commodity to help 
with the oversight and implementation or do you know much about 
that? And if not, could we please receive some information at a 
later time?
    Mr. Rusco. For the agricultural products, the Agricultural 
Marketing Service has staff that are specifically designated as 
administrative and oversight personnel for those programs. They 
are reimbursed by the programs. They develop expertise and 
knowledge about the programs and the industries over time. So 
that body has a great deal of expertise and specific knowledge 
about the industries and I think can provide very thoughtful 
oversight and administration. But it takes some time to develop 
that.
    Mrs. Brooks. Well, I certainly hope that we learn from the 
work of previous checkoff programs to advance it.
    So with that, I yield back. Thank you.
    Mr. Burgess. The chair thanks the gentlelady. The 
gentlelady yield back.
    I believe we are going to have two follow-ups, one from Mr. 
Cardenas, you are recognized for 5 minutes for your follow-up.
    Mr. Cardenas. Thank you very much, Mr. Chairman.
    I just wanted to take the opportunity to commend a business 
that is right in the middle of the largest populated county in 
the country, which is Angelus Block in LA County. It just so 
happens that it is in Sun Valley in my district. And it is 
serendipitous that that is where my father used to take me when 
he used to buy his block when we used to make block walls 
around the neighborhood where I used to work with my father.
    But I just wanted to give a shout-out to the Antonini 
family, who it has been in their family for generations. And 
they happen to be the largest manufacturer and supplier of 
concrete masonry units in all of southern California. And it 
was just wonderful to have the opportunity when I was a little 
kid to look up to my father and the former father-owner of the 
business and listen to them transact and for them to continue 
to serve the community for generations now and for me to be 
able to give service back to them by being hopefully a 
conscientious Member of Congress trying to figure out how we 
are going to make this legislation good, and hopefully we can 
bring it to fruition so that the industry could get the 
representation it is asking for.
    So I just wanted to say thank you to Angelus Block for 
their generations of work. And with all due respect, it is not 
lost on me that when you look at the concrete jungle of Los 
Angeles with 10 million people, that is a lot of masonry over 
the decades that they have been one of the suppliers of.
    So I yield back. Thank you very much, Mr. Chairman.
    Mr. Burgess. The chair thanks the gentleman.
    The gentleman yield back.
    I recognize myself for 5 minutes for follow-up.
    Along that same line, I would recognize the contributions 
of Acme Brick in north Texas. Certainly the best thing to have 
around your house, as I have known growing up, and every house 
I have lived in, in Denton County, Texas, has been indeed built 
out of Acme Brick.
    Ms. Herbst, I wanted to ask you, in your prepared testimony 
you reference the International Trade Administration. Is that 
part of the Department of Commerce?
    Ms. Herbst. Yes, it is.
    Mr. Burgess. And you note that it is charged with promoting 
the export of United States goods and services in foreign 
markets and ensuring fair trading and compliance with trade 
laws and agreements. Is that correct?
    Ms. Herbst. That is correct, yes.
    Mr. Burgess. So if this checkoff program were to proceed 
and if the moneys were to actually go out, are there 
precautions that you must take or that the Department must take 
in order to ensure that this is all done in compliance with the 
World Trade Organization, such that these checkoff moneys are 
not seen as subsidies that would unfairly put our companies 
that are competing with other companies overseas?
    Ms. Herbst. That would be correct. We are responsible for 
ensuring that we don't do anything that would put our companies 
in conflict with international law, yes.
    Mr. Burgess. And then is the converse true? Are you also 
charged with looking at materials that may be subsidized by 
other countries that are then unfairly sold in our markets in 
this country?
    Ms. Herbst. Yes, the International Trade Administration 
does have an enforcement responsibility, particularly when 
companies bring forward and ask us to investigate a potential 
case of a dumping.
    Mr. Burgess. Let me just, and this is really unrelated to 
what we are talking about this morning, but again, I so rarely 
get a chance to talk to someone from the Department of Commerce 
I want to use the time wisely.
    It came to my attention in the district that there are 
people who manufacture and install granite countertops in 
housing and apartments, but builders can actually buy the 
finished and assembled product from a Chinese source cheaper 
than they can purchase the materials and build it. So the 
competitive balance therefore goes to the foreign company.
    And their question to me is, is someone looking out for 
their best interest if a builder can simply buy a prefinished 
granite counter top from a Chinese source and there is no way 
that the guy who buys the slab and then employs the person to 
cut it and put it together, there is no way that they can be 
competitive other than of course obviously the superior quality 
of workmanship that exists with every trade in north Texas and 
Denton County in particular. Is that something your office 
would be in charge of?
    Ms. Herbst. Yes. I could offer that if we could work 
perhaps with your staff and follow up on that with them, we 
would welcome that.
    Mr. Burgess. I would welcome that. I would like that very 
much.
    That concludes my question. Is there any follow-up question 
from either side of the dais? If, not that will conclude the 
questions for this panel. I want to thank both of you for 
participating today. And we are going to take the briefest of 
recesses while we set up for the next panel. Thank you very 
much.
    [Recess.]
    Mr. Burgess. The subcommittee will come back to order. And 
I do want to thank you all for your patience. Thank you for the 
quick turnover on the panel. We do want to try to get through 
as much as we can, because there will be votes on the floor. 
And if possible, if we can conclude and not have to hold you 
over, that would be my goal.
    But I do want us to move into our second panel. We will 
follow the same format of the first panel. Each witness will 
have 5 minutes for an opening statement, and then you will have 
questions from the members.
    For our second panel I want to welcome the following 
witnesses: Mr. Major Ogilvie, the general manager for Ready Mix 
USA; Ms. Kate Offringa, president of the Vinyl Siding 
Institute; and Mr. Keith Waide, president of Ruby Concrete 
Company.
    We will begin our second panel opening statements with Mr. 
Ogilvie. You are recognized for 5 minutes for an opening 
statement, please.

 STATEMENTS OF MAJOR OGILVIE, GENERAL MANAGER, READY MIX USA, 
  LLC; KENT WAIDE, PRESIDENT, RUBY CONCRETE COMPANY; AND KATE 
    OFFRINGA, PRESIDENT, VINYL SIDING INSTITUTE INCORPORATED

                   STATEMENT OF MAJOR OGILVIE

    Mr. Ogilvie. Good morning. My name is Major Ogilvie. I work 
in Birmingham, Alabama with the USA Family of Companies. We are 
a CEMEX Company providing building materials to the 
construction industries. I am involved in many parts of our 
business, primarily in our concrete masonry operations, but 
also with our cement, aggregate, ready-mix, and other 
manufactured concrete products.
    Previously, I served as a general manager for our concrete 
masonry business, Block USA. Today I am here to testify as a 
representative of our U.S. concrete masonry industry.
    In October 2010, and after 2 years of study by members of 
our industry to determine the best way to better and more 
consistently fund important initiatives for our success in the 
future, I was honored to be asked to lead our industry's effort 
to pursue the creation of a commodity checkoff program to 
support much-needed research, education, and promotion efforts 
for our products. And I am honored to be with you today and to 
address the merits of H.R. 985.
    I would like to thank Chairman Burgess and Representative 
Schakowsky for their role in making this hearing possible. And 
I would like to thank the lead sponsors of the bill, 
Representative Brett Guthrie and Representative Kathy Castor, 
for their leadership.
    Let me outline the nature of our industry and the role that 
our product plays in construction. Concrete masonry is not just 
an American industry, it is truly a local industry. Concrete 
masonry manufacturing plants are located in every State and 
territory in the U.S.
    While the marketplace continues to be challenging today, 
the vast majority of our some 350 U.S. Concrete masonry-
producing companies remain as they have more than 100 years, as 
family-owned operations. Well over 90 percent of these 
companies are classified as small businesses, with annual plant 
sales revenue of concrete masonry products in the $2 million to 
$3 million range. It was for industries like ours that 
commodity checkoff programs were originally created, and this 
legislation does not change the bid process, the method our 
products are sold in the marketplace.
    The jobs created by our domestic concrete masonry companies 
are not outsourced overseas. All our plants are truly local 
businesses that support high-paying local jobs and generate tax 
revenues for our cities, counties, and states. The concrete 
products we manufacture are used directly in the construction 
of local schools, homes, hospitals, hotels, apartments, office 
buildings, shopping centers, and municipal buildings, mostly 
within a 75-mile radius due to the weight and the 
transportation cost. And our local impact goes well beyond the 
manufacturing plant. Also within a 75-mile radius, we create 
local jobs and revenues for our raw material suppliers, as well 
as our craft workers, the masons who install our products in 
the wall.
    Like other segments of the construction industry, business 
has been slow to rebound. Over the past 7 to 9 years, many 
plants have closed their doors and others are still fighting to 
return of profitability. A national study--thank you, Mrs. 
Brooks--by CNBC says our industry is still among the 10 worst 
hardest hit by the construction downturn. Demand for our 
products has declined and is still soft, layoffs in our 
industry hit hard, directly affecting our local economies.
    So how do we turn it around? That is why we are here today. 
We believe this program will spur and stimulate jobs as well as 
create new innovations in our industry, which will help both 
our construction industry partners and ultimately the American 
consumer.
    The public will benefit from successful implementation of 
this program through the construction more energy-efficient, 
more durable, more cost-effective, and stronger buildings. Like 
many of you, I have personally seen the impact of natural 
disasters and the devastation to homes and structures from the 
2011 Alabama tornadoes. Research and education coming from this 
checkoff program will help minimize the impact on communities 
from these events and reduce economic losses by helping 
designers, owners, and builders to make better use of concrete 
masonry attributes.
    Our industry has worked hard to share the need for this 
legislation to our local congressional representatives. Over 
the last 2 years, hundreds of our industry members, including 
our suppliers and customers, have traveled to Washington to 
tell their story, meeting with over 500 House and Senate 
offices. We have hosted over 50 Members of Congress and staff 
with plant tours in their districts. Our efforts resulted in 
267 cosponsors during the 113th Congress, and so far in the 
114th we have over 160. Our support is very bipartisan.
    Thank you for considering H.R. 985 and its ability to 
enable our industry to help ourselves, to create new high-wage 
jobs here at home, and ultimately improve our communities.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Ogilvie follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
   
    
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    Ms. Offringa is recognized for 5 minutes for an opening 
statement please.

                   STATEMENT OF KATE OFFRINGA

    Ms. Offringa. Thank you very much.
    Mr. Chairman, Ranking Member Schakowsky, members of the 
committee, thank you for the opportunity to testify today at 
this hearing on H.R. 985. My name is Kate Offringa.
    I have the honor to serve as president of the Vinyl Siding 
Institute here in Washington. We are the trade association for 
manufacturers of vinyl and other polymeric siding and suppliers 
to our industry. Vinyl siding manufacturing is a $2 billion 
industry that provides quality manufacturing jobs in this 
country. Further, our industry is an important part of the 
overall vinyl industry in the United States, a $54.5 billion 
industry with nearly 3,000 vinyl-producing facilities, 350,000 
employees, 70 percent of whose products go into buildings and 
construction.
    On behalf of our association's 44 member companies, I want 
to convey the Vinyl Siding Institute's opposition to H.R. 985. 
We oppose this bill for four primary reasons. And, again, I 
appreciate the opportunity to elaborate. Those are: One, 
concrete masonry industry is free to do collect research, 
education, and promotion of its products through its multiple 
trade associations; two, Federal sponsorship of a checkoff 
program amounts, in our view, to a subsidy for the concrete 
masonry industry; three, this bill would create a nonlevel 
playing field for competitive products like those manufactured 
by the companies that I represent; and, four, creation of a 
checkoff program for the concrete masonry industry will set a 
precedent, encouraging manufacturers of all sorts of products 
in our sector to seek similar assistance from the Federal 
Government.
    If you would, please allow me to address each of these 
points in turn. One, the concrete masonry industry, being free 
to do collective research through its trade associations: H.R. 
985 is a bill designed, and I quote from the text, ``to enable 
concrete masonry product manufacturers to establish, finance, 
and carry out a coordinated program of research, education, and 
promotion to improve, maintain, and develop markets for 
concrete masonry products.'' To quote further from the notice 
for this hearing, the intent is boosting overall sales and 
production of a particular good without reference to a specific 
brand.
    Mr. Chairman, members of the committee, I respectfully 
submit that that is the role of a trade association simply and 
well stated. We understand that the bill was introduced at the 
request of the masonry industry in part because many firms in 
that industry do not belong to organizations that contribute to 
concrete masonry research. Free-ridership is a problem common 
to trade associations in every industry. The challenge is upon 
us, as associations, to show value to our members and encourage 
their participation. The free-ridership problem is not unique 
to the concrete masonry industry and does not, in our view, 
warrant government intervention.
    Number two, Federal sponsorship of a checkoff program 
amounts, in our view, to a subsidy for the concrete masonry 
industry. As stated, the intent of H.R. 985 is to provide a 
federally sponsored mechanism that will assess the concrete 
masonry industry for funds to conduct research and promotion 
for its products. As competitors to that industry, my member 
companies oppose this bill, which will, if enacted, provide the 
concrete masonry industry with substantial, federally sponsored 
advantage over the research and promotion activities of our 
industry, thus providing the concrete masonry industry with an 
unfair, competitive advantage, in our view, over the products 
and systems of our industry.
    The report accompanying S. 429, an identical bill 
considered by the Senate in the last Congress, stated that the 
cost of the Federal Government to oversee the proposed checkoff 
program would be $4 million a year. That sum is greater than 
the annul budgets of many trade associations, including the 
Vinyl Siding Institute. And while H.R. 985, as drafted, 
provides for Department of Commerce recovery of administrative 
costs from the industry assessment, we do not believe that the 
total cost to the government can be recovered efficiently or 
effectively and are, therefore, concerned that this program 
would not be cost-neutral to the American taxpayer.
    And I would add that even if total cost recovery of 
government administrative expenses was achieved, the government 
sponsorship of the program appears, in our view, to be a seal 
of approval for the concrete masonry industry and, thereby, 
constitutes an advantage for them in our view.
    Number three, this bill would create a nonlevel playing 
field for competitive products like those manufactured by the 
companies I represent. We understand that checkoff programs are 
common in the agriculture industry. And we would like to draw a 
distinction for you between that industry and the building 
products industry as it applies to this argument. In the eyes 
of consumers, beef is generally beef and milk is generally milk 
with no obvious differentiation between producers. That ensures 
the ease with which research and promotional programs can be 
funded and implemented without causing competitive disadvantage 
to any producer. That is not the situation for the buildings 
products industry.
    There is a host of differences between concrete masonry and 
other cementitious siding products, vinyl siding, and other 
types of cladding for buildings. The inherent differences in 
our products create real competition between our categories 
within the broader building products industry. Federally backed 
promotion of one type of building product over another would 
amount to the Federal Government picking a winner in the eyes 
of the consumer is our concern. We believe the market should do 
that.
    Finally, number four, creation of a checkoff program for 
the concrete masonry industry will set a precedent, encouraging 
manufacturers of all sorts of products in building construction 
to seek similar assistance from the Federal Government. That is 
a slippery slope.
    In conclusion, the Vinyl Siding Institute and its members 
oppose H.R. 985 for the subsidized advantage it would give one 
competitor above all others. We ask that you consider the 
adverse effect passage and enactment of this bill would have on 
our industry. And we urge you to reflect on the dangerous 
precedent the legislation would set that could lead to any 
number of industries requesting similar checkoff programs.
    Thank you, once again, for the opportunity be heard today. 
And I would be happy to address any questions you have for me 
at the appropriate time.
    [The prepared statement of Ms. Offringa follows:]
    
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    Mr. Burgess. The chair thanks the gentlelady.
    The chair recognizes Mr. Waide for 5 minutes for your 
opening statement please.

                    STATEMENT OF KENT WAIDE

    Mr. Waide. Good morning. It is a privilege to testify in 
front of this subcommittee today on behalf of my company and 
others like mine. My name is Kent Waide. And I represent Ruby 
Concrete Company of Madisonville, Kentucky.
    I believe our company is like many others within the 
concrete masonry industry. We are family owned, and we are 
small. It began in 1869 and has been family operated for 146 
years. We currently have three generations from our family 
working at Ruby Concrete Company. And our business is 
recognized as one of the oldest in Kentucky. I am proud of the 
role our company has played in our region's history. We supply 
the masonry products used to build our local schools, fire 
stations, home centers, grocery stores, and other facilities 
that our community uses every day. We have also supplied public 
works projects, including roads, bridges, courthouses, and 
judicial centers. In addition, our products were used to build 
barracks for the 101st Airborne Division at Fort Campbell.
    We employ 16 people directly and create jobs both upstream 
for our vendors and downstream to our customers. Our business 
is small, innovative, resourceful, and aggressive. During the 
construction recession, we reinvested our capital to create one 
of the most modern concrete products plants in the U.S. The 
construction materials industry is changing however.
    Companies like mine struggle to compete with other building 
materials that have different demographics. We welcome 
competition. But we seek a mechanism to level the playing field 
for our commodity industry. If we manage our resources wisely, 
Ruby Concrete can invest in modern equipment and support our 
employees. But a company of my size simply does not have the 
resources to educate, research, and promote our commodity 
products throughout a broad-based market. We belong to 
associations that perform good work on our behalf.
    But I believe a commodity checkoff program is necessary if 
we are to collectively invest more fairly and support growth 
that will benefit all of us in the industry. Many of you know 
our product as a gray cinderblock. But it is actually a very 
versatile design tool. Producers like mine use a wide range of 
natural, manufactured, and recycled aggregates that are readily 
found throughout the country. Concrete blocks are strong enough 
to support tall buildings and protect families from flying 
debris in hurricanes and tornadoes. They are noncombustible and 
prevent the spread of fires in buildings. They also survive 
forest fires.
    Reinforced concrete masonry protects people and assets in 
earthquakes and wind events. It also shields against explosions 
and bullets, which is why our military uses concrete masonry to 
build mock cities in order to train soldiers in urban assault 
and terrorism defense. Concrete masonry is environmentally 
friendly. It does not rot or mold. And it is not subject to 
termites.
    It has terrific thermal mass properties that reduce the 
amount of insulation needed to meet energy codes. It can be 
made in a rainbow of colors to allow creative designs that 
integrate texture and imagination. For example, our company was 
commissioned by a university to produce a purple concrete block 
that was used to build a signature wall on the campus of the 
school with their certain colors.
    These properties, design qualities, and uses resulted 
through many years of work and testing. We have learned from 
each other and built on shared knowledge. But the old system of 
learning and communicating is ineffective in today's world. 
Technology, speed, and resources are necessary for our industry 
to advance. And we currently cannot keep up. We are losing 
ground. We are losing producers. And we are losing local jobs.
    I have spoken with many concrete block producers across the 
country. And we agree that our industry needs a new approach to 
support education and research that fosters new technologies 
and broad-based promotion. Our industry will leverage the 
outcomes of these investments to support the construction of 
high-performance, more sustainable, and cost-effective building 
solutions. That is why we urge the committee to pass the 
Concrete Masonry Research, Education, and Promotion Act, H.R. 
985. Thank you for your time. And I look forward to addressing 
your questions.
    [The prepared statement of Mr. Waide follows:]
    
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    Mr. Burgess. The chair thanks the gentleman.
    And that concludes the opening statements of our second 
panel.
    I am going to yield to Mr. Guthrie first, 5 minutes for 
your questions, please.
    Mr. Guthrie. Thank you, Mr. Chairman, for yielding. I 
appreciate that very much. I appreciate all three of you being 
here to testify, particularly Mr. Waide from our beloved 
Commonwealth. Welcome to Washington today.
    My first question is for Mr. Ogilvie and Mr. Waide. Isn't 
it true that the bidding and building process associated with 
concrete masonry construction would limit the impact on the 
resulting costs of the building?
    Mr. Ogilvie. I would agree with that statement, that 
between the building process or the bid process and other costs 
associated with building any structure would basically 
eliminate the assessment up charge. The assessment by design is 
designed to be so tiny as to not affect the overall cost of a 
building. And so we would not see that as a----
    Mr. Guthrie. I will just ask you a follow-up and then you 
both can answer. I know that you have been active in D.C. quite 
a bit on this issue. So your customers obviously know you have 
been here talking about assessments on the industry and so 
forth. Has your customers reacted to this with concern like, 
Major, you are up there doing this; is it going to add cost to 
us? What are your customers saying about it is my question.
    Mr. Ogilvie. They have. They recognize the need that our 
small industry has. And just like Kent was expanding on at the 
end of his testimony, we have got to do something for our 
industry to help transform it and get it into a modern 
technology that meets the marketplace needs. We absolutely have 
got to do that. Our customers recognize that. Our suppliers 
recognize that. We have enjoyed great support from both our 
suppliers and our masonry contractors coming up and telling our 
story to Members of Congress.
    Mr. Guthrie. Thank you.
    Mr. Waide?
    Mr. Waide. Representative Guthrie, I would concur with Mr. 
Ogilvie in that it truly is recognized as a job bill in that 
our customers need support in the education and research of 
this commodity product so that they can continue to build their 
businesses, and we can work together to do that.
    Mr. Guthrie. OK. In the text of the bill, we talk about 
funding research in your industry. Could either of you two 
elaborate on the kind of research that will be, that you 
envision would be used by the industry?
    Mr. Waide. I would be glad to address that. One example is 
actually going on at the University of Louisville right now. 
And they have a center there that is focusing on the benefits 
of thermal mass which I addressed in my statement regarding 
energy codes. Concrete masonry has terrific thermal mass 
properties that when used correctly and designed correctly can 
create a much more environmentally friendly building. And with 
all the LEEDs credits that are being sought after in the design 
community, that could add to the benefits of the buildings 
today.
    Mr. Guthrie. Do you have a comment on that, Mr. Ogilvie?
    Mr. Ogilvie. Mine are for in the marketplace, 
Representative. We have needs to help our customers, the 
designers, the builders, the developers, realize the values of 
our products. One of those and some of the low-hanging fruit of 
investments we will make, design software in the marketplace 
today, this is an item that would be $3 million, $4 million, $5 
million to purchase and would take that amount to implement 
over the course of time. But during the outreach of our 
industry's effort, we have learned that software today is out 
of date. So one of the low-hanging investments we would make 
early on is investing in updating our software because we have 
found that in the marketplace, because we don't have updated 
software, the economics against our products are working 
against us in a pretty significant way.
    Mr. Guthrie. I understand that construction practices are 
different throughout the country. We have a vast continental 
country. What you build in Florida, what you build in 
Birmingham, what you build in our mountains, it might be 
different if you are on the coast of Florida versus in our 
beautiful mountains. So how does this bill ensure that the 
funding raised will support local initiatives given that we 
have vast differences?
    Mr. Ogilvie. Well, as it was pointed out a little bit 
earlier, in the act, in the bill, 50 percent of it has to be 
spent in the region that it is raised in. So that will 
guarantee that. In looking at the investment model we are 
putting together, the regional requests will be held first, 
followed by our state, regional, and national. They will be 
done in that order so as to give the state, the local area, the 
top priority for the best investment, which, in our business, 
states, the demographics of states are very important.
    Mr. Guthrie. Thank you.
    My time has expired. I yield back.
    Thank you for your testimony.
    Mr. Burgess. The chair thanks the gentleman.
    The gentleman yields back.
    The chair recognizes Ms. Schakowsky for 5 minutes for 
questions please.
    Ms. Schakowsky. I think people listening to this debate 
would wonder how much of taxpayer dollars are involved in this 
legislation. And so I wonder, Mr. Ogilvie, in promoting 
concrete blocks and promoting your industry, are there taxpayer 
dollars, or is the industry providing the funding for the 
promotion?
    Mr. Ogilvie. Well, good question. First of all, as the 
legislation states, we are responsible for all the costs of the 
government, both administrative and personnel. We believe that 
the legislation, just because of the nature of our industry, 
meaning very concentrated in a local standpoint, will create 
additional economic activity, which will increase the tax 
revenue, both--for all layers of government, city, county, 
state and Federal. So we believe it will be a tax advantage, a 
tax increase as far as tax receipts go.
    Ms. Schakowsky. I think that is really important for people 
to understand that the taxpayer is not on the hook for 
promoting your industry.
    And, Ms. Offringa, do you see anything in this legislation 
that would prohibit yours from asking for the same kind of 
program?
    Ms. Offringa. No. I don't.
    Ms. Schakowsky. So we actually have heard from a number of 
building material industries that they may want to seek that. I 
just, I think it is important also to make the point that this 
is not to the exclusion of, but it is focused on an industry 
that has done a lot of homework and a lot of organizing and a 
lot of thought into a piece of legislation. And we may very 
well see others that, that come forward.
    Ms. Offringa. I agree with you. Thank you.
    Ms. Schakowsky. Actually, that is all I really have to say.
    So I am going to yield back my time. Thank you.
    Mr. Burgess. The gentlelady yields back.
    The chair thanks the gentlelady. The chair recognizes Mr. 
Harper from Mississippi, 5 minutes for questions please.
    Mr. Harper. Thank you, Mr. Chairman.
    Thanks to each of you for being here. And, of course, Major 
Ogilvie, it is good to see you again and reflect on all the 
years I watched you as the all-American running back at 
Alabama, two national championships and two MVPs and lots of 
big plays and pretty special deal there. You will have to tell 
us some Bear Bryant stories later.
    Hey, you'll remember the first time I saw you a couple 
years ago, I said, Number 42 right off the bat. So remember 
that. So we are glad to have each of you here.
    Mr. Ogilvie. Thank you.
    Mr. Harper. Mr. Waide, how would you address concerns that 
the assessment will disproportionately impact smaller concrete 
masonry producers?
    Mr. Waide. In disproportionately impacting them----
    Mr. Harper. Do you think there is a problem, there will be 
a problem for the smaller concrete masonry producers with this 
assessment? Do you think it is something that they will be able 
to manage?
    Mr. Waide. Everyone will be able to manage this. The 
amounts that we are looking at as far as the assessment is 
concerned, as Mr. Ogilvie pointed out, is very small in 
relation to the product costs and/or price. So it is not 
onerous in any way.
    Mr. Harper. Thank you.
    Ms. Offringa, if I could ask you a question, I am looking 
at your Web site, it lists all of your siding competitors to 
vinyl. I didn't see concrete masonry on that list. So why, 
today, is it a primary competition concern?
    Ms. Offringa. Thank you. That is a very good question. I 
appreciate the opportunity to clarify that. Our concern is that 
while this program is designed for concrete masonry and the 
product you see there, that the promotional efforts will spill 
over into general promotion of cement and cementitious 
products. And fiber cement cladding is a major competitive 
threat to vinyl siding. And a big concern of ours is the 
spillover effect where a program designed to promote concrete 
block could end up promoting concrete and other cementitious 
products generally speaking.
    Mr. Harper. If I could ask if either Mr. Waide or Mr. 
Ogilvie have a response or care to respond to that competition 
issue? Or shall I move on?
    Mr. Ogilvie. I can speak specific. I can't speak to other 
potential checkoffs or checkoffs in general, I can only speak 
to ours. What our checkoff will cover, concrete masonry 
checkoff, concrete block. It would not relate with any, with 
competition within this industry if that was your question.
    Mr. Harper. OK. Thank you.
    In the interest of time, Mr. Chairman, I am going to yield 
back.
    Mr. Burgess. The chair thanks the gentleman. The chair 
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes 
for questions please.
    Ms. Castor. I want to thank you, Mr. Chairman and Ranking 
Member Schakowsky for holding this hearing today. You are 
responding to local small businesses all across the country 
that oftentimes don't have a big voice here in Washington. So I 
want to thank you for taking the time for this committee 
hearing today. And I would also like to thank my colleague and 
cosponsor Brett Guthrie. He is a good friend. He has been a 
pleasure to work with on this bill and his staff as well. 
Representative Guthrie and I have introduced this bill together 
for the last two Congresses. And I am really pleased that we 
have garnered so much bipartisan support.
    Last Congress, we had 267 cosponsors. And this year we 
already have 159 cosponsors, including almost 30 of our Energy 
and Commerce colleagues. This bill is an industry-driven bill 
that will give concrete masonry businesses the opportunity to 
decide whether or not they want to institute a commodity 
checkoff initiative. If approved, it allows the concrete block 
industry to assess itself to pay for research and advertising 
at no cost to taxpayers.
    The concrete masonry industry is made up of primarily 
small, local businesses. Most block producers are small and 
local due to the huge weight of concrete block and the high 
cost of transportation. That is why they are so spread out all 
across the country. And virtually every congressional district 
is home to at least one producer and multiple masonry 
contractors.
    One of the reasons this bill and this initiative got my 
attention is that we are seeing an increase in the number of 
extreme weather events all across the country. And in my home 
State of Florida and throughout the entire Gulf Coast, we are 
particularly sensitive to tropical storms and hurricanes. Mr. 
Ogilvie, you mentioned the tornadoes in Alabama. You don't have 
to look back in the news pages or news reports to see reports 
of fires, floods. And I think that promotion of this industry 
is very important to making sure our structures are sturdy, 
that they can withstand the increasing intensity of these 
extreme weather events. Mr. Ogilvie, can you elaborate on the 
role concrete masonry could play in creating a more resilient 
construction environment? And how could this bill allow the 
concrete industry to better research and advertise products 
that can better withstand volatile weather conditions?
    Mr. Ogilvie. Thank you, Representative Castor.
    That is a big subject for us that requires, particularly on 
the research and the education part, resilient construction and 
the benefits that it can. That is a gigantic play for this 
industry, one of the areas that we will work toward and 
continue to work toward with this concrete masonry checkoff 
program. Wind resistance is a true value of our product. It 
offers the highest wind resistance towards tornadoes or 
hurricanes of products that are out there. And we will work 
more to not only conduct that research that will be required 
but also work within the colleges, the universities to educate 
the designers and the designers coming out in the marketplace 
to help us further resilient construction.
    Ms. Castor. In my home state we have had a real crisis 
after the active hurricane season of 2004 relating to property 
insurance. And I also see this initiative as a benefit for 
homeowners and commercial property owners all across the 
country. If they have sturdier structures, over time, they are 
going to be able to access property insurance at more 
affordable levels.
    Mr. Waide, do you have a comment on how we can promote 
resilience and stronger structures through this concrete 
checkoff initiative?
    Mr. Waide. I think you have pointed out the major areas, 
not only through the building side but also through insurance 
and that type. But the biggest thing that this is going to do 
is allow us to innovate and create stronger properties in our 
product, as well as be able to communicate that to the design 
community and integrate that into standard building practices. 
We have manufactured concrete blocks in some ways the same way 
for a long, long time. But technology has advanced to the point 
where we want to take advantage of that. And we feel like if we 
can get the funding to be able to do the research and put that 
technology to work for our industry, we can create better 
products that create better buildings. And, in turn, it is 
better for the consumer and for all of us.
    Ms. Castor. Thank you very much.
    And thank you again, Mr. Chairman, for calling this 
hearing.
    Mr. Burgess. The chair thanks the gentlelady.
    The gentlelady yields back.
    The chair recognizes the gentlelady from Indiana, Mrs. 
Brooks, 5 minutes for questions please.
    Mrs. Brooks. Thank you Mr. Chairman. I am going to turn the 
attention back to the jobs in the industry.
    And, Mr. Ogilvie, do you know how many jobs are supported 
by the concrete masonry products industry today roughly?
    Mr. Ogilvie. Yes, ma'am. The Department of Commerce does 
not distinguish between brick and block when they do their 
census. And these are 2012 numbers. But there are roughly, 
within brick and block operations, about 15,000 to 18,000 were 
the numbers that we looked at and we can estimate. And that is 
2012 numbers.
    Mrs. Brooks. And do you have any sense as to whether or not 
you expect the number to grow with the establishment of a 
checkoff program? How will a checkoff program assist with job 
creation?
    Mr. Ogilvie. Yes, ma'am. Number one, this downturn, this 
recession has hit our industry particularly hard because we are 
family businesses and to strive through that has been 
particularly difficult. We don't have access to large public 
capital. But the recession is not going to fix the challenge, 
the transformation that we see as an industry we need. We need 
to modernize our industry, be able to get up to transform it 
with new innovations, as Kent said. But we need to be able to 
transform it, like I was sharing a little bit earlier, with 
design software that helps our product be more competitive in 
the marketplace but also bring it up to code and allow us to 
change codes sooner than we have been able to do so in the past 
because the design codes, the design systems that are out there 
are penalizing our product in a wall system. This block is 
$1.20, $1.45 nationwide. And we are talking about a penny 
assessment and enough that will help us to put a design system 
that in the wall, this is anywhere from $12 to $15. We could 
save 100, 200 times that with updated design systems alone. Did 
that make sense?
    Mrs. Brooks. And thank you for bringing that block for 
demonstrative purposes today. It is helpful.
    Mr. Waide, can you share with us what are the main 
challenges facing the growth of the concrete masonry industry 
today? What are kind of the biggest challenges that you see 
that will serve as obstacles, that do serve as obstacles, you 
know, to strengthen your position in the market?
    Mr. Waide. Well, we have got a good product that is time 
tested. The problem that we face as producers is that I, 
individually, cannot put the resources in to innovate and 
research in ways to improve the product and put it in the 
marketplace today in a viable way. So that is why we seek the 
checkoff program so that we are not individually trying to do 
that, that we collectively, as an industry, can use technology 
for our benefit.
    Mrs. Brooks. Can you explain, though, how an improved 
product through R&D and through checkoff, can you explain how 
you believe that could increase job creation in the future and 
increase the strength of your industry and how we can connect 
those?
    Mr. Waide. Again, through technology, I can learn how to 
build a better block. And in that process, I can communicate 
with designers who are seeking those better performing building 
products. And if they are looking at and specify that product, 
then I create jobs because I am feeding the building industry 
with what they are needing, what they are wanting.
    Mrs. Brooks. Thank you.
    I yield back.
    Mr. Burgess. The chair thanks the gentlelady. The 
gentlelady yields back.
    The chair recognizes the gentleman from Oklahoma, Mr. 
Mullin, 5 minutes for your questions please.
    Mr. Mullin. I was just fixing to tell Mrs. Brooks she was 
using some big fancy words to describe a cinderblock a while 
ago. I have absolutely busted out numerous of those and 
actually installed a lot of them too. And I do appreciate 
bringing a visual aid. That is what we call that.
    Mrs. Brooks. I am a lawyer.
    Mr. Mullin. That helps explain that. I know. We understand. 
I am a plumber.
    Anyway, Ms. Offringa, I was wanting to kind of visit with 
you just a little bit. As a business owner, I mean, I have 
competition that enters in every day. We have companies ranging 
from plumbing all the way to banking and even a restaurant, 
which that is a whole animal in itself. And competition is 
something that comes in the market every single day. And as a 
business owner, if I am concerned that someone is going to get 
the competitive edge, it is not that I go out and I try to keep 
that competitive edge from happening; I go out and make myself 
stronger.
    So I am kind of more interested in your perspective on why 
we are trying to incentivize safety. What is a better product? 
What is a better way to do things? Is there a better option out 
there? How can we increase safety? How can we save money for 
the consumer? If your product is out there and it is able to 
compete, it is able to compete, but there is always going to be 
a need for your product. And so I guess I am kind of trying to 
get your point of view of how do you think this is going to put 
you at a negative disadvantage?
    Ms. Offringa. Thank you for your question.
    We are not afraid of competition. That is what we do, the 
industry I represent, and keep doing it. And that is the 
American way.
    But our position is that a government-backed checkoff 
program would appear to be a seal of approval on a particular 
type of product in the buildings industry and have spillover 
effect, as I said, to other types of cementitious products 
that----
    Mr. Mullin. But isn't that a far reach? You are assuming 
something that we don't even know. That is not even the point 
of this legislation.
    Ms. Offringa. Well, the position we are taking on it is 
they are free as an industry to do all those things, and they 
should do them. They should strengthen their industry and do 
R&D and promote their products. They should do them. And they 
are free to do them through their trade associations. And that 
is what we do.
    Mr. Mullin. But we have helped, as a government body, we 
have helped a lot of industries innovate. We have also hindered 
a lot too. I get that. But we, this is kind of a step that we 
try, we tried to, supposedly, create an atmosphere in 
Washington, D.C., which this is kind of counterproductive, but 
we are supposed to be creating an atmosphere for entrepreneurs 
to thrive, an opportunity for them to build, to succeed. 
Lately, through regulations, you have probably heard me rant on 
this before, we haven't. But this is one that we are.
    And I understand where the association is taking a stand. 
But I am having a hard time agreeing because I have been in 
construction my whole life. This is something that I could 
understand a point of view if it wasn't just making an 
assumption. And you are assuming that this is going to put the 
industry at a negative advantage. But can you see the positive 
in it too?
    Ms. Offringa. Well, those are our concerns. We are happy to 
compete on a level playing field.
    Mr. Mullin. No, I am not saying, I am saying can you see 
the positives? You, personally, can you see the positives in 
this?
    Ms. Offringa. Of government-sponsored programs that----
    Mr. Mullin. No, I am talking about specifically what we are 
talking about here today.
    Ms. Offringa. I understand checkoff programs and what they 
accomplish in the agriculture industry. And I think there is a 
difference when you start to apply them to manufactured 
products. And that would be something new for the Department of 
Commerce. We have concerns about the impact and how it would 
work out. But if it is something that you decide to do, then we 
think that lots of other industries are going to come ask you 
for the same thing.
    Mr. Mullin. Let me ask you, is there a way we can help your 
industry? Because I am all about creating an atmosphere for 
industries to thrive in. Is there a way that we can help your 
industry then?
    Ms. Offringa. Well, if this is a successful program, maybe 
we will be back next year and have a different conversation 
then about these types of promotional----
    Mr. Mullin. Which is my point. It is OK so often that we, 
that we help as long as we are helping me but not others. And 
if there was an opportunity that came along for us to help you, 
you would be OK with that. But what if these guys here want to 
oppose that? Do you understand my point? We are here to help. 
And we want to create an equal playing field. I am not wanting 
to pick winners and losers. So if an opportunity comes up, Ms. 
Offringa, come to my office. Let's see how we can work with 
you, OK?
    Ms. Offringa. Thank you.
    Mr. Mullin. Thank you. I yield back.
    Mr. Burgess. The chair thanks the gentleman.
    And the chair will recognize himself for 5 minutes for 
questions.
    And I do want to thank all of our members who have stayed 
with us this morning and heard from a very informative panel.
    I want to thank Mr. Mullin for educating me about gas cans. 
Over the Fourth of July holiday, I had the opportunity to buy a 
new gas can and found that I was unable to work the new nozzle 
that is required by the CPSC. So when he referenced the fact 
that sometimes we actually work at cross purposes to the 
advancement of industry, I feel your pain or I felt your pain. 
So I got the nozzle off the old gas can that had a hole in it 
and switched out. And it just leaked a little bit. And I am 
sure I probably damaged the ozone layer more than the CPSC 
intended for me to.
    Mr. Mullin, I wonder too if you would introduce your guest 
to the committee.
    Mr. Mullin. I am very privileged today to have my second 
oldest child, which I have five, my second oldest child would 
be Andrew. As adults, so often we get busy in our world, and we 
don't actually show our kids what we are doing. This job, as we 
all know, takes us away from our family all the time. And the 
last thing I want to do is have my kids grow up thinking this 
took me away from them. So I appreciate the chairman for 
allowing me to have him in the hearing today because if you 
ever want me see cry like a baby, get me talking about my kids.
    Mr. Burgess. It is so understood. I appreciate the 
opportunity to, perhaps, do that some day.
    And, Mr. Mullin, I might further ask as we get to the 
conclusion of our hearing today, if Andrew would like to take 
the chair and adjourn the subcommittee as we conclude. That 
would allow him to actually participate in the hearing.
    Before we get to that, though, I do have just a few 
observations. Ms. Offringa, it seems like I learned at a very 
young age from my mother that if you build a better mouse trap, 
the world will beat a path to your door. Was she correct about 
that? That we make a better product and people are going to 
want our product? If I understood your testimony correct, you 
are concerned that we may interfere with the mousetrap school 
of economics that was related to me by my mother. Am I 
understanding your concern correctly? We are talking about 
tilting the competitive advantage to a product that is not 
vinyl siding and doing that with a government program. I will 
be honest with you, I share that concern. I do have to wonder 
if that is the correct place and function for the Federal 
Government to be involved.
    I guess the question I would have to the other witnesses 
is, what prevents a voluntary program? And, yes, you are free 
to take money from your members and use that to the advancement 
of your product. I guess the ``trade association'' was the term 
of art that is used. What prevents that from happening now? 
What is it about your industry that makes that not a viable 
strategy?
    Mr. Waide. Thank you for the question. Our industry has 
worked for many years in trying to voluntarily put together 
innovation and advancements. The problem with our industry is 
that, as it has been well stated, there is a bunch of us that 
are spread out. And so it is hard to collaborate and get 
together, even through associations, to do that.
    But, more importantly, the dollars that it takes in order 
to accomplish meaningful innovation and research is not 
something that we can do just individually or just a few of us. 
It needs to be a collaboration of all of us. And the checkoff 
program is well established, not necessarily in this 
department, but it is well established. And it meets the needs 
of other commodity industries. And we feel like we fit well 
within the guidelines of that.
    Mr. Burgess. Yes, sir. I'm sorry. Major, please.
    Mr. Ogilvie. I am going to give you more of the history. 
First of all, we studied voluntary checkoff programs. I am 
going back to 2008, 2009. We studied grants. We actually came 
up here and met with a number of Congresses. But the seed was 
that we recognize as an industry we needed to be able to better 
fund, with all the transformation, all the needs going on in 
the construction industry, for concrete block to remain 
competitive and a viable product. So we studied those very 
quickly between grants and voluntary--voluntary can help you in 
a short-term issue, topic type thing. But in terms of the long-
term need that our industry felt like we need to move our 
product into the future, we didn't feel like voluntary programs 
were an effective way to do that. That is based on the history 
and study of voluntary programs that have been in place.
    Mr. Burgess. And I appreciate that. And I get the fact that 
your industry is widely dispersed over geographic areas. Your 
products are heavy. They are hard to transport.
    Mr. Ogilvie. Right.
    Mr. Burgess. But it also seems in the day of the Internet 
that some of those problems are, perhaps, manageable. And I 
don't know. These are just observations. I always worry about 
setting up a new government program. So I do share some of the 
concerns that were expressed today.
    And, Ms. Offringa, you used the word ``subsidy.'' And you 
heard me talk to our Commerce witness about the concern, if a 
subsidy could be seen as an unfair competitive advantage and 
whether that would get us into difficulties with the World 
Trade Organization. I guess my only other observation is if we 
set up a checkoff program, I hope that Commerce is prepared to 
do the necessary oversight to make certain that other 
industries are not adversely affected and that certainly we 
remain in compliance with all of our obligations under the 
World Trade Organization.
    Seeing that there are no further members wishing to ask 
questions, I do want to thank all of our witnesses for 
participation in today's hearing.
    Before we conclude, I would like to include the following 
documents to be submitted for the record with unanimous 
consent: A statement for the record on behalf of the Mason 
Contractors Association of Greater Chicago; a statement for the 
record on behalf of Back Brook Masonry; a joint statement for 
the record on behalf of Featherlite Building Products and the 
Acme Brick Company; and a letter from the National Association 
of Homebuilders.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I will remind 
members that they have 10 business days to submit additional 
questions for the record. I ask the witnesses to submit their 
responses within 10 business days of receipt of the questions.
    I do advise members that there is a vote on the floor.
    Mr. Andrew Mullin, if you will take the chair and read the 
last sentence that I have underlined there and then strike that 
gavel very hard.
    Mr. Andrew Mullin. Without objection, the subcommittee is 
adjourned.
    [Whereupon, at 10:45 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
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