<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:23627.wais]
THE IMPACT OF REGULATION ON U.S. MANUFACTURING: SPOTLIGHT ON DEPARTMENT
OF LABOR AND DEPARTMENT OF TRANSPORTATION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON REGULATORY AFFAIRS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
JUNE 28, 2005
__________
Serial No. 109-70
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
______
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada BRIAN HIGGINS, New York
KENNY MARCHANT, Texas ELEANOR HOLMES NORTON, District of
LYNN A. WESTMORELAND, Georgia Columbia
PATRICK T. McHENRY, North Carolina ------
CHARLES W. DENT, Pennsylvania BERNARD SANDERS, Vermont
VIRGINIA FOXX, North Carolina (Independent)
------ ------
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director/Communications Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Regulatory Affairs
CANDICE S. MILLER, Michigan, Chairman
GINNY BROWN-WAITE, Florida STEPHEN F. LYNCH, Massachusetts
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
LYNN A. WESTMORELAND, Georgia
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Ed Schrock, Staff Director
Erik Glavich, Professional Staff Member
Alex Cooper, Clerk
Krista Boyd, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on June 28, 2005.................................... 1
Statement of:
Sessions, Stuart L., vice president, Environomics, Inc.; Jeff
Melby, vice president, environmental and safety, Genmar
Holdings, Inc.; and Joan Claybrook, president, Public
Citizen.................................................... 86
Claybrook, Joan.......................................... 105
Melby, Jeff.............................................. 98
Sessions, Stuart L....................................... 86
Stidvent, Veronica Vargas, Assistant Secretary for Policy,
U.S. Department of Labor; and Jeffrey A. Rosen, General
Counsel, U.S. Department of Transportation................. 20
Rosen, Jeffrey A......................................... 34
Stidvent, Veronica Vargas................................ 20
Letters, statements, etc., submitted for the record by:
Claybrook, Joan, president, Public Citizen, prepared
statement of............................................... 107
Lynch, Hon. Stephen F., a Representative in Congress from the
State of Massachusetts:
Letter dated April 12, 2005.............................. 9
Prepared statement of.................................... 16
Melby, Jeff, vice president, environmental and safety, Genmar
Holdings, Inc., prepared statement of...................... 101
Miller, Hon. Candice S., a Representative in Congress from
the State of Michigan, prepared statement of............... 3
Rosen, Jeffrey A., General Counsel, U.S. Department of
Transportation, prepared statement of...................... 36
Sessions, Stuart L., vice president, Environomics, Inc.,
prepared statement of...................................... 89
Stidvent, Veronica Vargas, Assistant Secretary for Policy,
U.S. Department of Labor, prepared statement of............ 23
THE IMPACT OF REGULATION ON U.S. MANUFACTURING: SPOTLIGHT ON DEPARTMENT
OF LABOR AND DEPARTMENT OF TRANSPORTATION
----------
TUESDAY, JUNE 28, 2005
House of Representatives,
Subcommittee on Regulatory Affairs,
Committee on Government Reform
Washington, DC.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2003, Rayburn House Office Building, Hon. Candice S.
Miller (chairman of the subcommittee) presiding.
Present: Representatives Miller and Lynch.
Staff present: Rosario Palmieri, deputy staff director;
Dena Kozanas, counsel; Erik Glavich and Joe Santiago,
professional staff members; Alex Cooper, clerk; Alexandria
Teitz, minority counsel; Krista Boyd, minority professional
staff member; and Teresa Coufal, minority assistant clerk.
Ms. Miller. I would like to call the hearing to order.
Good afternoon, everyone. We are here today to discuss the
overall progress that the Department of Labor and the
Department of Transportation have made in responding to the
public's reform nominations that were included in the Office of
Management and Budget's 2005 Report on Regulatory Reform of the
U.S. manufacturing sector. This is the second in a series of
hearings discussing those regulations and guidance documents
that merits priority consideration because of the impact on
domestic manufacturing.
For many years it has been widely acknowledged that the
very foundation of a nation's economy is manufacturing. It is
certainly a critical component. It is a backbone of America,
because manufacturing actually creates goods. But it also
creates progress, innovation, it creates economic and human
prosperity. The manufacturing industry also helps employers and
employees which plays a role in creating.
For many years, the government has understood that we do
not actually create jobs; rather, the private sector actually
creates jobs. The role of the government has been to generate
an environment that attracts business investments and
encourages job creation. However, the manufacturing industry
has come under attack lately by the very government that once
helped to hold it together.
Even though manufacturing provides 14 million Americans
with jobs and accounts actually for 62 percent of all the
imports, domestic manufacturing has lost 2.8 million jobs
between 2000 and 2003. These are jobs that have provided a high
quality of life for Americans because of salaries and benefits.
In manufacturing of course, they are about 18 percent higher
than the rest of the private sector.
More than any other sector, manufacturers bear the highest
share of the cost of complying with regulation. At $8,000 per
employee, domestic manufacturers assume almost twice the
average cost for all the other U.S. industries. Workplace
regulations alone cost manufacturers over $2 million per firm
per year, roughly about $1,700 per employee.
Our global competitors do not have this large of a burden.
Regulatory compliance has become so burdensome that those costs
are now the equivalent of a 12 percent excise tax on
manufacturing. Such domestically imposed costs are harming
manufacturing and adding over 22 percent to the cost of doing
business in the United States. And we are not the only
developed nation with high structural costs, of course, but
these costs are higher here in almost every category. And that
22 or 23 percent is an enormous drag on economic growth and on
job creation.
The high cost of regulation, the increase in costs of
health care and the often-unwarranted tort litigation have all
altered the dynamics of domestic manufacturing. These new
dynamics have hindered the international competitiveness of
manufacturers and have constrained the demand for workers in
U.S. facilities.
Make no mistake, I certainly am a defender of regulations
that protect worker health and safety. I am a defender of
regulations that watch over consumers and safeguard our natural
resources. In fact, I have spent about three decades in public
service, and I have always thought of myself as a principal
advocate of our environment. But I do think that the common
standard must always be what is actually reasonable. And that
is the purpose of our hearing today. I am eager to have a
dialog about how best to improve Federal regulations for the
benefit of all Americans. In particular, I am hopeful that this
hearing will have a positive impact on those regulations
flagged by OMB for priority review that are still outstanding.
I am extremely troubled by the adverse effects some of
these regulations could have on our ability to remain
competitive with our key trading partners around the globe. By
acting on the combined 16 rules and guidance documents from the
Department of Labor and the Department of Transportation, I do
believe that we could be one step closer to reducing the cost
and burden on domestic manufacturing firms. The savings accrued
by reducing the regulatory burden on U.S. manufacturers could
be redirected into hiring new workers, investing in new
equipment and protecting American jobs.
Streamlining all of the unnecessary regulatory burdens on
the manufacturing sector is a powerful antidote for
reinvigorating the economy, for helping our small businesses
and certainly for the competitiveness agenda that we have here
in the United States of America, as we recognize that all of
our manufacturers are facing much different dynamics in the
global marketplace as well.
[The prepared statement of Hon. Candice S. Miller follows:]
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Ms. Miller. At this time I would like to yield to the
ranking minority member for his opening statement.
Mr. Lynch. Thank you, Madam Chair.
Again, I want to thank you for leading this whole process
and reviewing our regulatory framework in an effort to remove
unnecessary burdens on industry.
The manufacturing industry provides over 14 million
American jobs, which are critical to our economy. But as
someone who has worked in auto plants and steel mills and oil
refineries across this country, I can tell you that
manufacturing jobs can also be very tough and dangerous. But
there are significantly fewer injuries and deaths today than
just 30 years ago, because of our Federal and health safety
requirements.
Based on my own experience, I know how important the health
of the manufacturing industry is to the economy and to the
workers it employs. While I am committed to the growth of the
American manufacturing industry, I honestly believe that
exposing more workers to disease and injury will not accomplish
that goal. I must admit, as a threshold matter, that I am
concerned about OMB's approach and their activities in this
area. In reviewing the conduct of OMB, it is apparent that OMB
has created a regulatory hit list to focus on weakening or
gutting many existing health, safety and environmental
protections. This raises a lot of questions in my mind, and I
hope that we can explore them here today.
As a factual matter, I am concerned that weakening many of
these regulations will hurt workers and their families. I don't
believe that is necessary. We can have strong health, safety
and environmental protections while at the same time growing
manufacturing and the economy.
Now, I will concede that there are some regulations that we
can reform and eliminate. But I remain concerned about how OMB
and the agencies selected the regulations which we have
targeted. There seems to be a lack of transparency in OMB's
process for developing this list, and OMB solicited public
comments last year on agency regulations that should be
reformed.
But it is unclear how the relevant agencies and OMB got
from a list of 189 nominations to OMB's list of 76 priority
nominations. Accordingly, I am looking forward to hearing from
the representatives that are with us today from DOL and the
Department of Transportation about the selection process and
how they will respond to the nomination on OMB's list.
Finally, I hope we can carefully consider what weakening
each of these targeted regulations would mean to real
Americans. Two areas that I am particularly interested in: the
Department of Transportation's plan to issue proposed changes
to the hours of service rules pertaining to commercial drivers;
and the Department of Labor's plan to propose changes to the
Family and Medical Leave Act. Previous DOT rules limited the
amount of time that commercial drivers could be on the road to
10 consecutive hours with 8 hours off duty. In 2003, however,
the Department issued a new rule that actually increased the
number of permitted driving hours from 10 to 11, with a
required 10-hour break between shifts.
Madam Chair, in July 2004, the U.S. Court of Appeals for
the D.C. Circuit vacated the Department of Transportation's
rule, finding that the Department amazingly enough had not
considered the effect of their rule on driver health. Now, you
would think that would be a good place to start.
Specifically, the court deemed the final rule to be
arbitrary and capricious, because the agency neglected to
consider the driver's health as a statutorily mandated factor.
I find this unbelievable. It is my understanding that despite
this ruling, the Department recently reissued notice of
proposed rulemaking and comments and concerns--the same rule
that had been vacated by the Federal Appeals Court.
Accordingly, I am interested in whether DOT has in fact
addressed the court's primary concern and taken driver health
into account this time around.
In addition, I hope the Department of Labor will not weaken
the Federal Family Medical Leave Act. It is my understanding
that there is interest in modifying certain definitions of
serious illness and also extending the amount of time that a
person must be in recovery or disabled before an event is
eligible for FMLA consideration or inclusion.
It is an important law that protects the rights of workers
to take unpaid leave when they are suffering from a serious
health condition or when they need time off to care for a new
child or a sick family member. Under current regulations, a
serious health condition is defined in part as a condition that
requires more than 3 consecutive days of treatment and
recovery.
According to a May 26, 2005 USA Today article, one of the
proposed changes to FMLA would amend the statute's coverage to
only those illnesses that are serious enough to require 10 or
more days off. The current definition protects workers who
suffer from illnesses such as appendicitis or kidney stones or
are severe enough to require time off for treatment but do not
last for 10 days. Accordingly, the rollback to these
protections would cause employees who miss work because of a
serious illness to lose their jobs.
Madam Chair, I would like to submit for the record a letter
signed by over 200 groups, such as the National Partnership for
Women and Families, the Epilepsy Foundation, the Communication
Workers of America, the Children's Alliance of New Hampshire,
there are also some religious groups that have signed on as
well, urging the Department of Labor not to make any regulatory
changes that would undercut the protections of the Family
Medical Leave Act.
Ms. Miller. Without objection, that will be entered.
[The information referred to follows:]
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Mr. Lynch. Thank you, Madam Chairman.
The Family Medical Leave Act is just one of the important
protections that should be addressed today. It is not perfect,
and it could use some adjustment, some tweaking to make it
better and fairer to employers, understandably so. But I am
hoping to hear from Mr. Rosen and Ms. Stidvent more about the
status of all the Department of Labor and DOT nominations.
I want to thank you, Madam Chairman, again, you have been a
great leader on this issue and this whole process. I thank you
for your willingness to work with me and with the Democratic
party on this. I look forward to hearing all the testimony here
today, and I thank you, Madam Chairman, and I yield the
remainder of my time.
[The prepared statement of Hon. Stephen F. Lynch follows:]
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Ms. Miller. Thank you.
It is a practice of the Government Reform Committee to
swear in all our witnesses, so the second panel as well, if you
would also rise and then we can dispense with at the next
panel.
[Witnesses sworn.]
Ms. Miller. Thank you.
Just in the interest of moving things along, you will see
the little boxes in front of you for the witnesses there. We
ask you to try to keep your oral testimony to about 5 minutes.
If you have other testimony you want to submit for the record,
we certainly will take that of course. When you see the yellow
light, that means you have 1 minute remaining, to just give you
an idea to wrap it up and try to stay within the 5 minutes.
Our first panelist today is Secretary Veronica Stidvent.
She is the Assistant Secretary for Policy in the Department of
Labor, and she was confirmed by the Senate on December 8, 2004.
On a daily basis, some of Ms. Stidvent's responsibilities
include management and implementation of policy development,
oversight of regulations and compliance assistance strategies,
among other duties as well. Prior to joining the Department of
Labor, Ms. Stidvent joined the White House Chief of Staff's
Office, and before her White House job, she was a special
assistant to the OMB Office of Information and Regulatory
Affairs.
We welcome you to the committee today and look forward to
your testimony.
STATEMENTS OF VERONICA VARGAS STIDVENT, ASSISTANT SECRETARY FOR
POLICY, U.S. DEPARTMENT OF LABOR; AND JEFFREY A. ROSEN, GENERAL
COUNSEL, U.S. DEPARTMENT OF TRANSPORTATION
STATEMENT OF VERONICA VARGAS STIDVENT
Ms. Stidvent. Thank you. Chairman Miller and distinguished
members of the subcommittee, thank you for the opportunity to
appear before you today to discuss the Department of Labor's
progress in responding to the 11 reform nominations that were
included in OMB's 2005 Report on Regulatory Reform of the U.S.
Manufacturing Sector.
My written testimony addresses the Department's progress on
each of the 11 reform nominations. I would like to highlight
just a few of those for you now.
Regarding permanent labor certification, one commenter was
critical of the current process for certifying the
unavailability of U.S. workers for positions for which foreign
nationals are sponsored, and recommended the Department publish
final regulations that used a broader approach and streamlined
the certification process. The Department's Employment and
Training Administration published the final permanent labor
certification rule on December 27, 2004, and has implemented
the re-engineered permanent labor certification program. The
new process includes an e-filing capability and through the
utilization of technology, has reduced processing times from as
long as several years to approximately 60 days for those
applications not identified for audit.
Regarding the coke oven emission standard, two commenters
recommended that OSHA update its coke oven emission standard.
In January of this year, OSHA published Phase II of its
Standards Improvement Project, which streamlined several
provisions of the coke oven emissions standard. For example,
OSHA reduced the frequency of medical monitoring for certain
employees from semi-annually to annually after determining that
medical evidence did not support the need for semi-annual
monitoring.
The next reform suggestion pertains to hazard
communication/material safety data sheets. Several commenters
stated that these MSDSs should be prepared using a consistent
format and that the quality of information needed to be
improved. OSHA is preparing proposed guidance for the
preparation of MSDSs that will be posted on the agency's Web
site for comment in 2005 and will be completed in 2006.
In addition, OSHA has added to the spring 2005 regulatory
agenda the possible modification of the Hazards Communication
Standard to be consistent with the Globally Harmonized System
of Classification and Labeling of Chemicals.
Regarding OSHA's annual training requirements for separate
standards, one commenter observed that OSHA has separate annual
training requirements for a number of these standards, and the
commenter pointed out that EPA includes training requirements
for a number of regulations that are not always compatible with
OSHA requirements. The comment recommended that the agency
develop a single integrated training program.
The Department's May 2005 report to OMB on this referral
noted that OSHA does not actually require separate training
programs for each standard that requires such training. Rather,
employers are permitted to organize and present training in
whatever manner is most effective for the workplace involved.
The report also noted that OSHA has sought to avoid duplication
of EPA's training requirements on subjects where both agencies
have jurisdiction.
In order to further clarify training requirements and to
assist employers, OSHA plans to revise and update its
publication, Training Requirements in OSHA Standards and
Training Guidelines, before the end of 2005. These guidelines
help employers to design, implement and evaluate their training
programs to ensure that they are effective.
Regarding hazard communication training, one commenter
stated that OSHA's 2004 draft guidance on training requirements
under the Hazard Communication Standard was too complicated for
small businesses and recommended that OSHA develop a simplified
approach. OSHA anticipates finalizing the draft guidance in
2005 and expects to include a simplified approach as
recommended.
Furthermore, on hexavalent chromium, two commenters urged
OSHA to minimize the impact of its final hexavalent chromium
standard on small business. The agency is very much aware of
the concerns of small business and other stakeholders. OSHA
conducted a SBREFA panel review to focus on small business
concerns prior to publishing the proposed rule, and received
comments from many small business representatives at public
hearings held this past February.
Although under a court-ordered deadline to complete this
final rule by January 18, 2006, I can assure this committee
that OSHA will observe all the requirements applicable to the
regulatory process and will consider the issues raised by all
commenters as it develops this final rule.
Finally, there are the OSHA sling standards. Two commenters
recommended that OSHA update the sling standard to reflect the
American Society of Mechanical Engineers consensus standard.
OSHA does plan to update this sling standard as part of its
regulatory project to update standards based on national
consensus standards. OSHA is developing a guidance document on
the selection and use of slings which it plans to issue by
February 2006. This document will make it clear that slings
meeting the newer ANSI/ASME standard are acceptable.
Madam Chairman, I ask that my written testimony be
submitted for the record. I would be happy to respond to any
questions you may have.
Thank you.
[The prepared statement of Ms. Stidvent follows:]
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Ms. Miller. Thank you, Ms. Stidvent.
Our next witness is Jeffrey A. Rosen. He is the General
Counsel at the Department of Transportation. Mr. Rosen was
sworn in on December 15, 2003, and as the chief legal officer,
he has final authority over all legal questions within his
department and oversees the activities of over 400 attorneys in
the Department as well.
In the 21 years prior to his swearing in, Mr. Rosen was a
private practice attorney with Kirkland and Ellis, where he
built up extensive experience with matters pertaining to
government enforcement actions, business torts, and anti-trust,
among others. Until he joined the Department of Transportation,
he was also a professor at Georgetown University Law Center.
We certainly appreciate your attending today, and we look
forward to your testimony as well.
STATEMENT OF JEFFREY A. ROSEN
Mr. Rosen. Thank you. I am Jeffrey Rosen, General Counsel
of the U.S. Department of Transportation. I am pleased to have
the opportunity to speak with you this morning about the
regulatory review and reform efforts of the Department.
To fully appreciate DOT's regulatory review and reform
efforts and our response to the specific nominations of DOT
rules in the OMB report, it is useful to understand both the
scope of our responsibilities and the many steps we already
take to improve them or to eliminate them if no longer needed.
We take that responsibility seriously. And among other things,
DOT has been an active participant in OMB's regulatory review
efforts.
In OMB's review of the manufacturing sector, OMB asked DOT
to focus on five items. Two of those involved our Federal Motor
Carrier Safety Administration, which has among other things
responsibility for safety in the trucking area, and three of
the nominations dealt with the National Highway Traffic Safety
Administration's [NHTSA] responsibilities. NHTSA primarily
regulates automotive safety.
So let me give you a quick update on those five areas that
were the subject of the OMB nominations. I will start with the
two from the Federal Motor Carrier Safety Administration. The
first one concerned an existing rule on motor vehicle brakes.
The National Association of Manufacturers and the National
Marine Manufacturers Association have proposed that our Motor
Carrier Safety Administration consider allowing commercial
motor vehicles to use a certain type of brake, sometimes called
surge brakes, that is now authorized for consumer uses but not
for commercial uses.
The status of that is that our agency is currently planning
to publish a proposed rule on this subject in September 2005.
So we are working on the proposed rule and we will be
responsive to the OMB nomination with a Federal Register notice
that should be expected in September 2005.
With regard to the other FMCSA rule, the Small Business
Administration's Office of Advocacy raised a question with
regard to the hours of service regulation. The hours of service
regulation is a somewhat lengthy and complex regulation dealing
with the rules on how many hours truck drivers, for example,
can work, dealing with fatigue and other kinds of requirements.
SBA had asked that for drivers who deliver goods locally, short
haul, that they be permitted to drive more than 11 hours.
What I can say about that regulation is a couple of things.
FMCSA published a Federal Register notice last February 4,
2005, asking for public comment in response to the earlier rule
from 2003 having been partially invalidated by the court of
appeals. And it has been collecting input and is considering,
among other things, how to handle short haul and other effects
on small entities.
This is a rule that Congress, in the last extension on the
highway bill, provided an additional year of it being in
effect, notwithstanding the court's decision. So the rule
remains in effect, but unless Congress acts again, the
congressional extension of the rule would expire at the end of
this fiscal year.
So FMCSA is currently working on a final rule that we
anticipate would likely be published this August. The
resolution of the SBA issue will be a part of that, but I can't
tell you today what the resolution will be.
Switching over to the three NHTSA items that were on the
nominations list, and I see I am actually going to run over
time, so I will try to cover all three of them very quickly.
Ms. Miller. That is fine.
Mr. Rosen. The one on lighting, we expect to publish a
proposed rule in December of this year. The one on occupant
ejection, NHTSA has published two proposed rules dealing with
side impact protection and door latch strength in May of this
year and in December of last year. And with regard to vehicle
compatibility standards, NHTSA will soon be submitting a report
to OMB on the status of research that has been conducted in
that area, which may address whether a rule is appropriate.
Since I see my time is coming to an end, I will stop there,
other than to just emphasize that regulatory review and
improvement is a very important priority for the Department of
Transportation and will continue to have our efforts and
attention going forward.
[The prepared statement of Mr. Rosen follows:]
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Ms. Miller. Thank you very much. I appreciate both of you
coming here today. These are important issues, and I will start
the questioning.
I would like to address this issue that OSHA is in the
process of looking at and that is the hexavalent chromium rule.
I probably have learned more about that particular thing in the
last month or so than I even knew before. Even though it is not
a household word, if you are in a particular business, it is of
utmost importance, certainly, to you.
Some in the industry have actually said that the linear
risk model that you have utilized as you have been promulgating
your rule there over-predicts lung cancer risks, because the
studies that OSHA was using were based on workers employed
between the 1940's and the 1970's, when exposure was quite a
bit higher. I am just wondering if you might have a comment on
whether or not that is a true observation and if so, why would
you use that kind of antiquated data basing?
Ms. Stidvent. Madam Chairman, I will say at the outset that
I am a bit limited in what I can discuss at this point, and
since this is an open rulemaking and we plan to publish the
final rule in January.
But I can assure you that we did receive a number of
comments on the analyses used by OSHA in this rulemaking at
different stages. We took public comment in the requests for
information, during the SBREFA panel, during the number of
hearings we held in February of this year. And a number of
stakeholders raised a variety of issues with the analyses and
the methodology used by OSHA. We are taking all those comments
into consideration and will look very carefully at the analysis
used and the quality of the data that is being inputted into
those models that OSHA is using.
Ms. Miller. I appreciate that you have to be somewhat
guarded, because of where you are in the rulemaking process,
but I intend to make a few other comments, to make sure they
are on the record and push this case. I hope you take those
into consideration as well. Because a number of people have
brought to my attention the fact that, and you know, it is
interesting, but we had another hearing previous to this about
regulatory burdens on manufacturing and the National
Manufacturers Association had mentioned, I think I made that
point in my opening comments, a study about structural costs
for all of our manufacturers are about 22 or 23 points higher
than any of our foreign trading partners, including Canada. I
come from Michigan, that is really our largest trading partner
in my State.
But I was looking at a list of other countries that have
standards as well for these particular elements, and in looking
at what the proposal is from OSHA, we are going, I guess, from
our current 50 down to 1, I think is the proposal that you are
looking at in your rules. If you look at every one of our other
competitors, Mexico at 50, even Canada, which I have always
thought to be an extremely progressive nation, at 50, Japan,
European Union, on and on and on, China, India, 50, 50, 50 all
the way down the line. Sweden is at 20.
And I am just wondering, don't you think, and I don't know
if you can comment on this or not, but it would seem to me that
would certainly put our industries here in the United States at
a distinct competitive disadvantage to our foreign trading
partners. I have heard from quite a few people in the industry
in my area, their total consternation to the point that they
have just said they are going to close the doors. I
unfortunately come from a State that is continuing to bleed
manufacturing jobs. As I say, I think we have to be very
cognizant of the fact that OSHA requirements and other kinds of
regulations that we pass in the past have raised our standard
of living, have increased of course safety standards in the
labor force, etc.
But as a reasonable standard, reasonable being the
operative phrase, if we put our companies at this kind of a
disadvantage, I think we are going to lose a lot more jobs. Can
you comment on that?
Ms. Stidvent. Yes, that is certainly a concern that we have
heard in a number of arenas, not just limited to hexavalent
chromium. The question about how our work force and our
businesses compete on a global level, that is something that we
certainly share the concern about. Our utmost priority is the
health and safety of workers, of course.
In promulgating OSHA rules, we are constrained by the OSH
Act in what we can and cannot consider. But economic and
technological feasibility are part of that consideration. I can
assure you that we will be looking at all of these factors as
we move forward with the hexavalent chromium rule.
Ms. Miller. Just one other thing on that issue. Those can't
be the only factors, of course, that we have to look at. It is
interesting, in this particular element, as you are going
through your rulemaking process, I was looking at some
testimony from a fellow who is a colonel in the Air Force who
actually testified, apparently to OSHA, that the compliance
with this proposed rule, ``would require major reallocation and
that productivity would be expected to drop by 50 percent.'' In
other words, that the proposal apparently could have some sort
of an adverse impact on national security, because of the way
the element is utilized with aircraft.
I also serve on the House Armed Services Committee, so I
raise that as well. I am not sure if you wish to comment on
that or not, but I certainly want to raise that. I thought that
was rather startling.
Ms. Stidvent. Again, I hope I am not frustrating you with
my limited responses, but----
Ms. Miller. No problem. I just wanted to get it on the
record.
Ms. Stidvent. But we hear you and I can assure you that all
of these comments and concerns from all stakeholders will be
taken into consideration as we develop the rule.
Ms. Miller. Thank you.
I yield to the ranking member.
Mr. Lynch. Thank you.
Let me just go right back into that same issue on
hexavalent chromium. It is my understanding that, I am a former
welder, I used to weld stainless, I know this is a concern for
folks in that industry. I understand that this regulation does
not cover the construction industry, so they are not under this
reg.
But I am concerned that a lot of these processes have not
changed significantly since the data was gathered. I believe
the two studies that are out there are the Gibb study and the
Lippold study. The Gibb study obviously is the one that is
being criticized by some in industry because it dates back to
between the 1940's and 1970's.
However, it did involve 2,300 employees, and did involve
70,000 individual routine interventions of gathering data on
these people. The one that is being suggested by industry that
is more recent in time involves less than 800 employees instead
of 2,300. It involves less than 800 interventions instead of
70,000.
So I am reluctant to suggest that we move to something that
is more recent in time when it is not as thorough and probably
not as indicative or expressive of the threat that is out
there. So my suggestion is to proceed with caution and whatever
action you take, take it on the basis of sound evidence and not
because India has it or because Mexico has it. Because my
knowledge of their safety and health standards does not lead me
to believe that is some direction that we should go in.
I think that if manufacturers are leaving this country, it
is because they can exchange $25 an hour workers for $1 an hour
workers. That is the reason folks are closing up shop. And as
someone who used to work at a GM plant, I certainly understand
the impetus for that plant relocation to Mexico. And it was not
because of hexavalent chromium, it was because, as I say, they
could exchange $20 an hour jobs for $1 an hour jobs. That is
the thing that we have to deal with.
The second issue is that we also have trade laws and tax
laws in this country that provide incentives for employers and
manufacturers to relocate. Until we deal with that through our
trade policy, that trend will continue.
But again, I would ask with respect to this regulation on
hexavalent chromium, just to please proceed with caution. There
may be room here for a compromise, though I am not sure.
Certainly I think it is right to revisit it and make sure that
it is as effective and efficient as possible. I do not oppose
that, but again, I would not displace the previous study
because of the closeness in time of the, I believe it was the
Lippold study.
Mr. Rosen, I would like to talk to you about the hours of
service piece. I understand we are going to leave the 11 hour
standard in place until and unless Congress deals with it, is
that correct?
Mr. Rosen. I don't think I could say that. The rule that
was issued in 2003 that has that is in place under the
extension that Congress enacted through the end of this year.
Mr. Lynch. That's the one that the Third Circuit actually
vacated, is that correct?
Mr. Rosen. The court of appeals, I think, for the D.C.
Circuit vacated the rule, but then Congress reinstated it. And
the current extension from Congress would expire at the end of
the fiscal year. Our Motor Carrier Safety Administration is
working on a rule that would be issued in August to take effect
in the event that the current rule were to expire.
The content of the rule that will be issued--what I am
saying is I don't think I could say yet what it will include,
in part because it is a pending, open rulemaking. I don't think
I can comment exactly on what its comments will be.
Mr. Lynch. That's not very helpful to me.
Let me just say that there is a lot of data out there
indicating the causality between driver fatigue and fatal
accidents. I think at least it has been reported that about 20
percent of those truck accidents, big truck accidents that have
fatalities involved, 98 percent of the time, it is a person in
a passenger vehicle, it is not the truck driver, that there is
some fatigue involved.
What amazes me is that the D.C. Circuit vacated the rule
because the Department of Transportation had failed to consider
the health of the driver when issuing and formulating its rule.
That is particularly troubling to me. Wouldn't that be a good
place to start, given the evidence that is out there regarding
the connection between fatigue and fatal accidents? These are
our families that are on the road. There is a lot of cargo
being hauled around and a lot of these trucks are clearly
mismatched for the road, and they are a clear threat to
passenger vehicles on the road. These are our families and
these are the people we are sworn to protect.
Yet you have a rule here by the Department of
Transportation that completely ignores that. That is troubling
for me.
Mr. Rosen. Well, let me say a couple of things about that.
Mr. Lynch. Please.
Mr. Rosen. First, the primary purpose of the FMCSA, the
Motor Vehicle Safety Administration's regulations, is for
trucking safety, for the safety of the motorist, to prevent
accidents and injuries resulting from crashes with the trucks.
With regard to the drivers, there has been a longstanding
memorandum of understanding between FMCSA and OSHA by which
OSHA has set some of the requirements for driver health and
safety.
Now, the statute, and I think what you are referencing and
what the court of appeals was referencing, does talk about the
physical condition of the driver as one of the criteria. I
think it was the agency's view that factor had been considered,
the court obviously disagreed and the court has the final say
with regard to its ruling.
But ultimately, it is the objective to have these things
decided with the best available data. One of the complexities
for a rule like this is the knowledge and the data that is
available is not always as perfect or as extensive as might be
liked. But in the process of working on this rule, the
Department is in fact looking at and considering the available
data.
Mr. Lynch. OK, I am not sure that is--I appreciate it, Mr.
Rosen, I really do, that you come here and testify, both of
you, I appreciate that. I am not trying to hold you to blame
for any of the gaps in the process, by any means. I just see a
weakness, I guess, in the process, and I am just trying to
point that out and asking you to take another look at it, look
at it hard and try to remember that the court was fairly clear
in their decision.
There was a lot of evidence presented by the Department,
extensive in terms of the evidence that you put forward. It is
just that none of it covered the health of the driver. They
were not complaining that there was not enough evidence in the
aggregate presented, they just pointed out that none of it went
to the health of the driver. Clearly, the health of the driver,
not the condition of the driver, the health of the driver. I
think that is a central concern of any attempt to draft or to
reissue a reg in this area.
Thank you, Madam Chair, I yield back.
Ms. Miller. I was not going to ask this question, but as I
was listening to my colleague talk about the health and safety
of the driver, I have to ask you this question as well as about
when you are actually promulgating these rules, and you are
looking at different things. In a former life, before I got
this job, I was a secretary of state in Michigan. I served for
8 years as the chairperson of the Michigan Traffic Safety
Commission. So we had a lot to do with truck driving incidents
and different kinds of things.
One of the biggest problems, whatever you are driving,
whether it is trucks or cars or what have you, is driver
distraction. Just yesterday I was at a Visteon plant in my
district where they are doing some unbelievable things about
simplifying within the car for police officers relating to
driver distraction, with all the different kinds of things that
they have. Do you ever look at those kinds of issues when you
are looking at drivers?
In fact, just as a follow-up to that as well, you did
mention something about surge brakes and that you had several
groups that came to you and talked about surge brakes, etc. Do
you often promulgate your rules as an impetus because of
private groups or individuals coming to you or is this
something you just come to at your own looking at NHTSA
statistics?
Mr. Rosen. Taking the second half first, the impetus for
creating new rules can come either way, from the agencies
reviewing existing data and determining that there is either a
safety need or an opportunity for a safety improvement that is
sensible. So sometimes rules are self-initiated. And sometimes
members of the public petition us or request that we institute
rules.
I think on the list that OMB has provided and the five that
I am here primarily to address today, all of those are
nominations from the public. So the rule dealing with the
brakes is a nomination from a couple of associations as to what
they think, what they have suggested would be an improvement
and from their standpoint a more fair approach to the rule.
Ultimately the primary consideration for us is the safety
consequence. But if the rule can be improved in a way that is
beneficial to safety or is less costly without being
detrimental to the safety standard, then we are of course open
to suggestions from the public as to how to improve it.
Ms. Miller. You also mentioned in your written testimony
about sunset provisions in some of these various regulations.
Could you comment on your thought process? Sometimes these
regulations seem to take on their own life and then they go on
ad infinitum rather than ever having any kind of regulatory
review again of how they are actually working and years go by
and circumstances change, etc.
What is your thought about sunsetting some of these kinds
of things? I wonder if we ought not to codify that in many of
the things we do in this town.
Mr. Rosen. I would agree with that. I think it is a useful
mechanism that we ought to do more of, because it forces you to
reevaluate the effectiveness and accomplishments of a
regulation and decide, is it worth continuing, does it need
improvement or has it expired in its usefulness. I think one of
the examples I had identified in my testimony, in the written
testimony, was the computer reservation system rule that had
been promulgated with a sunset provision, but a good number of
years ago, when the economic circumstances in both the airlines
and the airline reservation business were extremely different
than they are today. And at a time when those systems were
owned by the airlines, unlike today.
So that was a good example--by having a sunset, it required
us to take a careful look at the conditions that were prevalent
at the sunset date, rather than because of the press of
business or other things, just look at it at a convenient time.
I think as a tool, it is extremely useful. It is a very
effective way to have agencies, as I say, assess the continuing
validity of the assumptions that went into the original rules.
I think there will be sunset provisions that will result in
some rules, that will have a decision made to continue them. I
think that is likely to happen. But even then, you have the
benefit of having made a careful, systematic, thoughtful
decision to continue it rather than inertia or ignorance. So I
think it is a tool that makes sense and I would like to see us,
and others, for that matter, use more of it more often.
Ms. Miller. I appreciate that. Shifting gears a little bit,
but talking about a rule that was made many, many years ago, I
think it is 36 years old, is the fire safety standard rule,
which was brought to my attention by a number of different
industry groups. The thing about any rule that is 36 years old,
never having a proper review of it certainly is alarming, I
would say, astounding is probably a good categorization of that
as well.
But I note in 2001 that OSHA said they could not update it
because they did not have adequate resources. I can appreciate
that as well. But perhaps there could be some comment on
something else OSHA could do. Could you publish a best
practices guide? Again, this particular rule being 36 years old
is crazy.
Ms. Stidvent. Yes, that is true, in many instances, as Mr.
Rosen pointed out, because rules tend to be on the books and
stay on the books, that happens over time. We are aware that
there are a number of instances where we have based rules on
consensus standards and then those consensus standards have
become updated. We currently do not have authority just to go
in and update the fast, easy way. We have to go through notice
and comment rulemaking.
So the final flammable liquid standard that you mentioned
is part of our ongoing project to update those standards based
on national consensus standards. That is on the agenda to work
on and to update, and we are planning on doing so.
Ms. Miller. I appreciate that. It is highly likely there
will be some legislation introduced in regard to that
particular issue.
I would yield to the ranking member for a second round of
questions.
Mr. Lynch. Thank you.
Let me ask you, I just want to go back to Mr. Rosen, we
were talking earlier about the process, we got public input and
I think there were 189 recommendations. Then OMB went directly
to the individual agencies and as a result of that, it was
pared down to I think 76 that were priority recommendations. I
am trying to think how many of those were DOT regs, 15, was it?
Mr. Rosen. From the original set, or how many are in the--
--
Mr. Lynch. How many finally made the priority cut?
Mr. Rosen. Five.
Mr. Lynch. What was the process? I assume you were part of
that process in going from whatever the original pool was, and
I do not expect you to know that, but how did you go from 189
to, in your case, 5 final regs on the hit list at the end of
the day?
Mr. Rosen. Ultimately you would need to ask the folks at
OMB for exactly how they pared it down. But I think the
process----
Mr. Lynch. Well, they say they work with you.
Mr. Rosen. I was going to say, I think the process included
consultation with us and presumably the other departments as to
our reactions to various rules, as to how significant are they,
how far-reaching are they, how costly are they, how dated are
they, if they are very old. And that we provided back some
comments and observations as to those that seemed like they had
more potential to be meaningful.
But how the line was drawn as to say, well, here is the
exact number, I do not know that I could illuminate very much
for you. But I think the process is pretty much what I just
said.
Mr. Lynch. OK. I am just trying to figure out why some made
the list and why some did not. It seems like there was a fairly
broad spectrum of nominees, and I am just curious as to why
particular regs made that list. I am just trying to get an idea
of what that process involved.
Mr. Rosen. Let me try this. We at DOT have done something
of our own version of this, where we in January had a Federal
Register notice inviting the public to comment on all of our
regulations and then held a public meeting in April where
people could come and tell us of places they thought our rules
could be improved or had provisions that were unnecessary or
really whatever they wanted to comment on.
So we have done something parallel, and I can tell you a
little bit about my own thought process as to how to go about
that. I have some numbers----
Mr. Lynch. Mr. Rosen, I appreciate it, I really do, I am
limited in my time. I really wanted to go not to your own
thought processes, but to the actual process of going----
Mr. Rosen. Well, I think they are related. As I said, we
got 66 nominations. And we are in the process of responding to
those in a public report. Inherently there is judgment to be
applied. That is the process that we have used, is looking at a
whole series of criteria and factors. I would assume that OMB
did something similar, because the consultations with us would
reflect that.
Mr. Lynch. Just so I am clear on this, was the requirement
that drivers drive more hours, was that part of this process,
instead of having 10 consecutive hours of driving, was that
something that came out of this process?
Mr. Rosen. No, because the process you are referencing is
in the 2005 OMB report. The hours that were set in the current
rule were issued by FMCSA in 2003.
Mr. Lynch. But the issue itself, making truck drivers drive
more hours, did that issue come out of this public comment
process?
Mr. Rosen. If I understand the question, I think the answer
is no.
Mr. Lynch. OK, good. That is fair enough. I am just asking
a general question.
Let me ask Ms. Stidvent a similar question. I believe there
were a number of recommendations that were focusing on DOL, and
then you culled it down to how many?
Ms. Stidvent. I believe the report listed 11.
Mr. Lynch. Do you remember how many originally were----
Ms. Stidvent. I do not remember originally how many. Well,
actually, my staff has been kind enough--in 2004, there were
37. In 2005, there were 11. To answer your question about
process, we received the public comments that had been
submitted to OMB's report from OMB. They asked, as Mr. Rosen
said, for our input on that.
In many of the instances, some of the nominations were
rulemakings we had already completed. Some of them were
rulemakings that we were willing to consider, but given the
workload we had, others were higher priority for us. So we
provided that kind of feedback. Again, I think OMB could shed
more light on exactly how they took that input from the
agencies and reworked it. But it was a collaborative process
where we said, this, we think, is a good idea, we are doing it
already, it is done already, that type of thing, because a
number of the nominations we received, because of the time
delay and the publication of the OMB report, sometimes they are
outdated.
Mr. Lynch. Fair enough. Maybe I could take that up with
OMB.
I do want to ask you about the Family Medical Leave Act,
though. This has been hugely important to a lot of families. We
are requiring both spouses to work at least a couple of jobs
nowadays. We have very little support out there for families,
and we are supposed to be trying to help them with that. Given
all the hours that moms and dads have to work these days and
care for families, this is a pretty important piece of
legislation for those families who need to raise children and
maybe in some cases take care of parents and do a number of
things.
I understand that one of the proposals that is being
floated, and I am not so sure how solid it is, but it is to
recommend that the definition of serious health issue be
revised to capture only those illnesses or disabilities that
last for 10 days, versus the current definition of 3 days or
more. Can you comment on that?
Ms. Stidvent. Sure, I can comment on it generally and
specifically, I think. I can tell you that my condition over
the last 7 months has exposed me to a number of people, who,
myself included, this definitely is a very important law. I
think that they at the Department recognize that. It is
important to a lot of people, as you mentioned, for a variety
of reasons. Understanding that, we are reviewing the
regulations, prompted in part by the Ragsdale decision and
other court decisions.
The proposal you mentioned, I do not know where that
originates from. I can tell you that no decisions have been
made at the Department on what changes to make and what
policies to pursue. This is a deliberative process, and we have
received a number of comments. In 2003, we met with over 20
groups, employer and employee groups, who have a variety of
concerns about the FMLA. We are processing all of those and
mulling all of that over.
No decisions have been made, so I guess I would be wary of
reports that say that a particular policy is being pursued or
is not being pursued. Because at this point it is definitely at
the deliberative stage.
Mr. Lynch. I understand. There are some reasonable
suggestions here about the impact of the law itself. I
understand some employers justifiably feel that they should not
be required to give perfect attendance to employees who take
advantage of the Family Medical Leave Act, because they are not
physically there. That is an employee benefit, an employer
decision that should be left with the employer, and I
understand that.
But on the other hand, I think 10 days is a rather long
period of time. I had a major surgery a couple of years ago,
and between the HMO trying to boot me out of the hospital and
my wife not wanting me at home, I was back to work in about 8
days. [Laughter.]
Mr. Lynch. It was major in my mind. I just see a whole lot
of families out there who do not have the support that I did.
This 10-day rule could be very, very damaging to any relief
that we might have intended to give those families. So I just
ask you to pay close attention to that, if you could.
Ms. Stidvent. I can assure you that we will. Other
rulemakings will follow all the notice and comment process. So
there will be nothing that can be rushed into implementation
without that notice and comment process.
Mr. Lynch. Thank you. Thank you, Madam Chair.
Ms. Miller. Thank you very much.
Now we will move on to the next panel, unless you have any
more questions. I would just make one comment about the Family
Medical Leave Act as well. It is a very important piece of
legislation. Unfortunately, not in place when I was in your
condition, in another lifetime, a long, long time ago.
But I do think again, reasonableness, being reasonable, the
operative phrase has to be the standard. You hear stories out
in the industry about somebody who is 6 minutes late for work
or something and then the small company has to go through an
unbelievable burden of paperwork, etc., to give this person a
half day off under the FMLA. I do not know all the different
stories, but you hear these kinds of things.
There are always people, individuals, who take advantage of
a very good law and make it difficult for everyone to comply
with. So I do think you need to look at some of those kinds of
things as well. I recognize the challenges, certainly, that you
both face.
We appreciate both of your attendance here today. You have
been very, very informative and enlightening. We look forward
to working with you together as we try to do what is best for
the American people. Thank you so much.
Ms. Stidvent. Thank you very much.
Mr. Rosen. Thanks for having us.
Ms. Miller. We will take a quick break.
[Recess.]
Ms. Miller. I would like to call the meeting back to order.
Our next panelist will be Mr. Stu Sessions. Mr. Sessions is
an economist with over 25 years of experience in supervising
and performing analysis of environmental, energy, and natural
resource policy. Mr. Sessions also has lengthy experience in
analysis of regulatory issues associated with air and water
pollution and solid and hazardous material waste as well,
having managed the division at EPA which is responsible for
this, and also having consulted frequently in this area. He
received a B.A. in economics from Amherst College and a Masters
in public policy from Harvard.
Mr. Sessions, we certainly welcome you to the hearing today
and appreciate your attendance. The floor is yours.
STATEMENTS OF STUART L. SESSIONS, VICE PRESIDENT, ENVIRONOMICS,
INC.; JEFF MELBY, VICE PRESIDENT, ENVIRONMENTAL AND SAFETY,
GENMAR HOLDINGS, INC.; AND JOAN CLAYBROOK, PRESIDENT, PUBLIC
CITIZEN
STATEMENT OF STUART L. SESSIONS
Mr. Sessions. Good afternoon, Madam Chair and Ranking
Member Lynch. Thank you for inviting me to testify.
I am here representing two manufacturing industry groups:
the Surface Finishing Industry, representing the U.S. metal
finishing industry; and the Specialty Steel Industry of North
America. I will be discussing OSHA's proposed regulations
lowering the Permissible Exposure Limit [PEL], for worker
exposure to hexavalent chromium. The proposed regulation, as
was discussed earlier, would reduce the current PEL from 52
micrograms down to 1 microgram.
Industry believes that the regulation would have three
significant adverse effects. First, compliance costs will be
very high. We estimate the proposed PEL will cost industry
nearly $2.9 billion per year. A breakdown of these costs is
given in exhibit 1 to my written testimony. This price tag
would make this regulation one of the very most expensive
environmental, safety or health regulations considered by the
government in recent years.
The high cost is due partly to the broad scope of the
regulation. It will affect at least 35 different manufacturing
industries, plus shipbuilding and construction, which are not
considered to be manufacturing industries. The high cost is
also partly due to the difficulty in reducing exposure so far
below the current PEL.
I will say a little about three particular manufacturing
industries that will have the highest costs. First, aerospace
manufacturing. The industry estimates a cost of about $1.1
billion per year. This cost for this one industry alone would
roughly equal the cost of the most expensive single Federal
regulation issued during fiscal year 2004. Metal finishing, a
second industry, we estimate a cost of $780 million per year
for this industry.
Both aerospace and metal finishing estimate a cost per
employee of roughly $15,000 to $18,000 per year. And I
reference the chairman's statement indicating that the average
regulatory costs for manufacturing overall now is about $8,000.
So for affected employees in these two industries, this single
regulation would roughly double the average cost that exists
currently.
A third affected industry with very high costs is steel
making and steel processing. Costs will be highest for those
who make and process stainless steel, in particular. We
estimate a cost of about $600 million per year for steelmakers
and their customers. Most of the costs for steel processing
industries will involve changing welding processes for those
who fabricate stainless steel. These changes can reduce a
welder's productivity by 25 to 40 percent, plus other costs.
A second major adverse economic impact that we foresee is
that many manufacturers will not be able to afford these high
compliance costs, and will be forced to close. As facilities go
out of business, the employees at these facilities will lose
their jobs.
One industry on which we have done detailed studies on
facility closures and job losses is metal finishing. We
estimate that the rule will cause half or more of all U.S.
metal finishing shops to close. In this one relatively small
industry, 80,000 employees in these facilities will lose their
jobs, and another 70,000 or more jobs will be lost among
companies who would have supplied the metal finishing shops and
their employees.
In my written testimony I discuss some of the other
industries where the rule will also cause plant closures and
job losses.
The third major adverse impact, the added cost to comply
with the proposed rule, will hurt manufacturers in competition
with foreign producers. The proposed rule requires a large
reduction in the existing standard and the chairman has already
indicated the comparison of the proposed PEL at 1 with the
standard that exists for most of our trading partners, which is
on the order of 50.
I will review the competitive impacts for a couple of the
industries. Aerospace. For many years, aerospace has
contributed the largest positive amount to the Nation's balance
of trade of any other manufacturing industry. We estimate that
this rule will add a cost penalty of about 1 percent of current
aerospace costs, 1 percent in addition to the roughly 12
percent that was again cited in the chairman's opening
statement. We estimate that the 1 percent might be enough to
tip some close aerospace competitions to foreign producers.
Metal finishing. In recent years, the metal finishing
industry has suffered a very sharp loss of business to Asia.
This rule will cost the metal finishing shops that survive, I
indicated that half or more won't, those who survive will bear
costs on the order of 2 to 10 percent or more of their current
cost of production.
Steel and stainless steel. The stainless industry, many
people are quite aware, has suffered intense foreign
competition and currently some 25 to 30 percent of the domestic
steel market is filled by foreign imports. This will prevent
domestic steelmakers from passing through the cost of the
regulations to the market and the domestic steelmakers are
further worried that the industry's downstream customers will
also be seriously affected by this revised PEL.
High compliance costs by the customers will cause many U.S.
stainless steel fabricators to outsource more operations to
other countries. The work will be performed abroad, and the
steel that they buy to work on will be bought abroad.
In conclusion, the statute requires OSHA to promulgate a
PEL that eliminates all significant health risks, but subject
to the constraint that the standard must be technically and
economically feasible. I have discussed the industry's belief
that the PEL is not economically feasible for most of the
affected industries.
In closing, I would quickly like to comment on technical
feasibility and health risks. In short, industry believes that
the proposed PEL of 1 is not technically feasible for many
affected manufacturing industries. Many facilities have found
that the controls that OSHA identifies as adequate to meet the
proposed PEL in fact cannot reliably reduce exposures to that
level.
With regard to health risks, industry is committed to
protecting the health of its workers. Industry believes there
is evidence of significant risks to worker health at high
levels of exposure well above the current standard of 52.
However, as the PEL option being considered is lowered much
below the current standard, uncertainty about health risks
increases, particularly for those industries where the nature
of the exposures differs substantially from those in the
industries on which OSHA's studies were based.
On balance, the industry would support a reduction in the
exposure limit to somewhere in the 20 to 25 micrograms per
cubic meter range. Such a standard would protect worker health,
would be operationally feasible and would avoid substantial job
losses and the erosion of U.S. manufacturing competitiveness.
Thank you very much.
[The prepared statement of Mr. Sessions follows:]
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Ms. Miller. Thank you.
Our next witness this afternoon is Jeff Melby. Mr. Melby is
the vice president of environmental and safety at Genmar
Holdings, Inc. Joining Genmar in 1996, Mr. Melby's primary
responsibilities included coordinating the environmental and
safety programs for the nine manufacturing facilities that
Genmar has in the United States, and leading Genmar's product
compliance program. He is a registered professional engineer in
Minnesota, also a member of the Minnesota State Bar.
We appreciate your coming to Washington to testify before
our committee this afternoon.
STATEMENT OF JEFF MELBY
Mr. Melby. Thank you, and good afternoon. I am here today
on behalf of my company as well as the National Marine
Manufacturers Association, which represents many of my fellow
recreational boat builders. We urge this committee to direct
OSHA to update the spray finishing using flammable and
combustible materials standard under 29 C.F.R. Section
1910.107, which I will refer to as the OSHA fire safety
standard.
This particular rule has burdened my company and many
others with unnecessary complication. In May 2004, NMMA
responded to the OMB's request for regulations that are unduly
burdensome or that need reform. NMMA nominated the outdated
OSHA fire safety standards because they are still based upon
the 1969 standards set by the National Fire Protection
Association, rather than the 2003 NFPA standards, which are
designed specifically for the recreational boat building and
composites industries, and are based upon updated information
and know-how.
NFPA is the Nation's standard-bearer for fire protection
standards, because it is comprised of the Nation's leading
insurers as well as the firefighting community. NMMA also
nominated the outdated Federal Motor Carrier Safety
Administration rules prohibiting the use of surge brakes on
trailers used for commercial purposes. I have included
discussion of this issue in my written comments and I will work
with the committee to address any questions that may arise in
connection with it. But admittedly, my focus here is on the
OSHA fire safety standards.
As I mentioned, the NFPA fire safety standards were adopted
by OSHA in the early 1970's, and have not been updated since
that time, even though fire suppression technology and know-how
has progressed dramatically. OSHA has even acknowledged that
these standards need to be reviewed and updated, but has
continued to do nothing about it.
Specifically, the issue has to do with the level of fire
protection necessary for operating a boat manufacturing plant.
Back in the early 1990's, NMMA and the American Composite
Fabricators Association approached OSHA and asked that the fire
safety standards be updated. Based on these discussions with
OSHA, we were directed to contact NFPA to have them evaluate
spray operations at boat manufacturing plants and determine if
the hazards from these operations warranted a change to the
safety standards.
Subsequently, NFPA revised its standards in 1996 by
creating a separate chapter to address the specific hazards and
requirements with regard to applying flammable resin in the
manufacturer of recreational boats and other fiberglass
composite products. The resin used to make fiberglass is
presently regulated under the OSHA fire safety standards
because styrene, which is present in the resin, is considered a
class I flammable liquid. NFPA created this separate chapter
based on extensive testing and several years of evaluation
within the NFPA 33-34 Spray Finishing Committee.
We then returned to OSHA in the late 1990's, requesting
that they update the 107 standards. In fact, OSHA included this
change in 1999 to update its unified agenda, but rescinded the
effort in 2001, citing ``resource constraints and other
priorities.'' Prior to the rescission, however, OSHA called
this rule ``one of OSHA's most complex and out of date rules.''
Yet even with this acknowledgement, OSHA has been unable to
correct it.
One of the tests that was performed was to spray resin in
an enclosed booth with no ventilation for 15 minutes. After 15
minutes, the concentration of flammable styrene vapor in the
booth was 690 parts per million. To put that in perspective,
consider that the lower flammable limit for styrene vapor is
11,000 parts per million. The reason why this type of material
acts this way is because styrene, which usually totals about 30
percent of the resin, does not volatilize like the solvents in
paints and remains within the resin as it is applied and cures
to make fiberglass.
In fact, the NFPA tests revealed that the resin does not
readily ignite and burns slowly when it does ignite. When OSHA
wrote the rules back in the 1970's, they actually examined
flammable solvents found in paints and other coatings such as
toluene and xylene, which are extremely volatile and flammable.
The main problem we face is that many State OSHA agencies
and local fire departments refer to the Federal OSHA standards
when enforcing local fire code or worker safety regulations.
There have been countless cases in our industry, including two
at our plants, where a State OSHA office cited us for not
complying with the 107 standards even though the plants were in
compliance with the updated NFPA fire safety standards.
After expending a great deal of time and resources,
including attorneys fees, we were able to convince one of the
State OSHA agencies to withdraw the violation. The other State
office refused to withdraw their citation, but did agree to a
compromise that did not increase our operational costs to the
extent that full compliance with the 107 standards would
require. The expended costs and continuing operational costs in
that case do not create a safer working environment.
There are three points that I want you to take away from my
testimony. First, in writing its regulation, OSHA originally
adopted the 1969 NFPA fire safety standards and OSHA has not
updated them since then, even though NFPA has revised the
standard to reflect new technologies and knowledge.
Second, OSHA has acknowledged that their standard is out of
date and actually written letters to other industry
manufacturers stating that if a facility is not in compliance
with the OSHA fire safety standards but is in compliance with
the NFPA 33 standards, OSHA would consider this a de minimis
violation under the OSHA de minimis policy. Nonetheless, in our
cases, State OSHAs do not follow the OSHA de minimis policy,
which causes us manufacturers great problems.
Finally, as you probably hear from many company
representatives that testify on regulatory issues, it is a
great challenge and burden to manufacturers to comply with the
complex regulations imposed on us today by local, State and
Federal Governments. When a regulatory agency has a rule on
their books that they understand to be outdated and we
understand to be outdated, something needs to be done to fix
it. That is why I am here today, to ask you to have OSHA update
its 29 C.F.R. Section 1910.107 regulation to reflect the NFPA
33 Chapter 17 consensus standards.
Thank you, and I ask that my written testimony be made part
of the permanent record. I am available for questions.
[The prepared statement of Mr. Melby follows:]
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Ms. Miller. Thank you. Your written statement will be
entered into the record, and we certainly appreciate your
testimony here today.
Our next witness is Joan Claybrook. Ms. Claybrook is the
president of Public Citizen. She has an extensive career in
automobile safety and public interest, dating back four
decades. She has worked on Capitol Hill and in the Department
of Transportation, as well as founding Public Citizen's
Congress Watch in 1973 and directing it until 1977. She
received a B.A. from Gaucher College and a law degree from
Georgetown Law Center. We appreciate your being here today, Ms.
Claybrook, and look forward to your testimony.
STATEMENT OF JOAN CLAYBROOK
Ms. Claybrook. Thank you very much, Madam Chairman and Mr.
Lynch. I appreciate the opportunity to testify. I am a former
regulator myself, as administrator of the National Highway
Traffic Safety Administration in the U.S. Department of
Transportation. I have worked extensively in motor vehicle
safety, but also in other regulatory areas.
The first point I would like to make is that well designed
regulations stimulate the economy, produce better products and
improve the overall quality of life. While it may seem
intuitive that regulation costs businesses a lot of money in
jobs, there is little actual research to suggest that this is
true. The industry mainly cites a study called Crain and
Hopkins, which is badly flawed and inflated. The OMB often
cites World Bank and OECD studies.
But these studies do not in fact address the economic
consequences of rollbacks of our well-justified health, safety,
and environmental rules. Most of the evidence points in just
the opposite direction in terms of the effectiveness. Just as
pollution wastes resources, unchecked harm to society is a
squandered opportunity to prevent injury or save lives. We all
pay, in terms of higher insurance and medical costs, lost
worker productivity and illness, even traffic delays.
In the automobile area, 42,000 people die every year, 3
million are injured. This in terms of economic costs is $230
billion in 2000 dollars, or $800 for every single man, woman
and child in America.
Well-crafted regulation actually spurs innovation and
growth. Regulation helps to protect industries from the
consequences of short-term profit made decisions. For example,
the fuel economy standards I issued in 1977 helped the auto
industry when it found itself in a competitive problem during
the domestic oil crisis of the late 1970's. Both the literature
and the core insights from my years of participation in the
regulatory process show that rules can improve economic well-
being. I have four that I would like to mention.
It is far cheaper to prevent harm than to clean it up
afterwards. Stimulating investment in sustainable practices
also benefits industry. Regulation levels the playing field and
reduces societal costs for beneficial innovations. Health,
safety, and environmental rules are beneficial on balance.
The assault on regulation is a very convenient lobbying
strategy, and not that there are not certain areas where
regulation should be changed, I completely agree that it should
be, but it is far easier to blame the government standards than
to deal with economic truths. A wealth of research shows that
direct labor costs such as wages for comparably skilled workers
are the major driver for industrial decisions to relocate jobs
and not regulatory costs, which are less than 1 percent of the
cost of shipped goods.
While manufacturing losses are devastating, very few major
regulatory burdens were added to the manufacturing sector since
the 1990's and that has been, there is no reason then to blame
regulatory burdens for changes and fundamental shifts that have
occurred in our global economy since 2000.
My second point is that OMB's 2000 draft report lacks
objectivity and balance. OMB has earned more than skepticism in
the public interest community by repeatedly publishing reports
that make no mention of the serious objections that have been
endlessly submitted to OMB. It is a miscarriage of OMB's
assignment to conduct a notice and comment process on draft
versions of its report, yet never actually respond to the
comments that are presented.
Every government agency in its preambles does that, and I
commend, by the way, the Department of Transportation both for
its extensive response to commets that are submitted to it in
its dockets, even if they do not agree with us, and also for
its transparency, which has been better than any other
government agency. I don't know if you are aware of that, but
it is excellent in terms of the availability of information of
proposed regulations and comments. The docket is all on the
web, and they are really a model for the government.
I have detailed the continuing grave deficiencies of OMB's
2000 draft report in my full written testimony.
My third point is that OMB's hit list is an inappropriate
interference with agency functions. First of all, the hit list
is a list of rules to remove. They never asked us for rules to
improve. New rules, areas where they are lacking information or
lacking protection. So Public Citizen submitted 30 proposals
last time to the OMB when they asked for their hit list. They
took two of them and put them in their final version, which is
still called a hit list, even though there are two positive
proposals that we recommended. One was for stopping ejections
when vehicles roll over, the other was for vehicles that are in
a vehicle mismatch, for lessening the impact of that on the
smaller vehicle.
OMB casts this process as a method for unearthing common-
sense regulatory fixes. But two of the major ones highlighted
that you have been discussing in this hearing are ongoing
rulemaking decisions. They are not things that no one ever
heard about or know about. They are highly controversial. One
is the hours of service rule, which Public Citizen has been
deeply involved in, and actually brought the lawsuit that
overturned the rule. The other is the hexavalent chromium rule,
which I would like to discuss further, perhaps in questions. I
think there are some things that are inaccurate that have been
said here today. That is also one which Public Citizen brought
a lawsuit and forced the agency to actually act.
I appreciate the opportunity to testify today, Madam
Chairman, and would be pleased to answer any further questions.
[The prepared statement of Ms. Claybrook follows:]
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Ms. Miller. Thank you. We appreciate all of our witnesses
being here. In regards to the auto industry and traffic safety,
I think Government has done such a great job of regulating the
automobile industry in the last several decades that we have
been an integral part of driving them to bankruptcy, quite
frankly, to the brink of bankruptcy, I think, with General
Motors, of where they are right now, and some of the other
problems.
Living in Michigan, in the Motor City, I see it every day,
these kinds of things. They are not leaving the United States
or Michigan always because of $1 an hour jobs. That certainly
is a part of a business decision. But I think the burden,
unbelievable regulatory burden that the Government has placed,
certainly the Federal Government as well as the State
government, we have been handmaidens.
That old saying, I am from the Government and I am here to
help you--it is a choking grain of truth, I suppose.
I would like to ask a question of Mr. Melby, if I could. I
thought your testimony was interesting, sir. You mentioned a
couple of your plants, the Genmar plants, have actually been
cited for adhering to the outdated Federal fire standards. But
that the States sometimes will not listen to what the Federal
Government's lead is on this. How often does that actually
occur? Do you have quite a bit of consternation with the way
that the individual States are dealing with the Federal
standards as well, and making it even worse?
Mr. Melby. On two occasions it was States that operate
their own, and have authority to run their OSHA programs. They
have adopted the Federal standards. They are comfortable with
the 107 standards as far as looking at any supporting
information running back through that this is the consensus
standard NFPA. It has been changed. You shouldn't cite us for
this.
They have told us, they do not have de minimis policies.
They are not able to do that. The rules are the rules. If we
wanted to take and contest it and spend the money, who knows
how that would turn out. But they are not able to vary from the
107 standards the way they are written.
Ms. Miller. Does your industry have any data on what kind
of a burden you think financially this particular, by OSHA not
updating the fire standard, what actually the financial burden
might be on perhaps a small business, as a general amount, and
a large business? Any idea at all?
Mr. Melby. I am not sure, but I can tell you what the
standard is requiring for us in this particular part of the
standard, which is dealing with what we put in the floor of our
booths to keep the sticky resin off the floor. If we went with
the flameproof cardboard that would be required under 107 as
opposed to a workplace standard with cardboard, it was going to
be a couple hundred thousand a year.
And that was the reference that I made that we were able to
compromise. We are probably going to increase our costs $50,000
in that instance. But under the standards, what we are doing
meets best practice.
Ms. Miller. Now, in full disclosure, I have to tell you why
I am asking you some of these questions. My dad built one of
the first fiberglass boats ever, back in the 1950's. In fact,
he had a big placque up in his shop that said, if God wanted us
to have fiberglass boats, he would have made fiberglass trees.
[Laughter.]
But I am somewhat familiar with the utilization of the
different elements that you use in the manufacturing of boats.
This is an area that I have some interest in. I watched during
the 1980's when the Federal Government put the Federal excise
tax on the boat manufacturing, thinking they were going to tax
the rich. And of course, what they did is destroy an industry
where they just simply went to another country, quite frankly.
And those that are rich amongst us would just order their boats
from a different country and document them somewhere else and
bring them in.
So I do have some consternation with this, and it looks
like you have some numbers there of what kind of impact this is
actually having on your industry.
Mr. Melby. What I have been handed, it says that the total
boat builders with fewer than 20 employees, very, very small
businesses, 794, the regulatory costs for these businesses
would be approximately $5.6 million. That is a conservative
estimate.
Ms. Miller. And if you think of the boat manufacturing
industry today, for the most part, outside of the larger ones,
there are so many small boat manufacturing industries. They are
not unionized and they are trying to comply. As has been
indicated with a number of these different studies, the cost of
compliance is particularly hard felt on small businesses as
well, as they are trying to comply with these things.
I would like to ask a question of Mr. Sessions in regard to
the hexavalent chromium rule that we have been discussing
somewhat today. It was interesting to me, listening to your
testimony about what your industry estimates the cost to be. I
wrote down here, I think you said $2.9 billion. Yet the OSHA
estimates for compliance costs fluctuate wildly from that. Do
you have any comment on why the huge difference?
Mr. Sessions. Yes. OSHA's estimates are far, far smaller
than industry estimates. I think the reasons encompass sort of
every step in the technical process of estimating the cost of
regulations. For example, there are a number of additional
industries affected by the rule beyond those that OSHA
considered, such as fiberglass insulation manufacturing, the
mining industry, the auto repair and body shops.
Second, for the industries that were identified as
affected, in general, industry thinks that far more of the
industry will be affected than OSHA assumes. For example, in
the steel industry, OSHA estimated costs for the specialty
steel producers but estimated no costs for the carbon steel
producers. But in fact, some of the carbon steel operations
will be affected.
Or in the metal finishing industry, OSHA estimated costs
for three particular varieties of metal finishing. But in fact,
hexavalent chromium is used in many more varieties and in
probably about twice as many facilities as metal finishing. So
the number of affected industries, the number of affected
sectors, the number of affected plants, the number of affected
workers. For example, the U.S. Navy has estimated that ship
repair workers, somewhere on the order of three to six times as
many of them will be affected by the regulation as OSHA costed
costs for.
Beyond that, the number of entities or workers affected,
there are differences about the capability of control
technologies, there are strong disagreements, as I mentioned,
about the technical feasibility of getting to one with the
control technologies that OSHA asserts will do the job.
Further differences in such kind of mundane things as unit
costs, a very small portion of the cost of this rule involves
more workers having to take showers and change their clothes
more often. So a part of the cost analysis is, how long does it
take a worker to shower and change. OSHA's estimate to shower
and change was 7 minutes. We think on average it takes quite a
bit more than that.
So across the whole range of bits and pieces that have to
be aggregated together to estimate costs, we disagree
substantially with OSHA. We wish that there were more time in
the rulemaking to sort of hash out these differences and get
some agreement and get a more reasonable agreement on what the
cost will be.
Ms. Miller. OK. I would like to yield to the ranking
member.
Mr. Lynch. Thank you, Madam Chairman.
Let me start with you, Mr. Sessions. To kind of follow this
court order that required the standard to be changed, and then
OSHA through its own process reduced the PEL from 52 micrograms
per cubic meter to 1 microgram per cubic meter. I do know that
the court was particularly incensed by OSHA's unwillingness to
proceed in a timely fashion.
Is it your estimation that the new standard, the 1
microgram per cubic meter, is that arbitrary, or are you saying
there is no science behind that? I just wanted to get a sense
of your perspective, and then I am going to ask Ms. Claybrook
the same question.
Mr. Sessions. First, a clarification. The existing limit is
52 right now; the 1 is a proposed new standard.
Mr. Lynch. That's correct.
Mr. Sessions. I think industry's opinion is that, as I
mentioned, the standard must eliminate significant risks, but
the standard must also be technically and economically
feasible. Industry believes strongly that one is not
technically nor economically feasible for most of--I don't
know, I am not sure I should say most--for many of the
regulated industries.
Mr. Lynch. I was just curious. That seems to be a drastic
shift, going to from 52 to 1. I just am not familiar with the
methodology that was used by OSHA.
But let me ask the same question of Ms. Claybrook.
Ms. Claybrook. First of all, Mr. Lynch, this existing
standard is 33 years old. It is a very old standard. And many
of the companies and industries that are going to be covered by
this already meet the standard of 1. So it is not something
that is not technologically or economically feasible in many
companies and many industries.
There are some that have a harder time than others, which
we will acknowledge. I think it is the electroplaters and there
is another industry that also has difficulties with this.
One of the solutions for a problem like this, where many
companies can do something about this, this is a carcinogen, a
well-recognized carcinogen that causes lung cancer. There are
thousands and thousands, tens of thousands of workers that are
affected by this. It is time, it is past time to do something
about this issue. But one possible solution is under OSHA's
authority, they can have a separate engineering control air
limit called a CCAL that if there is justification for it, can
have a separate limit.
So we would urge and recommend, and we have to OSHA, that
they address the standard as they have proposed. In fact, we
proposed a more stringent one. But at a minimum, most companies
will have to comply with it and can. And it has been shown in
the industry that they can. Then where there are exceptions, to
have this other process.
Mr. Lynch. It sounds like progress.
Ms. Claybrook. If I could make one other comment in
response to the chairman's point on the use of this old data.
The exposure time is very long for the development of lung
cancer. And the studies that have been, the data is the best we
have available, it is through the 1980's. So it is really not
all that old given the development time for lung cancer.
The linear risk model that is used is the standard for
occupational cancer. That is the standard that is used. The
industry-funded study, the Lippold study, acknowledges that the
linear model is good in predicting lung cancer. So it is not
that it is something that is not common and well understood in
the science.
Mr. Lynch. Thank you. Ms. Claybrook, I want to stay with
you for a minute. I had been trying in the previous panel to
shed a little light on the process that OMB used to target
certain regulations. I am particularly troubled by the hours of
service rule targeting, if you will. Could you discuss, you are
the former NTSB administrator, and I think you might have the
ability to speak to this, but could you speak to the issue of
the OMB process and what the suggested changes in the hours of
service rule might mean to the general public?
Ms. Claybrook. First of all, to drivers, to truck drivers,
it is the most hazardous occupation in America. Let's start
there. There are almost 800 truck drivers a year that are
killed in truck crashes, even though they are in these huge,
huge vehicles; 5,000 Americans are killed, and about 130,000
are seriously injured. So it is a huge issue.
Between 20 and 40 percent, depending on which study you
look at, of the crashes in trucks are from fatigue, fatigue-
related crashes. And so this is an issue of dire importance.
The Congress in 1996 I think it was, or 1997, commanded the
Department of Transportation to issue a new standard to protect
the public. Instead, they issued one that increases the number
of driving hours from 10 to 11 hours a day, even though all the
studies show that after 8 hours there is a drastic increase in
fatigue related crashes.
But they didn't only do that. They also said that you have
to have only 34 hours off before you have to start driving
again. The overall impact of this rule is a 20 percent increase
in driving time. Also, they did not put in the requirement for
a black box to enforce so that there would be an efficient
enforcement mechanism. Everybody knows that every driver has
three log books, which they call comic books, so they have
different ones for different purposes, one for getting paid,
one for the police and so on.
So that is why the court was outraged by this rule, it went
in the opposite direction from what the Congress had asked them
to do. Also, when the Federal Motor Carrier Safety
Administration was created in 1999, written right into the
statute it says that safety is the priority of this agency. So
that is why the rule was overruled then. On the day that the
highway bill was about to expire, on October 1st, that day they
snuck into the highway bill a 1-year extension for keeping the
rule that was vacated by the court. It was never debated, no
one had a chance to discuss it.
So it is in there for another year, and now they are doing
a new rulemaking and it looks like they are going to try and
keep essentially the old rule, the vacated rule, as the one
they are going to reissue. We have been extremely upset about
this and very concerned for both the public and for drivers.
Mr. Lynch. Thank you. I am equally as troubled. I find it
unbelievable. Maybe we can do something about it.
Thank you, Madam Chair. I yield back.
Ms. Miller. Thank you.
I want to go back to Mr. Sessions and talking about OSHA,
as they are going through promulgating their rule right now in
regard to this particular element. I thought it was interesting
when you were talking about the aerospace industry, in
particular. I think you said $1.1 billion we could lose because
of that. Certainly when you think of France, which is at about
50 as well, with Airbus, and these kinds of things, it is
rather startling, or even foreign steelmakers, you mentioned
the steel.
Obviously the cost of steel is something with the economic
modeling forever changing, with China and some of the other
emerging nations, with the cost of steel, scrap steel, etc.,
and then this rule on top of all of that is rather mind
boggling. I have had a number of the metal finishing shops in
my areas, just the smaller ones that have come forward with
their consternation about this rule. Basically these fellows
are just throwing their hands up in the air and saying, look,
we are out of business if this happens. We're out of business.
And you don't know if that is really true or not, but obviously
there is great angst on their part about what is going to
happen here.
And you were estimating that more than half of all the
metal finishing shops would close. I am always trying to
understand how these estimates are actually done. What is the
construct for these estimates? Could you talk about that a
little bit more, why you really think half of them will close?
Mr. Sessions. Sure. There are kind of two lines of analysis
that get there. The starting point in estimating what the
impact of any regulation will be is estimating the cost that
the regulated entities will have to try to bear. For this rule,
for example, we had engineers go to a sample of six
representative metal finishers and work with the facility
owners and look at their current exposure data and estimate
exactly what they would have to do to reliably meet the
proposed standard. They developed for these six facilities
estimates of the cost to meet the standard.
Then the question is, are these costs affordable. Part of
the answer to that is, will the producer be able to pass some
of the costs on to his customers, or will the facility owner
have to try to absorb the cost. Essentially we had economists
look at the markets served by each of these six facilities and
exactly what products they were selling where, what was the
nature of the competition. Some of them in fact were serving
industries where they could well pass costs through, but many
others were in cut-throat competition with producers from
Mexico or China or whatever.
So anyway, the next step is to assess how much of the cost
will have to be absorbed by the facility, then you can compare
the cost that is to be absorbed with some estimate of the
facility's ability to pay those costs in terms of its revenues
and its profits and its business outlook for the long term. So
in essence, the decision as to whether a facility will close is
a balancing of the cost impacts against the ability to pay. And
with these six facilities ,we did a very detailed analysis on
and concluded that at least three of them will definitely
close. It is likely that the others would be threatened
substantially also.
The second half of the analysis, though, is a very similar
analysis that the Environmental Protection Agency did a couple
of years ago for a water pollution rule that would affect this
very same industry. EPA did a very similar process of taking
case study facilities, collecting economic data, estimating the
costs and weighing the costs against the ability to pay.
EPA concluded in this rule that a cost averaging $61,000
would close more than half of the industry. This was another
regulatory agency a couple of years ago. And in fact, EPA
decided that its rule, which would cost an average of $61,000,
they would not promulgate because it would close so much of the
industry.
Well, we take that as a benchmark. And here is a rule that
we contend will cost on average more than $100,000 per
facility. And EPA's impacts that they see at $61,000 we think
provides substantial guidance to what we see with costs of
$100,000 or more. So we have the case studies as well as the
EPA study that lead us to this conclusion.
Ms. Miller. As we sort of conclude our hearing here, do you
have any comment on what Congress could do perhaps to
facilitate with the various agencies and how they might
streamline their rulemaking process or things that you have
seen over your years dealing with the various agencies, and
what kinds of things Congress might be able to do that would be
helpful?
Mr. Sessions. I think a number of the things Congress has
done are extremely helpful already, the Small Business
Regulatory and Enforcement Fairness Act is very important for
identifying impacts on small entities and getting agencies to
seriously consider alternatives that can reduce the burden on
small entities. I think the ultimate congressional authority to
overturn regulations if need be, it has been used very, very,
very rarely, but that is important.
I think there are a number of requirements, and people have
been talking about the OMB requirements for regulatory analysis
and the OMB list, etc. I submit that contributes to good
analysis. It contributes to identifying the impacts on health,
on economics, on jobs for any regulation that is under
consideration. I think Congress in its oversight role, perhaps
as you are doing here, encouraging agencies to take those
requirements seriously and to do as good a job as is possible
of identifying those impacts so that it can be sorted out and
balancing decisions can be made, I think that is a critical
role.
Ms. Miller. I want to thank you all for your comments. They
have called us for a vote.
Do you have any other questions before we adjourn?
Mr. Lynch. Just one final question. In the area of
hexavalent chromium, since proper ventilation equipment and
those types of technologies for containment are seen as
probably the best way of addressing the danger, would it be
helpful if Congress, if we decided to adopt this rule in this
fashion, provided a tax credit for those who purchase this
ventilation equipment? Would that lessen the impact of the rule
if it were adopted?
Mr. Sessions. I think that a significant share of the cost
for many of the industries will be additional ventilation. And
so a reduction in the cost of that ventilation would be
helpful. I think there are some industries where the answer is
not ventilation, but for many that would be very helpful.
Mr. Lynch. It is something we might look at.
Thank you, and I yield back, Madam Chair.
Ms. Miller. I certainly appreciate all of you attending
today. We appreciate your testimony so very, very much. And
with that, we are going to adjourn the meeting.
[Whereupon, at 3:47 p.m., the committee was adjourned.]
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