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DECEMBER 28, 2010
The Honorable Darrell E. Issa Ranking Minority Member Committee on Oversight and Government Reform U.S. House of Representatives 2157 Rayburn House Office Building Washington, DC 20515 Re: Regulations that Negatively Impact Jobs and the Economy The National Black Chamber of Commerce (NBCC) is pleased to provide this response to your request for information regarding the impact the federal regulatory process is having on the economy and jobs. The NBCC thanks you for your dedication to this highly important issue, and looks forward to working with you as you explore this and other matters as the next Chairman of the Oversight and Government Reform Committee. I am the NBCC’s President and CEO, and I represent for minority business and small business development on many issues including environmental and energy issues, housing, civil rights, e-commerce, entrepreneurship, corporate responsibility, and health. My response will focus on environmental regulations that will stifle job creation as well as existing programs with the potential to create jobs but for a lack of oversight and agency implementation. If you have any questions or requests for additional information on these issues, I urge you to follow up with me. A. Impact of EPA Regulations on Minority Jobs and Businesses In 2009 and 2010, the Environmental Protection Agency (EPA) has taken an aggressive approach to environmental regulation. EPA has spent the past two years churning out major regulations that impact every sector of society and adversely impact the economic well being of minorities more than society at large. EPA’s actions not only go against what was initially intended when the environmental laws were enacted, but they also threaten to jeopardize economic development and employment rates.
According to the Department of Labor, there are 15.1 million unemployed people as of November 2010, with the national unemployment rating increasing up to 9.8 percent. The American people are suffering, but the plight of minorities is even more disturbing. Unemployment rates among racial groups differ dramatically with whites at 8.9 percent; Hispanics at 13.2 percent; and Blacks at 16 percent. 1 This growing trend cannot be ignored. Minorities, who constitute a large majority of low- to very low-waged population, continue to get the short end of the stick. While EPA continues to forge ahead with regulations sure to hinder economic recovery, not only for business owners, but the general public alike, of particular concern is the economic impact on minorities, specifically African Americans and Hispanics. An economic impact analysis commissioned by the Affordable Power Alliance2 on the potential impacts of the EPA Endangerment Finding on minorities and low-income populations indicates that GHG regulation will have the effect of a discriminatory tax based on race, and unemployment among low-wage workers, who are disproportionately African American and Hispanic, is expected to increase exponentially. This is because a disproportionate percentage of their income will be spent on energy, including gasoline, residential electricity and residential natural gas prices, which are predicted to increase significantly by 2030. The same rationale applies to Black- and Hispanicowned businesses, which tend to be smaller and less well capitalized than white-owned businesses and thus are much more vulnerable to economic turmoil likely to result from EPA GHG regulation. The impact does not stop at cost of living expenses. Unemployment rates for African Americans and Hispanics will also be disproportionately affected by GHG regulation, given that the minority population will comprise the majority of citizens in the U.S. by 2050. If history is any indicator of what’s to come, unemployment rates for African Americans have been about twice that of whites. Not only do unemployment rates for minorities tend to increase more during recessions, and decrease less during recoveries than their white counterparts, but the duration of unemployment also tends to be longer. Minorities already affected by the current economic downturn will suffer even more so if EPA regulates GHGs as proposed. According to the Affordable Power Alliance economic impact analysis, cumulative loss of jobs by African Americans is predicted to be 1.7 million by 2015 and 4.9 million by 2030; and for Hispanics, 2.4 million by 2015 and 6.5 million by 2030.3 The negative impacts cited in this study portend serious national, if not global, implications. The negative impacts cited in the study portend serious national, if not, global implications.
B. HUD Section 3 Program and Job Creation
Employment Situation Summary (December 3, 2010). The unemployment rate for Asians was 7.6 percent. Roger Bezdek, Management Information Services, Inc., Potential Impact of the EPA Endangerment Finding on Low Income Groups and Minorities (March 2010), available at http://www.affordablepoweralliance.org/LinkClick.aspx?fileticket=GBqH57mHH5w%3d&tabid=40 3 Id.
Since you requested information on existing regulations that impact employment, I would like to call attention to the U.S. Department Housing and Urban Development’s (HUD) Section 3 Program, which I have championed for decades. The purpose of this program is to utilize the billions of dollars in federal funding, which is allocated annually to HUD for the specific purpose of creating jobs and training opportunities for residents of low- and very low- income communities, through the community development process. I, along with the U.S. Chamber of Commerce, have been working to push HUD to implement and enforce Section 3 of the HUD Act of 1968, which requires that employment opportunities generated by HUD financial assistance for housing and community development programs be targeted toward low- and very low-income persons. Notwithstanding mandatory regulatory language and case law, recipients of HUD funding have continuously failed to comply with Section 3, without sanction, for several decades. Instead of providing training and employment opportunities for the targeted local population, a majority of the fund recipients often times ignore the mandate altogether to the detriment of the poor. In December 2008, the Chamber filed two Freedom of Information Act (FOIA) requests for documents relating to the implementation and effectiveness of HUD’s Section 3 Program. After nine months and at least a dozen inquiries to HUD’s FOIA office and Office of General Counsel, HUD finally relinquished the documents in August 2009. An objective review of HUD’s own documents revealed not only the potential deprivation of benefits intended for the poor, but also a systematic failure to monitor program compliance. Under the Section 3 Program, fund recipients must monitor their own compliance and compliance of their contractors and subcontractors as well as submit a report to HUD annually. For FY 2008, a paltry 349 out of 3193 Public Housing Authorities and 143 out of 1137 Block Grant Entitlement Communities submitted annual reports. Although nearly 90 percent of HUD fund recipients completely disregarded the reporting mandate, HUD has consistently failed to apply appropriate sanctions. In September 2009, the U.S. Chamber and I met with Staci Gilliam-Hampton, Director for the Section 3 Program, to discuss the program’s failures and suggest courses of action to remedy the situation. As a result of our efforts, HUD launched a new campaign to increase program compliance in October 2009. As of March 2010, 3100 local and state government agencies had responded, revealing the creation of 17,000 new employment and training opportunities for Section 3 residents and facilitated the award of more than $340 million in HUD-funded construction contracts to Section 3 businesses. The funding also enabled about 3,600 Section 3 businesses to receive contracts to complete work on HUD-funded projects. While I applaud HUD’s accomplishments, the fight is far from over. Now that HUD has established a seemingly effective monitoring system, the next and primary goal should be ensuring compliance with the job creation mechanisms of the program. If implemented properly, Section 3 could generate substantial employment opportunities for those who need it most in a time when jobs are most scarce.
It should be noted that in addition to the millions of federal funding allocated to HUD annually for implementation of the Section 3 program, HUD received $13.6 billion in funding under the American Recovery and Reinvestment Act (ARRA), approximately $7.8 billion or 57 percent4 of which is subject to the statutory and regulatory requirements of Section 3 of the Housing and Urban Development Act of 1968.5 John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity, stated that "Section 3 is the law. We will work with state and local governments, public housing authorities, labor organizations, businesses, and community leaders to create job opportunities and vigorously enforce the law.”6 I completely agree with this proclamation, and I am simply requesting that these funds be utilized in the way Congress intended. To ensure that implementation of Section 3 does not fall by the wayside as it has in the past, we continue our efforts to monitor its progress. For example, the U.S. Chamber followed up with a FOIA request in October 2010 to obtain an update on compliance statistics for FY 2009, however HUD’s FOIA office reported that it had no record of the request. Accordingly, another FOIA request was submitted December 15, 2010. Our efforts, which can and have been thwarted by bureaucratic red tape in the past, are not enough. After decades of haphazard implementation and oversight by HUD, you are in the best position to achieve program implementation by holding HUD accountable for properly utilizing federal funds and complying with the requirements of the Section 3 program. I strongly urge you to take a hard look at HUD’s execution of the Section 3 Program and consider the benefits that the successful implementation this program can bring to low-income communities. C. How to Fix the Problem of Overregulation Rising energy costs have long been a major concern for the business community, especially with the recent anti-dependence on foreign oil sentiment and the realization that domestic energy independence is not imminent due the debacle that is the permitting process for building and operating energy facilities in the U.S.7 EPA’s proposed GHG regulations has done nothing to assuage these fears. Almost every major environmental law requires EPA to conduct a real, meaningful analysis of the economic and job-loss impacts of the regulations it issues there
The majority of Section 3 covered ARRA funding was provided under the following program areas: PIH Public Housing Capital Funds $4 Billion; Neighborhood Stabilization Program $2 Billion; Community Development Block Grants $1 Billion; Native American Housing Block Grants $510 Million; Assisted Housing Energy & Green Retrofits $ 250 Million; and Lead Hazard Control $ 78 Million (LHC Grants Only). 5 HUD Economic Stimulus Funding and The Creation of Jobs, Training, and Contracting Opportunities available at http://www.hud.gov/offices/fheo/section3/Econ-Stimulus-sec3-final.pdf 6 HUD Press Release, HUD Steps up Enforcement of Job Creation Requirements for State and Local Governments, March 8, 2010 available at http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-044 . 7 The U.S. Chamber of Commerce’s Project No Project initiative is a running inventory of energy projects that have been stalled, stopped or otherwise thwarted by “Not In My Back Yard,” or “NIMBY” activism. It is important to note that NIMBYs do not confine their opposition only to coal-fired power plants; by far the largest portion of the nearly 400 energy projects detailed on the PNP website is renewables. The U.S. Chamber is currently in the process of developing an economic analysis of the investment and jobs foregone by failing to move forward with these energy projects. They expect to release the final study in early 2011. I urge you to review this information when complete and take it under consideration when addressing some of the above stated issues.
under. For example: Section 317 of the Clean Air Act requires economic impact assessments for most major rules; and Section 321 of that same law, requires the Administrator to make a continuing evaluation of potential loss or shifts of employment (including plant closures) that may result from one of EPA’s regulations. EPA has confirmed to Congress that it refuses to do a Section 321 jobs analysis for any of its greenhouse gas-related regulations, nor does it appear to have done similar assessments for any of its other rules. Without EPA’s insight into the realworld impact of its policies, other groups have had to pick up the slack. According to the Manufacturers’ Alliance estimates, EPA’s reconsideration of the National Ambient Air Quality Standards for Ground-Level Ozone could cost as much as $1.013 trillion annually between 2020 and 2030 (a 5.4% net reduction in GDP) and could sacrifice 7.3 million jobs by 2020 (4.3% of projected labor force). EPA’s “Boiler MACT” industrial emissions standards for boilers, which EPA admitted were “simply too tight to be able to be achievable,” could reduce GDP by as much as $1.2 trillion. Moreover, every $1 billion spent on compliance costs could put 16,000 jobs at risk, according to a study prepared for the Council of Industrial Boiler Owners by the research firm IHS Global Insight. The North American Electric Reliability Corporation (NERC) found that EPA’s suite of rules on electric power generators could force up to 19 percent of our nation’s fossil-fired electric generation to retire in the next ten years. The impact on jobs resulting from such a largescale retirement of capacity could be colossal. However, EPA must complete more economic and jobs impact analysis in order to be sure. We have data for the handful of rules mentioned above. But we do not have it, nor does EPA appear ready to provide it, for dozens of other major rules that are plaguing NBCC’s members and preventing long-term investment. I emphatically recommend requiring EPA to conduct the statutorily-required analyses for all major regulations. Moreover, I urge the preemption of all EPA regulations issued in 2009 and 2010 that did not adequately comply with Sections 317 and 321 of the Clean Air Act. Thank you once again for your request for information on existing and proposed regulations that have negatively impacted job growth and the economy. The NBCC looks forward to your leadership of the Oversight and Government Reform Committee, and stands ready to work with you on these issues. Sincerely,
HARRY C. ALFORD President/CEO
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