time and I found them very helpful. I wish we had time for a lot of questions but I am afraid we better do our best to get back on schedule. We appreciate your time underrun. That is very unusual in any kind of governmental hearing.

Mr. LEVITAS. Thank you very much.

Senator NUNN. The next witnesses are Mr. Glenn Dewberry and James W. Howard.

TESTIMONY OF L. GLENN DEWBERRY, JR., PRESIDENT, ATLANTIC STEEL CO., ATLANTA, GA.

Mr. DEWBERRY. With your permission, I will excerpt from my

statement.

Senator NUNN. I appreciate very much your giving it to us.

Mr. DEWBERRY. We are one of the larger employers in Georgia. We have about 1,700 employees and about 1,800 stockholders and we are an independent company, not associated with other companies in the manufacture of steel. I want to say to you that some of the information you have covered is contained in my statement and I will skip over it to conserve time. I will get down to specific examples that can be used by your committee.

Our company has just recently undergone an expansion and relocation, and our first phase which is costing about $30 million, began operation in December. We have installed new environmental control equipment for a cost of over $212 million. We have taken steps to prevent rainwater which comes in contact with the roof of the buildings from running back into the creek as well as all process water from entering the creeks on the property. All runoff and process water is recirculated and if need be is pumped into a dry lake for evaporation. We have done everything that we know to do to meet the environmental control regulations.

We believe we have met all requirements for the new location as well as all requirements at the Atlanta location since we now have a permit to operate in both locations. We think that we have done an outstanding job at each location.

The pollution control equipment we have installed at the new location will cost us at least $400,000 a year to operate. This cost includes the electrical charge as well as other operating and routine repair costs. One of our estimates indicates this figure may run as high as $900,000 per year. None of these dollars add to our productivity; only our cost.

I have a couple of examples under OSHA I would like to talk about. One of those was just commented on by Mr. Fitzgerald and that is the noise standard, that section 1910.95 states when an employee is subjected to sound exceeding those listed in tables G-16, feasible administrative or engineering controls will be utilized. If such controls fail to reduce sound levels within the level of table G-16, personal protective equipment will be provided and used to reduce sound levels to within the levels of the table.

The word feasible is the problem word that industry is concerned with. We have our opinion and the OSHA people have another. We do not know what feasible means and they certainly don't. We think

whatever action we propose is feasible, right and proper. They disagree-so constant haranguing over the word and its meaning.

Another example is the problem with the requirements under the employee retirement income security act of 1974. Among other things, the act provides that a pension plan could elect one of three types of vesting procedures and thereby

Senator NUNN. Let me ask you one question about this word feasible. We have heard this from several witnesses. You are saying. as other witnesses have, that the agencies, mainly OSHA, are not using the word feasible to have anything to do whatsoever with costs. Practically, they are using the word feasible, as I understand it, as a synonym for the word attainable?

Mr. DEWBERRY. I am sure that in some instances, they have used cost. I do not mean to say in every instance they have not but I am sure in a lot of places, where they think it can be done, that they do not care what the costs are.

Now, in relationship to our situation, when we were moving into the Cartersville area, the EPA was cost conscious to some degree. They designated a consulting engineer to work with us. This proved to be helpful, but prior to this they wanted us to spend about $212 million in Atlanta to meet the air standard and we are only going to be there another 4 or 5 years. This is ridiculous. By showing them the schedule we had for relocating they agreed to allow us to operate in Atlanta for a fixed period of time. After that period we must spend money to be in compliance or cease operations.

Senator NUNN. Thank you.

Mr. DEWBERRY. But feasible is a word that I am sure will create argument because people will say they have not considered costs. Looking at the employment retirement income security act of 1974, the act does, to go back to it a moment, among other things, the act provides that a pension plan could elect one of three types of vesting procedures and thereby remain in compliance.

When most companies had selected one of the vesting procedures provided in the act, Internal Revenue Service issued Revenue Procedure 75-49 which, in effect, would have disqualified most pension plans-and nothing outside of the act had been done. The problem may not now be a threat but it has not been completely resolved.

Senator NUNN. We are having hearings on this subject now, by the Senate Select Committee on Small Business and the Finance Committee jointly. This whole question is being looked at and that does not mean there will be any answer but at least the people's attention has been gained as far as this problem is concerned.

I think similar hearings are going on your side.

Mr. LEVITAS. On this very point you raised.

Mr. DEWBERRY. It is completely frustrating. We do not know what to do.

Mr. LEVITAS. The most significant thing, aside from that particular example, it seems to me, is here it is a clear-cut case, where the Congress elected by the people stated you could select one of three methods of vesting and then the Commissioner of IRS, elected by nobody, has vetoed and rejected the congressional purpose and I think that just highlights precisely one of the things we are talking about.

Senator NUNN. The big thing we are concerned about now, based on present trends, is that the law that passed intended to increase employee protection under pension plans. That was the very purpose of the law.

Unless some changes are made, there are going to be literally hundreds of thousands of employees who were covered under pension plans, who are no longer going to be covered. If we do not do something about that law, it is going to end up jeopardizing employee protection in hundreds of thousands of cases, which is exactly the opposite of what Congress had in mind. It is a serious problem.

Mr. DEWBERRY. If I may move on to one more example, rather hurriedly, OSHA has what they call the log where you are supposed to keep the injury illness record. They say the log is a convenient means for classifying injury and illness cases and for noting the extent and outcome of each. I have a paragraph here to quote, but basically what it amounts to is that the classification they have is limited to recording the number of cases which result in various levels of severity-death, loss work days, restricted work activity, medical treatment, termination, or permanent transfer.

All recordable injuries are entered as "Code 10." Thus, we get a number but no analysis of the type of accident or even the part of the body involved. We are keeping records for someone who thinks they can analyze from this information.

The reliability of injury and illness incidence rates is suspect. The rules provide for an employer to determine what cases are to be recorded. A very vague definition of "first aid cases" complicates meaningful recording.

More than 25 steel company safety directors were asked to evaluate 10 injury reports and determine how many were recordable under OSHA. Responses varied from recording zero to recording all 10 cases. It must be remembered that these safety directors were all experienced safety people who had honest differences in interpretation of the OSHA instructions.

The primary use of these safety and health statistics has been to designate industries with poor records for more inspections.

An employer may devote a large number of manhours and be in complete compliance with OSHA recordkeeping requirements and yet not learn a thing which can be applied to the overall goal of OSHA of providing every American with a safe and healthy work environment. Moreover, the recordkeeping requirements can be selfincriminating.

There is another thing which concerns us. We are trying to keep. the records on many requirements, when out of the blue we become aware that something has been published in the Federal Register. By the way, your 60,200 pages of the Register for 1975 contained 25,000 separate changes and modifications in that 60,000 pages. I defy any. man to read it, and understand it, much less keep up with it. It is impossible—we are probably in violation of a law unknown to us.

I have one more and then I will hush. The problem of complying with Government regulations

Senator NUNN. Maybe that is a new way of dealing with the subject. Maybe you ought to sit back and say you will take the fifth amendment and not fill out the forms.

Mr. DEWBERRY. I do not know what they would do but they would find some way to haul us in. The problem of complying with Government regulations reaches the absurd and the attendant frustration becomes untenable when one agency mandates action directly in conflict with another.

Recently, after several months of discussions involving representatives of the SEC, the IRS, the Treasury Department, and the American Institute of CPAs, the IRS ruled that disclosure in financial statements of the income effect of the liquidation of a LIFO-inventory layer will not violate the conformity requirements of the tax law and thereby deny a company the right to continue the LIFO method for tax purposes.

IRS decided to permit the disclosure even though, in its view, it represents a technical violation of the literal requirements of the tax law. During this time, the SEC maintained that if the LIFO-inventory liquidation had a material effect on the company's financial statements that disclosure was required under SEC rules and proper financial reporting practices. Until a settlement was reached on January 19, 1976, a company was in the "Non-win" position of either being in violation of SEC requirements or being afoul of the tax laws and losing the ability to use the LIFO method for tax determining purposes.

I am encouraged by the support that Congressman Levitas has with the bill he submitted and which will provide Congress with a second look at administrative rules before they become effective, and, Senator, I am also heartened by your bill which will cure some of these regulatory ills which we have been speaking of. I appreciate the opportunity to present my views.

Senator NUNN. Thank you. We will be glad to put all of your prepared statement in the record, Mr. Dewberry.

[The prepared statement of Mr. Dewberry follows:]

PREPARED STATEMENT OF L. GLENN DEWBERRY, JR., PRESIDENT, ATLANTIC STEEL

COMPANY, ATLANTA, GA.

My name is L. Glenn Dewberry, Jr., and I am President of Atlantic Steel Company, here in Atlanta. Thank you for this opportunity to present some of my views toward the proliferation of Federal rules, regulations and restraints. Atlantic Steel Company is a publicly held company with approximately 1,800 stockholders, employing 1,700 employees. We are an independent steel producer with a wholly-owned subsidiary which manufactures pre-engineered metal buildings and steel tubing. The company is celebrating its 75th Anniversary this year.

In recent years, we have seen an unbelievable growth in government control of every aspect of business endeavor. Today, management spends less and less time in decision-making while more of its time along with lawyers, accountants, and actuaries is spent attempting to comply with laws, rules and regulations administered by a multiplicity of bureaus, agencies and commissions. Personnel activities are now controlled by governmental agencies-Equal Employment Opportunity Commission, Office of Federal Contract Compliance, the Occupational Safety and Health Commission, and the Employment Retirement Income and Security Act.

Industrial development decisions, such an expansion or relocation, are controlled by the Environmental Protection Agency, and sales activities are controlled by consumer protection agencies and the Federal Trade Commission. Cutting unnecessary government spending, eliminating the red tape and confusion, and streamlining the bureaucracy is absolutely essential if our private enterprise system is to have any future at all.

According to Dr. Murray Weidenbaum, of Washington University, business and individuals are now required to fill out over 5,000 different types of gov69-084-76- 4

ernment forms-taking an estimated 130 million manhours each year to complete.

During the past fifteen years, I understand that the Federal Register has expanded from 15,000 pages of fine type to the 60,221 pages last year. Embodied in these 60,000 pages were 25,000 separate regulations, modifications and changes. A major-often crucial-problem of business management today is that of capital formation-the struggle to accumulate funds for replacement, modernization and expansion of facilities.

When depreciation is woefully short, retained earnings are low, equity investment is unattractive, borrowing is almost prohibitive, new social programs require more capital with no promise of improved productivity, business is being asked to absorb the cost of stringent new environmental measures, expanded health and safety standards, the development of new energy sources, and the impact of the Employee Retirement Income and Security Act of 1974. No one doubts the benefits of these programs. But can we afford them? Are they worth the cost? Has Congress balanced the cost against the benefits?

To cite some examples, my company is now in an expansion and relocation program-the first phase costing about $30 million. For the first furnace, which began operations last December, we have installed environmental control equipment at a cost of over $21⁄2 million dollars.

Each year, the cost of operation and routine maintenance of this equipment will be at least $400,000 none of which adds to the productivity, only to cost. I have other examples of the effect of bureaucratic mandate and confusion. Actions under the Occupational Safety and Health Act are often arbitrary and contradictory. Compliance by business is undertaken at great cost, and yet the positive results are far from overwhelming.

We still do not know all of the requirements under the Employment Retirement Income Security Act of 1974. Among other things, the Act provided that a pension plan could elect one of three types of vesting procedures and thereby remain in compliance.

When most companies had selected one of the vesting procedures provided in the Act, Internal Revenue Service issued Revenue Procedure 75-49 which in effect would have disqualified most pension plans-and nothing outside the Act had been done.

This problem may not now be a threat, but it has not been completely resolved.

The problem of complying with government regulations reaches the absurd and the attendant frustration becomes untnable when one agency mandates action directly in conflict with another.

Recently, after several months of discussions involving representatives of the SEC, the IRS, the Treasury Department and the American Institute of CPA's, the IRS ruled that disclosure in financial statements of the income effect of the liquidation of a LIFO-inventory layer will not violate the conformity requirement of the tax law and thereby deny a company the right to continue the LIFO method for tax purposes.

IRS decided to permit the disclosure even though, in its view, it represents a technical violation of the literal requirements of the tax law. During this time, the SEC maintained that if the LIFO-inventory liquidation had a material effect on the company's financial statements that disclosure was required under SEC rules and proper financial reporting practices.

Until a settlement was reached on January 19, 1976 a company was in the "NON-WIN" position of either being in violation of SEC requirements or being afoul of the tax laws and losing the ability to use the LIFO method for tax determining purposes.

I am encouraged by the support that Congressman Elliott Levitas has with the bill he has submitted, and which will provide Congress with a "second look" at administrative rules before they become effective. I am also heartened by your bill, Senator Nunn, which will cure some of the regulatory ills of which I have been speaking, and should, as you point out, improve responsiveness on the part of Federal agencies.

Senator NUNN. Mr. Howard?

TESTIMONY OF JAMES W. HOWARD, HOWARD LUMBER & KILN CO., ATLANTA, GA.

Mr. HOWARD. I am glad to be here.

Senator NUNN. We are pleased to see you looking in such good