ernment was making me spend that I would have put into adding on to my facility. At that time, I knew full well that this inspection mandate was coming down. Had I told them then, they would have realized I might not have the money again in 2 years and they would not have even given me this 2-year approval.

So government regulation needs to be more thought-out in terms of helping us as small business people, but if you multiply me by 1,000 or 100,000, what does that do to the economic factor in terms of employment? So these things do need to be taken into consideration.

I believe that judicial review may have given me the opportunity to take some action. The reason that I asked for 2 years is after these regulations were promulgated I was not notified of them right away. In fact, there was a certain deadline that these regulations needed to take effect, and the way I found out was because all of the different contractors started to contact me-flyers, postcards, brochures, Federal regulations; you are required to do this. Of course, at that point a significant amount of time had gone by, and these contractors knew what they were doing. They used this marketing technique by informing all of the other such business people like myself that you are required to do this. And guess what. The deadlines were coming near and the prices to do this were exorbitant. So we need a lengthy period of time or statute of limitations for such a reason.

I appreciate the opportunity that you have given me today to inform you of this. I hope that something good comes out of it, and I will make myself available to give any other horror story that you may need.

[The prepared statement of Mr. Risalvato follows:]

PREPARED STATEMENT OF SAL RISALVATO ON BEHALF OF THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS

Good morning. I am Sal Risalvato, owner of Riverdale Texaco, a gasoline service station in Morris County, New Jersey. I have been in the service station business since 1978 and have been affected by many government regulations. These regulations have touched every aspect of my business from the sale of petroleum products to the service we provide in our repair shop.

Thank you for allowing me the opportunity to explain to you about the need and the effect of regulatory reform. I would like to accomplish_two things today. First I would like to tell you about the most costly regulations Congress imposed on me and the negative effects they have had on me. Second I would like to describe to you a positive scenario that would likely exist if these regulations had not been imposed upon me. I would also like to point out to you how a decision that seem intelligent at any point in time, can be rendered a stupid one, by government regulatory curve balls, that cannot be detected with anything less than a crystal ball.

In 1986, the service station that I had been leasing for the previous eight years was lost to the real estate boom of the 80's. My lease was up with the landlord and the property was too valuable to remain as a service station and the owner evicted me and built a group of retail stores. I lost my business. I spent the next year along with my brother Vinny, who had become my partner, looking for a suitable and affordable location. Of course there wasn't any way I was going to lease again. After looking at over 100 locations in northern New Jersey, my brother and I finally found a location that met our requirements. Due to rising environmental concerns, one of our most stringent requirements was that the integrity of the underground storage tanks at any location we investigated must not be compromised. Making what seemed to be an intelligent decision, we purchased a location that had new underground tanks installed one year prior to our purchase. We paid a premium price for the location because it had new tanks. Our crystal ball was not working correctly when we made that decision.

Within five years, unexpected government regulations altering the standards and requirements for underground storage tanks, picked my pocket for $95,000. Please keep in mind that after losing my business in 1986, I was left with virtually nothing. At the time I lost my business I still had six months left to pay on the note that I owed the bank when I purchased the business nine years earlier. When I purchased the second location in 1987, I had to borrow from family members and banks using my dad's home as collateral. Finding $95,000 in order to meet new EPA regulations was not going to be easy. Fortunately, between borrowing more money from family members, and funds advanced by Texaco in exchange for a supply contract, I obtained the money to meet the new government regulations. This really amounted to extortion, since I would not have been allowed to remain in business had I not met these requirements. In fact many service stations have been forced to close or have stopped selling gasoline simply because they could not find the capital necessary to meet the EPA requirements.

One would think that the EPA has inflicted enough pain and torture on my business. Not so. The new regulatory agenda is now attempting to blackmail me, my governor, the motorists of my State, and my fellow service station owners in New Jersey.

The State of New Jersey probably has the best motor vehicle inspection system in the nation. Presently motorists must have their cars inspected on an annual basis by either a State inspection facility or a licensed private repair facility such as mine. Vehicles are inspected for safety items such as brakes, lights, tires, and mirrors. Inspection of the vehicle emissions system are also conducted. Presently, New Jersey is faced with losing its inspection system because the regulators at the EPA are demanding a tougher emissions test be performed on all vehicles.

What does this mean? It means that in order to meet EPA requirements, the State of New Jersey will have to invest millions in new equipment at the State inspection facilities. It also means that if private facilities are to be permitted to continue performing inspections, they will have to invest in new equipment valued at $40,000 to $100,000. This decision making process has been in the making by EPA for the past two years and has paralyzed the decision making of the owners of private repair facilities. Once again, a faulty crystal ball that tries to unravel the logic of the bureaucrats and regulators could prove costly.

One concern of the State is the length of time it will take to perform the new type of inspection. So far, estimates of the time needed to fulfill EPA requirements, will cause far more lengthy lines at State run facilities. Also, due to the amount of time required to perform the emissions tests, the safety inspection that is the class of the nation will have to eliminated.

Since there will obviously be a large number of private inspection facilities that will be unable to meet the capital requirements needed to purchase the new mandated equipment, more motorists will be forced to visit the State facilities, thereby lengthening the already longer lines. The net result is this. Motorists will be far more inconvenienced that they already are. They will be expected to pay more for an inspection, including inspections at the State lanes which are currently free. Their time and money will be rewarded with less value since now there will not be a safety inspection. Small business such as mine will be forced to either give up an important profit center, or make purchases of equipment that are virtually unaffordable. I am running out of family members that have any capital, and those family members that do have it are running out of it, always loaning it to me.

The new Governor of New Jersey, Christie Whitman, has been negotiating with EPA in order to lessen the burden on our State. Presently she is being forced to make a hasty decision because EPA is threatening to impose sanctions against the State. If the State does not adopt an inspection system that is suitable to EPA, then the Department of Transportation will withhold $217 million of Federal Highway funds. This decision is likely to harm businesses like mine and the motorists who use our services.

Aside from the debate that is held trying to decide if the public interest is being served by any of these regulations, there is an awful lot of good that can be had without them. Let's assume that the previous regulations regarding underground storage tanks were less stringent. Let's also assume that the current threat of EPA regulations governing motor vehicle inspection are eliminated. A quick calculation gives my business between $135,000 and $195,000 to expand. Make no mistake about it, when we purchased this location, our dream was to add on three or four service bays and a sales room, employee room, sufficient storage space, and sufficient office space. Presently in order to utilize space inside the main building, our offices are housed in an office trailer on the side of my building. This has caused great stress with the municipal fathers, and twice in seven years we needed to receive temporary variances from the local Board of Adjustment in order to keep our

office. Each time we appease the Board by promising to expand the existing building. We explain to them that if not for costly government regulation, we would already have had the expansion complete. Our most recent appearance before the Board was this past November. We received temporary and final approval for another two years. I did not have the courage to tell them the EPA was holding another gun to my head. I pray a lot.

If our physical facility was expanded to the size we wish, there would be employment for at least 3 more full-time technicians, and 3 part-time assistants. There would also be a position for at least 1 full-time office person.

Please do not think that I have little regard for the environment. That would be false. I drink the same water and breathe the same air as everyone else. I have no desire to see the quality of either jeopardized. I do believe, however, that the downside of burdensome regulation must be properly evaluated relative to any benefits that may be derived from it. I am convinced that in my case the bad effect has outweighed the benefits.

Senator GRASSLEY. Well, the fact that you are still in business, I guess, shows that you are a real entrepreneur, and I hope you can stay in business and I hope, as a result of this legislation, we make it easier on you in the future and for other people who would like to become their own business, create their own job, to do it as you have.

I will have questions of both of you. I will start with you, Mr. Keith. You have, I think, related very well in your testimony about how many days your facility actually conducts activities that cause emission, how many bushels are run through your facility, and how many bushels your facility would handle if you operated according to the potential to emit, which would be 365 days a year, 24 hours a day.

Would you say that your operation is typical of Iowa and typical of country elevators generally?

Mr. KEITH. Yes, we are very typical. As a total company, we have got 9 locations and they are all just your standard Iowa grain elevator.

Senator GRASSLEY. You testified that the operating permit application that you have shown us there is 280 pages long. It asks questions that only can be answered with the help of outside consultants. What do you estimate is the cost to your facility in terms of time and consultant fees in complying with the paperwork burden?

Mr. KEITH. I think, as I said, this application is very technical and we are going to have to have some outside people help with some of the aspects of it, but I would honestly say I think it would be around $100,000 for our elevator. What we have got developed here by the 1990 Clean Air Act is it is almost like a consultant's full-time employment act. It has given these guys the opportunity to-like you said there, they are coming in and taking the rules as they come down and then come out and actively solicit your sales through EPA regulations.

Senator GRASSLEY. Well, maybe that is their way of solving the unemployment problem.

Mr. KEITH. They have been our toughest opposition to try to have changes.

Senator GRASSLEY. It is not a coincidence, then, that the regulations come out and these consultants come around to your place of business?

Mr. KEITH. That is right.

Senator GRASSLEY. These consultants-is it a competitive enterprise or do they pretty much all charge the same amount?

Mr. KEITH. It is never competitive. There are only two or three firms that are doing it.

to.

Senator GRASSLEY. So they probably can charge what they want

Mr. KEITH. That is right.

Senator GRASSLEY. Will this time-consuming and costly process result in reduced emissions from your facility or benefit the environment in any way, this $100,000 you think you will spend?

Mr. KEITH. It will have none whatsoever. It is strictly an exercise in paperwork.

Senator GRASSLEY. I would like to ask you about the kinds of materials that country grain elevators emit into the atmosphere, the type of dust that comes from your facility.

Mr. KEITH. Most of the-well, they call it particulate matter, is very large. It would be like-you would understand this-for everyone here, it would be corn has what we call bee's wings. That is part of it, large-scale dust.

Tom, go ahead.

Mr. O'CONNOR. The Environmental Protection Agency, Senator, requires that all emissions be calculated in determining potential to emit, and in many cases the types of emissions that you will get from a grain elevator will be large particles which will quickly settle out of the atmosphere.

Senator GRASSLEY. Are they toxic?

Mr. O'CONNOR. No, sir.

Senator GRASSLEY. Do they enter the atmosphere or do they just fall to the ground?

Mr. O'CONNOR. Most of it will fall to the ground. There is a small particulate that will enter the atmosphere. It is referred to as PM10, which simply means that it is 10 microns in size, a micron being one-millionth of a meter, so it is extremely small particulate matter.

Grain elevators are not the only ones that would emit that. It is emitted by any type of facility that would handle a solid product. That has been declared to be the particulate matter of concern by the Environmental Protection Agency, and when you look at the data that has been gathered on emissions from facilities, the fraction of total dust from grain elevators of PM-10 would range anywhere from only 4 percent to maybe as much as 25 percent. So only a very small fraction of emissions from facilities are of health con

cern.

Senator GRASSLEY. I am done with asking you questions, but I can't emphasize too much before I go to Mr. Risalvato that just in the normal process of doing business, the 30 or 40 days in the fall that we are harvesting, bringing our grain to a facility like yoursmine is at the little town of New Hartford, IA. My son combines. I haul the grain away from the combine, bring it in, and unload it at the elevator.

There is absolutely nothing you or I can do, or need do, to in any way control what I call dust. You referred to it in another term. It is the normal course of nature, doing business. We either do it

this way or we don't produce food in America. That is the way I see it.

Mr. KEITH. That is right.

Senator GRASSLEY. I think this is administrative overkill, if there

ever was.

Mr. O'CONNOR. Senator, there is one other point that I think I would like to make.

Senator GRASSLEY. You are entitled to do that. Please, go ahead. Mr. O'CONNOR. We had mentioned some of the emissions in the written testimony being one-fifth of the total emissions that would be allowable under the Clean Air Act, and we had mentioned there that we think there is flawed EPA data.

There have been some recent tests made in the Midwest under EPA-sanctioned guidelines which would suggest that the EPA emission factors are anywhere from 10 to 25 times too high. So, that 20 tons is really probably more like a 1- or 2-ton range. So when you take a look at the actual level of emissions, they are much lower even than what you were looking at in current EPA data.

Senator GRASSLEY. Let me ask you this before I go. You are, as a cooperative elevator or a privately-owned elevator, a little different entity than the family farmer. Some have very sophisticated grain-handling equipment. Has there ever been any indication that any of these rules might start applying on the family farm to a farmer who probably would be a much larger farmer than our average farmer in Iowa, but still handles a massive amount of grain?

In some cases, you might have one farmer who might handle more grain than maybe the smallest elevator in Iowa might handle. Have you ever indicated that these rules might start applying to them some day?

Mr. KEITH. We haven't actively solicited to have this expanded to private farmers, no.

Senator GRASSLEY. Well, I hope you don't. I mean, I am just saying have the bureaucrats indicated that to you.

Mr. KEITH. No, but there have been discussions about it from the standpoint of, gosh, it is not fair; why do we have to follow this and people that handle more bushels than some of the smaller elevators don't.

Senator GRASSLEY. Mr. Risalvato, you mentioned the EPA's efforts to centralize emission testing. The Governor of Virginia, George Allen, is suing EPA over this rule. What, if anything, is New Jersey doing to assist your cause, not just you personally, but in a general way, in bringing this before the courts?

Mr. RISALVATO. I don't know if there is anything that is being done to bring it before the courts. I know the governor has come to Washington a number of times in the past 6 months to negotiate. Each time, EPA says a particular point is nonnegotiable and eventually it is negotiated to where we want.

I have recently tried to persuade people in the State legislature to basically come to Washington and very politely tell EPA to stick it. I think that with the new attitude that we have in Washington right now and the fact that we are recognizing what the regulatory burdens are doing to both business and State governments, I think