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What is Business Roundtable

Business Roundtable (BRT) is an association of chief executive officers of leading U.S. companies working to promote sound public policy and a thriving U.S. economy.

In response to the July 18, 2012 invitation to submit ideas for streamlining federal regulations, Business Roundtable (BRT) respectfully submits these comments.
 
BRT is an association of chief executive officers of leading U.S. companies with more than $7.3 trillion in annual revenues and nearly 16 million employees. BRT member companies comprise nearly a third of the total value of the U.S. stock market and invest more than $150 billion annually in research and development – equal to 61 percent of U.S. private R&D spending. Our companies pay $182 billion in dividends to shareholders and generate nearly $500 billion in sales for small and medium-sized businesses annually. BRT companies give more than $9 billion a year in combined charitable contributions.
 
BRT has a long history of concern about regulatory burdens that threaten U.S. competitiveness and impede job creation and economic expansion. In 1994, BRT issued Toward Smarter Regulation, which described problems with the regulatory process and recommended specific solutions. Building on this earlier study, in September 2011, BRT released Achieving Smarter Regulation. As BRT noted in that report, “Federal regulation profoundly affects business in the United States. Unfortunately, while regulation can be essential, during this time of economic challenges it has become all too apparent that specific regulations are often counterproductive and far too costly, with a detrimental impact on employment and job creation. The challenge is to have only regulations that are necessary and cost-effective.” BRT also wrote to the President on April 12, 2011, applauding him for issuing Executive Order No. 13563 on Improving Regulation and Regulatory Review and identifying specific pending regulations with the largest economic or jobs impacts that should be reviewed and modified.
 
In responding to the current invitation, BRT has attempted to identify several existing regulations meeting the following criteria: (1) they are unreasonably burdensome; (2) they either have no quantifiable benefits or costs that are significantly in excess of quantifiable benefits; and (3) they are a significant impediment to investment, innovation and job creation. While the following existing examples are by no means an exhaustive list of regulations meeting these criteria, they are illustrative of the types of regulations that impose significant costs, slow down innovation and provide little in the way of public benefits.
 
EPA Definition of “Solid Waste,” 40 C.F.R. § 261.2(c) (2)
 
Since 1985, the Environmental Protection Agency (EPA) has regulated as “solid” and thus “hazardous” waste a wide range of industrial, commercial and consumer materials that are recycled by burning them to recover energy. This EPA rule imposes a significant annual burden on the American economy by:
  • discouraging energy recovery at many industrial facilities;
  • encouraging the landfilling of materials with significant energy value;
  • increasing the net energy demand on the power generation sector; and
  • imposing substantial compliance costs on those facilities that do engage in recycling for energy recovery.
This EPA rule should be reviewed and revised for several reasons, including:
  1. Congressional purpose. The Congressional purpose in enacting the Resource Conservation and Recovery Act of 1976 (RCRA) was to encourage the recycling and reuse of valuable materials. True, RCRA also called for EPA to regulate the handling of hazardous waste, defined essentially as “discarded material.” Yet EPA has persisted in regulating recycled materials as if they were “discarded,” even though recycling is the opposite of “discarding.” EPA’s approach has yielded overly broad rules of dubious legality, decades of litigation and needless regulatory burden. Recycling for energy recovery is simply not “discarding,” and it should not be regulated as such.
  2. Modern environmental regulation. The primary environmental concerns about burning for energy recovery have largely been addressed by stringent EPA rules adopted more recently under the Clean Air Act. Today, most industrial facilities burning hazardous materials for energy recovery must meet strict technology-based emissions limits under one or more MACT rules. There is no longer an environmental reason to regulate these facilities under RCRA in order to ensure the safe burning of hazardous materials for energy recovery.
  3. Superfund. Historically, some energy recovery practices resulted in environmental contamination. But this does not justify regulating these recycling practices under RCRA. Materials with energy value also have economic value. Thus, facilities have built-in economic incentives to handle those materials carefully and minimize any losses to the environment. Moreover, the federal Superfund program, which did not exist at the time of the historical damage incidents, now provides another layer of economic incentive to manage materials responsibly and avoid losses to the environment. Failure to do so could subject the facility to very substantial liability, as is well-known. Given these post-1980 legal and economic safeguards, regulating energy recovery under RCRA is now overkill, pure and simple.
Proposed Solution
 
Amend RCRA rules to delete 40 C.F.R. §261.2(c) (2), which classifies many industrial materials with energy value as hazardous waste.
 
FCC Regulation of Legacy Telecommunications Services
 
The FCC should revise and streamline its rules to facilitate the sunset, by a date certain, of legacy, 20th century, voice-centric telephone service and of the public switched telephone network that carried it. A defined sunset date will allow service providers to dramatically increase operating efficiency and to dedicate limited capital resources to building their state-of-the-art broadband, internet protocol (IP) networks throughout the country. After the sunset date, no carrier would be required to establish or maintain legacy (specifically Time Division Multiplex or TDM-based) services or networks, and all purchasers of such services would migrate to IP or other packet-based services.
 
Proposed Solution
 
  1. Streamline or eliminate FCC’s service discontinuance procedures under 47 U.S.C. § 214 and network modification rules to facilitate sunset and replacement of legacy networks and services with IP-based broadband networks and information services. (47 C.F.R. Part 63.) Federally preempt any state requirements that might operate to force service providers to maintain legacy networks or services. Such requirements could deter investment in broadband, and thus are inconsistent with and pose an obstacle to federal law and policies encouraging the transition to all IP networks and services.
  2. Reform Interconnection Rules (47 C.F.R. Part 51). Effective with the sunset date, the FCC should clarify that a carrier or other service provider that continues to rely on legacy TDM technology or to offer legacy TDM-based services should not be permitted to invoke the section 251 and 252 regime to force other service providers to interconnect. The Commission should maintain the market-based, regulation-free interconnection regime that has applied to IP-based interconnection for decades – including forbearing from application of section 251(c) (2) interconnection and other requirements if necessary. Following the transition, legacy providers should bear the cost of converting traffic to/from TDM when they interconnect with non-TDM based service providers.
  3. Reform wholesale obligations under 47 U.S.C. §§ 251 and 271 to eliminate unbundling, resale, collocation and other requirements that could require incumbent providers to maintain TDM networks and services. (47 C.F.R. Part 51.) Following the transition, unbundling should apply, if at all, only to bare copper loop facilities (i.e., requesting carriers should supply their own electronics).
  4. Clarify that the regulatory superstructure that accompanies legacy, TDM services does not extend to IP-based services. This superstructure includes, for example, equal access and dialing parity (47 C.F.R. Part 51 Subpart C), residual ONA/CEI (47 C.F.R. Part 64), record-keeping (47 C.F.R. Part 32), accounting (47 C.F.R. Part 32), guidebook, payphone (47 C.F.R. Part 64 Subpart M), and certain data collection requirements. Going forward any regulatory requirements should apply equally to all providers on a technology- neutral basis.
  5. Implement ETC reform – Sunset existing Eligible Telecommunications Carrier (ETC) designations on a date certain. Thereafter, limit ETC status and obligations only to carriers that voluntarily accept ETC status and only to those services and geographic areas that are supported by federal universal service funding.
  6. Reform the Universal Service Fund rules (47 C.F.R. Part 54) to provide support for broadband regardless of the regulatory classification of broadband services and eliminate any obligation to offer such services on a common carriage basis to be eligible for such support.
Securities and Exchange Commission, Disclosure of Payments by Resource Extraction Industries
17 C.F.R. Parts 229 and 249
 
Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 13(q) to the Securities Exchange Act of 1934, requiring resource extraction issuers to report annually information relating to any payment made to a foreign government for the purpose of the commercial development of oil, natural gas or minerals. Section 13(q) further requires a resource extraction issuer to provide information about the type and total amount of such payments made for each project and the type and total amount of payments made to each government. The term “project” is not defined in the statute. In August, 2012, the SEC adopted final rules to implement section 13(q).
 
The final rules adopted by the SEC require project level disclosures of payments to governments and fail to capture payments made by non-SEC registrants which have significant influence on the global industry. Furthermore, the rules do not require host governments to disclose revenues received while imposing reporting rules on companies without seeking participation by or input from host governments. In addition, in its final rule, the SEC declined to define “project,” providing only guidance regarding the meaning of the term. The SEC, in its final rule, estimated the initial cost of the rule could be up to $1 billion, with ongoing annual compliance costs of between $200 million and $400 million. Importantly, the SEC acknowledged that the rule will not “generate measurable, direct economic benefits to investors or issuers.”
 
To the extent the SEC implementing rules diverge from the Extractive Industry Transparency Initiative (EITI) framework, such rules carry great potential to harm U.S. registrants and their investors. Specifically, the SEC rules required disclosure of unnecessarily detailed information and do not include appropriate exemptions, thereby providing competitors with sensitive commercial information and place U.S. registrants at a competitive disadvantage. Moreover, the SEC rule is at variance with Section 3(c)(i) of Executive Order No. 13609 on International Regulation Cooperation, which in part provides that “in selecting which regulations to include in its retrospective review plan, [an agency should] consider … reforms to existing significant regulations that address unnecessary differences in regulatory requirements between the United States and its major trading partners … when stakeholders provide adequate information to the agency establishing that the differences are unnecessary.”
 
Proposed Solution
 
17 C.F.R. Parts 229 and 249 should be modified to require country-level disclosures of payments to governments.
 
Alternatively, Section 1504 of the Dodd-Frank Act provides the Commission with discretion to maintain the information submitted by individual resource extraction issuers in confidence for the Commission's internal use and to make only a compilation of such information available to the public. The public compilation could aggregate payment information from all SEC registrants at the country level. This approach would be consistent with EITI, would promote the transparency goals of Section 13(q), and would at the same time allow the Commission to fulfill its mandates to protect investors and promote competition and efficiency by protecting companies from disclosure of competitively sensitive information and from violation of laws prohibiting disclosure of specific commercial terms. This approach is the simplest, least burdensome and most effective way to implement Section 13(q) consistent with the statutory language.
 
Sincerely,
 
John Engler