NBCC Letter to House Oversight Committee on HUD Noncompliance and Utility MACT Rule

Thank you for your letter of May 16, 2012 requesting examples from the National Black Chamber of Commerce (NBCC) of government rules that negatively impact job growth among our members. NBCC is dedicated to economically empowering and sustaining African American communities through entrepreneurship and capitalistic activity within the

United States

and via interaction with the Black Diaspora. NBCC has been active in identifying ways that this administration could create more jobs and increase economic growth in the U.S. Included below are two of the most important issues we believe are hampering job growth for our members and the African American community.

Section 3 of the Housing and Urban Development Act of 1968, as amended by Section 915 of the Housing and Community Development Act of 1992, requires that economic opportunities generated by HUD financial assistance for housing and community development programs be targeted toward low- and very low-income persons. HUD, as well as several public housing authorities, asserts that compliance with this program is voluntary,[1] however case law[2] exists to the contrary. Notwithstanding mandatory regulatory language and cases, recipients of HUD funding (cities and municipalities) have consistently refused to comply with Section 3, without sanction, for several decades. Instead of providing training and employment opportunities for the targeted local population, public housing authorities often times grant contracts to large construction firms and/or unions, ignoring the mandate altogether to the detriment of the poor, and those Congress intended to benefit.

NBCC has attempted to work with HUD for several years to improve the agency’s enforcement of Section 3 compliance. While HUD has confirmed that noncompliance with Section 3 remains widespread, the agency has done nothing to compel funding recipients to improve compliance. Within the past three months, NBCC obtained additional information from HUD regarding Section 3 compliance patterns. This information revealed that some 1,200 fund recipients failed to comply with the requirements of Section 3. Notably, the Chicago Housing Authority did not issue a single contract with low- or very-low income persons, despite accepting $1.3 billion in HUD funds. If the housing authority had fully complied with Section 3, it would have distributed up to $130 million in contracts to these targeted local population, thereby generating up to 13,000 jobs.

In December 2011, the U.S. Environmental Protection Agency (EPA) finalized the Utility Maximum Achievable Technology (MACT) rule for electric utilities under the Clean Air Act. The Utility MACT rule is estimated by EPA to cost $10 billion to implement. Although on its face this rule is designed to reduce mercury emissions, more than 99.9% of the rule’s estimated benefits come from requiring further reductions in fine particulate matter. Fine particulate matter is already fully regulated, however, under several existing air rules.

NBCC petitioned EPA on November 2, 2011 to re-propose the Utility MACT rule, or in the alternative, to stay and reconsider the rule. EPA issued the rule without revisions. As a consequence of the Utility MACT rule, 25% or more of the country’s power stations are expected to have to shut down. As a result, jobs will be lost and electricity will become more expensive. Low- and very-low income persons will have to deal with higher electricity costs and the potential for more power interruptions during heat waves and cold weather. The most vulnerable members of our community will be forced to bear the burdens of the Utility MACT rule. EPA should have more fully considered the impact to the nation’s electricity supply from this rule. The assumed health benefits of the rule should have been more carefully evaluated to determine whether the rule’s benefits actually exceed its costs.

We hope this list is helpful to your committee’s continuing examination of the impact regulations have on employers. We will be happy to respond to any further requests or discuss these examples in more detail.

[1] Based on Section 3 being one of the congressional findings in the Act.

[2] See Ramirez, Leal & Co. v. City Demonstration Agency, 549 F.2d 97 (9th Cir. Cal. 1976) (the phrase “greatest extent feasible” “does not give [ ] City officials ‘broad discretion.’ ‘Greatest extent’ means what it says, the maximum.”); See also Williams v. United States HUD, 2006 U.S. Dist. LEXIS 62661 (E.D. NY Sept. 1 2006) (“statutory requirements that HUD provide ‘best efforts’ is mandatory, not hortatory…”.