    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

                      REGULATORY FLEXIBILITY IMPROVEMENTS
                                  ACT OF 2013

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                               REGULATORY REFORM,
                          COMMERCIAL AND ANTITRUST LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 2542

                                   __________

                                 JUNE 28, 2013

                                   __________

                               Serial No. 113-29

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                       BOB GOODLATTE, Virginia, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        JERROLD NADLER, New York
    HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT,
    LAMAR SMITH, Texas                       Virginia
    STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
    SPENCER BACHUS, Alabama              ZOE LOFGREN, California
    DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
    J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
    STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
    TRENT FRANKS, Arizona                  Georgia
    LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
    JIM JORDAN, Ohio                     JUDY CHU, California
    TED POE, Texas                       TED DEUTCH, Florida
    JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
    TOM MARINO, Pennsylvania             KAREN BASS, California
    TREY GOWDY, South Carolina           CEDRIC RICHMOND, Louisiana
    MARK AMODEI, Nevada                  SUZAN DelBENE, Washington
    RAUL LABRADOR, Idaho                 JOE GARCIA, Florida
    BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
    GEORGE HOLDING, North Carolina
    DOUG COLLINS, Georgia
    RON DeSANTIS, FLORIDA
    JASON T. SMITH, Missouri

               Shelley Husband, Chief of Staff & General Counsel
            Perry Apelbaum, Minority Staff Director & Chief Counsel
                                     ------

        Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                       SPENCER BACHUS, Alabama, Chairman

                     BLAKE FARENTHOLD, Texas, Vice-Chairman

    DARRELL E. ISSA, California          STEVE COHEN, Tennessee
    TOM MARINO, Pennsylvania             HENRY C. ``HANK'' JOHNSON, Jr.,
    GEORGE HOLDING, North Carolina         Georgia
    DOUG COLLINS, Georgia                SUZAN DelBENE, Washington
    JASON T. SMITH, Missouri             JOE GARCIA, Florida
                                         HAKEEM JEFFRIES, New York

                          Daniel Flores, Chief Counsel

                          James Park, Minority Counsel

                                C O N T E N T S

                                  ----------

                                 JUNE 28, 2013

                                                                       Page

                                    THE BILL

    H.R. 2542, the ``Regulatory Flexibility Improvements Act of
      2013''.........................................................     3

                               OPENING STATEMENTS

    The Honorable Spencer Bachus, a Representative in Congress from
      the State of Alabama, and Chairman, Subcommittee on Regulatory
      Reform, Commercial and Antitrust Law...........................     1
    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Ranking Member, Subcommittee on
      Regulatory Reform, Commercial and Antitrust Law................    33

                                   WITNESSES

    Karen R. Harned, Esq., Executive Director, National Federation of
      Independent Business
      Oral Testimony.................................................    36
      Prepared Statement.............................................    39
    Carl Harris, Vice President and General Manager, Carl Harris Co.,
      Inc., on behalf of the National Association of Home Builders
      Oral Testimony.................................................    47
      Prepared Statement.............................................    49
    Amit Narang, Regulatory Policy Advocate, Public Citizen
      Oral Testimony.................................................    59
      Prepared Statement.............................................    61
    Rosario Palmieri, Vice President, Infrastructure, Legal and
      Regulatory Policy, National Association of Manufacturers
      Oral Testimony.................................................    71
      Prepared Statement.............................................    73

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Material submitted by the Honorable Spencer Bachus, a
      Representative in Congress from the State of Alabama, and
      Chairman, Subcommittee on Regulatory Reform, Commercial and
      Antitrust Law..................................................    92

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable Spencer Bachus, a
      Representative in Congress from the State of Alabama, and
      Chairman, Subcommittee on Regulatory Reform, Commercial and
      Antitrust Law..................................................   102
    Prepared Statement of the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Regulatory Reform, Commercial and Antitrust Law   104
    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, Ranking
      Member, Committee on the Judiciary, and Member, Subcommittee on
      Regulatory Reform, Commercial and Antitrust Law................   105
    Material submitted by Public Citizen.............................   107
    Statement of Administration Policy...............................   135
    Response to Questions for the Record from Karen R. Harned, Esq.,
      Executive Director, National Federation of Independent Business   137
    Response to Questions for the Record from Amit Narang, Regulatory
      Policy Advocate, Public Citizen................................   138

                REGULATORY FLEXIBILITY IMPROVEMENTS ACT OF 2013

                                  ----------

                             FRIDAY, JUNE 28, 2013

                           House of Representatives,

                      Subcommittee on Regulatory Reform,
                          Commercial and Antitrust Law

                          Committee on the Judiciary,

                                Washington, DC.

        The Subcommittee met, pursuant to call, at 9:10 a.m., in
    room 2141, Rayburn House Office Building, the Honorable Spencer
    Bachus (Chairman of the Subcommittee) presiding.
        Present: Representatives Bachus, Holding, Collins, Smith,
    Cohen, DelBene, and Jeffries.
        Staff Present: (Majority) Daniel Flores, Chief Counsel;
    Jennifer Lackey, Legislative Director, Office of Rep. Collins;
    Justin Gibbs, Office of Rep. Smith of Missouri; Ashley Lewis,
    Clerk; Matthew Alexander, Intern; (Minority) James Park,
    Minority Counsel; Veronica Eligan, Professional Staff Member.
        Mr. Bachus. The Subcommittee on Regulatory Reform,
    Commercial and Antitrust Law hearing will come to order.
        Without objection, the Chair is authorized to declare
    recesses of the Committee at any time.
        We welcome all our witnesses today. Now we will have
    opening statements, and I will recognize myself for such time
    as I may consider.
        Most economic experts will agree that small businesses and
    small business trade drive and shape our economy and our
    ability to provide employment for American workers. In my view,
    the health of small businesses is one of the most important
    issues confronting our country. Small businesses are the source
    for almost half of our workforce, and while I am concerned
    about many economic factors, it is also my view that government
    regulations have a disproportionate impact on small businesses.
        While all businesses have to comply with State and local
    regulations, Federal regulations can impose an even greater
    burden because most small businesses simply do not have the
    resources or the time to monitor and participate in the Federal
    regulatory process or dispute new rules.
        According to the Small Business Administration, businesses
    with fewer than 20 employees spend on average 30 percent more
    per employee than large firms to comply with Federal
    regulations. The SBA also reports that these small employers
    represent 99.7 percent of all businesses and have created well
    over 60 percent of all new jobs for over the past 15 years.
        Although our economy may be showing signs of improvement,
    we are still suffering from job loss, lack of job creation and
    long-term employment or underemployment. It only makes sense
    that we look to small businesses and work to create an
    environment that will help them prosper.
        We all know the importance of small businesses in our
    district, so certainly this should be an area for bipartisan
    cooperation. It is my belief that the Regulatory Flexibility
    Improvements Act of 2013 offers one such opportunity, and I am
    pleased to be able to introduce legislation with my colleagues,
    Congressman John Barrow; Congressman Jim Matheson; the chairman
    of the Small Business Committee, Chairman Sam Graves; and
    Former Judiciary Committee Chairman Lamar Smith.
        It is my belief that improving the Regulatory Flexibility
    Act and the Small Business Regulatory Enforcement and Fairness
    Act will have a lasting impact on small businesses and help
    support long-term small business growth. We have a
    responsibility as legislators to ensure that regulations are
    appropriately tailored and that our regulatory process is
    effective.
        We have an excellent panel today that will offer diverse
    range of viewpoints on this legislation, and I want all of you
    to know that your input will serve a very important role as
    this legislation comes up for further consideration.
        I now recognize Mr. Cohen from Tennessee and Ranking Member
    of the Subcommittee for his opening statement.
        [The bill, H.R. 2542, follows]:

                                   __________

        Mr. Cohen. Thank you, Mr. Bachus, and I want you to know,
    in your absence, we went ahead and passed quite a few new
    regulations. The Regulatory Flexibility Improvements Act
    proposes some needlessly drastic measures that threaten to
    undermine public health and safety and waste public resources.
        I am open to ideas on tweaking the regulatory process in
    modest ways to make regulatory compliance easier for small
    businesses and perhaps even finding better ways for small
    businesses to provide input to specific rules. As drafted,
    though, this bill simply goes too far.
        Wait a minute. I am having a flashback. I said the same
    thing 2 years ago on this bill that was real similar to this in
    the same Subcommittee. It is indeed Groundhog's Day, and I am
    playing the part of Bill Murray. That is the role I have been
    cast in by being made the Ranking Member here.
        It is not necessarily Mr. Bachus' fault. He is doing what
    he thinks is right, but the fact is we are repeating and
    rehashing the same stuff over and over here. And the fact is
    regulations do have a function and an important function in our
    society, and regulations protect the American public from a
    vast array of harms.
        The reason we have regulations is because we have got to
    clean up our air, our water, protect children from dangerous
    toys, make sure our food is not going to cause us disease or
    even death, that we don't have financial markets go haywire and
    crazy and almost wreck the economy and have unsafe workplaces.
        Not all this will be stopped with regulations, but most
    regulations are for the purpose of protecting society, and that
    is what they do. And for those who say all we need are
    libertarian laissez-faire, no-regulation society, well, we will
    have a whole bunch of deaths in the marketplace and deaths from
    consumer products. The Bureau of Labor Statistics report in
    2011 census of fatal occupational injuries said there were
    4,693 workplace deaths in 2011.
        According to researchers in the National Institute for
    Occupational Safety and Health, American Cancer Society and
    Emory University School of Public Health, 50,000 to 70,000
    deaths from occupation-related diseases occurred in the United
    States.
        And while we are talking about regulatory cost, we should
    consider the cost of insufficient regulation. According to a
    joint study by Liberty Mutual Insurance Company and health
    economists at UC Davis, the estimated cost of workplace-related
    injuries is $250 billion, only 25 percent of which is covered
    by Workers' Comp.
        As I said, I know Chairman Bachus and other proponents of
    this bill sincerely share also my appreciation for the
    importance of regulation in protecting us from a myriad of
    harms, some of which I have mentioned. But I will emphasize the
    importance of regulation to point out that this bill, if
    enacted, could jeopardize these protections in the future. This
    bill was only used for regulatory review panels by requiring
    they apply the rules proposed by all agencies and by applying
    to them all major rules, not just those that are the subject to
    the Regulatory Flexibility Act.
        Currently, such review panels are required for rules that
    are subject to the Regulatory Flexibility Act and are proposed
    by the Environmental Protection Agency, OSHA, or the Consumer
    Financial Protection Bureau. These review panels, which consist
    of the chief counsel for advocacy of small business
    administration, a representative of the issuing agency and a
    representative from the Office of OIRA, review the covered
    rules and can send them back to the issuing agency. Clearly,
    the process is intended to slow down rulemaking. By
    dramatically expanding the use, this bill will effectively stop
    most rules from going into effect.
        The bill also burdens agencies with numerous additional
    analytical requirements, including the requirement that
    agencies assess the indirect economic effects of a proposed
    rule. The requirement to assess indirect effects has almost no
    limitation other than that such indirect effect should be
    reasonably foreseeable, sounds like Palsgraf, which is not much
    of a limitation. Under this fairly open-ended requirement,
    agencies would be at a loss to determine how much is enough
    when it comes to the regulatory analysis obligations.
        For example, what is the reasonably foreseeable and direct
    economic effect of a regulation requiring heightened security
    measures at airports? Would the issuing agency have to take
    into account the potential loss of business for the hotdog
    stand that is located far past the security checkpoint or
    better, the barbecue rib place, more appropriate for my
    jurisdiction.
        These are just two of the many concerns of the RFIA. We
    will hear more in detail from Mr. Narang of Public Citizen
    about the remaining concerns with the bill. There are things we
    could do to help small entities, including measures to assist
    small business with regulatory compliance. We ought to be able
    to support such measures in a bipartisan basis.
        I understand Mr. Narang may have a proposal to that effect.
    I hope his fellow witnesses and the other Members of the
    Subcommittee will give it true consideration for legislation
    that we can pass in a bipartisan fashion in anticipation of the
    Fourth of July. God bless America. I yield back the balance of
    my time.
        Mr. Bachus. Thank you. I thank the Ranking Member. One
    thing I may tell the panel and--not the panel here, but I think
    most of you probably know this, but I am not sure our Members
    do. The Regulatory Flexibility Act was 1980. In 1996, President
    Clinton said it wasn't being enforced and that it should be
    extended to small businesses, which he did, and that was kind
    of Groundhog Day, because a lot of what he said in 1996 is what
    is in this act because it just didn't happen.
        And you mentioned the EPA environmental standards. They are
    actually required by the law to do a lot of what we are asking
    them to do here, but they just simply hadn't done it, and I
    know Public Citizen has in their written testimony, which I
    read, said how this would slow things up. But I think the
    argument may be with the 1996 act. But the EPA, it said they
    were going to voluntarily comply with this and it just hadn't
    done it except I think on 56 occasions, 40-something occasions.
    Many times they just ignored the law, so I am not sure your
    argument may be with what President Clinton----
        Mr. Cohen. No. May I have a moment?
        Mr. Bachus. Oh, absolutely.
        Mr. Cohen. Yeah. I appreciate your bringing up who I
    consider was a tremendous President and a dear friend, but 1996
    wasn't necessarily his best year. That is also the year, you
    know, it was election year, and he signed the Defense of
    Marriage Act, and there were some of the things he did that
    year he didn't really believe. He has admitted that.
        Mr. Bachus. Well, you know, it is the law.
        Mr. Cohen. Well, so was that.
        Mr. Bachus. Until yesterday, right?
        Mr. Cohen. Right.
        Mr. Bachus. Day before yesterday. All right.
        Thank you. ``It wasn't a good year;'' that is a great
    argument.
        We have got an esteemed panel today. Ms. Karen Harned
    serves as executive director of the NFIB, National Federation
    of Independent Business, Small Business Legal Center. As
    executive director, she comments regularly on small business
    cases before Federal and State courts as well as the U.S.
    Supreme Court. Prior to joining the Legal Center, Ms. Harned
    was an attorney at the Washington, D.C., law firm specializing
    in food and drug law where she represented several small and
    large businesses and their respective trade associations before
    Congress and Federal agencies. She also served as the Assistant
    Press Secretary of the U.S. Senator Don Nickles of Oklahoma,
    which was a fine senator, fine person. Ms. Harned received her
    BA from the University of Oklahoma in 1989 and her JD from the
    George Washington University National Law Center in 1995. We
    welcome you.
        Mr. Carl Harris is co-founder of Carl Harris Company, a
    construction company founded in Wichita, Kansas in 1985. Mr.
    Harris' business engages in numerous residential and light
    commercial construction applications. He serves as national
    area chairman for the National Association of Homebuilders, a
    trade association that helps promote policies that make housing
    a national priority. NAHB strives to improve housing
    affordability, availability, and choice. Mr. Harris serves as
    the 2013 president of the Kansas Building Industry Association
    and affiliate of NAHB. KBIA, and that is Kansas Building
    Industry Association, serves as an advocate for Kansas Housing
    Industry and has more than 2,000 members. It has been a rough
    few years for the house--home building industry.
        Mr. Harris. It has, Mr. Bachus.
        Mr. Bachus. And hopefully, we are seeing some recovery, but
    I know many of your colleagues have actually gone out of
    business. I remember my father was a general contractor during
    the Carter administration and many of his colleagues didn't
    survive those high interest rates. But anyway.
        Mr. Amit Narang; is that right?
        Mr. Narang. Correct.
        Mr. Bachus. Okay. Is a regulatory policy advocate for
    Public Citizen, a nonprofit organization lobbying for citizen
    interest in the government. Founded in 1971, Public Citizen
    works on numerous issues, including the economic crisis,
    healthcare reform and climate change. Mr. Narang is the
    article's editor of the Administrative Law Review, a widely
    circulated legal journal focused on regulatory law and policy.
    He has been quoted in the New York Times and the Bureau of
    National Affairs, and I guess that is BNA, is what most of us
    call that. Mr. Narang received his bachelor's degree from the
    University of Pennsylvania and his JD from American University,
    Washington College of Law. We welcome you to our panel.
        Mr. Rosario Palmieri? Okay. Good. Is vice president of
    Infrastructure, Legal and Regulatory Policy for the National
    Association of Manufacturers. In that capacity, he works with
    manufacturers to develop and articulate the Association's
    position on regulatory civil justice, antitrust,
    transportation, and infrastructure issues. Mr. Rosario--
    actually, it is Mr. Palmieri. It says ``Rosario'' on there. I
    should probably read these things.
        Also leads NAM's efforts----
        Mr. Cohen. Take out all the excitement.
        Mr. Bachus [continuing]. In product safety and chairs the
    now CPSC coalition made up of manufacturers and retailers.
    Previously he served as NAM's director of Energy and Resources
    Policy.
        Boy, that was a challenge, wasn't it.
        Prior to joining the Association, Mr. Palmieri worked in
    the U.S. House of Representatives as the deputy staff director
    out of the Regulatory Affairs Subcommittee and the Committee on
    Government Reform. He also served on the House Committee on
    Small Business. He received his BA in political science from
    American university. We have two American University graduates,
    right? Did you all know each other?
        Mr. Palmieri. No, sir.
        Mr. Narang. Until today.
        Mr. Bachus. It is time you all got acquainted, right?
        Alright. We will now proceed with the--let's see. Actually,
    we need to have the opening--the panelists have their opening
    statements.
        Mr. Bachus. So, Ms. Harned, we will start with you. And you
    are recognized for 5 or more minutes. If you need 6 or 7
    minutes, that is fine, too, right? We don't--we would rather--
    we would rather you not rush and get it out.

        TESTIMONY OF KAREN R. HARNED, ESQ., EXECUTIVE DIRECTOR,
              NATIONAL FEDERATION OF INDEPENDENT BUSINESS

        Ms. Harned. Thank you so much.
        Good morning, Mr. Chairman Bachus and Ranking Member Cohen.
        NFIB, the Nation's largest small business advocacy
    organization, appreciates the opportunity to testify on the
    burdensome effects of regulation on small business and how H.R.
    2542, the ``Regulatory Flexibility Improvement Act of 2013,''
    would address many of those concerns.
        Two and a half years ago, I had the opportunity to testify
    before the Committee on a need for regulatory reform. As I
    stated at that time, overzealous regulation is a perennial
    concern for small business owners, but that fact has not
    changed. According to the June 2013 report of the NFIB Research
    Foundation's ``Small Business Economic Trends,'' 23 percent of
    small businesses say that government red tape is the most
    important problem they face, second only to taxes.
        To address the negative impact of regulations on small
    business, NFIB launched Small Businesses For Sensible
    Regulations in August 2011. Former Arkansas Senator Blanche
    Lincoln shares that campaign, which is a national effort to
    protect small businesses and American jobs from the impacts of
    regulation.
        NFIB believes that Congress must take action to level the
    regulatory playing field for small business. Congress should
    expand the Small Business Regulatory Enforcement and Fairness
    Act and its small business advocacy review panels to all
    agencies, including independent agencies. In so doing, all
    agencies would be in a better position to understand how small
    businesses fundamentally operate, how the regulatory burden
    disproportionately impacts them, and how each agency can
    develop simple and concise guidance materials.
        Moreover, Congress and the office of advocacy should ensure
    that agencies are following the spirit of SBREFA. There are
    instances where agencies have declined to adopt the
    recommendation of a SBAR panel or conduct a SBAR panel for
    either a significant rule or a rule that would greatly benefit
    from small business input. Congress should ensure that agencies
    perform regulatory flexibility analyses and require them to
    list all of the less burdensome alternatives that were
    considered.
        Each agency should provide an evidence-based explanation
    for why it is more--why it shows a more burdensome versus a
    less burdensome option and explain how their rule may act as a
    barrier to entry for a new business. Section 610 reviews should
    be strengthened. Agencies should be required to amend or
    rescind rules where the 610 review shows that the agency could
    achieve its regulatory goal at a lower cost to the economy.
        NFIB also believes that Congress should explore requiring
    agencies to provide updated information on how each agency
    mitigates penalties and fines on small businesses as required
    by SBREFA and require that such a report be conducted on an
    annual basis. Regulatory agencies will often proclaim the
    indirect benefits for regulatory proposals, but they decline to
    analyze and make publicly available the indirect costs to
    consumers, such as higher energy costs, jobs lost and higher
    prices. Agencies should be required to make public a reasonable
    estimate of a rule's indirect impact.
        Agencies should be held accountable when they fail to give
    proper consideration to the comments of the office of advocacy,
    and a formal mechanism should be put in place for resolving
    disputes regarding the economic cost of a rule between the
    agency and advocacy. Because of the improvements that are
    inherent in H.R. 2542, NFIB is hopeful that, if enacted, that
    review of agency actions will be strengthened and the small
    business voice will be more substantively considered throughout
    the regulatory process or the rulemaking process.
        NFIB is concerned that agencies are shifting from an
    emphasis on small business compliance to an emphasis on
    enforcement. Congress can help by stressing to agencies that
    they devote adequate resources to help small businesses comply
    with the complicated and vast regulatory burdens that they
    face. Congress also should pass legislation waiving fines and
    penalties for small businesses the first time they commit a
    nonharmful error on regulatory paperwork.
        Mistakes in paperwork are going to happen, but if no harm
    is committed as a result of the error, agencies should waive
    penalties for first-time offenses and help owners understand
    the mistakes that they have made.
        With main street still struggling to regain its footing,
    Congress needs to take steps to address the growing regulatory
    burden on small businesses. The proposed reforms in this
    legislation are a good first step. Thank you for the
    opportunity.
        Mr. Bachus. Thank you. I appreciate that opening statement.
        [The prepared statement of Ms. Harned follows:]
       Prepared Statement of Karen R. Harned, Esq., Executive Director,
               National Federation of Independent Business (NFIB)

                                   __________
        Mr. Bachus. Mr. Harris.

     TESTIMONY OF CARL HARRIS, VICE PRESIDENT AND GENERAL MANAGER,
    CARL HARRIS CO., INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF
                             HOME BUILDERS

        Mr. Harris. Chairman Bachus, Ranking Member Cohen and
    distinguished Members of the Subcommittee, my name is Carl
    Harris. I am cofounder of the Carl Harris Company, a
    construction firm based in Wichita, Kansas with about 20
    employees. I am also a member of the National Association of
    Homebuilders and president of the Kansas Building Industry
    Association. Thank you for the opportunity to be here today to
    talk about ways to reform and improve the Regulatory
    Flexibility Act.
        I applaud this Subcommittee for considering H.R. 2542, the
    ``Regulatory Flexibility Improvement Act of 2013,'' and I
    believe this legislation will go a long way in addressing the
    issues I have observed in the rulemaking process. As a small
    businessman operating in a heavily regulated industry, I
    understand how difficult it can be for a small builder to
    operate a successful thriving business that provides the
    highest levels of health, safety and welfare for its employees.
        The sheer volume of regulations isn't the only problem.
    Often regulations are crafted without respect to the size of
    the regulated entities or don't appropriately take into account
    the true cost of compliance. Congress appropriately
    acknowledged this dilemma when, in 1980, it passed the
    Regulatory Flexibility Act, the RFA, and subsequently amended
    that to include the Small Business Regulatory Enforcement
    Fairness Act, SBREFA. With the RFA, Congress intended for
    regulations to be crafted to the scale of businesses while
    achieving the goals of the rule. This was an admirable aim.
    However, in practice, it does not appear to be working as
    intended.
        I have had the fortune of representing the residential
    construction industry on a number of small business review
    panels over the years. I have seen firsthand how agencies treat
    the RFA process as little more than a procedural check-the-box
    exercise, or worse still, artfully avoid complying with certain
    parts of it altogether.
        For example, in 2008, OSHA proposed the Cranes and Derricks
    Rule, which was intended to protect workers from hazards
    associated with hoisting equipment in construction. I
    participated as a small entity representative on a review panel
    that followed. Several SERs, myself included, raised concerns
    about the feasibility of various aspects of the rule that were
    clearly designed for large commercial construction
    applications. I personally put forward an effective commonsense
    alternative that would save lives while keeping low the cost of
    compliance for small entities. Unfortunately, it seems that my
    feedback fell on deaf ears.
        I believe the requirements in section 4 of H.R. 2542 for
    agencies to state the disproportionate impact a rule may have
    on small entities would lend additional focus to agency action
    in accordance with Congress' original intent. At times, it
    seems that agencies are not performing a rigorous analysis of
    the impacts of proposed rules on small entities. The result is
    often regulations that don't acknowledge the true cost to small
    businesses.
        This is the case, in 2010, when OSHA proposed revising its
    occupational injury and illness recordkeeping requirements.
    OSHA maintained that the additional recording requirements did
    not amount to a significant burden on small business. They
    certified it, and to that effect, and in doing so, avoided
    analysis requirements contained in the RFA.
        On teleconferences, I raised the point that OSHA hadn't
    considered the true additional cost that small employers must
    face. I believe that more stringent regulatory flexibility
    analysis requirements contained in H.R. 2542 would have
    addressed this issue.
        Finally, the Small Entity Review Panel requirements in the
    RFA offer a valuable opportunity for small businesses to
    provide much needed input to ensure rules are appropriately
    scaled to the size of the businesses that they will impact.
        Unfortunately, there exists many ways for agencies to avoid
    this critical step in the rulemaking process. In 2008, the
    Environmental Protection Agency neglected to convene a review
    panel when the agency sought to amend its lead renovation and
    repair--repair and painting rule. This failure to convene a
    review panel resulted in an amended rule that grossly
    underestimated the impact on small businesses.
        I support the extended review panel requirements included
    in section 6 of H.R. 2542. I also suggest, for further
    consideration and future consideration, that Congress look
    toward a stronger enforcement mechanism for agency compliance
    with section 609(b) of the RFA, the review panel requirements.
        If the RFA allowed judicial review of section 609(b),
    agencies would feel more pressure to comply with convening a
    meaningful panel of SERs that could thoughtfully advise the
    agency as Congress intended.
        I appreciate this Subcommittee's effort to improve the RFA,
    and I urge passage of the Regulatory Flexibility Improvements
    Act of 2013. Thank you for the opportunity to testify today.
        Mr. Bachus. Thank you very much, Mr. Harris.
        [The prepared statement of Mr. Harris follows:]

                                   __________
        Mr. Bachus. Mr. Narang.

     TESTIMONY OF AMIT NARANG, REGULATORY POLICY ADVOCATE, PUBLIC
                                CITIZEN

        Mr. Narang. Thank you. Chairman Bachus, Ranking Member
    Cohen and Members of this Committee. Thank you for the
    opportunity to testify today on H.R. 2542, the ``Regulatory
    Flexibility Improvements Act of 2013.'' I am Amit Narang,
    regulatory policy advocate at Public Citizen's Congress Watch.
    Public Citizen is a national public interest organization with
    more 300,000 members and supporters.
        For more than 40 years, we have successfully advocated for
    stronger health, safety, consumer protection and other rules,
    as well for a robust regulatory system that curtails corporate
    wrongdoing and advanced the public interest.
        I am here today to express significant concerns about the
    Regulatory Flexibility Improvements Act of 2013. My concerns
    can be broken down into two parts. First, like so many other
    regulatory reform proposals, the RFIA adds more procedures,
    more analyses and more requirements to a regulatory process
    that badly needs less of each, without funding any of this
    additional work for agencies.
        Second, the RFIA forces agencies to find small business
    impacts where there are none, giving big business a free pass
    by slowing or blocking rules that in reality only affect large
    corporations.
        Turning to the first part. Important questions at the
    outset are, one, what does the current regulatory process look
    like; and two, is it a good idea to add more to it?
        As Public Citizen's visual depiction of the regulatory
    process shows, the current process is a model of inefficiency
    with a dizzying array of duplicative and redundant requirements
    that amounts to a virtual maze for agencies to navigate.
        This has led to a state of paralysis by analysis at Federal
    agencies. These agencies must contend with a broken regulatory
    process that is too slow, too calcified and too inflexible to
    respond to emerging health and safety threats. For example,
    OSHA has finalized just one significant worker safety standard
    since the beginning of 2010. As another example, it has been 2
    and a half years since the Food Safety Modernization Act passed
    on a bipartisan basis and still no food safety rules have been
    finalized. In practical terms, it is as if the food safety law
    doesn't exist. The list goes on.
        The RFIA makes this situation worse in many respects, but
    let me just focus on two in the short time I have.
        First, the RFIA establishes a vague, indirect effects test.
    If agencies find their rules result in indirect effects on
    small businesses that are ``reasonably foreseeable,'' they must
    treat those rules in the same exact way as rules that have a
    direct effect on small businesses. Since this ill-defined test
    gives agencies no guidance as to what constitutes, or more
    importantly, does not constitute an indirect effect, agencies
    will feel strong pressure to send their rules through the much
    longer process reserved for rules that actually do impact small
    businesses.
        Second, the RFIA makes all agencies conduct SBREFA Small
    Business Advisory panels on all of their major rules, even if
    the rule will have no effect on real small businesses. This new
    mandate, without any commensurate funding, represents a massive
    expansion over the current system and is in no way targeted at
    rules that have small business impacts. These panels are time
    and resource intensive, and yet the RFIA simply asks agencies
    to ignore small business impacts and go through the SBREFA
    review panel process every time they issue a major rule. That
    would have meant 83 SBREFA panels for rules issued last year
    alone at a time when agencies are cutting back and furloughing
    staff.
        Since small businesses don't benefit from delay or blocking
    of rules that do not apply to them anyway, who does benefit?
    The obvious answer is big businesses, who are let off the hook
    when it comes to commonsense new health and safety standards.
    An example here is helpful.
        Late last year, Public Citizen issues a report looking into
    whether the Volcker Rule would affect small banks, and if so,
    how. The yet to be finalized Volcker Rules is a critical Dodd-
    Frank financial reform that would prohibit federally insured
    banks from engaging in the kind of risky proprietary trading
    which led to the financial collapse. Our report showed that of
    7,181 banks in the U.S., 7,175 would be unaffected by the
    Volcker Rule. In other words, the Volcker Rule would only apply
    to the six largest banks in the U.S. that engage in proprietary
    trading.
        Even though the Volcker Rule is only directed at the big
    banks, the RFIA would have forced financial agencies to treat
    the rule as if it does affect small businesses. Do we want our
    financial agencies to be spending taxpayer money studying the
    Volcker Rule's supposed indirect effects on small businesses?
    The RFIA would have required financial agencies to put the
    Volcker Rule through small business advisory panels. Who would
    those panels have included to represent small businesses for a
    rule that only applies to big banks?
        If Congress wants to clarify how agencies should identify
    rules that may apply to small businesses, then it should do so
    in a clear, direct, and unambiguous manner. Instead, the RFIA
    creates more uncertainty for agencies when it comes to small
    business impacts.
        Over the years, Congress has repeatedly tried to address
    small business regulatory relief by adding more procedures,
    analyses, and requirements. If this hearing is any indication,
    it hasn't worked. It is time for a new approach.
        We all agree that we need to help real small businesses.
    One consensus approach would be to enhance small business
    regulatory compliance assistance. This provides direct
    compliance assistance targeted only to legitimate small
    businesses while preserving critical health and safe
    protections for the public's benefit.
        Congress has taken first steps in this direction, but more
    can and should be done. I look forward to working with Members
    of Congress on this consensus path forward. Thank you.
        Mr. Bachus. I appreciate that, Mr. Narang, and I do hope we
    will all work together on this.
        [The prepared statement of Mr. Narang follows:]

                                   __________
        Mr. Bachus. Mr. Palmieri.

    TESTIMONY OF ROSARIO PALMIERI, VICE PRESIDENT, INFRASTRUCTURE,
         LEGAL AND REGULATORY POLICY, NATIONAL ASSOCIATION OF
                             MANUFACTURERS

        Mr. Palmieri. Thank you, Mr. Chairman, Members of the
    Subcommittee, thank you for the opportunity to testify today
    about reform of the Regulatory Flexibility Act.
        The United States is the world's largest manufacturing
    economy. It produces more than $1.8 trillion of value each year
    and employs nearly 12 million Americans working directly in
    manufacturing. On behalf of the NAM and the millions of men and
    women working in manufacturing in the United States, I want you
    to know that we support your efforts to reform the RFA to
    unleash the small manufacturers in this country to do what they
    do best, makes things and create jobs.
        Manufacturers have been deeply affected by the most recent
    recession. This sector lost 2.2 million jobs during the period,
    and the numbers show that American manufacturing is growing
    more slowly than in competitive countries. We have seen
    policies from Washington that will not help our economic
    recovery and can actually discourage job creation. To regain
    manufacturing momentum and to return to net job gains, we need
    improved economic conditions and improved government policies.
        Many of the proposals being offered by the Subcommittee,
    including more detailed statements in the RFA process and
    requirements to describe redundant overlapping or conflicting
    regulations, will help us do just that. My written statement
    details our support for amendments to the periodic review
    requirements of the RFA. Those reforms address the challenges
    of the cumulative burden of regulations that are no longer
    serving our modern needs.
        But I would also like to spend some time on some of the
    critiques of the reforms in your legislation, including one
    that Mr. Narang just mentioned, the analysis of indirect
    effects in the RFA. So courts have found that agencies must
    only consider the direct effects of the regulations on small
    entities under this law. That is one of the reasons we are
    taking a look at this, and that is, despite the fact that
    Senator John Culver, a Democrat from Iowa and one of the lead
    authors of the RFA in 1980, declared otherwise in the
    legislative history, and there was a lot of confusion about
    this at the very beginning.
        The RFA was basically a good government, bipartisan law
    signed by President Carter and modeled after the National
    Environmental Policy Act, or NEPA. And under NEPA, the Council
    For Environmental Quality developed the implementing guidelines
    and regulation that all agencies must follow. They declared
    NEPA reviews to include both direct and indirect effects.
    Agencies have had to comply with these requirements for more
    than 30 years.
        Additionally, President Clinton's executive order on
    regulatory review requires the consideration of all costs and
    benefits, not just direct costs and benefits but all, and the
    implementing regulation OMB Circular A-4, which explains to
    agencies how they must comply with those analytical
    requirements of the executive order, states that agencies must
    identify the undesirable side effects and ancillary benefits of
    the rule.
        A review of indirect effects is already included in all the
    surrounding analysis of a regulation. It only makes sense to
    extend this review of indirect effects to the RFA as well. A
    simple example of why this is so important is EPA's forthcoming
    ``National Ambient Air Quality Standards, or NAAQS, for
    Ozone,'' a study we published with MAPI, estimates the most
    stringent ozone standard under consideration could result in
    the loss of 7.3 million jobs by 2020 and add a trillion dollars
    in new regulatory costs per year between 2020 and 2030, and yet
    this rule will never undergo a regulatory flexibility analysis.
        Why you might ask? Because EPA's NAAQS regulations don't
    have a direct impact on small entities. They regulate States,
    and the States in turn regulate small businesses and small
    communities, and since a State is not a small entity, it
    exempts the rule from coverage. This provision should not be
    controversial. No matter where you want to see the next ozone
    standard, you should want a fair accounting of its impact on
    small businesses, small nonprofits, small churches, and small
    local governments. Manufacturers hope this proposed legislation
    is just the beginning of a more thoughtful regulatory system
    built on common sense with an understanding of modern
    manufacturing.
        Mr. Chairman, thank you for the opportunity to testify
    today, and I will be happy to respond to questions.
        Mr. Bachus. Thank you very much.
        [The prepared statement of Mr. Palmieri follows:]

                                   __________
        Mr. Bachus. Let me say this. And this isn't one of my
    questions. But I think all four opening statements were
    excellent, and they really had a lot of substance in them. And
    so I appreciate it.
        At this time, Mr. Collins.
        Mr. Collins. Thank you, Mr. Chairman.
        Again, I come back to this because this is one of the
    issues that I believe is dominant in the issue, and I
    appreciate the testimony that is being given. I do, however,
    you know, believe that this is an issue that we continue to
    need to look at.
        Mr. Harris, I want to go to you first because I believe so
    many times, and no disrespect to the other witnesses, their
    views, you are a business owner who comes on behalf of. And I
    think we lose that face sometimes. We are here up here a good
    bit and we talk to each other, but when you bring that face to
    it, I think it is important.
        You know, in the issue, and I read your testimony and I
    also listened to you, probably would not surprise you to learn
    that a recent study found that every American family pays about
    $15,000 in hidden regulatory tax annually when you calculate it
    out. It is amazing what you could buy with that.
        What else other than passing this legislation can Congress
    do to help you do what you do best, create jobs and grow the
    economy? I would just love to hear your opinion on that.
        Mr. Harris. Well, thank you, Mr. Collins. I really
    appreciate the question.
        This is a first step. Again, we are not talking about
    specific regulation, only the process in which we should come
    up with regulations. As a small business owner, the uncertainty
    of the market is plenty, without having to deal with the
    uncertainty in the regulatory framework or governmental. Gone
    are the times when governmental agencies used to be consultive
    and now they are more punitive. Let's work together to find out
    what is better for all our employees and better for our
    community. That is what we need.
        Mr. Collins. From what I am hearing and you saying and I
    have heard the other witnesses as well, you are just looking
    for some certainty. So tell me what I have got to do, you know,
    is sort of the bottom line whether you like it or not, and this
    is the part of the issue, that certainty issue that we lack
    sometimes.
        Mr. Harris. Before I make investments in additional
    employees, before I make investment in additional capital for
    manufacturers, before I give some certainty to other small
    business subcontractors, I really have to feel better about the
    market in which I am dealing with and some certainty in regard
    to the regulations that affect that market and the things that
    go into the cost of our product.
        I mean, our studies have shown that in the cost of any
    house 25 percent of it can be directly linked to the cost of
    regulations, 25 percent of the house. I am here today to make
    sure that doesn't get any higher. I am not talking about doing
    less than that. Let's just see what we can do about stemming
    the tide of increased unnecessary regulation.
        Mr. Collins. And you actually, it is amazing, I think you
    are reading my notes up here, because I actually flagged that
    in your testimony here, this 25 percent issue. And look, I
    could talk to each one of you witnesses for hours on this issue
    because it is something, but I want to go back to that. Flesh
    that out a little bit for me. Because one of the things was
    mentioned, I think, in, Mr. Narang, your testimony about Dodd-
    Frank, which, frankly, in my area, has been a disaster for
    community banks. It is just absolutely a disaster because a lot
    of what it is, is it has tied up the money flowing, it has tied
    up people like you not being able to get to it to actually
    create jobs. Talk about that 25 percent just a little bit more.
        Mr. Harris. Well, 25 percent comes in a number of ways.
    One, the regulations on subcontractors that I employ in the
    production of anything that we are building, whether it is a
    residential property, whether it is a home for a small
    business. I mean, all of those are in there.
        And then you take into account the cost to manufacture the
    products we are going to put in the house, the cost of
    transportation, and all the regulation that goes into that. As
    you go back the link, it seems like government regulation has
    their hand in the pocket of everything we do, and I am not sure
    that those things, if given the right process, would have been
    flushed out.
        Mr. Collins. I am going to actually, because we are on a
    tight timeframe today, so I am just going to sort of end with
    this and just say, you believe that some regulations are
    necessary in what we do.
        Mr. Harris. Absolutely.
        Mr. Collins. And you and most--you know, and the vast, vast
    majority of business owners and all have no desire to hurt
    employees, to see them injured, to see them endangered or
    anything else. Would that be an honest statement from you as a
    business owner?
        Mr. Harris. Absolutely. And if I could tell you about my
    employee mix, we could start with my office, which is my wife,
    my sister, my father. I go to the field, it is my brother-in-
    law, my nephew, my sister's nephew.
        Mr. Collins. Sounds like Thanksgiving table.
        Mr. Harris. I am just telling you, we know our employees,
    we know their birthdays, we know their wives' and children's
    names, why on earth would you think that I would want to hurt
    those employees, because they are members of my family?
        Mr. Collins. I understand. Thank you for your testimony.
        And to the other witnesses, thank you. I could go on.
        Mr. Chairman, I yield back.
        Mr. Bachus. All right. Thank you.
        Mr. Cohen.
        Mr. Cohen. Thank you, Mr. Bachus.
        Mr. Narang, you said that the compliance assistance to
    small business hasn't been as extensively made available by the
    Federal Government, that that hadn't been an emphasis. I think
    Ms. Harned said the same thing. Do you all kind of in agreement
    on that area, do you think? Did you listen to her testimony?
        Mr. Narang. I did, and I do agree that what Ms. Harned said
    is critical. Compliance assistance is part of the conversation
    that, frankly, you know, has not really attracted much
    attention and it deserves much more attention.
        Mr. Cohen. What else in her testimony or in Mr. Harris' or
    Mr. Palmieri's did you find that you could agree on?
        Mr. Narang. Well, I mean, I agree that small businesses
    share a higher proportion of compliance cost with respect to
    their expenses than of course large businesses. And so I think
    that this is, you know, a critical reason to provide direct
    compliance assistance to small businesses.
        Large corporations, they don't need the compliance
    assistance. They have big compliance departments. Small
    businesses need the compliance assistance.
        Mr. Cohen. So that would involve, I guess, Ms. Harned,
    would that involve having more appropriations for Small
    Business Administration to have people that could help with
    compliance. Is that what you need?
        Ms. Harned. Right, within the agencies. And what we have
    actually seen over the last few years is agency budgets have
    diverted resources from their compliance assistance programs to
    in, like, the case of OSHA, for example, to enforcement. And
    that is where we are hoping that those funds can be protected
    and not diverted so that small business owners can really get,
    you know, the help they need from regulators to know what they
    are supposed to be doing.
        Mr. Cohen. Would you support additional appropriations to
    the different agencies to help in compliance and specify that
    it would be for compliance for small business, to help them?
        Ms. Harned. Well, we definitely think that there should be
    significant resources for compliance assistance. You know,
    whether that is additional money or, you know, a rebudgeting of
    an agency is left to the legislators. But that is an
    important----
        Mr. Cohen. But you have got to have both compliance, which
    is--and I agree with you that there is a whole bunch of mazes,
    and small business could use the help and we could supply it--
    but you have got to enforce it, too. If you don't enforce
    things, then why, you know, comply, if you don't have to. So
    you have got to have that, and I don't know if they just don't
    have enough money where they could do both. And if they need
    more money to do the compliance assistance, would you, would
    the NFIB support that?
        Ms. Harned. I mean, we want more resources for compliance
    assistance, like I said. That is what I would say.
        Mr. Cohen. Okay. Thank you.
        The analysis of indirect effects, how could that be dealt
    with, Mr. Narang?
        Mr. Narang. Well, I think it is crucial first to make sure
    that indirect effects, if they are going to be a part of agency
    analyses, and I don't agree that it is necessary, but if they
    are going to be a part, that they be well defined. We need to
    know exactly----
        Mr. Cohen. Like a number, a threshold?
        Mr. Narang. That is right. We need to know exactly what
    agencies must consider an indirect effect, what agencies should
    not consider an indirect effect. And, frankly, I think the most
    important thing is to not make it judicially reviewable. Once
    you drag an agency into court over a standard that is this
    ambiguous, it is going to be very hard for them to say, you
    know, we considered all the indirect effects. You know,
    litigants can very easily point to indirect effects that exist
    that, frankly, the agencies couldn't consider because indirect
    effects are nebulous, you know, they have no boundaries. And so
    I think it is very dangerous to have courts essentially
    overseeing this very ambiguous issue.
        Mr. Cohen. Your response is like some of the folks that are
    called here as witnesses by the majority, and they don't like
    that either, so it is interesting kind of coming together. And
    I think maybe you and Ms. Harned and Mr. Palmieri and you all
    could get together. You all could probably come up with a bill
    we could pass. I mean, there are some things we ought to do,
    but we just need to narrow in on what we can accomplish. And I
    think one of them is the compliance area and how we get them to
    do more compliance and not necessarily take away from
    enforcement.
        Do you believe that they are over-enforcing or do you
    believe they just don't have enough funds.
        Mr. Narang. First of all, I think it is extremely important
    that agencies be funded, fully funded, when they are conducting
    compliance assistance, that they don't shift around shrinking
    budgets to try to create compliance systems that reaps great
    benefits to smaller businesses.
        I do agree with Ms. Harned that in certain instances we
    don't want compliance assistance to be a front for gotcha
    enforcement, for example. We don't want companies thinking that
    they are seeking compliance assistance and then having agencies
    bring enforcement actions. But that is a very narrow issue,
    maybe only relevant to a few agencies, and I think that
    compliance assistance, as it has been fashioned in the first
    steps Congress has taken, is not going to result in the kind of
    enforcement issues.
        Enforcement is critical. You know, we can't have
    responsible companies following regulations, you know, and
    irresponsible companies not following regulations, cheating,
    and not enforcing, you know, the wrongdoers and not placing
    enforcement mechanisms on them. That harms, you know, the small
    businesses that are following the rules.
        Mr. Cohen. If I can have 30 seconds additional.
        Mr. Bachus. Sure.
        Mr. Cohen. Thank you.
        Ms. Harned, you said that first-time paperwork errors, that
    there is no way to kind of get a second chance. That is not
    provided for, that they can waive the fine in the law?
        Ms. Harned. Right. There is really no flexibility there.
    And that is something that again, for the small business
    owners, I mean, regulatory paperwork is a real----
        Mr. Cohen. That seems like a very simple thing we could
    agree on and get some kind of--maybe we could pass something
    just to say that on a first-time offense for paperwork, you
    can, you know, waive the penalty.
        Mr. Palmieri. Ranking Member Cohen, could I just mention
    that Congresswoman Tammy Duckworth, a Democrat from Illinois,
    has actually introduced legislation, the Small Business
    Paperwork Relief Act, to waive penalties for just paperwork
    violations, not something that is imminent for health or
    safety, and we are very supportive of that legislation and
    would encourage you to support it as well.
        Mr. Cohen. Thank you. We will look at it and probably do
    it.
        Are you related to Rafael.
        Mr. Palmieri. No, sir.
        Mr. Cohen. Okay. Just checking. Thank you.
        Mr. Bachus. Thank you.
        Mr. Jason Smith, our newest Member from Missouri, is now
    recognized.
        Is this your first investigative hearing?
        Mr. Smith of Missouri. It is, Mr. Chairman.
        Mr. Bachus. It is. So all eyes are on Mr. Smith from
    Missouri.
        Mr. Smith of Missouri. Don't have high expectations.
        You know, as I sat here, I have been here 23 days, and I
    think of the phrase that I have heard numerous times, that if
    it is moving the government will tax it, and if it continues to
    move they will regulate it, and if it stops moving they will
    subsidize it. And that is what we clearly see with the
    regulation that is here.
        Ms. Harned, I would maybe like to ask you if you know
    offhand an estimate of how many different Federal regulations
    there are that is affecting small businesses.
        Ms. Harned. Yeah, it is thousands, and that is really again
    the issue, because small business owners like, you know, Mr.
    Harris, they do not have an in-house person that can keep up
    with all that. The person that is doing it is Mr. Harris, and
    that is what we see with our small business owners, and that is
    why the regulatory state really is a problem for them.
        Mr. Smith of Missouri. You know, in the State of Missouri,
    we reformed all rules and regulations. It was actually my bill
    that put a systematic review process. Originally we tried to
    sunset every rule every 5 years. And we were upset that we had
    over 6,281 rules.
        From the last I have monitored at the Federal level, there
    is over 170,000 pages of rules and regulations. These are rules
    and regulations that directly affect small businesses and
    family farmers and individuals.
        And, Mr. Narang, I have a question from you. In your
    written testimony, you made this statement. It says, ``Experts
    from across the political spectrum have acknowledged that
    arguments linking regulations to job losses are nothing more
    than mere fiction.'' Could you state where you get that
    information?
        Mr. Narang. So, I believe I was referring to a particular
    study called the ``Crain and Crain'' study, commissioned by the
    SBA Office of Advocacy. It has been criticized both by former
    OIRA Administrator Cass Sunstein as deeply flawed and nothing
    more than an urban legend; and interestingly, also by John
    Graham--now, that is the former OIRA Administrator under George
    W. Bush--who indicated that a previous version of the study
    would not meet OMB information quality guidelines. I believe I
    also cited Bruce Bartlett, an ex-economist--well, an economist
    from the Reagan administration who did not agree that
    regulations lead to job losses.
        Mr. Smith of Missouri. So maybe it is just because I have
    been out in the district for the last 6 months, but we have a
    company that cited losing 475 jobs moving to Mexico because of
    government regulation in Butler County, Missouri, Poplar Bluff.
    Those are real jobs, real people that are being affected, and
    the reason they are moving to Mexico is because the regulations
    we have here--it is a manufacturing business--are more
    burdensome than what they are in Mexico. Those are real
    families that no longer will have income and that are going to
    be relying on government, and that is the last thing, in my
    opinion, that we need.
        We have another business. Because of new EPA regulations
    they are closing the last lead smelter in the United States in
    our area. That is 300 jobs. That is serious problems. And
    whenever you see these burdensome regulations that the
    executive branch just continues to promulgate, there are no
    checks and balances.
        And I think we need a true systematic approach that reforms
    all rules and regulations and to make sure that they don't
    cause an undue burden on businesses or individuals or family
    farmers, to make sure that these rules are narrowly tailored to
    actually carry out the true purpose and to make sure that rules
    are absolute.
        We had rules on the books in Missouri that said that every
    small business had to have a land line phone. It is not
    necessary. Times are changing. And that is what we need to see
    at the Federal Government. We need to get with the times and
    reduce these burdensome regulations. And I gladly support this
    legislation.
        Mr. Bachus. Thank you.
        I thought that was excellent for his first hearing. And I
    think what Mr. Smith says, you know, he has been in the
    district. He has been living in the district full-time and he
    has been hearing it even more than we who travel back and
    forth, so bring it down to jobs.
        Ms. DelBene from Washington State, recognized for 5
    minutes, very capable Member of our Subcommittee.
        Ms. DelBene. Thank you, Mr. Chair.
        And thanks to all of you for taking the time to be here
    today.
        I just want to start with you, Mr. Palmieri. You talk in
    your testimony about agencies continually engaging in a
    retrospective review of rules, and we are talking a little bit
    about funding and how that will happen. So would you also
    support that we fund agencies so they can conduct those
    retrospective reviews?
        Mr. Palmieri. So currently President Obama asked all
    agencies to undergo retrospective review after his executive
    order in 2011, and they have been implementing with current
    resources and even fewer resources to accomplish the task.
        All I think we would say is that if they are able to do it
    with current resources today and if we all think this is a good
    thing--and we do--that agencies should continuously look back,
    we should be continuously improving our regulatory system, and
    as Congressman Smith noted, getting rid of regulations that
    don't make sense, that on a going-forward basis we should make
    sure this is institutionalized and Congress should put its
    imprint on retrospective review and use the mechanism that is
    typically used, and many others, including in the RFA, section
    610, look back and sunsetting where regulations actually have a
    point at which they must undergo an additional review before
    they move forward.
        And so we think whatever way that is done, it should
    continue to be done and that there should not be kind of a one-
    time exercise or activity that this Administration has
    undergone.
        Ms. DelBene. And one of the things that I hear, have
    definitely heard in my State, just differing definitions and
    terms, sometimes within individual bills, et cetera. So how
    much of it is also just having some commonality so that there
    is a little more awareness on what a certain term might mean
    and knowing that that is consistent even sometimes across
    agencies so that it helps businesses understand the playing
    field? How important is that, do you believe?
        Mr. Palmieri. And I think one of the tenets of this
    legislative proposal is kind of a review of requirements across
    agencies. And I agree with you, I don't think that is done
    enough, because there are conflicting, duplicative, all sorts
    of challenges among different requirements that businesses
    face.
        And if you are in an individual regulatory agency, at EPA
    say, you don't have a really good sense of what OSHA is doing
    today or what the Federal Trade Commission might be thinking
    about in the next 6months or others in a variety of areas. And
    so better coordination, better interagency review. And part of
    this process requires that you actually talk to a small
    business, to sit down with them, representatives of small
    business, in advance of your rulemaking and ask how would this
    affect you and how does it interact with all the other
    requirements that you are currently facing and makes a specific
    note to look at the cumulative burden of regulation.
        So just like President Obama's executive order that
    identified the emerging threat of kind of the cumulative burden
    of regulation, this legislation would make sure that that is a
    part of the analysis that agencies have to do for small
    entities.
        Ms. DelBene. And Ms. Harned, you said that the NFIB's
    research foundation reports that 23 percent of small businesses
    said that red tape is the most important problem that they
    face. How much of that do you think is Federal versus State and
    local? Because I know, you know, from a business you are
    looking at a combination of rules, and they are not all Federal
    rules. A lot of them sometimes are State and local rules. What
    do you think the challenges are on the entire landscape, if you
    can take a look at that and separate those out a little bit?
        Ms. Harned. Right. I mean, your point is a good one,
    because it isn't just Federal rules, it is State rules, too.
    But that being said, our research for the past, you know,
    decades has shown that specifically Federal regulations have
    been in the top 10 list of concerns that small business owners
    have. So we have a survey called ``Problems and Priorities''
    that we release every 4 years. And I apologize, because I can't
    remember the exact ranking right now, but I know in that survey
    we do separate out the State and local versus the Federal. But
    again, our research continues to show that Federal is a real
    problem.
        Ms. DelBene. Well, I also assume that you have got a
    businesses who are in more than one State, and so that
    compounds the problem a little bit, or in multiple localities
    within a State. And so the different points of presence
    sometimes it might increase that challenge, too, for
    businesses.
        Ms. Harned. Right. Except I would say with NFIB's
    membership most of our members are intrastate, so that is not
    as much of an issue for our members as it might be for other
    business associations.
        Ms. DelBene. I know with more folks having kind of an
    online presence, it has kind of created a slightly different
    playing field than there has been in the past. I was just
    curious. Thank you very much. My time has expired.
        I yield back, Mr. Chair.
        Mr. Bachus. Thank you.
        The Chair now recognizes myself for questions. One thing I
    will tell you, that we had a hearing just 2 or 3 months ago,
    and I think Members on both sides of the aisle were shocked at
    Marathon Steel, which was a small company in Baltimore that had
    been praised highly by the Congress on Racial Equality, and
    several civil rights groups, and by the City of Baltimore for
    establishing businesses in inner city Baltimore, and they
    started a profit sharing plan. And they were exporting to like
    31 countries and had hired, you know, I think over a hundred
    employees. And jobs right where we needed them the most. And
    they were fined by the Treasury Department for missing a
    signature line on their profit sharing plan, although when they
    came in and fined them, they had totally complied with that.
    And they were actually sharing their profits with their
    employees.
        And I noticed one of you said Tammy Duckworth has proposed
    legislation--I don't know if that was you--to be able to waive
    that. And the Treasury Department adjusted it down to $20,000.
    But still, you know, it was just Members on both sides said,
    you know, that shouldn't happen. We have seen examples of that.
        Let me, Mr. Narang, and I am going to ask the others, but,
    you know, one of the things that does strike me is the agencies
    compute indirect benefits, which also can be harder to assess.
    And I know Ms. Harned in her testimony, and I think Mr. Harris
    and Mr. Palmieri, they all mentioned that they are--they
    compute those. And it seems like if they are going to compute
    benefits, indirect benefits, they ought to compute indirect
    costs just in a balance. And I think her testimony, and it is
    the last paragraph of page five on her testimony, says that
    actually that President Clinton issued an executive order
    mandating consideration of a rule's indirect impact. Are you
    aware of that executive order?
        Mr. Narang. I am.
        Mr. Bachus. And but you disagree with it, I guess, right?
        Mr. Narang. I don't disagree with the executive order. And
    I would like to take a closer look at the examples that were
    cited in terms of indirect benefits against the actual specific
    rules mentioned. What I would say is I think that is an
    excellent example of a kind of basic methodological fundamental
    flaw with the whole notion of cost-benefit analysis. One
    person's benefits is another person's costs. This is something
    that----
        Mr. Bachus. And I agree. I agree. But, you know, if you are
    going to consider one person's benefit, indirect benefit, you
    ought to consider one person's indirect costs, I would think
    just in fairness.
        Mr. Narang. You know, I believe if that is happening, I
    will take a closer look at those instances. You know, again, I
    think that the problem here is an overreliance on cost-benefit
    analysis. Congress mandates that agencies carry out certain
    responsibilities, fashion certain rules. When it comes to cost-
    benefit analysis, we shouldn't be making this something that is
    second-guessing congressional mandates.
        Mr. Bachus. Okay. Mr. Palmieri?
        Mr. Palmieri. Yeah, love to comment. I think something that
    Mr. Narang and I would probably agree on is, say, if we were
    looking at government fuel efficiency rules, if you only looked
    at kind of the direct impacts you would look at the impact of
    the fuel efficiency rules on automobile manufacturers and kind
    of the costs they impose and where the benefits they impose for
    automobile manufacturers.
        It would require a review of the indirect impacts to see
    what the benefits to consumers would be of higher fuel
    efficiency in their vehicles and cost savings over time.
        So we are already doing this type of analysis in a range of
    other rules. For whatever reason, the courts just looked at
    this law after it was passed in 1980 and decided that it wasn't
    clear enough and the legislative history wasn't clear enough.
    So this is just a correction. The RFA is a transparency law. It
    just says we are looking at impacts. It doesn't tell the agency
    what they have to do after they have considered that impact.
    But they have to consider it. So, to us, a review of indirect
    effects makes complete sense and is consistent with how
    Congress has operated for a long time.
        And Ranking Member Cohen mentioned foreseeability as an
    issue. And I think there are some ways to look at that are
    perhaps less complicated than Palsgraf. And products, you know
    consumer products manufacturers already comply with the
    Consumer Products Safety Act, which requires us to kind of
    anticipate foreseeable use and misuse of the products for
    consideration of product safety standards and making sure that
    they are right. So foreseeability I think is a completely
    reasonable definition for us to use.
        Mr. Bachus. Thank you. And let me just close by stating--
    and then Mr. Jeffries, we are going to go to you--Mr. Smith
    mentioned a lead smelter which will close in his district. I
    don't know, but I would imagine that it may result in lead
    being smelted right across the border in Mexico. And I know the
    EPA, when they proposed new regulations on our cement plant,
    they actually said that this cement, it will eliminate a
    certain capacity in the United States, but we can get that
    cement from Mexico and China. Well, I asked, well, in Mexico,
    the environmental standards are much more lax, and like that
    lead smelter, what if it moves right across the border? We know
    that a lot of our lead and arsenic in the air actually comes
    from Mexico, particularly in our Gulf Coast States. I mean,
    that is the source of them. If you look at a map, the West
    Coast has the largest--a lot of particulate matters--they have
    the largest concentration, even though the plants may be in the
    east, and that is because it comes from China in the jet
    stream. So we shut something down here, it results in more
    pollution here. And I asked the EPA, and they said, they could
    not consider--they didn't have any control over Mexico. Well,
    they certainly ought to compute that if it is going to result
    in more cement or more lead smelting across the border in
    Mexico, which then comes over in the air, they ought--to me,
    they ought to consider that. It is only fair. At this time, I
    recognize Mr. Jeffries from New York is free to ask any
    questions.
        Mr. Jeffries. Thank you very much, Chairman Bachus. And let
    me also thank the witnesses. Certainly the issue of small
    business success and vitality in America should be a
    nonpartisan issue. And I think everyone on this panel and
    within this Congress wants to ensure that small businesses can
    be successful, given the importance of your success to our
    economy, to the constituents that I represent, to those that
    all of us represent throughout this great country.
        But I did have some questions that I wanted to ask, you
    know, related to this concept of regulation as well as what is
    really hurting the pace of the recovery. And I will start with
    Mr. Harris. It appears that, based on some studies that I have
    taken a look at, homeownership in the United States and
    homeowners since the first quarter of 2006 have suffered
    approximately $7 trillion in home equity loss. Is that correct?
        Mr. Harris. That is--I don't know exact numbers, but we
    have seen significant decrease in equity positions on
    residential homes, yes.
        Mr. Jeffries. Right. So certainly there has been a
    staggering loss of home equity that has greatly impacted
    working families in middle class America throughout this
    country connected to the events surrounding--connected to the
    events related to the great recession of 2008. Is that fair to
    say?
        Mr. Harris. Yes, that is fair.
        Mr. Jeffries. And there are many explanations as it relates
    to the collapse of the economy in 2008, but a lot had to do
    with activity that was taking place in the housing market. Is
    that fair to say?
        Mr. Harris. I am not sure what you mean by activity in the
    housing market in regard to the downturn.
        Mr. Jeffries. Okay. To be specific, you are familiar with
    the term mortgage-backed securities, correct?
        Mr. Harris. Oh, absolutely.
        Mr. Jeffries. And mortgage-backed securities were being
    bundled in ways that were ultimately difficult to untangle,
    sold and resold, and directly related to the collapse of the
    economy in 2008. Is that fair to say?
        Mr. Harris. Yes. Agreed.
        Mr. Jeffries. And is it also fair to say that predatory
    lending activity related to the circumstances leading up to the
    collapse of the economy in 2008? Is that fair to say?
        Mr. Harris. I would think that the way in which loans were
    made in areas that they were made to people who obviously could
    not repay had a great deal to do with the downswing in that
    market, yes.
        Mr. Jeffries. Absolutely. And that would essentially
    capture what you just described sort of subprime lending to
    individuals who clearly did not have a capacity to sustain the
    ability to pay loans on a moving forward basis.
        Mr. Harris. That is correct.
        Mr. Jeffries. And would it be fair to say that your
    business, or other similarly situated businesses suffered
    tremendously as a result of the collapse of the economy and the
    downturn of the housing market given the events of 2008?
        Mr. Harris. Absolutely.
        Mr. Jeffries. And would it also be fair to say that some of
    the activity that we just discussed related to predatory loan
    activity, mortgage-backed securities, credit default swaps that
    were connected to those mortgage-backed securities all operated
    in a context where they were not as regulated pre-2008 as they
    clearly should have been with the hindsight of 20/20 vision? Is
    that a fair statement?
        Mr. Harris. Well, I think it is fair, but again, we are
    talking about regulating other than small businesses, when you
    start talking about regulating the large banks that had the no
    doc lending, the negative amortization lending, those did not
    come from small community banks in small communities that would
    be affected in this ruling.
        Mr. Jeffries. I agree with that point.
        Mr. Harris. Okay.
        Mr. Jeffries. One of the concerns that we have here,
    however, and Mr. Narang has articulated it, is that in our
    desire, which is a legitimately held one, to support small
    businesses and their ability to move forward, we may actually
    create opportunities for some of the larger corporations and/or
    businesses, and Mr. Narang gave an exact example, to escape the
    reach of regulation in a manner that in the past has proven to
    be harmful not just to American homeowners, but to your
    businesses and others that are similarly situated. Is that a
    fair observation?
        Mr. Harris. I think that is a fair observation. But again,
    if I could add, some of us who are in areas that weren't
    affected did not have the opportunity to have, nor did we want,
    no doc, negative amortization, pie-in-the-sky lending that
    occurred in various areas. We were penalized because of that
    activity, not because our members either benefited from that or
    not. It was just that was part of the outflow of that
    situation.
        Mr. Jeffries. I agree. And I know my time has expired. But
    I think we share a similar concern that you didn't necessarily
    benefit from the lack of regulation and you were hurt by the
    subsequent behavior that took place.
        And with that, I yield back. Thank you.
        Mr. Bachus. All right. Thank you. I appreciate those
    questions and the responses of our panel.
        At this time, I would like unanimous consent to submit the
    statement of Chairman Bob Goodlatte, our Chairman of our
    Committee in support of this bipartisan bill, and also a letter
    from the Associated Builders and Contractors in support of this
    comprehensive legislation, bipartisan.
        [The information referred to follows:]

                                   __________

                                   __________

        Mr. Bachus. And I am going to leave the record open if
    other Members, Mr. Conyers or others, wishes to submit a
    statement or documents in support or opposition to the
    legislation. And also I would ask the witnesses, Members may
    want a follow-up question, to send you a follow-up question.
        I do want to commend the Members, I think this is the very
    type of hearing that we can try to build some consensus.
    Because I think we all realize that with the House and the
    Senate we have to try to work together or we are not going to
    accomplish anything. And we have to do that by listening to all
    stakeholders.
        We are not going to bring the Members back. We have got a
    series of votes. But this concludes today's hearing. Thanks to
    all our witnesses for attending, for their excellent
    statements.
        Without objection, all Members will have 5 legislative days
    to submit additional written questions for the witnesses or
    additional materials for the record. This hearing is adjourned.
        [Whereupon, at 10:24 a.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     Prepared Statement of the Honorable Steve Cohen, a Representative in
    Congress from the State of Tennessee, and Ranking Member, Subcommittee
               on Regulatory Reform, Commercial and Antitrust Law

        The Regulatory Flexibility Improvements Act ``proposes some
    needlessly drastic measures that threaten to undermine public health
    and safety and waste public resources.''
        ``I am open to ideas on tweaking the regulatory process in modest
    ways to make regulatory compliance easier for small businesses and
    perhaps finding better ways for small business to provide input to
    specific rules. As drafted, though, [the bill] . . . simply goes too
    far.''
        If these statements sound familiar, it is because I am quoting
    myself from two and half years ago when we considered what appears to
    be an almost identical bill in this Subcommittee.
        Yet notwithstanding the concerns that I expressed and my hope that
    we instead consider more modest and meaningful assistance for small
    businesses, this latest measure simply rehashes the shortcomings of the
    bill from last Congress.
        Once again, this is the movie Groundhog Day, and I am Bill Murray's
    character.
        Although I say this at every regulatory hearing, it is worth
    repeating as we consider the merits of the bill before us today.
    Regulations are critical to protecting the American people from a vast
    array of harms, including dirty air and water, dangerous toys, reckless
    financial behavior, and unsafe workplaces.
        This is not an abstract notion. On the question of workplace
    safety, for instance, the Bureau of Labor Statistics reports in its
    2011 Census of Fatal Occupational Injuries that there were 4,693
    workplace deaths in 2011.
        According to researchers from the National Institute for
    Occupational Safety and Health, the American Cancer Society, and Emory
    University's School of Public Health, there are an estimated 50,000 to
    70,000 deaths from occupation-related diseases in the United States
    annually.
        And, while we are talking about regulatory costs, we should also
    consider the costs of insufficient regulation. According to a joint
    study by Liberty Mutual Insurance Company and health economists at the
    University of California at Davis, the estimated costs of workplace-
    related injuries is $250 billion, only 25% of which is covered by
    workers' compensation.
        I do not doubt that Chairman Bachus and the other proponents of the
    RFIA sincerely share my appreciation for the importance of regulation
    in protecting all of us from a myriad of harms. I emphasize the
    importance of regulation only to point out that this bill, if enacted,
    could jeopardize these types of protections in the future.
        For example, this bill will expand the use of regulatory review
    panels by requiring that they apply to rules proposed by all agencies
    and by applying them to all major rules, not just those that are
    subject to the Regulatory Flexibility Act.
        Currently, such review panels are required only for rules that: (1)
    are subject to the Regulatory Flexibility Act; and (2) are proposed by
    the Environmental Protection Agency, the Occupational Safety and Health
    Administration, or the Consumer Financial Protection Bureau.
        These review panels, which consist of the Chief Counsel for
    Advocacy of the Small Business Administration, a representative of the
    issuing agency, and a representative from the Office of Information and
    Regulatory Affairs, review the covered rules and can send them back to
    the issuing agency.
        Clearly, the process is intended to slow down rulemaking. By
    dramatically expanding their use, this bill will effectively stop most
    rules from going into effect.
        The bill also burdens agencies with numerous additional and
    amorphous analytical requirements, including the requirement that
    agencies assess the indirect economic effects of a proposed rule.
        The requirement to assess indirect effects has almost no
    limitation, other than that such indirect effects should be
    ``reasonably foreseeable,'' which is not much of a limitation.
        Under this fairly open-ended requirement, agencies would be at a
    loss to determine how much is enough when it comes to their regulatory
    analysis obligations. For example, what is the ``reasonably foreseeable
    indirect economic effect'' of a regulation requiring heightened
    security measures at airports? Would the issuing agency have to take
    into account the potential loss of business for the hot dog stand that
    is located far past the security checkpoint?
        These are just two of the many concerns with the RFIA. We will hear
    in more detail from Amit Narang of Public Citizen about the remaining
    concerns with the bill.
        There are things we can do to help small entities, including
    measures to assist small businesses with regulatory compliance. We
    ought to be able to support such measures on a bipartisan basis. I
    understand that Mr. Narang may have a proposal to that effect and I
    hope his fellow witnesses and the other members of this Subcommittee
    will give it real consideration.

    Prepared Statement of the Honorable John Conyers, Jr., a Representative
     in Congress from the State of Michigan, Ranking Member, Committee on
         the Judiciary, and Member, Subcommittee on Regulatory Reform,
                          Commercial and Antitrust Law

        Under the guise of protecting small businesses from burdensome
    regulatory requirements, the ``Regulatory Flexibility Improvements
    Act'' is actually yet another attempt to--

              prevent regulatory agencies from promulgating
            regulations that protect the health and safety of Americans;

              overwhelm regulatory agencies with unnecessary and
            costly analyses; and

              give well-financed businesses and anti-regulatory
            organizations greater opportunities to thwart the rulemaking
            process.

        Not surprisingly, similar legislation considered in the last
    Congress was opposed by the Obama Administration, which issued a veto
    threat, stating that the bill ``would seriously undermine the ability
    of agencies to execute their statutory mandates'' and '' impede the
    ability of agencies to provide the public with basic protections.''
        And, many of the Nation's leading consumer, labor, and
    environmental organizations have expressed similar concerns about this
    ``dangerous'' measure, including--

            --the AFL-CIO,

            --the American Lung Association,

            --the Consumer Federation of America,

            --Consumers Union,

            --the Natural Resources Defense Council,

            --Public Citizen,

            --the United Auto Workers, and

            --the National Women's Law Center, just to name a few.

        One of my principal concerns about this bill is that it could
    jeopardize Americans' health and safety.
        Our federal agencies are charged with promulgating regulations that
    impact virtually every aspect of our lives, including the air we
    breathe, the water we drink, the food we eat, the cars we drive, and
    the play toys we give our children.
        Small businesses, like all businesses, provide services and goods
    that also affect our lives. So, it makes no difference to a victim who
    breathes contaminated air or drinks poisoned water, whether the hazards
    were caused by a small or large business.
        The far-reaching legislation before us today would undermine the
    ability of federal agencies to quickly respond to emergent health and
    safety concerns.
        Section 5 of the bill, for example, repeals the authority under
    current law that allows an agency to waive or delay the initial
    analyses required under the Regulatory Flexibility Act ``in response to
    an emergency that makes compliance or timely compliance . . .
    impracticable.''
        Instead, the bill empowers the Chief Counsel for Advocacy to issue
    regulations about how agencies in general should comply with the Act.
        So, imagine if there is an epidemic E. coli or listeria infection
    caused by some item in our Nation's food distribution network, or an
    imminent environmental disaster that could be addressed systemically
    through regulation, this bill says ``Don't worry. Don't rush. Let's
    have the Chief Counsel for Advocacy decide.''
        This override of an agency's authority to respond to emergencies
    without having first go through the arduous and time-consuming task of
    review and analysis is simply wrong.
        Another problem with this bill is that it will result in the
    wasteful expenditure of taxpayer dollars by forcing agencies to
    redirect their scarce resources to meet the bill's needlessly
    burdensome compliance requirements.
        Section 6 of the bill, for example, would require agencies to
    review not only all rules, but, in addition, all guidance documents
    currently in effect as of the bill's date of enactment.
        We are talking about thousands of pages of regulations in the Code
    of Federal Regulations and several hundred thousands of guidance
    documents.
        This requirement even applies to regulations that have provided
    long-proven health safeguards, such as regulations banning lead in
    gasoline.
        It's no wonder that the Congressional Budget Office estimates that
    it will cost $80 million over a five-year period to implement these new
    requirements.
        We understand that some small businesses often have limited
    resources and that they can be more vulnerable to unnecessary,
    redundant, or conflicting regulations than their larger counterparts.
        But, we are not talking about your typical Mom and Pop small
    businesses under this bill. No, this bill applies to businesses that
    employ up to 500 workers.
        And, the answer is not to burden the agencies that are responsible
    for protecting public health and safety. Rather, our goal should be to
    help small businesses comply with these regulations.
        By overburdening the very agencies charged with protecting us, this
    bill clearly prioritizes corporate special interests.
        What a waste of scarce taxpayer dollars.
        A further concern I have about this bill is that it will result in
    paralysis by analysis and give corporate interests too much control
    over the rulemaking process.
        Section 2 of the bill, for example, would task agencies with the
    duty to examine the indirect economic effects of proposed regulations
    on small businesses, which would be in addition to their current
    obligation to assess the direct effects of these regulations.
        Now I ask you: what is an ``indirect economic effect'' of a
    regulation? Just think of the litigation that well-funded businesses
    and anti-regulatory organizations could fund to stop a rulemaking.
        This bill, if ever enacted, would force agencies to conduct highly
    speculative and labor-intensive assessments, all of which could be
    subject to litigation by well-financed business interests.
        Agencies would be required to engage in a virtual guessing game to
    divine the indirect effects of a proposed regulation, which, of course,
    would be subject to judicial review.
        Other ways in which the bill will result in regulatory paralysis
    are the following:

              It greatly expands the types of rules subject to
            analysis under the Regulatory Flexibility Act;

              It mandates that agencies prepare excessively
            detailed analyses for proposed rules; and

              It requires review panels to ensure that certain
            rules issued by all agencies--not just the three agencies under
            current law, namely, Environmental Protection Agency, OSHA, and
            the CFPB--consider the interests of small businesses.

        Glaringly missing from the bill is any provision requiring
    consideration of public interest concerns and of the benefits of
    regulations.
        This is a harmful bill that could potentially put the health and
    safety of all Americans at risk while adding nothing to the efficiency
    or cost-effectiveness of agency rulemaking. I strongly oppose this
    bill.

                                   __________