[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.

                                



























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