[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXPEDITING ECONOMIC GROWTH: HOW
STREAMLINING FEDERAL PERMITTING CAN CUT RED TAPE FOR SMALL BUSINESSES
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
SEPTEMBER 6, 2017
__________
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Small Business Committee Document Number 115-033
Available via the GPO Website: www.govinfo.gov
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26-719 PDF WASHINGTON : 2018
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HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
DON BACON, Nebraska
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
RALPH NORMAN, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Mr. Philip K. Howard, Senior Counsel, Covington & Burling LLP,
New York, NY, testifying on behalf of Common Good.............. 5
Mr. Louis A. Griesemer, President, Springfield Underground, Inc.,
Springfield, MO, testifying on behalf of the National Sand
Stone Gravel Association....................................... 7
Mr. Mark Hayden, General Manager, Missoula Electric Cooperative,
Missoula, MT................................................... 8
Ms. Margot Dorfman, CEO, U.S. Women's Chamber of Commerce,
Washington, DC................................................. 10
APPENDIX
Prepared Statements:
Mr. Philip K. Howard, Senior Counsel, Covington & Burling
LLP, New York, NY, testifying on behalf of Common Good..... 24
Mr. Louis A. Griesemer, President, Springfield Underground,
Inc., Springfield, MO, testifying on behalf of the National
Sand Stone Gravel Association.............................. 31
Mr. Mark Hayden, General Manager, Missoula Electric
Cooperative, Missoula, MT.................................. 39
Ms. Margot Dorfman, CEO, U.S. Women's Chamber of Commerce,
Washington, DC............................................. 43
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Associated General Contractors of America.................... 47
EXPEDITING ECONOMIC GROWTH: HOW STREAMLINING FEDERAL PERMITTING CAN CUT
RED TAPE FOR SMALL BUSINESSES
----------
WEDNESDAY, SEPTEMBER 6, 2017
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:00 a.m., in Room
2360, Rayburn House Office Building, Hon. Steve Chabot
[chairman of the Committee] presiding.
Present: Representatives Chabot, Luetkemeyer, Brat,
Radewagen, Kelly, Blum, Comer, Gonzalez-Colon, Bacon,
Fitzpatrick, Marshall, Norman, Velazquez, Evans, Murphy, Adams,
and Schneider.
Chairman CHABOT. The Committee will come to order.
First of all, on behalf of the Small Business Committee, I
wanted to extend our heartfelt prayers and support to the
communities ravaged by Hurricane Harvey. Unfortunately, the
storm took dozens of lives. It also took people's businesses
and possessions and homes. This Committee is committed to
helping these Americans reclaim and rebuild their lives as
quickly as possible. As part of this effort, the Committee has
been working, and will continue to work, with Administrator
Linda McMahon and the Small Business Administration to ensure
that it is able to efficiently and effectively respond. SBA's
Disaster Loan Program, which provides direct loans to business
owners and homeowners is a key component of the recovery
efforts in these communities. This Committee will continue to
be engaged on this issue for the coming weeks and months to
make sure that we are doing everything possible that we can to
help our fellow Americans in their time of need.
And I would also like to extend our heartfelt concern to
both the ranking member as well as Ms. Gonzalez-Colon for
Hurricane Irma, which is ready, in the very near future, I
believe, to hit Puerto Rico as well. And I know they have a lot
of family and friends and loved ones there. So it has been a
rough period of time for our country, and particularly the
communities that I just mentioned. So we wish you the best to
all your loved ones. And the things that I mentioned about are
this Committee's commitment to helping out the folks down in
Texas and Louisiana also extend to our fellow citizens in
Puerto Rico as well. So we will work with the staff of the
ranking member and Ms. Gonzalez-Colon if they have suggestions
or things that we can do to help there.
We are also here today to examine how the Federal
permitting process hurts small businesses, which obviously this
Committee is very involved with since it is the Small Business
Committee. As this Committee well knows, complying with
regulations is one of the biggest challenges facing small
businesses today. The time and cost to comply with the growing
number of regulations stymies economic growth and stifles
innovation.
The Federal permitting process is a component of this vast
regulatory state. Usually before a business can begin to open
its doors, launch a project, or begin an initiative, it must
obtain a number of permits before moving forward. But the
current permitting process is a maze that businesses big and
small must navigate. And as with regulations generally, the
Federal permitting process disproportionately affects small
businesses. To obtain all the proper permits, small businesses
must often deal with several agencies and departments with
overlapping regulatory jurisdictions and endure lengthy delays
waiting for permitting decisions, and cope with increasing
costs to comply with these Federal permitting requirements.
Our witnesses today will provide real examples of what it
is like to attempt to comply with our complex Federal
permitting process: having to constantly check boxes to move
forward with a project; having to fill out difficult permitting
applications only to wait for months, sometimes years, for
agencies to make decisions; having to do the nearly impossible
to meet all the permitting requirements while keeping their
doors open.
The current administration has taken positive steps to
address the Federal permitting process, including two executive
orders and a presidential memorandum. These actions acknowledge
the burden the Federal permitting process imposes on the
economy. That is a good start, but we must continue to look for
ways to simplify and streamline the permitting process,
especially to ease the regulatory burden on small businesses,
our economy's lifeblood.
That is why I introduced H.R. 33, the Small Business
Regulatory Flexibility Improvements Act of 2017, at the
beginning of this year. This bill ensures that Federal agencies
actually examine the impact of new regulations on small
businesses and consider ways to reduce unnecessary costs and
burdens. The Small Business Regulatory Flexibility Improvements
Act was included in a larger bill, H.R. 5, the Regulatory
Accountability Act of 2017, which passed the House with a
bipartisan vote back in January. The Senate has introduced a
similar bill, S. 584, and we are waiting for them to take this
important legislation up hopefully soon. If passed, the Small
Business Regulatory Flexibility Improvements Act will be
another step towards easing the regulatory burden on small
businesses.
I want to thank the witnesses here today. We appreciate you
taking the time out to travel to Washington, D.C. to testify
about your experiences, and we look forward to your testimony.
And I would now like to recognize the ranking member, Ms.
Velazquez, for her opening statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. And I just want to
echo your moving words. If there is a time when the federal
government must play a role it is when natural disasters
strike. And I pray for those victims in Texas, and Oregon with
the fires, and now the Caribbean. And we do not know if
Hurricane Irma will--well, the estimate, it is putting that
storm, that hurricane, in a path to hit the South in the United
States.
This Committee has worked diligently throughout the years
to revamp the disaster relief program and to provide the tools
to the Small Business Administration to be able to assist those
homeowners, businesses, and victims of any natural disaster.
But I really am very grateful for your words and we pray that
nothing happens; that there is no loss of lives. This is very
personal for me and it should be very personal for everyone.
Sometimes we forget that the people of Puerto Rico are American
citizens and they show up to fight and defend our country. So
thank you so much.
Mr. Chairman, like raising revenue and funding various
programs, regulation is a fundamental tool the Government uses
to implement public policy. The costs and benefits associated
with federal regulations has been a subject of great
controversy with the costs estimated in the hundreds of
billions of dollars and the benefits even higher. An inherent
part of the regulatory process is permitting, in which a
business must obtain approval from the federal government for a
project. While federal permits are critical to ensuring public
safety, they can also represent a costly and complicated hurdle
for small businesses. Unchecked, regulations can over time
become out of date, requiring companies to devote significant
resources to compliance.
This can be especially problematic for small companies that
lack in-house lawyers and economies of scale enjoyed by larger
competitors.
It is reasons like this that prompted Congress to enact the
Paperwork Reduction Act and the Regulatory Flexibility Act
which help ease and minimize small firms' compliance costs.
Despite the drawbacks, we should remember that permitting
requirements also advance important public goals, helping
ensure worker safety and protecting our air and water from
pollution. I think we can all agree that certain processes
should require a permitting process. For example, it seems like
basic common sense that a permit for the disposal of nuclear
waste is appropriate.
Similarly, a careful review will find that some permits
actually help small businesses and are critical to protecting
local economies. For example, in accordance with the Clean
Water Act, large boats are required to obtain a permit before
operating in U.S. waters. This limits pollutants and toxic
chemical compounds released into our waterways. This not only
protects the public health, but also ensures product life
remains plentiful and healthy for human consumption, keeping
intact local job-creating fishing industries.
Examples like this underscore why a ``one size fits all''
method for slashing regulation is inappropriate. Agencies
should examine their use of permits on a case-by-case basis. In
doing so, they can streamline and remove outdated regulations
without compromising public health and safety or jeopardizing
local environmental resources. One such method of analyzing the
regulatory landscape was included in the FASA Act, which
created a Federal Permitting Improvement Steering Council to
streamline and expedite permitting requirements for
infrastructure projects. Ensuring the FASA Act is fully
implemented and the council fully functional could go a long
way towards reducing permitting burdens. Unfortunately,
President Trump has yet to nominate an executive director of
the council.
Improving compliance assistance can also go a long way
toward leveling the playing field for small businesses. That is
why it is so important that agencies are adequately staffed.
Slashing budgets and imposing hiring freezes means agencies
have fewer resources to help small companies navigate and
comply with these processes. New technology can also play a
role in reducing regulatory burden.
It is my hope that today's discussion will shed light on
how we can further reduce compliance costs for small companies
without raising risks to the public health and the environment.
With that, I once again thank the witnesses for being here
and offering their insight, and I yield back the balance of my
time. Thank you, Mr. Chairman.
Chairman CHABOT. Thank you very much. The gentlelady yields
back.
And if Committee members have opening statements prepared,
I would ask that they be submitted for the record.
I would like to take just a moment to explain our timing
lights for the witnesses. Pretty simple. We operate under the
5-minute rule. You each get 5 minutes to testify and then we
will have 5 minutes to ask questions. There is a lighting
system to assist you. The green light will be on for 4 minutes,
the yellow light will be on for 1 minute letting you know to
wrap up, and the red light will come on and we hope that you
are either finished or will wrap up shortly thereafter.
And I would now like to introduce our very distinguished
panel this morning.
Our first witness will be Mr. Philip Howard, who is the
founder of Common Good, a nonpartisan coalition focusing on
simplifying the government. He has written many books and
articles on legal and government reform, and he was appointed
to President Trump's Strategic and Policy Forum in April of
this year. He is also Senior Counsel at Covington and Burling
in New York. Mr. Howard is testifying on behalf of Common Good,
and we welcome you here today.
Our second witness is Mr. Louis Griesemer. Mr. Griesemer is
the President and CEO of Springfield Underground located in
Springfield, Missouri.
I am pronouncing the name right, aren't I? Okay, thank you.
Springfield Underground supplies construction aggregates
and provides underground storage for warehousing, laboratories,
food storage, record storage, and data centers. Mr. Griesemer
is testifying on behalf of National Stone, Sand, and Gravel
Association, and we welcome you here today as well.
Our third witness will be Mr. Mark Hayden, who is the
General Manager of Missoula Electric Cooperative in Missoula,
Montana. The Missoula Electric Cooperative provides electric
distribution services to nearly 15,000 locations in Western
Montana and Eastern Idaho with many miles of its distribution
lines crossing over Federal lands. And we welcome you here
today as well.
And I would now like to recognize the ranking member to
introduce our fourth witness.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
It is my pleasure to introduce Ms. Margot Dorfman. Ms.
Dorfman is the founder and CEO of the U.S. Women's Chamber of
Commerce. The chamber represents 500,000 members, three-
quarters of whom are small business owners and federal
contractors. Through her leadership, this organization has
championed opportunities to increase women-business careers and
leadership advancement. Additionally, Ms. Dorfman has an
extensive background in business, including over 10 years in
executive positions with General Mills and other Fortune 500
firms. Welcome. Thank you.
Chairman CHABOT. Thank you very much. And I would just let
our witnesses know and also remind members that we are going to
have votes probably starting around 10 minutes till noon
approximately, but we are not absolutely sure. So we could
finish up, but may have to come back.
Mr. Howard, you are recognized for 5 minutes.
STATEMENTS OF PHILIP K. HOWARD, SENIOR COUNSEL, COVINGTON &
BURLING LLP; LOUIS A. GRIESEMER, PRESIDENT, SPRINGFIELD
UNDERGROUND, INC.; MARK HAYDEN, GENERAL MANAGER, MISSOULA
ELECTRIC COOPERATIVE; MARGOT DORFMAN, CEO, U.S. WOMEN'S CHAMBER
OF COMMERCE
STATEMENT OF PHILIP K. HOWARD
Mr. HOWARD. Thank you. Good morning, Mr. Chairman, members.
Thank you very much for this opportunity to appear here.
The focus of today's hearing, streamlining permitting for
small businesses, is of vital importance to this country for a
number of reasons. Small business is the heart of the American
economy, represents half the GDP. It is also the wetlands that
spawns the other half. Not many years ago, Amazon and Google
were small businesses. All the businesses that make this
country grow started as small businesses.
Small business is also the soul of the American economy.
What makes America so different than other countries is the
ability of anyone to go out and be entrepreneurial and follow
their star and make their own way by starting a business.
Regulation is critical, good regulation, as the ranking
member and the chairman both indicated. So the solution here in
my judgment is not deregulation; it is making regulation
practical for small business.
What has happened without anybody really intending it is
over the last 50 years, the permitting and regulatory structure
for small business has slowly started suffocating the goose
that lays the golden egg that everyone describes here. At this
point, according to the World Bank, the United States ranks
51st in the world in ease of starting a business. As the
chairman indicated, it is much more expensive for a small
business to comply with regulation than it is for big business,
on average about 36 percent more per worker.
Regulation is also extraordinarily unfair because the
inability to comply, even to understand, but to comply with
regulation means that small businesses that try hard to comply
are at a competitive disadvantage to small businesses that
realize that they can often just get away with ignoring
regulation all together. So you have this vast disparity that
is the opposite of what the rule of law is supposed to promote.
I think there are three flaws in our general approach to
regulating small business. First, it is too dense for real
people to understand, much less to comply with: literally
hundreds of millions of words of law, about 150 million words
of binding Federal law and regulation, probably over a billion
of State and local regulation. It gets denser every year
because rarely the legislature or regulators take away the
rules. It is like the roach motel. The regulations check in and
they never check out.
The reason it is so dense is not because that is necessary
to protect a safe workplace or clean water; it is because we
try to tell people exactly how to comply. We do not tell them
what the goals are and give them principles and provide
oversight mechanisms. Worker safety, for example, we literally
have thousands of rules telling people helpful things like
stairwell shall be lit by artificial or natural light. How else
can they be lit? They require material safety data sheets for
sawdust and sand and common dishwashing liquid, and give
tickets if you do not have them in the appropriate place. These
things have almost nothing to do with what makes the workplace
safe.
The third problem with regulating small business is the
government does not even try to coordinate among the different
agencies regulating small business. Federal Government agencies
do not coordinate among themselves and much less coordinate
with the State and local governments. So what happens is if you
are trying to start a business in New York, for example, start
a restaurant, Mayor Bloomberg found required permits from 11
different agencies. In D.C., you want an extra apartment, you
want to rent it out? Five permits. I have done studies of
infrastructure permitting, and one project with almost no
environmental impact, to raise the roadway of the Bayonne
Bridge, 47 permits from 19 different agencies. It is impossible
for a small business to navigate that labyrinth.
The solution is not deregulation, but to create a practical
method. Small businesses should also keep water clean. They
should also have safe workplaces. What that requires I think is
not just stemming the flow, which I agree with the chairman
needs to be done, but we need a new approach. We need a new
approach in general, replacing micro regulation with broader
goals. And to get there I think that the first step would be to
appoint an independent commission to do a study on the
cumulative burdens, State and local as well as Federal, and
recommend pilot projects where you have simplified regulation,
where you have simplified enforcement using outside bodies like
CPAs, except make them certified regulatory agents, to create a
safe harbor and help people to comply because you cannot expect
some small businessman to figure out exactly what all these
rules require. So we should somehow institutionalize a
mechanism, the goal of which is make it practical for small
business to comply with legitimate public goals. And it would
initiate such energy in our society if people could be
confident that they could actually go and understand the law
and go out and follow their star and do what has made the
American economy great for all these years. Thank you.
Chairman CHABOT. Thank you, Mr. Howard. Thank you.
Mr. Griesemer, you are recognized for 5 minutes.
STATEMENT OF LOUIS A. GRIESEMER
Mr. GRIESEMER. Chairman Chabot, Ranking Member Velazquez,
and members of the Committee, thank you for inviting me to
testify at this hearing on behalf of National Stone, Sand, and
Gravel Association, NSSGA.
NSSGA represents the 10,000 construction and aggregate
operations across the United States, located in every State and
nearly every congressional district. More than 70 percent of
NSSGA members are small businesses like mine. It is an industry
that directly employs over 100,000 people and indirectly
supports an additional 487,000 jobs throughout the economy.
Overall, NSSGA member companies represent more than 90 percent
of the crushed stone and 70 percent of the sand and gravel
produced and consumed annually in the United States.
NSSGA's primary concern is a fully funded, robust highway
trust fund. While nothing can take the place of these critical
Federal funds, regulatory overreach can cause costly project
delays so regulatory reform is of great importance to us.
As a business, we extract natural material for processing
into crushed, sized, and washed stone. Crushed stone, sand, and
gravel typically make up over 80 percent of ready-mix concrete
and over 90 percent of hot-mixed asphalt. Aggregates are used
in nearly all construction and public works projects, including
buildings, highways, bridges, and airports, as well as treating
drinking water and cleaning air emissions from power plants.
Some of the regulations we must follow to operate make sense,
and others do not, particularly for small businesses.
My family's business was started in 1946 by my father and
uncle, who discovered limestone while digging a farm pond and
recognized the need for road material in nearby Springfield,
Missouri. Springfield Underground now employs 43 people, and in
addition to supplying construction aggregates, we also utilize
our former underground operations as cold storage for
corporations such as Kraft-Heinz and Cargill. Like me, some of
our employees are the second or third generation of their
families to work at Springfield Underground. I have worked in
the industry since 1977.
I want to be clear that I am not against regulation, nor is
NSSGA. In fact, as the co-chair of the Mine Safety Health
Administration NSSGA Alliance, I have led cooperative
discussions with MSHA to develop and disseminate education and
training materials intended to boost workplace safety and
health for over 10 years. We have found that we can accomplish
more by working together rather than having just a command-and-
control relationship.
However, in too many cases, agencies unnecessarily slow
down projects, and Springfield Underground has experienced this
firsthand. In one instance, we had approved plans from our city
for an expansion of our tractor trailer parking lot. When a
State road contractor needed a place to dispose of crushed
pavement, we contracted with them to take the material as fill
for this parking lot. We applied for a land disturbance permit
that was held up first by U.S. Fish and Wildlife Service, but
then by the State. Both required a study to determine if we
were in a bat breeding area for an endangered species bat. The
potential breeding area amounted to a dozen trees and some
brush. The permit was delayed by 4 weeks until it was
determined that our land was not in the bat breeding zone.
Rather than creating a ripple effect by delaying the project,
another contractor had to take some of the material.
Another example, our air permit requires that we apply
water to unpaved areas to control dust. The humidity in
Missouri means that putting that much water down creates some
sticky mess that clings to truck tires. This site is also close
enough to an airport so the Federal Aviation Administration
does not want us to impound water that might attract migratory
birds that impact planes taking off and landing. One agency
limits our availability of water, while another agency demands
overuse of it.
These are only a few examples of problems that small
businesses like mine can face. We need Congress to step in and
help us by pursuing meaningful regulatory reform that assists
small businesses who only want to follow the rules and support
our employees and our community. To lessen the regulatory
burden, the Small Business Regulatory Flexibility Act should
apply to proposed Fish and Wildlife Service rules and the Mine,
Safety, and Health Administration rules, and Federal agencies
should have to meet deadlines for permit approvals and to
determine if a regulation applies to a site.
I appreciate this opportunity to address how streamlining
Federal permitting could help small businesses like mine. Thank
you, Mr. Chairman. I will be happy to respond to any questions.
Chairman CHABOT. Thank you very much.
Mr. Hayden, you are recognized for 5 minutes.
STATEMENT OF MARK HAYDEN
Mr. HAYDEN. Good morning, Chairman Chabot, Ranking Member
Velazquez, and members of the Committee. My name is Mark Hayden
and I am the general manager of Missoula Electric Cooperative,
MEC, in Missoula, Montana.
MEC, through its 41 dedicated employees, serves the
electric distribution needs of approximately 15,000 meters in
Western Montana and Eastern Idaho. Our 2,000 miles of
distribution line deliver energy to some of the most wild and
scenic locations in the country, nearly 3,000 miles of which
cross Federal land. We are proud members of the National Rural
Electric Cooperative Association, the Montana Electric
Cooperatives' Association, and the Northwest Public Power
Association.
For me, the timing of this hearing could not be more
appropriate. Western Montana is on fire. Lives have been lost,
property destroyed, hundreds evacuated. And while the fires
burning today were all lightning sparked, they are a stark
reminder to me of the unnecessary risk that long delays in
Federal approval of permit applications and inadequate fuel
reduction programs can bring to my co-op, our infrastructure,
and our members.
At MEC, we are constantly working to improve system
reliability and reduce the risk of power line-caused wildfires.
And vegetation management on Federal lands is a critical
component of our program. Our dealings in this regard have
generally been very positive, but this is not the situation in
all rights-of-way managed by the Forest Service. Other
cooperative representatives have testified before Congress of
inconsistent land management policies, long delays in approvals
and review times, and unnecessary liability resulting from
these delays.
In short, Federal reforms are needed to cut red tape and
make it easier for electric co-ops to manage vegetation on
federally managed rights-of-way. For that reason, we commend
the House for recently passing H.R. 1873, the Electricity
Reliability and Forest Protection Act, that received strong
bipartisan support. This legislation would give electric
utilities more consistent procedures and streamline processes
in order to better manage utility rights-of-way.
Unfortunately, H.R. 1873 will do little to address my
concerns regarding the delays in the application for major
operation and maintenance activities, especially when the
National Environmental Policy Act, NEPA, process is required to
amend these special use permits.
For example, MEC made the decision to request burial of
approximately 6.1 miles of overhead line on Forest Service land
to improve reliability and reduce the risk of fire, and an
application was submitted in December of 2013. Initial
estimates suggested a 6-month review process; however, 18
months later, we were still awaiting approval. It was then that
I was invited to provide testimony before the House Natural
Resources Committee Subcommittee on Water, Power, and Oceans
regarding these application delays. In preparation for that
testimony, I placed one final call to the local Forest Service
district ranger to express my concerns. The ranger told me that
if I wanted to see things change I should take up my issue with
Congress, at which point I told him I intended to do so the
following week.
Two days later, on the Saturday afternoon prior to the
hearing, MEC received unofficial notice via email that we were
authorized to begin construction. This project qualified for
categorical exclusion, meaning neither an environmental
assessment or environmental impact statement was required. I
can only imagine the number of months or years project approval
would have taken had those more in-depth investigations
applied.
Proper vegetation and fuels management on Federal land not
only affect our utility operations, but also those of our
customers. An executive at a family-owned lumber mill on our
lines tells me he views the cumbersome and time-consuming
process to fulfill NEPA requirements as the single most
important barrier to implementing timely stewardship and
restoration treatments on our national forests. Regulatory
barriers to proper vegetation and fuels management threaten not
only the operation of our utility and the livelihoods of our
members, but also of those businesses we serve.
Mr. Chairman, members of the Committee, for us the status
quo is not an option. We need streamlined, expedited procedures
that allow for timely implementation of projects to improve
system reliability, reduce the risk of power line-caused
wildfire, and protect the long-term health of our forests. Our
small businesses and the overall economies of the communities
we serve depend on it. The best way to accomplish that is to
provide consistency, flexibility, and accountability in the
Federal permitting and permit amendment processes, and we
believe this can be accomplished without abrogating the intent
of Federal regulations.
I appreciate this Committee's work in examining how small
businesses, such as Missoula Electric Cooperative, can benefit
from regulatory reform and for holding this hearing today.
Thank you for the honor of testifying before the Committee, and
I will be pleased to answer any questions.
Chairman CHABOT. Thank you. Thank you very much.
Ms. Dorfman, you are recognized for 5 minutes.
STATEMENT OF MARGOT DORFMAN
Ms. DORFMAN. Chairman Chabot, Ranking Member Velazquez,
members of the House Small Business Committee, I thank you for
the opportunity to speak today.
Federal regulations are created to implement our laws
typically for the purpose of protecting public health and
safety, and increasing or approximating competition where
markets are inadequate. Sometimes the reverse is true as large
businesses seek to use our laws and regulations for the purpose
of gaining market advantage while putting public health and
safety and smaller business competition at risk. Hurricane
Harvey has demonstrated the importance of human safety and how
closely linked our safety is to appropriate, well-enforced
regulations, and we have seen the importance of financial
regulations and oversight as our economy nearly fell apart due
to the lack of government oversight and accountability of our
financial institutions. We have seen the value of the Consumer
Financial Protection Bureau to small businesses seeking access
to capital and watching out for predatory and discriminatory
lending practices, and history has also shown us that the
rising concentration and anti-competitive behavior of some
large corporations has led to the decline in the amount of new
businesses entering the market.
The U.S. Women's Chamber of Commerce recognizes and
supports positive and responsible streamlining of Federal
permits as a way to expedite economic growth. However, our view
is twofold. One, the primary driver of problematic permitting
and regulatory processes is the poor manner in which the
government enacts and manages regulatory creation and
implementation including permitting. The annihilation of
regulations which protect public health and safety and increase
competition would only serve to put our lives and economy at
risk.
Two, for Congress to fuel greater small business
inactivity, you need to listen to small business owners who
will tell you to expedite economic growth through small
business success, you must improve the function of government,
remove economic uncertainty, drive down health insurance and
healthcare costs, drive up consumer spending, and simplify our
tax system. We agree that permitting and other regulatory
hurdles could be greatly improved and streamlined. It should be
much easier for small businesses to know what regulations
impact their businesses and what permits are necessary.
Completing required filings and permits should be made easier,
cheaper, and be concluded more quickly. The National
Environmental Policy Act, the FASA Act, and Title 41 created
the Federal Permitting Improvement Steering Council, but the
Council does not focus on the needs of small business. The
Small Business Administration is not a member of this council
and the FAS 41 2016 Annual Report to Congress does not mention
any consideration of small business and their activities or
concerns. This is one opportunity of many governmentwide to
make small business inclusion part of the fabric of government.
If we are to focus on regulations, permitting,
streamlining, and assisting small businesses to compete, grow,
and help fuel our economy, the U.S. Women's Chamber of Commerce
recommends the following.
One, give small business a seat at the table
governmentwide. Fund the Small Business Administration and
empower and compel SBA to serve as a real champion for small
businesses, rather than an agency that has been systematically
underfunded for years, and then hold SBA leadership accountable
for producing results.
Two, add small business assistance and fast-tracking of
permits so as to lighten the financial burden and improve small
business certainty and planning. Especially focus on fast-
tracking the construction or expansion of manufacturing
facilities.
Three, reduce the fees or remove the fees for small
business permitting on projects.
Four, foster small business-large business partnerships,
which include the large business partner securing required
permits and managing regulatory requirements.
Five, President Trump's recent budget proposal would defund
manufacturing extension partnership, which provides tremendous
assistance to small manufacturers. Instead, funding should be
increased and include strong assistance in permitting and other
regulatory requirements.
Six, champion a governmentwide initiative to require all
regulations be presented in plain English. All permitting
processes be modernized, streamlined, and transparently tracked
for timelines. All regulations be reviewed periodically so as
to ensure rules remain relevant and are carefully targeted to
avoid unintended consequences.
And seven, stop agency staff overreach as laws passed by
Congress are either not implemented or altered through weak,
regulatory implementation so as to render them useless.
Additionally, the U.S. Women's Chamber of Commerce strongly
encourages the House Small Business Committee to focus on what
really counts for small businesses, a well-run government,
removing economic uncertainty, driving down health insurance
and healthcare costs, driving up consumer spending, and
simplifying our tax system. Thank you.
Chairman CHABOT. Thank you very much.
And I will now recognize myself for 5 minutes.
Mr. Howard, I will begin with you. As you have mentioned,
small businesses face staffing and budget constraints that make
it especially hard for them to cope with unexpected delays.
What is the average amount of time it takes for an
infrastructure project nowadays to obtain Federal permits and
what are the costs associated with delays in permitting?
Mr. HOWARD. Well, it depends on the nature of the project.
Large projects take years, between often 5 to 10 years, which
has the effect of more than doubling the cost to taxpayers of
the infrastructure. Lengthy environmental review ironically
turns out to be usually very harmful to the environment because
it prolongs bottlenecks of, you know, polluting bottlenecks and
antiquated power lines that waste electricity, you know, for
example.
And just some of the stories we just heard are an
indication of a regulatory system that is not what Congress
intended when it passed NEPA. The NEPA guidance said
environmental reviews should--even for the most complex project
should not be more than 300 pages long. You could not find one
that is that short. Raising the Bayonne Bridge, 20,000 pages
for a project with almost no environmental impact. So very,
very painfully expensive.
And by the way, there are a lot of small businesses who are
subcontractors on the big projects. So they are delayed 5
years, too, you know, the aggregate supplier and such.
Chairman CHABOT. I have got limited time so let me move on.
Mr. Griesemer, how do permitting and compliance costs
affect your company's ability to bid on new projects?
Mr. GRIESEMER. Well, compliance becomes a part of--almost
all of our senior managers have some sort of compliance
component to what they do. It is across the board, whether it
is human resources, whether it is environmental, whether it is
safety, it impacts everybody's job. And we are a small company
that is devoted to compliance. That is our culture. We want to
comply with all the regulations. The difficulty is these
overlapping regulations, and sometimes not even knowing that a
regulation is going to--there are new ones popping up all the
time. The example I gave on the road project on the endangered
bat was not a problem the last time we had a land disturbance
permit, but the ripple effect is--this was a project that was
trying to be accelerated. All the other agencies, governmental,
regulatory agencies were getting out of the way and trying to
make this happen as quickly as possible and you have got one
agency that is just not on board with that.
Chairman CHABOT. Okay. Thank you.
Mr. Hayden, how does uncertainty in permitting and
regulatory costs affect the prices that your customers would
have to pay for electricity, for example?
Mr. HAYDEN. Well, of course, you know, one cost that I
cannot measure is this added risk, so I would start with that.
You know, we are very concerned about the added risk of fire,
wildfire caused by power lines down. And I mentioned that many
times because that is foremost.
But if we talk about material costs, scheduling of our
people, it is hard to invest in a piece of equipment or
materials for a job if we have an uncertainty whether the
project is either going to get approved or be delayed for
multiple years. So that is a direct cost to our members. Staff
time spent working on these is incredible. It takes an
inordinate amount of hours for our staff to deal with the back
and forth that goes on when permitting. And then it is service
reliability. If we cannot keep the lights on, that is a direct
cost to our members. It is a direct cost to our company.
Chairman CHABOT. Thank you very much.
And finally, Ms. Dorfman, I am always amazed at the number
of warnings I get when I buy something. You open it up, warned
not to eat something, like I am going to have this desire that
I have got to eat this thing, and probably it was some, you
know, I assume a child probably ate something they were not
supposed to and so a lawyer sued somebody and this is what we
all have to put up with. Now, the child probably could not read
the warning about not eating something on this, but
nonetheless, I am just wondering, do you think we ever go to
absurd lengths on these types of things, you know, protecting
us from ourselves? Do we ever go overboard or do you think all
these regulations are worthwhile?
Ms. DORFMAN. As I mentioned, I do believe that we have to
have some common sense to this. But the regulations have been
put in place for public safety and, in some instances, to
ensure that there is competitiveness. So I think it is not a
chop everything off and you have to go in with a fine-toothed
comb and really identify, or the tweezers, to make sure that
what you are removing is common sense. And I do not think there
is like a blanket statement for that.
Chairman CHABOT. So we should be reasonable, use common
sense in these things in general?
Ms. DORFMAN. Yes.
Chairman CHABOT. Thank you very much. I appreciate it. My
time is expired. The ranking member is recognized for 5
minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
So I know that we always say that regulations could hinder
economic growth and it could impose a burden, an economic
burden to small businesses compared to larger companies, and,
therefore, putting them at a disadvantage. But the fact of the
matter is that we here in Congress, we pass legislation, and as
a result of the legislation that we pass and enact into law,
regulations are called for by certain agencies to promulgate.
So my question is why do you think it takes 10 years for an
agency to promulgate regulation? Mr. Howard?
Mr. HOWARD. Part of the problem is how we regulate. We
changed the way we regulated after the 1960s to avoid bad
judgment by officials. So we got this idea. There were never
1,000-page rulebooks, you know, with the 1950s to 1960s. The
Interstate Highway Act was passed. We built 40,000 roads in
little over a decade. It would not take that long if we did not
try to create manuals that contemplate every single
eventuality. The 950-page Volcker Rule could be summarized in
one paragraph, no unreasonable proprietary trading by banks. So
it takes years for people to argue over the 1,000 pages.
Ms. VELAZQUEZ. We've held hearings here (more than one) on
the IRS, and we had a panel of small businesses, but we did not
have the IRS participating in that hearing. And for the most
part, everyone that was sitting at that table said the
important role that the IRS plays and that it's important for
them to have access to a live person, but they cannot. Well,
the disinvestment that has taken place in terms of certain
agencies that we vilify, such as EPA, OSHA, IRS, will have a
direct impact on slowing down the process for these agencies to
do their job. So they are understaffed. They do not have the
kind of manpower they need in order to expedite the processes.
So it is a very difficult balance. We need to strike a
balance. Right? We need to apply common sense and to help--to
get these agencies to do what is right, but then, on the other
hand, we expect for them to do their job without the type of
resources that are needed. Budget cuts have consequences and
sometimes the people that are intended to be helped, we are not
helping them.
Mr. HOWARD. Can I just say one thing?
Ms. VELAZQUEZ. Yes.
Mr. HOWARD. We also took away their authority. The chairman
of CEQ, the Council of Environmental Quality, does not have the
authority to say, oh, you are just burying the power line and
this is going to be better for fires? That is a categorical
exclusion. Go for it. Instead, he had to wait 18 months while
it sort of circulated through lots of employees. So creating
clear lines of authority to make decisions solves many of the
problems that have been described today.
Ms. VELAZQUEZ. So when agencies publish a proposed rule,
the Reg Flex Act requires agencies to describe and estimate the
number of small entities to which the proposed rule applies.
Agencies often underestimate the number of small businesses
impacted by proposed regulation or simply say that data is
unavailable. Is it your experience, and this question is for
anyone on the panel, is it your experience that the burden is
on small businesses to demonstrate that they will be affected?
And what is the best way to change this so that small
businesses do not have to sue federal agencies in order for
their voice to be heard? Mr. Hayden?
Mr. HAYDEN. You know, I do not know that the burden has
been placed on us to defend that, but I would look to the
Regulatory Flexibility Act to say, hey, these indirect costs,
they need to be measured in addition to the direct costs. Small
business needs a voice in the process of developing regulation,
you know, through that whole regulatory process. They need to
show math. They need to show their math on how we are not
affected. I guess that is what I would add to that is that I
think that would really move the ball in terms of our having a
voice in how those regulations are developed.
Chairman CHABOT. The gentlelady's time is expired.
The gentleman from Missouri. Thank you.
The gentleman from Missouri, Mr. Luetkemeyer, who is the
vice chairman of this Committee, is recognized for 5 minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman. And welcome to my
compatriot from Missouri here, Mr. Griesemer. Thank you for
your attendance today.
Let me start with you. I appreciate your story with regards
to the--I think it is the Indiana long-eared black bat, I
believe, is that what it is?
Mr. GRIESEMER. There is also an Ozarks long-eared bat.
Mr. LUETKEMEYER. Oh, okay. I know we have got a lot of
them. I had a situation in my district where we were doing the
same thing, had a community that had a project like this and we
came to realize that there has never even been a sighting in
our State of this bat, yet that may be hibernating in these
trees, and as a result it caused problems.
Could you elaborate just a little bit, talk about your
experience and then the cost to comply and the cost of the
delay that it cost you?
Mr. GRIESEMER. Sure. On that particular example, it seemed
to us a simple matter because there are apparently some maps
that exist within U.S. Fish and Wildlife that show that we are
not in a breeding zone. The issue was that they breed in the
trees. We are an underground mining operation. I kind of
consider that we are actually creating bat habitat, but that is
not the issue in front of us. But it would have been a fairly
simple matter it seems to me to just look at the map and say,
no, you are not in the breeding zone it is pretty clear.
What the expectation is, because of funding and staffing
and so forth, is that the expectation is it takes 4 weeks for
the review. And this was a U.S. 65 project; that is the main
artery between Springfield and Branson, Missouri. That is a
tourist destination, and this is our six-lane artery that was
being shut down. So it was really an accelerated project.
The Highway Department had incentives in place to make sure
this project was done in time, and as a subcontractor, echoing
what Mr. Howard said, we were just a cog in the wheel, but
potentially a vital cog that could have delayed this project
significantly.
Mr. LUETKEMEYER. How many people do you have in your
business that are dedicated just to working on compliance
issues?
Mr. GRIESEMER. As I said in my testimony, every one of our
officers has some compliance component in their job
description. Probably our engineering and environmental, we are
a small company so they have multiple duties. Our engineering
and compliance person that does most of our regulatory and
environmental permits and safety permits, half of his time,
probably 30 to 40 percent of the human resources time, is
devoted to that. A good percentage of my time as CEO is
devoted. We estimate a couple hundred thousand dollars' worth
of labor costs, management costs per year just for our company,
approximately 5 percent of our expenses a year are directly
related to regulatory.
Mr. LUETKEMEYER. Thank you.
Mr. Hayden, you were talking with regards to the hoops you
were having to jump through with regard to doing work on
Federal land, is that right?
Mr. HAYDEN. That is correct.
Mr. LUETKEMEYER. Do you have to do--do you have to jump
through more hoops on Federal land than you do if you put a
utility line over private land?
Mr. HAYDEN. We do. Yes.
Mr. LUETKEMEYER. Really?
Mr. HAYDEN. In terms of the NEPA permitting process would
require. We can bury, you know, generally bury line on private
land much more easily than Federal.
Mr. LUETKEMEYER. So you can do the same thing you are doing
on private land, yet on Federal land they make you jump through
a whole bunch of extra hoops and costs?
Mr. HAYDEN. Costs. Costs. Cost recovery agreements. Yes.
Mr. LUETKEMEYER. How many people do you have in your
company dedicated just to compliance, or percentage of people?
Mr. HAYDEN. Oh, percentage would be, you know, I have an
Engineering Department, who, we are a small company so I would
say that, you know, 15 to 20 percent of our engineering
managers' time would be devoted to that. But we outsource a lot
of that. When it comes to doing our long-range planning, we
outsource most of that environmental analysis work.
Mr. LUETKEMEYER. Okay, thank you.
Also, Mr. Hayden, I know you mentioned the Small Business
Regulatory Flexibility Improvements Act. It is the chairman's
bill that we have passed here in the House. It is sitting in
the Senate. And much to my consternation, it passed out of the
Senate the other day, but it did on a party line vote and one
of the senators, which is from Missouri, voted against it,
which is ridiculous because all we are trying to do is help the
small businesses.
Would you elaborate a little bit on the effect of that bill
on your business, how it would improve your ability to do
business?
Mr. HAYDEN. Well, I think it is a broad effect on any
regulation, not just our business, having that input, having a
panel sit down. If you think about a classic example would be
the Waters of the United States bill that has now been pulled
back, but there was no input from small business on the effect
that that was going to have an electric utility, like Missoula
Electric Cooperative. Electric co-ops cover about, you know, 75
percent of the Nation I think is the amount of landmass we
cover. Think of the impact of that and we did not even have a
seat at the table.
Mr. LUETKEMEYER. I appreciate that comment. And my time is
out here, but I want to make one comment here very quickly,
because you made the comment in your testimony with regards to
having a voice in the determination of the regulation. It is
vitally important, I think, and you just made the point again,
to be able to have small businesses at the table, people who
are going to be directly affected by these regulations, to at
least have an input or say in how these regulations are
developed. So thank you so much for your story and your time
today.
Chairman CHABOT. The gentleman's time has expired.
The gentleman from Pennsylvania, Mr. Evans, who is the
ranking member of the Subcommittee on Economic Growth, Tax, and
Capital Access, is recognized for 5 minutes.
Mr. EVANS. Thank you, Mr. Chairman.
Mr. Howard, I am going to probe a little bit on the part
when you talk about a new approach. And you say, you talk about
a new regulatory framework is needed, and the sense I get from
you in saying that is people do not want the other extreme of
total deregulation. That is kind of what you are saying. Now, I
know we are dealing strictly with Federal jurisdiction here,
but many businesses are worried about duplicate regulation,
both at the Federal level and the State and the local levels.
Can you discuss the extent to which firms face such duplicate
permits?
Mr. HOWARD. Well, I can give a few examples. The example
that I studied and issued reports on the last couple of years
has been infrastructure. And infrastructure projects typically
go through multiple layers of review. The new power line to
connect wind farms in Wyoming to the Pacific Northwest, for
example, had to get permits from each county in Idaho over
which the line was constructed, which delayed the project and
added to the cost of it and potentially, although it rarely
works out this way, could have been a veto.
One of the reasons the United States has almost no private
investment in infrastructure compared to Europe is because of
what Mr. Griesemer was saying, which is the uncertainty of when
the permit is going to be given. So nobody wants to invest
private money if they do not know if they are getting an answer
in a year or two. So that is one example that I happen to have
studied with infrastructure, but almost every area of endeavor
that is regulated has permits required on multiple levels of
government.
Mr. EVANS. And you sort of think, what I heard you say, and
I do not want to put words in your mouth, you said something
about having another commission. I heard you say you have
another commission.
Mr. HOWARD. Yeah, I am sorry. I did say that. Yes.
Mr. EVANS. You did say, I mean, I thought I heard you say
send another commission, so I am thinking in my head, educate
me on what you think by setting up another commission would
accomplish the objective. I am just----
Mr. HOWARD. Well, personally, I think that small business
should have a seat at the table.
Mr. EVANS. Right.
Mr. HOWARD. But I do not think it is possible to reconcile
the regulatory objectives with a large oil and gas company,
with the regulatory objectives of a company with 20 or 50
employees. I think those require different regulatory regimes,
not a ``one size fits all.''
Mr. EVANS. Mm-hmm.
Mr. HOWARD. And so I believe there should be pilot projects
to test dramatically simplified approaches to meeting
environmental goals and worker safety goals and other goals. I
am not for getting rid of those goals, but applying those in a
different way to small business because I do not think we can
ever reconcile the need to regulate Shell Oil or BP in one way
and regulate a small business in the same way. I just do not
think those two things are compatible.
Mr. EVANS. Okay.
Ms. Dorfman, a poll conducted by the American Sustainable
Business Council found that the lack of demand was the biggest
problem facing small businesses. Given this outcome, should we
be focusing our attention on ensuring small businesses have
customers reforming the Tax Code? And which provisions?
Chairman CHABOT. If you could turn the mic on there. Thank
you.
Ms. DORFMAN. Sorry. We find that the tax regulations are
overly complex and they are weighted to the wealthy, but also
to big business. And so we are not getting the same benefits as
you were mentioning. You know, you cannot compare BP to a 50-
person company, the same thing. We are not receiving the same
benefits so there are challenges there.
And then additionally, where the money comes from is really
looking at the consumer spending. And so we need the money into
the pockets of the consumer to drive the consumer spending to
grow small businesses.
Mr. EVANS. Real quick. Do you have any suggestions and
thoughts around that since tax reform is a discussion we are
generally talking about?
Ms. DORFMAN. We need to, when looking at that, ensure that
the consumer, which is generally the nonwealthy, the non-1
percent, has better tax benefits where they have more money
coming in to them that they can go ahead and use that money as
the extra money to spend on consumables.
Mr. EVANS. Thank you, Mr. Chairman. I yield back the
balance of my time.
Chairman CHABOT. Thank you. The gentleman yields back.
The gentlelady from American Samoa, Ms. Radewagen, who is
the chairman of the Subcommittee on Health and Technology, you
are recognized for 5 minutes.
Mrs. RADEWAGEN. Talofa. Good morning.
Thank you, Mr. Chairman and Ranking Member Velazquez, for
holding this hearing. I also want to thank all of today's
witnesses for appearing today. It is an important hearing. We
have been working on this exact issue in the Natural Resources
Committee on which I am also a member.
It is important that we also examine how burdensome
regulations harm America's small businesses. It is easy for
multinational corporations to hire an army of lawyers to handle
regulations. It is here where we need to advocate for small
businesses.
Mr. Howard, my question is for you. Regulatory overlap
between agencies can cause confusion for businesses and
complicates the permitting process. How do you think agencies
should decide which agency is the lead agency with overriding
authority when multiple agencies disagree?
Mr. HOWARD. The Balkanization of authority within the
Federal Government and among the different levels of government
makes trying to get permits, and indeed, trying to comply with
regulation, a form of chaos. It is anarchy. There are no clear
lines of authority to resolve disagreements among different
agencies. The laws are so dense that the President of the
United States does not have the authority right now to resolve
these disagreements.
In every area of regulation there should be an overarching
authority through the executive branch to resolve
disagreements. The FAST Act set up a 16-agency steering council
to resolve disagreements. I asked when they were doing it how
long it would take to schedule the meeting and what happened if
people did not agree. There is no clear line of authority up to
the president to resolve that disagreement.
Common Good has proposed three pages of amendments to the
FAST Act, which among other things would give the chairman of
the Council of Environmental Quality the authority to decide
all issues about scope and adequacy of environmental review and
would give the president, or whoever he designates, the
authority to resolve those disagreements. Without that
authority, what you get is bickering between Fish and Wildlife
and the Corps of Engineers that can take years.
Mrs. RADEWAGEN. Can you explain how a one-stop shop Federal
permitting system would work? Are there similar systems that
can be used as a model?
Mr. HOWARD. The one-stop shop has applied very well in
other countries. Germany, for example, designates one agency,
whether it is a State or a Federal agency there depending on
the project to give the permit. They still have to comply with
law, but they have ultimate authority to make the decision.
Germany, which is thought to be a greener country than the
United States, issues permits and complex projects within 1 to
2 years.
A one-stop shop is simply allocating authority to an agency
or to the White House and with whatever checks and balances
Congress chooses to put in it, oversight by someone else, and
everyone still has to comply with law, so there are judges and
courts in the background. But today, the authority is even.
Every agency is equal to every other agency. They are each
complying with their own regulations. They each have their own
goals. And that is why it takes months and years to get really
obvious approvals often.
Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you. The gentlelady yields back.
The gentlelady from North Carolina, Ms. Adams, who is the
ranking member of the Subcommittee on Investigations,
Oversight, and Regulations, you are recognized for 5 minutes.
Ms. ADAMS. Thank you, Mr. Chairman. And thank you to our
Ranking Member Velazquez as well. And thank you all for your
testimony. This question is to the entire panel.
The National Federation of Independent Business does a
regular survey of small businesses, but I find it particularly
interesting that their server results show that complaints
about regulations are relatively consistent through economic
booms and conservative presidents that prioritized
deregulation. For instance, the shared concern about regulation
under President Obama was about 13.9 percent. It is not
substantially higher than under George W. Bush, which was 9.9
percent and 11.0 percent; or Ronald Reagan's second term, which
was about 12.8. And one would think that regulatory concerns
would have significantly decreased under Reagan and Bush since
neither of those were known for being fans of big government.
So my question to all of you is why are regulatory concerns
consistently cited?
Ms. DORFMAN. I believe that there are challenges with
regulatory concerns. However, the issue is that because they
are not being addressed, getting through the permitting or
those sorts of things because there is not funding for the
Federal agencies to make sure things are expedited, that those
are what would create it. As you said, it was kind of
inconsequential from one party to the other, but what I think
the overarching is, is that there is always a lack of speed and
expedited service.
Ms. ADAMS. Okay.
Mr. Hayden?
Mr. HAYDEN. Congresswoman, I guess an example I would give
is just a frontline practical example. Ranking Member Velazquez
mentioned common sense. And in our example, we were trying to
move a power line outside of the forest and bring it out to
road right-of-way. In that first example I gave in my
testimony, the area under analysis had already had a
telecommunications line buried in that. So rather than doing
this full-blown analysis, would it not make sense to be able to
go to a file and look at the analysis that had been done
previously?
We have since submitted a second application and that
application seeks to bury a power line in a highway road right-
of-way. That ground has been disturbed by bulldozers when the
road was built, and it just does not make sense that this
thorough analysis has been done.
And I will give one final example. We got a bill for $8,000
to do that first analysis in the example I gave. That indicated
that 10 people had spent an average of 2.3 days on the project.
So 18 months, 2.3 days, even if that was sequential, it should
have been much shorter.
Mr. HOWARD. Under each of the Republican presidents you
mentioned, and I was involved in advising all of the last four
presidents, including starting with Clinton and Gore in
reinventing government, the basic approach was to prune the
jungle. Let's go in and get rid of stupid rules. But what they
did not do is create the authority mechanisms that allowed Mr.
Hayden to call somebody up and say this ground has already been
disturbed. It makes no sense whatsoever to wait a long time.
Can I please have permission to bury this line? No one in the
government thinks they have that authority.
Ms. ADAMS. Okay.
Mr. HOWARD. And so until you actually shift from a command
and control, what do the rules require, to give somebody the
job of actually asking what is common sense here and being
transparent about it, you know, saying here is why we made the
decision, American voters will increasingly be frustrated at
Big Brother. They are not frustrated because we are protecting
clean water or protecting the forest; they are frustrated
because they cannot get an answer and it is taking them months
to do something that ought to take a day.
Ms. ADAMS. Okay. Mr. Griesemer, would you like to comment?
Mr. GRIESEMER. Yeah, I would just echo that I have not,
regardless of which administration we have been under, there
has not really been a reduction that I am aware of of any other
volume of regulations. The Code of Federal Regulations is just
a massive thing, regardless of whether you are talking
environmental, safety and health or what area. It seems to be
almost immune from any kind of political influence as far as
deregulation. They do cut some things and try to streamline,
but we are not seeing the effect at the small business level.
Ms. ADAMS. All right. Thank you. Thank you very much. I
yield back.
Chairman CHABOT. Thank you. The gentlelady yields back.
Mr. Blum, before we get to you, the chair would like to
make a suggestion. We have four more questioners and we are
expecting votes at any minute. We are actually over now. Rather
than have to come back or cutting off--there it is right now--I
was going to suggest that we go to about 3 minutes each if that
would be okay.
Mr. Blum, you are recognized for 5 minutes. Thank you.
Mr. BLUM. Thank you, Chairman. Thank you to the panelists
for being here today.
Mr. Howard, you said you were involved in the Clinton-Gore
Reinvent Government effort, is that correct?
Mr. HOWARD. Yes, sir.
Mr. BLUM. Is this the government you all invented?
Mr. HOWARD. No, it actually got invented before. They just
did not quite succeed in reinventing it.
Mr. BLUM. The Competitive Enterprise Institute estimates
the cost to U.S. businesses for regulations is approach $2,000
billion a year, $2 trillion a year, and most of that is not
legislated. Most of that is developed by unelected, career
bureaucrats without a vote being held in the United States
Congress. Those bureaucrats report to not one voter. This is
why I support adamantly the REINS Act which has passed the
House of Representatives, but is stilled, like a lot of
legislation, in the U.S. Senate.
I would like to hear anyone from the panel, particularly
Mr. Howard, on how do we solve this dilemma? I mean, these are
unelected bureaucrats forcing trillions of dollars of cost onto
United States businesses. What do we need to do as a Congress?
I think the REINS Act is a great step in the right direction. I
would love to hear your thoughts.
Mr. HOWARD. First, you are correct. I agree completely that
Congress should have ultimate responsibility for regulations
that are just delegated lawmaking. So Congress should take
responsibility for the success of regulations, as well as for
statutes.
Now, just to push back a little, I do not remember the last
time Congress had hearings to go through the statutes that were
passed that authorized a lot of these regulations to say should
we clean up those statutes? So the REINS Act, it seems to me if
you are going to take responsibility, it should be for the
statutes as well as for the regulations.
The President used to have authority over public employees.
The Civil Service System--I have written extensively, I will
talk to you about it offline--needs to be overhauled both to
encourage better workers and to make people accountable when
they do not have common sense, when they use bad judgment, when
they are mean-spirited, and that would go a long way toward
making the unaccountable regulators, if you will, at least
somewhat accountable.
Mr. BLUM. Thank you. I will yield back my time, Mr.
Chairman.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
The gentleman from South Carolina, Mr. Norman, is
recognized for 3 minutes.
Mr. NORMAN. Thank you, Mr. Chairman. I will be brief
because we have to go vote.
But let me just say I have been on both sides. I am a
developer. I have been held hostage by the one-eyed bat, by the
Hilltop Wood Splitter. I have been in the political arena. Let
me just suggest, when we tried to get these businesses to name
the specifics of the rules that are costing them money that are
redundant, they were scared to do it because their philosophy
was it is going to get worse. I do not want it to take longer.
So I would suggest to get involved more because you are
talking, and I have seen from the political arena, you are
talking either a lot of people, business people cannot get
involved because you do not have the time, but you need to get
your people, Mr. Griesemer, your NSSGA, to really get involved
and get with us because I can tell you, the people coming to my
office wanting more regulations on a State level and a national
level far exceed the businesses that come to say stop it.
But we do not know what we do not know. And see, you are
talking to a lot of people who are not in the business arena. I
am. So get active. Let people who are business minded. And if
you do not--I have heard over and over, I do not have time. I
do not have time. Well, it is costing you a lot of money as I
have heard and it is redundant.
So I put the burden back on you all to get active. To get
from a local level on up to my level, get active. And a lot of
times the chamber is not going to get involved because they are
a lot of bureaucrats who are not interested in rocking the
boat. It is time to rock the boat, and we have a president now
who is willing to do that. I yield back.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
And the gentlelady from Puerto Rico--and I would, before
recognizing her, I would just note that the chair early on
expressed the Committee's sympathy and concern both for the
ranking member and yourself for your constituents and family
members who may be adversely impacted as we speak by Hurricane
Irma. And the gentlelady is recognized for 3 minutes.
Ms. GONZALEZ-COLON. I want to thank you, Chairman Chabot,
for your willingness to cooperate with the situation, and the
ranking member, for their concerns about the Hurricane Irma. It
is the worst hurricane ever that is hitting the Caribbean, the
U.S. Virgin Islands, and Puerto Rico. We are talking about 185
miles per hour. So never before have we had this kind of
impact.
And this issue that we are discussing today and the votes
that are taking place at the same time are issues that are very
important for the island in terms of how to improve our
economy.
Because of the time I will make just two questions. One of
them is that the President on January 24th released a
memorandum titled ``Streaming, Permitting, and Reducing
Regulatory Burdens for Domestic Manufacturing.'' In this
memorandum the executive departments and agencies are directed
to expedite reviews and approvals for construction and
manufacturing facilities while also reducing regulatory burdens
affecting domestic manufacturing. In that memo there is no
specific reference to the territories or even Puerto Rico. Do
you understand that the territories and Puerto Rico should be
included in the definition of that kind of regulation? That is
an open question for the panel.
You need to say yes.
Mr. GRIESEMER. Yes.
Mr. HOWARD. Yes.
Mr. HAYDEN. Yes.
Ms. GONZALEZ-COLON. Thank you for voluntarily saying that.
The second question will be regarding Mr. Howard. As you
know, the National Environmental Policy Act requires that all
major projects with Federal nexus to submit a comprehensive
review of the potential environmental impacts. Currently, the
Government Accountability Office reported that the
administration did not know how much time it spent on
environmental reviews, but they estimate that time in 4.6 years
took place in terms of the span of completing the average
environmental impact statement. In your opinion, how could that
number be more efficiently worked if we got a one-stop Federal
permitting system expediting the process?
Mr. HOWARD. Without question, the missing link in
shortening and focusing environmental review is that there is
no official, no environmental official, who has the authority
to make the judgment, what is important in this project.
Recently, there was a tunnel to be built under the Hudson
River, really important tunnel that needs to get built
immediately because the two existing tubes were damaged by
Super Storm Sandy and they can collapse at any moment and when
they do, there is gridlock for the entire metro area of New
York. They were being held up by environmental review for a
tunnel. It did not matter how they built the tunnel. It would
be better for the environment. But no one had the authority to
say get moving. You need to have that authority somewhere.
Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you very much. And the gentlelady
yields back.
We want to thank the panel very much. I am going to
withhold my closing statement, which was profound and well
written, et cetera, and thank you.
You all have shed a lot of light on what we need to do to
have a much better permitting process and how it adversely,
especially, affects small businesses.
I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
And if there is no further business to come before the
Committee, we are adjourned. Thank you very much. Got to go
vote.
[Whereupon, at 12:16 p.m., the Committee was adjourned.]
A P P E N D I X
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chairman Chabot, Ranking Member Velazquez, and Members of
the Committee:
Thank you for inviting me to testify before the Committee
today about streamlining federal permitting to reduce the
regulatory burden on small businesses. Small businesses play an
indispensable role in American culture and commerce but are
burdened by the dense regulations that have built up over the
past five decades. They do not have the time and resources to
understand, much less comply with, the many requirements.
Getting a permit to start a business, or to build anything,
requires going to multiple agencies, often at federal, state,
and local levels. These agencies rarely coordinate their
requirements. Often their demands are duplicative, and
sometimes conflict with one another. Nor do they honor the
practical implications of the regulations--not the costs, time
constraints, or diversion of energy.
The regulatory burden on small business extends far beyond
requirements to apply for specific permits: Regulatory
compliance itself is a form of mandatory permitting because a
small-business owner cannot do business without it.
As I will discuss, Congress should advanced its interest in
promoting small business by examining the permitting and
regulatory burdens imposed by state and local law as well as
federal law. A new regulatory framework is needed to meet
public regulatory goals in a way that is practical for people
running small businesses. Small businesses need a separate,
simpler regulatory system, focused on meeting regulatory goals,
not rote compliance with detailed specifications and
prescriptions. Government should make permits and licenses
accessible to real people with a ``one-stop shop.'' I propose
principles to frame a regulatory overhaul and specific
initiatives to set that overhaul in motion.
Small Business is the Driver of American Prosperity
Small businesses are critical, first, because they are the
largest part of the U.S. economy. Companies that have fewer
than 500 employees are collectively responsible for almost half
of the total GDP and more than half of all sales in the United
States.
Small businesses are also the incubator of big businesses--
a kind of wetlands which spawns innovation. According to the
Kauffman Foundation, the net increase in jobs since 1980 is
entirely attributable to newly-started businesses.
Small businesses also provide an open door by which
Americans can achieve self-determination and ownership, which
is important far beyond its economic consequences. America is
the land of opportunity in large part because of its
receptivity to individual initiative.
But the pace of growth has slowed: 11 percent fewer
businesses opened their doors in 2013 than in 1980. The
disjointed regulatory framework is a powerful disincentive to
entrepreneurship. According to 2017 World Bank rankings, the
U.S. ranks 51st in the world in ease of starting a business. By
many accounts, regulatory compliance costs are overwhelming for
small businesses. The U.S. Small Business Administration found
that companies with fewer than 20 employees faced regulatory
costs per employee that were 36 percent greater than the cost
for larger firms.
Studies suggest that most of these costs are attributable
to federal regulations: 58 percent of small-business owners
responded in a 2017 survey that federal requirements are the
most burdensome for their business. Nearly half of small
businesses report spending more than $10,000 annually on
federal companies, with 11 percent spending more than $40,000
in total per year.
The amount spent on compliance does not include the
diversion of time of small-business owners and managers towards
numerous compliance-related tasks. The paperwork can take one
or two hours per week, but the opportunity costs include the
constant distraction of worrying about what might be required.
42 percent of small-business owners say that they have delayed
or halted business investments due to the uncertainty about
existing requirements, while 39 percent did so because of the
uncertainty related to a new, pending regulation. Inc. Magazine
reports that 545 federal regulations affecting small business
were issued in 2015 alone.
America's Flawed Approach to Regulation
The onerous burden of regulation is typically met with
calls for de-regulation. When push comes to shove, however,
most Americans want government oversight over clean water, safe
workplaces, and caring nursing homes.
The core flaw of American regulation, in my view, is that
it leaves no room for practicality: Bureaucratic detail
suffocates everyone, including the regulator. There's no room
for balancing different considerations, or, indeed, even for a
discussion on what's sensible. Public goals are irrelevant;
what matters is compliance with thousands of rules--an
impossible task even for large businesses.
Getting permits is the threshold requirement for doing
business or constructing infrastructure or buildings. Over the
past 50 years, myriad licenses have been required--most for
good reasons, such as compliance with fire codes or
environmental goals, and some for anti-competitive reasons,
such as onerous requirements to get a license to be a
hairdresser. In some states, a barber or cosmetologist needs
ten times as much training as an emergency medical technician.
Government rarely coordinates all these permitting
requirements. The budding entrepreneur is expected to run a
gauntlet of different agencies without so much as a roadmap of
where to go. Mayor Michael Bloomberg found that opening a
restaurant in New York City required permits from as many as 11
agencies. A prospective lessor in Washington, DC must file five
forms with three different agencies to obtain permits to rent
out a condominium. Sometimes the requirements are duplicative:
Getting certified as a home care worker in New Jersey, for
example, requires the same background checks and fingerprinting
by two different agencies, adding unnecessary costs and delay
before being able to work.
Disjointed permitting and regulation impose painful and
unnecessary costs on all Americans. The inability to rebuild
America's decrepit infrastructure is a case in point. The
accretion of well-meaning review and permitting requirements
from all levels of government results in delays of upwards of a
decade on major projects. In my 2015 report, ``Two Years, Not
Ten Years,'' I found that a six-year delay more than doubles
the cost of projects. I also discovered that lengthy
environmental review is often harmful to the environment,
because it prolongs fixing traffic bottlenecks and inefficient
power grids. These delays hurt small construction companies by
deterring valuable projects and hurt small business generally
by imposing unnecessary blackouts, traffic jams, shipping
costs, and other effects of outmoded infrastructure.
The delays in infrastructure permitting are generally not
the result of ``over-regulation''--greener countries such as
Germany give permits in one or two years. The delays are caused
by the balkanization of approvals among multiple agencies at
all levels of government. A project to raise the roadway of the
Bayonne Bridge, for example, required 47 permits from 19
different agencies. The project had virtually no environmental
impact, because it used existing bridge foundations, but still
required an environmental assessment of 20,000 pages, including
appendices. This is not good government; it is regulation
devouring the public good instead of enhancing it.
Over the past 50 years, American regulation has grown into
a dense jungle of uncoordinated requirements. It fails not
because the goals of, say, environmental review or worker
safety, are invalid, but because it tries to meet those goals
with thousands of detailed dictates emanating from scores of
different regulatory agencies. It suffers the mindlessness of
central planning--not allowing people to adapt to practical
problems on the ground. But, worse, there is not one central
planner, but dozens who often make inconsistent demands. Worse
still, all those central planners are dead; they wrote the laws
and regulations decades ago, and small business must comply
even if the rules make no sense anymore.
Studies suggest, for example, that worker safety rules
often have had little impact on worker safety. This doesn't
mean the federal government should not oversee worker safety.
It means it should replace the micro-management model with a
goal-oriented oversight that focuses on results. It truly
doesn't matter if ``material safety data sheets'' for common
workplace products--say, soap and cleaning products--are kept
in plain view. How do we expect someone running a small
business to keep straight that and thousands of other
requirements?
A fundamental flaw in America's regulatory structure is
that no one is in charge. There's no one with the
responsibility to ask, ``What's the right thing to do here?''
No one in government has the job of balancing the demands of
different agencies. No one has the job of giving a small
business a permit. Instead, American regulation is a dense
legal jungle, impenetrable to all except large companies with
legal staffs of hundreds of lawyers.
Making Regulation Practical for Small Business
What's needed is a broad overhaul--replacing command-and-
control dictates with radically simpler regulatory goals, with
clear lines of authority so that citizens do not get whipsawed
by conflicting or duplicative requirements.
For small business, the threshold question is the practical
ability of a real person to deal with myriad public goals.
Government must respect the limited time and resources of
Americans who have the spirit and resourcefulness to start
businesses that keep America going. It must make clear its
goals and allow small business owners to use their common sense
in achieving them. The result will be greater compliance with
crucial societal norms.
To succeed, regulation must also be understandable. Clear
and concise principles and expectations must replace dense
instruction manuals. If the language is too complex and
voluminous, it undercuts compliance rather than ensuring it.
There will always be disagreements, but instead of fights over
the parsing of words in Section 526(v)(2), let them argue over
the best way to accomplish public goals.
A simpler system requires giving officials the authority to
make decisions. This is our choice: either a jungle of
thousand-page rulebooks, or a simplified framework where
officials make choices to give permits and make regulatory
decisions. These choices can be readily second-guessed by other
officials, and ultimately by courts, but there's no other
alternative. The only cure to dense bureaucracy is human
responsibility.
Accepting the role of human responsibility requires
overcoming myths that drive bad decisions from both sides of
the aisle. The liberal myth about the current regulatory system
is that detailed rules make sleazy operators do what's right.
But the current system is so dense that enforcement is
haphazard, and encourages bad operators to ignore the rules
altogether.
The conservative myth is that detailed rules deter
officials from exercising arbitrary power. But when laws are
unknowable, and demand impractical perfection, regulators wield
arbitrary power: a business with exceptional worker safety may
be penalized for paperwork violations. Lawyers step in where
regulators have left off, bringing lawsuits for minor
infractions of detailed specifications that do little to
advance desired public goals. A small business was sued for ADA
noncompliance after installing a soap dispenser an eighth of an
inch above the prescribed height for use by someone in a
wheelchair.
Replacing the Regulatory Jungle
Every president since Jimmy Carter has tried to prune the
regulatory jungle. But pruning a jungle is a fool's errand. It
is too dense. The internal logic of trying to tell people
exactly how to comply means that the red tape will immediately
grow back.
Small businesses almost universally call for a new paradigm
for government regulation. In a 2012 survey conducted for
Common Good by Clarus Research Group, 86 percent of small-
business leaders said that regulations would be more effective
in protecting public health and safety if they gave ``clear,
certain goals'' and ``more freedom to use common sense in
making daily decisions.''
There is also widespread public support for this approach.
A national survey of voters conducted in May 2017 also by
Clarus Research Group found that 62 percent of voters favor
making ``laws that give civil servants basic goals and
principles on how to do their jobs along with the flexibility
to work out the details on their own.'' 56 percent of
Republicans, 63 percent of independents, and 67 percent of
Democrats agree.
It is time that Congress heeded their call. Here are three
initiatives that would move forward a new simplified regulatory
regime, which honors the human scale and capacity of small
business:
1. Pilot projects for simpler goal-oriented
regulations. Congress should appoint an independent
commission to design pilot projects to test simpler
goal-oriented regulations for small business. Thee
pilots could, for example, consolidate into one
department all federal, state, and local compliance
related to employees: Fair Labor Standards Act,
workers' compensation, unemployment insurance, etc.
This oversight agency could readily be a state agency,
and Congress could condition federal funding on such
efforts at the state level. The commission could also
identify duplicative and obsolete laws that need to be
repealed, such as licensing requirements that mainly
serve as barriers to entry for new businesses.
2. Establish one-stop shops for permitting.
Government should do the work of coordinating different
agency demands, not require aspiring entrepreneurs to
trudge from agency to agency. Congress could create a
pilot project for a coordinating department, perhaps
within the U.S. Small Business Administration, which
would act as the point of contact for small businesses
needing a federal permit. Because different agencies
often disagree, Congress could also create clear lines
of authority up to the White House, to make sure
applicants get a decision on a timely basis.\1\
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\1\ In New York City, the NYC Business Acceleration Team helps
fledgling food and beverage businesses navigate the city's regulatory
system. A similar program was created in Los Angeles that cut the time
that restaurants spent on the permitting process in half.
3. Privatize enforcement. No level of government has
sufficient resources to check on the over 29 million
small businesses. Similarly, few small businesses have
the capacity to understand certain complex areas of
regulation, such as environmental regulation. A
solution here might be to create a safe harbor for
businesses that receive a regulatory compliance letter.
Just as most businesses have financial auditors who
bless their books, they could have a ``certified
regulatory expert'' to monitor their compliance and
issue compliance letters. These regulatory experts
could work with the business to make sure that they are
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in substantial compliance.
The spirit of America arises from the sense of personal
ownership of life's choices. It is this ownership that empowers
people to innovate, to take risks, and to pick themselves up
when they fail. Today, it is hard for anyone to accomplish
anything without a huge legal staff. The American can-do spirit
is bogged down by the accumulation and complexity of regulatory
requirements.
The solution is not to abandon important regulatory goals,
but to dredge out the regulatory muck and replace it with buoys
that make sure people stay within accepted channels. A new
simplified system of regulation will not only reduce the
monetary costs imposed on small businesses, but open the door,
now blocked by countless rules, to the deep store of creativity
that resides in current and prospective small-business leaders.
Thank you for this opportunity to appear before you.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chairman Chabot, Ranking Member Velazquez, and members of
the committee, thank you for inviting me to testify at this
hearing on behalf of the National Stone, Sand & Gravel
Association, (NSSGA), on how streamlining federal permitting
can cut red tape for small businesses and expedite economic
growth.
The National Stone, Sand & Gravel Association and Industry
NSSGA is the world's largest trade association by product
volume representing the mining industry. There are 10,000
construction aggregates businesses across the United States.
These are located in every state and nearly every congressional
district. More than 70% of NSSGA members are small businesses.
It is an industry that directly employs over 100,000 people,
and each of those 100,000 jobs indirectly supports an
additional 4.87 jobs throughout the economy. Overall, NSSGA
member companies represent more than 90% of the crushed stone
and 70% of the sand and gravel produced and consumed annually
in the United States. NSSGA's primary concern is a full-funded,
robust highway trust fund. While nothing can take the place of
these critical federal funds, regulatory over-reach can cause
costly project delays, so regulatory reform is of great
importance.
The United States annually consumes approximately 2.8
billion tons of aggregates annually. Crushed stone, sand and
gravel typically make up over 80% of ready mixed concrete and
over 90% of hot mixed asphalt. On a four-lane road, for
example, one lane alone requires an average of 38,000 tons of
construction aggregates for every mile. Aggregates are used in
nearly all residential, commercial, and industrial building
construction and in most public works projects, including
roads, highways, bridges, dams, and airports. A new school or
hospital typically requires 15,000 tons of aggregates in its
construction. Aggregates are used for many environmental
purposes including: treating drinking water and in sewage
treatment plants, for erosion control and in cleaning air
emissions from power plants. While Americans take for granted
this essential natural material, it is imperative for
construction.
Unlike other businesses, we cannot simply choose where we
operate. We are limited to where natural forces have deposited
the materials we mine. Not every aggregates deposit meets the
stringent standards set by the Federal Highway Administration
(FHWA) and state Departments of Transportation (DOTs) for use
in federal or state projects. So, our operations are limited to
areas that are near cities and roads where they are needed.
Generally, once aggregates are transported outside a 25-mile
limit, the cost of the material can increase 30 to 100% in
addition to creating environmental and transportation concerns.
Because our product is so heavy, over 90% of aggregates are
used within 50 miles of their original location, making our
industries' businesses uniquely tied to their community.
The aggregates business ca be described as making small
rocks out of larger ones. We extract material for processing
into crushed, sized, and washed stone. For safety and
efficiency purposes, our operations tend to utilize large
parcels of land that must be located where quality rock
naturally occurs. Our operations are heavily regulated before,
during and after extraction. Our primary waste is finer crushed
rock or dust from processing. For this we must perform a number
of ``one size fits all'' controls required under air and water
permits. Our facilities are routinely monitored to ensure we
are operating in a safe and environmentally responsible manner.
Some of the requirements make sense and others do not,
particularly for small businesses.
It gets even more complicated when we need to expand our
operations, open a new or temporary operation, or merely do
minor construction work at a site to upgrade our facilities to
provide needed material for crucial infrastructure projects. A
host of federal requirements come into play, among them the
Clean Water Act, the Endangered Species Act, and the Historic
Preservation Act. These statutes often require businesses to
prove that we should not fall under their jurisdiction. A
``regulated until proven otherwise'' approach is very costly
and difficult for any business, particularly a small company
like mine, without the resources for dedicated compliance staff
that larger corporations employ. This is not an efficient use
of resources for either the company or the agencies, and
punishes the businesses who are trying to comply and care
deeply about safety and the environment. It also shifts limited
federal enforcement dollars away from actually protecting the
environment.
Springfield Underground
I am a past chairman of NSSGA and have worked in the
industry since 1977. I appear today to stress the negative
impact that excessive regulation has on small businesses like
mine. My family's business was started in 196 by my father and
uncle, who discovered limestone while digging a farm pond and
recognized the need for road material in nearby Springfield,
Missouri. Springfield Underground now employs 43 people, and in
addition to supplying construction aggregates, we also use our
former underground operations as cold storage for major
corporations such as Kraft, Heinz, and Cargill. Like me, some
of our employees are the second or third generation of their
families to work at Springfield Underground.
I want to be clear that I am not against regulation, nor is
NSSGA; in fact, as the co-chair of the Mine Safety Health
Administration-NSSGA Alliance, I have led cooperative
discussions with MSHA to develop and disseminate education and
training materials intended to boost workplace safety and
health for ten years. The MSHA-NSSGA Alliance is the first
alliance MSHA ever entered into and is also its most active
alliance. It has been very productive in terms of training
programs for increased safety and efficient use of government
and business resources. Last year, the industry finished with
an injury incidence rate of just 1.95 injuries per 200,000
hours worked; the 16th year in a row in which our sector
achieved a lower rate than in the prior year. We have found
that we can accomplish more by working with agencies, rather
than having just a ``command and control'' relationship.
Unfortunately, not all my experiences with federal agencies
have been as positive. In too many cases, agencies
unnecessarily slow down projects.
The Small Business Administration estimates that
regulations cost 36% more for small businesses per employee
than for larger companies. At Springfield Underground, we
simply do not have the resources that larger corporations use
to comply with confusing and overlapping regulations. We
support efforts to reform the regulatory environment,
recognizing that any reform is likely to benefit small
businesses greatly because we suffer the most under the current
structure.
Infrastructure Depends on Aggregates, but Federal
Requirements Hamper Us
Through its economic, social and environmental
contributions, aggregates production helps to create
sustainable communities and is essential to the quality of life
Americans enjoy. Aggregates are a high-volume, low-cost
product. Because so much of our material is used in public
projects, any cost increases are ultimately borne by the
taxpayer. When aggregates producers are finished using the
stone, sand or gravel in an area, they pay to return the land
to other productive uses, such as water reservoirs, residential
developments, farm land, parks, nature preserves, or in our
case, underground storage.
On the federal level, we fall under regulations by the
Department of Labor, Environmental Protection Agency, Fish and
Wildlife Service and the Army Corps of Engineers. The
Department of Homeland Security and the United States Treasury
Department also regulate us because we engage in blasting. At
the state level, we obtain approvals from state agencies for
air and water quality permits and mining and blasting permits.
At the local level, multiple layers of land use approval are
required before we can open a new facility or even expand an
existing one. But I don't want to complain about reasonable
regulations that have defined benefits and are enforced fairly.
The members of our industry comply every day with safety and
environmental regulations that we support wholeheartedly as an
industry. There are, however, regulations that provide no
demonstrable public benefit, that delay or kill projects, and
that cost many good jobs in construction and related fields. As
government is the largest consumer of construction aggregates,
the cost of excess regulation falls on the American taxpayer.
In particular, the application of the Endangered Species
Act (ESA) and what constitutes a Waters of the United States
have been expanded far beyond what Congress intended, and more
often than not these act as an impediment to any development.
For example, Section 7 ESA consultation by the Fish and
Wildlife Service (FWS) is open-ended and lacking procedural
guardrails that can be relied upon to define the scope,
sequence and timing of agency review and action. Even when all
the required information is provided, the FWS can take months
or years to reach a decision. Permits in the U.S. take far
longer to obtain than other developed countries, and the ESA is
a major culprit. The ESA process has become a true impediment
to any sort of development through a lack of timely response by
FWS employees, who can delay projects significantly.
As previously mentioned, these problems are exacerbated
with small businesses, because we do not have the same
resources as large corporations to handle the4se issues. Small
businesses have to run this overwhelming gauntlet of
regulation, and it can cost jobs with very little (if any)
benefit.
Examples of Federal Requirements that Harm Business
Small businesses like mine that have projects stalled over
the ESA sometimes don't even involve the presence of endangered
species, and can create a domino effect that hurts other
businesses and citizens alike. In our case, we had approved
plans from our city for an expansion of our tractor-trailer
parking lot. When a state road contractor needed a place to
dispose of crushed pavement from repaving MO Highway 65 in
Springfield, we contracted with them to take the material as
fill for this parking lot. This material had to be removed from
the road so that repaving of an important artery in Springfield
could occur. Highway 65 not only is the major commuter highway
to Christian County (fastest growing county in Missouri), it is
the tourist route to Branson from Interstate 44. The Missouri
DOT put incentives in place for rapid completion. We applied
for a land disturbance permit that was delayed, first by FWS,
but then even longer by the Missouri Department of
Conservation, who both required a study to determine if we were
in a breeding area for the endangered bat. The habitat that we
would potentially destroy amounted to a dozen trees and some
brush. The permit was delayed by four weeks. It seems
reasonable that this small area could have been excluded in a
shorter period of time, while balancing the need for retaining
habitat.
That's an eternity for a state highway project like this.
Finally, after all this, the Missouri Department of
Conservation determined that we are not in a bat breeding zone.
This may not seem like a long delay, but consider that lanes
were closed and a major long-term road improvement could have
been unnecessarily delayed, creating a ripple effect that
impacts nearly all other businesses and citizens in the area
due to commuting delays.
Sometimes NSSGA members agree to unreasonable conditions
rather than accept long delays. One small business agreed to
$125,000 of mitigation at another site in order to proceed with
a project rather than have the project be delayed indefinitely
by having a permit application be put into pending status by
FWS. That was a significant financial burden for a small
family-owned business, but had to happen so that commitments to
highway departments and other customers could be met. This is a
case of a business agreeing to an agency's incorrect assessment
in order to proceed.
Another NSSGA member has faced a delay of eight years
waiting for the issuance of a Biological Opinion by FWS. This
project involved an open engagement process involving meetings
between federal agencies and local wildlife groups. The
permitting process and mitigation requirements for species
compensation reduced the project size from 1,100 acres to now
less than 400 acres. This process led to a finalized group
consensus years ago, but the assigned FWS biologist has
repeatedly delayed finalization of the biological opinion. This
is a project that has met relevant criteria, and has cost the
significant investment in money, time and other resources by
the member company, but has not been allowed to proceed.
In another example, a member worked diligently to protect
the habitat and the listed species on a site, but has faced a
delay of over a year waiting for an incidental take permit for
a facility expansion. These delays harm not only the companies
producing building materials and the infrastructure projects
that rely on them, but also delay important conservation
efforts.
NSSGA supports the administration's withdrawal of the 2015
Waters of the United States Rule, which would have radically
expanded jurisdiction under the CWA to include areas suspected
of only tenuous connections to navigable waters. While the
agencies' decision to return to the ``pre-rule'' status quo
once the 2015 rule is rescinded is not an ideal long-term
solution, the action at least restores the guidance that
aggregate operators are familiar with while the agencies work
to develop a rule that provides clarity and certainty. While
the 2015 rule would have cost aggregates operations millions of
additional dollars in mitigation to expand or open new
facilities, the current system is cumbersome and lengthy. Like
ESA consultation, determining applicability under the CWA can
create confusion and delays which are particularly burdensome
for small businesses.
The water on our site contains only natural dust, but under
the CWA is called ``process'' water and requires a CWA/National
Pollutant Discharge Elimination System (NPDES) permit for
discharge, which sets strict limits on what can be in the
water. We work to recycle this water and use it for dust
suppression as part of our air permit required by the Clean Air
Act. These permits are handled by the state, but the state
permits are approved by the EPA. One of our sites was audited
by EPA and warned that there were no signs designating the
outflow points on our property, even though this is not a
requirement of the state permit. This is just the sort of
federal ``check the box'' requirement that does not improve the
environment, but rather creates needless work and cost for
small business.
Our air permit requires that we apply 100 gallons of water
per day for every 1000 square feet of unpaved area unless it is
freezing or unless 1/4'' of rainfall has occurred. In the
spring and in the fall in Missouri it is cool and humid enough
that the ground doesn't dry out and create dust, yet we still
have to comply with this requirement. Putting that much water
down creates a sticky mess that clings to truck tires. We then
have to provide wash stations so the trucks don't track that
out onto the public roads. This site is also close enough to
the Springfield-Branson National Airport that the Federal
Aviation Administration doesn't want us to impound water that
will attract migratory birds that could affect planes taking
off and landing. Of course, that leaves us without sufficient
water supply for our water trucks in the summer time when it is
most needed. This is just one example of where multiple,
conflicting requirements cause problems that cost additional
money to solve, again, without helping improve the environment.
While we have had success working with the Mine Safety
Health Administration, numerous programs and requirements could
be improved, particularly those that impact small businesses.
The industry has a great safety record and we want to make sure
every regulation has a demonstrable effect in improving safety
or the environment.
To summarize, businesses like mine are put into impossible
situations, such as trying to prove a negative, while federal
agencies can stop projects nearly at will under the guise of
authority under CWA or ESA.
Suggestions for Improvement
Congress and the administration have come up with some
great ideas for cutting red tape, and I would urge you to move
forward with some of these. In particular, NSSGA supports:
1) Look at the impacts to small businesses
beforehand: The Small Business Regulatory Flexibility
Act should be expanded to include the Fish and Wildlife
Service and the Mine Safety and Health Administration's
rules so that impacts to small businesses must be
evaluated for major rules in the same way that rules
for EPA and OSHA are evaluated. SBREFA should be
strengthened by not allowing agencies to improperly
claim their rules do not meet the threshold, in
addition to other reforms.
2) Improve the permitting process, deadlines and
transparency: Currently small businesses often feel
they are guilty until they prove themselves innocent
and agencies are not accountable to respond to them in
a timely fashion, or multiple agencies have overlapping
requirements. The environment and worker safety an
still be protected or even improved by making the
process more transparent, timely and less adversarial.
3) Agencies should be held accountable: Just as
businesses are accountable, so should agencies.
Congress should ensure that they are fulfilling their
core functions under the appropriate acts, while not
promulgating unnecessary burdens and delays on
industry.
4) Reform efforts should be continuous: Periodic
review of rules should be required as well as updating
outdated statutes to better respond to changing
conditions.
We support reasonable regulation, based on science, that
preserves our natural resources, protects our environment and
ensures the safety of our employees and neighbors. We are
opposed, however, to overreaching regulation that hurts our
businesses and by extension, infrastructure. I appreciate this
opportunity to speak on how streamlining federal permitting
could help small businesses like mine, that are the lifeblood
of our nation's economy. Thank you, Mr. Chairman, and I will be
happy to respond to any questions.
United States House of Representatives Small Business Committee
Testimony of Mark C. Hayden
General Manager, Missoula Electric Cooperative
``Expediting Economic Growth: How Streamlining Federal Permitting Can
Cut Red Tape for Small Businesses.''
September 6, 2017
Good morning Chairman Chabot, Ranking Member Velazquez, and
members of the Committee, my name is Mark Hayden, and I am the
General Manager of Missoula Electric Cooperative (MEC) in
Missoula, Montana.
Thank you for the opportunity to testify today, and
allowing me to share my thoughts on how streamlining federal
permitting can cut red tape for small businesses. Missoula
Electric Cooperative is a proud member of the National Rural
Electric Cooperative Association, the Montana Electric
Cooperatives' Association, and the Northwest Public Power
Association. By way of background, MEC is a consumner-owned
electric utility serving the electric distribution needs of
approximately 15,000 meters in Western Montana and Eastern
Idaho. Our workforce includes 41 skilled and dedicated
employees committed to serving the energy needs of our member-
owners. The nearly 2,000 miles of distribution line that we
maintain deliver energy to some of the most wild and scenic
locations in the country--286 miles of which cross federal
land.
For me, the timing of this hearing could not be more
appropriate. The wildfires burning in Western Montana are
having a devastating effect on our state and local economies.
Currently five active fires have burned nearly 250,000 acres
in, or adjacent to, MEC's service territory, and personnel
totaling nearly 2,500 are protecting lives and property on many
fronts. Lives have been lost, homes have been lost, and
hundreds of resident evacuations due to the threat of fire,
including my own family. In the small community of Seeley Lake,
smoke concentrations have hovered in the hazardous range for
weeks, and a lake normally bustling with summer recreationists
has been closed to allow aircraft access to the precious fire-
fighting water resource. In short, a community whose economy
relies heavily on summer tourists has been dealt a devastating
blow. I fully recognize that the fires burning in Montana today
were all lighting sparked, but also realize the increased risk
that long delays in federal approval of permit applications,
inadequate fuels reduction programs, and other factors bring to
our co-op and to our infrastructure.
Electric cooperatives face a myriad of permitting and
regulatory requirements in order to conduct our business. For
some it may be permitting a new gas plant, and for others
relicensing an existing small hydropower installation. At MEC,
our permitting challenges have centered around our Special Use
Permits and the National Environmental Policy Act (NEPA) review
process used to amend these agreements. We work diligently to
maintain positive relations with those who hold the permits
authorizing our power lines on federal land, primarily the U.S.
Forest Service and to a lesser degree the Bureau of Land
Management. However, long delays in application processing
hinder our ability to adequately plan, and add significant
project cost.
We are constantly working to improve system reliability and
reduce the risk of power-line-caused wildfire, and vegetation
management is a critical component of our program, especially
on federal land. A great example of this occurs regularly in
the clearing of danger trees outside of our rights-of-way
during our co-op's Routine Operations and Maintenance
activities. Representatives from MEC and local Forest Service
officials communicate periodically and expectations are
understood. As a result, managers and crews can adequately plan
for the time and financial resources necessary to complete a
project. But this positive situation is not found on all
rights-of-way managed by the Forest Service. Other cooperative
representatives have testified before Congress of inconsistent
federal land management policies, long delays in approval and
review times, and unnecessary liability resulting from these
delays.
In short, federal reforms are needed to cut red tape and
make it easier for electric cooperatives to manage vegetation
to limit downed power lines, prevent catastrophic fires, and
respond to emergencies.
For that reason, we commend the House for recently passing
H.R. 1873, the ``Electricity Reliability and Forest Protection
Act'' that received strong bipartisan support. This legislation
would give electric utilities more consistent procedures and a
streamlined process in order to better manage utility rights-
of-way.
Unfortunately, in other cases, significant delays occur,
especially during major Operation and Maintenance activities,
where compliance with NEPA is a concern. Such approvals are a
requirement of our Special Use Permit, and necessary to
assuring electricity service is not jeopardized as a result of
work needed on rights-of-way.
For my co-op in Montana, our service area, like so many
parts of the West, has been adversely affected by the Mountain
Pine Beetle infestation and the dead and dying trees left in
its wake. One of the areas hardest hit is in the Swan Valley
north of Seeley Lake, Montana. Obviously, one of the most
effective ways to improve service reliability and mitigate fire
risk is to bury an overhead power line. As you can imagine,
each instance of tree/power line contact can pose significant
risk of wildfire ignition under the right environmental
conditions. However, converting overhead distribution lines to
underground is an expensive proposition, especially for a small
cooperative like MEC, so this cannot be standard practice.
After considerable internal discussions regarding our
situation in the Swan Valley, the decision was made in December
2013 to request permission to bury approximately 6.1 miles of
overhead three-phase line on Forest Service land. An
application was submitted to the Forest Service district office
having jurisdiction over the proposed project, and, just one
month after submittal, we were notified that approval of our
request was expected by June of 2014.
In May of 2015 I was invited to provide testimony before
the House Subcommittee on Water, Power and Oceans regarding the
delay in approval of this project application. In preparation
for my testimony, I placed one final call to the local Forest
Service District Ranger to express my frustration just prior to
the subcommittee hearing. This local official indicated that if
i wanted to see things change I should take up my issue with
Congress, at which point I told him that I intended to the
following week! Two days later on Saturday, May 16th, the
weekend prior to the hearing, MEC received unofficial notice
via email that all associated field work had been completed on
our project, confirmed that our co-op had paid the Forest
Service for all associated costs, and that we were authorized
to begin construction.
In all, MEC waited nearly 18 months for approval on the
Swan Valley project. Our cost recovery bill from the Forest
Service indicates that 10 different individuals spent an
average of 2.3 days each on our project. Most troubling to me
is that the project qualified for categorical exclusion,
meaning neither an environmental assessment or environmental
impact statement was required. I can only imagine the number of
months or years project approval would have taken had those
more in-depth investigations applied.
This situation I have described exemplifies the harm to
small businesses of unnecessary delays. To be effective in
business requires adequate planning, especially for large
construction projects, and the current process for federal
permit approvals makes that impossible. Firm timelines must be
incorporated into the approval process, and early, consistent
consultation with coordinating agencies should be mandated. The
uncertainly surrounding the approval process when working with
the Forest Service adds unacceptable risk to every project. For
example, materials ordered too early not only add to the
carrying cost during the delay, but also the risk of outright
cancellation if the permit is not approved. Materials ordered
too late risk long lead times in which an entire construction
season can be lost to the changing seasons. When service
liability and fire prevention are a concern, inconsistency and
delays risk unnecessary power interruption and increased
potential for powerline sparked fires. All this leads to higher
costs, which, ultimately, are borne by the owners of our
cooperative utility--our members.
Proper vegetation and fuels management on federal land not
only affects our utilities operations, but also those of our
customers. Many of our customers, including large commercial
accounts, are directly impacted by the Forest Services' actions
in our region. For example, our largest customer is one of the
few remaining family-owned lumber mills operating in Montana,
and in working closely with them, I get to hear firsthand about
some of the challenges faced by this small business. An
executive at the company tells me he views the cumbersome and
time-consuming process to fulfill NEPA requirements as the
single most important barrier to implementing timely
stewardship and restoration treatments on our National Forests.
The process commonly has evolved into PhD dissertation of 400-
800 pages for every decision to be approved by a line officer
within the Forest Service. According to him, this process
averages 3-5 years if there are no delays or interruptions from
budget delays or fire suppression costs, which consume manpower
and resources.
Montana's Governor has identified nearly 5 million acres of
hazardous fuel conditions across the state in need of immediate
fuel reduction treatments to reduce excess forest fuels. Over
590,000 acres across various ownerships in Montana have burned
so far this year. Regulatory barriers to proper vegetation and
fuels management threaten not only the operations of our
utility and the livelihoods of our members, but also of those
businesses we serve.
Not all the challenges we face stem from NEPA. Earlier this
year, our small utility submitted a second request for burial
of a power line located in a different Forest Service district
from the one I mentioned previously. This straightforward
project proposes to bury approximately 4 miles of overhead
line, much of which is located in heavily wooded forest today.
The new location would be in highway right-of-way along U.S.
Highway 12. Regarding that request, I just received
communication asking if we had considered delaying our project
until next spring, even though it has been communicated that
NEPA is not an issue. Problems cited by the Forest Service
include delays in consultation with coordinating agencies, and
resources stretched thin because of fire. We fully understand
the reality of these factors, but believe that cross-agency
consultation, review, and approval for a very straightforward
and routine application should not take a year to achieve.
Mr. Chairman, members of the committee, for us the status
quo is not an option. We need streamlined, expedited procedures
that allow for timely implementation of projects to protect the
long-term health of our forests, our small businesses, and the
overall economies of the communities we serve. The best way to
accomplish this is to provide consistency, flexibility, and
accountability into the federal permitting and permit amendment
processes, especially when system reliability and fire
prevention are driving factors. We believe this can be done
without abrogating the intent of federal regulations. I
appreciate this Committee's work in examining how small
businesses, such as Missoula Electric Cooperative, can benefit
from regulatory reform and for holding this hearing today.
Thank you again for the honor of testifying before this
Committee and I will be pleased to answer any questions.
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