[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




    REGULATORY REFORM AND ROLLBACK: THE EFFECTS ON SMALL BUSINESSES

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             MARCH 7, 2018

                               __________

 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
				                               

            Small Business Committee Document Number 115-061
              Available via the GPO Website: www.fdsys.gov 
              
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                     U.S. GOVERNMENT PUBLISHING OFFICE 
		 
28-782                    WASHINGTON : 2018                 
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
                   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
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
                           JOHN CURTIS, Utah
               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.............................................    10

                               WITNESSES

Ms. Karen Harned, Executive Director, Small Business Legal 
  Center, National Federation of Independent Business, 
  Washington, DC.................................................     4
Mr. Patrick Hedren, Vice President, Labor, Legal & Regulatory 
  Policy, National Association of Manufacturers, Washington, DC..     5
Mr. Randy Noel, Chairman, National Association of Home Builders, 
  Washington, DC.................................................     7
Ms. Lisa Heinzerling, Justice William J. Brennan, Jr., Professor 
  of Law, Georgetown Law, Washington, DC.........................     9

                                APPENDIX

Prepared Statements:
    Ms. Karen Harned, Executive Director, Small Business Legal 
      Center, National Federation of Independent Business, 
      Washington, DC.............................................    27
    Mr. Patrick Hedren, Vice President, Labor, Legal & Regulatory 
      Policy, National Association of Manufacturers, Washington, 
      DC.........................................................    38
    Mr. Randy Noel, Chairman, National Association of Home 
      Builders, Washington, DC...................................    46
    Ms. Lisa Heinzerling, Justice William J. Brennan, Jr., 
      Professor of Law, Georgetown Law, Washington, DC...........    52
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    ABC - Associated Builders and Contractors....................    91
    CUNA - Credit Union National Association.....................    92

 
    REGULATORY REFORM AND ROLLBACK: THE EFFECTS ON SMALL BUSINESSES

                              ----------                              


                        WEDNESDAY, MARCH 7, 2018

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:04 a.m., in Room 
2360, Rayburn House Office Building, Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Kelly, Blum, Comer, 
Fitzpatrick, Marshall, Norman, Curtis, Velazquez, Evans, 
Murphy, Lawson, Adams, Espaillat, and Schneider.
    Chairman CHABOT. Good morning. I am going to go ahead and 
call the hearing to order.
    We have been contacted by the ranking member who has 
indicated she is speaking right now in Financial Services and 
she has given our authorization to go ahead and move ahead. I 
know she is probably very anxious to hear my opening statement 
and will be very disappointed not to hear it but we can provide 
her with a copy of it.
    We have some of our other most distinguished democratic 
colleagues here as well to make sure that if I do anything 
wrong they will call me on it, so I won't.
    The Small Business Committee is here today to examine how 
the current regulatory reform and rollback efforts by Congress 
and the President have affected small businesses. As this 
Committee knows all too well, federal regulations continue to 
be one of the biggest challenges facing America's small 
businesses, and this impacts their abilities to grow.
    Every day, millions of small business owners across the 
country are working hard to provide jobs and grow the economy. 
But no matter what industry these small business owners are in, 
they must navigate what is often a tangled web of complex, 
confusing, and costly regulations. In fact, according to the 
National Small Business Association, the average small business 
owners spends at least $12,000 every year to deal with the 
costs of regulation.
    Even worse, a start-up company will spend on average over 
$83,000 in regulatory costs alone in their first year. Small 
business owners also spend a substantial amount of time 
navigating regulations, with nearly half of them spending over 
40 hours every year to handle new and existing regulations.
    The evidence is clear: federal regulations continue to be a 
problem for America's small business owners and they need to be 
addressed.
    There are federal laws in place that are designed to ensure 
that agencies do not issue new regulations without careful 
consideration. One is the Regulatory Flexibility Act, which 
requires agencies to consider how their proposed regulations 
will impact small entities. Another is the Congressional Review 
Act, a tool that Congress can use to rescind a regulation on an 
expedited track.
    We have used the Congressional Review Act to overturn 15 
regulations from the final months of the previous 
administration that were rushed through the rulemaking process 
as midnight regulations. Unfortunately, despite these 
established procedures, small businesses are not being 
adequately considered in the regulatory process.
    The President has also taken important steps to reduce the 
regulatory burden on small businesses, such as requiring two 
regulations be repealed for every new regulation, which we 
understand is actually quite more than two. I have heard it is 
up to 22 for every new regulation coming out of here, so that 
is definitely a step in the right direction. And establishing 
regulatory reform task forces to force agencies to take a hard 
look at regulations already on the books. And we are seeing 
results. In the first 8 months of the President's tenure, 
federal agencies added zero new regulatory costs and created 
over $8 billion in cost savings.
    That is a good start, but permanent, meaningful regulatory 
reform needs to come from Congress. For too long, Federal 
agencies have ignored their obligations and inappropriately 
used loopholes in the rulemaking process to avoid considering 
how their regulations will impact small businesses.
    That's why I sponsored H.R. 33, the Small Business 
Regulatory Flexibility Improvements Act of 2017, which would 
strengthen the Regulatory Flexibility Act and ensure that 
federal agencies actually examine how their new regulations 
would impact small businesses and require them to consider 
alternatives to reduce unnecessary costs and burdens.
    This bill was included in a larger bill, H.R. 5, the 
Regulatory Accountability Act of 2017, which passed the House 
with a bipartisan vote. The Senate's counterpart bill, S. 584, 
was voted out of Committee and is awaiting action by the full 
Senate, as are many other things. I encourage the Senate to 
vote on this critical, common sense legislation as soon as 
possible, so we can provide meaningful regulatory relief to 
America's small businesses.
    Our witnesses today will provide important insight into how 
the current regulatory reform and rollback efforts have been 
working for America's small businesses.
    I would normally now yield to the ranking member. I would 
assume that my colleagues do not want to give her opening 
statement, so we will let her opening statement be given at the 
point that she gets here.
    So I will then, let's see here. Let me get the appropriate 
next thing here.
    Okay. Well, we will go right into--I would assume that no 
other Committee members have opening statements. If they do, I 
would ask that they be submitted for the record.
    Without objection, so ordered.
    And I will take just a moment at this point to explain our 
lighting system. The ranking member is very familiar with that 
so this is not going to put her at any disadvantage I am sure.
    We operate under the 5-minute rule. It is pretty simple. 
There is a lighting system there. The green light will be on 
for your first 4 minutes. And then the yellow light will come 
on to let you know you have got a minute to wrap up, and then 
the red light will come on at the end of 5 minutes, and we ask 
you to stay within that time if at all possible. We will give 
you a little leeway if you need to go on, but try to wrap up if 
you see the light come on.
    And I will now introduce our distinguished panel here this 
morning.
    Our first witness is Karen Harned, who is the Executive 
Director of the Small Business Legal Center at the National 
Federation of Independent Business (NFIB). Ms. Harned comments 
regularly on small business cases before federal and state 
courts. She has also written and testified before Congress, 
including this Committee, on how regulations impact small 
businesses and provides compliance assistance for small 
business owners across the country.
    Our next witness is Patrick Hedren, who is Vice President 
for Labor, Legal, and Regulatory Policy at the National 
Association of Manufacturers (NAM). NAM is the largest 
manufacturing association in the country and represents small 
manufacturers in all 50 states. Mr. Hedren advocates on behalf 
of the Nation's manufacturers on specific regulations, 
regulatory reform, and labor and employment policies.
    Our third witness is Randy Noel, who is the current 
Chairman at the National Association of Home Builders. Mr. Noel 
also founded a custom homebuilding company in--is it La Place 
or La Place?
    Mr. NOEL. La Place.
    Chairman CHABOT. La Place, okay. Louisiana, which has built 
more than 1,000 custom homes in the greater New Orleans area. 
He brings more than 30 years of experience to the residential 
construction industry, and we appreciate all the testimony.
    And I would ask my colleagues, would they like me to 
introduce our final witness?
    Okay. I will go ahead and do it.
    Our final witness is Ms. Lisa--is it Heinzerling? It is? 
Okay. Heinzerling.
    Ms. Heinzerling is the Justice William J. Brennan, Jr., 
Professor of Law at Georgetown University Law Center. She 
specializes in administrative law, environmental law, and food 
law, and has several publications on these topics.
    We welcome Ms. Heinzerling today as we do all our witness.
    Ms. Harned, you are recognized for 5 minutes.

STATEMENTS OF KAREN HARNED, EXECUTIVE DIRECTOR, SMALL BUSINESS 
  LEGAL CENTER, NATIONAL FEDERATION OF INDEPENDENT BUSINESS; 
   PATRICK HEDREN, VICE PRESIDENT, LABOR, LEGAL & REGULATORY 
  POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS; RANDY NOEL, 
     CHAIRMAN, NATIONAL ASSOCIATION OF HOME BUILDERS; LISA 
HEINZERLING, JUSTICE WILLIAM J. BRENNAN, JR., PROFESSOR OF LAW, 
                         GEORGETOWN LAW

                  STATEMENT OF KAREN R. HARNED

    Ms. HARNED. Thank you, Chairman Chabot and Ranking Member 
Velazquez.
    On behalf of National Federation of Independent Business, I 
appreciate the opportunity to testify today regarding the 
positive impact deregulation is having and regulatory reform 
can have on small business. Overzealous regulation is a 
continuous concern for small business. The uncertainty caused 
by future regulation effectively acts as a boot on the neck of 
small business, negatively impacting their ability to grow and 
plan for the future.
    Since January 2009, government regulations and red tape 
have been listed as among the top three problems for small 
business owners according to NFIB Research Center's monthly 
Small Business Economic Trends Survey. And in a small business 
poll on regulations, NFIB found that almost half of small 
businesses surveyed viewed regulation as a very serious or 
somewhat serious problem.
    Compliance costs, difficulty understanding regulatory 
requirements, and extra paperwork are the key drivers of the 
regulatory burdens on small business. Understanding how to 
comply with regulations is a bigger problem for those firms 
with one to nine employees, since 72 percent of small business 
owners in that cohort try to figure out how to comply 
themselves, as opposed to assigning that task to somebody else.
    Finally, NFIB's research shows that it is the volume of 
regulations that poses the largest problem for 55 percent of 
small employers, as compared to 37 percent who are most 
troubled by a few specific regulations.
    America's small business owners view President Trump's 
commitment to rolling back unnecessary burdensome and 
duplicative regulation as one of his administration's greatest 
accomplishments in his first year. Every president as 
contributed to the problem of overregulation, with tens of 
thousands of pages being added to the Federal Register every 
year, yet the Trump administration, to its great credit, has 
reversed that trend, reducing the number of pages in the 
Federal Register by 36 percent.
    For fiscal year 2017, President Trump promised to eliminate 
two regulations for every new one proposed, but the 
administration exceeded that goal, eliminating 22 regulations 
for every new regulatory action.
    The Office of Information and Regulatory Affairs 
Administrator Neomi Rao has directed each Federal agency to 
have a net reduction in total incremental regulatory costs for 
fiscal year 2018. Congress has also provided significant relief 
by rejecting 15 burdensome regulations using its authority 
under the Congressional Review Act.
    NFIB commends this Committee and the House of 
Representatives for passing several regulatory reforms, 
including H.R. 5, the Regulatory Accountability Act which, as 
the chairman mentions, contains important reforms for small 
business and Title III, the Small Business Regulatory 
Flexibility Improvements Act.
    As H.R. 5 requires, NFIB supports the following regulatory 
reforms that we believe would make the regulatory process more 
effective, transparent, and accountable. NFIB believes that 
every agency should be required to comply with SBREFA and 
convene a Small Business Advocacy Review Panel before every 
economically significant rule is promulgated.
    NFIB supports reforms that would account for the indirect 
cost of regulation on small business. Federal agencies often 
proclaim the indirect benefits of their proposals but they 
decline to analyze and make publicly available the indirect 
cost to consumers. NFIB believes judicial review of RFA 
compliance should be available during the proposed rule stage.
    NFIB also supports reforms that would waive first-time 
paperwork violations, require agencies to conduct more vigorous 
cost-benefit analysis, end Chevron Deference, provide for 
third-party review of RFA analyses, codify Executive Order 
13563, and increase agency focus on compliance assistance.
    Finally, much work still needs to be done to ensure that 
agencies comply with existing law and do not view SBREFA as 
simply just another box to be checked.
    Small businesses are the engine of our economy, yet over 
the last several years, the crushing weight of regulation has 
used up valuable human and financial capital which is in short 
supply for America's small business owners. NFIB looks forward 
to working with Congress to pass regulatory reforms that would 
improve current law and level the regulatory playing field for 
small business.
    Thank you for inviting me to testify, and I look forward to 
answering any questions you may have.
    Chairman CHABOT. Thank you very much.
    The ranking member has indicated to me that she would like 
to give her opening statement after all the witnesses have 
testified.
    So Mr. Hedren, you are recognized for 5 minutes.

                  STATEMENT OF PATRICK HEDREN

    Mr. HEDREN. Chairman Chabot, Ranking member Velazquez, and 
members of the Committee, thank you very much. It is an honor 
to testify in front of you today about the impact of regulatory 
reform on small manufacturers in the United States.
    Thank you, Mr. Chairman, for the kind introduction earlier.
    I would like to focus my remarks on three key messages.
    First, when it comes to small business impacts, it is not 
just the heat, it is the humidity. Small manufacturers worry 
about the accumulation over time of overlapping and even 
conflicting rules, not just the big ticket items.
    Second, reducing burdens on small manufacturers, it is not 
about the number of rules that come off the books, but it is 
about the way the executive branch approaches regulation.
    And third, right now is an ideal time for Congress and the 
executive branch to reflect on what works and to reform the 
things that do not work.
    Today's hearing comes at a very interesting time for 
regulatory policy in general. Last year saw some of the biggest 
shifts in regulatory policy that I am aware of. Congress 
passed, Mr. Chairman, as you mentioned, and the President 
signed 15 Congressional Review Act resolutions. That is about 
15 times as many as ever before. The President issued Executive 
Order 13771, which calls on agencies to remove two regulations 
for each new one that they issue and to adhere to a net zero 
budget. And while agencies begin to reevaluate their existing 
rules with an eye toward reform, new major rulemaking has 
slowed dramatically.
    The truth as we see it is that reforming ineffective and 
costly regulations is painstaking work, and we see care and 
deliberation as a good thing. But our members are optimistic 
because of relatively calmer waters in this space and they are 
investing as a result.
    In our most recently quarterly outlook survey at the end of 
2017, 94.6 percent of NAM's members said that they were 
positive about their own company's outlook. That is an all-time 
high for that survey. That number actually made headlines.
    For regulatory geeks like myself, the fourth quarter survey 
also highlighted some interesting points. Over a third of 
respondents said that they spend at least 7 hours per week on 
regulatory paperwork, and almost a quarter spend over 10 hours. 
Four in 10 felt like they had enough guidance on how to comply 
with the regulations to which they are subject. Over half need 
to retain a law firm to help them keep up with paperwork. And 
at the same time, manufacturers are not anti-regulation. Over 
three-quarters told us that smart regulations are essential to 
ensure a level playing field.
    Our members want to see regulations that make sense for how 
small and medium-size manufacturers work in the real world, and 
we know that this is a bipartisan goal.
    Regulatory policy is always contentious, however, because 
the benefits of regulation are usually diffused while the 
burdens are usually concentrated. Some sectors like our own 
bear a major share of overall regulatory costs in the economy 
and our smaller members experience regulation on almost a 
personal level, and certainly to a greater degree.
    Despite bipartisan agreement that we need to do a better 
job in this space, we worry that both sides are talking past 
each other. Rulemaking by its nature should be about finding 
the right balance between the goals to be achieved and the 
price to be paid. So reforming the regulatory system is really 
about putting in place basic procedures to ensure that agencies 
do their best to achieve that balance. They should understand 
the parties they are regulating. They should evaluate 
meaningful alternatives. And they should try to maximize the 
net benefits of their rules.
    Executive Order 13771 has been in effect for about a year 
now, and since then, agencies have issued about half as many 
significant rule documents as under Presidents Bush and Obama 
in a similar time period. In fact, last year, the 
administration published 23 deregulatory actions with estimated 
cost savings.
    Through the end of fiscal year 2017, the administration 
wrapped up 67 deregulatory actions all together. These numbers 
do not really show a slash-and-burn approach to deregulation. 
Instead, they show a more methodical approach taking place 
through the rulemaking process, and that approach takes time.
    But maybe the most noteworthy number from last year is 
three, and that is the number of new final rules with over $100 
million in burdens on industry which is a historic low.
    So in light of what we have seen in the past year, we 
believe there are plenty of opportunities to implement further 
reforms, and now is an ideal time to do so. This Committee has 
done great work this year, last year, and in prior years, to 
propose necessary reforms that would close loopholes in the 
Regulatory Flexibility Act. This work is critical for small and 
medium-size manufacturers because agencies too often avoid 
analyzing small burden impacts or business impacts despite the 
original intent of Congress.
    But beyond legislation such as the Small Business 
Regulatory Flexibility Improvements Act, Congress should also 
focus on meaningful bipartisan reforms that may not be 
explicitly focused on small business but would nevertheless 
have an important impact on those businesses by driving better 
regulatory outcomes overall.
    The NAM urges the Committee to continue developing and 
promoting sensible, bipartisan legislation that will give small 
business a true voice and seat at the table. Thank you for your 
invitation again to speak today and for your attention on small 
and medium-size manufacturers across the country.
    I look forward to answering any questions you may have.
    Chairman CHABOT. Thank you very much.
    Mr. Noel, you are recognized for 5 minutes.

                    STATEMENT OF RANDY NOEL

    Mr. NOEL. Thank you. I am pleased to be here on behalf of 
the National Association of Home Builders on Regulatory Reform 
and Rollback: The Effects on Small Businesses.
    My name is Randy Noel, and I am a second-generation home 
builder from La Place, Louisiana, with more than 30 years of 
experience. I understand how difficult and costly it can be to 
comply with government regulations. But it is not just costly 
for me and my business. These costs also deny Americans the 
opportunity to own a home.
    Government regulations account for nearly 25 percent of the 
cost of a new single family home, and that places is 14 million 
American households out of the market for a new home.
    I am happy to report that things are getting better. In its 
first year, the administration has taken major steps to reduce 
the relentless and costly overregulation of American industry. 
We have seen more than 20 significant regulatory changes that 
will benefit homeowners and home buyers.
    I wish to focus on the progress that has already been made 
in reducing regulatory burdens for small businesses in our 
industry, the regulatory headwinds that still linger, and what 
steps should be taken to fix our broken regulatory rulemaking 
system.
    I would like to highlight one particularly unnecessary 
regulation the administration has ended. The previous 
administration issued an executive order creating a new Federal 
flood risk management standard, which required agencies to 
develop new regulations based on an expanded floodplain zone. 
The owners would have had no way of knowing if they had to 
comply with the new floodplain rules because maps of the 
expanded floodplain did not exist. They still do not exist.
    Although FEMA deals with flood insurance, this would have 
greatly affected HUD's mortgage programs. Specifically, 
homeowners within these unknown, unmapped, potential flood 
plains may have lost access to FHA mortgage insurance, 
jeopardizing affordable housing opportunities for low to 
moderate income working class families. We are grateful for 
this administration's decision to rescind the executive order, 
and HUD has withdrawn its proposed regulations.
    Even with the progress we have seen this year, significant 
work remains to peel back and revisit the accumulated layers of 
regulations. Let me highlight one of these regulations from my 
written statement.
    EPA's Lead Renovation Repair and Painting program. This 
rule addresses lead-based paint hazards created by renovation, 
repair, and painting activities that disturb lead-based paint 
in homes built before 1978. We all recognize the need to 
protect the health of our children, but this regulation is 
needlessly burdensome. For example, does it not make sense to 
ensure that homeowners and remodelers have an easy method to 
test their older home for lead paint? Yet, more than 5 years 
after the EPA said a test kit would be ready, we still lack a 
reliable, commercially available testing kit. This means 
remodelers may have to assume that a home has lead paint, which 
means a more costly bill to their client, which in turn may 
discourage homeowners from using a professional remodeler, one 
that has been trained. Or perhaps do the jobs themselves and 
risk exposure to lead paint.
    We should and must make fixes to existing regulations. But 
at the end of the day, that amounts to little more than a Band-
Aid. We need to reform our regulatory process to deal with 
these problems before, not after, the regulation is crafted. 
And we need to increase the level of congressional oversight 
over those agencies. This is the only sure way to safeguard 
against future bad regulation.
    Fortunately, there is a solution. Legislation has already 
passed this chamber that would go fix our regulatory system. 
The Regulatory Accountability Act, the Regulatory Flexibility 
Improvements Act, and the Regulations from the Executive in 
Need of Scrutiny Act, more commonly known as the REINS Act. 
NFIB will continue to urge the Senate to take up these 
important bills.
    I personally believe enacting the REINS Act is a lynchpin 
to reforming our regulatory process. It restores much needed 
congressional oversight to the rulemaking process. Without 
meaningful congressional oversight, poorly crafted rules often 
go into place, and businesses are forced to divert precious 
resources to lengthy and uncertain legal challenges.
    While the REINS Act returns control of the regulatory 
process to the people, the Regulatory Accountability Act 
repairs the process of developing regulations. And the 
Regulatory Flexibility Improvement Act ensures that agencies 
are considering the full impact of a proposed regulation on 
small businesses. Taken together, these reforms will ensure we 
protect the environment and our workers while also adding fuel 
to the engine of economic growth that America's small business 
represents.
    Thank you again for the opportunity to testify.
    Chairman CHABOT. Thank you very much.
    Ms. Heinzerling, you are recognized for 5 minutes.

                 STATEMENT OF LISA HEINZERLING

    Ms. HEINZERLING. Thank you for the opportunity to testify 
before you today.
    President Trump has made deregulation a central goal of his 
domestic policy. He has directed agencies to take an ax to 
existing regulations and has placed strict limits on the 
development of new regulations.
    Agencies have responded by delaying, suspending, and 
revoking existing regulations. All across the government, rules 
and policies that took years to develop have been put off or 
wiped out. These rules and policies address issues as important 
and diverse as climate change, consumer deception, airline 
safety, chemical accidents, food safety, sexual assault, and 
more. In a great many cases, the rules and policies have been 
put off or rejected with little of the legally required 
attention to statutory constraints, factual records, or 
procedural frameworks. As a consequence, Federal courts have 
rejected the administration's attempts to delay or suspend 
existing rules on such matters as lead paint, energy 
efficiency, and methane emissions from oil and gas facilities.
    Two weeks ago, for example, a Federal district court in 
California granted a preliminary injunction against the 
Department of Interior's suspension of a rule that was intended 
to reduce waste of natural gas from oil and gas facilities on 
public lands. Particularly pertinent in today's hearing, the 
court found that the Department's attempt to justify the 
suspension based on the rule's purported effects on small 
businesses was not supported by the factual evidence.
    Agencies have also responded to the President's 
deregulatory agenda by putting off or canceling new regulatory 
initiatives. Under the two-for-one executive order, the Office 
of Management and Budget is empowered to set regulatory budgets 
for the executive agencies. These are not ordinary budgets in 
which agencies have a limit on what they can spend to do their 
work. With regulatory budgets, agencies have a limit on what 
they can require private parties to spend to alleviate the 
problems the agencies have been charged by statute with 
addressing. For fiscal year 2018, OMB has given the agencies 
regulatory budgets that are in every case zero or negative.
    At the current rate of annual cost savings from all 
deregulatory efforts across all agencies, it would take the 
entire executive branch 2 or 3 years to accumulate cost savings 
sufficient to offset the cost of just one specific rule from 
one agency.
    Under this executive order as well, a reduction in 
regulatory costs is considered a success no matter how dearly 
we pay for it in benefits far gone. Consider again the 
regulatory budgets OMB has set for this fiscal year. The 
Department of Energy takes one of the biggest hits in OMB's 
regulatory budget. It must find $80 million in savings from 
discarded rules before it may spend a single dollar on new 
regulation, at which point it must still offset each dollar 
spent with reductions elsewhere. However, according to OMB 
itself, the Department of Energy is one of the star performers 
in the government when one compares the regulatory costs it 
imposes to the regulatory benefits it reaps for the public. The 
Department's regulations on energy efficiency over a 10-year 
period produced net benefits of as much as $31 billion. 
Consider, too, the example of the Environmental Protection 
Agency, no agency in this administration has taken a bigger ax 
to existing regulatory programs than the EPA. Yet, OMB has 
reported that EPA rules outperform the rules of all other 
agencies combined in the Federal government in terms of 
producing net monetized benefits. OMB estimates from 2006 to 
2016, EPA regulations provided as much as $750 billion in 
benefits measured in terms of lives saved, illnesses averted, 
and environmental degradation reduced, while imposing no more 
than $65 billion in costs. These are the kinds of programs the 
administration has slated for especially deep cuts. It makes no 
sense.
    As for the effects of the deregulatory surge on small 
businesses, make no mistake. The war on regulation is being 
conducted at the behest of some of the largest corporations in 
this country and its benefits are being delivered primarily to 
them. In fact, many of the administration's deregulatory 
actions not only fail to target their savings to small 
businesses, but they affirmatively harm small entities by 
withdrawing regulatory protections that would have benefitted 
them. In evaluating the deregulatory initiatives of this 
administration, one cannot simply assume that small entities 
are benefitted when regulations are withdrawn. Thank you.
    Chairman CHABOT. Thank you very much.
    And before I recognize the ranking member, I have noticed 
that one of our former members of Congress here who had a very 
distinguished career representing the state of Missouri, Kenny 
Hulshof is in the back of the room over here. So Kenny, 
welcome.
    And I would now like to recognize the ranking member for 
the purpose of making her opening statement before we move to 
regular order on questions.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you to 
all the witnesses for being here today.
    Regulations serve an important purpose in the world we live 
in. From the food we eat to the air we breathe, government 
regulations serve the primary purpose of helping to keep ups 
all safe.
    Yet, some regulations, even those with noble public safety 
reasons, also place an added burden on the public. Most 
prevalent among them are regulations which place an excessive 
compliance burden on small business owners.
    Small businesses face a greater burden of federal 
regulatory costs than their larger competitors, something 
federal agencies must consider when crafting regulations.
    On this committee, we are here to help ensure small 
businesses and entrepreneurs have an economic environment where 
they can grow and flourish.
    That is why we take very seriously the responsibility posed 
by the Regulatory Flexibility Act and the Small Business 
Regulatory Enforcement Fairness Act.
    It is critical that agencies are considering the economic 
impact of their regulations and paperwork requirements on small 
firms. At the same time, Congress needs to know what steps are 
needed to help agencies achieve this goal.
    Transparency and communication are the key to an effective 
system of regulation. To have efficient regulations, we must 
have a strong dialogue between regulators and the businesses 
before rules are promulgated. An open line of communication can 
ensure that regulations are written in a common sense way which 
minimizes unnecessary burdens for small businesses.
    We need to be sure small firms have an opportunity to weigh 
in on any changes made to the rulemaking process.
    Whether it is embracing technology, working to synchronize 
and coordinate at all levels of government, or improving 
communication, it is an important discussion we must have.
    Congress plays a critical role in ensuring regulations are 
not too burdensome, while at the same time protecting the 
American public. It is therefore irresponsible for the 
legislative or the executive branch to recklessly change or get 
rid of regulations without thoroughly looking at the impact and 
the long-term consequences.
    Although on its face, Executive Order 13771, which says 
that for every new regulation issued, at least two prior 
regulations should be identified for elimination, may seem like 
a good idea, it has very real impacts on the lives of consumers 
and small business owners. For instance, offshore drilling on 
our coasts not only harms the environment; it leaves small 
businesses that rely on tourisms subject to potential harm and 
lost revenue. Immediately we saw the governor of Florida 
sending a letter to President Trump regarding how opening 
offshore drilling will have an impact on a major industry 
activity, tourism, in not only Florida, but also New Jersey.
    We must collaborate to thoughtfully produce streamlined 
regulations for small firms, while keeping in mind our ultimate 
goal, to protect consumers and public safety.
    I look forward to hearing from each of you about how we can 
improve our current regulatory system and promote long-term 
economic growth.
    I once again thank the witnesses for being here.
    And I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    And I will now recognize myself for 5 minutes to begin the 
questioning. And I will begin with you, Ms. Harned.
    In your testimony, you stated that small business owners 
are frustrated by federal regulations and that early engagement 
in the process is key for small business owners. What are the 
current tools that small business owners can use to engage in 
the regulatory process? And are your members usually aware of 
these tools?
    Ms. HARNED. Right. So really SBREFA I guess has provided 
the best tools in that, you know, especially for the 
significant regulations where SBREFA applies EPA and OSHA, 
there is a chance for small business owners to participate on 
the Small Business Advocacy Review panels and really walk the 
regulators how a regulation is going to impact them. We think 
that is a great model that honestly needs to be replicated. We 
have had members that have done that and seen good results 
because really why we are so supportive of early engagement is 
we find still to this day, I mean, I have been at NFIB 16 
years, that the biggest challenge all of us face is trying to 
educate the regulators on what it actually means to be a small 
business owner and understanding that they do not have a 
general counsel if they have got five employees. They may not 
even have an attorney they could call to figure out what is 
going on. More broadly beyond where SBREFA applies currently, 
you know, obviously there is the comment process. We will 
comment on their behalf at NFIB, and we do again have a number 
of members that will engage that as well if they find out about 
it.
    Chairman CHABOT. Thank you very much.
    Mr. Hedren, I will go to you next.
    We know that notice and comment is an important tool that 
small businesses can use to ensure their concerns are being 
heard during the rulemaking process. Do you believe that notice 
and comment is enough? Or are there still other problems that 
prevent small businesses from being able to fully participate 
in the rulemaking process?
    Mr. HEDREN. Thank you, Mr. Chairman, for that question.
    I would first start by echoing what Karen said. I think 
that this is a challenging issue because with notice and 
comment, everybody in the country, and in fact, even if you are 
not in the country you have an ability to put a comment into 
the record for review by the agency and later, potentially, by 
a court. That is an incredibly important part of the engagement 
process.
    For smaller businesses, however, they are facing a lot of 
different issues just to kind of get to that point. And one of 
them is even understanding that something is taking place. So 
folks like ourselves at this table may have an advantage in 
hearing when an agency starts to act and undertake a new 
rulemaking that small businesses just are not really watching 
for. I mean, they are watching their bottom line. They are 
investing. They are growing. And not hopefully reading the 
Federal Register each day like we do.
    So the tools I think that we need and will benefit from are 
about greater outreach and SBA Office of Advocacy does an 
awesome job with reaching out to companies around the country 
and pulling together roundtables and helping them jump into the 
process. But we also need tools that enable and encourage and 
even force agencies to pay attention to these impacts and to 
affirmatively go out, find them, and incorporate them into 
their decision-making.
    Chairman CHABOT. Thank you very much.
    Mr. Noel, I will go to you next here. In your testimony, 
you mentioned the Waters of the United States rule as an 
example of a rule that was deeply flawed but has been withdrawn 
and is currently being rewritten. What advice do you have for 
the agencies to make sure small business owners are heard while 
they are rewriting various rules? This rule in particular, 
actually.
    Mr. NOEL. Well, it is important that, of course, they be 
part of the rewriting of the definition of the Waters of the 
U.S. It is a pretty murky subject to begin with. But the 
flipside of that is you need to make sure that they have access 
to property so they can continue to have their business.
    I have participated in some roundtables and discussions 
about issues like Waters of the U.S., and one of the things 
from a frustrating point of view from somebody in the industry 
is it seems that it falls on deaf ears when it comes time for 
the rule or regulation to come out. There does not seem to be a 
whole lot of accountability to reacting to the information that 
they receive, which discourages people to give them the 
information.
    Clearly, Waters of the U.S. impacts our industry in 
particular, and we are having a very, very difficult time 
getting to a point where we have affordable housing folks, so 
much so that most of the large urban areas across the country 
are beginning to talk about the affordable housing crisis that 
they are having. And a big piece of that was the definition of 
the Waters of the U.S. When you have to go through a 404 permit 
to get a wetlands permit to develop a piece of property, it is 
an expensive and long piece of work you have to do. So it is 
very important that the EPA listen to us. They have been 
listening to us. We are real proud that Secretary Pruitt has 
allowed us to participate in that discussion, and we think we 
can get to a place where it works for everybody.
    Chairman CHABOT. Thank you very much.
    Ms. Heinzerling, unfortunately, my time has run out, so I 
apologize for not getting a question to you. But as I say, my 
time has expired, and the ranking member is recognized for 5 
minutes.
    Ms. VELAZQUEZ. Thank you. Professor, when we go through the 
regulations, whether on this committee or when we hear about a 
discussion or debate on regulations, it seems like the focus is 
always on the complying costs associated with them. But many 
regulations benefit small businesses, both large and small, 
especially when it comes to increasing the productivity of 
their employees. Can you elaborate on this perspective?
    Ms. HEINZERLING. Yes. There is a distressing focus these 
days on costs alone and not on the benefits of regulation. And 
those benefits can take a huge variety of forms. And sometimes 
the regulations, in fact, directly pit large businesses against 
small businesses. And in that case, we miss, if we simply take 
a cleaver to the regulation, we miss the benefits for small 
businesses.
    So just to give you one example, the Department of 
Agriculture had been in the midst of developing a rule that 
would have protected small farmers against the anticompetitive 
practices of the large meat industry, and that rule has been 
withdrawn. And that is just one example of a case where we have 
regulations that not only indirectly benefit small businesses, 
which I would say a wide variety of regulations do, just like 
the tourism effects that you were talking about, but that 
directly are aimed at protecting them.
    Ms. VELAZQUEZ. Thank you.
    Mr. Noel, Hurricane Harvey devastated Texas where there are 
very relaxed building codes. In fact, it is just one of four 
states along the Gulf and Atlantic Coast with no mandatory 
statewide building codes and no program to license building 
officials. That has put insurers, who favor stricter building 
codes and fewer homes in risky locations against homebuilders 
who want to ease rules. How do we balance these competing 
regulatory demands to protect small construction firms, small 
insurance companies, and consumers at the same time?
    Mr. NOEL. Sure. Thanks for that question. As you know, I am 
from right outside of New Orleans, and we actually had that 
issue after Katrina. And I actually was actively involved with 
the Louisiana Home Builders Association passing a statewide 
uniform building code that was enforced thanks to a great deal 
of help from the Federal government to help fund the standup 
issues.
    Texas does have codes in certain areas. They have adopted 
the International Residential Code, particularly those on the 
coast are building to that. Floodplain maps, they comply with 
that. Builders do not oppose building codes. They want 
reasonable building codes that achieve what they want to 
achieve. You want to keep a house safe. You want to make sure 
that the homeowner has a place to go home to after a storm. But 
the flipside of that is to do it as affordable as you possibly 
can because what we do not want to have is to make housing so 
unaffordable that they are living in substandard housing that 
is not built----
    Ms. VELAZQUEZ. But do you not think that it does not 
provide a level playing field? We are not talking about not 
supporting rules or codes, but it eased those rules. And for 
insurance to take the risk of providing insurance for 
construction that might not provide a steady home, how do you 
reconcile that?
    Mr. NOEL. Well, in Louisiana, we passed the code so that 
would not happen. And the insurance companies were a large 
driver of that.
    Texas has a building code, and I suspect there may be some 
states that do not. I could get back to you on that. But for 
the largest part, the National Association of Home Builders, in 
particular, are very, very active in the adoption of building 
codes across the country because exactly what you say is the 
level playing field is not there if you have some people who 
are not building to codes and people building to codes.
    Also, most of our members across the country support 
licensing of builders, and actually, I think Texas had that at 
one time and they undid it. But the same thing as you point 
out. Let's have some consistency so the insurance companies 
know what their actuarial risk is basing their premiums on.
    Ms. VELAZQUEZ. Thank you.
    Mr. NOEL. So for the most part I think our members would 
support building codes across the country.
    Ms. VELAZQUEZ. Thank you.
    Professor, do you have any comment on that question?
    Ms. HEINZERLING. No.
    Ms. VELAZQUEZ. Thank you.
    Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    The gentleman from Mississippi, Mr. Kelly, who is the 
chairman of the Subcommittee on Investigations, Oversight, and 
Regulations, is recognized for 5 minutes.
    Mr. KELLY. Thank you, Mr. Chairman. And thank you to the 
ranking member. Thank you, witnesses, for testifying today. And 
thank you, Mr. Noel, for not having an accent.
    During my 3 years in Congress, I have never once had small 
businesses--and I stayed very active in my district and very 
active with my small businesses, and I have been on this 
Committee my entire time. And not once have I heard any of my 
small business owners say I wish you guys in Congress or I wish 
administrative agencies would enact more rules and regulations. 
Not once have I heard that. I have heard the opposite of that 
many, many times. In my opinion, every rule that is enacted 
should have to get congressional approval and should not be--so 
I would go further than the REINS Act. I think any rule should 
have to be approved by Congress. I think we have advocate our 
responsibility to rulemaking organizations which are not 
elected by the people.
    The costs to comply for small businesses are extremely over 
burdensome. They do not know what rules they have to. They do 
not have the staff, the training. They cannot afford to hire 
professionals to do those things, so they become really, many 
times I feel the administrative agencies, when they enact 
rules, are making regulations or solutions in search of a 
problem. They do not have a problem that they are trying to 
fix.
    That being said, Mr. Hedren, you note in your testimony 
that there is a record high optimism in the manufacturing 
industry. Is the reduction in new regulations part of the 
reason for that optimism?
    Mr. HEDREN. Thank you very much for that question, 
congressman. I think, from our perspective, there certainly is 
a component of that. I think that manufacturing optimism is 
supported by the general regulatory environment right now. And 
what we see I think most notably in that is there is a 
slowdown. So for particularly small and medium-size 
manufacturers, they have an opportunity to catch their breath 
and understand a little bit about what is going on and what is 
coming at them. And before, you know, you may have periods of 
time in which there are four or five new rules a month that 
might impact you that you have to learn how to comply with. And 
while our members completely understand the benefits that those 
rules may bring, it is still pretty tough to keep up with.
    Mr. KELLY. Mr. Noel, as a small business owner, do you feel 
like your voice is being adequately heard in the Federal 
rulemaking process through the comments and things? Do you feel 
like yours is properly heard?
    Mr. NOEL. From a personal perspective, I have dealt with 
placement of levies with the Army Corps of Engineers, the 
overtime rule. We sat on some roundtables for those things, and 
I have got to be honest. When I got the reports, because we 
participated they sent us reports, and I read the reports, I 
was a little disappointed that very little of what the 
community had said was overshadowed by all these outside 
entities that have never been to our area, comments in that 
same report, and that the agency reacted to not the community 
as much as they did to those outside entities.
    Normally, the way a small business in my industry finds out 
about a rule or regulation is the Federal employee walks onto 
the jobsite and cites them because they do not have the proper 
poster up or they do not have the proper paperwork in a file. 
Not that they have polluted anything but because they do not 
follow this long list of rules they do not have time to read 
because they are trying to work for a living. That is how they 
usually find out about it.
    Mr. KELLY. Thank you. And my experience has been comments 
are not properly paid attention to, and that in many cases, 
agencies have improperly influenced certain groups to comment 
so that they can get the correct comments for the rule that 
they want to enact.
    Ms. Harned, if I can ask you a question. Do you feel like, 
or what do you think new can do that would require the agencies 
to analyze the impact on small businesses better? I think many 
times they do look at the large business because they can 
afford to, so it puts small business out. What can we do to 
analyze the second and third order effects to small businesses 
of all regulations?
    Ms. HARNED. Yeah. This is something I have thought about a 
lot because it is hard, especially with the small businesses we 
are trying to get out, the 10 and unders, because they are busy 
running their business. I think we need to look at it is 2018, 
new technologies, ways to, you know, conference calls. People 
do not necessarily have to show up for a meeting. But also, 
help them understand here is what this rule is going to do, 
because many times they may not even understand they are 
impacted until after the fact. And so I think we need to just 
be much more aggressive in outreach, quite frankly. And if 
there are ways to make the agencies accountable to do just 
that, that is going to have a better result where you are not 
going to have unintended consequences with so many of these 
rules that you see.
    Mr. KELLY. Thank you.
    Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you very much. The gentleman yields 
back.
    The gentlelady from North Carolina, Ms. Adams, who is the 
ranking member of the Subcommittee on Investigations, 
Oversight, and Regulations, is recognized for 5 minutes.
    Ms. ADAMS. Thank you, Mr. Chairman. And thank you, Ranking 
Member Velazquez, for hosting the hearing today. And thank you 
to our folks here for your testimony.
    Ms. Heinzerling, is that correct?
    Ms. HEINZERLING. Yes.
    Ms. ADAMS. Okay. What are the implications for OMB's plan 
giving agencies regulatory budgets of zero or subzero for 
fiscal year 2018?
    Ms. HEINZERLING. They are dire.
    Ms. ADAMS. Okay.
    Ms. HEINZERLING. And I think that here in Congress, one of 
the things that can go unremarked sometimes is that agencies 
are entirely creates of statutes. The problems that they 
address are identified by Congress. Agencies are created by 
Congress. They are funded by Congress. They are charged by 
Congress. And so if we have a year in which we are on pace to 
have no major rules enacted, that means that some instruction 
from Congress is going unheeded by the agencies. And so to talk 
about accountability on the part of agencies without talking 
about the vast amount of unaccountability that is happening 
today because instructions are not being followed I think is 
one sided. And so I think the consequences are dire both in 
terms of attention to legal requirements and more profoundly in 
terms of attention to the kinds of concerns about public health 
and safety and the environment and consumer deception and on 
down the line that rules are intended to serve.
    Ms. ADAMS. All right. Is it possible that a very important 
regulation will not get implemented or will get implemented at 
the cost of two other regulations that should also stay in 
effect?
    Ms. HEINZERLING. I believe it is a certainty. If they 
follow those regulatory budgets, as I said, it is hard to find 
a major rule that could be achieved within this year given the 
level of cost versus----
    Ms. ADAMS. Okay. You know, we hear a lot about the 
regulatory environment in this Committee and I know that there 
are some areas that can be improved. Can you speak to the 
overlap between the state and Federal regulations and which has 
a greater impact on small firms?
    Ms. HEINZERLING. I think this is a hugely important 
question, and I think one of the striking features of many of 
the studies that talk about the effects of regulation on small 
businesses is that they do not separate out what are the 
regulatory costs from the Federal government versus what are 
the costs by the state government, or indeed, even local 
governments. And many of the costs that we see are actually 
imposed by those other entities.
    Ms. ADAMS. Okay. And this question will be for any of the 
other panelists that want to speak to it.
    The Paperwork Reduction Act was amended in 1995 to require 
OMB to set specific goals for reducing the burden from the 
level it had reached in 1995 and preventing those from growing 
in future years, but those goals were not met and the paperwork 
burden continues to increase. So what are the biggest 
challenges that agencies face in reducing the overall paperwork 
burden?
    Ms. HARNED. The challenges that agencies face?
    Ms. ADAMS. Yes.
    Ms. HARNED. I mean, honestly, I cannot speak to that. I can 
assure you though that is still very much a problem for my 
members. And I would just like to go back to something you were 
discussing. Our regulation study that NFIB did and released 
early 2017 indicated that 50 percent of respondents found 
Federal regulations to be the most problematic. We did break 
that out. State was 30 percent; local was 15. So I just wanted 
to state that for the record.
    Ms. ADAMS. Okay. Would anybody else like to respond?
    Mr. HEDREN. Sure. Congresswoman, I think that is an 
incredibly important question, and one that is actually a 
little bit tough to get to because paperwork is relatively less 
transparent in terms of how it is prepared, reviewed, and 
eventually sent out to the public as a paperwork collection 
request, information collection request. But there are 
certainly cases in which agencies are collecting the same 
information as other agencies but may not be aware of that. 
There may be instances, for example, in collecting generalized 
data about business operations that over collect, that are kind 
of collecting data for the sake of it.
    So there is always opportunity there, and I think what we 
saw in 2017 is really a lot of the impressive reductions in 
regulatory burdens came from the paperwork side because you can 
kind of get your arms around it.
    Another angle on this which is very important, and which 
the Committee has actually dealt with very well with the Small 
Business Regulatory Flexibility Improvements Act, is getting 
into agencies like the IRS, which have a disproportionate share 
of the paperwork collection volume.
    Ms. ADAMS. Okay. Thank you very much. I am out of time. Mr. 
Chair, I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    The gentleman from South Carolina, Mr. Norman, is 
recognized for 5 minutes.
    Mr. NORMAN. Thank you, Mr. Chairman. I just want to echo 
what General Kelly mentioned.
    Small businesses are sick and tired of needless 
regulations, and it has been a pleasure for this last year to 
get regulations off the books that unelected bureaucrats who 
have never run a small business--and I am a contractor. I am a 
real estate developer. We are sick and tired of people who do 
not really know, have field experience, and yet they are trying 
to read a book and pass a regulation. So thank God it is 
changing. That is why you are seeing the economy do what it is 
doing, and it will do greater things.
    Mr. Hedren, let me ask you specifically, we have got a 
company in our area, Composite Resources. How would they get 
notice of a regulation? Would they have to sift through 
thousands of papers to see what they have to comply with? And 
what is the cost of trying to dig through what bureaucrats have 
written to hopefully apply to a particular company?
    Mr. HEDREN. Congressman, thank you for that question.
    I think to start in reverse order, the cost is time. And in 
many cases, small and medium-size businesses do not have a 
specific regulatory official. It may just be the president of 
that business. So for Composite Resources that may be the 
senior leadership team taking their time to understand how they 
want to implement something in their facility. And in our 
experience, certainly those facility leaders take this very 
seriously and they will dedicate the time to do a good job.
    In terms of how they find out when things are changing, it 
is not always the cleanest process. And as others have 
mentioned, there is a state and Federal dynamic to this. There 
is an executive department, an independent agency dynamic to 
this, but when you really boil it down, there is no truly 
effective way to push this information out to people who may be 
affected, and that truly is one of the core issues at stake 
when we talk about getting small and medium-sized enterprises 
engaged in this process effectively.
    Mr. NORMAN. Thank you.
    Mr. Noel, you are in the field. You are in the business. 
What can we do to get the career development opportunities 
available that will foster people getting into the business, 
and what can we do to, I guess, influence that so that we can 
have our carpenters, we can have our brick masons, we can have 
our land developers?
    Mr. NOEL. I am speaking a lot in a lot of different venues 
about trying to change the mindset of the parents across the 
country that working with your hands is a noble pursuit. We 
have for so long told our children, and parents think that it 
is more important to go a 4-year college to be a success in 
life, and we have got to somehow reverse that. We have worked 
with counselors at schools. We are in a big push nationwide now 
to put vo-tech school classes back into the high schools.
    I was in Johnson City, Tennessee, recently, and watched 
some high school students that had vo-tech schools build some 
things, and it was remarkable. And those children loved it. It 
is a good pursuit, and we need to change that mindset across 
the country. And it is going to take a big advertising campaign 
of some sort to get to the parents to let them know, you know, 
how important it is to be able to work with your hands and 
create things. We are working on it. And if you can help, 
please help.
    Mr. NORMAN. We will do it. And keep up the good work. It is 
something, you know, the best social program we can pass is a 
job.
    Mr. NOEL. Yes, sir.
    Mr. NORMAN. And by helping people find their niche and 
doing it.
    Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you. The gentleman yields back. You 
made some very good points there I would say.
    The gentleman from Florida, Mr. Lawson, who is the ranking 
member of the Subcommittee on Health and Technology is 
recognized for 5 minutes.
    Mr. LAWSON. Thank you.
    One of the questions I wanted to ask you centers around the 
BP oil spill. When the regulation that we had in place then, or 
lack of regulation, how did it really hurt small businesses in 
the Louisiana area?
    Mr. NOEL. The results of the oil spill and the 
corresponding moratorium on drilling that happened, there were 
multiple layoffs in our area in South Louisiana, so there were 
a lot of people who worked in the oilfield that suddenly did 
not have a job so they did not want to build a home, clearly. 
Down the coast into Florida where the tourists were, the 
tourism just dropped off because of all the negative publicity 
across the country. People thought the beaches--you are from 
Tallahassee; right?
    Mr. LAWSON. Right.
    Mr. NOEL. Were covered with oil, and it was wonderful for 
me. My son lives in Destin. We did not have all the traffic 
problems and the beaches looked pretty well.
    My understanding, and I do not know this for a fact, but 
the BP oil spill was as much about enforcing the rules on that 
group of people that were responsible for that as it was 
anything. But it did have a negative impact on the economy down 
there, clearly.
    Mr. LAWSON. Okay. My other question would be from an 
attorney. How do you get people to participate in these 
regulations at agencies actually make them because it really 
affects the bottom line of a lot of different things. When we 
are talking about home building, people do not seem to realize 
that it really is going to be passed down to the consumer, and 
the consumer will not have the opportunity to purchase a home. 
But you see the regulation over and over. From a legal 
standpoint, how do you get them involved with some of the 
agencies when they are making these type regulations?
    Ms. HEINZERLING. Well, I think just to back up for one 
second, one of the things we have to have is to make sure that 
we actually go through that process that would allow them to 
comment, and in many of the activities we are seeing today we 
actually do not see that being followed, and that means they do 
not get a chance to comment because there is no process 
afforded with that opportunity.
    Secondly, to allow more people or encourage more people to 
comment. I think the agencies are making use of social media in 
a way that they did not before. I think that they have come 
under criticism, sometimes from the same people who like to 
have public comment and like to have the widest range of voices 
as possible, but they are using I would say a variety of modern 
tools to get as much input as possible in their rules. I have 
to say, having worked at the Environmental Protection Agency 
for 2 years, we did see things from another perspective which 
was we saw the amazing number of comments that we got on any 
significant proposal, and we felt our obligation to respond to 
those comments. Maybe at the end of the day the outcome was not 
what everybody wanted, but we felt it was our legal obligation 
to respond to the significant comments.
    Mr. LAWSON. Okay, thank you. And, you know, earlier, I 
think Mr. Harden was speaking about the rollback regulation. I 
have been in the insurance industry for 36 years. You have not 
seen any regulation unless you have been in the insurance 
industry. It is a lot of regulation. These rollbacks, when you 
say it is going to stimulate--that we have seen, I have seen 
them on the floor. Being a first timer, the rollbacks are going 
to stimulate the economy and you see it working in the economy 
now. From your perspective, and I do not have much time, how 
did the business community respond?
    Ms. HARNED. Right. Like Mr. Hedren's members, our members 
have been very positive about the rollback because it really 
did for so many of them, so many regulations coming at once, 
which is how they felt like they were living the last several 
years, was paralyzing. And as a result, they were sitting on 
their business the way it was. They were not growing. They were 
not moving forward. And now they do have a chance to catch a 
deep breath and know, okay, well, I do not have to worry right 
now about a ton more coming out of Washington at the moment. 
Let me get the decks cleared and figure out what is going on 
and that sort of thing, because it really was overwhelming. And 
our data has shown since the beginning that has been one of the 
key drivers to them growing.
    Mr. LAWSON. Okay. I have another question but my time is 
running out, so Mr. Chairman, I yield back.
    Chairman CHABOT. If you would like I can extend the 
gentleman a little additional time if you would like.
    Mr. LAWSON. Just a little additional time.
    Chairman CHABOT. The gentleman has another minute.
    Mr. LAWSON. Okay. Thank you very much. And anyone can 
answer it.
    A lot of these regulations come down to partisan issues, 
and you have one group who is saying it is the best thing to do 
the rollback, and the other group is saying that we are going 
to hurt the consumer. You know, how do you respond to that?
    If anybody cares to respond.
    Mr. NOEL. Well, let me see if I can try.
    You know, the parties change in the admonition ever soft. 
You know, we just had a change. The bureaucrats in those 
agencies, the people that work, not necessarily secretaries, et 
cetera, are not changing. And so they perpetuate a rule and 
then that continues on regardless of whose party is in power. 
Then it was all talk about, okay, are we going to roll back? 
Are we going to put more? You know, whatever. But the American 
people elect the Congress. They put them in office to safeguard 
their lives here in America, and I think it is important that 
those same elected officials safeguard that the laws that they 
pass are being implemented correctly, which is why I think we 
should have congressional oversight over the agencies in their 
rulemaking.
    Mr. LAWSON. I yield back, Mr. Chairman.
    Chairman CHABOT. Thank you very much. The gentleman yields 
back.
    The gentleman from Utah, Mr. Curtis, is recognized for 5 
minutes.
    Mr. CURTIS. Thank you. I appreciate all of you being here 
today.
    I have listened with great interest. Having been a former 
small business owner, I would like to speak and echo some of 
the comments that have been made. I believe small business 
owners wake up in the morning and they just pray that nobody 
gets hurt, none of their employees get hurt. They pray that 
their employees handle any sexual harassment claims 
appropriately in the way that they were taught to do. They pray 
there are no new lawsuits by their customers. This is what is 
on their mind and on their agenda. And then they worry about 
sales, and they worry about paying taxes. And then you have 
what we have alluded to. You have cities, you have counties, 
you have states, and you have the Federal government. Each one 
of them, all the things that they think are important for them 
to do that day when they wake up. And it is overwhelming.
    And I guess one of my questions is, and I will ask Ms. 
Harned--did I pronounce that correctly--is it possible that 
fewer regulations will actually lead to better compliance with 
existing regulations because we filtered out some of these 
things that they just cannot pay attention to and allow them to 
really focus on the things that are most important?
    Ms. HARNED. Absolutely I would agree with that because that 
is a huge problem. As Mr. Hedren said--or maybe it was Mr. 
Noel--so often, unfortunately, small business owners find out 
about a requirement when the inspector is at their business. 
There is just no way for them to keep up.
    I have friends that are very well heeled, small business 
owners, but they said, ``Karen, I learn about a new requirement 
every time I see you.'' And it is because I do this for full 
time. They are busy running their business, and I do think we 
need to prioritize. What is most important? What is most 
important for public safety? What is most important for 
environmental? And get rid of the regulatory underbrush. I am 
actually hopeful that the executive order the President put 
forward last year will do just that. Get rid of those 
regulations that have not been enforced in decades. If they 
have not been enforced in decades, why are they on the books? 
Just for a game of gotcha? I mean, that is not helpful.
    Mr. CURTIS. Yeah. We heard in testimony today that the war 
on deregulation is waged by big business. Would you address the 
disproportionate burden on small business of regulation and why 
it is harder for them actually than big business to comply?
    Ms. HARNED. Yes. Again, our research has shown that 72 
percent of those small business owners with less than 10 
employees are the ones actually reading that Federal Register 
notice once they find out about it to try to figure out what 
that rule is they are going to have to comply with and how to 
do so. And so that is a complete time burden for them because 
they are not an expert on that regulation or that area of the 
law. And for those that have more employees, they are farming 
that out but they are paying significant costs to do so. And 
so, again, not all regulation is bad, but we do need to 
prioritize and limit how much there is so that we can get--I 
really do again agree with you. We can get better compliance if 
people know what they are actually supposed to comply with.
    Mr. CURTIS. Right. Mr. Hedren and Mr. Noel, you are shaking 
your head. Would either of you care to comment on that?
    Mr. NOEL. Love to.
    Mr. CURTIS. All right.
    Mr. NOEL. You know, the National Association of Home 
Builders represents 140,000 building companies across the 
country. Every one of them find out about Federal regulations 
from us. And we have to take pages and pages of regulations and 
rules and condense them down into something they can digest and 
comply with. And then when you begin to comply with it you 
find, okay, the end goal, what the law is is one thing, but now 
I have got to do all this paperwork. I have to literally hire 
somebody and pay them anywhere from $500 to $1,200 a house to 
do the paperwork. You know, and most of our members are three 
people. So you raise the cost of housing every time you do 
this.
    Mr. CURTIS. Which is where the disproportionate burden 
comes on the small guy because the big guy can hire the 
lawyers?
    Mr. NOEL. He has already got the guy.
    Mr. CURTIS. Yeah.
    Mr. Hedren?
    Mr. HEDREN. Congressman, it is a great question, and we 
represent 14,000 members, of which some are larger and the vast 
majority of them are smaller. And I think the best way to think 
about our members is really an ecosystem of manufacturers. They 
supply to each other. They compete with each other. They grow 
together. And at times you might find that when a big business 
engages in advocacy in the process, the net outcome of that may 
be that they put whatever comes down from the agency in a final 
rule into bid requirements and the small businesses will get 
the bid requirements and shake their head thinking I have no 
idea why they are asking for this. And they did not see it 
coming. Did not really have a chance to connect with that. But 
it is a resource issue. It is an awareness issue.
    And to get to your opening thoughts. These business leaders 
do take this seriously. Having an injury on your worksite is 
awful. And people take it personally and they do what they can 
to avoid that. But the rules sometimes are prescriptive and 
they do no connect all the way through.
    Mr. CURTIS. Yeah. I find with small businesses a lot of 
times that injury is a very close friend. Right? These people 
are family in many cases.
    So I am out of time. I yield my time.
    Chairman CHABOT. Thank you.
    Mr. CURTIS. Thank you.
    Chairman CHABOT. Thank you. The gentleman's time has 
expired.
    The gentlelady from Florida, Ms. Murphy, who is the ranking 
member of the Subcommittee on Contracting and Workforce is 
recognized for 5 minutes.
    Ms. MURPHY. Thank you all for being here. I found the 
conversation very interesting, especially since I am married to 
a small business owner and live vicariously through his dealing 
with regulations.
    I also represent a district in Central Florida that is home 
to a vibrant hub of entrepreneurial activities and numerous 
innovators and creators and small businesses. We have created 
an environment that has allowed entrepreneurs to take chances 
and pursue their passions in Central Florida, and that is why 
it is one of the Nation's fastest growing regions. But 
nonetheless, I continue to hear from many of the entrepreneurs 
in my district that burdensome regulations have hindered the 
growth of their businesses. While I believe that reasonable 
regulation is essential to protecting our economy and public 
health and our environment, I do think as some of the witnesses 
have noted today that excessively burdensome regulations, while 
perhaps well intentioned, can do more harm than good in 
practice.
    With that in mind, my question to the panel is how can we 
better ensure that Federal agencies sufficiently understand the 
activity they are tasked with regulating? You will find that 
many of those bureaucrats have never actually worked in the 
industries that they are trying to regulate, and so while it 
may be well intentioned, there are quite a bit of unintended 
consequences.
    And then kind of a second part of that is how do we 
encourage agencies to regulate in a way that does not adopt a 
``one size fits all'' for regulation and instead uses 
approaches that acknowledge that there are differences in firm 
sizes and sophistication, especially as it relates to startups 
and second stage businesses?
    Ms. HEINZERLING. I think it would be useful, if you do not 
want the ``one size fits all'' approach, it would be useful for 
Congress to write laws in that way because many times statutes 
do not do that. They take on a problem, even a really important 
problem--air pollution, workplace safety, and so on--and they 
do not differentiate among different entities. If you want an 
agency to do that, you need to tell the agency to do that 
because in many cases there are legal problems associated with 
differentiating if the statute does not allow it. So I would 
recommend that kind of differentiation if that is what you 
want.
    Ms. MURPHY. Okay, thanks.
    Ms. HARNED. I also think that in addition to so much of 
what is in the Small Business Regulatory and Flexibility 
Improvements Act, which I think would all be very helpful in 
that. I mean, NFIB is very supportive of all the provisions in 
that.
    One idea I have heard that I think has been used in the UK 
is to have regulators shadow businesses. I really again think, 
and your husband has probably seen this, they just do not 
understand. And you cannot until you actually see a day in the 
life. And maybe there are ways that we can do that. I do really 
encourage Congress to consider these solutions that are more 
creative and also will get the regulators again to understand 
who they are regulating. And I just do not think that can 
happen without somebody having a real personal connection with 
that person and have the small business owner show them their 
business, but also really engage in the process. That is again 
why we are such big fans of the SBR panels and getting those 
for other rules.
    Mr. NOEL. In the perfect world we would have that done 
before the regulation ever goes in place.
    We took a gentleman that is in OSHA to a jobsite. We have 
to tether people so they do not fall off of roofs. And when you 
stand trusses up, which are the things that hold the roof up, 
there is nowhere to hook them to. So their solution was we 
build the roof on the ground and get a crane and put it on the 
top. So we took this gentleman to a jobsite and let them watch 
how they put together--and actually, this was a two story. And 
it dawned on him the things that they were requiring of our 
guys did not work. Now, unfortunately, the rule is already in 
place, so he had to go back and fix the rule. However Congress 
can have the agencies involved with the people that it is going 
to affect early in by seeing it on the ground, the better this 
will all be.
    Ms. MURPHY. Great. Thank you.
    Mr. HEDREN. Congresswoman, that is a great question. And 
actually, I would agree with Professor Heinzerling in saying 
that a big portion of how to address this problem is to give 
agencies the tools that they need in law to actually do that. 
And so this Committee has considered several bills that do 
that. But in our opinion, there is no shortage of ideas on how 
to improve this process, and I think that there is more to 
discuss here.
    Ms. MURPHY. Great. Thank you.
    I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady's time 
has expired.
    The gentleman from Pennsylvania, Mr. Fitzpatrick, is 
recognized for 5 minutes.
    Mr. FITZPATRICK. Thank you, Mr. Chairman. And thank you to 
the panel for being here. Thank you for being the voice of 
small business, which creates 7 out of every 10 new jobs in 
this country. The work you are doing is very important. So 
thanks for being here.
    A couple things I wanted to touch on, which may have been 
addressed earlier. Number one is the process. We took up 
something called the REINS Act early on in this session, which 
I believe to be very important because it goes to who decides. 
The administrative agencies under the executive branch 
obviously executing their constitutional authority to 
promulgate rules by giving the House of Representatives and 
Congress oversight over that. Because we are the body closest 
to the people, we get to consult with you all and hear the real 
road impact that these regulations are having. I hope that the 
Senate will take up consideration of that bill in short order 
because I think the process piece is very important.
    But then it becomes a question, if it is brought to us, how 
best can we find that point of equilibrium, that sweet spot, if 
you will, between overregulation and under regulation? We 
certainly talked about a lot during the tax reform debate, 
about finding that point of equilibrium where you are not--
rates are low enough so that we are competitive and it is not 
costing us jobs, but they are not so low that we are bleeding 
revenue to the U.S. government. The same with regulations. It 
is a matter of finding that point of equilibrium that under 
regulation, which we cannot tolerate either because that poses 
a threat in a whole host of areas, but not overregulating where 
we are strangling businesses and hurting small businesses' 
ability to create jobs.
    And lastly, if you could, for our purposes, identify one or 
two agencies where you think are the biggest culprits, if you 
will, of overregulation that are hurting small business.
    Mr. NOEL. Okay, I will try that. You know, many times when 
there is a problem that needs to be addressed, the stakeholders 
who are in the middle of the problem, will not address the 
problem, probably have the best answers. They need to help 
craft how that rule or regulation goes in place. Homebuilders 
typically do not like building codes, but we passed the 
statewide building code in Louisiana because we were going to 
lose all our insurance companies. There was a problem defined 
and the builders helped pass those codes. That is just an 
example of how you take the stakeholders and tell them we have 
a problem with something and we need to address it.
    When I was in high school, you never met an oilfield worker 
that did not have an arm missing or something. Well, we created 
workman's compensation programs across the country that do loss 
control, help people, teach people how not to get hurt because 
it affects their bottom line when they have to pay more premium 
because they had an injury. So the more you bring this closer 
to the people that actually are involved, I think the better 
the rules and regulations are going to be, and the problems 
will get solved.
    Ms. HARNED. I would echo that. That really has been 
something I consistently have heard from small business owners 
all over the country, is that really, they do not have as much 
of a problem with their state regulators because they know 
them, there is a relationship there, and they can get to where 
everybody wants them to be quicker. And I really think a lot of 
study would be required, quite frankly, and hard work by the 
regulators to figure out what all agencies are regulating on a 
specific issue. Because, you know, just as Patrick had pointed 
out on paperwork, two agencies with the same paperwork, this is 
not a good situation. That is happening across the government. 
That is happening with Federal and state. Why can you not have 
a situation where if somebody is doing well with state OSHA, 
for example, that, you know, stamp of approval by them, no 
issues, then that means that they do not have to worry about 
Federal OSHA. I mean, I just think there is so much more that 
can be done cooperatively with the different governments, the 
state and Federal, and also just, again, pairing everything 
down so that you are really getting the priority issues 
addressed and not just having a lot of regulatory underbrush 
that could really just be used for a ``gotcha game'' for small 
businesses.
    Mr. HEDREN. Sure. I will jump in as well. And congressman, 
thank you for that question.
    I would echo the comments of others. It is about rigor. It 
is about awareness. It is about building cooperation and 
relationship and understanding between agencies and the parties 
that they regulate. I would probably stop short of picking on a 
particular agency. We are a very broad group of manufacturers, 
and I think everybody sort of lives in their own environment in 
that regard. But that is why we advocate for regulatory reform 
measures that really get to the core essence of rulemaking 
itself rather than a particular agency or another.
    Mr. FITZPATRICK. Thank you. I yield back.
    Chairman CHABOT. Thank you very much. The gentleman yields 
back and his time has expired.
    And we want to thank our panel for being here today. And as 
this hearing comes to a close, I would just note that while 
progress has been made to address the regulatory burden on 
America's small businesses, it is clear that we have work to 
do. Small business owners should be allowed to focus on growing 
their businesses instead of spending countless hours navigating 
through a confusing mess of federal regulations.
    I look forward to working with my colleagues to make sure 
that we provide meaningful regulatory relief and reform the 
current process to give small business owners a stronger voice 
in the regulatory process.
    I would ask unanimous consent that all 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.
    [Whereupon, at 12:25 p.m., the Committee was adjourned.]





                            A P P E N D I X

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         COMMENTS OF THE NATIONAL ASSOCIATION OF MANUFACTURERS


                               BEFORE THE


                      COMMITTEE ON SMALL BUSINESS


                     U.S. HOUSE OF REPRESENTATIVES


                             MARCH 7, 2018


    Chairman Chabot, Ranking Member Velazquez, and members of 
the Committee on Small Business, thank you for the opportunity 
to testify about the impact of regulatory reform on small 
manufacturers in the United States.

    My name is Patrick Hedren, and I am the vice president of 
labor, legal and regulatory policy for the National Association 
of Manufacturers (NAM). The NAM is the nation's largest 
industrial trade association and voice for more than 12 million 
men and women who make things in America. The NAM is committed 
to achieving a policy agenda that helps manufacturers grow and 
create jobs. Manufacturers very much appreciate your interest 
in, and support of, the manufacturing economy.

    State of Manufacturing

    The NAM's most recent quarterly outlook survey from the end 
of 2017 showed the manufacturing sector on the upswing, with 
business leaders more upbeat about demand and production and 
more confident in their overall outlook. Indeed, 94.6 percent 
of NAM's members said that they were positive about their own 
company's outlook--an all-time high in the survey's 20-year 
history.

    It is important to note that the vast majority of 
manufacturers, 98.6 percent, have 500 or fewer employees. Three 
quarters of manufacturing firms have fewer than twenty 
employees.

    In the most recent data, manufacturers in the United States 
contributed $2.25 trillion to the economy in 2016, (or 11.7 
percent of GDP). For every $1.00 spent in manufacturing, 
another $1.89 is added to the economy, the highest multiplier 
effect of any economic sector. In 2016, the average 
manufacturing worker in the United States earned $82,023 
annually, including pay and benefits.

    Beyond providing economic signals in the manufacturing 
center, the quarterly NAM survey also highlights other points 
of interest among our 14,000 members. Last year's fourth 
quarter survey results were illuminating.

           Over 37 percent of respondents indicated 
        they spent at least seven hours per week on paperwork 
        to comply with regulations, and almost a quarter spend 
        over ten hours.

           Under 41 percent felt they had enough 
        guidance on how to comply with the regulations that 
        their company must follow.

           About the same percentage indicated they 
        felt that regulatory agencies are primarily concerned 
        with issuing fines, and

           Over half of respondents need to retain a 
        law firm to help them keep up and comply with paperwork 
        requirements.

    At the same time, manufacturers are not anti-regulation. 
Over three quarters of respondents told us that smart 
regulations are necessary to ensure a level playing field. 
Almost 45 percent felt that regulatory agencies were primarily 
concerned with ensuring compliance or with working alongside 
companies to reduce risk.

    Regulatory Environment

    Democrats and Republicans often agree on the need for 
simpler, less burdensome, and more effective regulation, even 
when the rhetoric often fails to match that consensus. 
Similarly, the business community is often misunderstood about 
its views on regulation. Manufacturers believe regulation is 
critical to protect worker safety, public health, and our 
environment. Regulation is also a critical tool to promote more 
efficient markets by addressing externalities and correcting 
market failures. Indeed, some critical government objectives 
can only be achieved through regulation, and that is a powerful 
argument for improving the process by which regulations are 
developed.

    The core challenge of regulatory policy is this: the 
benefits of regulation are often diffuse to society while the 
burdens of regulation are concentrated. Certain sectors, such 
as manufacturing, bear a sizeable portion of overall regulatory 
costs in the economy and therefore are able to provide good 
estimates of those costs during the course of a typical 
rulemaking. The benefit side of the ledger is much tougher to 
estimate, however, because individual parties may receive a de 
minimis share of the overall benefit, or because regulation may 
be intended to prevent so-called ``black swan'' events. As a 
result, it is no surprise that our public discourse on 
regulation tends to involve each side talking past the other.

    Rulemaking by its nature contemplates a balance between the 
goals to be achieved and the price to be paid. Reforming the 
regulatory system in many ways is about putting in place basic 
procedures to ensure that agencies do their best to achieve 
that balance. We believe they create better rules when they 
understand the parties they are regulation (who oftentimes may 
even share the agencies' goals), when they evaluate meaningful 
alternatives that could achieve the same or better regulatory 
outcome, and when they seek to maximize the net benefits to 
society of their actions.

    Small and Medium-Sized Manufacturers

    Small and medium-sized manufacturers experience the burdens 
of regulation in a different way than larger businesses, 
primarily because they lack the economies of scale that larger 
businesses rely on to spread the costs of compliance. Those 
costs include the burden of monitoring new or changing 
requirements, implementing new or different processes, 
completing paperwork, and working directly with regulatory 
agencies to resolve disputes. Each dollar that a small or 
medium-sized manufacturer spends on regulatory compliance is a 
dollar that it cannot spend to grow its business or expand its 
workforce.

    Executive Order 13771

    Executive Order 13771, often referred to as President 
Trump's ``one-in, two-out'' or ``net-zero regulatory budget'' 
order, has now been in effect for a little over a year. This 
Executive Order marks a significant change in regulatory 
philosophy compared to that of past Presidents from both 
parties. In President Trump's first year, according to the 
federal register, federal agencies issued roughly half as many 
rule documents deemed significant under Executive Order 12866 
than Presidents Bush and Obama issued in their respective first 
years.

    In President Trump's first year in office, the 
administration published 23 deregulatory actions with estimated 
annualized cost savings, excluding those nullified under 
Congressional Review Act resolutions. Through the end of fiscal 
year 2017, the administration completed 67 actions classified 
as deregulatory, including rules without estimated annualized 
cost savings. While these numbers are dramatic, they do not 
indicate a slash-and-burn approach to deregulation. Instead, 
they indicate a more methodical approach taking place through 
the rulemaking process. Perhaps the most noteworthy number 
through the end of fiscal year 2017 is three; the number of new 
final rules with over $100 million in burdens on industry--a 
historic low.

    This methodical approach, and dramatic slowdown in new 
rulemaking, has likely been an important component in record-
high manufacturing optimism. Manufacturers do best when 
regulatory conditions are certain and stable, because fast-
paced and dramatic regulatory or deregulatory actions may 
introduce new variables and risks into their operations. Simply 
slowing down discretionary agency actions appears to have had a 
greater impact than the projected net-decrease in per capita 
regulatory burdens.

    Opportunities for Executive Branch Reform

    Presidents of both political parties have engaged in 
efforts over the years to retrospectively review regulations 
and amend or rescind them as appropriate. The NAM has supported 
these efforts, and we remain impressed that each subsequent 
round of retrospective review identifies even more regulations 
in need of a fresh look. Executive Order 13771 structurally 
incentivizes an ongoing process of retrospective review, as 
agencies attempt to meet their burden reduction targets each 
fiscal year.

    Beyond retrospective review, we believe there are several 
important opportunities to improve the rulemaking process 
overall and across each agency. For example, through an 
Executive Order or further guidance to agencies, the 
administration could:

           Ensure stronger cost-benefit analysis. 
        Unless prohibited by law, agencies should seek to 
        maximize net benefits by requiring full cost-benefit 
        balancing when implementing regulatory statutes. This 
        may take the form of a rebuttable presumption that a 
        regulation should not proceed if the benefits do not 
        justify the costs. Agencies could further encourage the 
        public to submit their own cost-benefit analyses into 
        the rulemaking record for the agency to review.

           Require robust analysis of small business 
        effects. The administration may require each agency to 
        analyze the effects of high-impact rules on small 
        businesses, and when appropriate should invite greater 
        engagement with the Small Business Administration's 
        Office of Advocacy. Under the Regulatory Flexibility 
        Act, agencies are required to prepare a regulatory 
        flexibility analysis to determine the impact of 
        proposed or final rules on small entities and to 
        consider regulatory alternatives that would accomplish 
        the rule's objective with minimal burden on those 
        entities. Agencies frequently avoid this analysis by 
        simply asserting that the rule at-issue will not 
        significantly impact small entities.

           Promote better information quality. Agencies 
        should use the best available science for agency risk 
        assessments, and should provide more significant 
        transparency to the public on any data upon which the 
        agency relied when deciding among regulatory 
        alternatives.

           Conduct oversight or peer-reviewed of 
        independent agency rulemaking. Prior Presidents have 
        stopped short of requiring independent agencies to 
        submit their rules to the White House Office of 
        Information and Regulatory Affairs for review, a step 
        traditionally expected of executive agencies. As a 
        result, independent agencies have issued rules that 
        were later struck down in court because of deficient 
        analysis and a failure to fully consider the 
        consequences of agency action, an outcome that creates 
        risk and implementation burden without a countervailing 
        public benefit.

           Require advanced notices for economically 
        significant proposed rules. Major rulemakings should 
        give the public ample opportunity to provide early 
        input to agencies as they evaluate the most cost-
        effective approaches to meet their statutory goals.

           Allow response comments for significant 
        rules. Perhaps the single best way to improve the 
        quality comments submitted to agencies would be to 
        allow commenters to reply to arguments made by other 
        commenters. A 30-day response period may ultimately 
        save agencies time. This step would be especially 
        impactful for significant rulemakings, and could be 
        waived if exigent circumstances do not allow for it.

           Build in smart, prospective lookback 
        criteria. No new major rule should be issued without a 
        plan for future review. Rather than rely on ex poste 
        judgments on how a rule is performing once finalized, 
        agencies could set forth a set of bellwether 
        measurements by which each major rule will be measured 
        to determine if it is working as intended, or should be 
        amended or rescinded in the future.

           Provide fresh guidance on guidance. Non-
        binding guidance documents can help regulated parties 
        better understand federal requirements, but they can 
        also impose burdens when the public views them as 
        mandatory. Compounding this issue, agencies typically 
        do not issue draft guidance documents for public 
        comment. Providing more access to, and transparency 
        around, these documents will improve the ability of 
        small businesses to comply while simultaneously 
        lowering the risk of improper or unpredictable 
        enforcement actions.

    Each of these reforms would benefit small and medium-sized 
manufacturers by promoting smarter rules that are fit for 
purpose.

    Priorities for Congress

    Last year was noteworthy in terms of the role of Congress 
in the regulatory process. Before 2017, Congress had only used 
the Congressional Review Act (CRA) to overturn one rule (the 
so-called ``ergonomics'' rule in 2001). In 2017, by comparison, 
Congress overturned fifteen rules across a range of industries 
and subjects. Each of these rules was by definition a 
``midnight regulation'' completed late in the prior 
administration, and some of them would have had outsized 
impacts on small businesses. The CRA is only useable in limited 
and specific circumstances, however, so the NAM continues to 
advocate for substantive regulatory reform that will lead to 
smarter rules going forward.

    This committee has done admirable work this year, and in 
prior years, to propose needed reforms that would close 
loopholes in the Regulatory Flexibility Act. This work is 
critical for small and medium-sized manufacturers, because too 
many regulations that have significant effects on small 
businesses escape the process that Congress intended agencies 
to follow to ensure their rules make sense as-applied to those 
businesses.

    Beyond legislation such as the Small Business Regulatory 
Flexibility Improvements Act of 2017,\1\ Congress should also 
focus on meaningful and bipartisan reforms that may not be 
explicitly focused on small businesses, but would nevertheless 
have an important impact on those businesses by driving better 
regulatory outcomes overall. These efforts certainly include 
bills that would:
---------------------------------------------------------------------------
    \1\ S. 584, originally sponsored by Senators Lankford (R-OK), Risch 
(R-ID), and Grassley (R-IA); see also H.R. 33, originally sponsored by 
Representatives Chabot (R-OH-1), Goodlatte (R-VA-6), Marino (R-PA-10), 
Radewagen (R-AS-At Large), Knight (R-CA-25), Cuellar (D-TX-28), Graves 
(R-MO-6), Sessions (R-TX-32), King (R-IA-4), Kelly (R-MS-1), Tipton (R-
CO-3), Curbelo (R-FL-26), Hultgren (R-IL-14), and Luetkemeyer (R-MO-3).

           Require standards of rigor that match the 
        impact of rules. The NAM supports legislation such as 
        the Regulatory Accountability Act of 2017 \2\ that 
        would require agencies to conduct a robust analysis and 
        then truly evaluate alternative ways to address each 
        regulatory problem, but commensurate with the level of 
        impact anticipated from each rule. Greater analytical 
        requirements need not slow down agency rulemaking 
        efforts, and the NAM opposes restrictions on rulemaking 
        that serve no other purpose than to delay nece4ssary 
        protections. Rules with billions of dollars in economic 
        impacts deserve careful consideration and analysis, and 
        the NAM commends the House of Representatives for 
        passing its version of this bill last year as part of 
        the broader H.R. 5 package.
---------------------------------------------------------------------------
    \2\ S. 951, originally sponsored by Senators Portman (R-OH), 
Heitkamp (D-ND), Hatch (R-UT), and Manchin (D-WV); see also H.R. 45, 
originally sponsored by Representatives Goodlatte (R-VA-6), Peterson 
(D-MN-7), Smith (R-TX-21), Marino (R-PA-10), Sessions (R-TX-32), and 
Franks (R-AZ-8).

           Promote earlier participation in major 
        rulemakings. Public engagement is an important driver 
        of good regulatory outcomes, and is a critical 
        component of both transparency and predictability. The 
        NAM supports legislation such as the Early 
        Participation in Regulations Act of 2017 \3\ that would 
        require agencies to solicit earlier public 
        participation in major rulemaking. That engagement will 
        result in more effective rules that provide the 
        regulated public with better predictability.
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    \3\ S. 579, sponsored by Senators Heitkamp (D-ND), Hatch (R-UT), 
and Roberts (R-KS).

           Require agencies to lay out the standards by 
        which their rules will be measured in the future. Often 
        called ``prospective retrospective review,'' 
        legislation such as the Smarter Regs Act of 2015 \4\ 
        would ask agencies to set out up-front performance 
        metrics for their intended regulatory goals. If a rule 
        proves to be ineffective in achieving its stated goal, 
        agencies should look to update, restructure, or rescind 
        it.
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    \4\ S. 1817 (2015), originally sponsored by Senators Heitkamp (D-
ND), and Lankford (R-OK).

           Agencies should provide their guidance 
        documents in one easy-to-access place online. As above, 
        guidance documents are an important tool that agencies 
        use to provide information to the regulated public but 
        can become regulatory in their own right because they 
        may lay out expectations that appear mandatory. 
        Legislation such as the GOOD Act \5\ would require 
        agencies to put guidance documents online on one 
        location, enabling both oversight and easier compliance 
        for the public.
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    \5\ S. 2296, sponsored by Senator Johnson (R-WI); see also H.R. 
4809, sponsored by Representative Walker (R-NC-6).

           Independent agencies should be held to the 
        same standards as executive agencies. Independent 
        agencies are responsible for a significant portion of 
        high-impact rules, but they often fail to conduct 
        robust analyses of their regulatory proposals and they 
        seldom conduct an inter-agency review process to 
        identify areas in which their rules may overlap or 
        conflict with other agencies' requirements. Bills like 
        the Independent Agency Regulatory Analysis Act of 2017 
        \6\ would establish a basic, flexible, and non-binding 
        OIRA review process that would provide valuable insight 
        among agencies, and uncover opportunities for more 
        effective and efficient rules.
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    \6\ S. 1448, sponsored by Senators Portman (R-OH), Collins (R-ME), 
Lankford (R-OK), Ernst (R-IA) and Johnson (R-WI).

    The NAM urges the committee to continue developing and 
promoting sensible, bipartisan legislation that will give small 
business a true voice and seat at the table. Thank you for your 
invitation to speak to you today, and for your attention on 
small and medium-sized manufacturers across the country.


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    Introduction

    Chairman Chabot, Ranking Member Velazquez and Members of 
the Committee, thank you for the opportunity to testify today. 
My name is Randy Noel. I am a home builder and small business 
owner from LaPlace, Louisiana, and the Chairman of the Board of 
Directors of the National Association of Home Builders (NAHB).

    NAHB is a federation of more than 700 state and local 
associations representing more than 140,000 members nationwide. 
NAHB's members are involved in home building, remodeling, 
multifamily construction, land development, property 
management, and light commercial construction. Taken together, 
NAHB's members employ more than 1.26 million people and 
construct about 80 percent of all new American housing each 
year.

    The majority of NAHB's builder members are truly small 
businesses constructing 10 or fewer homes each year with fewer 
than 12 direct employees. These builders, in addition to 
building homes, must navigate a dense thicket of regulations. 
There is no question that we need to protect public health, 
welfare, safety and the environment. But federal agencies need 
to fully and consistently consider the unique burdens small 
businesses face in complying with regulations.

    As a second-generation home builder with more than 30 years 
of experience, I understand all too well how difficult (and 
often costly) it can be to comply with the many and varied 
government regulations that apply to my day-to-day work. NAHB 
estimates, on average, regulations imposed by government at all 
levels account for nearly 25 percent of the final price of a 
new single-family home built for sale.\1\
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    \1\ http://www.nahbclassic.org/
generic.aspx?sectionID=734&genericContentID=250611&channelID=311&--
ga=1.255452874.358516237.1489032231

    The significant cost of regulations reflected in the final 
price of a new home is not just a problem for the small 
businesses that build them; it has a negative effect on main 
street U.S.A. by making affording a home that much more 
difficult. Based on findings from a 2016 study, NAHB estimated 
that approximately 14 million American households were priced 
out of the market for a new home by government regulations in 
that year.\2\
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    \2\ http://eyeonhousing.org/2016/05/14-million-households-priced-
out-by-government-regulation/

    But I am happy to report today that things are getting 
better. The first year of Donald Trump's presidency has seen 
major progress on efforts to reduce the relentless and costly 
over-regulation of American industry. The home building 
industry and the small businesses that predominate it have been 
significant beneficiaries of these efforts. Builders have taken 
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note and entered 2018 with a great deal of optimism.

    Over the last three months, NAHB's Housing Market Index 
(HMI), a measure of builder sentiment, has recorded its highest 
readings in nearly two decades. Much of that optimism is due to 
tight existing home inventory, a solid economy with low 
unemployment, and an improving policy environment that offers 
hope for reduced regulatory burdens.

    Good Progress but the Job is Not Done

    Today I wish to focus on the significant progress that has 
already been made in reducing regulatory burdens for small 
businesses in our industry, how the changes have helped 
builders, and what regulatory headwinds still linger. While 
much has been accomplished, the hefty price home buyers are 
paying for government regulations represents just one more 
obstacle that home builders need to overcome in restoring the 
marketplace to normal conditions. Later in my testimony, I 
outline a number areas that Congress and the administration 
should address that would further reduce regulatory burdens on 
small businesses and spur job and economic growth.

    On the positive side, the successful efforts of this 
administration and Congress to reduce the regulatory burdens on 
small businesses in the home building industry are remarkable 
both in their number and scope. To date, we have seen more than 
20 significant regulatory changes that will benefit home 
owners, home buyers, and home builders. Allow me to quickly 
summarize some of the more significant changes.

    HUD Federal Flood Risk Management Standard (FFRMS)

    The Obama administration executive order that created the 
FFRMS would have expanded the federally regulated floodplain 
and required increased structural elevation and flood-proofing 
for all federally funded projects, including single-family 
homes and multifamily projects using FHA mortgage insurance.

    In response to the FFRMS, HUD proposed a problematic rule 
in 2016 to expand its floodplain management oversight. HUD's 
proposal threatened access to FHA mortgage insurance for 
single-family home buyers and multifamily builders and would 
have jeopardized affordable housing opportunities for countless 
low- to moderate-income working-class families.

    The additional elevation and flood-proofing requirements 
proposed for multifamily properties using FHA mortgage 
insurance programs would have made many projects infeasible, 
thereby preventing the delivery of much-needed rental housing 
during the current affordable housing crisis. Additionally, 
multifamily builders would have had no way of knowing if they 
had to comply with the new floodplain rules because maps of the 
expanded floodplain did not (and still do not) exist. President 
Trump rescinded the executive order and soon after HUD followed 
suit by withdrawing its FFRMS proposal.

    EPA/Corps Waters of the U.S. (WOTUS) Rule

    The 2015 WOTUS rule expanded federal jurisdiction of the 
Clean Water Act to isolated wetlands, channels that only flow 
when it rains, and most man-made ditches. The result would have 
greatly increased federal regulatory power over private 
property and led to increased permit requirements, project 
delays, and significant avoidance and mitigation costs. Equally 
important, the changes would not have significantly improved 
water quality because much of the rule improperly encompassed 
water features under state regulatory authority. As a result, 
31 states sued the federal government over the deeply flawed 
rule. The agencies are in the process of withdrawing the 2015 
rule and developing a new rule.

    Expanded Health Care Options

    Small businesses continue to struggle to provide health 
benefits to their employees. On October 12, 2017, President 
Trump signed an executive order that will ease restrictions on 
association health plans and health reimbursement accounts to 
create more options for small businesses to provide health 
benefits to their employees. Easing restrictions on association 
health plans will grant small businesses access to better and 
more affordable health care plans, allow them to negotiate 
lower costs for coverage, and level the playing field for 
smaller firms that want to help their workers and their 
families with their health care needs. Additionally, expanding 
the use of health reimbursement arrangements will allow small 
businesses to offer pre-tax dollars to insured employees to 
help pay premium and/or other out-of-pocket costs associated 
with medical care and services.

    OSHA Volks Recordkeeping Rule

    Finalized on December 19, 2016, this rule extended the 
explicit six-month statute of limitations on recordkeeping 
paperwork violations in the Occupational Safety and Health 
(OSH) Act of 1970 to five years. Earlier court rulings had 
affirmed applicability of the six-month statute of limitations; 
nonetheless, the agency proceeded with its rulemaking.

    The Volks Rule represented a particularly egregious end run 
around Congress's power to write the laws and a clear challenge 
to the judicial branch's authority to prevent an agency from 
exceeding its authority to interpret the law. Had it been 
allowed to stand, the rule would have subjected millions of 
small businesses to potential citations for paperwork 
violations, but do nothing to improve worker health or safety. 
Congress voted to overturn the rule by a joint resolution of 
Congress under the Congressional Review Act. President Trump 
signed the resolution into law on April 3, 2017.

    More to Be Done

    The Code of Federal Regulations didn't grow to over 180,000 
pages oversight. Even with the significant progress of the past 
year, there still remains significant work to be done in 
peeling back and revisiting the accumulated layers of 
regulations heaped upon small businesses. In particular, NAHB 
urges Congress and the administration to focus on the 
following:

    OSHA Multiemployer Policy

    Existing policy outlines agency procedures for allowing 
compliance officers to issue citations on work sites where 
there is more than one employer. On construction sites, this 
policy allows OSHA to issue citations to a general contractor 
(i.e., a home builder) for safety violations created by 
subcontractors, even if none of the general contractor's 
employees are exposed to the hazardous condition. This 
interpretation impermissibly nullifies the employer/employee 
relationship and must be changed.

    EPA Lead Renovation, Repair and Painting (RRP) Program

    This rule addresses lead-based paint hazards created by 
renovation, repair, and painting activities that disturb lead-
based paint in target housing and child-occupied facilities 
bui8lt before 1978.

    The RRP program, as it is currently being implemented, is 
an inefficient tool for achieving the environmental and health 
goals of the underlying statute and rule. The regulation is 
needlessly burdensome, costly, and fails to provide the tools 
needed for efficient implementation, which discourages 
homeowners from using the services of certified renovators. 
Most importantly, the lack of a reliable, commercially 
available lead paint test kit (more than five years after EPA 
believed a test kit would be ready) means renovators are left 
in the dark when it comes to compliance. Other aspects of the 
program, including the new renovator recertification 
requirements, add needless complexity to the rule's 
implementation and create an unnecessary bias against online 
training. EPA expects to complete a comprehensive review in 
spring 2018; NAHB is hopeful this review will lead to change.

    DOL Apprenticeship Programs

    With labor shortages in the residential construction 
industry reaching levels not seen in two decades, it is 
critically important that the administration and Congress take 
immediate steps to encourage the development of a skilled 
workforce now and for the future.

    Consistent with the President's Executive Order on 
Expanding Apprenticeships in America, the Employment and 
Training Administration (ETA) will be proposing regulations to 
establish the framework for industry-recognized apprenticeship 
programs, a new industry-led initiative to promote innovation 
and opportunity in apprenticeship, and integrate this 
initiative with the existing Registered Apprenticeship system. 
NAHB applauds this effort and looks forward to working with the 
administration to further this important program.

    FWS/NMFS Endangered Species (ESA) Regulations

    Implementation of the ESA increasingly impacts land use 
activities. The current regulations enable the services to 
assert authority over large swathes of land and a broad array 
of activities that are rarely associated with species 
conservation. The consultation requirements also remain 
expensive, burdensome and unwieldy. As land is impacted by the 
ESA, it becomes too expensive or otherwise extremely difficult 
to use for home building. The higher costs invariably translate 
into higher home prices, and higher prices, in turn, disqualify 
more individuals from being able to afford a home.

    Fixing the Underlying Problem

    The administration and this Congress is to be commended for 
its successful efforts thus far to reduce regulatory burdens on 
small businesses. Additionally, I urge the administration and 
Congress to continue its work and move swiftly to address 
outstanding regulatory hurdles. However, all of these actions 
will amount to little more than a Band-Aid on the problem until 
such time as Congress and the administration can successfully 
address our broken regulatory rulemaking system.

    NAHB has consistently said the only sure way to safeguard 
against future bad regulation is to fix the broken regulatory 
rulemaking process itself, ensure all regulations are designed 
with small businesses in mind, and, perhaps most importantly, 
restore meaningful congressional oversight to the rulemaking 
process. Fortunately, the solution already exists. Legislation 
has already passed the U.S. House that would go a long way 
toward accomplishing these goals: the Regulatory Accountability 
Act (RAA); the Regulatory Flexibility Improvements Act (RFIA); 
and the Regulations from the Executive in Need of Scrutiny 
(REINS) Act. NAHB will continue to urge the Senate to take up 
these important bills.

    The REINS Act restores much-needed congressional oversight 
to the rulemaking process, a desperately needed improvement 
given the growth of the regulatory state over the past few 
decades. Without meaningful congressional oversight, poorly-
crafted rules often to into place and businesses are forced to 
divert precious resources to lengthy and uncertain legal 
challenges.

    While the REINS Act returns control of the regulatory 
process to the people, the RAA repairs the decades-old, badly-
broken system and the RFIA makes common sense improvements to 
existing law to ensure all agencies are considering the true 
impact or proposed regulations on small businesses. Taken 
together, these reforms will ensure we protect the environment 
and our workers, while also adding fuel to the engine of 
economic growth that America's small businesses represent.

    Thank you again for the opportunity to testify today.
                 Testimony of Lisa Heinzerling

       Justice William J. Brennan, Jr., Professor of Law

                Georgetown University Law Center

          Before the House Committee on Small Business

                         March 7, 2018

 Hearing on ``The Effects of the President's Regulatory Reform 
           and Rollback Efforts on Small Businesses''

    Mr. Chairman and Members of the Committee, thank you for 
giving me the opportunity to testify before you today.

    President Trump has made deregulation a central goal of his 
domestic policy. Through executive orders aimed at particular 
regulatory programs, President Trump has directed agencies to 
take an axe to existing regulations. Through the so-called ``2-
for-1'' order on regulatory costs, President Trump has also 
placed strict limits on the development of new regulations.

    Agencies have responded by delaying, suspending, and 
revoking existing regulations.\1\ All across the government, 
rules and policies that took years to develop have been put off 
or wiped out. These rules and policies address issues as 
important and diverse as climate change, consumer deception, 
airline safety, chemical accidents, food safety, sexual 
assault, and more. In a great many cases, the rules and 
policies have been put off or rejected with little of the 
legally required attention to statutory constraints, factual 
records, or procedural frameworks. As a consequence, federal 
courts have rejected the administration's attempts to delay or 
suspend existing rules on such matters as lead paint, energy 
efficiency, and methane emissions from oil and gas facilities. 
Two weeks ago, for example, a federal district court in 
California granted a preliminary injunction against the 
Department of the Interior's suspension of a rule intended to 
reduce waste of natural gas from oil and gas facilities on 
public lands. Particularly pertinent to today's hearing, the 
court found that the Department's attempt to justify the 
suspension based on the rule's purported effects on small 
businesses was not supported by the factual evidence. Other, 
similar challenges to the administration's deregulatory 
activities remain pending and may suffer similar fates due to 
the administration's apparently indifferent attitude toward 
law, facts, and process.
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    \1\ Attached as an appendix to this testimony is my forthcoming 
article analyzing the first phase of the Trump administration's 
deregulatory surge: Lisa Heinzerling, Unreasonable Delays: The Legal 
Problems (So Far) of Trump's Deregulatory Binge, Harvard Law & Policy 
Review (forthcoming March 2018).

    Agencies have also responded to the President's 
deregulatory agenda by putting off or canceling new regulatory 
initiatives. Under the 2-for-1 executive order, the Office of 
Management and Budget (OMB) is empowered to set regulatory 
budgets for the executive agencies. These are not ordinary 
budgets, in which agencies have a limit on the amounts they can 
spend to do their work. With regulatory budgets, agencies have 
a limit on what they can require private parties to spend to 
alleviate the problems the agencies are charged with 
addressing. For fiscal year 2018, OMB has given the agencies 
regulatory budgets that are in every case zero or negative. 
Agencies may not, in other words, issue any new regulations 
without offsetting the new rules' costs by at least, and in 
most cases by more than, a 1:1 ratio. As the federal district 
court hearing a legal challenge to the 2-for-1 executive order 
found last week, at the current rate of annual cost savings 
from all deregulatory efforts across all agencies, ``it would 
take the Executive Branch as a whole two or three years to 
accumulate cost savings sufficient to offset even the most 
conservative estimated cost'' of just one rule from just one 
agency (a Department of Transportation rule related to motor 
vehicle safety). The court observed: ``the Executive Order 
curtails the ability of agencies to adopt significant new 
rules, even when the benefits of the new rules would vastly 
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outweigh the costs.''

    Indeed, it appears to be the official policy of this 
administration that regulatory benefits do not count when one 
is evaluating the wisdom of regulatory policy. Under the 2-for-
1 executive order, a reduction in regulatory costs is 
considered a success no matter how dearly we all play for it in 
benefits forgone. Consider again the regulatory budgets OMB has 
set for this fiscal year. The Department of Energy takes one of 
the biggest hits in OMB's regulatory budget; it must find $80 
million in savings from discarded rules before it may spend a 
single dollar on new regulation, at which point it must still 
offset each dollar spent with reductions elsewhere. However, 
according to OMB's own draft report on the costs and benefits 
of federal regulation, the Department of Energy is one of the 
star performers in the government when one compares the 
regulatory costs it imposes to the benefits it reaps for the 
public. OMB reports that the Department's regulations on energy 
efficiency from 2006 to 2016 produced net benefits ranging from 
$12 billion to $31 billion. And yet these are the programs OMB 
has slated for especially deep cuts. It makes no sense, if one 
cares about the public benefits of regulation.

    In this regard, consider, too, the example of the 
Environmental Protection Agency. No agency in this 
administration has taken a bigger axe to existing regulatory 
programs than the EPA. Yet OMB has also reported that EPA rules 
outperform the rules of all other agencies combined in terms of 
producing net monetized benefits. OMB estimates that from 2006 
to 2016, EPA regulations provided as much as $706 billion in 
benefits--measured in such terms as lives saved, illnesses 
averted, and environmental degradation reduced--while imposing 
no more than $65 billion in costs. However, the gargantuan 
benefits of EPA rules, particularly rules related to air 
pollution, disappear in the administration's regulatory budget 
for EPA.

    A question for today's hearing is whether the costs of this 
deregulatory surge to the public at large are at least 
mitigated by substantial benefits to small businesses. The 
answer is that this war on regulation is not designed to 
deliver benefits to small businesses. Recent cases rejecting 
the Trump administration's deregulatory moves are relevant here 
as well. The court hearing the case on Interior's rule on waste 
of natural gas on public lands found that the blanket 
suspension of the rule was not tailored to address the concerns 
of small entities. Similarly revealing is EPA's most recent 
regulatory plan. This plan is full of deregulatory initiatives 
the agency intends to undertake, but EPA highlights only two of 
the rules slated for revocation or relaxation as affecting 
small entities.

    Make no mistake: the war on regulation is being conducted 
at the behest of some of the largest corporations in this 
country, and its benefits are being delivered primarily to 
them. In fact, many of the administration's deregulatory 
actions not only fail to target their savings to small 
businesses, but they affirmatively harm small entities by 
withdrawing regulatory protections that would have benefited 
them. Consider, for example, the Department of Agriculture's 
withdrawal of a rule intended to address anti-competitive 
behavior in the meat industry. In this matter pitting small 
farmers against big agribusiness, the administration planted 
its flag on the side of big business. In evaluating the 
deregulatory initiatives of this administration, one cannot 
simply assume that small entities are benefited when 
regulations are withdrawn.


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