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24–853 PDF 2017

S. HRG. 114–637 

DROWNING IN REGULATIONS: THE WATERS 

OF THE U.S. RULE AND THE CASE 

FOR REFORMING THE RFA 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 27, 2016 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 

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(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED FOURTEENTH CONGRESS 

DAVID VITTER, Louisiana, Chairman 

JEANNE SHAHEEN, New Hampshire, Ranking Member 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

TIM SCOTT, South Carolina 

DEB FISCHER, Nebraska 

CORY GARDNER, Colorado 

JONI ERNST, Iowa 

KELLY AYOTTE, New Hampshire 

MICHAEL B. ENZI, Wyoming 

MARIA CANTWELL, Washington 

BENJAMIN L. CARDIN, Maryland 

HEIDI HEITKAMP, North Dakota 

EDWARD J. MARKEY, Massachusetts 

CORY A. BOOKER, New Jersey 

CHRISTOPHER A. COONS, Delaware 

MAZIE K. HIRONO, Hawaii 

GARY C. PETERS, Michigan 

MEREDITH WEST, Republican Staff Director 

ROBERT DIZNOFF, Democratic Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana ................... 1 

Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire ............................ 3 

WITNESSES

Panel 1 

DePriest, Darryl L., Chief Counsel for the Office of Advocacy, U.S. Small 

Business Administration, Washington, DC ....................................................... 6 

Panel 2 

Milito, Elizabeth, Senior Executive Counsel, National Federation of Independent Business, Washington, DC ................................................................... 19 

Knapp Jr., Frank, President & CEO, South Carolina Small Business Chamber of Commerce, Columbia, SC ......................................................................... 30 

Palmieri, Rosario, Vice President, Labor, Legal & Regulatory Policy, National 

Association of Manufacturers, Washington, DC ................................................ 38 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

American Fly Fishing Trade Association 

Statement Dated April 27, 2016 ...................................................................... 67 

DePriest, Darryl L. 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 8 

Responses to Questions Submitted by Chairman Vitter, Senators Scott 

and Fischer .................................................................................................... 90 

Environment New Hampshire 

Letter to Ranking Member Shaheen ............................................................... 68 

Knapp Jr., Frank 

Testimony .......................................................................................................... 30 

Prepared statement .......................................................................................... 32 

Supplemental testimony .................................................................................. 64 

Milito, Elizabeth 

Testimony .......................................................................................................... 19 

Prepared statement .......................................................................................... 22 

Response to a Question Submitted by Senator Fischer ................................ 96 

National Wildlife Federation 

Statement Dated April 27, 2016 ...................................................................... 70 

Clean Water Rule Timeline 2001–2016 .......................................................... 81 

Natural Resources Defense Council 

Letter to Chairman Vitter and Ranking Member Shaheen Dated April 

26, 2016 .......................................................................................................... 85 

Oregon Small Businesses 

Letter to President Barack Obama Dated February 3, 2015 ........................ 88 

Palmieri, Rosario 

Testimony .......................................................................................................... 38 

Prepared statement .......................................................................................... 40 

Response to a Question Submitted by Senator Fischer ................................ 98 

Shaheen, Hon. Jeanne 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 4 

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IV 

Vitter, Hon. David 

Opening statement ........................................................................................... 1 

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(1) 

DROWNING IN REGULATIONS: THE WATERS 

OF THE U.S. RULE AND THE CASE 

FOR REFORMING THE RFA 

WEDNESDAY, APRIL 27, 2016 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

428A, Russell Senate Office Building, Hon. David Vitter, Chairman 

of the Committee, presiding. 

Present: Senators Vitter, Risch, Rubio, Fischer, Gardner, Ernst, 

Ayotte, Shaheen, and Heitkamp. 

OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, 

AND A U.S. SENATOR FROM LOUISIANA 

Chairman VITTER. Good morning, everyone. We are going to call 

the meeting to order and proceed with this hearing right on time, 

particularly in light of our 11:00 a.m. vote on the Senate floor. 

Thank you all for joining us here today. This Senate Small Business and Entrepreneurship Committee hearing will examine the 

implementation of the Regulatory Flexibility Act. We are going to 

be hearing from the Chief Counsel for the Office of Advocacy at the 

SBA and a panel of industry representatives, and I want to thank 

all of our witnesses for being here today. 

Our conversation will focus on the need for regulatory reform in 

light of how federal agencies oftentimes issue new rules and regulations that cause undue burdens on small businesses. While there 

are laws in place like the Regulatory Flexibility Act to protect 

small businesses, federal agencies have been taking advantage of 

loopholes and misinterpretations to circumvent these laws. 

This is a major problem for our nation’s small businesses that 

struggle to comply with overly burdensome regulations. A large corporation has far more resources—some even have entire departments devoted to regulatory compliance—and the economies of 

scale result in heavier compliance costs for small businesses. 

It has become much more challenging for the owner of a small 

firm to shift his or her time and energy and money away from 

growing a business in order to comply with over-demanding regulations, particularly those that have increased under this Obama administration. 

I hope that today’s hearing will explore possible solutions to level 

the playing field for small businesses, specifically through the RFA. 

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2 

Many small businesses count on the RFA to protect their interests 

from economic burdens due to federal regulations. 

One of the most important tools to protect these firms is called 

an Initial Regulatory Flexibility Analysis, which requires agencies 

to conduct an economic analysis when a new rule will have a significant economic impact on a substantial number of small entities. 

Under President Obama’s administration, many agencies have 

avoided conducting this IRFA by simply claiming their proposed 

rules have no significant economic impact on those small entities. 

What is perhaps the biggest, most obvious example of this abuse 

occurred just last year, when the EPA and the Army Corps, their 

2015 Waters of the United States rule, which significantly expanded the scope of federal jurisdiction across the country under 

the Clean Water Act, was deemed to have no significant impact on 

small entities. When EPA and the Corps drafted WOTUS, they 

failed to include small businesses during the process, violating the 

Small Business Regulatory Enforcement Fairness Act of 1996. The 

EPA claimed that the rule would not have a substantial direct impact on small businesses and thereby avoided having to conduct 

that panel. 

Before WOTUS was finalized, this committee held a hearing in 

May 2015 examining the way the EPA and the Corps shut out 

small businesses during that rulemaking process. During that 

hearing, a representative from the SBA Office of Advocacy said, 

quote, ‘‘Advocacy believes, first, the rule will impose direct costs on 

small businesses. Second, these costs will have a significant economic impact on those small businesses. And, third, the agencies 

incorrectly certified the rule and should have conducted a SBREFA 

panel.’’ 

Despite Advocacy’s testimony highlighting the negative effects of 

WOTUS, the rule was finalized and is now one of the most wellknown cases in which the Obama administration, in my opinion, 

blatantly circumvented the process in an attempt to rush through 

a rule without considering the harm and burden it would cause to 

small businesses. 

It is imperative that Congress create greater accountability for 

agencies’ economic certification process and close loopholes in the 

RFA that allow the EPA, OSHA, and CFPB to avoid conducting 

these panels. That is why earlier this Congress, I introduced the 

Small Business Regulatory Flexibility Improvements Act, which 

provided comprehensive reform of the RFA and made vital adjustments to protect small businesses. I want our industry representatives here today to know that I am working to develop a new reform bill in an effort to make bipartisan common sense reforms. 

Now, let us get today’s conversation started. Again, I would like 

to thank everyone for being here today and look forward to our discussion. 

And with that, I will turn it over to our Ranking Member, Senator Shaheen. 

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OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING 

MEMBER, AND A U.S. SENATOR FROM NEW HAMPSHIRE 

Senator SHAHEEN. Well, thank you, Mr. Chairman, and I have a 

full statement that I will submit for the record and I will apologize 

in advance for having to leave early for another commitment. 

But, I certainly agree that there is no question that poorly crafted regulations can result in an excessive burden for small businesses, because unlike big companies, small firms often do not have 

the time and resources to devote to understanding new rules or to 

figure out how to comply. And for that reason, I think we need a 

regulatory process that works, not just for the public, but also for 

America’s small businesses. 

To improve the regulatory process for small business, we must 

ensure that federal agencies comply with the Regulatory Flexibility 

Act by consulting with small businesses and by working diligently 

to minimize the regulatory burden of new rules. 

I have also heard from small businesses that one of the most 

meaningful ways to help them with regulation is to ensure that our 

federal agencies, including the SBA, have the resources they need 

to provide compliance assistance, because compliance assistance 

helps level the playing field for small businesses by giving them 

the support they need. 

As we consider reforms to the rulemaking process, we need to be 

careful to do it in a way that does not stop important rules that 

protect the public. 

So, Mr. Chairman, I am pleased that we have Darryl DePriest 

here from SBA to start out the first panel and I look forward to 

at least hearing some of his remarks. Thank you very much. 

[The prepared statement of Senator Shaheen follows:] 

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Opening Statement 

Hearing: "Drowning in Regulations: The Waters of the U.S. Rule and the Case for 

Reforming the RF A" 

Senator Jeanne Shaheen 

April27, 2016 

Thank you, Mr. Chairman. 

I am interested in hearing from our witnesses today on their perspectives on our 

federal rulemaking process and how we can work together to improve our 

regulatory system for our small businesses. 

There is no question that poorly crafted regulations can result in an excessive 

burden for small businesses. Unlike big companies, small firms often don't have 

the time and resources to devote to understanding new rules or to figure out how to 

comply. 

At the same time, well-crafted regulations have the potential to encourage 

innovation and entrepreneurship, while addressing critical threats public health, the 

environment and safety. 

For that reason, we need a regulatory process that works- not just for the public, 

but also for America's small businesses. 

When the Committee held a hearing on the Waters ofthe United States rule last 

year, I expressed my frustration that, according to the Office of Advocacy at the 

Small Business Administration, the EPA did not adequately follow the appropriate 

procedures under the RFA, designed to consider the rule's impact on small 

businesses. 

However, I do not believe that the way to address this concern is to throw out 

critical protections -which have been sought by many small businesses that rely 

on clean drinking water to meet their bottom lines. 

Instead, I believe that the proper role for this Committee and others in Congress is 

to conduct proper oversight. Unfortunately, the EPA was not able to testifY at last 

year's hearing and, to my knowledge, was not invited to participate today. 

I have expressed my concerns directly with EPA Administrator McCarthy, and I 

hope to continue working with her to minimize any potential burdens on small 
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businesses going forward, while ensuring that small businesses that depend on the 

Waters of the US rule can see its benefits. 

To improve the regulatory process for small businesses, we must ensure that 

federal agencies comply with the RF A by consulting with small businesses and 

working diligently to minimize the regulatory burden of new rules. 

It is also important for Congress and the Administration to consider ways to cut red 

tape and get rid of outdated, unnecessary regulations. 

I've also heard from small businesses that one of the most meaningful ways to help 

them with regulations is to ensure that our federal agencies - including the SBA -

have the resources they need to provide compliance assistance. Compliance 

assistance helps level the playing field for small businesses by giving them the 

support they need. 

As we consider reforms to the rulemaking process, we need to be careful to do it in 

a way that does not stop important rules that protect the public. 

I am looking forward to hearing more from our witnesses today, including ideas 

for ensuring that we have a well-functioning rulemaking process that protects small 

businesses. 

Thank you. 
6 

Chairman VITTER. Great. Thank you, Senator. 

As we always do, we will invite other committee members to 

offer any opening comments for the record, but we want to go to 

our witnesses, and Senator Shaheen is right. 

Our first panel is the Honorable Darryl DePriest, who serves as 

the Chief Counsel for the Office of Advocacy at the SBA. Darryl has 

been leading the Office of Advocacy in advancing the views and interests of small business in the Federal Government since January 

of this year. 

Darryl, we all look forward to hearing from you. Your full written 

statement will be part of the hearing record, but you have five minutes to make a presentation here and then we will move on to a 

conversation. 

STATEMENT OF DARRYL L. DePRIEST, CHIEF COUNSEL FOR 

ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC 

Mr. DEPRIEST. Thank you, Chairman Vitter, Ranking Member 

Shaheen, and members of the committee. Good morning. As Chief 

Counsel for Advocacy, I would like to thank you for the opportunity 

to appear before the committee today to discuss the Office of Advocacy and its recently released legislative priorities for Congress in 

areas that we think strengthening the RFA will help in our obligation to represent the interests of small business in the regulatory 

process. 

As Chief Counsel, I will guarantee that the Office continues to 

work with federal agencies to alleviate the potential costs of regulation on small entities. To further describe our commitment and 

how we believe Congress can improve this process, I would like to 

update you on our priorities. 

The topic list of our legislative priorities are indirect effects, the 

scope of the Regulatory Flexibility Act, the quality of analysis of 

the agencies, the quality of certification, as the Chair recognized, 

SBREFA panels, and retrospective review. Let me go through them 

briefly. 

Insofar as indirect effects are concerned, under the RFA, agencies are not currently required to consider the impact of a proposed 

rule on small businesses that are not directly regulated by the rule, 

even though the impacts are foreseeable and often significant. Advocacy believes that indirect effects should be part of the RFA analysis, but that the definition of indirect effects should be specific and 

limited so that the analytical requirements of the RFA remain reasonable. 

In addition, Advocacy believes that the scope of the RFA should 

be expanded. In some cases, federal agencies use different 

rulemakings than the more familiar notice and comment. We believe that requiring an RFA analysis on interim final rules and 

clarifying that the RFA applies to certain interpretative rules 

issued by the Internal Revenue Service would allow for greater 

small business consideration in federal rulemakings. 

Another concern Advocacy has is the quality of analysis that is 

done in promulgating the rules. Advocacy is concerned that some 

agencies are not providing the information in a transparent and 

easy to access manner that is required by the Initial Regulatory 

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7 

Flexibility Analysis, the IRFA, or IRFA, and the Final Regulatory 

Flexibility Analysis, the FRFA, or FRFA. This hinders the ability 

of small entities in the public to comment meaningfully on the impacts on small entities and possible regulatory alternatives. 

Agencies should have a single section in the preamble of the Notice of Proposed Rulemaking and Notice of Final Rulemaking that 

lays out clearly the substantive contents of the IRFA or the FRFA, 

including a specific narrative for each of the required elements. In 

addition, agencies should be required to include an estimate of the 

cost savings to small entities in the FRFA. 

Insofar as quality of certification is concerned, some agencies’ improper certifications under the RFA have been based on a lack of 

information in the record about small entities rather than data 

showing that there would not be a significant impact on a substantial number of small entities. A clear requirement for threshold 

analysis would be a stronger guarantee of the quality of certifications. Advocacy believes that the RFA should be amended to require agencies to publish a threshold analysis supported by data in 

the record as part of the factual basis for the certification. 

SBREFA, or the Small Business Regulatory Enforcement Fairness Act, requires that panels, known as SBREFA panels, and they 

have proven to be extremely beneficial to the small business community during rulemakings at the EPA, OSHA, and the CFPB. I 

do not believe that panels are necessary in most cases, since many 

agencies have developed internal procedures for the consideration 

of small entity impacts that are appropriate for their organizations 

and their particular rulemakings. We do recommend, however, adding the Fish and Wildlife Service to the list of covered agencies, as 

we believe that would improve that agency’s rulemakings. Furthermore, requiring covered agencies to provide better information to 

panel participants in advance of the panel would give rise to better 

discussion and better rules. 

And, finally, as retrospective review is concerned, Advocacy believes Congress should strengthen Section 610 through legislation. 

This could be accomplished by prioritizing petitions for review that 

seek to reduce the regulatory burden on small business and provide 

for more thorough consideration of alternatives. We believe this 

would be valuable in addition to the existing required periodic review. Moreover, agencies should be required to provide a timely 

and effective response in which they demonstrate that they have 

considered alternative means of achieving the regulatory objective 

while reducing the regulatory impact on small business. This demonstration could take the form of an analysis similar to an FRFA. 

In closing, I would like to thank the committee and the staff for 

its continued support of the Office. As Chief Counsel, I look forward to working closely with you on ways to improve the RFA and 

issues affecting small entities across the country. Thank you. 

[The prepared statement of Mr. DePriest follows:] 

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U.S. SMALL BUSINESS ADMINISTRATION 

OFFICE OF 

Testimony of 

The Honorable Darryl L. DePriest, Esq. 

Chief Counsel for Advocacy 

U.S. Small Business Administration 

U.S. Senate 

Committee on Small Business and Entrepreneurship 

Date: April27, 2016 

Time: lOAM 

Location: Room 428A 

Russell Senate Office Building 

Washington, D.C. 

Topic: Regulatmy Reform 

4!l9 3rd Street 
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Created bv Congress in >1976, the Office of "\dn1cacv of the U>S. 

Small Business c\dministration (SB:\) is an independent ,·oice for 

small business within the federal government. The Chief Counsel 

for Advocacy, who is appointed by the President and confirmed bv 

the U.S> Senate, directs this office. The Chief Counsel advances the 

views, concerns, and interests of small business before Congress, 

the White House, federal agencies, federal courts, and state policy 

nukers. Issues are identified through economic research~ policy 

analyses, and smaU business outreach. The Chief Counsel's efforts 

are supported by Advocacy's staff in Washington, D.C., and by 

Regional Advocates throughout the country. For more 

information about the Office of :\dnlc;tcv, \>isit 

~P-'--""-"'-"-""'-""""=.ill!-'-"'"""''!.• or call (202) 205-6533. 
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The Honorable Darryl L. DePriest, Esq. 

Chief Counsel for Advocacy 

SBA Office of Advocacy 

Chairman Vitter, Ranking Member Shaheen, and Members of the Committee, good morning. As the Chief 

Counsel for Advocacy, I would like to thank you for the opportunity to appear before the Committee today 

to discuss the Office of Advocacy and its recently released legislative priorities for Congress. 

Over the past 40 years, the Office of 1\dvocacy has facilitated greater consideration of small business impacts 

through regulatory flexibility trainings, roundtables, comment letters, economic research, publications, and 

collaboration "~th federal officials throughout governmcut. Federal agencies treat Advocacy as a partner in 

the rulemaking process in the effort to reduce the regulatory burden on small business. 

As Chief Counsel, I will guarantee that the offtce continues to work with federal agencies to alleviate the 

potential costs of regulation on small entities. To further describe our commitment to this cause and how we 

believe Congress could improve this process, I would like to update you on Advocacy's 2016 Legislative 

Priorities. 

The topic areas that our legislative priorities include are: 

Indirect Effects, 

Scope of the Regulatory Flexibiliry Act (RFA), 

Quality of Analysis, 

Quality of Certification, 

SBREFA panels, and 

Retrospective Review. 

Indirect Effects 

Under the RF A, agencies are not currently required to consider the impact of a proposed rule on small 

businesses that are not directly regulated by the rule, even when the impacts are foreseeable and often 

significant Advocacy believes that indirect effects should be part of the RFA analysis, but that the definition 

of indirect effects should be specific and limited so that the analytical requirements of the RF A remain 

reasonable. Congress should amend section 601 of the RFA to define "impact" as including the reasonably 

foreseeable effects on small entities that purchase products or services from, sell products or services to, or 

otherwise conduct business with entities directly regulated by the rule; are directly regulated by other 

governmental entities as a result of the rule; or are not directly regulated by the agency as a result of the rule 

but are otl1em~se subject to other agency regulations as a result of tl1e rule. 

Scope of the RF A 

Currently, the requirements of the RFA are limited to those rulemakings that are subject to notice and 

comment. Section 553 of the Administrative Procedure 1\ct (J\PA), which sets out the general requirements 

for rulemak.ing, does not require notice and comment for interim final rulemakings, so agencies may impose a 

significant economic burden on small entities through these rulemakings mthout conducting an Initial 

Regulatory Flexibility Analysis (IRFA) or Final Regulatory Flexibility Analysis (FRFA). Advocacy believes the 

definition of a rule needs to be expanded to include interim final rulemakings that have the potential to 

impose economic burdens on small entities. 

In addition, the RFA has its own defmition of information collection. However, this definition is identical to 

the Paperwork Reduction Act (PRA) (35 USC 3501, et. seq.). A cross-reference to the PRA would allow 

Advocacy to rely on OMB's existing implementing regulations (5 CFR 1320) and guidance. 

For these reasons, Advocacy recommends that Congress (1) require RFA analysis for all interim flnal 

rulemakings with a significant economic impact on a substantial nnmber of small entities and (2) amend the 

conditions for IRS rulemakings to require an IRFA/FRFA to reference the PRA 
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The Honorable Darryl L. DePriest, Esq. 

Chief Counsel for Advocacy 

SB,\ Office of Advocacy 

Qualicy of Analysis 

The Office of Advocacy is concerned that some agencies are not providing the information required in the 

IRF A and the FRF A in a transparent and easy-to-access manner. This hinders the ability of small entities and 

the public to comment meaningfully on the impacts on small entities and possible regulatory alternatives. 

Agencies should have a single section in the preamble of the notice of proposed rulemaking and notice of 

ftnal rulemaking that lays out clearly the substantive contents of the IRF A or FRF ;\, including a specific 

narrative for each of the required elements. In addition, agencies should be required to include an estimate of 

the cost savings to small entities in the FRFA 

Qualicy of Certification 

Some agencies' improper certifications under the RFA have been based on a lack of information in the record 

about small entities, rather than data showing that there would not be a significant impact on a substantial 

number of small entities. A clear requirement for threshold analysis would be a stronger guarantee of the 

quality of certifications. Advocacy believes that the RF A should be amended to require agencies to publish a 

threshold analysis, supported by data in the record, as part of the factual basis for the certification. 

SBREFA Panels 

I do not believe panels are necessary in most cases, since many agencies have developed internal procedures 

for the consideration of small entity impacts that are appropriate for their organizations and their particular 

rulemakings. However, the Department of Interior's Fish and Wildlife Service consistently promulgates 

regulations without proper economic analyses. Advocacy believes the rules promulgated by this agency 

would benefit from being added as a covered agency subject to Small Business Advocacy Review Panels. 

In addition, Advocacy also believes that some recent Small Business Regulatory Enforcement Fairness Act 

(SBREFA) panels have been convened prematurely. SBREFA panels work best when small entity 

representatives have sufficient information to understand the purpose of the potential rule, likely impacts, and 

preliminary assessments of the costs and benefits of various alternatives. With this information small entities 

are better able to provide meaningful input on the ways in which an agency can minimize impacts on small 

entities consistent with the agency mission. Therefore the RF A should be amended to require that prior to 

convening a panel, agencies should provide, at a minimum, a clear description of the goals of the rulemaking, 

the type and number of affected small entities, a preferred alternative, a series of viable alternatives, and 

projected costs and benefits of compliance for each alternative. 

Retrospective Review 

Advocacy believes Congress should help strengthen Section 610 retrospective review through legislation. 

This could be accomplished by prioritizing petitions for review that seek to reduce the regulatory burden on 

small business and provide for more thorough consideration of alternatives. We believe this would be 

valuable in addition to the existing required periodic review. Moreover, agencies should be required to 

provide a timely and effective response in which they demonstrate that they have considered alternative 

means of achieving the regulatory objective while reducing the regulatory impact on small businesses. This 

demonstration should take the form of an analysis similar to a FRPA. 

In closing, I would like to thank the Committee and its staff for its continued support of the Office of 

Advocacy. As Chief Counsel, I look forward to working closely with you on ways to improve the Regulatory 

Flexibility Act and on issues affecting small entities across this country. If there are any questions, I would be 

pleased to answer them. 

2 
12 

Chairman VITTER. Thank you very much, Mr. DePriest. 

I will start the conversation with some questions. As I said a few 

minutes ago, on May 19 of 2015, the Office of Advocacy testified 

before this committee and said it believed EPA incorrectly certified 

the Waters of the United States rule. Specifically, the Office said, 

quote, ‘‘Advocacy believes, first, the rule will impose direct costs on 

small businesses. Second, these costs will have a significant economic impact on those small businesses. And, third, the agencies 

incorrectly certified the rule and should have conducted a SBREFA 

panel.’’ Has the Office of Advocacy changed that position in any 

way since then? 

Mr. DEPRIEST. No, sir. That is still our position. 

Chairman VITTER. Okay. When the Office faced that frustration 

of an improper certification, did it have any options to demand that 

EPA and the Corps certify properly that the rule would have had 

a significant impact? Did it have any tools at its disposal to make 

the agencies revisit that issue? 

Mr. DEPRIEST. No, it did not. It is not within the statute to have 

that authority to force an agency to do that. 

Chairman VITTER. So, do you believe the Office of Advocacy 

would be better able to perform its mission and serve as a source 

of accountability for federal agencies if it were given certain tools 

or options in that situation? 

Mr. DEPRIEST. Senator, I think it would depend upon what the 

tools would be. I think, in general, our position is that, as currently 

structured, the RFA works in that respect. I am not sure what additional tools would be necessary. 

Chairman VITTER. Well, as you know, some folks on this committee have ideas in that regard. We sent you my broad-based regulatory reform bill draft April 12, over two weeks ago, and it includes a provision allowing for a third party certification to judge 

whether an agency needs to conduct an IRFA or a SBREFA panel. 

Do you have a reaction to that sort of provision? 

Mr. DEPRIEST. Yes, I do. Thank you for reminding me of that 

specific provision. The provision in the proposed—in your proposal 

would have a certification by the GAO if there is a dispute between 

the Office of Advocacy and an agency as to whether a panel should 

be done or whether there is—the certification is improper. I think, 

in general, we do not—my opinion is that that would not particularly work for a few reasons. 

One is, as we looked at this particular instance of a difference 

between the EPA and the Office of Advocacy, then you have two 

executive groups with a conflict, and I wonder whether philosophically or policy-wise it is good to or wise to put a Congressional 

agency, like the GAO, in the middle between those two executive 

agencies. So, I have some concerns about that. 

Chairman VITTER. So, that concern is based on GAO being Congressionally based? 

Mr. DEPRIEST. And also the—yes, that is one of the concerns. 

Chairman VITTER. I do not want to cut you off—— 

Mr. DEPRIEST. Go ahead. 

Chairman VITTER [continuing]. Because I can follow up on that. 

Mr. DEPRIEST. Go ahead. 

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13 

Chairman VITTER. What if we moved the proposal to an entity 

that is not Congressionally based, that is executive based, like 

OIRA at OMB? 

Mr. DEPRIEST. I examined that, and I have some concerns about 

that, as well. My sense is that, you know, you might have a situation where the dispute between the agencies is basically a question 

of law, and the question is whether you would want OIRA to be 

deciding that question of law. 

Insofar as the particular instance that has been proposed, that 

I have seen proposals concerning, I am concerned that having a 

third party arbiter perhaps would shift the burden. Currently, the 

agencies have the burden of proving that the certification, or that 

the proposed rule will not have significant impact on a substantial 

number, and I am concerned that if we go to the process whereas 

the Office of Advocacy has to apply to some other agency to review 

our decision, that that shifts the burden to the Office to show that 

the proposal will have an effect, and I would prefer that the burden 

be on the agency. 

Chairman VITTER. Well, I guess my reaction to that is the agencies do not have any burden at all. I mean, they are the judge and 

the jury of themselves. They can say, it does not have a substantial 

impact, done, move on. So, it seems to me there is no burden in 

present law if they just want to improperly certify lack of those impacts. 

Mr. DEPRIEST. That is true, but there is legal recourse—— 

Chairman VITTER. What—— 

Mr. DEPRIEST [continuing]. And as you know, in the—— 

Chairman VITTER. What is that? 

Mr. DEPRIEST. In the WOTUS case, the affected entities filed 

suit against the EPA and the Corps, and as you know, that rule 

has currently been enjoined by the Sixth Circuit. 

So, my—it is a roundabout way, but it is the way that our system is designed, that there be another arbiter, but it will be a court 

of law as opposed to perhaps a Congressional arm or another executive agency. 

Chairman VITTER. Okay. I am past my time. We may come back 

to a second round if we have time. 

Let me turn to Senator Ernst—or, excuse me, Senator Shaheen. 

Senator SHAHEEN. Close. 

[Laughter.] 

There have been a number of regulatory reform proposals that 

would give the Office of Advocacy additional responsibilities, as 

Senator Vitter was describing. Can you talk about the capacity that 

you currently have to, should your responsibilities be expanded, to 

address those. What kind of staff support do you have, and what 

kind of challenges do you have as you look at the requirements 

under the Regulatory Flexibility Act and the role of your Office—— 

Mr. DEPRIEST. Well—— 

Senator SHAHEEN [continuing]. In trying to address that? 

Mr. DEPRIEST. Sorry. As Senator Vitter said, I have been in this 

role now for 16 weeks, not that I am counting. 

[Laughter.] 

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14 

But, I will say that the staff that I have encountered at the Office is very dedicated, very hard working, and they take their job 

very seriously representing the interest of small business. 

The only proposal that I have—and I think we have the capacity 

to do a number of—to do what we do now. The only—I would say 

that the proposal that I think would probably most stretch the Office and would require an expansion of the Office would be a proposal such as the ones I have seen where every agency would have 

to have a SBREFA panel. I think that would stretch the agency. 

It would stretch our Office and would require us to develop and 

have more people. 

Senator SHAHEEN. So, can you describe in a little more detail— 

you talked about how the process works and some of the changes 

that might—that you think would be helpful, but can you talk in 

more detail about how your office reviews proposed rules and then 

follows up with federal agencies? 

Mr. DEPRIEST. Sure. When a rule is promulgated or proposed 

and put in the Federal Register, every agency, with the exception 

of one, sends us a copy of the proposal for us to review and we try 

to make a determination whether the agency is correct or incorrect 

insofar as a substantial impact is concerned. We have economists 

on staff who review the economic underpinnings of the particular 

rule and the determination as to what the impacts will be. We then 

meet and discuss the issue with small entity representatives. We 

try to bring small entity representatives together with the agencies, all during this process of dealing with a proposed rule. 

There is also the interagency review that is done by OIRA that 

we participate in, and we hope that through the whole process of 

getting from the proposed rule where we analyze it and help the 

agency look at alternatives that may minimize the impact through 

the final rule that we can help the agency achieve their regulatory 

goal, at the same time minimize the impact that the regulation 

may have on small business. 

Senator SHAHEEN. And, so, is there an opportunity for small 

businesses to engage with the Office of Advocacy on the proposed 

rule? 

Mr. DEPRIEST. Yes. Even though—even in the absence of panels, 

there is a way to do that. We have pioneered a method called 

roundtables where we bring together the agency and small business to talk about an issue, and a lot of the times, that works. I 

give you just one specific example. 

The IRS recently proposed some changes to small retirement 

plans. A number of the individuals who work in that area, who administer those plans, or companies that have those plans were concerned about the unintended effects of that regulation. We put together a roundtable between the IRS and the small representatives 

and they voiced their concerns. And a few weeks ago, the IRS said, 

we have heard your concerns. We are going to withdraw the regulation. 

Senator SHAHEEN. Ahh. 

Mr. DEPRIEST. So, we have instances where those sort of informal opportunities work to the best interest of small business. 

LAP51NQ082 with DISTILLER

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Senator SHAHEEN. And, finally, can you comment on how expanding the role of Advocacy would affect the timing of when federal rules would be released. 

Mr. DEPRIEST. Well, the—I think—it is really difficult to say. 

There is—a covered agency like EPA, OSHA, CFPB, where they 

are required to do the panels, that puts a little extra time into the 

process. But that is about the only way I can see that there would 

be more time in putting out the regulations. 

Senator SHAHEEN. Thank you. Thank you, Mr. Chairman. 

Chairman VITTER. Okay. Thank you. 

Now we go to Senator Ernst. 

Senator ERNST. Thank you, Mr. Chairman, and thank you, sir, 

for being in front of our panel today. 

Before I get to my questions, I just wanted to say that I look forward to working with you on my legislation, the Prove It Act. I 

know you have not had a lot of time to review it yet, but you did 

mention in your testimony that you do have concerns with agency 

analysis and agencies that are not maybe paying attention to the 

voice of small business or your analysis, and what my bill does, it 

seeks to incentivize better analysis and certifications. So, I would 

love to work with you on this effort, find a great way forward, 

which I think we have got a great start to here with this bill. 

You have mentioned a couple of different interesting points. You 

mentioned the roundtables that Senator Shaheen had asked about. 

Did EPA meet with small business at all, do a roundtable, when 

they were going through the WOTUS effort? 

Mr. DEPRIEST. Yes, they were, if I remember correctly, at least 

four. 

Senator ERNST. And they discounted the feedback that came 

from those small businesses during that discussion? 

Mr. DEPRIEST. The small businesses did not persuade them that 

there would be the significant impact, yes. 

Senator ERNST. Okay. Do we see that there is significant impact 

for small—— 

Mr. DEPRIEST. Well, the rule has been stayed, although as I 

said—— 

Senator ERNST. Correct. 

Mr. DEPRIEST [continuing]. In response to Senator Vitter’s questions, our position on this remains the same, that this particular 

rule will have a significant impact on a substantial number of 

small entities. 

Senator ERNST. And I feel exactly the same way. So, we do understand that the rule has been stayed, but the important thing to 

remember is that it will take years for this process to happen 

through the judicial branch. And, so, rather than working with the 

agencies on the front end and bringing a little more transparency, 

the stakeholders together, and working to improve the legislation, 

now we are caught up in the judiciary. 

And as—and this was a different issue, but I know that Administrator Gina McCarthy had mentioned with a different rule that 

was being promulgated and had gone through the court system 

that—and she made light of it—that it did not really matter how 

the court decided, because by the time it all came out in the end, 

after years of going through the judicial branch, those businesses 

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will have already made their changes to comply with the federal 

standards. 

That is an unfortunate situation, and I see that our small businesses may be caught in that, as well, where they do not know how 

it is going to turn out, so they are going to make those unnecessary 

investments to meet the obligation should it not go in their favor. 

That is very unfortunate when I think we should be working these 

issues out on the front end. 

How often would you say that agencies improperly certify? 

Mr. DEPRIEST. I honestly do not know the answer to that question. I do know that it is significant, that it does occur, which is 

why we suggested in our legislative priorities that we look at the 

certification issue. 

Senator ERNST. Yes. I think we need to. This is a problem. 

Mr. DEPRIEST. Yes. 

Senator ERNST. And, how often do you find that agencies have 

not provided the best analysis, in a transparent manner, and easy 

to access, as well, because I can tell you, a lot of stakeholders do 

not know where to go to find information, do not know how to access that. 

Mr. DEPRIEST. I cannot give you, again, the exact numbers, but 

as I said in our—that is another of the areas where we think the 

RFA could be strengthened, given the strength of the certifications 

that we encounter. 

Senator ERNST. Okay. Well, I appreciate it today. I am running 

a little short of time, but I do want to thank you for your efforts. 

I think it is really important and I would love to work with you 

in these areas. I think a number of us are very passionate about 

this, and so, Mr. Chair, I do want to thank you for holding this 

hearing today, so I appreciate it. 

Chairman VITTER. Thank you very much. 

Now, Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

You know, one of the things that I am troubled by, a lot of discussion about Waters of the United States, because we have been 

in and out of court for over 25 years. We know that EPA has not 

satisfied at least the Supreme Court’s idea of what are Waters of 

the United States, but yet this body fails to act. We all have a pretty good time beating up on regulatory agencies, and I will not defend the process. I think that, clearly, Waters of the United States 

is going to have a very dramatic and significant impact on small 

entities. 

But, just to lay down a marker, it is up to this body to step in 

after this kind of up and down litigation, and we do have an access 

for small business. They are called committee hearings and we like 

to hear from small entities. 

I want to get to your discussion about retrospective review and 

why it is so significant. Under current existing mandates, after ten 

years, if there had been a finding that there was a significant impact on—substantial impact on a significant number of entities, 

that they would be required to automatically do a ten-year review. 

You suggested in your comments that we should look at how that 

retrospective review is being performed. 

LAP51NQ082 with DISTILLER

17 

I am wondering if you have had a chance to review a bill that 

I have introduced that has come through unanimously the HSGAC 

Committee, which is S. 1817. Have you had a chance to take a look 

at that bill? 

Mr. DEPRIEST. I have not, Senator. 

Senator HEITKAMP. What that bill would do is it would automatically require for any major rule, regardless of any process that was 

gone through to begin with, once we have designated a major rule, 

there would have to be a process put in place when that rule is 

being promulgated to basically notify everyone, all the stakeholders, that this is the retrospective analysis that needs to be 

done into the future. And, so, I call it the prospective retrospective, 

because it would not deal with the body of legislation that we 

have—or regulation that we have outstanding, but it would, in fact, 

set down a marker for a process for substantial, or for significant 

review of any major regulation. 

My question to you, and I guess if you can answer it today, is 

would that bill satisfy the concern that you have as a small business advocate that we would be, in fact, engaged in requiring retrospective review. 

Mr. DEPRIEST. Senator, I would really like to take a look at it 

and see whether that addresses the issue. I am open to looking at 

it and working with you and your staff to see whether there are 

ways in which we can strengthen the retrospective review. As I 

said, it is one of our priorities, as well. 

Senator HEITKAMP. We have another bill that has been knocking 

around that would basically put into place a commission that 

would, in fact, do retrospective review, or at least review rules, because one of the things that we see when we asked agencies, you 

know, how many of your rules are aging out of the system, no 

longer applicable, are make work paperwork but they still are 

doing it because no one takes a look at the rule, we find that they 

do not find a lot of their rules are aged out. And, so, I think we 

need a second look and an independent look, which I think the 

Chairman was getting at. 

One of the other kind of challenges that we have in all of this 

is making sure that for many of our entities, they have the ability 

to help small business come into compliance. Most of the agencies, 

I think, believe—they want to help small business come into compliance, but yet we see this frustration when it is ‘‘gotcha’’ moments as opposed to cooperation. What could we do to strengthen 

the agencies’ mandate to help small business come into compliance 

with new regulation? 

Mr. DEPRIEST. Actually, there is currently a requirement—— 

Senator HEITKAMP. Right. 

Mr. DEPRIEST [continuing]. That the agencies actually put together a compliance document. 

Senator HEITKAMP. If they were doing that, we would not get 

complaints. 

Mr. DEPRIEST. Understood. 

Senator HEITKAMP. So, we think there is a failure to actually 

perform that function. 

Mr. DEPRIEST. Understood. Well, we work with the agencies, and 

we have put that in our comment letters, as well, that the agency 

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has not come up with a compliance document. So, that is another 

area that we could study, certainly, and try to come up with something that might force that a little bit more. 

Senator HEITKAMP. Mr. Chairman, if I could just have a few 

more minutes, the subcommittee that I am ranking on with Senator Lankford, and Senator Ernst sits on, as well, has been doing 

a lot of work on various proposals, and I think some of the suggestions that you provided today should help inform our work on that 

subcommittee and so we would like to engage your Office and the 

work that you do in reviewing some of these attempts at bringing 

more people into the process, helping small business, in particular, 

have a voice in what that regulation does, but then on the backside, making sure that the compliance requirements are being met. 

And, so, I would love to have a visit with you, review the packages that we have been working on, and see if we can enhance 

those based on your experience at the Small Business Advocacy. 

Mr. DEPRIEST. Certainly. Thank you. Certainly. 

Chairman VITTER. Great. Thank you. 

The vote, just so everyone knows, has been pushed from 11:00 to 

12:00, so we have a little more flexibility. I want to just follow up 

with one question, and then I will invite the other members, if they 

have any wrap-up for Mr. DePriest. 

I commend you and thank you for recognizing the need for some 

additional SBREFA panels, specifically Fish and Wildlife, which I 

agree with. Do you believe the Department of Labor could benefit 

from conducting panels? Specifically, their Wage and Hour Division 

has issued significant rules with big, big impact on small business 

in a number of areas, so that is why I specifically bring that up. 

Mr. DEPRIEST. Well, as you know, the purpose of the SBREFA 

panels is to bring small business to the table and so the regulators 

can hear the interest. Better information, better rules is our 

mantra. 

Insofar as the other agencies, OSHA is covered, as you know. We 

have found that the Department of Labor really does hear from 

small businesses as they put forward these regulations. For example, the overtime rule which is currently working through the process, we have conducted five roundtables around the country to 

bring small businesses together with the Department of Labor. 

They have heard the interests that have been expressed. 

So, it is not—so, I am not sure that having the panel process is 

going to be even more information. If you had an agency that really 

was not soliciting the views of small business, then yes. But, I have 

found that in my experience, what I have seen thus far and what 

my staff has explained to me, that has not been a problem. 

Chairman VITTER. Well, I know Labor is hearing from small 

business. I would disagree with any suggestion that they are listening to small business. It is two very different things. 

Mr. DEPRIEST. Understood. 

Chairman VITTER. I personally think the SBREFA process would 

force more of that, and certainly those rules I alluded to are very 

significant on small business. 

Any wrap-up questions for Mr. DePriest? 

Okay. Thank you very much. I appreciate it. 

Mr. DEPRIEST. No, thank you. I appreciate it. 

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Chairman VITTER. We will now move on to our second panel, and 

as they get situated at the table, I will go ahead and introduce 

them. If I can just have everybody’s attention, I want to go ahead 

and introduce our second panel. 

Ms. Beth Milito serves as the Senior Executive Counsel with the 

National Federation of Independent Small Business Legal Center, 

a position she has held since March 2004. She has experience testifying before Congress, administrative agencies, and state legislatures on the impact of legislative and regulatory issues. 

Mr. Frank Knapp is the President and CEO of the South Carolina Small Business Chamber of Commerce and the Board Chair of 

the American Sustainable Business Council. 

And, finally, Mr. Rosario Palmieri is the Vice President for 

Labor, Legal and Regulatory Policy at the National Association of 

Manufacturers. In that capacity, he works with NAM members to 

develop and articulate the Association’s position on regulatory, civil 

justice, antitrust, food, beverage, consumer product, and labor 

issues. 

You will each have five minutes to present testimony. Of course, 

all of your written testimony will be made part of the record. 

Ms. Milito, welcome. 

STATEMENT OF ELIZABETH MILITO, SENIOR EXECUTIVE 

COUNSEL, SMALL BUSINESS LEGAL CENTER, NATIONAL 

FEDERATION OF INDEPENDENT BUSINESS, WASHINGTON, 

DC 

Ms. MILITO. Thank you very much, Chairman Vitter, Senator 

Ernst, and staff. Thank you all for your work on this hearing for 

today. 

On behalf of the National Federation of Independent Business, I 

appreciate the opportunity to testify on the devastating impact that 

overregulation has on small business and highlight the critical 

need for Regulatory Flexibility Act reforms. 

The costs of regulation are higher than ever, with the smallest 

firms bearing a disproportionate burden of the per employee costs. 

In short, small businesses are drowning and there does not appear 

to be a lifeguard on duty. 

In his first Inaugural Address, Thomas Jefferson said that the 

sum of good government was one which shall restrain men from injuring one another and shall leave them otherwise free to regulate 

their own pursuits of industry. Unfortunately, the Federal Government has ignored this axiom. 

The current regulatory system is broken. Onerous permitting requirements have made it extremely difficult, expensive, and time 

consuming to build much of anything today. According to the 

NFIB’s Small Business Economic Trend Survey, last month, 21 

percent of small business owners cited government regulations and 

red tape as their single most important problem. Despite the devastating impact of regulation on small business, federal agencies 

continue to churn out approximately ten new regulations each day. 

With that as a backdrop, I would like to briefly discuss two regulations that are of particular concern to NFIB. 

On June 29, 2015, the Environmental Protection Agency issued 

the Waters of the U.S. rule, which changes the Clean Water Act’s 

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definition for Waters of the United States to govern not just navigable waterways, as stated in the statute, but every place where 

water could possibly flow or pool. Under the rule, EPA and the 

Army Corps may now require homebuilders, farmers, and other 

property owners to spend tens of thousands of dollars on a permit 

before they can build or even do simple landscaping around seasonal streams, ponds, ditches, and depressions. Amazingly, EPA 

failed to analyze the small business impact of the rule as required 

by the RFA. In early 2015, SBA’s Office of Advocacy formally urged 

EPA to withdraw the Waters rule because of its potentially huge 

impact on small businesses. 

In addition to the Waters of the U.S. rule, I want to discuss a 

proposed labor regulation that could impact a substantial number 

of small businesses and further demonstrates the need for RFA reform. For the small businesses, labor regulations are particularly 

challenging. The small metal fabricator, for example, goes into 

business knowing how to finish metal products. He has a good 

sense of where he can get the supplies he needs and what kind of 

skills he is looking for in a workforce. What he likely does not 

know are the best business practices regarding wage and overtime 

calculation, compliance with anti-discrimination laws, and best hiring practices. 

On July 6, 2015, the Department of Labor published a proposed 

rule that would more than double the minimum salary that a 

worker must receive to be exempt from overtime, from the current 

$23,660 to over $54,000 annually. This rule is the epitome of an 

RFA analysis gone wrong. The nearly $750 million DOL’s initial 

Regulatory Flexibility Act analysis estimates small businesses 

would face in new costs during the rule’s first year grossly underestimates the true compliance costs for small businesses. 

For example, DOL estimates it will take only one hour for businesses to become familiar with a new overtime rule, but this assumption disregards a basic reality of regulatory compliance. It is 

the small business owner who will be wading through the rule’s 

text, not compliance specialists or outside counsel, like in large 

companies. 

NFIB believes that DOL’s proposed overtime rule and the EPA’s 

Waters of the U.S. rule clearly demonstrate why Congress must 

enact regulatory reforms to level the playing field for small businesses. 

Congress should expand Small Business Advocacy Review Panels 

to all agencies, including independent agencies. In so doing, all 

agencies, like DOL’s Wage and Hour Division, would be in a better 

position to understand how small businesses operate and how the 

regulatory disproportionately impacts small businesses. 

And agencies should be held accountable when they fail to give 

proper consideration to the comments of the Office of Advocacy, 

and a formal mechanism should be put in place for resolving economic cost disputes between the agency and Advocacy. 

Small businesses are the forefront of our economy, employing 

nearly half of all private sector employees in this country. This is 

why NFIB will continue to push for transparency in the rulemaking process and fight back against regulations that create unnecessary burdens with unintended consequences. Agencies must 

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recognize that flexibility, as mandated by the Regulatory Flexibility 

Act, affords small employers the opportunity to treat their employees and their workers fairly and allow small businesses to become 

community leaders and the engines of our economy. 

Thank you for holding this important hearing to shine light on 

the fact that regulatory reform needs to be a priority for Congress. 

I look forward to answering any questions you might have. Thank 

you. 

[The prepared statement of Ms. Milito follows:] 

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Insert offset folio 7 here 24853.007

Statement for the Record of Elizabeth Milito, Esq. 

NFIB Small Business Legal Center 

Before the 

U.S. Senate Committee on Small Business and Entrepreneurship 

Hearing on: "Drowning in Regulations: The Waters of the U.S. Rule and the Case for 

Reforming the RFA" 

April27, 2016 

National Federation of Independent Business (NFI B) 

1201 F Street, NW Suite 200 

Washington, DC 20004 
23 

LAP51NQ082 with DISTILLER


Insert offset folio 8 here 24853.008

Dear Chairman Vitter and Ranking Member Shaheen, 

On behalf of the National Federation of Independent Business, I appreciate the 

opportunity to submit for the record this testimony for the Senate Small Business and 

Entrepreneurship Committee's hearing entitled, "Drowning in Regulation: The Waters of 

the U.S. Rule and the Case for Reforming the RFA." 

My name is Elizabeth Milito and I serve as the Senior Executive Counsel for the NFIB 

Small Business Legal Center. NFIB is the nation's leading small business advocacy 

association, representing members in Washington, D.C., and all 50 state capitals. 

Founded in 1943 as a nonprofit, nonpartisan organization, NFIB's mission is to promote 

and protect the right of its members to own, operate, and grow their businesses. NFIB 

represents about 325,000 independent business owners who are located throughout the 

United States. 

The NFIB Small Business Legal Center is a nonprofit, public interest law firm 

established to provide legal resources and be the voice for small businesses in the 

nation's courts through representation on issues of public interest affecting small 

businesses. 

Impact of Regulation on Small Business 

Overzealous regulation is a perennial concern for small business. The uncertainty 

caused by future regulation negatively affects a small-business owners' ability to plan 

for future growth. Since January 2009, "government regulations and red tape" have 

been listed as among the top-three problems for small business owners, according to 

the NFIB Research Foundation's monthly Small Business Economic Trends survey. 1 

Not surprisingly then, the latest Small Business Economic Trends report analyzing 

March 2016 data had regulations as the top issue small business owners cite when 

asked why now is not a good time to expand. 2 Within the small business problem 

clusters identified by Small Business Problems and Priorities report, "regulations" rank 

second behind taxes. 3 

Despite the devastating impact of regulation on small business, federal agencies 

continue to churn out approximately 10 new regulations each day. 4 According to the 

Administration's fall2015 regulatory agenda, there are 3,297 federal regulations in the 

pipeline, waiting for implementation.5 

When it comes to regulations, small businesses bear a disproportionate amount of the 

regulatory burden. Regulatory costs are now nearly $12,000 per employee per year, 

'NFIB Research Foundation, Small Business Economic Trends, at p.18, March 2016. http:llwww.nfib.com/research· 

foundation/surveys/small~businessweconomic-trends 

2 /d. 

3 Wade, Holly, Small Business Problems and Priorities, at p. 18, August 2012. 

https://VMW.nfib.com/Portals/0/PDF/AIIUsers/research/studies/small-business-problems-priorities-2012-nfib.pdf 

4 Data generated from www.regulations.gov 5 http://wvvw.reginfo.gov/public/do/eAgendaMain 

2 
24 

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Insert offset folio 9 here 24853.009

which is 30 percent higher than the regulatory cost burden larger businesses face. 6 

This is not surprising, since it's the small business owner, not one of a team of 

"compliance officers" who is charged with understanding new regulations, filling out 

required paperwork, and ensuring the business is in compliance with new federal 

mandates. The small business owner is the compliance officer for her business and 

every hour that she spends understanding and complying with a federal regulation is 

one less hour she has to service customers and plan for future growth. Beyond the 

burden of time and money, excessive regulation creates significant frustration and 

stress for many small business owners. It is impossible to put a price tag on stress, but 

it clearly adds to the cost of regulation. 

During my twelve years at NFIB I have heard countless stories from small business 

owners struggling with a new regulatory requirement. To them, the requirement came 

out of nowhere and they are frustrated that they had "no say" in its development. That 

is why early engagement in the regulatory process is key for the small business 

community. But small business owners are not roaming the halls of administrative 

agencies, reading the Federal Register, The Hill, Politico, or Inside EPA. Early 

engagement in the rulemaking process is not easy for the small manufacturer in White 

Oak, Texas or Bismarck, North Dakota. As a result, small businesses rely heavily on 

the notice-and-comment rulemaking process, small business protections in the 

Regulatory Flexibility Act, and internal government checks like the Office of Advocacy at 

the Small Business Administration and Office of Information Regulatory Affairs to 

ensure agencies don't impose costly new mandates on small business when viable and 

less expensive alternatives to achieve regulatory objectives exist. 

Small businesses are the forefront of our economy. In fact, small businesses make up 

99.7 percent of U.S. employer firms, 63 percent of net new private-sector jobs, and 48.5 

percent of private-sector employment_? In short, small businesses are employers of 

choice for nearly half of private-sector employees in this country. This is why NFIB will 

continue to push for regulations that target a problem and that do not create 

unnecessary burdensome rules with unintended consequences. Agencies must: (1) 

consider the unique structure of small businesses; (2) understand why one size fits all 

laws and rules don't work; and (3) recognize that flexibility- as mandated by the 

Regulatory Flexibility Act (RFA)- affords small employers the opportunity to treat their 

employees and their workers fairly and allows small businesses to become community 

leaders. 

Unfortunately, as we come to the end of President Obama's administration, small 

businesses are scared. They are drowning in a regulatory avalanche, trying to wade 

through a number of new regulatory requirements with more mandates on the horizon. 

'Crain, Nicole V. and Crain, W. Mark, The Cost of Federal Regulation to the U.S. 

Economy, Manufacturing and Small Business, September 10, 2014. 

htto://www.nam.org/Data-and-Reports/Cost-of-Federal-Regulations/Federai-RegulationFuii-Study.pdf 

7 https://www.sba.gov/sites/default/files/FAQ March 2014 O.pdf 

3 
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While new environmental and financial regulations and regulatory proposals have 

definitely had a negative impact on small business over the last few years - as 

evidenced by EPA's Waters of the U.S. rule- today I also want to focus on a category of 

regulations that doesn't seem to get as much attention from Washington - labor 

regulations. 

Small businesses can be found in virtually all industries. Whether you are a 

manufacturer, baker, or dry cleaner the one thing you have in common with other 

business owners is employees. And for the small businesses NFIB represents with, on 

average, ten or fewer employees, these regulations can be some of the most 

challenging. The small metal fabricator, for example, goes into business knowing how to 

finish metal products, he has a good sense of where he can get the supplies he needs, 

and what kind of skills he's looking for in a workforce. What he likely does not know are 

the best business practices regarding wage and overtime calculation, compliance with 

various state and federal discrimination laws, and hiring. Moreover, it is unlikely that the 

small metal fabricator has a human resources compliance manager to help him 

navigate those different rules. 

Therefore, labor laws definitely represent a significant regulatory "tax" on small business 

that is likely to be much greater than the "tax" faced by bigger businesses with in-house 

HR departments. With that as the backdrop, I'd like to discuss several new and 

proposed regulations out of the Administration have been of particular concern to NFIB 

and its members. 

Environmental Protection Agency Waters of the U.S. Rule 

On June 29, 2015, the Environmental Protection Agency (EPA) and the Army Corps of 

Engineers issued the "Waters of the U.S." rule, which changes the Clean Water Act's 

definition for "waters of the United States" to govern not just navigable waterways, as 

stated in the statute, but every place where water could possibly flow or pool. Under the 

rule, EPA and the Army Corps may now require homebuilders, farmers, and other 

property owners to spend tens of thousands of dollars on a permit before they can build 

or even do simple landscaping around seasonal streams, ponds, ditches, and 

depressions. 

The moment this rule goes into effect small businesses will have to seek a federal 

permit from EPA to improve or develop any land that includes water no matter how 

incidental. That includes even the smallest project, like digging a post hole or laying 

mulch, as long as part of that land is wet. Nearly a decade ago, the average cost of a 

CWA permit was over $270,000. Altering land without a permit can lead to fines of up to 

$37,500 per day. 

Amazingly, EPA and the Army Corps failed to analyze the small business impact of the 

rule as required by the RFA. In early 2015, SBA's Office of Advocacy formally urged 

EPA to withdraw the WOTUS rule because of its potentially huge impact on small 

businesses. It cited the EPA's own estimate that the rule would cost the economy more 

than $100 million. 

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NFIB, joined by the U.S. Chamber of Commerce, challenged the rule in a federal court 

in Oklahoma arguing, among other things, that EPA acted outside of its authority under 

the Clean Water Act and violated the Regulatory Flexibility Act, and that the rule is an 

unconstitutional infringement of state rights to regulate intrastate lands and waters. 

On October 9, 2015, the 6th Circuit Court of Appeals stopped EPA and the Army Corps 

from moving forward in implementing the rule until the 6th Circuit can determine whether 

or not it is legal. While NFIB is pleased with a stay, the drawn out legal proceedings add 

to the uncertainty caused by future regulation and continue to negatively affect small 

business' ability to plan for future growth. 

Department of Labor "Overtime" Proposed Rule 

On July 6, 2015, the Department of Labor published in the Federal Register a notice of 

proposed rulemaking regarding "Defining and Delimiting the Exemptions for Executive, 

Administrative, Professional, Outside Sales and Computer Employees." 

The Fair Labor Standards Act (FLSA) generally requires covered employers to pay their 

employees overtime premium pay of one and one-half times the employee's regular rate 

of pay for all hours worked over 40 in a workweek. However, there are a number of 

exemptions from the FLSA's minimum wage and overtime requirements. Section 

13(a)(1) of the FLSA, codified at 29 U.S.C. 213(a)(1 ), exempts from both minimum 

wage and overtime protection "any employee employed in a bona fide executive, 

administrative, or professional capacity ... or in the capacity of outside salesman." The 

FLSA does not define the terms "executive," "administrative," "professional," or "outside 

salesman." 

DOL has consistently used its rulemaking authority to define and clarify the section 

13(a}(1) exemptions. Since 1940, the implementing regulations have generally required 

each of three tests to be met for the exemptions to apply. First, the employee must be 

paid a predetermined and fixed salary that is not subject to reduction because of 

variations in the quality or quantity of work performed (the "salary basis test"). Second, 

the amount of salary paid must meet a minimum specified amount (the "salary level 

test"). Third, the employee's job duties must primarily involve executive, administrative, 

or professional duties as defined by the regulations (the "duties test"). 

In its proposed rule, DOL proposes changes only to the salary level test. Currently, the 

minimum salary that a worker must receive is $455 per week ($23,660 annually). The 

proposal seeks to more than double that amount to $970 per week ($50,440 annually). 

In addition, DOL seeks- for the first time- to automatically increase the salary 

threshold at either the 40th percentile of all salaried wage earners, or at a rate 

equivalent to the Consumer Price Index for All Urban Consumers (CPI-U). No timeframe 

for how frequently this increase will take place is proposed, however. 

According to DOL's initial regulatory flexibility analysis (IRFA), small businesses will 

face nearly $750 million in new costs in the first year if the rule is finalized as proposed. 

These costs are made up of $186.6 million in costs associated with implementing the 

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rule and $561.5 million in additional wages that will now be paid to workers 8 

Unfortunately, these estimates simultaneously underestimate the compliance costs to 

small businesses and overestimate the transfers to employees. 

First, the IRFA underestimates compliance costs because it does not take into account 

business size when estimating the time it takes to read, comprehend and implement the 

proposed changes. As an example, DOL "estimates that each establishment will spend 

one hour of time for regulatory familiarization." This assumption erroneously disregards 

a basic reality of regulatory compliance- the smaller the business, the longer and more 

expensive it is to comply. As previously noted, numerous studies have identified that 

federal regulatory compliance disproportionately affects small businesses, as compared 

to larger ones. Primarily, this is because small companies typically lack specialized 

compliance personnel. Typically, the duty of compliance officer falls to the business 

owner or the primary manager. These individuals are generally not experts in wading 

through regulatory text, so familiarization time is greater than for large companies. 

Alternatively, a small business could hire an outside expert to devise a compliance plan, 

but this cost will also be significantly greater than what a firm with in-house compliance 

staff would endure. 

In this case, complying with the rule requires far more than simply looking at a salaried 

employee's weekly wages. This is just one piece of the puzzle. If an employee is 

currently salaried and makes greater than the current threshold of $455 per week, but 

less than the proposed $970 per week, the small business owner must now spend a 

considerable amount of time calculating out varying scenarios- none of which is 

beneficial for anyone involved. 

Department of Labor Proposed Rule on Paid Sick Leave for Federal Contractors 

On February 26, 2016 the agency proposed a rule "Establishing Paid Sick Leave for 

Federal Contractors." If promulgated, small businesses that have contracts with the 

federal government would be required to provide employees up to seven days of paid 

sick leave a year, including leave taken to care for a family member. Among other 

things, NFIB is concerned that this proposed rule would be particularly burdensome on 

small federal contractors in one of two ways. For covered small businesses that do not 

have a paid sick leave program, they will have to implement one and figure out how 

they will pay for it. For covered small businesses that already have a paid leave 

program, they will have to reconfigure the program to meet the highly prescriptive 

requirements of the proposed rule. 

Department of Labor "Persuader" Rule 

On March 24, 2016 DOL finalized a rule, "Interpreting the 'Advice' Exemption in Section 

203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA), which will 

make it difficult and expensive for small business owners to access labor and 

employment attorneys. The rule is an expansion of the federal "persuader rule," in which 

businesses must publicly disclose whenever they hire consultants and labor counsel to 

'Federal Register. Vol. 80, No. 128, July6. Page 38606. 

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assist with anti-union efforts. Under the new rule, attorneys would also need to disclose 

the names of clients to whom labor information is provided. If either party (attorney or 

business) does not file or provides false information, it can mean jail time. 

The rule would affect small businesses the most because they typically don't have inhouse lawyers or in-house labor relations experts. Worse, the American Bar Association 

(ABA) predicts the "persuader rule" will make it much harder for owners to get legal 

advice. Because the new rule conflicts with attorney-client confidentiality rules, the ABA 

forecasts that fewer lawyers will practice labor law. 

Among other things, NFIB believes DOL is acting outside its authority under the 

LMRDA, the rule is in violation of the protections afforded all Americans under the First 

Amendment, and that the agency failed to properly consider small business impact as 

required under the RFA. As a result, on March 31, we challenged the rule in a federal 

district court in Texas. 

The Case for RFA Reform 

Rules such as the ones I've discussed today demonstrate why Congress must take 

action to level the playing field by reforming the RFA and its amending laws. Currently, 

agencies are required to perform an IRFA prior to proposing a rule that would have a 

significant economic impact on a substantial number of small entities - as DOL has 

confirmed the proposed overtime rule would. While these analyses are helpful for 

agencies to realize the cost and impact a proposed rule would have on small business, 

agencies would get additional benefit from convening a Small Business Advocacy 

Review (SBAR) panel for rules of significant impact. 

SBAR panels allow an agency to walk through a potential proposal with small business 

owners, either in person or via telephone, and receive feedback and other input from 

those who will be directly impacted by the regulation. These panels are currently 

required for EPA, the Occupational Safety and Health Administration, and the 

Consumer Financial Protection Bureau. NFIB believes all agencies- in particular the 

entire DOL- would achieve better regulatory outcomes if required to go through such a 

procedure. 

Expansion of the Small Business Regulatory Enforcement and Fairness Act (SBREFA) 

and SBAR panels to all agencies - including independent agencies - would put 

agencies in a better position to understand how small businesses fundamentally 

operate, how the regulatory burden disproportionately impacts them, and how each 

agency can develop simple and concise guidance materials. Moreover, Congress and 

SBA Office of Advocacy should ensure agencies are following the spirit of SBREFA. 

There are instances where EPA and OSHA have declined to conduct a SBAR panel for 

a significant rule and/or a rule that would greatly benefit from small business input. 

Congress should also demand that agencies perfonm regulatory flexibility analyses and 

require agencies to list all of the less-burdensome alternatives that were considered. 

Each agency should provide an evidence-based explanation for why it chose a more7 
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burdensome versus less-burdensome option and explain how their rule may act as a 

barrier to entry for a new business. To this end, the Prove It Act of 2016, would help to 

overcome poor agency RFA certifications. The bill would require a third-party review 

when the agency and the SBA Office of Advocacy disagree on small business impact. If 

the disagreement occurs then the analysis would be turned over to the Office of 

Information and Regulatory Affairs for review and a determination as to whether the 

agency must perform a better RFA analysis. 

Conclusion 

Small businesses are the engine of our economy. Unfortunately, they also bear a 

disproportionate weight of government regulation. The effects of overregulation require 

an enormous expense of money and time to remain in compliance. The effort required 

to follow these and other regulations prevent small business owners from growing and 

creating new jobs. 

Thank you for holding this important hearing shining a light on the fact that regulations 

are a hidden "tax" on small businesses. I look forward to working with you on this and 

other issues important to small business. 

8 
30 

Chairman VITTER. Thank you very, very much, Ms. Milito. 

Now, we will hear from Mr. Knapp. 

STATEMENT OF FRANK KNAPP, JR., PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, SOUTH CAROLINA SMALL BUSINESS 

CHAMBER OF COMMERCE, COLUMBIA, SC 

Mr. KNAPP. Thank you, Chairman Vitter and members of the 

committee. My name is Frank Knapp. I am the President and CEO 

of the South Carolina Small Business Chamber of Commerce and 

Board Co-Chair of the American Sustainable Business Council, 

which through its network represents 200,000 businesses. 

Clean water—everyone in this room wants it, small business 

owners want it, and they understand that the way we protect it is 

through regulations. National scientific polling commissioned by 

the American Sustainable Business Council found plenty of support 

by small businesses with fewer than 100 employees to protect our 

waters. The survey showed that 80 percent supported the WOTUS 

rule, 62 percent agreed that government regulations are needed to 

prevent water pollution, and 61 percent believe that government 

safeguards for water are good for businesses and local communities. 

Now, there is no denying that any regulation will be a burden 

on small businesses directly impacted by the regulation. While we 

all want clean water, we want to achieve the goal of the Clean 

Water Act with as little burden as possible on small businesses. 

In 1980, Congress passed the bipartisan Regulatory Flexibility 

Act, which was supposed to solve the problem of excessive burden 

on small businesses while allowing for needed regulations. The 

RFA worked. 

Which brings us to the issue of the RFA and the WOTUS rule, 

which was intended to answer the loud call for clarification on 

what waters are and are not covered under the Clean Water Act. 

The EPA believed that it complied with the RFA, even though it 

did not conduct a Small Business Regulatory Enforcement Fairness 

Act panel. The Office of Advocacy disagrees. There are no bad federal agency actors here, only a significant disagreement that will 

be settled by the court. Should the EPA have conducted a SBREFA 

panel? The court will decide that. 

However, the reality is that the Clean Water Act is a very complex law making the regulations to implement it very complicated 

and controversial. While the promulgation of almost all other regulations is managed with little problem, WOTUS is an anomaly. 

Therefore, it certainly does not justify significant changes to the 

RFA and certainly not to the changes of which I have seen proposed by the House or Senate. The regulatory reforms being offered 

either add more federal agencies to be subject to the RFA or add 

more administrative duties and requirements to those agencies already covered by the RFA without any additional resources. 

The result is not going to benefit small businesses, which need 

fair, well crafted regulations produced in a timely fashion. Instead, 

the results will be better described as de-regulatory chaos. Federal 

agencies will take even longer than current years or even decades 

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31 

nesses will face even more uncertainty due to longer time needed 

to promulgate regulations and increased litigation. The reality is 

that there is nothing wrong with the RFA, but here is what needs 

to be done to allow it to work in today’s more complex and fast 

moving nation and government. 

First, we have created the public impression that all regulations 

are evil, and if we would just get rid of them, the economy will 

thrive. Cost is all the public hears, never the benefits of regulations. For example, the EPA and the Corps of Engineers estimate 

that permitting and mitigation costs under the WOTUS rule will 

increase by tens of millions annually. These are direct costs and 

some believe that indirect costs should also be reported. 

But there is no analysis showing how these direct costs are also 

direct benefits to the local economy because most of this money will 

go to local small businesses for goods and services. The money just 

does not disappear. It flows through the local economy directly and 

indirectly. 

The economic health and social benefits of rules put in terms of 

dollars is not considered by the Office of Advocacy and the regulatory agencies. Whether this is by statute or custom, this must 

change if we are to get truly accurate data to make rulemaking decisions and give the public complete information about the value of 

regulations. 

Second, everyone wants more outreach and better analysis of regulatory impact in promulgating a rule. So, let us invest in that. We 

have essentially starved the regulatory agencies and Advocacy 

while at the same time wanting both to do more. And then when 

the machine gets clogged up and controversial, we want to fix the 

wrong problem and make more problems. The RFA process we 

have today simply needs more resources so it can run more effectively and efficiently. 

Third, once a rule has been promulgated, and hopefully the burden on small businesses has been reduced as much as possible, the 

job of the Federal Government is not done. Small businesses need 

to be educated about the new rule, and when necessary, provided 

regulatory compliance assistance. Congress has also set up a process for this, not only within the regulatory agency, but also through 

the SBA Office of the National Ombudsman. 

Where the Office of Advocacy works on the front end of the development of significant regulations, the Office of the National Ombudsman is charged with helping small businesses on all regulation 

compliance on the back end. It serves as the conduit for small businesses to have their grievances about compliance problems or other 

issues with federal agencies heard directly by the agencies in question in an effort for successful resolution. In this way, the Office 

of the National Ombudsman and the agencies can detect patterns 

of compliance problems so that the agency can revisit the rule. 

This is an important part of the rulemaking process that is woefully underfunded and, thus, underutilized. If Congress really 

wants to help small businesses deal with the new federal regulations, invest more in the small businesses outreach, support, and 

feedback loop. 

Thank you for the opportunity to speak and I will be glad to answer any questions from the committee. 

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Statement by Frank Knapp, Jr. 

Before the Committee on Small Business & Entrepreneurship 

United States Senate 

"Drowning in Regulations: The Waters of the U.S. Rule and the Case for 

Reforming the RF A" 

April 27, 2016 

Thank you, Chairman Vitter, Ranking Member Shaheen and members of the committee. My 

name is Frank Knapp, Jr. I am the President and CEO of the South Carolina Small Business 

Chamber of Commerce, a statewide, 5,000+ member advocacy organization working to make 

state government more small business friendly. I am also the board co-chair of the 

American Sustainable Business Council which through its network represents 200,000 

businesses. ASBC advocates for policy change at the federal and state level that supports a 

more sustainable economy. 

We are here today to talk about the Waters of the United States rule and its impact on small 

businesses, the process that the Environmental Protection Agency undertook to promulgate 

that rule and whether WOTUS makes the case for reforming the Regulatory Flexibility Act. 

Let's start with clean water. Everyone in this room wants it. Small business owners want it 

and they understand that the way we protect it is through regulations. Regulations aren't put 

in place to punish some businesses but to protect all of them, and the public, from the 

behavior of some that can negatively impact everyone else. 

Ask the small businesses of Charleston, West Virginia, what happened to them after the 

2014 chemical spill in the Elk River that shut down their water supply and their businesses 

costing the local economy $19 million a day. Ask the small business owners in Wisconsin 

along Six Mile Creek and Lake Mendota what happened when 300,000 gallons of manure 

spilled in 2013 contributing to algae blooms, unpleasant odors and bacteria-tainted water 

that forced beach closings. 

That is the type of water pollution that worries Benjamin Bulis, President and CEO of the 

American Fly Fishing Trade Association, who testified before this committee almost a year 

ago in support of the Clean Water Act. His association supports protecting the headwaters 

of our nation and the fishing industry, which is made up of manufacturers, retailers, 

outfitters and guides to the tune of approximately 828,000 jobs with about an $115 billion 

economic impact every year. 
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And national, scientific polling' commissioned by American Sustainable Business Council 

found plenty of support by small businesses with fewer than 100 employees to protect our 

waters. The survey showed that So percent supported the Waters of the U.S. rule. Sixty-two 

percent agreed that government regulations are needed to prevent water pollution and 61% 

believe that government safeguards for water are good for businesses and local 

communities. Support for the clarification of federal rules under the Waters of the U.S. 

crossed political lines, with 78 percent of self-identified Republicans and 91 percent of selfdescribed Democrats supporting the rule. 

Now there is no denying that any regulation will be a burden on the small businesses 

directly impacted by the regulation. In the case of the Waters of the U.S. this burden is felt 

mostly by land owners and the agriculture, real estate, home builders, cattlemen, farmers 

and mining industries. While we all want clean water, we want to achieve the goal of the 

Clean Water Act with as little burden as possible on small businesses. 

In 1946 Congress passed the Administrative Procedure Act to address this issue. Then in 

1980 Congress passed the bi-partisan Regulatory Flexibility Act, which was supposed to 

solve the problem of excessive burden on small businesses while allowing for needed 

regulations. 

The RF A worked and we in South Carolina passed our own Regulatory Flexibility Act with 

the support of my organization and our state chamber and NFI B. That was twelve years ago 

and our all-volunteer South Carolina Small Business Regulatory Review Committee looks at 

every promulgated regulation to see how it might be amended to be less burdensome on 

small businesses. Very few problems are found and when they are the Committee has 

worked well with state agencies to resolve the issues. 

Which brings us to the issue of the RF A and the Waters of the U.S. rule. A rule that 

everyone apparently from the Court, to units of government, to the business community 

were calling for clarification on what waters are and are not covered under the Clean Water 

Act. 

The Environmental Protection Agency believed that it complied with the RF A when it 

certified that the new WOTUS rule would not have a significant negative impact on a 

substantial number of small businesses and therefore it did not conduct a Small Business 

Regulatory Enforcement Fairness Act, or SBREF A, panel. 

The Office of Advocacy, which is responsible for implementing the RF A and working with 

regulatory agencies to reduce the burden on small businesses, disagrees with EPA's 

decision and has asked the agency to withdraw the rule and conduct the SBREF A panels 

prior to promulgating the final rule. 

There are no bad federal agency actors here, only a significant disagreement that will be 

settled by the court. 

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But to both agencies' credit, even without the formal panels they reached out for comments 

from the small business community. The EPA personnel in Washington and around the 

nation have participated in over 400 meetings with numerous impacted industries, 

individual businesses, local government, NGOs, and other associations before promulgating 

WOTUS in April of 2014. The agency did take into consideration the comments and made 

adjustments to the final rule as a result. 

This significant outreach by EPA probably exceeded most regulatory outreach efforts. Even 

the Office of Advocacy might acknowledge this. 

In addition, on October 15,2015 the EPA convened a meeting of small entities for reviewing 

the new rule. The agency acknowledged that it was not intended to serve as a review panel 

under the RF A but stated in a summary report of the meeting that the "EPA is prepared to 

consider additional changes to the proposed rule in response to public comments, including 

any comments from small entities." It is important to point out that the organizations 

critical of the WOTUS rule do not have to wait for a SBREF A panel in order to achieve one 

of its objectives-offering alternative ways to lessen the burden on small businesses while 

meeting the goals of WOTUS. 

For its part, the Office of Advocacy has been active in the rulemaking process leading up to 

and after the release of the WOTUS rule. Since 2011 it has worked with the EPA and the 

Corps of Engineers in holding small entity roundtables and meeting small businesses. 

Advocacy's outreach has included almost 150 small businesses and their representatives. 

Based on the concerns it heard and its own analysis of the rule's expected impact, Advocacy, 

as previously noted, would like formal SBREF A panel conducted. 

Should the EPA have submitted to the RF A and conducted a SBREF A panel? The court will 

decide that. 

However, had it done so several outcomes might have occurred. WOTUS wouldn't be tied 

up in court at least on this issue so the process might have gone smoother and faster. There 

might have been some more mitigation in the rules to further reduce the burden on small 

businesses. Advocacy might have ended up supporting the rule. And we wouldn't be here 

today making the incorrect conclusion that WOTUS is the poster child for significant 

changes to the RF A. 

The reality is that the Clean Water Act is a very complex law making the regulations to 

implement it very complicated and controversial. While the promulgation of almost all 

other regulations is managed with little problem, WOTUS is unique. 

The Waters of the United States rule is an anomaly among all regulations. Therefore it 

certainly doesn't justify significant changes to the RF A-and certainly not the changes of 

which I have seen proposed in the House or Senate. 

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In his testimony last year to this committee, the Senior Executive Counsel of the NFIB Small 

Business Legal Center acknowledged that the purpose of the new WOTUS rule was to 

clarify the jurisdiction of the Clean Water Act. He stated that the "NFIB believes action by 

Congress is necessary to ultimately provide the type of clarification that would allow small 

business owners to operate without fear of unknowingly violating the CWA (Clean Water 

Act)." 

Just last week, the U.S. Chamber's Senior Vice President for Environment, Technology and 

Regulatory Affairs, in testimony to the Senate Committee on Homeland Security and 

Governmental Affairs concluded that the EPA is "the primary lawmaker on environmental 

issues, not Congress. This is a travesty and Congress must regain its role as the primary 

legislative body." 

But the regulatory reforms being offered are not designed to put Congress in charge of 

clarifying past laws or recapturing its primacy over the intent of regulations. 

Instead they either add more federal agencies to be subject to the RF A or add more 

administrative duties and requirements to those agencies already covered by the RF A 

without any additional resources. 

The result is not going to benefit small businesses which need fair, well-crafted regulations 

produced in a timely fashion. Instead the results will better be described as "deregulatory 

chaos". 

Federal agencies will take even longer than the current years or even decades to 

promulgate regulations, 

There will be even more avenues for opponents of regulations to delay regulations 

through litigation, 

Businesses will face even more uncertainty due to the longer time needed to 

promulgate regulations and increased litigation. 

The reality is that there is nothing wrong with the RF A as enacted in 1980. Some of the 

members of Congress that supported it at that time are still here today. They crafted a very 

good rulemaking process that worked well for a long time. Here is what needs to be done to 

allow it to work in today's more complex and fast-moving nation and government. 

Balance the Balance Sheet 

We have created a public impression that all regulations are evil and if we would just get rid 

of them the economy will thrive. That's the message the public hears but everyone here 

knows that regulations are needed for the benefits they yield. 

So why do we never see the benefits of regulations in any agency analysis? For example the 

EPA and the Corps estimate that permitting costs under the WOTUS rule will increase over 

$19 million annually and mitigation costs will rise over $59 million. These are direct costs 

and some believe that indirect costs should also be reported. But there is no analysis 

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showing how these direct costs are also direct benefits to the local economy because most of 

this money will be go to local small businesses for goods and services. The money doesn't 

just disappear. It flows through the local economy directly and indirectly. 

Even the U.S Chamber in its testimony to a Senate committee last week said that agencies 

are to analyze costs and benefits in the rulemaking process. The NFIB made a similar 

statement in its testimony last year. 

However, the positive side of the ledger is always blank when the potential impacts of 

regulations are analyzed. The economic, health and social benefits of rules put in terms of 

dollars is not considered by the Office of Advocacy and the regulatory agencies. Whether 

this is by statute or custom, this must change if we are to get a truly accurate data to make 

rulemaking decisions and give the public complete information about the value of 

regulations. 

Invest in Better Outreach and Analysis 

Everyone, including the critics of the rulemaking process, wants more outreach and better 

analysis of regulatory impact in promulgating a rule. So let's invest in that. We have 

essentially starved the regulatory agencies and Advocacy while at the same time wanting 

both to do more. And then when the machine gets clogged up and controversial we want to 

fix the wrong problem and make more problems. The RF A process we have today simply 

needs more resources so it can run more effectively and efficiently. If you want agencies to 

cross every T and dot every I in the RF A process, give them the resources to do it so they 

can both perform their everyday tasks and conduct the quality rule making analysis and 

outreach we all want. 

Help Small Businesses Understand the Rules and Provide Compliance Assistance 

Once a rule has been promulgated and hopefully the burden on small businesses has been 

reduced as much as possible, the job of the federal government is not done. Small 

businesses need to be educated about the new rule and, when necessary, provided 

regulatory compliance assistance. Congress has also set up a process for this, not only 

within every regulatory agency, but also through the SBA Office of the National 

Ombudsman. Where the Office of Advocacy works on the front end of the development of 

significant regulations, the Office of the National Ombudsman is charged with helping 

small businesses on all regulation compliance on the back end. It serves as the conduit for 

small businesses to have their grievances about compliance problems or other issues with 

federal agencies heard directly by the agencies in question in an effort for successful 

resolution. In this way the Office of the National Ombudsman and the agencies can detect 

patterns of compliance problems so that the agency can revisit the rule. 

5 
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This important component of the rulemaking process is woefully underfunded and thus 

underutilized. If Congress really wants to help small businesses deal with needed federal 

regulations, invest more in this small business outreach, support and feedback loop. 

In conclusion, the current regulation promulgating process can produce good rules while 

protecting small businesses from unnecessary burdens if we provide the adequate resources 

for agencies to expeditiously carry out the requirements Congress has already put in place 

on the front end and back end of the process. The WOTUS experience is an outlier not 

justifying all the regulatory reform proposals which, while achieving the agenda of some 

seeking to delay and stop some regulations, will inevitably fail to help the vast majority of 

small businesses. 

Thank you for the opportunity to speak before you today and I welcome any questions the 

committee may have. 

1 "Small Business Owners Favor Regulations to Protect Clean Water'' results from a scientific national phone poll of 

small business owners, July 2014, http:/ /asbcouncil.org/poll-small-business-owners#Water 

6 
38 

Chairman VITTER. Thank you. 

And now, Mr. Palmieri. 

STATEMENT OF ROSARIO PALMIERI, VICE PRESIDENT, 

LABOR, LEGAL, AND REGULATORY POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, DC 

Mr. PALMIERI. Chairman Vitter, Senator Ernst, it is an honor to 

testify before you today about the implementation of the Regulatory Flexibility Act. 

The U.S. is the world’s largest manufacturing economy, pro- ducing more than $2 trillion in value each year and directly employing nearly 12 million Americans and supporting 18 million jobs 

in the economy. Unfortunately, manufacturing jobs have not fully 

recovered since the last recession. We are still at a net loss of 1.5 

million jobs. And to regain manufacturing momentum and return 

to net manufacturing job gains, we need improved economic conditions and improved government policies. 

Excessive regulatory changes and uncertainty impose high costs, 

especially on small businesses, and small businesses bear a disproportionate burden of regulation because of the often high fixed 

costs of compliance not subject to economies of scale. That is why 

the work of this committee and the implementation of the Regulatory Flexibility Act are so important. And unfortunately, agencies 

are not anxious to analyze these impacts. 

A recent study showed that between 1996 and 2012, fewer than 

eight percent of rules were subject to the RFA’s analysis requirements. And although we hope that is because agencies were making excellent decisions, let me share a quick list of the most expensive EPA rules: EPA’s greenhouse gas limits on power plants; National Ambient Air Quality Standards for Ozone; Boiler MACT; 

NESHAP 6X; and certainly the one we have talked about the most 

today, the Waters of the U.S. rule. EPA has certified that each of 

them would not have a significant impact on a substantial number 

of small entities, and I think we—most of us would agree that that 

just is not the case. And I list several other examples from other 

agencies, and EPA is not alone in its avoidance of the requirements 

of the RFA. 

SBA’s Office of Advocacy has shared that it has saved small businesses $1.6 billion in first year regulatory cost savings and since 

1998 has saved $130 billion. Imagine what could have been accomplished if fewer rules could evade these requirements. 

Lawmakers have universally supported the RFA’s provisions, but 

Congress needs to strengthen the law and close the loopholes that 

agencies use to avoid its requirements. Among the reasons for the 

small number of regulations requiring this analysis for the exclusion of indirect effects, if an agency can claim it is not directly regulating small entities because it is regulating further up the supply 

chain or just regulating governments, it will not conduct an RFA. 

But this was not the original intent of the RFA. One of the original authors of the Act, Senator John Culver, a Democratic Senator 

from Iowa, clearly stated that the scope of the RFA included direct 

and indirect effects. Unfortunately, the courts disagreed and subsequent courts have found indirect effects to be outside the scope. 

But, this one change would bring many of the rules most costly to 

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39 

small businesses under the Act’s framework and result in significant cost savings for small businesses. 

An example of an entire class of regulations exempted from the 

RFA because of this are Clean Air Act rules establishing National 

Ambient Air Quality Standards. Despite the fact that even the EPA 

acknowledges these rules often cost hundreds of billions of dollars 

to implement, no small entities are directly affected by these rules 

simply because the Clean Air Act only directly regulates states, 

which in turn regulate small businesses. 

The simple clarification of law will have significant benefits to 

our small business economy, all the while ensuring the continued 

strong protection of air quality. After all, the RFA only requires the 

analysis of small entity impacts. It does not dictate how an agency 

will design its regulation. 

Since the RFA was modeled on the National Environmental Policy Act, its consideration of effects is also helpful to understanding 

the original intent of the authors of the legislation and what Congress passed it. NEPA’s implementing regulations define the term 

effect to mean direct effects and indirect effects which are caused 

by the action and are later in time or further removed in distance 

but are still reasonably foreseeable. 

The House has already passed legislation which would close 

many of the loopholes that agencies exploit to avoid the RFA’s requirements, including the addition of indirect effects within the 

scope of the law. The NAM encourages the Senate to take action 

on similar provisions to ensure these vital improvements. 

Senate and House proposals importantly also address regulatory 

look-backs through an improved Section 610 of the RFA. While we 

have appreciated the administration’s efforts on retrospective review of regulations, they have not resulted in significant cost savings or a change in culture in federal agencies. To truly build a culture of continuous improvement and thoughtful retrospective review of regulations, different incentives are needed. To incentivize 

these high-quality reviews, Section 610 must be reformed to clean 

up outdated or unnecessary regulatory accumulation. 

I appreciate the opportunity to testify today on behalf of manufacturers around the country and I applaud you for holding today’s 

hearing. I would be happy to respond to questions. 

[The prepared statement of Mr. Palmieri follows:] 

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Testimony 

of Rosario Palmieri 

Vice President, Labor, legal and Regulatory Policy 

National Association of Manufacturers 

before the Committee on Small Business and Entrepreneurship 

U.S. Senate 

on Drowning in Regulations: The Waters of the U.S. Rule and 

the Case for Reforming the RFA 

April27, 2016 
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TESTIMONY OF ROSARIO PALMIERI, VP, LABOR, LEGAL & REGULATORY POLICY OF 

THE NATIONAL ASSOCIATION OF MANUFACTURERS 

BEFORE THE 

COMMITIEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

U.S. SENATE 

APRIL 27, 2016 

Chairman Vitter, Ranking Member Shaheen and members of the Committee on Small 

Business and Entrepreneurship, thank you for the opportunity to testify about federal regulations 

and how the rulemaking process impacts U.S. small businesses, particularly small 

manufacturers. 

My name is Rosario Palmieri, 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 appreciate your attention to the regulatory burdens that 

are impacting their competitiveness and growth. In particular, we thank the chairman for his 

efforts to increase agencies' sensitivity to regulatory effects on small businesses. 

I. Manufacturing in the United States 

Manufacturing in the United States lost 2.3 million jobs in the last recession. Since then, 

we have gained back 802,000 manufacturing jobs. To maintain momentum and encourage 

hiring, the United States needs not only improved economic conditions but also government 

policies more attuned to the realities of global competition. 

Manufacturing has the highest multiplier effect of any economic sector. For every $1.00 

spent in manufacturing, another $1.40 is added to the economy. Manufacturers in the United 

States contributed $2.17 trillion to the economy (or 12 percent of GOP) and support an 

estimated 18.5 million jobs in the United States-about one in six private-sector jobs. In 2014, 

the average manufacturing worker in the United States earned $79,553 annually, including pay 

and benefits-24 percent more than the average worker. 

Nearly 95 percent of all manufacturers in the United States have fewer than 100 

employees, and the Small Business Administration (SBA) defines a small manufacturer as a 

firm with fewer than 500 employees. To compete on a global stage, manufacturers in the United 

States need policies that enable them to thrive and create jobs. Growing manufacturing jobs will 

strengthen the U.S. middle class and continue to fuel America's economic recovery. 

Manufacturers appreciate the committee's focus on ways to reduce the regulatory burden 

imposed on small businesses. Unnecessarily burdensome regulations place manufacturers of 

all sizes at a competitive disadvantage with our global counterparts. 
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II. The Cost of Regulatory Burdens Facing Manufacturers 

Because manufacturing is such a dynamic process, involving the transformation of raw 

materials into finished products, it involves more environmental and safety regulations than in 

other businesses. In September 2014, the NAM issued a report' that shows the economic 

of federal regulations. The report found that manufacturers in 2012 spent on average 

employee to comply with regulations, double the amount employee for 

ous:me,ssE!S (see Figure 1 ). The smallest with than 50 

em,p;ovet,S--Incur regulatory costs of $34,671 per employee per year. This is more than triple 

average U.S. business. 

Figure 1: Regulatory Compliance Costs per Employee per Year, 2012 (in 2014 Dollars) 

$40,000 

$30,000 

$20,000 

$10,000 

$0 

All Firms < 50 Employees 50-99 Employees 100+ Employees 

j!I!Manufacturers IIIAIJ U.S. Businesses 

The burden of environmental regulation falls disproportionately on manufacturers, and it 

is heaviest on small manufacturers because their compliance costs often are not affected by 

economies of scale (see 2). Manufacturers recognize that regulations are to 

health safely, but we need a regulatory system that effectively meets 

supporting innovation and economic growth. In recent years, the scope and 

complexity of federal rules have made it harder to do business and compete in an everglobal economy, As a result, manufacturers are sensitive to regulatory measures that 

benefit and cost justifications. 

In October 2013, the Manufacturers Alliance for Productivity and Innovation 

released an updated study2 that highlighted the regulatory burdens placed on m~'n"'"r''"''"'~ 

The study found that since 1981, the federal government has issued an average of just under 

1.5 manufacturing-related regulations per week for more than 30 years. Individually and 

cumulatively, these regulations include significant burdens imposed on manufacturers in the 

United States and represent real compliance costs that affect our ability to expand and hire 

workers. 

2 
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Manufacturers, particularly small manufacturers, know very well the importance of 

allocating scarce resources effectively to achieve continued success, which includes increased 

pay and benefits for employees. Every dollar that a company spends on complying with an 

unnecessary and ineffective regulatory requirement is one less dollar that can be allocated 

toward new equipment or to expand employee pay and benefits. Government-imposed 

inefficiencies are more than numbers in an annual report. They are manifested in real costs 

borne by the men and women who work hard to provide for their families. In a Federal Reserve 

Bank of Philadelphia report released this month, nearly 7 4 percent of manufacturing leaders in 

the region said that their state and federal regulatory compliance costs had increased over the 

past few years, with no one noting declines in !his trend. In addition, they devoted 5.8 percent of 

their capital spending costs to regulatory compliance on average, more than what was spent on 

data and network security ( 4. 7 percent) or physical security (2. 8 percent)3 

Figure 2: Environmental Regulatory Compliance Costs per Employee per Year, 2012 

(in 2014 Dollars) 

All 

U.S. Businesses 

All 

Manufacturers 

1111 Other %! Environmental 

Manufacturers, 

< 50 Employees 

Agencies are failing in their responsibility to conduct analysis that would better assist 

them in understanding the true benefits and costs of their rules. Despite existing statutory 

requirements and clear directives from the president to improve the quality of regulations, 

manufacturers face an increasingly inefficient and complex myriad of regulations that place 

unnecessary costs on the public. Our regulations should be designed to most effectively meet 

regulatory objectives while minimizing unnecessary burdens. 

IlL Regulatory Environment 

Our regulatory system is in need of considerable improvement and reform. New 

regulations are too often poorly designed and analyzed and ineffectively achieve their benefits. 

They are often unnecessarily complex and duplicative of other mandates. Their critical inputsscientific and other technical data-are sometimes unreliable and fail to account for significant 

uncertainties. Regulations are allowed to accumulate with no real incentives to evaluate existing 

requirements and improve effectiveness. In addition, regulations many times are one-size-fits-all 

without the needed sensitivity to their impact on small businesses. We can do better. 

Unnecessary regulatory burdens weigh heavily on the minds of manufacturers. In the 

NAM Manufacturers' Outlook Survey for the first quarter of 2016, 73 percent of respondents 

3 Manufacturing Business Outlook Survey (April2016), Federal Reserve Bank of Philadelphia, 

www.philadelphiafed.org/manufacturing-BOS 

3 
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cited an unfavorable business climate due to government policies, including regulations and 

taxes, as a primary challenge facing businesses-up from 62.2 percent in March 2012. 

The federal government's own data reflect these challenges. According to the annual 

information collection budget, the paperwork burden imposed by federal agencies, excluding the 

Department of Treasury, 4 increased from 1.509 billion hours in fiscal year (FY) 2003 to 2.446 

billion hours in FY 2013, an increase of 62.1 percent (see Figure 3). In other words, federal 

agencies-excluding the Department of Treasury-imposed more than 279,000 years' worth of 

paperwork burden on the American public in FY 2013.5 

These are challenges to prosperity, job growth and competitiveness that federal 

regulators are placing on manufacturers and other businesses in the United States. For the 10 

years ending in FY 2013, which is the last year of available data, federal agencies (excluding 

the Department of Treasury) added almost 82 million hours in paperwork burden through their 

own discretion. This is on top of the 1.121 billion hours that non-Treasury agencies estimate 

was added because of new statutory requirements. 

Figure 3: Government-Wide Paper Burden, Excluding the Department of Treasury 

2.500 

2,000 

Burden 1 

•

500 

Hours 

(Millions) 1,

000 

500 

0 

2012 

1980 198219841986198819801992198419961998 2000 2002 2004 2006 2008 20102012 

Fiscal Year 

Manufacturers appreciate the need for recordkeeping and paperwork essential to 

ensuring compliance with important regulatory requirements, but government-imposed 

regulatory burdens continue to increase despite advancements in technology and both statutory 

and executive branch directives that federal agencies minimize unnecessary burdens. 

As the modern federal regulatory state expanded, Congress grew increasingly 

concerned about the significant regulatory and paperwork burdens imposed on the public, 

particularly small businesses. In September 1980, the Regulatory Flexibility Act (RFA) was 

4 The Department of Treasury's burden estimates include the Internal Revenue Service and account for 75 percent of 

the total federal public burden imposed. Treasury's burden increased from 6.590 billion hours in FY 2003 to 7.007 

billion hours (or 6.3 percent) in FY 2013. See Office of Information and Regulatory Affairs (OIRA), "Information 

Collection Budget of the United States Government." https://www.whitehouse.gov/omb/inforeg_infocoll#icr. 5 1n FY 2013, federal agencies excluding the Department ofTreasury imposed the equivalent of 7.7 hours of 

regulatory burden for every person in the United States. In FY 2003, per-person regulatory burden was 5.2 hours 

annually. This demonstrates that the increase in regulatory burden is far outpacing population growth. Population 

estimates available from the U.S. Census Bureau, https:/lwww.census.gov/popestldata/historical/2000slindex.html. 

4 
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signed into law and requires federal agencies to thoughtfully consider small businesses and 

other small entities when developing regulations. If an agency determines that a regulation is 

likely to have "significant economic impact on a substantial number of small entities," the agency 

must engage in additional analysis and seek less burdensome regulatory alternatives. In 

addition to requiring improved regulatory analysis to better determine the small entity impact, 

the RFA attempted to improve public participation in rulemaking by small businesses. It also 

requires agencies to publish an agenda semiannually listing expected rulemakings that would 

impact small businesses and to conduct "lookback" reviews-required under Section 610 of the 

law-of regulations that affect small entities to identify rules in need of reform. 

Despite the statutory requirements of the RFA and other reform measures, federal 

regulatory burdens continue to increase every year. Congress amended the RFA with passage 

of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996. Importantly, 

SBREFA requires the Environmental Protection Agency (EPA) and the Occupational Safety and 

Health Administration (OSHA) to empanel a group of small business representatives to help 

consider a rule before it is proposed. In recognizing the importance of the SBREFA panel 

process, the 111th Congress expanded this requirement to include the new Consumer Financial 

Protection Bureau when it passed the Dodd-Frank Wall Street Reform and Consumer Protection 

Act. 

There have also been presidential directives aimed at improving the regulatory state. 

The NAM welcomed efforts by President Barack Obama to reduce regulatory burdens. The 

president has signed executive orders, and the Office of Management and Budget (OMS) has 

issued memoranda on the principles of sound rulemaking, considering the cumulative effects of 

regulations, strengthening the retrospective review process and promoting international 

regulatory cooperation. Unfortunately, these initiatives have yet to provide real cost reductions 

for manufacturers or other regulated entities. 

The directives to reduce regulatory burdens are well-intentioned, but any benefits 

realized by these efforts have been subsumed by the unnecessarily burdensome regulations 

that federal agencies have been and are promulgating. Based on data from the Government 

Accountability Office,6 578 major new regulations-defined as having an annual effect on the 

economy of at least $100 million-have been issued by the current administration. A new major 

regulation has been issued by the current administration once every 4.55 days. Manufacturers 

and other regulated entities have confronted nearly 20 more major regulations per year from the 

Obama administration than during the Bush administration (see Figure 4). 

6 U.S. Government Accountability Office, Congressional Review Act Overview, 

http://www.gao.gov/legal/congressional-review-actloverview. 

5 
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Figure 4: Major Regulations per Year, Through 2015 

Bush Administration Obama Administration 

Regardless of the political party in charge, these regulations include significant burdens 

imposed on manufacturers and other small businesses and represent real compliance costs that 

affect our ability to expand and hire workers. There are numerous examples that highlight the 

regulatory challenges that manufacturers confront (see Attachment A). The additional costs of 

these regulations are added to the already significant cumulative burdens of existing regulations 

imposed on manufacturers and other businesses. There is a failure within the federal 

government to truly understand the impact of regulatory requirements, such as paperwork and 

recordkeeping, especially on small businesses. 

IV. Reducing Regulatory Impediments 

Manufacturing in America is gaining momentum, but it could be much stronger if federal 

policies did not impede growth. If we are to succeed in creating a more competitive economy, 

we must reform our regulatory system so that manufacturers can innovate and make better 

products instead of spending hours and resources complying with inefficient, duplicative and 

unnecessary regulations. Manufacturers are committed to commonsense regulatory reforms 

that protect the environment and public health and safety as well as prioritize economic growth 

and job creation. 

Manufacturers support reform proposals, such as efforts put forth by Chairman Vitter, to 

strengthen the RFA and to ensure regulators are sensitive to the burdens placed on small 

businesses. The RFA's requirements are especially important to improving the quality of 

regulations and have saved billions of dollars in regulatory costs for small businesses. In 

January 2016, the SBA's Office of Advocacy-an independent office helping federal agencies 

implement the RFA's provisions-issued its annual report indicating that it helped save small 

businesses more than $1.6 billion in FY 2015 in first-year cost savings. Since 1998, the Office of 

Advocacy indicates that the RFA has yielded nearly $130 billion in savings for small businesses. 

Imagine the positive impact on regulations if agencies were not able to avoid the RFA's 

requirements so easily. 

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a. Increase Sensitivity to Small Business 

The RFA requires agencies to be sensitive to the needs of small businesses when 

drafting regulations. Among a number of procedural requirements, agencies must consider less 

costly alternatives for small businesses and prepare a regulatory flexibility analysis when 

proposed and final rules are issued. Lawmakers have universally supported the RFA's 

provisions, but Congress needs to strengthen the law and close loopholes that agencies use to 

avoid its requirements. 

Unfortunately, agencies are able to avoid many important RFA requirements by simply 

asserting that a rule will not impact small businesses significantly. A recent analysis in the 

Administrative Law Review shows that agencies avoided the requirement of the RFA for more 

than 92 percent of rules issued between the fall regulatory agendas of 1996 and 2012.7 

Attachment A of my testimony outlines some of the most significant regulatory challenges 

currently facing small manufacturers, and most of those rules failed to conduct any small entity 

analysis or were deficient in significant ways. Among the reasons for this small number of 

regulations requiring a regulatory flexibility analysis is the exclusion of "indirect effects." One of 

the original authors of the RFA, Sen. John Culver (D-IA), intended that the scope of the RFA 

include direct and indirect effects.• Unfortunately, the U.S. Court of Appeals for the D.C. Circuit 

in 19859 disagreed, and subsequent courts have found "indirect effects" to be outside the scope 

of the RFA. This one change in the RFA would bring many of the rules most costly to small 

businesses under the act's framework and result in significant cost savings for small 

businesses. One example of an entire class of regulations exempted from the RFA because of 

this decision are Clean Air Act rules establishing National Ambient Air Quality Standards. 

Despite the fact that even the EPA acknowledges these rules often cost hundreds of billions of 

dollars to implement, no small entities are "directly effected" by these rules-simply because the 

Clean Air Act only directly regulates states which, in turn, regulate small businesses. This 

simple clarification to the law will have significant benefits to our small business economy, all 

the while ensuring the continued strong protection of air quality. After all, the RFA only requires 

the analysis of small entity impacts; it does not dictate how an agency will design its regulation. 

Since the RFA was modeled on the National Environmental Policy Act (NEPA), its consideration 

of effects is also helpful to understanding the original intent of the authors of the legislation and 

the Congress that passed the law. The NEPA's implementing regulations define the term 

"effect" to mean "direct effects" and "indirect effects," which are caused by the action and are 

later in time or further removed in distance but are still reasonably foreseeable. 10 

The House has already passed legislation-the Small Business Regulatory Flexibility 

Improvements Act of 2015 (H.R. 527), introduced by House Small Business Committee 

Chairman Steve Chabot (R-OH)-which would close many of the loopholes that agencies 

exploit to avoid the RFA's requirements, including the addition of indirect effects within the 

scope of the law. The NAM encourages the Senate to take action on similar provisions to 

ensure vital improvements to the RFA are achieved in this Congress. Agency adherence to the 

RFA's requirements is important if regulations are to be designed in a way that protect the 

public, workers and the environment without placing unnecessary burdens on small businesses. 

Through careful analysis and an understanding of both intended and unintended impacts on 

7 See Connor Raso, Agency Avoidance of Rulemaking Procedures, 67 ADMIN. L. REv. 65, 69, 99 (2015) (identifying 

only 1,926 rules out of 24,787 as having completed RFA analyses). 8 126 Gong. Rec. 21,456 (1980). 9 Mid-Tex Elec. Coop. v. FERC, 773 F.2d 327, 342-43 (D.C. Cir. 1985). 

1o 40 C.F.R. § 1508.8. 

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stakeholders, agencies can improve their rules for small entities, leading to improved 

regulations for everyone. 

b. Streamline Regulations Through Periodic Review. Section 610 

Section 610 of the RFA requires that agencies periodically review rules to determine 

significant impacts to small entities. The intent of Congress is clear: 5 U.S. C. §610(a) states, 

" ... The purpose of the review shall be to determine whether such rules should be continued 

without change, or should be amended or rescinded, consistent with the stated objectives of 

applicable statutes, to minimize any significant economic impact of the rules upon a substantial 

number of such small entities .... " 

Through a thoughtful examination of existing regulations, we can improve the 

effectiveness of both existing and future regulations. Importantly, retrospective reviews could 

provide agencies an opportunity to analyze, revise and improve techniques and models used for 

predicting more accurate benefit and cost estimates for future regulations. 

For an agency to truly understand the effectiveness of a regulation, it must define the 

problem that the rule seeks to modify and establish a method for measuring its effectiveness 

after implementation. In manufacturing, best practices include regular reprioritizations and 

organized abandonment of less useful methods, procedures and practices. The same mentality 

should apply to regulating agencies: the periodic review process should be the beginning of a 

bottom-up analysis of how agencies use their regulations to accomplish their objectives. 

The current administration strongly promotes the benefits of conducting retrospective 

reviews. Executive Order 13563 directs agencies to conduct "retrospective analysis of rules that 

may be outmoded, ineffective, insufficient or excessively burdensome, and to modify, 

streamline, expand or repeal them in accordance with what has been learned." Retrospective 

review of regulations is not a new concept, and there have been similar initiatives over the past 

40 years. In 2005, the OMB, through the OIRA, issued a report, titled "Regulatory Reform of the 

U.S. Manufacturing Sector." That initiative identified 76 specific regulations that federal agencies 

and the OMB determined were in need of reform. In fact, the NAM submitted 26 of the 

regulations characterized as most in need of reform. Unfortunately, like previous reform 

initiatives, the 2005 initiative failed to live up to expectations, and despite efforts by federal 

agencies to cooperate with stakeholders, the promise of a significant burden reduction through 

the review of existing regulations never materialized. 

To truly build a culture of continuous improvement, the periodic review process must be 

strengthened. The power of inertia is very strong. Without an imperative to review old 

regulations, it will not be done, and we will end up with the same accumulation of conflicting, 

outdated and often ineffective regulations that build up over time. These types of systems need 

to be reinforced throughout the government to ensure regulatory programs are thoughtful, 

intentional and meet the needs of our changing economy. 

As Michael Greenstone, former chief economist at the Council of Economic Advisers 

under President Obama, wrote in 2009, "The single greatest problem with the current system is 

that most regulations are subject to a cost-benefit analysis only in advance of their 

implementation. That is the point when the least is known, and any analysis must rest on many 

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unverifiable and potentially controversial assumptions."" Retrospective review of existing 

regulations should include a careful and thoughtful analysis of regulatory requirements and their 

necessity as well as an estimation of their value to intended outcomes. 

c. Hold Independent Regulatory Agencies Accountable 

The president does not exercise similar authority over independent regulatory agencies, 

such as the Federal Communications Commission, the National Labor Relations Board (NLRB), 

the Securities and Exchange Commission (SEC) and the Consumer Product Safety 

Commission (CPSC), as he does over other agencies within the executive branch. Independent 

agencies are not required to comply with the same regulatory principles outlined in executive 

orders and OMS guidance as executive branch agencies and often fail to conduct any analysis 

to determine expected benefits and costs. 

Independent regulatory agencies are required to comply with the RFA, however, as 

Congress clearly intended that these agencies stand accountable and thoughtfully consider 

impacts of their rules on small businesses. Since independent regulatory agencies are not 

accountable to the OIRA nor do they participate in interagency review of their rules, 

accountability mechanisms to ensure executive branch agency compliance with the RFA do not 

exist for them. A stronger RFA is necessary because the courts are the only backstop to 

noncompliance by independent agencies. 

d. Enhance the Abilities of Institutions to Improve the Quality of Regulations 

The SBA's Office of Advocacy plays an important role in ensuring that agencies 

thoughtfully consider small entities when promulgating regulations. When Congress created the 

office in 1976, it recognized the need for an independent body within the federal government to 

advocate for those businesses most disproportionately impacted by federal rules. The office 

helps agencies write better, smarter and more effective regulations. We urge Congress to 

support this office and provide it with the resources it needs to carry out its important work. 

V. Conclusion 

Chairman Vitter, Ranking Member Shaheen and members of the committee, thank you 

for the opportunity to testify today and your attention to these issues. Manufacturers believe that 

reforms to strengthen the RFA are necessary to create smarter regulations and minimize 

unnecessary burdens imposed on small businesses and others. The regulatory system can be 

improved while still enhancing our ability to protect health, safety and the environment. 

In his January 2011 Memorandum on Regulatory Flexibility, Small Business and Job 

Creation, 12 President Obama established a goal "to eliminat[e] excessive and unjustified 

burdens on small businesses and to ensur[e] that regulations are designed with careful 

consideration of their effects, including their cumulative effects, on small businesses." However, 

that goal gets farther from our reach with the regulatory onslaught that businesses in this 

country must endure. 

11 Michael Greenstone. "Toward a Culture of Persistent Regulatory Experimentation and Evaluation," in David Moss 

and John Cisternino, eds., New Perspectives on Regulation, The Tobin Project, 2009, p. 113, 

http://tobinproject.orglsites/tobinproject.org/files/assets/New_Perspectives_Ch5_Greenstone.pdf. 

1

2 76 Fed. Reg. 3827 

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Manufacturers are committed to working toward policies that will restore common sense 

to our broken and inflexible regulatory system. Too many regulations that have significant 

effects on small businesses escape the RFA's requirements because unchallenged traditions 

enable agencies to exploit loopholes. The RFA must be strengthened to ensure all agencies 

carefully consider unintended impacts and costs and are sensitive to the needs of small 

businesses. The NAM urges the committee to move forward with legislation expeditiously. Jobs 

and growth for small manufacturers depend on your efforts. 

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Attachment A: Regulatory Challenges for Manufacturers 

Compliance with the RFA is underlined for each rule where applicable. 

a. Existing Regulations 

The Department of Labor's (DOL) OSHA: Occupational Exposure to Crystalline Silica 

(78 Fed. Reg. 56274). OSHA finalized the crystalline silica rule on March 25, reducing by half 

the permissible exposure limits for crystalline silica and mandates extensive and costly 

engineering controls. It also will require employers to provide exposure monitoring, medical 

surveillance, work area restrictions, clean rooms and recordkeeping. The proposal is based on 

outdated data and would impact 534,000 businesses and 2.2 million workers. The costs of this 

proposal could far exceed its benefits. An analysis by engineering and economic consultants 

estimated that the silica rule would impose $5.5 billion in annualized compliance costs on 

affected industries. Silica is perhaps the most common construction and manufacturing material 

in the world; it is a critical component in many manufacturing, construction, transportation, 

defense and high-tech industries and is present in thousands of consumer products. OSHA's 

estimate relies upon data from a SBREFA panel that examined a draft rule in 2003, more than 

13 years ago. Since 2003, significant changes in the economy and technological advances 

made in personal protective eguipment demonstrate that the proposed changes are 

unnecessarv and overly burdensome. During the rule's comment period and until it was made 

final in late March, the NAM and other industry stakeholders repeatedly asked OSHA to 

convene a new SBREFA panel so the most current analysis of costs and other impacts may be 

considered. These reguests were rejected. Manufacturers will now be faced with a new 

regulation that could force some of our members to shut their doors. 

The DOL's Office of Labor-Management Standards: Interpretation of the "Advice" 

Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act 

(Persuader Rule) (81 Fed. Reg. 15924). On March 23, the DOL published its final persuader 

rule, which provides sweeping changes to the rules that administer the Labor-Management 

Reporting and Disclosure Act. The agency drastically expanded the definition of "persuader" 

activity on how employers can seek advice regarding labor-organizing activities and when an 

entity will have to disclose information to the department. Under the old rules, only those entities 

that had direct contact with employees regarding labor-organizing campaigns would have to 

disclose their activity to the DOL Under the new rule, however, even those consultants who 

have no face-to-face contact with employees and are educating employers on rights to organize 

and bargain collectively will have to report to the DOL as persuaders. The only exception to the 

new definition is if an entity or consultant is only giving advice to the employer (this would 

include lawyers). These changes would make it more difficult for manufacturers, especially 

smaller-sized manufacturers, to educate employees on union campaigns or to seek additional 

information on what is permitted for discussion under the law. During attempted RFA analysis. it 

was determined that economic impacts to small entities would follow: however. the department 

stated that it would not have significant impacts on a substantial number of small entities, and 

therefore. a full RFA analysis was unnecessary. 

EPA: Greenhouse Gas (GHG) Emission Limits for Existing Electric Utilities (80 Fed. 

Reg. 64510). The EPA finalized its much-publicized carbon pollution standard for existing power 

plants on October 23, 2015, setting first-of-their-kind performance standards for GHG emissions 

from existing power plants. The EPA's rule will fundamentally shift how electricity is generated 

and consumed in this country, effectively picking winners and losers in terms of both 

technologies and fuels. The rule also represents an attempt to vastly expand the EPA's 

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traditional authority to regulate specific source categories by setting reduction requirements that 

reach into the entire electricity supply-and-demand chain. The requirements will be substantial, 

potentially costing billions of dollars per year to comply. Some studies estimate that compliance 

with the rule would cost well over $300 billion and cause double-digit electricity price increases 

for ratepayers in most states. Manufacturers are concerned about these potential costs and 

reliability challenges as electric power fleets are overhauled in compliance with the regulations. 

Manufacturers are also keenly aware that the EPA is using this regulation as a model for future 

direct regulations on other manufacturing sectors-meaning manufacturers could potentially be 

hit twice by GHG regulations. Interestingly, the EPA asserts that its final rule "will not have a 

significant economic impact on a substantial number of small entities." The regulation is 

currently stayed by the Supreme Court until litigation is resolved. Thirty-four senators and 171 

members of the House filed a brief pointing out the many legal and policy shortcomings of the 

EPA's rules on February 23, 2016, and currently 27 states are party to the legal challenge. 

EPA: National Ambient Air Quality Standards (NAAQS) for Ozone (80 Fed. Reg. 65292). 

On October 1, 2015, the EPA finalized a more stringent NAAQS at 70 parts per billion (ppb), 

from the previous standard of 75 ppb. More than 60 percent of the controls and technologies 

needed to meet the rule's requirements are what the EPA called "unknown controls." Because 

controls are not known, the new standard may result in the closure of plants and the premature 

retirement of equipment used for manufacturing, construction and agriculture. The proposal 

could reduce GOP by $140 billion annually and eliminate 1.4 million job equivalents per year. In 

total, the costs of complying with the rule from 2017 through 2040 could top $1 trillion, making it 

the most expensive regulation ever issued by the U.S. government. The previous standard of 75 

ppb-the most stringent standard ever-was never even fully implemented, while emissions are 

as low as they have been in decades and air quality continues to improve. The EPA itself 

admitted that implementation of the previous standard of 75 ppb, when combined with the 

dozens of other regulations on the books that will reduce ozone precursor emissions from 

stationary and mobile sources, will drive ozone reductions below 75 ppb (and close to 70 ppb) 

by 2025. The massive costs of a stricter standard-the most expensive regulation of all time, by 

a significant margin-was simply not necessary. As with GHG emission limits. the EPA states 

that the final rule "will not have a significant economic impact on a substantial number of small 

entities." 

EPA: Emission Standards for Industrial, Commercial and Institutional Boilers and 

Process Heaters (Boiler MACT) (78 Fed. Reg. 7138). In January 2013, the EPA published its 

final Boiler MACT (maximum achievable control technology) rule. The NAM and business and 

environmental groups filed legal challenges in a federal appeals court, and the agency received 

10 petitions for reconsideration, including one filed by the NAM that also requested 

reconsideration of related rules involving air pollutants for area sources (Boiler GACT, or 

generally available control technology) and commercial and solid waste incineration units. The 

EPA estimates that the MACT portion of the rule alone will impose capital costs of near $5 

billion, plus $1.5 billion more in annual operating costs. The NAM will continue to advocate 

achievable and affordable Boiler MACT regulations. While the rule itself has improved over time, 

there are still flaws and unsettled legal and regulatory issues that impose significant costs and 

uncertainty for manufacturers. In the final rule notice. the EPA expressed concerns over 

"potential small entity impacts." However. the agency determined that. since it had conducted 

regulatorv flexibility analysis for a different but related rule. it did not need to conduct similar 

analysis for this extremely costly rule. 

EPA: National Emission Standards for Hazardous Air Pollutants: Area Source Standards 

for Nine Metal Fabrication and Finishing Source Categories (NESHAP 6X) (73 Fed. Reg. 

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42978). The NESHAP 6X regulations became effective July 23, 2008, for new sources and July 

25, 2011, for existing sources. NESHAP 6X is an air toxics regulation on metal fabrication and 

finishing operations (i.e., welding). Among other requirements, NESHAP 6X requires ongoing, 

indefinite, quarterly visual emissions monitoring for welding operations and for abrasive blasting 

operations, even after months or years of "zero visible emissions" have been recorded. As one 

might expect. the EPA certified that the rule "will not have a significant economic impact on a 

substantial number of small entities." 

EPA and the Anny Corps of Engineers: Definition of "Waters of the United States" 

Under the Clean Water Act (80 Fed. Reg. 37054). On May 27,2015, the EPA and Army Corps 

of Engineers finalized a rule to greatly extend federal jurisdiction of Clean Water Act programs 

well beyond traditional navigable waters to tributaries, flood plains, adjacent waters and vaguely 

defined "other waters." The rule gives federal agencies direct authority over land-use decisions 

that Congress had intentionally reserved to the states. Its vague definitions subject countless 

ordinary commercial, industrial and even recreational and residential activities to new layers of 

federal requirements under the Clean Water Act. For manufacturers, the uncertainty of whether 

a pond, ditch or other low-lying or wet area near their property is now subject to federal Clean 

Water Act permitting requirements is a regulatory nightmare, which can introduce new upfront 

costs, project delays and threats of litigation. As of October 9, 2015, the rule has been stayed 

nationwide by the U.S. Court of Appeals for the Sixth Circuit, pending resolution of litigation. 

When one considers the number of small manufacturers and farmers that this rule will impact. it 

is confounding that the EPA certified that the rule will not have a significant economic impact on 

a substantial number of small entities. 

Interagency Working Group on Social Cost of Carbon: Technical Suppot1 Document, 

Social Cost of Carbon for Regulatory Impact Analysis. In May 2013, the administration 

increased its estimates of the "social cost" of emitting carbon dioxide (C02) into the atmosphere 

(i.e., social cost of carbon). As a result, the new estimates allow agencies to greatly increase the 

value of benefits of regulations that target or reduce C02 emissions. The process for developing 

the social cost of carbon estimates was not transparent and failed to comply with OMB 

guidelines and information quality obligations. Many of the inputs to the models were not subject 

to peer review, and the interagency working group that developed the new estimates failed to 

disclose and quantify key uncertainties to inform decision makers and the public. Despite wide 

public concern over the new estimates, agencies are using them to justify the costs of many of 

the costliest federal regulations. The OMB public comment period initiated at the end of 2013 

yielded significant concerns by stakeholders that have never been adequately addressed, and 

federal agencies continue to rely on the 2013 social cost of carbon estimates that were 

developed and finalized without any public participation. Guidance documents are not subject to 

the RFA. 

NLRB: Ambush Elections (79 Fed. Reg. 74308). On Apri114, 2015, the NLRB's "ambush 

elections" rule became effective. The new rule shortens the time in which a union election can 

take place to as little as 14 days and limits allowable evidence in pre-election hearings. The 

NLRB provided no evidence supporting the dramatic change in policy. Business owners would 

effectively be stripped of legal rights ensuring a fair election, and those who lack resources, or 

in-house legal expertise, will be left scrambling to hastily navigate and understand complex 

labor processes. The compressed time frame for elections could deny employees the 

opportunity to make fully informed decisions about unionization. The rule also requires all 

employers to turn over their employees' personal e-mail addresses, home and personal cell 

phone numbers, work locations, shifts and job classifications to union organizers. Employees 

have no say in whether their personal information can be disclosed, and the recipient of the 

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personal information has no substantive legal responsibility to safeguard and protect workers' 

sensitive information. The rule also provides no restriction on how the private information can be 

used, and employees have no legal recourse to hold accountable an outside group that 

compromises this important private information. Surprisingly. the Board determined that there 

would be no significant impact on small entities as the RFA would only require they determine 

the direct burden of compliance associated in cases of representation elections, and not that 

they consider the indirect cost associated with the rule impacting all companies that would hire 

legal advice to stay informed or ensure compliance. 

NLRB: Joint-Employer Standard (Browning-Ferris Industries of California. Inc. (362 

NLRB No. 186)). On August 27, 2015, the NLRB issued a decision in the Browning-Ferris 

Industries, Inc. case, which redefines the 30-year-old joint-employer standard, calling into 

question what type of relationship one employer has with another. The previous standard 

deemed businesses joint employers only when they share direct and immediate control over 

essential terms and conditions of employment, including hiring, firing, discipline, supervision and 

direction. Now, however, manufacturers who contract out for any product or service with another 

company could find themselves in a joint-employer relationship triggering responsibility for 

collective bargaining agreements and other parts of the National Labor Relations Act. The 

previous standard is one that all industries understood and had been operating with for more 

than 30 years. Due to the fact that there has been no change in circumstance in the business 

community, the change in this standard is unjustified. Manufacturers will now have to reanalyze 

all business relationships and how they do business in the future. NLRB adjudicatory decisions, 

even those with widespread effect on businesses. are not subject to the RFA. 

b. Currently Proposed Regulations 

CPSC: Mandatory Standard for Recreational Off-Highway Vehicles (79 Fed. Reg. 

68964). In October 2014, the CPSC proposed a mandatory standard for recreational offhighway vehicles (ROVs) despite admitting that it had no evidence showing its proposed 

changes would improve safety. The proposal violates statutory requirements that the agency 

defer to voluntary standards and, when issuing mandatory standards, to issue only 

performance-based criteria and not design mandates. The CPSC's insistence on a mandatory 

standard will compromise the mobility and utility of the vehicles in the off-highway setting for 

which they are intended, negatively impact safety by limiting research and innovation and harm 

consumer demand. The result of this agency action would be the loss of thousands of 

manufacturing and retail jobs. Industry analysis has shown that at least 90 percent of serious 

incidents with ROVs would not have been affected by the CPSC proposal, but were instead 

caused by operator actions. If the rule were to be finalized, the variety of products available to 

consumers would be greatly limited as many features would be illegal and consumer demand 

for new vehicles would significantly decrease. In the CPSC's initial regulatory flexibility analysis, 

the commission found that the proposed rule "will not likely have a significant direct impact on a 

substantial number of small firms." However. the agency's analysis fails to consider dealers. 

other than those that would be considered "importers." 

CPSC: Voluntary Remedial Actions and Guidelines for Voluntary Recall Notices (78 Fed. 

Reg. 69793). In November 2013, the CPSC issued a proposed rule that would place significant 

burdens on manufacturers and retailers of consumer products and negatively impact the highly 

successful voluntary recall process. The proposed rule would make voluntary corrective action 

plans and voluntary recalls legally binding, increasing enforcement jeopardy and legal 

consequences in product liability, other commercial contexts or in a civil penalty matter. The 

proposal would eliminate a company's ability to disclaim admission of a defect or potential 

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hazard. The proposed rule would also empower CPSC staff to include compliance programs in 

corrective action plans. The CPSC lacks the statutory authority to proceed with binding 

regulations for voluntary programs. The success of our consumer product recall system is 

based on a strong cooperative relationship between the CPSC and the companies it regulates. 

The rule removes longstanding incentives for firms to proactively cooperate with the CPSC and 

could seriously threaten the Fast-Track recall program, which the CPSC itself highlights as a 

model of good governance and was implemented as a way to assist small firms to issue 

effective recalls. Small businesses that would be impacted by the proposed rule include 

manufacturers, importers, shippers, carriers. distributors and retailers. However, the CPSC 

failed to include an initial regulatorv flexibility analysis in its proposed rule. 

DOL: Contractor Blacklisting, Implementation of Executive Order 13673 (Fair Pay and 

Safe Workplaces). The executive order, proposed rule and guidance could bar federal 

contractors from new work if there has even been an allegation of a labor law violation in the 

past three years. It would apply to contracts valued at $500,000 or more and will be 

implemented by 2016. The DOL will issue guidance through notice and comment, and OMSthrough the Federal Acquisition Regulatory Council-will spearhead the issuance of a 

regulation. First and foremost, the president does not have the legal authority to make the 

regulatory changes that will follow from this order. By directing the DOL to develop guidance 

that will establish degrees of violations not included in the underlying statutes, the executive 

order significantly amends the enforcement mechanisms Congress established for these laws. 

In addition, the order disregards existing enforcement powers the administration already has 

through federal acquisition regulations and labor laws as well as the longstanding process by 

which suspension and debarment actions are taken. This process is set forth in the Federal 

Acquisition Regulation (FAR) and specifically in FAR Part 9.4. Each agency has the ability to 

determine, through the agency's suspension and debarment official, whether the government 

should refrain from doing business with a particular contractor because the contractor is not 

"presently responsible." Factors taken into account for making such a determination include 

whether there has been a finding of fraud committed on the contract and/or willful and serious 

violations of other U.S. laws. Furthermore, the agency official may consider whether the 

contractor has taken measures to remediate past bad actions or eliminated systemic problems 

from the past. Rather than improving upon these existing processes, the executive order would 

unnecessarily create additional burdens on contractors and further complicate an already 

complex contracting process. 

DOL: Federal Contractor Paid Sick Leave Proposed Rule (81 Fed. Reg. 9592). As 

directed by last year's Executive Order 13706, the DOL released a proposed rule requiring all 

federal contractors and subcontractors to provide to employees seven days of paid sick leave 

annually, which can be used for personal illness as well as leave allowing for family care. This 

will go into effect for every newly awarded contract starting January 1, 2017. This new mandate 

will apply to any contractors' or subcontractors' employees working "on" or "in connection with" 

any new contracts, and there is no dollar or employee threshold for the requirement to apply. 

Furthermore, the days accrued will also carry over into the following year. There is a lot of 

confusion about this new mandate and how it will affect leave programs already in place at 

certain contractors and subcontractors. Manufacturers that already provide paid time may have 

to start tracking time in hourly increments if an employee is taking leave under the Family 

Medical Leave Act. 

DOL's OSHA: Improve Tracking Workplace Injuries and Illnesses (78 Fed. Reg. 67253 

and 79 Fed. Reg. 47605). The proposed rule would change current reporting requirements for 

employer injury and illness logs and permit OSHA to publish the information on its website. 

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While the agency has the statutory authority to collect the information, the statute does not 

authorize OSHA to make the information publicly available. The proposed rule presents privacy 

issues for employees as the information contained in injury and illness logs includes personally 

identifiable information, as well as other private information about individual employees. This 

information should not be available for public consumption. The employer reports also include 

information that is unrelated to work activity, which, without context, could mischaracterize a 

company's safety record. The NAM believes that the existing recordkeeping system is sufficient 

to allow employers to identify and address hazards in their workplaces. Finally, despite lacking 

statutory authority, OSHA issued an update to its proposal that would place companies in 

enforcement jeopardy if the agency determines that a requirement such as additional training or 

even reflective clothing is an "adverse action" in response to an employee injury report. Finally, 

in a supplement to the proposed rule, OSHA provided no regulatory text, but it suggests in the 

questions it posed that a mere posting of a company's safety record could be viewed by the 

agency as the company discouraging the reporting of incidents. These proposed updates would 

inject uncertainty and ambiguity into the workplace safety dynamic. Current protections for 

employees from retaliation in response to injury reports are comprehensive, well-established 

and support company initiatives to improve the health and well-being of employees. OSHA 

determined that its proposed revisions would impose no cost burden and therefore would not 

require an RFA analysis. The rule imposes significant consequences. however. including 

reputational harm from publishing information that is often preliminary and does not reflect 

actual workplace incidents. 

DOL's Wage and Hour Division Proposed Rule Regarding Defining and Delimiting the 

Exemptions for Executive, Administrative, Professional, Outside Sales and Computer 

Employees (80 Fed. Reg. 38516). Last year, the DOL proposed to increase the minimum salary 

threshold from $23,440 to $50,660 for employees to be exempted from overtime pay pursuant 

to the Fair Labor Standards Act (FLSA). The proposal would also automatically tie future salary 

threshold increases to the Consumer Price Index, which could lead to another substantial 

increase in only a few short years. Under the FLSA, certain employees are exempt from 

overtime pay if they meet certain requirements. In 2004, the rules were amended to exempt 

employees if they made more than $23,440 ($455 per week) and performed duties in certain 

categories or in a managerial or professional role. This proposed dramatic increase will require 

manufacturers to reclassify certain salaried employees as hourly, making them eligible for 

overtime pay. 

Equal Employment Opportunity Commission (EEOC) Employment Information Report 

(EE0-1) Form Change (81 Fed. Reg. 5113). The proposed form change would require all 

employers with 100 or more employees to submit an employee compensation data based on 

sex, race and ethnicity, categorized in 12 pay bands and 10 job categories. The administration 

believes this will encourage compliance with equal pay laws, and agencies will be able to target 

enforcement more effectively by focusing efforts where there are grave discrepancies. The 

proposal and expanded recordkeeping (the EE0-1 Report would expand from 180 data cells to 

approximately 3,600) requirements would put a company at risk of publicly disclosing 

employees' private information, potentially exposing proprietary information of a company. 

Moreover, the proposal would violate the Paperwork Reduction Act-it is unnecessary and 

duplicative. The agency also failed to employ sound rulemaking principles that are outlined in 

Executive Order 13563. The proposal would fail to accomplish the stated regulatory objectives. 

Information collections, even ones that institute vast, new regulatory programs. are not subject 

to the RFA. 

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c. Anticipated Proposed Regulations 

CPSC: Mandatory Standard for Table Saws (76 Fed. Reg. 62678). In October 2011, the 

CPSC initiated rulemaking procedures to establish mandatory safety standards for table saws. 

The rulemaking, in its current trajectory, would potentially seek to impose a standard that could 

only be achieved through the use of one claimed patented technology. Regulation should not be 

used to advantage one technology or one company over another. The Consumer Product 

Safety Act dictates when the commission can issue a mandatory standard: only upon a finding 

that an existing voluntary standard would not prevent or adequately reduce the risk of injury in a 

manner less burdensome than the proposed CPSC mandatory standard. Data used by the 

CPSC on alleged table saw injuries are questionable and outdated and not relevant to current 

voluntary standards. If the CPSC proceeds with a mandatory standard, such action would 

undermine the industry's incentive to develop new alternative table saw safety technology and 

would impose unnecessary and significantly increased costs on consumers. In issuing an 

advance notice of proposed rulemaking, the CPSC fails to even mention the costs to small 

businesses, such as carpenters and contractors, in its discussion on economic considerations. 

According to the Power Tool Institute, the CPSC's proposal would increase the cost of each 

benchtop table saw by approximately $1 ,000-four times the average price and an $875 million 

impact only for the benchtop category of table saws. Such a burden is not justifiable for do-ityourself or small contractor customers. Unfortunately, this rulemaking illustrates a trend at the 

agency where the CPSC has failed to conduct adequate cost-benefit analyses with its 

rulemakings and imposes prohibitive costs on manufacturers and consumers without accounting 

for the actual risks associated with the products. An advanced notice of proposed rulemaking is 

not subject to the RFA. 

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Chairman VITTER. Thank you very much, Mr. Palmieri. 

I want to pick up on a theme you mentioned and ask Milito to 

talk about the implications for small businesses from the fact that 

indirect impacts are not taken into account in any way, because 

certainly those can be very, very significant. Do you agree with Mr. 

Palmieri that they should be taken into account? 

Ms. MILITO. I absolutely do. Thank you very much for that question. And as Mr. Palmieri mentioned, one of the rules that NFIB 

is concerned about, and I believe this is in my written statement, 

too, was the Clean Power Plan rule, too, and that is because of the 

indirect impact that that rule is going to have on energy costs for 

small businesses. 

So, we—NFIB has for a long time advocated that agencies consider the indirect impact that the rules will have. And I know this 

is something that the Office of Advocacy has also raised, too, and 

it came up in the Department of Labor, the overtime rule, too, and 

it is something that I think is often brushed off by agencies. So, 

we would be very supportive of a reform that would require agencies to consider indirect impact. 

Chairman VITTER. Okay. Ms. Milito, my second question is about 

small businesses having adequate time to hear about a rule and 

offer feedback through the public comment period. Do you think 

they, in general, have adequate time, and are agencies responsive 

or not, in general, to requests for extension of that comment period? 

Ms. MILITO. In my opinion, agencies are—have not been particularly receptive to requests for additional time, and that has been 

very true, I would say, in the last 18 months, I think where the 

administration is on the clock and racing to get some rules out. 

Certainly, that was the case, unfortunately, with the overtime rule. 

Some economic studies could not be completed. I mean, NFIB’s own 

economic study came in after the proposal closed, and at that point, 

we found out that the overtime rule will impact probably at least 

40 percent of NFIB members. But we could not get that in the formal record because we just did not have time. 

So, again, that is a problem that we just do not have enough 

time, and, you know, to get the word out to small businesses, too, 

that this rule is coming down and we want your input. 

Chairman VITTER. Okay. Mr. Palmieri, you have been closely involved in this regulatory reform discussion for more than a decade. 

Over the period you have watched it, do you believe agencies have 

begun following the RFA less and less over time? Is that the trend 

line? I certainly think it is, unfortunately, and what do you think 

that is the result of? 

Mr. PALMIERI. I think that every government agency wants to do 

its job extraordinarily well, but because of time factors or others 

finds work-arounds. And, so, work-arounds to the Regulatory Flexibility Act or others are simply avoiding them whenever possible. 

And, so, even if they feel like they are doing an excellent job of 

analyzing the impacts of a rule, they would rather not go through 

these procedural requirements if they do not have to, and the law 

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quirements, especially the RFA, even more so than the Administrative Procedures Act. 

So, it is very clear that agencies, whenever possible, will not conduct this analysis unless they are required to by Congress, and 

these loopholes, for lack of a better word, have allowed them to do 

so, and, I think, unfortunately, every few years, the RFA and other 

provisions which attempt to restrain agencies or correct their 

thinking in certain ways absolutely have to be reformed to improve 

the system. 

Chairman VITTER. Okay. And, Mr. Palmieri, you mention a number of possible improvements. What would you list as the top three 

or so reforms needed to the RFA? 

Mr. PALMIERI. I would say indirect effects is absolutely a number 

one. Some improvement to the process, whether it is rule writing 

authority for the chief counsel or some other third party certification process to assist agencies in correctly certifying these rules, 

the 610 process, and expansion of SBREFA panels. 

Chairman VITTER. Okay. All right. Thank you very much. 

Senator Ernst. 

Senator ERNST. Yes, thank you, Mr. Chairman, and thank you to 

all three of you for appearing in front of our committee today. 

Mr. Palmieri, I should not have to ask this, but I will. I think 

you have made your position clear on this. But, is it safe to say 

that you think WOTUS would have a direct significant economic 

impact on your manufacturers? 

Mr. PALMIERI. Absolutely. I mean, so, even when it is not directly 

impacting a facility, the ability to transport their goods to market 

for export is another critical factor here and we know very clearly 

how significant an impact this will have on our infrastructure in 

many ways. 

Senator ERNST. Can you list out for the record other impacts, 

other areas that might have an economic impact on those manufacturers or small businesses? 

Mr. PALMIERI. Sure. I mean, energy prices, because of the transmission location and others, public infrastructure, roads, others on 

the transportation side, and then, certainly, depending on the type 

of manufacturing facility, its ability to expand its facility may be 

extraordinarily limited. Its ability to get permits, you know, we use 

a significant amount of water in manufacturing and send it back 

out cleaner than it came in, all of those industries would be heavily 

impacted. 

Senator ERNST. Have you had the opportunity to discuss with 

some of your manufacturers—I just got this as a comment when I 

was in Iowa on part of my 99 county tour, but there was a manufacturer there that had questions about expanding and adding on 

to their facility. Have you had any indications of what a permitting 

process would be like for those that just simply wanted to add on 

a few thousand additional square feet onto a facility? 

Mr. PALMIERI. I guess what I would say is that the permitting 

process is already so challenging on the air quality side as well as 

all of the other local challenges, that adding the length of time 

often associated with the Section 404 permitting process could add 

18 months to two years plus to any type of facility expansion, and 

that is on top of the years that it already takes. And, so, for many 

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manufacturers, even the possibility that they might need a 404 permit is enough to say, I am not going to expand this facility. I am 

going to find other ways. I am going to think about a new facility 

in a different area that would not be affected. And, so, this harms 

many communities where these permits might be necessary. 

Senator ERNST. Yes. And you mentioned the exact answer that 

I got from this manufacturer after they had looked into the permitting requirements, the impact of many of these rules and regulations, and they simply decided, as a small business, it is not worth 

our time or effort to attempt to expand our business and industry, 

and that is very unfortunate. That is not the answer that I want 

to hear from our economic engines out there. So, it has been very 

frustrating. 

And, in Iowa—and I keep going back to WOTUS because I am 

familiar—very familiar—with WOTUS—in Iowa, the WOTUS rule 

as it is mapped out would impact 97 percent of our land in Iowa— 

97 percent. I know in Missouri it is 99.8 percent of the land in Missouri. So, God bless those three percent of the folks in Iowa that 

will not have to go through the permitting process, but this is the 

challenge that we have. And most of our small homeowners, small 

business owners, they simply cannot go through the regulatory burdens that so many of the large manufacturers can. 

Again for you, Mr. Palmieri, in your testimony, you mentioned 

the need to enhance the abilities of Advocacy to improve the quality of regulation. Do you think that giving Advocacy an additional 

review flag in the form of requesting OIRA to prove an agency’s 

analysis will promote more thoughtful consideration of small entities? 

Mr. PALMIERI. Absolutely. I mean, we think that this decision is 

too important to be left purely to an agency that is, unfortunately, 

in its self interest to certify that it does not have to comply with 

the RFA. 

Senator ERNST. Okay. Well, I thank you for your input. Thank 

you for being here today. 

Thank you, Mr. Chair. 

Chairman VITTER. Okay. I am going to go to a short second 

round, because I did not get to Mr. Knapp. 

Mr. Knapp, for an entity that is self-proclaimed as a small business organization, you all take positions that are outliers, in my experience, in terms of small business organizations. You all supported Dodd-Frank. You supported increasing the EPA’s budget, a 

big small business agenda item—I am saying that facetiously, in 

my experience—opposed tort reform, supported Waters of the 

United States rule. What do you think explains the fact that you 

take positions which I have never heard any other small business 

entity taking? 

Mr. KNAPP. Thank you, Mr. Chairman. Thank you for the opportunity to actually have a question asked. 

First of all, I do want to point out that we do not self-describe. 

We are no more self-descriptive than the National Association of 

Manufacturers represent the manufacturers and NFIB represents 

their members. 

Look, we—— 

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Chairman VITTER. Just to be clear, I was just referring to the 

name of the organization—— 

Mr. KNAPP. Yes. 

Chairman VITTER [continuing]. Which is the South Carolina 

Small Business Chamber of Commerce. 

Mr. KNAPP. That is correct, and we are, in fact, that. And, also, 

the American Sustainable Business Council, also representing 

about 2,000 businesses—200,000 across the country. 

So, the question, then, is why are we outliers, and I do not disagree with that assessment of traditional business organizations. 

We in South Carolina are only concerned about small businesses. 

We do not have to worry about big businesses. They will take care 

of themselves. And it has been our experience in South Carolina 

that when organizations that represent businesses in general typically will come down on the side for whatever is in the best interest 

of big business, and I think it is very clear that whatever is in 

the—if things are in the interest of big business, that does not 

mean they are always in the best interest of small businesses. 

So, yes, we do take positions that are often in disagreement with 

other business organizations, but we do back that up with research 

and we do back that up with logic and our experience. So, I appreciate your question, though. 

Chairman VITTER. Okay. Well, just to be clear in terms of where 

I am coming from, I was not talking about U.S. Chamber of Commerce. I was talking about specific small business organizations 

that I am familiar with, still very, very different on all the issues 

I mentioned. 

Mr. KNAPP. Yes, sir. 

Chairman VITTER. To that point, how are you all funded? 

Mr. KNAPP. How are we all funded? Well, if you are talking 

about the South Carolina Small Business Chamber of Commerce, 

we are funded with dues. We are not a very well resourced organization, and we do have dues. We do have other sources of income, 

working on special projects. 

The American Sustainable Business Council is, again, a dues 

structured organization, both from the organizations that belong as 

well as the individual businesses and individuals that contribute to 

it. They often also are working on direct projects along with other 

organizations. So—which is not uncommon for most small business 

organizations to really have different sources of revenue stream, 

and we offer benefits and we derive some cash flow from those benefits we offer. 

Chairman VITTER. And for the South Carolina entity, of all the 

dues and contributions of any kind for projects or anything else, 

what percentage do you think come from trial lawyers or people associated with trial lawyers? 

Mr. KNAPP. Uh, no more so than anybody else. The Association 

for Justice is a trade association member. 

Chairman VITTER. Well, you say no more so than anyone 

else—— 

Mr. KNAPP. No more so than any other trade—— 

Chairman VITTER. If anyone else means other small business associations, their answer would be zero, I guarantee you. 

Mr. KNAPP. Yeah. Well—— 

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Chairman VITTER. So, if your answer is anything above zero, that 

is very different, but go ahead. I did not mean to interrupt. 

Mr. KNAPP. Well, let us put it this way. I disagree with this line 

of questioning, of questioning our organization and our authenticity 

and who we represent in the decisions we make and that business. 

We have a board of directors and they make the decisions. They 

are made up of small business people. So, however we cobble together our resources to operate, and we do not operate with a very 

large budget. We probably operate with less than three days’ budget of the National Manufacturers Association. So, we do it because 

I can provide some resources to the organization that I have other 

sources of revenue through my small businesses, and so that is the 

way of life with small businesses. They are often under-resourced 

and overworked, but we do the best we can because we operate like 

a small business. 

Chairman VITTER. Okay. So, again, what would that percentage 

be for—— 

Mr. KNAPP. I honestly cannot answer that question. I mean, I 

can if I go back, but I do not think it is relevant to this point of 

view. 

Chairman VITTER. Okay. Well, this disagreement, I think, is very 

relevant. 

But, thank you all very much for your testimony. This is a very 

important topic which we are certainly going to follow up on, and 

I am going to continue working with all the committee members on 

a bipartisan bill to find additional ways to protect small businesses 

and ensure their voice is heard in the rulemaking process. 

So, with that, the hearing is adjourned. 

[Whereupon, at 11:09 a.m., the committee was adjourned.] 

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APPENDIX MATERIAL SUBMITTED 

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Supplemental Statement by Frank Knapp, Jr. 

Submitted May 2, 2016 

Before the Committee on Small Business & Entrepreneurship 

United States Senate 

"Drowning in Regulations: The Waters of the U.S. Rule and the Case for Reforming the RFA" 

April27, 2016 

I would like to place additional testimony into the record for the above referenced hearing. This 

has been necessitated by the line of questioning of Chairman Vitter. 

Specifically, Chairman Vitter asked why the organizations I was representing at the hearing had 

taken the positions listed below and what would cause a small business organization to take such 

positions. Chairman Vitter believed that it was relevant to ask for information about the funding 

for the American Sustainable Business Council and the South Carolina Small Business Chamber 

of Commerce in order to understand why these organizations took the positions they do. 

In regard to the South Carolina Small Business Chamber, Chairman Vitter wanted to know what 

percentage of all the organization's funding came from "trial lawyers" or people associated with 

"trial lawyers". I acknowledged that the South Carolina Association for Justice was a trade 

association member of the South Carolina Small Business Chamber but was not able at the 

hearing to answer the question of what percentage of all revenue came from "trial lawyers". 

Chairman Vitter also stated that "trial lawyers" contribute no funding to any other small business 

organization. The implication was clear that Chairman Vitter believes that the South Carolina 

Small Business Chamber is unduly influenced by revenue from "trial lawyers" and thus does not 

truly represent the interests of small businesses. 

This challenge to the integrity of the South Carolina Small Business Chamber of Commerce and 

to me personally as the president and CEO of this organization requires a thorough response. 

Let me first provide my personal and professional qualifications as an advocate for small 

businesses. 

-Founded the advertising/public relations firm, The Knapp Agency, in 1991 which is ongoing 

today 

-Co-founded the South Carolina Small Business Chamber of Commerce in 2000 and serve as its 

president and CEO 

-Serve on the South Carolina Small Business Development Center Advisory Board 

-Serve as co-chair of the American Sustainable Business Council Board of Directors 

-Awarded the U.S. Small Business Administration 2014 South Carolina Small Business 

Financing Advocate of the Year 

-Serve on the U.S. Small Business Administration Regulatory Fairness Board, Chair of Region 

IV. 
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Chairman Vitter questioned why the business organizations I was representing at the hearing 

took the following positions. 

Supported Dodd-Frank. The Great Recession starting in 2008 was felt the strongest by small 

businesses, many of which did not survive, both because of the suppression of consumer demand 

and later because of lack of access to capital. Small businesses did not create the Great 

Recession and it was and still is a priority to protect small businesses from a future economic 

disaster resulting from an ineffectively regulated financial system. Both the American 

Sustainable Business Council and the South Carolina Small Business Chamber support DoddFrank in order to protect future generations of small businesses from the danger of another 

collapse of our nation's financial system. 

Opposed Tort Reform. The South Carolina Small Business Chamber has a track record of 

leadership in assuring that the state civil courts are free of frivolous lawsuits, legal proceedings 

are less costly and small businesses maintain their rights to protect themselves against big 

business. It is the latter issue to which Chairman Vitter is possibly referring. The South 

Carolina Small Business Chamber successfully blocked legislative efforts to severely restrict the 

ability of small businesses to file a civil lawsuit against a bigger business regarding unfair trade 

practices. A civil lawsuit is often the only method of obtaining balance between a well-financed 

big business and a small business in trade matters where the big business has engaged in unfair 

trade practices resulting in financial harm to the small business. No record of the American 

Sustainable Business Council opposing "tort reform" is found. 

Supported the Waters of the U.S. Rule. As outlined in my original written testimony, small 

businesses support regulations to protect clean water: 

"And national, scientific polling commissioned by American Sustainable Business Council found plenty 

of support by small businesses with fewer than I 00 employees to protect our waters. The survey showed 

that 80 percent supported the Waters of the U.S. rule. Sixty-two percent agreed that government 

regulations are needed to prevent water pollution and 61% believe that government safeguards for water 

are good for businesses and local communities. Support for the clarification of federal rules under the 

Waters of the U.S. crossed political lines, with 78 percent of self-identified Republicans and 91 percent of 

self-described Democrats supporting the rule." 

Both the American Sustainable Business Council and the South Carolina Small Business 

Chamber support the Waters of the U.S. rule issued by the EPA. 

Supported Increasing the EPA Budget. The American Sustainable Business Council and the 

South Carolina Small Business Chamber believe that the federal Regulatory Flexibility Act is a 

well- crafted procedure for protecting small businesses from unnecessary regulatory burden. 

However, all federal regulatory agencies, including the EPA, and Office of Advocacy need more 

financial resources for the RF A to work more effectively and efficiently. This is a pro-small 

business position that is outlined in my original written testimony. 

2 
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In regard to the South Carolina Small Business Chamber, Chairman Vitter chose not to recognize 

the following: 

-The South Carolina Small Business Chamber has been the only business organization to oppose 

workers' compensation rate increases successfully in court since 2005. 

-The South Carolina Small Business Chamber has been the only general business organization to 

oppose electricity and gas rate hikes successfully at the S.C. Public Service Commission 

since 2002. 

-The South Carolina Small Business Chamber proposed and led the successful effort to reduce 

the state income tax on small business profits by over 28 percent. 

-The South Carolina Small Business Chamber proposed and led the successful effort to lower the 

eligibility for state job tax credits to targeted businesses from creating I 0 new jobs to 

creating 2 new jobs thus making it easier for small businesses to qualify. 

-The South Carolina Small Business Chamber proposed and led the successful effort to provide a 

$1000 state business tax credit per new Registered Apprentice of any business as an 

incentive for workforce development. 

-The South Carolina Small Business Chamber proposed and led the successful effort to change 

the state procurement code to give bidding incentives to out-of-state contractors to 

subcontract with South Carolina small businesses for goods and services. 

The South Carolina Small Business Chamber is able to take these strong actions in support of all 

small businesses because we represent only the interests of small businesses. We are not 

influenced by financial contributions from big business entities like utilities, insurance 

companies, big manufacturers, the fossil fuel industry and large banks. Thus the positions taken 

by the South Carolina Small Business Chamber, we believe, are truly in the best interest of small 

businesses and are considered outliers only in comparison to positions taken by organizations 

influenced by big business funding. 

While I still disagree with Chairman Vitter's line of questioning about the revenue the South 

Carolina Small Business Chamber derives from "trial lawyers" or parties associated with "trial 

lawyers", the answer to his question is approximately 7 percent for 2016. 

In regards to the value of the legal profession, "trial lawyers" are small businesses that employee 

workers and thus contribute to the local economy, provide needed services to individuals and 

businesses, and are active in their community schools, faith institutions, and other non-profits. 

The owners of small law firms are often in leadership positions with local chambers of 

commerce and provide significant funding to these small business associations through their 

dues. Like other small business owners, "trial lawyers" are concerned about a wide array of 

issues not just the ones that only impact their businesses. 

Thank you for the opportunity to provide this additional testimony. 

3 
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affta AMERICAN FLY FISHING TRADE ASSOCIATION 

Benjamin H. Bulis, President and CEO of American Fly Fishing Trade Association (AFFTA), for 

the Senate Committee on Small Business and Entrepreneurship hearing entitled, Drowning in 

Regulations: The Waters of the U.S. Rule and the Case for Reforming the RFA April 27, 2016. 

Dear, Mr. Chairman and members of the Committee. I appreciate the opportunity to provide a 

statement for the record in support of The Waters of the U.S. Rule. I had the opportunity to 

testify before the committee last May in support of the Clean Water Act and the protections of 

our Nations headwaters. The rule will always be a priority for the small businesses that make up 

the American Fly Fishing Trade Association (AFFTA). 

AFFTA represents the businesses of fly fishing including manufacturers, retailers, outfitters and 

guides across the nation, who all share the same bottom line: furthering the sport and industry 

of fly fishing. This cannot be accomplished without a strong rule protecting what is most vital 

for vibrant fisheries habitat: clean water. The formula that drives AFFTA is very simple: Access 

to healthy habitat creates recreational opportunity that drives economic activity and jobs. 

To see how important clean water is to our members' businesses you can look at the recent 

devastating fish kills in the Gulf of Mexico in and around the Caloosahatchee River and also the 

Indian River Lagoon on the east coast of Florida near Stuart. Highly contaminated fresh water 

released from lake Okeechobee produced devastating algae blooms and brown tides that 

unfortunately removed dissolved oxygen from the water and resulted in the fish kills. The small 

businesses in the area were devastated by beach closures and signs that warned people not to 

touch or eat any fish. This all occurred during their peak spring break season. 

Fishing in America supports approximately 828,000 jobs, results in nearly $50 billion annually in 

retail sales and has an economic impact of about $115 billion every year (Sportfishinq in 

America an Economic Force for Conservation, American Sportfishing Association, 2013). It 

stands to reason that the health of our nation's waters is vital to the continued success of our 

industry, and to the health of America's economy. The Waters of the U.S. Rule promotes water 

quality through improved protections for wetlands and headwater streams, and will be a boon 

to our members' businesses. 

If we fail to protect our most important natural resource, clean water, we risk destroying the 

$200 billion annual economy of the hunting and fishing industry, as well as put 1.5 million 

people out of work. 

Sincerely, 

Benjamin H. Bulis 
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The Honorable Senator Shaheen 

1589 Elm Street 

Suite 3 Manchester, NH 03101 

Dear Senator Shaheen, 

As a small business owner who relies on clean water, I urge you to publicly support the 

administration's final Clean Water Rule to restore critical Clean Water Act protections to 

waterways nationwide. 

From recreational business owners to restaurateurs, we all know that clean water is critical to our 

economy and the vitality of our communities. In addition, I personally depend on clean water for 

my business. From Lake Sunapee to New Hampshire's coast, our iconic waterways are integral 

to our economic success as well as our quality of life. 

Yet misguided Supreme Court decisions opened up loopholes in the Clean Water Act, leaving 

streams and wetlands that feed and filter the lakes we love- and help provide drinking water for 

503,000 New Hampshire residents-- at risk of unchecked pollution. 

For this reason, the EPA and Army Corps of Engineers have now approved the Clean Water 

Rule that reestablishes protections to the intermittent streams, wetlands and rivers left in limbo 

by these loopholes. Restoring the Clean Water Act will help ensure that our communities are 

healthy and our local economies are strong. 

I urge you to stand up as a leader for our rivers, lakes and streams and publicly support the 

proposed Clean Water rule so that this effort to protect the waterways our business depends on 

will become a reality. 

Sincerely, 

Paul Eja- Pauly's Pockets 

51 Main St, 

Durham, NH 03824 

Stephen W- Tree Brew Barista 

3 Bicentennial Sq. 

Concord. NH 0330 I 

Michelle Lees Crackskull Coffee & Books 

86 Main St. 

Newmarket, NH 03857 

Melissa Ruffini - Urban Mayhem Skate 

1356 Elm St. 

Concord, NH 0330 I 

Jessica Gorhan- All Elements Healing 

51 Main St. 

Concord, NH 0330 I 

Emily Galvin & Sue McCoo Viking House 

19 N Main St. 

Concord. NH 03301 

Christ Zuber- The Place Studio and Gallery 

9N Main St. 

Concord, NH 03301 

Alex Moody Sub Style Vapors, LLC 

6 N Main St. 

Concord, NH 03301 
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Tressa Kosavicz Little River Oriental Rugs 

10 N Main St. 

Concord, NH 03301 

Amanda Hackett 

Dos Amigos Burritos 

46NMain St. 

Concord, NH 03301 

Thomas Smith 

Depot Antiques and Toys 

JON Main St. 

Concord, NH 03301 

David Lund- Express Jewelry Center 

44 N Main St. 

Concord, NH 03301 

Gerry Mark - Caring Gifts 

18 N Main St. 

Concord, NH 03301 

Melody Broider- Spank Alley Board Shop 

59 S Main St. 

Concord, NH 03301 

Elizabeth Demarcus- Lizzy Stitch Quilts 

249 Sheep Davis Rd. 

Concord, NH 03301 

Bill Lustig- Signararna of Concord 

249 Sheep Davis Rd. Unit 4 

Concord, NH 03301 

Michelle Smart- Mattress Maker 

80S Main St. 

Concord, NH 03301 

Deb Moulpied- Bona Fide Green Goods 

35 S Main St. 

Concord, NH 03301 

Hillary Killam - Sun Tan City 

80 Storrs St. 

Concord, NH 03301 

Lia Liporto -New England Cupcakery 

28 S Main St. 

Concord, NH 03301 

Don Const- Quick Water Canoe & Kayak 

15 Hannah Dustin Dr. 

Concord, NH 03301 

Alicia Kingsbury- Little Pea Boutique 

153 Manchester St. 

Concord, NH 03301 
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WILDLIFE 

e 

Before the Senate Small Business Committee 

Hearing Examining the Waters of the U.S. Rule and the Case for Reforming the RFA 

Statement for the Record ofthe National Wildlife Federation 

on the Clean Water Act "Waters of the United States" Rulemaking 

April27, 2016 

The National Wildlife Federation (NWF) submits this statement for the hearing record in strong 

support of the Environmental Protection Agency ("EPA") and the Army Corps of Engineers 

("Corps") Clean Water Rule defining "Waters of the United States" under the Clean Water Act. 

As we document in our statement below, this rule clarifying and restoring Clean Water Act 

protections fosters strong local economies and millions of jobs. Healthy wetlands and streams 

are economic engines for local recreation-based economies. Every year 47 million Americans 

head to the field to hunt or fish. For example, the American Sportfishing Association reports 

that anglers generated more than $201 billion in total economic activity in 2011, supporting 

more than 1.5 million jobs. 

In some rural, mountain communities, river recreation and related activities generate the 

largest share of the local economy. Indeed, throughout the headwaters states, river 

recreation, including boating, fishing and wildlife watching, represents billions of dollars in 

commerce. These fishing and river guides, outfitters, bait shops, hotels and coffee shops are 

true small businesses that form the backbone of many rural communities. And they depend 

upon clean water and healthy wetlands, lakes, and streams. 

The National Wildlife Federation represents over 6 million conservation-minded hunters, anglers, 

and outdoor enthusiasts nationwide. Conserving our Nation's wetlands, streams, and rivers for 

fish, wildlife, and communities is at the core of our mission. We have been active in advocating 

for Clean Water Act protections since the Act was passed in 1972. For the past 15 years we have 

been actively engaged in the effort to clarify the definition of "Waters of the United States" that 

underpins the 1972 Clean Water Act in the wake of the controversial and disruptive SWANCC and 

Rapanos U.S. Supreme Court decisions issued in 200 I and 2006 respectively. 

As we document in our statement below, the final Environmental Protection Agency ("EPA") and 

the Army Corps of Engineers ("Corps") Clean Water Rule: 

• Responds to- and is consistent with- the U.S. Supreme Court's direction in SWANCC 

and Rapanos; 

• Clarifies and limits - but does not expand - the historic scope of Clean Water Act 
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jurisdiction; 

• Includes new clarifications and exemptions that expressly exclude some waterbodies 

previously deemed "waters of the U.S."; 

• Strengthens the Clean Water Act's Federal-State cooperative federalism framework and 

empowers states to better protect state waters within this framework; 

• Addresses many of the concerns raised by state, agricultural, and western water 

stakeholders during the extended and rigorous rulemaking process; 

• Fosters a strong economy and millions of jobs that depend upon clean and abundant waters 

and healthy wetlands and waterways; and 

• Enjoys widespread and bi-partisan public support. 

The 1972 Clean Water Act has been successful at improving water quality and stemming the 

tide of wetlands loss in every state. However, Clean Water Act safeguards for streams, lakes 

and wetlands have been eroding for over a decade following two controversial Supreme Court 

decisions which cast doubt on more than 30 years of effective Clean Water Act implementation. 

Recent water pollution threats to drinking water from Ohio, West Virginia and Michigan to Iowa 

and Montana remind us of the high value of clean water, and crystallize the need to improve the 

Clean Water Act, not weaken it. 

For more than a decade now, 60 percent of stream miles in the United States, which provide 

drinking water for more than 117 million Americans, have been at increased risk of pollution and 

destruction. Wetlands that provide essential water quality, flood protection, and fish and wildlife 

habitat are at risk as well. In fact, the rate of wetlands loss increased by 140 percent during the 

2004-2009 period- the years immediately following the Supreme Court decisions. This is the 

first documented acceleration of wetland loss since the Clean Water Act was enacted more than 

40 years ago during the Nixon administration. 

When wetlands are drained and filled and streams are polluted, fish and wildlife suffer and we 

lose the ability to pursue our outdoor passions and pass these treasured traditions on to our 

children. Moreover, pollution and destruction of headwater streams and wetlands threaten 

America's hunting and fishing economy- which accounts for over $200 billion in economic 

activity each year and 1.5 million jobs, supporting rural communities in particular. 

It is for these reasons that the National Wildlife Federation and our 6 million members and 

supporters across the country steadfastly support the final Clean Water Rule. 

I. The Clean Water Rule Responds to- and Is Consistent With- the Supreme Court's 

Direction in SW ANCC and Rapanos. 

The Clean Water Rule revises the longstanding definition of"waters of the United States" subject 

to the Clean Water Act in response to the Supreme Court's decisions in Solid Waste Agency of 

Northern Cook County v. U.S. Army Corps of Engineers ("SWANCC"), 1 and Rapanos v. United 

States2 The Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) 

I 531 U.S.I59 (2001). 2 126 S. Ct. 2208 (2006). 
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took on this historic rulemaking because at least two of the Supreme Court Justices clearly called 

for it in their Rapanos concurring opinions: Chief Justice Roberts3 and Justice Breyer, 4 and a 

majority in Rapanos embraced the role of expert agency regulations to clarify which waters are -

and are not- "waters of the United States." 

The 2001 SWANCC decision was narrow. It simply precluded the Corps from asserting 

jurisdiction over certain ponds based solely on their use by migratory birds. It did not overturn 

any aspect of the existing waters of the U.S. regulatory definition, including the broad (a)(3) "other 

waters" provision. In 2006, in Rapanos, the Supreme Court issued a fractured (4-1-4) decision 

involving wetlands adjacent to non-navigable tributaries of traditional navigable waters. 

Importantly, the Court issued five opinions, none of which garnered a majority. In the ensuing 

litigation over which of the Court's opinions to apply, Justice Kennedy's opinion establishing the 

"significant nexus" test for Clean Water Act jurisdiction has been widely accepted by the U.S. 

Courts of Appeals. Justice Kennedy's "significant nexus" test requires a showing - through 

regulation or case-by-case - that the ecological linkages between smaller or more remote 

waterbodies and navigable waters, "alone or in combination," must be more than "speculative or 

insubstantial." 

The Clean Water Rule closely tracks Kennedy's pivotal significant nexus test, grounding its 

definition of which waters are jurisdictional in science-based findings of significant nexus to 

traditionally navigable and interstate waters. The Federal Register preambles to the proposed and 

final rules include an extensive legal analysis documenting the rule's allegiance to the Kennedy 

significant nexus test. As a binding rule, promulgated through a rigorous, transparent, and 

extended rulemaking process, the rule's revised definition of "waters of the United States" 

will provide greater certainty and consistency in jurisdictional determinations for 

landowners, federal and state agency field staff, and the courts. It will also ensure that 

longstanding clean water protections continue to safeguard millions of wetland acres and 

stream miles that have been in legal limbo for more than a decade. 

2. The Final Clean Water Rule Clarifies and Limits -- But Does Not Expand - the 

Historic Scope of Clean Water Act Jurisdiction. 

The final rule clarifies and definitively restores Clean Water Act protection to two major categories 

of waters, while drawing clarifying and limiting boundaries: 

1. Tributaries to traditionally navigable and interstate waters and the territorial seas. For 

example, intermittently-flowing headwater streams that have a defined bed and bank and ordinary 

high water mark, and flow to a traditionally navigable or interstate water body; and 

2. Wetlands, lakes, and other water bodies located adjacent to these tributaries (i.e., within 

the l 00-yr floodplain up to a maximum distance of l ,500ft.). 

Based on the best wetland science, the final rule also bolsters protections of specified wetlands 

3 547 U.S. at 757-58. 4 547 U.S. at 812. 
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located beyond river floodplains: prame potholes in the Dakotas, western vernal pools in 

California, Carolina and Delmarva bays and pocosins along the Atlantic coastal plain, and Texas 

coastal prairie wetlands along the Gulf of Mexico. Each of these types of wetlands function 

together- i.e., are "similarly situated" -to provide fish and wildlife habitat, important flood 

storage and drought resistance, and critical pollution filtration, and therefore warrant Clean Water 

Act protection. 

While these clarifications remove uncertainty, and better protect many wetlands and streams 

that have been at risk for the last decade, the fact is that the final Clean Water Rule actually 

narrows the historic scope of Clean Water Act jurisdiction, excluding protections for some 

wetlands and other waters protected for almost 30 years prior to 200 I. 

First and foremost, the rule deletes the pre-existing and longstanding "other waters" 

provision that provided Clean Water Act jurisdiction over many types of waters based on 

their potential effect on interstate commerce. Given the breadth of the federal commerce 

clause power, and the Clean Water Act legislative intent to regulate to the full extent of that 

power, this provision provided for Clean Water Act jurisdiction over millions of wetland acres 

protected for almost 30 years prior to 2001. In response to the Court's questioning of this 

commerce link to jurisdiction without regard to the water's ecological links to navigable waters, 

EPA and the Corps deleted this section and instead expressly linked all jurisdictional "waters of 

the U.S." determinations to science-based findings of significant nexus to navigable waters. As 

a result, many of the intrastate, non-navigable, geographically "isolated" wetlands, lakes, and 

ponds previously covered by the Clean Water Act will no longer be covered under the final 

Clean Water Rule. 

Second, the definition of"waters of the U.S." includes for the first time-- a clear definition 

of "tributary" that both clarifies and limits Clean Water Act jurisdiction over streams, 

ditches, and other tributaries. To be found a jurisdictional tributary, a waterway must have a 

bed, bank, and ordinary high water mark. To further clarify what is not a jurisdictional tributary, 

the final rule expressly excludes - again for the first time - several types of ditches, as well as 

gullies, rills, non-wetland swales, and lawfully constructed grassed waterways. 

In further response to concerns from agricultural and water treatment and delivery sectors, and 

in addition to existing exemptions for prior converted cropland and waste treatment systems, 

the final rule also explicitly excludes from the definition of waters of the U.S. other water 

features, including artificially irrigated areas, stormwater control features, and wastewater 

recycling systems. 

In addition, the final rule adds physical and measurable limits to adjacent and nearby waters, 

further narrowing jurisdiction and excluding wetlands and other waterbodies previously covered 

by the Clean Water Act. 

And, of course, the final rule reiterates the Clean Water Act exemptions for the following activities 

that are important for farming, forestry and mining from applicable permitting requirements: 

• Most common farming and ranching practices, including "plowing, cultivating, seeding, 
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minor drainage, harvesting for the production of food, fiber, and forest products;" 

• "Construction or maintenance of farm or stock ponds or irrigation ditches, or the 

maintenance of drainage ditches;" 

• "Agricultural stormwater discharges and return flows from irrigated agriculture;" 

• "Construction of temporary sediment basins on a construction site;" and 

• "Construction or maintenance of farm or forest roads or temporary roads for moving 

mining equipment." 

3. The Clean Water Rule Strengthens the Clean Water Act's Federal-State Cooperative 

Federalism Framework and Empowers States to Better Protect State Waters within 

this Framework. 

In 2006, mor~ than 30 state attorneys general filed an amicus brief in Rapanos recognizing the 

essential Federal-State cooperative federalism framework for protecting the Nation's waters and 

supporting the Bush Administration's broad view of Clean Water Act jurisdiction to meet the goals 

of the Clean Water Act. In 2014, the States of New York, Connecticut, Delaware, Illinois, 

Maryland, Rhode Island, and Washington, and the District of Columbia reiterated the importance 

of broad Clean Water Act jurisdiction to protecting the waters of their states and the health and 

welfare of their citizens. In 2015, the States of New York, Connecticut, Hawaii, Massachusetts, 

Oregon, Vermont, and Washington, and the District of Columbia, reiterated these views when they 

moved to intervene in court in support of the Clean Water Rule. 

The state attorneys general explained their interest in the Clean Water Rule as follows: 

"First .... The health and integrity of watersheds, with their networks of tributaries and 

wetlands that feed downstream waters, depend upon protecting the quality of upstream 

headwaters and adjacent wetlands. Moreover, watersheds frequently do not obey state 

boundaries, with all of the lower forty-eight states having waters that are downstream of the 

waters of other states. Thus, coverage under the Act of ecologically connected waters 

secured by the Rule is essential to achieve the water quality protection purpose of the Act, 

and to protect Proposed Intervenor States from upstream pollution occurring outside their 

borders. 

"Second, by clarifying the scope of "waters of the United States," the rule promotes 

predictability and consistency in the application of the law, and in turn helps clear up the 

confusing body of case law that has emerged in the wake of the Supreme Court's Rapanos 

decision. The Rule accomplishes this by reducing the need for case-by-case jurisdictional 

determinations and, where such determinations are needed, by clarifying the standards for 

conducting them. Each of the Proposed Intervenor States implements programs under the 

Act. Thus, the rule is of direct benefit to movants because it helps alleviate administrative 

burdens and inefficiencies in carrying out those programs. In addition, the rule would help 

the States in administering the federal dredge-and-fill program if they choose to do so. See 

33 U.S.C. §1344 (allowing States to implement a permitting program for dredge and fill 

material). 

"Third, the rule advances the Act's goal of securing a strong federal "floor" for water 
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pollution control, thereby protecting the economic interests of Proposed Intervenor States 

and other downstream states. The Rule allows movants to avoid having to impose costly, 

disproportionate, and economically harmful limits on instate pollution sources to waters 

within their borders, in order to offset upstream discharges that would otherwise go 

unregulated if the upstream waters are deemed to fall outside the Act's jurisdiction and are 

not otherwise regulated by upstream states. The Rule protects the economies of Proposed 

Intervenor States because it serves to "prevent the 'Tragedy of the Commons' that 

might result if jurisdictions can compete industry and development by providing more 

liberal limitations than their neighboring states." NRDC, 568 F.2d at 1378 (quoting 

Train, 510 F.2d at 709)."5 

On a practical level, the 2008 Guidance has resulted in delays, confusion and uncertainty for 

applicants seeking permits along with increased workloads for Corps and EPA officials. EPA's 

costs to enforce CW A 402, 404, and 311 have increased significantly due to the incremental 

resources required to assert jurisdiction post SWANCC and Rapanos.6 Because it can be difficult 

to establish where the CW A applies after the Supreme Court's decisions in SWANCC and Rapanos, 

enforcement efforts have shifted away from small streams high in the watershed where jurisdiction 

is a potential issue. Post-Rapanos uncertainty and added time and expense is undermining Clean 

Water Act enforcement and the overall effectiveness of the Clean Water Act in maintaining and 

restoring the nation's waters. 

A key attribute of the Clean Water Rule is its additional clarity, relieving federal and state 

agencies and landowners alike of the confusing and burdensome case-by-case jurisdictional 

determinations required under the guidance for plans to discharge pollutants into most 

wetlands and streams. Ironically, the Clean Water Rule litigation and the current stay of the 

final rule not only extend but actually contribute to confusion and delay by precluding EPA 

and Corps efforts to provide field level training, workshops, supplemental clarification, and 

transparency in the implementation ofthe rule. 

4. The Final Clean Water Rule Addresses Many of the Concerns Raised by State, 

Agricultural, and Small Business Stakeholders during the Extended and Rigorous 

Rulemaking Process. 

The final Clean Water Rule is the product of four years of rigorous and transparent scientific and 

public policy deliberation. See the attached Timeline 2001-2016. In 2011, in the face of 

congressional inaction, EPA and the Corps formally launched an administrative effort to clarify 

the "waters of the U.S." The 2011 Proposed Guidance was the subject of extensive interagency 

review, economic analysis, and public notice and comment. Approximately 250,000 comments 

were submitted on the guidance, and these overwhelmingly supported the revised guidance. 

5 NY et al Motion to Intervene (6th Cir. August 28, 2015) (emphasis added). 6 See 2014 EPA Economic Analysis at 30-31, at: 

http:/ /www2.epa.gov/sites/production/files/20 14-

03/documents/wus proposed rule economic analysis.pdf. 
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In 2011-2012, on a parallel track, the EPA Office of Research and Development compiled a draft 

science report, The Connectivity of Streams and Wetlands to Downstream Waters: A Review and 

Synthesis of the Scientific Evidence (Connectivity Report). 7 This scientific report, based on peerreviewed literature and an additional review by independent scientists, was prepared to inform the 

Administration's proposed rule clarifying which waters are protected under the Clean Water Act. 

In July 2013, the EPA Science Advisory Board (SAB) launched an SAB Expert Scientific Peer 

Review of the Connectivity Report. 8 In September 2013, the agencies released the Draft 

Connectivity of Streams and Wetlands Science Report for public comment. Also in September 

2013, after holding up action on the Clean Water guidance in the Office of Management (OMB) 

for almost two years, the Administration sent its draft proposed Clean Water Rule to OMB for 

interagency review. 

In March 25,2014, after months of interagency review, the EPA and the Army Corps of Engineers 

jointly proposed the formal rule clarifying and partially restoring the historic scope of waters 

protected under the Clean Water Act. The 2-page proposed rule text in the federal register was 

thoroughly explained and supported by a lengthy preamble, including both scientific and legal 

appendices, the publicly available Connectivity Science Report, and a thorough Economic 

Analysis. The 200-day public comment period ended November 14, 2014.9 Americans 

submitted over I million comments on the proposed rulemaking, and these comments were 

overwhelmingly in support of the rulemaking. 

In late September-early October 2014, the SAB issued reports affirming the scientific basis for the 

proposed rule (SAB Rule Letter) 10 and affirming - with recommendations for enhancing - the 

scientific accuracy of the Connectivity Report (SAB Connectivity Peer Review Letter). 11 The 

Connectivity Report was revised and strengthened in accordance with the SAB recommendations 

7 See 

https:llcfoub.epa. gov/ncea!risklrecordisplay. cfm? deid= 296414&CFID= 5617 6401 &CFTO KEN 

=47329782 

8 See SAB Peer Review process at: 

http ://yosemite .epa. gov I sab/ sabproduct.nsf/fedrgstr _ acti vites/W atershed%2 OConnectivity%20 Re 

port!OpenDocument&TableRow=2.1 #2. 9 See EPA Waters of the U.S. rulemaking process materials at: http://www2.epa.gov/uswaters. 10 EPA SAB letter to Administrator McCarthy, Science Advisory Board (SAB) Consideration of 

the Adequacy of the Scientific and Technical Basis of the EPA's Proposed Rule titled "Definition 

of Waters of the United States under the Clean Water Act" (September 30, 2014) (SAB Rule 

Letter) at: 

http://yosemite.epa.gov/sab/sabproduct.nsf/518D4909D94CB6ES 85257D6300767DD6/$Fi le/EP 

A-SAB-14-007+unsigned.pdf 

11 EPA SAB letter to Administrator McCarthy, SAB Review of the Draft EPA Report 

Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the 

Scientific Evidence (October 17, 2014) (SAB Connectivity Peer Review Letter) at: 

http:/ /yosemite.epa.gov /sab/sabproduct.nsf/fedrgstr _ activites/ AF I A285 3 7854F8AB8525 707 400 

5003D2/$File/EPA-SAB-15-00I +unsigned. pdf 
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and was released in final form in January 2015. 12 Both the SAB report and the Final 

Connectivity Report inform the agencies' final "waters of the U.S." rule. 

Throughout 2014, EPA held hundreds of stakeholder meetings, including repeated meetings 

with agricultural, municipal, small business entities, and other stakeholders seeking improved 

clarity in the rulemaking. This rigorous and transparent rulemaking process offers the best 

opportunity in a generation to clarify which waters are-and are not-waters of the U.S. subject 

to the Clean Water Act in a manner that provides more clarity than ever before. 

5. The Clean Water Rule Fosters Strong Local Economies and Millions of Jobs that 

Depend upon Clean and Abundant Water and Healthy Wetlands and Waterways. 

EPA's economic analysis demonstrates that this rule to clarify and restore clean water 

protections is good for the economy. EPA estimates that the change in benefits ofCWA 

programs exceeds the costs by a ratio of greater than I: I. The economic analysis finds that the 

rule will provide at least $339 million and up to $572 million annually in benefits to the public, 

including reducing flooding, filtering pollution, providing fish and wildlife habitat, supporting 

hunting and fishing, and recharging groundwater. 13 

Healthy wetlands and streams are economic engines for local recreation-based economies. Every 

year 4 7 million Americans head to the field to hunt or fish. For example, the American Sportfishing 

Association reports that anglers generated more than $201 billion in total economic activity in 

2011, supporting more than 1.5 million jobs. 14 The U.S Fish and Wildlife Service estimated that 

duck hunting in 2006 had a positive economic impact of more than $2.3 billion, supporting more 

than 27,000 private sector jobs. 15 

In some rural, mountain communities, river recreation and related activities generate the largest 

share of the local economy. Indeed, throughout the headwaters states, river recreation, including 

boating, fishing and wildlife watching, represent billions of dollars in commerce. 16 In the Colorado 

River Basin portion of Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming, 2.26 

million people participated in water sports in 2011, spending $1.7 billion that generated $2.5 

billion in total economic output. 17 

12 Final EPA Report: Connectivity of Streams and Wetlands to Downstream Waters: A Review 

and Synthesis of the Scientific Evidence (January 20 15) at: 

http://cfpub.epa.gov /ncea/cfm/recordisplay .cfm ?deid=296414#Download 13 See Clean Water Rule: Definition of"Waters of the United States," 80 Fed. Reg. at 37101 

(June 29, 2015). 14American Sportfishing Association, Sportfishing in America (January 2013). 15 Economic Impact of Waterfowl Hunting in the United States, Addendum to the 2006 National 

Survey of Fishing, Hunting, and Wildlife-Associated Recreation, November 2008. US Fish and 

Wildlife Service. 16 Western Resource Advocates 2014 Rule Comments. 17 SOUTHWICK ASSOC., ECONOMIC CONTRIBUTIONS OF OUTDOOR RECREATION ON THE 

COLORADO RIVER & ITS TRJBUTAR!ES (May 3, 2012) (Table E-3), available at 
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The same holds true in New Hampshire, where protecting small streams and wetlands 

supports fish and wildlife and a vibrant recreational industry. The U.S. Fish and Wildlife 

Service reports that in 2011, $554 million was spent on wildlife recreation in New 

Hampshire, including $209 million on fishing, and more than three-quarters of a million 

people participated in these recreational activities throughout the state. New Hampshire's 

thriving brewing industry relies on clean water. New Hampshire breweries contribute 

almost $250 million to the economy every year and support more than 3,100 jobs. 

Another indication of the economic implications of protecting the Nation's water resources is 

revealed in the example of the actions taken by New York City to initiate a $250 million program 

to acquire and protect up to 350,000 acres of wetlands and riparian lands in the Catskill Mountains 

to protect the quality of its water supply rather than constructing water treatment plants which 

could cost as much as $6-8 billion. (Dailey et al. 1999). In South Carolina, a study showed that 

without the wetland services provided by the Congaree Swamp, a $5 million wastewater treatment 

plant would be required (http://water.epa.gov/type/wetlands/people.cfm). 

The algal blooms that cause health problems also come at high economic costs. For example, 

Dodds et a! (2009) estimated that the total annual cost of the eutrophication of U.S. fresh waters 

was $2.2 billion. This estimate included recreational and angling costs, property values, drinking 

water treatment costs, and a conservative estimate of the costs of the loss of biodiversity. Polasky 

and Ren (201 0) cited research that estimated that if two lakes (Big Sandy and Leech) in Minnesota 

had an increase in water clarity of three feet, lakefront property owners would realize a benefit of 

between $50 and $100 million. 

By any measure, clarifying and restoring clean water protections for America's waters is a 

good investment for healthy communities and a healthy economy. 

6. The Clean Water Rule, like the Clean Water Act, Enjoys Widespread, Bi-Partisan 

Support. 

Poll after poll shows broad public support for clean water, the Clean Water Act, and the Clean 

Water Rule. In 2015, the bi-partisan team of Public Opinion Strategies and Greenberg Quinlan 

Rosner Research found that 83% of hunters and anglers supported using the Clean Water Act 

to protect small streams and wetlands. 18 Forty-nine percent (49%) of the sportsmen polled 

identified with the Tea Party. Support for this policy was strong across the political spectrum with 

77 percent ofRepublicans, 79 percent oflndependents and 97 percent of Democrats in favor. Fully 

89 percent said that the Clean Water Act has been "more of a good thing" for the country, 

with majorities of every single demographic sub-group echoing this sentiment. It comes as no 

surprise, then, that the Clean Water Rule enjoyed overwhelming public support through the 

extended rulemaking process. 

http ://protectfl ows .com/wp-content/up loads/20 I 3/09/Co lorado-River-Recreational-Economiclmpacts-Southwick-Associates-5-3-12 2.pdf. 18 http://www.nwf.org/-/media/PDFs/Water/20 15/20 15-Sportsmen-Poll/National NWFSportsmen-Water-Survey 2015.pdf 
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Clean water and the Clean Water Act have traditionally received strong bipartisan support. EPA 

Administrators serving Republican Presidents, from Russell Train (1973-1977) to William Reilly 

(1989-1993), have strongly supported broad protections for wetlands and streams. Republican 

leader Senator Howard Baker of Tennessee echoed these words of support when the Clean Water 

Act was amended in 1977: "[t]he once seemingly separate types of aquatic systems are, we now 

know, interrelated and interdependent. We cannot expect to preserve the remaining qualities of 

our water resources without providing appropriate protection for the entire resource." 19 In 1986, 

the Reagan administration developed the broad definition of waters of the United States20 and 

President George H.W. Bush confirmed "no net loss" of wetlands as his administration policy in 

January, 1989. 

In 2003, in the face of strong opposition, the Bush Administration's EPA was forced to withdraw 

an advanced notice of proposed rulemaking to potentially remove from Clean Water Act 

jurisdiction many non-navigable, intrastate wetlands, streams and other waters. That spring, 39 

state agencies and hundreds of thousands of individuals and organizations submitted comments 

urging the EPA and the Corps not to reduce the historic scope of waters protected under the Clean 

Water Act. Later that year, over 200 members of Congress from both parties (including Rep. Paul 

Ryan among others) wrote a letter to President Bush urging him "not to pursue any policy or 

regulatory changes that would reduce the scope of waters protected under the Clean Water Act." 

The Clean Water Rule, like the Clean Water Act, enjoys widespread, bi-partisan public support. 

CONCLUSION 

The National Wildlife Federation strongly supports this historic "waters of the United States" 

rulemaking as necessary, good for the economy, and the best chance in a generation to clarify 

which waters are- and are not- "waters of the United States" protected by the 1972 Clean Water 

Act. The final Clean Water Rule, once affirmed by the Courts, will provide greater long-term 

certainty for landowners, better protect important streams and wetlands and the fish, wildlife, and 

communities that depend on them, and advance our collective efforts to "restore and maintain the 

chemical, physical, and biological integrity of the Nation's waters." 

Respectfully Submitted, 

Jan Goldman-Carter 

Director, Wetlands and Water Resources 

Glenn Watkins, Water Resources Coordinator 

National Wildlife Federation 

1990 K St., NW Suite 430 

Washington, DC 20006 

19 123 Cong. Rec. 26,718 (Aug. 4, 1977) (emphasis added). 20 See http://www2.epa.gov/sites/production/files/20 15-06/documents/epa-hg-ow-20 11-0880-

20862.pdf at 37056. 
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ATTACHMENTS: 

Clean Water Rule Timeline 2001-2016 

Email: goldmancarterj@nwf.org 

Office phone: 202-797-6894 
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Clean Water Rule Timeline: 2001-2016 

• January 2001 Supreme Court decides Solid Waste Agency of Northern Cook 

Cty. v. Army Corps of Engineers (SWANCC): The Supreme Court held (in a 5-4 

opinion) that the use of "isolated" non-navigable intrastate ponds by migratory birds 

was not by itself a sufficient basis to find Clean Water Act jurisdiction over such waters. 

• 2002 Introduction of the Clean Water Authority Restoration Act: A bill to amend 

the 1972 Clean Water Act to clarify the jurisdiction of the United States over the Waters 

of the United States. Essentially this same legislation was introduced in each 

congressional session from 2002 through 2010. 

• January 2003 Advanced Notice of Proposed Rulemaking (ANPRM) and 

SWANCC Guidance: The Bush Administration's EPA issues SWANCC guidance 

(immediately effective without advance public notice and comment) with an advanced 

notice of proposed rulemaking. 

• Spring 2003 Comments Opposing ANPRM: 39 state agencies and hundreds of 

thousands of individuals and organizations submitted comments urging the EPA and 

the Corps not to reduce the historic scope of waters protected under the Clean Water 

Act. 

• November 2003 Congress Opposes Narrowing CWA Jurisdiction: Over 200 

members of Congress from both parties (including Rep. Paul Ryan among others) 

wrote a letter to President Bush urging him "not to pursue any policy or regulatory 

changes that would reduce the scope of waters protected under the Clean Water Act." 

• December 2003 Withdrawal of ANPRM: The Bush Administration abandons its 

rulemaking to reduce the scope of waters covered by the Clean Water Act, but retains 

the SWANCC Guidance, effectively removing CWA protections for an estimated 20 

million so-called "isolated" wetland acres. 

• June 2006 Supreme Court decides Rapanos vs. the United States and Carabell 

v. United States: The Supreme Court issues a fractured (4-1-4) decision involving 

wetlands adjacent to non-navigable tributaries of traditional navigable waters. A four 

justice plurality found that "waters of the U.S" covers "relatively permanent, standing 

or continuously flowing bodies of water" (including some seasonally flowing rivers) that 

are connected to traditional navigable waters, as well as wetlands with a "continuous 

surface connection" to such relatively permanent waters. Justice Kennedy's 

concurring opinion disagrees with the plurality opinion, and concludes that "waters of 

the U.S." includes wetlands that possess a "significant nexus" with navigable waters. 

He finds that wetlands possess the requisite significant nexus if they "either alone or 

in combination with similarly situated [wet] lands in the region, significantly affect the 

chemical, physical, and biological integrity" of other covered waters more readily 

understood as navigable. Three of the various opinions urged the agencies to initiate 

a rulemaking clarifying the "waters of the U.S". The decision was a 4-1-4 ruling. 
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• 2006-2014: Federal Court Litigation on "Waters of the U.S" Mounts PostRapanos, adding to costly litigation, uncertainty, delay, and hampered Clean 

Water Act enforcement. 

• 2007-2008 Bush Administration Rapanos Guidance: The Bush EPA issues 

immediately effective Rapanos Guidance without advance public notice and 

comment. This guidance largely ignores the Kennedy direction to base significant 

nexus determinations based on the combination of similarly situated waters and 

imposes a confusing and burdensome case-by-case jurisdictional requirement on 

most wetlands and streams. Modest revisions were made to the Bush Administration 

Guidance in 2008. 

• 2009 Clean Water Restoration Act (CWRA) is favorably reported to the Senate 

Floor by the Senate Environment and Public Works Committee, but is stalled in 

Congress through 2010. CWRA would have restored the historical scope of the 

Clean Water Act to those waters protected by the Act prior to the 2001 SWANCC 

decision, but not expanded the scope of jurisdiction beyond those covered at that time. 

• April 2011 Proposed Guidance: EPA and the Corps proposed guidance for 

determining CWA jurisdiction to replace guidance issued in 2003 and 2008. The 

proposal also announced the agencies' plans to proceed with rulemaking. The 2011 

Proposed Guidance was the subject of extensive interagency review, economic 

analysis, and public notice and comment. Approximately 250,000 comments were 

submitted on the guidance, and these overwhelmingly supported the revised 

guidance. The proposed guidance would provide more certain and predictable 

protections for many streams and wetlands by comparison to the existing 2003 and 

2008 guidance documents. The 2011 guidance still required a case-specific finding of 

significant nexus, but it found that based on the combined downstream effects of 

tributaries and adjacent waters within a watershed, significant nexus and CWA 

jurisdiction were highly likely to be established for these categories of waters. 

• 2011-2012: EPA Office of Research and Development compiles a draft science 

report, The Connectivity of Streams and Wetlands to Downstream Waters: A 

Review and Synthesis of the Scientific Evidence. This scientific report, based on 

peer-reviewed literature and an additional review by independent scientists, informs 

the Administration's proposed rule clarifying which waters are protected under the 

Clean Water Act. 

• July 2013: EPA Science Advisory Board (SAB) Launches an SAB Expert 

Scientific Peer Review of the Connectivity Report. SAB peer review process and 

substance available throughout process at: 

https://yosemite.epa.gov/sab/sabproduct.nsf/fedrgstr activites/Watershed%20Conne 

ctivity%20Report!OpenDocument&TableRow=2.2#2. 
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• September 2013: Administration Releases Draft Connectivity of Streams and 

Wetlands Science Report for public comment. 

• September 2013: Administration Sends Proposed Clean Water Rule to OMB: 

After holding up action on the Clean Water guidance in the Office of Management 

(OMB) for almost two years, the Administration sent its draft proposed Clean Water 

Rule to OMB for interagency review. 

• March 25, 2014: Administration Formally Proposes Clean Water Rule: The EPA 

and the Army Corps of Engineers jointly propose the formal rule clarifying and partially 

restoring the historic scope of waters protected under the Clean Water Act. The 200+-

day comment period ended November 14, 2014. 

o EPA held over 100 meetings with state entities as well as many with 

agricultural and other stakeholders during the comment period: 

EPA Headquarters Proposed Rule Meetings/Events For Docket EPAHQ-OW-2011-0880 (following the release of the proposed rule): 

http://www.regulations.gov/#!documentDetaii:D=EPA-HQ-OW-2011-

0880-13183 

2014 EPA Regional Proposed Rule Meetings/Events for Docket EPAHQ-OW-2011-0880: 

http://www. regulations.gov/#!documentDetail; D=EPA-HQ-OW-2011-

0880-13182 

• Summer 2014: Connectivity Report Peer-Review Wraps Up: affirming the scientific 

synthesis and concluding that the scientific synthesis provides a sufficient scientific 

foundation for the Proposed Clean Water Rule. 

• October 17, 2014: The Science Advisory Board's final peer review report supporting 

the draft Connectivity Report is formally issued. 

• November 14, 2014: Clean Water Rule public comment period ended, with over 

1 million comments submitted. 

o EPA held dozens of meetings with stakeholders before finalizing the 

Clean Water Rule: EPA Headquarters Stakeholder Meetings for Docket 

EPA-HQ-OW-2011-0880 Occurring After the Close of the Comment Period 

(November 14, 2014): http://www.regulations.gov/#!documentoetaii;D=EPAHQ-OW-2011-0880-20870 

• May 27, 2015: EPA and the Army Corps of Engineers signed the final Clean 

Water Rule. The final rule was published in the federal register on June 29, 2015, 

available at https://www.epa.gov/sites/production/files/2015-06/documents/epa-hgow-2011-0880-20862.pdf and became effective on August 28, 2015. 
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• October 9, 2015: The Sixth Circuit U.S. Court of Appeals, ruling on the consolidated 

petitions from multiple circuits, issued a nationwide stay of the Clean Water Rule 

pending further resolution of the multi-district litigation challenging the rule. 

• February 22, 2016: The Sixth Circuit panel found jurisdiction to review the merits of 

the Clean Water Rule. A petition to review en bane is under consideration. 

• Pending lifting of stays of the Clean Water Rule, the 2003 and 2008 guidance 

documents requiring cumbersome and confusing case-by-case jurisdictional 

determinations remain in effect. 
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April 26, 2016 

Honorable David Vitter, Chairman 

Honorable Jeanne Shaheen, Ranking Member 

Senate Committee on Small Business and Entrepreneurship 

428A Russell Senate Office Building 

Washington, DC 20S10 

Dear Chairman Vitter and Ranking Member Shaheen: 

On behalf of the Natural Resources Defense Council, please accept this letter and enclosed materials for the 

record of your hearing scheduled for April27, 2016, titled "Drowning in Regulations: The Waters of the U.S. Rule 

and the Case for Reforming the RFA." 

Based on the hearing's title, NRDC is concerned about the fairness of the examination of the economic impacts 

of the Clean Water Rule developed by the Environmental Protection Agency and the U.S. Army Corps of 

Engineers, as well as the process that led to its adoption last year. We write to assure the Committee, however, 

that there is good news on both fronts; the Clean Water Rule both helps protect a resource critical to the 

national economy and to small businesses- clean water- and was developed through a process that provided 

ample opportunity for small businesses to be heard. 

The Clean Water Rule addresses a major problem. Legal uncertainty spawned by a pair of Supreme Court rulings 

and subsequent administrative policies left more than half of the nation's stream miles and tens of millions of 

acres of wetlands without guaranteed protection from pollution and other harms. The importance of clean 

water to numerous businesses is difficult to overstate; for instance, the hunting and fishing economy- much of 

which is linked to resources the Clean Water Rule would help protect- is an approximately $200 billion 

proposition, supporting about 1.5 million jobs. 1 Similarly, the economic analysis published with the final rule 

estimates that the public benefits (not all of which could be quantified) will be as high as $572 million per year 

and will outweigh the rule's costs. 2 

To address the Supreme Court's decisions and to update the Clean Water Act regulations, EPA and the Corps 

initiated a rulemaking process- something that numerous stakeholders requested. 3 EPA produced an 

1 Fact Sheet, "The Clean Water Rule: Fueling the Fishing & Hunting Industry," available at http:l/protectdeanwater.org/wp~ 

content/uploads/2015/08/Soorting-lndustrv·Fact-Sheet-CWR·7.14.1S.pdf; see a/sa Fact Sheet, "The Clean Water Rule: 

Crucial for Small Business," available at http:/lprotectcleanwater.org/wp-content/uploads/201S/08/Ciean-Water-Rule-FactSheet-Benefits-to-Smaii-Business.pdf. 

2 U.S. EPA & U.S. Army Corps of Engineers, Economic Analysis of the EPA-Army Clean Water Rule, at x-xi (May 20, 2015), 

available at https://www.epa.gov/sites/production/files/2015-06/documents/508· 

final dean water rule economic analysis 5~20-lS.pdf. 

3 See U.S. EPA, 11Persons and Organizations Requesting Clarification of Waters of the United States by Rulemaking," available 

at http://www.epa.gov/cleanwaterrule/persons-and-organizations-requesting-clarification~waters-united-statesrulemaking. 

NATURAL RESOURCES DEFENSE COUNCIL 

1!52 !5TH STREET NW WASHINGTON. DC 20005 ! T 202 289.6868 F 202 2B9.!060 NROC.ORG 
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extensively peer-reviewed scientific report confirming that streams and wetlands are connected to downstream 

waters in significant ways. 4 The agencies then developed a rule that relies on this strong scientific basis and on 

the Supreme Court's direction about the kinds of waters the Clean Water Act can protect. But the rule was not 

developed in a vacuum; the agencies took comment on the proposal from Aprii21-November 14, 2014, a long 

comment period that itself followed years of public engagement on potential new policy guidelines and on the 

scientific report. During the comment period, EPA met with more than 400 stakeholders. 5 

Opponents of the Clean Water Rule will undoubtedly make much of the fact that the Small Business 

Administration Office of Advocacy criticized the development of the rule and specifically disagreed with the 

certification of the rule as not having "a significant economic impact on a substantial number of small entities," 

under the Regulatory Flexibility Act. However, the agencies' response to comment document discusses the 

certification decision at some length, and also explains the significant small business outreach that has occurred 

about this issue over several years. 6 One commenter even described the Office of Advocacy's analysis as resting 

on an "obviously shaky legal foundation .... "' 

In addition, the Office of Advocacy's opposition to an important environmental initiative comes as little surprise 

to environmental stakeholders. Too often, Advocacy unfortunately echoes the criticisms lodged against 

environmental safeguards made by regulated industries. 8 1n the case of the Clean Water Rule, for instance, 

Advocacy repeated industry claims about the likely impacts of the rule on normal farming practices and on utility 

line construction, and called on the agencies to withdraw the rule. 9 The idea of retreating on the rule contrasted 

with the views expressed by the American Sustainable Business Council, which said, "Scientific polling of 

independent small businesses commissioned by ASBC about the business need for clean water contradicts the 

4 See generally 80 Fed. Reg. 37,054, 37,061-65 (June 29, 2015) (final Clean Water Rule summary of science report findings). 5 See EPA Headquarters Proposed Rule Meetings/Events For Docket EPA-HQ-OW-2011-0880 (following the release of the 

proposed rule), available at http://www.regulations.gov/#!documentDetaii;DoEPA-HQ-OW-2011-0880-13183; 2014 EPA 

Regional Proposed Rule Meetings/Events for Docket EPA-HQ-OW-2011-0880, available at 

http://www.regulations.gov/#!documentDetaii;D=EPA-HQ-OW-2011-0880-13182; EPA Headquarters Stakeholder Meetings 

for Docket EPA-HQ-OW-2011-0880 Occurring After the Close of the Comment Period (November 14, 2014), available at 

http://www.regulations.gov/#!documentDetaii;DoEPA-HQ-OW-2011-0880-20870. 

6 U.S. EPA & U.S Army Corps of Engineers, Clean Water Rule Comment Compendium Topic 11: Costs/Benefits (Volume 1}, at 

111 (section titled "RFA/SBREFA"), available at https://www.epa.gov/sites/production/files/2015~ 

06/documents/cwr response to comments 11 econ voll.pdf. 7 James Goodwin, Senior Policy Analyst, Center for Progressive Reform, "SBA Office of Advocacy Continues to Carry 'Water' 

for Big Business" (Oct. 2, 2014), available at http:/lwww.progressivereform.org/CPRBiog.cfm?idBiog-D265AD26-0AC0-

2141-1D40DF38449EOA54. 

8 See, e.g., Sidney Shapiro & James Goodwin, Distorting the Interests of Small Business: How the Small Business 

Administration Office of Advocacy's Politicization of Small Business Concerns Undermines Public Health and Safety, (Jan. 

2013), available at http://www.progressivereform.org/articles/sba office of advocacy 1302.pdf; Katie Weatherford & 

Ronald White, Center for Effective Government, Gaming the Rules: How Big Business Hijacks the Small Business Review 

Process to Weaken Public Protections (Nov. 2014), available at http://www.foreffectivegov.org/files/regs/gaming-therules.pdf; "Small Business, Big Nuisance," onEarth (Nov. 14, 2014), available at https:/lwww.nrdc.org/onearth/smallbusiness-big-nuisance. 

9 Letter from Winslow Sargeant, Ph.D., Chief Counsel for Advocacy, to Gina McCarthy, EPA Administrator & Maj. Gen. John 

Peabody, Deputy Commanding General for Civil and Emergency Operations, U.S. Army Corps of Engineers (Oct. 1, 2014), 

available at https://www.sba.gov/advocacy/1012014-definltion-waters-united-states-under-c!ean-water-act. 

2 
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position taken by SBA Advocacy. Eighty percent of small business owners favor federal rules to protect upstream 

headwaters, as proposed in the EPA's new 'Waters of the U.S.' rule." 10 

Despite a diversity of views in the business community about the Clean Water Rule, Advocacy appears to us to 

have been most interested in the views of opponents of the rule. When Advocacy held a "roundtable" about 

the rule, the agenda included a presentation about the proposed rule's requirements from the agencies, but the 

discussion of "Small Business Implications" was to be led by an attorney representing the "Waters Advocacy 

Coalition," a group of organizations made up of some of the leading opponents of the Clean Water Rule. 

Although NRDC advised Advocacy that there were also significant small business supporters of the rule, and 

asked whether they would be given equal opportunity during the Roundtable presentation to explain why, that 

request was refused. Specifically, staff of the Office of Advocacy initially said that there was insufficient time 

before the Roundtable to add someone to the presentation. When the Roundtable was later rescheduled, 

providing additional time to change the agenda, staff responded to a renewed request for balanced business 

participation in the presentation by indicating that the agencies could speak in support of the rule. That, of 

course, is no response at all- the point is not that the agencies supported the rule they proposed; the more 

important fact is that small businesses did as well, and it is unfortunate that Advocacy did not allow for a 

balanced presentation by business groups. 

In the end, NRDC believes that EPA and the Army Corps' consideration of small business interests in developing 

the Clean Water Rule was robust, and we believe that the Office of Advocacy's contrary perspective is incorrect. 

Thank you for the opportunity to present our views on this important matter. If NRDC can be of any further 

assistance in your consideration of these matters, please do not hesitate to contact me at (202) 289-2361 or 

jdevine@nrdc.org. 

Sincerely, 

Jon P. Devine, Jr. 

Senior Attorney 

water Program 

Natural Resources Defense Council 

10 American Sustainable Business Council, Business Leaders Question SBA Advocacy's Comments on EPA's Water Rule (Oct. 

2, 2014), available at http://asbcouncil.org/news/press-release/business-leaders-guestion-sba-advocacys-comments-epaswatervrule. 

3 
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The Honorable Barack Obama 

The White House 

1600 Pennsylvania Ave. NW 

Washington, DC 20500 

February 3, 2015 

Dear Mr. President, 

As small business owners in Oregon, we urge you to continue moving forward with a rule to restore critical Clean 

Water Act protections to Oregon's waterways and waters nationwide. 

From recreational business owners to restaurateurs, we know that clean water is critical to our livelihoods and the 

vitality of Oregon's communities. We depend on clean water for thriving businesses and the wellbeing of our 

families. The health of iconic waterways like the mighty Rogue River and stewardship of Oregon's water resources 

is integral to our economic success. 

The Rogue is a hallmark of Oregon and provides our state with drinking water and valuable recreation opportunities. 

It's where generations of Oregonians have gone to swim, raft and fish. But the health of the Rogue and other 

waterways across Oregon is at risk. 

Shortsighted Supreme Court decisions opened up loopholes in the Clean Water Act, leaving the smaller waterways 

that feed into the Rogue and the drinking water for I. 7 million Oregonians at risk of unchecked pollution. Our major 

waterways are only as clean as the streams and wetlands that feed into them, and 53 percent of streams across 

Oregon are now inadequately protected. 

To protect our waters in Oregon, we urge you to move forward with a rulemaking to restore critical protections to 

these waters under the Clean Water Act. 

We believe that, by restoring the Clean Water Act, your administration can help ensure that our communities are 

healthy and our local economies continue to grow. 

We appreciate your commitment to protecting Oregon's waterways, and we hope you will move swiftly to ensure 

they are protected for years to come. 

Sincerely, 

Stumptown Coffee 

Worthy Brewing Co. 

Depoe Bay Winery 

World Class Wines 

Advanced Vineyard Systems 

Harvester Brewing 

Humble Brewing 

Lucky Labrador Brewing 

Columbia River Brewing 

Gilgamesh Brewing 

N ossa F amillia 

Plew's Brews 

Vagabond Brewing 

Thump Coffee 

Salem Ale Works 

Wasson Brothers Winery 

Rose City Coffee Co. 

Oregon Coast Coffee 

Oblique Coffee Roasters 

Lone Pine Coffee Roasters 

Capt Beans Coffee 

Kyra's Bake Shop 

Carl's Coffee 

Case Study Coffee 

Water Ave. Coffee Company 

Anna Bananas 

Green Plow Coffee 

Blue Moon Cafe 

Dragonfly Farm 

Horton Road Organics 

Chang Family Farm 

Crooked Furrow Farm 

Camas Swale Fann 

Lost Creek Farm 
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River Bend Farm & Pleasant Hill Orchard 

Up & Down CSA Farm 

Square Peg Farm 

The Mushroomery 

Home Grown Food Products 

Outback Farms 

Flying Onion Farm 

Maryhill Orchards 

Lively Organic Farm 

Farmageddon Growers Collective 

Picklopolis 

Spring Water Farm 

InTownAg 

HeidiHo Veganics 

LiveForestFarms 

Oberst Family Farm 

Rick Steffen Farms 

Fraga Farm 

Lincoln City Liquor 

Carter's Nursery 

I 01 Plants, Inc. 

Elk Pass Nursery 

Buddies Flowers 

Garden Fever! 

City Farm 

Wild Oak Native Plants 

AF Nursery LLC 

Lotus Grotto Gifts 

Realty on the Rogue 

Olde Towne Seafood and Market 

The Cobbler's Bench 

Earthkeeper Landscaping 

Emerald City Locksmith 

Food Waves 

Sandbar & Grill 

De Garde Brewing 

Heart 

Green Acres Landscape 

Wallace Books 

Tre Bone 

Zumbido de Portland 

Etcetera 

LifeSource Natural Foods 

DeSantis Landscapes 

Dr. Bruce A. Olson 

Fleet Feet Sports 

Sunriver Fishing Center 

Fireside 

Mountain Supply of Oregon 

Mazama Fishing Pro Shop 

Caddis Fly Angling Shop 

Everybody's Bike Rentals 

Cha! Cha! Cha! 

Lardo 

Que Pasa Cantina 

Proper Eats Market & Cafe 

Chowdah 

Zakwell Inc. dba Crave Catering 

Lounge Lizard 

Slims Restaurant and Lounge 

Cat Hospital of Portland 

Ammies Goodie's 

Jonathan H. Warmflash DMD PC 

Hardcorc Florist 

Yam Garden 

Flying Fish Co. 

Black Swan Events 

Robert Harker Piano Service 

Trilibrium &Trilibrium Wealth Management 

Hydrophix Systems 

North Pacific Sign 

Ruby Jewel 

Peninsula Station 

H.E.L.P. Group, Inc. 

St. John's Booksellers 
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VIA EMAIL 

The Honorable David Vitter 

Chairman 

U.S. SMALL BUSINESS ADMINISTRATION 

May 26, 2016 

Committee on Small Business and Entrepreneurship 

428A Russell Senate Office Building 

Washington, DC 20510 

Dear Chairman Vitter: 

This letter is in response to your letter dated May 12, 2016, which included additional 

questions for the record for the hearing titled, "Drowning in Regulations: The Waters of the 

U.S. Rule and the Case for Reforming the RFA" held on April 27, 2016. Enclosed you will find 

our responses. 

The Office of Advocacy appreciates the opportunity to provide the Committee with more 

information about the office's activities. If you or any member of the Committee has any 

questions regarding these responses, please do not hesitate to contact me or Elle Patout, 

Congressional Affairs and Public Relations Manager. She can be reached at (202)205-6941 or 

Elle.Patout@sba.gov. 

409 3rd Street 

Sincerely, 

ff~.~.2~ 

Darryl L. DePriest 

Chief Counsel for Advocacy 

SBM 

OFFICE OF ADVOCACY 

~ _":i!y"'::·~I:M 5i~WiilifY1'><><:: j 

DC 10416/202--205-6533 ph /202-205-6926!ax 
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QUESTION 1: 

Post-Hearing Questions for the Record 

Submitted to Mr. Darryl L. DePriest 

From Chairman David Vitter 

Do you believe the Office of Advocacy would be able to better perform its mission 

and serve as a source of accountability for federal agencies, if it were given more 

options in the rulemaking process when it disagreed with a certification? 

No, I believe that the Office of Advocacy is well served with its current options. Advocacy 

serves as a public advocate for the interests of small business, a role that is not limited to the 

four corners of the RFA. For this reason, Advocacy prefers that agencies be held accountable 

for the RFA by the President, through Executive Order 12866 review; Congress, through 

oversight; the public, through public comment; and the courts, through judicial review. 

Advocacy provides insight and advice to each of these parties on the interests of small entities, 

including as it relates to RFA compliance, but does not seek greater authority to intervene in 

rulemakings. The ability to delay or deny rulemaking activity might diminish Advocacy's role as 

a broader advocate. 

QUESTION 2: 

You have cited the success of SBREFA panels in including small businesses to be a 

part of the discussion during the rulemaking process, specifically recommending the 

Fish and Wildlife Service to be required to conduct them. How did you come to this 

conclusion, and what do you look for in agency when considering whether they 

should be required to conduct a SBREA panel or not? 

The Fish and Wildlife Service (FWS) does not notify the Office of Advocacy of its rules or 

respond to the Office of Advocacy's comments as required by the Small Business Jobs Act of 

2010 and Executive Order 13272. The Fish and Wildlife Service contends that critical habitat 

designations under the Endangered Species Act (ESA) have little to no impact on small entities. 

FWS rationalizes that most or all of the costs are incurred at the time a species is listed under 

the ESA, and that the ESA does not allow cost to be considered at the time of listing. As a 

result, critical habitat designations are certified. Advocacy disagrees with FWS's position. If 

FWS's reasoning was what was contemplated by Congress when it enacted the ESA, there 

would have been no need for the ESA to require that the costs of a critical habitat designation 

be a factor in that designation. It is clearly the case that restricting the use of large swaths of 

land may have an impact on the owners and users of that land. Advocacy looks for an accurate 

estimation and description of small entity impact when reviewing agency regulations. Advocacy 

continues to encourage FWS to make a full accounting of the costs of critical habitat 

designations in their economic analysis and to perform an Initial Regulatory Flexibility analysis 

where required. 

QUESTION 3: 

You mentioned that SBREFA panels did not necessarily need to be expanded to the 

Department of Labor (DOL), citing they voluntarily did several roundtables with 

small businesses over the controversial overtime rule. How many voluntary 

roundtables did the Environmental Protection Agency (EPA) and Corp of Engineers 

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do on the Waters of the United States (WOTUS) Rule? Do you believe the EPA and 

the Corps' roundtables on WOTUS were helpful to small businesses since they still 

did not certify a significant economic impact on a substantial number of small 

businesses? 

Advocacy always encourages agencies to reach out to small businesses. Congress has imposed 

specific requirements on certain agencies, including EPA, which requires specific outreach to 

small businesses under SBREFA when there will be a significant economic impact on a 

substantial number of small businesses. The SBREFA panels allow small businesses the 

opportunity to weigh in on what a rule should look like before the agency has drafted the rule 

and discuss and address issues that can be avoided. Small businesses appreciated the 

opportunity to share their concerns with EPA regarding the WOTUS rule. However, the failure 

to hold SBREFA panels meant that small businesses did not have the opportunity to weigh in on 

the problems with this rule prior to the agency drafting it and committing to certain aspects of 

the rule. While we do not know the exact number of roundtables the EPA held on this issue, 

Advocacy held two roundtables, one in Washington, DC and the second in Los Angeles, CA, 

both of which were attended by EPA officials. 

QUESTION4: 

Based on your many letters requesting extensions, do you believe agencies often do 

not give small businesses enough time to offer constructive feedback in the public 

comment period? 

Yes, I believe there are frequently situations where small businesses need additional time to 

provide constructive feedback to agencies in response to proposed rules. However, I do not 

believe the right amount of time is the same in every situation. Shorter comment periods may 

be appropriate for rulemakings that are not highly technical, that will not impose significant 

economic costs, or for which the agency has conducted broad public outreach. I believe that it 

is reasonable for agencies to publish most proposed rules with significant impact with a public 

comment period of 60 days and, later, to provide for more time based on public input. My 

primary concern is when a small business can demonstrate the need for more time and the 

agencies deny that request. 

QUESTION 5: 

Should agencies be required in the general notice of a proposed rule to provide an 

explanation for the public comment period time frame it chose and what factors the 

agency considered in the process? 

No, I do not believe this would be productive. Agencies are generally willing to grant additional 

time for public comment when requested. Agencies frequently respond favorably to simple oneparagraph requests. I do not agree with a requirement to document consideration of factors in 

advance. 

I believe it reasonable for agencies to be guided by the following recommendations made by 

the Administrative Conference of the United States in Recommendation 2011-2 when setting an 

initial public comment period: 

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"As a general matter, for 'significant regulatory actions' as defined in Executive Order 12866, 

agencies should use a comment period of at least 60 days. For all other rulemakings, they 

should generally use a comment period of at least 30 days. When agencies, in appropriate 

circumstances, set shorter comment periods, they are encouraged to provide an appropriate 

explanation for doing so." 

QUESTION 6: 

Would it be helpful for small businesses to require agencies to have a minimum day 

60 public comment period when conducting an IRFA and thus certifying a significant 

impact on a substantial number of small businesses? 

Perhaps, but I believe a case-by-case determination remains preferable. The RFA should work 

within the timeframes allowed by the Administrative Procedure Act, not extend them. 

An IRFA is not a certification that a rule would have a significant economic impact on a 

substantial number of entities. It is the analysis required of all proposed rules, except those for 

which the agency knows that there will NOT be a significant economic impact on a substantial 

number of small entities. For example, the IRFA may include a significant level of uncertainty 

and identify a large number of unknowns about the impacts on small entities such that the 

agency could not certify, but the overall rulemaking is relatively uncomplicated and would not 

otherwise require a 60-day public comment period. 

Similarly, Advocacy encourages public scrutiny and comment on agency certifications. Some of 

these certifications may reasonably require more time than some IRFAs. 

From Senator Scott 

QUESTION 1: 

But I believe they should also be listening to stakeholders, and giving their concerns 

credence by conducting economic analysis to see how this rule is actually going to 

affect them and their employees. Does your office agree that DOL should make 

economic analysis available before the rule is finalized? 

Based on small business feedback, Advocacy believes that DOL's proposed overtime rule would 

add significant compliance costs and paperwork burdens on small entities, particularly 

businesses in low wage regions and in industries that operate with low profit margins. In our 

public comment letter, Advocacy recommended that DOL publish a Supplemental Initial 

Regulatory Flexibility Analysis to reanalyze small business impacts. Advocacy recommended 

that DOL be more transparent regarding the numbers of small businesses impacted and the 

costs of this rule on these small businesses. DOL should have released this extra information as 

a supplemental document so that commenters could provide more robust comments, and 

develop and propose alternatives that would minimize the impact of this rule on small entities. 

On Wednesday, May 18, 2016, DOL released the final overtime rule. DOL did not publish a 

Supplemental IRFA. However, DOL was more transparent in the Final Regulatory Flexibility 

Analysis regarding the numbers of small businesses impacted and the cost of the rule on these 

businesses; and also provided more information on how it arrived at this data. Based on our 

feedback from our roundtables, Advocacy continues to believe that DOL is underestimating the 

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cost of this rule on small entities. Due to these low cost estimates, DOL's evaluation of 

appropriate alternatives to lower the impact on small businesses may not be comprehensive. 

In the final rule, DOL adopted some regulatory alternatives recommended by Advocacy that 

may minimize some of the economic impact. For example, DOL has considered regional 

impacts of the salary threshold, has considered bonuses and other compensation in the salary 

threshold test, and has changed the updates to the salary threshold to every three years 

(instead of every year). In addition, DOL did not change the duties test as a result of small 

business comments. The final rule was only released last week, but we have heard from small 

businesses that they remain concerned that the salary threshold is still set too high at over 

$47,000. While DOL did consider the regional impacts of the salary threshold by choosing to 

set the threshold at the 40th percentile of the lowest wage region (the South), selection of this 

broad region includes the wages of 17 states (including Washington, DC, and Virginia). 

Advocacy will continue to seek feedback from small businesses on the final rule. 

QUESTION 2: 

How can we ensure that DOL effectively considers comments on proposed rules 

from SBA or any other administrative agency? Do you believe that the roundtables 

fulfilled their purpose? Senator Vitter mentioned requiring DOL to conduct SBREFA 

panels as an option-are there other ways that we can ensure that regulatory bodies 

are effectively considering input from stakeholders? 

The Regulatory Flexibility Act was updated by the Small Business Jobs Act of 2010 to require 

that Final Regulatory Flexibility Analyses to be more detailed and to respond directly to 

Advocacy comments to the proposed rule. We believe the Department of Labor (DOL) did hear 

from small businesses during this process. For example, we conducted five roundtables around 

the country that included representatives from the DOL and small businesses. Advocacy 

believes that small businesses did need more time to respond to this important rule. Our office 

submitted a public comment letter to DOL during the comment period to seek an extension of 

the comment period; this request was not granted. Advocacy does not believe the panel 

process would provide any more information to DOL. While we may not agree with some of the 

other agencies' policy decisions on rules that have small business impacts, we believe they have 

done a significant amount of small business outreach. 

QUESTION 3: 

If the rule were to go into effect, do you believe that the Department should be 

required to conduct economic analysis before any automatic increases in the income 

threshold go into effect? 

In our comment letter, Advocacy recommended that DOL analyze the impact of the annual 

salary updates on small businesses. DOL did analyze the impact of the automatic increases on 

small businesses in the final rule (see table 46 in the FRFA). However, Advocacy is also 

concerned that DOL's analysis still underestimates the costs of these automatic increases on 

small entities. For example, DOL has estimated that each small business will spend only five 

minutes every three years on regulatory familiarization to understand how the new threshold 

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will impact their business. Advocacy still recommends that DOL continue to update their RFA 

analysis every three years, when this threshold is updated. 

QUESTION4: 

Moving forward, how will you support the interests of small business owners 

throughout implementation of the overtime rule? 

Advocacy is available to help DOL in getting the word out to small businesses on how to comply 

with this regulation. DOL has published a Small Business Compliance Guide, and Advocacy will 

make sure that this document is distributed to the small business community. Advocacy will 

continue to gather feedback on how this rule is affecting small businesses, and bring back this 

vital information to DOL, the White House and Congress. 

From Senator Fischer 

QUESTION 1: 

Does the final rule to redefine the scope of federal jurisdiction under the Clean 

Water Act succeed in clarifying the scope? Would the proposed rule lead to more 

litigation, including more citizen suits? 

The rule does not clarify the scope of jurisdictional waters. The rule is currently the subject of 

litigation in the 6th Circuit. 

QUESTION 2: 

How could the final rule to redefine the scope of Federal jurisdiction under the Clean 

Water Act affect our nation's economy and the ability of industry to grow and create 

jobs? 

The rule introduces uncertainty in the Clean Water Act regulatory scheme. Businesses may 

choose not to pursue projects because they do not have confidence that they will be able to get 

a permit in a timely or economical fashion. Small businesses have commented that the scope of 

the rule is too broad and would potentially bring every body of water under federal jurisdiction. 

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NFIB 

The Voice of Small BusinesS: 

May 18,2016 

The Honorable David Vitter 

Chairman, U.S. Senate Committee on Small Business and Entrepreneurship 

428A Russell Senate Office Building 

Washington, D.C. 20510 

Attn: Kathryn Eden 

Dear Chairman Vitter: 

This letter is in response to your May 12,2016, letter submitting a question for the record from 

Senator Fischer. Senator Fisher asked the following question and below is my response. 

QUESTION: Do you believe that the rule will have a direct impact on small businesses? 

How? 

Yes. I do believe the Waters of the United States rule will have a direct adverse impact on 

many small businesses. The United States Environmental Protection Agency and the U.S. 

Army Corps of Engineers (the Agencies) are pursuing a significant expansion of federal 

CW A jurisdiction, which will necessarily exert more government control over private 

properties--including many owned by small businesses. As a result, the rule will have severe 

practical and financial implications for many. This is because a business owner cannot make 

economically beneficial uses of his or her land once it is considered jurisdictional. And if an 

owner proceeds with a project on a portion of land that might be considered a water of the 

U.S., the owner faces the prospect of devastating fines-up to $37,500 per day. 

Consequently, most landowners--especially small businesses-will be forced into keeping 

their properties undeveloped. If the purported jurisdictional water covers the entire property, 

the owner may well be denied the opportunity to make any productive or economically 

beneficial use of the property. In some cases, it may be possible for the owner to obtain a 

permit to allow for development; however, there is no guarantee a permit will be issued. 

Moreover, for small business owners and individuals of modest means, such a permit is 

usually cost prohibitive. 

While multinational corporations with tremendous capital resources might be able to afford 

permitting costs, most small businesses are without recourse. Usually, their only option is to 

swallow their losses and forgo any development plans. Unfortunately, these small businesses 

suffer greatly because they have usually tied up much of their assets into their real estate 

investments and can neither afford necessary permits, nor legal representation to challenge 

improper jurisdictional assertions. And lawsuits challenging these assertions are fact 

intensive and extremely costly to litigate. 

National Federation of Independent Business 

1201 F Street NW' Suite 200 'Washington, DC 20004 • 202-554-9000' Fax 202·554.()496 
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Thank you again for holding this important hearing shining a light on the fact that regulations are 

a hidden "tax" on small businesses. I look forward to working with you on this and other issues 

important to small business. 

Sincerely, 

Elizabeth Milito 

Senior Executive Counsel 

NFIB Small Business Legal Center 

Nati011al Federation of Independent Business 

1201 F Street NW' Suite 200 'Washington, DC 20004 '202-554-9000 • Fax 202-554-0496 
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Nt Manufacturers 

Rosario Palmieri 

Vice President 

Labor, Legal & Regulatory Policy 

The Honorable David Vitter 

Chairman 

Committee on Small Business & Entrepreneurship 

U.S. Senate 

Washington, DC 20510 

Dear Chairman Vitter: 

May 26, 2016 

Thank you for the opportunity to testify before your committee. Below is a response to 

the question for the record. 

Senate Committee on Small Business and Entrepreneurship Hearing 

April 27, 2016 

Follow-up Question for the Record 

Question from Senator Fischer: 

Would the final rule's expansion of federal powers create an unreasonable burden to 

small developers and other private property owners, especially given that the states are best 

positioned to assume jurisdiction and protect on a local level the water quality of small and 

intermittent bodies of water? 

Response from Mr. Palmieri: 

Yes, if the final rule were to be fully implemented, it could create an unreasonable 

burden on many private property owners, especially small businesses. Federal regulations are 

making it harder for businesses to grow and Americans to work. Rules that should help our 

communities thrive are instead making life harder for job creators, workers and their families. 

Two years ago, the EPA and the Army Corps of Engineers (Corps) announced they 

would attempt to redefine the words in the Clean Water Act (CWA) that define what is regulated 

by the federal government rather than state and local governments. By law, the CWA applies to 

"navigable waters," which is in turn defined as "the waters of the United States, including the 

territorial seas."' However, in the four decades since enactment of the CWA, stakeholders have 

grappled with what that phrase actually means. 

For example, there have been times when some tried to call isolated gravel pits "waters 

of the United States."2 In other instances, the application of CWA jurisdiction prevented 

I 33 U.S.C. § 1362(7). 2 Solid Waste Agency q(Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001). 

Leading Innovation. Creating Opportunity. Pursuing Progress. 

7331Qtn Street, NW, Suite 700, Washington, DC 20001 · P 202-637·3177 · F 202·637·3182 · www.nam.org 
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landowners from preparing their land to build a home.3 Fortunately, the judicial system has 

operated as a buffer to these sorts of misinterpretations of the law. It has not, however, resolved 

the need for clarity. And an expensive and lengthy legal battle is often not an option for a small 

family farm or a start-up company. 

Manufacturers therefore would welcome a clear rule that resolves disagreement over the 

scope of the CWA. The official policy of the NAM is that the term "waters of the United States" 

should be interpreted to mean waters that are navigable in fact or that have a relatively 

permanent surface connection to a water that is navigable in fact. 

Unfortunately, the final "waters of the United States" regulation fails to clear up existing 

jurisdictional problems and may even create new ones. The regulation expands the scope of the 

CWA to areas that are not always wet, but also fails to provide clear exclusions to determine 

specifically which waters qualify. Manufacturers will face increased regulatory uncertainty, 

permitting costs, and supply and customer chain disruptions. Ambiguities in the new regulation 

will give rise to third-party lawsuits, even in cases where the EPA decides a water is not a water 

of the U.S. This is an unreasonable burden to small developers and other private property 

owners. 

The EPA and the Corps claim the final rule does not expand CWA jurisdiction. Consider 

the following, however: 

Relatively minor activities such as clearing sediment from stormwater basins or moving 

stormwater drains now require additional permitting and reviews. This increases time 

and money required to complete work; 

Ditches, including roadside ditches that have perennial flow, are regulated. The rule 

includes exemptions for certain ditches, but there are many other types of ditches that 

are now regulated as tributaries. Even dry ditches that are either a relocated tributary or 

were excavated in a tributary are now regulated by the EPA. It is up to landowner to 

prove that their ditches do not excavate or relocate a historic tributary. This allows the 

federal government to assert jurisdiction based on past conditions, not present; 

Increased stream numbers and tributary lengths could prevent critical nationwide permits 

in some cases. This stalls transmission line maintenance, infrastructure expansion, and 

other projects that currently rely on nationwide permits; 

At a minimum, energy exploration and production companies expect the number of 

permits required to double. Managing the nine- to eighteen-month individual permitting 

process is difficult and could lead to loss of leases and associated product sales. For the 

increases in permitting, site delineations, and modified construction practices, one NAM 

member informs us that costs could increase in the range of 100 to 750 percent. 

Breweries worry about how this rule will impact their ability to get the grains they need to 

make beer. When homebuilders face increased site costs, homeowners could be forced 

to sacrifice other items to stay within budget; 

If a manufacturer needs to install a larger loading dock and some additional space to 

manufacture products, the new rule could force the manufacturer to seek permits and 

3 Sackett v. United States Environmental Protection Agency, 132 S. Ct. 1367 (2012). 
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potentially put major systems in place to treat stormwater unless certain exemptions are 

met; and 

A heavy equipment manufacturer's site for testing equipment and moving dirt has rain 

flow, and as a result may now be covered. Even if the agencies say it is not a problem, 

citizen suits could hamper operations and maintenance work or prevent clearing out 

ponds and holes used for testing. 

The final "waters of the U.S." rule substitutes the new definition into all CWA programs 

and regulations across the entire country, which in turn changes the jurisdictional application of 

all other CWA rules. Implementation will be difficult: in the past, typically only CWA Section 404 

dredge-and-fill permits sought jurisdictional determinations, but now other programs will start 

seeing the need for more determinations. An influx of new requests will mean more delay. And 

applicants with pending permits will have to start over based on the new rule. 

Ultimately, this translates into greater legal costs and fewer profits to reinvest into 

communities. It means consumers pay more, but get less. For manufacturers, more money will 

be spent on permitting instead of innovation, and projects that create jobs in communities could 

be delayed or shelved. 

Sincerely,