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21–408 PDF 2016

S. HRG. 114–352 

AMERICAN SMALL BUSINESSES’ PERSPECTIVES 

ON ENVIRONMENTAL PROTECTION AGENCY 

REGULATORY ACTIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SUPERFUND, WASTE 

MANAGEMENT, AND REGULATORY OVERSIGHT 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 12, 2016 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 
(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JAMES M. INHOFE, Oklahoma, Chairman 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

SHELLEY MOORE CAPITO, West Virginia 

MIKE CRAPO, Idaho 

JOHN BOOZMAN, Arkansas 

JEFF SESSIONS, Alabama 

ROGER WICKER, Mississippi 

DEB FISCHER, Nebraska 

MIKE ROUNDS, South Dakota 

DAN SULLIVAN, Alaska 

BARBARA BOXER, California 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

CORY A. BOOKER, New Jersey 

EDWARD J. MARKEY, Massachusetts 

RYAN JACKSON, Majority Staff Director 

BETTINA POIRIER, Democratic Staff Director 

SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, 

AND REGULATORY OVERSIGHT

MIKE ROUNDS, South Dakota, Chairman 

DAVID VITTER, Louisiana 

MIKE CRAPO, Idaho 

JOHN BOOZMAN, Arkansas 

DAN SULLIVAN, Alaska 

JAMES M. INHOFE, Oklahoma (ex officio) 

EDWARD J. MARKEY, Massachusetts 

THOMAS R. CARPER, Delaware 

JEFF MERKLEY, Oregon 

CORY A. BOOKER, New Jersey 

BARBARA BOXER, California (ex officio) 
(III) 

C O N T E N T S 

Page 

APRIL 12, 2016 

OPENING STATEMENTS 

Rounds, Hon. Mike, U.S. Senator from the State of South Dakota .................... 1 

Markey, Hon. Edward J., U.S. Senator from the State of Massachusetts .......... 3 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 4 

WITNESSES 

Canty, Michael, President and CEO, Alloy Bellows & Precision Welding, 

Inc. ......................................................................................................................... 6

Prepared statement .......................................................................................... 9 

Responses to additional questions from Senator Inhofe ............................... 24 

Buchanan, Tom, President, Oklahoma Farm Bureau Federation ....................... 27 

Prepared statement .......................................................................................... 29 

Responses to additional questions from Senator Vitter ................................ 54 

Sullivan, Thomas M., of counsel, Nelson Mullins Riley & Scarborough LLP ..... 58 

Prepared statement .......................................................................................... 60 

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 70 

Senator Vitter ............................................................................................ 72 

Knapp, Frank, Jr., President and CEO, South Carolina Small Business 

Chamber of Commerce ......................................................................................... 74 

Prepared statement .......................................................................................... 76 

Responses to additional questions from Senator Inhofe ............................... 80 

Reichert, Emily, CEO, Greentown Labs ................................................................ 84 

Prepared statement .......................................................................................... 87 

Responses to additional questions from Senator Inhofe ............................... 94 

(1) 

AMERICAN SMALL BUSINESSES’ PERSPECTIVES ON ENVIRONMENTAL PROTECTION 

AGENCY REGULATORY ACTIONS 

TUESDAY, APRIL 12, 2016 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, 

AND REGULATORY OVERSIGHT, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:31 p.m. in room 

406, Dirksen Senate Office Building, Hon. Mike Rounds (chairman 

of the subcommittee) presiding. 

Present: Senators Rounds, Markey, Boozman, Inhofe, and Booker. 

OPENING STATEMENT OF HON. MIKE ROUNDS, 

U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA 

Senator ROUNDS. Good afternoon, everyone. The Environment 

and Public Works Subcommittee on Superfund, Waste Management, and Regulatory Oversight is meeting today to conduct a 

hearing on American Small Businesses’ Perspectives on Environmental Protection Agency Regulatory Actions. 

The purpose of the hearing is to further this subcommittee’s 

oversight of EPA’s rulemaking process. We have already held hearings examining the science advisory process underpinning EPA’s 

regulatory action, the sue-and-settle agreements that result in new 

EPA regulations, and the EPA’s approach to economic analysis 

used to justify regulations. 

This hearing will examine EPA’s consideration of small businesses in its rulemaking process and the real-world impacts of EPA 

regulation from the perspective of regulatory experts and small 

business owners. 

America’s small businesses are the backbone of the U.S. economy. The 28 million small businesses in the United States provide 

55 percent of all American jobs and make up 99.7 percent of U.S. 

employer firms. 

The ability to build a small business from the ground up is a cornerstone of the American dream. Small businesses are able to 

flourish in our country. They provide jobs for millions of Americans 

and account for 54 percent of all United States sales. Unfortunately, despite their success, American small businesses are hindered by approximately 3,000 current and pending regulations that 
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will impact small businesses and cost $1.75 trillion annually in 

compliance costs. 

The Environmental Protection Agency imposes some of the most 

significant and far reaching regulatory burdens on small businesses. According to the Small Business Administration, EPA regulations cost small businesses 364 percent more to comply than 

large businesses. For example, EPA’s greenhouse gas reporting rule 

is estimated to be 65 times more burdensome for small businesses 

than larger entities. 

American small businesses are burdened with sweeping EPA regulations and provided few resources to aid them in complying with 

a myriad of confusing and costly regulations. In a recent study, 90 

percent of respondents identified Government regulations as a 

challenge affecting their business. 

Mindful of the disproportionate impacts Federal regulations 

could have on small businesses, Congress passed the Regulatory 

Flexibility Act, or RFA, in 1980, which requires Federal agencies 

to analyze how their regulations will impact small businesses and 

consider less burdensome alternatives. The RFA requires agencies 

to convene a small business advocacy review panel to receive input 

from small businesses’ representatives before a proposed rule is 

issued. 

However, the Government Accountability Office and others have 

found that the RFA does not define a number of key terms, and 

the courts have done little to clarify these terms. 

Additionally, while courts have held agencies are not required 

under the RFA to analyze the effect of a regulation on small businesses if the regulation only indirectly impacts small businesses, 

agencies are still bound by executive orders to consider a regulation’s impact on these businesses. Yet the EPA claims major environmental regulations, such as revisions to the National Ambient 

Air Quality Standards, or NAAQS, will have no significant impact 

on small businesses because NAAQS standards apply directly to 

States, not small businesses. However, these regulations will lead 

to significant economic harm on small businesses. 

Further, the EPA has improperly certified that major regulations 

imposed by the Obama administration, such as the Waters of the 

U.S. Rule and the Clean Power Plan, will not have significant impacts on U.S. small businesses. However, the independent Small 

Business Administration’s Office of Advocacy, the Government 

agency tasked with providing support and resources to small businesses, expressed concerns over each of these rules, even going so 

far as to urge the EPA to withdraw the expansive Waters of the 

U.S. Rule due to concerns regarding the costly impact the rule will 

have on small businesses. 

The Office of Advocacy also pointed out particular challenges 

that would be faced by small businesses in complying with the 

EPA’s proposed Federal compliance plan for the Clean Power Plan 

and how it would impact small businesses. 

American small businesses provide jobs, products, and services 

for millions of Americans. We must recognize the unique characteristics and challenges faced by this vital segment of the U.S. economy so that businesses are able to thrive and grow rather than be 
3 

burdened by complex, overreaching EPA regulations that run contrary to the original intent of Congress. 

I would like to thank our witnesses for being with us here today, 

and I look forward to hearing your testimony. 

Now I would like to recognize my friend, Senator Markey, for a 

5-minute opening statement. 

Senator Markey. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, 

U.S. SENATOR FROM THE STATE OF MASSACHUSETTS 

Senator MARKEY. Thank you, Chairman Rounds. Thank you, 

Chairman Inhofe, for having this very important hearing today. 

And I am very delighted that Dr. Emily Reichert of Greentown 

Labs in Somerville, Massachusetts, is with us today, and Frank 

Knapp, the President and CEO of the South Carolina Small Business Chamber of Commerce and Co-Chair of the American Sustainable Business Council, are able to join us today. 

I had the opportunity to visit Greentown Labs with Dr. Reichert 

and EPA Administrator Gina McCarthy in the fall. Dr. Reichert 

and the work she is leading at Greentown Labs have helped make 

Massachusetts a clean energy innovation hub. 

Frank Knapp has been a leader of the South Carolina Small 

Business Chamber of Commerce and an advocate for American 

small businesses and their employees across the Nation. 

I look forward to hearing from both of them and the other witnesses. 

Today’s hearing will examine the impact on small businesses of 

EPA’s efforts to protect public health and the Nation’s water and 

air. Massachusetts is the home to over 620,000 small businesses 

that employ 1.4 million people, or over 46 percent of our work 

force. In Massachusetts, we understand that a healthy environment is key to a healthy economy. Where some might see Government overreach, our entrepreneurs see opportunity to develop new 

technology and to create new jobs. 

We know that by cutting carbon pollution we can grow our economy and save American families money. It is a formula that works. 

We did it in Massachusetts through the Regional Greenhouse Gas 

Initiative. 

Since the Regional Greenhouse Gas program went into effect in 

2009, the program has added almost $3 billion in economic value 

to participating States and saved consumers more than $1.5 billion. 

This formula is at the heart of the Clean Power Plan. 

The Clean Power Plan will create jobs and grow our economy. It 

is a signal to the marketplace to invest in clean energy. Today, 

more than 2.5 million Americans are employed in clean energy, and 

this February the Solar Foundation released a report showing that 

sunny Massachusetts is second in the Nation in total solar workers. 

Massachusetts now has nearly 100,000 clean energy jobs in our 

State. It is now in the top 10 in terms of sectors for employment, 

up from non-existence for all intents and purposes 10 to 15 years 

ago. Protecting the climate and public health by investing in the 

clean energy sector is fueling small business entrepreneurs and 

innovators across the country. 
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The same is true when it comes to clean water. Sensible regulations protect our beaches, our waterways, our drinking water, and 

our economy. In Massachusetts, we love that Dirty Water—the 

Standells—but understand that tourism, recreation, agriculture, 

and other economic engines of growth in Massachusetts need clean 

water in order to flourish. 

For over 40 years the Clean Water Act has played an integral 

role in the protection and clean up of America’s most iconic and important waterways, and we must continue that effort. It helped 

clean up the Charles River and Boston Harbor, and today a cleaner 

Boston Harbor is helping revive waterfront development, create 

jobs, and grow our economy dramatically. 

The Clean Water Rule is smart and sensible and has the support 

of business leaders. Last year, 300 small businesses, including several in Massachusetts, wrote a letter to President Obama in support of the new rule. What small businesses, entrepreneurs, 

innovators, and Government are doing in my home State of Massachusetts can serve as a model for the rest of our Nation, demonstrating that growing our economy and protecting our environment go hand in hand. 

Because small businesses play such an important part in our economic vitality, Congress has directed agencies to incorporate the 

impact of their regulations on small businesses. EPA takes their 

responsibilities to incorporating small businesses’ concerns very seriously. For example, their recently finalized Petroleum Refineries 

Rule was only applied to major refineries. Small refineries were excluded, one of the suggestions made by the Small Business Administration’s Office of Advocacy. 

I look forward to working with my colleagues to ensure that EPA 

and the Small Business Administration get the resources they need 

so that the views of small businesses continue to be incorporated 

into the rulemaking process. 

Again, Mr. Chairman, thank you for holding this hearing, and I 

am looking forward to hearing from our witnesses. 

Senator ROUNDS. Thank you, Senator Markey. 

We are also pleased to have the chairman of the full committee 

here with us, Senator Inhofe. 

Senator Inhofe, thank you, and welcome. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. Thank you. I have imposed upon Chairman 

Rounds and Senator Markey to allow me to make a couple of comments, even though this is a subcommittee hearing. And at the appropriate time I want to introduce one of our witnesses, as we do 

for all the witnesses that come along. 

Just two quick stories. One is my poetic justice story. And by the 

way, you are looking up here at a panel of really diverse philosophies. I consider Senator Markey one of my closest personal 

friends, and I have even back when we were serving in the House 

together. Yet you won’t find two Senators who are further apart 

philosophically than the two of us. So you will enjoy this story. 

For 20 years I was in the real world, and I was being abused by 

the bureaucracy, and I can remember so often there I was down 
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there building and developing. Most of this was in the coast in 

Texas. And toward the end of it, I thought, who would be opposed? 

Why am I getting harassed by the bureaucracy? Here I am expanding the tax base, doing things that Americans are supposed to do; 

hire people, making fortunes, losing fortunes, and all that. So why 

is it that the Federal Government is the chief opposition to everything I am trying to do? 

Well, the poetic justice part of it is I now chair the committee 

that has jurisdiction over the bureaucracy that tried to put me out 

of business for 20 years. 

[Laughter.] 

Senator INHOFE. The other thing I want to remind both of my 

good friends up here, Senator Rounds and Senator Markey, is that 

I was Mayor of Tulsa in 1980, and I was in the middle of drafting 

this bill at the time. I was pretty naı ̈ve and I thought, well, that 

takes care of all the problems of costing businesses and all that. 

It didn’t quite work, but we tried. 

That is my statement. 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA

Thank you, Subcommittee Chairman Rounds, for convening today’s hearing, and 

thank you to our witnesses for being here to testify. I am especially pleased we will 

hear testimony today directly from small business owners with operations across the 

country from Oklahoma, to Ohio, to Massachusetts. 

Our Nation’s best ideas and economic success stories stem from small businesses. 

Yet it is small businesses that are most vulnerable to Federal regulatory overreach, 

where even a minor change in the eyes of a regulator can equate to a death sentence 

for a small operation. I know first-hand, from my days as a former developer, how 

red tape can bury a small operator from doing good work, as I once had to go to 

26 different government bureaucracies to get a single project permit approved. 

For these reasons, it is critical small businesses have a voice in Washington, both 

in Congress and in the overwhelming Federal bureaucracy. Today the subcommittee 

will take a closer look at how well those voices have been heard at the U.S. Environmental Protection Agency (EPA). 

Mindful of the sensitivity small businesses have to Federal regulation, Congress 

has enacted several laws and Presidents have signed executive orders that require 

Federal agencies to carefully consider the impacts of a potential regulation on small 

businesses. Most notably, the Regulatory Flexibility Act of 1980 (RFA), and its 

amendments from the Small Business Regulatory Enforcement Fairness Act 

(SBREFA) of 1996, designed a process to make Federal regulators think about how 

small businesses would actually comply with a regulation—on the front end. This 

statutorily mandated process was so important, Congress created the Office of Advocacy within the U.S. Small Business Administration to monitor agency implementation of the RFA. 

Decades later, we are amidst a regulatory regime under the Obama administration that has grown too big and short-changed this process. EPA has exploited ambiguities in these laws to issue its agenda driven policies, even at the expense of small 

businesses. Instead of robust review and meaningful input from small businesses 

prior to issuing a regulation, the Obama-EPA has treated the RFA has a mere 

‘‘check-the-box’’ exercise. 

This is precisely what happened before EPA proposed its waters of the U.S. 

(WOTUS) Rule to drastically expand waters regulated by EPA, which will make it 

extremely difficult for farmers to make routine changes to their own property and 

decrease farmers’ property values. In this case, EPA and the Army Corps of Engineers certified the proposed rule would not have significant small business impacts—contrary to the advice of the Office of Advocacy. EPA’s decision to simply ignore the Office of Advocacy’s advice allowed the agency to circumvent RFA requirements despite ample evidence that the rule would lead to much higher costs for 

many small businesses. 
6 

There are plenty of other examples where the Obama-EPA and the Office of Advocacy have disagreed on the impacts a potential regulation could have on a small 

business. Ultimately, this regulatory approach is inefficient. Disregarding small 

businesses leads to poorly written rules and years of litigation, which only delays 

action that could produce meaningful public health and environmental benefits. 

Accordingly, Congress must continue to conduct oversight over EPA’s implementation of the RFA to ensure robust analysis and input from small businesses are used 

to issue leaner, smarter regulations that benefit all stakeholders and avoid costly 

rules with little to no benefit. American ingenuity and well-being depend on it. 

Senator ROUNDS. Thank you, Mr. Chairman. 

Senator MARKEY. May I just say to Chairman Inhofe, I was an 

original co-sponsor of that bill in 1980. 

Senator INHOFE. That was one of our early successes. Maybe our 

only success. 

[Laughter.] 

Senator ROUNDS. I had just bought my first home in 1980. 

[Laughter.] 

Senator ROUNDS. Thank you. 

Our witnesses joining us for today’s hearing are Mr. Michael 

Canty, President and CEO, Alloy Bellows & Precision Welding, 

Inc.; Tom Buchanan, President, Oklahoma Farm Bureau Federation; Thomas M. Sullivan, of counsel, Nelson Mullins Riley & Scarborough; Mr. Frank Knapp, Jr., President and CEO of South Carolina Small Business Chamber of Commerce; and Dr. Emily 

Reichert, CEO, Greentown Labs. 

Now we will turn to our first witness, Mr. Michael Canty, for 5 

minutes. 

Mr. Canty, you may begin your opening statement, and welcome. 

STATEMENT OF MICHAEL CANTY, PRESIDENT AND CEO, 

ALLOY BELLOWS & PRECISION WELDING, INC. 

Mr. CANTY. Thank you. 

Good afternoon. I want to thank Subcommittee Chairman 

Rounds and Ranking Member Senator Markey and all of the subcommittee members for allowing me the opportunity to share my 

perspectives on the impact of EPA regulatory actions on small business. 

My name is Michael Canty. I have been in the business world 

for 40 years. I have owned my own current company for about 10 

years. I have about 135 employees with two manufacturing locations, up from 25 employees about 10 years ago. We sell primarily 

to the power generation, oil and gas, aerospace, and semiconductor 

industries. 

I am proud to be here representing not only Alloy Bellows, but 

the National Small Business Association, NSBA. The NSBA represents 65,000 small business owners across every sector of this 

country, and it is a member-driven and staunchly nonpartisan organization, and I currently serve as an Associate Trustee. 

I also have significant public service serving on a council, village 

council, and as Mayor for 8 years on various public service boards 

and councils and commissions, including over 4 years now on the 

CSI, or Common Sense Initiative, from Ohio initiated by the Governor, John Kasich, to review all regulations being proposed by 

State agencies before they become law, and all regulations every 5 

years to sunset them if they become obsolete. 
7 

In recent years the EPA has an important job. However, the EPA 

is one of the most prolific regulatory agencies that exist, in my 

view. It has implemented a seemingly endless stream of rules and 

regulations, including the Waters of the U.S. and the Clean Power 

Act, which have significant negative impacts on small business. 

Small businesses want to help, but it is becoming increasingly difficult to do so. 

Alloy Bellows was forced to hire a few years ago a senior level 

compliance officer just to keep up with the regulatory issues and 

stay in compliance. We spend well in excess of $200,000 every year 

just to do that. 

An OSHA inspector came in a surprise visit to our organization, 

and her mentality to us kind of sums up many—certainly not all, 

but many of the Federal regulatory agencies. She fined us for a 

very, very minor infraction of an adjustable guard on a little-used 

manual grinder. It was up one-eighth of an inch too high, an issue 

that we fixed on the spot. We got a fine of thousands of dollars, 

and she told me flat out that finding issues and issuing fines was 

how they help fund their department. 

I decided I couldn’t be more shocked at whether it was her candidness or angry at just the mindset of how she had to deal with 

things. 

The cumulative effect on Federal regulations is pretty intense. I 

often hear from elected officials and Agency staffers, this is just 

one more form, and it only takes 22 minutes to fill out and submit. 

We must wonder if those same elected officials and staffers have 

ever worked at a growing manufacturing company, where resources 

are scarce, personnel are pressed with company needs, and nothing 

gets done either in isolation or in the 22 minutes they often say. 

I want to thank Chairman Rounds for introducing the bipartisan 

RESTORE resolution. This resolution would have an enormous impact on my small business and all businesses. And along those 

same lines, the NSBA strongly supports the National Regulatory 

Budget Act of 2014, introduced by Senator Marco Rubio. It is 

aimed to ensure fairness and common sense in the Federal regulatory processes. Regulatory compliance costs are disproportionately higher on small businesses than their large counterparts. 

Some of those issues were read during the opening statement. 

In Ohio, the Common Sense Initiative, now State law thanks to 

Governor Kasich, was passed as a second bill. It requires all proposed State agencies to run their proposed regulations through a 

cost-benefit review process and ensure that all affected stakeholders have input into the process. The numbers are impressive. 

The number of annually proposed regulations has dropped significantly as bad proposals get weeded out early and then through the 

process as well. 

Some personal examples. Stormwater regulation. When I was a 

Mayor in the early 2000s, the Federal EPA passed the stormwater 

regulations requirements on every community to develop, monitor, 

and report annually on six key areas of water quality at every 

water area, every outflow in the community. The EPA mandates 

were vague, and they were overreaching. The result was excessive, 

permanent, and annual taxpayer cost paid by both businesses and 

residents alike. 
8 

NORSD—the Federal and State EPA imposed in Ohio certain 

regulatory and extensive requirements to control potential and real 

sewage overflows into Lake Erie during 500-year storms. To deal 

with this, the State of Ohio set up through State law multijurisdictional sewer districts to control and manage the problem. My 

business is located in one of those multijurisdictional districts. The 

district just imposed—and this isn’t the first time—without oversight and without a vote, stormwater control fees, a permanent annual $35 million fee, a 19.5 percent increase in their annual budget. Our firm’s share was $2,000 annually, every year, forever. 

NORSD also implemented an 11 percent to 13 percent increase 

in sewer fees for each of the next 5 years and stated that that annual increase would continue for the next 25, a 1,900 percent-plus 

increase paid for by business and residents alike. Our firm, with 

135 employees, is moving in 2017, and we are moving out of the 

NORSD district. 

Our electric costs alone because of the input on coal and the 

shutting down of those plants has increased 35 percent on our company, an energy intensive company, over the last 2 years. 

Senator ROUNDS. Sir, if you could, bring it to a close, OK? 

Mr. CANTY. I will sum up. 

Senator ROUNDS. Thank you. 

Mr. CANTY. Over the last 10 years our philosophy has been to 

make everything we sell. Ninety-five percent of everything we have 

sold is made in America, with American labor. That has to change. 

Next Sunday I leave for Poland and Berlin, and the first week of 

June for China to set up vendor relationships with companies due 

in large part to the ever increasing and ever costly increase cost 

of Federal regulations on small businesses like mine. That means 

fewer jobs, fewer investments, and fewer technologies in the U.S. 

Again I want to thank Senator Rounds and Ranking Member 

Senator Markey for holding this hearing and allowing me to testify 

on behalf of NSBA. The need for relief is real and immediate. 

Thank you. 

[The prepared statement of Mr. Canty follows:] 
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Senator ROUNDS. Thank you, Mr. Canty. 

At this time I would ask if Senator Inhofe would care to introduce Mr. Buchanan. 

Senator INHOFE. OK. 

Well, first of all, we are very happy to have Tom Buchanan here. 

He has been a good friend for a long period of time. He has a cowcalf operation in southwestern Oklahoma. He grows wheat and irrigated cotton. He is the Vice Chairman of the Oklahoma Water Resources Board and is President of the Oklahoma Farm Bureau, and 

most important, a close friend. 

Senator ROUNDS. Thank you. 

Mr. Buchanan, you may begin your opening statement. 

STATEMENT OF TOM BUCHANAN, PRESIDENT, 

OKLAHOMA FARM BUREAU FEDERATION 

Mr. BUCHANAN. Thank you, Senator Inhofe, for that introduction. 

Chairman Inhofe, Subcommittee Chairman Rounds, and Minority 

Member Markey and members of the committee, I appreciate this 

opportunity to testify on behalf of American Farm Bureau and this 

great Nation’s farmers and ranchers. 

My name is Tom Buchanan. I am President of the Oklahoma 

Farm Bureau, and I serve on the Board of the American Farm Bureau Federation. 

Chairman Rounds, it seems that 1980 is an important date for 

everyone on the committee, including myself. While your esteemed 

colleagues started their professional career in 1980, so did I; 1980 

is when I produced my first cotton crop and grew my first set of 

calves. So I have been trying to farm ever since that point. 

I have attached two documents which I would like to request be 

included in the committee’s record for this hearing. I would also 

like to begin by expressing my gratitude to Chairman Inhofe for 

the Government Accountability Office’s investigation into EPA’s illegal lobbying and social media campaign. 

From our perspective, EPA did use covert propaganda to mislead 

the public and violate the Anti-Lobbying Act and was more focused 

on promoting a flawed WOTUS Rule than keeping an open mind 

or hearing good faith concerns with their proposal. Farmers and 

ranchers deserve better when important matters of public policy 

are discussed and are at stake. 

I am here today because of my organization’s experience with a 

major new Clean Water Act rulemaking by EPA and the Corps. 

This is a rule of extraordinary practical importance for farmers, 

ranchers, and almost anyone who grows, builds, or makes anything 

in this great Nation. 

After carefully studying the proposed rule, we at Farm Bureau 

concluded that the rule’s vague and broad language would define 

waters of the United States to include countless land areas that are 

common in and around farm fields and ranches across the countryside. These are acres that don’t look a bit like water. They look like 

land, and they are farmed and ranched today. 

But by defining them as waters of the U.S., the rule would make 

it illegal to farm, build fences, cut trees, build a house, or do most 

anything else there without first asking permission of the Federal 
28 

Government and navigating a costly and complex permitting process. 

From the day it first issued the proposed rule, EPA behaved like 

an advocate for a decision that was already made, willing to say 

most anything to get the desired result. It waged a public relations 

campaign aimed directly at farmers and ranchers, providing false 

and misleading assurances in speeches and blogs that the rule will 

not increase permitting requirements for farmers or get in the way 

of farming. Our experience is that EPA and the Corps will interpret their rules broadly, not narrowly. 

EPA also engaged in an extraordinary social media campaign 

aimed at a different audience, the broader public audience. That 

campaign consisted almost entirely of non-substantial platitudes 

about the importance of clean water, which, of course, no one disputes the need for clean water. It used simplistic blogs, tweets, and 

YouTube videos to generate purported support for the rule among 

well intended people who have absolutely no idea what the rule 

would actually do or what its actual costs would be. EPA later 

claimed public support for the rule, even though the vast majority 

of those who actually read the rule, State and local governments, 

businesses and organizations representing virtually every segment 

of the U.S. economy, vehemently opposed it. 

I would like to point out that the agencies also ignored another 

important regulatory safeguard for small businesses by improperly 

certifying the WOTUS Rule under the Regulatory Flexibility Act. 

The Office of Advocacy concluded that the effects of EPA’s WOTUS 

Rule would have direct economic impacts on a substantial number 

of small businesses, and the agency should have convened a small 

business advocacy review panel under the Small Business Regulatory Enforcement Fairness Act before releasing the rule for comment. 

Congress should hold the agencies accountable for ignoring the 

requirements of the RFA and for openly showing their contempt for 

small entities by characterizing their concerns about this proposal 

as silly and ludicrous. 

Last, EPA should try to honestly and transparently account for 

the regulatory impact and cost of their actions, even when they expect opposition. I truly hope this committee’s efforts will lead us in 

that direction. 

Thank you for the time and this opportunity. 

[The prepared statement of Mr. Buchanan follows:] 
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Senator ROUNDS. Thank you for your testimony, Mr. Buchanan. 

Our next witness is Mr. Thomas Sullivan. 

Mr. Sullivan, you may begin. 

STATEMENT OF THOMAS M. SULLIVAN, OF COUNSEL, 

NELSON MULLINS RILEY & SCARBOROUGH LLP 

Mr. SULLIVAN. Thank you, Mr. Chairman, members of the subcommittee. I am pleased to present my views on how EPA rules impact small business. The bulk of my testimony will actually cover 

how small businesses impact EPA rules, or at least how the Reg 

Flex Act is designed to ensure that small business has a voice in 

the process. 

Believe it or not, my first job in Washington was with the Environmental Protection Agency. I served under both Administrator 

Bill Reilly and Administrator Carol Browner. I then joined the National Federation of Independent Business, NFIB. One of my 

proudest professional experiences was working on NFIB’s campaign 

working with this committee to prevent small businesses from 

being sued under the Superfund law just because they sent household garbage to their local landfill. It was the story of Barbara Williams of Gettysburg, Pennsylvania, who I was honored to be with 

when President George W. Bush signed the Small Business Superfund bill in January 2002. 

Later that month I was unanimously confirmed to head the Office of Advocacy that we have already discussed this afternoon at 

the SBA. The Office of Advocacy is responsible for overseeing the 

Regulatory Flexibility Act. I served there as Chief Counsel for Advocacy until 2008. During my tenure, that office issued approximately 300 public comment letters to 68 agencies, averaging about 

38 letters to agencies per year. 

I have remained deeply interested in how small businesses are 

impacted by regulation and how small business involvement in the 

decisionmaking can benefit regulatory policy. 

The rationale for passage of the Regulatory Flexibility Act still 

exists today. That rationale is based on the critical role small businesses play in our economy and an understanding of how small 

firms are disproportionately impacted by regulation. Recent data 

show that small firms create almost two-thirds of the net new jobs 

in this country, and we will hear later in the panel how small businesses lead America’s innovation economy. Studies from the Office 

of Advocacy show that small firms produce 16 times the number of 

patents per employee than their larger business competitors. 

At the same time, research shows that over $2 trillion cost of 

Federal regulation hits small businesses the hardest. Small businesses with fewer than 50 employees shoulder $11,724 per employee per year to keep up with regulatory mandates. That cost is 

more than twice the cost of healthcare at a per-employee basis. 

Plus, the cost for the small firms is 29 percent higher per employee 

than for firms with 100 or more employees. 

Those are the reasons that led to the enactment of the Regulatory Flexibility Act in 1980. 

There has been extensive research about the success and failures 

of the Regulatory Flexibility Act, and I would actually just like to 
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get into some of the good news and bad news about how it is being 

implemented. 

The good news is that EPA actually does work with the Office 

of Advocacy and hosts SBREFA panels to explore how the Agency 

can sensitize its approach to small business. It is encouraging to 

know that EPA holds pre-panel sessions before the SBREFA panels 

actually start in order to think through issues that they may not 

have anticipated in developing a rulemaking. 

The bad news is that there are still times when EPA’s deadlines, 

whether they are judicial, statutory, or political, push the careerists to approach the Regulatory Flexibility Act as a set of bureaucratic procedural hurdles. The most obvious example of EPA purposely avoiding the Regulatory Flexibility Act, in my opinion, was 

its recent promulgations of the Waters of the U.S. Rule that Mr. 

Buchanan just outlined. 

That troubling situation with EPA’s promulgation of the Waters 

of the U.S. Rule leads people like me to try and figure out, how can 

it be improved. EPA’s decision on whether to conduct a full examination of small business impacts is really a critical point in the 

rulemaking process. That certification part of the Reg Flex Act is 

truly the fork in the road when it comes to whether EPA should 

listen to small business or not. I believe that Congress, the EPA, 

and the Office of Advocacy should consider ways in which EPA certification would benefit from an objective third party’s judgment 

when the Office of Advocacy has an objection. 

When agencies quarrel over their impact on the environment, the 

Council on Environmental Quality acts as an arbiter. Some thought 

should be given on whether a similar model could work for disagreements between the Office of Advocacy and EPA under the 

Regulatory Flexibility Act. 

In my opinion, EPA makes its best decisions or, as Senator Markey said, sensible regulations when it decides to embrace the Regulatory Flexibility Act and treat its interaction with small business 

as a constructive dialogue where the Agency can meet its objectives 

while also minimizing burden on small business. It can work. I 

have seen it work. And I thank the committee for taking the time 

to make sure it can work. 

[The prepared statement of Mr. Sullivan follows:] 
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Senator ROUNDS. Thank you, Mr. Sullivan. 

We will now hear from our next witness, Mr. Frank Knapp, Jr. 

Mr. Knapp, you may begin. 

STATEMENT OF FRANK KNAPP, JR., PRESIDENT AND CEO, 

SOUTH CAROLINA SMALL BUSINESS CHAMBER OF COMMERCE 

Mr. KNAPP. Thank you, Chairman Rounds, Ranking Member 

Markey, and Chairman Inhofe. My name is Frank Knapp. I am the 

President of the South Carolina Small Business Chamber of Commerce, also the Board Co-Chair of the American Sustainable Business Council, with a network representing 200,000 businesses. 

Today’s hearing topic is important for small business and the vitality of our economy. Good regulations tend to stimulate innovation and entrepreneurship in addition to limiting or preventing destructive forms of economic activity. Bad regulations, whether because they are not designed properly or simply not needed, would 

be a burden on small businesses and thus harm our economy. Everyone here would prefer the former and not the latter. 

However, even good regulations will have some negative impact 

on certain small businesses. The issue is do the positive economic, 

social, environmental, or health outcomes outweigh the negatives. 

For example, well constructed regulations that encourage alternative energy to reduce carbon dioxide emissions impede the use 

of fossil fuels, which reduces capital spending and jobs in the fossil 

fuel industries. However, alternative energy is much more responsive to technology driven innovation, and dollar for dollar invested, 

alternative energy stimulates much more employment than fossil 

fuels. 

The issue today is, does the Environmental Protection Agency 

and the Federal Government’s process of promulgating regulations 

adequately consider any negative on small businesses when developing a final regulation? Twelve years ago we addressed this issue 

in South Carolina. Back then, my organization worked with our 

State Chamber of Commerce and our State’s NFIB to pass our 

Small Business Regulatory Act modeled after the Federal law. 

A few years ago, the then-chairman to the Regulatory Review 

Committee told me that in 7 years his committee had reviewed 

about 300 proposed regulations and identified only 10 that raised 

their concern. His committee worked with the State agencies promulgating these new regulations to satisfactorily amend the regulations to address unnecessary burdens on impacted small businesses. 

The Regulatory Flexibility Act works in our State because we 

provide the all-volunteer committee the resources they need to do 

an effective job on newly proposed regulations, and there is the important point. If you want the regulatory process to be fair to all 

parties, and you set up a mechanism to do that, it has to be adequately resourced. 

Back on June 27th of 2012, I testified before the U.S. House 

Small Business Committee on this same subject. Mr. Keith Holman 

of the U.S. Chamber of Commerce was also testifying. I referred to 

Mr. Holman’s filed written testimony in my testimony, and here is 

what I said back then: ‘‘Mr. Holman correctly identifies one area 

where the EPA’s compliance with the RFA can be improved: more 
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resources for the rulemaking process. While there are voices we 

hear in Washington critical of the EPA and calls for cutting back 

or freezing the regulatory process, the reality is that it can work 

better for small businesses and the public if the EPA was better 

funded.’’ 

That testimony was almost 4 years ago. Yet here we are still 

talking about the EPA regulations and small businesses, as well as 

proposals to erode the operational capacity of regulatory agencies, 

instead of providing the proper resources for them to do the job 

Congress tasked them to do, to protect small businesses. 

This month, ASBC, the American Sustainable Business Council, 

led a coalition of 25 business organizations, including the South 

Carolina Small Business Chamber, in filing an amicus brief with 

the D.C. Circuit Court of Appeals in support of the Clean Power 

Plan. The brief argues that unrestrained climate change will burden national, State, and local economies with increased costs and 

business disruptions from droughts, flooding, reduced agriculture 

productivity, extreme weather, rising seas, and other disturbances. 

In addition, the report points out that the Clean Power Plan would 

boost economic growth by generating new market-based solutions 

and new jobs in renewable energy. 

Small business also supports the intent of the Waters of the U.S. 

Polling commissioned by ASBC found that 92 percent of small business owners support regulations to protect our water and air and 

that 80 percent supported the Waters of the U.S. Rule. 

Small businesses know that the risks of clean water disruptions 

are very real. In 2013 massive manure spills into clean water 

sources occurred in Wisconsin, threatening the dairy industry. In 

2014 it was the Elk River chemical spill in West Virginia which 

cost the State’s economy $19 million a day. 

When clean water resources are shut down, the economic burden 

falls on small businesses. 

In conclusion, the regulation promulgating process can produce 

good rules while protecting small businesses from unnecessary burdens if we provide the resources for agencies to expeditiously carry 

out the requirements Congress has already put in place. But the 

Federal Government’s responsibility to impacted small businesses 

shouldn’t stop there. Some small businesses will find compliance 

with Federal regulations difficult. The answer is not to throw the 

baby out with the bath water and invalidate existing rules. Instead, we believe the solution lies in expanding the capacity of the 

Federal Government to provide regulatory compliance assistance to 

small business. 

Thank you for the opportunity to speak before you today. I welcome any questions the committee may have. 

[The prepared statement of Mr. Knapp follows:] 
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Senator ROUNDS. Thank you, Mr. Knapp. 

And now, to introduce our next witness, I would ask Ranking 

Member Markey to do the honors. 

Senator MARKEY. Thank you, Mr. Chairman, very much. 

We are very honored to have Dr. Reichert here with us today. 

Her office, her operation is in Somerville, Massachusetts. It is like 

equidistant from Tufts, Harvard, MIT, Boston University, all of 

these 250,000 students all within like a 3- or 4-mile radius of 

where she has set up this incredible Greentown Laboratories; and 

she now has dozens of startup companies all trying to capture this 

incredible green energy revolution, job creating, a millionaire making clean energy revolution, and it is our honor to have you here, 

Doctor. 

Senator ROUNDS. Welcome, Doctor, and you may begin. 

STATEMENT OF EMILY REICHERT, CEO, GREENTOWN LABS 

Ms. REICHERT. All right. Thank you, Chairman Rounds, Ranking 

Member Markey, and Senator Inhofe, for giving me the opportunity 

to testify on the impacts of EPA’s regulations on American small 

businesses. My name, as Senator Markey just said, is Dr. Emily 

Reichert, CEO of Greentown Labs. We are the largest clean technology incubator in the country, located in Somerville, Massachusetts, with 40,000 square feet of space used to enable entrepreneurs to solve the world’s biggest energy and environmental 

challenges. 

The mission of Greentown Labs is to enable a vibrant community 

of entrepreneurs to work on their visions and to provide access to 

space, resources, and funding that allows their early stage companies to thrive. 

We offer roughly 25,000 square feet of prototyping lab along with 

co-located office space, a shared machine shop and electronics shop, 

immersion in a growing community of clean technology entrepreneurs, onsite events and programs designed to help small businesses rapidly grow their networks and their companies. 

Greentown Labs was started in 2011 by four startup companies 

who needed inexpensive space to build prototypes. Back in 2011 

our operating budget was just $99,000 a year, covering rent and 

shared supplies for four companies without any Government assistance of any kind. It was a grassroots initiative. 

Five years later, in 2015, Greentown Labs was home to over 40 

companies, operating as a for-profit small business with a business 

of $2.1 million and six full-time employees. 

Overall, in 2015, 83 percent of our budget was privately funded 

in the form of members paying rent and large corporate entities 

sponsoring our programming and activities because they want access to the innovation coming out of Greentown Labs. Only 17 percent of our operating budget was from public sources, 2 percent of 

which was from Federal grants, a $50,000 grant from the Small 

Business Administration for one of our programs. 

In total, we have now supported 103 small businesses since our 

founding in 2011. In a recent survey of our alumni has shown that 

86 percent of them continue to grow today, the majority of these 

in Massachusetts, but others have relocated to Texas, Colorado, 
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California, and Wisconsin and continue to grow their businesses in 

these States. 

Greentown Labs tries hard to quantify the impact our companies 

have on our community. Today, 50 member companies call 

Greentown Labs home. Greentown Labs companies employ more 

than 400 people and provide nearly 300 indirect jobs as well. These 

companies and our alumni have raised more than $180 million in 

both public and private funding, and in Massachusetts. This is all 

happening in one of the most heavily regulated States in the country. 

Since being elected, Governor Charlie Baker has undertaken a 

review of State regulations. We now know that we have over 1,600 

regulations that companies have to deal with to do business in the 

State. Many of these are the State’s interpretation of Federal 

standards. But like in many other States, in Massachusetts Federal rules act as the floor, particularly when it comes to environmental regulations. 

Over the last 9 years, Massachusetts has enacted a number of 

laws that increase our State’s investment in renewable energy, 

clean technology deployment, and business regulations regarding 

these matters. It has also led to over 1 gigawatt of installed renewable energy capacity in Massachusetts as of 2015. 

Over the same timeframe, Massachusetts has also grown to be 

one of the leading States in innovation, home to thousands of startup companies, small businesses. According to the Massachusetts 

Clean Energy Center, a quasi-State government agency who issues 

an annual report on the clean energy industry and is now considered the gold standard whose methodology is used in 10 other 

States, job growth in the State’s clean energy sector continues to 

grow by double digits every year since 2010, 11.9 percent in 2015 

alone, which represents 10,500 new jobs. 

For the purpose of this hearing, though, I want to share some 

specific examples of how companies at Greentown Labs incubator 

are creating new innovative products that benefit from some of the 

regulations passed and under consideration by the EPA. 

In April 2012 the EPA put into effect regulations under the 

Clean Water Act to limit water pollution from aircraft and airport 

runway de-icing operations. In response to this, a young company 

in our incubator is developing a new electric-based plane wing deicing method that will not only help airlines comply with this regulation, but will also help airlines save time and money on the runway and potentially remove all glycol, a toxic substance, from the 

de-icing of planes. 

I mentioned another company in my written testimony that has 

benefited from the Clean Air Act. They help landfill owners to better monitor and utilize methane gas, allowing the owner to make 

money while reducing emissions of methane, a greenhouse gas with 

a much greater impact, 25 times more, than carbon dioxide. 

Across the country, new companies like Greentown, the two 

Greentown startups I have mentioned are popping up every day. 

We see them in places from L.A. to New York City, to Oregon, to 

Texas, Chicago, Detroit, even Hawaii. 

I know that many of the people on this panel with me believe 

that environmental regulations cause an unnecessary burden to 
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small businesses, but I, in my experience, have not seen that. Instead, I have observed EPA regulations to be a catalyst for new 

business ideas and new innovative products. And as this committee 

continues to review the impacts of EPA regulations on small businesses, I hope you will keep the experience of Massachusetts and 

Greentown Labs in mind. 

Creating regulations that can help promote a cleaner and more 

efficient environment can also lead to job growth and create innumerable opportunities for new businesses. 

Thank you again for inviting me here today and for the opportunity to speak on such an important issue. 

[The prepared statement of Ms. Reichert follows:] 
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Senator ROUNDS. Dr. Reichert, thank you for your testimony. 

Senators will now have 5 minutes each for questions. I will begin 

the questioning. 

Mr. Canty, in your testimony you discuss the Small Business Advisory Council that you are a member of. When I was working as 

a Governor in South Dakota, we had a similar panel that would 

regularly review State regulations. We referred it to as the Rules 

Review Committee. There are 41 States that have a similar plan 

in place. Can you tell us the benefits of having a stakeholder panel 

review regulations, and in particular how this panel helps ease the 

regulatory burden for small businesses? 

Mr. CANTY. Thank you, Mr. Chairman. Yes, I have served on this 

committee for 4 and a half years, since its inception. What we find 

is that, first, when all stakeholders get around and are required to 

be around the formation of new policies, proposed policies for organizations, it becomes much more balanced. They begin to understand the needs and the costs better than what they might have 

been before. And with all good intentions, proposals that aren’t 

quite so solid get weeded out very early in the process or get modified. 

There are, the first year, as you might expect, a significant reduction of proposed policies being reduced, but right now it has settled into about 25 or 30 percent fewer agency proposals being done. 

But far more important, when those policies do get through and get 

passed, they are better, they are more solid, they are more business 

friendly, and they are accepted by everyone around the table because they all had a stake in it, and they are much more friendly 

to the business community. 

Senator ROUNDS. Thank you. 

Mr. Buchanan, many farm families and ranches will be impacted 

by the Waters of the U.S. Rule. These are small family owned, and 

in some cases the land and the farm have been passed down 

through family to family, generation after generation. Do you believe the EPA adequately took the unique characteristics of these 

family farms and family owned agricultural operations into consideration when promulgating the WOTUS Rule? And what impact 

will this rule have on these families? 

Mr. BUCHANAN. Thank you for the question, Chairman Rounds. 

I would tell you that I categorically would say that, no, they did 

not take into account the impact that this would have to those family farmers. Thank you for recognizing that the majority of farmers 

and ranchers in this great Nation are truly family farmers and 

have operated on that land for many generations now, and will continue to do that. 

The impact that my neighbors are beginning to see is that certainly as this hangs over our head, being able to make business 

plans and implement potentially new ag business plans are on hold 

because we don’t really know where this is going to go. Additionally, any purchase or sale of land is in question now. What could 

that land be used for? 

So the impact is growing and is beginning to scare rural America, and is really impacting the rights of private property owners, 

and I would hope that this committee recognizes that. Thank you, 

sir. 
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Senator ROUNDS. Thank you, sir. 

Mr. Sullivan, EPA’s Brick MACT Rule is another instance where 

it seems EPA overlooked the impacts on small businesses. EPA estimated the rule would cost $25 million. However, a February 2016 

U.S. Chamber report, which I would like to insert in the record, reported the cost to be as much as $100 million per year. Importantly, more than 60 of the 70 U.S. brick plants impacted by the 

rule are small businesses, often family owned. In South Dakota, 

this could cost nearly 300 good paying jobs. 

I understand EPA convened a small business review panel and 

the Office of Advocacy recommended the EPA should grant flexibilities to minimize the impacts on these already struggling small 

businesses. So can you help me understand what went wrong here? 

Mr. SULLIVAN. Thank you, Senator. The brick industry is a very 

good case example of how the proverbial straw will break the camel’s back. These are family owned businesses that, unfortunately, 

due to regulatory pressures over and over and over again, are rapidly just folding shop, and that gets at the challenge of process 

versus outcome. You can have a process that I think this entire 

panel would agree on, that if it truly engages the small business 

community in a constructive discussion, you can come up with better alternatives. 

The challenge with the brick MACT and several other rules that 

impact the brick industry is that if you have a series of panels and 

a series of EPA rules, eventually just that overwhelming burden is 

going to crush an industry, and I am afraid that that is what has 

gone on here. 

So the solution to that challenge I think goes beyond just the Reg 

Flex Act into an understanding of how EPA calculates the cumulative impact. It does a very good job of calculating and making 

public the cumulative benefits of many of the air rules, but I think 

it does not do as good of a job as measuring and making public the 

cumulative burden. And I think if the Agency is being public about 

both the cumulative benefits of many Clean Air Act rules, then I 

think that you deserve and the public deserves an equal assessment of the cumulative burdens on those same industries. 

Senator ROUNDS. Thank you, Mr. Sullivan. 

Senator Markey. 

[The referenced report was not received at time of print.] 

Senator MARKEY. Thank you, Mr. Chairman, very much. 

Dr. Reichert, I was thrilled by your ability to lay out how new 

companies get created when EPA identifies problems that have to 

be solved. So can you expand upon that a little bit more? What gets 

unleashed when there is a clear pollution or environmental issue 

that is identified from the private sector perspective? 

Ms. REICHERT. Absolutely. Thank you, Senator. In fact, I think 

I can best do that by sharing a few additional examples of companies that have responded to environmental regulations, already in 

effect or about to be in effect. So in addition to the young companies that I had mentioned previously, we have several others who 

benefit from new markets that are created by Clean Air Act regulations already in effect or about to be in effect. 

So one company creates coatings for copper tubing, which increases condensation efficiency in power plants, increasing the 
98 

plant’s overall efficiency and reducing emissions. And this company 

will benefit from the Clean Air Act’s Clean Power Plan. 

A second example, one of our companies provides highly sensitive 

infrared sensing of methane gas leaks. Two more of our companies 

provide technologies to capture or use natural gas from wellheads 

through the multi-phase compression or microturbine technologies 

that they have developed. And those companies all benefit from 

several different Clean Air Act regulations; one is about methane 

emission standards for new and modified sources in the oil and gas 

industry, a second is the Clean Air Act’s oil and gas air pollution 

standards, and a third, stationary internal combustion engines also 

under the Clean Air Act. 

Senator MARKEY. Thank you. So that is kind of exciting. You 

don’t end the old industry; you add new technology that just keeps 

the old industry going, but with higher environmental standards 

met by innovative new technologies. So I think that is pretty much 

what we are talking about. 

Mr. Knapp, in your testimony you are saying that the Clean 

Water Rule enjoys a lot of bipartisan support and that you are here 

representing, I think you said, 200,000, 300,000 small businesses? 

Mr. KNAPP. Yes. The American Sustainable Business Council. 

Senator MARKEY. Yes. Could you talk about why those small 

businesses support the Clean Water Rule? 

Mr. KNAPP. Small business owners are nothing more than regular folk out there. Who doesn’t want clean water? And that is 

what I have always told everybody. A small business person really 

is just like your neighbor; they just happen to own a business. They 

have the same concerns that everybody else has. 

So to the degree that they feel that clean water is important and 

they support a regulation that would in fact guaranty that their 

fresh source of water is going to be protected. So it is not unusual 

for the results that we get from our polling, because those are the 

same results you get from polling of the general public. 

Senator MARKEY. So can you talk a little bit about this balance 

between regulation on the one hand and cost to businesses with the 

clear positive impacts that come about because of the regulations? 

That creates, sometimes, a little bit of a conundrum in seeing the 

benefits that come as well as the obvious kind of constraints that 

a regulation might place upon an existing way of doing business, 

but yet there are clear positives as well. 

Mr. KNAPP. Yes. Look, regulations exist and the rules exist because there is some outcome that we are seeking, the Government 

wants to happen. Congress has passed some type of legislation that 

is going to require the implementation, which requires rules. 

So will there be impacted businesses that will be negatively impacted by a rule? Yes. But again, it is the overwhelming relationship between the negative response and the positive impact. And 

we know that regulations and rules will be responded to by the private sector. That is what the private sector does; they recognize 

where they can make money, and they go there. And if a rule was 

established that clearly sets a path for businesses to follow, they 

will follow it. 

Does that mean that some businesses are going to be negatively 

impacted? Yes, it does. But what businesses really want are fair 
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rules; they want those rules to be set and to not be questioned all 

the time, because that then creates the uncertainty that we heard 

about here with the Waters of the U.S. 

Senator MARKEY. So once you set the goals for social or economic 

or health or environment outcomes, then all of a sudden you get 

this incredible explosion of entrepreneurial activity, which solves 

the problem. 

Mr. KNAPP. Which the doctor just talked about. 

Senator MARKEY. Not just here at Greentown, but all across 

America as well. And that is kind of the balance that we have always struck since the beginning of the clean water and safe foods 

revolution back in the early part of the 19th century; it has always 

been a balance. But I think in the end it is pretty clear that the 

net effects of it are healthier, cleaner society, and many more jobs 

that were created in solving the problem. 

So thank you, Mr. Chairman. 

Senator ROUNDS. Chairman Inhofe. 

Senator INHOFE. Thank you, Mr. Chairman. 

Let me follow up a little bit from Chairman Rounds’ questions 

to you, Mr. Buchanan. Your testimony mentions how the Small 

Business Administration Office of Advocacy told the EPA that the 

WOTUS Rule will have significant economic impacts on small business. 

The EPA ignored what I call this expert advice, refused to consult with small businesses, and said it certified that the rule would 

have no small business impacts. Now, clearly they don’t have to do 

it. They will just ignore the recommendations. The Office of Advocacy is there to advise people of what is going to happen. What is 

your thought about that? 

Mr. BUCHANAN. I would adamantly say that the EPA should not 

ignore that recommendation. We have to recognize now that SBA 

is set there for a purpose, and in this instance their ability to function especially with independence within this process is imperative. 

Agencies need to recognize that SBA is here to advocate and to 

communicate to the other agencies about the impact of any proposed rule to small businesses across America, so they have to be 

listened to and have to be an integral part of this process. 

Senator INHOFE. Well, Mr. Sullivan, you just heard Mr. Buchanan say the EPA’s failure to consult with small businesses 

against the Office of Advocacy’s recommendation hurt its members. 

Now, do you have any recommendations that we can make, make 

it stronger or how to reconcile agency disputes with the Office of 

Advocacy? I mean, they are supposed to be consulting back and 

forth. 

Mr. SULLIVAN. Thank you, Chairman Inhofe. I have included detailed recommendations in my written testimony. I will try to summarize. I think there are a couple of fundamental things that don’t 

work, and one of them is the legal community saying, well, if there 

is a problem, then after EPA finalizes the rule we can go to court. 

I think in the world of a small business owner, in the world of a 

farmer, having EPA certify that it is not going to impact small 

business, for SBA to throw the penalty flag and then for farmers 

to have to wait 2, 3, 5, 7 years before a case is—— 
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Senator INHOFE. Let me interrupt just a little bit here because 

you are telling me something I didn’t know. 

Mr. SULLIVAN. Sure. 

Senator INHOFE. You are saying that they have to certify that it 

is not going to hurt, and this is in light of the fact even if they were 

told by the Office of Advocacy that it would? 

Mr. SULLIVAN. Yes. It is just an interagency disagreement. I 

think what makes this unique is the Office of Advocacy’s independent role. This committee certainly is aware that agencies 

should have deliberative discussions that are private and confidential to come up with recommendations. 

The Office of Advocacy’s role as an independent check on regulatory authority is a significant and unique authority within the 

Federal Government; however, it is limited. And one of those limits 

is when the Office of Advocacy says, I am sorry, but you cannot certify that this rule will not significantly economically affect small 

businesses, then the businesses have to wait until after the rule is 

finalized before they go to court. 

There is an unfairness there. I think in the legal community we 

are satisfied by saying, well, you know, the law provides a legal 

backstop. But the reality is that backstop happens 2, 4, 7 years 

later, and actually what happens in those 7 years, as you heard 

from Mr. Buchanan, is uncertainty and other bad things. I think 

that Congress can take action and try to come up with ways for 

quicker and more efficient resolutions of that disagreement. 

Senator INHOFE. And that is helpful. That is helpful. 

Before I lose my time here, Mr. Canty, a lot of the regulations 

coming out of the EPA’s Office of Air, the Air Office, called the 

Clean Power Plan, I think we all need to understand what this is. 

This is what the President came up with and made a commitment 

in Paris that we in the United States would reduce emissions by 

between 26 and 28 percent by 2025. They don’t know how they are 

going to do it. 

We even tried to have a hearing and the EPA didn’t want to 

come in and tell us how they are going to do it. So obviously nobody knows how that is going to happen. But it would have devastating effect on the reliability, the reliability, the predictability. 

Can you kind of walk through how even a brief disruption in 

electricity impacts the operation at one of your manufacturing offices? 

Mr. CANTY. Thank you, Senator Inhofe. You are quite right, it is 

not only the extra cost to a manufacturing company like mine, but 

when we have outages, which we have on a regular basis, it is not 

just the 5-minute or the 30-minute outage that we have; it is the 

rebooting of equipment, it is the rebooting of personnel and the rebooting of software, it is the stoppage of work and then trying to 

get a whole team back working. The cost is pretty significant. 

And when we look at relocating, taking into power considerations 

is critical what we do and how we do it, and that is happening in 

Ohio a great deal because of the Clean Air Act being proposed to, 

before their time, shut down a great deal of our energy that comes 

out of coal plants. Everyone wants clean air, but when you are 

pushing it faster than technology can garner it and faster than new 

capacity in other forms can take it over, we end up severely hurt-
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ing manufacturing companies and other businesses that are desperate for that power. 

Senator INHOFE. Thank you. 

Senator ROUNDS. Thank you. 

Senator Booker. 

Senator BOOKER. Thank you very much, Mr. Chairman. Actually, 

we appreciate the thorough testimony from the witnesses, and any 

other questions I have I will submit for the record. 

Senator ROUNDS. Very good. 

At this time I think we are going to try to do one more round 

of 3 minutes each, and we will limit ourselves on it, but this will 

give us an opportunity to wrap up. Let me begin. 

Mr. Sullivan, in your testimony you say that there are times 

when the EPA approaches the Regulatory Flexibility Act as merely 

a bureaucratic procedural hurdle. The RFA was defined to be a 

safeguard for small businesses when agencies seek to implement 

regulations that will impact them. 

When it is viewed as simply a procedural hurdle, how does this 

affect the quality of the regulation and the thoroughness of the review of how the regulations will impact small businesses? 

Mr. SULLIVAN. Thank you, Chairman Rounds. I think when agencies, including EPA, look at the Reg Flex Act as a hurdle it doesn’t 

work. When they look at it from a constructive exercise it does. 

That means committing to having a SBREFA panel early in the 

process, it means listening to the small business owners before the 

ink is dry on the proposed regulation, and it means working with 

the small businesses all the way through the rulemaking process, 

and it doesn’t stop there, the actual compliance and implementation process. And if that is the case, it is a constructive dialogue, 

it is not an adversarial dialogue, and it can work. 

Senator ROUNDS. Mr. Canty, you will soon be traveling to Poland, Germany, and China in order to begin the process of importing products for your company that you used to make in-house. 

Can you explain what about the regulatory environment has made 

it impossible for you to continue to produce these products in the 

United States? And when this happens, what is the overall impact 

on your business, including jobs in your company? 

Mr. CANTY. Thank you, Mr. Chairman. We have grown in the 

past 10 years our employment by over 400 percent. Our company 

has grown in revenues by over 500 percent. Our goal has always 

been to in-source everything. But the magnitude, the cumulative 

magnitude of regulations from the EPA, from OSHA, from the Department of Labor, from the NLRB that have been passed and are 

currently in the process of being passed are just becoming so costly 

and so cumbersome that it drives manufacturers like us to go overseas, where they don’t have to comply with some of those costs and 

certainly not to the level that they have to do here. 

They also end up having an unknown. We don’t know what is 

going to come this year or next year or the year after. What additional escalating costs are going to be coming? How are we going 

to have to comply? And to what level are we going to have inspectors, surprise inspectors, whether it is the EPA, in a very clean 

company that we have, or OSHA or someone else come in and say 

you are doing it wrong, so you are going to get tens of thousands 
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of dollars of fines because you didn’t know about the rules, you 

didn’t understand the rules? That is a huge issue. That is as important to us as the costs are. 

And the impact on our company. We have invested millions the 

past 10 years, we are a small company, in new technologies and 

new equipment, processes and people. We have technology and 

equipment no one in the world has at this point. That won’t happen with some of these product lines; it is going to go overseas. And 

the technology and the jobs and the processes and our manufacturing prowess both with our company and this country are going 

to continue to be shifted overseas instead of right here, made in 

America, where I would just as soon have it be. 

Senator ROUNDS. Thank you, Mr. Canty. 

Senator Markey. 

Senator MARKEY. Thank you very much. 

We only have 3 minutes. I want to give you, Mr. Knapp, and Dr. 

Reichert a chance to deal with this question of whether or not 

these environmental regulations, in their own way, create a bubbling, boiling caldron of competitiveness trying to create the new 

ideas to make our country cleaner and safer on the one hand, but 

also more prosperous with homegrown jobs. 

So maybe you, Mr. Knapp, you can talk about the 200,000 companies that you are representing in this sector; and you, Dr. 

Reichert, maybe you can talk about the Massachusetts challenge, 

this accelerator going from concept to execution and starting up 

new companies to solve these problems. 

Mr. KNAPP. I am going to let the doctor talk about the specific 

acceleration of companies. I want to address some things, if you 

don’t mind, Senator, some things that were said. The Clean Power 

Plan is going to be implemented by the States. It is a goal set by 

the Federal Government, by the Administration, EPA, but it will 

be up to each State to decide how they are going to achieve that 

goal. 

I don’t think that any State is going to then say we are going 

to shut down electricity to do that. I know in South Carolina we 

are very fortunate, we have two nuclear plants being built that will 

take care of 80 percent of our goal. Coincide or not, we are going 

to be sitting pretty good. 

But nevertheless, the proof is in the economic data that clearly 

shows that when you invest in new technology, you grow more jobs. 

I will note that you probably said that you have over 100,000 clean 

energy jobs in Massachusetts, and congratulations on that. I will 

tell you that that is actually more jobs than the coal mining industry right now. So you are going that way, and they are going the 

other way. But on balance we are producing a healthier and stronger economy with new technology. 

Senator MARKEY. Dr. Reichert. 

Ms. REICHERT. Thank you, Senator. So, in my experience as CEO 

of Greentown Labs since 2013, we have seen just incredible growth 

in the innovation in clean technology sectors here in Massachusetts. I can speak especially about all of the different support systems that have sprung up, whether they be accelerators, incubators, and other means of support to help these early stage companies get off the ground. 
103 

It is a tough thing to do, right, you are going from an idea to 

something that you make in the lab to something that you hope 

can be 5 that work in the lab to 50 that work in the field to 1,000 

that hopefully work in your first customer’s shop. So it is a real 

challenge that these startups face. They struggle with it, but it is 

also an incredible opportunity, and so many of them are doing so 

well, and we just see that really all over Massachusetts. 

But we also are in touch with incubators from around the country, whether they be in Texas or Michigan or Illinois, California, 

New York, Hawaii. All of these other incubators we work with who 

are also helping early stage companies to develop their technologies, they are seeing the same thing, too. 

Senator MARKEY. When I look at MIT, I know there are 2,000 

kids at MIT who have self-selected themselves into the energy club. 

So that is 2,000 kids with 800s on their boards saying, I want to 

work on energy issues, and they want to do well and do good. In 

other words, they would like to solve the problems and get rich at 

the same time. 

And that is not just at MIT, it is at every college all across America, regardless of the State. These kids are there, readying to go 

to solve the problem. And like you are saying on methane, there 

is a new technology there that could be used and applied to solve 

the problem of whether or not these other plants ever have to shut 

down. They just found a way of reducing by 95 percent the methane by unleashing this new technology. 

So I just think it is very exciting to our country, and the potential is really unlimited in this sector, and I think that all energy 

technologies, as a result, can flourish simultaneously. 

Thank you, Mr. Chairman. 

Senator ROUNDS. Senator Boozman. 

Senator BOOZMAN. Thank you, Mr. Chairman. 

First of all, being from Arkansas, I want to welcome our Oklahoma neighbors that are in the audience from Oklahoma Farm Bureau, and then also USRA. 

Mr. Buchanan, tell me what we can do to better encourage rule 

writing that takes into account impacts to small business. 

Mr. BUCHANAN. Thank you for the opportunity, sir, and good to 

see you again. 

I want you to know that what I have heard on this panel, and 

hopefully this answers your question, is that some people believe 

that Government regulation drives ingenuity and innovation and 

meets new needs. I will tell you that 6 million members of American Farm Bureau who are family farmers and ranchers are meeting needs today by using technologies that the market drives. 

There is not a one of us that produces product that somebody 

doesn’t want to buy. We have the ultimate regulator, and that is 

the American consumer. And if we are producing a safe and a quality and an affordable product, the American consumer will continue 

to do business with us. Regulations will do nothing but handcuff 

us and handicap us. I’m getting all soapbox a little bit, sir. 

Senator BOOZMAN. No, we want you to get on your soapbox. That 

is good. 

Mr. BUCHANAN. I would hope that we would recognize that regulations placed on American farmers and ranchers become, in my 
104 

view, somewhat of a food snobbery. There are many amongst us in 

this Nation that are having difficulties feeding their families today. 

In fact, in my home State of Oklahoma, one in four children goes 

to bed hungry at night. Food insecurity is a big issue across this 

Nation, across the world. I would ask you folks who can write regulations or not write regulations to not handcuff, not handicap 

American agriculture. 

Think that when you go to the grocery store, regardless of where 

you shop, Senator Boozman, if that is at a discount grocery store 

or the boutiques, or a farmer’s market on a Saturday morning, the 

American public today, as I alluded to, enjoys the most abundant, 

the highest quality and the most affordable food sources they have 

ever had, and that is a result of American agriculture meeting the 

need of the market. I am a market driven guy. Call me naı ̈ve. I 

believe if the market requests something, wants something, that 

American farmers will meet that demand. 

So to answer your question, Senator Boozman, what we can do 

to encourage rural America and American agriculture is—being a 

smart aleck here—get out of our way, give us the opportunity to 

continue to feed and clothe and start doing fueling for this Nation. 

We are ready to do that job, we want to do that job and will do 

it if you give us the chance. Thank you, sir. 

Senator BOOZMAN. Thank you. 

Mr. Sullivan, as you know, the EPA often creates new mandates 

under the sue-and-settle process. Here is how it works: the EPA 

will be sued by a left-wing law firm or lobbyist group; then the 

agency will settle the lawsuit with the group, agreeing to pass new 

mandates by negotiated deadline; the courts rubber stamp the 

agreement. In the end, the Agency gets more power, and the law 

firms and lobbyists get what they want, too. 

Do you think these negotiated deadlines from sue-and-settle 

agreements can rush critical interagency reviews such as those required under the Regulatory Flexibility Act? 

Mr. SULLIVAN. Yes, I do. 

Senator BOOZMAN. Very good. What kind of harm and consequences are caused by the rushed interagency reviews under the 

Regulatory Flexibility Act? 

Mr. SULLIVAN. Thank you, Senator. The harm that is caused by 

deadlines, whether real or false, are that agencies don’t listen to 

small business. I am a dad; I have two little boys, and I learn every 

day that what helps our family is when I listen to them. Thank 

goodness they are not always right, but listening makes a big difference. And I think that when folks have deadlines and the incentive, every incentive is to pass a rule, then an agency is disinclined 

to listen, and based on that input from small business make 

changes that both meet the underlying statutory goal and minimize 

the burden on business. 

Senator BOOZMAN. Very good. 

Thank you, Mr. Chairman. 

Senator ROUNDS. Senator Booker, would you care to? 

Senator BOOKER. No. 

[Laughter.] 

Senator ROUNDS. OK. Very good. 

Senator INHOFE. I haven’t had my 3 minutes. 
105 

Senator ROUNDS. Oh, I am sorry. Mr. Chairman, would you care 

to take 3 minutes? 

Senator INHOFE. Yes. 

[Laughter.] 

Senator INHOFE. Let me just share something that everybody in 

this room knows, and that is I am very thankful that the courts 

have gotten involved in some of these. What we consider, Mr. 

Knapp, the ones out in my State to be the most significant overregulations, if you might, would be the WOTUS. In fact, I think I 

mentioned earlier that when I talked to Mr. Buchanan in his capacity as the President of the Oklahoma Farm Bureau, he identified the WOTUS bill. And then the other is the Clean Power Plan. 

But the courts have come along, the Sixth Circuit put a stay on 

the WOTUS bill, so you have breathing room now. We don’t know 

what the outcome is going to be. Then the U.S. Supreme Court put 

a stay, issued a stay on the Clean Power Plan. And of course, that 

is the one where we had some 27 States, more than half the States 

had lawsuits against the EPA on that particular regulation, the 

Clean Power Plan. 

Now, that is all good, but it tells me that if we had done a better 

job of passing the regulations to begin with it wouldn’t be necessary for the courts to come in and intervene. I was just on the 

Senate floor today with a giant chart just like this on the Clean 

Power Plan. If you look at what is going to happen, on February 

9th the stay took place; June 2nd the case is before a three judge 

panel. It goes on all the way back. It is going to be 2018 before 

there is going to be any final decision on this thing. 

Now, I see that as good news, but it is a problem because, obviously, if they had done the job right in the first place, we wouldn’t 

have had to have all this unpredictability. 

Do you agree with that, Mr. Buchanan? 

Mr. BUCHANAN. Absolutely. I would assume, sir, sitting in your 

chair, strategically, you would be able to slow-play that. That 

might be a good thing, but I would tell you that when I am getting 

ready to plant a cotton crop and my fellow farmer neighbors and 

ranchers in Oklahoma are trying to get the inputs that they need 

to produce whatever crop they are going to produce for the coming 

year, the inability to know what is coming down, the inability to 

know what EPA or anybody else might place a new regulation upon 

us really makes it very tough to do business. 

And if I may, sir, one thing that while agriculture has the mic, 

we would like to take advantage of that, and I want you to know 

that it appears that many times we are overlooked, being landowners, about how we treat the land, and I hope it doesn’t fall on 

deaf ears, but the majority of farmers don’t have big 401(k) accounts, they don’t have great big stock holdings; they have investment in land, and that is their retirement plan. And that retirement plan will be passed on to their sons and daughters and family 

members. And why in the world would anyone in good conscience 

pass on something to their family members that was polluted or ruined or somehow infringed upon the ability to produce? 

Senator INHOFE. There is a mentality that somehow Government 

has to intervene to make sure you are taking care of your property 

and all this. I had a meeting in my office; there are four people 
106 

here that were in my office a couple hours ago, and this idea, they 

are more concerned than anybody else. That is why the partnership 

program has been one of the most successful programs that we 

have had. It has been very successful in Oklahoma. 

Thank you, Mr. Chairman. 

Senator ROUNDS. First of all, let me just say thank you to all of 

our panel members, and Ranking Member Markey and Chairman 

Inhofe. The idea behind this is to get good information, to learn, 

to see what we can do to do better, and it requires input from all 

sides, and that is what we are receiving here today. 

I would like to thank you for taking the time to be with us today, 

and I would also like to thank my colleagues as well for attending 

this hearing and their thoughts. 

The record for this meeting will be open for 2 weeks, which 

would bring us to Tuesday, April 26th. 

With that, this hearing is adjourned. Thank you. 

[Whereupon, at 3:53 p.m. the committee was adjourned.] 

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