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76–478 2012

CAUGHT UP IN RED TAPE: THE IMPACT OF 

FEDERAL REGULATIONS ON SMALL BUSINESSES 

AND CONTRACTORS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JUNE 14, 2012 

Small Business Committee Document Number 112–072 

Available via the GPO Website: www.fdsys.gov 


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HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 


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C O N T E N T S 

OPENING STATEMENT 

Page 

Hon. Mick Mulvaney ............................................................................................... 1 

WITNESSES 

Colonel Charles O’Cain, USAF, Ret., Owner, Owl Business Consulting, LLC, 

Rock Hill, SC ........................................................................................................ 4 

Mr. Doug Meyer-Cuno, President, Carolina Ingredients, Rock Hill, SC ............. 10 

Mr. Monty Felix, CEO, Alaglas Pools, Saint Matthews, SC ................................ 16 

Curwood Chappell ................................................................................................... 23 

Jeff Carrington ......................................................................................................... 23 

Ken Speirs ................................................................................................................ 25 

Warren White ........................................................................................................... 27 

APPENDIX 

Prepared Statements: 

Colonel Charles O’Cain, USAF, Ret., Owner, Owl Business Consulting, 

LLC, Rock Hill, SC ....................................................................................... 31 

Mr. Doug Meyer-Cuno, President, Carolina Ingredients, Rock Hill, SC ..... 41 

Mr. Monty Felix, CEO, Alaglas Pools, Saint Matthews, SC ......................... 32 


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CAUGHT UP IN RED TAPE: THE IMPACT OF 

FEDERAL REGULATIONS ON SMALL BUSINESSES AND CONTRACTORS 

THURSDAY, JUNE 14, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:05 a.m., in the 

Rock Hill City Council Chambers, 155 Johnston Street, Rock Hill, 

South Carolina, Hon. Mick Mulvaney (Chairman of the Subcommittee) presiding. 

Present: Representative Mulvaney. 

Chairman MULVANEY. Good morning. I am going to call this 

hearing to order. Thank you all for being here. I am going to deal 

with a couple of housekeeping matters first. 

First, I want to tell you why we are here and thank you all for 

coming. A lot of folks do not realize, this is a formal and official 

Congressional hearing. This has the same scope and the same 

gravity that it would if we were doing this in the Longworth House 

Office Building in Washington, D.C. It is just that as the Chairman 

of a Subcommittee, I have the ability to do this anywhere that I 

like. We have done one of these hearings in Los Angeles, California, we have done one of these hearings in Sumter, South Carolina. And I think it is a tremendous tool to allow us to go outside 

of Washington, D.C. and actually get input from real folks and 

from real people about real world experiences and how the law relates to them. 

So today, before we begin, I want to thank everybody for being 

here, especially the witnesses. I appreciate their willingness to be 

here. I do have a request, gentlemen, that when you present your 

testimony, if you would do it, please, from the podium behind you, 

because there is a microphone there. We did not have three microphones for you up front. 

The way it is going to work today, folks, because this is part of 

the formal Congressional Record, is that you are going to hear me 

read an introduction. You are also going to hear me read some 

questions when the gentlemen are finished. Each of the gentlemen 

will have as much time as they like to tell us about the reasons 

that we are here, which is to try and look at the ways that government impacts their business when it comes to regulatory and 

health insurance issues. So with that, I will begin with my formal 


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introduction and my statement and we will go to you gentlemen 

and we will take questions and stuff after that. 

The House Small Business Committee has kept a particular 

focus on federal regulations and policies that are adding to the assortment of uncertainties confronting small business, particularly 

when those uncertainties add to our nation’s stubbornly high unemployment rate. 

We have held numerous hearings in Congress related to various 

regulations and have heard continuously that the entire regulatory 

process is flawed and that it often punishes job creators and stifles 

economic growth. Even President Obama launched an effort to 

evaluate regulations that create unnecessary burdens. The President has issued an Executive Order mandating that agencies do 

more than the bare minimum required to ensure that stakeholders 

have an opportunity to communicate their views on agency regulatory actions. Unfortunately, the regulatory agencies under his administration have gone in the exact opposite direction from time to 

time. 

On October 24 of last year, Gallop released a poll that outlined 

small business owners’ most pressing concerns, and according to 

this poll, small business owners are most likely to say that complying with government regulations is the most important problem 

facing them today. That is more than taxes and more than the 

overall economy. The Gallop poll is mirrored by numerous trade association surveys, such as the one conducted by the United States 

Chamber of Commerce in March of 2012. That Chamber study 

found that almost half of small business owners said regulation is 

a greater threat to their business than taxation and litigation combined. Similarly, a poll conducted by the National Federation of 

Independent Business found that 63 percent of respondents believe 

the rules issued by the federal government have done more to hurt 

small business and 74 percent believe that the federal government 

should focus on creating jobs instead of issuing new rules and regulations. The message is clear—small businesses need Washington 

to stay out of the way. 

Small business owners face unique challenges in navigating federal regulations. According to the study, ‘‘The Impact of Regulatory 

Costs on Small Firms,’’ published by the SBA’s Office of Advocacy 

in September of 2010, small businesses face an annual regulatory 

cost of over $10,500 per employee, which is 36 percent higher than 

the per employee regulatory cost facing large firms. It is oftentimes 

more expensive for small firms to implement regulatory rules and 

to abide by regulations than it is for large businesses. 

And while regulations certainly have benefits, they also have 

costs that are barriers to entry, distort markets, and divert scarce 

capital away from job creation. Small businesses simply do not 

have the resources to navigate the ever-increasing maze of federal 

regulations. 

Take the new healthcare law for example. Between now and full 

implementation in 2018, 46 new provisions of that healthcare law 

will need to be implemented. This is on top of the 46 that have already been implemented over the past two years. The sheer number of things to track and comply with has gotten to be so confusing for small mom and pop shops struggling to get by in tough 


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economic times, that many of them have simply given up. It all 

goes back to the question, why is Washington making things harder for small business and not easier. 

EPA, another federal agency that has consistently drawn the ire 

of the small business community, has proposed rules to regulate 

greenhouse gases, the proposed utility maximum achievable control 

technology rule, and the potential regulation of coal ash. All have 

the capacity to increase the cost disproportionately on small businesses. Each of these rules on their own and in combination could 

directly and indirectly lead to substantially higher energy costs and 

reductions in employment. 

Direct costs incurred by small businesses when complying with 

regulations present a significant problem, but it is not just direct 

costs that hinder growth. Dodd-Frank is an excellent example of 

how indirect costs can hurt small businesses as well. While very 

few of the 500 rulemakings required by Dodd-Frank will apply to 

small business, these new rules will have the potential to hit them 

where it hurts them the most, their access to capital. In the last 

few years, lending to small firms has plummeted to record lows. 

The stricter regulatory environment created by Dodd-Frank and 

the new Consumer Financial Protection Bureau combined with the 

uncertainty brought by many of the law’s main provisions could 

very well be the reason why we have seen such weak growth in 

small business lending. 

Unfortunately, these are but a few of the regulatory burdens facing America’s small business owners. Washington must do a better 

job of helping small firms grow to become tomorrow’s big businesses. 

I look forward to listening to the testimony from each of the gentlemen today and hope you can help me and this Committee identify these regulatory barriers and discuss options that are available 

to us. Again, I welcome you. 

And what we will do is I will read a brief introduction for the 

record for each of you gentlemen, and then we will start with you, 

Colonel O’Cain, and move down the table and take your testimony. 

Please take as much time as you like. If we were in Washington, 

we would be limited to five minutes, but the nice thing about doing 

these hearings here is that we have got as much time as you like. 

So please do not feel rushed at any time. 

I know you have all submitted written testimony, which will be 

part of the record. Feel free to go beyond that in your verbal testimony. Again, what we are trying to do here today is take the story, 

take the real world stories of what happens when small businesses 

try and deal with what Washington gives them, and take those stories back to Washington to try and see if we cannot improve things. 

The introductions. Our first witness today is retired United 

States Air Force Colonel Charles O’Cain. He spent 30 years as an 

acquisition executive on active duty and in the Reserves working 

in various capacities from base level to the Pentagon. He has also 

worked for 25 years in the private sector as a contracts executive 

for Texas Instruments Defense Group and for Raytheon. For the 

past five years, he has been the owner of Owl Business Advisors, 

helping small and medium sized businesses conduct business with 

federal, state, county, and city governments as a consultant. 


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Thank you again, Colonel, for being here. 

Next will be Douglas Meyer-Cuno. Mr. Meyer-Cuno founded 

Carolina Ingredients in July of 1990 with a vision of creating a customer-service driven and value-added distribution company. After 

10 years, Carolina Ingredients built a blending facility which allowed the company to create even more value for its customer base. 

And over the past two decades, the company has evolved into a 

well-known regional blending manufacturer with sales throughout 

the United States. Mr. Meyer-Cuno has been actively involved in 

managing the sales department but now dedicates the majority of 

his time to the company’s vision and planning. Today, the company 

proudly employs 37 people and is located right here in Rock Hill. 

Thanks, Mr. Meyer-Cuno, for your time as well. 

Rounding out the panel is Mr. Monty Felix, owner and CEO of 

the Alaglas Pools in Saint Matthews, South Carolina. He is the immediate past president of the American Composite Manufacturers 

Association, which represents composite manufacturers across a 

wide variety of industries, including aerospace, automotive, architecture, custom molding, marine, recreation and transportation industries. Thank you again for making the trip up the road from 

Saint Matthews, Mr. Felix. 

So with that, Colonel, we will begin with you. I understand you 

are going to talk to us a little bit today about the difficulties that 

sometimes businesses face when contracting with the federal government, something very near and dear to my heart. Again, if you 

would not mind, perhaps moving to the podium while you speak, 

that would be extraordinarily helpful. 

STATEMENTS OF COLONEL CHARLES O’CAIN, USAF, RET., 

OWNER, OWL BUSINESS CONSULTING, LLC, ROCK HILL, 

SOUTH CAROLINA; DOUG MEYER-CUNO, PRESIDENT, CAROLINA INGREDIENTS, ROCK HILL, SOUTH CAROLINA; AND 

MONTY FELIX, CEO, ALAGLAS POOLS, SAINT MATTHEWS, 

SOUTH CAROLINA 

STATEMENT OF COLONEL CHARLES O’CAIN 

Colonel O’CAIN. Good morning, Mr. Mulvaney and everyone else 

who is attending the hearing. 

Maybe I should start by explaining the difference between a 

large business and a small business. A large business, all these 

problems that Mr. Mulvaney has alluded to regarding regulations 

are not a problem for large business. They are a cost, but not a 

problem, because in each one of those areas where a regulation has 

to be complied with, they simply have a vice president or senior 

vice president or director with an army of people who take care of 

all that. They make all the right submissions and they do not get 

in any kind of trouble with the government, because they have the 

resources to be able to do that. 

But mom and pop, they do not have these vast resources to call 

to help them navigate their way through these shark-infested 

waters. It is daunting enough that a number of small businesses 

will not even try to do business with the government because they 

see that it is too complicated, too complicated. And then there are 

other small businesses who want to do business with the governVerDate Mar 15 2010 09:22 Nov 16, 2012 Jkt 076478 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 E:\HR\OC\A478.XXX A478

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ment and they attempt to do business with the government. Because resources are vital to them, financial resources, they generally try themselves. So they will go online and search websites 

and read this site and that site and what-have-you. And normally 

after a few weeks, they are more confused than when they started. 

They have no idea where to start to begin doing business with the 

government, and if they think they have begun the process, they 

have no idea when they are done. How do you know when you are 

done. How many certifications does it take before you can actually 

submit a bid and negotiate a contract with the government. 

This is what I do now as a consultant. As Mr. Mulvaney pointed 

out, I have considerable experience on both sides of the negotiating 

table, both on the government side and the private sector side. I 

worked for large businesses—Texas Instruments and Raytheon are 

huge billion dollar businesses. And so, you know, we did not have 

problems with the regulations, we just had a vice president that 

took care of all that for us and we went on about doing our business. 

What I do to help small businesses be in a position to do business with the government is I guide them through the process. I 

know what it takes. There are about 15 things that you have to do 

in order to be able to do business with the government, unless you 

want to do also business with GSA, which adds another four or 

five. But the way the process is set up, you cannot start with step 

six because you need—in step six, you need the certificate you got 

from step five to go to step six. And so when businesses try to work 

their way through the process, they find something and say, look, 

I need to do this in order to be able to do business with the government. So they try to go do it. Halfway through the form, they find 

out there is a code that they do not have. They have no idea how 

to get that code, there is no step, there is no note out to the side 

that this code comes from, you know, step five. And so on and so 

forth. So you have to go step one through step X in order to be able 

to do business with the government. 

Most small businesses understand the reason that some of this 

is difficult. I think all of us would understand that. Would you like 

your government to do business with terrorist organizations or convicted felons? Or how would your like your taxpayers’ dollar spent 

by businesses that have a long history of providing terrible goods 

and services? 

Part of the process that a small business goes through is to vet 

those out, is to get the non-players out of the way so that the legitimate, sound, honest, hard-working small business organizations 

can do business with the government. So the small businesses do 

not argue that yeah, this is necessary, some of this is necessary in 

order to ferret out the non-players, but there are other things that 

enter into a small business’ decision to do business with the government. There are a lot of products and services where they are 

required to be done by U.S. firms. A lot of small businesses get 

their base products, their raw materials overseas because a lot of 

it comes from overseas. And so someone has to advise them that 

you cannot get your material from Taiwan any more, you are going 

to have to get it within the United States in order to do business 

with the government. The good thing is that everybody has to do 


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that. Your competitors also have to get their raw materials from 

the United States and not outside. 

There are certain countries that you cannot do business with. 

Cannot do business with North Korea—not sure why you would 

want to, but you cannot. Iran is also a country that you cannot do 

business in, and there is a list of them, they are all listed. You just 

have to know where to go find them, you know. Everything you 

need to do in order to be able to sell goods and services to the government is online somewhere. And the problem is that small businesses do not know where to go to start and they do not know 

when they are finished with all the processes that are necessary in 

order to do business with the government. 

There is what is called a CAGE code, it is an identification code 

that without that, you cannot do business with anybody. Well, how 

do you get that? How do you know you need that? And then how 

do you go get it? Well, that is like step four, so you have got to 

have gone through one, two and three before you can get to a 

CAGE code which comes electronically from the government. Back 

in the old days, it was all done by paper and this process could easily take a year and a half or two years in order to be able to do 

business with the government. The good news is that the government has all of these regulations and requirements online, it is just 

a matter of finding them and knowing what step to go through, the 

order to go through in order to be able to do business with the government. 

I do not have solutions for all the problems that Mr. Mulvaney 

brought up, with regulations and that sort of thing, but again, a 

lot of these regulations are good regulations. OSHA, you know, do 

you want to have a safe work environment. I have gone into clients 

and gone into their warehouse and just walking around, looked up 

and seen a heavy item up on the top shelf just teetering up there 

waiting on a thunderstorm to send that crashing down on somebody’s head. And as I walk through, now I am an OSHA rep—not 

really, but I am trying to help them stay clear of violations that 

when the OSHA rep comes in they are going to find. These make 

sense. I say you are going to have to move that box back because 

it is going to fall on somebody and kill them and if the OSHA guy 

comes in here, he will shut you down. And so a lot of these have 

practical reasons for being there, you know. 

The government gets over-zealous though, you know, and there’s 

this reason and that reason and the other reason and what-haveyou. Unfortunately, I do not have the answers to all of that—I do 

not. What I do have answers to is how can we make it easier for 

small businesses to be able to do business with the government, to 

be able to submit proposals, submit bids, go in and negotiate contracts. That I can do. The good news is that it is easy to do in that 

there is a light at the end of the tunnel, the solution is there and 

it is a matter of implementing that. I am not a computer whiz, but 

I can sit down with a computer whiz and knock this thing out in 

a short period of time. So what you would have then maybe is a 

flood of small businesses coming in trying to do business with the 

government and now they are learning about OSHA and healthcare 

and all the other stuff. 


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But the way it is now, they do not have to worry about that, because they never can get to the table. What I can do is bring them 

to the table. And that is my expertise. 

All the other regulations, I am sorry, I do not have answers to 

them. 

Chairman MULVANEY. Colonel, let me interrupt you and ask you 

a question because you have hit on some of the key items. 

Thank you, by the way, for mentioning the fact that taxpayers 

do not want the government dealing with terrorists and felons and 

folks who have a reputation for really shoddy materials and there 

is a public interest in making sure that folks that are dealing with 

the government are following all the OSHA regulations, for example. I think it is important to remember that we are not here today, 

there is no movement in Washington to get rid of those types of 

regulations. There are some that all of us accept actually are helpful to the process and also protect the taxpayers in the long run. 

However, at the other end of the extreme, I am reminded of the 

hearing that we conducted in Sumter and in Sumter, there was a 

$103 million government contract to build the new Third Army 

Headquarters at Shaw Air Force Base. Third Army moved from 

Fort McPherson in Atlanta up to Sumter, and they did so with a 

$103 million contract. We found out as a result of the hearing down 

in Sumter that less than $250,000 of that money actually went to 

small local businesses. And when we asked why, we heard a lot of 

what you just talked about, which is it was simply too hard for 

folks to get qualified. You mentioned that there are 15 steps plus 

another four if you are GSA. You did not talk about the additional 

10 steps if you are trying to be an 8A minority owned business or 

something like that. 

Colonel O’CAIN. That is actually in there. That is part of the 15 

steps because with a client, I asked them, I said, you know, you 

are a man, but does your wife own this business or own 51 percent 

or does your wife work in the business and could you convert to 

being an 8A contractor and that sort of thing. So part of those 15— 

I cover a lot of that with them to give them the best advantage. 

But yeah, that is part of—— 

Chairman MULVANEY. If you and I sat down with that 15-step 

list and I said, Colonel, help me streamline this, what would be the 

first place you would look at to maybe either combine a couple of 

steps, skip a couple of steps, what are the opportunities you have 

got to make that easier? 

Colonel O’CAIN. Well, actually, Mr. Mulvaney, I can step someone through the 15 steps in about two weeks, and that is submission time and receipt time for the various codes and all. All those 

codes have a reason in the government, there are reasons for those 

codes that go to the efficient operation of an organization as large 

as the United States government. So to combine those steps, it 

would take someone smarter than me to go do that. 

The point is, if those steps are there, how can you get through 

them as quickly as possible. That I can go do. It is like how do you 

do away with OSHA. 

Chairman MULVANEY. You and I were talking beforehand, before 

the hearing, about what it used to be like before the internet and 

how the internet actually has created the opportunity to try and 


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improve things that used to be done by mail back and forth, which 

I think was much longer. We also talked about the fact that there 

is so much information available on the internet that it is sometimes difficult to navigate. 

Could you talk about what the advantages or disadvantages or 

the online system are? 

Colonel O’CAIN. Yes. First of all, that is a vast improvement. 

When I was a second lieutenant, I was telling Mr. Mulvaney, someone would submit a written form and the checker of the form would 

get down to box three and there is an error, so they would mail 

it back to them and there is mail time, you know, a week, 10 days, 

whatever. And then when the small business gets a chance, they 

would get the form at night and would go through and correct the 

error in box three and resubmit the form. And then the checker 

would get all the way down to maybe, you know, box eight and find 

an error and mail it back to them, and so on and so forth, and a 

year and a half later, you know, they finally are able to do business 

with the government. 

All of that can be done in two weeks now, can be done in two 

weeks if you know where to go and you know what the boxes 

mean—two weeks. So we have gone from a year and a half to two 

weeks. So I see that as a vast improvement. The problem is is that 

there is no place out there on the internet that will take a small 

business and say here are the 15 things you need to go do with little notes out to the side, you know, click on this and we will tell 

you what this step is. 

Chairman MULVANEY. Have you tried the SBA website for that? 

Colonel O’CAIN. Have I tried what? 

Chairman MULVANEY. Is there an SBA—Small Business Administration—website? 

Colonel O’CAIN. Oh, yes, and a lot of the stuff is in there. In fact, 

a lot of the codes and the things and what you have to do is in 

there. But you have to know which little tab to go to to click on 

to work on step two and so on and so forth. 

The point is is that somewhere there ought to be some key 

phrases like ‘‘Doing business with the government’’ or ‘‘How to do 

business with the government’’ or ‘‘Government business’’ or something that will take you to a table and say, you know, if you want 

to just do business with the local base—Army, Navy, Air Force, 

Marine base—here are the 15 things you need to go do and here 

is the order that you need to go do them in, because you need a 

code from step one to go to step two and the code from step two 

to go to step three and so on and so forth. And when you get 

through, you will be able to do business with the government. 

If you want to do business with GSA also, then here are the four 

or five other steps that you need to go through. And this is why 

they are there. One of the steps with GSA is you have to take a 

course, you have to take an online course that will take an average 

person several hours to go complete. And the reason for that is that 

GSA—their base is so big, they do business with the entire federal 

government, most state, county and city governments are able to 

order some things from GSA. And so in order to be able to do business with GSA, they do not have time to call up every small business that does not know what they are doing and say you cannot 


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do that. And so what they do is they require anyone who wants to 

do business with GSA to take this course and you have to successfully complete that course and get a certification that you have finished that before you can go on to the other three steps. That is 

not bad. 

Chairman MULVANEY. We just did an entire hearing last week on 

the GSA schedules and the process by which you can get your materials on the schedule. It was scintillating, I can assure you. 

Colonel O’CAIN. Yeah. 

Chairman MULVANEY. I am going to ask you one last question 

and then I am going to ask Mr. Meyer-Cuno to step up. 

Colonel O’CAIN. Okay. 

Chairman MULVANEY. I am going to ask all of today’s folks the 

same question, which is one of the things that we are charged with 

in Washington is trying to prioritize. And with the limited amount 

of time between now and the end of the year and the election, I 

was really stunned by the Gallop poll numbers, the ones that said 

that small businesses considered regulation to be their biggest concern, above taxation and litigation. And my initial reaction to that 

was that wait a second, but we spend all of our time on taxation 

in Washington, D.C. and if we fix taxation, we’ll fix small business 

and so forth. But then I thought back to my days owning and running a restaurant, while the tax code was certainly something that 

I paid attention to, I did not actually worry about the tax code until 

after I started making money. And litigation, I felt like I had a 

handle on it, if I did things right, that I knew were right, I was 

fairly convinced I was not too worried about being sued over something. But I lived in constant fear of forgetting to check a box on 

a piece of paper some place that would subject me to some type of 

fine or fee or penalty from the federal government. 

So I will just ask you, Colonel, if you think—are the results of 

that Gallop poll consistent with what you have seen with your customers? 

Colonel O’CAIN. Yes, it is. And you know, there are two types of 

small businesses, one of them is already doing business with the 

government and they have had some problems somewhere for 

something; and then the other one is the ones who are afraid to 

do business with the government because of all the horror stories 

they have heard and they have gone into the internet and hit a 

brick wall and have no idea, you know, how to proceed forward in 

order to do business with the government. 

The thing is most reasonable people and small business owners, 

if they ever get the chance to get in there, they can figure a lot of 

that out. Okay? Depending on the type of business, you mentioned 

restaurant, you know, obviously you are going to be inspected to 

make sure it is sanitary. Is that bad, you know, that people do not 

get diseases from eating in your restaurant? I do not think that is 

bad, you know. Most restaurants are cleaner than my wife’s kitchen, because it has to be, you know. But, you know, those are not 

necessarily bad, but somebody starting a restaurant needs to know 

that there are going to be inspectors coming around and these are 

the kinds of things they are going to look for. They are not going 

to inspect it like it is your home kitchen, they are going to inspect 

it far beyond that. You know, crawling underneath the stove to see 


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if they can find a little crumb of bread or whatever, you know, and 

all these count against you. 

So yes, regulations can be daunting and that sort of thing. There 

are places where a small business can go to get help. Right here 

in town, Winthrop University has mentors or something like that. 

Chairman MULVANEY. The Small Business Development Center. 

Colonel O’CAIN. Exactly. And these people have various levels of 

experience in different kinds of business and that sort of thing. 

And sometimes you can go there and maybe get a question answered or that sort of thing. Or you can hire someone like me. 

Chairman MULVANEY. Colonel, thank you very much. We may 

have some follow-up questions at the end, but I will ask Mr. 

Meyer-Cuno to step up now and tell us a little bit about—— 

Colonel O’CAIN. Thank you very much. 

Chairman MULVANEY. Thank you, Colonel. 

Mr. Meyer-Cuno, you are going to talk today a little bit about 

your business and how it is going to deal with the new healthcare 

law. 

STATEMENT OF DOUG MEYER-CUNO 

Mr. MEYER-CUNO. First of all, thank you, Chairman Mulvaney 

for inviting me today. 

So a lot of what you have heard I am going to repeat but try to 

give you a story. First of all, I am not a governmental policy wonk 

and I am not an expert on public healthcare. However, I am a businessman and I know a few things about managing a company, creating jobs and perhaps most importantly keeping my employees 

employed. 

So when I was asked to testify on the impact of the Patient Protection and Affordable Care Act, otherwise and affectionately 

known as Obamacare, I thought I could provide a business perspective. 

First, and you mentioned this earlier, I respect the government’s 

role in prudent legislation that provides a template for businesses 

to function, pay taxes, and establish laws which create the boundaries for our citizens. We need a balance of laws and regulations 

and taxes. We have to have that, it creates long-term sustainability. So I am not advocating we do not need that kind of scenario. 

So I am going to give you a little bit about my story. Carolina 

Ingredients was started in 1990 as a food ingredient distribution 

company out of my home. The first 10 years of business, we grew 

to 12 employees—not very many. Then we created additional value 

by adding a spice and seasoning manufacturing plant. Fast forward 

two decades to 2010, we built the first LEED certified seasoning 

manufacturing company in the country, here in Rock Hill. That 

was at the end of 2009. We employed 21 people at that time. Now 

we employ 37 people. So why do I share this with you? Well, I 

humbly submit our company is an example of the American dream. 

I would like to talk a little bit about the country’s core culture 

because I think we are getting away from that and it goes to the 

legislation. Our model that this country was founded on over the 

last 200 years was based on entrepreneurship, based on self-reliance, independency, creativity and individual accountability. The 


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first 200 years of this country’s success, this phenomenal success 

we have had, is based on these core cultures. And there are many 

others, but that conversation is not for today. 

It is no secret that the regulations our governments have in place 

today are much different and far exceed what existed in 1776, not 

even to mention 1976. And frankly, that is not a bad thing. We 

talked about that earlier, we need regulations in all aspects of our 

lives. Balance must be created to ensure long-term sustainability. 

However, the Obamacare swings the pendulum to the extreme and 

destroys the balance. And that is what I would like to talk about. 

So I mentioned, I am a small businessman. It was a slow transition, it emulates the success of many small businesses. You mentioned this earlier, Chairman Mulvaney, according to the Small 

Business Administration, small businesses employ 59.7 million 

workers, with large corporations employing 60 million, so it is 

about 50/50. Out of that, the small business community supplies 43 

percent of high tech work force. That includes your scientists, your 

engineers, your computer programmers. We also hire a large percentage of the non-skilled workforce. So overall, from 1993 to 2009, 

we supply 65 percent of all jobs in the private sector. 

Well, why is this important? Only 30 out of 100 companies that 

are created today will survive their first two years. Out of the remaining 30, half will survive the first five years and only five will 

make it to their tenth birthday. Of those five companies, only a 

quarter will make it to their 15th birthday. So the reality is, two 

percent of the corporations will meet or exceed their 20th birthday. 

So let us take it back a little, 70 out of 100 companies that are created today will not see their second birthday two years from now, 

and only two percent will be around in 20 years. 

So we have this Obamacare. The legislation is over 2000 pages 

and to be precise, it is 2074. For all of the Senators and Congressmen, I respectfully suggest or say, really? Are you serious? Do we 

really need a healthcare program or a bill that is 2000 pages? And 

can frankly anybody tell me what is in it, accurately? It just cannot 

be done. It is a quagmire. 

So my question would be what are the long-term costs to the citizens and to the government? And who knows? Here is what I do 

know. All government regulations cost small business time, money, 

and manpower—without a doubt. The more time you allocate towards compliance, the less time you have to create jobs, manage 

our businesses, and compete in the global market. Regulations are 

costly. We talked about this too. For small businesses with less 

than 20 employees, regulations cost $10,500, a little bit more than 

that, per employee. And you are right, large corporations, it is less 

than that. So for young corporations or small corporations, it is 36 

percent more than it would cost a large organization. 

That does not even include Obamacare here. Now in Obamacare, 

there are multiple regulations that have nothing to do with 

healthcare. There are items like the tanning tax, the 1099 reporting forms, the Cadillac tax, the employer mandates, the individual 

rebates. Oh, by the way, if you survive all those regulations, we 

have a bonus, it is called the healthcare insurance tax, just cannot 

get enough of those. In the end, the legislation is evasive, it is punitive and overwhelming to the business community. 


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Ever heard of death by a thousand cuts? This is the type of 

things that are death by a thousand cuts. My best guess, Carolina 

Ingredients’ healthcare cost will increase between 100 and 150 percent. These are annual healthcare costs today of $125,000 will 

eventually range between $200,000 and $300,000. That is based on 

a payroll of about 51 people, because we are growing. It is based 

on the healthcare tax of $500 per person, the Cadillac tax of 40 

percent, Medicare payroll tax, employer mandates. 

With such cumbersome regulations and costs, I predict many 

small businesses will default to the government managed 

healthcare insurance plan. They do not want to be subjected to 

penalties and they do not want to be subjected to mandates. In 

truth, we do not know the real costs because we do not know what 

type of healthcare plan is going to be the benchmark that the government sets to compare to the private sector. That is not established yet. So in reality, the potential cost will continue to escalate 

and we really have no idea what the cost will be. And this frankly 

is not the model that our country was built on. 

The unknown. We cannot predict our future. And if we cannot 

predict our future, the cost to employ hard-working Americans becomes a guessing game. Already the CBO projects the healthcare 

law will now cost $1.8 trillion, which is twice what was predicted 

by them two years ago. Okay? To date, the current administration 

is unable to articulate the cause of this increase. Where is the accountability? As the years progress, does anybody truly believe the 

cost will stop or decline? No, it will not. 

Back to the penalties. There is a serious concern the employer 

and the individual mandates will be so intrusive, companies will 

defer to government healthcare plans as to avoid potential penalties. Frankly, we would rather spend our time building businesses, not tackling insurance mandates. I thought we were a partnership. You, the government, create the rules, the laws, the regulations that are specific, reasonable, and understandable. They are 

not meant to be punitive, they are not meant to destroy the backbone of America’s small businesses. In return, we take calculated 

risks. We hire people and build businesses that are profitable and 

we pay taxes on those profits. And I realize in today’s political environment, we have the have-nots and haves apparently, according 

to President Obama. I know that using the word profits is a dirty 

word and we should not murmur such a phrase. But the truth of 

the matter is this, without profits, companies do not survive. Without companies, employees are not hired. No employees, no tax base; 

no tax base, no money to fund legislative policies. This is fact, no 

doubt about it. You can follow world history, no government created a sustainable society by the government creating jobs and 

then becoming a global economic model to emulate. I might remind 

you of countries like Cuba, Russia, the entire Soviet Bloc countries, 

North Korea, and even China until the last 25 years. 

So what is the moral of this? The moral is do not cook the golden 

goose. If you regulate us to death, surely you will suffocate us all. 

At best, Obamacare will weaken our entrepreneur fortitude, thus 

minimize the country’s sustainability as the world’s greatest economic engine—and we are the greatest economic engine. At worst, 

we will become a society dependent upon the government to make 


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our decisions that they think are in our best interest, much like 

countries I mentioned above. This is not the model our country was 

founded on and it has not been the model we followed for 200 

years. 

Or perhaps our politicians think they know what is best and 

then we will fall under what history demonstrates happens to all 

governments, eventually they all fail under this philosophy—that is 

a fact. Do I want Obamacare to fuel the government’s desire to 

mandate me and our business through unaccountable regulations? 

No, thank you. 

I will take my two percent chance of creating a company and surviving 20 years over our government regulating me to death. Historically speaking, the odds are on my side. 

Thank you, sir. 

Chairman MULVANEY. Thank you, Mr. Meyer-Cuno. Let me ask 

you a couple of questions specifically about the healthcare bill. 

There is a part of the bill that has gotten some attention. It is the 

35 percent tax credit for employers’ health insurance costs if they 

meet certain criteria. According to a study the GAO just did, there 

were four million small businesses that qualified for that program 

but only 170,000 took advantage of that. Some said they did not 

know about it, some said they knew about it but it was too hard 

for them to qualify for it or do the paperwork for it, others said it 

was simply not worth it in terms of the amount of money. 

Let me ask you a question. Were you aware of the tax credit program that was part of the healthcare bill? 

Mr. MEYER-CUNO. We are not, we were not aware of it. And 

probably the reason would be, again, we have 37 employees. My 

controller is our HR person, we only have so much time in the day. 

For us to labor through such a maze would be very complicated 

and at this time, we do not have the manpower to do it. So we just 

simply do not know. 

Chairman MULVANEY. And no offense intended to Colonel 

O’Cain, who I understand runs a business doing this, but one of 

the options would have been to hire somebody to look into that, but 

that would have had a cost that you would have to factor into the 

overall profitability of the operation, right? 

Mr. MEYER-CUNO. That is correct. But not only that, you do not 

know what you do not know. So if you do not know it exists, you 

cannot go hire somebody to find something that you do not know 

is out there. 

Chairman MULVANEY. Colonel. 

Colonel O’CAIN. Mr. Mulvaney, a number of these regulations exempt certain size businesses. In other words, if you have less than 

500 employees, you are exempt; if you have less than 100 employees, you are exempt; if you have less than 50 employees, you are 

exempt. 

Chairman MULVANEY. Correct. 

Colonel O’CAIN. If you have less than 10 employees, you are exempt. So there are varying levels of who it applies to. This particular part of the Obamacare, I have no idea, but it could be that 

because he has only got 37 employees, maybe he was not eligible 

for it, I do not know. 


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Chairman MULVANEY. Sure. But to his point, I think you would 

have to actually do the research to find out if he’s exempt from it 

in the first place. 

Colonel O’CAIN. Exactly. 

Chairman MULVANEY. You know, when my family ran a small 

business, Mr. Meyer-Cuno, and I ran a business, I wanted to give 

my folks healthcare and we did for a long period of time. 

One of the reasons we asked you to be here, your company is in 

not a unique situation but in an interesting situation where you 

have got I think it is 39 employees, you have grown over the last 

couple of years from 22, you are on your way to getting to that 

magic 50 number. And you know where I am going with this question, which is would you take the impacts of the healthcare law 

into consideration as you go from hiring that 49th and 50th and 

51st employee. And conversely, if you had 52, would you take into 

consideration the cost benefits of going back down to 49 in order 

to get one of those exemptions that the Colonel talked about? 

Mr. MEYER-CUNO. The quick and easy, down and dirty answer is 

water seeks the path of least resistance. Right? So companies— 

look, we are here to make money, we are here—we are out working 

every day. We just do not have the time and the bandwidth to deal 

with all these things. So you will take the path of least resistance 

if it comes—the short answer is we would do what we can to minimize our healthcare costs but to take care of our employees the 

best way we can. 

Chairman MULVANEY. At the end of the day, you are going to do 

whatever makes you more profit. 

Mr. MEYER-CUNO. We are going to do what we can to be profitable and take care of our employees the best way we can. So for 

example, we might consider setting up a separate organization to 

take 10 employees and put it in that organization and call it ABC 

Company in order to prevent what you are just talking about, in 

order to stay away from the 50. 

Chairman MULVANEY. I remember when we ran our business, we 

would go from 50 to 52 if we thought that was the best thing for 

the company and for the shareholders. Never did we have to consider that growing the company might actually make us less money 

because of the impact of something like the healthcare bill. 

Mr. MEYER-CUNO. And on top of that, we have to go—well, if I 

grow to 52 and we have an economic downfall, a recession, what 

happens if I lay those people off? What is the healthcare cost to me 

at that point? For example, COBRA. So you have to take all of 

those into consideration. But the easiest thing we will do when we 

are running eight, nine hours a day, we are busy, we are going to 

take the path of least resistance because we just do not have the 

time or bandwidth to try to figure out all these answers. 

Chairman MULVANEY. One of the stories I have heard from small 

businesses and big businesses alike in South Carolina, in fact all 

over the country, is that—they hit on something you mentioned 

and something that we dealt with in my family business, which is 

that we wanted to provide our employees with healthcare. It is one 

of the things that we felt a moral obligation to do, especially being 

a family-owned business—that may be a stronger connection. And 

several of them said that while it might be cheaper for them to disVerDate Mar 15 2010 09:22 Nov 16, 2012 Jkt 076478 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HR\OC\A478.XXX A478

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continue healthcare entirely, to simply pay the fee, the fine for not 

meeting employer mandates, but they did not want to do that. 

Then I asked them, I said well what if your competition does not 

feel the same moral compulsion to provide that healthcare program 

and your competition thus acquires a competitive advantage by 

dumping their employees onto the public exchanges. And obviously 

that changed the character. What are your thoughts on that? 

Mr. MEYER-CUNO. I would first like to say our employees have 

full coverage. We used to pay 100 percent of their coverage until 

a year or two ago and they pay—last year, they paid 85 percent— 

we paid 85 percent, so they cover 15 percent. First time ever. We 

have a program called Target Care, which is an independent company that actually comes in once a month and meets with every 

single employee and reviews their statistics. Once a year, we do a 

complete blood work on them at our cost, we do it at our cost. And 

they meet with them and go over their blood pressure, their BMI, 

cholesterol, potential for diabetes. The reason why I bring that all 

up is because we feel compelled to take care of our customer. At 

the end of the day—I mean our employees, sorry. At the end of the 

day, we have to compete. And if we have all of that and if we take 

care of our employees at the end and our competitors are not, eventually we will have to compete. If we have to drop the coverage, 

we will have to compete. 

So, you know, we do not want to do that. We do not want to not 

take care of our employees and we want to offer healthcare. We 

just do not feel that the government should be frankly in our shorts 

doing it. Let the markets take care of themselves and frankly 

maybe it should go strictly to the individual. 

Chairman MULVANEY. Let me ask you one more question. You 

mentioned the fact that because of the rising cost you had to switch 

from 100 percent coverage to 85 percent. 

Mr. MEYER-CUNO. Right. 

Chairman MULVANEY. I am no longer a small business, I had to 

sell my business, so I do not employ anybody any more. We have 

all been told that once the Affordable Healthcare Act passed, that 

the cost of providing healthcare would go down. What has been 

your experience the last 18 months since that bill has passed? 

Mr. MEYER-CUNO. It has not gone down. I think our increase last 

year was just a tad over five percent and in order to achieve that— 

and we use Blue Cross-Blue Shield—we offer an HSA program and 

another program which is—— 

Chairman MULVANEY. HSA is healthcare savings account? 

Mr. MEYER-CUNO. Savings account. So we offer that program and 

then we offer a standard full program. But we changed the dynamics by saying, okay, if you, the employee do not meet five of these 

characteristics, your BMI, your cholesterol levels, your heart rate 

levels, other things, if you do not meet that, then we pay 75 percent; if you meet three, then we pay 85 percent; if you meet four, 

we are going to pay 90 percent. So there is an incentive program 

for our employees to stay healthy and we cover more of their insurance. But if they do not want to—they are assets, employees are 

assets and we want to take very good care of our employees. But 

if they do not take care of themselves, it is just like a machine that 

breaks down. If they are unhealthy, it is a cost to us. 


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But at the end of the day, in order to keep at that five percent 

increase, that is what we had to do. But we do incentivize our employees on a positive side, not a punitive side, to stay healthy and 

then we will—you know, long term, that helps us. 

Chairman MULVANEY. Mr. Meyer-Cuno, thanks very much for 

your testimony today. If you stick around, we might have some 

questions at the end. 

Mr. Felix. 

And by the way, I am going to do something—one of the advantages that we have in doing these field hearings that we do not 

have in Washington, D.C. is we have a lot more flexibility over the 

hearing, and I thank everybody. I see a lot of unfamiliar faces, I 

imagine there are a lot of other small business people here. When 

Mr. Felix is finished with his testimony and I ask him a couple of 

questions, it is my intention to go ahead and open the microphone 

up to anybody else who wants tell what their business is going 

through, to tell their experiences so far, so that we have a chance 

to get as much information as we can today before we close the 

hearing. 

So, with that, Mr. Felix, please proceed. 

STATEMENT OF MONTY FELIX 

Mr. FELIX. Chairman Mulvaney, thank you for the opportunity to 

speak today. My wife and I bought Alaglas Pools in 1999. Some of 

you may know where it is, it is right off I–26 as you go from Columbia to Charleston. The business was started in 1987. 

Prior to that I was President and Chief Operating Officer of a 

local company here in Fort Mill, CCC, the garbage company. And 

prior to that, I was President and COO of a power distribution 

company up in Richmond. So I have had kind of a broader sense 

in terms of business experience. 

We bought it in 1999 and we grew it ten times up until about 

2007, 2007 was our best year and then we came into 2008—we are 

a very seasonal business, so I pretty well track the bell curve. We 

came into May, business was half what it was before. We went to 

the bank and said hey, we have got some real problems here and 

of course in September 2008, everything tanked. My wife and I liquidated all of our personal assets to keep the company alive and 

over the course of the succeeding three years, we lost two-thirds of 

our revenue and 80 percent of our people. It was a matter of survival. 

I also served for seven years and was appointed by the previous 

Governor of the State of South Carolina as Chairman of the South 

Carolina Small Business Regulatory Review Committee which is 

patterned after the federal RFA. And previous to that, I was also 

appointed by the previous Governor for a one-year stint as the Deputy State Director for the Department of Social Services. I had all 

the operations in the state, about 3500 people. So I have been on 

both sides of the aisle here relative to agencies and regulations and 

then on the business side. 

And I currently serve as past president of ACMA and continue 

to sit on their board. And I am a retired United States Marine 

Corps Colonel. I had to put that in when I saw the Colonel’s tag 

over there. Add some dignity to this. 


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Colonel O’CAIN. Semper Fi. 

Mr. FELIX. Semper Fi. 

I have some prepared statements and then I have got some additional statements that I would like to share. 

As an owner of a small company, I depend on the federal government to regulate industry based on valid and transparent reviews 

of the scientific, economic, and other relevant facts. Unfortunately, 

recent regulations and other actions by EPA and the HHS are not 

based on valid assessment, but appear to be driven by policy decisions that hide the real facts. 

For example, in April of 2011, the National Academy of Sciences 

released a major peer review of EPA’s Integrated Risk Information 

System, commonly known as IRIS. The NAS was very unhappy 

that EPA had failed to implement many longstanding NAS recommendations aimed at improving the scientific quality of EPA’s 

decisions. EPA’s IRIS program can have profound impacts on our 

economy. As just one example, municipal drinking water system 

managers are very concerned that recent EPA risk levels will bankrupt city budgets, without any health benefit. In my written comments, I include a summary of the potential impacts of EPA’s IRIS 

program. 

Congress also recently ordered an NAS peer review of the HHS 

Report on Carcinogens, commonly known as the RoC, to address 

similar concerns about scientific quality. My own company is dealing with the fallout from an RoC assessment that was mismanaged 

by the HHS staff and ignores the best science and the many international experts who concluded this chemical is safe—talking about 

styrene. I also provide a written summary of the problems with 

this RoC assessment in my handout. Americans are being misinformed about health risks and good manufacturing jobs and innovation will continue to move to other countries. 

On April 23rd, the Small Business Committee held a joint hearing with the House Science Committee to look into the HHS Report 

on Carcinogens. Business owners at this hearing testified that they 

are having trouble with increases in insurance costs and employee 

turnover as a result of biased and incorrect HHS assessments. And 

scientific experts testified that HHS fails to employ the modern 

valid assessment methods long recommended by the NAS. And I 

ask the Subcommittee to refer to the record for the April 23rd 

hearing for more information. 

Biased, policy-driven analysis will also lead to increased electricity costs for manufacturers in South Carolina and across the 

country, which will also send jobs offshore. EPA’s Utility MACT 

rule justifies a requirement for utilities to install very expensive 

control equipment by pointing to claimed health benefits. Yet according to expert testimony before a February 8th hearing of the 

Energy and Commerce Committee, EPA based its benefits estimate 

on a small number of cherry-picked, non-representative and flawed 

studies, and double counted emission reductions already achieved 

under other rules. I encourage the Subcommittee to refer to the 

record for the February 8th hearing for information. As a result of 

the bad analysis, EPA grossly over-estimated the rule’s benefits. 

When President Obama first took office, he made a commitment 

to the use of sound science and sound analysis. However, it seems 


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this administration believes that an analysis is sound as long as it 

supports this pro-regulation agenda. 

I strongly encourage the Small Business Committee to continue 

its efforts to promote business viability, innovation, and job growth 

by holding the administration to the President’s promises to base 

regulatory and other decisions on sound, fair, and transparent 

analysis of the relevant facts. 

Couple of things. When I was Chairman—I was Chairman of the 

South Carolina Small Business Regulatory Review Committee for 

seven years. That Committee, five appointed by the Governor, 

three by the Senate Pro Tem and three by the Speaker, all business people. The purpose: to look at every single proposed South 

Carolina agency regulation that comes out, to ascertain whether or 

not there could be a potential for an adverse economic impact on 

small business. And we did that for seven years. And by and large, 

this is a very small-business friendly state. It may be 50/50 in people, but 90 percent of the businesses in this state are small businesses. 

What did we do when we ran across a situation with an agency? 

And this gets to your last question, I am going to hit it right here. 

What can be done? There are a couple of things that can be done. 

When we had a situation with an agency that created or had a proposed agency regulation that we felt could have an adverse business effect on small business, we required that agency to do an economic impact analysis and a regulatory flexibility analysis. And 

there was a series of things they had to go back to, they had to 

look at what is the market we are talking about in small business. 

Agencies do not do that. I was in that agency of DSS for a year. 

Business is business, there is no differentiation between a small 

business and a big business. 

In the Regulatory Flexibility Act that was passed by the Governor in 2004, it actually lays this out, it’s law in this state. And 

there is also an interesting part of that law that says if a small 

business is—if there is a notice of violation to a small business, 

that small business can rectify that in 30 days and the agency has 

the authority to issue no fine. There is one, sir, that you can do. 

Another one is reporting. I take chemicals, I take resins and 

catalysts and fiberglass, and I make stuff. And as a result of that, 

I have to report to EPA under Title 5, which is a certification. But 

every month I have to report to SC DHEC, you know, exactly my 

emissions and what-have-you, et cetera, et cetera. And I am a oneman guy too, you know, death by a thousand cuts is a beautiful 

way to say it because if something gets done, it is me. Yet I have 

to report every month. Well, look, if you take my total emissions 

on a yearly basis and you double them, I will not even be in the 

.01 percent of the total emissions in the state. So where am I 

going? There should be different reporting standards for big and 

small companies. I should only have to report on an annual basis. 

Big guys, you know, if you are five percent or more, or two percent 

or more, in terms of emissions, then your reporting standard 

should be more credible because if you screw up in a month because of your volume, you are going to have an adverse impact. But 

small business can be dealt with differently. 

Those are two concrete ways. 


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Tax credits versus revenue. I love this one. I get a call from Department of Commerce. Monty, if you hire 10 people, we will give 

you a tax credit. I said I do not need a tax credit, I need somebody 

to buy a swimming pool. You know, it amazes me how bureaucrats 

have this misunderstanding that everything happens below the 

line. Okay? It does not. Nothing happens until somebody sells 

something. When we sell a swimming pool and we sell a bunch of 

them, then I will go out and I will hire somebody to go build more 

pools. But I can tell you right now, sir, that going forward, and all 

the small business owners I know, we are holding onto our cash 

and we are not hiring anybody unless it is absolutely essential. 

And a tax credit is nice, but if you are not making money, what 

is a tax credit? It is a loss carry forward, it means nothing to me, 

but I still have to make that guy happy. 

I think in my closing comments here, it really comes down to a 

couple of things. Mr. Meyer-Cuno mentioned it. I think we have 

evolved to a point in our country where we have to take a real hard 

look, are we going to be a society of self-reliant people or a society 

of government-reliant? And until we answer that question, we cannot get a handle on regulations because if we continue to drift towards government reliance, then there are going to be more and 

more regulations because if we are government reliant, then there 

is the acceptance of the philosophy that government has to be involved in everything. But that is where this balance has to come 

from, there has to be a balance. 

And one last comment when it comes to EPA regulatory and 

what-have-you. There is always a balance—as businessmen, there 

is always a balance between, as I see it, safety concerns and what 

I will call operational practicality. The health insurance thing was 

a great example, right? In my market, when I go to hire people, 

and we went from 95 to 12 and now we are back to 17, healthcare 

is not an issue in hiring. I might want to give it, but why should 

I? I am not being penalized for it, I am not losing people to other 

companies because everybody is out there just scrambling for a job. 

So I am not saying it is not important, and there will come a time 

in the next two, three, four years, as we continue to grow back 

where it will become important and then I will have to take a hard 

look at it. 

But I think that is the fundamental issue, sir, relative to regulations. And that issue is if you are government-reliant—if you believe in government reliance, then your bureaucracy will always 

look for rules and regulations to maximize complete safety, let us 

say, at whatever cost. And that is not healthy for the United States 

and that is not healthy for big or small companies, and to be quite 

honest with you, we need to get back to a self-reliant philosophy. 

Once we begin to do that, I think you are going to see businesses 

flourish. And like I said, you know, it really comes down to, when 

people start buying swimming pools, that is a good thing and I can 

start hiring people. 

Thank you. 

Chairman MULVANEY. Mr. Felix, thank you for that. I have got 

a couple of questions all over the board and I think I know the answer to this one, but I want to just be clear. 


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You said that you and many other folks you know in small business are not investing their capital and not hiring people right 

now. And like I said, I think I know the answer, but tell me why. 

Mr. FELIX. Uncertainty. I mean what is going to happen with the 

Bush tax cuts? My gosh, you know, if those are not renewed, there 

is going to be a huge tax bill. Why am I going to take working capital, cash, and go hire somebody or put it in a piece of capital 

equipment if I am going to be faced with a huge—I am a Sub S, 

everything flows over to my 1040. You know, according to our 

President, I am a super-millionaire. And this is what is going to 

happen. My belief is that people are going to hoard cash. If you do 

not believe small companies, look at big companies, everybody is 

looking around the corner. They want to see stability and I think 

that is the key issue. Until there is a comfortable feeling on my 

part and others where I believe that I can invest a dollar either 

into a human asset or a fixed asset, knowing that the dollar of investment is going to return to me something and I will not have 

to go back and take that dollar away a year from now, until we get 

back to there, my belief is that we are going to hoard cash. 

Chairman MULVANEY. I will tell you one of my experiences, one 

of the things that you do not—there is no analog to, there is nothing to compare it to in the whole world, is firing somebody. I have 

had to do it before, and it is one of the least enjoyable things I 

think I have ever done in my entire life. And unless you have had 

to do it before, I do not think people realize how you might be slow 

to hire somebody if you really are afraid that you might have to 

lay them off. It is easy to fire somebody if they goof off, that is not 

what I am talking about. I am talking about laying off people because business has taken a downturn. That is an extraordinarily 

difficult thing, because to a certain extent, you have to admit your 

own failings as a leader, as a business owner. I am sorry, I was 

not good enough at what I did to keep you here and I have to let 

you go. That is something that until you have to do it, you do not 

realize how difficult it is and wanting to avoid that and be extraordinarily cautious in hiring people, especially when you talk about— 

you know, it is uncertainty. 

Folks think that means uncertainty in the market. Uncertainty 

is part of the marketplace. Whether or not I can find the customers 

or you can find the customers, that is the uncertainty that we are 

made to deal with. It is the uncertainty to talk about healthcare 

and tax rates and government regulation. That is the type of uncertainty that I think you are talking about and that I experienced 

when I was a small business. It is not the uncertainties of the market, it is not whether or not we can make a product that folks will 

want to buy and will buy. That is what we are programmed to deal 

with as businesspeople. It is the other stuff that made me pull my 

hair out. 

You mentioned something that got my attention early on, on a 

different topic, about how the Report on Carcinogens—and I am assuming now we are talking about styrene in particular—— 

Mr. FELIX. Yes, sir. 

Chairman MULVANEY [continuing]. Would have an impact on municipal water services. Tell me about that. Am I making that linkage correctly or are those two separate topics? 


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Mr. FELIX. The implication of any additional regulation has a financial impact and that is the implication on city budgets. 

Chairman MULVANEY. But you specifically mentioned water; why 

is that? 

Mr. FELIX. Because with enhanced regulations relative to water 

purification, the city or the county government is going to have to 

go buy additional capital equipment and it is going to take cash 

and money. 

Just like in my business, in my business when I deal with styrene, if I am a big company and I do more than 100 tons a year, 

I have to put a thermal oxidizer out there. That is a five or six million dollar non-value-added cap ex that I have to put in that draws 

down cash but I have no value from that. 

Chairman MULVANEY. Mr. Felix, you just mentioned something 

that I think a lot of folks are not familiar with. Tell me the difference between a non-value-added capital expenditure and a 

value-added capital expenditure. 

Mr. FELIX. Fair question. I am a manufacturer of swimming 

pools, build swimming pools. As my business grows, I need another 

spray unit, because I have got more—I need to add capacity because I have got more business. So I go out and I spend 25 grand 

and I buy a spray unit, and that is a value-add. Why? Because 

when I use that, I build more pools and when I build more pools, 

I sell more pools, I make more money. 

What is a non-value-added? Let us say—by the way, I was involved with the EPA in setting the MACT standard for our particular industry, and it took us about seven years to work through 

that. But what is a non-value-added expenditure? Let us say, for 

instance, the EPA came out and said, Monty, you are a small business, but you know, you spray this and you spray that and there 

is some styrene here, and you are going to have to—we are going 

to require you to go spend $2.3 million to put in a thermal oxidizer, 

because we do not want styrene anywhere. So in order for you to 

have your Title 5, you are going to have to make that capital expenditure. Well, first of all, I am a small business, I am a private 

company. I cannot go to the capital markets, I cannot go issue 

stock. If I want money, I have got to go to a bank and sign a note. 

So getting capital is exceedingly difficult for a small business. 

Number two, let us say I get it and I put that $2.3 million thermal 

oxidizer in. It provides no value. Does it help me build more pools? 

No. It costs me cash, yeah, but it is non-value-added. The valueadded, to me, is something that I buy that provides for me capacity, let us say, to do more pools so I can sell. Non-value-added is 

a requirement, a regulatory requirement, which in many cases is 

nothing more than a regulatory tax, that requires me, in order to 

stay in business, to buy this thing and it provides no value add in 

terms of my capacity. 

Chairman MULVANEY. Who ultimately pays for the price of that 

particular piece of non-value-added capital expenditure? 

Mr. FELIX. Sir, you know and I know, the customers. But then 

again, what happens if you have a company out there that is under 

the radar and they are making swimming pools but they are not 

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ply with the law. Now their cost structure is less than mine; I cannot compete. 

You see, that is the problem. I think that there needs to be some 

sensible regulations that do not inhibit what I call the operational 

practicalities of running a business and being successful. And what 

has happened now is that practicality has been overshadowed by 

too many regulations. 

Chairman MULVANEY. You mentioned utility MACT and I want 

to talk about that for a second. MACT, by the way, is an acronym, 

M-A-C-T, and there are actually several of these initiatives going 

through Washington right now. I am more familiar with boiler 

MACT and cement MACT. Again, maximum achievable control 

technology. And what it really means, especially in the boiler circumstance, for example, the federal government is trying to regulate a standard that cannot yet be hit. The technology does not 

exist yet to achieve the containment or the control technology that 

the standard requires. And the impact here locally, where we have 

large wood and paper products industries; for example, Resolute 

Paper, Chesterwood Products, boiler MACT is a big deal for those 

kinds of folks. 

We talk about cement MACT. I remember the discussions in 

Congress about cement MACT which was going to do the same 

thing for the cement industry and someone opined that we would 

not be able to make cement in this country any more if this rule 

went into place and one of the responses from the proponents of 

the cement MACT rule was that was okay, there was plenty of capacity in Mexico, where they do not have those types of rules. I was 

stunned by that admission. 

Let me ask you, Mr. Felix, about the impact of utility MACT on 

consumers and businesses in South Carolina if it goes in place. 

Mr. FELIX. The utility MACT? 

Chairman MULVANEY. Yes, sir. 

Mr. FELIX. I’m not familiar with the utility MACT. I am familiar 

with—— 

Chairman MULVANEY. I am sorry, I must have asked—— 

Mr. FELIX. Must be the other guy. In my industry, because we 

use resins, it is regulated and there is a MACT for that, maximum 

achievable control technology for that. And again, what it is is one 

huge algorithm that says if you do X, Y, Z, then you cannot do A, 

B, C. And if you are going to do A, B, C you have to go by this 

and what-have-you. So I imagine—and I am only guessing—that 

any MACT is going to be some regulatory effort to control emissions or flow or something like that. But I am not familiar with 

that one. 

Chairman MULVANEY. I appreciate it and it was one of the other 

witnesses, who actually was not here today. So thank you and my 

apologies. 

Mr. Felix, thanks very much. 

Mr. FELIX. Thank you. 

Chairman MULVANEY. At this point, I am going to open the podium up to anybody else who wants to come up and ask a question 

of the panel or of me or anybody else who has had an experience 

that they want to share. This is a public hearing and if you want 


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to take the opportunity to tell us what is happening with your business, please do. 

There is a gentleman in the back who I recognize, a young man. 

STATEMENT OF CURWOOD CHAPPELL 

Mr. CHAPPELL. Do I need to come up to the mic? 

Chairman MULVANEY. No, sir. You are blessed with a voice that 

carries, Mr. Chappell. 

Mr. CHAPPELL. Thank you, Mr. Congressman and the panel here 

and the people that are asking the questions. Where I come at, talk 

is cheap, it takes money to buy land. You have got to start somewhere, we have gotten too much control. 

You know who I am. Mr. Mick, I want to take a minute to say 

that I have done this in the county, with the help of councilmen. 

We can cut out a lot of red tape for small businesses with our bureau, we want a bureau. We are going to try to get one for small 

business. We cut the red tape and we have got small business, convenience stores and other things and paint shops and so, so, so, so 

and repair shops. We cut our county regulations down to get that. 

You have got to do the same thing in Washington. Do not let me 

give you advice, but let me make statements. I am no authority on 

the subject, but I am opinionated on most. [Laughter.] 

I appreciate what you are doing and we started back here and 

we just killed a couple of bills that was damaging to our people and 

our business and we are going to probably kill some more and promote what you are promoting. I admire your spunk in that and I 

appreciate you very much, and come back to see us sometime. 

Chairman MULVANEY. Thank you, Councilman. 

Anyone else? Yes, sir. 

And if you could give your name for the record, please. The first 

gentleman was Curwood Chappell, who everybody here except the 

court reporter knows. [Laughter.] 

She is not from here, Curwood. 

STATEMENT OF JEFF CARRINGTON 

Mr. CARRINGTON. Thank you, Mr. Chairman, I appreciate this 

opportunity. My name is Jeff Carrington, I am the president of a 

startup company here in South Carolina. The organization is 

Crown Sea Brands, LLC, we are former combat Marines who have 

formed a service-disabled owned company. 

Colonel O’CAIN. Semper Fi. 

Mr. CARRINGTON. Semper Fi, Colonel. 

We have a few others in the audience here, it is a secret society. 

But my purpose today—I will make it brief, with the Chairman’s 

indulgence and the other attendees’ indulgence, I want to flip the 

coin slightly and tell you a little bit about a case of under-regulation. And it specifically relates to—and let me start first by expressing my gratitude and appreciation for Mr. Mulvaney’s work on 

H. 3893—is that correct, sir? 

Chairman MULVANEY. We do not track them by the number. I 

apologize. 

Mr. CARRINGTON. The STAR Act. 

Chairman MULVANEY. Yes, sir, thank you. 


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Mr. CARRINGTON. Your bill, which apparently I think the long 

title was the Subcontracting Transparency and Responsibility Act, 

do I have that right? 

Chairman MULVANEY. I think it is Reliability. 

Mr. CARRINGTON. Well, Title 2 specifically relates to enforcement 

of the regulations—and this is my point—that are written into the 

Code concerning subcontractors, to promote the utilization of subcontracting capacity by major federal contractors. There is a whole 

string of legislation, U.S. Code stuff and SBA rules and regs and 

executive orders, and it all cuts to the idea of promoting opportunities for veterans and service-disabled veterans. 

We are obviously in that latter category and we have formed this 

company really under the understanding that the opportunity is 

valid and challenging but rewarding. I am really a serial entrepreneur, this is my fourth startup. Just a stipulation for the record. 

I do not need really a handout, we are really looking for a handup. 

My last company was an acquisition by Berkshire Hathaway, so I 

know the rules of business, I know the survivability issues that Mr. 

Meyer-Cuno talked about, the mine field of growing a business, getting it on the board and, ultimately in my case, getting Berkshire 

Hathaway to buy my little company. It sounds grandiose, it is probably the smallest acquisition they ever did. 

So I am not here looking for really a handout, we are really looking for a handup. And let me be specific. The large contractors— 

we are in the agricultural products and food area. The large contractors that supply DoD, particularly, four to five billion dollar annual expenditure, are organized, it is almost an oligopoly and it is 

done so for valid reasons, because of concentration and streamlining and cost-saving. I understand that, I am perfectly okay with 

that. But built into the regs that are supposed to stimulate opportunities for service-disabled veterans are explicit requirements 

where there are subcontracting opportunities that, I think the 

magic phrase is ‘‘maximum practicable opportunity,’’ exists or 

should be created to benefit service-disabled veteran-owned companies, if we just focus on my specific category for a moment—maximum practicable opportunity. 

Well, I have been out there for two years, I have done everything 

that I think ought to be required to do the due diligence, to make 

the rounds, to meet the people, to assert our bona fides in terms 

of our products, our qualifications, all of that, if you will just accept 

that on faith for the time being is in order, and I can tell you, and 

here is my bottom line, that the major contractors out there, I will 

name names—U.S. Foods would be one, Sysco another, Sodexo another, SoPakCo another, the big South Carolina based company, 

are paying virtually no attention to those rules and regs. 

I will get back to my conclusion and why I appreciate your legislation so much, your bill. The Title 2 of that Act is exactly what 

is required. This is the point about flipping the coin and the underregulation versus non-regulation. These major contractors are not 

being held to account for providing maximum practicable opportunity for service-disabled veterans. 

I am a big guy and I can take the hard knocks, I am a former 

Marine, but what really sticks in my craw is I am a two-time Vietnam veteran, I spent the better part of two years over there, that 


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homecoming was less than good, but we dealt with it. And now, 

fast forward and we have the opposite situation where there is all 

this encouragement and sentiment and positive rhetoric about 

helping veterans and it is almost like Alice in Wonderland. It is 

deja vu all over again because I am being killed with kindness. I 

am being encouraged that there are these opportunities and the reality on the ground is those opportunities are really—— 

Chairman MULVANEY. Mr. Carrington, I appreciate that. I do not 

mean to cut you off, but I do want to point out, and you did not 

know this, that that Act actually came out of the hearing that we 

had in Sumter. That is why these things are so inherently valuable 

to us as lawmakers, because we went down to Sumter and talked 

to some of the local businesses down there, and they told us exactly 

what you just said, many of them veteran-owned. You can imagine 

in Sumter, a large retired veteran population. 

Mr. CARRINGTON. Yes. 

Chairman MULVANEY. And they said look, we do not mind not 

getting the bids. We do not mind submitting our bid and getting 

beat, that is what we do as business people, sometimes you win, 

sometimes you lose. What we do not like is the fact that we never 

get a chance. 

Mr. CARRINGTON. Amen. 

Chairman MULVANEY. And what was happening is that large 

businesses were—on their contracts with the government were formulating the contracts, manipulating the contracts in such a fashion to where small businesses could not get them. For example, the 

contract for concrete was ten times as large as any local concrete 

company could provide. So by manipulating that contract, the large 

contractor was able to effectively cut out the local businesses. And 

that is what gave rise to the STAR Act, which we would not have 

known about if we had not done that hearing. 

Mr. Carrington, I appreciate you being here. 

Mr. CARRINGTON. I appreciate the opportunity. 

Chairman MULVANEY. No, I appreciate you doing this. 

Anybody else before we wrap up? The gentleman in the back and 

then the gentleman in the front. 

Yes, sir. And I am sorry, was there a young lady behind? No? 

Okay, all right. 

Yes, sir, and if you could tell us who you are. 

STATEMENT OF KEN SPEIRS 

Mr. SPEIRS. My name is Ken Speirs, I am a general contractor 

here in Rock Hill. I apologize, I have been out working today, so 

I am not properly dressed for this. But I wanted to come in and 

speak. We actually spoke when you were running for election. 

Being a contractor in this area, a small contractor, we have really been hit hard. A couple of things, talking about regulation, I will 

give you one quick thing that you can think about and everybody 

here will really understand part of what we are facing. 

DHEC regulated us several years ago. I have been doing this 

work for over 30 years. You can do a septic tank anywhere for 

$3000 to $3500. That same septic tank now is an engineered system which has gone up a minimum—minimum—$18,000–$19,000. 

Chairman MULVANEY. Eighteen thousand or hundred? 


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Mr. SPEIRS. Eighteen thousand. And we are putting one in now 

at a school that may run into $35,000, for a school that has less 

than 50 systems for an engineered drip system. So the government 

is regulating us to death. 

When the economy hit, the federal government gave the banks 

big piles of money to bail them out. What did the banks do? They 

turned around to people like me that had credit scores of 800 and 

better, and said we are going to cut your line of credits out. At the 

time I was doing metal buildings. Well, for those that do not build 

metal buildings, you order the metal building, you put a deposit 

down. When the building is delivered, you give them a check on 

site for the building in full before they unstrap and unload the 

building. So we live on credit. We live on credit from the banks and 

the banks came in and cut our credit, cut our credit cards, not because we were late, it is because we, quote, were contractors. 

At the same time, for years I have bought properties, different 

properties, slipped them, rent them, do different things to them, 

sell them, a lot of bank foreclosure properties and things like that. 

Used to be you could go in and do these properties, some of them, 

within 20 days you could do them, regulate them out, sign them, 

do a good job. That same work that was taking us two months, 

some of it takes you two years because of regulations. The banks 

are not working with us. 

So they come to me, and this has happened, and they come to 

me and they say, Mr. Speirs, I would like to upfit this building, 

$150,000–$200,000 upfit. Well, everybody says okay, that is no big 

deal. The people cannot get the loans to do the work. It is not because they have bad credit, it is not because they are a startup 

business. It is they cannot get the loans. 

Rock Hill has a great thing for small businesses, they try, York 

County has a small business association, South Carolina has. But 

the problem is if the banks are not willing to work with them, then 

the people cannot get the money, then that comes down to me, it 

comes down to your larger general contractors and we cannot get 

the work. And what happens, and what has happened around here 

is I am a small general contractor, I do not do million dollar type 

things. But the million dollar jobs are not out there now. Your big 

jobs are not there, they are not going, so what happens when those 

contractors do not have work, they come down the line. 

Chairman MULVANEY. Mr. Speirs, before you move on, I want to 

pick your brain on a specific. Oftentimes, it helps us to have a specific example, as opposed to general concepts. 

Tell me one thing that changed about septic tanks that drove 

that cost up from $3000–$3500 to $20,000. 

Mr. SPEIRS. I will be glad to give you one. I am working with a 

school now with Dennis Gooch out on Board Road. There is a field 

beside him that has cows in it, the cows do their business on top 

of the ground. Years ago, he had a septic system put in there and 

what you would do is you would dig this system out, depending on 

the soil type, on an average you would dig it out and put two foot 

of rock or two foot of fill, some parts of South Carolina use tires. 

You would put drain pipe in, level it out, put your rock, your 

grass—not grass but straw— on top of it and cover it up. 


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Now that same system, they are coming up with an engineered 

system, you pump it out into a tank that pumps it through a filter 

that pumps it through another system that pumps it to another 

system versus draining out in the ground like we did here for years 

and years. You actually run it through a filtering system and it is 

what they call a grid system, and a lot of these systems will only 

do up to 450 gallons a day. So they have come in with a system 

and come in with these companies that said you will use these systems, you have no options. 

So where the average person would say okay, I am going to spend $3000–$4000 on a system, now they have to have this new 

engineered system and they cannot come in and dig it out and 

bring red dirt in or whatever, bring rock in and do it. So now, they 

are like, I cannot do this. 

Chairman MULVANEY. Mr. Speirs, I appreciate that. What we 

will do in my office is try and figure out—oftentimes even though 

that is a DHEC issue, oftentimes it is actually driven by federal 

regulation. So we will try and figure out if that is something that 

the federal government is mandating that DHEC is simply implementing, and see if we can look at it from that perspective. So I 

appreciate that input. 

Anything else? 

Mr. SPEIRS. If the people from your office—I would make this invite, if I can do this, I would like to bring you out to the one project 

that we are looking at and let somebody in your office look at the 

system and see exactly how silly I think this is. If somebody in 

your office would be willing to meet with us, I will be willing to 

leave a card and I would be willing—— 

Chairman MULVANEY. Actually I would like to do that myself. 

We used to build septic systems, it would be interesting to see how 

they work today. So if you want to give your name to the gentleman in the back, we can do that. 

Thank you, Mr. Speirs, I appreciate it. 

Chairman MULVANEY. The gentleman up front. 

STATEMENT OF WARREN WHITE 

Mr. WHITE. Good morning, my name is Warren White, and I am 

the Chief Operating Officer of a company called Komet USA. We 

are a wholly owned subsidiary of Gebr. Brasseler, which is a large 

German manufacturer of dental and medical cutting tools. 

I will give you a good example of what we do. We are actually 

the people who make the tools that dentists cut your teeth with. 

We are the largest in the world. 

Chairman MULVANEY. Does this make you a popular person? 

Mr. WHITE. Absolutely. [Laughter.] 

Makes everybody look great, those smiles look really good. 

I am going to give you a little company history before we get to 

our problem. Our owner started our company in 1923 with two 

brothers, so it was the Brasseler brothers. They took their mother’s 

sewing machine, retooled it, put it in the garage and actually started making little cutting tools out of steel in the garage, and the one 

brother was, we will say the manufacturer, the other two brothers 

were the sales people. They put their goods in a wheelbarrow and 

they sold them door to door in Dusseldorf and became a pretty big 


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regional manufacturer in Germany. It grew and grew and became 

the number one manufacturer of cutting tools in Germany. 

Well, in 1939, things changed a little bit. They became manufacturer of dental rotary instruments for the German Army, which 

made them very productive. However, in 1944, the American Air 

Force had relocation plans for them. They went over the top and 

bought them out and they actually had to move to a small village 

and Lemgo, Germany is right now where our headquarters is. We 

employ about 1000 people there and we manufacture everything 

from the smallest cutting tool to the largest cutting tools or blades 

that an orthopedic surgeon would use or an ENT surgeon would 

use or oral surgeon, dentist, for example. 

In 2005, we moved here to Rock Hill and we employ about 100 

people now in various positions, primarily sales and marketing and 

we are now one of the leaders in sales of rotary instruments in the 

United States and we are definitely a worldwide leader, market 

leader, in rotary instruments. So there is the background. 

Here is the problem. We are becoming competitively disadvantaged to our competitors because of a federal agency and that federal agency is the FDA. The FDA is holding import packages as we 

send our inventory to the United States—and by the way, we ship 

directly to our end user from Germany FedEx every day. We send 

500, 250 to 500 packages every day to our end user, whether it is 

in San Francisco, whether it is in Dallas, Texas, these packages are 

going there. And when they get hung up by the FDA, a two-day 

delivery is quickly a ten-day delivery and that ten-day delivery 

puts us at a tremendous competitive disadvantage to our competitors. 

This situation changed from one day to the next. One day the 

switch was turned from a two-day delivery, to a five to ten-day delivery. 

Chairman MULVANEY. Mr. White, what was the justification for 

the delay? 

Mr. WHITE. Mr. Mulvaney, we have been in contact with FedEx 

who is our agent in this, with the FDA and we have had no answer, none, except we have inadequate amount of staff. Well, I 

could accept an inadequate amount of staff if it happened over a 

period of time, but from one day to the next when the light turns 

on and off, somebody—they cannot explain that to me. It is too 

fast. Business does not happen that way. Business is an evolution, 

not a light switch. Something happened in their system. 

And by the way, this is not happening just to Komet, this is happening to the dental industry from China, the implant business. By 

the way, people probably do not realize this, but about 30 percent 

of prosthetic work, that is the teeth that are coming in like if you 

need a crown, that is coming from China now, that is not coming 

from the U.S. 

And so companies in China actually ship that product one-day 

air, two-day air, back to the United States and it goes into your 

mouth as an American product, which frankly, I am not very proud 

of that. But it goes back to the simple fact that our government is 

in our way and that the FDA is a tremendous competitive disadvantage to Komet and to my other colleagues in the dental industry. 


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And I appeal to you to somehow loosen this up. This is unbelievably restrictive to us. I have sent Mr. O’Neal a number of correspondence, I have sent you some and we have talked personally 

about this. This issue is not going to end until somebody puts their 

foot in it. And I appeal to you to take care of that, because we are 

a contributing entity in South Carolina, we have choices of a lot of 

states that we could move to, but people like Kelly and Mr. Chappell, I mean we have got a great community here, but if we are 

going to be profitable and if we are going to stay profitable, we 

have to get the government out of our business. 

One other point that I think is important. I know Mr. MeyerCuno said something about—quite a bit actually about the 

healthcare. I do not know if everybody realizes that starting next 

year, your dental costs—I can only speak for dental and medical— 

because of President Obama, the price of dental instruments, medical instruments, will go up at least two percent because everything 

that is coming over now will have an additional two percent tax on 

every dental instrument, medical instrument that is sold in the 

United States, just as a premium for this wonderful healthcare act 

that they have passed into law. 

Chairman MULVANEY. Thank you, Mr. White. I appreciate you 

taking the time to let us know. And my staff is telling me that they 

have spoken to you and we will talk to you further on your specific 

issue after the meeting. 

Mr. WHITE. I appreciate that. Thank you very much, and I enjoyed today’s meeting, I think it was very fruitful for me. 

Chairman MULVANEY. This gives me an opportunity to mention 

the medical device tax, which the House passed a bill on last week 

that would actually repeal that medical device tax which is part of 

the healthcare bill. 

Thank you to everybody for coming. We will go ahead and read 

a statement for the record as we close. 

Before we end, I want to state that I do not feel that all regulations are bad. Regulations are necessary and could be beneficial to 

society, as several of our witnesses today acknowledged. They protect our food supply, ensure that drugs work and to keep financial 

markets transparent. But they also have costs by erecting barriers 

to entry, distorting markets, diverting scarce capital. What we were 

talking about today are regulations that go above and beyond just 

serving the public interest and disproportionately hinder small 

businesses in a multitude of ways. 

Responsive regulations require agencies to balance the intended 

benefits against the economic costs of the rules that they impose. 

Historically, federal agencies appear to have been much better at 

uncovering the benefits of the regulations than they are at calculating the costs of those. 

Of course, this makes selecting the appropriate balance needed 

to protect the public much more difficult, but particularly since 

most businesses subject to regulation are small and therefore not 

always capable of making their concerns known. 

It is a very important issue to me and that folks I know in both 

parties are very passionate about and we will continue to work on 

back in Washington. Small businesses are in fact the foundation of 

our economy. 


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You heard one of our witnesses talk about the fact that half the 

people in the nation work in small businesses. Actually in South 

Carolina, it is closer to 80 percent. And the large majority of our 

new jobs created every single month nationwide are in small businesses. 

I want to thank each of you gentlemen for coming up today. I 

want to thank everybody for participating, especially those of you 

who came from long distances. There is a formal opportunity that 

I have and other members will have. By the way, other members 

will have the opportunity to read the transcript and to submit 

questions for the record, statements for the record, and so forth. So 

just because I am the only member of Congress who is here does 

not mean that I am the only member of Congress, number one, 

that is interested in this; and that, number two, will participate in 

this hearing, albeit after the fact. So with that, I will ask for the 

record that we have five days to submit additional questions. 

Unless there is anything else, I thank everybody for participating 

and we will call this hearing of the Small Business Committee to 

an adjournment. 

Thank you. 

[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.] 


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