U.S. GOVERNMENT PUBLISHING OFFICE

28–782 WASHINGTON : 2018

REGULATORY REFORM AND ROLLBACK: THE 

EFFECTS ON SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MARCH 7, 2018 

Small Business Committee Document Number 115–061 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RALPH NORMAN, South Carolina 

JOHN CURTIS, Utah 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 10 

WITNESSES 

Ms. Karen Harned, Executive Director, Small Business Legal Center, National Federation of Independent Business, Washington, DC .......................... 4 

Mr. Patrick Hedren, Vice President, Labor, Legal & Regulatory Policy, National Association of Manufacturers, Washington, DC ..................................... 5 

Mr. Randy Noel, Chairman, National Association of Home Builders, Washington, DC ............................................................................................................. 7 

Ms. Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of Law, 

Georgetown Law, Washington, DC ..................................................................... 9 

APPENDIX 

Prepared Statements: 

Ms. Karen Harned, Executive Director, Small Business Legal Center, 

National Federation of Independent Business, Washington, DC ............. 27 

Mr. Patrick Hedren, Vice President, Labor, Legal & Regulatory Policy, 

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

Mr. Randy Noel, Chairman, National Association of Home Builders, 

Washington, DC ............................................................................................ 46 

Ms. Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of Law, 

Georgetown Law, Washington, DC .............................................................. 52 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

ABC - Associated Builders and Contractors ................................................... 91 

CUNA - Credit Union National Association ................................................... 92 

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REGULATORY REFORM AND ROLLBACK: THE 

EFFECTS ON SMALL BUSINESSES 

WEDNESDAY, MARCH 7, 2018 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 11:04 a.m., in Room 

2360, Rayburn House Office Building, Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, Kelly, Blum, Comer, 

Fitzpatrick, Marshall, Norman, Curtis, Vela ́zquez, Evans, Murphy, 

Lawson, Adams, Espaillat, and Schneider. 

Chairman CHABOT. Good morning. I am going to go ahead and 

call the hearing to order. 

We have been contacted by the ranking member who has indicated she is speaking right now in Financial Services and she has 

given our authorization to go ahead and move ahead. I know she 

is probably very anxious to hear my opening statement and will be 

very disappointed not to hear it but we can provide her with a copy 

of it. 

We have some of our other most distinguished democratic colleagues here as well to make sure that if I do anything wrong they 

will call me on it, so I won’t. 

The Small Business Committee is here today to examine how the 

current regulatory reform and rollback efforts by Congress and the 

President have affected small businesses. As this Committee knows 

all too well, federal regulations continue to be one of the biggest 

challenges facing America’s small businesses, and this impacts 

their abilities to grow. 

Every day, millions of small business owners across the country 

are working hard to provide jobs and grow the economy. But no 

matter what industry these small business owners are in, they 

must navigate what is often a tangled web of complex, confusing, 

and costly regulations. In fact, according to the National Small 

Business Association, the average small business owners spends at 

least $12,000 every year to deal with the costs of regulation. 

Even worse, a start-up company will spend on average over $83,000 in regulatory costs alone in their first year. Small business 

owners also spend a substantial amount of time navigating regulations, with nearly half of them spending over 40 hours every year 

to handle new and existing regulations. 

The evidence is clear: federal regulations continue to be a problem for America’s small business owners and they need to be addressed. 

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There are federal laws in place that are designed to ensure that 

agencies do not issue new regulations without careful consideration. One is the Regulatory Flexibility Act, which requires agencies to consider how their proposed regulations will impact small 

entities. Another is the Congressional Review Act, a tool that Congress can use to rescind a regulation on an expedited track. 

We have used the Congressional Review Act to overturn 15 regulations from the final months of the previous administration that 

were rushed through the rulemaking process as midnight regulations. Unfortunately, despite these established procedures, small 

businesses are not being adequately considered in the regulatory 

process. 

The President has also taken important steps to reduce the regulatory burden on small businesses, such as requiring two regulations be repealed for every new regulation, which we understand 

is actually quite more than two. I have heard it is up to 22 for 

every new regulation coming out of here, so that is definitely a step 

in the right direction. And establishing regulatory reform task 

forces to force agencies to take a hard look at regulations already 

on the books. And we are seeing results. In the first 8 months of 

the President’s tenure, federal agencies added zero new regulatory 

costs and created over $8 billion in cost savings. 

That is a good start, but permanent, meaningful regulatory reform needs to come from Congress. For too long, Federal agencies 

have ignored their obligations and inappropriately used loopholes 

in the rulemaking process to avoid considering how their regulations will impact small businesses. 

That’s why I sponsored H.R. 33, the Small Business Regulatory 

Flexibility Improvements Act of 2017, which would strengthen the 

Regulatory Flexibility Act and ensure that federal agencies actually 

examine how their new regulations would impact small businesses 

and require them to consider alternatives to reduce unnecessary 

costs and burdens. 

This bill was included in a larger bill, H.R. 5, the Regulatory Accountability Act of 2017, which passed the House with a bipartisan 

vote. The Senate’s counterpart bill, S. 584, was voted out of Committee and is awaiting action by the full Senate, as are many other 

things. I encourage the Senate to vote on this critical, common 

sense legislation as soon as possible, so we can provide meaningful 

regulatory relief to America’s small businesses. 

Our witnesses today will provide important insight into how the 

current regulatory reform and rollback efforts have been working 

for America’s small businesses. 

I would normally now yield to the ranking member. I would assume that my colleagues do not want to give her opening statement, so we will let her opening statement be given at the point 

that she gets here. 

So I will then, let’s see here. Let me get the appropriate next 

thing here. 

Okay. Well, we will go right into—I would assume that no other 

Committee members have opening statements. If they do, I would 

ask that they be submitted for the record. 

Without objection, so ordered. 

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And I will take just a moment at this point to explain our lighting system. The ranking member is very familiar with that so this 

is not going to put her at any disadvantage I am sure. 

We operate under the 5-minute rule. It is pretty simple. There 

is a lighting system there. The green light will be on for your first 

4 minutes. And then the yellow light will come on to let you know 

you have got a minute to wrap up, and then the red light will come 

on at the end of 5 minutes, and we ask you to stay within that time 

if at all possible. We will give you a little leeway if you need to go 

on, but try to wrap up if you see the light come on. 

And I will now introduce our distinguished panel here this morning. 

Our first witness is Karen Harned, who is the Executive Director 

of the Small Business Legal Center at the National Federation of 

Independent Business (NFIB). Ms. Harned comments regularly on 

small business cases before federal and state courts. She has also 

written and testified before Congress, including this Committee, on 

how regulations impact small businesses and provides compliance 

assistance for small business owners across the country. 

Our next witness is Patrick Hedren, who is Vice President for 

Labor, Legal, and Regulatory Policy at the National Association of 

Manufacturers (NAM). NAM is the largest manufacturing association in the country and represents small manufacturers in all 50 

states. Mr. Hedren advocates on behalf of the Nation’s manufacturers on specific regulations, regulatory reform, and labor and employment policies. 

Our third witness is Randy Noel, who is the current Chairman 

at the National Association of Home Builders. Mr. Noel also founded a custom homebuilding company in—is it La Place or La Place? 

Mr. NOEL. La Place. 

Chairman CHABOT. La Place, okay. Louisiana, which has built 

more than 1,000 custom homes in the greater New Orleans area. 

He brings more than 30 years of experience to the residential construction industry, and we appreciate all the testimony. 

And I would ask my colleagues, would they like me to introduce 

our final witness? 

Okay. I will go ahead and do it. 

Our final witness is Ms. Lisa—is it Heinzerling? It is? Okay. 

Heinzerling. 

Ms. Heinzerling is the Justice William J. Brennan, Jr., Professor 

of Law at Georgetown University Law Center. She specializes in 

administrative law, environmental law, and food law, and has several publications on these topics. 

We welcome Ms. Heinzerling today as we do all our witness. 

Ms. Harned, you are recognized for 5 minutes. 

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STATEMENTS OF KAREN HARNED, EXECUTIVE DIRECTOR, 

SMALL BUSINESS LEGAL CENTER, NATIONAL FEDERATION 

OF INDEPENDENT BUSINESS; PATRICK HEDREN, VICE 

PRESIDENT, LABOR, LEGAL & REGULATORY POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS; RANDY NOEL, 

CHAIRMAN, NATIONAL ASSOCIATION OF HOME BUILDERS; 

LISA HEINZERLING, JUSTICE WILLIAM J. BRENNAN, JR., 

PROFESSOR OF LAW, GEORGETOWN LAW 

STATEMENT OF KAREN R. HARNED 

Ms. HARNED. Thank you, Chairman Chabot and Ranking Member Vela ́zquez. 

On behalf of National Federation of Independent Business, I appreciate the opportunity to testify today regarding the positive impact deregulation is having and regulatory reform can have on 

small business. Overzealous regulation is a continuous concern for 

small business. The uncertainty caused by future regulation effectively acts as a boot on the neck of small business, negatively impacting their ability to grow and plan for the future. 

Since January 2009, government regulations and red tape have 

been listed as among the top three problems for small business 

owners according to NFIB Research Center’s monthly Small Business Economic Trends Survey. And in a small business poll on regulations, NFIB found that almost half of small businesses surveyed 

viewed regulation as a very serious or somewhat serious problem. 

Compliance costs, difficulty understanding regulatory requirements, and extra paperwork are the key drivers of the regulatory 

burdens on small business. Understanding how to comply with regulations is a bigger problem for those firms with one to nine employees, since 72 percent of small business owners in that cohort 

try to figure out how to comply themselves, as opposed to assigning 

that task to somebody else. 

Finally, NFIB’s research shows that it is the volume of regulations that poses the largest problem for 55 percent of small employers, as compared to 37 percent who are most troubled by a few specific regulations. 

America’s small business owners view President Trump’s commitment to rolling back unnecessary burdensome and duplicative 

regulation as one of his administration’s greatest accomplishments 

in his first year. Every president as contributed to the problem of 

overregulation, with tens of thousands of pages being added to the 

Federal Register every year, yet the Trump administration, to its 

great credit, has reversed that trend, reducing the number of pages 

in the Federal Register by 36 percent. 

For fiscal year 2017, President Trump promised to eliminate two 

regulations for every new one proposed, but the administration exceeded that goal, eliminating 22 regulations for every new regulatory action. 

The Office of Information and Regulatory Affairs Administrator 

Neomi Rao has directed each Federal agency to have a net reduction in total incremental regulatory costs for fiscal year 2018. Congress has also provided significant relief by rejecting 15 burdensome regulations using its authority under the Congressional Review Act. 

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NFIB commends this Committee and the House of Representatives for passing several regulatory reforms, including H.R. 5, the 

Regulatory Accountability Act which, as the chairman mentions, 

contains important reforms for small business and Title III, the 

Small Business Regulatory Flexibility Improvements Act. 

As H.R. 5 requires, NFIB supports the following regulatory reforms that we believe would make the regulatory process more effective, transparent, and accountable. NFIB believes that every 

agency should be required to comply with SBREFA and convene a 

Small Business Advocacy Review Panel before every economically 

significant rule is promulgated. 

NFIB supports reforms that would account for the indirect cost 

of regulation on small business. Federal agencies often proclaim 

the indirect benefits of their proposals but they decline to analyze 

and make publicly available the indirect cost to consumers. NFIB 

believes judicial review of RFA compliance should be available during the proposed rule stage. 

NFIB also supports reforms that would waive first-time paperwork violations, require agencies to conduct more vigorous costbenefit analysis, end Chevron Deference, provide for third-party review of RFA analyses, codify Executive Order 13563, and increase 

agency focus on compliance assistance. 

Finally, much work still needs to be done to ensure that agencies 

comply with existing law and do not view SBREFA as simply just 

another box to be checked. 

Small businesses are the engine of our economy, yet over the last 

several years, the crushing weight of regulation has used up valuable human and financial capital which is in short supply for 

America’s small business owners. NFIB looks forward to working 

with Congress to pass regulatory reforms that would improve current law and level the regulatory playing field for small business. 

Thank you for inviting me to testify, and I look forward to answering any questions you may have. 

Chairman CHABOT. Thank you very much. 

The ranking member has indicated to me that she would like to 

give her opening statement after all the witnesses have testified. 

So Mr. Hedren, you are recognized for 5 minutes. 

STATEMENT OF PATRICK HEDREN 

Mr. HEDREN. Chairman Chabot, Ranking member Vela ́zquez, 

and members of the Committee, thank you very much. It is an 

honor to testify in front of you today about the impact of regulatory 

reform on small manufacturers in the United States. 

Thank you, Mr. Chairman, for the kind introduction earlier. 

I would like to focus my remarks on three key messages. 

First, when it comes to small business impacts, it is not just the 

heat, it is the humidity. Small manufacturers worry about the accumulation over time of overlapping and even conflicting rules, not 

just the big ticket items. 

Second, reducing burdens on small manufacturers, it is not about 

the number of rules that come off the books, but it is about the way 

the executive branch approaches regulation. 

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And third, right now is an ideal time for Congress and the executive branch to reflect on what works and to reform the things that 

do not work. 

Today’s hearing comes at a very interesting time for regulatory 

policy in general. Last year saw some of the biggest shifts in regulatory policy that I am aware of. Congress passed, Mr. Chairman, 

as you mentioned, and the President signed 15 Congressional Review Act resolutions. That is about 15 times as many as ever before. The President issued Executive Order 13771, which calls on 

agencies to remove two regulations for each new one that they 

issue and to adhere to a net zero budget. And while agencies begin 

to reevaluate their existing rules with an eye toward reform, new 

major rulemaking has slowed dramatically. 

The truth as we see it is that reforming ineffective and costly 

regulations is painstaking work, and we see care and deliberation 

as a good thing. But our members are optimistic because of relatively calmer waters in this space and they are investing as a result. 

In our most recently quarterly outlook survey at the end of 2017, 

94.6 percent of NAM’s members said that they were positive about 

their own company’s outlook. That is an all-time high for that survey. That number actually made headlines. 

For regulatory geeks like myself, the fourth quarter survey also 

highlighted some interesting points. Over a third of respondents 

said that they spend at least 7 hours per week on regulatory paperwork, and almost a quarter spend over 10 hours. Four in 10 felt 

like they had enough guidance on how to comply with the regulations to which they are subject. Over half need to retain a law firm 

to help them keep up with paperwork. And at the same time, manufacturers are not anti-regulation. Over three-quarters told us that 

smart regulations are essential to ensure a level playing field. 

Our members want to see regulations that make sense for how 

small and medium-size manufacturers work in the real world, and 

we know that this is a bipartisan goal. 

Regulatory policy is always contentious, however, because the 

benefits of regulation are usually diffused while the burdens are 

usually concentrated. Some sectors like our own bear a major share 

of overall regulatory costs in the economy and our smaller members experience regulation on almost a personal level, and certainly 

to a greater degree. 

Despite bipartisan agreement that we need to do a better job in 

this space, we worry that both sides are talking past each other. 

Rulemaking by its nature should be about finding the right balance 

between the goals to be achieved and the price to be paid. So reforming the regulatory system is really about putting in place basic 

procedures to ensure that agencies do their best to achieve that 

balance. They should understand the parties they are regulating. 

They should evaluate meaningful alternatives. And they should try 

to maximize the net benefits of their rules. 

Executive Order 13771 has been in effect for about a year now, 

and since then, agencies have issued about half as many significant 

rule documents as under Presidents Bush and Obama in a similar 

time period. In fact, last year, the administration published 23 deregulatory actions with estimated cost savings. 

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Through the end of fiscal year 2017, the administration wrapped 

up 67 deregulatory actions all together. These numbers do not really show a slash-and-burn approach to deregulation. Instead, they 

show a more methodical approach taking place through the rulemaking process, and that approach takes time. 

But maybe the most noteworthy number from last year is three, and that is the number of new final rules with over $100 million 

in burdens on industry which is a historic low. 

So in light of what we have seen in the past year, we believe 

there are plenty of opportunities to implement further reforms, and 

now is an ideal time to do so. This Committee has done great work 

this year, last year, and in prior years, to propose necessary reforms that would close loopholes in the Regulatory Flexibility Act. 

This work is critical for small and medium-size manufacturers because agencies too often avoid analyzing small burden impacts or 

business impacts despite the original intent of Congress. 

But beyond legislation such as the Small Business Regulatory 

Flexibility Improvements Act, Congress should also focus on meaningful bipartisan reforms that may not be explicitly focused on 

small business but would nevertheless have an important impact 

on those businesses by driving better regulatory outcomes overall. 

The NAM urges the Committee to continue developing and promoting sensible, bipartisan legislation that will give small business 

a true voice and seat at the table. Thank you for your invitation 

again to speak today and for your attention on small and mediumsize manufacturers across the country. 

I look forward to answering any questions you may have. 

Chairman CHABOT. Thank you very much. 

Mr. Noel, you are recognized for 5 minutes. 

STATEMENT OF RANDY NOEL 

Mr. NOEL. Thank you. I am pleased to be here on behalf of the 

National Association of Home Builders on Regulatory Reform and 

Rollback: The Effects on Small Businesses. 

My name is Randy Noel, and I am a second-generation home 

builder from La Place, Louisiana, with more than 30 years of experience. I understand how difficult and costly it can be to comply 

with government regulations. But it is not just costly for me and 

my business. These costs also deny Americans the opportunity to 

own a home. 

Government regulations account for nearly 25 percent of the cost 

of a new single family home, and that places is 14 million American households out of the market for a new home. 

I am happy to report that things are getting better. In its first 

year, the administration has taken major steps to reduce the relentless and costly overregulation of American industry. We have 

seen more than 20 significant regulatory changes that will benefit 

homeowners and home buyers. 

I wish to focus on the progress that has already been made in 

reducing regulatory burdens for small businesses in our industry, 

the regulatory headwinds that still linger, and what steps should 

be taken to fix our broken regulatory rulemaking system. 

I would like to highlight one particularly unnecessary regulation 

the administration has ended. The previous administration issued 

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an executive order creating a new Federal flood risk management 

standard, which required agencies to develop new regulations 

based on an expanded floodplain zone. The owners would have had 

no way of knowing if they had to comply with the new floodplain 

rules because maps of the expanded floodplain did not exist. They 

still do not exist. 

Although FEMA deals with flood insurance, this would have 

greatly affected HUD’s mortgage programs. Specifically, homeowners within these unknown, unmapped, potential flood plains 

may have lost access to FHA mortgage insurance, jeopardizing affordable housing opportunities for low to moderate income working 

class families. We are grateful for this administration’s decision to 

rescind the executive order, and HUD has withdrawn its proposed 

regulations. 

Even with the progress we have seen this year, significant work 

remains to peel back and revisit the accumulated layers of regulations. Let me highlight one of these regulations from my written 

statement. 

EPA’s Lead Renovation Repair and Painting program. This rule 

addresses lead-based paint hazards created by renovation, repair, 

and painting activities that disturb lead-based paint in homes built 

before 1978. We all recognize the need to protect the health of our 

children, but this regulation is needlessly burdensome. For example, does it not make sense to ensure that homeowners and remodelers have an easy method to test their older home for lead paint? 

Yet, more than 5 years after the EPA said a test kit would be 

ready, we still lack a reliable, commercially available testing kit. 

This means remodelers may have to assume that a home has lead 

paint, which means a more costly bill to their client, which in turn 

may discourage homeowners from using a professional remodeler, 

one that has been trained. Or perhaps do the jobs themselves and 

risk exposure to lead paint. 

We should and must make fixes to existing regulations. But at 

the end of the day, that amounts to little more than a Band-Aid. 

We need to reform our regulatory process to deal with these problems before, not after, the regulation is crafted. And we need to increase the level of congressional oversight over those agencies. This 

is the only sure way to safeguard against future bad regulation. 

Fortunately, there is a solution. Legislation has already passed 

this chamber that would go fix our regulatory system. The Regulatory Accountability Act, the Regulatory Flexibility Improvements 

Act, and the Regulations from the Executive in Need of Scrutiny 

Act, more commonly known as the REINS Act. NFIB will continue 

to urge the Senate to take up these important bills. 

I personally believe enacting the REINS Act is a lynchpin to reforming our regulatory process. It restores much needed congressional oversight to the rulemaking process. Without meaningful 

congressional oversight, poorly crafted rules often go into place, 

and businesses are forced to divert precious resources to lengthy 

and uncertain legal challenges. 

While the REINS Act returns control of the regulatory process to 

the people, the Regulatory Accountability Act repairs the process of 

developing regulations. And the Regulatory Flexibility Improvement Act ensures that agencies are considering the full impact of 

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a proposed regulation on small businesses. Taken together, these 

reforms will ensure we protect the environment and our workers 

while also adding fuel to the engine of economic growth that America’s small business represents. 

Thank you again for the opportunity to testify. 

Chairman CHABOT. Thank you very much. 

Ms. Heinzerling, you are recognized for 5 minutes. 

STATEMENT OF LISA HEINZERLING 

Ms. HEINZERLING. Thank you for the opportunity to testify before you today. 

President Trump has made deregulation a central goal of his domestic policy. He has directed agencies to take an ax to existing 

regulations and has placed strict limits on the development of new 

regulations. 

Agencies have responded by delaying, suspending, and revoking 

existing regulations. All across the government, rules and policies 

that took years to develop have been put off or wiped out. These 

rules and policies address issues as important and diverse as climate change, consumer deception, airline safety, chemical accidents, food safety, sexual assault, and more. In a great many cases, 

the rules and policies have been put off or rejected with little of the 

legally required attention to statutory constraints, factual records, 

or procedural frameworks. As a consequence, Federal courts have 

rejected the administration’s attempts to delay or suspend existing 

rules on such matters as lead paint, energy efficiency, and methane 

emissions from oil and gas facilities. 

Two weeks ago, for example, a Federal district court in California 

granted a preliminary injunction against the Department of Interior’s suspension of a rule that was intended to reduce waste of 

natural gas from oil and gas facilities on public lands. Particularly 

pertinent in today’s hearing, the court found that the Department’s 

attempt to justify the suspension based on the rule’s purported effects on small businesses was not supported by the factual evidence. 

Agencies have also responded to the President’s deregulatory 

agenda by putting off or canceling new regulatory initiatives. 

Under the two-for-one executive order, the Office of Management 

and Budget is empowered to set regulatory budgets for the executive agencies. These are not ordinary budgets in which agencies 

have a limit on what they can spend to do their work. With regulatory budgets, agencies have a limit on what they can require private parties to spend to alleviate the problems the agencies have 

been charged by statute with addressing. For fiscal year 2018, 

OMB has given the agencies regulatory budgets that are in every 

case zero or negative. 

At the current rate of annual cost savings from all deregulatory 

efforts across all agencies, it would take the entire executive 

branch 2 or 3 years to accumulate cost savings sufficient to offset 

the cost of just one specific rule from one agency. 

Under this executive order as well, a reduction in regulatory 

costs is considered a success no matter how dearly we pay for it 

in benefits far gone. Consider again the regulatory budgets OMB 

has set for this fiscal year. The Department of Energy takes one 

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of the biggest hits in OMB’s regulatory budget. It must find $80 

million in savings from discarded rules before it may spend a single 

dollar on new regulation, at which point it must still offset each 

dollar spent with reductions elsewhere. However, according to 

OMB itself, the Department of Energy is one of the star performers 

in the government when one compares the regulatory costs it imposes to the regulatory benefits it reaps for the public. The Department’s regulations on energy efficiency over a 10-year period produced net benefits of as much as $31 billion. Consider, too, the example of the Environmental Protection Agency, no agency in this 

administration has taken a bigger ax to existing regulatory programs than the EPA. Yet, OMB has reported that EPA rules outperform the rules of all other agencies combined in the Federal 

government in terms of producing net monetized benefits. OMB estimates from 2006 to 2016, EPA regulations provided as much as 

$750 billion in benefits measured in terms of lives saved, illnesses 

averted, and environmental degradation reduced, while imposing 

no more than $65 billion in costs. These are the kinds of programs 

the administration has slated for especially deep cuts. It makes no 

sense. 

As for the effects of the deregulatory surge on small businesses, 

make no mistake. The war on regulation is being conducted at the 

behest of some of the largest corporations in this country and its 

benefits are being delivered primarily to them. In fact, many of the 

administration’s deregulatory actions not only fail to target their 

savings to small businesses, but they affirmatively harm small entities by withdrawing regulatory protections that would have benefitted them. In evaluating the deregulatory initiatives of this administration, one cannot simply assume that small entities are benefitted when regulations are withdrawn. Thank you. 

Chairman CHABOT. Thank you very much. 

And before I recognize the ranking member, I have noticed that 

one of our former members of Congress here who had a very distinguished career representing the state of Missouri, Kenny Hulshof 

is in the back of the room over here. So Kenny, welcome. 

And I would now like to recognize the ranking member for the 

purpose of making her opening statement before we move to regular order on questions. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. And thank you to 

all the witnesses for being here today. 

Regulations serve an important purpose in the world we live in. 

From the food we eat to the air we breathe, government regulations serve the primary purpose of helping to keep ups all safe. 

Yet, some regulations, even those with noble public safety reasons, also place an added burden on the public. Most prevalent 

among them are regulations which place an excessive compliance 

burden on small business owners. 

Small businesses face a greater burden of federal regulatory 

costs than their larger competitors, something federal agencies 

must consider when crafting regulations. 

On this committee, we are here to help ensure small businesses 

and entrepreneurs have an economic environment where they can 

grow and flourish. 

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That is why we take very seriously the responsibility posed by 

the Regulatory Flexibility Act and the Small Business Regulatory 

Enforcement Fairness Act. 

It is critical that agencies are considering the economic impact of 

their regulations and paperwork requirements on small firms. At 

the same time, Congress needs to know what steps are needed to 

help agencies achieve this goal. 

Transparency and communication are the key to an effective system of regulation. To have efficient regulations, we must have a 

strong dialogue between regulators and the businesses before rules 

are promulgated. An open line of communication can ensure that 

regulations are written in a common sense way which minimizes 

unnecessary burdens for small businesses. 

We need to be sure small firms have an opportunity to weigh in 

on any changes made to the rulemaking process. 

Whether it is embracing technology, working to synchronize and 

coordinate at all levels of government, or improving communication, it is an important discussion we must have. 

Congress plays a critical role in ensuring regulations are not too 

burdensome, while at the same time protecting the American public. It is therefore irresponsible for the legislative or the executive 

branch to recklessly change or get rid of regulations without thoroughly looking at the impact and the long-term consequences. 

Although on its face, Executive Order 13771, which says that for 

every new regulation issued, at least two prior regulations should 

be identified for elimination, may seem like a good idea, it has very 

real impacts on the lives of consumers and small business owners. 

For instance, offshore drilling on our coasts not only harms the environment; it leaves small businesses that rely on tourisms subject 

to potential harm and lost revenue. Immediately we saw the governor of Florida sending a letter to President Trump regarding how 

opening offshore drilling will have an impact on a major industry 

activity, tourism, in not only Florida, but also New Jersey. 

We must collaborate to thoughtfully produce streamlined regulations for small firms, while keeping in mind our ultimate goal, to 

protect consumers and public safety. 

I look forward to hearing from each of you about how we can improve our current regulatory system and promote long-term economic growth. 

I once again thank the witnesses for being here. 

And I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

And I will now recognize myself for 5 minutes to begin the questioning. And I will begin with you, Ms. Harned. 

In your testimony, you stated that small business owners are 

frustrated by federal regulations and that early engagement in the 

process is key for small business owners. What are the current 

tools that small business owners can use to engage in the regulatory process? And are your members usually aware of these tools? 

Ms. HARNED. Right. So really SBREFA I guess has provided 

the best tools in that, you know, especially for the significant regulations where SBREFA applies EPA and OSHA, there is a chance 

for small business owners to participate on the Small Business AdSBREP-219A with DISTILLER

12 

vocacy Review panels and really walk the regulators how a regulation is going to impact them. We think that is a great model that 

honestly needs to be replicated. We have had members that have 

done that and seen good results because really why we are so supportive of early engagement is we find still to this day, I mean, I 

have been at NFIB 16 years, that the biggest challenge all of us 

face is trying to educate the regulators on what it actually means 

to be a small business owner and understanding that they do not 

have a general counsel if they have got five employees. They may 

not even have an attorney they could call to figure out what is 

going on. More broadly beyond where SBREFA applies currently, 

you know, obviously there is the comment process. We will comment on their behalf at NFIB, and we do again have a number of 

members that will engage that as well if they find out about it. 

Chairman CHABOT. Thank you very much. 

Mr. Hedren, I will go to you next. 

We know that notice and comment is an important tool that 

small businesses can use to ensure their concerns are being heard 

during the rulemaking process. Do you believe that notice and comment is enough? Or are there still other problems that prevent 

small businesses from being able to fully participate in the rulemaking process? 

Mr. HEDREN. Thank you, Mr. Chairman, for that question. 

I would first start by echoing what Karen said. I think that this 

is a challenging issue because with notice and comment, everybody 

in the country, and in fact, even if you are not in the country you 

have an ability to put a comment into the record for review by the 

agency and later, potentially, by a court. That is an incredibly important part of the engagement process. 

For smaller businesses, however, they are facing a lot of different 

issues just to kind of get to that point. And one of them is even 

understanding that something is taking place. So folks like ourselves at this table may have an advantage in hearing when an 

agency starts to act and undertake a new rulemaking that small 

businesses just are not really watching for. I mean, they are watching their bottom line. They are investing. They are growing. And 

not hopefully reading the Federal Register each day like we do. 

So the tools I think that we need and will benefit from are about 

greater outreach and SBA Office of Advocacy does an awesome job 

with reaching out to companies around the country and pulling together roundtables and helping them jump into the process. But we 

also need tools that enable and encourage and even force agencies 

to pay attention to these impacts and to affirmatively go out, find 

them, and incorporate them into their decision-making. 

Chairman CHABOT. Thank you very much. 

Mr. Noel, I will go to you next here. In your testimony, you mentioned the Waters of the United States rule as an example of a rule 

that was deeply flawed but has been withdrawn and is currently 

being rewritten. What advice do you have for the agencies to make 

sure small business owners are heard while they are rewriting various rules? This rule in particular, actually. 

Mr. NOEL. Well, it is important that, of course, they be part of 

the rewriting of the definition of the Waters of the U.S. It is a pretty murky subject to begin with. But the flipside of that is you need 

SBREP-219A with DISTILLER

13 

to make sure that they have access to property so they can continue to have their business. 

I have participated in some roundtables and discussions about 

issues like Waters of the U.S., and one of the things from a frustrating point of view from somebody in the industry is it seems 

that it falls on deaf ears when it comes time for the rule or regulation to come out. There does not seem to be a whole lot of accountability to reacting to the information that they receive, which discourages people to give them the information. 

Clearly, Waters of the U.S. impacts our industry in particular, 

and we are having a very, very difficult time getting to a point 

where we have affordable housing folks, so much so that most of 

the large urban areas across the country are beginning to talk 

about the affordable housing crisis that they are having. And a big 

piece of that was the definition of the Waters of the U.S. When you 

have to go through a 404 permit to get a wetlands permit to develop a piece of property, it is an expensive and long piece of work 

you have to do. So it is very important that the EPA listen to us. 

They have been listening to us. We are real proud that Secretary 

Pruitt has allowed us to participate in that discussion, and we 

think we can get to a place where it works for everybody. 

Chairman CHABOT. Thank you very much. 

Ms. Heinzerling, unfortunately, my time has run out, so I apologize for not getting a question to you. But as I say, my time has 

expired, and the ranking member is recognized for 5 minutes. 

Ms. VELA ́ ZQUEZ. Thank you. Professor, when we go through 

the regulations, whether on this committee or when we hear about 

a discussion or debate on regulations, it seems like the focus is always on the complying costs associated with them. But many regulations benefit small businesses, both large and small, especially 

when it comes to increasing the productivity of their employees. 

Can you elaborate on this perspective? 

Ms. HEINZERLING. Yes. There is a distressing focus these days 

on costs alone and not on the benefits of regulation. And those benefits can take a huge variety of forms. And sometimes the regulations, in fact, directly pit large businesses against small businesses. 

And in that case, we miss, if we simply take a cleaver to the regulation, we miss the benefits for small businesses. 

So just to give you one example, the Department of Agriculture 

had been in the midst of developing a rule that would have protected small farmers against the anticompetitive practices of the 

large meat industry, and that rule has been withdrawn. And that 

is just one example of a case where we have regulations that not 

only indirectly benefit small businesses, which I would say a wide 

variety of regulations do, just like the tourism effects that you were 

talking about, but that directly are aimed at protecting them. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Noel, Hurricane Harvey devastated Texas where there are 

very relaxed building codes. In fact, it is just one of four states 

along the Gulf and Atlantic Coast with no mandatory statewide 

building codes and no program to license building officials. That 

has put insurers, who favor stricter building codes and fewer 

homes in risky locations against homebuilders who want to ease 

rules. How do we balance these competing regulatory demands to 

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14 

protect small construction firms, small insurance companies, and 

consumers at the same time? 

Mr. NOEL. Sure. Thanks for that question. As you know, I am 

from right outside of New Orleans, and we actually had that issue 

after Katrina. And I actually was actively involved with the Louisiana Home Builders Association passing a statewide uniform 

building code that was enforced thanks to a great deal of help from 

the Federal government to help fund the standup issues. 

Texas does have codes in certain areas. They have adopted the 

International Residential Code, particularly those on the coast are 

building to that. Floodplain maps, they comply with that. Builders 

do not oppose building codes. They want reasonable building codes 

that achieve what they want to achieve. You want to keep a house 

safe. You want to make sure that the homeowner has a place to 

go home to after a storm. But the flipside of that is to do it as affordable as you possibly can because what we do not want to have 

is to make housing so unaffordable that they are living in substandard housing that is not built—— 

Ms. VELA ́ ZQUEZ. But do you not think that it does not provide 

a level playing field? We are not talking about not supporting rules 

or codes, but it eased those rules. And for insurance to take the 

risk of providing insurance for construction that might not provide 

a steady home, how do you reconcile that? 

Mr. NOEL. Well, in Louisiana, we passed the code so that would 

not happen. And the insurance companies were a large driver of 

that. 

Texas has a building code, and I suspect there may be some 

states that do not. I could get back to you on that. But for the largest part, the National Association of Home Builders, in particular, 

are very, very active in the adoption of building codes across the 

country because exactly what you say is the level playing field is 

not there if you have some people who are not building to codes 

and people building to codes. 

Also, most of our members across the country support licensing 

of builders, and actually, I think Texas had that at one time and 

they undid it. But the same thing as you point out. Let’s have some 

consistency so the insurance companies know what their actuarial 

risk is basing their premiums on. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. NOEL. So for the most part I think our members would support building codes across the country. 

Ms. VELA ́ ZQUEZ. Thank you. 

Professor, do you have any comment on that question? 

Ms. HEINZERLING. No. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

The gentleman from Mississippi, Mr. Kelly, who is the chairman 

of the Subcommittee on Investigations, Oversight, and Regulations, 

is recognized for 5 minutes. 

Mr. KELLY. Thank you, Mr. Chairman. And thank you to the 

ranking member. Thank you, witnesses, for testifying today. And 

thank you, Mr. Noel, for not having an accent. 

SBREP-219A with DISTILLER

15 

During my 3 years in Congress, I have never once had small 

businesses—and I stayed very active in my district and very active 

with my small businesses, and I have been on this Committee my 

entire time. And not once have I heard any of my small business 

owners say I wish you guys in Congress or I wish administrative 

agencies would enact more rules and regulations. Not once have I 

heard that. I have heard the opposite of that many, many times. 

In my opinion, every rule that is enacted should have to get congressional approval and should not be—so I would go further than 

the REINS Act. I think any rule should have to be approved by 

Congress. I think we have advocate our responsibility to rulemaking organizations which are not elected by the people. 

The costs to comply for small businesses are extremely over burdensome. They do not know what rules they have to. They do not 

have the staff, the training. They cannot afford to hire professionals to do those things, so they become really, many times I feel 

the administrative agencies, when they enact rules, are making 

regulations or solutions in search of a problem. They do not have 

a problem that they are trying to fix. 

That being said, Mr. Hedren, you note in your testimony that 

there is a record high optimism in the manufacturing industry. Is 

the reduction in new regulations part of the reason for that optimism? 

Mr. HEDREN. Thank you very much for that question, congressman. I think, from our perspective, there certainly is a component 

of that. I think that manufacturing optimism is supported by the 

general regulatory environment right now. And what we see I 

think most notably in that is there is a slowdown. So for particularly small and medium-size manufacturers, they have an opportunity to catch their breath and understand a little bit about what 

is going on and what is coming at them. And before, you know, you 

may have periods of time in which there are four or five new rules 

a month that might impact you that you have to learn how to comply with. And while our members completely understand the benefits that those rules may bring, it is still pretty tough to keep up 

with. 

Mr. KELLY. Mr. Noel, as a small business owner, do you feel 

like your voice is being adequately heard in the Federal rulemaking process through the comments and things? Do you feel like 

yours is properly heard? 

Mr. NOEL. From a personal perspective, I have dealt with placement of levies with the Army Corps of Engineers, the overtime 

rule. We sat on some roundtables for those things, and I have got 

to be honest. When I got the reports, because we participated they 

sent us reports, and I read the reports, I was a little disappointed 

that very little of what the community had said was overshadowed 

by all these outside entities that have never been to our area, comments in that same report, and that the agency reacted to not the 

community as much as they did to those outside entities. 

Normally, the way a small business in my industry finds out 

about a rule or regulation is the Federal employee walks onto the 

jobsite and cites them because they do not have the proper poster 

up or they do not have the proper paperwork in a file. Not that 

they have polluted anything but because they do not follow this 

SBREP-219A with DISTILLER

16 

long list of rules they do not have time to read because they are 

trying to work for a living. That is how they usually find out about 

it. 

Mr. KELLY. Thank you. And my experience has been comments 

are not properly paid attention to, and that in many cases, agencies 

have improperly influenced certain groups to comment so that they 

can get the correct comments for the rule that they want to enact. 

Ms. Harned, if I can ask you a question. Do you feel like, or what 

do you think new can do that would require the agencies to analyze 

the impact on small businesses better? I think many times they do 

look at the large business because they can afford to, so it puts 

small business out. What can we do to analyze the second and 

third order effects to small businesses of all regulations? 

Ms. HARNED. Yeah. This is something I have thought about a 

lot because it is hard, especially with the small businesses we are 

trying to get out, the 10 and unders, because they are busy running 

their business. I think we need to look at it is 2018, new technologies, ways to, you know, conference calls. People do not necessarily have to show up for a meeting. But also, help them understand here is what this rule is going to do, because many times 

they may not even understand they are impacted until after the 

fact. And so I think we need to just be much more aggressive in 

outreach, quite frankly. And if there are ways to make the agencies 

accountable to do just that, that is going to have a better result 

where you are not going to have unintended consequences with so 

many of these rules that you see. 

Mr. KELLY. Thank you. 

Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. 

The gentlelady from North Carolina, Ms. Adams, who is the 

ranking member of the Subcommittee on Investigations, Oversight, 

and Regulations, is recognized for 5 minutes. 

Ms. ADAMS. Thank you, Mr. Chairman. And thank you, Ranking Member Vela ́zquez, for hosting the hearing today. And thank 

you to our folks here for your testimony. 

Ms. Heinzerling, is that correct? 

Ms. HEINZERLING. Yes. 

Ms. ADAMS. Okay. What are the implications for OMB’s plan 

giving agencies regulatory budgets of zero or subzero for fiscal year 

2018? 

Ms. HEINZERLING. They are dire. 

Ms. ADAMS. Okay. 

Ms. HEINZERLING. And I think that here in Congress, one of 

the things that can go unremarked sometimes is that agencies are 

entirely creates of statutes. The problems that they address are 

identified by Congress. Agencies are created by Congress. They are 

funded by Congress. They are charged by Congress. And so if we 

have a year in which we are on pace to have no major rules enacted, that means that some instruction from Congress is going 

unheeded by the agencies. And so to talk about accountability on 

the part of agencies without talking about the vast amount of 

unaccountability that is happening today because instructions are 

not being followed I think is one sided. And so I think the conSBREP-219A with DISTILLER

17 

sequences are dire both in terms of attention to legal requirements 

and more profoundly in terms of attention to the kinds of concerns 

about public health and safety and the environment and consumer 

deception and on down the line that rules are intended to serve. 

Ms. ADAMS. All right. Is it possible that a very important regulation will not get implemented or will get implemented at the cost 

of two other regulations that should also stay in effect? 

Ms. HEINZERLING. I believe it is a certainty. If they follow 

those regulatory budgets, as I said, it is hard to find a major rule 

that could be achieved within this year given the level of cost 

versus—— 

Ms. ADAMS. Okay. You know, we hear a lot about the regulatory 

environment in this Committee and I know that there are some 

areas that can be improved. Can you speak to the overlap between 

the state and Federal regulations and which has a greater impact 

on small firms? 

Ms. HEINZERLING. I think this is a hugely important question, 

and I think one of the striking features of many of the studies that 

talk about the effects of regulation on small businesses is that they 

do not separate out what are the regulatory costs from the Federal 

government versus what are the costs by the state government, or 

indeed, even local governments. And many of the costs that we see 

are actually imposed by those other entities. 

Ms. ADAMS. Okay. And this question will be for any of the other 

panelists that want to speak to it. 

The Paperwork Reduction Act was amended in 1995 to require 

OMB to set specific goals for reducing the burden from the level 

it had reached in 1995 and preventing those from growing in future 

years, but those goals were not met and the paperwork burden continues to increase. So what are the biggest challenges that agencies 

face in reducing the overall paperwork burden? 

Ms. HARNED. The challenges that agencies face? 

Ms. ADAMS. Yes. 

Ms. HARNED. I mean, honestly, I cannot speak to that. I can assure you though that is still very much a problem for my members. 

And I would just like to go back to something you were discussing. 

Our regulation study that NFIB did and released early 2017 indicated that 50 percent of respondents found Federal regulations to 

be the most problematic. We did break that out. State was 30 percent; local was 15. So I just wanted to state that for the record. 

Ms. ADAMS. Okay. Would anybody else like to respond? 

Mr. HEDREN. Sure. Congresswoman, I think that is an incredibly important question, and one that is actually a little bit tough 

to get to because paperwork is relatively less transparent in terms 

of how it is prepared, reviewed, and eventually sent out to the public as a paperwork collection request, information collection request. But there are certainly cases in which agencies are collecting 

the same information as other agencies but may not be aware of 

that. There may be instances, for example, in collecting generalized 

data about business operations that over collect, that are kind of 

collecting data for the sake of it. 

So there is always opportunity there, and I think what we saw 

in 2017 is really a lot of the impressive reductions in regulatory 

SBREP-219A with DISTILLER

18 

burdens came from the paperwork side because you can kind of get 

your arms around it. 

Another angle on this which is very important, and which the 

Committee has actually dealt with very well with the Small Business Regulatory Flexibility Improvements Act, is getting into agencies like the IRS, which have a disproportionate share of the paperwork collection volume. 

Ms. ADAMS. Okay. Thank you very much. I am out of time. Mr. 

Chair, I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

The gentleman from South Carolina, Mr. Norman, is recognized 

for 5 minutes. 

Mr. NORMAN. Thank you, Mr. Chairman. I just want to echo 

what General Kelly mentioned. 

Small businesses are sick and tired of needless regulations, and 

it has been a pleasure for this last year to get regulations off the 

books that unelected bureaucrats who have never run a small business—and I am a contractor. I am a real estate developer. We are 

sick and tired of people who do not really know, have field experience, and yet they are trying to read a book and pass a regulation. 

So thank God it is changing. That is why you are seeing the economy do what it is doing, and it will do greater things. 

Mr. Hedren, let me ask you specifically, we have got a company 

in our area, Composite Resources. How would they get notice of a 

regulation? Would they have to sift through thousands of papers to 

see what they have to comply with? And what is the cost of trying 

to dig through what bureaucrats have written to hopefully apply to 

a particular company? 

Mr. HEDREN. Congressman, thank you for that question. 

I think to start in reverse order, the cost is time. And in many 

cases, small and medium-size businesses do not have a specific regulatory official. It may just be the president of that business. So 

for Composite Resources that may be the senior leadership team 

taking their time to understand how they want to implement something in their facility. And in our experience, certainly those facility 

leaders take this very seriously and they will dedicate the time to 

do a good job. 

In terms of how they find out when things are changing, it is not 

always the cleanest process. And as others have mentioned, there 

is a state and Federal dynamic to this. There is an executive department, an independent agency dynamic to this, but when you 

really boil it down, there is no truly effective way to push this information out to people who may be affected, and that truly is one 

of the core issues at stake when we talk about getting small and 

medium-sized enterprises engaged in this process effectively. 

Mr. NORMAN. Thank you. 

Mr. Noel, you are in the field. You are in the business. What can 

we do to get the career development opportunities available that 

will foster people getting into the business, and what can we do to, 

I guess, influence that so that we can have our carpenters, we can 

have our brick masons, we can have our land developers? 

Mr. NOEL. I am speaking a lot in a lot of different venues about 

trying to change the mindset of the parents across the country that 

SBREP-219A with DISTILLER

19 

working with your hands is a noble pursuit. We have for so long 

told our children, and parents think that it is more important to 

go a 4-year college to be a success in life, and we have got to somehow reverse that. We have worked with counselors at schools. We 

are in a big push nationwide now to put vo-tech school classes back 

into the high schools. 

I was in Johnson City, Tennessee, recently, and watched some 

high school students that had vo-tech schools build some things, 

and it was remarkable. And those children loved it. It is a good 

pursuit, and we need to change that mindset across the country. 

And it is going to take a big advertising campaign of some sort to 

get to the parents to let them know, you know, how important it 

is to be able to work with your hands and create things. We are 

working on it. And if you can help, please help. 

Mr. NORMAN. We will do it. And keep up the good work. It is 

something, you know, the best social program we can pass is a job. 

Mr. NOEL. Yes, sir. 

Mr. NORMAN. And by helping people find their niche and doing 

it. 

Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you. The gentleman yields back. You 

made some very good points there I would say. 

The gentleman from Florida, Mr. Lawson, who is the ranking 

member of the Subcommittee on Health and Technology is recognized for 5 minutes. 

Mr. LAWSON. Thank you. 

One of the questions I wanted to ask you centers around the BP 

oil spill. When the regulation that we had in place then, or lack 

of regulation, how did it really hurt small businesses in the Louisiana area? 

Mr. NOEL. The results of the oil spill and the corresponding 

moratorium on drilling that happened, there were multiple layoffs 

in our area in South Louisiana, so there were a lot of people who 

worked in the oilfield that suddenly did not have a job so they did 

not want to build a home, clearly. Down the coast into Florida 

where the tourists were, the tourism just dropped off because of all 

the negative publicity across the country. People thought the 

beaches—you are from Tallahassee; right? 

Mr. LAWSON. Right. 

Mr. NOEL. Were covered with oil, and it was wonderful for me. 

My son lives in Destin. We did not have all the traffic problems 

and the beaches looked pretty well. 

My understanding, and I do not know this for a fact, but the BP 

oil spill was as much about enforcing the rules on that group of 

people that were responsible for that as it was anything. But it did 

have a negative impact on the economy down there, clearly. 

Mr. LAWSON. Okay. My other question would be from an attorney. How do you get people to participate in these regulations at 

agencies actually make them because it really affects the bottom 

line of a lot of different things. When we are talking about home 

building, people do not seem to realize that it really is going to be 

passed down to the consumer, and the consumer will not have the 

opportunity to purchase a home. But you see the regulation over 

and over. From a legal standpoint, how do you get them involved 

SBREP-219A with DISTILLER

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with some of the agencies when they are making these type regulations? 

Ms. HEINZERLING. Well, I think just to back up for one second, 

one of the things we have to have is to make sure that we actually 

go through that process that would allow them to comment, and in 

many of the activities we are seeing today we actually do not see 

that being followed, and that means they do not get a chance to 

comment because there is no process afforded with that opportunity. 

Secondly, to allow more people or encourage more people to comment. I think the agencies are making use of social media in a way 

that they did not before. I think that they have come under criticism, sometimes from the same people who like to have public comment and like to have the widest range of voices as possible, but 

they are using I would say a variety of modern tools to get as much 

input as possible in their rules. I have to say, having worked at the 

Environmental Protection Agency for 2 years, we did see things 

from another perspective which was we saw the amazing number 

of comments that we got on any significant proposal, and we felt 

our obligation to respond to those comments. Maybe at the end of 

the day the outcome was not what everybody wanted, but we felt 

it was our legal obligation to respond to the significant comments. 

Mr. LAWSON. Okay, thank you. And, you know, earlier, I think 

Mr. Harden was speaking about the rollback regulation. I have 

been in the insurance industry for 36 years. You have not seen any 

regulation unless you have been in the insurance industry. It is a 

lot of regulation. These rollbacks, when you say it is going to stimulate—that we have seen, I have seen them on the floor. Being a 

first timer, the rollbacks are going to stimulate the economy and 

you see it working in the economy now. From your perspective, and 

I do not have much time, how did the business community respond? 

Ms. HARNED. Right. Like Mr. Hedren’s members, our members 

have been very positive about the rollback because it really did for 

so many of them, so many regulations coming at once, which is 

how they felt like they were living the last several years, was paralyzing. And as a result, they were sitting on their business the way 

it was. They were not growing. They were not moving forward. And 

now they do have a chance to catch a deep breath and know, okay, 

well, I do not have to worry right now about a ton more coming 

out of Washington at the moment. Let me get the decks cleared 

and figure out what is going on and that sort of thing, because it 

really was overwhelming. And our data has shown since the beginning that has been one of the key drivers to them growing. 

Mr. LAWSON. Okay. I have another question but my time is 

running out, so Mr. Chairman, I yield back. 

Chairman CHABOT. If you would like I can extend the gentleman a little additional time if you would like. 

Mr. LAWSON. Just a little additional time. 

Chairman CHABOT. The gentleman has another minute. 

Mr. LAWSON. Okay. Thank you very much. And anyone can answer it. 

A lot of these regulations come down to partisan issues, and you 

have one group who is saying it is the best thing to do the rollback, 

SBREP-219A with DISTILLER

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and the other group is saying that we are going to hurt the consumer. You know, how do you respond to that? 

If anybody cares to respond. 

Mr. NOEL. Well, let me see if I can try. 

You know, the parties change in the admonition ever soft. You 

know, we just had a change. The bureaucrats in those agencies, the 

people that work, not necessarily secretaries, et cetera, are not 

changing. And so they perpetuate a rule and then that continues 

on regardless of whose party is in power. Then it was all talk 

about, okay, are we going to roll back? Are we going to put more? 

You know, whatever. But the American people elect the Congress. 

They put them in office to safeguard their lives here in America, 

and I think it is important that those same elected officials safeguard that the laws that they pass are being implemented correctly, which is why I think we should have congressional oversight 

over the agencies in their rulemaking. 

Mr. LAWSON. I yield back, Mr. Chairman. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. 

The gentleman from Utah, Mr. Curtis, is recognized for 5 minutes. 

Mr. CURTIS. Thank you. I appreciate all of you being here 

today. 

I have listened with great interest. Having been a former small 

business owner, I would like to speak and echo some of the comments that have been made. I believe small business owners wake 

up in the morning and they just pray that nobody gets hurt, none 

of their employees get hurt. They pray that their employees handle 

any sexual harassment claims appropriately in the way that they 

were taught to do. They pray there are no new lawsuits by their 

customers. This is what is on their mind and on their agenda. And 

then they worry about sales, and they worry about paying taxes. 

And then you have what we have alluded to. You have cities, you 

have counties, you have states, and you have the Federal government. Each one of them, all the things that they think are important for them to do that day when they wake up. And it is overwhelming. 

And I guess one of my questions is, and I will ask Ms. Harned— 

did I pronounce that correctly—is it possible that fewer regulations 

will actually lead to better compliance with existing regulations because we filtered out some of these things that they just cannot pay 

attention to and allow them to really focus on the things that are 

most important? 

Ms. HARNED. Absolutely I would agree with that because that 

is a huge problem. As Mr. Hedren said—or maybe it was Mr. 

Noel—so often, unfortunately, small business owners find out about 

a requirement when the inspector is at their business. There is just 

no way for them to keep up. 

I have friends that are very well heeled, small business owners, 

but they said, ‘‘Karen, I learn about a new requirement every time 

I see you.’’ And it is because I do this for full time. They are busy 

running their business, and I do think we need to prioritize. What 

is most important? What is most important for public safety? What 

is most important for environmental? And get rid of the regulatory 

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underbrush. I am actually hopeful that the executive order the 

President put forward last year will do just that. Get rid of those 

regulations that have not been enforced in decades. If they have 

not been enforced in decades, why are they on the books? Just for 

a game of gotcha? I mean, that is not helpful. 

Mr. CURTIS. Yeah. We heard in testimony today that the war 

on deregulation is waged by big business. Would you address the 

disproportionate burden on small business of regulation and why 

it is harder for them actually than big business to comply? 

Ms. HARNED. Yes. Again, our research has shown that 72 percent of those small business owners with less than 10 employees 

are the ones actually reading that Federal Register notice once 

they find out about it to try to figure out what that rule is they 

are going to have to comply with and how to do so. And so that 

is a complete time burden for them because they are not an expert 

on that regulation or that area of the law. And for those that have 

more employees, they are farming that out but they are paying significant costs to do so. And so, again, not all regulation is bad, but 

we do need to prioritize and limit how much there is so that we 

can get—I really do again agree with you. We can get better compliance if people know what they are actually supposed to comply 

with. 

Mr. CURTIS. Right. Mr. Hedren and Mr. Noel, you are shaking 

your head. Would either of you care to comment on that? 

Mr. NOEL. Love to. 

Mr. CURTIS. All right. 

Mr. NOEL. You know, the National Association of Home Builders represents 140,000 building companies across the country. 

Every one of them find out about Federal regulations from us. And 

we have to take pages and pages of regulations and rules and condense them down into something they can digest and comply with. 

And then when you begin to comply with it you find, okay, the end 

goal, what the law is is one thing, but now I have got to do all this 

paperwork. I have to literally hire somebody and pay them anywhere from $500 to $1,200 a house to do the paperwork. You know, 

and most of our members are three people. So you raise the cost 

of housing every time you do this. 

Mr. CURTIS. Which is where the disproportionate burden comes 

on the small guy because the big guy can hire the lawyers? 

Mr. NOEL. He has already got the guy. 

Mr. CURTIS. Yeah. 

Mr. Hedren? 

Mr. HEDREN. Congressman, it is a great question, and we represent 14,000 members, of which some are larger and the vast majority of them are smaller. And I think the best way to think about 

our members is really an ecosystem of manufacturers. They supply 

to each other. They compete with each other. They grow together. 

And at times you might find that when a big business engages in 

advocacy in the process, the net outcome of that may be that they 

put whatever comes down from the agency in a final rule into bid 

requirements and the small businesses will get the bid requirements and shake their head thinking I have no idea why they are 

asking for this. And they did not see it coming. Did not really have 

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a chance to connect with that. But it is a resource issue. It is an 

awareness issue. 

And to get to your opening thoughts. These business leaders do 

take this seriously. Having an injury on your worksite is awful. 

And people take it personally and they do what they can to avoid 

that. But the rules sometimes are prescriptive and they do no connect all the way through. 

Mr. CURTIS. Yeah. I find with small businesses a lot of times 

that injury is a very close friend. Right? These people are family 

in many cases. 

So I am out of time. I yield my time. 

Chairman CHABOT. Thank you. 

Mr. CURTIS. Thank you. 

Chairman CHABOT. Thank you. The gentleman’s time has expired. 

The gentlelady from Florida, Ms. Murphy, who is the ranking 

member of the Subcommittee on Contracting and Workforce is recognized for 5 minutes. 

Ms. MURPHY. Thank you all for being here. I found the conversation very interesting, especially since I am married to a small 

business owner and live vicariously through his dealing with regulations. 

I also represent a district in Central Florida that is home to a 

vibrant hub of entrepreneurial activities and numerous innovators 

and creators and small businesses. We have created an environment that has allowed entrepreneurs to take chances and pursue 

their passions in Central Florida, and that is why it is one of the 

Nation’s fastest growing regions. But nonetheless, I continue to 

hear from many of the entrepreneurs in my district that burdensome regulations have hindered the growth of their businesses. 

While I believe that reasonable regulation is essential to protecting 

our economy and public health and our environment, I do think as 

some of the witnesses have noted today that excessively burdensome regulations, while perhaps well intentioned, can do more 

harm than good in practice. 

With that in mind, my question to the panel is how can we better 

ensure that Federal agencies sufficiently understand the activity 

they are tasked with regulating? You will find that many of those 

bureaucrats have never actually worked in the industries that they 

are trying to regulate, and so while it may be well intentioned, 

there are quite a bit of unintended consequences. 

And then kind of a second part of that is how do we encourage 

agencies to regulate in a way that does not adopt a ‘‘one size fits 

all’’ for regulation and instead uses approaches that acknowledge 

that there are differences in firm sizes and sophistication, especially as it relates to startups and second stage businesses? 

Ms. HEINZERLING. I think it would be useful, if you do not 

want the ‘‘one size fits all’’ approach, it would be useful for Congress to write laws in that way because many times statutes do not 

do that. They take on a problem, even a really important problem—air pollution, workplace safety, and so on—and they do not 

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ute does not allow it. So I would recommend that kind of differentiation if that is what you want. 

Ms. MURPHY. Okay, thanks. 

Ms. HARNED. I also think that in addition to so much of what 

is in the Small Business Regulatory and Flexibility Improvements 

Act, which I think would all be very helpful in that. I mean, NFIB 

is very supportive of all the provisions in that. 

One idea I have heard that I think has been used in the UK is 

to have regulators shadow businesses. I really again think, and 

your husband has probably seen this, they just do not understand. 

And you cannot until you actually see a day in the life. And maybe 

there are ways that we can do that. I do really encourage Congress 

to consider these solutions that are more creative and also will get 

the regulators again to understand who they are regulating. And 

I just do not think that can happen without somebody having a 

real personal connection with that person and have the small business owner show them their business, but also really engage in the 

process. That is again why we are such big fans of the SBR panels 

and getting those for other rules. 

Mr. NOEL. In the perfect world we would have that done before 

the regulation ever goes in place. 

We took a gentleman that is in OSHA to a jobsite. We have to 

tether people so they do not fall off of roofs. And when you stand 

trusses up, which are the things that hold the roof up, there is nowhere to hook them to. So their solution was we build the roof on 

the ground and get a crane and put it on the top. So we took this 

gentleman to a jobsite and let them watch how they put together— 

and actually, this was a two story. And it dawned on him the 

things that they were requiring of our guys did not work. Now, unfortunately, the rule is already in place, so he had to go back and 

fix the rule. However Congress can have the agencies involved with 

the people that it is going to affect early in by seeing it on the 

ground, the better this will all be. 

Ms. MURPHY. Great. Thank you. 

Mr. HEDREN. Congresswoman, that is a great question. And actually, I would agree with Professor Heinzerling in saying that a 

big portion of how to address this problem is to give agencies the 

tools that they need in law to actually do that. And so this Committee has considered several bills that do that. But in our opinion, 

there is no shortage of ideas on how to improve this process, and 

I think that there is more to discuss here. 

Ms. MURPHY. Great. Thank you. 

I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady’s 

time has expired. 

The gentleman from Pennsylvania, Mr. Fitzpatrick, is recognized 

for 5 minutes. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. And thank you 

to the panel for being here. Thank you for being the voice of small 

business, which creates 7 out of every 10 new jobs in this country. 

The work you are doing is very important. So thanks for being 

here. 

A couple things I wanted to touch on, which may have been addressed earlier. Number one is the process. We took up something 

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called the REINS Act early on in this session, which I believe to 

be very important because it goes to who decides. The administrative agencies under the executive branch obviously executing their 

constitutional authority to promulgate rules by giving the House of 

Representatives and Congress oversight over that. Because we are 

the body closest to the people, we get to consult with you all and 

hear the real road impact that these regulations are having. I hope 

that the Senate will take up consideration of that bill in short 

order because I think the process piece is very important. 

But then it becomes a question, if it is brought to us, how best 

can we find that point of equilibrium, that sweet spot, if you will, 

between overregulation and under regulation? We certainly talked 

about a lot during the tax reform debate, about finding that point 

of equilibrium where you are not—rates are low enough so that we 

are competitive and it is not costing us jobs, but they are not so 

low that we are bleeding revenue to the U.S. government. The 

same with regulations. It is a matter of finding that point of equilibrium that under regulation, which we cannot tolerate either because that poses a threat in a whole host of areas, but not overregulating where we are strangling businesses and hurting small 

businesses’ ability to create jobs. 

And lastly, if you could, for our purposes, identify one or two 

agencies where you think are the biggest culprits, if you will, of 

overregulation that are hurting small business. 

Mr. NOEL. Okay, I will try that. You know, many times when 

there is a problem that needs to be addressed, the stakeholders 

who are in the middle of the problem, will not address the problem, 

probably have the best answers. They need to help craft how that 

rule or regulation goes in place. Homebuilders typically do not like 

building codes, but we passed the statewide building code in Louisiana because we were going to lose all our insurance companies. 

There was a problem defined and the builders helped pass those 

codes. That is just an example of how you take the stakeholders 

and tell them we have a problem with something and we need to 

address it. 

When I was in high school, you never met an oilfield worker that 

did not have an arm missing or something. Well, we created workman’s compensation programs across the country that do loss control, help people, teach people how not to get hurt because it affects 

their bottom line when they have to pay more premium because 

they had an injury. So the more you bring this closer to the people 

that actually are involved, I think the better the rules and regulations are going to be, and the problems will get solved. 

Ms. HARNED. I would echo that. That really has been something I consistently have heard from small business owners all over 

the country, is that really, they do not have as much of a problem 

with their state regulators because they know them, there is a relationship there, and they can get to where everybody wants them 

to be quicker. And I really think a lot of study would be required, 

quite frankly, and hard work by the regulators to figure out what 

all agencies are regulating on a specific issue. Because, you know, 

just as Patrick had pointed out on paperwork, two agencies with 

the same paperwork, this is not a good situation. That is happening across the government. That is happening with Federal and 

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state. Why can you not have a situation where if somebody is doing 

well with state OSHA, for example, that, you know, stamp of approval by them, no issues, then that means that they do not have 

to worry about Federal OSHA. I mean, I just think there is so 

much more that can be done cooperatively with the different governments, the state and Federal, and also just, again, pairing everything down so that you are really getting the priority issues addressed and not just having a lot of regulatory underbrush that 

could really just be used for a ‘‘gotcha game’’ for small businesses. 

Mr. HEDREN. Sure. I will jump in as well. And congressman, 

thank you for that question. 

I would echo the comments of others. It is about rigor. It is about 

awareness. It is about building cooperation and relationship and 

understanding between agencies and the parties that they regulate. 

I would probably stop short of picking on a particular agency. We 

are a very broad group of manufacturers, and I think everybody 

sort of lives in their own environment in that regard. But that is 

why we advocate for regulatory reform measures that really get to 

the core essence of rulemaking itself rather than a particular agency or another. 

Mr. FITZPATRICK. Thank you. I yield back. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back and his time has expired. 

And we want to thank our panel for being here today. And as 

this hearing comes to a close, I would just note that while progress 

has been made to address the regulatory burden on America’s 

small businesses, it is clear that we have work to do. Small business owners should be allowed to focus on growing their businesses 

instead of spending countless hours navigating through a confusing 

mess of federal regulations. 

I look forward to working with my colleagues to make sure that 

we provide meaningful regulatory relief and reform the current 

process to give small business owners a stronger voice in the regulatory process. 

I would ask unanimous consent that all members have 5 legislative days to submit statements and supporting materials for the 

record. 

Without objection, so ordered. 

And if there is no further business to come before the Committee, 

we are adjourned. Thank you very much. 

[Whereupon, at 12:25 p.m., the Committee was adjourned.] 

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COMMENTS OF THE NATIONAL ASSOCIATION OF 

MANUFACTURERS 

BEFORE THE 

COMMITTEE ON SMALL BUSINESS 

U.S. HOUSE OF REPRESENTATIVES 

MARCH 7, 2018 

Chairman Chabot, Ranking Member Vela ́zquez, and members of 

the Committee on Small Business, thank you for the opportunity 

to testify about the impact of regulatory reform on small manufacturers in the United States. 

My name is Patrick Hedren, and I am the vice president of labor, 

legal and regulatory policy for the National Association of Manufacturers (NAM). The NAM is the nation’s largest industrial trade association and voice for more than 12 million men and women who 

make things in America. The NAM is committed to achieving a policy agenda that helps manufacturers grow and create jobs. Manufacturers very much appreciate your interest in, and support of, the 

manufacturing economy. 

State of Manufacturing 

The NAM’s most recent quarterly outlook survey from the end of 

2017 showed the manufacturing sector on the upswing, with business leaders more upbeat about demand and production and more 

confident in their overall outlook. Indeed, 94.6 percent of NAM’s 

members said that they were positive about their own company’s 

outlook—an all-time high in the survey’s 20-year history. 

It is important to note that the vast majority of manufacturers, 

98.6 percent, have 500 or fewer employees. Three quarters of manufacturing firms have fewer than twenty employees. 

In the most recent data, manufacturers in the United States contributed $2.25 trillion to the economy in 2016, (or 11.7 percent of 

GDP). For every $1.00 spent in manufacturing, another $1.89 is 

added to the economy, the highest multiplier effect of any economic 

sector. In 2016, the average manufacturing worker in the United 

States earned $82,023 annually, including pay and benefits. 

Beyond providing economic signals in the manufacturing center, 

the quarterly NAM survey also highlights other points of interest 

among our 14,000 members. Last year’s fourth quarter survey results were illuminating. 

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• Over 37 percent of respondents indicated they spent at 

least seven hours per week on paperwork to comply with regulations, and almost a quarter spend over ten hours. 

• Under 41 percent felt they had enough guidance on how 

to comply with the regulations that their company must follow. 

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

• Over half of respondents need to retain a law firm to help 

them keep up and comply with paperwork requirements. 

At the same time, manufacturers are not anti-regulation. Over 

three quarters of respondents told us that smart regulations are 

necessary to ensure a level playing field. Almost 45 percent felt 

that regulatory agencies were primarily concerned with ensuring 

compliance or with working alongside companies to reduce risk. 

Regulatory Environment 

Democrats and Republicans often agree on the need for simpler, 

less burdensome, and more effective regulation, even when the 

rhetoric often fails to match that consensus. Similarly, the business 

community is often misunderstood about its views on regulation. 

Manufacturers believe regulation is critical to protect worker safety, public health, and our environment. Regulation is also a critical 

tool to promote more efficient markets by addressing externalities 

and correcting market failures. Indeed, some critical government 

objectives can only be achieved through regulation, and that is a 

powerful argument for improving the process by which regulations 

are developed. 

The core challenge of regulatory policy is this: the benefits of regulation are often diffuse to society while the burdens of regulation 

are concentrated. Certain sectors, such as manufacturing, bear a 

sizeable portion of overall regulatory costs in the economy and 

therefore are able to provide good estimates of those costs during 

the course of a typical rulemaking. The benefit side of the ledger 

is much tougher to estimate, however, because individual parties 

may receive a de minimis share of the overall benefit, or because 

regulation may be intended to prevent so-called ‘‘black swan’’ 

events. As a result, it is no surprise that our public discourse on 

regulation tends to involve each side talking past the other. 

Rulemaking by its nature contemplates a balance between the 

goals to be achieved and the price to be paid. Reforming the regulatory system in many ways is about putting in place basic procedures to ensure that agencies do their best to achieve that balance. 

We believe they create better rules when they understand the parties they are regulation (who oftentimes may even share the agencies’ goals), when they evaluate meaningful alternatives that could 

achieve the same or better regulatory outcome, and when they seek 

to maximize the net benefits to society of their actions. 

Small and Medium-Sized Manufacturers 

Small and medium-sized manufacturers experience the burdens 

of regulation in a different way than larger businesses, primarily 

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because they lack the economies of scale that larger businesses rely 

on to spread the costs of compliance. Those costs include the burden of monitoring new or changing requirements, implementing 

new or different processes, completing paperwork, and working directly with regulatory agencies to resolve disputes. Each dollar that 

a small or medium-sized manufacturer spends on regulatory compliance is a dollar that it cannot spend to grow its business or expand its workforce. 

Executive Order 13771 

Executive Order 13771, often referred to as President Trump’s 

‘‘one-in, two-out’’ or ‘‘net-zero regulatory budget’’ order, has now 

been in effect for a little over a year. This Executive Order marks 

a significant change in regulatory philosophy compared to that of 

past Presidents from both parties. In President Trump’s first year, 

according to the federal register, federal agencies issued roughly 

half as many rule documents deemed significant under Executive 

Order 12866 than Presidents Bush and Obama issued in their respective first years. 

In President Trump’s first year in office, the administration published 23 deregulatory actions with estimated annualized cost savings, excluding those nullified under Congressional Review Act resolutions. Through the end of fiscal year 2017, the administration 

completed 67 actions classified as deregulatory, including rules 

without estimated annualized cost savings. While these numbers 

are dramatic, they do not indicate a slash-and-burn approach to deregulation. Instead, they indicate a more methodical approach taking place through the rulemaking process. Perhaps the most noteworthy number through the end of fiscal year 2017 is three; the 

number of new final rules with over $100 million in burdens on industry—a historic low. 

This methodical approach, and dramatic slowdown in new rulemaking, has likely been an important component in record-high 

manufacturing optimism. Manufacturers do best when regulatory 

conditions are certain and stable, because fast-paced and dramatic 

regulatory or deregulatory actions may introduce new variables 

and risks into their operations. Simply slowing down discretionary 

agency actions appears to have had a greater impact than the projected net-decrease in per capita regulatory burdens. 

Opportunities for Executive Branch Reform 

Presidents of both political parties have engaged in efforts over 

the years to retrospectively review regulations and amend or rescind them as appropriate. The NAM has supported these efforts, 

and we remain impressed that each subsequent round of retrospective review identifies even more regulations in need of a fresh look. 

Executive Order 13771 structurally incentivizes an ongoing process 

of retrospective review, as agencies attempt to meet their burden 

reduction targets each fiscal year. 

Beyond retrospective review, we believe there are several important opportunities to improve the rulemaking process overall and 

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across each agency. For example, through an Executive Order or 

further guidance to agencies, the administration could: 

• Ensure stronger cost-benefit analysis. Unless prohibited by 

law, agencies should seek to maximize net benefits by requiring full cost-benefit balancing when implementing regulatory 

statutes. This may take the form of a rebuttable presumption 

that a regulation should not proceed if the benefits do not justify the costs. Agencies could further encourage the public to 

submit their own cost-benefit analyses into the rulemaking 

record for the agency to review. 

• Require robust analysis of small business effects. The administration may require each agency to analyze the effects of 

high-impact rules on small businesses, and when appropriate 

should invite greater engagement with the Small Business Administration’s Office of Advocacy. Under the Regulatory Flexibility Act, agencies are required to prepare a regulatory flexibility analysis to determine the impact of proposed or final 

rules on small entities and to consider regulatory alternatives 

that would accomplish the rule’s objective with minimal burden on those entities. Agencies frequently avoid this analysis 

by simply asserting that the rule at-issue will not significantly 

impact small entities. 

• Promote better information quality. Agencies should use 

the best available science for agency risk assessments, and 

should provide more significant transparency to the public on 

any data upon which the agency relied when deciding among 

regulatory alternatives. 

• Conduct oversight or peer-reviewed of independent agency 

rulemaking. Prior Presidents have stopped short of requiring 

independent agencies to submit their rules to the White House 

Office of Information and Regulatory Affairs for review, a step 

traditionally expected of executive agencies. As a result, independent agencies have issued rules that were later struck 

down in court because of deficient analysis and a failure to 

fully consider the consequences of agency action, an outcome 

that creates risk and implementation burden without a countervailing public benefit. 

• Require advanced notices for economically significant proposed rules. Major rulemakings should give the public ample 

opportunity to provide early input to agencies as they evaluate 

the most cost-effective approaches to meet their statutory 

goals. 

• Allow response comments for significant rules. Perhaps the 

single best way to improve the quality comments submitted to 

agencies would be to allow commenters to reply to arguments 

made by other commenters. A 30-day response period may ultimately save agencies time. This step would be especially 

impactful for significant rulemakings, and could be waived if 

exigent circumstances do not allow for it. 

• Build in smart, prospective lookback criteria. No new 

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1S. 584, originally sponsored by Senators Lankford (R-OK), Risch (R-ID), and Grassley (R-IA); 

see also H.R. 33, originally sponsored by Representatives Chabot (R-OH-1), Goodlatte (R-VA-6), 

Marino (R-PA-10), Radewagen (R-AS-At Large), Knight (R-CA-25), Cuellar (D-TX-28), Graves (RMO-6), Sessions (R-TX-32), King (R-IA-4), Kelly (R-MS-1), Tipton (R-CO-3), Curbelo (R-FL-26), 

Hultgren (R-IL-14), and Luetkemeyer (R-MO-3). 2S. 951, originally sponsored by Senators Portman (R-OH), Heitkamp (D-ND), Hatch (R-UT), 

and Manchin (D-WV); see also H.R. 45, originally sponsored by Representatives Goodlatte (RContinued 

forming once finalized, agencies could set forth a set of bellwether measurements by which each major rule will be measured to determine if it is working as intended, or should be 

amended or rescinded in the future. 

• Provide fresh guidance on guidance. Non-binding guidance 

documents can help regulated parties better understand federal requirements, but they can also impose burdens when the 

public views them as mandatory. Compounding this issue, 

agencies typically do not issue draft guidance documents for 

public comment. Providing more access to, and transparency 

around, these documents will improve the ability of small businesses to comply while simultaneously lowering the risk of improper or unpredictable enforcement actions. 

Each of these reforms would benefit small and medium-sized 

manufacturers by promoting smarter rules that are fit for purpose. 

Priorities for Congress 

Last year was noteworthy in terms of the role of Congress in the 

regulatory process. Before 2017, Congress had only used the Congressional Review Act (CRA) to overturn one rule (the so-called 

‘‘ergonomics’’ rule in 2001). In 2017, by comparison, Congress overturned fifteen rules across a range of industries and subjects. Each 

of these rules was by definition a ‘‘midnight regulation’’ completed 

late in the prior administration, and some of them would have had 

outsized impacts on small businesses. The CRA is only useable in 

limited and specific circumstances, however, so the NAM continues 

to advocate for substantive regulatory reform that will lead to 

smarter rules going forward. 

This committee has done admirable work this year, and in prior 

years, to propose needed reforms that would close loopholes in the 

Regulatory Flexibility Act. This work is critical for small and medium-sized manufacturers, because too many regulations that have 

significant effects on small businesses escape the process that Congress intended agencies to follow to ensure their rules make sense 

as-applied to those businesses. 

Beyond legislation such as the Small Business Regulatory Flexibility Improvements Act of 2017,1 Congress should also focus on 

meaningful and bipartisan reforms that may not be explicitly focused on small businesses, but would nevertheless have an important impact on those businesses by driving better regulatory outcomes overall. These efforts certainly include bills that would: 

• Require standards of rigor that match the impact of rules. 

The NAM supports legislation such as the Regulatory Accountability Act of 2017 2 that would require agencies to conduct a 

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VA-6), Peterson (D-MN-7), Smith (R-TX-21), Marino (R-PA-10), Sessions (R-TX-32), and Franks 

(R-AZ-8). 3S. 579, sponsored by Senators Heitkamp (D-ND), Hatch (R-UT), and Roberts (R-KS). 

4S. 1817 (2015), originally sponsored by Senators Heitkamp (D-ND), and Lankford (R-OK). 

5S. 2296, sponsored by Senator Johnson (R-WI); see also H.R. 4809, sponsored by Representative Walker (R-NC-6). 6S. 1448, sponsored by Senators Portman (R-OH), Collins (R-ME), Lankford (R-OK), Ernst (RIA) and Johnson (R-WI). 

robust analysis and then truly evaluate alternative ways to address each regulatory problem, but commensurate with the 

level of impact anticipated from each rule. Greater analytical 

requirements need not slow down agency rulemaking efforts, 

and the NAM opposes restrictions on rulemaking that serve no 

other purpose than to delay nece4ssary protections. Rules with 

billions of dollars in economic impacts deserve careful consideration and analysis, and the NAM commends the House of Representatives for passing its version of this bill last year as part 

of the broader H.R. 5 package. 

• Promote earlier participation in major rulemakings. Public 

engagement is an important driver of good regulatory outcomes, and is a critical component of both transparency and 

predictability. The NAM supports legislation such as the Early 

Participation in Regulations Act of 2017 3 that would require 

agencies to solicit earlier public participation in major rulemaking. That engagement will result in more effective rules 

that provide the regulated public with better predictability. 

• Require agencies to lay out the standards by which their 

rules will be measured in the future. Often called ‘‘prospective 

retrospective review,’’ legislation such as the Smarter Regs Act 

of 2015 4 would ask agencies to set out up-front performance 

metrics for their intended regulatory goals. If a rule proves to 

be ineffective in achieving its stated goal, agencies should look 

to update, restructure, or rescind it. 

• Agencies should provide their guidance documents in one 

easy-to-access place online. As above, guidance documents are 

an important tool that agencies use to provide information to 

the regulated public but can become regulatory in their own 

right because they may lay out expectations that appear mandatory. Legislation such as the GOOD Act 5 would require 

agencies to put guidance documents online on one location, enabling both oversight and easier compliance for the public. 

• Independent agencies should be held to the same standards 

as executive agencies. Independent agencies are responsible for 

a significant portion of high-impact rules, but they often fail to 

conduct robust analyses of their regulatory proposals and they 

seldom conduct an inter-agency review process to identify 

areas in which their rules may overlap or conflict with other 

agencies’ requirements. Bills like the Independent Agency Regulatory Analysis Act of 2017 6 would establish a basic, flexible, 

and non-binding OIRA review process that would provide valuable insight among agencies, and uncover opportunities for 

more effective and efficient rules. 

The NAM urges the committee to continue developing and promoting sensible, bipartisan legislation that will give small business 

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a true voice and seat at the table. Thank you for your invitation 

to speak to you today, and for your attention on small and mediumsized manufacturers across the country. 

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1http://www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=250611&channelID=311&— 

ga=1.255452874.358516237.1489032231 2http://eyeonhousing.org/2016/05/14-million-households-priced-out-by-government-regulation/ 

Introduction 

Chairman Chabot, Ranking Member Vela ́zquez and Members of 

the Committee, thank you for the opportunity to testify today. My 

name is Randy Noel. I am a home builder and small business 

owner from LaPlace, Louisiana, and the Chairman of the Board of 

Directors of the National Association of Home Builders (NAHB). 

NAHB is a federation of more than 700 state and local associations representing more than 140,000 members nationwide. 

NAHB’s members are involved in home building, remodeling, multifamily construction, land development, property management, 

and light commercial construction. Taken together, NAHB’s members employ more than 1.26 million people and construct about 80 

percent of all new American housing each year. 

The majority of NAHB’s builder members are truly small businesses constructing 10 or fewer homes each year with fewer than 

12 direct employees. These builders, in addition to building homes, 

must navigate a dense thicket of regulations. There is no question 

that we need to protect public health, welfare, safety and the environment. But federal agencies need to fully and consistently consider the unique burdens small businesses face in complying with 

regulations. 

As a second-generation home builder with more than 30 years of 

experience, I understand all too well how difficult (and often costly) 

it can be to comply with the many and varied government regulations that apply to my day-to-day work. NAHB estimates, on average, regulations imposed by government at all levels account for 

nearly 25 percent of the final price of a new single-family home 

built for sale.1

The significant cost of regulations reflected in the final price of 

a new home is not just a problem for the small businesses that 

build them; it has a negative effect on main street U.S.A. by making affording a home that much more difficult. Based on findings 

from a 2016 study, NAHB estimated that approximately 14 million 

American households were priced out of the market for a new home 

by government regulations in that year.2

But I am happy to report today that things are getting better. 

The first year of Donald Trump’s presidency has seen major 

progress on efforts to reduce the relentless and costly over-regulation of American industry. The home building industry and the 

small businesses that predominate it have been significant beneficiaries of these efforts. Builders have taken note and entered 2018 

with a great deal of optimism. 

Over the last three months, NAHB’s Housing Market Index 

(HMI), a measure of builder sentiment, has recorded its highest 

readings in nearly two decades. Much of that optimism is due to 

tight existing home inventory, a solid economy with low unemploySBREP-219A with DISTILLER

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ment, and an improving policy environment that offers hope for reduced regulatory burdens. 

Good Progress but the Job is Not Done 

Today I wish to focus on the significant progress that has already 

been made in reducing regulatory burdens for small businesses in 

our industry, how the changes have helped builders, and what regulatory headwinds still linger. While much has been accomplished, 

the hefty price home buyers are paying for government regulations 

represents just one more obstacle that home builders need to overcome in restoring the marketplace to normal conditions. Later in 

my testimony, I outline a number areas that Congress and the administration should address that would further reduce regulatory 

burdens on small businesses and spur job and economic growth. 

On the positive side, the successful efforts of this administration 

and Congress to reduce the regulatory burdens on small businesses 

in the home building industry are remarkable both in their number 

and scope. To date, we have seen more than 20 significant regulatory changes that will benefit home owners, home buyers, and 

home builders. Allow me to quickly summarize some of the more 

significant changes. 

HUD Federal Flood Risk Management Standard (FFRMS) 

The Obama administration executive order that created the 

FFRMS would have expanded the federally regulated floodplain 

and required increased structural elevation and flood-proofing for 

all federally funded projects, including single-family homes and 

multifamily projects using FHA mortgage insurance. 

In response to the FFRMS, HUD proposed a problematic rule in 

2016 to expand its floodplain management oversight. HUD’s proposal threatened access to FHA mortgage insurance for single-family home buyers and multifamily builders and would have jeopardized affordable housing opportunities for countless low- to moderate-income working-class families. 

The additional elevation and flood-proofing requirements proposed for multifamily properties using FHA mortgage insurance 

programs would have made many projects infeasible, thereby preventing the delivery of much-needed rental housing during the current affordable housing crisis. Additionally, multifamily builders 

would have had no way of knowing if they had to comply with the 

new floodplain rules because maps of the expanded floodplain did 

not (and still do not) exist. President Trump rescinded the executive order and soon after HUD followed suit by withdrawing its 

FFRMS proposal. 

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

The 2015 WOTUS rule expanded federal jurisdiction of the Clean 

Water Act to isolated wetlands, channels that only flow when it 

rains, and most man-made ditches. The result would have greatly 

increased federal regulatory power over private property and led to 

increased permit requirements, project delays, and significant 

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avoidance and mitigation costs. Equally important, the changes 

would not have significantly improved water quality because much 

of the rule improperly encompassed water features under state regulatory authority. As a result, 31 states sued the federal government over the deeply flawed rule. The agencies are in the process 

of withdrawing the 2015 rule and developing a new rule. 

Expanded Health Care Options 

Small businesses continue to struggle to provide health benefits 

to their employees. On October 12, 2017, President Trump signed 

an executive order that will ease restrictions on association health 

plans and health reimbursement accounts to create more options 

for small businesses to provide health benefits to their employees. 

Easing restrictions on association health plans will grant small 

businesses access to better and more affordable health care plans, 

allow them to negotiate lower costs for coverage, and level the playing field for smaller firms that want to help their workers and 

their families with their health care needs. Additionally, expanding 

the use of health reimbursement arrangements will allow small 

businesses to offer pre-tax dollars to insured employees to help pay 

premium and/or other out-of-pocket costs associated with medical 

care and services. 

OSHA Volks Recordkeeping Rule 

Finalized on December 19, 2016, this rule extended the explicit 

six-month statute of limitations on recordkeeping paperwork violations in the Occupational Safety and Health (OSH) Act of 1970 to 

five years. Earlier court rulings had affirmed applicability of the 

six-month statute of limitations; nonetheless, the agency proceeded 

with its rulemaking. 

The Volks Rule represented a particularly egregious end run 

around Congress’s power to write the laws and a clear challenge 

to the judicial branch’s authority to prevent an agency from exceeding its authority to interpret the law. Had it been allowed to stand, 

the rule would have subjected millions of small businesses to potential citations for paperwork violations, but do nothing to improve worker health or safety. Congress voted to overturn the rule 

by a joint resolution of Congress under the Congressional Review 

Act. President Trump signed the resolution into law on April 3, 

2017. 

More to Be Done 

The Code of Federal Regulations didn’t grow to over 180,000 

pages oversight. Even with the significant progress of the past 

year, there still remains significant work to be done in peeling back 

and revisiting the accumulated layers of regulations heaped upon 

small businesses. In particular, NAHB urges Congress and the administration to focus on the following: 

OSHA Multiemployer Policy 

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Existing policy outlines agency procedures for allowing compliance officers to issue citations on work sites where there is more 

than one employer. On construction sites, this policy allows OSHA 

to issue citations to a general contractor (i.e., a home builder) for 

safety violations created by subcontractors, even if none of the general contractor’s employees are exposed to the hazardous condition. 

This interpretation impermissibly nullifies the employer/employee 

relationship and must be changed. 

EPA Lead Renovation, Repair and Painting (RRP) Program 

This rule addresses lead-based paint hazards created by renovation, repair, and painting activities that disturb lead-based paint in 

target housing and child-occupied facilities bui8lt before 1978. 

The RRP program, as it is currently being implemented, is an inefficient tool for achieving the environmental and health goals of 

the underlying statute and rule. The regulation is needlessly burdensome, costly, and fails to provide the tools needed for efficient 

implementation, which discourages homeowners from using the 

services of certified renovators. Most importantly, the lack of a reliable, commercially available lead paint test kit (more than five 

years after EPA believed a test kit would be ready) means renovators are left in the dark when it comes to compliance. Other aspects of the program, including the new renovator recertification 

requirements, add needless complexity to the rule’s implementation 

and create an unnecessary bias against online training. EPA expects to complete a comprehensive review in spring 2018; NAHB is 

hopeful this review will lead to change. 

DOL Apprenticeship Programs 

With labor shortages in the residential construction industry 

reaching levels not seen in two decades, it is critically important 

that the administration and Congress take immediate steps to encourage the development of a skilled workforce now and for the future. 

Consistent with the President’s Executive Order on Expanding 

Apprenticeships in America, the Employment and Training Administration (ETA) will be proposing regulations to establish the 

framework for industry-recognized apprenticeship programs, a new 

industry-led initiative to promote innovation and opportunity in apprenticeship, and integrate this initiative with the existing Registered Apprenticeship system. NAHB applauds this effort and 

looks forward to working with the administration to further this 

important program. 

FWS/NMFS Endangered Species (ESA) Regulations 

Implementation of the ESA increasingly impacts land use activities. The current regulations enable the services to assert authority 

over large swathes of land and a broad array of activities that are 

rarely associated with species conservation. The consultation requirements also remain expensive, burdensome and unwieldy. As 

land is impacted by the ESA, it becomes too expensive or otherwise 

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extremely difficult to use for home building. The higher costs invariably translate into higher home prices, and higher prices, in 

turn, disqualify more individuals from being able to afford a home. 

Fixing the Underlying Problem 

The administration and this Congress is to be commended for its 

successful efforts thus far to reduce regulatory burdens on small 

businesses. Additionally, I urge the administration and Congress to 

continue its work and move swiftly to address outstanding regulatory hurdles. However, all of these actions will amount to little 

more than a Band-Aid on the problem until such time as Congress 

and the administration can successfully address our broken regulatory rulemaking system. 

NAHB has consistently said the only sure way to safeguard 

against future bad regulation is to fix the broken regulatory rulemaking process itself, ensure all regulations are designed with 

small businesses in mind, and, perhaps most importantly, restore 

meaningful congressional oversight to the rulemaking process. Fortunately, the solution already exists. Legislation has already 

passed the U.S. House that would go a long way toward accomplishing these goals: the Regulatory Accountability Act (RAA); the 

Regulatory Flexibility Improvements Act (RFIA); and the Regulations from the Executive in Need of Scrutiny (REINS) Act. NAHB 

will continue to urge the Senate to take up these important bills. 

The REINS Act restores much-needed congressional oversight to 

the rulemaking process, a desperately needed improvement given 

the growth of the regulatory state over the past few decades. Without meaningful congressional oversight, poorly-crafted rules often 

to into place and businesses are forced to divert precious resources 

to lengthy and uncertain legal challenges. 

While the REINS Act returns control of the regulatory process to 

the people, the RAA repairs the decades-old, badly-broken system 

and the RFIA makes common sense improvements to existing law 

to ensure all agencies are considering the true impact or proposed 

regulations on small businesses. Taken together, these reforms will 

ensure we protect the environment and our workers, while also 

adding fuel to the engine of economic growth that America’s small 

businesses represent. 

Thank you again for the opportunity to testify today. 

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1 Attached as an appendix to this testimony is my forthcoming article analyzing the first 

phase of the Trump administration’s deregulatory surge: Lisa Heinzerling, Unreasonable Delays: 

The Legal Problems (So Far) of Trump’s Deregulatory Binge, Harvard Law & Policy Review 

(forthcoming March 2018). 

Testimony of Lisa Heinzerling 

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

Georgetown University Law Center 

Before the House Committee on Small Business 

March 7, 2018 

Hearing on ‘‘The Effects of the President’s Regulatory Reform and Rollback 

Efforts on Small Businesses’’ 

Mr. Chairman and Members of the Committee, thank you for 

giving me the opportunity to testify before you today. 

President Trump has made deregulation a central goal of his domestic policy. Through executive orders aimed at particular regulatory programs, President Trump has directed agencies to take an 

axe to existing regulations. Through the so-called ‘‘2-for-1’’ order on 

regulatory costs, President Trump has also placed strict limits on 

the development of new regulations. 

Agencies have responded by delaying, suspending, and revoking 

existing regulations.1 All across the government, rules and policies 

that took years to develop have been put off or wiped out. These 

rules and policies address issues as important and diverse as climate change, consumer deception, airline safety, chemical accidents, food safety, sexual assault, and more. In a great many cases, 

the rules and policies have been put off or rejected with little of the 

legally required attention to statutory constraints, factual records, 

or procedural frameworks. As a consequence, federal courts have 

rejected the administration’s attempts to delay or suspend existing 

rules on such matters as lead paint, energy efficiency, and methane 

emissions from oil and gas facilities. Two weeks ago, for example, 

a federal district court in California granted a preliminary injunction against the Department of the Interior’s suspension of a rule 

intended to reduce waste of natural gas from oil and gas facilities 

on public lands. Particularly pertinent to today’s hearing, the court 

found that the Department’s attempt to justify the suspension 

based on the rule’s purported effects on small businesses was not 

supported by the factual evidence. Other, similar challenges to the 

administration’s deregulatory activities remain pending and may 

suffer similar fates due to the administration’s apparently indifferent attitude toward law, facts, and process. 

Agencies have also responded to the President’s deregulatory 

agenda by putting off or canceling new regulatory initiatives. 

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Under the 2-for-1 executive order, the Office of Management and 

Budget (OMB) is empowered to set regulatory budgets for the executive agencies. These are not ordinary budgets, in which agencies 

have a limit on the amounts they can spend to do their work. With 

regulatory budgets, agencies have a limit on what they can require 

private parties to spend to alleviate the problems the agencies are 

charged with addressing. For fiscal year 2018, OMB has given the 

agencies regulatory budgets that are in every case zero or negative. 

Agencies may not, in other words, issue any new regulations without offsetting the new rules’ costs by at least, and in most cases 

by more than, a 1:1 ratio. As the federal district court hearing a 

legal challenge to the 2-for-1 executive order found last week, at 

the current rate of annual cost savings from all deregulatory efforts 

across all agencies, ‘‘it would take the Executive Branch as a whole 

two or three years to accumulate cost savings sufficient to offset 

even the most conservative estimated cost’’ of just one rule from 

just one agency (a Department of Transportation rule related to 

motor vehicle safety). The court observed: ‘‘the Executive Order 

curtails the ability of agencies to adopt significant new rules, even 

when the benefits of the new rules would vastly outweigh the 

costs.’’ 

Indeed, it appears to be the official policy of this administration 

that regulatory benefits do not count when one is evaluating the 

wisdom of regulatory policy. Under the 2-for-1 executive order, a 

reduction in regulatory costs is considered a success no matter how 

dearly we all play for it in benefits forgone. Consider again the regulatory budgets OMB has set for this fiscal year. The Department 

of Energy takes one of the biggest hits in OMB’s regulatory budget; 

it must find $80 million in savings from discarded rules before it 

may spend a single dollar on new regulation, at which point it 

must still offset each dollar spent with reductions elsewhere. However, according to OMB’s own draft report on the costs and benefits 

of federal regulation, the Department of Energy is one of the star 

performers in the government when one compares the regulatory 

costs it imposes to the benefits it reaps for the public. OMB reports 

that the Department’s regulations on energy efficiency from 2006 

to 2016 produced net benefits ranging from $12 billion to $31 billion. And yet these are the programs OMB has slated for especially 

deep cuts. It makes no sense, if one cares about the public benefits 

of regulation. 

In this regard, consider, too, the example of the Environmental 

Protection Agency. No agency in this administration has taken a 

bigger axe to existing regulatory programs than the EPA. Yet OMB 

has also reported that EPA rules outperform the rules of all other 

agencies combined in terms of producing net monetized benefits. 

OMB estimates that from 2006 to 2016, EPA regulations provided 

as much as $706 billion in benefits—measured in such terms as 

lives saved, illnesses averted, and environmental degradation reduced—while imposing no more than $65 billion in costs. However, 

the gargantuan benefits of EPA rules, particularly rules related to 

air pollution, disappear in the administration’s regulatory budget 

for EPA. 

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A question for today’s hearing is whether the costs of this deregulatory surge to the public at large are at least mitigated by 

substantial benefits to small businesses. The answer is that this 

war on regulation is not designed to deliver benefits to small businesses. Recent cases rejecting the Trump administration’s deregulatory moves are relevant here as well. The court hearing the case 

on Interior’s rule on waste of natural gas on public lands found 

that the blanket suspension of the rule was not tailored to address 

the concerns of small entities. Similarly revealing is EPA’s most recent regulatory plan. This plan is full of deregulatory initiatives 

the agency intends to undertake, but EPA highlights only two of 

the rules slated for revocation or relaxation as affecting small entities. 

Make no mistake: the war on regulation is being conducted at 

the behest of some of the largest corporations in this country, and 

its benefits are being delivered primarily to them. In fact, many of 

the administration’s deregulatory actions not only fail to target 

their savings to small businesses, but they affirmatively harm 

small entities by withdrawing regulatory protections that would 

have benefited them. Consider, for example, the Department of Agriculture’s withdrawal of a rule intended to address anti-competitive behavior in the meat industry. In this matter pitting small 

farmers against big agribusiness, the administration planted its 

flag on the side of big business. In evaluating the deregulatory initiatives of this administration, one cannot simply assume that 

small entities are benefited when regulations are withdrawn. 

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