[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] EXPEDITING ECONOMIC GROWTH: HOW STREAMLINING FEDERAL PERMITTING CAN CUT RED TAPE FOR SMALL BUSINESSES ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION __________ HEARING HELD SEPTEMBER 6, 2017 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 115-033 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 26-719 PDF WASHINGTON : 2018 ---------------------------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Publishing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected]. HOUSE COMMITTEE ON SMALL BUSINESS STEVE CHABOT, Ohio, Chairman STEVE KING, Iowa BLAINE LUETKEMEYER, Missouri DAVE BRAT, Virginia AUMUA AMATA COLEMAN RADEWAGEN, American Samoa STEVE KNIGHT, California TRENT KELLY, Mississippi ROD BLUM, Iowa JAMES COMER, Kentucky JENNIFFER GONZALEZ-COLON, Puerto Rico DON BACON, Nebraska BRIAN FITZPATRICK, Pennsylvania ROGER MARSHALL, Kansas RALPH NORMAN, South Carolina NYDIA VELAZQUEZ, New York, Ranking Member DWIGHT EVANS, Pennsylvania STEPHANIE MURPHY, Florida AL LAWSON, JR., Florida YVETTE CLARK, New York JUDY CHU, California ALMA ADAMS, North Carolina ADRIANO ESPAILLAT, New York BRAD SCHNEIDER, Illinois VACANT Kevin Fitzpatrick, Majority Staff Director Jan Oliver, Majority Deputy Staff Director and Chief Counsel Adam Minehardt, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Steve Chabot................................................ 1 Hon. Nydia Velazquez............................................. 2 WITNESSES Mr. Philip K. Howard, Senior Counsel, Covington & Burling LLP, New York, NY, testifying on behalf of Common Good.............. 5 Mr. Louis A. Griesemer, President, Springfield Underground, Inc., Springfield, MO, testifying on behalf of the National Sand Stone Gravel Association....................................... 7 Mr. Mark Hayden, General Manager, Missoula Electric Cooperative, Missoula, MT................................................... 8 Ms. Margot Dorfman, CEO, U.S. Women's Chamber of Commerce, Washington, DC................................................. 10 APPENDIX Prepared Statements: Mr. Philip K. Howard, Senior Counsel, Covington & Burling LLP, New York, NY, testifying on behalf of Common Good..... 24 Mr. Louis A. Griesemer, President, Springfield Underground, Inc., Springfield, MO, testifying on behalf of the National Sand Stone Gravel Association.............................. 31 Mr. Mark Hayden, General Manager, Missoula Electric Cooperative, Missoula, MT.................................. 39 Ms. Margot Dorfman, CEO, U.S. Women's Chamber of Commerce, Washington, DC............................................. 43 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: Associated General Contractors of America.................... 47 EXPEDITING ECONOMIC GROWTH: HOW STREAMLINING FEDERAL PERMITTING CAN CUT RED TAPE FOR SMALL BUSINESSES ---------- WEDNESDAY, SEPTEMBER 6, 2017 House of Representatives, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 11:00 a.m., in Room 2360, Rayburn House Office Building, Hon. Steve Chabot [chairman of the Committee] presiding. Present: Representatives Chabot, Luetkemeyer, Brat, Radewagen, Kelly, Blum, Comer, Gonzalez-Colon, Bacon, Fitzpatrick, Marshall, Norman, Velazquez, Evans, Murphy, Adams, and Schneider. Chairman CHABOT. The Committee will come to order. First of all, on behalf of the Small Business Committee, I wanted to extend our heartfelt prayers and support to the communities ravaged by Hurricane Harvey. Unfortunately, the storm took dozens of lives. It also took people's businesses and possessions and homes. This Committee is committed to helping these Americans reclaim and rebuild their lives as quickly as possible. As part of this effort, the Committee has been working, and will continue to work, with Administrator Linda McMahon and the Small Business Administration to ensure that it is able to efficiently and effectively respond. SBA's Disaster Loan Program, which provides direct loans to business owners and homeowners is a key component of the recovery efforts in these communities. This Committee will continue to be engaged on this issue for the coming weeks and months to make sure that we are doing everything possible that we can to help our fellow Americans in their time of need. And I would also like to extend our heartfelt concern to both the ranking member as well as Ms. Gonzalez-Colon for Hurricane Irma, which is ready, in the very near future, I believe, to hit Puerto Rico as well. And I know they have a lot of family and friends and loved ones there. So it has been a rough period of time for our country, and particularly the communities that I just mentioned. So we wish you the best to all your loved ones. And the things that I mentioned about are this Committee's commitment to helping out the folks down in Texas and Louisiana also extend to our fellow citizens in Puerto Rico as well. So we will work with the staff of the ranking member and Ms. Gonzalez-Colon if they have suggestions or things that we can do to help there. We are also here today to examine how the Federal permitting process hurts small businesses, which obviously this Committee is very involved with since it is the Small Business Committee. As this Committee well knows, complying with regulations is one of the biggest challenges facing small businesses today. The time and cost to comply with the growing number of regulations stymies economic growth and stifles innovation. The Federal permitting process is a component of this vast regulatory state. Usually before a business can begin to open its doors, launch a project, or begin an initiative, it must obtain a number of permits before moving forward. But the current permitting process is a maze that businesses big and small must navigate. And as with regulations generally, the Federal permitting process disproportionately affects small businesses. To obtain all the proper permits, small businesses must often deal with several agencies and departments with overlapping regulatory jurisdictions and endure lengthy delays waiting for permitting decisions, and cope with increasing costs to comply with these Federal permitting requirements. Our witnesses today will provide real examples of what it is like to attempt to comply with our complex Federal permitting process: having to constantly check boxes to move forward with a project; having to fill out difficult permitting applications only to wait for months, sometimes years, for agencies to make decisions; having to do the nearly impossible to meet all the permitting requirements while keeping their doors open. The current administration has taken positive steps to address the Federal permitting process, including two executive orders and a presidential memorandum. These actions acknowledge the burden the Federal permitting process imposes on the economy. That is a good start, but we must continue to look for ways to simplify and streamline the permitting process, especially to ease the regulatory burden on small businesses, our economy's lifeblood. That is why I introduced H.R. 33, the Small Business Regulatory Flexibility Improvements Act of 2017, at the beginning of this year. This bill ensures that Federal agencies actually examine the impact of new regulations on small businesses and consider ways to reduce unnecessary costs and burdens. The Small Business Regulatory Flexibility Improvements Act was included in a larger bill, H.R. 5, the Regulatory Accountability Act of 2017, which passed the House with a bipartisan vote back in January. The Senate has introduced a similar bill, S. 584, and we are waiting for them to take this important legislation up hopefully soon. If passed, the Small Business Regulatory Flexibility Improvements Act will be another step towards easing the regulatory burden on small businesses. I want to thank the witnesses here today. We appreciate you taking the time out to travel to Washington, D.C. to testify about your experiences, and we look forward to your testimony. And I would now like to recognize the ranking member, Ms. Velazquez, for her opening statement. Ms. VELAZQUEZ. Thank you, Mr. Chairman. And I just want to echo your moving words. If there is a time when the federal government must play a role it is when natural disasters strike. And I pray for those victims in Texas, and Oregon with the fires, and now the Caribbean. And we do not know if Hurricane Irma will--well, the estimate, it is putting that storm, that hurricane, in a path to hit the South in the United States. This Committee has worked diligently throughout the years to revamp the disaster relief program and to provide the tools to the Small Business Administration to be able to assist those homeowners, businesses, and victims of any natural disaster. But I really am very grateful for your words and we pray that nothing happens; that there is no loss of lives. This is very personal for me and it should be very personal for everyone. Sometimes we forget that the people of Puerto Rico are American citizens and they show up to fight and defend our country. So thank you so much. Mr. Chairman, like raising revenue and funding various programs, regulation is a fundamental tool the Government uses to implement public policy. The costs and benefits associated with federal regulations has been a subject of great controversy with the costs estimated in the hundreds of billions of dollars and the benefits even higher. An inherent part of the regulatory process is permitting, in which a business must obtain approval from the federal government for a project. While federal permits are critical to ensuring public safety, they can also represent a costly and complicated hurdle for small businesses. Unchecked, regulations can over time become out of date, requiring companies to devote significant resources to compliance. This can be especially problematic for small companies that lack in-house lawyers and economies of scale enjoyed by larger competitors. It is reasons like this that prompted Congress to enact the Paperwork Reduction Act and the Regulatory Flexibility Act which help ease and minimize small firms' compliance costs. Despite the drawbacks, we should remember that permitting requirements also advance important public goals, helping ensure worker safety and protecting our air and water from pollution. I think we can all agree that certain processes should require a permitting process. For example, it seems like basic common sense that a permit for the disposal of nuclear waste is appropriate. Similarly, a careful review will find that some permits actually help small businesses and are critical to protecting local economies. For example, in accordance with the Clean Water Act, large boats are required to obtain a permit before operating in U.S. waters. This limits pollutants and toxic chemical compounds released into our waterways. This not only protects the public health, but also ensures product life remains plentiful and healthy for human consumption, keeping intact local job-creating fishing industries. Examples like this underscore why a ``one size fits all'' method for slashing regulation is inappropriate. Agencies should examine their use of permits on a case-by-case basis. In doing so, they can streamline and remove outdated regulations without compromising public health and safety or jeopardizing local environmental resources. One such method of analyzing the regulatory landscape was included in the FASA Act, which created a Federal Permitting Improvement Steering Council to streamline and expedite permitting requirements for infrastructure projects. Ensuring the FASA Act is fully implemented and the council fully functional could go a long way towards reducing permitting burdens. Unfortunately, President Trump has yet to nominate an executive director of the council. Improving compliance assistance can also go a long way toward leveling the playing field for small businesses. That is why it is so important that agencies are adequately staffed. Slashing budgets and imposing hiring freezes means agencies have fewer resources to help small companies navigate and comply with these processes. New technology can also play a role in reducing regulatory burden. It is my hope that today's discussion will shed light on how we can further reduce compliance costs for small companies without raising risks to the public health and the environment. With that, I once again thank the witnesses for being here and offering their insight, and I yield back the balance of my time. Thank you, Mr. Chairman. Chairman CHABOT. Thank you very much. The gentlelady yields back. And if Committee members have opening statements prepared, I would ask that they be submitted for the record. I would like to take just a moment to explain our timing lights for the witnesses. Pretty simple. We operate under the 5-minute rule. You each get 5 minutes to testify and then we will have 5 minutes to ask questions. There is a lighting system to assist you. The green light will be on for 4 minutes, the yellow light will be on for 1 minute letting you know to wrap up, and the red light will come on and we hope that you are either finished or will wrap up shortly thereafter. And I would now like to introduce our very distinguished panel this morning. Our first witness will be Mr. Philip Howard, who is the founder of Common Good, a nonpartisan coalition focusing on simplifying the government. He has written many books and articles on legal and government reform, and he was appointed to President Trump's Strategic and Policy Forum in April of this year. He is also Senior Counsel at Covington and Burling in New York. Mr. Howard is testifying on behalf of Common Good, and we welcome you here today. Our second witness is Mr. Louis Griesemer. Mr. Griesemer is the President and CEO of Springfield Underground located in Springfield, Missouri. I am pronouncing the name right, aren't I? Okay, thank you. Springfield Underground supplies construction aggregates and provides underground storage for warehousing, laboratories, food storage, record storage, and data centers. Mr. Griesemer is testifying on behalf of National Stone, Sand, and Gravel Association, and we welcome you here today as well. Our third witness will be Mr. Mark Hayden, who is the General Manager of Missoula Electric Cooperative in Missoula, Montana. The Missoula Electric Cooperative provides electric distribution services to nearly 15,000 locations in Western Montana and Eastern Idaho with many miles of its distribution lines crossing over Federal lands. And we welcome you here today as well. And I would now like to recognize the ranking member to introduce our fourth witness. Ms. VELAZQUEZ. Thank you, Mr. Chairman. It is my pleasure to introduce Ms. Margot Dorfman. Ms. Dorfman is the founder and CEO of the U.S. Women's Chamber of Commerce. The chamber represents 500,000 members, three- quarters of whom are small business owners and federal contractors. Through her leadership, this organization has championed opportunities to increase women-business careers and leadership advancement. Additionally, Ms. Dorfman has an extensive background in business, including over 10 years in executive positions with General Mills and other Fortune 500 firms. Welcome. Thank you. Chairman CHABOT. Thank you very much. And I would just let our witnesses know and also remind members that we are going to have votes probably starting around 10 minutes till noon approximately, but we are not absolutely sure. So we could finish up, but may have to come back. Mr. Howard, you are recognized for 5 minutes. STATEMENTS OF PHILIP K. HOWARD, SENIOR COUNSEL, COVINGTON & BURLING LLP; LOUIS A. GRIESEMER, PRESIDENT, SPRINGFIELD UNDERGROUND, INC.; MARK HAYDEN, GENERAL MANAGER, MISSOULA ELECTRIC COOPERATIVE; MARGOT DORFMAN, CEO, U.S. WOMEN'S CHAMBER OF COMMERCE STATEMENT OF PHILIP K. HOWARD Mr. HOWARD. Thank you. Good morning, Mr. Chairman, members. Thank you very much for this opportunity to appear here. The focus of today's hearing, streamlining permitting for small businesses, is of vital importance to this country for a number of reasons. Small business is the heart of the American economy, represents half the GDP. It is also the wetlands that spawns the other half. Not many years ago, Amazon and Google were small businesses. All the businesses that make this country grow started as small businesses. Small business is also the soul of the American economy. What makes America so different than other countries is the ability of anyone to go out and be entrepreneurial and follow their star and make their own way by starting a business. Regulation is critical, good regulation, as the ranking member and the chairman both indicated. So the solution here in my judgment is not deregulation; it is making regulation practical for small business. What has happened without anybody really intending it is over the last 50 years, the permitting and regulatory structure for small business has slowly started suffocating the goose that lays the golden egg that everyone describes here. At this point, according to the World Bank, the United States ranks 51st in the world in ease of starting a business. As the chairman indicated, it is much more expensive for a small business to comply with regulation than it is for big business, on average about 36 percent more per worker. Regulation is also extraordinarily unfair because the inability to comply, even to understand, but to comply with regulation means that small businesses that try hard to comply are at a competitive disadvantage to small businesses that realize that they can often just get away with ignoring regulation all together. So you have this vast disparity that is the opposite of what the rule of law is supposed to promote. I think there are three flaws in our general approach to regulating small business. First, it is too dense for real people to understand, much less to comply with: literally hundreds of millions of words of law, about 150 million words of binding Federal law and regulation, probably over a billion of State and local regulation. It gets denser every year because rarely the legislature or regulators take away the rules. It is like the roach motel. The regulations check in and they never check out. The reason it is so dense is not because that is necessary to protect a safe workplace or clean water; it is because we try to tell people exactly how to comply. We do not tell them what the goals are and give them principles and provide oversight mechanisms. Worker safety, for example, we literally have thousands of rules telling people helpful things like stairwell shall be lit by artificial or natural light. How else can they be lit? They require material safety data sheets for sawdust and sand and common dishwashing liquid, and give tickets if you do not have them in the appropriate place. These things have almost nothing to do with what makes the workplace safe. The third problem with regulating small business is the government does not even try to coordinate among the different agencies regulating small business. Federal Government agencies do not coordinate among themselves and much less coordinate with the State and local governments. So what happens is if you are trying to start a business in New York, for example, start a restaurant, Mayor Bloomberg found required permits from 11 different agencies. In D.C., you want an extra apartment, you want to rent it out? Five permits. I have done studies of infrastructure permitting, and one project with almost no environmental impact, to raise the roadway of the Bayonne Bridge, 47 permits from 19 different agencies. It is impossible for a small business to navigate that labyrinth. The solution is not deregulation, but to create a practical method. Small businesses should also keep water clean. They should also have safe workplaces. What that requires I think is not just stemming the flow, which I agree with the chairman needs to be done, but we need a new approach. We need a new approach in general, replacing micro regulation with broader goals. And to get there I think that the first step would be to appoint an independent commission to do a study on the cumulative burdens, State and local as well as Federal, and recommend pilot projects where you have simplified regulation, where you have simplified enforcement using outside bodies like CPAs, except make them certified regulatory agents, to create a safe harbor and help people to comply because you cannot expect some small businessman to figure out exactly what all these rules require. So we should somehow institutionalize a mechanism, the goal of which is make it practical for small business to comply with legitimate public goals. And it would initiate such energy in our society if people could be confident that they could actually go and understand the law and go out and follow their star and do what has made the American economy great for all these years. Thank you. Chairman CHABOT. Thank you, Mr. Howard. Thank you. Mr. Griesemer, you are recognized for 5 minutes. STATEMENT OF LOUIS A. GRIESEMER Mr. GRIESEMER. Chairman Chabot, Ranking Member Velazquez, and members of the Committee, thank you for inviting me to testify at this hearing on behalf of National Stone, Sand, and Gravel Association, NSSGA. NSSGA represents the 10,000 construction and aggregate operations across the United States, located in every State and nearly every congressional district. More than 70 percent of NSSGA members are small businesses like mine. It is an industry that directly employs over 100,000 people and indirectly supports an additional 487,000 jobs throughout the economy. Overall, NSSGA member companies represent more than 90 percent of the crushed stone and 70 percent of the sand and gravel produced and consumed annually in the United States. NSSGA's primary concern is a fully funded, robust highway trust fund. While nothing can take the place of these critical Federal funds, regulatory overreach can cause costly project delays so regulatory reform is of great importance to us. As a business, we extract natural material for processing into crushed, sized, and washed stone. Crushed stone, sand, and gravel typically make up over 80 percent of ready-mix concrete and over 90 percent of hot-mixed asphalt. Aggregates are used in nearly all construction and public works projects, including buildings, highways, bridges, and airports, as well as treating drinking water and cleaning air emissions from power plants. Some of the regulations we must follow to operate make sense, and others do not, particularly for small businesses. My family's business was started in 1946 by my father and uncle, who discovered limestone while digging a farm pond and recognized the need for road material in nearby Springfield, Missouri. Springfield Underground now employs 43 people, and in addition to supplying construction aggregates, we also utilize our former underground operations as cold storage for corporations such as Kraft-Heinz and Cargill. Like me, some of our employees are the second or third generation of their families to work at Springfield Underground. I have worked in the industry since 1977. I want to be clear that I am not against regulation, nor is NSSGA. In fact, as the co-chair of the Mine Safety Health Administration NSSGA Alliance, I have led cooperative discussions with MSHA to develop and disseminate education and training materials intended to boost workplace safety and health for over 10 years. We have found that we can accomplish more by working together rather than having just a command-and- control relationship. However, in too many cases, agencies unnecessarily slow down projects, and Springfield Underground has experienced this firsthand. In one instance, we had approved plans from our city for an expansion of our tractor trailer parking lot. When a State road contractor needed a place to dispose of crushed pavement, we contracted with them to take the material as fill for this parking lot. We applied for a land disturbance permit that was held up first by U.S. Fish and Wildlife Service, but then by the State. Both required a study to determine if we were in a bat breeding area for an endangered species bat. The potential breeding area amounted to a dozen trees and some brush. The permit was delayed by 4 weeks until it was determined that our land was not in the bat breeding zone. Rather than creating a ripple effect by delaying the project, another contractor had to take some of the material. Another example, our air permit requires that we apply water to unpaved areas to control dust. The humidity in Missouri means that putting that much water down creates some sticky mess that clings to truck tires. This site is also close enough to an airport so the Federal Aviation Administration does not want us to impound water that might attract migratory birds that impact planes taking off and landing. One agency limits our availability of water, while another agency demands overuse of it. These are only a few examples of problems that small businesses like mine can face. We need Congress to step in and help us by pursuing meaningful regulatory reform that assists small businesses who only want to follow the rules and support our employees and our community. To lessen the regulatory burden, the Small Business Regulatory Flexibility Act should apply to proposed Fish and Wildlife Service rules and the Mine, Safety, and Health Administration rules, and Federal agencies should have to meet deadlines for permit approvals and to determine if a regulation applies to a site. I appreciate this opportunity to address how streamlining Federal permitting could help small businesses like mine. Thank you, Mr. Chairman. I will be happy to respond to any questions. Chairman CHABOT. Thank you very much. Mr. Hayden, you are recognized for 5 minutes. STATEMENT OF MARK HAYDEN Mr. HAYDEN. Good morning, Chairman Chabot, Ranking Member Velazquez, and members of the Committee. My name is Mark Hayden and I am the general manager of Missoula Electric Cooperative, MEC, in Missoula, Montana. MEC, through its 41 dedicated employees, serves the electric distribution needs of approximately 15,000 meters in Western Montana and Eastern Idaho. Our 2,000 miles of distribution line deliver energy to some of the most wild and scenic locations in the country, nearly 3,000 miles of which cross Federal land. We are proud members of the National Rural Electric Cooperative Association, the Montana Electric Cooperatives' Association, and the Northwest Public Power Association. For me, the timing of this hearing could not be more appropriate. Western Montana is on fire. Lives have been lost, property destroyed, hundreds evacuated. And while the fires burning today were all lightning sparked, they are a stark reminder to me of the unnecessary risk that long delays in Federal approval of permit applications and inadequate fuel reduction programs can bring to my co-op, our infrastructure, and our members. At MEC, we are constantly working to improve system reliability and reduce the risk of power line-caused wildfires. And vegetation management on Federal lands is a critical component of our program. Our dealings in this regard have generally been very positive, but this is not the situation in all rights-of-way managed by the Forest Service. Other cooperative representatives have testified before Congress of inconsistent land management policies, long delays in approvals and review times, and unnecessary liability resulting from these delays. In short, Federal reforms are needed to cut red tape and make it easier for electric co-ops to manage vegetation on federally managed rights-of-way. For that reason, we commend the House for recently passing H.R. 1873, the Electricity Reliability and Forest Protection Act, that received strong bipartisan support. This legislation would give electric utilities more consistent procedures and streamline processes in order to better manage utility rights-of-way. Unfortunately, H.R. 1873 will do little to address my concerns regarding the delays in the application for major operation and maintenance activities, especially when the National Environmental Policy Act, NEPA, process is required to amend these special use permits. For example, MEC made the decision to request burial of approximately 6.1 miles of overhead line on Forest Service land to improve reliability and reduce the risk of fire, and an application was submitted in December of 2013. Initial estimates suggested a 6-month review process; however, 18 months later, we were still awaiting approval. It was then that I was invited to provide testimony before the House Natural Resources Committee Subcommittee on Water, Power, and Oceans regarding these application delays. In preparation for that testimony, I placed one final call to the local Forest Service district ranger to express my concerns. The ranger told me that if I wanted to see things change I should take up my issue with Congress, at which point I told him I intended to do so the following week. Two days later, on the Saturday afternoon prior to the hearing, MEC received unofficial notice via email that we were authorized to begin construction. This project qualified for categorical exclusion, meaning neither an environmental assessment or environmental impact statement was required. I can only imagine the number of months or years project approval would have taken had those more in-depth investigations applied. Proper vegetation and fuels management on Federal land not only affect our utility operations, but also those of our customers. An executive at a family-owned lumber mill on our lines tells me he views the cumbersome and time-consuming process to fulfill NEPA requirements as the single most important barrier to implementing timely stewardship and restoration treatments on our national forests. Regulatory barriers to proper vegetation and fuels management threaten not only the operation of our utility and the livelihoods of our members, but also of those businesses we serve. Mr. Chairman, members of the Committee, for us the status quo is not an option. We need streamlined, expedited procedures that allow for timely implementation of projects to improve system reliability, reduce the risk of power line-caused wildfire, and protect the long-term health of our forests. Our small businesses and the overall economies of the communities we serve depend on it. The best way to accomplish that is to provide consistency, flexibility, and accountability in the Federal permitting and permit amendment processes, and we believe this can be accomplished without abrogating the intent of Federal regulations. I appreciate this Committee's work in examining how small businesses, such as Missoula Electric Cooperative, can benefit from regulatory reform and for holding this hearing today. Thank you for the honor of testifying before the Committee, and I will be pleased to answer any questions. Chairman CHABOT. Thank you. Thank you very much. Ms. Dorfman, you are recognized for 5 minutes. STATEMENT OF MARGOT DORFMAN Ms. DORFMAN. Chairman Chabot, Ranking Member Velazquez, members of the House Small Business Committee, I thank you for the opportunity to speak today. Federal regulations are created to implement our laws typically for the purpose of protecting public health and safety, and increasing or approximating competition where markets are inadequate. Sometimes the reverse is true as large businesses seek to use our laws and regulations for the purpose of gaining market advantage while putting public health and safety and smaller business competition at risk. Hurricane Harvey has demonstrated the importance of human safety and how closely linked our safety is to appropriate, well-enforced regulations, and we have seen the importance of financial regulations and oversight as our economy nearly fell apart due to the lack of government oversight and accountability of our financial institutions. We have seen the value of the Consumer Financial Protection Bureau to small businesses seeking access to capital and watching out for predatory and discriminatory lending practices, and history has also shown us that the rising concentration and anti-competitive behavior of some large corporations has led to the decline in the amount of new businesses entering the market. The U.S. Women's Chamber of Commerce recognizes and supports positive and responsible streamlining of Federal permits as a way to expedite economic growth. However, our view is twofold. One, the primary driver of problematic permitting and regulatory processes is the poor manner in which the government enacts and manages regulatory creation and implementation including permitting. The annihilation of regulations which protect public health and safety and increase competition would only serve to put our lives and economy at risk. Two, for Congress to fuel greater small business inactivity, you need to listen to small business owners who will tell you to expedite economic growth through small business success, you must improve the function of government, remove economic uncertainty, drive down health insurance and healthcare costs, drive up consumer spending, and simplify our tax system. We agree that permitting and other regulatory hurdles could be greatly improved and streamlined. It should be much easier for small businesses to know what regulations impact their businesses and what permits are necessary. Completing required filings and permits should be made easier, cheaper, and be concluded more quickly. The National Environmental Policy Act, the FASA Act, and Title 41 created the Federal Permitting Improvement Steering Council, but the Council does not focus on the needs of small business. The Small Business Administration is not a member of this council and the FAS 41 2016 Annual Report to Congress does not mention any consideration of small business and their activities or concerns. This is one opportunity of many governmentwide to make small business inclusion part of the fabric of government. If we are to focus on regulations, permitting, streamlining, and assisting small businesses to compete, grow, and help fuel our economy, the U.S. Women's Chamber of Commerce recommends the following. One, give small business a seat at the table governmentwide. Fund the Small Business Administration and empower and compel SBA to serve as a real champion for small businesses, rather than an agency that has been systematically underfunded for years, and then hold SBA leadership accountable for producing results. Two, add small business assistance and fast-tracking of permits so as to lighten the financial burden and improve small business certainty and planning. Especially focus on fast- tracking the construction or expansion of manufacturing facilities. Three, reduce the fees or remove the fees for small business permitting on projects. Four, foster small business-large business partnerships, which include the large business partner securing required permits and managing regulatory requirements. Five, President Trump's recent budget proposal would defund manufacturing extension partnership, which provides tremendous assistance to small manufacturers. Instead, funding should be increased and include strong assistance in permitting and other regulatory requirements. Six, champion a governmentwide initiative to require all regulations be presented in plain English. All permitting processes be modernized, streamlined, and transparently tracked for timelines. All regulations be reviewed periodically so as to ensure rules remain relevant and are carefully targeted to avoid unintended consequences. And seven, stop agency staff overreach as laws passed by Congress are either not implemented or altered through weak, regulatory implementation so as to render them useless. Additionally, the U.S. Women's Chamber of Commerce strongly encourages the House Small Business Committee to focus on what really counts for small businesses, a well-run government, removing economic uncertainty, driving down health insurance and healthcare costs, driving up consumer spending, and simplifying our tax system. Thank you. Chairman CHABOT. Thank you very much. And I will now recognize myself for 5 minutes. Mr. Howard, I will begin with you. As you have mentioned, small businesses face staffing and budget constraints that make it especially hard for them to cope with unexpected delays. What is the average amount of time it takes for an infrastructure project nowadays to obtain Federal permits and what are the costs associated with delays in permitting? Mr. HOWARD. Well, it depends on the nature of the project. Large projects take years, between often 5 to 10 years, which has the effect of more than doubling the cost to taxpayers of the infrastructure. Lengthy environmental review ironically turns out to be usually very harmful to the environment because it prolongs bottlenecks of, you know, polluting bottlenecks and antiquated power lines that waste electricity, you know, for example. And just some of the stories we just heard are an indication of a regulatory system that is not what Congress intended when it passed NEPA. The NEPA guidance said environmental reviews should--even for the most complex project should not be more than 300 pages long. You could not find one that is that short. Raising the Bayonne Bridge, 20,000 pages for a project with almost no environmental impact. So very, very painfully expensive. And by the way, there are a lot of small businesses who are subcontractors on the big projects. So they are delayed 5 years, too, you know, the aggregate supplier and such. Chairman CHABOT. I have got limited time so let me move on. Mr. Griesemer, how do permitting and compliance costs affect your company's ability to bid on new projects? Mr. GRIESEMER. Well, compliance becomes a part of--almost all of our senior managers have some sort of compliance component to what they do. It is across the board, whether it is human resources, whether it is environmental, whether it is safety, it impacts everybody's job. And we are a small company that is devoted to compliance. That is our culture. We want to comply with all the regulations. The difficulty is these overlapping regulations, and sometimes not even knowing that a regulation is going to--there are new ones popping up all the time. The example I gave on the road project on the endangered bat was not a problem the last time we had a land disturbance permit, but the ripple effect is--this was a project that was trying to be accelerated. All the other agencies, governmental, regulatory agencies were getting out of the way and trying to make this happen as quickly as possible and you have got one agency that is just not on board with that. Chairman CHABOT. Okay. Thank you. Mr. Hayden, how does uncertainty in permitting and regulatory costs affect the prices that your customers would have to pay for electricity, for example? Mr. HAYDEN. Well, of course, you know, one cost that I cannot measure is this added risk, so I would start with that. You know, we are very concerned about the added risk of fire, wildfire caused by power lines down. And I mentioned that many times because that is foremost. But if we talk about material costs, scheduling of our people, it is hard to invest in a piece of equipment or materials for a job if we have an uncertainty whether the project is either going to get approved or be delayed for multiple years. So that is a direct cost to our members. Staff time spent working on these is incredible. It takes an inordinate amount of hours for our staff to deal with the back and forth that goes on when permitting. And then it is service reliability. If we cannot keep the lights on, that is a direct cost to our members. It is a direct cost to our company. Chairman CHABOT. Thank you very much. And finally, Ms. Dorfman, I am always amazed at the number of warnings I get when I buy something. You open it up, warned not to eat something, like I am going to have this desire that I have got to eat this thing, and probably it was some, you know, I assume a child probably ate something they were not supposed to and so a lawyer sued somebody and this is what we all have to put up with. Now, the child probably could not read the warning about not eating something on this, but nonetheless, I am just wondering, do you think we ever go to absurd lengths on these types of things, you know, protecting us from ourselves? Do we ever go overboard or do you think all these regulations are worthwhile? Ms. DORFMAN. As I mentioned, I do believe that we have to have some common sense to this. But the regulations have been put in place for public safety and, in some instances, to ensure that there is competitiveness. So I think it is not a chop everything off and you have to go in with a fine-toothed comb and really identify, or the tweezers, to make sure that what you are removing is common sense. And I do not think there is like a blanket statement for that. Chairman CHABOT. So we should be reasonable, use common sense in these things in general? Ms. DORFMAN. Yes. Chairman CHABOT. Thank you very much. I appreciate it. My time is expired. The ranking member is recognized for 5 minutes. Ms. VELAZQUEZ. Thank you, Mr. Chairman. So I know that we always say that regulations could hinder economic growth and it could impose a burden, an economic burden to small businesses compared to larger companies, and, therefore, putting them at a disadvantage. But the fact of the matter is that we here in Congress, we pass legislation, and as a result of the legislation that we pass and enact into law, regulations are called for by certain agencies to promulgate. So my question is why do you think it takes 10 years for an agency to promulgate regulation? Mr. Howard? Mr. HOWARD. Part of the problem is how we regulate. We changed the way we regulated after the 1960s to avoid bad judgment by officials. So we got this idea. There were never 1,000-page rulebooks, you know, with the 1950s to 1960s. The Interstate Highway Act was passed. We built 40,000 roads in little over a decade. It would not take that long if we did not try to create manuals that contemplate every single eventuality. The 950-page Volcker Rule could be summarized in one paragraph, no unreasonable proprietary trading by banks. So it takes years for people to argue over the 1,000 pages. Ms. VELAZQUEZ. We've held hearings here (more than one) on the IRS, and we had a panel of small businesses, but we did not have the IRS participating in that hearing. And for the most part, everyone that was sitting at that table said the important role that the IRS plays and that it's important for them to have access to a live person, but they cannot. Well, the disinvestment that has taken place in terms of certain agencies that we vilify, such as EPA, OSHA, IRS, will have a direct impact on slowing down the process for these agencies to do their job. So they are understaffed. They do not have the kind of manpower they need in order to expedite the processes. So it is a very difficult balance. We need to strike a balance. Right? We need to apply common sense and to help--to get these agencies to do what is right, but then, on the other hand, we expect for them to do their job without the type of resources that are needed. Budget cuts have consequences and sometimes the people that are intended to be helped, we are not helping them. Mr. HOWARD. Can I just say one thing? Ms. VELAZQUEZ. Yes. Mr. HOWARD. We also took away their authority. The chairman of CEQ, the Council of Environmental Quality, does not have the authority to say, oh, you are just burying the power line and this is going to be better for fires? That is a categorical exclusion. Go for it. Instead, he had to wait 18 months while it sort of circulated through lots of employees. So creating clear lines of authority to make decisions solves many of the problems that have been described today. Ms. VELAZQUEZ. So when agencies publish a proposed rule, the Reg Flex Act requires agencies to describe and estimate the number of small entities to which the proposed rule applies. Agencies often underestimate the number of small businesses impacted by proposed regulation or simply say that data is unavailable. Is it your experience, and this question is for anyone on the panel, is it your experience that the burden is on small businesses to demonstrate that they will be affected? And what is the best way to change this so that small businesses do not have to sue federal agencies in order for their voice to be heard? Mr. Hayden? Mr. HAYDEN. You know, I do not know that the burden has been placed on us to defend that, but I would look to the Regulatory Flexibility Act to say, hey, these indirect costs, they need to be measured in addition to the direct costs. Small business needs a voice in the process of developing regulation, you know, through that whole regulatory process. They need to show math. They need to show their math on how we are not affected. I guess that is what I would add to that is that I think that would really move the ball in terms of our having a voice in how those regulations are developed. Chairman CHABOT. The gentlelady's time is expired. The gentleman from Missouri. Thank you. The gentleman from Missouri, Mr. Luetkemeyer, who is the vice chairman of this Committee, is recognized for 5 minutes. Mr. LUETKEMEYER. Thank you, Mr. Chairman. And welcome to my compatriot from Missouri here, Mr. Griesemer. Thank you for your attendance today. Let me start with you. I appreciate your story with regards to the--I think it is the Indiana long-eared black bat, I believe, is that what it is? Mr. GRIESEMER. There is also an Ozarks long-eared bat. Mr. LUETKEMEYER. Oh, okay. I know we have got a lot of them. I had a situation in my district where we were doing the same thing, had a community that had a project like this and we came to realize that there has never even been a sighting in our State of this bat, yet that may be hibernating in these trees, and as a result it caused problems. Could you elaborate just a little bit, talk about your experience and then the cost to comply and the cost of the delay that it cost you? Mr. GRIESEMER. Sure. On that particular example, it seemed to us a simple matter because there are apparently some maps that exist within U.S. Fish and Wildlife that show that we are not in a breeding zone. The issue was that they breed in the trees. We are an underground mining operation. I kind of consider that we are actually creating bat habitat, but that is not the issue in front of us. But it would have been a fairly simple matter it seems to me to just look at the map and say, no, you are not in the breeding zone it is pretty clear. What the expectation is, because of funding and staffing and so forth, is that the expectation is it takes 4 weeks for the review. And this was a U.S. 65 project; that is the main artery between Springfield and Branson, Missouri. That is a tourist destination, and this is our six-lane artery that was being shut down. So it was really an accelerated project. The Highway Department had incentives in place to make sure this project was done in time, and as a subcontractor, echoing what Mr. Howard said, we were just a cog in the wheel, but potentially a vital cog that could have delayed this project significantly. Mr. LUETKEMEYER. How many people do you have in your business that are dedicated just to working on compliance issues? Mr. GRIESEMER. As I said in my testimony, every one of our officers has some compliance component in their job description. Probably our engineering and environmental, we are a small company so they have multiple duties. Our engineering and compliance person that does most of our regulatory and environmental permits and safety permits, half of his time, probably 30 to 40 percent of the human resources time, is devoted to that. A good percentage of my time as CEO is devoted. We estimate a couple hundred thousand dollars' worth of labor costs, management costs per year just for our company, approximately 5 percent of our expenses a year are directly related to regulatory. Mr. LUETKEMEYER. Thank you. Mr. Hayden, you were talking with regards to the hoops you were having to jump through with regard to doing work on Federal land, is that right? Mr. HAYDEN. That is correct. Mr. LUETKEMEYER. Do you have to do--do you have to jump through more hoops on Federal land than you do if you put a utility line over private land? Mr. HAYDEN. We do. Yes. Mr. LUETKEMEYER. Really? Mr. HAYDEN. In terms of the NEPA permitting process would require. We can bury, you know, generally bury line on private land much more easily than Federal. Mr. LUETKEMEYER. So you can do the same thing you are doing on private land, yet on Federal land they make you jump through a whole bunch of extra hoops and costs? Mr. HAYDEN. Costs. Costs. Cost recovery agreements. Yes. Mr. LUETKEMEYER. How many people do you have in your company dedicated just to compliance, or percentage of people? Mr. HAYDEN. Oh, percentage would be, you know, I have an Engineering Department, who, we are a small company so I would say that, you know, 15 to 20 percent of our engineering managers' time would be devoted to that. But we outsource a lot of that. When it comes to doing our long-range planning, we outsource most of that environmental analysis work. Mr. LUETKEMEYER. Okay, thank you. Also, Mr. Hayden, I know you mentioned the Small Business Regulatory Flexibility Improvements Act. It is the chairman's bill that we have passed here in the House. It is sitting in the Senate. And much to my consternation, it passed out of the Senate the other day, but it did on a party line vote and one of the senators, which is from Missouri, voted against it, which is ridiculous because all we are trying to do is help the small businesses. Would you elaborate a little bit on the effect of that bill on your business, how it would improve your ability to do business? Mr. HAYDEN. Well, I think it is a broad effect on any regulation, not just our business, having that input, having a panel sit down. If you think about a classic example would be the Waters of the United States bill that has now been pulled back, but there was no input from small business on the effect that that was going to have an electric utility, like Missoula Electric Cooperative. Electric co-ops cover about, you know, 75 percent of the Nation I think is the amount of landmass we cover. Think of the impact of that and we did not even have a seat at the table. Mr. LUETKEMEYER. I appreciate that comment. And my time is out here, but I want to make one comment here very quickly, because you made the comment in your testimony with regards to having a voice in the determination of the regulation. It is vitally important, I think, and you just made the point again, to be able to have small businesses at the table, people who are going to be directly affected by these regulations, to at least have an input or say in how these regulations are developed. So thank you so much for your story and your time today. Chairman CHABOT. The gentleman's time has expired. The gentleman from Pennsylvania, Mr. Evans, who is the ranking member of the Subcommittee on Economic Growth, Tax, and Capital Access, is recognized for 5 minutes. Mr. EVANS. Thank you, Mr. Chairman. Mr. Howard, I am going to probe a little bit on the part when you talk about a new approach. And you say, you talk about a new regulatory framework is needed, and the sense I get from you in saying that is people do not want the other extreme of total deregulation. That is kind of what you are saying. Now, I know we are dealing strictly with Federal jurisdiction here, but many businesses are worried about duplicate regulation, both at the Federal level and the State and the local levels. Can you discuss the extent to which firms face such duplicate permits? Mr. HOWARD. Well, I can give a few examples. The example that I studied and issued reports on the last couple of years has been infrastructure. And infrastructure projects typically go through multiple layers of review. The new power line to connect wind farms in Wyoming to the Pacific Northwest, for example, had to get permits from each county in Idaho over which the line was constructed, which delayed the project and added to the cost of it and potentially, although it rarely works out this way, could have been a veto. One of the reasons the United States has almost no private investment in infrastructure compared to Europe is because of what Mr. Griesemer was saying, which is the uncertainty of when the permit is going to be given. So nobody wants to invest private money if they do not know if they are getting an answer in a year or two. So that is one example that I happen to have studied with infrastructure, but almost every area of endeavor that is regulated has permits required on multiple levels of government. Mr. EVANS. And you sort of think, what I heard you say, and I do not want to put words in your mouth, you said something about having another commission. I heard you say you have another commission. Mr. HOWARD. Yeah, I am sorry. I did say that. Yes. Mr. EVANS. You did say, I mean, I thought I heard you say send another commission, so I am thinking in my head, educate me on what you think by setting up another commission would accomplish the objective. I am just---- Mr. HOWARD. Well, personally, I think that small business should have a seat at the table. Mr. EVANS. Right. Mr. HOWARD. But I do not think it is possible to reconcile the regulatory objectives with a large oil and gas company, with the regulatory objectives of a company with 20 or 50 employees. I think those require different regulatory regimes, not a ``one size fits all.'' Mr. EVANS. Mm-hmm. Mr. HOWARD. And so I believe there should be pilot projects to test dramatically simplified approaches to meeting environmental goals and worker safety goals and other goals. I am not for getting rid of those goals, but applying those in a different way to small business because I do not think we can ever reconcile the need to regulate Shell Oil or BP in one way and regulate a small business in the same way. I just do not think those two things are compatible. Mr. EVANS. Okay. Ms. Dorfman, a poll conducted by the American Sustainable Business Council found that the lack of demand was the biggest problem facing small businesses. Given this outcome, should we be focusing our attention on ensuring small businesses have customers reforming the Tax Code? And which provisions? Chairman CHABOT. If you could turn the mic on there. Thank you. Ms. DORFMAN. Sorry. We find that the tax regulations are overly complex and they are weighted to the wealthy, but also to big business. And so we are not getting the same benefits as you were mentioning. You know, you cannot compare BP to a 50- person company, the same thing. We are not receiving the same benefits so there are challenges there. And then additionally, where the money comes from is really looking at the consumer spending. And so we need the money into the pockets of the consumer to drive the consumer spending to grow small businesses. Mr. EVANS. Real quick. Do you have any suggestions and thoughts around that since tax reform is a discussion we are generally talking about? Ms. DORFMAN. We need to, when looking at that, ensure that the consumer, which is generally the nonwealthy, the non-1 percent, has better tax benefits where they have more money coming in to them that they can go ahead and use that money as the extra money to spend on consumables. Mr. EVANS. Thank you, Mr. Chairman. I yield back the balance of my time. Chairman CHABOT. Thank you. The gentleman yields back. The gentlelady from American Samoa, Ms. Radewagen, who is the chairman of the Subcommittee on Health and Technology, you are recognized for 5 minutes. Mrs. RADEWAGEN. Talofa. Good morning. Thank you, Mr. Chairman and Ranking Member Velazquez, for holding this hearing. I also want to thank all of today's witnesses for appearing today. It is an important hearing. We have been working on this exact issue in the Natural Resources Committee on which I am also a member. It is important that we also examine how burdensome regulations harm America's small businesses. It is easy for multinational corporations to hire an army of lawyers to handle regulations. It is here where we need to advocate for small businesses. Mr. Howard, my question is for you. Regulatory overlap between agencies can cause confusion for businesses and complicates the permitting process. How do you think agencies should decide which agency is the lead agency with overriding authority when multiple agencies disagree? Mr. HOWARD. The Balkanization of authority within the Federal Government and among the different levels of government makes trying to get permits, and indeed, trying to comply with regulation, a form of chaos. It is anarchy. There are no clear lines of authority to resolve disagreements among different agencies. The laws are so dense that the President of the United States does not have the authority right now to resolve these disagreements. In every area of regulation there should be an overarching authority through the executive branch to resolve disagreements. The FAST Act set up a 16-agency steering council to resolve disagreements. I asked when they were doing it how long it would take to schedule the meeting and what happened if people did not agree. There is no clear line of authority up to the president to resolve that disagreement. Common Good has proposed three pages of amendments to the FAST Act, which among other things would give the chairman of the Council of Environmental Quality the authority to decide all issues about scope and adequacy of environmental review and would give the president, or whoever he designates, the authority to resolve those disagreements. Without that authority, what you get is bickering between Fish and Wildlife and the Corps of Engineers that can take years. Mrs. RADEWAGEN. Can you explain how a one-stop shop Federal permitting system would work? Are there similar systems that can be used as a model? Mr. HOWARD. The one-stop shop has applied very well in other countries. Germany, for example, designates one agency, whether it is a State or a Federal agency there depending on the project to give the permit. They still have to comply with law, but they have ultimate authority to make the decision. Germany, which is thought to be a greener country than the United States, issues permits and complex projects within 1 to 2 years. A one-stop shop is simply allocating authority to an agency or to the White House and with whatever checks and balances Congress chooses to put in it, oversight by someone else, and everyone still has to comply with law, so there are judges and courts in the background. But today, the authority is even. Every agency is equal to every other agency. They are each complying with their own regulations. They each have their own goals. And that is why it takes months and years to get really obvious approvals often. Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back. Chairman CHABOT. Thank you. The gentlelady yields back. The gentlelady from North Carolina, Ms. Adams, who is the ranking member of the Subcommittee on Investigations, Oversight, and Regulations, you are recognized for 5 minutes. Ms. ADAMS. Thank you, Mr. Chairman. And thank you to our Ranking Member Velazquez as well. And thank you all for your testimony. This question is to the entire panel. The National Federation of Independent Business does a regular survey of small businesses, but I find it particularly interesting that their server results show that complaints about regulations are relatively consistent through economic booms and conservative presidents that prioritized deregulation. For instance, the shared concern about regulation under President Obama was about 13.9 percent. It is not substantially higher than under George W. Bush, which was 9.9 percent and 11.0 percent; or Ronald Reagan's second term, which was about 12.8. And one would think that regulatory concerns would have significantly decreased under Reagan and Bush since neither of those were known for being fans of big government. So my question to all of you is why are regulatory concerns consistently cited? Ms. DORFMAN. I believe that there are challenges with regulatory concerns. However, the issue is that because they are not being addressed, getting through the permitting or those sorts of things because there is not funding for the Federal agencies to make sure things are expedited, that those are what would create it. As you said, it was kind of inconsequential from one party to the other, but what I think the overarching is, is that there is always a lack of speed and expedited service. Ms. ADAMS. Okay. Mr. Hayden? Mr. HAYDEN. Congresswoman, I guess an example I would give is just a frontline practical example. Ranking Member Velazquez mentioned common sense. And in our example, we were trying to move a power line outside of the forest and bring it out to road right-of-way. In that first example I gave in my testimony, the area under analysis had already had a telecommunications line buried in that. So rather than doing this full-blown analysis, would it not make sense to be able to go to a file and look at the analysis that had been done previously? We have since submitted a second application and that application seeks to bury a power line in a highway road right- of-way. That ground has been disturbed by bulldozers when the road was built, and it just does not make sense that this thorough analysis has been done. And I will give one final example. We got a bill for $8,000 to do that first analysis in the example I gave. That indicated that 10 people had spent an average of 2.3 days on the project. So 18 months, 2.3 days, even if that was sequential, it should have been much shorter. Mr. HOWARD. Under each of the Republican presidents you mentioned, and I was involved in advising all of the last four presidents, including starting with Clinton and Gore in reinventing government, the basic approach was to prune the jungle. Let's go in and get rid of stupid rules. But what they did not do is create the authority mechanisms that allowed Mr. Hayden to call somebody up and say this ground has already been disturbed. It makes no sense whatsoever to wait a long time. Can I please have permission to bury this line? No one in the government thinks they have that authority. Ms. ADAMS. Okay. Mr. HOWARD. And so until you actually shift from a command and control, what do the rules require, to give somebody the job of actually asking what is common sense here and being transparent about it, you know, saying here is why we made the decision, American voters will increasingly be frustrated at Big Brother. They are not frustrated because we are protecting clean water or protecting the forest; they are frustrated because they cannot get an answer and it is taking them months to do something that ought to take a day. Ms. ADAMS. Okay. Mr. Griesemer, would you like to comment? Mr. GRIESEMER. Yeah, I would just echo that I have not, regardless of which administration we have been under, there has not really been a reduction that I am aware of of any other volume of regulations. The Code of Federal Regulations is just a massive thing, regardless of whether you are talking environmental, safety and health or what area. It seems to be almost immune from any kind of political influence as far as deregulation. They do cut some things and try to streamline, but we are not seeing the effect at the small business level. Ms. ADAMS. All right. Thank you. Thank you very much. I yield back. Chairman CHABOT. Thank you. The gentlelady yields back. Mr. Blum, before we get to you, the chair would like to make a suggestion. We have four more questioners and we are expecting votes at any minute. We are actually over now. Rather than have to come back or cutting off--there it is right now--I was going to suggest that we go to about 3 minutes each if that would be okay. Mr. Blum, you are recognized for 5 minutes. Thank you. Mr. BLUM. Thank you, Chairman. Thank you to the panelists for being here today. Mr. Howard, you said you were involved in the Clinton-Gore Reinvent Government effort, is that correct? Mr. HOWARD. Yes, sir. Mr. BLUM. Is this the government you all invented? Mr. HOWARD. No, it actually got invented before. They just did not quite succeed in reinventing it. Mr. BLUM. The Competitive Enterprise Institute estimates the cost to U.S. businesses for regulations is approach $2,000 billion a year, $2 trillion a year, and most of that is not legislated. Most of that is developed by unelected, career bureaucrats without a vote being held in the United States Congress. Those bureaucrats report to not one voter. This is why I support adamantly the REINS Act which has passed the House of Representatives, but is stilled, like a lot of legislation, in the U.S. Senate. I would like to hear anyone from the panel, particularly Mr. Howard, on how do we solve this dilemma? I mean, these are unelected bureaucrats forcing trillions of dollars of cost onto United States businesses. What do we need to do as a Congress? I think the REINS Act is a great step in the right direction. I would love to hear your thoughts. Mr. HOWARD. First, you are correct. I agree completely that Congress should have ultimate responsibility for regulations that are just delegated lawmaking. So Congress should take responsibility for the success of regulations, as well as for statutes. Now, just to push back a little, I do not remember the last time Congress had hearings to go through the statutes that were passed that authorized a lot of these regulations to say should we clean up those statutes? So the REINS Act, it seems to me if you are going to take responsibility, it should be for the statutes as well as for the regulations. The President used to have authority over public employees. The Civil Service System--I have written extensively, I will talk to you about it offline--needs to be overhauled both to encourage better workers and to make people accountable when they do not have common sense, when they use bad judgment, when they are mean-spirited, and that would go a long way toward making the unaccountable regulators, if you will, at least somewhat accountable. Mr. BLUM. Thank you. I will yield back my time, Mr. Chairman. Chairman CHABOT. Thank you very much. The gentleman yields back. The gentleman from South Carolina, Mr. Norman, is recognized for 3 minutes. Mr. NORMAN. Thank you, Mr. Chairman. I will be brief because we have to go vote. But let me just say I have been on both sides. I am a developer. I have been held hostage by the one-eyed bat, by the Hilltop Wood Splitter. I have been in the political arena. Let me just suggest, when we tried to get these businesses to name the specifics of the rules that are costing them money that are redundant, they were scared to do it because their philosophy was it is going to get worse. I do not want it to take longer. So I would suggest to get involved more because you are talking, and I have seen from the political arena, you are talking either a lot of people, business people cannot get involved because you do not have the time, but you need to get your people, Mr. Griesemer, your NSSGA, to really get involved and get with us because I can tell you, the people coming to my office wanting more regulations on a State level and a national level far exceed the businesses that come to say stop it. But we do not know what we do not know. And see, you are talking to a lot of people who are not in the business arena. I am. So get active. Let people who are business minded. And if you do not--I have heard over and over, I do not have time. I do not have time. Well, it is costing you a lot of money as I have heard and it is redundant. So I put the burden back on you all to get active. To get from a local level on up to my level, get active. And a lot of times the chamber is not going to get involved because they are a lot of bureaucrats who are not interested in rocking the boat. It is time to rock the boat, and we have a president now who is willing to do that. I yield back. Chairman CHABOT. Thank you very much. The gentleman yields back. And the gentlelady from Puerto Rico--and I would, before recognizing her, I would just note that the chair early on expressed the Committee's sympathy and concern both for the ranking member and yourself for your constituents and family members who may be adversely impacted as we speak by Hurricane Irma. And the gentlelady is recognized for 3 minutes. Ms. GONZALEZ-COLON. I want to thank you, Chairman Chabot, for your willingness to cooperate with the situation, and the ranking member, for their concerns about the Hurricane Irma. It is the worst hurricane ever that is hitting the Caribbean, the U.S. Virgin Islands, and Puerto Rico. We are talking about 185 miles per hour. So never before have we had this kind of impact. And this issue that we are discussing today and the votes that are taking place at the same time are issues that are very important for the island in terms of how to improve our economy. Because of the time I will make just two questions. One of them is that the President on January 24th released a memorandum titled ``Streaming, Permitting, and Reducing Regulatory Burdens for Domestic Manufacturing.'' In this memorandum the executive departments and agencies are directed to expedite reviews and approvals for construction and manufacturing facilities while also reducing regulatory burdens affecting domestic manufacturing. In that memo there is no specific reference to the territories or even Puerto Rico. Do you understand that the territories and Puerto Rico should be included in the definition of that kind of regulation? That is an open question for the panel. You need to say yes. Mr. GRIESEMER. Yes. Mr. HOWARD. Yes. Mr. HAYDEN. Yes. Ms. GONZALEZ-COLON. Thank you for voluntarily saying that. The second question will be regarding Mr. Howard. As you know, the National Environmental Policy Act requires that all major projects with Federal nexus to submit a comprehensive review of the potential environmental impacts. Currently, the Government Accountability Office reported that the administration did not know how much time it spent on environmental reviews, but they estimate that time in 4.6 years took place in terms of the span of completing the average environmental impact statement. In your opinion, how could that number be more efficiently worked if we got a one-stop Federal permitting system expediting the process? Mr. HOWARD. Without question, the missing link in shortening and focusing environmental review is that there is no official, no environmental official, who has the authority to make the judgment, what is important in this project. Recently, there was a tunnel to be built under the Hudson River, really important tunnel that needs to get built immediately because the two existing tubes were damaged by Super Storm Sandy and they can collapse at any moment and when they do, there is gridlock for the entire metro area of New York. They were being held up by environmental review for a tunnel. It did not matter how they built the tunnel. It would be better for the environment. But no one had the authority to say get moving. You need to have that authority somewhere. Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. I yield back. Chairman CHABOT. Thank you very much. And the gentlelady yields back. We want to thank the panel very much. I am going to withhold my closing statement, which was profound and well written, et cetera, and thank you. You all have shed a lot of light on what we need to do to have a much better permitting process and how it adversely, especially, affects small businesses. I would ask unanimous consent that 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. Got to go vote. [Whereupon, at 12:16 p.m., the Committee was adjourned.] A P P E N D I X [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman Chabot, Ranking Member Velazquez, and Members of the Committee: Thank you for inviting me to testify before the Committee today about streamlining federal permitting to reduce the regulatory burden on small businesses. Small businesses play an indispensable role in American culture and commerce but are burdened by the dense regulations that have built up over the past five decades. They do not have the time and resources to understand, much less comply with, the many requirements. Getting a permit to start a business, or to build anything, requires going to multiple agencies, often at federal, state, and local levels. These agencies rarely coordinate their requirements. Often their demands are duplicative, and sometimes conflict with one another. Nor do they honor the practical implications of the regulations--not the costs, time constraints, or diversion of energy. The regulatory burden on small business extends far beyond requirements to apply for specific permits: Regulatory compliance itself is a form of mandatory permitting because a small-business owner cannot do business without it. As I will discuss, Congress should advanced its interest in promoting small business by examining the permitting and regulatory burdens imposed by state and local law as well as federal law. A new regulatory framework is needed to meet public regulatory goals in a way that is practical for people running small businesses. Small businesses need a separate, simpler regulatory system, focused on meeting regulatory goals, not rote compliance with detailed specifications and prescriptions. Government should make permits and licenses accessible to real people with a ``one-stop shop.'' I propose principles to frame a regulatory overhaul and specific initiatives to set that overhaul in motion. Small Business is the Driver of American Prosperity Small businesses are critical, first, because they are the largest part of the U.S. economy. Companies that have fewer than 500 employees are collectively responsible for almost half of the total GDP and more than half of all sales in the United States. Small businesses are also the incubator of big businesses-- a kind of wetlands which spawns innovation. According to the Kauffman Foundation, the net increase in jobs since 1980 is entirely attributable to newly-started businesses. Small businesses also provide an open door by which Americans can achieve self-determination and ownership, which is important far beyond its economic consequences. America is the land of opportunity in large part because of its receptivity to individual initiative. But the pace of growth has slowed: 11 percent fewer businesses opened their doors in 2013 than in 1980. The disjointed regulatory framework is a powerful disincentive to entrepreneurship. According to 2017 World Bank rankings, the U.S. ranks 51st in the world in ease of starting a business. By many accounts, regulatory compliance costs are overwhelming for small businesses. The U.S. Small Business Administration found that companies with fewer than 20 employees faced regulatory costs per employee that were 36 percent greater than the cost for larger firms. Studies suggest that most of these costs are attributable to federal regulations: 58 percent of small-business owners responded in a 2017 survey that federal requirements are the most burdensome for their business. Nearly half of small businesses report spending more than $10,000 annually on federal companies, with 11 percent spending more than $40,000 in total per year. The amount spent on compliance does not include the diversion of time of small-business owners and managers towards numerous compliance-related tasks. The paperwork can take one or two hours per week, but the opportunity costs include the constant distraction of worrying about what might be required. 42 percent of small-business owners say that they have delayed or halted business investments due to the uncertainty about existing requirements, while 39 percent did so because of the uncertainty related to a new, pending regulation. Inc. Magazine reports that 545 federal regulations affecting small business were issued in 2015 alone. America's Flawed Approach to Regulation The onerous burden of regulation is typically met with calls for de-regulation. When push comes to shove, however, most Americans want government oversight over clean water, safe workplaces, and caring nursing homes. The core flaw of American regulation, in my view, is that it leaves no room for practicality: Bureaucratic detail suffocates everyone, including the regulator. There's no room for balancing different considerations, or, indeed, even for a discussion on what's sensible. Public goals are irrelevant; what matters is compliance with thousands of rules--an impossible task even for large businesses. Getting permits is the threshold requirement for doing business or constructing infrastructure or buildings. Over the past 50 years, myriad licenses have been required--most for good reasons, such as compliance with fire codes or environmental goals, and some for anti-competitive reasons, such as onerous requirements to get a license to be a hairdresser. In some states, a barber or cosmetologist needs ten times as much training as an emergency medical technician. Government rarely coordinates all these permitting requirements. The budding entrepreneur is expected to run a gauntlet of different agencies without so much as a roadmap of where to go. Mayor Michael Bloomberg found that opening a restaurant in New York City required permits from as many as 11 agencies. A prospective lessor in Washington, DC must file five forms with three different agencies to obtain permits to rent out a condominium. Sometimes the requirements are duplicative: Getting certified as a home care worker in New Jersey, for example, requires the same background checks and fingerprinting by two different agencies, adding unnecessary costs and delay before being able to work. Disjointed permitting and regulation impose painful and unnecessary costs on all Americans. The inability to rebuild America's decrepit infrastructure is a case in point. The accretion of well-meaning review and permitting requirements from all levels of government results in delays of upwards of a decade on major projects. In my 2015 report, ``Two Years, Not Ten Years,'' I found that a six-year delay more than doubles the cost of projects. I also discovered that lengthy environmental review is often harmful to the environment, because it prolongs fixing traffic bottlenecks and inefficient power grids. These delays hurt small construction companies by deterring valuable projects and hurt small business generally by imposing unnecessary blackouts, traffic jams, shipping costs, and other effects of outmoded infrastructure. The delays in infrastructure permitting are generally not the result of ``over-regulation''--greener countries such as Germany give permits in one or two years. The delays are caused by the balkanization of approvals among multiple agencies at all levels of government. A project to raise the roadway of the Bayonne Bridge, for example, required 47 permits from 19 different agencies. The project had virtually no environmental impact, because it used existing bridge foundations, but still required an environmental assessment of 20,000 pages, including appendices. This is not good government; it is regulation devouring the public good instead of enhancing it. Over the past 50 years, American regulation has grown into a dense jungle of uncoordinated requirements. It fails not because the goals of, say, environmental review or worker safety, are invalid, but because it tries to meet those goals with thousands of detailed dictates emanating from scores of different regulatory agencies. It suffers the mindlessness of central planning--not allowing people to adapt to practical problems on the ground. But, worse, there is not one central planner, but dozens who often make inconsistent demands. Worse still, all those central planners are dead; they wrote the laws and regulations decades ago, and small business must comply even if the rules make no sense anymore. Studies suggest, for example, that worker safety rules often have had little impact on worker safety. This doesn't mean the federal government should not oversee worker safety. It means it should replace the micro-management model with a goal-oriented oversight that focuses on results. It truly doesn't matter if ``material safety data sheets'' for common workplace products--say, soap and cleaning products--are kept in plain view. How do we expect someone running a small business to keep straight that and thousands of other requirements? A fundamental flaw in America's regulatory structure is that no one is in charge. There's no one with the responsibility to ask, ``What's the right thing to do here?'' No one in government has the job of balancing the demands of different agencies. No one has the job of giving a small business a permit. Instead, American regulation is a dense legal jungle, impenetrable to all except large companies with legal staffs of hundreds of lawyers. Making Regulation Practical for Small Business What's needed is a broad overhaul--replacing command-and- control dictates with radically simpler regulatory goals, with clear lines of authority so that citizens do not get whipsawed by conflicting or duplicative requirements. For small business, the threshold question is the practical ability of a real person to deal with myriad public goals. Government must respect the limited time and resources of Americans who have the spirit and resourcefulness to start businesses that keep America going. It must make clear its goals and allow small business owners to use their common sense in achieving them. The result will be greater compliance with crucial societal norms. To succeed, regulation must also be understandable. Clear and concise principles and expectations must replace dense instruction manuals. If the language is too complex and voluminous, it undercuts compliance rather than ensuring it. There will always be disagreements, but instead of fights over the parsing of words in Section 526(v)(2), let them argue over the best way to accomplish public goals. A simpler system requires giving officials the authority to make decisions. This is our choice: either a jungle of thousand-page rulebooks, or a simplified framework where officials make choices to give permits and make regulatory decisions. These choices can be readily second-guessed by other officials, and ultimately by courts, but there's no other alternative. The only cure to dense bureaucracy is human responsibility. Accepting the role of human responsibility requires overcoming myths that drive bad decisions from both sides of the aisle. The liberal myth about the current regulatory system is that detailed rules make sleazy operators do what's right. But the current system is so dense that enforcement is haphazard, and encourages bad operators to ignore the rules altogether. The conservative myth is that detailed rules deter officials from exercising arbitrary power. But when laws are unknowable, and demand impractical perfection, regulators wield arbitrary power: a business with exceptional worker safety may be penalized for paperwork violations. Lawyers step in where regulators have left off, bringing lawsuits for minor infractions of detailed specifications that do little to advance desired public goals. A small business was sued for ADA noncompliance after installing a soap dispenser an eighth of an inch above the prescribed height for use by someone in a wheelchair. Replacing the Regulatory Jungle Every president since Jimmy Carter has tried to prune the regulatory jungle. But pruning a jungle is a fool's errand. It is too dense. The internal logic of trying to tell people exactly how to comply means that the red tape will immediately grow back. Small businesses almost universally call for a new paradigm for government regulation. In a 2012 survey conducted for Common Good by Clarus Research Group, 86 percent of small- business leaders said that regulations would be more effective in protecting public health and safety if they gave ``clear, certain goals'' and ``more freedom to use common sense in making daily decisions.'' There is also widespread public support for this approach. A national survey of voters conducted in May 2017 also by Clarus Research Group found that 62 percent of voters favor making ``laws that give civil servants basic goals and principles on how to do their jobs along with the flexibility to work out the details on their own.'' 56 percent of Republicans, 63 percent of independents, and 67 percent of Democrats agree. It is time that Congress heeded their call. Here are three initiatives that would move forward a new simplified regulatory regime, which honors the human scale and capacity of small business: 1. Pilot projects for simpler goal-oriented regulations. Congress should appoint an independent commission to design pilot projects to test simpler goal-oriented regulations for small business. Thee pilots could, for example, consolidate into one department all federal, state, and local compliance related to employees: Fair Labor Standards Act, workers' compensation, unemployment insurance, etc. This oversight agency could readily be a state agency, and Congress could condition federal funding on such efforts at the state level. The commission could also identify duplicative and obsolete laws that need to be repealed, such as licensing requirements that mainly serve as barriers to entry for new businesses. 2. Establish one-stop shops for permitting. Government should do the work of coordinating different agency demands, not require aspiring entrepreneurs to trudge from agency to agency. Congress could create a pilot project for a coordinating department, perhaps within the U.S. Small Business Administration, which would act as the point of contact for small businesses needing a federal permit. Because different agencies often disagree, Congress could also create clear lines of authority up to the White House, to make sure applicants get a decision on a timely basis.\1\ --------------------------------------------------------------------------- \1\ In New York City, the NYC Business Acceleration Team helps fledgling food and beverage businesses navigate the city's regulatory system. A similar program was created in Los Angeles that cut the time that restaurants spent on the permitting process in half. 3. Privatize enforcement. No level of government has sufficient resources to check on the over 29 million small businesses. Similarly, few small businesses have the capacity to understand certain complex areas of regulation, such as environmental regulation. A solution here might be to create a safe harbor for businesses that receive a regulatory compliance letter. Just as most businesses have financial auditors who bless their books, they could have a ``certified regulatory expert'' to monitor their compliance and issue compliance letters. These regulatory experts could work with the business to make sure that they are --------------------------------------------------------------------------- in substantial compliance. The spirit of America arises from the sense of personal ownership of life's choices. It is this ownership that empowers people to innovate, to take risks, and to pick themselves up when they fail. Today, it is hard for anyone to accomplish anything without a huge legal staff. The American can-do spirit is bogged down by the accumulation and complexity of regulatory requirements. The solution is not to abandon important regulatory goals, but to dredge out the regulatory muck and replace it with buoys that make sure people stay within accepted channels. A new simplified system of regulation will not only reduce the monetary costs imposed on small businesses, but open the door, now blocked by countless rules, to the deep store of creativity that resides in current and prospective small-business leaders. Thank you for this opportunity to appear before you. [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman Chabot, Ranking Member Velazquez, and members of the committee, thank you for inviting me to testify at this hearing on behalf of the National Stone, Sand & Gravel Association, (NSSGA), on how streamlining federal permitting can cut red tape for small businesses and expedite economic growth. The National Stone, Sand & Gravel Association and Industry NSSGA is the world's largest trade association by product volume representing the mining industry. There are 10,000 construction aggregates businesses across the United States. These are located in every state and nearly every congressional district. More than 70% of NSSGA members are small businesses. It is an industry that directly employs over 100,000 people, and each of those 100,000 jobs indirectly supports an additional 4.87 jobs throughout the economy. Overall, NSSGA member companies represent more than 90% of the crushed stone and 70% of the sand and gravel produced and consumed annually in the United States. NSSGA's primary concern is a full-funded, robust highway trust fund. While nothing can take the place of these critical federal funds, regulatory over-reach can cause costly project delays, so regulatory reform is of great importance. The United States annually consumes approximately 2.8 billion tons of aggregates annually. Crushed stone, sand and gravel typically make up over 80% of ready mixed concrete and over 90% of hot mixed asphalt. On a four-lane road, for example, one lane alone requires an average of 38,000 tons of construction aggregates for every mile. Aggregates are used in nearly all residential, commercial, and industrial building construction and in most public works projects, including roads, highways, bridges, dams, and airports. A new school or hospital typically requires 15,000 tons of aggregates in its construction. Aggregates are used for many environmental purposes including: treating drinking water and in sewage treatment plants, for erosion control and in cleaning air emissions from power plants. While Americans take for granted this essential natural material, it is imperative for construction. Unlike other businesses, we cannot simply choose where we operate. We are limited to where natural forces have deposited the materials we mine. Not every aggregates deposit meets the stringent standards set by the Federal Highway Administration (FHWA) and state Departments of Transportation (DOTs) for use in federal or state projects. So, our operations are limited to areas that are near cities and roads where they are needed. Generally, once aggregates are transported outside a 25-mile limit, the cost of the material can increase 30 to 100% in addition to creating environmental and transportation concerns. Because our product is so heavy, over 90% of aggregates are used within 50 miles of their original location, making our industries' businesses uniquely tied to their community. The aggregates business ca be described as making small rocks out of larger ones. We extract material for processing into crushed, sized, and washed stone. For safety and efficiency purposes, our operations tend to utilize large parcels of land that must be located where quality rock naturally occurs. Our operations are heavily regulated before, during and after extraction. Our primary waste is finer crushed rock or dust from processing. For this we must perform a number of ``one size fits all'' controls required under air and water permits. Our facilities are routinely monitored to ensure we are operating in a safe and environmentally responsible manner. Some of the requirements make sense and others do not, particularly for small businesses. It gets even more complicated when we need to expand our operations, open a new or temporary operation, or merely do minor construction work at a site to upgrade our facilities to provide needed material for crucial infrastructure projects. A host of federal requirements come into play, among them the Clean Water Act, the Endangered Species Act, and the Historic Preservation Act. These statutes often require businesses to prove that we should not fall under their jurisdiction. A ``regulated until proven otherwise'' approach is very costly and difficult for any business, particularly a small company like mine, without the resources for dedicated compliance staff that larger corporations employ. This is not an efficient use of resources for either the company or the agencies, and punishes the businesses who are trying to comply and care deeply about safety and the environment. It also shifts limited federal enforcement dollars away from actually protecting the environment. Springfield Underground I am a past chairman of NSSGA and have worked in the industry since 1977. I appear today to stress the negative impact that excessive regulation has on small businesses like mine. My family's business was started in 196 by my father and uncle, who discovered limestone while digging a farm pond and recognized the need for road material in nearby Springfield, Missouri. Springfield Underground now employs 43 people, and in addition to supplying construction aggregates, we also use our former underground operations as cold storage for major corporations such as Kraft, Heinz, and Cargill. Like me, some of our employees are the second or third generation of their families to work at Springfield Underground. I want to be clear that I am not against regulation, nor is NSSGA; in fact, as the co-chair of the Mine Safety Health Administration-NSSGA Alliance, I have led cooperative discussions with MSHA to develop and disseminate education and training materials intended to boost workplace safety and health for ten years. The MSHA-NSSGA Alliance is the first alliance MSHA ever entered into and is also its most active alliance. It has been very productive in terms of training programs for increased safety and efficient use of government and business resources. Last year, the industry finished with an injury incidence rate of just 1.95 injuries per 200,000 hours worked; the 16th year in a row in which our sector achieved a lower rate than in the prior year. We have found that we can accomplish more by working with agencies, rather than having just a ``command and control'' relationship. Unfortunately, not all my experiences with federal agencies have been as positive. In too many cases, agencies unnecessarily slow down projects. The Small Business Administration estimates that regulations cost 36% more for small businesses per employee than for larger companies. At Springfield Underground, we simply do not have the resources that larger corporations use to comply with confusing and overlapping regulations. We support efforts to reform the regulatory environment, recognizing that any reform is likely to benefit small businesses greatly because we suffer the most under the current structure. Infrastructure Depends on Aggregates, but Federal Requirements Hamper Us Through its economic, social and environmental contributions, aggregates production helps to create sustainable communities and is essential to the quality of life Americans enjoy. Aggregates are a high-volume, low-cost product. Because so much of our material is used in public projects, any cost increases are ultimately borne by the taxpayer. When aggregates producers are finished using the stone, sand or gravel in an area, they pay to return the land to other productive uses, such as water reservoirs, residential developments, farm land, parks, nature preserves, or in our case, underground storage. On the federal level, we fall under regulations by the Department of Labor, Environmental Protection Agency, Fish and Wildlife Service and the Army Corps of Engineers. The Department of Homeland Security and the United States Treasury Department also regulate us because we engage in blasting. At the state level, we obtain approvals from state agencies for air and water quality permits and mining and blasting permits. At the local level, multiple layers of land use approval are required before we can open a new facility or even expand an existing one. But I don't want to complain about reasonable regulations that have defined benefits and are enforced fairly. The members of our industry comply every day with safety and environmental regulations that we support wholeheartedly as an industry. There are, however, regulations that provide no demonstrable public benefit, that delay or kill projects, and that cost many good jobs in construction and related fields. As government is the largest consumer of construction aggregates, the cost of excess regulation falls on the American taxpayer. In particular, the application of the Endangered Species Act (ESA) and what constitutes a Waters of the United States have been expanded far beyond what Congress intended, and more often than not these act as an impediment to any development. For example, Section 7 ESA consultation by the Fish and Wildlife Service (FWS) is open-ended and lacking procedural guardrails that can be relied upon to define the scope, sequence and timing of agency review and action. Even when all the required information is provided, the FWS can take months or years to reach a decision. Permits in the U.S. take far longer to obtain than other developed countries, and the ESA is a major culprit. The ESA process has become a true impediment to any sort of development through a lack of timely response by FWS employees, who can delay projects significantly. As previously mentioned, these problems are exacerbated with small businesses, because we do not have the same resources as large corporations to handle the4se issues. Small businesses have to run this overwhelming gauntlet of regulation, and it can cost jobs with very little (if any) benefit. Examples of Federal Requirements that Harm Business Small businesses like mine that have projects stalled over the ESA sometimes don't even involve the presence of endangered species, and can create a domino effect that hurts other businesses and citizens alike. In our case, we had approved plans from our city for an expansion of our tractor-trailer parking lot. When a state road contractor needed a place to dispose of crushed pavement from repaving MO Highway 65 in Springfield, we contracted with them to take the material as fill for this parking lot. This material had to be removed from the road so that repaving of an important artery in Springfield could occur. Highway 65 not only is the major commuter highway to Christian County (fastest growing county in Missouri), it is the tourist route to Branson from Interstate 44. The Missouri DOT put incentives in place for rapid completion. We applied for a land disturbance permit that was delayed, first by FWS, but then even longer by the Missouri Department of Conservation, who both required a study to determine if we were in a breeding area for the endangered bat. The habitat that we would potentially destroy amounted to a dozen trees and some brush. The permit was delayed by four weeks. It seems reasonable that this small area could have been excluded in a shorter period of time, while balancing the need for retaining habitat. That's an eternity for a state highway project like this. Finally, after all this, the Missouri Department of Conservation determined that we are not in a bat breeding zone. This may not seem like a long delay, but consider that lanes were closed and a major long-term road improvement could have been unnecessarily delayed, creating a ripple effect that impacts nearly all other businesses and citizens in the area due to commuting delays. Sometimes NSSGA members agree to unreasonable conditions rather than accept long delays. One small business agreed to $125,000 of mitigation at another site in order to proceed with a project rather than have the project be delayed indefinitely by having a permit application be put into pending status by FWS. That was a significant financial burden for a small family-owned business, but had to happen so that commitments to highway departments and other customers could be met. This is a case of a business agreeing to an agency's incorrect assessment in order to proceed. Another NSSGA member has faced a delay of eight years waiting for the issuance of a Biological Opinion by FWS. This project involved an open engagement process involving meetings between federal agencies and local wildlife groups. The permitting process and mitigation requirements for species compensation reduced the project size from 1,100 acres to now less than 400 acres. This process led to a finalized group consensus years ago, but the assigned FWS biologist has repeatedly delayed finalization of the biological opinion. This is a project that has met relevant criteria, and has cost the significant investment in money, time and other resources by the member company, but has not been allowed to proceed. In another example, a member worked diligently to protect the habitat and the listed species on a site, but has faced a delay of over a year waiting for an incidental take permit for a facility expansion. These delays harm not only the companies producing building materials and the infrastructure projects that rely on them, but also delay important conservation efforts. NSSGA supports the administration's withdrawal of the 2015 Waters of the United States Rule, which would have radically expanded jurisdiction under the CWA to include areas suspected of only tenuous connections to navigable waters. While the agencies' decision to return to the ``pre-rule'' status quo once the 2015 rule is rescinded is not an ideal long-term solution, the action at least restores the guidance that aggregate operators are familiar with while the agencies work to develop a rule that provides clarity and certainty. While the 2015 rule would have cost aggregates operations millions of additional dollars in mitigation to expand or open new facilities, the current system is cumbersome and lengthy. Like ESA consultation, determining applicability under the CWA can create confusion and delays which are particularly burdensome for small businesses. The water on our site contains only natural dust, but under the CWA is called ``process'' water and requires a CWA/National Pollutant Discharge Elimination System (NPDES) permit for discharge, which sets strict limits on what can be in the water. We work to recycle this water and use it for dust suppression as part of our air permit required by the Clean Air Act. These permits are handled by the state, but the state permits are approved by the EPA. One of our sites was audited by EPA and warned that there were no signs designating the outflow points on our property, even though this is not a requirement of the state permit. This is just the sort of federal ``check the box'' requirement that does not improve the environment, but rather creates needless work and cost for small business. Our air permit requires that we apply 100 gallons of water per day for every 1000 square feet of unpaved area unless it is freezing or unless 1/4'' of rainfall has occurred. In the spring and in the fall in Missouri it is cool and humid enough that the ground doesn't dry out and create dust, yet we still have to comply with this requirement. Putting that much water down creates a sticky mess that clings to truck tires. We then have to provide wash stations so the trucks don't track that out onto the public roads. This site is also close enough to the Springfield-Branson National Airport that the Federal Aviation Administration doesn't want us to impound water that will attract migratory birds that could affect planes taking off and landing. Of course, that leaves us without sufficient water supply for our water trucks in the summer time when it is most needed. This is just one example of where multiple, conflicting requirements cause problems that cost additional money to solve, again, without helping improve the environment. While we have had success working with the Mine Safety Health Administration, numerous programs and requirements could be improved, particularly those that impact small businesses. The industry has a great safety record and we want to make sure every regulation has a demonstrable effect in improving safety or the environment. To summarize, businesses like mine are put into impossible situations, such as trying to prove a negative, while federal agencies can stop projects nearly at will under the guise of authority under CWA or ESA. Suggestions for Improvement Congress and the administration have come up with some great ideas for cutting red tape, and I would urge you to move forward with some of these. In particular, NSSGA supports: 1) Look at the impacts to small businesses beforehand: The Small Business Regulatory Flexibility Act should be expanded to include the Fish and Wildlife Service and the Mine Safety and Health Administration's rules so that impacts to small businesses must be evaluated for major rules in the same way that rules for EPA and OSHA are evaluated. SBREFA should be strengthened by not allowing agencies to improperly claim their rules do not meet the threshold, in addition to other reforms. 2) Improve the permitting process, deadlines and transparency: Currently small businesses often feel they are guilty until they prove themselves innocent and agencies are not accountable to respond to them in a timely fashion, or multiple agencies have overlapping requirements. The environment and worker safety an still be protected or even improved by making the process more transparent, timely and less adversarial. 3) Agencies should be held accountable: Just as businesses are accountable, so should agencies. Congress should ensure that they are fulfilling their core functions under the appropriate acts, while not promulgating unnecessary burdens and delays on industry. 4) Reform efforts should be continuous: Periodic review of rules should be required as well as updating outdated statutes to better respond to changing conditions. We support reasonable regulation, based on science, that preserves our natural resources, protects our environment and ensures the safety of our employees and neighbors. We are opposed, however, to overreaching regulation that hurts our businesses and by extension, infrastructure. I appreciate this opportunity to speak on how streamlining federal permitting could help small businesses like mine, that are the lifeblood of our nation's economy. Thank you, Mr. Chairman, and I will be happy to respond to any questions. United States House of Representatives Small Business Committee Testimony of Mark C. Hayden General Manager, Missoula Electric Cooperative ``Expediting Economic Growth: How Streamlining Federal Permitting Can Cut Red Tape for Small Businesses.'' September 6, 2017 Good morning Chairman Chabot, Ranking Member Velazquez, and members of the Committee, my name is Mark Hayden, and I am the General Manager of Missoula Electric Cooperative (MEC) in Missoula, Montana. Thank you for the opportunity to testify today, and allowing me to share my thoughts on how streamlining federal permitting can cut red tape for small businesses. Missoula Electric Cooperative is a proud member of the National Rural Electric Cooperative Association, the Montana Electric Cooperatives' Association, and the Northwest Public Power Association. By way of background, MEC is a consumner-owned electric utility serving the electric distribution needs of approximately 15,000 meters in Western Montana and Eastern Idaho. Our workforce includes 41 skilled and dedicated employees committed to serving the energy needs of our member- owners. The nearly 2,000 miles of distribution line that we maintain deliver energy to some of the most wild and scenic locations in the country--286 miles of which cross federal land. For me, the timing of this hearing could not be more appropriate. The wildfires burning in Western Montana are having a devastating effect on our state and local economies. Currently five active fires have burned nearly 250,000 acres in, or adjacent to, MEC's service territory, and personnel totaling nearly 2,500 are protecting lives and property on many fronts. Lives have been lost, homes have been lost, and hundreds of resident evacuations due to the threat of fire, including my own family. In the small community of Seeley Lake, smoke concentrations have hovered in the hazardous range for weeks, and a lake normally bustling with summer recreationists has been closed to allow aircraft access to the precious fire- fighting water resource. In short, a community whose economy relies heavily on summer tourists has been dealt a devastating blow. I fully recognize that the fires burning in Montana today were all lighting sparked, but also realize the increased risk that long delays in federal approval of permit applications, inadequate fuels reduction programs, and other factors bring to our co-op and to our infrastructure. Electric cooperatives face a myriad of permitting and regulatory requirements in order to conduct our business. For some it may be permitting a new gas plant, and for others relicensing an existing small hydropower installation. At MEC, our permitting challenges have centered around our Special Use Permits and the National Environmental Policy Act (NEPA) review process used to amend these agreements. We work diligently to maintain positive relations with those who hold the permits authorizing our power lines on federal land, primarily the U.S. Forest Service and to a lesser degree the Bureau of Land Management. However, long delays in application processing hinder our ability to adequately plan, and add significant project cost. We are constantly working to improve system reliability and reduce the risk of power-line-caused wildfire, and vegetation management is a critical component of our program, especially on federal land. A great example of this occurs regularly in the clearing of danger trees outside of our rights-of-way during our co-op's Routine Operations and Maintenance activities. Representatives from MEC and local Forest Service officials communicate periodically and expectations are understood. As a result, managers and crews can adequately plan for the time and financial resources necessary to complete a project. But this positive situation is not found on all rights-of-way managed by the Forest Service. Other cooperative representatives have testified before Congress of inconsistent federal land management policies, long delays in approval and review times, and unnecessary liability resulting from these delays. In short, federal reforms are needed to cut red tape and make it easier for electric cooperatives to manage vegetation to limit downed power lines, prevent catastrophic fires, and respond to emergencies. For that reason, we commend the House for recently passing H.R. 1873, the ``Electricity Reliability and Forest Protection Act'' that received strong bipartisan support. This legislation would give electric utilities more consistent procedures and a streamlined process in order to better manage utility rights- of-way. Unfortunately, in other cases, significant delays occur, especially during major Operation and Maintenance activities, where compliance with NEPA is a concern. Such approvals are a requirement of our Special Use Permit, and necessary to assuring electricity service is not jeopardized as a result of work needed on rights-of-way. For my co-op in Montana, our service area, like so many parts of the West, has been adversely affected by the Mountain Pine Beetle infestation and the dead and dying trees left in its wake. One of the areas hardest hit is in the Swan Valley north of Seeley Lake, Montana. Obviously, one of the most effective ways to improve service reliability and mitigate fire risk is to bury an overhead power line. As you can imagine, each instance of tree/power line contact can pose significant risk of wildfire ignition under the right environmental conditions. However, converting overhead distribution lines to underground is an expensive proposition, especially for a small cooperative like MEC, so this cannot be standard practice. After considerable internal discussions regarding our situation in the Swan Valley, the decision was made in December 2013 to request permission to bury approximately 6.1 miles of overhead three-phase line on Forest Service land. An application was submitted to the Forest Service district office having jurisdiction over the proposed project, and, just one month after submittal, we were notified that approval of our request was expected by June of 2014. In May of 2015 I was invited to provide testimony before the House Subcommittee on Water, Power and Oceans regarding the delay in approval of this project application. In preparation for my testimony, I placed one final call to the local Forest Service District Ranger to express my frustration just prior to the subcommittee hearing. This local official indicated that if i wanted to see things change I should take up my issue with Congress, at which point I told him that I intended to the following week! Two days later on Saturday, May 16th, the weekend prior to the hearing, MEC received unofficial notice via email that all associated field work had been completed on our project, confirmed that our co-op had paid the Forest Service for all associated costs, and that we were authorized to begin construction. In all, MEC waited nearly 18 months for approval on the Swan Valley project. Our cost recovery bill from the Forest Service indicates that 10 different individuals spent an average of 2.3 days each on our project. Most troubling to me is that the project qualified for categorical exclusion, meaning neither an environmental assessment or environmental impact statement was required. I can only imagine the number of months or years project approval would have taken had those more in-depth investigations applied. This situation I have described exemplifies the harm to small businesses of unnecessary delays. To be effective in business requires adequate planning, especially for large construction projects, and the current process for federal permit approvals makes that impossible. Firm timelines must be incorporated into the approval process, and early, consistent consultation with coordinating agencies should be mandated. The uncertainly surrounding the approval process when working with the Forest Service adds unacceptable risk to every project. For example, materials ordered too early not only add to the carrying cost during the delay, but also the risk of outright cancellation if the permit is not approved. Materials ordered too late risk long lead times in which an entire construction season can be lost to the changing seasons. When service liability and fire prevention are a concern, inconsistency and delays risk unnecessary power interruption and increased potential for powerline sparked fires. All this leads to higher costs, which, ultimately, are borne by the owners of our cooperative utility--our members. Proper vegetation and fuels management on federal land not only affects our utilities operations, but also those of our customers. Many of our customers, including large commercial accounts, are directly impacted by the Forest Services' actions in our region. For example, our largest customer is one of the few remaining family-owned lumber mills operating in Montana, and in working closely with them, I get to hear firsthand about some of the challenges faced by this small business. An executive at the company tells me he views the cumbersome and time-consuming process to fulfill NEPA requirements as the single most important barrier to implementing timely stewardship and restoration treatments on our National Forests. The process commonly has evolved into PhD dissertation of 400- 800 pages for every decision to be approved by a line officer within the Forest Service. According to him, this process averages 3-5 years if there are no delays or interruptions from budget delays or fire suppression costs, which consume manpower and resources. Montana's Governor has identified nearly 5 million acres of hazardous fuel conditions across the state in need of immediate fuel reduction treatments to reduce excess forest fuels. Over 590,000 acres across various ownerships in Montana have burned so far this year. Regulatory barriers to proper vegetation and fuels management threaten not only the operations of our utility and the livelihoods of our members, but also of those businesses we serve. Not all the challenges we face stem from NEPA. Earlier this year, our small utility submitted a second request for burial of a power line located in a different Forest Service district from the one I mentioned previously. This straightforward project proposes to bury approximately 4 miles of overhead line, much of which is located in heavily wooded forest today. The new location would be in highway right-of-way along U.S. Highway 12. Regarding that request, I just received communication asking if we had considered delaying our project until next spring, even though it has been communicated that NEPA is not an issue. Problems cited by the Forest Service include delays in consultation with coordinating agencies, and resources stretched thin because of fire. We fully understand the reality of these factors, but believe that cross-agency consultation, review, and approval for a very straightforward and routine application should not take a year to achieve. Mr. Chairman, members of the committee, for us the status quo is not an option. We need streamlined, expedited procedures that allow for timely implementation of projects to protect the long-term health of our forests, our small businesses, and the overall economies of the communities we serve. The best way to accomplish this is to provide consistency, flexibility, and accountability into the federal permitting and permit amendment processes, especially when system reliability and fire prevention are driving factors. We believe this can be done without abrogating the intent of federal regulations. I appreciate this Committee's work in examining how small businesses, such as Missoula Electric Cooperative, can benefit from regulatory reform and for holding this hearing today. Thank you again for the honor of testifying before this Committee and I will be pleased to answer any questions. [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] [all]