[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

REGULATORY FLEXIBILITY ACT COMPLIANCE: IS EPA FAILING SMALL BUSINESSES?

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HEARING

before the

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

HEARING HELD
JUNE 27, 2012

__________

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

Small Business Committee Document Number 112-075
Available via the GPO Website: www.fdsys.gov

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C O N T E N T S

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OPENING STATEMENTS

Page
Hon. Sam Graves.................................................. 1

WITNESSES

Keith W. Holman, Legal and Policy Counsel, U.S. Chamber of
Commerce, Environment, Technology and Regulatory Affairs
Division, Washington, DC....................................... 2
Frank Knapp, President and CEO, South Carolina Small Business
Chamber of Commerce, Columbia, SC.............................. 4
Jeff Brediger, Director of Utilities, Orrville Utilities,
Orrville, OH................................................... 6
David Merrick, President, Merrick Design and Build Inc.,
Kensington, MD................................................. 8

APPENDIX

Prepared Statements:
Keith W. Holman, Legal and Policy Counsel, U.S. Chamber of
Commerce, Environment, Technology and Regulatory Affairs
Division, Washington, DC................................... 23
Frank Knapp, President and CEO, South Carolina Small Business
Chamber of Commrce, Columbia, SC........................... 33
Jeff Brediger, Director of Utilities, Orrville Utilities,
Orrville, OH............................................... 38
David Merrick, President, Merrick Design and Build Inc.,
Kensington, MD............................................. 45
Questions for the Record:
Rep. Mulvaney Questions for Mr. Merrick...................... 51
Rep. Mulvaney Questions for Mr. Knapp........................ 52
Answers for the Record:
Knapp Answer for the Record.................................. 53
Merrick Answer for the Record................................ 54
Additional Materials for the Record:
Squire Sanders Letter for the Record......................... 57
National Federation of Independent Business Statement for the
Record..................................................... 70
National Association of Home Builders Statement for the
Record..................................................... 73
National Association of Realtors Letter for the Record....... 78
Design Build Group Letter for the Record..................... 81
Congressman Mike Coffman Statement for the Record............ 83
Baker Botts L.L.P. Letter for the Record..................... 85
Douglas County Business Alliance Letter for the Record....... 100
Colorado Contractors Association Letter for the Record....... 102
Associated Builders and Contractors, Inc. Letter for the
Record..................................................... 104
National Association for Surface Finishing Letter for the
Record..................................................... 106

HOUSE COMMITTEE ON SMALL BUSINESS

SAM GRAVES, Missouri, Chairman
ROSCOE BARTLETT, Maryland
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
MIKE MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JEFF LANDRY, Louisiana
JAIME HERRERA BEUTLER, Washington
ALLEN WEST, Florida
RENEE ELLMERS, North Carolina
JOE WALSH, Illinois
LOU BARLETTA, Pennsylvania
RICHARD HANNA, New York
ROBERT T. SCHILLING, Illinois

NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
MARK CRITZ, Pennsylvania
YVETTE CLARKE, New York
JUDY CHU, California
DAVID CICILLINE, Rhode Island
CEDRIC RICHMOND, Louisiana
JANICE HAHN, California
GARY PETERS, Michigan
BILL OWENS, New York
BILL KEATING, Massachusetts

Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director

REGULATORY FLEXIBILITY ACT COMPLIANCE: IS EPA FAILING SMALL BUSINESSES?

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WEDNESDAY, JUNE 27, 2012

House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:07 a.m., in Room
2360, Rayburn House Office Building, Hon. Sam Graves (Chairman
of the Committee) presiding.
Present: Representatives Graves, Chabot, Mulvaney, Tipton,
West, Ellmers, Hanna, Schilling, Hahn, and Owens.
Chairman Graves. We will go ahead and bring our witnesses
up and we will get the name tags out and we can get started.
Good afternoon, everyone, this hearing will come to order.
I want to thank our witnesses for being here today. I
appreciate it very much and we definitely look forward to
your--to your testimony. Small businesses are
disproportionately burdened by the cost of regulations in
comparison to their larger counterparts by virtue of their size
and resources. Despite the economic downturn and painfully slow
recovery, the regulatory burden on small businesses continues
to grow. Increased regulations means small businesses must
dedicate more time, more money and resources to comply with the
regulations instead of doing what they do best, and that is
creating jobs and innovative new products.
To ensure that Federal agencies analyze the impact of new
regulations on small businesses, Congress enacted the
Regulatory Flexible Act, or the RFA. The RFA requires all
Federal agencies to examine the impact of their proposed and
final rules on small businesses, small not-for-profits and
small government jurisdictions. If those impacts are
significant, the agency is required to consider less burdensome
alternatives. The RFA has been on the books for some 30-years,
but Federal agencies still fail to comply or fully comply with
both the letter and spirit of the law and unfortunately, the
Environmental Protection Agency is not meeting its legal
obligations under the RFA. And by failing to comply with the
RFA, the Environmental Protection Agency imposes unnecessary
burdens on small businesses instead of using small businesses
to, their input to craft better tailored regulations that
address specific problems.
Last December, the Regulatory Flexibility Improvements Act
of 2011, which was H.R. 527 and I co-wrote along with the House
Judiciary chairman Lamar Smith, passed the House, and H.R. 527
will strengthen the RFA and close the loopholes that agencies
exploit to avoid complying with the RFA. H.R. 527 is stalled in
the Senate and the President has threatened to veto it.
Unfortunately, the failure to act on H.R. 527 seems to be
indicative of the administration's attitude towards small
businesses in our struggling economy, apathetic, and out of
touch. And today we will be hearing directly from small
business on how EPA's regulations are affecting their ability
to compete and create jobs. And additionally, we will be
examining the EPA's compliance with the RFA. And again, I want
to thank all of our witnesses for being here today and for your
participation. And we will move right on into--right on into
your opening statements.
And basically, to explain the lights to you, you each have
5-minutes, and once it gets down to 1 minute the light will
turn yellow, and then past the 5-minutes, it will turn red so
that you have a moment beyond that to go ahead and give your
testimony. But again, we look forward to all of you being here.
And our first introduction, is going to be Mr. Keith
Holman, who currently serves as the legal and policy counsel at
the United States Chamber of Commerce in their environmental,
technology, and regulatory affairs division. Prior to working
for the U.S. Chamber, Mr. Holman was the regional counsel for
the Environmental Protection Agency and an assistant chief
counsel in the Office of Advocacy for the Small Business
Administration. As assistant chief counsel, Mr. Holman
advocated for the interest of small businesses before the EPA
and the Department of Energy and reviewed the small business
impacts on Federal rule makers involving air quality. And
again, thank you for being here. I look forward to your
testimony.

STATEMENTS OF KEITH W. HOLMAN, LEGAL AND POLICY COUNSEL, U.S.
CHAMBER OF COMMERCE, ENVIRONMENT, TECHNOLOGY AND REGULATORY
AFFAIRS DIVISION; FRANK KNAPP, PRESIDENT AND CEO, SOUTH
CAROLINA SMALL BUSINESS CHAMBER OF COMMERCE, ON BEHALF OF THE
AMERICAN SUSTAINABLE BUSINESS COUNCIL; JEFF BREDIGER, DIRECTOR
OF UTILITIES, ORRVILLE UTILITIES, ON BEHALF OF THE AMERICAN
PUBLIC POWER ASSOCIATION; AND DAVID MERRICK, PRESIDENT, MERRICK
DESIGN AND BUILD INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF
THE REMODELING INDUSTRY

STATEMENT OF KEITH W. HOLMAN

Mr. Holman. Thank you, Chairman Graves, and members of the
committee. Good afternoon. Again, my name is Keith Holman. I am
the legal policy counsel at the U.S. Chamber of Commerce. The
Chamber of Commerce has approximately 96-percent of its
membership which is small businesses, so the Regulatory
Flexibility Act is actually very important to the Chamber and
its members. You have asked me to offer the Chamber's views
today on how the U.S. Environmental Protection Agency is
actually complying with the Regulatory Flexibility Act, or we
call it, the RFA. And as you said, between 2010, and excuse me,
2002 and 2010, I was an assistant chief counsel at the SBA
Office of Advocacy, and I had primary responsibility for
working with the EPA on RFA-compliance matters on their
rulemaking. So this is an issue I am very familiar with.
I think it is fair to say that when Congress passed the RFA
back in 1980, it is hard to believe it has been around this
long, it was--the idea was to give small entities in that small
businesses, small associations, and small communities some sort
of voice in the Federal rulemaking process. Put simply, the RFA
requires Federal agencies to assess the economic impact of
their planned regulations on small entities, and to consider
alternatives that would lessen those impacts. The RFA requires
each Federal agency to review its proposed and final rules to
determine if a rule in question will have what is known as a
significant economic impact on a substantial number of small
entities.
If the rule will, in fact, have that impact, which we call
SEISNOSE, the agency must assess the anticipated economic
impacts of the rule and evaluate whether there are alternatives
that would actually allow the impact of the rule to be
minimized on small entities, but would still accomplish the
regulatory objectives of the rule.
Now, EPA looked at, you know, particularly as an agency,
writes a lot of rules every year. They are one of the most
prolific rule-writing agencies of all of the Federal agencies.
For that reason, back in 1996, Congress decided to require EPA,
when it goes through rulemakings, to go through an additional
step other than just looking at the impact of their
regulations.
They have to do what is actually known as a small business
advocacy review panel. The panel process is triggered whenever
there is a rule that they anticipate will have a substantial
economic impact on a significant number of small entities.
Since 1996, EPA has done more than 30 of these panels. Small
entity representatives who speak for the industries that will
be impacted by the rule are invited to come in and have face-
to-face meetings with EPA, with Advocacy, and with the Office
of Information and Regulatory Affairs which is at the Office of
Management and Budget.
This is a unique opportunity for small businesses to
actually sit down with the agency that is going to regulate
them, and say, here is how this rule is going to affect me. It
is very valuable. It does take time, and it takes some
resources, but in my experience, it has been extremely
valuable, very early in the process before you actually get a
rule that goes to proposal, before the public ever sees it, you
are giving a chance for small entities to actually sit down
with the agency, ask questions, get feedback, understand the
rule that is actually going to apply to them, and have some
ability to help in the design of the rule as it is finalized.
This has been a very, very valuable process. I worked on
nine panels during my time at SBA's Office of Advocacy. Those
panels were very valuable. Three examples I give in my written
testimony were the Cooling Water Intake Panel, the Lime MACT
Panel, and something called the MSAT Panel, which was a rule
for mobile source air toxics. Why were they good? Because EPA
did a very good job of getting the information pulled together
early on, meeting with the small entities, doing a really good
job of trying to figure out who they were, how they were going
to be affected, and what the potential alternatives would be
that would help them. Finding the alternatives is crucial.
Since 2009, what we have seen is EPA has not been doing
this same good job, particularly with panels. Three things have
been problems with panels. They don't do panels when they are
supposed to do them. This has been a problem with the
greenhouse gas rules, with things like the coal ash rule, and
with many other rules where EPA just doesn't do the panel. Or
they say, well, we have agreed to a court deadline so we don't
have time to do a panel correctly, so they don't go through the
steps to do a panel correctly. And I have outlined some
situations where that has happened publicly in the last 4-years
or so.
Finally, there are situations where you do a panel. They
take the time to do the panel, but they don't follow the
panel's recommendations. This is a critical problem for the
process. Thank you.
Chairman Graves. Our next witness is Mr. Frank Knapp. He is
the vice chairman of the American Sustainable Business Council
and President of South Carolina Small Business Chamber of
Commerce. Mr. Knapp, we appreciate you coming in and look
forward to your testimony.

STATEMENT OF FRANK KNAPP

Mr. Knapp. Thank you, Chairman Graves, members of the
committee.
Chairman Graves. Yeah, you might turn your mic on.
Mr. Knapp. Thank you very much. Appreciate it. Chairman
Graves, members of the committee, I am Frank Knapp, Jr.,
president and CEO and cofounder of the South Carolina Small
Business Chamber of Commerce, and vice chair of the American
Sustainable Business Council. Thank you for the opportunity to
testify before you today.
The South Carolina Chamber of Commerce is a statewide
advocacy organization with over 5,000 members that promotes a
more small business-friendly State and Federal Government. The
American Sustainable Business Council was founded in 2009, and
its members now represent over 150,000 businesses and more than
300,000 entrepreneurs, owners, executives, investors, and
business professionals across the country. These diverse
business organizations cover the gamut of local and State
Chamber of Commerce, micro-enterprise, social enterprise, green
and sustainable business groups, local living economy groups,
women business leaders, economic development organizations, and
investor and business incubators.
I had the opportunity to read the testimony of Mr. Holman,
representing the U.S. Chamber of Commerce, and Mr. Merrick
representing the National Association of the Remodeling
Industry prior to preparing my comments. I commend them for
their civility of their remarks and their focus on the
Regulatory Flexibility Act as it pertains to the Environmental
Protection Agency.
Both gentlemen recognize the importance of the Regulatory
Flexibility Act for ensuring that regulations are reviewed to
determine if they are too burdensome for small businesses, and
if the goals of regulations can be achieved in alternative
methods.
They pointed out some instances where businesses, the
business community and EPA didn't agree, but they also point
out successful RFA stories. In 2004, my South Carolina
organization worked with our South Carolina Chamber of Commerce
and the NFIB to pass a Regulatory Flexibility Act modeled after
the Federal law. Last August the then-chairman of the South
Carolina Small Business Regulatory Review Committee told me
that over the previous 7 years, his committee had reviewed over
300 proposed regulations and identified only 10 that raised a
concern. His committee worked with the State agencies
promulgating these new regulations satisfactorily resolved the
issues. The Regulatory Flexibility Act has created an effective
process to protect small businesses, even if the process itself
needs some attention from time to time.
Mr. Holman correctly identifies one area where the EPA's
compliance with the RFA can be improved; more resources for the
rulemaking process. While there are voices we hear in
Washington critical of the EPA and calls for cutting back or
freezing the regulatory process, the reality is, that it can
work better for small businesses and the public if the EPA was
better funded. With more resources, the EPA can do a better job
of meeting the requirements of the RFA to the benefit of a
small business. However, more resources for the EPA would not
only allow the agency to be more efficient and effective in
complying with the RFA, it would also enable the organization
to do a better job of protecting the public's and environment's
health while unleashing entrepreneurial innovations and
creating jobs.
Any responsible new rule that protects the health of our
citizens and workers opens a door to newer and better products.
Our Nation is loaded with these small business entrepreneurs,
just waiting to solve a problem when the demand is created. The
Toxic Substance Control Act is so outdated that the EPA's
resources are so strained that there are literally over 80,000
chemicals in the Agency's inventory, but it has only been able
to require testing for only about 200. Just yesterday, the
State of California took the lead on investigating the health
hazards of toxic flame retardant chemicals used in furniture
and mattresses, while not providing protection from fires.
The EPA should be examining this national hazard, but it
doesn't have the resources. Can the materials we sleep in, and
sleep on, sit on, be nontoxic and still resist fire?
Absolutely. Ask Barry Cik, owner of Naturepedic in Cleveland,
Ohio. Naturepedic manufactures baby and crib mattresses that
provide proper support, meet government flammability
requirements, provide waterproofing, seamless designs and other
hygienic features, all without the use of harmful chemicals or
allergic materials.
But instead of helping this innovative industry take off
and make bedding healthier for families, we protect the use of
carcinogen materials of the past by not properly imparting the
EPA with the needed legislative resources and support. The
public and small business owners want good regulations. A
recent national poll of small business owners conducted for the
American Sustainable Business Council found that 80 percent
support disclosure and regulations of toxic materials; 79
percent support ensuring clean air and water, and 61 percent
support moving the country towards energy efficiency and clean
energy.
It is very clear that the future of our economy really
depends on our tying to sustainable economy. And the EPA really
has the opportunity if we take this opportunity to empower them
and give them the resources to actually move us towards that
sustainable economy faster. So thank you very much for the
opportunity to testify today.
Chairman Graves. Thank you very much, Mr. Knapp.
Chairman Graves. Our third witness is Jeff Brediger. He is
the director of Utilities for Orrville Utilities which is
located in Orrville, Ohio. Mr. Brediger started with Orrville
Utilities as a plan engineer in 1987. He served as the American
Municipal Powers--on the American Municipal Power's board of
trustees as an active member of the American Public Power
Association. He is APPA's small generation representative and
serves on the Energy, Environment and Government Relations
Committees. He has served on several EPA small business
advocacy review panels, including the panel on Boiler MACT,
major and another area source rules. Mr. Brediger, thanks for
coming in from Ohio. I appreciate you being here.

STATEMENT OF JEFFREY A. BREDIGER

Mr. Brediger. You are welcome. Mr. Chairman, members of the
committee, good afternoon. My name is Jeff Brediger. I am the
utilities director for Orrville Utilities in Orrville, Ohio. I
am presenting this testimony today on behalf of Orrville
Utilities, and American Public Power Association, of which my
municipal utility is a member. APPA is a national service
organization, representing the interests of more than 2,000
not-for-profit community-owned electric utilities that serve
over 46 million Americans. Under SBREFA, 90 percent of these
utilities themselves are considered small businesses, and in
addition to that, they are serving the small businesses in
their communities. Orrville is a small city of about 8,300
located in the northern part of Ohio. Some may recognize
Orrville from its association as the home of the J.M. Smucker
Company, our largest employer with over 1,500 employees. Our
community owns its own coal-fired power plant which has enabled
us to offer competitively-priced electricity to our customers
since 1917, has helped promote local business development
efforts, and has protected our customers from volatile
electricity markets. But as environmental requirements tighten,
Orrville Utilities face increasingly costs and burdens to
provide those important services to our community.
Our greatest concern is the EPA's Boiler MACT rule, which
was to be finalized this spring, which after several rounds of
legal challenges, reconsiderations, and proposals, we are still
waiting for. In 2003, I participated with APPA in the SBREFA
review process for the Boiler MACT rule. I also served as a
small-entity representative in the latest SBREFA effort on the
current proposed rule. The SBREFA process was important to
Orrville and other small electric generators because small
utilities and small governments were a subset of those being
regulated by the Boiler MACT rule and EPA was not focused on
the burdens on these small entities.
The primary recommendation from the SBREFA panel proposed
that the EPA implement a health-based compliance alternative
that would allow entities to avoid significant costs of
hydrogen chloride scrubbers when they could demonstrate their
emissions did not pose a significant health risk. This proposed
solution would have provided significant cost relief for small
entities while maintaining protective of human health. The EPA
had the discretion to adopt it under the Clean Air Act, but
failed to do so. In our view, the process failed.
When coupled with the President's 2011 executive order on
regulatory reform, SBREFA should ensure that the needs of small
businesses are thoroughly addressed as a regular consideration
of the regulatory process for certain agencies' rules. But the
process has fallen short of desired expectations.
In some cases, the EPA has declined to convene a panel to
evaluate small entity relief. When panels are convened, they
may lack the information necessary to generate effective
alternatives. When effective alternatives are generated, the
EPA may ignore the results. Our recent experience with SBREFA
has been disappointing at best. While the SBREFA process is
intended to provide small entities with an expanded opportunity
to participate into the development of certain regulations, the
process lately has taken on more of window dressing, with the
EPA simply checking the box, to indicate a requirement has been
met, even if done insufficiently.
In addition, poor preparation by EPA staff has wasted the
time and resources of panel participants, and too little time
is invested in the panel process to allow participants to
properly review and comment on detailed technical materials and
issues. Perhaps most disturbing is when the panels produce a
viable alternative, only to have the EPA ignore the
recommendation coming from those with real world operational
experience.
Despite our misgivings regarding our experiences with the
SBREFA process, Orrville and APPA thoroughly endorse the
concept of a specialized process to seek, consider, and
incorporate the specific needs of small entities in the
regulatory process.
In our written statement, we do offer specific
recommendations for improving the SBREFA process. Also I will
add, as a local government, we do share the same concerns. It
is not that we do not want to do anything. We struggle with the
requirements that are totally unnecessary.
In conclusion, I commend this committee for holding this
hearing today. It is clear that some important changes need to
be made to the way the EPA performs its duties under SBREFA,
and we look forward to those improvements.
I thank you for the opportunity to present this testimony,
and I would be happy to answer any of your questions. Thank
you.
Chairman Graves. Thank you, Mr. Brediger.
Chairman Graves. Our final witness is David Merrick, who is
the President of Merrick Design and Build, which is a full-
services residential and commercial remodeling, designing, and
building company located in Kensington, Maryland. Mr. Merrick
is an active member of the National Association of Remodeling
Industry, and currently serves as chairman of their Government
Affairs Committee. Thank you for being here today. I look
forward to your testimony.

STATEMENT OF DAVID MERRICK

Mr. Merrick. Thank you, Mr. Chairman, and members of the
committee. I am pleased to present this testimony on behalf of
the National Association of the Remodeling Industry. NARI is a
nonprofit trade association based in Des Plaines, Illinois. We
have 58 chapters in major metro areas nationwide and our
membership of 7,000 companies is comprised of remodeling
contractors, local suppliers, and national suppliers. Eighty-
three percent of NARI members have fewer than 20 employees, and
many are one- or two-man operations; a new thought about small
business.
I run a design build company in Kensington, Maryland.
Merrick Design Build is a full service residential and
commercial remodeling design and build company. In 2010, when
EPA decided to change the LRRP rules, NARI was disappointed. We
worked with several contracting, home building, and remodeling
businesses to express our concerns and comments to EPA that we
submitted in July of 2010. With the chairman's permission, I
would like to submit our comments for the record. They are from
July 21st, 2010, and were written by Baker Botts LLP, and
submitted to the EPA on amendments to LRRP.
Chairman Graves. Without objection.
Mr. Merrick. Thank you, sir. Fundamental to our concerns
was the removal of the opt-out provision and EPA's refusal to
reconvene a group of small businesses, the U.S. Small Business
Administration's Office of Advocacy, and the Office of
Management and Budget to ensure flexibility in the rulemaking
for small businesses. NARI's concern with the EPA moving
forward with a public and commercial building rule are
threefold. First, we are concerned that the EPA may proceed
without convening a SBREFA small business advocacy review
panel. We do not want the same thing to happen when EPA
proposed the 2010 amendments to LRRP, that a rule move forward
without a SBREFA panel.
Second, NARI is concerned that EPA may move forward with a
public and commercial LRRP rule without clear evidence and data
showing that lead poisoning risk to children under 6 and
pregnant women from construction activities at public
commercial buildings.
If the EPA cannot present a clear connection between the
activity and the risk to children and pregnant women, then our
customers certainly will not understand why their projects have
become more expensive.
Third, when EPA moves forward with the rule, NARI would
advise that the Agency make rules flexible enough to cover
different scenarios. This is what NARI member Kevin Nau advised
the EPA during meetings last year. With the chairman's
permission, I would like to submit Kevin Nau's letter to EPA,
from March 1, 2011, for the record.
Chairman Graves. Without objection.
Mr. Merrick. Thank you. NARI is pleased with the
opportunity to advise the committee about how EPA interacts
with small business when the Agency develops regulations. The
SBREFA process was designed to codify what simply makes sense
for small businesses to work with EPA to come up with
constructive solutions for complex problems. It seems as though
the process works when EPA listens to the input from the Office
of Advocacy and from small business. It does not seem to work
when EPA rushes the process or avoids it altogether. We will
continue to work with the EPA. We will try and increase our
customers' knowledge of LRRP rules, and we will continue to
work with remodelers to create--increase EPA certification.
Our dialogue with EPA is important because NARI should be
EPA's partners in our efforts to protect children and pregnant
women from lead-based dangers caused by remodeling activities.
Thank you for your attention to these important matters.
Chairman Graves. Thank you very much to all of our
witnesses and we will start with our questions. We will start
with Mr. Schilling.
Mr. Schilling. Thank you, Chairman. The first question I
have would be for Mr. Knapp, and thank you all for coming to
the panel. I really appreciate it. Did I hear in your opening
statement that you say--just clarify this for me. I kind of
opened up when I heard it. Did you say more money for the EPA
is what is needed? So basically, what I heard, and tell me if I
am wrong is, more money for the EPA for more regulation is
going to help the economy?
Mr. Knapp. Congressman, what I heard and what I read in the
testimony today, was that there is concern that the EPA is not
fulfilling all of the requirements of the RFA; that they
sometimes move faster than they should move. What that tells
me, as somebody who has been around for a while, is that maybe
they don't have the resources; that they may aspire to do these
things, but like any organization that does not have specific
resources, they start moving things quicker.
And so that is what I meant. I mean, literally, if we want
them to do the perfect job for small businesses, and comply
with all of the RFA to the letter of the law, then they need to
have the resources to do that. And that will serve all of these
gentlemen up here much better. And so yes, I hate to say this,
but I think that there are--resources and support for the EPA
could solve a lot of the problems that you have heard today.
Mr. Schilling. Very good. And then, the RFA requires
Federal agencies to analyze the impact of regulations on small
entities. Do you think this is a good idea?
Mr. Knapp. Absolutely, it is a good idea. I mean, from our
experience in South Carolina--again, a friend of mine who
Congressman Mulvaney knows, Monty, you know, he headed that
organization for the original chairman for 7 years, and the
last 300 regulations being promulgated by State agencies in
South Carolina, found 10 that they weren't happy with. They
worked with those agencies, and it all worked out.
So yes, small businesses need to have that type of
protection, and that type of input that we were talking about
into the process with the RFA.
Mr. Schilling. Okay, earlier last year, we had the head of
the EPA in on the Ag Committee and what we talked about is the
apparatuses that they were going to have the farmer actually
wear, and one of the questions to Ms. Jackson was, do you know
how much these cost? And she said she wasn't sure. Do you know
if they are $5,500, or $5,000? But that, you know, in itself
says that they didn't bring in the farmer to ask the question.
Now, you know, they have been talking for quite some time about
regulating farm dust. Thank you very much, sir.
Mr. Knapp. Thank you, sir.
Mr. Schilling. What I would like to do, Mr. Merrick, how
many people do you employee, sir?
Mr. Merrick. We have 16 full-time employees.
Mr. Schilling. And is keeping your workers and clients safe
one of your top priorities.
Mr. Merrick. Keeping our workers and clients safe is a
fundamental aspect of business. If we don't take care of our
workers, they won't be around, they won't do their job, and if
we don't take care of our customers, they won't come back and
they won't recommend us to other customers.
Mr. Schilling. As a small business owner trying to do your
best to comply with EPA rules, what is your greatest fear in
dealing with the EPA?
Mr. Merrick. My greatest fear would be that they don't
listen to us or don't ask our advice.
Mr. Schilling. And then, I got plenty of time, all right.
Basically, members who are certified on a lead-safe work
practices lost business because of the lead paint rule, would
that be a fair statement?
Mr. Merrick. The businesses are still out there and there
are people doing the jobs. The largest problem right now is the
lack of enforcement. EPA has identified almost 650 small
entities that this rule will cover, and has certified 123,000
firms, and that is 20 percent.
Mr. Schilling. Very good. With that I yield back. Thank
you, sir.
Chairman Graves. Ms. Hahn.
Ms. Hahn. Thank you, Chairman Graves, for holding this
hearing. It has been interesting, and I was--I keep saying I am
the new kid on the block, but actually, come next week, I think
I will actually have been here a year. And I really have loved
being on the Small Business Committee, and I have convened a
small business advisory council that advises me on issues and
legislation that Congress is, you know, considering how it does
impact small businesses. And I have gone around and talked to
hundreds, over 100 small businesses myself because I want to
know, you know, what can the Federal Government do? Or can we
be more helpful? Should we get out of the way? What is the
burden? What is keeping you from succeeding, from growing, from
hiring? Because I believe, like a lot of people here, that
small businesses really are the backbone of our economy. I
think they are the key to actually turning this economy around.
They are the ones that are actually hiring folks right now.
So we want to do what we can to support them. But when I
talk to them, I am not hearing as much about that it is the
environmental regulations that are keeping them back. They
always love to say, Janice, we need more customers. That is
what is going to help us. We want the economy to turn around.
We want other people to have jobs so that they can spend their
money in our businesses.
And in my community in Los Angeles, it has actually been
some of the environmental regulations that have created small
businesses. We have had very strict environmental regulations
at the Port of Los Angeles, and what it has done is create this
whole new technology, this clean-air technology that spawned
businesses that used algae to reduce stationary source
emissions. It has allowed an electric truck company to actually
create the first long-haul electric truck, and this guy has
actually sold his electric drive system to China. And he has
created about 150 jobs.
So I know regulations can be burdensome. I know that is
what we are hearing today. But for me, and Mr. Merrick, you
know, I am trying to get--being on this committee, I know that
we oversee the Small Business Administration. So I want to get
a sense from you in the context of the EPA, and some of these
regulations, what has been your experience, or some of your,
you know, other small businesses that you know, directly with
the Small Business Administration in helping you comply with
regulations, or helping explain some of the regulations that
are coming down? How has that experience been, and is that an
area that we could probably maybe do a better job of?
I mean, it is all about resources with the SBA as well, but
is that a better connection with small businesses from the
Federal Government's perspective that we can actually help with
some of these problems?
Mr. Merrick. I wouldn't say that the EPA has gone out of
its way to be helpful, and I would like to start by making a
point about in remodeling what a small business is. Most
remodelers are one- or two-man operations, and recordkeeping
for them can be a huge burden. Many of them, their idea of
recordkeeping is a shoebox that they dump receipts in and dump
them on their accountant's lap at tax time. So asking them to
do any kind of regulation bookkeeping is a burden on them, and
as you pointed out with the new businesses that are created, as
new businesses are created, old businesses sometimes have to go
away.
And one of the unfortunate side effects of regulations is
the smaller one- or two-man businesses simply don't have the
resources within their own organization to function with all of
the regulations. My primary concern as a small businessman is
the economy. And as I look at my business, I am large enough to
keep records properly, and I live in fear of the EPA walking
into my operation and not criticizing me on the way I protect
people from lead paint, but on the records I am keeping about
how I did that.
Ms. Hahn. And again, you didn't really comment on the, you
know, the Small Business Administration.
Mr. Merrick. It was a long question.
Ms. Hahn. What is your interaction--I know, and a lot of
pontificating. What is your experience with them?
Mr. Merrick. With the SBA?
Ms. Hahn. Yeah, with the SBA?
Are they helping you comply with some of these, or to
understand some of these regulations? Or is that a resource
that you even access?
Mr. Merrick. Yeah, I would say it is a resource that I
don't access and I can't honestly answer that question.
Ms. Hahn. Okay. And when I get my bid from the contractor
on remodeling, should I triple the time and double the money?
Just kidding.
Mr. Merrick. No, but I do have a card.
Ms. Hahn. Thank you, Mr. Chairman.
Chairman Graves. Mr. West.
Mr. West. Thank you, Mr. Chairman, and thanks for the panel
for being here. And, you know, I think everyone agrees there
has to be some, you know, regulation that is out there to make
sure that we do have a free market that operates properly and
does not put the consumer at a disadvantage. But I think there
is a simple maxim out there that the more you regulate
something, the less you get of it.
You know, I am down in the State of Florida, and we have
the EPA suing our State over this thing called numeric nutrient
criteria, which is basically telling our farmers and some of
our local municipalities that they have to produce storm drains
or runoff water that is parts per billion purer than rain
water. And of course, when they were challenged, the EPA
couldn't tell them where they got that formula from. You know,
we have got a--we are big in the maritime industry down along
the coastline there, southeast coast. Twin Vee Catamarans, you
know, the gentleman there, Roger, had to hire an EPA-compliant
assistant because of all of the regulations that were coming
down as far as, you know, construction, and gasoline tank
construction, and motors, and things of that nature. And that
one EPA compliant assistant caused him to not be able to hire
three people to build boats.
And so, you know, my question to you all, and the panel is,
you know, do you all believe that the small business, you know,
the Flexibility Act, the panel that works with the Regulatory
Flexibility Act, they are failing in trying to constrain or
rein in the EPA as far as, you know, listening to you and
taking into account some of the ramifications thereof on your
businesses and industries, what have you, before they issue
these regulations.
And before I close out, and get your response, you know,
Lisa Jackson came up here, the administrator of the EPA last
year before the Energy and Commerce Committee, and she was
asked, did she take in the economic impact of the regulations
that they are producing? She said no. And that is the problem
that I have.
So I would like to know what impact you are seeing and
whether you believe the small business Regulatory Flexibility
Act and the panel is really meeting up to its intents or are
you just getting steamrolled?
Mr. Knapp. Congressman, thank you very much. By the way, it
is a pleasure to meet you.
Mr. West. Thank you.
Mr. Knapp. I am not sure what that is about. Thank you,
Congressman.
Mr. West. We are all from the south, Mick. You can like
each other.
Mr. Knapp. We try to be polite, don't we?
Mr. West. Mick is not polite.
Mr. Knapp. There is always that balance. There is always
that balance between protecting the health and safety of our
people and our environment, and not having that heavy burden.
And that is what the RFA is supposed to look at, at least for
the small businesses that will be impacted by those
regulations. To the degree they are--may not be able to work
with everybody, to the extent they need it, I will go again and
say that a lot of it comes back to resources. I don't think
that the EPA has----
Mr. West. I don't think the EPA needs more stuff.
Mr. Knapp. Well, that is not what I hear here. But that is
okay. If you want good quality work out of any organization,
whether it be private sector, or public sector, you have got to
make sure that it has the adequate funds to do the job. And I
don't think that the EPA has any malevolence in it. Can they do
better from time to time? Probably can. But so can every
organization. But thank you, sir.
Mr. West. But in 2011, the Federal Government added over
71,000 pages of new regulations to the Federal Register. That
is unconscionable to me. And look, I--22 years in the United
States military. I understand accomplishing a mission without
having a whole lot of resources. And I think that the focus of
the EPA is really counterproductive to our small businesses and
our free-market growth. And that is why I am trying to get the
understanding. Are they really listening to you? Is there any
consequence out there for them not listening to you?
Mr. Brediger. The answer is no, they are not listening, in
my opinion. The EPA has some very intelligent people on staff.
When we have convened these SBREFA panels, we bring a very
talented group of people together with the common goal of
trying to understand these very complex issues. And from my
perspective, we are just choosing to ignore those or water them
down, or discount them. For example, take the recent
recommendations that the panel made on our Boiler MACT panel to
preclude the addition of scrubbers. For our community, we are
looking at this rulemaking alone costing anywhere from $8.5 to
$12 million per unit, and we have four units, sir, and our
budget is only $30 million. These scrubbers alone add in the
neighborhood of $2- to $3 million for those overall costs.
The EPA just doesn't seem to want to recognize those costs,
or take the data that our panel members bring in the case. They
say well, we have done our study. We have done our own
economics. But we have seen in my opinion, sir, some of these
estimates off by magnitudes of three or four. And the EPA says
we have done our estimates, check the box. We have done our
job. Time to move on.
Mr. West. Well, if I can ask just a short follow-on. The
people that you are talking about showing you their work, are
they really and truthfully, you know, familiar? Do they have
experience in your industry? Or are they just sitting back
crunching numbers?
Mr. Brediger. Somewhat.
Mr. West. Come on now. Throw the dog a bone, okay? You have
got to give me a definitive answer. You sound like a
politician.
Mr. Brediger. I am trying not to be, sir.
Mr. West. Okay.
Mr. Brediger. Generally not. I would say if you are looking
to try to take the expertise that the panel members bring to
these committees, and match that up against who the agency
brings in to the table, we have a far superior panel member on
board, and that is where a lot of the rub is at. We fail both
on defending economics. We are technically more superior in my
opinion.
Mr. West. Thank you, Mr. Chairman. I yield back.
Chairman Graves. Okay, Mr. Hanna.
Mr. Hanna. Mr. Knapp, how are you doing?
Mr. Knapp. I am on the hot seat tonight, aren't I?
Mr. Hanna. I don't think so. I think people are sitting
here wondering if you are really a businessman or not.
Mr. Knapp. I can assure you, sir, I have been for a number
of years.
Mr. Hanna. Me too. I have a quick question. For the SBREFA
reviews, the SBAR, you call it. Mr. Holman, you said
significant economic impact or substantial number--for a
substantial number of small entities. Those are all of those
subjective words.
Mr. Holman. Correct.
Mr. Hanna. Right. Well, what does that mean?
Mr. Holman. What it means is Congress apparently wanted
each agency to look at each situation and try to decide for
that given rulemaking in that situation, and those regulated
entities, what is a significant economic impact and what is a
substantial number of small entities. So what most agencies,
including EPA have done, is to develop guidance documents for
their rule writers, that set out of sort of rules of thumb that
they go by, and how they make that determination in each case.
Mr. Hanna. Can you give me an idea of what that looks like
because that is also so subjective that it doesn't pin down the
agency to have these----
Mr. Holman. I am going to paint a little bit broadly, but
EPA generally says if a rule is likely to have more than a 3-
percent economic impact on small entities, and it affects--it
is a sliding scale, but let's say 1,000 or more small entities
are going to be impacted by the rule, then there is no way that
they can avoid having to go through the panel process under
their guidance.
Mr. Hanna. But you said out of, I think, 300, they had
reviewed 10?
Mr. Holman. That is in South Carolina. That is a state
rule. That has nothing to do with the Federal RFA.
Mr. Hanna. Wouldn't that suggest to you, though, that the
rulemaking procedure is skewed in favor of an agency, whether
it is understaffed, or disinterested, would be able to rush to
judgment?
Mr. Holman. Yes. And I can actually give you some thoughts
on the resource issue.
Mr. Hanna. Go ahead.
Mr. Holman. I mean, I agree that it is tempting to say,
wow, you know, we should just throw more money at EPA because
they need to do this job correctly because it is an important
job. But having watched this process work pretty well during
the mid 2000s, I know that EPA can do this job when they want
to. They do a good job on panels when they are interested in
doing a good job on panels. Resources are not really the
problem. It is the fact that this is not a high priority for
the Agency at this time.
Mr. Hanna. As a matter of fact, the rules, aren't they--
forgive me for interrupting--but aren't they set up to actually
advance the procedure more quickly? And wouldn't the fact that
they are understaffed tend to give them an excuse to have fewer
panels?
Mr. Holman. I think that is--that happens. I think the
biggest most obvious reason that they use to say we don't have
time to do a panel is we have agreed to a deadline, or we have
a deadline put upon us. We just don't have time to do a panel.
Mr. Hanna. So an artificial deadline can be the cause to
undermine a rule that is designed to protect businesses, and
hence, almost automatically undo the very thing it is designed
to do?
Mr. Holman. Yes, and what we have seen in the last few
years is more and more what I call multibillion dollar rules
that have huge impact on the economy, including small
businesses, and that unfortunately, the Agency often treats a
small business the same way they treat, you know, a large
corporation. And because we don't go through this panel
process, there is never a chance of trying to figure out how
are these small guys different from the big guys.
Mr. Hanna. Would you say it might be inappropriate for the
agency to be in charge of what it decides or doesn't decide to
review? Wouldn't it be appropriate to have an outside source
that--to decide what panels, what item, what issue should have
a panel, which one should not?
Mr. Holman. Ideally, that would be very good if there was
an agency like OIRA that would decide, is this an appropriate
thing not to be going through a panel.
Mr. Hanna. Right. I mean, I have dealt with a lot of
environmental agencies in my life in my own business, and so
much can change from individual to individual. You have
different inspectors on different days and different outcomes
and hugely different costs to whatever I was doing. Thank you
very much.
Mr. Holman. Thank you.
Chairman Graves. Mr. Mulvaney.
Mr. Mulvaney. Thank you, Mr. Chairman. Mr. Knapp, welcome.
Mr. Knapp. Thank you.
Mr. Mulvaney. Mr. Knapp, welcome. Good to see a fellow
South Carolinian. Mr. West commented on his way out that he
didn't really think you were from South Carolina. I assured him
that you were. One of the things that I have learned in the
short time that I have been here, is that I am going to
disagree with folks all the time. We do these hearings all the
time, and we always hear opposing views, which I always
appreciate.
I have also come to know, however, that I would like to
know where the information is coming from. If I am on a hearing
and I have Heritage and Brookings, I can understand where they
are coming from. If I have an economist from Yale and one from
the University of Chicago, I have got a sense for where I am
coming from. So any time I have a group that comes in and calls
themselves the Small Business Chamber of Commerce from any
State, South Carolina or wherever, which at one time or another
has supported Dodd-Frank, the public option health care, Cap
and Trade, thought the stimulus was too small, supports Boiler
MACT, opposed tort reform, and then actually was advocating for
a brand-new State small business government agency, as your
organization has done all of those things, I want to talk a
little bit about who you all are. And I think it is a fair
question. You have heard other folks, you know, say today that
they can't believe someone from a small business group is
saying some of the things you are saying. The group has
actually come up before in conversation. And if we could--
actually, before I ask the question, I have got the stuff off
your Web site and your affiliated groups, your members and all
that, and one of the groups that has been here before us, the
Main Street Alliance. You folks are affiliated with that group?
Mr. Knapp. The Main Street Alliance is an organization we
have worked for. We don't have any formal affiliation with them
other than we have partnered on issues at the national level
before.
Mr. Mulvaney. Got you. And how long has that relationship
gone on?
Mr. Knapp. We have probably been working with Main Street
Alliance on issues on and off probably for the last 3 years.
Mr. Mulvaney. Will you play my video, please, is that
ready?
[Video was played as requested.]
Mr. Mulvaney. Actually, what I went on to tell Mr. Daley at
that time was, at your site, your organization was linked on
their Web site as yours is. Later that day, your organization
came off of their Web site. So I am going to ask you a simple
question. Was Mr. Daley telling us the truth when he said he
was not affiliated you folks at all?
Mr. Knapp. Well, Congressman, if I might, I think that was
very unfair you to do that to Bill Daley. He is a friend of
mine. He did not know you were going to bring that up. He had
no idea where that came from. He is not responsible for what
goes on the Web site with Main Street Alliance. So I think that
was really, really unfair of you to do that. So that----
Mr. Mulvaney. Why did you think it was unfair, Mr. Knapp?
Mr. Knapp. It was unfair because the gentleman was there to
talk about another issue altogether. And for you to bring up
and start talking about the South Carolina Small Business
Chamber of Commerce, which was not invited to the table, I
don't think it is up to Mr. Daley to defend us. I can do that
very well. Thank you.
Mr. Mulvaney. Well, was it up to Mr. Daley to not tell us
the truth about his affiliations?
Mr. Knapp. Mr. Daley was not telling you the truth. He does
not run that Web site. He doesn't know who put that on there,
or what it says. But all it does is the same as ours. We have a
relationship from time to time, with the Small Business
Majority, with the Main Street Alliance, with some other
organizations. It doesn't mean we are part of them. We just
have a good relationships with them, and want to promote them
to other people to come to our Web site.
Mr. Mulvaney. I don't remember what Mr. Daley's title is
with the Main Street Alliance. I do remember, however, that he
had enough influence over the Web site to take your
organization off of it before the end of the day.
Mr. Knapp. And I can assure you that Mr. Daley did not do
that because I got contacted by Sam Blair, who is with the
administration of the Main Street Alliance. He told me what
went on. He sent me that video, which I was appalled at, and
they did remove me because frankly, sir, you intimidated them.
Mr. Mulvaney. I think it is always fair, Mr. Knapp, to know
the motivations for the people who are giving testimony here.
Mr. Knapp. That is fine.
Mr. Mulvaney. And to know who they are affiliated with;
know who they really are. And again, if you are going to be
this Small Business Chamber of Commerce and come in and say
things like, you know what I really think will pump up the
economy is to give the EPA more money, then you can fully
expect us to start asking some questions about your
organization, the Main Street Alliance. In fact, let's talk
about your organization.
Mr. Knapp. Well, no, no, let me interrupt you, sir.
Mr. Mulvaney. No, no, you don't get to do that, actually,
Mr. Knapp. We are not on your radio show.
Mr. Mulvaney. Let's talk about your organization. You
advertise as having 5,000-plus members. How many of those are
members of the South Carolina Academy of Trial Lawyers--oh, I
am sorry, the new name is the South Carolina Association for
Justice.
Mr. Knapp. Association for Justice. We provide membership,
we grant membership to the associations that belong as trade
associations. This has been a long standard of ours. So when
the trial--when the South Carolina Association for Justice
becomes a member and has a board member, we convey membership
on all of them. It doesn't mean that they are paying dues, but
we convey a membership.
Mr. Mulvaney. In fact, it is free to be a member of your
organization.
Mr. Knapp. You can. Absolutely, sir. We have always been
under the principle that we would rather have more members than
more money. Now, that means we live hand to mouth, but it also
means that we get to communicate our message to the members, to
the people of South Carolina, to the small businesses, and we
find that it resonates.
Mr. Mulvaney. But of your 5,000-plus members, and is it
6,000, or is it about 5,000, is that fair? That is what your
Web site says.
Mr. Knapp. Yes, sir.
Mr. Mulvaney. How many of those are you counting are
members of the Academy of Association for Justice?
Mr. Knapp. Association for Justice. It is probably about--I
would say that their membership is probably around 1,500.
Mr. Mulvaney. Okay. Then how many of your members in that
5,000 are members of the workers' comp bar?
Mr. Knapp. They are all--as you probably know, sir, the
Injured Workers Advocates and the Association for Justice
basically have overlapping membership.
Mr. Mulvaney. Got you. All right. Do you have any home
builders who are your members?
Mr. Knapp. You know, we used to have the home builders as a
trade association, and then they dropped off as a trade
association member. We still have our heating and air
conditioning members of our association.
Mr. Mulvaney. So you don't have any home builders as
members?
Mr. Knapp. No. We do not have the trade association. I
cannot answer the question of how many or if we have any home
builders themselves. I do not look over our membership lists.
Mr. Mulvaney. So if I asked you the question have you asked
your home builder members if they thought it would be a good
idea to give the EPA more money, you wouldn't know their
response to that?
Mr. Knapp. I would not know. I have not asked them that
question.
Mr. Mulvaney. Do you have any remodelers?
Mr. Knapp. Yes, we do have remodelers. I know we do.
Mr. Mulvaney. And did you ask them about your presentation
here today, that you think giving EPA more money----
Mr. Knapp. No, sir. We did not poll our membership and ask
them what I should say today, as I imagine that most members
did not poll every one of their members to ask them what they
are going to say today.
Mr. Mulvaney. But you refer to a lot of polling in your
statement today. Where do those polls come from?
Mr. Knapp. Those polls are national polls conducted on
behalf, or conducted for the American Sustainable Business
Council and the Main Street Alliance and the Small Business
Majority, and that is where those polling data come from.
Mr. Mulvaney. Do you have any paving contractors?
Mr. Knapp. We may have paving contractors. I would be glad
to go research this when I get back.
Mr. Mulvaney. And we all reserve the right to ask questions
afterwards, so we would be more than happy to send you those
things.
Mr. Knapp. Thank you, sir.
Mr. Mulvaney. I could ask the same thing about convenience
store owners, swimming pool installers, auto body shops.
Mr. Knapp. Yes, sir.
Mr. Mulvaney. I am just stunned, Mr. Knapp, again, as I was
with the Main Street Alliance, that somebody comes in and says
look, I represent small business, and I really think the way we
can fix things is to give the EPA more money. I have never
heard that before from anybody other than the EPA, and other
folks like the EPA a lot. I am just stunned.
I could ask you the same questions about Boiler MACT, which
you support. And I have been through our State. You know, we go
home as much as we possibly can, and every small business I go
to is scared to death of Boiler MACT. And yet you are here
promoting it.
You don't get to ask any questions, Mr. Knapp. Again, we
are not on your radio show. Which reminds me, this is not--your
work with the South Carolina Small Business Chamber of Commerce
is not your full-time gig, is it?
Mr. Knapp. Although, sir, I do not get paid a full-time
salary, or I probably spend the majority of my time on the
South Carolina Small Business Chamber of Commerce, and I might
add, we have never taken a position on that Boiler issue.
Never.
Mr. Mulvaney. Now, a majority of your time--how much of
your time is in at the Knapp Agency, your public relations firm
that you own and operate?
Mr. Knapp. Well, I am not sure that this is under the
purview of this committee, but I would probably say about 15,
20 percent of my time is with my public relations firm.
Mr. Mulvaney. And how much of it is as the progressive talk
show host on WOIC in Columbia?
Mr. Knapp. I have a 2 hours a day show every weekday
afternoon from 4 to 6, and, sir, I invite you to be a guest any
time you want to.
Mr. Mulvaney. In fact, I listened a couple days ago when
you invited in Mr. Matt Gertz, the Deputy Research Director for
Media Matters, for his input. You were looking for a
responsible media representative to talk about what was going
on in the right wing media, and you invited Media Matters in to
do that.
And, again, do you want to give a plug to the radio, it is,
what, 1240 AM or something?
Mr. Knapp. Well, it is 1230 AM on the dial. You can go to
youneedtoknow.info and stream it any time you want to.
Mr. Mulvaney. Mr. Knapp, I appreciate you coming here
today. You have been a good sport. But, again, I think it is
important that we understand exactly who is giving us the
testimony. By the way, who invited you to be here today?
Mr. Knapp. I was invited to be here today, that invitation
came through the American Sustainable Business Council.
Mr. Mulvaney. But were you a Republican-requested witness
or a Democrat-requested witness?
Mr. Knapp. No, sir, I was in the minority.
Mr. Mulvaney. Okay. Again, nothing in what I have tried to
do here, Mr. Knapp, today is to undermine the veracity of what
you are saying. I actually believe that you believe just about
everything that you have said.
Mr. Knapp. Thank you, sir.
Mr. Mulvaney. And that is not my point here. My point here
is to let everybody on this committee know who is giving them
testimony, to take that into consideration as we sit here and
go through the issues.
There is one thing I don't believe, Mr. Knapp, and I will
close with this: You said that you hated to say this, but you
really think the EPA should get more money. And I don't believe
that. I believe that you really do want to say that and you
really do believe the EPA should get more money.
With that, I will yield back the balance of my time. Thank
you, Mr. Chairman.
Chairman Graves. Mr. Tipton.
Mr. Tipton. Thank you, Mr. Chairman. I would like to thank
our panel for taking the time to be able to be here. I am a
small businessman as well, and one thing that I find incredibly
disturbing is that in order to be able to fill out all of the
forms, be able to fill all the requirements, we actually have
out of the SBA a report saying that we are spending $10,585 per
employee to be able to comply.
You know, we are facing an incredible debt in this country,
and the best solution to that is to be able to get people back
to work in this Nation. To be able to get this economy moving
once again, it is going to have to actually come from the
private sector.
We know we have a problem with the EPA. One of the first
town hall meetings that I held better than a year ago was in
the San Luis Valley of Colorado visiting with potato farmers.
And our issues are always about water. They didn't bring up
water. They brought up the EPA. The overreach and the tentacles
seem to be extraordinary. And we all want clean air, we all
want clean water, but we are continuing to see an agency that
is continuing to expand and to overreach.
I guess I would just like to ask the panel, do you think
that it is appropriate to have an agency that is writing rules
and regulations, and the only way to be able to reverse those
once they go final is having the obligatory act of Congress?
Should there be a better way? Should Congress be able to roll
up its sleeves and actually get involved in this regulatory and
review process before the EPA goes final? Mr. Holman?
Mr. Holman. You know, we have actually--we have supported,
the Chamber has supported the REINS Act. There are some
questions that come up about how that would work in practice in
terms of if it was implemented. But clearly, Congress needs to
take some increased role in this process. The fact that we have
an agency that essentially no one is home in terms of the
oversight of the agency and how they do panels and how they do
their business and writing billion dollar rules. You know, last
year in 2011, EPA had four rules that are over $1 billion each
in the pipeline, more to follow, more coming. We know that.
What we are asking in this particular hearing is at least
have some place at the table for small businesses. If you say
EPA thinks that is too much work, they don't want to take the
time to do it, they don't want oversight from Congress, we
would say there needs to be oversight from Congress on that.
Mr. Tipton. Would you agree with that, Mr. Knapp?
Mr. Knapp. I agree with Mr. Holman that that poses some
problem if Congress has to approve every regulation that is
promulgated by an agency. I think the cumbersomeness of that
would be amazing, and given our division in Congress, it is
hard to get anything done; essentially I think it would shut
down all future regulations.
Mr. Tipton. Are you calling on the U.S. Senate to approve
the REINS Act passed by the U.S. House of Representatives?
Mr. Knapp. No, sir, we are not.
Mr. Tipton. Mr. Brediger?
Mr. Brediger. Back where I come from, we believe that the
EPA works under the auspices of Congress, and when we see these
regulations rolling out and when we are looking for relief, we
seem to have to find our relief in the Federal Court system.
That troubles us. We should be coming back to this body seeking
the relief and requiring the kind of oversight that is
necessary before the genie pops out of the bottle. We seem to
be chasing our tail all the way around. We think it is this
Congress' job to stop some of these things before they come out
so we can use these panels, for example, to complement the work
that should be done.
Mr. Tipton. So effectively, what you are saying is if EPA
is asking for input, maybe it would be a good idea for them to
listen?
Mr. Brediger. Yes.
Mr. Tipton. Not a bad idea.
Mr. Brediger. Not a bad idea.
Mr. Tipton. Mr. Merrick?
Mr. Merrick. To expect that every rule that comes out of
the EPA would be perfect and ready for the street every time I
think is far-fetched. There ought to be some kind of review
process to review the rules once they have been implemented and
see how it is working. I know we have gone back to the EPA and
they are very gracious about meeting with us. They take our
comments and disappear behind the doors and we never hear from
them again.
Mr. Tipton. And are forgotten again. You know, you had
mentioned in your testimony that the EPA had a set emission
limits that are unachievable based on their failed
calculations. Is this a pretty common occurrence?
Mr. Merrick. I believe that would be----
Mr. Tipton. Was that from Mr. Brediger?
Mr. Brediger. The answer to that is yes. Yes, we have
limits that are beyond where technology exists today. Yes, sir.
Mr. Merrick. And they have limits on our work that are
beyond capability too.
Mr. Tipton. Great. Well, do you think maybe if we really
want to be able to fix something, Mr. Knapp, maybe you want to
be able to jump in on this as well, the last I was able to
read, and the numbers may have been adjusted up or down, but it
was about a $10.8 billion budget, something along those lines
for the EPA. If we really want to fix the problem, maybe we
take some of that money that has already been appropriated
rather than putting a burden back on a business and we actually
fix the problem. Would that be an approach?
Mr. Knapp. Well, as you have already heard my testimony, I
think part of the problem that these gentleman are experiencing
is because of the lack of resources and support for the EPA. So
I don't know that by cutting their budget even more and doing
something else with it, it is going to get any better outcomes
than what they are getting now.
Mr. Tipton. So forget the goal. Just increase the
bureaucracy?
Mr. Knapp. Sir, it is not a matter of increasing the
bureaucracy. But if Congress has given them instructions and
provided them with a document that is called the RFA, and they
are to carry it out to the best extent to try to work with
these organizations, and if they have too quick a deadline and
if they don't think they are getting--if they are getting short
shrift, then there may be a problem of resources, and that is
the way they are dealing with it.
Mr. Tipton. I am over time. I guess what is really
disturbing about that is we continue to hear testimony from a
variety of different sources that the EPA does not listen, that
it is agenda-driven from within, and the RFA is something that
they aren't really paying attention to. The impacts that we are
truly seeing on small business across this Nation and in real
lives is devastating right now to the economy, and we need to
be able to find a better commonsense balance to it.
So thank you gentleman for being here.
Chairman Graves. With that, I want to thank all of you for
participating in the hearing. When the EPA fails to comply with
the Regulatory Flexibility Act, small businesses suffer, and I
think that the quality of rules that the EPA promulgates, I
think that suffers also. The EPA should be working
collaboratively with small businesses to ensure that small
business impacts are analyzed and that less burdensome
alternatives are considered.
For the record, I want to say that tomorrow the EPA
administrator, Lisa Jackson, is testifying before the Committee
on Science, Space, and Technology, and we are going to be
submitting a letter for the record outlining the concerns with
EPA's compliance with the RFAs that were raised in today's
hearing.
In addition, we will continue to exercise our oversight
responsibilities to ensure that Federal agencies do comply with
the RFA.
With that, I would ask unanimous consent that members have
5 legislative days to submit statements and supporting
materials for the record. Without objection, that is so
ordered.
With that, the hearing is adjourned. Thank you.
[Whereupon, at 2:10 p.m., the committee was adjourned.]

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