[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] THE BENEFITS OF A DEREGULATORY AGENDA: EXAMPLES FROM PIONEERING GOVERNMENTS ======================================================================= JOINT HEARING BEFORE THE SUBCOMMITTEE ON INTERGOVERNMENTAL AFFAIRS AND THE SUBCOMMITTEE ON HEALTHCARE, BENEFITS, AND ADMINISTRATIVE RULES OF THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION __________ SEPTEMBER 27, 2018 __________ Serial No. 115-108 __________ Printed for the use of the Committee on Oversight and Government Reform [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov http://oversight.house.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 32-690 PDF WASHINGTON : 2018 Committee on Oversight and Government Reform Trey Gowdy, South Carolina, Chairman John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland, Darrell E. Issa, California Ranking Minority Member Jim Jordan, Ohio Carolyn B. Maloney, New York Mark Sanford, South Carolina Eleanor Holmes Norton, District of Justin Amash, Michigan Columbia Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts Virginia Foxx, North Carolina Jim Cooper, Tennessee Thomas Massie, Kentucky Gerald E. Connolly, Virginia Mark Meadows, North Carolina Robin L. Kelly, Illinois Ron DeSantis, Florida Brenda L. Lawrence, Michigan Dennis A. Ross, Florida Bonnie Watson Coleman, New Jersey Mark Walker, North Carolina Raja Krishnamoorthi, Illinois Rod Blum, Iowa Jamie Raskin, Maryland Jody B. Hice, Georgia Jimmy Gomez, Maryland Steve Russell, Oklahoma Peter Welch, Vermont Glenn Grothman, Wisconsin Matt Cartwright, Pennsylvania Will Hurd, Texas Mark DeSaulnier, California Gary J. Palmer, Alabama Stacey E. Plaskett, Virgin Islands James Comer, Kentucky John P. Sarbanes, Maryland Paul Mitchell, Michigan Greg Gianforte, Montana Michael Cloud, Texas Vacancy Sheria Clarke, Staff Director William McKenna, General Counsel James Lesinski, Counsel Brick Christensen, Senior Policy Advisor Sarah Vance, Healthcare, Benefits, and Administrative Rules Subcommittee Staff Director Sharon Casey, Deputy Chief Clerk David Rapallo, Minority Staff Director Subcommittee on Intergovernmental Affairs Gary Palmer, Alabama, Chairman Glenn Grothman, Wisconsin, Vice Jamie Raskin, Maryland, Ranking Chair Minority Member John J. Duncan, Jr., Tennessee Mark DeSaulnier, California Virginia Foxx, North Carolina Matt Cartwright, Pennsylvania Thomas Massie, Kentucky Wm. Lacy Clay, Missouri Mark Walker, North Carolina Vacancy Mark Sanford, South Carolina ------ Subcommittee on Healthcare, Benefits, and Administrative Rules Jim Jordan, Ohio, Chairman Mark Walker, North Carolina, Vice Raja Krishnamoorthi, Illinois, Chair Ranking Minority Member Darrell E. Issa, California Jim Cooper, Tennessee Mark Sanford, South Carolina Eleanor Holmes Norton, District of Scott DesJarlais, Tennessee Columbia Mark Meadows, North Carolina Robin L. Kelly, Illinois Glenn Grothman, Wisconsin Bonnie Watson Coleman, New Jersey Paul Mitchell, Michigan Stacey E. Plaskett, Virgin Islands C O N T E N T S ---------- Page Hearing held on September 27, 2018............................... 1 WITNESSES Ms. Laura Jones, Executive Vice President and Chief Strategic Officer, Canadian Federation of Independent Business Oral Statement............................................... 6 Written Statement............................................ 9 Mr. Matt Vickers, Product Sales Engineer, New Markets, Xero Oral Statement............................................... 49 Written Statement............................................ 51 Mr. Scott Brinkman, Secretary of the Executive Cabinet, Commonwealth of Kentucky Oral Statement............................................... 56 Written Statement............................................ 58 Mr. Amit Narang, Regulatory Policy Advocate, Public Citizen Oral Statement............................................... 61 Written Statement............................................ 64 APPENDIX January 13, 2015, Gallup ``American Entrepreneurship: Dead or Alive? submitted by Mr. Palmer 98 THE BENEFITS OF A DEREGULATORY AGENDA: EXAMPLES FROM PIONEERING GOVERNMENTS ---------- Thursday, September 27, 2018 House of Representatives, Subcommittee on Intergovernmental Affairs, joint with the Subcommittee on Healthcare, Benefits, and Administrative Rules, Committee on Oversight and Government Reform, Washington, D.C. The subcommittees met, pursuant to call, at 2:14 p.m., in Room 2247, Rayburn House Office Building, Hon. Gary Palmer [chairman of the Subcommittee on Intergovernmental Affairs] presiding. Present from Subcommittee on Intergovernmental Affairs: Representatives Palmer, Grothman, Massie, Walker, Raskin, and DeSaulnier. Present from Subcommittee on Healthcare, Benefits, and Administrative Rules: Representatives Jordan, Walker, Grothman, and Krishnamoorthi. Mr. Palmer. The Subcommittee on Intergovernmental Affairs and the Subcommittee on Healthcare, Benefits, Administrative Rules will come to order. Without objection, the presiding member is authorized to declare a recess at any time. Over the past several decades, regulations imposed by the Federal Government have had an adverse impact on economic activity as these Federal regulations have accumulated over time. Regulatory accumulation is a drag on our economy, and it stifles innovation. According to a recent study by the Mercatus Center, the Federal regulations had held at the 1980 levels, our economy would be nearly 25 percent larger than it was as of 2012. We have seen the results of this regulatory accumulation and the stunning decline of the number of new businesses. A Gallup organization report from back in 2015 showed that American business deaths outnumbered business births. I have a copy of that entitled, ``American Entrepreneurship: Dead or Alive?'' that I would like to enter into the public record and will do so without objection. Mr. Palmer. In my experience in Alabama, people don't want to start a business when the overwhelming uncertainty of the regulatory process threatens to come down on them. Why bother when the risks are compounded by a myriad of complex and sometimes contradictory regulations? Recognizing the potential benefits of a deregulatory agenda, President Trump called for a one-in, two-out ratio for new regulatory actions. The shift in regulatory policy is expected to save business owners and entrepreneurs both time and money. While the United States is still in the early stages of implementing regulatory reform, we know from some of our foreign friends and allies that the push for deregulation has resulted in tremendous outcomes. In British Columbia, the Canadian Government experimented with regulatory reform beginning 2001. To date, the British Columbia Government has repealed more than 40 percent of their regulatory requirements. As a result, British Columbia experienced a period of per-capital GDP growth and business development that outpaced the national average in Canada. Another success story took place in Australia where the national government initiated a standard business reporting or SBR system that made it easier for businesses to report one time rather than typical duplicative reporting mechanisms. Savings from the SBR from 2015 to 2016 were roughly $1.1 billion in Australian dollars or $750-800 million U.S. However, we don't have to look so far for success stories. Our 50 States have shown what may work for the rest of the country. Kentucky Governor Matt Bevin instituted a red-tape reduction initiative. State officials are undertaking review of the entire pool of State regulations to identify those that are unnecessary, duplicative, and ineffective. In a short period of time, Kentucky has repealed 453 regulations, which is nearly 10 percent of Kentucky's total pool of regulations. Kentucky officials report these efforts have led to the creation of roughly 40,000 jobs and $9.2 billion in direct investment in the State. We are fortunate to have with us at today's hearing witnesses who can speak to each of these examples. I am eager to learn from them, what worked, what didn't, and what could be done differently. I would like to make clear that this hearing is not about slashing regulations, as some may suggest. Our focus today is on streamlining reporting to make compliance burdens easier. Our focus is on helping small businesses survive and thrive in the 21st century. We are talking about eliminating obsolete, duplicative, and contradictory regulations that don't make sense. I will close with something President Obama said about regulations back in 2011 in the Wall Street Journal. He wrote that, ``Sometimes those rules have gotten out of balance, placing unreasonable burdens on business, burdens that have stifled innovation and have had a chilling effect on growth and jobs.'' I bring this up because to me this is something that we should all agree is important to our nation. For a nation as economically powerful as ours to lag behind our friends and allies when it comes to innovation and new business creation is not only unfortunate, it is a missed opportunity. I ask my Democratic friends to join us in making this a priority. I thank the witnesses again and look forward to hearing from each of you about regulatory reform success stories. I will also ask to have this Gallup report included in the record, as I mentioned earlier. And without objection, so ordered. Mr. Palmer. I now recognize the ranking member of the Healthcare, Benefits, Administrative Rules Subcommittee, Mr. Krishnamoorthi, for his opening statement. Mr. Krishnamoorthi. Thank you, Mr. Chairman, for holding today's hearing, and thank you to all the witnesses for coming. And thank you for the audience for participating. I agree with all my colleagues that we need smart regulations, and we need to make sure that we keep the interests of taxpayers first. On the other hand, I am incredibly concerned about recent actions by the Trump administration, which I believe are shortsighted and will harm millions of Americans and increase costs to the Federal Government. In his second week in office, President Trump issued an executive order mandating that two regulations be eliminated for every new regulation proposed. This so-called two-for-one policy ignores numerous and well-documented economic benefits derived from many of the regulations that are proposed to be eliminated. President Trump's attempts to rollback student loan protections, offshore drilling protections, environmentally sound fuel-efficiency standards, and consumer financial protections should alarm all people, Democrats and Republicans alike. If your workplace is OSHA-certified, if your food is approved by the FDA, or your local water supply certified as clean by the EPA, this executive order places your well-being potentially at risk. Just this week the House overwhelmingly passed an FAA reauthorization that contains several pro-consumer protections. It prohibits airlines from forcibly removing passengers, requires a minimum leg room for each seat, prohibits the use of cell phones in flight, and requires all airports to provide nursing rooms for mothers and babies. I don't think that we should be forcing unelected bureaucrats to repeal any of these requirements without adequate thought and investigation. The President's order imposes a needlessly arbitrary standard on public agencies that have a charge to serve the public. This particular rule ties the hands of public employees and prevents them from using the best-available evidence about which regulations should stay and which should be revised or repealed. The Office of Management and Budget annually issues a congressionally mandated report that identifies the cost of government rules on the private sector and the estimated financial benefits produced for the American people. Every Federal rule has a cost and a benefit, and this report is key to making sure that the benefits always outweigh the costs. We owe this to every taxpayer. Every year, this OMB-mandated report shows objectively that the economic benefits of Federal rules far outweigh the costs. Just last year, the totals were $4.9 billion in costs on businesses and $27.3 billion in benefits to the American public. This is a report that was commissioned by the Trump Office of Management and Budget. Let me be clear. The benefits always have to outweigh the rules. There is no question about it. We have to make regulations smart, and we owe this to the taxpayers. However, in a case like this where the Trump administration's own OMB issues a report showing that the benefits of these rules and regulations outweigh the costs by a measure of five to one, does it really make sense to have a two-for-one policy in terms of eliminating one for every two that are proposed? I thank our witnesses for sharing their testimony today, and I look forward to continuing this important discussion. Thank you. Mr. Palmer. I now recognize the chairman of the--excuse me. That is not predicative. Mr. Raskin. Let's not get ahead of ourselves. Mr. Krishnamoorthi. Let's not get ahead of ourselves. Mr. Palmer. Yes. Yes. I now recognize the ranking member of the Intergovernmental Affairs Subcommittee, Mr. Raskin, for his opening statement. Mr. Raskin. Chairman Palmer, thank you so much. So a couple months ago we convened a hearing to discuss the theory that government-issued regulations are failing the American people, and at that hearing I tried to defend our regulatory process from the notice and comment period through regulatory enforcement as simply a set of rules. And I reminded my colleagues that rules are ubiquitous. There are sets of rules we follow every day, and all of us have no doubt followed dozens of rules even just since waking up this morning. Our job in Congress here is to pass laws that reflect the values of the people and implement our priorities, and agencies help us do that by adopting rules to execute and enforce those laws. At that same hearing we took a tour of some of the most celebrated rules ever promulgated by agencies, for example, the seatbelt rule, the overtime rule, and so on. Like these, most Federal rules are commonsense protections of vital freedoms that we cherish, freedom from air pollution and water pollution, freedom from dangerous consumer appliances, freedom from workplace discrimination and predatory business practices and monopolies. Rules have made our people freer and our country safer, healthier, cleaner, and more secure. And my opinion has not changed on that. As we know, regulation is just a fancy name for a rule, and we all live according to them. Every household, every family, every sport, every school, every road and highway, every institution, every economy, every corporation, Congress and indeed this committee, we all have rules that we adhere to and live by. In one of his first official acts, President Trump issued an executive order directly targeting rules. His so-called two- for-one policy arbitrarily called for the repeal of two existing rules for every new one promulgated with zero attention to the economic and social benefits that those rules might be continuing to our country. That's like saying every time we pass a law, we should have to repeal two laws. But I remember a moving passage from Judge Learned Hand who said ``Thou shalt not ration justice.'' President Trump and my colleagues in the House have made destroying government rules one of their top priorities. They have made deregulation a political fetish. And they are indeed rationing justice. Behind all the deregulatory rhetoric, the majority is on a crusade to scrap rules that limit the power of big corporations or rein in Wall Street and the financial industry. They are targeting regulations under the Clean Water Act and the Clean Air Act, rules that restrict the freedom of polluters. I can't count the times we voted in the House on creating new rules that interfere with women's rights to make their own healthcare decisions and decisions about birth control and reproduction. We have stalled the Farm Bill over new regulations that they want to seek. They want to impose work requirement rules on SNAP recipients, and they are inventing new rules to stop legal immigrants who want to become citizens from accessing certain government programs. This kind of bureaucratic extremism proliferates more regulation and more red tape not in the pursuit of justice or freedom but control and power. Since our last hearing in July, the administration has only added to its hit list of targeted Obama-era rules. The administration sold out working-class families who strive to attain a college education by allowing Secretary DeVos to rescind the borrower defense rule. For-profit colleges will now be able to engage in predatory behavior again with relative impunity. Just last month, the White House announced the repeal of fuel-efficiency standards. This troubling rule reversal will allow almost a billion metric tons of carbon dioxide into the atmosphere in the next 20 years and increase consumer spending on gasoline by $20 billion by 2025. Rules generally make our country safer, healthier, and more just. Unfortunately, the administration is using rules to rollback progress, pollute our environment, and imperil our freedoms. The costs of an America without any rules are not hard to imagine and they are impossible to accept. We cannot risk American lives and our nation's environment because the President wants to reward big campaign donors and corporations while using the regulatory boogieman to try to destroy democratically chosen regulations. Let's think pragmatically and not ideologically. Let's remember that Federal regulations are just our rules, and when it comes to building a strong democracy, laissez isn't fair. I appreciate all of our witnesses for their time and testimony today, and I look forward to an important discussion about the continued utility of the rules we all rely on. I yield back, Mr. Chairman. Mr. Palmer. I thank the gentleman. The chair now recognizes the chairman of the Healthcare, Benefits, and Administrative Rules Subcommittee, Mr. Jordan, for his opening statement. Mr. Jordan. Thank you, Mr. Chairman. And I disagree with so much of what my good friend and colleague from Maryland just-- and I do mean good friend. We got a bill we are working on together that would--actually, he mentioned rationed justice. I do think we need to ration regulations, but we got a bill we are working on that focuses on the Constitution and the rights of those in the press not to have the government force them or compel them to give their confidential source away. So I appreciate the gentleman, the professor from Maryland, but I just disagree. I think you go ask almost any American, do you think 72,000 rules that the EPA has on the oil and gas industry in our State is probably too many? It probably is. So that is all we are focusing on here is that idea that maybe we got a little too much government. Let's get back to commonsense regulation. Some of the things I think that the administration has done on the regulatory front have been helpful and have led to this amazing economic growth we have witnessed over the last 20 months, 4.2 percent annualized growth rate right now, which is tremendous, and far better than where we were just a few years ago. So that is what is at stake here. And I appreciate the chairman having this hearing. And because I walked in 22 minutes late for committee, I am going to yield back the remainder of my time so we can get right to our good set of witnesses here. Thank you, Mr. Chairman. Mr. Palmer. I thank the gentleman. I am now pleased to introduce our witnesses: Ms. Laura Jones, executive vice president and chief strategic officer of the Canadian Federation of Independent Business. Thank you for being here; Mr. Matt Vickers, product sales engineer, New Markets at Xero. Thank you; Mr. Scott Brinkman, secretary of the executive cabinet for the Commonwealth of Kentucky, appreciate your presence; and Mr. Amit Narang, regulatory policy advocate at Public Citizen. Thank you, sir, for being here. Pursuant to committee rules, all witnesses will be sworn in before they testify. Please stand and raise your right hand. [Witnesses sworn.] Mr. Palmer. The witnesses may be seated. The record will reflect that all witnesses answered in the affirmative. In order to allow time for discussion, please limit your testimony to five minutes. Your entire written statement will be made part of the record. As a reminder, the clerk in front of you shows--the clock in front of you--and we can get a clerk if we need to. As a reminder, the clock in front of you shows the remaining time during your opening statement. The light will turn yellow when you have 30 seconds left--and unlike a traffic light, that does mean speed up--and red when your time is up. So please remember to press the button in front of your microphone before speaking. I am pleased now to recognize Ms. Jones for her testimony. WITNESS STATEMENTS STATEMENT OF LAURA JONES Ms. Jones. Chairman Jordan, Chairman Palmer, Ranking Members Raskin and Krishnamoorthi, I want to thank you for inviting me to testify. I bring very warm wishes from north of the border. And by way of background, my interest in regulatory reform comes from my roots as an economic researcher and also from my current position at the Canadian Federal of Independent Business, representing and advocating for small-business owners who, like their American counterparts, are deeply affected by regulation. I'm here today to talk about the British Columbia model of regulatory reform, and I think the overarching lesson from this model is that a substantial reduction in government rules is possible without negatively affecting the human health, safety, and environmental outcomes that we all care about. And I think this is important because it speaks directly to the challenge that modern governments in developed countries face, which is how do you best control red tape while protecting the important justified regulations? And we know this is important because excess regulation or red tape leads to a host of bad consequences from reduced incomes to increased income inequality and poverty. Governments of all stripes tend to agree that reducing red tape is a worthy objective, but accomplishing this objective can prove elusive. This is where the British Columbia model stands out. It stands out as a model that has delivered results. The main result is a 49-percent reduction in regulatory requirements since 2001. And the three keys to accomplishing this result: political leadership, regulator involvement, and simplicity. By way of context, British Columbia is Canada's westernmost province, and its reform started 17 years ago in 2001. At the time, economic growth and employment in the province lagged the rest of the country and had done so for most of the previous decade. The '90s is often referred to as the dismal decade in British Columbia. Excessive regulation was--examples of excessive regulation were just not that hard to come by, so, for example, forest companies were told what size nails they had to use to build small bridges over streams. Restaurants were told what size television sets they could have in their establishments. So in 2001, a new government was elected, and they had made the campaign promise that they would improve the economy, including reducing regulation by one-third in three years. The government accomplished this goal and more, and there were three key elements to the reforms. First, a minister was appointed whose only job it was to quarterback and champion these reforms and make sure they were put in place. Second, a measure that was simple enough that it could be applied broadly across government rules was used. And finally, two regulatory requirements had to be eliminated for every new one introduced. And this policy was later changed to one in, one out. In terms of the reforms outcomes, by 2004 the one-third target had been exceeded. And once the target was met, this new one-for-one policy was put in place. But here's the interesting thing: The regulatory restrictions level, requirements level did not stabilize at the one-third reduction but continued to go down to the 49-percent reduction that I said. Regulators continued to identify rules to cut faster than they were adding rules, although there was no longer any pressure to cut. I think that's an interesting outcome. In terms of outcomes, of course, it's also important that this wasn't just about cutting rules for the sake of cutting rules. It was also about maintaining high outcomes. And there were high outcomes of health, safety, and environment that were maintained. Another outcome, the province went from being one of the worst-performing economies in the country to being one of the best. So in conclusion, I want to repeat the three lessons that I think come from this model. Political leadership matters. The involvement of regulators matters. Regulators are not the enemy in this story. They were an important part of the solution. And the final reason for success is simplicity. Somewhat ironically, I think it's tempting to overcomplicate regulatory reform, and the thing that really distinguishes B.C.'s regulatory reforms is its reliance on a clear simple measure that could be applied broadly and communicated easily. And so there's a place for more complicated measures, but there's also a place for simpler ones. And with that, I'll conclude my comments and thank you very much. I look forward to questions. [Prepared statement of Ms. Jones follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. Thank you for your testimony. The chair now recognizes Mr. Vickers for five minutes for his testimony. STATEMENT OF MATT VICKERS Mr. Vickers. Great. Firstly, I want to thank the Committee on Oversight and Government Reform and the subcommittee members here today for the opportunity to discuss standard business reporting. My name is Matt Vickers. I work for a publicly listed accounting software company Xero. In 2005, the Australian Government established a task force to review compliance burdens on Australian businesses. Their report shared that a typical New South Wales business spends 400 hours per year or A$10,000 on the preparation and sending of paperwork to government. It's estimated that the total cost of regulation to the Australian economy in 2005 was A$86 billion or 10 percent of that country's gross domestic product. That's about $62 billion U.S. And Australia has 7 percent of the population of the United States, so you can extrapolate from there. The task force offered 100 recommendations for reducing the regulatory burden on businesses. One recommendation was to simply financial reporting for individual businesses, and a standard business reporting work group was established. The work group aimed to optimize existing government processes to reduce business compliance costs to A$800 million over six years at a cost of A$320 million. Standard business reporting, or SBR, is the idea that multiple regulatory agencies should agree on common standardized data structures and elements for the information they collect from private sector businesses. By asking for this information in a consistent fashion, it removes the need for a business to resubmit the same information in multiple ways for multiple agencies. So I could ask you to imagine a small business in Wisconsin or Kentucky or California being able to add a new employee into their system or add a new director or shareholder or prepare all their State and income taxes and have all the relevant Federal and State agencies being given updated information almost instantaneously as the result of one data change within--made by the business owner. And imagine being able to do all that from a single piece of software. That's the power of this SBR and that's what we're talking about here. SBR does not change the intent or the content of regulatory reports but instead improves the efficiency of the government- business interactions by standardizing the information the private sector is required to report. The implementation of SBR began in 2008 and the first reports were available two years later. It did not require any regulatory change. And as the chairman stated in his opening remarks, the Australian Tax Office estimated that the changes saved the government and companies A$1.4 billion in compliance costs during the 2016 tax year, far exceeding that original six-year goal of A$800 million. In 2018, an Australian business can now interact with three Federal and eight State agencies in a single software environment. More agencies are planned to come on board in the future. SBR removed the technology and cost barriers for Xero and other software vendors like us to integrate securely with multiple government systems. Xero's software now allows Australian businesses to make use of a single regulatory reporting solution for multiple agencies direct from their accounting system. In the U.S., there are a number of relevant policy reforms already under way. This committee has already accomplished a large governmentwide data standards project. The Digital Accountability and Transparency Act of 2014 mandated that the Treasury Department create a governmentwide data taxonomy. The DATA Act information model scheme that now governs around 100 Federal agencies report their spending activity. This shows that the government here is now practiced at such reforms. The House of Representatives unanimously passed the Open, Public, Electronic, and Necessary Government Data Act as part of the Foundations for Evidence-Based Policymaking Act, which would require all Federal agencies to maintain public data assets in machine-readable formats. And just last night, the House passed the Grant Reporting Efficiency and Agreements Transparency Act, which accomplishes reforms similar to SBR for U.S. Federal grant reporting. Though none of these ledgers of reforms explicitly address Federal financial reporting by all businesses, they do offer examples of efforts to seek governmentwide reporting standards and require machine-readable data for reporting in other domains. In the United States where Federal and State agencies operate on a much larger scale, legislation is likely to be required to compel agencies to work together to accomplish reforms similar to the SBR program in Australia. The Financial Transparency Act is a bipartisan legislative proposal which would require all eight major Federal financial regulators to adopt a standardized data structure for the information they collect from public companies, banks, and financial firms, and with the right support in Congress, such legislation could form the basis of genesis of SBR in the United States. It's our belief that well-deployed technology has the potential to reduce the cost of government and compliance to the taxpayer. By reducing the compliance burden of small businesses, the capital can be redeployed to pursue income- generating activities. Like a tax cut, this puts money back in the hands of small businesses. But unlike a tax cut, this gives them something else: time. We believe the U.S. Government can realize these benefits on a far greater scale than the Australian example. Thank you for the opportunity to testify. Thanks. [Prepared statement of Mr. Vickers follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the gentleman. The chair now recognizes Mr. Brinkman for five minutes for his testimony. STATEMENT OF SCOTT BRINKMAN Mr. Brinkman. Thank you, Chairman Palmer and Jordan, Ranking Members Krishnamoorthi and Raskin, and members of the subcommittees, for affording me this opportunity to discuss Governor Bevin's Red Tape Reduction Initiative. Governor Bevin campaigned on a theme that is all about jobs, which at its core means creating a more inviting environment to attract both human and financial capital. Candidate Bevin's Blueprint for a Better Kentucky listed seven action items that he would pursue if elected Governor. One of the action items was reforming State Government. Although there are many aspects to reforming State Government, a key component of that effort is modernizing Kentucky's administrative regulations, and one of the first undertakings of the administration was the formulation and implementation of its Red Tape Reduction Initiative. As part of this initiative, every cabinet and agency within the executive branch has been directed to review every regulation promulgated by--over the years and make one of the following determinations: First, completely repeal the regulation as its original purpose is no longer relevant. second, amend the regulation to conform it to a Federal counterpart. This effort includes eliminating inconsistent definitions and standards with the goal that the State regulation should never be more burdensome than the Federal counterpart unless circumstances unique to Kentucky require a stricter standard. Third, amend and modernize the regulation to make it clear and simpler to understand by those subject to the regulation, and also make it easier to update in the future. Fourth, combine the regulation with other regulations to include a single subject matter such as fees and applications in one regulation for ease of review by those subject to it. Finally, leave the regulation as it's currently written. The goal of the administration is to reduce by one-third the number of restrictions on businesses and individuals in Kentucky. In 1975, there were four volumes of regulations in effect in Kentucky. That number had grown to 14 volumes when Governor Bevin took office. Our current data reflects that, of the approximately 4,700 separate regulations on the books at the outset of the administration, over 2,700 regulations have been reviewed, 488 regulations have been repealed, 454 regulations have been amended, and 56 new regulations have been promulgated. The initiative has the support of business groups, trade associations, chambers of commerce, and other organizations across Kentucky. There are several lessons to be learned from Kentucky's Red Tape Reduction Initiative. First, the Governor must own the initiative in every aspect, and it helps to have a tangible symbol associated with the endeavor. In the case of Kentucky, we created the lapel pin that I'm wearing today, and Governor Bevin and his top officials wear this pin every day. Further, Governor Bevin speaks out regularly regarding the initiative--the importance of the Red Tape Reduction Initiative to individuals and groups throughout Kentucky. As a result of the Governor's leadership, there is growing awareness of the initiative every day throughout the Commonwealth. Second, it is important to create a website that is interactive with the public and allows for individuals to post recommendations on the repeal or amendment of regulations. Kentucky's Red Tape Reduction Initiative website is RedTapeReduction.com. Kentuckians have submitted scores of thoughtful ideas on how to reduce unnecessary regulations that drive up the cost of conducting business and create inefficiencies without contributing to public health or public safety. Finally, the effort of the cabinets and other agencies must be sustained on a regular basis. Our cabinets and other agencies regularly review and re-review existing regulations to ensure that the goals of the Red Tape Reduction Initiative are being met. This is a thoughtful and deliberative process that never ends. We have also decided to digitize and modernize the manner in which our State agencies draft and promulgate regulations. To that end, Kentucky has contracted with Esper Regulatory Technologies, Inc., to provide state-of-the-art technological tools to our regulation drafters throughout the executive branch to assist them in the review of existing regulations and the promulgation of new regulations. In conclusion, the administration's efforts to simplify the ability of Kentuckians to conduct business are paying valuable dividends. As of last month, Kentucky's unemployment rate was 4 percent, which is the lowest it has been since 1976 when this statistic began to be tracked, and its workforce participation rate is trending towards 40th in the Nation from 47th when Governor Bevin took office. Kentucky also realized during the month of April this year the highest amount of monthly tax receipts in its history, driven largely by corporate and individual income tax receipts. Also as of last month, there were 1,983,103 Kentuckians in the workforce based upon preliminary numbers for August, which is the highest number of employed Kentuckians in the history of the Commonwealth. Kentucky attracted $9.2 billion of announced direct investment in the State in 2017, which is a record amount for any year, and approximately $16.8 billion since Governor Bevin took office, representing the creation of almost 46,000 jobs. There are many factors contributing to the success, including the enactment of smart and innovative legislation. However, it is the firm belief of the Governor that the implementation of the Red Tape Reduction Initiative and the exposure that it has received has contributed in large part to the growing perception that Kentucky is an attractive State in which to create and sustain good-paying jobs for its citizens. Thank you. [Prepared statement of Mr. Brinkman follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. Just to inform our witnesses and the members of the committees, votes may be called between 3:15 and 3:30. It is my intent to conclude the hearing with the members who are present so that we do not have to hold you hostage while we go vote. So with that, I will now recognize Mr. Narang for five minutes for his testimony. STATEMENT OF AMIT NARANG Mr. Narang. Chairmen Palmer and Jordan, Ranking Members Krishnamoorthi and Raskin, and members of the committee, thank you for the opportunity to testify today. I am Amit Narang, regulatory policy advocate at Public Citizen's Congress Watch. Public Citizen is a national public interest organization with more than 500,000 members and supporters. For more than 40 years, we have successfully advocated for stronger health, safety, consumer protection, and other rules, as well as for a robust regulatory system that curtails corporate wrongdoing and advances the public interest. Public health and safety regulation has been among the greatest public policy success stories in our country's history. Regulations have made our air far less polluted and our water much cleaner; they've made our food and drug safer; they've made our workplaces less dangerous; they've made our financial system more stable; they've protected consumers from unsafe products and from predatory lending practices; they've made our cars safer; they've outlawed discrimination on the basis of race, gender, and sexual orientation; and much more. These regulations are now considered to be bedrock public protections widely popular with the public. In short, our regulatory safeguards are to be celebrated and emulated. Yet there is much more progress to be made addressing threats to the health, safety, environment, and financial security of hardworking American families. Unfortunately, President Trump and his administration are taking the country in exactly the opposite direction, embarking on a radical and unprecedented deregulatory agenda that has led to the corporate capture of our regulatory system of public protections. One of the key drivers of this administration's attack on public protections is Executive Order 13771, the so- called two-for-one executive order that imposes a regulatory budget on agencies. When the executive order was issued, Public Citizen, along with partner groups, challenged the order in court as unconstitutional and illegal. And this lawsuit is ongoing and pending a district court. Our lawsuit stipulates that the order exceeds the President's constitutional authority, violates his article II duty to take care that the laws are faithfully executed, and directs Federal agencies to engage in unlawful actions that harm members of the public, including members of Public Citizen. The order places requirements on agencies that are nowhere authorized by any statute, and in fact are in direct conflict with numerous bedrock public protection laws passed by Congress, which should be of utmost concern to members of this committee and all Members of Congress. None of the laws passed by Congress direct or even permit agencies to issue regulations that protect the public only if they can first get rid of existing regulations that protect the public and only if the new regulatory protections impose no new costs on corporations or hurt corporate profits. The message the executive order sends to hardworking Americans and their families is this: It is more important for our government to boost corporate profits than it is for our government to ensure that Americans have the right to clean air and water, safe food, safe workplaces, civil rights protections, safe and non-toxic consumer products, including children's products, safe cars, financial protections that hold Wall Street accountable, and many more commonsense safeguards. The executive order has now been enforced for roughly 20 months, and the results are clear: The order has blocked and delayed agencies from issuing hundreds of public protections according to official government data listed on OMB's unified regulatory agenda, while providing underwhelming cost savings to corporations of $570 million under fiscal year 2017, which amounts to about .001 percent of GDP growth under the second quarter of this fiscal year. In other words, the cost of the executive order in terms of public protections that have been blocked significantly outweigh the minimal benefits to corporations that the order has provided with respect to cost savings. Among the protections that the public has lost are new lead-in-drinking-water standards; new gun-control measures; new vehicle, truck, and train safety standards; dozens of new environmental protections, including restrictions on toxic chemicals under TSCA; safety standards for new tobacco products like e-cigarettes; numerous workplace safety protections; and updates to energy efficiency standards. It is likely that agencies will be unable to accumulate enough cost savings to corporations under the executive order to be able to issue important new protections that will save lives such as new auto safety technology that allows vehicle-to-vehicle communications that can potentially save thousands of lives per year. The executive order has failed to unleash economic growth as promised by supporters of the order, at least according to Goldman Sachs. Goldman Sachs studied whether job growth and capital spending have been stronger in sectors in companies that were more highly regulated before the most recent election. According to Goldman Sachs' January 2018 report, quote, ``We find no evidence that employment or capital spending accelerated more after the election in an area where regulatory burdens are higher.'' In sum, the executive order has been a lose-lose for our country. It has made Americans less safe by blocking or delaying critical new regulations that protect the public, while providing underwhelming cost savings to corporations and failing to create economic growth. Public Citizen encourages this committee and Members of Congress to conduct vigorous oversight over the continuing implementation of Executive Order 13771 to ensure that Federal agencies are doing their statutorily mandated duty to protect the public by issuing new health, safety, environmental, and consumer protection regulations, as Congress intended. Public Citizen also encourages Members of Congress to be mindful of the need to explicitly exempt agencies from complying with this executive order when drafting and enacting new legislation designed to protect the public by requiring agencies to issue new regulations. Thank you, and I look forward to your questions. [Prepared statement of Mr. Narang follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the witnesses for their testimony. The chair will now recognize Mr. Massie for five minutes for his questions. Mr. Massie. Thank you, Mr. Chairman. Secretary Brinkman, you mentioned that Kentucky, under Governor Bevin's leadership, has repealed over 400 regulations and amended over 400 regulations? I didn't get the exact numbers, but can you tell us what some of the more consequential regulations have been in terms of easing up burdens on companies or fostering economic development? Mr. Brinkman. Thank you, Congressman. The current data as of a couple days ago is 480 regulations have been repealed, 454 regulations have been amended. A good example of a regulation that we inherited was a--that older buildings that--above 45 feet you could not use PVC; you had to use cast-iron piping and--even though the International Plumbing Code authorizes PVC as a permitted piping material. And what we found particularly in cities like Louisville and Lexington is we have older office buildings that are class C office buildings, and developers want to convert those to residential properties. And most of the traditional office buildings have their plumbing stacked near the elevator shafts. If you convert them to residential, you're going to have to expand the piping and-- to accommodate residential living. And so we've estimated that that will save anywhere from, you know, $100,000, $200,000 per floor for developers to redevelop these office buildings into downtown living. So that's a perfect example where we had an outdated regulation that was just making it more difficult to redevelop these properties into downtown living. We also had a rule that we called our cut rule that any boxing or wrestling match, if participants started bleeding in any instance, the match had to cease immediately. We repealed that, and now we have a very vigorous--become a very vigorous State for holding martial arts, wrestling, boxing matches, which are very popular with our population and adding to the economic vibrancy of our communities. Mr. Massie. So did you get any pushback when you changed the regulation to allow PVC from the steel and cast-iron manufacturers or ---- Mr. Brinkman. There was nothing major. There was ---- Mr. Massie. Okay. Mr. Brinkman. Because I think people recognized it was outdated and not necessary and in fact would further economic development without in any way compromising public safety. Mr. Massie. And, you know, when we talk about reducing regulation at the government level, a lot of times we are thinking about reducing regulation on private business, but I served in county government, and there were State regulations that always constrained the county government. I am sure there are Federal regulations that constrain the State Government. Do you know of any of those regulations that eased up sort of the onerous demands on counties and cities or--not to put you on the spot but ---- Mr. Brinkman. Right. Mr. Massie.--it may be easier for me to ask it at another level. Are there regulations at the Federal level that you would like to see us reduce that are constraining your ability to improve things in Kentucky? Mr. Brinkman. Well, I mean, certainly, the Waters of the United States and the regulations promulgated thereunder have been very restrictive and have made it difficult to develop property and add to the tax base, which, as you know, is critical for our counties and cities throughout Kentucky, particularly in light of the pension liabilities that exist. There's a perfect example of that where if we have sensible regulation at the Federal level, we believe that we can have further economic development, which will add to the tax base, which will help all our counties and cities meet their financial obligations, help our school districts, which, as you know, education funding has been a challenge in light of our pension obligations. So that's a perfect example where we think that with sensible regulations at the Federal level, our school districts, or cities, and our counties will benefit immensely. Mr. Massie. Ms. Jones, did you mention that you had a two- for-one rule in the regulation there in Canada? The President signed an executive order with a similar rule. I am a little bit worried that it is not really the number of the regulations but, I mean, regulation could be three orders of magnitude more restrictive than another regulation. Can you speak to the value of having a two-for-one rule and is it important to look at the magnitude of the regulation or the number of the regulations? Ms. Jones. I think it's important to do both, so I think for the biggest rules you want to have robust benefit-cost analysis in place, but just like in a toolkit, you want to have maybe--if you wanted to have a robust toolkit, you'd have a sledgehammer and a hammer and a wrench and a screwdriver. You want to pick the right tool for the right job. And I think it is important to capture the blizzard of small things that can add up to a very big cumulative burden. And to do that with a simple measure that you can use broadly is good. And the difference--there is a difference between the Trump two-for-one, which uses a more complicated measure and the British Columbia two-for-one, which used a simpler measure and was applied much more broadly. So the Trump two-for-one policy applies to about 8 percent of the most economically significant rules, using a cost-benefit analysis, which again absolutely has its place. British Columbia's was much more granular, so they counted everything. And each regulation could have literally thousands of regulatory requirements associated with it. That's what B.C. counted. It was very broad. Mr. Massie. I like the granular approach. My time is expired, so I am going to yield back, Mr. Chairman. Mr. Palmer. I thank the gentleman. The chair now recognizes the ranking member, Mr. Raskin, for five minutes for his questions. Mr. Raskin. Thank you, Mr. Chair. Ms. Jones, let me stick with you for a second. The project that you describe that took place in British Columbia was undertaken on a bipartisan basis ---- Ms. Jones. It was ---- Mr. Raskin.--or a multi-partisan basis? Ms. Jones. No. In British Columbia, it was a new government that came into power, a liberal government that came into power, and won an overwhelming majority actually because of concern around economic issues. Mr. Raskin. Yes. Ms. Jones. However, the government has since changed, and the government that was previously in power has so far kept the reforms in place. Mr. Raskin. So, in other words, it's not so much a bone of ideological contention in Canada. Is that right? Or ---- Ms. Jones. I think red tape reform has broad support across the political spectrum ---- Mr. Raskin. Yes. Ms. Jones.--in Canada. You see that at the Federal level as well. Mr. Raskin. Yes. Ms. Jones. Canada's one-for-one rule, you had all parties-- in fact all votes except for one in Parliament on that legislation were for it. Mr. Raskin. Thank you. So, Mr. Narang, let me come to you. So I think everybody can agree that we would want to have as few rules as possible but all the rules that we need in order to advance what our public priorities are. How do you see the administration's deregulation campaign? Is it something that is focused on bureaucratic simplification, or do you see it as a cover for dismantling substantive rules that the administration opposes? Mr. Narang. Well, I'd say it's more the second, and the reason I say that--and look, I'll agree with others when I say it's not--it's probably good policy to get rid of regulations, as long as those regulations don't provide any safety benefits. But that is not what we're seeing with this executive order. There are no exemptions for regulations, for example, that provide safety benefits that have been proven to protect the public and have been proven to provide economic and social benefits above the cost. All the regulations are subject to the executive order, whether or not they protect the public and provide health and safety to the public. Mr. Raskin. Got you. So what would be a way to advance the goal of bureaucratic simplification, reducing red tape, and especially the time that is required to comply with regulations, while at the same time not undermining the public interest as it is embodied in specific legal mandates? And I don't know, Ms. Jones, whether you have got some take on that from the Canadians? Ms. Jones. Yes, I think one of the important things that happen in British Columbia is that regulators themselves were part of the solution. This wasn't just the private sector saying here's the long list of rules that we want you to cut or eliminate. This was much more of a partnership. The private sector was engaged and consulted for where--small businesses were consulted. But regulators, too, had a very important role, and I think they did a great job of helping to protecting the most important rules ---- Mr. Raskin. So it was like a broadly ---- Ms. Jones.--while getting rid of the rest. Mr. Raskin.--consultative process where people are collaborating and then also the regulators are not demonized in the process but they are people who actually know where the different skeletons are and which rules seem to be atrophying or obsolete? Ms. Jones. The way I would characterize it is you take regulation makers and you turn them into regulation managers, so they have two parts of their job. One is to find and develop new rules, but another part of their job is to continuously find and get rid of those ones that are duplicative or obsolete or no longer work anymore. And I think they're doing a pretty good job in British Columbia. Mr. Raskin. Yes. Mr. Brinkman, did you want to comment on that? Mr. Brinkman. Yes. Under Kentucky law, we have a very rigorous process for promulgating and amending regulations. We have a public comment period. We get comments, and then oftentimes we amend the regulations. We have a statement of consideration, and then it goes before a standing committee of both the House and Senate of Kentucky with members of both the majority and minority parties that review those regs, and the regs go to the committee of jurisdiction, whether it's health and welfare or transportation, and any of those committees can find the regulations deficient. To my knowledge, and it's just to my knowledge, but I do not believe any committee has found any of our regulations--or proposed regulations deficient to date. I may be wrong, but I don't believe so because we have this consultative process with stakeholders and members of both chambers in both political parties. Mr. Raskin. Okay. Thank you, Mr. Chairman, I yield back. Mr. Palmer. The chair recognizes the gentleman from Wisconsin, Mr. Grothman, for five minutes for his questions. Mr. Grothman. Yes. First thing, in dealing with rules, of course, rules have different sizes, you know? There are 100- page rules and there are one-page rules. And sometimes if you do like one in, one out or whatever, there are rules you want to change, and you call that a regulatory rule change but really what you are doing is you are putting in a rule that is beneficial. So at first blush they did one in, one out or one in and two out or whatever seems kind of simplistic because there are rules you want to change. Do any of you want to respond to that? Mr. Vickers. I think, you know, rules are valuable, et cetera, but we need to consider as we're making them the cost of compliance. The cost of compliance is, you know, the handbrake that comes in ---- Mr. Grothman. And nobody doubts that the rules are horrible and particularly on a Federal level they are probably unconstitutional to boot, but I am talking about a technical question, you know? If we are going to say we are going to get rid of one rule for every new rule we promulgate, new rules can come up that we like, right, because they kind of replace old, bad rules. I guess that is what I'm saying. Just physically how do you deal with that problem? Mr. Brinkman. If I might, one of the initiatives we've undertaken is we're looking at our section 1915(c) waivers. Those are the waivers for our individuals with development of disabilities. And these waivers were--and the accompanying regulations were written over a period of decades, and they're very inconsistent. They're difficult to understand. They're difficult to administer. And so we've undertaken an initiative. It's--we've been working on it for about a year. It's probably going to encompass another couple years because you have to get this right obviously. This--these clients, there's no margin for error. But by just making the waivers and the regulations consistent and easier to understand, we believe that four groups are going to benefit: first and foremost, the clients and their parents and caregivers; second, the independent case managers; third, the providers; and then four, our internal staff within our cabinet. This is a situation where we are cleaning up relations for the benefit of four different populations. Mr. Grothman. If you are able to do that. Now, I am going to give you another question, which really gets to me the guts of the problem because I have dealt with administrative rules a lot on a State-level, and I am going to cover three areas I think we ought to completely undo on a Federal level: nursing homes, where so many employees spend forever filling out paperwork rather than taking care of their residents; special education, where I think we have people in special ed that shouldn't be there or in which the teachers spend an inordinate amount of time in this country filling out forms rather than working with students; and transportation, where everybody agrees that as soon as you put Federal dollars in a project, it costs wildly more than if there are no Federal dollars. Nevertheless, I know on all three of these if we simplified them, in this country we would have a problem because, while I love friends of both parties, sometimes people of one party, out of maybe just a general distrust of business, will fight any changes that would seem just common sense. What I will ask you to do if you have had any less regulation in your country, how do you deal with the more government-worshiping side of the aisle? How did you get them to go along and admit that sometimes the government is wrong or it is possible to put too much paperwork on business? Ms. Jones. One of the arguments that we make when we're talking to those that might be a bit skeptical about cutting rules and the outcomes that might--that you might get as a result of that is that we need a lot more transparency in the system. And so with the B.C. regulatory requirements, you can see that if there were 10,000 regulatory requirements cut in the environmental area, you could ask--start asking tough questions like if there were worse outcomes, you could say look at those rules, and you could have those kinds of challenge functions. If the rules were cut and the outcomes were maintained at high levels, that gave you a different kind of feeling, but it gave more accountability and transparency into the system, which is good whether you think there should be more rules or there should be fewer rules. And that's the kind of transparency we have on the tax side. Mr. Grothman. Mr. Brinkman, if you were able to reduce the regulatory burden in Kentucky, were you able to do it and both parties were able to go along with it? Mr. Brinkman. Well, again, because of our statutory scheme, both parties have a role in reviewing regulations and voting on them and they could find them deficient. And again, we invite stakeholders to our public comment period. So we feel it's a very collaborative process, and to my knowledge I don't think the other party has found any--to my knowledge any of our regulations to be alarming, any regulations we've repealed or amended. I may be wrong, but I don't believe they've found any of those alarming ---- Mr. Grothman. Good for you ---- Mr. Brinkman.--but sensible. Mr. Grothman.--and I look forward to dealing with the other Congressmen on this panel next year, and maybe we can sit on the side and make suggestions but I'm particularly focusing on those three areas, transportation, oh, the paperwork with the poor nursing homes, and special ed. Thanks. Mr. Palmer. The gentleman yields back. The chair recognizes the ranking member, Mr. Raskin, for-- oh, wait a minute. The ranking member Mr. Krishnamoorthi--I am having a tough day today--for five minutes for your questions. Mr. Krishnamoorthi. Thank you, Mr. Chairman. You know, my--look, I am a former small-business man, so I really appreciate any efforts to cut red tape and regulations, unnecessary regulations. However, you know, at the same time that we want to cut red tape, we don't want to, you know, lay out the red carpet for predatory practices or anticompetitive practices or anti-consumer practices, what have you. So, you know, one--I am on the Ed and Workforce Committee in addition to being on the Oversight Committee, and one thing I wanted to ask Mr. Narang about is basically what we are seeing in terms of cutting rules that would basically prevent predatory practices in the education space and specifically the borrower defense rule. I think you mentioned this before. I am very concerned about this. This is the rule that basically allows students to basically recoup money that was fraudulently taken from them when they paid for worthless degrees or an education that really didn't pan out to anything. And so I would just like to get your sense of, you know, repealing the kind of a rule, you know, what kind of effect does that have and how do we, you know, deal with something like that? Mr. Narang. Thank you, Congressman. So we are also at Public Citizen are quite concerned about the growing student debt crisis in this country. It is maybe the biggest debt crisis that we have, and obviously it is handcuffing opportunities for students across the country. The borrower defense rule was an important rule that was put forward in during the Obama administration by the Education Department to make sure that students that do not get degrees that work out for them are able to avoid the kind of massive debt that we're seeing way too often with students. Unfortunately, the Trump Administration's Education Department is rolling that back. They've done so in an illegal way, at least according to one court that has struck down the massive delay of the rule. These are critical protections for students. I don't--you know, if the Trump Administration continues down this road, we're not looking at any solutions for the debt crisis. Mr. Krishnamoorthi. So here is ---- Mr. Narang. We are just looking at actions that make it worse. Mr. Krishnamoorthi. Here is the deal, okay? Like when we promulgate the rules, we have to make sure on the one hand that we don't issue excessive red tape, we don't put obsolete regulations in place, and so forth. However, on the other hand, you have to balance that against regulatory capture by the industry that you are regulating. You don't want them to necessarily start to decide what the regulations are going to be so that they can continue with practices that perhaps the public is uncomfortable with. And so I go to Ms. Jones and just ask you, how do you balance that? Because that is kind of what is happening in the education space. We know that in the current Education Department there are officials at senior levels who come from the very industries that they are trying to undo regulations on. So how do you prevent that ---- Ms. Jones. Well ---- Mr. Krishnamoorthi.--because we all want to see less red tape, but we don't want to open the door to predatory practices. Ms. Jones. Well, I'll come back to two of the--what I think are the lessons from British Columbia. One is political leadership. And the minister responsible for the regulatory reforms in British Columbia was very clear that this wasn't just about cutting rules, that enforcement was going to be strong, fines in many cases went up so there were fewer rules, but enforcement and the penalties for disobeying the rules were in place, so that's ---- Mr. Krishnamoorthi. So there is real independence. Ms. Jones. So that's an important ---- Mr. Krishnamoorthi. Yes. Yes. Ms. Jones.--part of the equation. And I would say the second lesson from the British Columbia model that's relevant here is really the engagement of regulators. So this isn't just about--it's not one extreme or the other. You're looking for that happier middle ground ---- Mr. Krishnamoorthi. Right. Right. Ms. Jones.--right, where it's not no rules. That's not what they were doing. But the--the overarching lesson is you can have high levels of health, safety, and environmental outcomes with many fewer rules. And that's good for everyone. And, by the way, not just for business, for citizens. So things like the childcare ---- Mr. Krishnamoorthi. Right. Ms. Jones.--subsidy application that used to take four ---- Mr. Krishnamoorthi. Right. Ms. Jones.--that used to take--you know, it was 18 days and now it takes four days, you know, things like that were good for citizens. Mr. Krishnamoorthi. So I agree. I was just recently in Kentucky, sir, and I see that there is change afoot, but I heard a lot of complaints about the Federal Government. Do you know why? Because of uncertainty on trade rules and tariffs at the Federal level. And you know the bourbon industry is obviously intensely affected. So talk to me about uncertainty and unpredictability with regard to Federal trade rules and regulations and how does that affect you? Mr. Brinkman. Well, I mean, obviously, that's a national debate that's going on that affects a number of industries in Kentucky, as you referenced. But more to the point in terms of our efforts with our Red Tape Reduction Initiative, as I indicated in my testimony, one of the things we're doing is we're conforming to the Federal counterparts, so if the Federal Government determines that a regulation is appropriate, we're conforming to that Federal counterpart. Too often in the past we had a separate regulation dealing with the same subject matter with inconsistent definitions and standards. That makes it impossible for any business, including any small business -- -- Mr. Krishnamoorthi. Sure. Mr. Brinkman.--to try to figure out what the rules of the game are. So that's part of our ---- Mr. Krishnamoorthi. Sure. Mr. Brinkman.--initiative where we're not necessarily weakening the regulatory regime. We're simply recognizing the supremacy of the Federal Government ---- Mr. Krishnamoorthi. Sure. Mr. Brinkman.--and conforming to it. Mr. Krishnamoorthi. Sure. But where you don't have a State analog to a Federal rule, which has supremacy or, you know, takes the whole domain like trade, you want predictability, you want some certainty? Mr. Brinkman. Of course. Mr. Krishnamoorthi. Yes. Mr. Brinkman. Of course. As you well know, being a small- business person, that predictability, understanding the rules of the game is paramount of the ability to, you know, sustain the business. We know that's very important. Mr. Krishnamoorthi. Got it. Thank you. Mr. Brinkman. Yes. Mr. Palmer. I thank the gentleman. The chair now recognizes the gentleman from California, Mr. DeSaulnier, for five minutes for his questions. Mr. DeSaulnier. Thank you, Mr. Chairman. The chairman and some of my colleagues are sometimes mystify that I was once a Republican when they see how I vote, but this is an area where at least in my life experience it was a bipartisan effort, and these questions are directed to Mr. Narang because I understand you have done some investigation on this. I was appointed by Governor Pete Wilson in 1996, '94, to be a member of the California Air Resources Board. This is to enforce the U.S. Clean Air Act and the California Clean Air Act. The U.S. Clean Air Act, which was signed originally by Richard Nixon, a Republican from California, recognizing that California had much more severe public health costs when it came to pollution. Then reauthorization was signed by another Californian, Ronald Reagan, and a Republican. I was reappointed by Governor Schwarzenegger, a Republican, and then Governor Davis, a Democrat. So one of the joys of being on that board was that it was largely nonpartisan up until recently, that there were always equal members left over from previous administrations. But we did cost-benefits that I thought were terrific. The staff knew that they wouldn't bring something to the board or committee of the board until it had been thoroughly cost-benefited, which I thought was really good, particularly the public health costs, given its charge. So in that context we spent many, many years coming up with State statutes that went to issues around climate change and carbon emissions. We were very careful that we wouldn't be preempted under CAFE standards at the Federal level. We applied for a waiver. We had never been denied a waiver under the Clean Air Act until this instance. The Obama administration came in and gave us the waiver. We were going to prevail, most legal experts opined. And now we have this administration wanting to roll Obama administration regulations around carbon to complement California Air Resources Board work that has been in effect in a bipartisan level way for 20 years, actually longer than that when our Scientific Advisory Committee first came to us and said this is a problem. So the estimate I understand that you have done some work on is that this rule, if it goes into effect and we can't work something out with California, the Administration, the car industry, will cost $100 million to enforced but will cost almost $1 billion to the economy. So could you talk a little bit about that? And politics and political opinions being driven and entering into, which I think should be nonpartisan if we had the benchmarks right in measuring statutes and regulatory efforts to make sure that they were--we could have a real conversation about their benefits and their costs. Mr. Narang. Thank you, Congressman. So there are reams of evidence demonstrating that fuel economy standards are good for the economy, for the national economy, for State economies. This is separate of course from the, you know, environmental benefits that we get from increased fuel economy standards. This is--actually I think maybe the most interesting recent piece of evidence is when the Trump Administration proposed the rollback and potentially, you know, superseding of California's waiver. There was a lot of internal disagreement between the Department of Transportation and EPA. And the EPA experts, you know, were showing--this all came out post-proposal of the rule, but the EPA experts were showing strong data to the Department of Transportation officials saying, look, all of the--the methods that you're using, the numbers that you're using, they are wrong. You're making assumptions that are not based in fact, and the EPA can't support these conclusions. Now, obviously, the EPA, you know, is partly involved in the rollback, but I think it was very telling to see those behind-the-scenes documents from EPA staff to the Department of Transportation staff, making it clear that they did not feel that the evidence that now, you know, the Department of Transportation is relying on in rolling back the fuel economy standards, that that is solid evidence that--lots of EPA studies, cost-benefit studies dating back decades show that the Department of Transportation numbers are wrong. Mr. DeSaulnier. So I would just like to conclude. When I was in the legislature, I was a big supporter because I represented California in the National Conference of State Legislators. And I looked at what States were doing around regulatory authority, and I actually thought one of the really good things that Texas did was their Sunset Commission, an independent commission that did terrific work in looking at statutes and regulatory issues and doing cost-benefits and saying, you know, it is not working as intended. The legislature either needs to change it or we are going to sunset it. So I really think there is a wonderful opportunity here, as I say, if we get the framework right, that this would be nonpartisan. I think all of us want government to work better and more efficiently for Americans. And, Mr. Chairman, I know you feel the same way, so hopefully, this can become more of that dialogue and less of the political dialogue. Thank you, Mr. Chairman. Mr. Palmer. I thank the gentleman, and I do have great hope that this can be a bipartisan effort. It is interesting. We had three regulatory reform task force hearings last year in 2017 with agency representatives who came and testified about agency employees implementing the executive orders. And frankly, when we announced these hearings, I thought that we would get some pushback. I thought there would be some resistance, but what we found was not only was there no resistance, there was enthusiasm for it. And the thing that I tried to get across to people is, first of all, we all breathe the same air, we are all drinking the same water, whether it is bottled or otherwise. We are walking on the same grounds. Our kids and families are breathing the air and drinking the water. That is not what this is about. What this is about is having a sensible regulatory environment. And what we have found from the regulators who came over, the folks who were trying to implement this is this helps them do their job. When you have regulations that are accumulated to the degree that they have over time, you start to realize that you are trying to implement regulations that are obsolete. You are implementing regulations that people have forgotten were on the books that you have duplicated, and they don't match, and in many cases they are contradictory. It imposes an enormous cost on businesses. This is not rolling out the red carpet, as somebody said, to business. That is not what this is about. This is about sensible regulation because I think that it is one area where we agree. The regulations that we have adopted over the years, particularly on the environment, have resulted in dramatic improvement in environmental quality. I mean, our economy has grown almost 500 percent since 1980. Vehicle miles have gone up over 100 percent. Population has increased over 30 percent. Energy consumption is up over 30 percent, but emissions, for instance, are down over 50 percent. We are making progress. What we want to do is make sure that we can continue to make progress, but at the same time allow people to flourish. And it almost sounds like another opening statement, so I am now going to recognize myself for five minutes for questions as we await the call of votes. And one of the things in the State of Alabama that we were looking at doing--I was on the Governor's Task Force for Improving State Government--was to create a one-stop shop. And we are talking about getting rid of the obsolete regulations and the duplications and the contradictions, but we also need to make it easier for people, whether it is getting permits or being able to get answers in regard to their questions about regulations. Has that been part of what has been done in British Columbia or Australia or Kentucky? And we will begin with Ms. Jones. Ms. Jones. Yes, in British Columbia there's been some work to do one-stop shopping for sure. That was part of the reforms, and I think that's gone over very well. There's also at the Federal level ongoing work to simplify that and have one business number and that kind of thing, so that's certainly very popular. I think it's one of many, many things that needs to be done, and that was, again, one of the things that B.C. did right was they didn't say bring us-- often, I've been involved in regulatory reform exercises where people will say bring us your top 10 irritants. And it's not about the top 10 irritants. The one-stop shop may be very well on that list, but it really is about the blizzard of little things. So, again, having that broad, clear, simple measure was very helpful in that regard. Mr. Palmer. Mr. Vickers? Mr. Vickers. Yes, SBR and Australia is in effect a one-stop shop. It allows you to file your taxes, to register a business, to register an employee, and so on through a single reporting framework. And the way that that worked was agencies came together, agreed on a common taxonomy, and generated reports using those common data elements. And when you do that, you reduce the cost of compliance significantly, and that has huge benefits for business. I quoted the A$1.4 billion figure before. Ninety-seven percent of that was savings to small business, so a huge number of that. Mr. Palmer. Yes. Mr. Brinkman. Yes, Mr. Chairman, that's the other part of this initiative that I didn't discuss, but clearly, we are creating one-stop. We have initiatives for one-stop for businesses and individuals to go to one portal to handle all their needs. And our applications are going online so people can complete the applications online, submit the payment for a renewal fee for a license, that type of thing online, and we're also working with our agencies every day to cut down on the processing time to respond to requests for permits or applications or things of that sort because we know that one of the more frustrating things for individuals and businesses is the uncertainty of not knowing when or if an application, a license, a permit, et cetera, is going to be granted. So we are very cognizant of the need to be responsive, and that is part of our initiative. Mr. Palmer. You know, Mr. Vickers--well, go ahead. You would like to follow up? Mr. Vickers. Yes, just quickly. I would encourage you to think about the harmonization--potential harmonization between Federal and State compliance regulations. It's one thing to focus on, say, the State of Alabama or Kentucky, but if you still have to deal with the Federal Government separately, that is--that introduces a burden. Mr. Palmer. Well, that is part of what we are trying to do, and you, in your previous response to my question, said that 97 percent of the savings went to small business, and that is really the economic engine of the American economy. It is the employment engine of the American economy. Massive corporations have the resources to hire compliance people to make sure they comply with this, but small business really gets hammered by the overaccumulation of regulations. And I had entered into the record this--it's actually an article about the Gallup report, the Gallup organization report that came out back in 2014. It showed that we were averaging 100,000 more business startups than closures prior to 2008. And then we went through--and this sounds partisan, but it is just facts. We went through what I would consider a blizzard of new regulations, and there were also other issues with the recession, but I think this compounded the problem, that by 2014 we had gone from 100,000 more businesses opening than closing to 70,000 more businesses closing than starting up. And on a per capita basis we no longer ranked first in entrepreneurism or third or fourth. We ranked 12th. And it is particularly harmful for small business. And one of the things about what we are trying to do with the regulatory reform, the red tape reduction and what you people have done successfully I might add is that you have removed uncertainty. And I preach this till I am blue in the face, but money is just like water. It will always seek the path of least resistance. And when you have got particularly small businesses, they are already taking risk, you just add to that risk aversion when you have overly complex regulations. What people want is a predictable environment in which to invest. And if you do what has been done in British Columbia and Australia and Kentucky and in the U.K., you reduce the uncertainty. And for us in our economy that is particularly important because we see what is happening right now in the economy and the low unemployment. As we continue to create an environment where people will start a business, you will hire more people, wages will go up because it puts upward pressure on wages, that is really what we are trying to do here. We want to create an environment where we don't diminish the quality of our environment. We want to continue to improve that. And by the way, wealthy nations do that. Poor nations don't as well. But we want people to flourish. And really the good thing about this--and I speak to my good friend from California, Mr. DeSaulnier--and he is a good friend. We have become very good friends since our time in Congress; we came in at the same time--is that what British Columbia and Australia and Kentucky and even the U.K. have done is they have created a model. You have worked out some of the kinks that I think is going to be very, very helpful and instructive to us so that it significantly reduces the potential for missteps and what we are trying to do. So I want to thank our witnesses for appearing today and for the great work that you all have done. As I said before, it has been very helpful to us all, and we look forward to interacting with you again in the future. The hearing record will remain open for two weeks for any member to submit a written opening statement or questions for the record. If there is no further business, without objection, the subcommittee stands adjourned. [Whereupon, at 3:31 p.m., the subcommittees were adjourned.] APPENDIX ---------- Material Submitted for the Hearing Record [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]