[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
RETROSPECTIVE REVIEW: HAVE EXISTING REGULATORY BURDENS ON SMALL
BUSINESSES
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MAY 8, 2013
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 113-015
Available via the GPO Website: www.fdsys.gov
_____
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HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
BLAINE LUETKEMER, Missour
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JAIME HERRERA BEUTLER, Washington
RICHARD HANNA, New York
TIM HUELSKAMP, Kansas
DAVID SCHWEIKERT, Arizona
KERRY BENTIVOLIO, Michigan
CHRIS COLLINS, New York
TOM RICE, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
YVETTE CLARKE, New York
JUDY CHU, California
JANICE HAHN, California
DONALD PAYNE, JR., New Jersey
GRACE MENG, New York
BRAD SCHNEIDER, Illinois
RON BARBER, Arizona
ANN McLANE KUSTER, New Hampshire
PATRICK MURPHY, Florida
Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Sam Graves.................................................. 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
The Honorable Polly Torttenberg, Under Secretary of
Transportation for Policy, United States Department of
Transportation, Washington, DC................................. 3
Jeanne Hulit, Associate Administrator, Office of Capital Access,
United States Small Business Administration, Washington, DC.... 5
Cheryl Cook, Chief Information Officer, United States Department
of Agriculture, Washington, DC................................. 7
APPENDIX
Prepared Statements:
The Honorable Polly Trottenberg, Under Secretary of
Transportation for Policy, United States Department of
Transportation, Washington, DC............................. 30
Jeanne Hulit, Associate Administrator, Office of Capital
Access, United States Small Business Administration,
Washington, DC............................................. 36
Cheryl Cook, Chief Information Officer, United States
Department of Agriculture, Washington, DC.................. 38
Questions for the Record:
None.
Answers for the Record:
None.
RETROSPECTIVE REVIEW: HAVE EXISTING REGULATORY BURDENS ON SMALL
BUSINESSES BEEN REDUCED?
----------
WEDNESDAY, MAY 8, 2013
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:00 p.m., in Room
2360, Rayburn House Office Building, Hon. Sam Graves [Chairman
of the Committee] presiding.
Present: Representatives Graves, Chabot, Luetkemeyer,
Mulvaney, Tipton, Huelskamp, Schweikert, Collins, Rice,
Velazquez, Schrader, Clarke, and Chu.
Chairman Graves. Good afternoon, everyone. I will call this
hearing to order. And I want to thank our witnesses for being
here today and taking time out of your very busy schedules, and
I look forward to your testimony.
We are here today to examine the results of a government-
wide initiative to review existing red tape. Like an overgrown
forest that needs to be thinned periodically, the regulatory
system requires some regular pruning.
All Presidents since President Carter have directed Federal
agencies to review regulations, and Congress has ordered
agencies to periodically review regulations that have a
significant impact on a substantial number of small businesses.
However, agencies' past efforts to comply with these mandates
have generally been inconsistent and quite ineffective.
In 2011, President Obama issued Executive Order 13,563
directing Federal agencies to create plans for reviewing their
existing significant regulations. And in 2012 the President
issued Order 13,610, which requires agencies to regularly
report on the results of the retrospective review efforts. The
President also instructed agencies to give special
consideration to initiatives that would reduce regulatory
burdens on small businesses. And with the government-wide
regulatory review initiative well into its second year, this is
an ideal time to examine the results that we have so far.
Only a limited number of actions have been finalized that
provide quantified reductions in costs or paperwork burdens.
Some actions will provide meaningful burden reductions for
small businesses, but other actions are less significant or
make questionable burden reduction estimates. However, the
small number of burden-reducing actions pale in comparison to
the fast growing thicket of red tape, and a few recently
released reports shine some new light on the regulatory burden.
According to the Office of Management and Budget, or OMB,
in fiscal year 2012 there were 14 major rules alone that
imposed an additional $14.8 to $19.5 billion in annual costs,
which was the costliest year on record for federal regulation.
As a point of comparison, there were six major rules in fiscal
year 2003 that imposed only $1.9 to $2 billion in annual costs.
A more comprehensive tally of 2012 agency regulatory cost
estimates found that 539 final rules added about $215 billion
in new burdens.
Agencies have to do a better job to reduce overly
burdensome and unnecessary red tape and paperwork to ensure
that small businesses are able to survive and grow in a
competitively global economy. And I look forward to hearing
from all of our agencies today and our witnesses on what
burdens they have seen or worked to reduce on small businesses
as a result of their recent retrospective review efforts.
And with that, I turn to Ranking Member Velazquez for her
opening statement.
Ms. Velazquez. Thank you, Mr. Chairman. I want to take this
opportunity to thank all the witnesses for being here today and
the chairman for holding this important hearing.
Our government's regulatory structure profoundly influences
the American economy. Certainly without many regulations, the
public interest would be harmed. These rules make our water
safe to drink, ensure our air is safe to breathe, protect
workers from unnecessary risks, and protect consumers from
unsafe products. Regulations also help our markets operate
fairly. Without them, small businesses and entrepreneurs will
often find their efforts to introduce new products and services
stymied by large, entrenched companies who fear competition and
seek to game the system.
While regulation has a role to play, the challenge is
ensuring these rules remain relevant and are carefully targeted
to avoid unintended consequences. In that regard, retrospective
reviews are critically important in achieving that careful
balance. This process helps those of us in Congress as well as
the agencies develop smarter, more effective regulations and to
modify or eliminate rules whose purposes have been outlived.
A number of mechanisms exist for evaluating these
regulations. The Regulatory Flexibility Act requires an
examination of all regulations that have a significant economic
impact on small entities. Other agencies, like EPA, are
required under the Clean Air and Water Acts to periodically
review their own regulations. President Obama has reaffirmed
these principles by issuing Executive Order 13563, which calls
for a government-wide review of regulations. This undertaking
has already yielded a number of new ideas, some of which I
expect we will hear about today.
I know the Department of Agriculture is reducing
information collection burdens on industry while also updating
its lending processes. The Small Business Administration is
also working to streamline its capital access application
procedures. If done correctly, simplifying these rules will get
more capital flowing to small firms at a time when our economy
could use this boost. The Department of Transportation is
working on 83 initiatives that will save the department effort,
taxpayers money and reduce inefficiencies for industry. I am
pleased to see these agencies are taking the president's
executive order seriously.
Part of this hearing's purpose will be to get a better
grasp on how small firms might be affected by some of these
challenges and what more can be done to further alleviate
regulatory burden. Balancing regulatory costs against benefits
is always a difficult challenge, but I am encouraged by
initiatives we have seen thus far. These steps are a genuine
effort to get it right, and I look forward to discussing what
more can be done in that regard.
With that, I yield back, Mr. Chairman.
Chairman Graves. Thank you very much.
And our first witness is going to be Polly Trottenberg, who
is the Under Secretary of Transportation for Policy at the
Department of Transportation. Ms. Trottenberg was previously
the Executive Director of Building America's Future, which is a
non-profit organization that focuses on infrastructure
investment. She also served in the United States Senate for 12
years, and most recently was Deputy Chief of Staff and
Legislative Director for Senator Barbara Boxer.
Welcome. Thank you for coming in. I appreciate you taking
the time.
STATEMENTS OF THE HON. POLLY TROTTENBERG, UNDER SECRETARY OF
TRANSPORTATION FOR POLICY, UNITED STATES DEPARTMENT OF
TRANSPORTATION; JEANNE A. HULIT, ASSOCIATE ADMINISTRATOR,
OFFICE OF CAPITAL ACCESS, UNITED STATES SMALL BUSINESS
ADMINISTRATION; AND CHERYL COOK, CHIEF INFORMATION OFFICER,
UNITED STATES DEPARTMENT OF AGRICULTURE
STATEMENT OF THE HON. POLLY TROTTENBERG
Ms. Trottenberg. Thank you. Thank you, Chairman Graves and
Ranking Member Velazquez and members of the Committee. I am
pleased to be here today to testify on the Department of
Transportation's implementation of President Obama's Executive
orders which seek to reduce regulatory burdens.
Through our ongoing review and revision of DOT's rules and
regulations under these two Executive orders, we have already
saved U.S. businesses significant time and money over the last
couple of years, and we hope to save them even more in the
coming years. And we will do so while we continue our
fundamental mission, saving lives and improving safety
throughout our Nation's transportation system, reducing the
environmental impacts of transportation, and providing strong
consumer protections for the traveling public.
We know this Committee has a special charge to evaluate how
our rules and regulations affect America's small businesses. At
DOT, we too are continuously mindful of the regulatory burdens
small businesses face, and we try our best to balance them with
the very significant legal and statutory requirements.
DOT has one of the largest rulemaking responsibilities in
the Federal Government. We are proud of our recent regulatory
requirements, including CAFE standards, overhauling pilot rest
requirements, improving pipeline, auto, bus and truck safety
enforcement, and strengthening aviation consumer protections.
And we have done so with very robust public and private sector
participation, the best science and economic modeling
available, a commitment to trying to use plain, understandable
English in our rulemaking, and seeking pragmatic, nonregulatory
solutions where we can that will minimize burdens and costs for
U.S. businesses.
But we know we can do better in the regulatory arena, and I
am grateful that the Committee is showing interest. We do look
forward to working with you more on this issue. And I also want
to thank the Committee for noting in today's hearing memo that
USDOT's January 2013 retrospective regulatory review report
does detail a wide variety of actions we have taken over the
last few years on 89 rulemakings across all parts of the
Department. These actions are designed to update, streamline,
clarify or remove obsolete regulations, consolidate duplicative
requirements, and reduce the number of entities subject to our
regulations.
The 64-page report details the extensive work that
department experts have done, with the input of hundreds of
stakeholders and members of the public, to improve the
regulatory process and reduce red tape wherever we can. We are
proud of the work contained in the report and I invite the
Committee to review it on our website. The document is somewhat
lengthy, because we are reporting on all the recommendations we
have received from the public that we are addressing, and we
welcome your input on how we might improve the format of the
report.
And within the report, at least 20 of the rulemaking
actions listed will have a particular benefit for small
businesses. The most dramatic of these actions is a proposal
that the Federal Motor Carriers Safety Administration, FMCSA,
is currently developing with its stakeholders to rescind an
outdated 1978 requirement that truck drivers submit and
trucking companies retain very burdensome paper driver vehicle
inspection reports even when there are no defects found in the
vehicle. FMCSA estimates that rescinding this 35-year-old
requirement would save the trucking industry $1.5 billion a
year without adversely affecting safety. We know that FMCSA's
regulations can have a large impact on the trucking industry,
particularly small and independent carriers, and this proposal
could make a real dramatic difference for those small carriers.
Other proposals within our report call for moving to
electronic filing signatures and recordkeeping in a number of
our industries, and simplifying our certification and complaint
procedures, which are often complex, duplicative and time-
consuming. And those items may not sound that flashy, but in
addition to FMCSA's $1.5 billion proposal, these other proposed
actions cumulatively could save small businesses, which include
motor carriers, railroads, general aviation operators,
additional tens of millions of dollars and countless hours of
time and aggravation. They are really the quintessential
definition of cutting red tape.
And we will continue our efforts to uncover and implement
more such actions. In fact, the President's two recent
Executive orders institutionalize many of the practices that
the Department has long embraced under administrations from
both parties, as the chairman mentioned. DOT has been regularly
reviewing and revising its existing regulations for almost 35
years. And that said, we know we still have a lot more work to
do. And that work also requires close collaboration with the
NTSB, the GAO, our Inspector General and, of course, Congress,
all of which play a very significant role in setting DOT's
regulatory agenda.
In conclusion, let me once again thank the Committee for
its interest in DOT's work. We share your desire to
continuously improve the safety, environmental quality and
consumer protection of our transportation system in a sensible,
scientific and cost beneficial way, while ensuring that
American businesses, large and small, are treated fairly so
that they can grow and thrive.
Thank you, and I will be happy to take any questions.
Chairman Graves. Thank you very much.
Our next witness is Jeanne Hulit. Ms. Hulit is the
Associate Administrator for the Office of Capital Access at the
Small Business Administration. Prior to her federal government
service, Ms. Hulit was the Senior Vice President for Commercial
Lending at Citizens Bank and she also worked for Key Bank as a
middle market lender.
Thank you very much, and I appreciate you being here.
STATEMENT OF JEANNE A. HULIT
Ms. Hulit. Thank you, Chairman Graves, Ranking Member
Velazquez and members of the Committee. I am pleased to be
testifying before you on the Small Business Administration's
efforts to streamline its regulations.
In the Office of Capital Access, we have taken several
steps to ease the regulatory burden on small business. We have
a proposed rule to streamline both our 7(a) and 504 loan
programs, which just closed for public comment. SBA's proposed
rule will enable the 504 and 7(a) loan programs to better serve
small businesses. In addition to reducing paperwork
requirements and cost, the new rules will ease some barriers to
program participation while reducing risks to the SBA and our
CDC partners.
The two most significant changes are to the personal
resources test and the affiliation requirement for both
programs. Both of these proposed changes will increase
eligibility for 7(a) and 504 loans, allowing more small
businesses to access these critical financing tools.
By streamlining the documentation requirements for
affiliated businesses, SBA will help applicants avoid
submitting multiple and often duplicative tax returns and
financial statements and significantly reduce paperwork
requirements. Similarly, elimination of personal resources
tests will streamline the application process, increase
investment options for small business owners, and remove
restrictions that could prevent the agency from approving
projects with significant community benefit.
These changes are estimated to reduce 93,800 hours of
process burden for participants in the 504 and 7(a) loan
programs, which is a 10 percent reduction for borrowers and
lenders and a 5 percent reduction for the agency.
In addition to regulatory reductions, the Office of Capital
Access has implemented process improvements that have reduced
the paperwork burden to key 7(a) programs, resulting in
significantly increased participation.
Changes in our Cap line program, providing revolving lines
of credit, resulted in a 393 percent increase in loan volume in
that program between 2011 and 2012. And year to date, the
volume continues to double.
Our Small Loan Advantage product was streamlined this past
June, which has resulted in a monthly volume of $55 million
versus $5 million before the program changes, a tenfold
increase.
Additionally, in August of 2012, the Office of Capital
Access reduced the paperwork requirements for many participants
in our surety bond program. The Quick Bond Guarantee
Application, or Quick App, combines the contractor application
and SBA surety agreement to one easy to use form. This reform
significantly reduces paperwork and processing time for SBA-
backed surety bonds on construction contracts of $250,000 or
less. As a result, year to date we have seen an increase of 49
percent in the number of bonds guarantied over last year.
In addition to these capital access improvements, there
have also been significant regulatory and paperwork reforms in
other SBA programs. For example, our Office of Investment has
streamlined the application process for SBIC licenses. Harry
Haskins, our Deputy Associate Administrator for Investment, was
announced yesterday as a finalist for the Samuel J. Heyman
Service to America medal, a prestigious award dedicated to
honoring America's civil servants. Harry and his team were
recognized for the work they have done to streamline and turn
around our SBIC program, which has had three consecutive record
breaking years. Our SBIC team helped reduce the processing time
for new SBIC funds to just 5.4 months, down from almost 15
months in 2009.
And for the thousands of small firms that do business with
the Federal Government, we have helped reduce the time it takes
to get paid. The President's Quick Pay Initiative cut in half,
from 30 days to 15 days, the amount of time it takes for the
Federal Government to pay small businesses. Getting paid sooner
means that small businesses can get funds more quickly to
reinvest in additional working capital, marketing their
products and hiring new workers.
In addition to reviewing and revising its own regulations,
the SBA has also engaged the small business community to find
out how other Federal rules and regulations can be adapted to
fit the changing needs of emerging entrepreneurs. In 2011,
senior administration officials visited eight cities as part of
the Startup America Initiative. At these roundtables, the SBA
listened to small business owners, entrepreneurs and investors
as they described improvements to processes and regulations
that can help build a more supportive environment for
entrepreneurship and innovation.
Those ideas were described in a report encompassing a broad
array of policy ideas from student loans to intellectual
property, and we have shared it with our Federal partners and
the general public.
Finally, as a former regional administrator in New England,
I can attest to the agency's efforts to coordinate with the
Office of Advocacy to ensure that new regulations do not overly
burden small businesses. Our regional administrators conduct
outreach efforts with regional advocates to respond to concerns
voiced across the country.
I believe that the SBA has made significant progress in
reducing the regulatory paperwork burdens on America's small
business; however, work still remains, and we are committed to
continuing these streamlining efforts.
I wish to thank you for inviting me to testify on this
important topic today. I look forward to answering your
questions.
Chairman Graves. Thank you very much.
Our final witness is Cheryl Cook, who is the Chief
Information Officer for the Department of Agriculture. Prior to
being named as the Chief Information Officer, Ms. Cook has
served in a number of positions at the USDA. She also served as
the Deputy Secretary for Marketing and Economic Development at
the Pennsylvania Department of Agriculture and the Executive
Director of Keystone Development Center, which was a nonprofit
that helps new and emerging cooperatives.
So thank you very much for being here. I appreciate it.
STATEMENT OF CHERYL COOK
Ms. Cook. Thank you, Mr. Chairman, Ranking Member
Velazquez, members the Committee.
In the interests of getting right to the discussion, I
would like to submit my full statement for the record and just
summarize remarks about USDA's efforts to reduce regulatory
burden on small businesses and facilitate new business
development through an array of research, financial and
technical assistance programs.
I have had the privilege of being the CIO for just over a
year now. I was still in USDA Rural Development as Deputy Under
Secretary when the Executive orders were issued, so I kind of
bridge, you know, both of those roles, so I was pleased to have
the opportunity to be the witness for USDA today, even though I
am not necessarily an expert in some of things that your
constituents might be raising with you.
Small businesses, including farms and ranches, create a
foundation for prosperity across rural America, providing an
abundant and affordable food supply, fiber supply, and
increasingly our renewable energy supplies.
Under President Obama and Secretary Vilsack's leadership,
small businesses have been a critical element of our strategy
to improve economic opportunity for those living in rural
communities. We recognize that farmers, ranchers and rural
business owners devote long hours and hard work to their trade
and acknowledge our responsibility to ensure that their efforts
are not weighed down by unnecessary and burdensome paperwork.
Revising or repealing unnecessary, duplicative or overly
burdensome regulations already was underway in USDA's internal
processes when the Executive orders were issued. Deputy
Secretary Merrigan responded to the new orders by providing a
more formal framework comprised of teams from around mission
areas and agency levels to more formally review our
regulations.
We looked at several factors, most of them found in the
Regulatory Flexibility Act, such as the continued need for the
regulation, the nature of comments we have been receiving from
the public, the complexity of the regulation, the length of
time since the regulation had been evaluated, and the degree to
which technology, economic conditions or other factors might
have changed in the areas affected by the regulation. USDA also
considered comments from stakeholders, internal resource
capacity, and the potential need for statutory change to enable
regulatory change.
USDA invited the public to participate in this review
through the publication of a request for information in April
of 2011, along with an invitation to visit our open government
website and provide comments directly there, an opportunity
that still exists today.
In addition, the Department's largest regulatory and
service delivery component agencies conducted independent
public outreach activities, employing a variety of mechanisms,
from social media to more traditional requests for information
and customer focus groups.
Through this effort over 2,100 public comments were
received from a broad range of stakeholders, including
individuals, regulated entities, trade groups, other
governmental entities, including tribal governments, and USDA
employees.
USDA released its final plan for retrospective analysis in
August 2011, and in the subsequent months targeted eight areas
for significant reduction on small business burden.
Since then, we have made progress in many of those areas.
For example, in January of 2012, the Food Safety Inspection
Service published a proposed rule for electronic export
application and certification fees to make the export component
of the agency's public health information system available as a
much simpler and cheaper electronic alternative to the paper-
based application and certification process that had existed
before. Last November, a similar rule from FSIS for electronic
imports inspection and certification was issued, and will save
thousands of hours in finding and completing the necessary
paper forms.
Last month Rural Development's Rural Business Cooperative
Service published a proposed rule to streamline grant
applications and reporting requirements. Personally I found
this one very satisfying. We are finally moving past the
accusation that you had to either be a professional grant
writer or have enough money in your pocket already to hire a
professional grant writer in order to access these assistance
programs. We are now streamlining that process.
USDA also has made significant investments in information
technology to reduce red tape and make it easier to access our
financial and technical assistance programs. While many of
USDA's 19 agencies have IT modernization efforts underway to
push their programs to the Web, most notable is the Farm
Service Agency's MIDAS Initiative, which finally rolled out
nationwide earlier this month. Through MIDAS, FSA employees
finally have modern tools to provide better service to farmers
and ranchers, logging into a single system rather than having
to toggle back and forth among several systems, being able to
incorporate GIS technology into their work finally
electronically for the first time instead of having to print a
paper map and then draw on it with a pen to outline which
fields are going to be planted to what crops this year.
USDA continues to accept comments from the public on any of
its regulations and continues to look for ways to advance the
mission of our Department consistent with the Executive orders.
Agencies continue to engage with stakeholders and provide ever
more information online in formats that make doing business
with USDA easier no matter what kind of device you might be
using.
USDA's open government website still gives the public a
format to provide input, and we welcome any suggestions on our
services from the people who use them.
Mr. Chairman, thank you again for the opportunity to appear
today. I would be happy to address any questions you have at
this point.
Chairman Graves. Thank you all very much. Again, I know you
are all busy, and I appreciate you coming in.
I have two questions actually for Ms. Trottenberg, and they
are specific to aviation, but my first question is about there
is a program out there called the Living History Flight
Experience Program, and what that did was allow owners and
operators of very historically significant aircraft, which can
be very expensive to maintain and run--they used to be able to
apply for an exemption to have some limited passenger carrying
capability to be able to, you know, again, help pay for those
aircraft. Two years ago the FAA eliminated that exemption and
said they would come out with a rule in October of 2012, which
was last October, and they have still yet to provide a rule.
And I know a lot of these folks are just hanging out there
waiting for an opportunity.
But my first question is, why is it that you all closed the
rule, or the exemption at least on that when--you know, just to
be able to get the experience, I guess, of flying in one of
these historic aircraft, but yet right now you can buy a ride
on Spaceship 2 to experience space, as a commercial effort. It
is okay to go into space and take a ride there, but it is not
okay to take a ride on one of these airplanes, or at least
allow these 501(c)(3)s to apply for an exemption to be able to
give that.
Ms. Trottenberg. Yeah. And I apologize, Mr. Chairman. I
actually am not familiar with the Living History rule, so I
don't know what FAA's reasoning was. I hear your concern,
though, that it has taken a long time, and I certainly would
like to get back to your staff on sort of what the status of it
is.
You know, in general, I know from the FAA's point of view,
you know, they do sort of a constant upgrade on their rules and
regulations looking at safety issues, and, you know, I am not
sure here. I would presume that might have been the reasoning
behind it, but again, I would like to check and get back to on
that.
Chairman Graves. Well, then have your staff or yourself
write down. There is three things that I want to know. You
know, one, I want to know what the, you know, purpose behind
this was, which is a very general question. The second thing is
I want to know when the rule, the new rule is going to come
out, because you missed the deadline by a long ways, as matter
of fact, and you have got a lot of people out there depending,
so I want to know when. And I also want to know how much you
are involving the industry out there to help write the new
rules, to make sure that these opportunities are safe and that
they can continue to offer--or be able to apply for this
exemption and offer these rides, you know, obviously with a
waiver.
The next thing is, is when it comes to the FCC, I mean the
Federal Communications Commission, which recently issued a rule
on ELTs, those are emergency locator transmitters. They are in
every single aircraft that is out there. They are required to
be in every single aircraft that is out there. They right now
operate on 121.5 megahertz. And basically you have airplanes
and airlines that monitor that frequency all the time in case
something goes down and so they can find that aircraft.
Well, the FCC came out with a rule that said that they can
no longer be manufactured, they cannot be imported, they cannot
be certified, they cannot be used and they cannot be sold,
which means you have hundreds of thousands of aircraft out
there with this equipment in there and now being required to
buy new equipment, which is going to cost, you know, millions
and millions of dollars to the industry and to a lot of small
businesses out there.
And my question is, and you may not be able to answer this
either, but I do want an answer from you, I want to know if the
FAA, Department of Transportation is going to oppose that FCC's
rule, because it is going to be extraordinarily burdensome. And
these are small businesses and this equipment is very
expensive. These are small businesses that are trying to
operate. And, again, it comes right underneath what we are
talking about and some of the things that are coming out,
involving the industry out there, which it is not being
involved, it is not being asked to take part in this process.
And you probably aren't familiar with that rule either. I will
let you go ahead and comment.
Ms. Trottenberg. Well, I know, Mr. Chairman, we have
obviously a new chairman coming into the FCC, and actually the
DOT. We have a lot of issues that we are setting up an agenda
to speak to them about, so let me make sure this is on the list
and get with FAA and get back to you with some answers on it.
You know, there is a whole range in the transportation
field, as you know, of spectrum and communication issues that,
you know, involve our two agencies.
Chairman Graves. Well, how soon can I expect an answer? Can
I expect it in 2 weeks?
Ms. Trottenberg. Let us try and get you something by the
end of this week. How about that?
Chairman Graves. Okay. By the end of this week. That is
perfect.
Ms. Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman.
Every time we do hearings in this committee as well as
other committees, but particularly this one, time and time
again we hear stories on regulations from small businesses, the
burden of those regulations, they don't have the amount of
money that would allow for them to hire the lawyers and
accountants and so on.
So the president offered a great opportunity for the
federal agencies to review existing regulations based on his
Executive Order 13563, and that executive order provides
specific instructions to the federal agencies as far as
reviewing existing significant regulations. So I take issue
with agencies that go beyond the scope of the executive order
and review rules that are proposed rules, not focusing on the
existing regulations.
So my question is, why are agencies doing that? For
example, Ms. Hulit, I would like to hear what the rationale is
for SBA to include so many rulemakings in its report and not
many existing regulations other than size standards, which we
know SBA is already statutorily required to update?
Ms. Hulit. Thank you, Congressman Velazquez. The agency is
in a constant dialogue with our lending community and our small
business borrowers on how our programs are affecting them,
whether they are useful, whether there are barriers to
accessing the program. So in addition to the size standard
issue that is required under the Executive order and reviewing
our existing regulations, we have gone through a comprehensive
process with our borrowers and with our lenders to get feedback
on our loan programs. Some of that feedback has been existing
regulatory issues that are problematic that they would like to
see us change. And so we have to work comprehensively just not
only on the Executive order, but on other issues that we hear
from our client base, the borrowers and the lenders, on what
we----
Ms. Velazquez. Of all the completed actions that you have
taken, can you name at least three regulations, that are
existing regulations, that have been included in the report?
Ms. Hulit. I know that there are several size standards
that have been submitted to OMB.
Ms. Velazquez. Size standards, statutorily SBA has to
update----
Ms. Hulit. Right. I understand that. And we----
Ms. Velazquez. So that is beyond the scope of the executive
order by the president, which specifically asks to review
existing regulations. Look, you have in your books regulations
that are dated 10, 15 years that do not make sense in today's
economic reality. If we are seriously committed to take this
opportunity to review those existing regulations and decide
through economic impact analysis and everything that you have
to do whether they make sense or not, then that is what the
president wants and that is what we expect.
I would like to ask Transportation, each of the agencies
here today have been reporting for over a year now on
retrospective reviews, and so I just would like to ask you,
will the sequester hurt DOT's ability to carry out those
initiatives?
Ms. Trottenberg. Yes. Thanks for the question. And I think
you have heard our Secretary, Ray LaHood, and a number of our
modal administrators, including FAA Administrator Michael
Huerta, have pretty much talked at great length about a lot of
the impacts of sequester. Now, obviously we are grateful that
Congress recently passed legislation that will enable us to
mitigate some of the effects within the FAA, but clearly we
have at DOT been planning for the sequester essentially for a
year, and a lot of parts of the Department, we have engaged in
a hiring freeze, and now luckily furloughs will be minimized,
but the agency has had to cut expenses in a lot of ways.
Clearly it has an effect on our operations.
Ms. Velazquez. And SBA and then USDA, the same question on
the sequester.
Ms. Hulit. Under the sequester, we have six accounts that
had to be reduced under the sequester, and we have been
executing those cuts accordingly. Fortunately at this point we
don't have to have furloughs, but we have had to reduce our
program authority as well as some of our grant support.
Ms. Velazquez. Ms. Cook.
Ms. Cook. Largely the same answer. Our Food Safety
Inspection Service was facing fairly significant furloughs that
would have had an immediate impact on----
Ms. Velazquez. But----
Ms. Cook.--meat packers, but we have managed to avoid that.
Ms. Velazquez. My question is will the sequester impact the
review of existing regulations?
Ms. Cook. It doesn't impact the review. To the extent that
the review concluded that we might need a new IT system, for
example, our ability to contract out is diminished by the
resources that have been sequestered, of course, but it doesn't
stop us from moving forward with the review.
Ms. Velazquez. One area where the success of this executive
order will be defined is whether or not there is coordination
among agencies. And I know that historically this has been a
problem and very difficult to accomplish. Such interagency
consultation is absolutely critical to reduce regulatory
burden. For instance, the EPA and DOT were able to do so
regarding fuel economy standards. Has the USDA taken similar
steps where appropriate to coordinate with other agencies?
Ms. Cook. USDA has coordinated with other agencies. For
example, last year we put out a joint notice of funds
availability with the Economic Development Administration,
leveraging our resources with theirs so that, again, people who
might not be a professional grant writer can get to one system
and reach both agencies' financial assistance programs.
Within USDA coordination can be a challenge. As you know,
we are a department of 19 different agencies and 10 staff
offices, and sometimes just keeping our own cats herded can be
a challenge. Where this came up for us in last year's review
process really was in the area of tribal consultation. We are
absolutely committed at USDA to consulting with tribal
partners, but we were killing them, frankly, with the number of
consultation opportunities we are offering across 19 agencies,
and so our Secretary's Office of Tribal Relations stepped in to
help us better coordinate that consultation activity and give
them, I think, a more manageable bite at our regulatory agenda.
Ms. Velazquez. Ms. Trottenberg, do you have any example
where you have been coordinating with other agencies?
Ms. Trottenberg. Yeah. I mean, again, particularly speaking
about aviation, one of the new provisions FAA will be
implementing is creating an unmanned aerial craft program, a
pilot program, and that is a program that clearly requires
coordination across the Federal Government, with DOD and NASA
and the FCC. And so, yes, we are going to make sure we talk to
all the affected agencies and jurisdictions so that we don't
later run into complexities and problems that would slow the
program down.
Ms. Velazquez. And Ms. Cook and Ms. Hulit, have you worked
together in terms of the assisted loan programs?
Ms. Cook. Sure. USDA and the Small Business Administration
actually has a memorandum of understanding committing ourselves
to working together on our programs. In many cases one picks up
where the other leaves off.
Chairman Graves. Quick follow up. When you mentioned
working with agencies across the federal government, which is
great, what about involving those businesses or those
associations that are going to be affected by some of these
rules? UAVs a perfect example.
Ms. Trottenberg. Yeah. I mean, there we are doing a lot of
outreach with businesses and local communities. And I would say
all of us that travel around the country, we are regularly
meeting with communities that are interested in their business
communities that want to put in applications and participate in
the program. So we are getting a lot of terrific input. And,
you know, there are a lot of challenging issues there,
particularly privacy issues. As you know, now a lot of local
communities are starting to pass ordinances saying they don't
want to have those types of aircraft in their communities. So
there are a lot of legal, privacy, technical and business
issues to work through, but I think we are going to get a lot
of great input and it is going to be a really terrific program.
Chairman Graves. Mr. Luetkemeyer.
Mr. Luetkemeyer. Thank you, Mr. Chairman. And thank all the
witnesses today for their agencies' efforts to try and
streamline things and take the burden of regulation off our
small businesses. They are our job creators, and when you
hamper them, you hamper the ability of them to produce the jobs
that are going to get us out of this mess.
Today I want to talk to Ms. Trottenberg. I have got a
couple questions for you. And first I want to thank your agency
for the help. I know Congressman Graves and I worked on the
hours of service issue and, you know, we had a little problem
with it and you were willing to sit down and your agency was
willing to sit down and review the issue and review our
concerns about it, and then we were able to get something done
in a timely fashion. I hope that you would be willing to work
on that issue with another issue I am not going to bring up
here.
My staff should have briefed you or your staff with regards
to my issue I am going to bring up today, which is the
reinterpretation by your agency with regards to the FMCSA
interpretation of the exemption of the rule of farmers
transporting hazardous materials by requiring them to have a
CDL along with alcohol and drug testing within a 150-mile
radius. Originally the rule was 150 miles within the State, and
the new language, according to the new statute, is 150 air
miles regardless of boundary, whether it is a road, whether it
is a political subdivision line, State line or it is a river,
whatever, 150 air miles, and yet your agency made the statement
that FMCSA treats as equivalent to the farm vehicle drivers,
which is the previous definition, of operators of a farm
vehicle.
So as a result, we have gone back to the old definition and
sort of muddied the waters, and now we have farmers who are
getting ready to go in the field that are unable to transport
their things without having to go through the process of
getting a CDL license. And so I guess my comment to you is can
we expect some help?
Ms. Trottenberg. Absolutely. I think--and I am looking over
here at the staff. I think the good news is we have been
talking to your staff and the Farm Bureau, and I think we are
going to have a good solution very shortly, and we can brief
your staff on the details.
Mr. Luetkemeyer. Okay. When is that ``shortly''?
Ms. Trottenberg. I think the ``shortly'' is end of May,
early June, so within the next few weeks.
Mr. Luetkemeyer. Okay. Ms. Cook, how important is this to
get this done real quickly? You represent all the farmers.
Ms. Cook. Farming is a seasonal activity, to be sure.
Mr. Luetkemeyer. And so what is happening right now?
Ms. Cook. Well, it depends on where you are in the country
what is happening right now.
Mr. Luetkemeyer. Well, I am in the Midwest. Most of this is
going on in Missouri, where I am from. What is happening?
Ms. Cook. What is happening right now is the farmers are
beginning to do their planting.
Mr. Luetkemeyer. So how important is it to get this done
ASAP?
Ms. Cook. It is important.
Mr. Luetkemeyer. Would you make that into a request of Ms.
Trottenberg to get that done?
Ms. Cook. I would be happy to work with Ms. Trottenberg and
the DOT.
Mr. Luetkemeyer. Okay.
Ms. Trottenberg. Let us see what we can do to hurry it
along. I take your point about the timing issues on----
Mr. Luetkemeyer. It is very important. I know this is a
problem we had with the hours of service issue. And, again, it
was a situation where the farmers were in the fields right now.
This has to be done immediately, otherwise you are going to
lose a whole planting season and these folks are going to be in
a situation that is going to be cross-wise with what they want
to try and do here.
And remember, farming is a small business. These folks are
business people who are trying to make a living and do the
right thing as well.
And I am curious, whenever the rule was proposed, did you
go back to the congressional statements that were made during
the debate on this bill and use that as a guideline for the
intent of what this rule was supposed to--whenever this was put
into law? Did you go back and review that so that you
understood the intent of how this was supposed to be handled?
Ms. Trottenberg. Yeah. I mean, when we do rulemaking like
this, we do go back and look at congressional intent. I think
here clearly, you know, I think we would admit we didn't get it
right and, you know, we are trying to fix it as quickly as
possible.
Mr. Luetkemeyer. Okay. Well, that is kind of curious,
because I know this is what Mr. Lankford of Oklahoma, and he
was representing the Panhandle and using that as an example of
the 150 air miles, because obviously looking at Oklahoma, it
has got just, you know, a sliver of land out there. So
obviously the intent was to be able to go across State lines,
so I have a hard time understanding how this could happen.
Did you contact the Farm Bureau at all with regards to
making this rule before the rule was implemented?
Ms. Trottenberg. Yeah. I mean, I can check with--I believe
we did contact the Farm Bureau. But, look, obviously, you know,
I think we recognize here we made some mistakes, we need to fix
them. And I take your point, we need do it expeditiously.
Mr. Luetkemeyer. Okay. I appreciate that. With that, again,
I follow up on Chairman Graves's comment a minute ago, I am
kind of curious as well, you know, we are talking about working
across agencies here. Did you contact the Department of
Agriculture and find out what kind of impact this is going to
have whenever you put this rule out?
Ms. Trottenberg. I am looking over at the staff to see. I
presume we did. I think we usually are pretty----
Mr. Luetkemeyer. Ms. Cook, do you know?
Ms. Cook. No, sir. I would have no reason to know.
Ms. Trottenberg. I think on these types of rules, we are in
pretty regular communication with USDA.
Mr. Luetkemeyer. Hmm. And USDA didn't throw a fit over this
one?
Ms. Cook. I didn't observe any fits being thrown.
Mr. Luetkemeyer. Well, I hope you do next time.
Ms. Cook. Yes, sir.
Mr. Luetkemeyer. Because I am going to throw one here if we
don't get this changed, because this is a really big deal to
lots and lots of farmers around the country. And as you well
know now, Farm Bureaus are interested in this, all the ag
groups are interested in this. This is a really, really big
deal. So I appreciate your looking into it and we will look
forward to working with your agency. Thank you very much for
your time.
I yield back the balance of my time.
Chairman Graves. Ms. Chu.
Ms. Chu. Yes. Ms. Hulit, I am interested in the access to
capital for small businesses. And you stated that you were
streamlining the paperwork burdens for the 504 and 7(a) loan
programs. To what extent do you predict that these changes to
the paperwork will reduce the regulatory burden hours for small
business, and will there be an increase of lending to small
businesses as a result of these changes?
Ms. Hulit. Certainly. As I mentioned in my testimony, we do
expect a significant decrease in the burden hours, but we do
expect an increase in availability of capital and increase in
our loans. We project about 47,000 loans over a 5-year period
will occur as a result of these changes, resulting in about $30
billion in additional financing, supporting about half a
million jobs over the 5-year period.
Ms. Chu. And how have you reduced the regulatory burden for
these small businesses?
Ms. Hulit. Well, the two key areas are the personal
resources task and the affiliation requirements, and those are
significant paperwork burdens that are required to demonstrate
a small business is a small business. The affiliation rule, for
example, is the same rule, the demonstration requirements for
government contracting apply to the loan programs, which is a
disincentive for making an application through our 504 loan
program. We have seen a voluminous amount of tax returns and
financial statements needed to demonstrate that they are not
affiliated with a larger company, so we streamlined the
affiliation rule to mirror what we did in the SBIC program.
Ms. Chu. And how did you happen to focus in on these? Did
your agency work with lenders and small businesses in coming up
with these new requirements?
Ms. Hulit. Thank you for asking. We have conducted
extensive outreach. We conducted over 120 roundtables with
small businesses across the country over a 1-year period to
hear what were the most complicated factors about our loan
programs and what they would like to see changed.
Additionally, we worked with NADCO, the trade association
for the CDC community over a 6-month process. We called our
Reinvigoration Committee to get their priority list on what
would be most impactful, both statutorily, regulatorially, as
well as our SOP changes to make the program more user friendly.
So we had a lot of outreach.
And these two changes, the personal resources test and the
affiliation test, were the number one and number two priority
changes that were identified.
Ms. Chu. Thank you.
Ms. Hulit. You are welcome.
Ms. Chu. Ms. Trottenberg, I wanted to commend the
Department of Transportation for your efforts in implementing
the President's Executive order. I have no doubt that the
extensive regulatory review that your agency conducted was very
time consuming and labor intensive. And like DOT, all agencies
face a tradeoff in allocating their limited resources and
conducting regulatory reviews as other mission critical
activities.
From your experiences, what would you consider the most
effective way to conduct regulatory reviews and ensure that the
agency is getting the greatest net benefit from these reviews
without utilizing resources that would be better used in other
activities?
Ms. Trottenberg. Yeah. Thank you, Congresswoman. And I
think one of the things we are trying to do a better job of,
and I hear some of the members on this Committee having
concerns about it, finding new ways to do better outreach to
the public, to small businesses, to all the interested
stakeholders. And there are a lot of new technologies out
there. Federal agencies are--I mean, there is a CIO here, but
we are often a little lumbering when it comes to adopting the
latest technologies and using social media, but in terms of our
outreach now and the regulatory process and in all the other
things we are doing, we are really trying to improve on that
score. And I think you can reach a lot more people, we are
trying to use a lot more online tools, dialogues, webinars, you
name it, where we can get a lot more input and reach people and
businesses all over the country, but, you know, potentially
reduce costs by not having to fly us or fly them all over the
place.
So I think there is a lot we are trying to do there and I
think it is really yielding some good results. When we put out
things for discussion and comment, we can now get thousands of
people engaging in live debates where they can go back and
forth online, and it is producing some really great results.
Ms. Chu. And would anybody else on the panel want to
respond?
Ms. Hulit. I would just like to say as well, in addition to
the outreach that we have done across the country, not just on
the capital access side, but our other departments in the
agency, we have gotten a lot of personal feedback, but our
social media tools have been critical. We have a much more
enhanced interactive ability to communicate with small business
borrowers. We have the hits on our website are significant, as
well as through, you know, Facebook, Twitter, et cetera, we get
our message out.
Ms. Cook. USDA is blessed with a network of almost 3,000
local offices, and our employees are going to the grocery
store, they are going to church, they are sitting at Little
League games, the very people that they are working with, so we
have had an excellent network for getting customer feedback for
a long time.
In addition, though, the advent of social media has just
really taken off for us in ways that, frankly, my office had
not anticipated. Now in my current role, the thing that keeps
me up most at night is the constant demand for more network
bandwidth to accommodate social media. And, you know, I see no
end to that. It is the thing that we are working on the most
every single day in the CIO's office.
Ms. Chu. Thank you. I yield back.
Chairman Graves. Mr. Schweikert.
Mr. Schweikert. Thank you, Mr. Chairman.
You actually just said something that has completely
changed my direction of the question. And forgive me if I
mispronounce. Is it Hullett?
Ms. Hulit. Hulit.
Mr. Schweikert. Hulit. Okay. Sorry.
Ms. Hulit. Hulit.
Mr. Schweikert. It always helps if I actually put these on,
because I can't actually read any of the name plates from here.
First of all, for SBA, standard operating procedure manual,
how big is it?
Ms. Hulit. Hefty.
Mr. Schweikert. And mechanically when you have done sort of
these reviews, sort of the mechanics and duplication and sort
of the bureaucratic mechanics, is that one of the things you
really spend time delving into, saying, this is our standard
operating procedure?
Ms. Hulit. Yes. As a matter of fact, we are in the process
of updating our 50.10.5 SOP, which is our loan origination SOP,
our loan servicing origination and oversight. And what we are
trying to do there is really simplify and streamline the SOP,
make it much more user friendly. I can attest to the fact that,
coming from a lending environment where our credit policy
manuals are pretty hefty too, there is content that needs to be
there, but it needs to be presented in a way that is user
friendly, and we are working on that.
Mr. Schweikert. Well, if I remembered your resume, you had
been a mid market lender at one point.
Ms. Hulit. Correct.
Mr. Schweikert. So you have had this sort of experience
with here is our standard--or here is--actually, you refer to
it, or your agency refers to it as standard operating
procedure. I assume you also mean best practices, because as
you know, sometimes best practices, saying we do it in this
format, don't have to be nearly as specific, you know, in line-
by-line detail.
Ms. Hulit. I guess I am not sure where you are going with
that.
Mr. Schweikert. I am trying to understand, as you go back
and are reviewing your standard operating procedures, does it
really have to be, as you call it, hefty?
Ms. Hulit. I think it can be improved, as I said. And we
are working on improving it and getting more clarity to our
lending partners so they understand what the expectations are
without having to go through volumes of paperwork.
Mr. Schweikert. And now to the point where your previous
testimony sort of changed where I was going to go with this,
are you using your social media platform to help you refine
that and make it simpler and easier to understand?
Ms. Hulit. Our SOP is a available through our sba.gov
website and the lender portal that our lenders utilize for----
Mr. Schweikert. You have to have a really big bandwidth to
be able to download it all.
Ms. Hulit. They don't need to download it all. They can go
to sections that are pertinent to their activities.
We also obviously, we have about 90 percent of our loan
applications are submitted electronically through our e-tran
system. So we have several initiatives, not just what we are
doing currently, for electronic application for our loans, but
we have a process called SBA One, which is in the President's
2014 budget, which will streamline and make electronic the
application process from the borrower's experience, the lender,
the lender to the agency and for our oversight. So we have an
initiative that is underway to use technology to make our SOP
and our process a lot more streamlined.
But your concern about the depth of our SOP, yes, there is
room to improve not only what we are trying to communicate in
the SOP in terms of direction to our lending partners, but also
how it is presented.
Mr. Schweikert. Okay. And that goal is simplification?
Ms. Hulit. Absolutely.
Mr. Schweikert. Because I have had the pleasure about a
month or two ago sitting down with a number of my SBA lenders
in Arizona, and they have had good relations with sort of the
regional offices, but there is a sense of frustration that
things change, and the notification process back to them, and
often they are filling it out the way they know how, and then
they get a rejection saying, oh, you missed something, we
changed that a month ago.
Ms. Hulit. Uh-huh.
Mr. Schweikert. Fair criticism?
Ms. Hulit. Fair criticism. Our changes are published both
electronically, they are available on our website, and our
district offices should be communicating that, and they are
training with their lending partners as well, but there is
always room for improved communications.
Mr. Schweikert. Well, Mr. Chairman, just sort of a final
comment. The old saying, I believe it had something to do with
there is two ways to keep people from knowing something: don't
tell them, or tell them so much they are overwhelmed. And as
you say, when something is hefty and certain changes happen
into it, it is often going to slip through the cracks. So I
hope that is--because that was the one real frustration I was
getting from my lenders, is we need a simplified way to know we
need to change how we put data on this line or the mechanics.
Ms. Hulit. I would like to say that exactly the feedback
that you are talking about is precisely what we are
incorporating into what we are trying to do in our next version
of the SOP, which is to simplify our programs and simplify the
SOP as well. So that feedback has been heard loud and clear in
the agency. It is an ongoing process and we are working in that
direction.
Mr. Schweikert. I appreciate it. And thank you, Mr.
Chairman. Yield back.
Chairman Graves. Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman.
Well, it all sounds very complicated to this little country
horse veterinarian still, so I hope my other small business
colleagues can find their way through the processes that you
all have out there.
Very specifically, I guess, Ms. Cook, I also serve on the
Ag Committee, and there has been a lot of discussion by the
chairman and the ranking member both of the challenges USDA
faces with technology. Indications were, at least a year or two
ago, that we are still primarily a cobol-based system and cloud
computing, and desktop technology was not really there yet in
USDA. Is that still an accurate view of USDA?
Ms. Cook. Again, USDA is a collection of 19 different
agencies and 10 staff offices, each of which get their own
appropriations for things like IT, and we have haves and we
have have nots.
I don't think I can overemphasize the significance of MIDAS
coming out. That is 10 years in the making. Getting that----
Mr. Schrader. But the backbone of USDA is still cobol-based
technology?
Ms. Cook. The agencies that I came from, the rural
development agencies, many of our programs are still mainframe
cobol-based.
Mr. Schrader. You have been hit by the sequester, like
every other agency out there, some $2 billion or whatever.
Given the different opportunities you have had and some of the
work like MIDAS, what role has technology played hopefully in
helping you still deliver good service with these tough, tough
reductions?
Ms. Cook. You know, technology has been the promise for a
long time in USDA. We have seen the number of offices reduced,
we have seen the number of staff reduced. We have brought
technology to the extent funds allowed. We just last year
completed the process of upgrading servers and routers in those
local offices----
Mr. Schrader. Great.
Ms. Cook.--really for the first time since 2000, 2001.
Mr. Schrader. Do you have an ongoing account deferred
maintenance, our how ever you want to term it account, to help
upgrade over time?
Ms. Cook. We do for the field-based agencies, for the Farm
Service agencies, Natural Resources, Conservation Service, and
Rural Development.
Mr. Schrader. But not so much the rest, so----
Ms. Cook. Not so much the rest.
Mr. Schrader. Okay. New program, micro loan program. How is
that working? It sounds like you are getting some real good
applications.
Ms. Cook. Yeah. The Farm Service Agency has initiated a new
micro lending program specifically to be more risk based in
their lending, let them serve smaller producers for whom that
$15,000 or $20,000 for even a used tractor or a piece of
equipment makes all the difference in being able to stay in
operation or not. It is going very well.
Mr. Schrader. Very good. Is there an increase in
applications? It is a fairly new program.
Ms. Cook. It is a fairly new program, but the outreach has
been good. FSA also enjoys a network of State and regional
offices, local offices that have been providing outreach to
producers.
Mr. Schrader. I appreciate that. There are a lot of small
farmers. They are not all huge agribusinesses out there, and--
--
Ms. Cook. No, they are not. Most farmers actually have
other sources of income in addition to their farm income. And,
you know, keeping them on the land and in their community has
been one of or objectives since the Lincoln administration.
Mr. Schrader. I guess the last question for me would be for
all three of you. We have focused on rules and regulations that
your agencies put out, and you are reviewing those and deciding
which are perhaps appropriate in this environment and which are
not.
How about looking at what we tell you to do, the statutory
guidelines? And I know it is always tough to take on the egos
here in Congress, but it would be perhaps easier to deal with
the regulations if you are able to get rid of some of the laws
that we pass, all in earnestness and maybe with good intent,
maybe appropriate 20, 30, 40, 50, 100 years ago, but in today's
transportation, small business and agricultural systems really
don't apply.
Has there been any attempt as you have gone through the
President's directive and your own internal workings to look at
some of the laws and statutes that really perhaps take more
time than they are actually worth, and maybe give this
Committee and other Committees in Congress some guidance about,
could you consider reviewing, however politically correct you
want to be, consider reviewing some of these brilliant ideas
you had to the past?
Let's start with you, Ms. Cook.
Ms. Cook. Okay. Well, as you know, USDA gets much of its
statutory authority in 4 to 5-year increments through the
periodic enactment of what is called a Farm Bill, generically.
We are overdue----
Mr. Schrader. Yep.
Ms. Cook.--by a year, and so part of our regulatory review
process----
Mr. Schrader. We will be fixing that in 2 weeks.
Ms. Cook. Cool.
Part of our regulatory review process was indeed looking at
anticipated statutory changes in what would have been the 2012
Food, Farm and Jobs Bill----
Mr. Schrader. Okay.
Ms. Cook.--to see whether there might be areas to
streamline regulations by first streamlining legislation. And
to give you just one example out of Rural Development, because
I lived it for 11 years in the field and here in D.C., we have
currently 11 different statutory definitions of the term
``eligible rural area,'' and as you are trying to streamline
your application processes and, you know, even be able to put
up one map on the website that says this is rural, this isn't,
we can't do that yet. And it confuses us, let alone the people
that we serve sometimes trying to determine whether a
particular project in a particular location is eligible for
this program but not that program over there. And, you know, we
can do better than we have been doing.
Mr. Schrader. Well, my time has expired. I don't want to
take a lot, but if you have other--if you could get those to my
office, and Ms. Hulit and Ms. Trottenberg, get something like
that to our office and maybe even the Committee as a whole, I
would sure appreciate that, so we can, you know, do a real
introspective review.
And I yield back. Thank you, Mr. Chair.
Chairman Graves. Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman.
To start with, I will share my bias. I have spent 35 years
as a small business owner. I think we have too many
regulations. So that is a bias, so I will start with that.
I am just curious, you know, when you come to work and use
the word ``vision,'' do you think we have just the right number
of regulations, do you think we have too many regulations, or
do you think we need more regulations, kind of as a start maybe
for a little give and take here.
Ms. Trottenberg. I am happy to jump into that. And I think
I will agree with you, we have too many, but I think I--I think
it is worth--and actually it goes a bit to the previous
gentleman's question about why we sort of find ourselves where
we are.
I think at DOT when we were preparing for this hearing, I
asked, well, where do all our regulations comes from? The
majority of them come from the authorizing committees of
Congress. You know, I will give you a good example. MAP-21, we
just had an authorization bill passed in transportation last
year. It was a very popular bill, passed with bipartisan
majorities in the House and Senate, President signed it. It has
100 new legislative mandates for DOT, which we estimate will
incur 50 to 60 new rulemakings, half of which will be done by
the Federal Motor Carrier Safety Administration.
Mr. Collins. Not to cut you off, but I am just curious. Ms.
Hulit.
Ms. Hulit. I would agree. My----
Mr. Collins. Okay. I'm just trying to set the stage.
Ms. Hulit. Yes. Certainly.
Mr. Collins. Ms. Cook?
Ms. Cook. I would agree, although for us it is more
qualitative than quantitative.
Mr. Collins. All right. So if we come to work, and we all
know and small business knows we have too many, and I will be
audacious enough to say 50 percent too many, 25 percent, a
really big number. And if we agree there is too many, is there
an attempt by any of the agencies to actually numerically
reduce the number, like to come to work and say today we are
going to delete 10, or this week we are going to delete 100 or
this month 1,000, and do you track it? Do you know, for
instance, over the last year, how many new regulations have
gone in? I mean, that is a specific number. And how many, if
any, you have deleted? So has the number gone up, down, or
stayed the same? And if our goal is, and we all agree we have
too many, I would like to think every month somebody should
say, we just introduced 100 new regulations and we deleted 120,
so net negative 20, we are getting where we need to go. Does
that thought process even exist within your agency or does
anyone track it or not?
Ms. Trottenberg. I mean, I think the thought process exists
to see if there are ones that we can eliminate, but again, most
of our regulations are statutory.
Mr. Collins. No. I hear that, but----
Ms. Trottenberg. They come from Congress or they come
from----
Mr. Collins. No. I hear that.
Ms. Trottenberg.--the NTSB or GAO has made. So I----
Mr. Collins. In my world, that is defending the fact that
they keep growing.
Ms. Hulit?
Ms. Trottenberg. It is not defending it, but it is just the
agency can't unilaterally undo a congressional mandate.
Mr. Collins. Okay. I call it defense, but go ahead. Ms.
Hulit.
Ms. Hulit. I would agree with Ms. Trottenberg. It sounds
easier than it is. We are in the process of making some simple
changes to our loan programs, it has taken us over a year. It
is very challenging.
Mr. Collins. Ms. Cook?
Ms. Cook. I would look at the diversity of the communities
that we serve. I don't know that a total number really gives
you, again, a qualitative view at whether life is better or
worse for a farm or ranch, compared to a meat packing plant,
compared to an energy company, compared to a school providing
school breakfast to know that you have made life better or
worse.
Mr. Collins. Well, I guess what I will do--I kind of pretty
much anticipated this. And I just would give you my
observation. If we all agree, and we did, we have too many
regulations, the way to have fewer is to measure where we are
and to measure it quantitatively, daily, weekly, monthly, to
have a report, but also to have a process that would say our
goal here is to reduce it, and pick a number, you know, pick
some audacious number, we want to cut 10 percent of our
regulations. How many is that? Is it 1,000, is it 5,000? If you
don't measure it, if you don't hold yourself accountable, but
are defensive to say Congress in fact by passing laws is
creating more and more regulations, we are never going to get
where we all started out agreeing. We have too many
regulations. You have to measure it. You have to hold yourself
accountable. And I would hope maybe you could take that back
and at some point, if I said what is the data, did we go up,
did we go down, did we stay the same, you could snap your
fingers and that number would come out, because we are never
going to get a reduction of regulations if that is not one of
the reasons we come to work every day. Just don't know if you
will agree or disagree. I got 20 seconds. Do agree or disagree
that is reasonable?
Ms. Trottenberg. I mean, I understand your approach. Again,
I feel like the challenge we face--I mean, I mentioned MAP-21.
Mr. Collins. So you disagree.
Ms. Trottenberg. You know, we didn't write them.
Mr. Collins. Ms. Hulit?
Ms. Hulit. I don't think I can answer that question as
simply as it is stated.
Mr. Collins. Okay. It was kind of a yes-no, but go ahead,
Ms. Cook.
Ms. Cook. Speaking from my own personal experience, when we
tried this in the 1990s a lot of things moved out of
regulation, where there was public comment and transparency,
and into the very handbooks and other things we have been
talking about that don't have opportunities for public comment
and don't necessarily have transparency. So, again, I am not
sure a total number of reduction actually gives you a better
result at the end.
Mr. Collins. Well, I thank you all for your--I know my time
is up, but I would say I think we need more of a focus on
reducing regulations, and I am disappointed somewhat to hear
that is clearly not likely to happen. Thank you.
Mr. Chairman.
Chairman Graves. Mr. Rice.
Mr. Rice. Thank you, sir.
I am real concerned about American competitiveness. And I
have got some graphs and figures here that show that, you know,
in fact regulations have just ballooned in the last 4 years,
growing by, you know, 30, 40 percent. And I see reports here
from CBO that the regulatory requirement complying with it
costs small businesses over $10,000 a year. And I have watched
over decades, you know, we lose millions of American jobs every
year. We blame people for outsourcing, but in fact--you know,
and you say it is because of low wages, and I am sure some of
that is true, but I also am convinced that the second highest
reason is because of our regulatory framework. Complying with
that is too expensive, too time-consuming and it forces
businesses overseas. And I don't think we take seriously enough
the threat that this regulatory framework is to our economy
and, in fact, the very sovereignty of this country. You know, I
serve on the T and I Committee, Transportation and
Infrastructure, and the scariest thing I have heard since I
have been in Congress is that the Port of Miami has been trying
to get Federal approval to dredge their own port with their own
money for 14 years. You know, that goes to the very
competitiveness of our country, goes to the core of our
national security. And if we don't take this seriously and do
something about it, I don't see--you know, it is just going to
get worse and worse and worse.
So my plea, my very strong and sincere request is that we
take this extremely seriously and we hit the reset button. You
know, I hear people--I am a CPA and a tax lawyer. I hear people
talking all the time about zero-based budgeting, that we should
start from zero every year. Actually, I am less concerned about
that than I am about zero-based regulation. Maybe we should
just throw this stuff out and start over again, because truly,
if it takes 14 years to get that kind of approval--we are
working on trying to get a permit for I-73 in South Carolina,
we have been working for 6 years now, and the end is not in
sight. You know, we have very limited dollars for
infrastructure investment. It is so hard to find those dollars,
yet we spend such a large percentage of those very limited
dollars on complying with, you know, this enormous regulatory
structure.
I know I am picking on you in transportation.
Ms. Trottenberg. And, Congressman, listen, I think we agree
very much that the permitting process in transportation takes
way too long. USDOT has been putting a lot of effort into that,
as has the administration. Speaking of the question of agencies
working together, we have a whole cross-agency effort to try
and improve the permitting time. And we agree port dredging
takes way, way too long. But, again, I guess I have to
reiterate, if you wanted to start all over again, again, many--
all of the regulatory framework is statutory. It does--I mean,
not to say agencies don't have a role, but much of what we do
is mandated by Congress, and so if we wanted to peel it away,
we would need do that with you.
Mr. Rice. Well, here I come to Congress, I have been here
for 4 months, I am a tax lawyer. What I need is your
suggestions, because I want to know where we start in reducing
this red tape and getting these approvals for the Port of
Miami. You know, there is two ports on the East Coast that are
going to be able to take these post-Panama ships. Two. If we
started digging today----
Ms. Trottenberg. A lot more argue that they will.
Mr. Rice. If we started digging today, they wouldn't be
ready. We have got Baltimore and we have got Norfolk. Florida
wants one. What is it going to take to get the approval? You
know, Charleston, Savannah. I mean, go down--this is at the
very heart--this will absolutely destroy millions of American
jobs.
We had the representative of Maersk Shipping Line, the
largest shipper in the world, was in our subcommittee last
week, or 2 weeks ago. He said they were building transfer
stations in the Caribbean so they wouldn't have to deal with
the United States Government. It wasn't that long ago people
would come here because they wanted to deal with us versus
other people. Now it is reversed.
We have to take the burden off. We have got to reduce this
pile of regulation. We have got to get very serious about it.
And it is not happening. I mean, despite your earnest effort,
and I am sure they are earnest efforts, these reports that I
have got here show in fact the regulatory burden is growing at
an ever-increasing pace, faster than it ever has. So we have
got to find a solution.
Thank you very much.
Chairman Graves. Ms. Clarke.
Ms. Clarke. Thank you very much, Mr. Chairman. And I thank
the ranking member in absentia. I understand she will be
rejoining us shortly.
I would like to also thank our witnesses for their
testimony today. And my question is for Ms. Trottenberg.
Section 610 of the Regulatory Flexibility Act already requires
agencies to review regulations within 10 years of their
adoption for their impact on small businesses. Do you believe
that Executive Order 13563 has basically made Section 610
reviews unnecessary?
Ms. Trottenberg. No, I don't think they are unnecessary.
And, again, at DOT, as I mentioned in my testimony, we have
been doing a regular regulatory review for 35 years and we have
that 10-year cycle, but obviously the President's Executive
order, I will admit they put a new focus in our agency and
brought together really dozens of experts throughout all our
modal administrations to really take a fresh look and to again
engage I think in a very robust process of public outreach,
outreach to businesses, outreach to stakeholder groups. And we
got--you know, again, we got dozens and dozens of creative
ideas, and now we are tracking them on this report that we are
putting out every year.
Ms. Clarke. And would the other witnesses agree or do you
have a different take on the comparative nature, assuming that
some of it may be duplicative? What is your take on it? Ms.
Cook, Ms. Hulit?
Ms. Cook. Section 610 of the Regulatory Review Act does
provide the criteria that we used in responding to the
Executive order, so one informed to the other rather than
duplicated.
Ms. Hulit. I would agree. And as a small agency, we have
constant contact with our client base and we are constantly
looking at our regulations and seeing what we can do to be more
streamlined.
Ms. Clarke. Mr. Chairman, that is basically it for me. I
yield back the balance of my time.
Chairman Graves. Thank you very much.
Mr. Huelskamp.
Mr. Huelskamp. Thank you, Mr. Chairman.
I regret I only have I guess 5 minutes for a pretty
important topic. I sure wish someone was here from the EPA and/
or the IRS. That would probably be number one and two for
complaints, but the USDA is here, and I appreciate that. I want
to note particular regulatory issues that I did bring up with
the Secretary nearly 2 years ago. Under RUS apparently there is
an effort underway to limit construction of a power plant in my
district because USDA would like to have some major
environmental reviews because they happened own other property
on the site. Are you aware of this situation in western Kansas,
and what has the Secretary done to allow this project to go
forward and create hundreds and hundreds of new jobs?
Ms. Cook. Congressman, I am not aware of this particular
issue, so let us back get back to you.
Mr. Huelskamp. Okay. I appreciate that. It would be related
to the Sunflower power plant.
A second issue, which actually brings up the--has had the
most constituent complaints over the last 2 years for my
office, and that would be your proposed changes and mandates to
the school lunch program. And we are well aware that was
coming, because the folks that run those programs said it is
going to be a major disaster, and it has turned out to be the
case. Plenty of evidence that good intentions don't always
work, especially when you are trying to mandate from Washington
what should happen in 100,000 school districts.
And I have looked at the legislation that did pass, and I
don't believe it required restrictions, for example, on how
much fruits and vegetables a school district could actually
serve. Can you explain how the USDA reached a decision that
they wanted to limit access to fruits and vegetables in the
school lunch menu?
Ms. Cook. No. So let us get back to you on that as well.
You know, I am familiar the Healthy Hunger-Free Kids Act, but I
would be reluctant to try to answer that particular question.
Mr. Huelskamp. Okay. And a second one to follow up on that
would be related. Can you explain why the USDA decided to limit
access to meats and dairy in that same particular program? I
presume you don't have an answer to that, but the third one and
a follow-up would be, for many of my rural school districts,
kindergartners and seniors in high school actually go through
the same service line in these small districts. Under your
regulations, the limits placed on the kindergartners as far as
what they can be served in terms of calorie limits are the same
ones placed on an 18-year-old. I would like a response from the
USDA of exactly why that actually makes sense. And those are
three of those areas.
An issue for DOT I would like to ask about that has been
coming up particularly for those in the harvest business, I am
a farmer myself, but the transportation of modern farm
equipment that might exceed the normal lengths for moving
equipment, moving across roads and--is there any update on what
DOT is trying to do to make sure we meet the 21st century
requirements in modern agriculture?
Ms. Trottenberg. Yeah. MAP-21, again, the transportation
bill that Congress passed last year has actually tasked us with
doing a very comprehensive new look at all the truck size and
weight issues, and actually we have that process underway. We
are going to be doing outreach and obviously reaching out to
the agricultural community, the business community, truckers,
you name it. So we are hoping, yes, to take a look at how we--
you know, we have a patchwork system with different State
regulations overlaid with Federal law, and we are going to try
and look at, you know, what might be a 21st century solution to
some of those questions.
Mr. Huelskamp. Do you think we are going to actually make
progress on that? I wanted stronger language in there. I don't
think Congress has been too specific on that, but curious to
what you actually think will occur out of that.
Ms. Trottenberg. Well, I hate to prejudge it, because I
have to say, you know, we have talked about some contentious
issues today, and this one might be the most contentious that
we face in transportation. As you are probably aware, there are
strong feelings on all sides. And, again, I know there were a
lot of folks in Congress who were hoping to get actual
legislative language telling us what to do, and the best they
could agree upon is to have us study it. You know, we are going
to do a really thorough job. We are well aware of the desire in
the agricultural community and the business community to try
and, you know, up truck size and weight in different places. We
also have a very, very strong safety advocacy community, as you
know, who feels very strongly that we shouldn't. And, you know,
again, just as we try and do in our rulemaking, I hope we are
going to get good public input and use good science and good
economics to try and come up with some good solutions.
Mr. Huelskamp. I look forward to that.
And lastly for the USDA, if we could have some comments on
the proposed listing of the Lesser Prairie Chicken. Again, that
is another agency. What is frustrating to me is, you know, my
farmers and ranchers and oil and gas folks, they could care
less which agency it is, all they know is it is coming from
Washington and they recognize the listing of this Lesser
Prairie Chicken will have a significant impact on the future of
agriculture in western Kansas and five other States. And I
haven't seen any comments from the USDA about this, because it
is another agency. So I look forward to if the Secretary could
step up and defend agriculture, as hopefully I believe I will
expect him to do.
So I yield back, Mr. Chairman. Thank you.
Chairman Graves. Mr. Tipton.
Mr. Tipton. Thank you, Mr. Chairman.
And I would like to echo my colleague's comments in regards
to Greater Sage Grouse and the Prairie Chicken. We have got the
overlapping regulatory issues that are certainly coming in, and
we would like to hear that as well. It is of great concern.
I would like to thank our panelists for taking the time to
be able to be here today. And all of your respective agencies
did comply with the Regulatory Flexibility Act and consider the
potential negative effects that new regulations have on
businesses? We can just go down the line.
Ms. Trottenberg. We certainly do. And we also try and
consider very much the cumulative effect that potential rules
and regulations have. It is a very big part of our review
process, and we really do try and do the math on it and make
sure that we are reducing the burdens as best we can.
Mr. Tipton. Good. Ms. Hulit?
Ms. Hulit. I would say as well we take it very seriously.
We have the Office of Advocacy within the SBA. We work very
closely with the Office of Advocacy of what they are hearing
and inform our decisions.
Mr. Tipton. Ms. Cook?
Ms. Cook. Yeah. I would agree with that. We are looking on
the regulatory side both at making it easier to find the rules
and comply with the rules through electronic permitting and
certification. We are also trying to reduce the paperwork
burden for our financial and technical assistance programs as
well.
Mr. Tipton. Great. So we have unanimous agreement that, you
know, we are striving to be able to reduce that.
And I would like to go back to some of the previous
questions that have been asked. We have the evidence that it
has come to this Committee that we are spending $10,585 per
employee for small businesses to be able to comply. I
understand that we have the 10-year review process, we have the
Executive order from the President. And does this remind you a
little bit of being on a treadmill? We run in place, we don't
really reduce any regulations?
Can you point to me, going to the point of the hefty
manuals as an example, and I am not trying to be mean spirited
on that, because you have to try and comply, but how many
rules, how many regulations over the last decade have we pulled
back compared to how many we have added?
Ms. Trottenberg. Yeah. I admit, I think we have pulled back
very few. And, again, as I was saying, you know, one of our
agencies, I think one that gives this Committee some
frustration, last year Congress has tasked them with another, I
think it is about 30 new rulemakings. So even if we could pull
a couple back, there is no question in terms of the net number,
it is increasing. But, you know, I guess my plea would be, the
agencies have their role to play, but Congress, the NTSB, there
are a lot of different entities involved in sort of the
rulemaking structure that we have in place. It is not just
something agencies can unilaterally repair.
Mr. Tipton. Let me ask just kind of a general question that
many of us have discussed here. Would it be useful before your
rules go final to bring them back to the authoritative
committees for approval?
Ms. Trottenberg. Well, that is a good question.
Mr. Tipton. Would you agree to that?
Ms. Trottenberg. It is probably not up to me to agree to
it. I think that is something Congress could tell us to do any
time they would like to.
Mr. Tipton. Director Jackson of the EPA just told me no.
She didn't want to be able to come back.
Ms. Trottenberg. Oh.
Mr. Tipton. Don't you think, because you are doing
interpretation effectively of legislative intent----
Ms. Trottenberg. Correct.
Mr. Tipton.--which may lead the agencies to be making
determinations which in fact may not comply with legislative
intent, so wouldn't it be a good commonsense proposal to be
able to bring those back to the Committees and say, we agree
with you or we disagree with you in these areas, to be able to
help you achieve the goal that you are aspiring to?
Ms. Trottenberg. Yeah. And I would have only two thoughts
on that. I mean, one is as we do our rulemakings, we are
involved in the Administrative Procedures Act, which, again, is
a lot of congressionally-mandated steps, so in terms of when we
can go back to Congress and what you can tell us to do, believe
us or not, I would like to consult the legislative framework
that we work under.
I would also say that we frequently in the agencies go back
to Congress to try and get congressional intent. I would point
out, let's look now that we have a divided Congress, sometimes
congressional intent can be not as easy to divine as you might
hope. And, you know, this Committee is charged with reducing--
you know, one of the things you are looking at is reducing
regulatory burdens on small businesses. Our authorizing
committees, who are the ones who give us a lot of our
regulations, they are meanwhile very much urging us to hurry up
and start doing these rulemakings. So sometimes Congressional
intent can be complicated, even contradictory. But I understand
the spirit of, you know, what you wish we could do, which is in
the end produce a product that those in Congress who wanted us
to produce it feel achieve their ends.
Mr. Tipton. Well, one, we can give you a little bit of
insight, or at least from my perspective. We had had the rules
that were coming out of the Department of Transportation, out
of the EPA in terms of light trucks, which is going to be
another, what, $8.8 billion in terms of costs that are going to
be associated. This is harmful when we are struggling to be
able to create jobs. And the goal, in my sense, right now when
we have massive unemployment in rural America, we have a
struggling economy with only pockets of prosperity in this
Nation right now, it is not to add on more burden, more
regulatory authority, but to be reducing this, to unleash
American entrepreneurialism.
And my time has expired, Mr. Chairman. I yield back. Thank
you, ladies.
Chairman Graves. Any other questions?
Seeing none, I want to thank all of our witnesses for being
here today. And we will continue to monitor agency efforts to
review existing regulations, and we would just ask that the
agencies, all the agencies renew their efforts to identify
regulations that affect small businesses and consider ways to
reduce burdens.
And with that, I would ask unanimous consent that all
members have 5 legislative days to submit statements,
supporting materials for the record. Without objection, that is
so ordered. And with that, the hearing is adjourned. Thank you.
[Whereupon, at 2:30 p.m., the committee was adjourned.]
A P P E N D I X
STATEMENT OF
POLLY TROTTENBERG
UNDER SECRETARY FOR POLICY
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON SMALL BUSINESS
U.S. HOUSE OF REPRESENTATIVES
Agency Progress Implementing
Executive Order 13563, Improving Regulation and Regulatory Review and
Executive Order 13610, Identifying and Reducing Regulatory Burdens
MAY 8, 2013
Chairman Graves, Ranking Member Velazquez, and Members of
the Committee, thank you for inviting me to testify today on
the subject of agency progress implementing President Obama's
Executive Order (EO) 13563, Improving Regulation and Regulatory
Review, and EO 13610, Identifying and Reducing Regulatory
Burdens.
I am grateful for the opportunity to present the work of
the U.S. Department of Transportation (DOT), under the
leadership of Secretary Ray LaHood, in the area of regulatory
reform and what our Agency is doing to reduce the burdens and
costs of compliance for small businesses.
Through our ongoing review and revision of DOT's rules and
regulations under those two executive orders, we have been able
to save American businesses significant time and money over the
last two years, while continuing to improve safety throughout
our Nation's transportation system, reduce the environmental
impacts of transportation, and provide important consumer
protections for the traveling public.
We are proud of the work we have done on behalf of the
American people, and that the U.S. has one of the safest
transportation systems in the world, but we know that we can
always do better in the regulatory arena, and I thank the
Committee for their interest. We hope to work with you to
address the ongoing challenges we face.
DOT has, by some measures, one of the largest rulemaking
responsibilities in the Federal Government. Some of its modes,
like the Federal Aviation Administration (FAA), the Federal
Railroad Administration (FRA), and the Federal Transit
Administration (FTA) combine regulatory duties with other
programs such as infrastructure development; others, like the
National Highway Traffic Safety Administration (NHTSA), the
Federal Motor Carrier Safety Administration (FMCSA), and the
Pipeline and Hazardous Materials Safety Administration (PHMSA),
focus primarily on safety regulations and enforcement.
The rulemaking and enforcement environment is extremely
important--done right, it helps to prevent crashes and save
lives, mitigate environmental damage, reduce carbon emissions,
and provide consumer protection in a cost-beneficial way. The
regulatory process has produced some of DOT's and the Obama
Administration's most important accomplishments, including
raising Corporate Average Fuel Economy (CAFE) standards,
overhauling pilot rest requirements, improving pipeline, auto,
bus and truck safety enforcement, and strengthening aviation
consumer protections.
And we have done so with robust public and private sector
participation, the best science and economic modeling
available, a commitment to using plain, understandable English,
and seeking non-regulatory and pragmatic solutions that
minimize burdens and costs for American businesses wherever we
can.
The regulatory process is incredibly detailed--building
upon decades of legislative history--contentious, and often
litigious, since it affects the operations and costs of the
regulated industries, such as airlines and aircraft
manufacturers, automobile manufacturers, commercial truck and
bus operators, railroads, pipelines, and transit systems.
And we know this Committee has a special charge to evaluate
how our rules and regulations affect America's small
businesses. At DOT, we too are continuously mindful of the
burdens small businesses we regulate can face. We constantly
seek opportunities to reduce these burdens--as discussed later
in my testimony--while advancing our statutory safety,
environmental, and consumer protection missions.
Congress itself plays a very large role in the regulatory
area. While all of DOT's regulatory agenda is authorized by
statute, a large portion of it is not self-generated but is
either specifically statutorily-mandated by Congress or in
direct response to recommendations of the National
Transportation Safety Board (NTSB), the Government
Accountability Office (GAO) or the Inspector General (IG). The
vast majority of statutorily mandated regulations originate
from regular authorizing legislation for our operating
administrations.
For example, last summer Congress reauthorized our Nation's
highway and transit programs in the ``Moving Ahead for Progress
in the 21st Century Act'' or MAP-21. The bill, which passed
with strong bipartisan support, contained approximately 100
statutory mandates for DOT, which we estimate will result in
50-60 separate rulemakings in a two-year period of which over
half are assigned to FMCSA.
MAP-21's statutorily mandated rulemakings cover areas that
all of us would likely agree are important priorities--new
safety responsibilities, especially in transit, pipelines and
motor carriers, environmental streamlining to save project
sponsors time and money, and moving to a more performance-based
transportation system. But some of these rulemakings will add
further complexity to our existing regulatory scheme and
possibly burdens to small entities, while some we believe will
streamline it.
And we know that one of the most active areas of regulation
has been under the Federal Motor Carrier Safety Administration,
which does have a large impact on the bus and trucking
industry, particularly small and independent carriers, which
are essential partners with DOT in moving people and goods
throughout the country.
To that end, we have been extremely proactive in our
regulatory review efforts since the President's signing of EOs
13563 and 13610, with FMCSA leading the charge. One such effort
is a proposal \1\ under development to rescind the requirement
that truck drivers submit, and trucking companies retain,
burdensome paper driver-vehicle inspection reports when there
are no actual vehicle defects found.
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\1\ Proposed rulemaking entitled: ``Inspection, Repair, and
Maintenance; Driver-Vehicle Inspection Report: (RIN #2126-AB46).
FMCSA estimates that rescinding this requirement will save
the trucking industry about $1.5 billion per year, without
adversely affecting safety. The savings from each report is
modest, but when you consider it provides almost daily savings
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for millions of drivers it has a large impact.
Additionally, the Agency developed this proposal in
response to a request from industry to rescind the requirement
on a much smaller population of carriers. The Agency decided it
was appropriate to seek public comment on a rulemaking proposal
to apply this regulatory relief to a much larger segment of the
motor carrier industry. Since many motor carrier operations are
small businesses, this is precisely the type of regulatory
review that provides a direct improvement to the bottom line of
many small businesses. This rule is currently under internal
review at DOT.
FMCSA has also implemented key provisions in MAP-21 that
reduce the regulatory burden on small farmers, by expanding an
hours-of-service (HOS) exemption for farm-related operations
during the planting and harvesting seasons as well as
exemptions from other operating regulations for certain
farmers. They published guidance on October 1 to ensure our
State partners were aware of the regulatory relief provisions
in MAP-21 so that farmers could take full advantage of the
statutory exemptions.\2\ The guidance was followed up by a
final rule published in March of 2013.
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\2\ Notification of statutory exemptions: ``Statutory Amendments
Affecting Transportation of Agricultural Commodities and Farm
Supplies'' http://www.gpo.gov/fdsys/pkg/FR-2012-10-01/pdf/2012-
24106.pdf
Also, as directed by the Regulatory Flexibility Act, DOT
routinely seeks out ways to reduce the effects of its
regulations on small businesses. Two examples of this are (1)
indexed hazardous materials carrier registration fees, which
allow small businesses to pay a lower rate than their larger
counterparts, that saved small businesses $54 million dollars
last year and (2) allowances for small railroads to use
abbreviated safety procedures, in recognition of the lower
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level of risk inherent in their operations.
The President's signing of EO 13563 and EO 13610
successfully institutionalized many of the regulatory practices
that the Department has long embraced. In addition to our
efforts under EO 13563 and EO 13610, DOT has long recognized
the importance of regularly reviewing its existing regulations
to determine whether they need to be revised or revoked and has
had a system in place to do so for almost 35 years. In order to
carry out President Obama's executive orders, the Department
took swift action and developed an aggressive implementation
plan seeking broad input from all our key stakeholder groups
and the American public on our plan for identifying and
reviewing existing rules that might be outmoded, ineffective,
insufficient, or excessively burdensome.
Our results were encouraging. We held a Department-wide
public meeting that had about 200 participants, and we received
roughly 150 comments as a result of our outreach, all of which
were placed into a public docket for review. Commenters ranged
from large industry and labor groups to State Departments of
Transportation, to small businesses such as owner-operator
motor carriers. The comments received from these groups were
just as varied as the sources--ranging from detailed critiques
of our prior regulatory analyses, to suggestions to improve the
grant management process.
In addition to the Department-wide public outreach, FMCSA
recently tasked its Motor Carrier Safety Advisory Committee
(MCSAC) to provide FMCSA with ideas and concepts to make its
reviews under the Regulatory Flexibility Act more effective for
both the Agency and the private sector. MCSAC provided its
recommendations in April, and they suggest ways of increasing
the level of public engagement to ensure we fully address the
concerns of small businesses.
We are also committed to using plain English so that small
business owners and the general public can understand what we
are proposing, understand our methods for estimating the costs,
and understand how to respond to us in a way that allows us to
consider other alternatives for addressing the safety
challenge, at a lower cost. All of our proposed rules and
communications with the public incorporate a robust effort to
make sure they are understandable. Our guidance on this can be
viewed at our plain language website.\3\
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\3\ http://www.dot.gov/regulations/plain-language
To make certain our rules are reviewed in accordance with
these requirements, DOT publishes a plan listing all our
regulations and assigns each to a particular year for review
over a 10-year period \4\. We then update the plan each Fall,
including brief reports on the progress made on the reviews.
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\4\ http://www.reginfo.gov/public/jsp/eAgenda/StaticContent/201210/
Preamble--2100.html
In addition to the motor carrier rules mentioned earlier, I
would like to outline for you some specific rules that we
identified in our most recent Retrospective Regulatory Review
Report that may have implications for small businesses.\5\ That
report lists 89 rulemaking actions that are underway in
response to EO 13563, including at least 20 that will have a
positive effect on small business. These include, among others,
the following:
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\5\ The report can be accessed at: http://www.dot.gov/sites/
dot.dev/files/docs/january-2013-dot-rrr-report-final--0.pdf
FMCSA will propose a rulemaking \6\
concerning e-signatures that would amend various
sections of the Federal Motor Carrier Safety
Regulations to enable the use of e-signatures in
support of electronic recordkeeping. This would save
the industry millions of dollars each year by
explicitly allowing electronic records and electronic
signatures in place of the more burdensome paper
records.
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\6\ Proposed rulemaking entitled: ``Electronic Signatures'' (RIN#
2126-AB47).
PHMSA is evaluating comments and developing
a final rule \7\ that would allow for the certification
of fireworks by government-approved laboratories,
similar to the process that the Consumer Product Safety
Commission uses. It is intended to maintain the current
level of safety in certification, but would greatly
speed the process, freeing PHMSA's resources from the
certification process and saving money for the private
sector through quicker certification decisions,
potentially saving the industry up to $19 million per
year.
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\7\ Notice of Proposed Rulemaking entitled: ``Hazardous Materials:
Revision of Requirements for Fireworks Approvals'' (RIN# 2120-AC41).
FAA has proposed a rulemaking \8\ to update,
simplify and streamline rules of practice and procedure
for filing and adjudicating complaints against
airports, including small business complaints. It would
improve efficiency by enabling parties to file
submissions with the FAA electronically, and by
incorporating modern business practices into how the
FAA handles complaints. Small businesses, including
general aviation operators and aviation service
businesses who are often involved in complaints, would
benefit from this rule because it would decrease time
spent and volume of paper documents needed to process
complaints by allowing parties to file electronically.
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\8\ Notice of Proposed Rulemaking entitled: ``Rules of Practice for
Federally-Assisted Airport Enforcement Proceedings'' (RIN# 2120-AJ97).
FRA is also developing a proposed rule \9\
to take advantage of advancements in technology, which
would allow small and commuter railroads to use
electronic recordkeeping to maintain the records for
review, without submitting them to FRA, which would
reduce recordkeeping burdens by approximately 200,000
hours annually for the regulated railroads.
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\9\ Proposed rulemaking entitled: ``Hours of Service Recordkeeping
Amendments'' (RIN# 2130-AC41).
These are only a few of the regulations that we have
reviewed in order to carry out our duties under the relevant
EOs and the statutory requirements that mandate agency
retrospective regulatory review. We invite the Committee to
view the entire report, which will give you a much better sense
of the breadth of our continuing efforts in this regard, and we
stand ready to provide more information or a face-to-face
briefing as needed. The January 2013 report can be found on
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DOT's website:
http://www.dot.gov/sites/dot.dev/files/docs/january-2013-
dot-rrr-report-final--0.pdf \10\
In conclusion, let me once again thank the Committee for
its interest in the Administration's and DOT's work in
reviewing and reducing regulatory burdens on small businesses.
We share your desire to continuously improve the safety,
environmental quality, and consumer protection of our
transportation system in a sensible, scientific, and cost-
beneficial way while ensuring that American businesses--large
and small--are treated fairly so that they can grow and thrive.
I am happy to take your questions.
U.S. SMALL BUSINESS ADMINISTRATION
WASHINGTON, D.C. 20416
TESTIMONY OF
JEANNE A. HULIT
ASSOCIATE ADMINISTRATOR FOR CAPITAL ACCESS
U.S. SMALL BUSINESS ADMINISTRATION
BEFORE THE
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON SMALL BUSINESS
MAY 8, 2013
Thank you Chairman Graves, Ranking Member Velazquez and
members of the Committee. I am pleased to be testifying before
you on the Small Business Administration's (SBA) efforts to
streamline its regulations.
In SBA's Office of Capital Access (OCA), we have taken
several steps to ease the regulatory burden on small business.
We have recently streamlined both our 7(a) and Certified
Development Company (CDC) loan programs. The two most
significant changes have been to the ``personal resources
test'' and the ``size affiliation requirement'' for the
programs. Both of these proposed changes will increase
eligibility for 7(a) and CDC loans, allowing more small
businesses to access these critical financing tools.
We have also streamlined the 504 loan closing process.
Through this change, SBA is implementing efficiencies in SBA
counsel's document review process. This significantly reduces
the review time required by SBA counsel and will result in
speedier loan package reviews and faster loan closings.
OCA has also reduced the paperwork requirements for many
participants in our surety bond program. The Quick Bond
Guarantee Application--or ``Quick App''--combines the
contractor application and SBA's surety agreement into one,
easy-to-use form. This reform significantly reduces paperwork
and processing times for SBA-backed surety bonds on
construction contracts of $250,000 or less.
In addition to these OCA improvements, there have also been
some significant regulatory and paperwork reforms in other SBA
programs. For the thousands of small firms that do business
with the Federal government, we have helped reduce the time it
takes to get paid. The President's ``Quick Pay'' initiative cut
in half--from 30 days to 15 days--the amount of time it takes
the Federal government to pay small businesses. Getting paid
sooner means that small businesses can more quickly re-invest
those funds in additional working capital, marketing their
products, or hiring new workers.
SBA's Office of Disaster Assistance (ODA) reform efforts
have focused on further reducing the time it takes to approve
loans to disaster victims. In the wake of Hurricane Sandy, ODA
developed a pilot ``auto-approval'' process that uses credit
scores and gross income from an applicant's Federal tax return
as the basis for the approval decision. If expanded beyond the
pilot, the streamlined approval process would significantly
reduce SBA's processing costs for smaller disaster loans.
In addition to retrospectively reviewing and revising its
own regulations, SBA has also engaged the small business
community to find out how other Federal rules and regulations
can be adapted to fit the changing needs of emerging
entrepreneurs. In 2011, senior Administration officials visited
eight cities as part of the Startup America initiative. At
these roundtables, SBA listened to small business owners,
entrepreneurs and investors, as they described improvements to
processes and regulations that can help build a more supportive
environment for entrepreneurship and innovation. Those ideas
were described in a report encompassing a broad array of policy
areas--from student loans to intellectual property--and we have
shared it with our Federal partners and the general public.
I believe SBA has made significant progress in reducing the
regulatory and paperwork burdens on America's small business.
But work still remains, and we are committed to continuing
these streamlining efforts.
I wish to thank you for inviting me to testify on this
important topic today, and I look forward to answering any
questions you may have.
Statement of Cheryl Cook
Chief Information Officer
United States Department of Agriculture
Before the House Committee on Small Business
May 8, 2013
Chairman Graves and members of the committee, I am pleased
to have this opportunity to discuss the Department of
Agriculture's efforts to reduce regulatory burdens on small
businesses, and to facilitate new business development through
cutting-edge research and an array of financial and technical
assistance programs. Small businesses, including farms and
ranches, create a foundation for prosperity in rural America.
They provide millions of jobs, provide an abundant and
affordable food supply, and increase our Nation's energy
independence. Under President Obama and Secretary Vilsack's
leadership, small businesses have been a critical element of
our strategy to improve economic opportunity for those living
in rural communities. USDA has taken steps to support the
productivity and viability of small farming and ranching
enterprises, crate new opportunity for local and regional
marketing, expand conservation efforts and provide support for
rural small businesses to expand, grow and hire more. Across
each of these efforts, we recognize that farmers, ranchers and
rural business owners devote long hours and hard work to their
trade--and we have a responsibility to ensure that their
efforts are not weighed down by unnecessary, burdensome
paperwork.
Given the unique nature of USDA's work, its close
relationship with rural America, and its related sensitivity to
the small businesses that foster economic growth, the
Department was eager to undertake a review of its regulations
and paperwork activities as required by Executive Orders 13563
and 13610. Our goal was to identify significant rules and
information collections that were obsolete, unnecessary,
unjustified, excessively burdensome, or counterproductive to
our efforts to revitalize rural America.
USDA has taken steps to revise or repeal regulations that
are unnecessary as a result of changed circumstances, or are
duplicative or inappropriately burdensome. To accomplish this,
USDA has internal procedures that establish a process for the
development and review of all regulatory actions to ensure that
USDA's regulatory actions foster economic growth; respect the
role of State, local, and tribal governments; and do not impose
unreasonable costs on society. The procedures cover the full
rulemaking cycle, starting when the need for a regulatory
action is first identified, and carries through drafting,
technical, legal, policy, and interdepartmental review,
publication of proposed rule in the Federal Register, receipt
of public comments, and publication of a final rule for
inclusion in the Code of Federal Regulations.
In order to implement Executive Orders 13563, ``Improving
Regulation and Regulatory Review'' and 13610, ``Identifying and
Reducing Regulatory Burdens'' Deputy Secretary Kathleen
Merrigan directed a retrospective review team comprised of
mission area and agency-level regulatory review coordinators
and work groups. The team initiated a review of USDA
regulations that focused on increasing the public's access to
critical USDA programs, particularly those programs where
access could be simplified and the reporting burdens reduced.
The intent was to minimize burdens on individuals, businesses
and communities attempting to access programs that promote
economic growth, create jobs, and protect the health and safety
of the American people.
The review encompassed the activities of the largest
regulatory and service delivery organizations in the
Department: RD, RMA, FSA, National Resources Conservation
Service (NRCS), the Food Safety and Inspection Service (FSIS),
the Forest Service (FS), and the Animal and Plant Health
Inspection Service (APHIS). These agencies offered the best
opportunities to achieve President Obama's goals for promoting
regulatory innovation and reducing reporting burdens, while
simultaneously reducing administrative and operating costs.
In order to identify candidates for analysis, USDA
considered several factors in setting priorities. A number of
these factors are outlined under Section 610 of the Regulatory
Flexibility Act including: the continued need for the
regulation; the nature of comments or petitions received
concerning the regulation from the public; the complexity of
the regulation; the extent to which the regulation overlaps,
duplicates, or conflicts with other Federal regulations, and,
to the extent applicable, with State and local government
regulations; the length of time since the regulation has been
evaluated, and the degree to which technology, economic
conditions, or other factors may have changed in the areas
affected by the regulation. For the purposes of implementing
E.O. 13563, USDA also considered the urgency for improving
customer service by simplifying, streamlining, or improving
quality for information collection procedures; comments from
stakeholders; resource capacity and potential approval process
timelines; and need for statutory change.
USDA invited the public to participate in its review
through the publication of a Request for Information (RFI) in
the Federal Register on April 20, 2011. USDA also invited the
public to participate through its Open Government Web site. In
addition, USDA's largest regulatory and service delivery
organizations conducted independent public outreach activities
employing a variety of mechanisms, including social media and
traditional RFI's to continue seeking input from the public.
Through this efforts, over 2,100 public comments were received
from a broad range of stakeholders, including individuals,
regulated entities, trade groups, and USDA employees.
Based on USDA's evaluation and public input, USDA released
its Final Plan for Retrospective Analysis on August 18, 2011.
The final plan, which was subsequently updated to reflect input
for Executive Order 13610, identifies 13 initiatives that would
significantly reduce regulatory burdens and several initiatives
aimed at reducing paperwork burdens. Of these, eight were
featured in USDA's Fall 2012 Statement of Regulatory Priorities
as regulatory actions that would significantly reduce burdens
on small business.
Since the release of its Final Plan for Retrospective
Analysis, USDA has made progress in implementing these
initiatives. For example:
On January 23, 2012, FSIS published a proposed rule for
Electronic Export Application and Certification Fee to make the
export component of Agency's Public Health Information System
(PHIS) available as an alternative to the paper-based
application and certification process.
On November 27, 2012, FSIS published a proposed rule for
Electronic Import Inspection and Certification of Imported
Products and Foreign Establishments, which is intended to
reduce the information collection burden on importers by
approximately 10,000 hours. We are moving forward with a
proposed rule to expand FSIS' use of generic labeling.
On April 12, 2013, RD's Rural Business Service published a
rule that proposes to streamline grant application
requirements. The final rule is expected to reduce the
information collection burden by reducing the number of hours
it takes to complete a technical report for projects with total
project costs (TPC) of more than $80,000 to $200,000;
eliminating the requirement for a technical report for projects
with TPC of $80,000 or less; and reducing the number of hours
it takes to complete the application.
USDA also has made significant investments in information
technology to reduce red tape and make it easier to access
USDA's financial and technical assistance programs. While many
of USDA's 19 agencies have IT modernization efforts underway to
push their programs to the Web, most notable is Farm Service
Agency's Modernize and Innovate the Delivery of Agricultural
Systems (MIDAS) initiative, the first phase of which was
implemented in FSA field offices this month. MIDAS aims to
provide FSA employees with better tools to provide stronger
service for producers by logging into a single system rather
than toggling among several and, for the first time, fully
integrates GIS technology with information about farm, fields
and crop histories.
USDA continues to accept comments from the public on any of
its regulations and continues to look for ways to advance the
mission of USDA consistent with the Executive Orders.
Consistent with the need for periodic review of its
regulations, USDA has continued to employ its Open Government
Web site to give the public an ongoing forum to provide input
and discuss the retrospective analysis of regulations, and to
help USDA formulate plans for future reviews. If, at any time,
members of the public identify possible reforms to streamline
requirements and to reduce existing burdens, USDA will give
those suggestions careful consideration. USDA is committed to
identifying inefficient, duplicative, or obsolete regulations
and to identify ways to reduce program burdens and increase
access.
That concludes my statement for the record. I would be
happy to answer any questions.