Senators debate impact of federal regulations on small businesses

By: Greg LaMotte

Members of the Senate Committee on Small Business and Entrepreneurship listened to testimony, and discussed the harm and benefits of federal regulations for American small businesses in a hearing on Capitol Hill Wednesday.

Senators heard testimony from two small business owners and advocates: Randy Noel of Reve Inc., a builder of custom homes and 1st Vice Chairman of the National Association of Home Builders, and Frank Knapp of the American Sustainable Business Council, who is also CEO of the South Carolina Small Business Chamber of Commerce.

Chairman of the committee Sen. James Risch (R-Idaho) led the debate.

“It’s small businesses who are responsible for building this country,” Risch said. “They built this country not because of the federal government, but in spite of the federal government. We want to go back to that as far as I’m concerned.”

Ranking member Sen. Jeanne Shaheen (D-N.H.) explained that the committee’s job is to allow small businesses to grow, and also shared her concern with how federal regulations affect this growth.

“We need to harmonize and streamline and repeal regulations that no longer make sense,” she said.

However, Shaheen held that certain regulations can “encourage innovation and provide critical protections” to small businesses that need help in these areas.

Noel spoke first of the two advocates, focusing on the lack of input in the rule-making process small businesses have, despite being affected most by them. He referred to the EPA rule “Waters of the United States” as an example of a regulation that impacts homebuilders such as himself without having say in its becoming law.

“In order to reduce the regulatory burden on small businesses, the NAHB believes you must restore Congressional oversight authority to the process,” Noel said.

Knapp echoed this sentiment of small businesses needing more input in his testimony as well, but sought a different route in how regulation of small businesses should change.

“Unfortunately, just as the regulatory decision-making process isn’t serving small businesses well, compliance assistance is also inadequate,” he said.

Both Knapp and Noel cited statistics to support their arguments. Sen. Risch, who is in favor of pulling back on federal regulation of small businesses, praised Knapp’s reform-based testimony.

“It’s the best face I’ve ever seen put on this disaster,” Risch said. “I’ve met morticians who couldn’t do nearly as well as you did.”

Member of the committee Sen. John Kennedy (R-La.) was less impressed, and questioned the solutions offered by Knapp.

“I want to be sure I understand what you’re saying….the answer to too much government is more government?” Kennedy said.

Kennedy went on to call the number of rules “breathtaking,” and said that despite the amount and complexity of the rules, the attitude of the agencies that make and enforce them is often an issue as well.

“Too often you just encounter condescension, and smugness, and this unspoken understanding that if you’re complying too much, well, what goes around comes around,” Kennedy said.

Risch shared his agreement with Kennedy’s comments on agency attitude. Risch explained how, in his past occupation as a lawmaker, he would caution clients to never let inspectors for the EPA to come onto their property without a warrant. He contrasted this regulatory experience with times his local fire marshal inspected his office. Unlike how he dealt with EPA inspectors, Risch invited the fire marshal with open arms.

“You know why I did that? Cause I knew that guy was interested in seeing that my place wouldn’t catch on fire, and if it did, they could put it out,” Risch said. “He wasn’t interested in raising money through fines.”

Sen. Kennedy and Noel agreed that an agency funding itself through fines was “a moral hazard,” as stated through Risch’s anecdote.

The final Senator to speak at the hearing was Sen. Heidi Heitkamp (D-N.D.), who criticized the existence of conflict between regulatory agencies and the small businesses which they regulate.

“That continues to be the challenge—this adversarial relationship that presupposes that people don’t have the same goals for clean air and clean water,” she said.

Noel explained that the need for clean air and water when building homes is evident, but the regulations and paperwork concerning that need aren’t always sensible.

The hearing ended on a nonpartisan note, where both Democrats and Republicans agreed regulatory reform is important in aiding small businesses.

“This is not a partisan issue,” Risch said. “Admittedly we have a little different issue as to the regulatory mass of regulations, but on the other hand I think we all agree that there are some regulations that are necessary, and there’s a whole lot more that aren’t, and we all need to be vigilant about that.”

Sen. Heitkamp offered final words to an Idaho family in the hearing room that, according to Risch, lost their small business due to overregulation, and to other small business owners of America.

“Stay tuned,” she said. “We’re hearing you. And hopefully we’ll get you some relief.”



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