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Regulatory Flexibility Improvements Act of 2011

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. SMITH of Texas. Mr. Chairman, I yield myself such time as I may consume.

America's economic recovery remains sluggish, with the unemployment rate still at 9 percent. Jobs are the key to economic recovery, and small businesses are the primary job creators in America.

A study for the Small Business Administration found that regulations cost the American economy $1.75 trillion annually, or over $15,000 per household.

Mr. Chairman, while job creators suffer under the weight of these regulations, Federal employees are visibly writing even more to implement the mandates of new laws like ObamaCare and Dodd-Frank. The same study also found that the cost of regulatory compliance is disproportionately higher for small businesses. This hurts their ability to create jobs for Americans.

Last month a Gallup poll found that small business owners consider ``complying with government regulations'' as the ``most important problem'' they face.

On February 8, 2011, I introduced H.R. 527, the Regulatory Flexibility Improvements Act of 2011, to provide urgently needed help to small businesses. Mr. Graves and Mr. Coble are original cosponsors along with the bill's 24 additional cosponsors.

This bill primarily reinforces the Regulatory Flexibility Act of 1980 and the Small Business Regulatory Enforcement Fairness Act of 1996.

It only requires agencies to do what current law and common sense dictate that they should be doing. Current law requires agencies to prepare a regulatory flexibility analysis so agencies will know how a proposed regulation will affect small businesses before it is adopted. But the Government Accountability Office has found in numerous studies that agencies are not always adhering to these laws.

For example, current law allows an agency to avoid preparing a regulatory flexibility analysis if the agency head certifies that the new rule will not have a significant economic impact on a substantial number of small businesses. But these terms are not defined in the law, and agencies routinely take advantage of this and fail to prepare any analysis.

The bill fixes this problem by requiring the Small Business Administration to define these terms uniformly for all agencies. Also, it requires agencies to justify a certification in detail and to give the legal and factual grounds for the certification. And this bill restricts agencies' ability to waive the Regulatory Flexibility Act's requirements.

The legislation also requires agencies to document all economic impacts, direct and indirect, that a new regulation could have on small businesses. Agencies already must account for indirect economic impacts under the National Environmental Policy Act. Small businesses deserve the same level of scrutiny.

This bill assures that small businesses will have a voice in the regulatory process. Currently, only three agencies, the Occupational Safety and Health Administration, the Environmental Protection Agency, and the Consumer Financial Protection Bureau must consult with small business advocacy review panels before issuing new major regulations. Building on this, the bill requires all agencies to use advocacy review panels.

Equally important, this bill strengthens requirements that agencies review and improve existing regulations whenever possible to lower the burden on small business. It enhances the Small Business Administration's ability to comment on and help shape major rules. It assures that the law is uniformly implemented so agencies can not interpret their way out of its requirements. And the bill improves judicial review.

Some critics of regulatory reform may claim that this bill undermines agencies' ability to issue new regulations. On the contrary, the bill only strengthens the existing law with carefully tailored commonsense reforms.

Especially in light of current economic conditions, this bill is a timely and logical step to protect small businesses from overregulation. Like the Regulatory Flexibility Act of 1980 and the Small Business Regulatory Enforcement Fairness Act of 1996, the Regulatory Flexibility Improvements Act of 2011 recognizes that economic growth ultimately depends on job creators, not regulators.

The economy is already on shaky footing. It is more important than ever for regulators to look before they leap to impose more regulations. I urge my colleagues to support the bill, and I reserve the balance of my time.

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Mr. SMITH of Texas. Mr. Chairman, I yield myself the balance of my time.

Job creation is the key to economic recovery, and small businesses are America's main job creators. But overregulation kills jobs and is especially burdensome for small businesses. Anyone who doesn't believe that probably hasn't spent much time in the private sector. Even President Obama, who has not spent much time in the private sector, wrote in a Wall Street Journal op-ed and recognized that overregulation ``stifles innovation'' and has ``a chilling effect on growth and jobs.''

It has been 15 years since Congress last updated the Regulatory Flexibility Act of 1980. Experience during that time reveals that further reforms are necessary. The Regulatory Flexibility Improvements Act of 2011 makes carefully targeted reforms to the current law to ensure that agencies properly analyze how a new regulation will affect small businesses before adopting that regulation. In the current economic climate, with millions of Americans looking for work, we simply cannot afford to overburden small businesses with more wasteful or inefficient regulations.

I urge my colleagues to support the bill. I look forward to its passage.

I yield back the balance of my time.

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MR. SMITH of Texas. Mr. Chairman, I support this amendment.

The amendment aims to require an agency to account for rules implementing the free trade agreements when the agency considers the cumulative impact of a proposed rule. I support free trade because I believe it is in the best interest of American business, workers, and consumers alike.

The gentleman from Pennsylvania and I may differ on this issue, but in the context of this amendment, that is beside the point. It can't hurt to make sure that agencies consider the impact of rules implementing the free trade agreements in their regulatory cumulative impact calculations. I don't think the analysis will show that free trade destroys American small businesses. Quite the opposite is true, in fact. But that isn't a reason not to do the analysis. We should know how these kinds of regulations contribute to the cumulative regulatory burden on small businesses.

In conclusion, Mr. Chairman, I do support this amendment and hope to have the gentleman from Pennsylvania's support for the bill on final passage.

I yield back the balance of my time.

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Mr. SMITH of Texas. Mr. Chairman, I yield myself the balance of my time.

The bill only requires agencies to do what common sense and current laws dictate they should be doing right now. The Department of Homeland Security is not exempt from the Regulatory Flexibility Act. Like other agencies, the Department should analyze how a new regulation will affect small businesses before issuing the regulation. If the Department needs to issue a regulation in a true emergency situation, such as one involving national security, it can already do so under the ``good cause'' exception to notice-and-comment rulemaking in the Administrative Procedure Act. This good cause exception would allow the agency to bypass the analysis required by the Regulatory Flexibility Act as well.

As written, the amendment would exempt the Department from H.R. 527 but not from the Regulatory Flexibility Act, itself. The result of this would be two versions of the Regulatory Flexibility Act at play in the Federal Government--one for the Department and one for everyone else.

Small businesses do not need any more confusion and uncertainty when they are trying to participate in the Federal regulatory process.

For these reasons, I oppose the amendment, and I yield back the balance of my time.

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Mr. SMITH of Texas. Mr. Chairman, even the President and his regulatory czar, Professor Cass Sunstein, admit that over-regulation hampers job creation. The Regulatory Flexibility Act of 1980 is based on the fact that regulatory compliance is especially costly for small businesses, which are America's main job creators. In this economy, we have no room for error when it comes to over-regulation.

The bill ensures that all agencies follow the Regulatory Flexibility Act. H.R. 527 does not ask agencies to do anything that they should not be doing already right now.

There is no reason to create the blanket exemptions proposed by this amendment. There are no such exemptions currently in the Regulatory Flexibility Act for the categories of rules described in the amendment. Further, the amendment would create tremendous confusion among agencies and small businesses regarding which version of the law would apply to a future rulemaking. We need less confusion and uncertainty, not more, in the regulatory process.

If the amendment stems from a concern about the ability of agencies to make rules in emergency situations, I would note once again that agencies may avail themselves of the ``good cause'' exception to the notice-and-comment rulemaking process already in the Administrative Procedure Act. If an agency justifiably invokes this exemption, it will not have to conduct the analysis required under the Regulatory Flexibility Act.

For these reasons, I oppose this amendment, and I yield back the balance of my time.

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Mr. SMITH of Texas. Thank you, Mr. Chairman.

First of all, I would like to point out that the National Federation of Independent Business actually does support this legislation. I also would like for the record to show that a recent Gallup poll taken on October 24 of this year said that small business owners themselves cite ``complying with government regulations'' as their most important problem. Now, that's why we are here today.

Mr. Chairman, I oppose this amendment because it puts the cart before the horse. The reason we require agencies to conduct regulatory flexibility analysis is so the agencies and the public will know how a new regulation will affect small businesses before the agency issues the regulation.

The amendment would exempt from the Regulatory Flexibility Act any rule that would result in net job creation. We certainly know that regulations can destroy jobs. Even the administration acknowledges that.

Whether regulations can ever truly create jobs is another question all together. Assuming that a regulation could create jobs, an agency will not know this without analysis first, which is what the bill requires agencies to do.

There is no good reason to transfer this responsibility to conduct this analysis from the agency, themselves, to the Office of Management and Budget, as the amendment proposes.

For these reasons, I oppose the amendment, and I yield back the balance of my time.

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Mr. SMITH of Texas. Mr. Chairman, I yield myself the balance of my time.

I oppose this amendment because it is unnecessary and would result in a biased study by the Government Accountability Office.

The study proposed by the amendment focuses excessively on costs to agencies to comply with the Regulatory Flexibility Act, and how the bill would affect agencies' abilities to pass new regulations. The study would not focus enough on how the bill would benefit small businesses and lead to better regulations, which is where our focus should be.

It is worthwhile to require agencies to finally comply with the law. That is especially true if it means that agencies will reduce unnecessary regulatory burdens and free small businesses to create jobs.

In the future, I certainly would like to know whether agencies comply with the Regulatory Flexibility Act as amended by this bill, or whether they remain disobedient. This amendment, however, favors the idea that the bill places too heavy of a burden on regulators.

Fundamentally, the purpose of the Regulatory Flexibility Act is to reduce the regulatory burden on small businesses, not on agencies. Job creators, not job regulators, are the key to our economic recovery.

Mr. Chairman, for these reasons, I oppose the amendment, and I yield back the balance of my time.

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Mr. SMITH of Texas. I oppose this amendment because it carves out an exception to the bill for regulations under the Food and Drug Administration.

If agencies were doing the depth of pre-regulatory analysis they are supposed to be doing under the Regulatory Flexibility Act, then we wouldn't be here today.

Small businesses create jobs, and jobs are the key to economic recovery. To help small businesses--like minority-owned restaurants, for example--create jobs, we need to reduce, not increase, the regulatory burden on them.

The FDA is not currently exempt from the Regulatory Flexibility Act, so it makes no sense to exempt the FDA from the bill, either.

This amendment also would create confusion within the FDA by exempting only its responsibilities under the Food Safety Modernization Act from this bill. There should not be two versions of the Regulatory Flexibility Act in play at the FDA.

For these reasons, I oppose the amendment, and I yield back the balance of my time.

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