House Small Business Subcommittee on Investigations, Oversight and Regulations Chairman David Schweikert (R-AZ) today led a hearing to examine the compliance of federal agencies with the Regulatory Flexibility Act (RFA) and the efforts of the Office of Advocacy at SBA to hold agencies accountable.
Signed into law in 1980, the RFA requires agencies to assess the economic impact of their regulations on small businesses, and, if significant, consider alternatives that are less burdensome. But unfortunately, federal agencies often use loopholes to avoid compliance with the statute. The federal government publishes between 3,000 and 4,000 new regulations every year, many of which impact small businesses that are disproportionately burdened by regulatory requirements in comparison to their larger counterparts.
"Small businesses are expected to adapt to be successful," said Chairman Schweikert. "Why can't the rules Washington levies against them do the same? The RFA and the demands it makes on agencies to consider regulatory impacts on small businesses have been on the books since the Carter Administration. The world has changed a lot since then, as have small businesses. I hope this Administration will join our Committee to strengthen the process of how we monitor the impact of new regulations and fix old, broken ones."
Last Congress, the House Small Business Committee passed the Regulatory Flexibility Improvements Act of 2011 (H.R. 527). The bill would close loopholes used by agencies to avoid compliance with the RFA, require a better assessment of the impacts that regulations will have on small businesses, force agencies to perform better periodic review of rules, and grant the Chief Counsel for Advocacy at the Small Business Administration greater powers for enforcement of the RFA.
During the first three years of the Obama Administration, 106 "major" regulations -- those with an annual economic impact of $100 million or more -- were issued. In comparison, during the first three years of the previous Administration, 28 major regulations were issued. With the explosion in regulatory output during the current Administration, it is imperative that small businesses have a voice in a strong Office of Advocacy and a strong RFA. The Small Business Committee will build on today's hearing over the course of this Congress to ensure that it does.
Notable Witness Quotes:
Carl Harris, Vice President and General Manager of Carl Harris Co., Inc in Wichita, Kansas said, "Congress, in crafting the RFA, clearly intended for all covered federal agencies to carefully consider the proportional impacts of federal regulations on small businesses. Unfortunately, all too often federal agencies view RFA compliance as either a technicality of the federal rulemaking process or, worse yet, as unnecessary. In an effort to ensure that regulations are crafted in accordance with the Congressional intent of the RFA, I urge Congress to seek out ways to improve agency compliance with the Regulatory Flexibility Act."
Marc Freedman, Executive Director of Labor Law Policy at the U.S. Chamber of Commerce, Washington, DC said, "The Regulatory Flexibility Act and the Small Business Regulatory Enforcement Fairness Act exist to help agencies improve their rulemakings, not to impede them. If agencies welcomed the input of small businesses as a source of real world understanding these regulations would likely be more narrowly tailored without sacrificing the agency mission or regulatory objective. In the interest of transparency, OSHA should conduct more small business panel reviews and other agencies should look for more direct ways to develop the input of small businesses consistent with Section 609 (a)."
Winslow Sargeant, Ph.D, Chief Counsel for Advocacy of the U.S. Small Business Administration in Washington, DC said, "We have learned through our experience with the RFA that regulations are more effective when small firms are part of the rulemaking process. The result of enhanced agency cooperation with the Office of Advocacy and improved agency compliance with the RFA benefits small businesses, the regulatory environment, and the overall economy."