The Hill - Put More Muscle into the Regulatory Flexibility Act

Op-Ed

By Rep. Sam Graves

The Regulatory Flexibility Act (RFA) is an excellent concept: federal agencies must assess the economic impact of their regulations on small firms, and if significant, consider less burdensome alternatives. Although the law has been on the books for more than three decades, agencies still fail to fully comply with the RFA's requirements. This law needs to be updated and strengthened to hold federal agencies accountable for their clear responsibilities to small businesses. The good news is there is a solution: The Regulatory Flexibility Improvements Act of 2013 (H.R. 2542).

The Committee on Small Business has been hearing for years about agency lip service paid to the RFA and the loopholes exploited to get around this statute. When that happens, small businesses are regulated without the full protection intended by the congressional authors of the RFA, and those businesses and our economy suffer.

Carl Harris, a small business owner from Wichita, Kansas, testified before the Committee earlier this year that "…the reality is that far too often agencies either view compliance with the [Regulatory Flexibility] Act as little more than a procedural "check the box' exercise or they artfully avoid compliance by other means. Agencies should seek to partner with small entities to help create more efficient, more effective regulations and, in so doing, reduce the compliance costs for small businesses."

The bipartisan Regulatory Flexibility Improvements Act makes the necessary changes so that agencies take the RFA's requirements seriously. Among this bill's provisions to better protect small businesses, it requires agencies to consider indirect impacts from regulations, in addition to the direct effect, so the consequences on the economy is better understood, and ensures that agencies convene small business review panels so that small businesses have an opportunity to shape a regulation on the front end so the regulations are easier to comply with on the back end.

The bill has the full support of the small business community, including 125 business groups and other entities that represent small firms, which signed a September 16, 2013 letter strongly endorsing H.R. 2542.

Federal agencies are regulating at a record pace, and that can be debilitating for small businesses. Red tape is costly and cumbersome for small firms, and agencies need to do a much better job of seeing the real world impact of regulations as they are written, and not just after small companies start counting the costs. Not all regulations are bad, but many are unnecessarily burdensome. Small business owners consistently cite time-consuming, costly compliance with government regulations as one of their biggest concerns.

The United States economy needs thriving small businesses, which are the source of nearly half of the nation's private sector workforce. Millions of jobless or under employed Americans are hurting from the nation's slow recovery. Small businesses are essential to national prosperity, but they are waiting to hire, expand or invest because they are burdened by uncertainty, rising health care costs, and red tape.

It's also important for small businesses to have the information they need on impending regulations. This year, the Committee launched "Small Biz Reg Watch" to help small businesses participate in the development of federal regulations. This online resource at the Committee's website regularly highlights proposed regulations that could impact small companies and encourages business owners to make comments to the federal agency.

Until small businesses are able to grow and hire at a greater pace, the nation cannot see a return to full economic strength and robust job creation. Ensuring that regulations are properly evaluated for their potential economic impact before they are finalized is a smart upfront investment that will pay long-term dividends in the form of workable regulations. The bipartisan Regulatory Flexibility Improvements Act of 2013 will strengthen the RFA to make small business growth a reality.

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