Denver Business Journal - Let's reduce regulations on U.S. small businesses

Op-Ed

By Rep. Mike Hoffman

Over the past three years, President Obama has issued several Executive Orders and memos to federal agencies aimed at reducing unnecessary regulatory burdens. Unfortunately, these executive edicts have done little to quell small business concerns about regulatory uncertainty. Nor have they actually addressed the persistent failure of many federal agencies to analyze and reduce the negative impact of regulations on small firms, as required by existing law.

This week is the 49th annual National Small Business Week, a time to recognize the contributions of small businesses to the economic well-being of America. This week should also serve as an opportunity to analyze the roadblocks that hold our nation's small companies back from growing and creating jobs. Uncertainty about inconsistent credit, taxes, and energy costs are major problems for small businesses owners, but we're learning that the concern about over-regulation seems to be at an all time high.

A recent U.S. Chamber of Commerce poll found that concerns about federal regulation were at the highest levels of the year. The poll showed that 52 percent of small businesses cited regulations as the top threat to their business, which was an increase of nine percent from June 2011.

Most reports assessing the regulatory burden focus on significant federal rules, which are those defined as costing more than $100 million. However, the truth is that every new regulation is significant to a small business owner. Federal agencies issue between 3,000 and 4,000 final rules each year -- for a small business owner, this literally means death by a thousand cuts.

Last week, the Obama Administration finalized several proposals that it estimates will reduce regulatory costs by $2.3 billion and remove more than 5.8 million paperwork burden hours. While I commend any efforts to reduce and remove redundant and unnecessary regulations, these numbers should be considered in context. Since the beginning of this year, the Obama Administration has imposed more than 109 million annual paperwork burden hours and $47 billion in compliance costs. It is estimated that the published regulatory burden for 2012 alone will surpass $122 billion.

During the first three years of the Obama administration, 106 new major federal regulations added more than $46 billion per year in new costs. This is almost four times the number and more than five times the cost of the major regulations under the previous President's first three years.

Instead of micromanaging our society through over-regulation, the Obama Administration should focus on making it easier and less expensive for small business to hire new employees. If the President really wants to help small businesses and enact substantive regulatory reform, he can start by removing his veto threat and working with Congress to pass legislation like the Regulatory Flexibility Improvements Act of 2011 (H.R. 527).

The Regulatory Flexibility Improvements Act of 2011 passed the House in December. The bill would ensure careful consideration of consequences of rulemaking through the removal of loopholes that agencies have used to avoid compliance with the Regulatory Flexibility Act, a statute that has been in place for over 30 years. The Regulatory Flexibility Act (RFA) of 1980 requires federal agencies to assess the economic impact of their regulations on small businesses, and if the impact is significant, consider alternatives that are less burdensome. However, agencies have used loopholes to get around this requirement.

The President's most recent Executive Order, 13610, focuses on the need for agencies to conduct retrospective analyses of existing rules to determine if the rules are still necessary or should be modified or streamlined in light of changes circumstances. Unfortunately, E.O. 13610 failed to reference Section 610 of the RFA, which mandates that agencies conduct retrospective review of regulations that have a significant economic impact on a substantial number of small entities. Agency compliance with this requirement has been sorely lacking. The Regulatory Flexibility Improvements Act of 2011 would revise Section 610 to ensure that federal agencies will periodically review regulations as Congress intended.

To help businesses grow and create jobs, the federal government must analyze the costs imposed by regulations and consider whether less burdensome alternatives can achieve the agencies goals. At a time when the economy is stuck in neutral and unemployment remains stubbornly high, Washington must do more to provide regulatory relief to the private sector so that small businesses can be free to grow and create jobs.

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