Small businesses are responsible for nearly two-thirds of job growth in this country. However, regulatory compliance limits small business expansion. The annual cost per employee of complying with federal regulations is significantly higher for smaller firms than larger firms.
Unnecessary regulation is a perennial cause of concern for NFIB’s members and is particularly burdensome on small businesses, which lack the resources and personnel to keep up with new rules. According to NFIB’s monthly Small Business Economic Trends survey, “unreasonable government regulations” ranks as a top problem. Unfortunately, the regulatory burden on small business has continued to grow for decades. Congress and the administration must curtail costly regulations that disproportionately affect small businesses. Reforming the regulatory process is one of NFIB’s top legislative priorities.
NFIB-Supported Regulatory Reform Legislation
NFIB supports regulatory reform proposals, including the Prove It Act, Small Business Regulatory Flexibility Improvements Act, the Guidance Out of Darkness (GOOD) Act, and the Independent Agency Regulatory Analysis Act.
NFIB supports efforts to strengthen the Regulatory Flexibility Act (RFA) by expanding Small Business Advocacy Review (SBAR) Panels to all agencies (currently only EPA, OSHA, and CFPB must conduct SBAR Panels), requiring public disclosure of the regulatory alternatives the agency examined, requiring agencies to consider the indirect costs from regulation or requiring the SBA Office of Advocacy to certify the RFA analyses of agencies.
NFIB also supports the Unnecessary Agency Regulations Reduction Act, which would create a process to eliminate outdated, duplicative, or burdensome agency regulations by requiring the Office of Information and Regulatory Affairs to submit a list of regulations to consolidate or repeal on an annual basis.
NFIB supports the Providing Accountability through Transparency Act and the Guidance Clarity Act, both of which are meant to make government actions easier for the public to understand. The Providing Accountability through Transparency Act would require government agencies to include and make publicly available online a 100-word plain language summary for each proposed rule. The Guidance Clarity Act would require federal agencies to include text in guidance documents clarifying that guidance documents are not laws, and do not have the force and effect of a law.
Burdensome Regulations
The Financial Crimes Enforcement Networks’ (FinCEN) beneficial ownership information (BOI) reporting requirement took effect January 1, 2024. This law requires corporations or limited liability companies (LLCs) with 20 or fewer employees and $5 million or less in gross annual revenues to report beneficial ownership information containing personally identifiable information of small business owners to FinCEN.
A beneficial owner is defined as anyone who owns 25% or more of the ownership interests of a reporting business, or an individual who has substantial control over a reporting business. NFIB opposed the Corporate Transparency Act, which created the beneficial ownership information reporting requirements.
NFIB is concerned that FinCEN has failed to adequately define what businesses must report, and who exactly must report. NFIB hosted a free webinar available now with an expert guest to provide further information on what needs to be reported and by whom.
On September 18, NFIB sent a letter to the House Financial Services Committee expressing disappointment that the committee did not consider stronger legislation to delay or repeal the beneficial ownership information regulation. Instead, FinCEN released a 56-page compliance guide which demonstrates this is no longer a simple request for information. NFIB is continuing to urge Congress to repeal the law to avoid further burdens on small business owners.
NFIB will continue to work with Congress to address problems with the legislation and support legislation to hold FinCEN accountable to small business owners. NFIB Federal Government Relations and Legal experts recently joined a Small Business Rundown podcast episode to provide further information on the requirements and penalties.
NFIB has created a fact sheet that covers general information on the rule including types of businesses covered, reporting timelines, the information businesses must report, and more.
Waters of the United States (WOTUS)
The Environmental Protection Agency (EPA) and Department of the Army issued their final WOTUS rule in January 2023. Under the Clean Water Act (CWA), the WOTUS Rule determines which bodies of water fall under federal jurisdiction. The radical expansion of federal authority over private property wetlands across the country will require owners to spend more time and money on compliance.
The rule went into effect on March 20, 2023, which expands the EPA’s jurisdiction over private property.
On May 25, 2023, the U.S. Supreme Court announced a 9-0 decision in a significant WOTUS case—Sackett v. Environmental Protection Agency. The Supreme Court determined the EPA and Department of the Army overstepped their regulatory authority under the CWA. This ruling affirmed NFIB’s amicus brief in the Sackett case, which significantly narrows the reach of the federal CWA and is a victory for small business farmers, ranchers, home builders, and contractors. Considering the decision in Sackett, the EPA issued a revised WOTUS rule.
Scope 3
NFIB opposes the Securities and Exchange Commission’s (SEC) proposed rule requiring public companies to calculate and report the greenhouse gas emissions of the private companies with which they do business, also known as “Scope 3.” Scope 3 climate disclosures for small businesses were recently removed from the SEC’s final rule, which is a significant victory for small businesses.
NFIB Advocacy on Regulations
NFIB is also actively advocating against regulations that will harm small businesses. Federal agencies need to do a better job of analyzing the effects of their rules on small businesses and allow more opportunities for small business input.
Here are some of the most recent comments NFIB has submitted to the White House and various federal agencies:
Senate Small Business Committee small business regulations hearing statement for the record – 8/23/2023
Letter of support to Rep. Luetkemeyer for the Guidance Clarity Act – 6/30/2023
House Oversight and Accountability Committee regulations hearing statement for the record – 6/13/2023
Key vote letter for H.J. Res. 27, the CRA resolution to repeal the EPA’s WOTUS final rule – 3/16/2023
House Small Business Committee WOTUS hearing statement for the record – 3/8/2023
Letter of support for H.J.Res. 27, the CRA resolution to repeal the EPA’s WOTUS final rule – 2/28/2023
Letter of support for S.J. Res. 8, the CRA resolution to repeal the Department of Labor’s ESG final rule – 2/27/2023
House Water Resources and Environment Subcommittee WOTUS hearing statement for the record – 2/8/2023