12/06/2007
U.S. House Committee on Small Business holds hearing on improving the Regulatory Flexibility Act
CONTACT: Melissa Sharp 202-314-2068
Andrew Langer,
WASHINGTON, D.C.--The U.S. House Small Business Committee held a hearing today to consider legislation to improve the Regulatory Flexibility Act (RFA). Andrew Langer, senior manager of regulatory affairs at the National Federation of Independent Business, the nation's leading small-business association, testified at the hearing (right). He urged lawmakers to remember that it's not one specific rule that causes such a burden, it's the compilation of thousands of detailed regulations that make compliance extremely burdensome for small firms. 
NFIB Senior Manager of Regulatory Affairs
"Regulations cannot be made in a vacuum," Langer said. "Agencies have to take into account how each and every little rule adds up to weeks' worth of a small business' time."
At the hearing, NFIB proposed specific suggestions for how Congress can improve the current regulatory state for small-business owners. Listed below is a summarized list of these recommendations. For more detail on these proposals, please visit www.NFIB.com to download a complete copy of the submitted testimony.
Top Ten Recommendations for Regulatory Reform in Congress:
1. More Stringent Review of Rules on the Books: Section 610 of the Regulatory Flexibility Act ought to be expanded to cover the review of all rules impacting small business (currently, reviews only cover regulations the agency considered "economically significant" at the time they were proposed).
2. Include Indirect Economic Impacts in Regulatory Review: Congress ought to require agencies to consider how regulations affect small businesses who themselves are not being directly regulated by a rule, but will nevertheless be impacted.
3. Codification of Executive Orders Created To Help Small Business: Several presidents have ordered changes to agency policies in order to facilitate greater assistance to small business, but these orders are at the mercy of whichever president is in office. They ought to be made into concrete laws.
4. Strengthen Compliance Guide Mandates: Small businesses continue to be frustrated with the instructions they are supposed to follow in figuring out how to comply with new regulations. Agencies should be required that whenever a rule requires a final regulatory flexibility analysis, then they must also publish a compliance guide, in plain language, specifically geared towards small businesses.
5. Expand Small Business Protections to the IRS: The RFA's jurisdiction over the IRS must be clarified. IRS rules ought to be subject to Small Business Regulatory Enforcement Fairness Act (SBREFA) panels, similar to those faced by proposed OSHA and EPA regulations, and most importantly, small-business protections must expressly cover all new information collection requests (i.e., questions) and not just new forms, as the IRS currently interprets the law.
6. Require that Agencies Publish the Name and Direct-Dial Phone Number For A Regulation's Principal Author: One of the most problematic situations for a small business owner is knowing who to turn to when a question arises. We believe that the person primarily responsible for a regulation's shepherding through promulgation would have the greatest expertise on a regulation. If a small-business owner is going to be required to follow a regulation, then it's only courteous and fair that the person who wrote the regulation be made regularly available for questions about the regulation.
7. Financially Penalize Agencies Who Ignore Their Regulatory Flexibility Obligations: Many small-business owners and their representatives believe that agencies only pay scant attention to their obligations under the law. Part of the reason for this is that there is no penalty when the agencies treat their obligations in a pro-forma manner. We recommend that should it be found that an agency affirmatively ignored their obligation, that some financial penalty accrue to the agency.
8. Expand the Purview of the Regulatory Fairness Boards to Include Review of Agency Compliance with Regulatory Flexibility Laws: Currently, there exists no body which engages in an across-the-board, comprehensive review of agency compliance. We believe that the Regulatory Fairness Program administered by the National Ombudsman for Small Business at the SBA has been a rousing success. We believe that these successes ought to be built upon and that expanding this program's scope to include regulatory flexibility compliance review would be appropriate.
9. Mandate That Each Agency Annually Publish An Accounting of Their Total Regulatory Cost: If we want to get an honest, accurate look at regulatory burdens, then each agency ought to be accounting for its fair share. If agencies have to do annual budgets, and regular audits of their books and business practices, then they ought to also report on what impact they're having to the economy at large.
10. Mandate that New Rules Assess Not only Cumulative Regulatory Costs for Small Business, But Present Those Costs in the Context of their Overall Regulatory Burden: If we all agree that it is not just "major" rules, but the incremental costs of all rules that create this burden for small business, then we have to assess costs within context. Agencies are forced to continuously restate the burden that they already impose, and have to then show how they are about to add to that burden. This ought to be done in a variety of metrics as well: dollar costs, costs in man-hours, costs in days lost.
