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 Small Business Regulatory Flexibility Improvements Act, the Guidance Out of Darkness (GOOD) Act, the Guidance Clarity Act, the Independent Agency Regulatory Analysis Act, and expanding Small Business Advocacy Review (SBAR) Panels to all agencies (currently only EPA, OSHA, and CFPB must conduct SBAR Panels).
NFIB supports the Unnecessary Agency Regulations Reduction Act, which would create a process to eliminate outdated, duplicative, or burdensome agency regulations by requiring the Office of Information and Regulatory Affairs to submit a list of regulations to consolidate or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 a 100-word plain language summary for each proposed rule. These plain language summaries would also be made publicly available online. NFIB also support the Guidance Clarity Act, which would require federal agencies to include text in guidance documents clarifying that guidance are not laws, and do not have the force and effect of a law.
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 requires corporations and limited liability companies (LLCs) with 20 or fewer full-time employees to file new reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) containing the personally identifiable information of small business owners.
The new FinCEN rule is effective January 1, 2024. Reporting companies created or registered before that date will have one year to file their initial reports, while reporting companies created or registered after January 1, 2024 will have 30 days after creation or registration to file their initial reports. NFIB is concerned that FinCEN has failed to adequately define what businesses must report, and who exactly must report.
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 supports the Financial Crimes Enforcement Network Improvements Act because it would do just that, hold FinCEN more accountable to the public and small business community. NFIB sent a letter of support for this bill and encourages members of Congress to cosponsor.
Waters of the United States (WOTUS)
The Environmental Protection Agency (EPA) and Department of the Army issued its final WOTUS rule on Dec. 30, 2022. 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 U.S. Supreme Court is currently considering a significant WOTUS case—Sackett v. Environmental Protection Agency. NFIB filed an amicus brief in the Sackett case, which argues the Supreme Court should find that EPA has exceeded its federal authority under the Clean Water Act (CWA).
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.” NFIB is concerned that small businesses are not equipped to calculate this information and may have to contract with consultants to provide accurate estimates or risk losing business. NFIB is also concerned with larger businesses voluntarily requiring similar ESG reporting by small businesses without a government mandate. Not every small business will be able to afford these services and this requirement can act as a new market barrier for small businesses.
NFIB opposes saddling small businesses with additional regulatory and paperwork burdens related to data privacy, such as writing highly prescriptive data privacy plans and informing every customer of data breaches. As Congress continues pursuing legislation intended to protect the private data of consumers, NFIB urges Congress to consider the impact these efforts may have on small businesses, which are not the target of data privacy restrictions. Legislation that is not properly targeted will have negative downstream effects on the small business community.