Friday, February 06, 2015

House Passes Bill Improving Regulation of Small Business

The House passed the Small Business Regulatory Flexibility Improvements Act, H.R. 527, by a bi-partisan vote of 260 to 163, with 19 Democrats voting for the bill. The Act requires more detailed analysis of proposed regulations, provides greater small business input into the regulatory process, and ensures that federal agencies will review existing regulations for their impact on small business. H.R. 527 provides needed reforms to the Regulatory Flexibility Act of 1980 (RFA) and the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). The RFA and SBREFA attempted to require agencies to account better for the impacts of proposed regulations on small businesses and other small entities and to tailor final regulations to minimize adverse impacts on these entities, but have not commanded full agency compliance.

H.R. 527 updates the RFA and SBREFA to close loopholes and more effectively reduce the disproportionate burden that over-regulation places on small entities, thereby enhancing job creation.

The Act would also expand the use of advocacy review panels to all federal agencies, including independent regulatory agencies such as the SEC and CFTC, for any major rule or for any rule that will have a significant economic impact on a substantial number of small entities. The Act clarifies the type of information the agency must provide to the Office of Advocacy and describes the content and focus of the report itself, which is to be drafted by the Chief Counsel for Advocacy in consultation with other panel members. Rather than simply listing concerns raised by small entities in the panel process, the report should discuss what will minimize costs or maximize benefits.

In a Statement of Policy, the Administration said that H.R. 527 would impose unneeded and costly analytical and procedural requirements on agencies that would prevent them from performing their statutory responsibilities. It would also create needless regulatory and legal uncertainty and costs for businesses. The bill would impose unnecessary new procedures on agencies and invite frivolous litigation. When a Federal agency promulgates a regulation, explained the Administration, the agency must adhere to the robust and well understood procedural requirements of the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act, as well as the Administrative Procedure Act and other Federal statutes such as the Unfunded Mandates Reform Act and the Paperwork Reduction Act.

Furthermore, the Administration's noted its deep commitment to promoting small business and ensuring that regulations do not unduly burden the Nation's small businesses is reflected in Executive Orders 13563 and 13610. These Executive Orders require agencies to examine existing regulations and to eliminate, streamline, or alter them where they are excessively burdensome. In particular, Executive Order 13610 directs agencies to give special consideration to initiatives that would reduce unjustified regulatory burdens or simplify or harmonize regulatory requirements imposed on small businesses. In response to these Executive Orders, twice a year agencies develop and publish their retrospective review plans for public comment.