In the first full week of February, the House of Representatives passed two bills aimed at curbing excessive regulatory actions impacting small business.
The Small Business Regulatory Flexibility Improvements Act (HR 527)
On February 5, the House passed H.R. 527, the Small Business Regulatory Flexibility Improvements Act, which significantly strengthens the Regulatory Flexibility Act of 1980 (RFA) to give millions of Americans employed by small businesses the voice they deserve in the regulatory process.
After House passage of the bill, Small Business Committee Chairman Steve Chabot (R-OH), the bill’s primary sponsor, issued followed the statement:
“Half of America’s workforce gets up every day and goes to work at a small business. When poorly designed rules put a financial burden on these workplaces, they also threaten the livelihood of millions of working families.
“H.R. 527 is not a bill that stops regulations; it allows small businesses to be a part of the solution and provide valuable input during the rulemaking process. This bill simply makes government think before it acts by answering, ‘How will this impact America’s working families?’”
According to the Committee’s press release, the 35 years since the RFA was enacted, agencies have exploited loopholes to get around the good-government intentions of the original legislation. The Small Business Regulatory Flexibility Improvements Act closes those loopholes by requiring more detailed analysis of proposed regulations, providing greater opportunity for small business input, and ensuring agencies regularly review regulations already on the books for their economic impact on small businesses.
In addition, it expands the scope of the required economic impact analysis to consider those effects which are often indirect but reasonably foreseeable.
Unfunded Mandates Information and Transparency Act of 2015 (HR 50)
On February 4, the U.S. House passed H.R. 50 by a vote of 250-173. The bill, sponsored by Virginia Foxx (R-NC), strengthens the Unfunded Mandate Reform Act (UMRA) to provide additional safeguards against unfunded federal mandates on entities (like local and state governments) and private sector businesses. Specifically, H.R. 50 would:
- Impose stricter and more clearly defined requirements for how and when federal agencies must disclose the cost of federal mandates.
- Agencies must conduct UMRA analyses unless a law “expressly” prohibits them from doing so.
- Agencies must measure a proposed rule’s annual effect on the economy, not just “expenditures” as is currently required.
- Ensure that those affected have the opportunity to weigh in on proposed mandates.
- Requires UMRA analyses for all final rules, regardless of whether or not the regulation was subject to a notice of proposed rulemaking (NPRM). Currently, agencies can avoid conducting UMRA analyses if they decide a particular regulation is not subject to a NPRM. This creates an incentive for agencies not to seek public comments on regulations.
- Directs agencies to consult with private sector entities, such as small businesses, that will be directly impacted by proposed regulations in the same way they currently do with state, local and tribal governments.
- The legislation equips Congress and the public with tools to determine the true costs of regulations by codifying the Congressional Budget Office (CBO) practice of accounting for specific costs of federal mandates such as forgone business profits, costs passed onto consumers and other entities and behavioral changes.
- Ensures accountability for adhering to its provisions and those set forth by UMRA:
- Designates the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) as responsible for determining whether agencies have satisfied UMRA’s cost disclosure requirements.
- Authorizes the judicial branch to place a stay on regulations or invalidate rules if the originating federal agency fails to complete statutorily required UMRA analyses.
- Requires agencies to include in their annual reports to Congress an appendix detailing their regulatory consultation actives with state, local and tribal governments and the private sector.
These are good steps toward improving the position of small business in addressing regulatory excesses. It is important that this legislation be used in the examination of both current regulations that stifle or impede small business, as well as future federal regulatory actions.