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Senators Lankford, Grassley, Risch, Roberts, Hoeven Introduce Small Business Regulatory Relief Bill

WASHINGTON, DC – Senator James Lankford (R-OK) today introduced the Small Business Regulatory Flexibility Improvements Act (S.1120) to require federal agencies to analyze the full impact of a proposed regulation on small businesses during the rulemaking process. Lankford chairs the Homeland Security and Governmental Affairs Subcommittee on Regulatory Reform and Federal Management. The bill is co-sponsored by Senators Chuck Grassley (R-IA), who is chairman of the Finance Committee, Jim Risch (R-ID), who is chairman of the Senate Foreign Relations Committee, Pat Roberts (R-KS), who is chairman of the Senate Agriculture Committee, and Senator John Hoeven (R-ND), who is chairman of the Senate Indian Affairs Committee.

“Small businesses are the backbone of our nation’s economy but they are often burdened by the regulatory decisions made in Washington,” said Lankford. “The Small Business Regulatory Flexibility Improvements Act is a solution that closes the loopholes federal agencies use to ignore the economic impact of new regulations on small businesses. This legislation ensures the needs of small businesses are considered from day one of when any new regulation is drafted.”

“Whether intended or not, big government regulations are often a boon to big business, driving small businesses and entrepreneurs out of the marketplace who otherwise would compete to offer better products and services at better prices for consumers,” Grassley said. “If we’re hurting small businesses, we’re hurting job creation and we’re hurting a large number of employees in this country. This common-sense bill makes critical improvements to the rulemaking process by requiring agencies to take a much closer look at how proposed regulations might impact small businesses.  It also gives small businesses a stronger voice at the table before rules are finalized. Reducing unnecessary burdens on our nation’s small businesses should be one thing that all of us can agree on.”

“Washington bureaucrats constantly issue new burdensome regulations, increasing costs and uncertainty for many small business owners,” said Risch. “We need to remove obstacles impeding small business growth, instead of adding more. This bill will ensure appropriate controls are in place before a new regulation is implemented.”

“Small businesses are essential to the rural economy and this legislation will ensure the economic impact any regulation will have on these businesses is fully assessed before it is implemented,” said Roberts. “I’m proud to support this bill that will help protect small businesses from the burdensome costs of unnecessary regulations.”

“America’s small businesses are incubators of innovation and a driving force in creating new jobs,” said Hoeven. “Regulations burden small businesses to a greater degree than larger businesses, and agencies should take this into account when proposing regulations. Instead, they too often use loopholes to impose one-size-fits-all mandates. Our legislation would require that agencies account for small businesses’ real cost of complying with new regulations and provide flexibility. We need to provide certainty for our job creators and prevent unnecessary regulations that hamper growth.”

According to the National Federation of Independent Business’ Small Business Problems and Priorities, “unreasonable government regulations” ranks as the second largest problem for small businesses. Due to limited resources, small businesses often face disproportionate challenges when complying with new federal regulations. According to the American Action Forum, a 10 percent increase in cumulative regulatory costs can result in a five to six percent fall in the number of businesses with fewer than 20 workers. That translates to a loss of over 400 small businesses in an industry. Meanwhile, those same regulations are associated with a two to three percent increase in businesses with 500 or more workers.

Small Business Regulatory Flexibility Improvements Act

  • This bill would force agencies to analyze the total impact regulations have on all small businesses and closes loopholes used by agencies to avoid compliance with the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement and Fairness Act (SBREFA) of 1996.
    • The RFA of 1980 requires federal agencies to assess the impact of proposed regulations on “small entities.” Under the RFA, agencies, including independent agencies, must prepare a regulatory flexibility analysis for rules deemed to have a “significant economic impact on a substantial number of small entities.” However, the RFA did not define “significant economic impact” or “substantial number of small entities,” leaving agencies with broad discretion to decide when regulatory flexibility analysis requirements are triggered.
    • The SBREFA of 1996 amended the RFA to create additional requirements agencies must follow when promulgating rules that impact small entities, however, deficiencies in both of the RFA and SBREFA left small businesses burdened by massive, one-size-fits-all regulatory schemes.
    • Agencies are frequently able to work around RFA and SBREFA requirements by (1) considering only the direct economic impacts of proposed rules; (2) not including tribes as a small entity; (3) exempting IRS regulations; (4) requiring small business review panels of only three agencies; and (5) allowing agencies to sign off on rules as having “no significant economic impact” without detailed analysis. 
  • The Small Business Regulatory Flexibility Improvements Act would require agencies to change their rulemaking procedures so that RFA analyses include detailed statement describing: (1) the reasons why action by the agency is being considered; (2) the objectives of and legal basis for the rule; (3) the estimated number and type of small entities to which the proposed rule will apply; (4) the projected reporting and compliance requirements; (5) all relevant federal rules which may duplicate, overlap, or conflict with the proposed rule; (6) the estimated cumulative economic impact of the rule; (7) any disproportionate economic impact on small entities; and (8) any impairment of the ability of small entities to have access to credit.
  • The bill would waive fines for certain first-time paperwork violations by small businesses but excludes waived fines for issues such as public health or safety, criminal activity, IRS laws, violations previously warned of, and other issues relating to public interest.