PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

H.R. 5: Regulatory Accountability Act of 2017

By at 9 January, 2017, 2:51 pm

UPDATE: On January 11, 2017 the House passed H.R. 5 by a vote of 238-183.

Dear Chairman Goodlatte, Chairman Chabot and Representatives Peterson, Marino, Ratcliffe and Luetkemeyer:

On behalf of the members of the Small Business & Entrepreneurship Council (SBE Council), thank you for your leadership on regulatory reform and for introducing H.R. 5, the “Regulatory Accountability Act (RAA) of 2017.” SBE Council strongly supports this comprehensive initiative to bring transparency, accountability, common sense and inclusiveness to the federal regulatory process.

The burden of excessive regulation is depressing entrepreneurship and small business growth in America. Our regulatory system must become more responsive, flexible and friendly to startups and small businesses, and our members are very optimistic about reform opportunities in 2017. Regulations have a disproportionate impact on small firms, and small businesses have been struggling with the weight and uncertainty of a regulatory drag – on top of a weak economy – for more than a decade. We believe H.R. 5 will ease regulatory burdens, establish an environment of certainty that is fundamental to strong investment and growth, and restore trust and confidence in our federal government.

Each title of the RAA is meaningful for entrepreneurs and small businesses, including:

Title I (the Regulatory Accountability Act), would make regulatory agencies accountable to the public, small businesses and Congress. Small businesses and entrepreneurs deserve a system that is balanced and fair and Title I enables such by including their views and feedback earlier in the rulemaking process; requiring agencies to advance the least costly option that is in keeping with congressional intent; requiring fully transparent and documented administrative hearings to evaluate the data and assumptions used by regulators for major rules; restrict the use of interim final rules; and strengthen the legal process to challenges involving regulations that would have the most impact on small businesses and the economy.

Title II, the Separations of Powers Restoration Act, is an important reform that will end the Chevron doctrine, a dangerous judicial abdication that has fueled overregulation and the growth of the administrative state for decades. The Supreme Court’s landmark 1984 decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, is a major contributing factor that has fueled intrusive and excessive regulation. Federal judges are often the last line of defense against regulatory overreach, but Chevron has significantly undermined that role. Title II would amend Section 706 of the Administrative Procedure Act, so that courts would decide ‘‘de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions and rules.’’ In essence, agencies’ interpretations of law would no longer receive deference—exactly the remedy small businesses need to get a fair shake in the courts.

Title III, the Small Business Regulatory Flexibility Improvements Act, requires agencies to get serious about their small business responsibilities. Title III closes loopholes used by regulators to ignore or dismiss legitimate small business concerns and impact, and requires agencies to account for the direct, indirect and cumulative costs of regulation on small businesses. With Title III, small businesses would finally be given a meaningful voice in the regulatory process, which would benefit our economy, American workers and the environment for new business creation.

Title IV, the Require Evaluation Before Implementing Executive Wishlists Act, is a vital measure that would place a “hold” on mega-regulations (those costing the economy one billion dollars or more on an annual basis) until legal challenges to the final rule are completed. Such a stay would only take place if rules were challenged in court within 60 days of its promulgation. Business executives, entrepreneurs, and investors make decisions based on government policy and actions, and it makes perfect sense that the Administrative Procedure Act take into account potential legal challenges to mega-regulations. The financial impact and damage of major rules on small businesses and our economy begin upon finalization of a rule (if not before.) Our federal regulatory system must provide a safeguard against poorly crafted or illegal rules, or those that sidestep the formal process, where legal challenges may lead to rules being sent back to the drawing board, or tossed out altogether. Title IV provides that protection.

Title V, the All Economic Regulations are Transparent Act, would instill needed sunlight and openness within the federal regulatory process. Among other important provisions, Title V would require regulators to report the number of regulations each agency develops, their economic impact, and the number of regulations removed from the system. Such accounting of regulation is not too much to ask of our federal government. In fact, a Congressional Budget Office (CBO) report (May 2015) in the 114th Congress found that this Title is not expected to “add a significant administrative burden” to federal agencies and “would not significantly delay the implementation of final regulations.” Opponents of regulatory transparency and accountability often say that reform measures such as Title V would make regulators do too much work, or it would disturb the rulemaking process. CBO’s analysis demonstrates this is not the case.

Title VI, the Providing Accountability through Transparency Act, would require agencies to publish “plain-English” online summaries of proposed rules so that small business owners and entrepreneurs actually understand what these regulatory actions mean in practice, and specifically what regulators are proposing to do.

SBE Council is pleased to support H.R. 5. We look forward to working with you and all our small business friends in the Congress to advance this common-sense legislation into law. Regulatory reform is long overdue, and our nation’s small businesses and economy will receive a boost in confidence and growth with H.R. 5’s enactment.

Sincerely,

Karen Kerrigan, President & CEO

cc: Members of the U.S. House of Representatives

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