What About Small Business Regulatory Reform?

By at 8 December, 2017, 12:20 pm

Don’t Be Fooled by Meaningless “Relief” Efforts

UPDATED from original August 24 Post

U.S. Senator James Lankford (R-OK), Senate Committee on Small Business and Entrepreneurship Chairman Jum Risch (R-ID), House Small Business Committee Chairman Steve Chabot (R-OH) and House Judiciary Committee Chairman Bob Goodlatte (R-VA) continue to fight for an important bill to give entrepreneurs a more reasonable regulatory system that is responsive to how federal red tape and rules impact small businesses.

Read their December 7 joint Op-ed in The Hill:

Requiring Federal Regulators to Consider How Regulations Will Affect Small Businesses


By Karen Kerrigan-

From the first full day President Trump took office until now, the Administration has focused on removing regulatory impediments and overreach that are hurting our economy and its small businesses.  A series of executive orders, Congressional Review Act (CRA) resolutions signed by the President (15 in total), as well as specific actions by the agencies to roll back or review some of the more onerous rulemakings under the Obama Administration have made a significant difference in bringing certainty and lower costs for many businesses.

According to the American Action Forum, the volume and impact of new regulatory actions under President Trump have slowed dramatically while $3.7 billion has been saved through signed CRAs. In an AAF report that looks at executive agency actions of Trump vs. Obama during the first 6 months of their Administrations:

Compared to the Obama Administration, the Trump Administration has imposed: 1/20th of the lifetime costs, 1/11th of the annual costs, and 1/8th of the paperwork. With nearly 6 million fewer paperwork burden hours, that amounts to the workload savings of roughly 3,000 full-time employees.

In terms of advancing reforms to modernize the entire federal regulatory process and how it actually “makes the sausage,” a variety of legislative initiatives are making their way through Congress. Obviously, we are very focused on getting a bill to President Trump’s desk that will make federal agencies and departments more responsive, accountable and transparent regarding how rules are made that affect America’s entrepreneurs and small businesses. Progress is being made on this front.

The Small Business Regulatory Flexibility Improvements Act (S.584), sponsored by Senator James Lankford (R-OK), passed the Senate Homeland Security and Government Affairs Committee on May 17 by a vote of 8-6.  The vote should have been a widely bipartisan one given that most Senators do acknowledge that small businesses are unfairly hurt by federal red tape and the current system puts them at a disadvantage. Unfortunately, not one Democrat voted for S.584 despite the fact that the bill makes small-business focused reforms and gives small firms a bigger voice during the rulemaking process.  (As a side note, a bill similar to S.584 passed the U.S. House on January 11, 2017 along with a package of other bills.)

Click here to see if your U.S. Senators are members of the Senate Homeland Security and Government Affairs Committee. Those voting against S.584 include: Claire McCaskill (D-MO), Jon Tester (D-MT), Heidi Heitkamp (D-ND), Gary Peters (D-MI), Margaret Hassan (D-NH), and Kamala Harris (D-CA).

Real Change that Will Bring Certainty and Protect Small Businesses

The Lankford bill, S.584, updates the Regulatory Flexibility Act and closes loopholes used by rule writers to avoid complying with steps that protect small businesses from rash or one-size-fits-all regulations. It would make federal agencies account for a full and complete economic impact of their proposed regulations (direct and indirect costs); include IRS rulemakings for analysis; require full transparency as to why a rule was drafted, how it was drafted, and the real impact on small businesses; review old rules currently on the books; and waive certain fines for first-time paperwork violations.

This is a critical bill for Main Street, as large companies have their K Street outposts to comb through the Federal Register on a daily basis and intervene with regulators on their behalf.  S.584 embeds common sense steps in proposed federal rulemakings, which systematically protect startups and small firms from overreaching regulatory efforts.

Again, why any Member of Congress would oppose protecting small businesses from the most costly and onerous federal regulations is beyond comprehension. Unfortunately, it seems Democrat members of the committee are listening to groups on the left who believe the broken regulatory system is perfectly fine.

Unfortunately, Senator Claire McCaskill (D-MO), ranking member of the Senate Homeland Security and Government Affairs Committee, provided erroneous information about the legislation during the committee’s vote on S.584. Senator McCaskill reported that “all regulations” would be classified as those affecting small businesses and therefore get swept into the analysis that would be required by agencies.  That would mean thousands and thousands of rules, and would result in government paralysis due to the extra work foisted upon agencies. This is simply NOT TRUE.

As noted by Senator Lankford in response to the misinformation only “50 or 60 regulations a year” – and these would be the largest rules proposed by agencies – would be impacted. He cited SBA Office of Advocacy data regarding the scope and reach of S.584.

Beware: The Artificial Regulatory “Relief” Bill   

Sometimes when members of Congress vote against a reasonable piece of legislation (due to special interest influence) that would positively impact many of their constituents back home, they hold up another piece of legislation that provides them “cover.” Such is the case with S. 584.

To shield them from criticism for their “No” vote on S.584, some members are pointing to their support of a bill called the Small Business Regulatory Relief Act of 2017, S.1146.

Sounds impressive, right?

Unfortunately, the impact of S.1146 would not be that impressive for most small businesses in terms of what is needed to keep regulations minimal, less costly and appropriately scaled.

The legislation, introduced by Senators Jeanne Shaheen (D-NH), Ranking member of the Committee on Small Business and Entrepreneurship, and Jon Tester (D-MT), who voted against S.584 in committee, would simply give more federal money to the SBA’s Office of the National Ombudsman to do a better job.  A lot of focus of the legislation is geared toward helping small businesses better comply with existing federal regulation.

Here is the mission of The Ombudsman, according to their website:

The National Ombudsman’s mission is to assist small businesses when they experience excessive or unfair federal regulatory enforcement actions, such as repetitive audits or investigations, excessive fines, penalties, threats, retaliation or other unfair enforcement action by a federal agency.    

The Ombudsman’s office can be a good resource and tool for small businesses. The effectiveness of the office depends upon leadership and whether the person appointed to head the office really cares about small business.

But the bottom line is this, S.1146 will not provide small businesses with regulatory relief from the expansive, excessive and poorly written regulations that are getting pumped out of the federal agencies.  The Ombudsman office can only help when there is “unfair regulatory enforcement actions” against a small business after the fact, that is following the enactment of regulations.

S. 1146 does nothing to modernize the unaccountable federal regulatory process, or improve how rules are written to take small business impact into account.

So if your U.S. Senators say they support S.1146 (the Small Business Regulatory Relief Act of 2017), please ask them if they also support REAL regulatory reform and relief for small business. If they do, he or she will support – and vote for – S. 584, the Small Business Regulatory Flexibility Improvements Act when it reaches the Senate floor for a full vote in the future.

(See the small business letter supporting S.584 and signed by SBE Council here.)

Senator Lankford’s floor speech on S.584 (starts at 1:30 following some remarks on the budget) and cites SBE Council data on “missing businesses” and the small business regulatory burden.

Karen Kerrigan is president & CEO, Small Business & Entrepreneurship Council.


News and Media Releases