Velazquez on Regulatory Flexibility Act

WASHINGTON, June 15, 2011 /PRNewswire-USNewswire/ -- Rep. Nydia M. Velazquez (D-NY), the Ranking Member of the House Committee on Small Business, delivered the following statement today at a hearing entitled "Lifting the Weight of Regulations: Growing Jobs by Reducing Regulatory Burdens":

"With the economic recovery proceeding in a very uneven manner, the contributions of small businesses are more important than ever.  For us, that means making sure entrepreneurs are able to do what they do best – innovate, create, and grow –without government getting in the way.  Unfortunately, for many small firms, the cost of regulatory compliance remains high.  Businesses with less than 20 employees pay more than $10,500 per employee in compliance costs – an amount that is 36 percent higher than their larger counterparts.  The result is that many are spending more on regulatory requirements than they are on building their companies.

"To address this, the Regulatory Flexibility Act was enacted in 1980 to give small businesses a louder voice in the regulatory process.  It is apparent that it has been successful, as regulatory costs were reduced by $15 billion in 2010.  In the last three years, the EPA and OSHA also convened seven small business advocacy review panels, providing small firms with greater participation in important environmental and occupational safety matters.

"Even though RFA has been successful, it could do better.  The time has come for agencies to more broadly measure the effect of regulations on small businesses.  After all, many regulations are aimed at States, which means that agencies can ignore the downstream impact on small businesses.  This has to stop.

"Steps must be taken to make Reg Flex analyses more detailed so that they cannot ignore the RFA and simply certify that a rule has no significant economic impact on small businesses.   Addressing this matter will ensure agencies are required to provide a more factual basis for such certifications, rather than just a sentence that dismisses the concerns of small firms.  

"It is also important to give 'real teeth' to section 610, which requires agencies to review outdated regulations that remain on the books, yet which continue costing small businesses money.  While the RFA requires agencies to periodically review existing rules, these requirements are ambiguous and agencies often do not apply them consistently.  As a result, these reviews have been much less effective than they should be.  

"In addition, and as I have said before, any expansion of the panel process must be closely examined.  I wholeheartedly support efforts to rein in agencies that are insensitive to small businesses, but we cannot simply 'flick a switch' and add 50 new agencies to the panel process.  Therefore, it is prudent for this Committee to fully examine the need, cost and appropriateness of such an expansion.  

"While these types of changes can reduce the regulatory burden for small businesses, we should not box ourselves in and think that expanding Reg Flex is the only means to accomplish this goal.  There are other ways -- outside of Reg Flex -- that can achieve these ends without eviscerating the very regulatory processes necessary to implement the laws passed by Congress.  This includes providing higher quality education and technical assistance to businesses regarding regulatory compliance.  In addition, broader reforms could right-size agency enforcement policies, which could help ease this burden.   By doing so, we can reduce the impact on small businesses, without the costs and risk of a wholesale regulatory restructuring.

"Regardless of how we move forward, it is important do so with one eye on the fiscal environment we are working within.  While the SBA's Office of Advocacy plays a role critical role, it has a budget of $9 million and 46 employees.  

"It is already taxed in meeting its current role and expanding its powers significantly should be carefully considered.   Given the current conditions, such statutory leaps may not be prudent -- smaller steps might prove more appropriate and effective.  Doing so can yield many of the positive benefits I think all of us on this Committee seek to provide, but without the undue expense and bureaucratic upheaval.

"With this in mind, I look forward to today's discussion on how RFA can be modernized to better meet small businesses' needs. Since being signed into law more than three decades ago, it has played an essential part in reducing regulatory burden.  As we consider ways to improve it, we must move forward in a manner that is responsive to both small businesses and taxpayers.  By doing so, we can best ensure that entrepreneurs will be the job creating catalysts our economy needs.  I yield back."

CONTACT: Alex Haurek, (202) 225-2361

SOURCE Representative Nydia M. Velazquez, Ranking Member, House Committee on Small Business