When the president signs an act of Congress into law, federal agencies are required to abide by it. However, this has not been the case with the Regulatory Flexibility Act, which federal agencies continue to ignore time and time again.
Created by Congress in 1980 to relieve the stress of onerous overregulation on small businesses, the RFA charges all federal agencies with examining the impact of their proposed and final rules on small firms. If those impacts are significant, the agency is required to consider less burdensome alternatives.
But despite the law’s existence for more than 30 years, every president from Ronald Reagan to Barack Obama has mandated a comprehensive review of existing agency regulations. The fact that presidents must reiterate what is in the law to agencies, which continue to ignore the act, demonstrates the essential need to strengthen and revise the RFA.
The failure of agencies to abide by the RFA is placing an enormous burden on small businesses, killing jobs, obstructing business growth and decreasing competition. Excessive federal regulations already cost small firms more than $10,500 per employee — 35 percent more than the cost of regulatory compliance for large businesses.
In a recent House Small Business Committee hearing, David Frulla, a partner with Kelley Drye & Warren LLP, had this to say on why agencies ignore the RFA: “[A]gencies just don’t get it — they really don’t get and understand the impacts that their regulations have on small businesses and so they just proceed; others have their mission and they don’t care.”
Small firms are our No. 1 job creators, employing more than half of the country’s private sector workforce, and are the key to a long-term, sustainable economic recovery. That recovery will not happen unless we rein in the mass of regulations coming from Washington.
For this reason, I introduced the Small Business Size Standard Flexibility Act and joined with House Judiciary Chairman Lamar Smith (R-Texas) to introduce the Regulatory Flexibility Improvements Act, which were both marked up this week by the Small Business Committee.
Together, the bills will close loopholes used by agencies to avoid compliance with the RFA, require a better assessment of the impacts that regulations will have on small businesses, force agencies to perform better periodic review of rules and grant the chief counsel for advocacy at the Small Business Administration greater powers for enforcement of the RFA.
Federal agencies should not be able to ignore the RFA and this legislation will help guarantee that they don’t. We must get government out of the way and help foster an environment where small businesses are free to grow and create jobs. At a time when unemployment is higher than 9 percent, we should be looking for every avenue possible to create jobs and get Americans back to work. Ensuring that agencies follow the RFA is a logical first step.
Rep. Sam Graves (R-Mo.) is chairman of the Small Business Committee.