Regulatory reform and oversight of small business issues within government agencies are key responsibilities of Congress.  Small businesses are disproportionately impacted by regulatory costs, making it vital that Congress ensures that federal agencies examine the impact of new regulations on small firms and consider ways to reduce unnecessary costs and burdens.

Congress must also continue to monitor the Executive Branch to make sure that it complies with the letter and spirit of both the Regulatory Flexibility Act and the Paperwork Reduction Act—two laws designed to ease the regulatory and paperwork burdens on small businesses.  These important laws are explained in detail below.

The Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (RFA or RegFlex Act) (5 U.S.C. §§ 601-12) requires federal agencies to assess the impact of proposed and final federal regulations on small businesses, small non-profits, and small governmental jurisdictions (collectively referred to in the RFA as “small entities”).  If those impacts will have a significant effect on a substantial number of small businesses, agencies are required to examine alternatives that will reduce the burdens while still achieving statutory and regulatory objectives. 

The RFA applies to every federal rule, both proposed and final, for which an agency must conduct notice and comment rulemaking as required by section 553 of the Administrative Procedure Act or any other law.  The basic premise of the RFA is that a one-size-fits all regulation may impose disproportionate cost burdens on small entities.  Under the RFA, each agency must review its regulations to ensure that, while accomplishing its statutory mandate, the ability of small entities to invent, produce and compete is not inhibited.

Congress gave the Chief Counsel for Advocacy of the United States Small Business Administration the responsibility of monitoring agency compliance with the RFA. 

The Paperwork Reduction Act

The Paperwork Reduction Act (PRA) (44 U.S.C. §§ 3501-20) requires federal agencies to submit all information collection requests to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget before collecting information from the public.  A “collection of information” is defined in the PRA as “the obtaining, causing to be obtained, soliciting, or requiring the disclosure of facts or opinions by or for an agency” by 10 or more non-federal “persons.” “Person” is defined to include individuals, partnerships and corporations.  One of the primary purposes of the PRA is to minimize the paperwork burden on individuals and small businesses.  OIRA is permitted to approve reporting and recordkeeping requirements only if they will be useful to the agency or are required by law.  Like the RFA, the PRA must be amended to strengthen protections against unnecessary and duplicative reporting and recordkeeping requirements.

In addition to its responsibilities under the PRA, OIRA also implements Executive Order 12866.  This order requires federal agencies to prepare cost-benefit analyses of significant rules to demonstrate that the regulatory approach adopted by an agency maximizes net benefits to the public.  Although there has been speculation in the past about revising this order, small businesses would benefit most from scrupulous enforcement of the existing order. 

Regulatory Watch

In January 2013, Committee Republicans launched  Small Biz Reg Watch, a new website initiative to help small businesses participate in the development of federal regulations. This online resource regularly highlights proposed regulations that could impact small companies and instructs business owners on how they can submit comments to the federal agency considering the said regulation.  This resources is regularly updated and can be found HERE.