Press Releases

Luetkemeyer Requests GAO to Audit Federal Agencies on their Regulatory Impact on Small Businesses

Washington, December 9, 2022

WASHINGTON, D.C. – Today, Ranking Member Blaine Luetkemeyer (R-MO) issued the following statement after penning a letter to the Government Accountability Office (GAO) requesting an audit of federal agencies’ implementation of the Regulatory Flexibility Act, the Small Business Regulatory Enforcement Fairness Act, and the Congressional Review Act.

“Small businesses are the American economy’s lifeline. When they are successful, the next great economy is on the way. New regulations which can impact small businesses must be properly reviewed to avert negative consequences. The Biden Administration is statutorily required to implement these regulatory reviews under the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA). With a track record of $309.1 billion in regulations and 193.1 million new paperwork hours, the Biden Administration is no friend to Main Street USA. This administration needs to be checked to protect small businesses from burdensome and detrimental regulations,” said Ranking Member Luetkemeyer.

Read the full letter here.

Key excerpts of the letter:

“As the Ranking Member on the U.S. House of Representative Committee on Small Business, I write to request that the U.S. Government Accountability Office (‘GAO’) audit agencies’ implementation of the Regulatory Flexibility Act (“RFA”), Small Business Regulatory Enforcement Fairness Act (‘SBREFA’), and Congressional Review Act (‘CRA’).

“As I’m sure you are aware, these laws were designed to bring small businesses to the regulatory decision-making table.  Specifically, these laws require agencies to give explicit notice of proposed rules to small businesses, provide small businesses with exceptional opportunities to raise concerns, and compel agencies to consider such concerns.  These laws also provide for congressional review of promulgated rules that have a significant impact on a substantial number of small businesses.  Despite the desired intent, there is ongoing concern that implementation of these measures have left small businesses wanting in the regulatory arena.

“As inflation continues to impact the American economy, I seek updated information on the implementation of these laws to identify if agencies are inappropriately imposing preventable regulatory costs on small business owners.  Recently, the Supreme Court in West Virginia v. EPA highlighted concerns about agencies exercising authority beyond express congressional authorization.  As detailed below, the West Virginia case speaks to the Committee’s concern about the broad scope of discretion afforded to agencies to determine if the RFA and related laws apply to agency actions.  Rising costs, whether through inflation or regulations, detrimentally impact small businesses across the country.  As inflation continues to plague the economy with no foreseeable relief in sight, it is imperative to minimize any inflationary impact burdensome regulatory costs may have on small businesses.”

The House Committee on Small Business Requests the GAO to assess the following:

  • How frequently agency rules are exempt from the RFA and related polices since the last GAO study on this matter was conducted.
  • The analysis employed by agencies to determine whether a proposed rule has a significant impact on a substantial number of small entities, including:
    • How agencies weigh adverse and beneficial impacts to determine if a proposed rule lacks a significant impact.
    • How agencies consider and weigh indirect impacts to determine if a proposed rule lacks a significant impact on small entities
  • Whether agencies adopt the Office of Advocacy’s standard in drafting a sufficient “statement of factual basis” to certify if a proposed rule lacks a significant impact on a substantial number of small entities.
  • Agency implementation of Section 212 of SBREFA to determine whether agencies have appropriately developed, published, and distributed small entity compliance guides for each covered rule.
  • Any other question or topic uncovered over the course of the GAO’s audit which may be pertinent to the topic in this engagement request.

Background:

House Committee on Small Business Republicans are concerned whether agencies are taking advantage of undefined and ambiguous terms in these measures to bypass compliance, and in turn prevent small businesses interests from having a voice in the regulatory rulemaking process. The Committee is seeking information about how agencies define critical terms, the scope of impacts considered in the decision-making process, and the extent to which agencies consider the indirect impacts of each decision.

On October 24, 2022 the Ranking Member sent a letter to 26 agencies requesting information on the implementation of these measures. To date, the Committee has only received 6 substantive responses, some of which have been disappointingly lacking in detail. Alternatively, the GAO has exhibited some success in auditing agency implementation of these measures in the past. Most of the GAO’s assessments on these measures were conducted nearly 20 years ago. As such, this letter is requesting an update to many of the assessments the GAO has previously conducted.

###