News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
March 16, 2005

CONTACT: Kate Davis, Allyson Ivins, (202) 225-4038

Regulations Continue to Overwhelm Small Businesses
Hearing examines concerns and solutions to regulatory challenges facing small firms

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today highlighted the need to provide relief for small companies as the annual regulatory burden for small businesses is estimated to be nearly $6,975 per employee - almost 60 percent higher than their larger counterparts.

"Small businesses are constantly faced with challenges that hinder their success, and almost every major association representing this sector has testified at some point that the regulatory burden remains among their top priority," Congresswoman Velázquez said. "Despite the President's promise to solve regulatory and paperwork burdens, the administration has not even lived up to its own promises about regulatory reform. Since many small firms see the Regulatory Flexibility Act as their one true tool to weed out government excess, we owe it to them to constantly check and make sure it remains sharp and useful."

Today, H.R. 682 - a bill designed to significantly overhaul the highly successful Regulatory Flexibility Act (RFA) - was examined. RFA first became law almost 25 years ago and was last amended by Congress in 1996 by the Small Business Regulatory Enforcement Fairness Act (SBREFA). The law requires government agencies to consider the economic impact of their regulatory proposals on small businesses - which many agencies fail to comply with. Oftentimes, agencies have little understanding for, or simply fail to consider the effect their standards may have on the small business community.

In an ambitious approach to tackle this situation, H.R. 682 forces agencies to mitigate the burden on small firms by setting high standards for regulation review and analysis through a panel process. Specifically, the Internal Revenue Service (IRS), which promulgates the most regulations, but does the least analysis of any agency, stands to be the most significantly impacted by the proposed panel hearings.

Congresswoman Velázquez stressed that while the bill contains many strong provisions, she remains concerned over several that could draw objections from the Bush Administration, federal agencies, and even Republican Chairmen. The panel process, which has been successful in reducing regulatory burden, if enacted as proposed in H.R. 682, has the potential to slow down well intended and necessary regulations from protecting American citizens - such as those pertaining to public safety, health and workforce safeguards. In addition, the bill transfers new tasks to SBA's Office of Advocacy but does not authorize any additional resources, which could reduce Advocacy's effectiveness in helping small businesses. Velázquez also expressed concern over legislation that fails to clarify whether or not SBA or Advocacy would set the size standards for small businesses.

"The burden of federal regulations is real, and the Office of Advocacy has consistently reported that this is a significant burden for small business," Congresswoman Velázquez said. "The RegFlex Act has been a successful tool in helping to alleviate these impacts. Any changes proposed to the Act should represent the consensus of the small business community, which ultimately bears the brunt of regulatory compliance. As this issue continues to be a top concern for small firms - we must be extremely careful in any steps we take to alter or enhance their protections are in small businesses best interests."

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