STATEMENT
Of the Honorable Nydia M. Velázquez, Chairwoman
United States House of Representatives, Committee on Small Business
Full Committee Hearing: “Legislation to Improve the Regulatory Flexibility Act”
Thursday, December 6, 2007 at 10:00 am

Today the Committee is reviewing legislation to strengthen the Regulatory Flexibility Act, or RegFlex.  Passed into law in 1980, RegFlex has played a critical role in ensuring that America’s small businesses are not overly burdened by federal regulations.  While the Act has improved this process in many ways, small firms are still more affected by regulations than are their larger counterparts.

The reality is that more must be done to address this problem that can hurt our overall economy. Last month, this Committee took the first step in identifying ways to improve RegFlex.  We heard from small businesses representing a diverse group of industries on ways to craft legislation to strengthen the Act. 

There was one clear theme present in the testimony: Agencies are not doing enough to consider the impacts of their rules and regulations on small businesses.  A more effective statute can help reduce unnecessarily burdensome regulations

Working with the minority, the small business community, and with input from the SBA Office of Advocacy, the Committee has written draft legislation which addresses a number of the deficiencies of RegFlex. 

One of the goals of the legislation is to address the problem of outdated regulations.  The Committee Print would clarify when agencies need to review specific rules.  It also gives small businesses a greater voice in the process and enhances transparency, helping to eliminate unnecessary burdens.

The committee also wants to ensure that agencies are not ignoring the underlying requirements of RegFlex.  The Act was never intended to completely eliminate or slow down regulations, but for agencies to consider if there are more effective alternatives to meet policy goals.  Too often, agencies avoid fully analyzing the impact of their rules on small businesses by certifying that a rule will have no significant consequences. 

This bill will strengthen the analysis requirements by compelling agencies to consider reasonably foreseeable indirect economic impacts on small businesses when writing rules. 

One key recommendation from the Office of Advocacy was to codify Executive Order 13272, which is included in the legislation.  This change puts in statute that there must be greater coordination between agencies and the SBA Office of Advocacy, ensuring that regulators fully consider the economic impacts on small firms.  Earlier notification will provide Advocacy with a greater opportunity to assist agencies in RegFlex compliance.

This print we are reviewing today is by no means a final version.  Today’s panelists will discuss how this language can help small businesses and identify ways it can be improved. I would like to thank all of the witnesses today for coming to the Committee and sharing their views. 

I look forward to continuing our work with Ranking Member Chabot to pass meaningful reform to the Regulatory Flexibility Act which will lessen burdens on small businesses and allow our nation’s entrepreneurs to continue to move our economy forward.