[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FULL COMMITTEE MARKUP OF
H.R. 4458, THE SMALL BUSINESS
REGULATORY IMPROVEMENT ACT
=======================================================================
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
DECEMBER 13, 2007
__________
Serial Number 110-64
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
______
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
HEATH SHULER, North Carolina STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona TODD AKIN, Missouri
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas STEVE KING, Iowa
DAN LIPINSKI, Illinois JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa DEAN HELLER, Nevada
YVETTE CLARKE, New York DAVID DAVIS, Tennessee
BRAD ELLSWORTH, Indiana MARY FALLIN, Oklahoma
HANK JOHNSON, Georgia VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
STANDING SUBCOMMITTEES
Subcommittee on Finance and Tax
MELISSA BEAN, Illinois, Chairwoman
RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana STEVE KING, Iowa
HANK JOHNSON, Georgia VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
______
Subcommittee on Contracting and Technology
BRUCE BRALEY, IOWA, Chairman
HENRY CUELLAR, Texas DAVID DAVIS, Tennessee, Ranking
GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York SAM GRAVES, Missouri
JOE SESTAK, Pennsylvania TODD AKIN, Missouri
MARY FALLIN, Oklahoma
.........................................................
(ii)
?
Subcommittee on Regulations, Health Care and Trade
CHARLES GONZALEZ, Texas, Chairman
RICK LARSEN, Washington LYNN WESTMORELAND, Georgia,
DAN LIPINSKI, Illinois Ranking
MELISSA BEAN, Illinois BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
VERN BUCHANAN, Florida
JIM JORDAN, Ohio
______
Subcommittee on Urban and Rural Entrepreneurship
HEATH SHULER, North Carolina, Chairman
RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
MICHAEL MICHAUD, Maine Ranking
GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
______
Subcommittee on Investigations and Oversight
JASON ALTMIRE, PENNSYLVANIA, Chairman
CHARLIE GONZALEZ, Texas LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona LYNN WESTMORELAND, Georgia
(iii)
?
C O N T E N T S
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OPENING STATEMENTS
Page
Velazquez, Hon. Nydia M.......................................... 1
Chabot, Hon. Steve............................................... 2
Ellsworth, Hon. Brad............................................. 4
APPENDIX
Prepared Statements:
Velazquez, Hon. Nydia M.......................................... 8
Chabot, Hon. Steve............................................... 10
Ellsworth, Hon. Brad............................................. 11
(v)
FULL COMMITTEE MARKUP OF HR. 4458,
THE SMALL BUSINESS REGULATORY
IMPROVEMENT ACT
----------
Thursday, December 13, 2007
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:13 a.m., inRoom
2360, Rayburn House Office Building, Hon. Nydia M. VelaAE1zquez
[chair of the Committee] Presiding.
Present: Representatives Velazquez, Shuler, Larsen,
Grijalva, Michaud, Cuellar, Altmire, Braley, Clarke, Ellsworth,
Johnson, Sestak, Higgins, Hirono, Chabot, Bartlett, Graves,
Akin, Shuster, Musgrave, King, Fortenberry, Westmoreland,
Gohmert, Davis, Fallin, Buchanan, and Jordan.
OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
Chairwoman Velazquez. I am pleased to call this morning's
markup to order. Today we are considering H.R. 4458, the Small
Business Regulatory Improvement Act. This legislation, offered
by Mr. Ellsworth, strengthens key sections of the Regulatory
Flexibility Act to help alleviate the growing burdens facing
small firms.
Since 1980 RegFlex has served to ensure that America's
entrepreneurs are not placed at a disadvantage by Federal
regulations. However, as we approach 28 years of RegFlex on the
books, it is clear that certain parts of the law are not
working as well as they should be. Over the past several weeks,
this Committee has examined ways to improve RegFlex. The bill
before us represents the final result of that work.
The Small Business Regulatory Improvement Act was developed
with the input of the small business community, policymakers
and the chief counsel for advocacy. In these discussions, one
thing that was abundantly clear was a concern of the growing
regulatory burden on small businesses and its impact on
entrepreneurship. Tens of thousands of pages of regulations
continue to flow from agencies annually. In fact, just this
Monday, the Federal Register exceeded the 70,000-page mark for
the year.
It is time to rein in the rapidly increasing regulatory
costs facing America's entrepreneurs. Although critics of
RegFlex have long labeled it as an impediment to the regulatory
process, this is simply not the case. For the nearly three
decades the law has been on the books, the volume of
regulations continue to grow. By making certain that regulators
consider the needs of small businesses when they write and
review regulations, the law actually enhances transparency and
makes for a better informed regulatory process.
The legislation we are marking up today will significantly
strengthen RegFlex by addressing the weaknesses that were
identified in our recent discussions. Many of the witnesses
expressed concerns that agencies were not living up to their
obligations to review the burdens of existing rule on small
business.
The General Accounting Office has reported on numerous
occasions that agency compliance with this requirement was
poor. The legislation holds the agencies more accountable by
requiring them to report the results of their reviews to
Congress annually.
The Small Business Regulatory Improvement Act also
addresses what the chief counsel for advocacy has described as
the biggest loophole in the law, the fact that agencies do not
have to consider the full economic impact of the rules and
regulations on small businesses. By fixing this problem, the
Small Business Regulatory Improvement Act will require agencies
to consider the indirect impacts of the rule on small
businesses.
The Federal Government should be using its resources to
make sure that regulations accomplish their goal without adding
unnecessary costs to small businesses. This bill will increase
the role of the Office of Advocacy in helping agencies identify
ways to achieve this. The goal here is not to limit
regulations. It is to create a regulatory process that is
balanced and fair to small businesses. Regulations should be
designed to ensure protections are in place without creating
burdens that do nothing to further policy objectives. As the
regulatory burden increases, small businesses are finding it
harder to keep up.
A study recently commissioned by the Small Business
Administration Office of Advocacy determined that regulatory
costs for small businesses are 45 percent greater than for
larger firms. These costs amount to over $7,600 annually.
Having consulted with the minority, the Office of Advocacy, and
the small business community on this bill, I believe we have
drafted commonsense legislation that will improve this
important law and ensure that small businesses are not
overlooked in the regulatory process. By strengthening and
clarifying many aspects of RegFlex, this legislation can help
stop the growth of complying costs.
I would like to thank Mr. Ellsworth for introducing this
legislation as well as thanking the Ranking Member Mr. Chabot
and his staff for their efforts in working with us on marking
this bill. I now would like to yield to Mr. Chabot for his
opening remarks.
OPENING STATEMENT OF MR. CHABOT
Mr. Chabot. Thank you, Madam Chairwoman, for yielding. And
the bill that we are considering today has some useful
improvements, the Regulatory Flexibility Act. I would like to
thank the Chairwoman and Mr. Ellsworth for their hard work in
bringing this bill forward and working on it. While I will vote
for the bill, I do believe the bill needs some enhancements to
be truly effective in reducing the regulatory burdens on our
small businesses.
More than a quarter of a century ago the growth of the
regulatory state was imposing undue burdens on the capacity of
small businesses to compete. The situation was exacerbated by
the Federal agencies issuing a one-size-fits-all rule that may
work for large firms but fail small businesses, which often
lack the financial and legal resources to interpret and comply
with these regulations.
Senator John Culver, a Democrat who was quite liberal,
responded by drafting a statute, the Regulatory Flexibility
Act, or RFA, that forced agencies to consider the impacts on
their rules on small businesses in the same way that the
Federal Government considers the environmental impact when
building a dam or a road or that type of thing.
The RFA represents a simple yet profound change to the
Administrative Procedure Act which requires that rulemaking be
conducted rationally. To conduct rational rulemaking, an agency
must understand the scope of the problem. Since the vast
majority of entities regulated by the Federal Government are
small businesses, the Regulatory Flexibility Act plays a key
role in helping agencies understand the scope of the problem
and ultimately conduct rational rulemaking. It is important to
understand that the RFA affects the process by which an agency
issues regulations, not the substance of the rule. No changes
we are considering today or that have been considered in the
past will force an agency to reduce burdens on small
businesses. Instead, it will provide the agency with evidence
that its regulatory objective can be attained in a more cost-
effective manner. Logic would then dictate that the agency take
the more cost-effective approach in reaching its objectives.
The bill we are considering today will improve the process
by which agencies consider the impacts of their proposed and
final rules on small businesses and other small entities,
including rules that have been in effect for 10 years. The bill
also codifies an executive order, granting the chief counsel
for advocacy certain authority. I am concerned that the
codification of the executive order conflicts with the
requirements of the government in the Sunshine Act. That act
requires independent collegial bodies like the FCC or SEC to
adopt their regulation in open meetings. Authorizing these
agencies to provide such rules to the chief counsel prior to an
open meeting violates, in my view, the government and Sunshine
Act. And I would ask the Chairwoman to work with us to resolve
this issue as the bill moves forward in the legislative
process.
While these changes in the bill are necessary, they are not
sufficient to really force agencies to consider the impact of
their rules on small businesses. The only way to do that is to
empower the chief counsel for advocacy to write governmentwide
regulations that all agencies would follow in implementing the
RFA. This would bring regularity to a process now fraught with
the idiosyncratic views of each agency. More importantly,
agencies and courts would give deference to the opinions of the
chief counsel in the same way that the rules of the Council for
Environmental Quality are given deference in the drafting of
environmental impact statements.
I would ask the Chairwoman to assist us in making sure that
the chief counsel has not only the necessary powers but
sufficient powers to see the agencies will care that the RFA is
on the books.
And with that, I will yield back.
Chairwoman Velazquez. Well, let me just say, Mr. Chabot,
that you have got my commitment to continue to work in trying
to move the process forward.
Mr. Chabot. Thank you very much.
Chairwoman Velazquez. And now I would like to recognize the
lead sponsor of this legislation, Mr. Ellsworth, for his
statement on the legislation.
OPENING STATEMENT OF MR. ELLSWORTH
Mr. Ellsworth. Thank you, Madam Chairwoman, thank you
Ranking Member Chabot. I practiced this week after last week's
hearing to get that right again.
Mr. Chabot. Thank you very much, Mr. Ellsworth.
Mr. Ellsworth. Thank you both very much for scheduling this
markup on this bill. I want to thank the members of the Small
Business Committee as well as staff who worked so closely with
the Committee to ensure we could develop the bipartisan bill
that we have with us today.
As we discussed before this Committee, small businesses are
too often put on a competitive disadvantage as a result of
Federal regulations. Big corporations who have teams of
lawyers, accountants, and compliance officers have a much
easier time with small competitors when it comes to complying
with complex regulations and paperwork. In fact, on a per-
employee basis, as the Chairwoman said, it costs about 45
percent more for small companies to comply with Federal
regulations than their larger competitors. That is why American
small businesses need the Regulatory Flexibility Act.
For over 25 years, this act has required Federal agencies
to take into account the negative impact of their regulations
on small businesses. In fact, under the Regulatory Flexibility
Act, in many cases agencies are required to adjust their
regulations to ease the burden on small companies.
Unfortunately, some bureaucrats ignore the spirit of this law
by finding loopholes that allow them to push on without
considering the effects of new regulation on American small
businesses. And that is why we are here today. The Small
Business Regulatory Improvement Act closes these loopholes and
brings small businesses back to the table when regulations are
written.
There is no doubt that this bill is going to help small
businesses. The list of organizations who have endorsed this
bill continues to grow. I would like to list a few of those who
have already endorsed this plan. They are the U.S. Chamber of
Commerce, the Farm Bureau, the American Medical Association,
the American Dental Association, the American Hospitals
Association, the Food Marketing Institute, the National
Association of Manufacturers, the National Association of Wheat
Growers, the National Electrical Contractors Association, the
National Council for Farmers Cooperatives, the National Retail
Federation, the National Roofing Contracting Association, the
Owner-Operator Independent Driver Association, and, just in, is
the Association of General Contractors. These groups have
apparently heard the same thing from theirs members as I have
heard from small business owners: It is time for the Federal
Government to stop ignoring the unique negative impacts of
certain regulations on small businesses. I am glad we are here
today to address this issue. I urge all my colleagues to help
ease the burden for the small businesses in their districts and
support this important bill.
Thank you, Madam Chair. I yield back my time.
Chairwoman Velazquez. Thank you. Are there any other
members that wish to be recognized on the legislation?
The Committee now moves to consideration of the bill, H.R.
4458. The clerk will report the title of the bill.
The Clerk. A bill to amend chapter 6 of title 5, United
States Code, commonly known as the Regulatory Flexibility Act,
to ensure complete analysis of potential impacts on small
entities of rules, and for other purposes.
Chairwoman Velazquez. I ask unanimous consent that the bill
in its entirety be open for amendments at this time. Does any
member seek recognition for the purpose of offering an
amendment?
Seeing no amendments, the question is on passing and
reporting the bill H.R. 4458.
All those in favor say aye.
All those opposed, no.
Mr. Chabot. Recorded vote, please, Madam Chair.
Chairwoman Velazquez. A recorded vote has been requested.
And The clerk will call the vote.
The Clerk. Ms. Velazquez.
Ms. Velazquez. Aye.
The Clerk. Ms. Velazquez votes aye.
Mr. Schuler.
Mr. Schuler. Aye.
The Clerk. Mr. Schuler votes aye.
Mr. Gonzalez.
[No response.]
The Clerk. Mr. Larsen.
[No response.]
The Clerk. Mr. Grijalva.
Mr. Grijalva. Aye.
The Clerk. Mr. Grijalva votes aye.
Mr. Michaud.
Mr. Michaud. Aye.
The Clerk. Mr. Michaud votes aye.
Ms. Bean.
[No response.]
The Clerk. Mr. Cuellar.
Mr. Cuellar. Aye.
The Clerk. Mr. Cuellar votes aye.
Mr. Lipinski.
[No response.]
The Clerk. Ms. Moore.
[No response.]
The Clerk. Mr. Altmire.
Mr. Altmire. Aye.
The Clerk. Mr. Altmire votes aye.
Mr. Braley.
Mr. Braley. Aye.
The Clerk. Mr. Braley votes aye.
Ms. Clarke.
Ms. Clarke. Aye.
The Clerk. Ms. Clarke votes aye.
Mr. Ellsworth.
Mr. Ellsworth. Aye.
The Clerk. Mr. Ellsworth votes aye.
Mr. Johnson.
Mr. Johnson. Aye.
The Clerk. Mr. Johnson votes aye.
Mr. Sestak.
Mr. Sestak. Aye.
The Clerk. Mr. Sestak votes aye.
Mr. Higgins.
Mr. Higgins. Aye.
The Clerk. Mr. Higgins votes aye.
Ms. Hirono.
Ms. Hirono. Aye.
The Clerk. Ms. Hirono votes aye.
Mr. Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot votes aye.
Mr. Bartlett.
Mr. Bartlett. Aye.
The Clerk. Mr. Bartlett votes aye.
Mr. Graves.
Mr. Graves. Aye.
The Clerk. Mr. Graves votes aye.
Mr. Akin.
Mr. Akin. Yes.
The Clerk. Mr. Akin votes aye.
Mr. Shuster.
[No response.]
The Clerk. Mrs. Musgrave.
Mrs. Musgrave. Yes.
The Clerk. Mrs. Musgrave votes aye.
Mr. King.
[No response.]
The Clerk. Mr. Fortenberry.
Mr. Fortenberry. Yes.
The Clerk. Mr. Fortenberry votes aye.
Mr. Westmoreland.
[No response.]
The Clerk. Mr. Gohmert.
Mr. Gohmert. Yes.
The Clerk. Mr. Gohmert votes aye.
Mr. Heller.
[No response.]
The Clerk. Mr. Davis.
Mr. Davis. Aye.
The Clerk. Mr. Davis votes aye.
Ms. Fallin.
Ms. Fallin. Aye.
The Clerk. Ms. Fallin votes aye.
Mr. Buchanan.
Mr. Buchanan. Aye.
The Clerk. Mr. Buchanan votes aye.
Mr. Jordan.
Mr. Jordan. Yes.
The Clerk. Mr. Jordan votes aye.
Chairwoman Velazquez. Are there any other members present
seeking to change or record their vote? Mr. Westmoreland?
Mr. Westmoreland. Yes.
The Clerk. Mr. Westmoreland votes aye.
Chairwoman Velazquez. The Clerk will report the vote.
The Clerk. Twenty-five ayes, zero noes.
Chairwoman Velazquez. The ayes have it, and H.R. 4458 is
adopted and ordered reported.
I ask unanimous consent that the Committee be authorized to
correct section numbers, punctuation, and cross-references, and
to make other necessary technical and conforming corrections on
the bills considered today. Without objection, so ordered.
Mr. Chabot. Madam Chair, I ask unanimous consent that the
gentleman's vote be recorded.
Chairwoman Velazquez. Mr. Larsen, how do you want to be
recorded?
Mr. Larsen. Thank you, Mr. Chabot. Yes.
Chairwoman Velazquez. This markup is adjourned.
[Whereupon, at 10:30 a.m., the Committee was adjourned.]
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