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Requiring federal regulators to consider how regulations will affect small businesses

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Every day, millions of American small business owners and their employees work hard to develop products, provide services, and create jobs that grow our economy. They are mom-and-pop stores, restaurants, tech startups, family farms, manufacturers, and distributors—they are our nation’s entrepreneurs. They are hardworking Americans. And they continue to work hard, even while navigating a tangled web of complex and costly regulations.

We are encouraged by the administration’s efforts to ease this burden, including an Executive Order requiring the cost of any one new regulation to be offset by the removal of at least two existing regulations. However, it is Congress, and not the Executive Branch, that has the opportunity—and the obligation—to provide real, meaningful, and permanent regulatory relief for small businesses. They certainly don’t need or want another do-nothing bill or press release that pays lip service without delivering actual change. They need regulatory reform—reform which ensures regulators in future administrations actually listen to and take seriously the concerns of America’s small businesses.

{mosads}Some of us in Congress are listening. During a House Small Business Committee hearing in September, one witness, Philip Howard, who testified on behalf of Common Good, a non-partisan coalition that focuses on simplifying government, told the Committee about one specific regulation bogging down small businesses: “Worker safety. For example, we literally have thousands of rules telling people helpful things like stairwell shall be lit by artificial or natural light.  How else can they be lit?”  Howard concluded, “These things have almost nothing to do with what makes the workplace safe.”

Small businesses need real regulatory reform like H.R. 33, the Small Business Regulatory Flexibility Improvements Act, which passed the House as part of a larger regulatory reform package on Jan. 11, 2017, and the Senate companion, S. 584, which passed the Senate Homeland Security and Governmental Affairs Committee in May 2017.

The Small Business Regulatory Flexibility Improvements Act forces federal regulators to actually consider how regulations will affect small businesses. Regulators must hear from small businesses before writing rules. Regulators must look at ways to reduce excessive burdens on small businesses before finalizing rules. Regulators must think carefully before they act.

Unlike larger corporations, small businesses cannot afford teams of lawyers to decipher the latest regulation or how to comply with the latest rule. Small businesses disproportionately suffer the consequences of over-regulation. They must spend thousands of dollars—on average $12,000 per employee per year—to sift through thousands of pages of confusing regulations, wade through agency bureaucracy, fill out lengthy permitting applications, wait weeks and months for agency decisions, and fight agency overreach. In fact, before a small business can even open its door, it must pay around $83,000 in start-up costs directly related to regulations.

“Large employers often have staffs of accountants, attorneys, and other trained professionals dedicated to complying with government paperwork and reporting requirements. Small businesses, on the other hand, particularly those of 15 or less employees simply cannot afford to do that,” Frank Cania, Founder and President of driven HR, told the House Small Business Committee in March.

Small businesses should not be an afterthought, but rather a part of the regulatory process. They need to have their voice heard before the regulations are written. That’s what the Small Business Regulatory Flexibility Improvements Act does. It guarantees that small businesses’ voices are heard before the ink is dry, which will lead to smarter regulations with greater flexibility.

Despite being a strong bipartisan bill in the House of Representatives, not one Senate Democrat on the Committee voted for the Small Business Regulatory Flexibility Improvements Act. To deflect attention from their vote against this common sense bill, some Senate Democrats are promoting legislation, such as S. 1146, the Small Business Regulatory Relief Act, which sounds similar in name but lacks any real substance.

Instead of providing real relief, this bill funnels money towards programs that help small businesses comply with existing federal regulations instead of reducing them. This bill fails to address the real problem: that there are too many costly and unfair regulations to begin with.

Take, for example, how a new IRS rule will be treated under each bill. Under the Small Business Regulatory Flexibility Improvements Act, the IRS will have to engage with small business owners before the rule is final. This is accomplished by requiring the agency to thoroughly analyze the full economic impact the new rule will have on small businesses, the number of businesses affected, and how long it will take business owners to complete paperwork for the new requirement. After this analysis is complete, the IRS will have to take part in a panel to thoroughly explain their analysis and listen to those that will be directly affected by the new rule. This process will provide transparency and force the agency to only adopt rules that are necessary.

On the other hand, the Small Business Regulatory Relief Act would leave the current process in place. The IRS would create new rules in the dark and small business owners would wake up one day to yet another regulation where their voice was not heard. They would then only have the opportunity to call someone in Washington and ask for help in complying with the new rule.

The Small Business Regulatory Flexibility Improvements Act should be an easy win for everyone: for small businesses, for the economy, and for American taxpayers. Fewer burdensome regulations would allow small businesses the freedom to do what they do best – grow the economy and create jobs. While the administration is moving in the right direction, small businesses are still waiting for long-term, permanent relief.

That is why our Senate Democrat colleagues need to put aside their partisanship and support this bill.

Small businesses don’t care about partisan politics. They care about keeping their doors open. They care about building their businesses. They care about serving our local communities. In fact, small businesses are the heartbeat of our communities. They provide livelihoods for millions of workers and their families. Creating nearly two out of every three new private sector jobs and employing half of the private sector workforce, they are the engines of our economy.

Ever more relevant as Congress focuses on tax reform, regulations are a hidden tax on all small businesses. It is time for Congress to follow through on regulatory reform to help small businesses across our nation every day.

Chabot is the House Small Business Committee chairman, Lankford is the junior senator from Oklahoma, Goodlatte is the House Judiciary Committee chairman, and Risch is Senate Committee on Small Business & Entrepreneurship chairman.


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