Chairman Graves Investigates Job Crushing Loopholes in the Regulatory Flexibility Act

Press Release

House Small Business Committee Chairman Sam Graves (R-MO) today held a full committee hearing to examine how federal agencies are ignoring important requirements in the Regulatory Flexibility Act (RFA). The failure of agencies to abide by the RFA is placing an enormous burden on small businesses and thus, killing jobs, obstructing business growth and decreasing competition.

"We have the Regulatory Flexibility Act for a reason-- and federal agencies should be following it and held accountable for their actions," said Chairman Graves. "Following some statutes and ignoring others is not an option.

"When agencies ignore this Act and impose burdensome rules and costly regulations on small businesses, it hinders job creation and will continue to slow down our economic recovery. Unelected federal bureaucrats should not be in the position to execute overreaching directives without any examination of their actions.

"We must get government out of the way and help foster an environment where small businesses are free to grow and create jobs. At a time of nearly nine percent unemployment, we should be looking for every avenue possible to create jobs and get Americans back to work. Enforcing the RFA and eliminating unnecessary costs and burdens on small businesses would be a logical first step in doing this."

The RFA charges all federal agencies with examining the impact of their proposed and final rules on small businesses. If those impacts are significant, the agency is required to consider less burdensome alternatives.

In February, Graves introduced the Small Business Size Standard Flexibility Act of 2011 (H.R. 585) and also joined with House Judiciary Chairman Lamar Smith (R-TX) to introduce the Regulatory Flexibility Improvements Act of 2011 (H.R. 527). Both pieces of legislation strengthen the RFA to, among other things, ensure that regulations devised by the Administration take into account the direct and indirect effects on small businesses before implementing them.

Notable Witness Quotes:
David Frulla, a partner with the law firm Kelley Drye & Warren, LLP, in Washington, D.C., whose practice includes regulatory and administrative law, had this to say during the hearing: "…the RFA has been interpreted since the first reported RFA court decision, to be strictly procedural. Agencies are not required to choose the least burdensome viable regulatory option." Later in the hearing he continued, "Small businesses are looking for a regulatory system that protects the public, while not overburdening operations and stifling growth and job creation."

Rich D. Draper, CEO of the Ice Cream Club, Inc in Florida said, "As the dairy industry is already subjected to significant regulation, we are worried about duplicative regulatory efforts by various levels of government. For example, we are inspected regularly by the US Department of Agriculture (USDA), working with the Florida Department of Agriculture, and also the US Food and Drug Administration (FDA). We have four major inspections by the Florida Department of Agriculture each year as well as numerous other visits to collect samples and calibrate equipment."

Bill Squires, Sr. Vice President and General Counsel for Blackfoot Telecommunications Group in Montana said, "Clearly, there will be little, if any, argument from America's small business community anytime attempts are made to appropriately limit unnecessary burdens and costs that often emerge in the wake of regulatory initiatives no matter how well intentioned." Later in the hearing he continued, "It is the view of our sector that the RFA is not doing what it was designed to do in terms of its application and interaction with regulations that emerge from within the Federal Communications Commission (FCC). Far too often, rulemakings are issued by the FCC that appear to have given little real regard to the RFA and its requirements to thoroughly review the impact of proposed regulatory orders on America's small community-based communications providers."

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