The House Judiciary Committee passed a bill (HR 527) on July 7 that would amend the Regulatory Flexibility Act to ensure that all federal agencies undertake a more complete analysis of the potential economic impacts of proposed rules and regulations on small businesses. The bill, the Regulatory Flexibility Improvements Act, was introduced by House Judiciary Chairman Smith, R-Texas. It cleared the committee on a party-line vote of 18 to 8.

"The Small Business Administration (SBA) estimates that federal regulations impose a crushing $1.75 trillion burden on the economy -- $15,000 per household," Rep. Smith said. "Excessive regulations create a hardship on small businesses."

Republicans said regulatory reform is long overdue. Democrats said the bill is part of the GOP's anti-regulatory agenda. Rep. Smith said the bill would make much-needed revisions to the Regulatory Flexibility Act of 1980 and to the Small Business Regulatory Enforcement Fairness Act of 1996.

While those statutes require agencies to prepare analysis of the impact of proposed regulations on small businesses, the Government Accountability Office has found that agency compliance is inconsistent. Some agencies avoid conducting regulatory analysis simply by issuing boilerplate language that says a new rule will not have a significant economic impact on small businesses.

Under the House bill, the SBA would play a much larger role in deciding when agencies must conduct an analysis and whether an exemption is justified. Rep. Smith said current law requires only three agencies -- the EPA, the Consumer Financial Protection Bureau and the Occupational Safety and Health Administration -- to consider the advice of small business advocacy review panels before issuing new regulations. The new bill would require all agencies to use advocacy review panels. The bill would 1) eliminate agencies’ ability to waive or delay compliance with regulatory flexibility analyses, 2) grant additional powers to the SBA’s chief counsel for advocacy and 3) subject a broader range of agency rules to public comment and review.

In the Senate, Sen. Snowe (R-ME), the ranking member of the Senate Small Business and Entrepreneurship Committee, has authored similar legislation (S. 474, the Freedom Act) aimed at easing the regulatory burden on small businesses. A majority of the Senate voted for her bill on June 20 when it was offered as an amendment to another measure, but it did not clear a 60-vote procedural threshold.