From The Editor

Small Businesses Seek Input on Regulatory Impact

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MCN Editor Dan Markham The Metals Service Center Institute and National Association of Wholesaler-Distributors have joined a coalition formed by the U.S. Chamber of Commerce seeking Congressional action on regulatory matters. The trade groups joined more than 100 others calling for legislation to grant input to small business in the federal regulatory process.

In a letter to ranking members of Congress from both parties, the group said the intent of the Regulatory Flexibility Act of 1980 needs to be fulfilled.

The Regulatory Flexibility Act of 1980 was signed into law after a bipartisan coalition of small businesses, community leaders and elected representatives confronted the danger of imposing burdensome red tape on American small businesses. Upon signing the RFA into law, President Carter said, “small businesses are vital to the growth and to the future of our country” and that regulations “can impose a disproportionate and unfair burden on small businesses.”

The RFA was designed to correct any disproportionate burden on small businesses by encouraging federal regulatory agencies to consider the impact of new mandates on small businesses and to minimize negative impacts, without compromising the underlying regulatory objectives.

“Unfortunately, loopholes in the RFA allow federal regulators to bypass the law’s requirements and misrepresent the costs of new mandates on small businesses because (a) transparency requirements only apply to businesses directly regulated and (b) judges may not punish agencies for ignoring small business concerns,” the letter said.
Federal agencies have on numerous occasions failed to adhere to the requirements under the RFA, the letter claimed, noting 28 instances where the Small Business Administration’s Office of Advocacy cited agencies for lack of RFA compliance.

For example, SBA’s Office of Advocacy found the Department of Labor’s analysis of the impact of its independent contractor rule “deficient” because it "severely underestimated” the economic impacts of the rule on small business; and “failed to estimate any costs” for small businesses to reclassify independent contractors as employees,” the letter said.

“Our concern that small businesses are being shut out of the regulatory process are amplified by recent data showing the growth of federal red tape.  The National Association of Manufacturers’ most recent study on the cost of regulation shows that the cost per employee to comply with federal regulations is three times greater for small firms than the average costs for manufacturers.  Former CBO Director Douglas Holtz-Eakin recently testified before the Small Business Committee that the costs from regulatory mandates currently being issued are fifty percent greater than under any previous administration,” the letter added.