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Congress to Mark Up Small Business Regulatory Flexibility Bill

The Regulatory Flexibility Act directs federal agencies to assess the effects of their rules on small businesses. How’s that going? A new book Where the Jobs Are: Entrepreneurship and the Soul of the American Economy, finds that most job creation comes from start-ups; they're usually small. But business formation has declined. On Wednesday the 18th, the House of Representatives Committee on Small Business, chaired by Rep. Sam Graves (R-M0.), will mark up H.R. 2542, the Regulatory Flexibility Improvements Act of 2013. It was introduced by Rep. Spencer Bachus (R-Ala.). The original "Reg Flex" Act has been around a long time, since 1980, and has been amended since then. It requires that agencies, in their semiannual regulatory Unified Agendas “describ[e] regulatory actions they are developing that may have a significant economic impact on a substantial number of small entities.” The year-end 2012 Unified Agenda of federal regulations didn't appear until the Friday before Christmas. It revealed an uptick in this category of rules. Despite President Obama’s claim to have issued fewer rules than George W. Bush (“In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his.”), rules impacting small business have bumped upward in the past several years. As the table below shows, at year-end 2012, overall rules in the pipeline (active, completed, and long-term) affecting small business according to federal agencies stand at 854. In fact, the number of rules with small-business impacts under Obama since 2010 has regularly exceeded 800. The last time rules in this category exceeded 800 was in 2003. At the markup, policymakers should examine the rules in question, and administration claims of less regulation, in more detail.  
Year RFA Req'd RFA Not Req'd Total
2005 390 398 788
2006 377 410 787
2007 375 382 757
2008 397 356 753
2009 372 386 758
2010 428 417 845
2011 418 404 822
2012 470 384 854

Of these 854 rules in play with small business impacts, 470 required a Regulatory Flexibility Analysis (RFA), a 12.4 percent increase over 2011 and a level well above anything seen in the past decade.

The number requiring a RFA has surpassed 400 only under Obama in the recent past. Another 384 rules were otherwise deemed to impact small business, but not to require a flexibility analysis. This category has been more stable, but nonetheless merits attention to assure more good than bad is done. The table linked here, a component of Ten Thousand Commandments, breaks out all of the 2012 Unified Agenda’s 854 rules affecting small business by department, agency, and commission. Six--the Departments of Commerce, Health and Human Services; Agriculture, Transportation; plus the Federal Communications Commission (FCC) and the Environmental Protection Agency -- account for 526, or 62 percent, of rules affecting small business. (The Table also lists all rules, whether or not small business is impacted; the overall proportion of total rules affecting small business, as seen at bottom right, stands at 21 percent. For those interested, the numbers of rules affecting small business broken down by department and agency from Unified Agendas since 1996 appear here.) Congress should examine rules affecting small business as part of a broader economic liberalization agenda. The Regulatory Flexibility Improvements Act is one opportunity.