House Passes Regulatory Flexibility Improvements Act of 2011

An October 2011 Gallup Poll showed that 22 percent of small business owners who responded believed that complying with government regulations was the biggest challenge they face in running their businesses successfully. A 2010 study undertaken by the Small Business Administration Office of Advocacy revealed that the cost of regulatory compliance is 36 percent higher for small businesses than it is for large businesses. In response to small business owners’ concerns, members of Congress introduced the Regulatory Flexibility Improvements Act of 2011. On December 1, 2011, the House passed the bill. Small business owners should be aware of the provisions of the bill and how it would impact them should it become law.

Focusing on Small Businesses

House Small Business Committee Chairman Sam Graves, one of the bill’s initial sponsors, said the purpose of the proposed Act is to force lawmakers to consider the impact of any new regulations they pass on small business. The bill would amend the process of how federal agencies analyze and develop regulations.

Supporters of the bill believe that reining in federal regulations with which small business owners have to comply will ultimately lead to increased economic performance and job growth across the country.

Specifics of the Act

The proposed Act would implement several reforms of the federal rule-making process, including:

• Mandating that initial and final regulatory flexibility analyses include alternatives to proposed rules that either maximize beneficial economic impact on small businesses or minimize economic harm to small businesses
• Requiring a plan for review of all existing rules for economic impact on small businesses no later than 180 days after the bill becomes law
• Allowing the Chief Counsel to be involved in an agency’s adjudication of rules regarding small businesses and inform small businesses of the impact of an agency’s rule making
• Providing for judicial review of rules to make sure the rules comply with the Act

Consult an Attorney

The Act next goes to the Senate for consideration. However, until the Senate votes on the proposed Act, federal regulations remain as complex as ever. Business owners should understand how important it is to have the help of an experienced attorney to ensure that a business meets regulatory requirements, given the convoluted nature of many government rules.