Policymakers often talk about the importance of small businesses, but they will simultaneously implement rules and regulations that make it extremely difficult for those same companies to conduct commerce.
And though economic policies, such as tax cuts, are very important to the health of small businesses, to be in support of small businesses truly and all of the benefits they bring to a community, government must be accountable for the effect that their actions will have on these entrepreneurs.
In short, it’s time to give small businesses a real say in the regulations that impact them.
The current approach to accounting for this issue is through the Small Business Regulatory Enforcement Fairness Act (SBREFA). Passed into law in 1996, SBREFA seeks to ensure that agencies consider the impact of their regulations on small businesses as part of their rulemaking process.
Components of this review include providing small business compliance guidance and responding to small business inquiries, as well as agency engagement with the Office of Advocacy at the U.S. Small Business Administration (SBA).
To its credit, this office works diligently to analyze rules. However, the available resources and tools it uses to help small businesses need to be updated to reflect the modern-day flow of regulatory mandates emanating from Washington, D.C.
With that said, it is time for Congress to examine the impact of the SBREFA process and implement changes to ensure that small businesses are top of mind when regulatory decisions are made. While there are a number of ways to approach this task, there are some foundational updates that Congress should consider.
First, SBREFA should be updated to ensure our nation’s courts can enforce every aspect of the law. Currently, only a few of the law’s provisions that require agencies to produce small business impact statements are subject to judicial review. Making every provision within SBREFA reviewable by the courts will help convince regulatory enforcement agencies to take their responsibilities seriously to make sure they minimize economic harm to small businesses.
If policymakers genuinely believe that small businesses are the economic engine of our communities, it is in everyone’s best interest to mandate judicial review of any rule that could reasonably impact small business to hold the executive branch accountable to its constituents.
Second, SBREFA should be amended in accordance with legislation put forward by Sen. Joni Ernst, called the Prove It Act. As the current ranking member of the Senate Small Business Committee, Sen. Ernst has been a vocal advocate for federal rulemaking accountability and transparency. Her bill provides the SBA Office of Advocacy with the ability to challenge any agency’s position that its rule will not harm small businesses.
Citing the disastrous Obama-Biden Waters of the United States rule (WOTUS), which gives the federal government the ability to regulate 97% of the water in her home state, she has made it clear that her bill will give the “small business community the opportunity to send federal agencies back to the drawing board to ‘prove’ that what they’re proposing won’t hurt small businesses.”
In fact, in recent congressional testimony, Mark Williams of the Luck Companies, a stone and gravel firm in Virginia, shared that the disastrous WOTUS rule “has no clear line on what is ‘in’ and what is ‘out,’ making it very difficult for our industry and other businesses to plan new projects and make hiring decisions. If it is determined that development of a site will take too long or cost too much in permitting or mitigation, we won’t move forward. This means that a whole host of economic activities in a community will not occur, all in the name of protecting a ditch or a farm pond.”
Finally, SBREFA should be amended to account for the secondary impact of federal rules on small businesses. It is often the unintended consequences or the downstream effects of a rule or law that affect a small business’s ability to operate efficiently and meaningfully participate in commerce.
By forcing policymakers to put themselves in the position of the small business when they are actually writing these rules, we can avoid some of these issues and give these companies the opportunity they need to succeed.
Entrepreneurship is a public service in that it creates jobs, contributes to local tax bases, and builds communities. It is time for our federal agencies to update a law that is almost 30 years old and does right by those who believe so deeply in the American Dream.
Linda McMahon is the former Administrator of the U.S. Small Business Administration and the Chair of the America First Policy Institute.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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