Banking and Finance Law Daily Wrap Up, PRUDENTIAL REGULATION—ABA, others urge House panel to advance Regulatory Flexibility Act changes, (Sep 9, 2024)

By Nora Macaluso

A separate group, meanwhile, said the panel should reject the proposed changes, which are scheduled to be considered at a September 10 markup.

A coalition of industry associations including the American Bankers Association urged House Small Business Committee leaders to advance legislation making changes to the Regulatory Flexibility Act. The letter was addressed to the leaders of the House of Representatives Committee on Small Business. The panel is scheduled to meet September 10 to mark up a set of bills that would amend the act.

“On behalf of millions of small businesses across the country, we write to thank you for prioritizing legislation to provide regulatory relief and reduce red tape for small businesses,” the groups, which included business associations such as the U.S. Chamber of Commerce and the National Association of Manufacturers, wrote in a letter to committee Chairman Roger Williams (R-Texas) and ranking member Nydia Velazquez (D-N.Y.).

Regulations put in place in recent years disproportionally affect “small businesses that do not have lawyers and compliance officers to navigate complex regulatory issues,” the letter said.

Agencies are generally not complying with the act, said the groups, citing a recent committee staff report and a 2023 National Federation of Independent Business white paper.

The groups also urged the panel to advance the Prove It Act, which they said “would increase small business input in the regulatory process and ensure agencies are fully accounting for the impact of regulations on small businesses,” and other proposals that “would increase the transparency and accountability of the regulatory process for small businesses.”

The Prove It Act would allow small businesses to petition the SBA Chief Counsel to review whether a proposed rule would “have a significant economic impact on a substantial number of small entities,” and if it would, to send the rule back to the agency that proposed it for regulatory analysis.

In the years since the RFA was passed in 1980, “agencies have found ways to disregard or avoid many of the requirements,” the letter said. “We appreciate the Committee’s focus on ensuring the intent of the RFA is fulfilled through legislation like H.R. 7198, the Prove It Act,” the groups said.

Letters from advocacy groups. Meanwhile, an alliance of other groups including Public Citizen, the AFL-CIO, and the Economic Policy Institute, sent the committee leaders letters opposing the changes. The Coalition for Sensible Safeguards said the bills would “cause unnecessary and lengthy regulatory delays, encourage court challenges, create uncertainty for and harm small businesses by increasing the influence that large corporations have over the substance of agency rulemakings.”

The groups urged the panel to reject all the bills—H.R. 8033, H.R. 9030, H.R. 9031, H.R. 9032, H.R. 9033, and H.R. 9085—as well as the Prove It Act.

“Given that many of the new analytical requirements in these bills would be difficult or impossible to satisfy in practice, large corporations would have endless opportunities to hold up regulations they oppose by challenging agency compliance,” the coalition said. “For example, corporate interests would always be able to find some impact that was not adequately quantified or some indirect effect that was not fully considered.”

The Prove It Act, the coalition said in a separate letter to the lawmakers, would expand the Small Business Administration Office of Advocacy’s authority “instead of addressing the fundamental flaws” of the RFA. The act would slow the regulatory process “and empower an office that has been neither appropriately focused on small business concerns nor adequately transparent in how it conducts its actions.”

The coalition urged the panel to consider alternative proposals such as H.R. 1507, the Stop Corporate Capture Act, “that offer real and meaningful reforms to strengthen the regulatory process.”

Public Citizen sent a separate letter to the committee heads saying the Biden administration “has complied with the RFA to a far greater degree than the previous Administration” and “any claims that the current Administration is not complying with the RFA is not supported, and in fact contradicted” by government data.

Companies: American Bankers Association; Alliance for Chemical Distribution; American Bakers Association; American Bankers Association; American Chemistry Council; American Craft Spirits Association; American Exploration & Mining Association; American Hotel & Lodging Association; American Farm Bureau Federation; American Road & Transportation Builders Association; American Short Line and Regional Railroad Association; American Waterways Operators; Associated Builders and Contractors; Associated Equipment Distributors; Associated General Contractors of America; Can Manufacturers Institute; Coalition for Sensible Safeguards; Economic Policy Institute; Energy Workforce & Technology Council; Independent Community Bankers of America; International Franchise Association; International Wood Products Association; Job Creators Network; National Asphalt Pavement Association; National Association of Convenience Stores; National Association of Insurance and Financial Advisors; National Association of Manufacturers; National Association of Realtors; National Association of Wholesaler-Distributors; National Cattlemen’s Beef Association; National Federation of Independent Business; National Fisheries Institute; National Funeral Directors Association; National Grocers Association; National Lumber & Building Material Dealers Association; National Mining Association; National Pork Producers Council; National Propane Gas Association; National Retail Federation; National Roofing Contractors Association; National Rural Electric Cooperative Association; National Small Business Association; National Stone Sand & Gravel Association; North American Association of Food; Equipment Manufacturers; Owner-Operator Independent Drivers Association; Plumbing-Heating-Cooling Contractors—National Association; Public Citizen; Precision Machined Products Association; PRINTING United Alliance; The Meat Institute; The Toy Association; Treated Wood Council; U.S. Chamber of Commerce; USA Rice

LegislativeActivity: BankingOperations CapitalBaselAccords PrudentialRegulation