During National Small Business Week, Senators Seek to Give Small Businesses a Stronger Voice in the Rulemaking Process

WASHINGTON—As part of National Small Business Week, U.S. Senator Joni Ernst (R-IA) is reintroducing her bipartisan legislation that aims to improve transparency and strengthen the voices of Iowa’s small businesses in the federal rulemaking process. Her colleague from Arizona, Democratic Senator Kyrsten Sinema, joins her in this effort.

“Too often regulators in Washington don’t fully consider how the rules and regulations they churn out impact our small businesses. They’ll claim that a rule or regulation won’t have a significant impact on small businesses without doing a thorough analysis. Our bipartisan bill will give Iowa’s small business community the opportunity to send agencies back to the drawing board to ‘prove’ that what they’re proposing won’t hurt small businesses,” said Senator Joni Ernst, member of the Senate Committee on Small Business and Entrepreneurship.

“Arizona’s small businesses should have a voice in bureaucratic rulemaking that could harm Arizona jobs. The Prove it Act is a commonsense bill that helps guard against unreasonable regulations,” said Senator Sinema.

Specifically, the Prove It Act gives the Small Business Administration’s (SBA) Office of Advocacy, the small business watchdog for rules and regulations, the ability to question an agency’s analysis if it claims a rule or regulation won’t impact small businesses.

A great example of why the Prove It Act is so important is the burdensome proposed Waters of the U.S. (WOTUS) rule. This rule would have drastically expanded federal authority over land and water to the point that the U.S. Environmental Protection Agency (EPA) would have regulated water on 97 percent of the land in Iowa.

SBA’s Office of Advocacy found that EPA and the Army Corps of Engineers improperly certified this rule, and, despite EPA claiming otherwise, the rule would have indeed had a costly and direct impact on small businesses. Provisions in the Prove It Act would have allowed for a review or reconsideration of the proposed rule before it is put into action.

Background:

Under the Regulatory Flexibility Act (RFA), federal agencies are required to certify whether a rule has a significant economic impact on a substantial number of small businesses.  If the rule does, agencies are then required to perform a substantive regulatory analysis. Agencies also have the discretion to certify that the rule would not impact small businesses significantly and can then bypass further analysis requirements.

The Prove It Act gives the Office of Advocacy an opportunity to submit a request to an agency to take a second look and reconsider its certification. If after 30 days of review the agency determines that its certification was incorrect, then the agency would be required to do further analyses on the rule. The request for review must be published in the Federal Register and on the Office of Advocacy’s website to ensure transparency.

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