Senators Offer Bipartisan Bill to Increase Small Businesses Role in Regulatory Process

WASHINGTON, D.C. – U.S. Senators Joni Ernst (R-IA) and Heidi Heitkamp (D-ND), members of the Senate Committee on Small Business and Entrepreneurship, introduced the bipartisan Prove It Act. This bipartisan legislation aims to improve transparency and strengthen the voices of small businesses in the rulemaking process by giving the Small Business Administration’s (SBA) Office of Advocacy (the small business watchdog for federal rules and regulations) an opportunity to ask agencies to prove their regulatory analysis when proposing a rule that may be economically harmful to small businesses.

For example, the proposed Waters of the U.S. (WOTUS) rule drastically expanded federal authority over land and water to the point that the Environmental Protection Agency (EPA) could regulate water on 97 percent of the land in Iowa.  The SBA’s Office of Advocacy found that the EPA and Army Corps improperly certified this rule, and, despite the EPA claiming otherwise, the rule would indeed have 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.

“Small businesses make up 97 percent of all of Iowa’s employers, meaning their success is our state’s success,” said Senator Ernst. “The bipartisan Prove It Act serves as a check on the federal agency certification and analysis process, allowing the small business community the opportunity to question a rule, and, if a discrepancy is found, allowing for it to be re-evaluated before it’s finalized. I am grateful to have the support of Senator Heitkamp as we work to rein in burdensome regulations to foster a more thoughtful and efficient rulemaking process for our small businesses.”

“Small businesses are the backbone of North Dakota’s economy, and we need to make sure they have a level playing field to grow, thrive, and create jobs,” Heitkamp said. “The needs of small businesses have to be considered as regulations are created so we can prevent red tape and burdensome rules from unfairly impacting them. That’s why Senator Ernst and I are introducing this bipartisan legislation to give small businesses a bigger seat at the table and a stronger voice if a proposed regulation could hurt their ability to grow. For years, I’ve heard from North Dakota small business owners that one of their biggest concerns is federal rules, and the Prove It Act will make sure their voices are heard.”   

Other examples of areas the Prove It Act could be applied include: the EPA’s Risk Management Program Rule, the Department of Energy’s energy conservation standards for manufactured housing, and the Department of Energy’s energy conservation standards for vending machines.

In Fiscal Year 2016, the Office of Advocacy provided 20 official public comment letters to federal agencies on a variety of proposed rules. Most frequently, the concerns were raised over the inadequacy of an agency’s analysis of a proposed rule.

Senator Ernst first introduced the Prove It Act in the 114^th Congress, where it was approved by the Senate Committee on Small Business and Entrepreneurship.

View the bill text here.

About the Prove It Act:

• 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 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 small businesses a stronger voice and requires agencies to prove their regulatory analysis if the Small Business Administration Office of Advocacy disagrees with the agency’s decision to certify that the rule would not have a significant economic impact.
  • The request for review must be published in the Federal Register and on the SBA Office of Advocacy’s website to ensure transparency.