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Rep. Luetkemeyer Introduces Regulatory Transparency for Small Businesses Act

Congressman Blaine Luetkemeyer (MO-03) introduced the Regulatory Transparency for Small Businesses Act. The bill forces federal agencies, when proposing a regulation, to identify an approximate number of small entities that will be affected by the regulation, NAICS Codes for those industries, and a cost per small entity. The agency must also provide the data used to make that determination. 

“On top of record inflation, workforce shortages and more, overregulation is costing our small business communities hundreds of thousands every year. As of 2021, the Biden Administration has issued 817 final rules costing $482.7 billion, resulting in 292.7 million hours of paperwork.” Said Congressman Luetkemeyer.” Part of the problem is that agencies are not being transparent about the potential impact the rules they are passing will have. This lack of transparency has led to many overburdensome rules that have negatively impacted small businesses across the nation. This bill will deter more harmful rules from passing by ensuring that agencies include critical information about how rules will impact small businesses before they can move forward with the rulemaking process.  

Background: According to the Regulatory Flexibility Act (RFA), if an agency believes a rule will have significant economic impact on a substantial number of small businesses, they must construct regulatory flexibility analyses addressing cost of compliance and significant alternatives considered, along with other applicable metrics. In contrast, if an agency determines that a rule will not have such an impact, the head of the agency must “certify” that decision and is then free to continue with normal rulemaking procedures. Unfortunately, there is nothing in statue to define what criteria should be included when an agency certifies that a rule will not have a significant impact, leaving agencies free to unilaterally decide which rules are impactful to small businesses and which are not. 

Because of this, many rules in violation of the RFA have been enacted without any changes. One of the more notorious cases includes the recent Supreme Court ruling of Waters of the United States (WOTUS). Because agency heads erroneously certified that WOTUS would not significantly impact small businesses, the rulemaking process was finalized with essentially no changes.  

The Regulatory Transparency for Small Businesses Act ensures agencies are no longer overlooking these critical preliminary measures when they certify and forces agencies to be transparent about their calculations.

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