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STATEMENT

Of the Honorable Nydia M. Velázquez, Ranking Member

Committee on Small Business - Full Committee Hearing:

“Reducing Red Tape: The New OIRA Administrator's Perspective”

July 24, 2013

Small businesses are critical to the economy, creating nearly 70 percent of net new jobs and generating more than 50 percent of GDP.   While their contributions are essential to putting a real dent in the nation’s unemployment rate, regulatory costs threaten to undermine this important role. While credible estimates of these costs are hard to come by, over the last 7 years this committee has extensively examined the impact of regulations on small firms.  During this time, it has become clear that although these rules provide significant benefits to the public, they are in fact creating very real challenges for a wide-range of smaller companies.

President Obama had addressed this matter head on by issuing Executive Orders 13563 and 13610.  Together, these mandates have the potential to bring real relief to small businesses across the country.  They call for the careful reassessment—a retrospective analysis—of regulations that are in place.  After this evaluation has been undertaken, agencies will be in a position to streamline, modify, or eliminate rules that do not make sense in their current form or under existing circumstances.  Specifically, agencies are directed to prioritize initiatives that will produce significant cost savings and reductions in paperwork burdens. As a result, small businesses will face fewer headaches in dealing with federal regulations.

In May, this committee heard from agencies on their progress in implementing these orders.  We learned for the most part that agencies are taking these requirements more seriously than they have in the past, particularly when it comes to the section 610 requirements in the Regulatory Flexibility Act.  Several agencies – from Treasury to Labor to DOT – have already issued final rules that will reduce burdens on businesses.  Other changes, like those to the FAR, will help small businesses directly by reducing government bureaucracy. During today’s proceedings, I am particularly interested in hearing whether these moves indicate a long-overdue change to agency behavior.  All too often, similar efforts have been just a flash in the pan – as agency compliance with previous calls for regulatory reduction faded quickly.

While the president’s initiative is welcome, we cannot overlook the importance of the Regulatory Flexibility Act as well.  It has provided an overarching structure for agencies to work within, limiting the impact of their rules on small businesses.  With efforts currently underway in the Judiciary Committee to revise this important statute, we must ensure that any changes do not undermine its effectiveness. 

This means not heaping on the SBA’s Office of Advocacy – who implements the RFA – with responsibilities beyond its capacity.  As a result of the sequester, this office is already struggling to make due with less and adding more duties makes little sense.  The truth is that taxpayers will be stuck with another bill – or more likely – no additional funding will be provided and the office will be unable to carry out these obligations effectively

Instead, we should be considering changes to the RFA in the areas that are most glaring – rather than rewriting the entire act.  This includes ensuring periodic reviews become a regular part of the regulatory process and that agencies cannot evade their responsibilities under the act.  It also means broadening the panel process, but in a way that makes sense in the current fiscal environment. With Administrator Shelanski here today, I am eager to not only hear about agency implementation of their retrospective review plans, but also what steps, if any should  be taken to improve the RFA. 

Reducing regulatory burden is a laudable if elusive goal.  It is something that Congress, the administration, and the private sector must work toward and constantly improve as the regulatory environment evolves.  With this in mind, I am hopeful that these most recent executive orders will be a break from past efforts.  Reversing these trends are essential not only to small businesses, but to the economy overall.

I yield back the balance of my time. 

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