STATEMENT
by the
Honorable Nydia M. Velázquez
Ranking Member, Small Business Committee
SBREFA Hearing
March 6, 2002
Regulatory and paperwork burdens are one
of the greatest challenges that confront this nation's
small businesses. Firms that employ fewer than 20 workers
face an annual regulatory burden of almost $7,000 per
employee - a burden nearly 60% greater than what corporate
America faces.
Add to this how, many times, small business
owners do not have a legal department or a regulatory
expert to help them understand and comply with federal
rules. The hurdles created by regulations can mean the
difference between a business sinking - or surviving.
In an effort to level the playing field
for small businesses, Congress enacted the Regulatory
Flexibility Act in 1980. This groundbreaking legislation
mandated that federal agencies consider the impact their
regulatory proposals would have on small businesses.
This law was created to ensure that such proposals did
not have unintentional and detrimental effects on small
firms.
While the Reg Flex Act was a first step
in providing some fairness in the regulatory process,
much more still needs to be done. Reg Flex was able
to put small business concerns on the radar screens
of federal agencies, but compliance has proven both
uneven and elusive.
In 1996, President Clinton signed the
Small Business Regulatory Enforcement Fairness Act,
also known as SBREFA. This raised the regulatory stakes
for agencies by putting legal teeth into the regulatory
fairness process by allowing small businesses adversely
affected by a proposed rule to challenge it in the courts.
SBREFA has gone a long way to improving the regulatory
process and has helped to protect the interests of small
business.
I believe that today is an appropriate
time for us to go back and reexamine where we are in
terms of the state of small business regulations. What
we are now seeing is very much a mixed bag.
Some agencies actively engage small business
in the regulatory process, while others, like the FCC
--- which is probably responsible for the most regulations
affecting small businesses --- has one of the worst
track records for leaving small businesses out.
Another agency that has an inconsistent
track record is the Center for Medicare and Medicaid
Services (CMS). Today, CMS came out with its prescription
drug card proposal. This rule is a perfect example of
an agency's failure to comply with the law. It also
demonstrates a lack of understanding of the Reg Flex
Act and why it exists - to protect small businesses
and incorporate their views into the rule-making process.
CMS heard from Democrats on the House
Small Business Committee, who encouraged agency officials
to speak to small businesses while they proceeded with
the proposal process.
Associations that represent small business,
such as the Association of Community Pharmacists and
the Association of Chain Drug Stores, also voiced their
concerns to CMS. Still, the agency ignored these requests
for small business inclusion and pushed forward.
CMS, like other agencies, must realize
that Reg Flex and SBREFA were created for a reason.
They serve an important purpose - to protect the interests
of small businesses and to ensure they are not negatively
impacted or overly burdened by an agency rule that is
in the pipeline.
The regulatory process is a complex -
and sometimes burdensome - undertaking. But regulations
can also be fair, balanced and provide the necessary
protection to our health, welfare and our environment.
Federal agencies must work to determine the impact their
regulations have on small businesses, explore the regulatory
options for reducing that impact, and be held accountable
for their final choice of a regulatory approach.
