U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

39–552 PDF 2007

FULL COMMITTEE MARKUP OF

H.R. 4458, THE SMALL BUSINESS

REGULATORY IMPROVEMENT ACT

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

DECEMBER 13, 2007

Serial Number 110-64

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

LOUIE GOHMERT, Texas, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

Ellsworth, Hon. Brad ............................................................................................... 4

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 8

Chabot, Hon. Steve .................................................................................................. 10

Ellsworth, Hon. Brad ............................................................................................... 11

(V) 

(1)

FULL COMMITTEE MARKUP OF HR. 4458, 

THE SMALL BUSINESS REGULATORY 

IMPROVEMENT ACT 

Thursday, December 13, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:13 a.m., inRoom 

2360, Rayburn House Office Building, Hon. Nydia M. 

VelaAE1zquez [chair of the Committee] Presiding. 

Present: Representatives Vela ́zquez, Shuler, Larsen, Grijalva, 

Michaud, Cuellar, Altmire, Braley, Clarke, Ellsworth, Johnson, 

Sestak, Higgins, Hirono, Chabot, Bartlett, Graves, Akin, Shuster, 

Musgrave, King, Fortenberry, Westmoreland, Gohmert, Davis, 

Fallin, Buchanan, and Jordan. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. I am pleased to call this morning’s 

markup to order. Today we are considering H.R. 4458, the Small 

Business Regulatory Improvement Act. This legislation, offered by 

Mr. Ellsworth, strengthens key sections of the Regulatory Flexibility Act to help alleviate the growing burdens facing small firms. 

Since 1980 RegFlex has served to ensure that America’s entrepreneurs are not placed at a disadvantage by Federal regulations. 

However, as we approach 28 years of RegFlex on the books, it is 

clear that certain parts of the law are not working as well as they 

should be. Over the past several weeks, this Committee has examined ways to improve RegFlex. The bill before us represents the 

final result of that work. 

The Small Business Regulatory Improvement Act was developed 

with the input of the small business community, policymakers and 

the chief counsel for advocacy. In these discussions, one thing that 

was abundantly clear was a concern of the growing regulatory burden on small businesses and its impact on entrepreneurship. Tens 

of thousands of pages of regulations continue to flow from agencies 

annually. In fact, just this Monday, the Federal Register exceeded 

the 70,000-page mark for the year. 

It is time to rein in the rapidly increasing regulatory costs facing 

America’s entrepreneurs. Although critics of RegFlex have long labeled it as an impediment to the regulatory process, this is simply 

not the case. For the nearly three decades the law has been on the 

books, the volume of regulations continue to grow. By making certain that regulators consider the needs of small businesses when 

2

they write and review regulations, the law actually enhances transparency and makes for a better informed regulatory process. 

The legislation we are marking up today will significantly 

strengthen RegFlex by addressing the weaknesses that were identified in our recent discussions. Many of the witnesses expressed concerns that agencies were not living up to their obligations to review 

the burdens of existing rule on small business. 

The General Accounting Office has reported on numerous occasions that agency compliance with this requirement was poor. The 

legislation holds the agencies more accountable by requiring them 

to report the results of their reviews to Congress annually. 

The Small Business Regulatory Improvement Act also addresses 

what the chief counsel for advocacy has described as the biggest 

loophole in the law, the fact that agencies do not have to consider 

the full economic impact of the rules and regulations on small businesses. By fixing this problem, the Small Business Regulatory Improvement Act will require agencies to consider the indirect impacts of the rule on small businesses. 

The Federal Government should be using its resources to make 

sure that regulations accomplish their goal without adding unnecessary costs to small businesses. This bill will increase the role of 

the Office of Advocacy in helping agencies identify ways to achieve 

this. The goal here is not to limit regulations. It is to create a regulatory process that is balanced and fair to small businesses. Regulations should be designed to ensure protections are in place without creating burdens that do nothing to further policy objectives. 

As the regulatory burden increases, small businesses are finding it 

harder to keep up. 

A study recently commissioned by the Small Business Administration Office of Advocacy determined that regulatory costs for 

small businesses are 45 percent greater than for larger firms. 

These costs amount to over $7,600 annually. Having consulted with 

the minority, the Office of Advocacy, and the small business community on this bill, I believe we have drafted commonsense legislation that will improve this important law and ensure that small 

businesses are not overlooked in the regulatory process. By 

strengthening and clarifying many aspects of RegFlex, this legislation can help stop the growth of complying costs. 

I would like to thank Mr. Ellsworth for introducing this legislation as well as thanking the Ranking Member Mr. Chabot and his 

staff for their efforts in working with us on marking this bill. I now 

would like to yield to Mr. Chabot for his opening remarks. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. Thank you, Madam Chairwoman, for yielding. And 

the bill that we are considering today has some useful improvements, the Regulatory Flexibility Act. I would like to thank the 

Chairwoman and Mr. Ellsworth for their hard work in bringing 

this bill forward and working on it. While I will vote for the bill, 

I do believe the bill needs some enhancements to be truly effective 

in reducing the regulatory burdens on our small businesses. 

More than a quarter of a century ago the growth of the regulatory state was imposing undue burdens on the capacity of small 

businesses to compete. The situation was exacerbated by the FedVerDate 0ct 09 2002 15:15 Jan 08, 2008 Jkt 033615 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\39552.TXT LEANN
3

eral agencies issuing a one-size-fits-all rule that may work for large 

firms but fail small businesses, which often lack the financial and 

legal resources to interpret and comply with these regulations. 

Senator John Culver, a Democrat who was quite liberal, responded by drafting a statute, the Regulatory Flexibility Act, or 

RFA, that forced agencies to consider the impacts on their rules on 

small businesses in the same way that the Federal Government 

considers the environmental impact when building a dam or a road 

or that type of thing. 

The RFA represents a simple yet profound change to the Administrative Procedure Act which requires that rulemaking be conducted rationally. To conduct rational rulemaking, an agency must 

understand the scope of the problem. Since the vast majority of entities regulated by the Federal Government are small businesses, 

the Regulatory Flexibility Act plays a key role in helping agencies 

understand the scope of the problem and ultimately conduct rational rulemaking. It is important to understand that the RFA affects 

the process by which an agency issues regulations, not the substance of the rule. No changes we are considering today or that 

have been considered in the past will force an agency to reduce 

burdens on small businesses. Instead, it will provide the agency 

with evidence that its regulatory objective can be attained in a 

more cost-effective manner. Logic would then dictate that the agency take the more cost-effective approach in reaching its objectives. 

The bill we are considering today will improve the process by 

which agencies consider the impacts of their proposed and final 

rules on small businesses and other small entities, including rules 

that have been in effect for 10 years. The bill also codifies an executive order, granting the chief counsel for advocacy certain authority. I am concerned that the codification of the executive order conflicts with the requirements of the government in the Sunshine 

Act. That act requires independent collegial bodies like the FCC or 

SEC to adopt their regulation in open meetings. Authorizing these 

agencies to provide such rules to the chief counsel prior to an open 

meeting violates, in my view, the government and Sunshine Act. 

And I would ask the Chairwoman to work with us to resolve this 

issue as the bill moves forward in the legislative process. 

While these changes in the bill are necessary, they are not sufficient to really force agencies to consider the impact of their rules 

on small businesses. The only way to do that is to empower the 

chief counsel for advocacy to write governmentwide regulations 

that all agencies would follow in implementing the RFA. This 

would bring regularity to a process now fraught with the idiosyncratic views of each agency. More importantly, agencies and courts 

would give deference to the opinions of the chief counsel in the 

same way that the rules of the Council for Environmental Quality 

are given deference in the drafting of environmental impact statements. 

I would ask the Chairwoman to assist us in making sure that the 

chief counsel has not only the necessary powers but sufficient powers to see the agencies will care that the RFA is on the books. 

And with that, I will yield back. 

4

Chairwoman VELA ́ ZQUEZ. Well, let me just say, Mr. Chabot, that 

you have got my commitment to continue to work in trying to move 

the process forward. 

Mr. CHABOT. Thank you very much. 

Chairwoman VELA ́ ZQUEZ. And now I would like to recognize the 

lead sponsor of this legislation, Mr. Ellsworth, for his statement on 

the legislation. 

OPENING STATEMENT OF MR. ELLSWORTH 

Mr. ELLSWORTH. Thank you, Madam Chairwoman, thank you 

Ranking Member Chabot. I practiced this week after last week’s 

hearing to get that right again. 

Mr. CHABOT. Thank you very much, Mr. Ellsworth. 

Mr. ELLSWORTH. Thank you both very much for scheduling this 

markup on this bill. I want to thank the members of the Small 

Business Committee as well as staff who worked so closely with the 

Committee to ensure we could develop the bipartisan bill that we 

have with us today. 

As we discussed before this Committee, small businesses are too 

often put on a competitive disadvantage as a result of Federal regulations. Big corporations who have teams of lawyers, accountants, 

and compliance officers have a much easier time with small competitors when it comes to complying with complex regulations and 

paperwork. In fact, on a per-employee basis, as the Chairwoman 

said, it costs about 45 percent more for small companies to comply 

with Federal regulations than their larger competitors. That is why 

American small businesses need the Regulatory Flexibility Act. 

For over 25 years, this act has required Federal agencies to take 

into account the negative impact of their regulations on small businesses. In fact, under the Regulatory Flexibility Act, in many cases 

agencies are required to adjust their regulations to ease the burden 

on small companies. Unfortunately, some bureaucrats ignore the 

spirit of this law by finding loopholes that allow them to push on 

without considering the effects of new regulation on American 

small businesses. And that is why we are here today. The Small 

Business Regulatory Improvement Act closes these loopholes and 

brings small businesses back to the table when regulations are 

written. 

There is no doubt that this bill is going to help small businesses. 

The list of organizations who have endorsed this bill continues to 

grow. I would like to list a few of those who have already endorsed 

this plan. They are the U.S. Chamber of Commerce, the Farm Bureau, the American Medical Association, the American Dental Association, the American Hospitals Association, the Food Marketing 

Institute, the National Association of Manufacturers, the National 

Association of Wheat Growers, the National Electrical Contractors 

Association, the National Council for Farmers Cooperatives, the 

National Retail Federation, the National Roofing Contracting Association, the Owner-Operator Independent Driver Association, and, 

just in, is the Association of General Contractors. These groups 

have apparently heard the same thing from theirs members as I 

have heard from small business owners: It is time for the Federal 

Government to stop ignoring the unique negative impacts of certain 

regulations on small businesses. I am glad we are here today to adVerDate 0ct 09 2002 15:15 Jan 08, 2008 Jkt 033615 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\39552.TXT LEANN
5

dress this issue. I urge all my colleagues to help ease the burden 

for the small businesses in their districts and support this important bill. 

Thank you, Madam Chair. I yield back my time. 

Chairwoman VELA ́ ZQUEZ. Thank you. Are there any other members that wish to be recognized on the legislation? 

The Committee now moves to consideration of the bill, H.R. 4458. 

The clerk will report the title of the bill. 

The CLERK. A bill to amend chapter 6 of title 5, United States 

Code, commonly known as the Regulatory Flexibility Act, to ensure 

complete analysis of potential impacts on small entities of rules, 

and for other purposes. 

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that the bill 

in its entirety be open for amendments at this time. Does any 

member seek recognition for the purpose of offering an amendment? 

Seeing no amendments, the question is on passing and reporting 

the bill H.R. 4458. 

All those in favor say aye. 

All those opposed, no. 

Mr. CHABOT. Recorded vote, please, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. A recorded vote has been requested. 

And The clerk will call the vote. 

The CLERK. Ms. Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Aye. 

The CLERK. Ms. Vela ́zquez votes aye. 

Mr. Schuler. 

Mr. SCHULER. Aye. 

The CLERK. Mr. Schuler votes aye. 

Mr. Gonzalez. 

[No response.] 

The CLERK. Mr. Larsen. 

[No response.] 

The CLERK. Mr. Grijalva. 

Mr. GRIJALVA. Aye. 

The CLERK. Mr. Grijalva votes aye. 

Mr. Michaud. 

Mr. MICHAUD. Aye. 

The CLERK. Mr. Michaud votes aye. 

Ms. Bean. 

[No response.] 

The CLERK. Mr. Cuellar. 

Mr. CUELLAR. Aye. 

The CLERK. Mr. Cuellar votes aye. 

Mr. Lipinski. 

[No response.] 

The CLERK. Ms. Moore. 

[No response.] 

The CLERK. Mr. Altmire. 

Mr. ALTMIRE. Aye. 

The CLERK. Mr. Altmire votes aye. 

Mr. Braley. 

Mr. BRALEY. Aye. 

The CLERK. Mr. Braley votes aye. 

6

Ms. Clarke. 

Ms. CLARKE. Aye. 

The CLERK. Ms. Clarke votes aye. 

Mr. Ellsworth. 

Mr. ELLSWORTH. Aye. 

The CLERK. Mr. Ellsworth votes aye. 

Mr. Johnson. 

Mr. JOHNSON. Aye. 

The CLERK. Mr. Johnson votes aye. 

Mr. Sestak. 

Mr. SESTAK. Aye. 

The CLERK. Mr. Sestak votes aye. 

Mr. Higgins. 

Mr. HIGGINS. Aye. 

The CLERK. Mr. Higgins votes aye. 

Ms. Hirono. 

Ms. HIRONO. Aye. 

The CLERK. Ms. Hirono votes aye. 

Mr. Chabot. 

Mr. CHABOT. Aye. 

The CLERK. Mr. Chabot votes aye. 

Mr. Bartlett. 

Mr. BARTLETT. Aye. 

The CLERK. Mr. Bartlett votes aye. 

Mr. Graves. 

Mr. GRAVES. Aye. 

The CLERK. Mr. Graves votes aye. 

Mr. Akin. 

Mr. AKIN. Yes. 

The CLERK. Mr. Akin votes aye. 

Mr. Shuster. 

[No response.] 

The CLERK. Mrs. Musgrave. 

Mrs. MUSGRAVE. Yes. 

The CLERK. Mrs. Musgrave votes aye. 

Mr. King. 

[No response.] 

The CLERK. Mr. Fortenberry. 

Mr. FORTENBERRY. Yes. 

The CLERK. Mr. Fortenberry votes aye. 

Mr. Westmoreland. 

[No response.] 

The CLERK. Mr. Gohmert. 

Mr. GOHMERT. Yes. 

The CLERK. Mr. Gohmert votes aye. 

Mr. Heller. 

[No response.] 

The CLERK. Mr. Davis. 

Mr. DAVIS. Aye. 

The CLERK. Mr. Davis votes aye. 

Ms. Fallin. 

Ms. FALLIN. Aye. 

The CLERK. Ms. Fallin votes aye. 

Mr. Buchanan. 

7

Mr. BUCHANAN. Aye. 

The CLERK. Mr. Buchanan votes aye. 

Mr. Jordan. 

Mr. JORDAN. Yes. 

The CLERK. Mr. Jordan votes aye. 

Chairwoman VELA ́ ZQUEZ. Are there any other members present 

seeking to change or record their vote? Mr. Westmoreland? 

Mr. WESTMORELAND. Yes. 

The CLERK. Mr. Westmoreland votes aye. 

Chairwoman VELA ́ ZQUEZ. The Clerk will report the vote. 

The CLERK. Twenty-five ayes, zero noes. 

Chairwoman VELA ́ ZQUEZ. The ayes have it, and H.R. 4458 is 

adopted and ordered reported. 

I ask unanimous consent that the Committee be authorized to 

correct section numbers, punctuation, and cross-references, and to 

make other necessary technical and conforming corrections on the 

bills considered today. Without objection, so ordered. 

Mr. CHABOT. Madam Chair, I ask unanimous consent that the 

gentleman’s vote be recorded. 

Chairwoman VELA ́ ZQUEZ. Mr. Larsen, how do you want to be recorded? 

Mr. LARSEN. Thank you, Mr. Chabot. Yes. 

Chairwoman VELA ́ ZQUEZ. This markup is adjourned. 

[Whereupon, at 10:30 a.m., the Committee was adjourned.]

8


39552.001
9


39552.002
10


39552.003
11


39552.004
12

Æ


39552.005