A recent 15-month congressional investigation into America’s growing regulatory burden has revealed that the cost of over 900 final rules adopted under President Joe Biden exceeds that of any prior administration, causing considerable harm to small businesses across the country. The House Committee on Small Business, chaired by Rep. Roger Williams (R-Texas), found that federal agencies have not been adhering to the Regulatory Flexibility Act (RFA) in its letter or spirit. This law was designed to shield Main Street America from excessive government intervention and overly burdensome regulations, but it has not functioned as intended and requires significant improvement.
The RFA, enacted in 1980, mandates that federal agencies take into account the impact of their one-size-fits-all regulatory proposals on small businesses and other similar entities. The goal is to protect America’s business community from heavy-handed government and undue regulatory burdens. However, the last major update to the RFA was 25 years ago, during which time the administrative state has grown exponentially, along with the regulatory burden on small businesses.
The committee’s investigation has led them to conclude that the law is not working as intended and needs to be drastically improved, citing that federal agencies constantly fail to comply with it, causing small businesses to suffer. The massive number of regulations that federal agencies pass each year and the resulting paperwork hours showcase how detrimental an unchecked regulatory regime can be on small businesses.
The report indicates that since President Biden took office through May 3, 2024, his administration has issued 891 final rules, totaling 232.2 million paperwork hours and imposing final rule costs of $1.47 trillion. Some experts suggest the regulatory cost is even higher, with Dan Goldbeck, director of regulatory policy at the American Action Forum (AAF), stating that the unprecedented level of regulations under the Biden administration has resulted in over 930 final rules at a cost exceeding $1.6 trillion since early May.
The scale of these figures is even more staggering when compared to those of the two immediately preceding administrations. The Biden administration’s current final rule cost total is more than five times greater than that accumulated through this point under President Barack Obama. By contrast, under President Donald Trump, the final rule costs were a net negative $159.9 billion, meaning that the final rules adopted during his tenure reduced the overall regulatory burden.
Mr. Goldbeck pointed to several deficiencies in the RFA process and highlighted the need for change. He noted that administrative agencies have discovered ways to bypass the law’s requirements, exploit loopholes, and engage in faulty cost analyses. The level of regulatory activity under the Biden administration has been immense, with new burdensome rules being finalized frequently, compounding existing regulatory requirements on small businesses.
The report states that most federal agencies are failing to properly comply with the RFA’s requirements, often treating it as a mere check-the-box exercise rather than genuinely analyzing the effects of their regulations. Some issues identified include federal agencies improperly certifying rules to avoid conducting an RFA analysis, underestimating both the costs of new rules and the number of impacted small businesses, failing to adequately consider less burdensome rule alternatives or choosing those that have more detrimental effects on small businesses, and not taking into account overlapping or conflicting existing rules.
Moreover, some federal agencies have refused to submit to congressional oversight, violating the U.S. Constitution and preventing the committee from fulfilling its duty to protect America’s small businesses from the regulatory onslaught. To address these issues, the committee recommends amending the current RFA requirements to include stronger language and descriptions of the cumulative economic impact of the rule, as well as any disproportionate impacts on small entities, and how the rule may undermine their access to credit.
The report concludes that change is necessary, as the current regulatory framework is insufficient in protecting America’s small businesses from an ever-increasing burden of rules and regulations.