ASSE Member Testifies at DC Regulatory Flexibility Hearing
On July 1, 2010, the DC City Council held a public hearing regarding Bill 18-772, the “District Small Business Regulatory Flexibility Act of 2010” before DC Council members Cheh and Brown, at which ASSE-National Capital Chapter witness Bruce Donato testified in favor of the bill.
Bill 18-772 proposes the creation of a “new sub-chapter to improve government rule-making by creating procedures to analyze the availability of more flexible regulatory approaches for small businesses.”
According to Council member Cheh, over 40 states currently have regulatory flexibility laws that have garnered favor among small businesses. Specifically, Virginia and Maryland have adopted regulatory flexibility laws textually similar to the Small Business Administration’s RegFlex Act, which has saved small businesses significant expense. Regulatory flexibility laws help small businesses avoid undue cost by not forcing small businesses to use limited financial and personnel resources towards adhering to regulatory rules targeted at large and small businesses alike.
Council member Brown asserted that DC currently ranks 51st among the states regarding friendliest environments to conduct business. Specifically, Brown stated that government agencies currently enact regulations without necessarily considering adverse economic impact those rules may have upon businesses which lack substantial financial resources. The SBA noted that small businesses constitute an essential part of the District’s economy, especially in times of economic downturn. Currently, DC has no regulatory flexibility requirements.
Due to their financial and personnel limitations, small businesses are ill-equipped to adhere to compliance and reporting requirements of certain regulatory rules. Therefore, their success as a business is at the mercy of government regulation. According to the SBA, businesses constitute economies of scale, and small businesses shoulder a disproportionate share of the regulatory burden due to their struggle to adhere to regulatory rules which larger businesses can withstand. The SBA reiterated that Bill-18-722 will improve the regulatory landscape for small businesses by considering their limited resources prior to enacting regulatory rules.
However, the SBA and a representative from the Adams Morgan Business District expressed concern that Bill 18-722 lacks a definition for “adverse impact.” Specifically, when analyzing the consequences proposed regulatory rules will have on small businesses, government agencies will have no workable guideline to follow in order to determine what constitutes “adverse impact.” Therefore, small businesses may remain disadvantaged if government agencies can unilaterally determine the meaning of “adverse impact” as it applies to the stability of small businesses.
The SBA and the representative from the Business District expressed reservations over the proposed bill’s failure to address judicial oversight in order to ensure successful implementation. According to the SBA, the State of Delaware passed a failed regulatory flexibility law because the agencies did not adhere to the law, and the lack of judicial oversight resulted in a failure to implement the legislation. Therefore, while SBA supports the bill, it asserted that a reference to judicial oversight would strengthen the legislation.
A representative from the Institute for Liberty expressed their support of the bill. The Institute asserted that the economy of the District benefits from the ambition of entrepreneurs, especially during an economic recession. Bill 18-722 will help small business owners improve business by easing regulatory pressure.
Bruce Donato, representative of ASSE’s National Capital Chapter, expressed support for the legislation. According to ASSE, three-quarters of the businesses in the District constitute “small businesses.” Bill 18-722 will mandate that government agencies must consider the disproportionate burden certain regulatory rules place upon small businesses prior to enacting regulations. ASSE asserted that “compliance per covered employee costs small businesses more than it does larger employers”, and government agencies currently do not consider the availability of less intrusive means to “accomplish the statutory objective.” ASSE supports the proposed legislation because it is a significant step towards improving the regulatory environment for small businesses in DC. ASSE also expressed concern that the bill does not include a provision for judicial oversight to ensure successful implementation.