House Republicans Take Aim at Surge in Fees, Regulations for Small Businesses

The U.S. Department of Labor in Washington on March 26, 2020. Alex Edelman/AFP via Getty Images

House Republicans are calling on the Biden administration to account for increased fees and regulations in what they call a “regulatory attack on Main Street.”

The House Committee on Education and the Workforce has written a letter (pdf) dated Aug. 15 to Department of Labor (DOL) Acting Secretary Julie A. Su expressing concerns and seeking clarification regarding the DOL’s compliance with federal law during the formulation of new regulations.

“During a recent hearing held by the Committee’s Subcommittee on Workforce Protections, we heard testimony that DOL has failed to comply with important rulemaking procedures,” states the letter, signed by Committee Chair Virginia Foxx (R-N.C.) and Subcommittee on Workforce Protections Chair Kevin Kiley (R-Calif.).

“The hearing examined how the Small Business Administration’s (SBA) Office of Advocacy found significant noncompliance with the Regulatory Flexibility Act (RFA) by the Wage and Hour Division (WHD). As part of our oversight, the Committee requests information relating to the concerns raised by the Office of Advocacy to ensure DOL is taking its RFA requirements seriously.”

The House Committee on Small Business supports the correspondence, noting that the panel has sent 39 letters to the Biden administration, questioning the implementation of more than $400 billion in new regulations, which amount to more than 230 million hours in new paperwork.

“The National Federation of Independent Businesses (NFIB) Small Business Legal Center noted in a review of the Office of Advocacy’s comment letters that there were 28 instances during the 117th Congress where agencies across the federal government failed to follow the RFA,” Ms. Foxx and Mr. Kiley stated. “DOL was responsible for nearly 18 percent of these failures.”

Focusing on How Department Operates

The Education and Workforce committee is investigating the DOL to ensure it follows the RFA, a law that ensures government agencies consider how their rules affect small businesses.

The RFA says agencies must explain how a new rule could affect small businesses. They need to publish two types of analyses: one when they suggest a rule called the initial regulatory flexibility analysis (IRFA) and another when the rule becomes final (final regulatory flexibility analysis or FRFA). If a practice is thought to bring little or no harm to small businesses, agencies can skip these analyses, but only if the agency head confirms the lack of potential damage.

Republican leaders mentioned in their letter a review by the National Federation of Independent Businesses (NFIB) Small Business Legal Center. This review showed that the DOL frequently didn’t follow the RFA guidelines.

In a specific instance cited by lawmakers, the DOL issued both an IRFA and a statement suggesting that a new rule would have minimal impact on small businesses. This action reportedly caused confusion within the Office of Advocacy.

Additionally, the committee highlighted other occasions when the Office of Advocacy identified instances where the DOL failed to conduct the necessary rule analysis as mandated by the RFA. This consistent pattern underscores a deviation from regulatory guidelines.

The Committee underscored the importance of the DOL’s adherence to the RFA, asserting that failure to comply with these regulatory standards could potentially result in an incomplete understanding of how new regulations impact small businesses, potentially leading to complications and legal challenges.

Committee Requests

To address the noted concerns and to ensure the DOL takes the RFA seriously, the Committee is asking the department for written answers and explanations about specific suggestions from the Office of Advocacy.

Specifically, they are asking the DOL to explain why they sometimes include both an IRFA and a note saying a rule won’t have any significant negative impact on small businesses.

The DOL’s response to the Committee’s inquiry, which they asked to receive by Aug. 29, is thought likely to shed light on the agency’s commitment to regulatory compliance and its engagement with the concerns raised by the Office of Advocacy.

“By failing to analyze the effects on small businesses adequately, DOL is undermining confidence in its rulemakings and engaging in rule by executive fiat,” the lawmakers said in the conclusion of their letter.

“The lapses identified by the Office of Advocacy demonstrate DOL’s calculated approach to fulfilling its obligations under the RFA to fit regulatory and informational requirements to the size and scope of businesses.”

Additional inquiries from House Republicans include an Aug. 14 letter (pdf) from the House Committee on Small Business, where Chairman Roger Williams (R-Texas) addressed the Biden administration’s return to work policy.

“According to President Biden, the COVID pandemic has been over for 11 months. Why the federal government is just now planning on getting back to work is beyond me,” Mr. Williams.

“Even though Main Street has long been back to work, the SBA is still allowing its employees to only come into work twice a week. It’s time they start marching to the same tune. I sincerely hope Administrator Guzman listens to the American people and reconsiders her policy of remote work so that all small businesses can better receive the assistance they need.”

The Department of Labor didn’t respond by press time to The Epoch Times’s request for comment.