House Passes “Red Tape Reduction and Small Business Job Creation Act”

July 26, 2012

Measure freezes new job-killing regulations and streamlines rulemaking process

WASHINGTON —The House of Representatives today passed a comprehensive regulatory reform bill to cut red tape and make the federal rulemaking process more friendly to job creators. The measure included several provisions previously passed by the House Committee on Oversight and Government Reform.

“The Obama Administration has issued some 106 rules in its first three years that collectively will cost taxpayers more than $46 billion annually in compliance and lost productivity.  This is four times the number of major regulations and five times the cost of rules issued in the prior administration’s first three years,” Oversight and Government Reform Committee Chairman Issa said.

“In more than 30 hearings, examinations and public forums, our Committee has heard loud and clear from job creators across the country who tell us that red tape imposed by the federal government chokes economic expansion and hurts job creation.  Nonpartisan research surveys report that the American public feels the same way—with an overwhelming majority saying federal regulations are a major reason why the economy is struggling.  This bill helps unwind much of this unnecessary red tape and frees entrepreneurs and business owners to do what they do best: create jobs and opportunity,” Issa added.

The Red Tape Reduction and Small Business Act (H.R. 4078) includes several key proposals:

  • The bill imposes a freeze on economically significant regulations that harm the economy until the unemployment stabilizes at 6 percent or below;
  • It permanently blocks administrations, during the “lame duck” post election period in which they are not serving a subsequent term, from issuing economically significant regulations.  Administrations in this category have historically issued new rules at a 17 percent higher rate than non election years;
  • The bill also ensures that parties impacted by government red tape have a right to intervene before agencies agree to binding legal settlements that mandate new regulations.  This will ease the use of judicial decrees or settlement agreements to force new regulations outside the regular process;
  • It also requires that independent federal agencies such as the Federal Communications Commission and National Labor Relations Board comply with the same review requirements as other agencies as well as increased public transparency concerning unfunded mandates imposed on state and local governments;
  • Ease regulatory hurdles on federal construction projects.  One survey found that some 350 energy projects were stalled because of red tape that, if expedited, could generate nearly 2 million construction jobs plus $145 billion in economic activity;
  • The legislation also requires the Securities and Exchange Commission and the Commodity Futures Trading Commission to conduct more thorough cost-benefit analysis of proposed regulations.  Last year the agencies had over 100 rules in the approval process.

Several of the red tape reduction measures included were also supported by President Obama’s Job’s Council; three of the provisions included in this legislation were earlier passed by the House Committee on Oversight and Government Reform as stand-alone bills, and were included as part of the larger Red Tape Reduction and Small Business Job Creation Act.  The Committee recently released a comprehensive staff report documenting, in the words of job creators and business operators, the specific regulatory impediments they face that stifle job creation. A copy is available here.

President Obama’s rulemaking and regulatory administrator Cass Sunstein has praised the Oversight Committee’s “constructive and important work” on the issue of streamlining red tape and easing federal rules that hurt job creation.