By KENT HOOVER
khoover@bizjournals.com

A majority of the Senate voted to give small businesses additional protections against federal regulatory burdens, but the legislation fell short of the 60 votes needed to pass.

The Senate voted 53-46 June 9 for an amendment sponsored by Sen. Olympia Snowe, R-Maine, that would strengthen the Regulatory Flexibility Act. All 47 Republicans voted for the bill.

The bill was brought up as an amendment to legislation reauthorizing the Economic Development Administration.

The RFA requires agencies to consider the impact that proposed regulations would have on small businesses. If the impact is economically significant, agencies are required to consider less-burdensome alternatives.

Snowe's legislation would require agencies to consider not just the direct impact of a regulation, but also the indirect impacts on small firms that do business with companies that are directly affected.

The bill, which is called the Freedom from Restrictive Excessive Executive Demands and Onerous Mandates Act, also would expand the RFA's requirements to agency guidance documents. Business groups contend agencies often issue informal guidance instead of new regulations in order to get around the RFA.

In addition, the bill would require nine additional agencies to convene panels of small-business owners to provide input on economically significant rules. That requirement already applies to the Environmental Protection Agency, the Occupational Safety and Health Administration and the new Consumer Financial Protection Bureau.

The legislation also would allow small businesses to challenge proposed regulations in court before they become final if agencies haven't followed the RFA's requirements.

Regulatory burdens cost jobs

The bill was endorsed by 32 business groups and trade associations, who noted the per-employee cost of complying with federal regulations is much higher for small businesses than it is for large businesses.

Regulatory burdens are one reason why small businesses "are skittish about hiring," said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council.

"They are concerned about the cost impact of major laws now being implemented, and added burdens and costs that may be imposed as a result of regulatory proposals in the pipeline," Kerrigan said.

Small businesses "need regulatory reform now," said Susan Eckerly, senior vice president, National Federation of Independent Business.

"We have heard bipartisan support for the type of common-sense regulatory reform found in this amendment, so it's very disappointing to see it fail," Eckerly said.

Business groups took some consolation in the fact that a majority of the Senate voted in favor of the bill. That's a sign that the bill eventually could pass, said Giovanni Coratolo, vice president of small business policy at the U.S. Chamber of Commerce.

"I think it really moved the ball forward," Coratolo said.

Issue now goes back to committee

Opponents of the legislation voiced two primary objections. Public-interest groups contended the bill would gut protections for consumers, workers and the environment by tying up agencies with litigation and busywork.

"By discouraging federal agencies from vigilant oversight, this amendment puts all American families in jeopardy by threatening them with less-safe food and water, fewer consumer protections and diminished workplace safety protections," contended the Coalition for Sensible Safeguards.

Some senators complained there had been no hearing on Snowe's bill and said it should be considered in tandem with other regulatory reform bills.