Regulatory Flexibility Act Ineffective at Protecting Small Businesses

Federal agencies' disregard for mandate affects communications sector

Arlington, Va., (March 30, 2011) - A lack of language that compels federal agencies-particularly independent agencies like the FCC-to comply with the Regulatory Flexibility Act (RFA) often results in insufficient recognition of the RFA's mandate to thoroughly review the impact of proposed regulations on the nation's small community-based communications providers. William Squires, senior vice president and general counsel of Blackfoot Telecommunications Group (Missoula, Mont.) offered this view in testimony on behalf of the National Telecommunications Cooperative Association (NTCA) at Wednesday's House Small Business Committee hearing, "Reducing Federal Agency Overreach: Modernizing the Regulatory Flexibility Act."

The RFA directs federal agencies to balance the societal goals tied to regulations with the needs of small businesses so as to counteract the natural inclination toward "one size fits all" approaches to policy. Squires testified, however, that agencies including the FCC often fail to adequately comply with the RFA.

"Instead of conducting this analysis, agencies often summarily state that alternative regulation was considered and rejected," Squires said. He noted that in the cases where final rules were adopted, the commission failed to fully analyze the impact of its rules on small businesses and failed to fully explain why alternatives were rejected. Squires listed several of the FCC's existing rules and proposed rules that have had-or potentially would have-"a significant and unnecessarily damaging financial impact on small carriers." Among them: truth in billing, bill shock, marking and lighting of antenna structures, E-911 and voice and data roaming.

Squires urged the committee to codify certain provisions of Executive Orders 13272- which deals with cooperation between the Small Business Administration's Office of Advocacy (OA) and other federal agencies regarding implementation of the RFA-and 12866, which requires a cost-benefit analysis for all significant rules. Such action would make these orders applicable to independent agencies in the same way they now apply to executive agencies.

He recommended several other legislative actions to enhance small business participation in the communications sector:
  1. Require all agencies to explain whether and how each rulemaking decision promotes and/or protects small businesses.
  2. Amend the RFA to require agencies to suggest and analyze alternatives that account for the nature and competitive position of small businesses when conducting rulemakings.
  3. Consult with the OA well in advance of rules being adopted, and specifically address any suggested additions or modifications.
  4. Provide the FCC's Office of Communications Business Opportunities with specific authority and responsibility to require agency bureaus to coordinate regulatory initiatives with the office from the very conception of action on any proceeding.
View Squires' testimony

The National Telecommunications Cooperative Association is the premier association representing over 570 locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America. NTCA provides its members with legislative, regulatory and industry representation; meetings; publications and educational programs; and an array of employee benefit programs. Visit us at

Contact NTCA at 703-351-2037