On February 1, 2024, Representative Brad Finstad (R-MN) introduced the bipartisan Prove it Act in the U.S. House of Representatives. Senate Small Business and Entrepreneurship Committee Ranking Member Joni Ernst introduced the companion legislation last year. The Prove It Act aims to give small businesses a seat at the table during the regulatory process and aims to limit the regulatory burden on small businesses.
The Prove it Act would require federal agencies to consider reasonably foreseeable indirect future costs of their proposed federal regulations as part of their Initial Regulatory Flexibility Analysis, where feasible. The proposed legislation also creates a process whereby small businesses and organizations representing small businesses can ask the Small Business Administration’s Office of Advocacy to formally review a federal agency’s certification that a proposed regulatory rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (RFA). This ensures small businesses will be able to raise concerns that a rule was improperly certified and have a third-party review and determine whether certification was proper.
The Prove it Act would also require that, for any guidance document or other relevant documents clarifying or interpreting any rule found by agencies to likely have a significant economic impact on a substantial number of small businesses, agencies would publish said documents, as determined by the agency, to Regulations.gov or similar website and allow for comments to ensure small businesses can both easily access the resources and provide feedback or request additional clarity where needed.
The regulatory burden on insurance producers, registered representatives of broker-dealers, and financial advisors is often put in place without proper discussion or concern for the negative impact on the ability to conduct business or properly serve clients and consumers. Additionally, federal regulators often work to circumnavigate the RFA, which leads to a loss of growth and opportunity for these small businesses that represent Main Street America and make up an integral part of the community in which they work. The Prove It Act seeks to address the loopholes in the RFA by increasing small business input in the regulatory process and strengthening the requirements for agencies to examine the impacts of regulations on small businesses.
NAIFA offers its full support to the Prove It Act and urges Congress to promptly enact this legislation. NAIFA encourages lawmakers to continue their efforts to reduce unnecessary regulatory burdens on small businesses and to allow insurance professionals and financial advisors to continue to serve the best interests of their clients.
Prospects: A companion bill was introduced in the U.S. Senate last year. The Senate Bill (S.1863) was reported out of committee in January 2024. Prospects for the House bill look positive as there is bipartisan support, but it remains to be seen when a vote will take place later this year.
NAIFA Staff Contact: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.