Passed
223 Yea190 Nay19 Not voting1/2 required
HR-2965-119
Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.
Sponsored by Beth Van Duyne (R-TX)
What it does
This bill would require the Small Business Administration (SBA) to ensure that its own rulemaking imposes no net new costs on small businesses starting in fiscal year 2026. It would also require the SBA's Office of Advocacy to submit annual reports to Congress cataloging the regulatory costs that all other federal agencies — not just the SBA — impose on small businesses, broken down by agency and individual rule. No new funding is authorized to carry out these requirements.
Who benefits
Small businesses subject to SBA regulations, who would face no net increase in regulatory compliance costs from SBA rulemaking. Members of Congress, who would receive annual data on the regulatory burden other agencies place on small businesses. Advocacy groups and researchers focused on regulatory policy, who would gain a structured, publicly available dataset. Businesses considering whether to remain classified as "small" under SBA definitions, who may benefit from reduced compliance costs.
Who is hurt
Workers or consumers who might otherwise be protected by new SBA rules that the agency could no longer issue without offsetting existing rules. Small businesses that benefit from SBA regulations (e.g., rules that level the playing field against larger competitors or protect against fraud). Federal employees at the SBA's Office of Advocacy, who would face new annual reporting obligations with no additional funding authorized. Agencies whose regulatory activity would be publicly scrutinized and compared, potentially creating political pressure to reduce rules regardless of their merits.
Supporters argue
Supporters argue that small businesses — which employ roughly 46% of the U.S. private-sector workforce according to SBA data — are disproportionately burdened by federal regulations because they lack the legal and compliance staff that large corporations use to absorb regulatory costs. They contend that a zero-net-cost budget for SBA rulemaking forces the agency to prioritize and offset new rules with repeals, reducing cumulative regulatory drag. The annual reporting requirement, they argue, creates transparency and accountability across all federal agencies, giving Congress the data it needs to conduct meaningful oversight of the full regulatory burden on small businesses.
Opponents argue
Opponents argue that a blanket zero-cost regulatory budget prevents the SBA from issuing new rules even when those rules would protect small businesses, workers, or the public from demonstrable harms — effectively treating all regulatory costs as equivalent regardless of their benefits. They contend that the reporting mandate, unfunded by the bill, would strain the Office of Advocacy's existing resources and may produce incomplete or inconsistent data. Critics also argue that the bill's scope is narrow — applying only to SBA's own rules — while leaving the far larger regulatory footprint of agencies like the IRS, EPA, and OSHA untouched, making it largely symbolic in practice.
Constitutional context
The bill directs the SBA Administrator — an executive branch official — to achieve a specific regulatory outcome (zero net cost), which raises questions under the Nondelegation and Vesting Clauses (Art. I, §1) about whether Congress is appropriately directing agency action or improperly constraining executive discretion. Post-Loper Bright v. Raimondo (2024), courts independently review whether agency rules stay within statutory authority, meaning any SBA rule issued under this constraint could face heightened judicial scrutiny.
Checks and balances
The executive branch (SBA) loses rulemaking flexibility, as it would be constrained to zero net regulatory cost; Congress gains oversight leverage through the mandatory annual reports, while courts retain authority to review whether specific SBA rules comply with the statutory zero-cost mandate.
Historical precedent
Executive Order 13771 (2017), known as the "one-in, two-out" rule, required federal agencies to repeal two existing regulations for every new one issued and imposed a similar zero-net-cost regulatory budget government-wide; it was revoked by Executive Order 13992 in 2021.
Passed