Regulatory relief - small business

Entrepreneur, April, 1996 by Stephen Barlas

A new bill to ease small-business burdens just may make it through

While the creaky battleship "Regulatory Reform" is stuck, probably permanently, in the senatorial drydock, Sen. Christopher Bond (R-MO) is trying to sail a trim small-business regulatory reform sloop through the Senate, House and down Pennsylvania Avenue to the White House for President Clinton's signature.

At press time, Bond, who is the chairman of the Senate Committee on Small Business, was expected to introduce extensive revisions to his Small Business Regulatory Fairness Act in March. Bond's bill will give small business new leverage to fight what some see as unfair rules and unreasonable inspectors at the Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA) and IRS.

Bond is negotiating with Sen. Dale Bumpers (D-AR), the ranking Democrat on the Small Business Committee, in an effort to put together a bipartisan bill. Keith Cole, the Bond staffer who has been conducting the negotiations, thinks an agreement is possible.

"This bill is not about politics," says Bond. "It is about providing real relief to small businesses."

The bill's key provision is allowing judicial review under the Regulatory Flexibility Act (RFA) of 1980. This law requires federal agencies to consider alternatives to new regulations whose requirements would have "a significant economic impact on a substantial number of small businesses." The agency does not have to pick the "least cost" alternative; it just has to consider it.

But federal agencies often disregard the RFA. "Many agencies--particularly the IRS--routinely ignore the intent of the RFA," says Bennie Thayer, president of the National Association for the Self-Employed (NASE).

Haphazard application of the RFA has annoyed small business enough to make it the number-three recommendation of the White House Conference on Small Business, held last June. That resolution called for allowing federal courts to assess whether federal agencies followed the RFA, making the RFA applicable to IRS rulings, and expanding it to require cost-benefit analysis and risk assessment of proposed rules, as well as including small-business participation in rule-making.

Even President Clinton has endorsed judicial review of the RFA, says James Morrison, senior policy advisor to the NASE. The House passed a bill (H.R. 926, folded into H.R. 9) in March 1995 that included a judicial review provision; the Senate regulatory reform bill (S. 343), sponsored by Majority Leader Bob Dole (R-KS), also included a judicial review provision. That bill came to the Senate floor last summer but was never voted on due to a filibuster. Democrats were unhappy with a provision prohibiting agencies from issuing new regulations whose cost to business exceeded their benefit to the public. This provision was most ardently sought by big business groups.

While judicial review is the jewel of the Bond bill, it is surrounded by some semiprecious stones. A second provision would allow small-business owners to rate OSHA and EPA inspectors and IRS auditors. The ratings would be sent to the Small Business Administration's chief counsel for advocacy, who would publish an annual report for Congress focusing on customer satisfaction and regional variations in auditing and inspection.

A third provision would make laws of some small-business enforcement policies the EPA and OSHA have developed administratively under President Clinton. For example, the EPA's interim policy allows inspectors to waive part or all of a penalty if the small business corrects the violation within an appropriate time or uses the money it would have spent on the penalty to correct the problem. And a fourth provision would make it easier for small business to get reimbursed for legal fees by the feds if fines were found to be excessive.

There is substantial bipartisan support in the Senate for small-business-- as opposed to big-business--regulatory reform. Although the Dole bill never passed in the Senate, some amendments were voted on, and two that passed dealt with small business.

While the Bond bill will be largely small-business-oriented, Democrats may object to some provisions. Certainly some federal agencies won't be happy about small businesses rating federal employees, surmises Morrison. Nonetheless, election-year politics could enhance the bill's chances. According to Craig Brightup at the National Roofing Contractors Association, "Both parties may want to go into the elections saying, 'This is what we did in response to the White House Conference on Small Business.' "

Easy Does It

Simplified tax reporting plan gains momentum

It's no secret that paperwork burdens associated with state and federal tax requirements get a very high mercury reading on the small-business anger thermometer. Now the federal government is taking preliminary steps to cool that heat.

The effort is part of the Simplified Tax and Wage Reporting System (STAWRS) project undertaken last year by the IRS, Treasury Department, Social Security Administration, SBA and Department of Labor. Jere Glover, chief counsel in the Small Business Administration's (SBA) office of advocacy, has been the unofficial ramrod for the small-business portion of STAWRS.