Legislative Priorities for the 109th Congress
     Office of Advocacy, U.S. Small Business Administration
                                
The Office of Advocacy was established pursuant to Pub. L. 94-305
to represent the views of small business before Federal agencies
and Congress. Advocacy is an independent office within the U.S.
Small Business Administration (SBA), so the views expressed by
Advocacy do not necessarily reflect the views of the SBA or the
Administration.

The Office of Advocacy's top legislative priority is to give
small businesses a legitimate voice in the regulatory process.

Advocacy's research shows that small businesses pay an average of
$6,975 per employee annually to comply with federal
regulations-60% more than large businesses.  Yet, small
businesses generate 60-80% of all net new jobs, represent 99.7%
of employers, employ half of all private sector employees, and
innovate at a rate 13 times greater than large firms.

For twenty-five years, the Regulatory Flexibility Act (RFA) has
required that agencies consider less burdensome approaches to
regulation in order to level the playing field for small
business.  The RFA was amended in 1996 by the Small Business
Regulatory Enforcement Fairness Act (SBREFA).  Among other
things, the 1996 amendments made agency small business impact
analysis subject to judicial review and required two agencies
[Occupational Safety and Health Administration (OSHA) and
Environmental Protection Agency (EPA)] to seek direct input from
small entities prior to issuing regulatory proposals.

Government has saved small entities billions of dollars by
following the RFA's direction and minimizing the impact of
regulatory mandates on small business.  History has shown that
regulatory sensitivity towards small entities can be achieved
without sacrificing the underlying purpose of environmental
protection, workplace safety, border security, and other
governmental priorities.

The 109th Congress has the opportunity to amend the RFA and
SBREFA to improve the regulatory climate for small business. The
following four amendments fill in loopholes that currently reduce
the effectiveness of both statutes.

I. Review of Existing Rules - The Crain and Hopkins study on
regulatory costs showed a cost to Americans of $843 billion.
$497 billion of that regulatory burden falls on the business
community.  Since new regulations are promulgated each year, the
cumulative impact can be staggering.  It is necessary to evaluate
existing regulations periodically to minimize this impact.

     Amendment:     Modify section 610 of the Regulatory
     Flexibility Act, 5 U.S.C.  601-612 (RFA), that requires
     federal agencies to review 10-year-old regulations to assess
     their present-day impact.  Section 610 should be broadened
     so that agencies review all rules periodically and not just
     those viewed as significant when initially promulgated.
     This change would encourage agencies to update their rules
     every ten years to ensure that regulatory protections
     reflect current conditions.
     
     
                    
II. Proper Consideration of Small Entities in Agency Rulemaking -
The President prioritized the need for government agencies to
consider their impact on small entities under the RFA when he
signed Executive Order 13272.  Section 3 of the Executive Order
requires agencies to notify the Office of Advocacy of draft rules
that will have a significant economic impact on a substantial
number of small entities.  It also requires agencies to give
appropriate consideration to Advocacy's comments and address the
comments in final rules.

     Amendment:     Codify section 3 of the Executive Order to
     ensure that the President's attention to the impact of
     regulation on small entities becomes a permanent part of how
     government operates.  This amendment will also ensure that
     independent agencies comply with the RFA.

III. Help States Consider Alternatives to Costly Regulation - The
federal government sometimes issues regulations that must be
implemented by the states.  When this happens, federal agencies
are not required to do the detailed analysis of impacts and
alternatives required under the RFA.  Instead, states with RFA-
type laws on the books, and with fewer resources than federal
agencies, must do the analysis themselves, resulting in what
amounts to an unfunded mandate.  Under current law, agencies are
only required to analyze direct impacts, even though there may be
foreseeable and costly indirect impacts when states enforce
federal regulations.

     Amendment:     Amend the RFA to ensure that agencies analyze
     the impact of their rules on small entities and provide
     states with regulatory alternatives that will enable states
     to meet federal requirements while minimizing the impact on
     small entities.

IV. Help Small Business Comply with Regulations - Sometimes small
business non-compliance with federal regulations is simply due to
the fact that they do not understand the regulations.  The intent
behind section 212 of SBREFA was to ensure that small businesses
had a way to understand often complex and technical federal
regulations.  Section 212 of SBREFA requires federal agencies to
publish a small business compliance guide for each final rule
that has a significant economic impact on a substantial number of
small entities.  However, small business continues to be
frustrated with rules that are not published with adequate
compliance information.

     Amendment:     Amend SBREFA to require that agencies publish
     plain language small business compliance guides whenever a
     final rule requires a final regulatory flexibility analysis
     (FRFA).  Agencies would also be required to report annually
     on their efforts to comply with this section.