In 1979, the cost of federal regulations was estimated at $100 billion, a fivefold increase over the 1970 total. By 2004, that cost had ballooned to an estimated $1.1 trillion. This is more than 9 percent of U.S. gross domestic product and adds up to $10,172 per household. It is more than the average annual household expenditure on healthcare in 2004 (which was just under $9,000).
Small businesses bear more than their share of this burden. Small firms pay 45 percent more per employee than large businesses do to comply with federal regulations. The Office of Advocacy is the small business representative in agency regulatory implementation decisions, and the office continues to seek new ways to even out the small business burden. In recent years, the office has made significant progress in working with agencies to improve draft rule proposals as a result of President Bush’s Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking.”
How else can Advocacy be effective? By focusing on rules that are on the books and are ripe for reform.
When the Regulatory Flexibility Act (RFA) was passed in 1980, it required agencies to go back and look at existing regulations to see if they were having an undue impact on small business because they were old, outmoded, or obsolete. This look-back provision is found in Section 610 of the RFA.
In the months ahead, the Office of Advocacy will launch the new Regulatory Review and Reform Initiative, or R3. Advocacy will work with small entities to identify rules that should be updated to eliminate unnecessary burdens on small business or to make compliance easier.
This summer, Advocacy will issue a how-to guide on complying with Section 610 of the RFA. In the fall, a call for nominations of federal rules in need of reform will go to stakeholders. Advocacy will consider all responses, consult with small businesses and their representatives, and work with agencies to review rules.
This winter, Advocacy will launch a webpage giving twice-yearly status reports on agencies’ review and reform efforts. A summation of reform progress will appear as part of Advocacy’s annual report on RFA compliance, which is due in winter 2008. Another key part of the R3 project will be to help agencies improve their compliance with Section 610. Advocacy is committed to a rigorous training schedule for agencies and departments.
As the entire Office of Advocacy gears up for this new push, we will be in touch with our many small business partners. In addition, the Office of Management and Budget has committed to work cooperatively with Advocacy to make R3 a success. Look for much more news on this exciting direction in the months to come.
