Time for r3: regulatory review and reform

Piling law upon law, and regulation upon regulation, the federal government is slowly (but surely) crushing the country with the burden of compliance. Today, at a price tag of over $1 trillion annually, federal regulations now cost more per household than healthcare.     Small business owners bear the brunt of the business regulations. The smallest pay $7,647 per employee to comply with federal regulations every year. That is 45 percent more per employee than their largest competitors do.
Now, there is a way to try to lighten that load.
The Regulatory Review and Reform (r3) initiative developed by the Office of Advocacy of the U.S. Small Business Administration encourages federal agencies to reduce the burden of existing regulations by reviewing existing rules for their impact on small business.
A recent Government Accountability Office (GAO) report documented the need for more public participation and openness in federal agencies’ review of existing regulations. The report spotlighted agencies’ compliance with section 610 of the Regulatory Flexibility Act (RFA), which mandates that agencies periodically examine their existing regulations and consider ways to minimize the burden on small business while still meeting the important regulatory goals.
Since the RFA became law in 1980, federal agencies have focused the provisions that required analysis of the impact of proposed regulations on small business.
By following the RFA when issuing new regulations, federal agencies saved small businesses over $7.2 billion in foregone regulatory compliance costs in fiscal year 2006. That is only the first year difference between the compliance costs of the proposed regulations, and the compliance costs after choosing an alternative approach minimizing the small business burden.
After listening to the voice of small business, regulators were able to avoid one-size-fits-all approaches that disproportionately burden America’s entrepreneurs.
For example, the Environmental Protection Agency (EPA) finalized a rule designed to protect fish and other aquatic life when caught in cooling water intakes from rivers and lakes by power plants and manufacturers. After considering the concerns of small business, EPA analysis recognized that the smaller facilities were not contributing significantly to the problem.
As a result, EPA modified the final rule to exempt the smaller facilities, saving them over $74 million in fiscal year 2006 alone.
Using a similar process, retrospective analysis such as section 610 reviews can work to lessen the cumulative regulatory burden imposed by rules issued years ago. However, the GAO report found that agency implementation of section 610 reviews and attention to the burden of existing regulations often suffers from a lack of clear standards, insufficient public participation, and inadequate communication of the results to stakeholders.
The Office of Advocacy’s r3 initiative addresses these issues by offering agencies training in the implementation of section 610 of the RFA, soliciting recommendations from the small business community on rules to review, and providing public updates on the status of agency reviews.
We encourage small business owners to nominate federal regulations needing review and reform through the r3 web site at www.sba.gov/advo/r3. By making their voice heard in this process, small business owners can begin to do something about the disproportionate regulatory costs imposed on them.
At over $1.1 trillion per year, the cumulative burden of complying with federal regulations has reached a critical point. The Office of Advocacy is committed to doing something about it. With your help and r3 nominations, we will.
 Steve Adams is the New England Regional Advocate for the Office of Advocacy of the U.S. Small Business Administration. He is the direct link between small business owners, state and local government agencies, state legislators, small business associations, and SBA’s Office of Advocacy. Contact Steve Adams at (617) 565-8418 or stephen.adams@sba.gov.