Small Business Groups Fight Regulatory Burdens

Business steps up fight against ‘regulatory tsunami’

The Business Journals – by Kent Hoover
Date: Tuesday, November 23, 2010, 10:51am EST

More than 40 major new rules were issued by the Obama administration during fiscal 2010, costing the economy at least $26.5 billion, according to government estimates.

The actual cost is much higher, according to the Heritage Foundation, since agencies didn’t quantify the cost of many of their rules.

Complying with these rules poses a disproportionate burden on small businesses. A new study by the Small Business Administration’s Office of Advocacy found that businesses with fewer than 20 employees pay an average of $10,585 per employee to comply with federal regulations. That cost is only $7,454 for larger employers, the study found.

To fight this growing regulatory burden, business groups want help from Congress, the courts, and the SBA’s Office of Advocacy, which represents small businesses in the federal rulemaking process.

“The biggest single threat to job creation facing us today is a regulatory tsunami of unprecedented force,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

Many regulations are essential, Donohue said, but “now there are thousands of new and questionable regulatory rulemakings in the pipeline.”

As examples, he cited 29 major rules proposed by the Environmental Protection Agency, and 100 regulations and policy changes in the works at the Department of Labor and the National Labor Relations Board, which will affect everything from compensation to union organizing. Businesses face hundreds of more new rules as a result of health care reform and financial regulatory reform.

“We have never seen anything on this scale before,” he said.

The chamber will add “significant resources” to fight this growing regulatory burden, he said. It will hire a regulatory economist, file more lawsuits challenging regulations and start a new organization that “will continually tell the story to the American people about the massive costs of excessive regulations — a tax, if you will, on jobs and on their personal and economic freedom.”

Regulations have supporters

Many Americans, however, are ready to fight any attempts to roll back regulation. OMB Watch, a public-interest group in Washington, D.C., criticized the chamber’s attack on regulation as irresponsible.

“The chamber is once again putting special interests ahead of the public interest,” said OMB Watch Executive Director Gary Bass. “Attacking regulation won’t help the ailing economy, and it isn’t what Americans want.

“Most businesses operate responsibly, but we can’t afford to live in a country where the unscrupulous ones are allowed to put the rest of us at risk,” he said.

Most regulations imposed on businesses were created to address unsafe or unfair practices. Each rule has its own constituency that will defend the need for regulation.

The Senate Small Business and Entrepreneurship Committee found this out at a Nov. 18 hearing on regulatory burdens. The hearing notice mentioned that the Americans with Disabilities Act would be one of the topics addressed. When it came time for the hearing, the room was packed with people in wheelchairs.

Sen. Mary Landrieu, D-La., who chairs the committee, made it clear at the outset that the hearing “was not about attacking the American with Disabilities Act.” The ADA was off-limits for the rest of the hearing.

‘Prove us wrong,’ watchdog told

Instead, the hearing focused on the SBA’s Office of Advocacy and a provision in health care reform that requires businesses to file 1099 forms with the Internal Revenue Service any time they spend more than $600 a year with any other business.

“It is my top priority to ensure that small businesses are not unfairly burdened by regulations,” said Winslow Sargeant, Office of Advocacy’s chief counsel.

Sargeant has been at his post for only three months. During that time, his office has held nine roundtables with small businesses on issues ranging from the 1099 reporting requirement to labor issues. Sargeant endorsed repeal of health care reform’s 1099 provision. The office also has sent 13 letters to federal agencies commenting on proposed regulations.

Sen. Olympia Snowe of Maine, the committee’s ranking Republican, opposed Sargeant’s appointment because she and some business groups weren’t convinced he would be aggressive enough in opposing the Obama administration’s “regulatory rampage.” “I sincerely hope you prove us wrong,” she told Sargeant.

You need to more than a watchdog for small businesses, Snowe said, you need to “be a bulldog.”

“This isn’t a suggestion — it’s a fundamental obligation.”

After the hearing, one advocate for regulatory relief wasn’t convinced Sargeant will be effective in this role.

“This administration doesn’t care about the work that Winslow does,” said Andrew Langer, president of the Institute for Liberty and former regulatory affairs director for the National Federation of Independent Business.

Cost of federal regulations
Annual cost per employee for firms with:
Fewer than 20 employees: $10,585
20-499 employees: $7,454
500 or more employees: $7,755
Source: Small Business Administration Office of Advocacy

http://www.bizjournals.com/extraedge/washingtonbureau/archive/2010/11/29/bureau1.html