The SBA’s Top Ten for Regulatory Review and Reform

In case you have been wondering about it, it’s true: the smallest of American businesses bear the brunt of business regulation. According to the Small Business Administration (SBA), American small businesses pay about 45% more per employee to comply with regulations than big businesses do. In its capacity as the “watchdog of American small business,” the SBA began a process last year to lighten this burden by streamlining and updating outdated and ineffective regulation. 

So, last year, the SBA encouraged small businesses to nominate regulations that needed to be changed or eliminated. In the end, this group nominated over 80 rules for review and reform. Six months ago, back in February, SBA’s Office of Advocacy announced the 2008 Top 10 Rules for Review and Reform. These were then sent to the appropriate agencies for action. 

The SBA has released its six-month status update of this process, which is called the r3 Regulatory Review and Reform Initiative. Here are where things stand (broken up by agency): 

Environmental Protection Agency

Update Air Monitoring Rules for Dry Cleaners to Reflect Current Technology
EPA should revise outdated or inaccurate testing requirements so that modern dry cleaners can have a valid method for demonstrating compliance. 

The EPA is currently revising the New Source Performance Standard (NSPS) for petroleum dry cleaning equipment. 

Flexibility for Community Drinking Water Systems
EPA should consider expanding the ways for small communities to qualify to meet alternative drinking water standards, provided that the alternative standards are protective of human health and are approved by state authorities. 

On March 2, 2006, EPA announced a review of the affordability criteria for small systems (71 Federal Register 10671). EPA has not announced when its review will be completed. 

Simplify the Rules for Recycling Solid Waste
EPA should simplify the rules for recycling useful materials that, because of their current classification, must be handled, transported, and disposed of as hazardous wastes. 

On October 28, 2003, EPA issued a proposal to revise the definition of solid waste. The agency issued a supplemental proposal on March 26, 2007. The draft final rule is under review at the Office of Information and Regulatory Affairs (OIRA). 

EPA Should Clearly Define “Oil” in its Oil Spill Rules
EPA should clarify the definition of “oil” in its oil spill program, so that small facilities that store nonpetroleum-based products are not unintentionally captured by spill prevention program requirements. 

On May 30, 2008 EPA and representatives of the U.S. Coast Guard met with small business stakeholders. EPA has not formally announced its intention to review its definition of oil in its oil spill program. 

Department of Transportation/Federal Aviation Administration
Update Flight Rules for the Washington, DC, Metropolitan Area
FAA and other agencies should review the flight restriction rule for the region surrounding Washington, DC, to determine whether the rule could be revised to avoid harming small airports within the region. 

On March 19, 2008 the FAA notified Advocacy by letter that it expects to finalize the flight restriction rules by January 2009. FAA indicated in the letter that the agency would work with Advocacy to ensure a transparent review of the rules’ impact on small entities. 

Federal Acquisition Regulation Council

Eliminate Duplicative Financial Requirements for Architect-Engineering Services Firms in Government Contracting
The duplicative retainage requirement should be removed or reduced in architect-engineering services contracts, as has been done for other services.  

The Office of Federal Procurement Policy (OFPP) submitted Advocacy's r3 retainage proposal to the FAR Council. The FAR case number assigned to this issue is 2008-015. The FAR case is being reviewed by the FAR finance team, which anticipates completing a committee report by September 30, 2008. The report will indicate the Council’s next steps regarding the proposed FAR change. Information describing the FAR process

Department of the Treasury/Internal Revenue Service

Simplify the Home Office Business Deduction
The IRS should revise their rules to permit a standard deduction for home-based businesses, which constitute 53 percent of all small businesses. 

On March 14, 2008, the IRS informed Advocacy that this issue has been assigned to IRS attorneys for review. On July 30, 2008, the Deputy Commissioner of the IRS’ Small Business/Self-Employed Division testified on this issue before the House Small Business Subcommittee on Regulations, Healthcare, and Trade. The IRS is continuing to review this issue, including exploring opportunities to simplify the rules and make Form 8829, Expenses for Business Use of Your Home, easier to use. 

U.S. Department of Labor/Mine Safety and Health Administration

Update MSHA Rules on the Use of Explosives in Mines to Reflect Modern Industry Standards
MSHA should update its current rules to be consistent with modern mining industry explosives standards. 

MSHA has not formally announced its intention to update explosives standards. The group that nominated this issue testified before the House Small Business Subcommittee on Regulations, Healthcare and Trade on July 30, 2008. 

U.S. Department of Labor/Occupational Safety and Health Administration

Update OSHA’s Medical / Laboratory Worker Rule
The current rule should be reviewed to determine whether it can be made more flexible in situations where workers do not have potential exposure to bloodborne pathogens. 

OSHA has not formally announced its intention to review rules governing exposure to bloodborne pathogens. 

Office of Management and Budget/Office of Federal Procurement Policy

Update Reverse Auction Techniques for Online Procurement of Commercial Items
The current reverse auction techniques should be reviewed to determine whether a government-wide rule is necessary to create a more consistent and predictable online process. 

On October 4, 2006 the Office of Federal Procurement Policy (OFPP) announced to the acquisition community that this action item is under review to determine the appropriate course of action for this acquisition tool.

OFPP has also completed surveys of vendors and users. The surveys were targeted for government buyers who have never done a procurement using a reverse auction, and government buyers with significant experience using reverse auctions. The outcome of this review should be a FAR reverse auction regulation establishing conditions of applicability. This regulatory framework will be supplemented by a detailed "best practice" guide for the acquisition community. 

The Bottom Line

Some regulation is necessary to ensure safety and security, but all too often that regulation causes more trouble than it solves. We applaud the SBA for taking this initiative and look forward to a better small business climate because of it. We will continue following this story closely and we’ll keep you up-to-date on its progress. 

Happy Labor Day!