SBA wish list seeks rules reform

For many small-business owners, it can seem as though federal bureaucrats do little more than churn out reams of mind-numbing regulations that make running a business more difficult and more expensive.

Even though the feds are required to ascertain the burden a proposed rule might pose to small firms and to consider alternatives, that doesn’t always happen. Existing regulations can be even harder to reform. Overall, the cost to businesses to follow federal rules already on the books has grown to $1.1 trillion, according to the Office of Advocacy at the Small Business Administration.

Businesses with fewer than 20 employees often are hit hardest. Small companies spend 45% more to comply with federal regulations than their larger counterparts, said Thomas M. Sullivan, the office’s chief counsel.

His job is to get policymakers to pay attention to the sometimes technical regulatory issues that cost small businesses time and money but don’t add to public health or safety. Those costs can “severely hamper our country’s competitiveness,” Sullivan said, by slowing down the growth of small businesses, which are considered by many to be the engines of the U.S. economy.

“We do not do a very good job of looking backward at the existing cumulative regulatory burden and saying there are ways to reform existing rules and regulations that will ease the burden on small firms,” said Sullivan, who heads the office created in 1976 to give small business a voice in the federal rule-making process.

To help change that, he announced last week the office’s first top 10 list of existing rules it will target for review and reform.

They include broad-based measures -- revise Internal Revenue Service rules to allow a standard home-office deduction option -- as well as industry-specific measures such as the one that architecture and engineering firms say requires them to pay double deposits to insure the work they do for the federal government.

Small-business groups, individuals and think tanks nominated their wish lists for rule reform. To see the list, go to www.sba.gov/advo/r3/r3_nominations08.

With six nominations each, the Mercatus Center at George Mason University and the national steering committee of the Small Business Environmental Assistance Program/Small Business Ombudsman had the longest lists.

The office picked 82 nominations to consider for its final list.

One proposed by the Small Business Environmental Assistance Program was among several Environmental Protection Agency rules suggested for reform. The agency will be asked to overhaul an outdated rule that requires dry cleaners to use clean-air testing methods that don’t reflect the way most modern machines work.

The top 10 list is also included in the 2007 annual report the office released last week that tracks how well federal agencies followed the Regulatory Flexibility Act.

Just getting the target agencies to say they will review the rules will be considered the first measure of success in what could be a three- to five-year process before rules are changed, Sullivan said.

He plans to post progress reports every six months on the advocacy’s website, www.sba.gov/advo. “We can get things reformed a lot quicker this way,” said Mike Hull, the SBA advocate for Region 9, which includes California.

California does not yet have a formal, governmentwide nomination program for rules ripe for reform, state small-business advocate Marty Keller said. Even though individual state agencies have methods for small business input, part of his role is to encourage and guide small-business feedback on regulations.

California this year will do a formal study of the cost of state regulations on small businesses, the first state to do so. As with the federal model, the idea is to give lawmakers concrete information about the total cost of regulations on small businesses.

Sullivan’s office also has drafted model regulatory flexibility legislation that it is encouraging states to adopt. California has some legislation that addresses the issue but not a comprehensive plan.In many cases, California’s laws are more stringent than federal rules.

The federal dry cleaning rule targeted for reform, for instance, is not a big worry to most California dry cleaners, said Dave Suber, owner of Perfect Cleaners in West Los Angeles and a board member of the California Cleaners Assn., a trade group.

His members are focused instead on the state’s ban by 2023 on machines that use the perchloroethylene solvent that the EPA rules are meant to measure. The South Coast Air Quality Management District requires the machines to be phased out by 2020. The agency also has limited the amount of solvent, which has contaminated drinking water in some areas, that a dry cleaner can use.

“I’m not a perc user but I think it’s creating a black market for perc,” Suber said. Machines that don’t use the solvent are typically much more expensive, he said.Public comment still being takenThe SBA has extended the deadline for public comment on the long-awaited rule it issued Dec. 27 outlining how it will implement a 2000 federal law that mandates a better shot at government contracts for small businesses owned by women.

The rule, which took a narrow interpretation of the need for a set-aside program, sparked an uproar among women’s business groups and others. They took issue with the SBA’s claim that women were underrepresented in just four industry categories.

The agency will accept public comment until March 31, a month later than the original deadline. To weigh in online, go to www.regulations.gov.

cyndia.zwahlen@latimes.com