From the December 1997 issue of Entrepreneur

Nearly two years after the passage of the Small Business Regulatory Enforcement Fairness Act (SBREFA), small-business groups are restless. The law was supposed to open a new era of federal friendliness toward entrepreneurs. And while it's premature to call the law a bust, SBREFA's shortcomings are becoming readily apparent.

At various hearings last year, small-business groups revealed their complaints. "I see the same amount of effort made on [small-business regulatory enforcement] following the law's passage that we saw before: very little effort indeed," says Todd McCracken, president of National Small Business United (NSBU), a bipartisan small-business advocacy organization. McCracken spoke before the House Small Business Committee in July.


Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

Above The Law

The SBREFA contained several provisions, such as the Congressional Review Act (CRA). The act was supposed to make it easier for Congress to void any new federal regulations considered overly burdensome by allowing the Senate to pass a resolution of disapproval with a majority vote of 51; there can be no filibuster. The House would also need a majority vote to pass a similar resolution.

However, few, if any, CRA resolutions of disapproval have been introduced in Congress since the SBREFA's passage. And that's not for lack of opportunity--nearly 5,000 new regulations have been passed since 1995.

McCracken believes Congress has not objected to regulations because they aren't aware of how these regulations are affecting small business. Rep. Sue Kelly (R-NY) has introduced the Congressional Office of Regulatory Analysis (CORA) Creation Act (H.R. 1704). CORA would do regulatory analysis for Congress, enabling them to challenge federal agency rationale and decision-making.

CORA is in the Capitol Hill deep freeze, however. It has been referred to two House committees. There are no Democratic co-sponsors in the House and no companion Senate bill.

Board Games

Another section of the SBREFA created regional fairness boards and a national ombudsman. The boards are supposed to receive complaints about federal agency heavy-handedness and refer those complaints to the ombudsman. The ombudsman, Peter W. Barca, will issue his first annual report early next year.

Barca's report will be based on input from the fairness boards, which have been slow to get off the ground. Scott George, general manager of Mid America Dental, Hearing, & Vision Center in Mt. Vernon, Missouri, serves on the board in his region. His board's members were approved in September 1996, but the White House took 11 months to approve the one-page form the board sent to Washington as a condition for starting its work. "Getting this process off the ground has been frustratingly slow," says George.

George thinks some federal agencies, such as the Occupational Safety and Health Administration (OSHA), have tried more than others to take SBREFA's aim to heart. In fact, OSHA, as part of Vice President Gore's Reinventing Government initiative, has tried to reorient its state inspection programs toward "cooperative compliance." Yet even OSHA has come under fire from small-business groups that don't approve of its program.

Congress did use a SBREFA provision to force the IRS to delay a rule increasing the tax on many limited partnerships (See "Tax Talk," September). But that postponement is a lonely victory on the SBREFA ledger.

Contact Sources

Mid America Dental, Hearing & Vision Center, 1050 W. Hayward Dr., Mt. Vernon, MO 65712, (417) 466-7196

Rep. Sue Kelly, (202) 225-5441, dan.boston@mail.house.gov

Small Business Administration, National Ombudsman, 500 W. Madison St., #1240, Chicago, IL 60661, (312) 353-0880