Small Business and the SBA Office of Small Business and the SBA Office of Advocacy – An OverviewAdvocacy – An Overview

Bruce LundegrenBruce LundegrenAssistant Chief CounselAssistant Chief Counsel

Office of AdvocacyOffice of AdvocacyU.S. Small Business AdministrationU.S. Small Business Administration

(202) 205-6144(202) 205-6144bruce.lundegren@sba.govbruce.lundegren@sba.gov

Overview of PresentationOverview of Presentation

The SBA Office of Advocacy – The Federal Watchdog for The SBA Office of Advocacy – The Federal Watchdog for Small BusinessSmall BusinessThe Impact of Small Business on the EconomyThe Impact of Small Business on the EconomyOverview of the Regulatory Process (Administrative Overview of the Regulatory Process (Administrative Procedure Act and Executive Order 12866)Procedure Act and Executive Order 12866)The Regulatory Flexibility ActThe Regulatory Flexibility ActThe Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996(SBREFA) of 1996Executive Order 13272Executive Order 13272OSHA’s Regulatory Agenda – What’s on the Horizon?OSHA’s Regulatory Agenda – What’s on the Horizon?

SBA Office of Advocacy – The Federal SBA Office of Advocacy – The Federal Watchdog for Small BusinessWatchdog for Small Business

Created in 1976 as an independent voice for small Created in 1976 as an independent voice for small businessbusinessHeaded by the Chief Counsel for AdvocacyHeaded by the Chief Counsel for AdvocacyOversee agency compliance with the Regulatory Oversee agency compliance with the Regulatory Flexibility Act (1980) Flexibility Act (1980) – requires federal agencies to assess the impact of their requires federal agencies to assess the impact of their

regulations on small business and consider less regulations on small business and consider less burdensome alternatives burdensome alternatives

Added small business consideration to the Added small business consideration to the rulemaking processrulemaking processAgencies prepare IRFA and FRFA (or certify)Agencies prepare IRFA and FRFA (or certify)

The Impact of Small Business on the The Impact of Small Business on the EconomyEconomy

Small businesses are the key to the nation’s Small businesses are the key to the nation’s well beingwell being

Firm with fewer than 500 employeesFirm with fewer than 500 employees– Represent 99.7 percent of all employer firmsRepresent 99.7 percent of all employer firms– Employ about half of all private sector employeesEmploy about half of all private sector employees– Pay 43 percent of total U.S. private payrollPay 43 percent of total U.S. private payroll– Have generated 65 percent of all net new jobs over Have generated 65 percent of all net new jobs over

the past 17 yearsthe past 17 years

The Impact of Small Business on The Impact of Small Business on the Economythe Economy

In 2008, there were 27.3 million total small In 2008, there were 27.3 million total small businessesbusinesses– Of these, 6 million were employersOf these, 6 million were employers– Accounted for 49.6 percent of U.S. private sector Accounted for 49.6 percent of U.S. private sector

jobsjobs

In 2009, real GDP growth in U.S. increased by 0.7 In 2009, real GDP growth in U.S. increased by 0.7 percent, while private sector employment decreased percent, while private sector employment decreased by 5.5 percentby 5.5 percent

The Impact of Small Business on The Impact of Small Business on the Economythe Economy

Business ownership is becoming more Business ownership is becoming more inclusive in the U.Sinclusive in the U.S– Minority-owned businesses numbered 5.8 million Minority-owned businesses numbered 5.8 million

in 2007, and increase of 45.6 percent over 2002in 2007, and increase of 45.6 percent over 2002– Woman-owned businesses totaled 7.8 million in Woman-owned businesses totaled 7.8 million in

2007, a 20.1 percent increase since 20022007, a 20.1 percent increase since 2002– Businesses showed signs of stability and Businesses showed signs of stability and

improvement over 2009improvement over 2009

The Cost of Regulation & the Burden on The Cost of Regulation & the Burden on Small BusinessSmall Business

Study by Nicole and Mark Crain shows annual cost Study by Nicole and Mark Crain shows annual cost of regulations $1.75 trillion (2008) of regulations $1.75 trillion (2008) Disproportionate impact on small businessDisproportionate impact on small business– Per Employee = $10,585 < 20 employees v. $7,755 Per Employee = $10,585 < 20 employees v. $7,755

= 500 + employees (36 percent more)= 500 + employees (36 percent more)Economic = $4,120 < 20 v. $5,835 + 500Economic = $4,120 < 20 v. $5,835 + 500Environment = $4,101 < 20 v. $883 + 500Environment = $4,101 < 20 v. $883 + 500Tax = $800 < 20 v. $517 + 500Tax = $800 < 20 v. $517 + 500OSHA & Homeland Security = $610 < 20 v. $520 + 500OSHA & Homeland Security = $610 < 20 v. $520 + 500

An Overview of the Regulatory An Overview of the Regulatory ProcessProcess

The Basic Framework: The Administrative The Basic Framework: The Administrative Procedure ActProcedure Act– Requires federal agencies to publish proposed rules for Requires federal agencies to publish proposed rules for

public comment (“notice and comment” rulemaking)public comment (“notice and comment” rulemaking)

– Great deference is given to federal agency decisionsGreat deference is given to federal agency decisions

– Courts overturn only if “arbitrary and capricious”Courts overturn only if “arbitrary and capricious”

– Has been changed by Executive Order and RFA Has been changed by Executive Order and RFA requirementsrequirements

– OSHA rules must address significant risk and be OSHA rules must address significant risk and be technologically and economically feasibletechnologically and economically feasible

White House Review of Regulations: White House Review of Regulations: OIRA and Executive Order 12866OIRA and Executive Order 12866

White House (centralized) review of agency rules began in the White House (centralized) review of agency rules began in the Nixon administration and have become increasingly Nixon administration and have become increasingly sophisticatedsophisticated

President Reagan first required formal cost-benefit analysis in President Reagan first required formal cost-benefit analysis in 19811981

Current manifestation is Executive Order 12866, signed by Current manifestation is Executive Order 12866, signed by President Clinton in 1993 (remains in effect)President Clinton in 1993 (remains in effect)

Applies to significant regulatory actions (> $100 million)Applies to significant regulatory actions (> $100 million)

Requires agencies to prepare a “regulatory impact analysis”Requires agencies to prepare a “regulatory impact analysis”– assess aggregate costs and benefits, consider feasible alternatives, assess aggregate costs and benefits, consider feasible alternatives,

avoid duplication, choose the most cost-effective alternative avoid duplication, choose the most cost-effective alternative

White House Review of Regulations: White House Review of Regulations: (Continued)(Continued)

Centralized review conducted by OMB’s Office of Centralized review conducted by OMB’s Office of Information and Regulatory Affairs (OIRA)Information and Regulatory Affairs (OIRA)OIRA Administrator is Cass SunsteinOIRA Administrator is Cass SunsteinMeets with interested stakeholdersMeets with interested stakeholders

President Obama issued Executive Order 13563 President Obama issued Executive Order 13563 (supplements and reaffirms EO 12866; retrospective (supplements and reaffirms EO 12866; retrospective review of regulations)review of regulations)OIRA also established government-wide standards OIRA also established government-wide standards for Information Quality, Peer Review, Risk for Information Quality, Peer Review, Risk Assessment, and the use of Guidance DocumentsAssessment, and the use of Guidance Documents

Regulatory Flexibility Act of 1980Regulatory Flexibility Act of 1980

Applies to rules that must undergo notice and Applies to rules that must undergo notice and comment rulemaking under the APA or any other comment rulemaking under the APA or any other statutestatute

Agencies must determine whether the rule, if Agencies must determine whether the rule, if promulgated, would have a “significant economic promulgated, would have a “significant economic impact” on a “substantial number of small entities”impact” on a “substantial number of small entities”

Small entities include small businesses, small non-Small entities include small businesses, small non-profits, and small governmental jurisdictionsprofits, and small governmental jurisdictions

Regulatory Flexibility Act Regulatory Flexibility Act (Continued)(Continued)

Threshold Question: Will the rule, if promulgated, Threshold Question: Will the rule, if promulgated, would have a “significant economic impact” on a would have a “significant economic impact” on a “substantial number of small entities”?“substantial number of small entities”?

If no, agency head may so “certify” and no further If no, agency head may so “certify” and no further analysis is requiredanalysis is required

If yes, agency must prepare and publish for comment If yes, agency must prepare and publish for comment an Initial Regulatory Flexibility Analysis (IRFA)an Initial Regulatory Flexibility Analysis (IRFA)

Initial Regulatory Flexibility Initial Regulatory Flexibility Analysis (IRFA)Analysis (IRFA)

Reason action is being takenReason action is being taken

Objectives of the proposed ruleObjectives of the proposed rule

Description and estimate of the number of small Description and estimate of the number of small entities impactedentities impacted

Estimated compliance requirementsEstimated compliance requirements

Duplicative, overlapping, or conflicting rulesDuplicative, overlapping, or conflicting rules

““Significant” alternatives considered (e.g., different Significant” alternatives considered (e.g., different compliance or reporting requirements, simplification, compliance or reporting requirements, simplification, performance standards, exemption, etc.)performance standards, exemption, etc.)

Final Regulatory Flexibility Final Regulatory Flexibility Analysis (IRFA)Analysis (IRFA)

Need for and objectives of the ruleNeed for and objectives of the rule

Description and estimate of the number of small Description and estimate of the number of small entities impactedentities impacted

Issues raised by public commentIssues raised by public comment

Assessment of those issues and changes made to Assessment of those issues and changes made to proposed rule as a resultproposed rule as a result

Steps the agency has taken to minimize impacts on Steps the agency has taken to minimize impacts on small entities (consistent with objectives) or why small entities (consistent with objectives) or why alternatives were not selectedalternatives were not selected

RFA (Some Other Issues)RFA (Some Other Issues)

Use SBA Small Business Size StandardUse SBA Small Business Size Standard

Direct v. Indirect ImpactsDirect v. Indirect Impacts

RFA is procedural, not substantiveRFA is procedural, not substantive

Final action subject to judicial reviewFinal action subject to judicial review

Advocacy can file “amicus curie” briefsAdvocacy can file “amicus curie” briefs

Small Business Regulatory Small Business Regulatory Enforcement Fairness Act of 1996 Enforcement Fairness Act of 1996

(SBREFA)(SBREFA)

OSHA, EPA (and now the CFPB within the Federal OSHA, EPA (and now the CFPB within the Federal Reserve) must convene Small Business Advocacy Reserve) must convene Small Business Advocacy Review (SBAR) Panels before proposing certain rulesReview (SBAR) Panels before proposing certain rules

Agencies must issue compliance guides for small Agencies must issue compliance guides for small businessbusiness

Allows for judicial review of agency complianceAllows for judicial review of agency compliance

Executive Order 13272Executive Order 13272

Strengthened the RFA by Strengthened the RFA by – requiring agencies to issue RFA compliance requiring agencies to issue RFA compliance

policiespolicies– notify Advocacy of upcoming rulesnotify Advocacy of upcoming rules– address Advocacy’s comments with specificity;address Advocacy’s comments with specificity;

Requires Advocacy to Requires Advocacy to – Issue RFA compliance guideIssue RFA compliance guide– train agencies on RFA compliancetrain agencies on RFA compliance– Report to Congress and OMBReport to Congress and OMB

SBA Office of AdvocacySBA Office of Advocacy

Cost savings from 2002 - 2008 = over $50 billionCost savings from 2002 - 2008 = over $50 billion

Legislative PrioritiesLegislative Priorities– Review existing regulations - §610 - allow public Review existing regulations - §610 - allow public

petitionspetitions– Improve SBREFA process - 120 daysImprove SBREFA process - 120 days– Consider indirect impacts - reasonably foreseeable Consider indirect impacts - reasonably foreseeable

effectseffects

OSHA’s Regulatory Agenda – OSHA’s Regulatory Agenda – What’s on the Horizon?What’s on the Horizon?

Injury and Illness Prevention Program (I2P2)*Injury and Illness Prevention Program (I2P2)*

Review/Look-back of OSHA Chemical StandardsReview/Look-back of OSHA Chemical Standards

Occupational Exposure to Crystalline SilicaOccupational Exposure to Crystalline Silica

Improve Tracking of Workplace Injuries and IllnessesImprove Tracking of Workplace Injuries and Illnesses

Cooperative AgreementsCooperative Agreements

Hazard Communication (GHS)Hazard Communication (GHS)

Combustible Dust**Combustible Dust**

Injury and Illness Recording and Reporting Requirements - Injury and Illness Recording and Reporting Requirements - Musculoskeletal Disorders (MSD) Column**Musculoskeletal Disorders (MSD) Column**

MSHA’s Regulatory Agenda – MSHA’s Regulatory Agenda – What’s on the Horizon?What’s on the Horizon?

Respirable Crystalline SilicaRespirable Crystalline Silica

Notification of Legal IdentityNotification of Legal Identity

Proximity Detection Systems for Mobile Machines in Proximity Detection Systems for Mobile Machines in Underground MinesUnderground Mines

Proximity Detection Systems for Continuous Mining Proximity Detection Systems for Continuous Mining Machines in Underground MinesMachines in Underground Mines

Patterns of ViolationsPatterns of Violations

Thank you!Thank you!

Questions/Comments/Discussion?Questions/Comments/Discussion?

Contact Info:Contact Info:Bruce LundegrenBruce Lundegren

Assistant Chief CounselAssistant Chief CounselOffice of AdvocacyOffice of Advocacy

U.S. Small Business AdministrationU.S. Small Business Administration(202) 205-6144(202) 205-6144

bruce.lundegren@sba.govbruce.lundegren@sba.gov