Larry Mocha may be the rare entrepreneur who doesn't need to worry about state regulators quietly introducing rules that could hurt his business. Instead, Mocha, the owner of Tulsa's Air Power Systems, a $4 million, 30-employee manufacturer of cylinders and valves for trucks, says: "Heads of various government agencies call me to get my opinion on the new rules, which shows they care."
It also shows they're obeying the law. In 2002, Oklahoma became the first to pass a so-called regulatory flexibility law using language provided by the Small Business Administration. The 2002 law requires the governor to appoint a group of business owners that will work with state agencies to ensure new rules aren't unduly burdensome on small companies. Entrepreneurs can sue agencies that short-circuit the process. Mocha chairs Oklahoma's committee, but in most other states, committees are still being formed.
Mocha and his team are ever vigilant. They've yet to shoot down any agency proposals, but that doesn't mean they've been quiet. Last year, the state legislature passed a law requiring small businesses to file their taxes electronically if they owed $2,500 or more a month. "It was a tremendous strain, especially in rural Oklahoma, where many people aren't hooked up to the Internet," says Mocha. After the committee and other advocates complained, the tax commission allowed businesses that lacked Internet capability to file on paper.
Since mid-2002, 12 states have followed Oklahoma's lead, with both Democrats and Republicans sponsoring regulatory flexibility bills. The most recent state to adopt such a law was Rhode Island, on Sept. 13. Seven more states have bills pending, and Pennsylvania lawmakers are expected to vote on one this fall. In addition to vetting new rules, most committees are charged with reviewing existing regulations every five years.
The Small Business Administration and the National Federation of Independent Businesses say the laws save small companies time and money. The federal Regulatory Flexibility Act, which the states are emulating, saved small businesses $6.3 billion in 2003, according to the SBA's office of advocacy. "This legislation sends the message that we're watching," says New Jersey State Assemblyman Guy Gregg (R), co-sponsor of a regulatory flexibility bill. "Sometimes government agencies work better if there's the fear of a lawsuit," he says.
Not everyone is thrilled about the legislation, which was defeated last year in Nebraska and California. Julian Zelazny, director of the State Environmental Resource Center, a Madison (Wis.) nonprofit research group, says the laws will slow the adoption of rules designed to protect the public. He says they add bureaucracy, "the ultimate aim of which is to slow things down."
Implementation varies across states. Entrepreneurs can find information about state regulatory laws at sba.gov/advo/region.html. In the states that have adopted the laws, entrepreneurs can comment on proposed rules by contacting trade groups or members of committees such as Mocha's. Colorado business owners can sign up for an online notification system and receive alerts about proposed regulations. Democracy, it seems, has never been easier.
By Pallavi Gogoi