Riddles on the Potomac

An Executive Order instructs federal agencies to consider the interests of small-business owners. Simple? Not in Washington

Last month, National Small Business Week celebrated the contributions of U.S. entrepreneurs to the national economy with awards, receptions, and many fine words. But while all agreed that small businesses, which employ two Americans in three, have been more than pulling their weight, one question received scant attention: What have Uncle Sam's bureaucrats being doing to help business owners survive, thrive, and solidify the economy's still-shaky recovery?

According to a newly released report from the Small Business Administration's Office of Advocacy, not as much as the Bush Administration wanted when it issued Executive Order 13272. That edict, unveiled in August, 2002, requires regulatory agencies to draft specific procedures that guarantee small-business interests get due consideration when new regulations are being prepared.


  "Our lawyers are both frustrated and encouraged," says Thomas M. Sullivan, chief council for the SBA's Office of Advocacy. "When we have a communication with the Federal Communications Commission (FCC) that first says it's not covered by the letter of this Executive Order because it's 'independent', then that's frustrating. But then, three weeks later, when they...communicate with our office and say, 'We still want to learn more about how we can do a better job considering small-business impact, well that's fantastic."

The SBA advocate's report divides federal agencies into two categories. The first consists of Cabinet-level departments, such as the Defense Dept., while the second is composed of independent agencies, like the FCC, SEC, and FDIC.

The good news: All Cabinet-level departments are reported as being in compliance with the both the letter and spirit of the EO 13272. In the latter category, however, 59 of 75 agencies have not responded to it, Sullivan said. Of these, nine were singled out in the report as having a particular impact on the activities and plans of small business. (The agencies named were: Export-Import Bank, Farm Credit Administration, Federal Communication Commission, Federal Deposit Insurance Corporation, Federal Emergency Management Administration, Federal Housing Finance Board, Federal Maritime Commission, Federal Reserve, and the Securities & Exchange Commission.)

"We've stopped looking through the federal register every day for rules that haven't adequately considered small business," says Sullivan. "Instead, we're relying on more direct input from small business groups like the Associated Builders & Contractors, the National Federation of Independent Business, the Chamber of Commerce, the National Association of Manufacturers...the list goes on and on."


  Sullivan added that such trade groups had expressed concern about regulations enacted by both the SEC and the FCC, including recent FCC efforts to revise media-ownership rules. The SBA's compliance report confirms that the FCC submitted pending regulations to Sullivan's office, but he feels more effort is needed to honor the intentions of EO 13272 -- not just at the FCC, but in all federal agencies. Small-business owners would be better served, he said, if agencies compiled and published their own impact appraisals of pending regulations.

EO 13272, complains Sullivan, "puts significant burden on the FCC to do the analysis and let the public see that analysis, comment either on its validity or how it effects the bottom line, and suggest ways to change the proposal to minimize the burden." Given Washington's approach to doing business, that's not a burden likely to be lifted from the shoulders of the small-business community anytime soon.

By Edward Popper in New York

Before it's here, it's on the Bloomberg Terminal. LEARN MORE