Fewer Strings Attached

A new law lets little guys sue to end excess paperwork

It drives gas station owners up the wall. Every year since 1986, they've had to file a report with the local fire department listing any flammable substances on their premises, as decreed by the Environmental Protection Agency. The EPA rationale: Firefighters should know of any hazards present in the event of a fire. But do they really need to be told there's gasoline in gas stations? "It's always shocking to fire departments," scoffs William L. Ferren, president of B-B-F Oil Co. in Pine Bluff, Ark., which operates 24 stations across the state. Ferren says he spends almost $50,000 a year filling out such needless paperwork.

Ferren may not have to worry about such annoyances if a new law, signed by President Clinton on Mar. 29, works as planned. Under the Small Business Regulatory Enforcement Fairness Act of 1996, small business would, for the first time, have the power to challenge in court government regulations it deems too burdensome.

STRAIGHT TALK. The initiative is sweeping in scope (table). The new law gives small business the right to sue federal agencies for not adequately considering the impact of a regulation on small enterprises. It waives fines for small, first-time regulatory violations, forces the feds to pay legal costs if a court finds that the feds excessively fined a small business, and requires that new regulations be written in laymen's terms rather than legalese. "This is probably the most significant legislation for small businesses in the last decade," says Bennie L. Thayer, president of the National Association for the Self-Employed.

Indeed, small-business lobbyists in Washington can barely contain their euphoria. For years, federal agencies have been required to assess whether their rules put unreasonable burdens on small business and to correct any problems. Trouble is, the 1980 mandate has never had "adequate teeth," says SBA Administrator Philip Lader. The reason: Friends of the regulators on Capitol Hill saw to it that federal agencies were exempt from legal action for failing to perform these "small-business impact" statements. So since there was no penalty for not following the requirement, government bureaucrats simply ignored it.

Now, small businesses can take federal agencies to court if they feel their concerns are being ignored. And the fact that Uncle Sam must pay the tab if, say, the Internal Revenue Service or the Occupational Safety & Health Administration takes a small-business owner to court over a fine and loses, may encourage more business owners to stand their ground in such disputes.

Crafting a fix for 1980's Regulatory Flexibility Act has been a perennial nonstarter in Congress for more than a decade. Powerful House Government Operations Committee Chairman Jack B. Brooks (D-Tex.), a champion of the EPA and OSHA, bottled up all "right to sue" provisions in his panel during the '80s.

PRIORITY. But the momentum changed in the 1992 Presidential campaign. Both President George Bush and then Governor Clinton made the fix a key part of their efforts to woo the small-business community. After the election, Vice-President Al Gore pushed it as part of his Reinventing Government effort. Then, Brooks lost in the 1994 GOP landslide, where passage of the reg-flex provisions was part of the Republican Contract With America. At the same time, Clinton's White House Conference on Small Business made the issue a top priority. And emboldened by their success in killing health-care reform in 1993, the small-business lobby turned up the heat. "They knew how much we wanted reg-flex," says one small-business lobbyist. This time--victory.

With the ink barely dry on the new law, some agencies are rushing to head off possible court actions. The Small Business Administration has drastically simplified its regulations in anticipation, cutting the number of pages of regulations by 50%. Other agencies are expected to follow soon. Now, small businesses will have a chance to drive Washington bureaucrats up the wall once in a while.

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