Bullied By Big Brother? Now You've Got An Ally

A place to complain about unfair treatment by regulators

When Charles A. Garber's scientific research and materials company faced fines of $8,000 for possible violations of Department of Transportation rules on shipping hazardous materials, he did the expected: hired a lawyer and argued to the DOT that he was exempt. At the same time, though, Garber, owner of Structure Probe Inc. in West Chester, Pa., complained to the Small Business Administration's brand-new Regulatory Fairness Program, Regfair. Its ombudsman contacted the DOT to get the facts. Soon--after Garber agreed to change his procedures--the fines were dropped. Did the inquiry help? The DOT says no; the ombudsman says probably; and Garber says absolutely. In any case, he's glad he got to vent his spleen and help the program build a record on the department's treatment of small business.

If you'd like to call your own bureaucratic nemesis to account, Regfair might be just the ticket. The program was born about a year ago, after the Small Business Regulatory Enforcement Fairness Act of 1996 directed the SBA to create a regulatory fairness ombudsman, as well as 10 regional fairness boards made up of small-business owners. Their job is to investigate complaints and, more generally, to tell Congress whether agencies are paying attention to how their rules affect the little guy.

Ombudsman Peter Barca and his boards have devised an appraisal form business owners can file--anonymously, if they wish--about either enforcement actions or specific regulators. In the past year, they've heard cases such as these:

-- Albuquerque restaurateur Kathy Diaz claimed an Internal Revenue Service agent subjected her to a "five-year reign of terror" that began when the agent scrapped a back-taxes payment agreement reached with his predecessor. According to Diaz, the agent was so angry about her testimony before a regional fairness board that he threatened to seize her business. She complained to IRS higher-ups, who ultimately put another agent on the case. (The IRS declined to comment.)

-- Joyce Chen Inc., a 23-employee kitchen products company, said it got caught in a turf conflict between the Environmental Protection Agency and the Food & Drug Administration. The company's lawyer, Michael Morizio, says Joyce Chen's antibacterial cutting board won FDA approval--but then was ordered by the EPA to halt production because of a question about the labeling of a pesticide used in the board. After months of negotiations, the company has reached an agreement and started paying off $82,500 in fines.

The SBA didn't help resolve these cases. Indeed, Barca says it's not his job to intervene in specific enforcement actions. So why complain to an office that can jawbone but has no teeth? Because, backers say, Barca can alert Congress if the same agency comes up repeatedly. "No agency wants to be recognized as the worst small-business agency in government today," he says. (So far, the IRS and the EPA lead the unpopularity contest.) Barca is under pressure to get tougher by some on Capitol Hill, including Senator Christopher S. Bond (R-Mo.), chairman of the Senate Small Business Committee, who wrote the Regfair law. Bond wants the finger-pointing to be more specific and aggressive.

Members of regional fairness boards, meanwhile, urge complainers to share their pain. "We have an opportunity to really refine the regulatory process," says mid-Atlantic board member Shawn Marcell, owner of Prima Facie Inc., a telemarketing research company in King of Prussia, Pa. He calls the first year a "building time." Now, he says, the boards are ready to roll, and interest is picking up. Some 20 new complaints were filed in the past four weeks (33 came in during the previous year) and Barca is asking for more staff to keep up with the calls.

So if you want to talk to Washington, here's a platform. It can't hurt; it might just help. But as Garber, Diaz, or Morizio would tell you, don't fire your lawyer just yet.

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