1. Small Business and the SBA Office of Advocacy – An Overview Bruce Lundegren Assistant Chief Counsel Office of Advocacy U.S. Small Business Administration (202) 205-6144 bruce.lundegren@sba.gov

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

3. SBA Office of Advocacy – The Federal Watchdog for Small Business Created in 1976 as an independent voice for small business Headed by the Chief Counsel for Advocacy Oversee agency compliance with the Regulatory Flexibility Act (1980) –requires federal agencies to assess the impact of their regulations on small business and consider less burdensome alternatives Added small business consideration to the rulemaking process Agencies prepare IRFA and FRFA (or certify)

4. The Impact of Small Business on the Economy Small businesses are the key to the nation’s well being Firm with fewer than 500 employees –Represent 99.7 percent of all employer firms –Employ about half of all private sector employees –Pay 43 percent of total U.S. private payroll –Have generated 65 percent of all net new jobs over the past 17 years

5. The Impact of Small Business on the Economy In 2008, there were 27.3 million total small businesses –Of these, 6 million were employers –Accounted for 49.6 percent of U.S. private sector jobs In 2009, real GDP growth in U.S. increased by 0.7 percent, while private sector employment decreased by 5.5 percent

6. The Impact of Small Business on the Economy Business ownership is becoming more inclusive in the U.S –Minority-owned businesses numbered 5.8 million in 2007, and increase of 45.6 percent over 2002 –Woman-owned businesses totaled 7.8 million in 2007, a 20.1 percent increase since 2002 –Businesses showed signs of stability and improvement over 2009

7. The Cost of Regulation & the Burden on Small Business Study by Nicole and Mark Crain shows annual cost of regulations $1.75 trillion (2008) Disproportionate impact on small business –Per Employee = $10,585 < 20 employees v. $7,755 = 500 + employees (36 percent more) Economic = $4,120 < 20 v. $5,835 + 500 Environment = $4,101 < 20 v. $883 + 500 Tax = $800 < 20 v. $517 + 500 OSHA & Homeland Security = $610 < 20 v. $520 + 500

8. An Overview of the Regulatory Process The Basic Framework: The Administrative Procedure Act –Requires federal agencies to publish proposed rules for public comment (“notice and comment” rulemaking) –Great deference is given to federal agency decisions –Courts overturn only if “arbitrary and capricious” –Has been changed by Executive Order and RFA requirements –OSHA rules must address significant risk and be technologically and economically feasible

9. White House Review of Regulations: OIRA and Executive Order 12866 White House (centralized) review of agency rules began in the Nixon administration and have become increasingly sophisticated President Reagan first required formal cost-benefit analysis in 1981 Current manifestation is Executive Order 12866, signed by President Clinton in 1993 (remains in effect) Applies to significant regulatory actions (> $100 million) Requires agencies to prepare a “regulatory impact analysis” –assess aggregate costs and benefits, consider feasible alternatives, avoid duplication, choose the most cost-effective alternative

10. White House Review of Regulations: (Continued) Centralized review conducted by OMB’s Office of Information and Regulatory Affairs (OIRA) OIRA Administrator is Cass Sunstein Meets with interested stakeholders President Obama issued Executive Order 13563 (supplements and reaffirms EO 12866; retrospective review of regulations) OIRA also established government-wide standards for Information Quality, Peer Review, Risk Assessment, and the use of Guidance Documents

11. Regulatory Flexibility Act of 1980 Applies to rules that must undergo notice and comment rulemaking under the APA or any other statute Agencies must determine whether the rule, if promulgated, would have a “significant economic impact” on a “substantial number of small entities” Small entities include small businesses, small non- profits, and small governmental jurisdictions

12. Regulatory Flexibility Act (Continued) Threshold Question: Will the rule, if promulgated, would have a “significant economic impact” on a “substantial number of small entities”? If no, agency head may so “certify” and no further analysis is required If yes, agency must prepare and publish for comment an Initial Regulatory Flexibility Analysis (IRFA)

13. Initial Regulatory Flexibility Analysis (IRFA) Reason action is being taken Objectives of the proposed rule Description and estimate of the number of small entities impacted Estimated compliance requirements Duplicative, overlapping, or conflicting rules “Significant” alternatives considered (e.g., different compliance or reporting requirements, simplification, performance standards, exemption, etc.)

14. Final Regulatory Flexibility Analysis (IRFA) Need for and objectives of the rule Description and estimate of the number of small entities impacted Issues raised by public comment Assessment of those issues and changes made to proposed rule as a result Steps the agency has taken to minimize impacts on small entities (consistent with objectives) or why alternatives were not selected

15. RFA (Some Other Issues) Use SBA Small Business Size Standard Direct v. Indirect Impacts RFA is procedural, not substantive Final action subject to judicial review Advocacy can file “amicus curie” briefs

16. Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) OSHA, EPA (and now the CFPB within the Federal Reserve) must convene Small Business Advocacy Review (SBAR) Panels before proposing certain rules Agencies must issue compliance guides for small business Allows for judicial review of agency compliance

17. Executive Order 13272 Strengthened the RFA by –requiring agencies to issue RFA compliance policies –notify Advocacy of upcoming rules –address Advocacy’s comments with specificity; Requires Advocacy to –Issue RFA compliance guide –train agencies on RFA compliance –Report to Congress and OMB

18. SBA Office of Advocacy Cost savings from 2002 - 2008 = over $50 billion Legislative Priorities –Review existing regulations - §610 - allow public petitions –Improve SBREFA process - 120 days –Consider indirect impacts - reasonably foreseeable effects

19. OSHA’s Regulatory Agenda – What’s on the Horizon? Injury and Illness Prevention Program (I2P2)* Review/Look-back of OSHA Chemical Standards Occupational Exposure to Crystalline Silica Improve Tracking of Workplace Injuries and Illnesses Cooperative Agreements Hazard Communication (GHS) Combustible Dust** Injury and Illness Recording and Reporting Requirements - Musculoskeletal Disorders (MSD) Column**

20. MSHA’s Regulatory Agenda – What’s on the Horizon? Respirable Crystalline Silica Notification of Legal Identity Proximity Detection Systems for Mobile Machines in Underground Mines Proximity Detection Systems for Continuous Mining Machines in Underground Mines Patterns of Violations

21. Thank you! Questions/Comments/Discussion? Contact Info: Bruce Lundegren Assistant Chief Counsel Office of Advocacy U.S. Small Business Administration (202) 205-6144 bruce.lundegren@sba.gov