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Re: OMB/OIRA Request for Comments on Executive Order for Federal Regulatory Review, 74 Fed. Reg. 8819

Published Wednesday, March 25, 2009 7:00 am

Kevin F. Neyland, Acting Administrator
Office of Information and Regulatory Affairs
Office of Management and Budget
NEOB Room 10102
725 17th St, NW
Washington, DC 20503
[Submitted Via Electronic Mail]

Re: OMB/OIRA Request for Comments on Executive Order for Federal Regulatory Review, 74 Fed. Reg. 8819

Dear Mr. Neyland:

I am an American citizen, incredibly concerned about the economic state of this nation. I understand that small businesses are the engine of our economy. 90 percent of all businesses have fewer than 20 employees, and small businesses provide two-thirds of all new jobs. These businesses will be the key to our economic recovery.

These are the businesses that are also the hardest hit by regulatory costs. According to the federal Small Business Administration, firms with fewer than 20 employees pay, on average, 45% more for regulatory compliance than larger firms. These firms pay $7,647 per employee, per year-money that could be better spent on producing more products and creating more jobs. The cost per household to keep up with federal regulatory mandates is more than the families spend on health insurance. The regulatory state now costs more than a trillion annually, and Americans spend, according to your own agency, more than 8.5 billion hours every year filling out paperwork for the federal government.

Therefore, if we are trying to stimulate the economy, getting a handle on these costs is imperative. I am asking you to consider the following seven recommendations as you consider a new Executive Order that governs the White House review of regulations:

1. Ensure that Existing Burdens Are Being Reviewed: I recommend that the new executive order on regulatory planning and review include a process for agencies to propose revisions to existing rules that can meet the original regulatory intent while lessening the cost on small businesses. I also recommend that as part of OMB's annual report on regulatory costs, a specific section be devoted to an accounting of agencies' review of existing regulations and steps taken to achieve better results.

2. Include Indirect Economic Impacts in Regulatory Review: One of the ongoing deficiencies in OMB's review of regulations is that information on the real impact on small business remains hidden. Either ancillary impacts aren't taken into account, or industries not directly affected but nevertheless impacted by the rulemaking are ignored.

3. Executive Order 13272: Among other things, Executive Order 13272, "Proper Consideration of Small Entities in Agency Rulemaking," strengthened small business protections under the Regulatory Flexibility Act by setting out a formal working relationship between OIRA and SBA's Office of Advocacy, creating additional responsibilities for federal agencies in complying with laws protecting small entities, and laying out reporting requirements for compliance with the Executive Order. The provisions in Executive Order 13272 should be part of the new executive order.

4. Require Compliance Guides: Small businesses continue to be frustrated with figuring out how to comply with new regulations. I recommend that OMB not allow any major rules to be finalized unless the information submitted by the agency, as part of the time line established, includes the complete text of the small business compliance guide.

5. Include Small Business Representation in a Regulatory Working Group: Currently, there exists no body of senior agency officials who are directly accountable for the government's impact on the cost of doing business in the United States. I suggest that the new executive order on regulatory planning and review reinvigorate the Regulatory Working Group established by President Clinton's Executive Order 12866 (section 4(d)). And, every Working Group member should be the point of contact for their respective agency's responsibilities under the Regulatory Flexibility Act.

6. Mandate That Each Agency Annually Publish an Accounting of Their Total Regulatory Cost: If we want to get an honest, accurate look at regulatory burdens, then each agency ought to be accounting for its fair share. This would actually simplify matters for both OIRA and members of the public who are interested in assessing these costs: OIRA could still publish its report on the costs of major rules, but they could also take the numbers put forth by each agency as to the costs of all of their rules (major and not-so-major), add them up, and come up with a far-more-accurate figure for annual regulatory costs. If agencies have to do annual budgets, and regular audits of their books and business practices, then they ought to also report on what impact they're having to the economy at large.

7. Mandate that New Rules Assess Not only Cumulative Regulatory Costs for Small Business, But Present Those Costs in the Context of their Overall Regulatory Burden: If we all agree that it is not just "major" rules, but the incremental costs of all rules that create this burden for small business, then we have to assess costs within context. Agencies are forced to continuously restate the burden that they already impose, and have to then show how they are about to add to that burden. This ought to be done in a variety of metrics as well: dollar costs, costs in man-hours, costs in days lost.

Even if I were to believe that massive amounts of government spending could produce economic recovery (which I do not), any amount of government spending would be neutralized by the twin burdens of regulation and paperwork imposed by the federal government. If the government is serious about getting the economy back on track, then I hope that OMB will seriously consider these recommendations.

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