Small business owners worried about the economic squeeze from state agency
regulations in the future will have a new avenue to take their concerns to after
the start of the year.
The Regulatory Flexibility Bill, endorsed by the U.S. Small Business Administration and signed by Gov. Don Carcieri on Sept. 13, takes a law requiring state agencies to minimize the economic impact of regulations on small businesses a step further beginning Jan. 1, 2005. The law also designates the Rhode Island Economic Development Corporation as an advocate for small businesses in the regulatory process “when appropriate” and requires the EDC to quantify the economic impact a new rule may have in some cases.
A federal law with the same philosophical intent for its own agencies has been on the books for years.
State agencies are already required to consider the adverse economic influence of any regulation and to provide notice to potentially impacted parties. The new law will open up a 15-day window for small business owners to appeal the measure to the state Economic Development Corporation. Republican Sen. Leo Blais, the bill’s sponsor, saw the bill signed into a law after two years of pushing for the legislation. He said the bill would hopefully allow for flexible solutions that can be worked out directly between the state and businesses.
Blais, a pharmacist and the owner of Pawtuxet Valley Prescription in Coventry, said business owners can sign up to be notified of new rules and regulations through a drop-down menu on the Secretary of State’s Web site, www.state.ri.us.
He said the law also allows for a “constant housecleaning” of the system, instituting a regular review and update of an agency’s rules within six years of a rule change and again every five years thereafter.
Asked if there are any particular horror stories he’s heard over the years from small business owners, Blais replied that he hadn’t, if only because “there’s never been a mechanism to fix a horror story.”
The law, which was actually signed earlier in the summer, requires state agencies to notify both the governor’s office and the state Economic Development Corporation of any proposed regulation before the start of the “formal rule-making process.”
If either office identifies a change as having the potential for an adverse economic impact, the state agency will be required to prepare a “regulatory flexibility analysis” – a report contrasting the need for a change with alternatives that could accomplish the aims of the rules and minimize the impact on small businesses.
From there, the EDC is required to act as an advocate for the concerns of a small business, detailing the number of businesses that may be impacted, the cost estimates for complying with the regulation, the likely effects of the change and a list of alternate ways to achieve the purpose of the agency’s proposed regulation.
Small businesses will continue to have the ability to appeal a regulation through a number of state offices, but now have the ability to make an appeal in state court.
Carcieri described small businesses as “the backbone of our economy,” with all but of a handful of the state’s 60,000 businesses being classified as “small.”
He thanked the general assembly for their willingness to take up the issue, noting that Massachusetts’ Gov. Mitt Romney had to resort to an executive order to have a similar law passed in the Bay State. Thomas Sullivan, the SBA’s chief counsel for advocacy, emphasized that the bill was essentially about jobs, citing statistics that over three-quarters of all net jobs are created by small businesses – and that 60 percent of regulatory burden tends to fall on the shoulders of small-business owners, at the cost of about $7,000 per small business employee, he said.
Though similar legislation has been considered in 18 states, Sullivan said Rhode Island is only the ninth state to sign a bill into law.
While the law doesn’t spell out what exactly happens if disagreements remain after the EDC reviews the regulation, Blais said at least the economic impact of new policies would be discussed.
“The mission is still to protect, promote and preserve public safety and health in Rhode Island,” said Blais of state agencies. “And no business wants to impact that. …
At the end of the day we still need regulations. It’s how we get there that’s
the trick.”
