No More Crying Over Spilled Milk

Small businesses saved $11.7 billion in fiscal year 2011—and $10.7 billion of that will be annually recurring costs—as a result of regulatory changes made to final rules based on Office of Advocacy recommendations, according to this year’s Annual Report on the Regulatory Flexibility Act, FY 2011. Since 1980, Advocacy has facilitated compliance with the Regulatory Flexibility Act (RFA), which requires federal agencies to examine proposed rules for their impacts on small entities and to suggest alternatives that may mitigate regulatory burdens while carrying out the purposes of the rules.

This process is not simple. Advocacy’s work with federal agencies includes training rule writers in the requirements of the RFA; working closely with agencies in confidential preproposal discussions; conducting outreach to small entities and trade associations through electronic notification, roundtables, and formal panels; providing written comments to the agencies; and reporting annually on agencies’ compliance. 

The rules cover the spectrum of American life, from clean air to workplace safety. Rules cover the building blocks of decision-making, such as defining what constitutes a small business, what is oil, and who is a fiduciary.

In FY 2011, for example, the Department of Energy saved $400 million for small firms carrying out new water efficiency standards for showerheads. In keeping with one of Advocacy’s recommendations, the agency gave small manufacturers a grace period of two years to sell any remaining noncompliant products and adjust their product designs to meet the new standards.

A general safe harbor recommended by the Office of Advocacy and adopted by the Department of Justice gave small businesses a reprieve from having to automatically redo accessibility improvements. Under the safe harbor, small businesses who previously upgraded specific elements in their facilities to comply with the 1991 standards for accessibility of public buildings under the Americans with Disabilities Act are exempt from redoing these elements to meet the 2010 requirements until they initiate new construction plans. This example of flexibility is estimated to save small businesses more than $8 billion annually.  

Perhaps the most celebrated accomplishment was touted by President Obama in his State of the Union Address on January 24: “We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill—because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk.” 

That was the Environmental Protection Agency’s Milk and Milk Products; Oil Spill Prevention, Control, and Countermeasures Rule, described on p. 26 of the report. Removing milk and milk processing plants from that rule saved small businesses an estimated $146 million annually.

The report covers many more regulatory reforms—though none so pithily proverbial.

—Kathryn Tobias, Senior Editor