Academic journal article Journal of Business and Entrepreneurship

1996 in Review: What Kind of a Year Was It for Small Business in Terms of Regulatory Reform?

Academic journal article Journal of Business and Entrepreneurship

1996 in Review: What Kind of a Year Was It for Small Business in Terms of Regulatory Reform?

Article excerpt


This manuscript outlines new laws enacted by Congress in 1996 relevant to small business and analyzes their impact. In terms of regulatory reforms, 1996 was actually a relatively good year for the entrepreneur.

The first and most significant legislative development discussed is the Small Business Regulatory Enforcement Fairness Act. Also analyzed are new developments in the areas of health care, minimum wage, welfare reforms, and tax relief. On balance, small business owners should benefit from these new legislative mandates.


What did 1996 hold in store for small business in terms of new federal legislative developments? The surprising answer is a sigh of relief to most entrepreneurs-mostly good news. From regulatory reform to health care to selected tax relief, the small business owner fared relatively well in the 1996 Congress. This article will highlight numerous changes and new developments at the federal level which are largely beneficial for small business.


The most significant piece of legislation to come out of Washington last year was the Small Business Regulatory Enforcement Fairness Act, which gives small business some relief from arbitrary government rule making and more of a voice in the regulatory process. It also attempts to address the large amount of money small businesses have to shell out to comply with federal regulations. According to the General Accounting Office, American businesses spent $650 billion, or 9% of the total U.S. GDP, in 1995 to comply with regulatory rules.

As a result of this new law, for the first time, federal agencies such as the Occupational Safety and Health Administration (OSHA) and the Environment Protection Agency (EPA) must assess the economic impact of their regulations on small business before they are implemented. A similar law in 1990, the Regulatory Flexibility Act, forced agencies to examine the effect of new rules by didn't give small business people any real say in the process. Now government agencies have to be more responsible for the rules they make because small business owners can challenge any federal agency's regulations and/or ruling in court.

Before the law came into effect, a small business faced a tremendous financial risk if it challenged an agency's regulation as unreasonable. Now, if a court rules against OSHA or EPA, the agency must pay the challenger's attorney's fees and expenses.

The law also provides a multilayered system for business men and women to have greater involvement in the formulation of rules that affect them. Regulatory agencies are now required to listen to the opinions of business leaders before making any proposals for significant rule changes. To this end, a database will be set up by the Small Business Administration with the names of CEOs around the country who can be consulted about new regulations as they are being formulated.

In addition, every proposed rule change must be submitted to the House, Senate, and General Accounting Office for review and be accompanied by a cost-benefit analysis and a description of die steps the agency has taken to minimize the impact the rule will have on small business. If a rule does actually go into effect, the agencies must now assist businesses to comply with the regulations by writing guides that can be easily understood by those who must abide by them. The law also allows a 60-day review period in which Congress can reject new regulations which they deem are unnecessary.

Finally, the law sets up mechanisms for small businesses to monitor their interactions with agencies. The aim is to build a better working relationship and prevent much of the frustration business people like Franc Cremeans had when dealing with agencies.

An independent ombudsman at the Small Business Administration will now receive confidential complaints and comments from companies around the country on their interactions with federal regulators. …

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