The House has approved legislation that would expand the ability of the Small Business Administration (SBA) to aid small businesses in complying with federal and state regulations. However, the bill would also allow SBA to target regulations that the small business community finds objectionable.

The SBA Entrepreneurial Development Programs Act of 2007 (H.R. 2359), would give new responsibilities to existing regional Small Business Development Centers (SBDCs) to provide small businesses with regulatory compliance advice. SBDCs would provide free training and educational services and free "in-depth counseling" to small business owners and operators. The bill would also expand Internet sharing of regulatory compliance assistance information.

The bill would also require the administrator of SBA to prepare an annual report of federal regulations and recommend regulations to be reviewed. The regulations addressed would be those the administrator determines to be the "most burdensome to small business concerns."

In preparing the list, the SBA administrator would consult with the SBA Office of Advocacy, which typically serves as a liaison between the small business community and the White House or federal agencies. SBA would then transmit the list to the president and the House and Senate small business committees.

Once the list is established, the Office of Advocacy would then identify listed regulations eligible for review under the existing legal framework for rulemaking. The Office of Advocacy would notify federal agencies and the White House Office of Management and Budget of these rules and request the appropriate agency perform a review.

Specifically, the bill focuses on rules for which agencies have not performed a regulatory flexibility analysis or for which the analysis has proved inaccurate. Under the Regulatory Flexibility Act of 1980, while developing rules agencies must perform a regulatory flexibility analysis, which assesses the impact a rule will have on small entities.

The objective of the bill is to reduce or eliminate the burden imposed on small businesses by those regulations SBA identifies. The bill would also raise the profile of those regulations and subject them to greater scrutiny by the White House and lawmakers.

However, the bill's focus on the regulatory flexibility analysis could become problematic. An agency's decision to move forward with a regulation is based on how that regulation will affect society as a whole. While a rule may impose a cost on businesses, it may also hold great benefit for public health, the environment, national security or the economy. The bill would require agencies to review a regulation only from the perspective of businesses.

The provision is also duplicative. The Regulatory Flexibility Act provided that regulations affecting small entities be reviewed every ten years. The bill would expand the burden of agencies by forcing agency officials to review the impacts of regulations at the behest of SBA and possibly on an annual basis.

On June 20, the House voted 405-18 in favor of the bill. The Senate Small Business and Entrepreneurship Committee is scheduled to mark up a similar bill on June 26. Currently, the Senate version does not contain this regulatory review provision.