Regflex Report Card: Some Agencies Flunk

 

As legislative counsel for the National Federation of Independent Business, Frank Swain fought hard for the passage of the Regulatory Flexibility Act during the last months of the Carter Administration. Now, as President Reagan's Chief counsel for advocacy at the Small Business Administration, the 31-year-old Swain is keeping a close watch on how federal agencies comply.

The so-called "regflex" act, which amends the Administrative Procedures Act, encourages government agencies to show sensitivity to small business pressures when developing new regulations and, where possible, to reduce regulatory requirements altogether. But in his first report card, Swain noted that several key agencies are dragging their heels.

Swain gave lowest marks to the Internal Revenue Service, for ignoring the spirit of the law by maintaining that its interpretations are not regulations; the Food and Drug Administration, for not going through adequate analysis of regulatory changes; and the Department of Defense, which has claimed exemption from the act for the entire department except the Army Corps of Engineers.

Falling into Swain's category of "much-improved" agencies were the Department of the Interior and the Federal Communications Commission. Both were cited for positive new attitudes toward small firms. While it's still too early to gauge the impact, the FCC, for instance, has demonstrated more interest in examining the problems of small companies competing in the telecommunications industry.

The best grades of all went to the Labor and Transportation departments, the Federal Trade Commission, and the Securities and Exchange Commission. The SEC was praised for its "major efforts in regulatory reform on behalf of the small business community."

Frequently, Swain notes, it costs small companies two to three times more to comply with regulations than it does larger firms because of the demands on management time, professional fees, or the sheer cost of making even minor changes in production or pollution-control methods. Swain says his staff has been directed to monitor proposed regulations on an agency-by-agency basis as they are published in the Federal Register in Washington. "If something comes along that smells fishy," says Swain, "we have people on board who can call the agency on it."

While the focus of the new act has been on newly promulgated rules, it affects regulations already on the books as well. Agencies were given 10 years to review existing rules, but Swain says he'll do what he can to see that regulators don't "wait until the ninth year before they do anything."