Accountability for burdens on small business

By state Sen. Mark Scheffel

Posted

Small business in Colorado saw a small victory last week in the advancement of my Senate Bill 30, which passed out of the State, Veterans and Military Affairs Committee on a unanimous 5-0 vote. The bill adds an additional level of legislative review for new rules and regulations promulgated by state agencies.

Business compliance costs for state agency rules and regulations are a major impediment to business expansion and job creation. The U.S. Small Business Administration in 2010 estimated that federal rules add $1.75 trillion annually to business operating costs — and that does not count the costs of state-imposed rules.

By law, new rules published each year to implement the laws enacted by the legislature are only temporary — they expire on May 15 unless approved by lawmakers through the annual omnibus rule review bill. The problem is that over the years, the rule review bill has become a virtual rubber stamp and only rarely is any agency rule given the careful scrutiny it deserves.

My bill adds two new requirements to the annual rule review process. First, when a rulemaking agency does a cost-benefit analysis on a proposed rule, it must be published on the agency's website. Second, the past sponsors of the original legislation that gave rise to the regulation will be notified of the new rule along with all the members of the legislative committee that has oversight jurisdiction over the agency.

The bill is a small but important step toward more meaningful oversight of agency rulemaking. If there is a serious concern about the impact of a new rule on small business or a particular industry sector, a member of the committee of reference — for example, the Business, Labor and Technology Committee or the Agriculture and Natural Resources Committee — can ask for a hearing on the agency rule. If the arguments are persuasive enough, the rule can be blocked by amendment to the rule review bill. That possibility is not guaranteed but is at least enhanced by these added notifications.

A deeper problem is the weakness in current statutes of the requirement that agencies perform a cost-benefit analysis of proposed rules. A 2003 law mandating such analysis, SB03-121, has a huge loophole that has allowed 98 percent of the new rules promulgated since 2004 to escape any cost-benefit analysis. Of the 486 new rules issued in 2011, only eight had a cost-benefit analysis performed.

There is much work still to be done. We must continue to work for greater accountability and transparency in agency rulemaking and more thorough review of rulemaking that adversely affects employers.

I will continue to work on behalf of businesses and employers, and support bills that stimulate growth and job creation. If you have any questions, feel free to contact me at my office, at 303-866-4869.

State Sen. Mark Scheffel represents District 4, which includes Parker, Castle Rock and southern Douglas County.
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