Congress Insists on Easy-to-Understand Guides for Small Business

Federal regulations written in plain English? That's the promise.

By Matthew Mogul, Associate Editor, The Kiplinger Letter

June 22, 2007

Small firms won't have to hire lawyers as often to translate federal regulations that govern what businesses can and can't do. A new law adds teeth to Clinton-era legislation requiring federal regulatory agencies to publish compliance guides for all new rules having a significant economic impact on small firms. Lawmakers acted because they believe too many agencies were ignoring their obligations to small businesses.

One aspect of the new law designed to help business owners say agencies must explain their rules "using sufficiently plain language likely to be understood by affected small entities." In plain English that means they must use plain English so firms won't have to decipher the gibberish, gobbledygook and bureaucratic legalese that many agencies routinely rely on.

"There always has been a need for compliance lawyers and there always will be," said Thomas Sullivan, chief counsel at the Small Business Administration’s Office of Advocacy. "But, does this law does make it easier for small businesses to understand the rules? Yes."

Regulators will get called before Congress each year to defend their guides. It means, for example, that representatives from the Occupational Safety and Health Administration or the Internal Revenue Service will have to prove to lawmakers that they're producing these guides and writing them so businesses can understand them. The 1996 had no such enforcement provision.

In Congressional testimony, the SBA's Sullivan pointed to Federal Communications Commission Website with guidance for small firms that probably wouldn't pass muster under the new law. He said more than half of the 285 entries on the site don't even address compliance. "FCC's assertion that this Website somehow satisfies its Section 212 obligations comports neither with the letter nor the spirit of [the 1996 law]."

The new law makes clear that the guides must be available to the public at the time the new rules take effect. It also requires that each agency make their guides available on their Websites.

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