The long dormant Small Business Regulatory Review Board, intended to provide owners a voice in the creation of rules that affect their businesses, has been revived. In November, Gov. Scott Walker signed legislation recreating the board and promising owners greater input.

Created by Gov. Jim Doyle in 2003, the review board fell short of expectations that business owners would have greater say over regulations adopted by a plethora of government agencies.

The board met fewer than a dozen times between 2005 and 2008 and has not convened at all over the past three years. The website for the now-defunct Department of Commerce, which originally housed the board, continued to promote the board as a means for owners to protest rules.

“If you are a small Wisconsin business owner and you believe an existing or proposed state agency rule will adversely affect your business,” the website announced as recently as November, “you now have the means to make your concerns known.”

But, after the department was disbanded earlier this year, a disclaimer appeared on the website warning that the former department’s functions had been divvied up among other state agencies, including the new Wisconsin Economic Development Corp.

But WEDC has not kept the board’s flickering flame alive. This new public authority, which assumed the Department of Commerce’s economic development duties in July, did not reconstitute the board under its auspices, according to Tom Thieding, WEDC spokesman.

The new plan, as laid out in 2011 Act 46 and signed by Walker on November 1, is to reorganize the board, increase the number of small business appointees, and house it within the state Department of Administration.

Old board-favored agencies
The original board contained six members from the business community but eight members from state agencies. The state employees hailed from the departments of Natural Resources, Workforce Development, Commerce, Health and Family Services, Regulation and Licensing, Administration, Revenue and Agriculture, Trade and Consumer Protection — the departments that created the rules that business was protesting.

Critics say the board, which also included one member each from the state Assembly and state Senate, was dysfunctional from the beginning. It was weighed down by the agency representatives, who argued to maintain the rules under review. Act 46 cuts those agency representatives from the board entirely.

“We removed all of the agency people,” says state Sen. Terry Moulton (R-Chippewa Falls), who briefly served as the board’s state Senate representative. Moulton, chair of the Senate’s Workforce Development, Small Business and Tourism committee, sponsored the legislation. “Small business will have more of a presence and an impact.”

“The board in the past was dominated by representatives of the agencies themselves. They became advocates for the regulations. You had a confrontational relationship on the board,” says Bill Smith, director of the Wisconsin chapter of the National Federation of Independent Business (NFIB), which pushed to reorganize the board.

Rick Petershack, a Madison attorney and owner of Civility Press Ltd., a small publishing company, says the agency representatives “had the point of view of their agency in mind.” Also, he says, “it was hard for them to be critical of other agencies.”

More Business Appointees
The new board retains slots for two legislators and increases the number of small business appointees to seven; Walker supported this change. By changing the board’s makeup, spokesman Cullen Werwie says, “small business owners will provide meaningful, valuable input.”

As before, the board will serve as an advisory body with little direct power, although the new law gives it greater authority to choose which rules it considers. Previously, state agencies submitted proposed rules believed to have a “significant” financial impact on a “substantial” number of small businesses, but board members disagreed over these thresholds.

“They might say, ‘this could affect 2,000 businesses, but that’s not a large number in the world of small businesses,’” Smith says of state agencies. Under the new law, agencies submit any rule that may impact small businesses to the board, and the board decides whether the effect is great enough to warrant scrutiny.

This scrutiny includes the possibility of collecting input from small business owners, including those on the board, and recommending changes to the agency proposing the rule. Still,  the agency holds the reins and does not have to follow the recommendations of the board.

“We didn’t have much authority,” Petershack says of the previous board. “The most we could do was to send (a proposed rule) back to (an agency) to look at it again.” The previous board also reviewed agencies’ evaluations of proposed rules’ impact on small businesses. On a couple occasions, he says, the board found errors in the data.

A Voice for Business
The new law, while concentrating the influence of small business interests on the board, makes no major additions to its power. Small businesses, as before, will be defined as those with 25 or fewer full-time employees or gross annual sales of less than $5 million.

Supporters have emphasized the importance of giving small businesses greater input in the rule-making process. “The governor believes it is important to ensure that businesses have a voice,” Werwie says. NFIB’s goal, according to Smith, has been to bring the voice of small business into the room when rules are written. “I think we’ve accomplished that,” he says.

In its previous incarnation, the board heard many concerns. Medical transport companies protested rules on Medicaid reimbursement. “Considerable discussion followed regarding the industry’s attempts to have their concerns addressed,” minutes from an August 2008 meeting reported. That same day, the board heard protests of “compliance costs” brought on by new asbestos training requirements. Later, social workers objected to a rule’s financial impact on small mental health clinics.

During its tenure, the board also discussed or heard testimony on rules for controlling invasive species, handling flammable or combustible liquids, reducing erosion, storing fertilizer in bulk, and transporting hazardous waste. At one meeting, the Wisconsin Grocers Association spoke on “concerns regarding a food certification fee” charged by the state, according to minutes, and at another, the Department of Agriculture, Trade and Consumer Protection presented on a “nutrient management” rule that was upsetting the state’s poultry industry.

The board penned recommendations for agencies, but, Petershack says, “I don’t know that we got them to change anything” outside of reconsidering some of their analyses on how rules would affect small businesses. Much of the board’s work, he says, “was reviewing rules and ensuring the agencies had adequately done their assessments.”

One Small Victory
In the August 2008 meeting, Carol Dunn, then serving as the Department of Commerce’s Small Business Ombudsman and the board’s sole staff member, scored a coup for the board. She said the Department of Natural Resources had not analyzed an invasive species rule’s impact on commercial fishers. A DNR representative said this was “a departmental oversight,” minutes say. The board requested further study.

The board stopped meeting in 2008 after Dunn, who organized the meetings, was transferred to another position in the Department of Commerce but not replaced.

The frequency of meetings was already on the decline, Petershack says. “It had already slowed down.” The board met five times in 2005, the most in any year, then just once in 2006, once in 2007 and only two or three times in 2008.

As it begins to meet again, the board could have its hands full given the new procedure for determining when rules have a “significant” financial impact on a “substantial” number of small businesses. But Moulton, the state senator, says he doesn’t expect the board to be overwhelmed. Additionally, the board can review both established and proposed rules, meaning it could dig into the backlog of rules approved during the board’s dormancy. But a decision to do so rests with the board itself, according to Werwie.

Smith, the NFIB director, says the board’s reorganization is the latest chapter in a long history of regulatory review, both at the state and federal levels. Congress passed the federal Regulatory Flexibility Act in 1980 under President Jimmy Carter. Then Wisconsin passed its RFA in 1983 under Gov. Tony Earl. Both laws require government agencies to analyze the burdens they impose on small businesses when crafting regulations. Wisconsin agencies, after determining a rule will have an impact, must consider ways to lessen it, including simplifying reporting requirements, establishing lesser penalties for small businesses (in certain cases), or even exempting them altogether.

The 2003 regulatory flexibility bill strengthened some of these measures, but since then, “there hasn’t been a very strong enforcement tool,” Smith says.

The board was partly intended as such a tool but, its powers were limited, Petershack says. Also, relatively few business owners knew of its existence. “There was very little awareness,” he says. “It would have been helpful to have a budget to get the word out.”

By Matt Hrodey

Matt Hrodey is a Milwaukee-based writer and editor.