The Office of Interagency Affairs includes employs advocates who pursue regulatory, legislative, and other policy initiatives that support small business growth. The office prepares comment letters and testimony on federal proposals that may affect small firms. The hallmark of Advocacy's efforts is addressing concerns shared by small businesses of all types. These include access to capital, burdens of regulatory compliance, costs associated with telecommunications reform, and tax policies that place undue burdens on small firm operations. In addition, the Office of Interagency Affairs tackles regulatory issues that affect specific industries.
In pursuing good public policy, the Office of Interagency Affairs also monitors federal agencies' compliance with the Regulatory Flexibility Act of 1980 (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). The RFA requires federal agencies to analyze the impact of proposed regulations if they are likely to have a "significant impact on a substantial number of small entities." The Office of Advocacy reports on agencies' compliance to Congress each year.
The Office of Advocacy has commented on a number of rules that affect rural small businesses.
Additional information on advocate actions can be found at www.sba.gov/advo/laws.
Access Charge Reform
Universal service requirements help keep the cost for basic telephone service low for customers and businesses in rural areas by requiring customers in lower-cost, high-density urban areas to subsidize the higher cost of rural access. In the Telecommunications Act of 1996, Congress mandated that the subsidy be funded by an explicit charge. Congress did so, because an explicit charge billed to customers would allow new competitive carriers to collect and receive universal service support and, encourage competition.
The Office of Advocacy supports the goal of universal service to keep telecommunications service affordable in rural areas. In addition, Advocacy supports the efforts of Congress and the Federal Communications Commission (FCC) CC to make universal service subsidies explicit and based on actual measurable costs of providing service to high-cost (rural) areas.
FCC implementation of the explicit universal service subsidy has created costs and difficulties for all small businesses. For example, the long distance costs and business line costs were originally inflated to provide universal service fund support. As explicit fees have begun to be added to customers' bills, long distance and business line fees have not been reduced proportionally, and the cost of telephone service to small businesses has risen. Advocacy has encouraged the FCC to alter its implementation of the explicit universal service charges so that these unintended inequities for all small businesses (both rural and urban) are reduced.
Radon and Arsenic Rules
These rules affect small rural governments and small rural water supply owners that are regulated by the safe drinking water rules. The Office of Advocacy advised the Environmental Protection Agency on methods to make the rules less expensive, potentially saving rural small businesses hundreds of millions of dollars annually. These recommendations included less stringent regulatory standards or, in the case of radon, an alternative compliance mechanism to address the same hazard. This work was done as part of the SBREFA panel process over the last two years and may help rural areas.
Extending Wireless Services to Tribal Lands
The FCC has begun a series of initiatives designed to spur provision of wireless services to tribal and rural areas. One rule change designed to accomplish this goal would grant incentives to companies, particularly larger ones, that agree to provide service to low-penetration areas. In fact, the FCC appears to take the view that the larger telecommunications companies are the ones best situated to fill this need. The Office of Advocacy believes the FCC should encourage smaller local businesses to meet this need, since these companies often have strong ties to the communities they serve and are more motivated than nonlocal firms to gauge and fill the needs of rural and tribal residents.
Licensing Spectrum Based upon Geographic Area
The Office of Advocacy has been involved in a number of FCC proceedings that have proposed licensing spectrum in various bandwidths on a geographic basis. The FCC has chosen to create "Economic Areas" as the geographic licensing unit in several services. Economic Areas tend to be large areas covering urban and rural jurisdictions. Advocacy believes smaller areas based on specific urban, suburban, or rural jurisdictions would be more appropriate since companies could better target the market they wish to serve. This would result in greater participation by small businesses, which would likely have difficulty competing with large businesses in the much larger economic areas. Advocacy's position would allow small rural businesses the opportunity to compete for licenses.
Medicare Participation Requirements for Rural Health Clinics
Pursuant to the Balanced Budget Act of 1997, the Health Care Financing Administration (HCFA) proposed a rule to revise certification and payment requirements for rural health clinics (RHCs). This rule redefined qualifying rural shortage areas in which RHCs must be located, established criteria for identifying RHCs that can continue to be approved as Medicare RHCs in areas no longer designated as medically underserved. The rule also limited waivers of certain non-physician practitioner staffing requirements. It also imposed payment limits on provider-based RHCs and prohibited commingling or the use of the space, equipment and other resources of an RHC with another entity. Advocacy commented that the agency did not have a factual basis for its certification, that RHCs may lose their designation, that the prohibition against commingling did not take into account legitimate office-sharing relationships (particularly in rural areas), and that HCFA should have prepared an initial regulatory flexibility analysis (IRFA).
Patient Restraint One-Hour Rule
HCFA proposed a rule requiring a doctor or other licensed independent practitioner to assess the need to continue restraining patients within one hour after restraints were first used. This rule is especially burdensome for rural facilities because physicians may have to travel great distances in order to assess a patient. Rep. Saxby Chambliss (R-Ga.) requested information from Advocacy on whether or not HCFA complied with the Regulatory Flexibility Act (RFA) in promulgating the one-hour rule, and what possible remedial action might be taken. Advocacy concluded that no study of impact on rural facilities had been conducted and that less burdensome regulatory alternatives had not been considered; hence, the agency was in violation of the RFA. The agency should be required to reconsider the rule and prepare a proper analysis.
Ambulance Fee Schedule Rule
HCFA proposed a rule designed to alter Medicare reimbursement for ambulance services, which would have had a significant impact on rural ambulance services. Specifically, HCFA proposed to base reimbursement on the beneficiary's medical condition rather than the type of vehicle used (for example, advanced life support/ALS and basic life support/BLS). Ambulance services would have to document and submit to HCFA records of the level of medical care needed by a beneficiary based on certain pre-determined diagnosis codes. The rule also attempted to narrow the definition of an ambulance by requiring a certain number of personnel to operate each vehicle as well as requiring certain minimum equipment and supply levels. Such rules would be difficult for rural providers, which who often face higher costs because of lengthy trips. Among other things, the Office of Advocacy challenged the agency's failure to prepare an adequate analysis of the rule's impact and whether rural ambulance services were receiving adequate reimbursement levels. In the final rule, equipment requirements were reduced, staff requirements were modified to comport with state laws, and physician certification requirements were modified to give ambulance services additional time to obtain them. Congress ordered HCFA to initiate a negotiated rulemaking process to resolve the ALS-BLS reimbursement issue. The overall result was more categories of ambulance services and a greater cost shifting to rural services that will receive higher payments due to the higher costs they incur for lengthier trips.
Hospital Outpatient Prospective Payment System (PPS)
HCFA proposed the Outpatient PPS rule in order to replace the old cost-based Medicare reimbursement system with a new system based on pre-determined rates for individual services. Such a system would fail to account for cost differences faced by rural hospitals, which have fewer economies of scale and scope. Advocacy commented that certain hospitals (for instance, cancer, rural and rehabilitation hospitals) should not be included in the Outpatient PPS rule because of their low volume and/or high costs. Because of the impact this rule would have had on hospital outpatient facilities, Congress later mandated that payments to hospitals be increased by 10 percent and that some hospitals be exempt.
Roadless Initiative
The Forest Service plans to set aside 45 million acres of forestland as roadless (i.e., barring any further construction in those areas). Although it is a nationwide initiative, it mostly affects activities in national Forest Service lands in rural Montana, Oregon, Nevada, Arizona, Wyoming, Utah, Idaho, and Washington. This rule will impact rural small businesses, including timber harvesters and miners, which may not be able to get to their principal source of income. It will also have a an impact on local school districts, which rely on timber payments to fund schools. The Forest Service invited Advocacy and other agencies to become involved in the regulatory process before the rule was announced, increasing the opportunity for comment on small business needs. While the original initiative included 54 million acres, the new proposal covers 45 million acres. In addition, the new proposal will not go into effect in Alaska for five years, at which time it will affect nine million acres in Alaska. Finally, because of Advocacy's work, exemptions may be included for certain rural industries.
Fishing Industry
Many rural areas rely on the fishing industry as a principal source of income. In the George's Bank area off the New England coast, the National Marine Fisheries Service (NMFS) refused to allow scallop fishing because NMFS asserted that the stock was depleted. The industry produced its own research indicating that the scallops were so abundant in George's Bank that they were dying from overcrowding. NMFS promulgated the regulation without considering the industry's research. Advocacy stated that the agency failed to consider the industry data and suggested that ignoring the alternative of reopening George's Bank not only violated the RFA, but may also have been arbitrary and capricious. Based upon Advocacy's comments, the Secretary of Commerce ordered the agency to re-evaluate the scallop industry's research. NMFS subsequently reopened George's Bank for scallop fishing.
Mining
The Bureau of Land Management (BLM) issued a rule intended to prevent mining businesses, which are located in rural areas, from mining area without reclaiming it. The rule required miners to obtain a reclamation bond, assuring that they would clean up the area once mining had finished. The Office of Advocacy notified BLM that they had not properly analyzed the impact on small businesses nor had they used a proper size standard. BLM refused to change its analysis.
The mining industry filed suit against BLM in Northwest Mining v.. Babbitt. The court found that BLM had not used the proper size standard in doing the RFA certification, rescinded the rule, and ordered the agency to do a proper analysis.
BLM then re-proposed the rule. Meanwhile, Congress ordered a study by the National Research Council to determine whether the regulation was really needed. Since BLM's deadline for comments fell before study had been completed, Advocacy argued that BLM keep the comment period open until the study was concluded. Advocacy also argued that BLM's economic analysis was flawed and had not considered true alternatives to the rule. BLM is in the process of making the rule final.
Commercial Mail Receiving Agencies (CMRA)
A new rule from the U.S. Postal Service (USPS) requires that all businesses using commercial mail receiving agencies (CMRAs) indicate so by putting "PMB" or "#" in their address. This rule could have a significant impact on rural small businesses, which may use the CMRAs as safe places to receive mail for small or home-based businesses. There may be a stigma attached to a business with such an address, and small businesses could potentially lose business because customers may not be aware of the new address requirements. Moreover, the address change would require a costly change in letterhead, business cards, and other company materials.
The Office of Advocacy stated that it does not support the rule. Advocacy became involved by hosting roundtables, attending meetings with the U. S. Postal Service, and writing comment letters challenging the legality of the action and the costs of the rule on small businesses. While the original rule was to go into effect in April 1999, it has now been postponed for all businesses until August 2001, allowing for the use of old materials and the printing of new business supplies.
Glacier Bay Fishing Area
In 1997, the National Park Service (NPS) proposed a regulation prohibiting commercial fishing in nonwilderness waters of Alaska's Glacier Bay proper, an area which includes many rural small businesses. The proposal provided a 15-year seasonal exemption from the prohibition for commercial fishers who could demonstrate a reasonable history of participation in a specific Glacier Bay fishery. However, the proposal did not include an analysis of the potential impact on the fishing industry, even though the proposal would have effectively put several operations out of business and would likely have had a substantial economic impact on small fishing villages. In February 1999, Advocacy questioned the certification and urged NPS to perform an IRFA. With Advocacy's assistance, NPS prepared an IRFA and finalized the rule, which contains less stringent eligibility criteria for determining which businesses are able to fish under the exemption provisions of the rule, thereby avoiding undue impact on rural small businesses.
Information courtesy of the Small Business Administration.
