Small business group to bring lawsuits against agencies

The National Federation of Independent Business, the influential small-business lobbying group, plans to announce on March 22 that it is launching a separate legal entity that will challenge federal agencies that fail to take small-business issues into account when drafting regulations.

The NFIB Legal Foundation,which chose an internal candidate, Thomas M. Sullivan, as the executive director, has been on the drawing board for almost 15 years.

The new foundation joins several other Washington interest groups including the U.S. Chamber of Commerce and the American Trucking Associations that have used affiliates to advance a pro-business agenda through the judicial system.

"We've already established ourselves as a presence on the Hill, in the 50 state capitals, and the regulatory agencies," Sullivan said. "The final frontier is the courts. Now we can offer a full-service advocacy program for our membership."

The foundation's first-year budget of approximately $300,000 comes from an NFIB affiliate and Tom Musser, an NFIB board member who is CEO of an electrical contracting business in Kennett Square, Pa. Sullivan said that in the coming years the foundation will raise most of its money independently, with a goal of doubling the budget next year and tripling it in two years. More cash will be needed, because litigating a typical regulatory case from start to finish can cost at least $200,000, he added.

The NFIB's new legal arm will focus only on regulations that affect small business. The chamber's Litigation Center goes to court on a variety of business issues, and the trucking organization concentrates on transportation issues. According to Sullivan, the new center can call on a powerful weapon, the 1996 Small Business Regulatory Enforcement Fairness Act, which enables a company to sue federal agencies if they fail to adequately consider the impact of new regulations on small businesses. Along with other statutes, the four-year-old law helps companies challenge what they consider to be overzealous enforcement. The center's targets may include Americans With Disabilities Act regulations, Environmental Protection Agency clean air rules, and Occupational Safety and Health Administration requirements.

Sullivan said that the foundation has not decided which regulations to attack first. The NFIB's legal arm, he added, expects to file two lawsuits each year that involve "challenging an agency's actions from start to finish." Moreover, it expects to file four to eight friend-of-the-court briefs in federal cases that affect small-business owners. The NFIB has heretofore filed only two friend-of-the-court briefs, Sullivan said.

The foundation will also produce manuals advising its members on how to respond to regulatory enforcement. The first one, a handbook on federal employment law that was produced in collaboration with the New York City-based Atlantic Legal Foundation, is almost finished, Sullivan said. "NFIB lobbies against government mandates, but once a mandate is in place, our members are starved for information that explains how they can comply with the law," he said.

Sullivan was the NFIB's regulatory policy counsel for the past two years. From 1993-97, he worked in the EPA's Office of Congressional and Legislative Affairs.

The foundation has lured several heavyweights to its advisory board, including former Commodity Futures Trading Commission Chairman Wendy Lee Gramm and former Bush White House Counsel C. Boyden Gray. Gramm, the one-time head of the Office of Management and Budget's Office of Information and Regulatory Affairs; and Gray, the former counsel to the Presidential Task Force on Regulatory Relief, are two of several advisory-board members who spent time burrowing into the federal government's regulatory apparatus.

The other board members include Keith Cole, a lawyer at Swidler Berlin Shereff Friedman who helped draft the small-business relief law while an aide to the Senate Small Business Committee; Dorothy L. Strunk, the acting assistant Labor secretary for OSHA under President Bush; and Thomas M. Sussman, a Washington lawyer with the Boston-based law firm of Ropes & Gray, who worked for the Justice Department's Office of Legal Counsel and as chief counsel to the Senate Judiciary Administrative Practice and Procedure Subcommittee.

To be sure, there are plenty of conservative lawyers advancing pro-business arguments. The Chamber's well-regarded litigation outfit has earned key victories at the Supreme Court. The conservative Washington Legal Foundation ponies up $4.5 million a year, not counting pro bono work by 250 law firms and by a passel of law students. But "any new efforts are welcome," said Daniel J. Popeo, the WLF's chairman and general counsel. "As it is, we have our hands full."

The small-business foundation will follow a different model from that taken by small, pro bono legal shops such as the libertarian Institute for Justice or the liberal Trial Lawyers for Public Justice, Sullivan emphasized. Instead of hiring many in-house lawyers, he said, the foundation will rely on outside law firms or lawyers brought in temporarily to do the heavy lifting.

Clyde Wayne Crews, the director of competition and regulation policy at the free-market Competitive Enterprise Institute, said that the new foundation is "a necessary piece of the puzzle." But, he added, unnecessary regulation can be eliminated only when Congress is forced to approve new federal regulations.

Alan Morrison of the liberal Public Citizen Litigation Group-who acknowledged that he is "jealous" of the NFIB foundation's budget-worries that overzealous litigation by the foundation could persuade regulators to bend over backward to avoid business-backed lawsuits. On the other hand, he acknowledged that Public Citizen and the new foundation have a common bond. "As one who thinks the courts should be available to those who need them, I certainly can't condemn them for exercising their legal rights," he said. "Whether they will use it or abuse it is impossible to say."