1250 Connecticut Ave, NW, Suite 200

Washington, DC 20036

December 31, 2008

Ms. Shawne McGibbon, Acting Chief Counsel

Office of Advocacy
US Small Business Administration
409 3rd St, SW
Washington, DC 20416
VIA ELECTRONIC MAIL

Re: Recommendation for the Office of Advocacy’s R3 Initiative

Dear Ms. McGibbon:

This letter will serve as the recommendation of the Institute for Liberty for a regulation to be
reviewed under the Small Business Administration’s Office of Advocacy’s R3 initiative. The
Institute for Liberty is a 501c(4) advocacy organization based in Washington, DC. We focus on
the impact of the federal regulatory state on small business and entrepreneurship.

Several years ago, I had the privilege of meeting with a group of fireworks manufacturers from
around the United States. The firms that took part in that meeting all fell under multiple SBA
definitions for “small business”—and they all shared a common problem. Each firm was being
faced with a serious threat of being regulated out of existence by the Bureau of Alcohol, Tobacco
and Firearms (ATF).

Following September 11th, the Congress passed the Safe Explosives Act (SEA), designed in part
to deal with security issues arising from the manufacture and distribution of high explosives in
the United States. One of the unintended consequences of SEA is that a number of small
manufacturers of fireworks were caught in the ATF’s regulatory net. As you are well-aware,
small businesses are not as able to handle regulatory burdens as their larger counterparts are.
Advocacy’s own data shows that regulatory costs are 50% higher for firms with fewer than 20
employees, as many of these fireworks manufacturers are.

These businesses are not asking for an absence of regulation. What they are hoping is that the
R3 initiative can review the situation and recommend that these firms be given their own
regulatory framework, preferably one that lies outside of the ATF, and that takes into account the
IFL R3 Recommendation Letter
December 31, 2008

unique circumstances of being a small enterprise that is in the business of making an

entertainment product.

They are not manufacturing firearms. They are manufacturing fireworks. The safety and
security issues that they face can be best dealt with outside of ATF. Thank you for the
consideration of our recommendation. If you have any questions or comments, do not hesitate to
call me at IFL’s office: (202) 261-6592, or to reach me via e-mail at
Andrew.Langer@instituteforliberty.org.

Sincerely,

Andrew M. Langer,
President