Small Business Compliance Impact Scoring (SBCIS) v1.0

Version: 1.0.0 Author of record: Brett Halverson Stewardship: Halverson Co. License: CC BY 4.0 (this document); Apache 2.0 (accompanying schemas) Repository: github.com/bch1212/sbcis Canonical web rendering: regimpact.dev/methodology Effective date: 2026-05-13 (planned v1.0 publication) Prior versions: none

Cite this version

Halverson, B. (2026). Small Business Compliance Impact Scoring (SBCIS) v1.0. Halverson Co. Available at https://regimpact.dev/methodology.

BibTeX:

@techreport{halverson2026sbcis,
  author = {Halverson, Brett},
  title = {Small Business Compliance Impact Scoring (SBCIS) v1.0},
  institution = {Halverson Co.},
  year = {2026},
  url = {https://regimpact.dev/methodology}
}

Preface (non-normative)

SBCIS scores federal regulatory rules on their compliance burden for small and medium-sized businesses (SMBs). The framework is intended for journalists, researchers, attorneys, trade associations, and SMB owners who need a defensible, reproducible way to compare rules.

This methodology builds on three established conventions (cited inline where applied):

1. The Office of Management and Budget’s Circular A-4 for regulatory cost-benefit analysis (OMB, 2003; revised 2023).
2. SBREFA (Small Business Regulatory Enforcement Fairness Act of 1996, P.L. 104-121) and the panels conducted under its authority.
3. The Paperwork Reduction Act (44 U.S.C. ch. 35) information-collection burden conventions.

SBCIS does not replace any of these. It provides a compact, ranked-comparable score where the underlying frameworks produce text-heavy analyses that are difficult to compare side by side.

Section A: Scope

A.1 What’s in scope

SBCIS v1.0 scores:

1. Federal proposed rules (“PRORULE” in the Federal Register).
2. Federal final rules (“RULE” in the Federal Register).
3. Federal information collection requests under the PRA when they would impose new compliance burden on SMBs.

For each in-scope rule, SBCIS produces a single Impact Score (0 to 25) and per-axis estimates, plus dollar and time burden estimates anchored to a representative 25-employee SMB.

A.2 What’s out of scope (v1.0)

1. State rules (planned for v2.0).
2. Local ordinances (out of scope indefinitely unless they incorporate federal or state rules by reference).
3. Sub-regulatory guidance, FAQs, and bulletins (out of scope unless the issuing agency formally treats them as binding).
4. NEPA-style procedural rules with no compliance burden on private entities.
5. Internal-government rules (5 CFR personnel rules, internal procurement rules without external counterparties).

A.3 Geographic scope

SBCIS v1.0 covers rules applicable in the United States and its territories. Rules with international scope (export controls, ITAR amendments) are in scope only for the portion of compliance burden falling on US SMBs.

A.4 Size scope

“Small business” follows the Small Business Administration’s industry-specific size standards (13 CFR Part 121). The SBCIS representative SMB is a 25-employee firm in NAICS 23 (Construction) or 31 to 33 (Manufacturing), which is the median small employer size in 2024 BLS QCEW data. Industry-specific size standards apply when calculating affected-firm headcount within the applicability axis.

Section B: Cost dimensions

SBCIS recognizes three cost dimensions, each captured by one or more axes:

B.1 Direct compliance cost (capital + recurring)

Capital expenditure: one-time spending required to come into compliance. Examples: equipment replacement, software procurement, structural modifications, training program build-out.

Recurring expenditure: annual spending required to maintain compliance. Examples: subscription services, ongoing monitoring fees, license renewals, third-party audits, recordkeeping software.

B.2 Time burden (PRA-style hours)

Hours per affected SMB per year required to read, file, train staff on, and respond to inquiries about the rule. SBCIS follows the PRA convention of valuing time at full-loaded employer cost (wage + benefits + overhead at ~1.45x wage rate).

B.3 Forgone-opportunity cost (estimable only)

The cost of opportunities precluded by the rule (e.g., a forbidden product line, a restricted geographic market). SBCIS v1.0 includes forgone-opportunity cost only when the agency itself or an authoritative third party (academic study, congressional research) has published a defensible estimate. Speculative forgone-opportunity claims are excluded.

Section C: Scoring axes

SBCIS scores each rule on five axes. Each axis is a float between 0.0 and 5.0. The aggregate Impact Score is the sum (0.0 to 25.0).

C.1 Capex (capital expenditure)

Score the per-affected-SMB one-time capital expenditure required to come into compliance:

Anchor: $2,500 per axis point per year (one-time $12,500 per full axis point amortized over five years). See methodology calibration in Section H Example 2.

C.2 Opex (recurring expenditure)

Score the per-affected-SMB recurring annual expenditure:

Anchor: $1,200 per axis point per year. See Section H Example 3.

C.3 Hours (time burden)

Score the per-affected-SMB annual hours burden:

Anchor: 16 hours per axis point per year. See Section H Example 1.

C.4 Applicability (industry breadth + size cuts)

Score the breadth of the affected SMB population:

Computed from BLS QCEW industry counts for the named NAICS codes in scope, multiplied by SBA size-standard fractions. When the rule scopes to size cuts (e.g., “employers with 50+ FTEs”), apply those cuts before computing the fraction.

C.5 Edge severity (worst-case for outliers)

Score the severity of impact on the most-affected segment within the applicable population. This captures cases where the median affected SMB sees little impact but a small subset faces an existential burden:

C.6 Impact Score buckets

Section D: Cost calculation

For a rule scored on the five axes with a representative SMB headcount h:

ratio = max(1, h / 25)

annualized_capex_dollars = capex_axis * $2500 / 5 * ratio
annual_opex_dollars      = opex_axis  * $1200     * ratio
annual_hours             = hours_axis * 16

cost_center  = annualized_capex_dollars + annual_opex_dollars
cost_low     = round(cost_center * 0.8)
cost_high    = round(cost_center * 1.2)

The +/- 20% band reflects (a) the granularity of axis assignment, and (b) uncertainty in industry-specific cost variation. SBCIS does not claim point-estimate precision.

Time burden is expressed separately as annual_hours rather than converted to dollars. Users who want a dollar-converted hours figure should apply their own labor rate; SBCIS does not assume one.

Section E: Industry weighting

SBCIS v1.0 uses NAICS-aware industry weighting for two purposes:

E.1 Headcount baseline

The representative-SMB anchor (25 employees) is the median small-employer size in BLS QCEW 2024 across NAICS 23, 31 to 33, 44 to 45, and 81. Scoring a rule scoped to NAICS 11 (Agriculture) or NAICS 51 (Information) should re-anchor the representative SMB to the median small-employer size in that sector before applying Section D.

E.2 Cost variance by industry

Capex and opex anchors in Section C assume the representative SMB. For industries where the same compliance task is materially more or less expensive (e.g., HVAC equipment in a restaurant vs. an office), document the deviation in the rationale field and adjust the per-axis dollar anchor in the worked example. Do not change the axis assignment itself.

E.3 Capex amortization period

SBCIS uses a 5-year straight-line amortization for capital expenditure in the annualized cost figure. This matches IRS Section 179 expensing conventions for typical SMB equipment. Rules with capital expenditure expected to last materially longer (e.g., structural building modifications) may use a 10-year amortization, documented in the rationale.

Section F: Provenance rules

Every published score must include at least three citations:

1. The originating regulatory text. A direct link to the Federal Register publication.
2. At least one cost-benefit source. Preference order: - The agency’s own Regulatory Impact Analysis (RIA) for major rules - The OIRA Information Collection Request supporting statement - The SBREFA panel report if convened - SBA Office of Advocacy comment letter if filed - Independent academic study
3. A baseline-data source. BLS QCEW, Census County Business Patterns, or equivalent for the affected-population calculation.

Scores published without all three citation classes are treated as drafts, not published scores. The web-rendered score badge for a draft is visually distinguishable.

Section G: Anti-gaming rules

SBCIS explicitly forbids:

G.1 Discretionary exclusion on enforcement-likelihood grounds

A rule cannot be excluded from scoring on the grounds that “it is unlikely to be enforced.” If the rule is final, it is scored. If it is proposed, it is scored. Enforcement likelihood is not a methodology dimension.

G.2 Netting compliance benefits against costs

SBCIS scores the compliance burden, not the benefit. If the rule has benefits that reduce healthcare costs, environmental remediation, or worker injuries, those are not netted against the score. SBCIS is explicitly a one-sided burden measure; users who want a benefit-net assessment should consult the underlying RIA.

This is the most important anti-gaming rule. Without it, a rule with a $5M/year compliance burden and a $50M/year health benefit could be scored as “negative impact,” which would defeat the purpose of comparison.

G.3 Aggregating across affected groups

A score is per affected SMB, not aggregate. Multiplying by affected-firm count happens at the index-compilation step, not at the per-rule score.

G.4 Vendor-tilted scoring

The author of a published SBCIS score must disclose any financial interest in the affected industry, in the products that bring the rule into compliance, or in regulatory outcomes. SBCIS v1.0 author Brett Halverson discloses: operates RegImpact, which sells compliance-impact analysis services to SMBs. This disclosure is mandatory for every score.

Section H: Worked examples (calibration set)

These three worked examples are the v1.0 calibration set. Any SBCIS implementation must reproduce these scores given the same axis assignments.

H.1 Example 1: Modest paperwork rule

Rule: Hypothetical EPA notification rule requiring quarterly water-discharge attestation by small operators in NAICS 31-33 sectors.

Scoring: - Capex: 0.0 (no equipment required) - Opex: 0.5 (negligible direct cost; existing email infrastructure suffices) - Hours: 2.0 (filing takes ~8 hours per quarter, 32 hours per year) - Applicability: 3.0 (covers manufacturing SMBs across multiple states; ~25% of NAICS 31-33 SMBs) - Edge severity: 1.0 (the most-affected outlier sees ~1.5x median)

Computed: - Impact Score: 6.5 - Annual cost: roughly $480 to $720 (mostly opex axis) - Annual hours: 32.0

Bucket: low (excluded from quarterly index).

Citations: - Originating: hypothetical, illustrative only - Cost-benefit: would cite agency RIA - Baseline: BLS QCEW NAICS 31-33 small employer counts

H.2 Example 2: Equipment replacement rule

Rule: Hypothetical OSHA rule requiring warehouse forklift speed-limiters in indoor pedestrian-adjacent zones (NAICS 493 and 484).

Scoring: - Capex: 4.0 (retrofit kit + installation: ~$8,500 per forklift, amortized; representative 25-employee warehouse has 4 forklifts in scope) - Opex: 1.0 (annual maintenance ~$1,200) - Hours: 0.5 (compliance recordkeeping ~8 hours per year) - Applicability: 2.0 (NAICS 493 + 484; ~8% of SMBs) - Edge severity: 3.0 (smallest warehouses with single-forklift fleets see relative burden ~5x median due to fixed-cost per device)

Computed: - Impact Score: 10.5 - Annual cost: roughly $2,560 to $3,840 (capex dominates) - Annual hours: 8.0

Bucket: low (below the 12.0 threshold; would not appear in quarterly index).

H.3 Example 3: Industry-wide compliance program

Rule: Hypothetical FTC rule requiring annual third-party privacy audit for SMBs handling more than 5,000 consumer records (NAICS 51 + 52 + selected 44-45).

Scoring: - Capex: 3.0 (initial audit infrastructure and software: ~$7,500 one-time) - Opex: 4.0 (annual third-party audit fee: ~$4,800/yr) - Hours: 3.0 (audit preparation: ~48 hours per year) - Applicability: 4.0 (broad across consumer-facing SMBs; ~40% of small employers) - Edge severity: 4.0 (smallest affected firms see relative burden ~7x median; some may choose to drop below 5,000-record threshold rather than comply)

Computed: - Impact Score: 18.0 - Annual cost: roughly $5,040 to $7,560 (opex dominates; capex contributes $600/yr annualized) - Annual hours: 48.0

Bucket: high (featured in quarterly index, eligible for “most-burdensome” highlight).

Section I: Versioning

I.1 Semantic versioning

SBCIS uses Semantic Versioning 2.0.0 (semver.org).

• Patch (1.0.x): wording clarifications, citation corrections, example additions. No score changes for any prior worked example.
• Minor (1.x.0): new axes, new anti-gaming rules, new worked examples that may shift bucket-boundary cases. Backward-compatible in that all prior axis assignments remain valid; cost estimates may shift up to 10%.
• Major (x.0.0): axis redefinition, methodology rebuild. Scores from prior major versions are not directly comparable.

I.2 Re-scoring on version change

When SBCIS publishes a new minor or major version:

1. The version stamped on every prior score remains valid; that score’s interpretation should be in the context of that version.
2. Authoritative re-scoring of prior rules under the new version is optional and clearly labeled.
3. The CHANGELOG documents what changed and how prior scores would shift if re-scored.

Section J: Limitations and disputes

J.1 What SBCIS does not do

1. SBCIS does not predict enforcement intensity.
2. SBCIS does not estimate compliance-benefit value.
3. SBCIS does not quantify litigation risk associated with non-compliance.
4. SBCIS does not weight rules by political controversy or public-comment volume.

J.2 Open review and dispute resolution

SBCIS is open for public review. The methodology, scoring code, and worked examples all live at github.com/bch1212/sbcis. Anyone may file a GitHub issue or pull request with:

• A specific axis-assignment correction for a published score (treated as a calibration request).
• A methodology change proposal (treated as a v-next candidate).
• A bibliography addition (treated as a patch).
• An anti-pattern observation (treated as a v-next candidate against Section G).

The steward (Halverson Co.) responds within 14 days. Substantive contributions are credited in the CHANGELOG and, with the contributor’s consent, in Appendix B.

There is no pre-publication private review gate. The publish-then-iterate model matches OWASP Risk Rating Methodology, CVSS, and the Carbon Disclosure Project, which similarly publish openly and accrue review through use.

J.3 Independence

SBCIS is stewarded by Halverson Co. but is independent of any specific Halverson Co. product. The methodology document is the source of truth; any divergence between the SBCIS scoring code and this document is resolved in favor of the document.

Appendix A: Glossary

• Affected SMB: an SMB falling within the rule’s scope as defined by SBA size standards (13 CFR 121).
• Annualized capex: capital expenditure spread evenly over the amortization period (5 years for v1.0 default).
• Impact Score: sum of the five axes, 0.0 to 25.0.
• Provenance: the set of citations supporting a score.
• Representative SMB: a 25-employee firm in the rule’s NAICS scope, used as the cost-anchor.

Appendix B: Contributor credits

SBCIS is open for public review (Section J.2). This appendix lists contributors who have filed substantive GitHub issues or pull requests that have been merged into the methodology. As of v1.0 publication, this list is empty; it will be populated as contributions arrive.

To contribute, file an issue or pull request at github.com/bch1212/sbcis. Substantive contributions are credited here with affiliation language of the contributor’s choosing.

Appendix C: Bibliography

• Office of Management and Budget. Circular A-4: Regulatory Analysis. September 17, 2003; revised November 9, 2023. https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf
• Small Business Administration, Office of Advocacy. Annual Report on the Regulatory Flexibility Act. https://advocacy.sba.gov
• US Bureau of Labor Statistics. Quarterly Census of Employment and Wages. https://www.bls.gov/cew/
• US Bureau of Labor Statistics. Employer Costs for Employee Compensation. https://www.bls.gov/news.release/ecec.toc.htm
• Federal Register. FederalRegister.gov. https://www.federalregister.gov
• US Census Bureau. County Business Patterns. https://www.census.gov/programs-surveys/cbp.html

Appendix D: Schema (machine-readable score)

A score conforming to SBCIS v1.0 must validate against the JSON Schema at schema/sbcis-score.schema.json in the SBCIS repository. The schema is Apache 2.0 licensed.

Changelog

• 1.0.0 (2026-05-13, planned): Initial public release.