SBA office worked to block federal regulations on businesses

An independent office within the Small Business Administration has worked to block health, safety and environmental regulations on behalf of small and large businesses without appropriate technical expertise, two new studies have charged.

Scholars at the nonprofit Center for Progressive Reform in a report released Tuesday argued that the SBA unit set up in 1976 to go to bat for small business owners was a “small and largely unaccountable office” that quietly became “a highly influential player in the federal regulatory system, combatting protections developed by other federal agencies.”

The SBA's Office of Advocacy “has lost its way," said report co-author Sidney Shapiro, University Distinguished Chair in Law at Wake Forest University School of Law. "Instead of focusing like a laser on advancing the unique interests of small business, it's spending too much of its time, and too many taxpayer dollars, acting as a federal outpost for big business and its anti-regulatory agenda.”

One example is the office reportedly pressuring the Environmental Protection Agency “to water down key pending standards that limit the toxic pollutants coal power plants can release. The office’s comments did not press for special exemptions for smaller power plants,” the report said, “they simply called for the EPA not to put any limits at all on most of the hazardous pollutants the rule would limit (such as arsenic, fine particle pollution, and lead).” The final regulation is protected to prevent 4,200-11,000 premature deaths each year, the center reported. The study argued that regulations such as those setting air pollution standards actually help small businesses by bolstering the market for pollution control equipment.

Also released on Tuesday, a study by the Center for Effective Government (formerly OMB Watch) charged that the Office of Advocacy over the years has “decided to comment on technical, scientific assessments of the cancer risks of formaldehyde, styrene, and chromium. By its own admission, Advocacy lacks the scientific expertise to evaluate the merits of such assessments,” the study said.

Analysts found that the office’s comments raised no issues of specific concern to small business and relied almost exclusively on talking points provided by trade associations dominated by big chemical companies. From 2005 to 2012, the center found, the American Chemistry Council and members spent more than $333 million “lobbying Congress and federal agencies on, among other things, a protracted campaign to prevent government agencies from designating formaldehyde, styrene, and chromium as carcinogens. The Formaldehyde Council, Styrene Industry Research Council, and Chrome Coalition spent millions more. These groups asked the Office of Advocacy for assistance, and the office became their willing partner.”

The Center for Progressive Reform said the record “demonstrates how the Office of Advocacy has taken advantage of the overly broad standards developed by the SBA to define what counts as a small business…. In dozens of industries, SBA considers companies with up to 500 employees to be small businesses; in a few areas, firms with up to 1,500 workers are deemed "small."

Its report recommends that Congress amend the office’s authorizing statutes to “focus on promoting small business `competitiveness’ instead of on reducing regulatory impacts or burdens,” and to bolster congressional oversight.

The Center for Effective Government study challenged the Office of Advocacy’s practice of hosting regular environmental roundtables attended by trade association representatives and lobbyists. “The discussions and minutes are kept secret, although the consensus positions that emerge appear to inform the Office of Advocacy’s policy positions.” Saying such practices violate “the spirit, and perhaps the letter, of the Federal Advisory Committee Act,” the center called for the Government Accountability Office to investigate.

The Advocacy Office said through a spokesman that it would have no comment, having not read the embargoed reports.

An SBA press release last February said the office had saved small businesses $11.7 billion in first-year regulatory costs and $10.7 billion in annually recurring costs by helping federal agencies comply with the Regulatory Flexibility Act. “As a former entrepreneur, I can attest that small firms are in a better position to grow, innovate, and create jobs when regulations are less burdensome,” said Chief Counsel for Advocacy Winslow Sargeant. “Federal agencies that work with Advocacy to use the RFA effectively write rules that are better for small entities and the economy while still meeting the statutory goals the regulations were designed to carry out.”

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