You’re the Boss Blog: A Small-Business Office Is Accused of Advocating for Big Business

The Agenda

How small-business issues are shaping politics and policy.

For decades, the Office of Advocacy, a bureau within the Small Business Administration, has worked behind the scenes to soften the impact of federal regulations on small companies. It is charged with, among other responsibilities, representing “the views and interests of small businesses before other federal agencies.” To learn how regulatory policies might affect small businesses, the office regularly convenes round-table discussions with its constituents.

But before one such forum on labor safety in January 2011, an Office of Advocacy official invited a lobbyist for General Electric to participate, according to e-mails obtained by an organization known as the Center for Effective Government. “You are welcome to attend as long as you maintain a small business perspective!” the official wrote, adding the well-known emoticon to suggest winking irony. Then he wrote, “Seriously, we would very much appreciate your input and expertise!”

To some critics, the participation of G.E., one of the biggest corporations in America, in a meeting ostensibly about small-business concerns is one example of a larger concern about the Office of Advocacy. These critics suggest that — just as other divisions of the S.B.A. have come in for criticism about looking the other way as big companies get government contracts or increased access to government-guaranteed loans — the office has provided big businesses with a back door into the government’s rule-making deliberations.

With a staff of 47 and a budget of $9 million — and its own appropriation, separate from the rest of the S.B.A. — the office is tasked with making sure that other agencies consider the impact of their regulations on small businesses under procedures set by federal laws, particularly the Regulatory Flexibility Act, and prods those agencies to find alternatives to minimize that impact.

Not surprisingly, that kind of prodding has its fans. “The Office of Advocacy continues to be the only voice within the federal government actively advocating to alleviate that burden,” Susan Eckerly, senior vice president for public policy at the National Federation of Independent Business, said in a statement. The N.F.I.B. is a conservative trade association that generally takes little interest in the activities of the S.B.A., but it came to the Office of Advocacy’s defense recently after two organizations separately published critical reports on the office. “In our many years of working with the Office of Advocacy,” Ms. Eckerly said, “we have found them to take great pains to ensure they are representing the views of small businesses that otherwise would have no voice in the rule-making process.”

The office claims to have saved small businesses more than $88 billion in just the first-year costs of complying with new regulations since 2002. For example, in 2011 the Justice Department adopted a proposal from the office to allow companies to avoid having to comply with new standards under the Americans With Disabilities Act — a change the office has claimed saved small businesses $8.3 billion. In this example and others, however, it is impossible to know whether the impetus for the rule change came from the Office of Advocacy or elsewhere.

Some critics of the Office of Advocacy maintain it goes beyond its mandate and exhibits a general hostility toward regulation. They blame the office and the Regulatory Flexibility Act for delaying regulations by months, or even years, and for weakening the final policies. And in their reports, the Center for Effective Government and the Center for Progressive Reform claim the office works too closely with large corporations and the trade associations that represent them.

For example, in 2010 and 2011 the Office of Advocacy criticized efforts at other agencies to lay the groundwork for regulating three hazardous chemicals, citing the concerns of small businesses. But based on e-mails and other documents obtained from the office through Freedom of Information Act requests, the Center for Effective Government concluded that the office entered into these three scientific debates at the behest of trade groups, principally the American Chemistry Council, and relied on them extensively — if not exclusively — to frame its line of attack.

“No small businesses objected to the scientific assessments or asked the Office of Advocacy to intervene in the cancer assessments,” Randy Rabinowitz, the center’s director of regulatory policy, wrote in the report. “The Office of Advocacy made no effort to determine whether the positions it took represented small-business views and interests.”

Moreover, according to the Center for Progressive Reform report, the S.B.A. office “commonly seeks to weaken the requirements of proposed rules for all affected entities” instead of proposing rule changes narrowly tailored to small companies. Indeed, in at least four of the six rules established in 2012 in which the Office of Advocacy claims cost savings for small businesses, the office pushed changes that would benefit all businesses, not just small ones. In another case, the office proposed increasing the small-business size standards set by the S.B.A. to accommodate larger businesses.

Brad Howard, a spokesman for the Office of Advocacy, said in an e-mail that “our sole focus and Congressional mandate is and always has been on minimizing the burden on small businesses.” But, he said, “occasionally, these alternatives benefit everyone.” And the office’s work with trade groups “is only part of the picture,” adding that staff members of the office also talk directly with small companies.

Trade associations are essential to the Office of Advocacy’s efforts to understand how regulations might affect small companies, said Thomas M. Sullivan, a Washington lawyer who served as chief counsel for the office during the Bush administration. “Do you know how hard it is to find an independent trucker and get them to read an 800-page Federal Register proposal? They just don’t have time!” he said.

Of course, the interests of small and large companies may coincide, even when small companies are granted preferential treatment. A handful of large companies make the chemical styrene, and thousands of small companies use it to manufacture other products. All could face consequences if the Health and Human Services Department labels it a cancer risk. The fact that no small businesses complained to the office about the assessment for styrene, or submitted comments while the Health and Human Services Department was preparing its report, could indicate lack of interest or, as Mr. Sullivan, the former chief counsel, suggested, lack of time or awareness.

Ms. Rabinowitz, of the Center for Effective Government, sees it differently. The Office of Advocacy was set up to give voice to businesses that otherwise would not have one. “But in the cases we’ve looked at, and the cases C.P.R. has looked at, apparently, Advocacy is not voicing any unique small-business perspective,” she said. “The American Chemistry Council is adequately, legitimately and loudly representing the interests of the chemical companies — they’re a big player in these debates.

“As a matter of policy, why is the taxpayer subsidizing an office of the federal government to amplify their complaints?”

Article source: http://boss.blogs.nytimes.com/2013/03/18/a-small-business-office-is-accused-of-advocating-for-big-business/?partner=rss&emc=rss