A federal agency formed to defend the interests of small business has turned into what critics call an anti-regulatory spokesperson, and it is targeting President Biden’s agenda.
The Small Business Administration’s advocacy office tends to increase during Democratic administrations, seeking to influence federal environmental and workplace regulations to be more accessible to businesses like small refineries and tanneries.
The office has already pushed back on energy standards and Biden’s critical habitat proposals, after four years of silence under former President Trump.
“It was almost dormant under the Republican administrations, then it kicks in under the Democratic administrations,” said Amit Narang, an analyst at left-wing Public Citizen, who criticized the office. “It could become a problem for the EPA as it was under the Obama administration.”
Originally established by Congress in 1976, the office was designed “to be the independent voice of small business within the federal government.”
It is headed by the chief advocacy lawyer, a politically appointed person, but the small agency is independent and isolated from the views of the president.
Its role is twofold.
Internally, the office convenes expert groups on rules determined to have significant impact on small entities, in accordance with the Small Business Regulatory Fairness Act (SBREFA).
The panels are “public” but closed to the press, according to the SBA website. The law requires the EPA, the Occupational Safety and Health Administration, and the Consumer Financial Protection Bureau to participate in the roundtables.
Externally, the office comments on the impacts of all manner of federal actions, with a pro-business and generally anti-regulatory bias, in hopes of securing exemptions or other kinds of breaks.
Supporters say SBREFA signs – often pronounced sub-ree-fa – lead to stronger rules, even though they can slow down the rulemaking process.
“We measure our success in savings which we can attribute to agencies reviewing or redefining regulations to reduce the cost of compliance,” said Major Clark, who was the acting chief counsel for the Advocacy Office. over the past five years.
“We’re doing a pretty decent job,” said Clark, who was acting because Trump never appointed anyone to head the agency.
Critics accuse the office of being a taxpayer-funded anti-regulation operation buried in the federal government that relies heavily on the United States Chamber of Commerce and other trade groups that represent big business to fight against federal regulations.
James Goodwin, a regulatory advocate at the Center for Progressive Reform, helped develop a report in 2013 detailing how the American Chemistry Council – which represents companies like DuPont and WR Grace & Co. – influenced an SBREFA panel on an OSHA rule on silica, which can be dangerous at high levels.
The report found that a quarter of the representatives who participated in the review panels were appointed by lawyers linked to the trade group. And a third of the specific points raised by the SBA office mirrored the points raised by the ACC.
A new report of the Congressional Research Service explored similar issues with the Office of Advocacy, including the lack of clarity around the definition of small entities, partisan and ideological disputes, and limited funding.
The office’s responsibilities have expanded over time, the report notes, and Republicans pushed legislation to expand it further.
But Narang said the office has relied for years on now debunked studies by economists Nicole Crain and Mark Crain. According to one of their claims, the annual cost of federal regulations reached over $ 1.75 trillion in 2008.
The Government Accountability Office and other academics have interrogates Crains work because it focused on the old rules of the 1980s and 1990s and ignored benefits such as air and water quality or food and medical safety.
Yet, Narang said, the Crain’s research “has just entered the bloodstream and it has become a talking point from hell.”
Action on the DOE, Rules of Procedure
For much of the last administration, the SBA Office of Advocacy did not host any EPA panels except one in November 2020 on standards for the carcinogenic air pollutant, ethylene oxide. .
The office commented on just two rules in 2017, up from 36 in 2009, former President Obama’s first year in office.
Clark attributed the decline to Trump’s deregulatory leanings and his executive order ordering all federal agencies to initiate two regulations for every new regulation established.
“There was a period when the regulatory pipeline was relatively empty,” he told E&E News in an interview.
But now that pipeline is starting to fill up. And the office voted against a rule from the Department of Energy.
In one letter To Energy Secretary Jennifer Granholm, the agency said many small businesses have complained “about how a lack of predictability in the agency’s actions can have a serious impact on their operations.”
The DOE proposal would reverse the Trump administration’s changes to product testing for efficacy standards. Environmentalists said the previous administration gave businesses unnecessary breaks.
In another case, in May, the SBA office argued that the Home Office’s Fish and Wildlife Service ignored comments from small businesses like power co-ops when finalizing a designation of critical habitat for the northern Mexican garter snake.
And in April, the office convened a panel on the EPA’s regulations on 1-bromopropane, a solvent used in dry cleaning.
Brittany Bolen, who headed the EPA’s policy office under Trump, agreed that the SBA would be more active during the Biden administration, “given the ambitious regulatory agenda under the administration.”
“I think it’s hard to say at this point to what extent their comments will influence these rules,” she said.
“I never found a rule that the EPA didn’t screw up”
Tom Sullivan, who was chief counsel for the Office of Advocacy during the George W. Bush administration, called the office “extremely important,” although its success, he said, could be better measured by the things you don’t read in the press.
“If you look past the headlines, there is a huge desire by federal agencies to get legitimate small business input into rule-making,” he said, adding, “Post it on Reginfo.gov just isn’t going to cut it. “
In recent years, the office’s budget has grown steadily, with Biden’s White House offering $ 9.62 million for fiscal 2022, a modest increase.
And some of the office’s harshest critics believe it should actually have more money to be able to do its job properly.
Goodwin argued that the current 55 employees in the office are not enough to travel the country adequately to really know about thousands of small businesses and help them comply with the rules.
Kevin Bromberg, who was the SBA’s deputy chief counsel for environmental policy, refuted the notion that the office’s reliance on business groups is a problem.
He said the current methodology is needed to reach much of the country. After all, he argued, “small businesses are busy running their own affairs.”
Bromberg and his colleagues joked that as part of their process they would call a small business to see if they made fun of a proposed rule, he said.
“They always laughed,” he said. “I never found a rule that the EPA didn’t screw up somehow.”
Bob Perciasepe, deputy administrator of the EPA during the Obama years, said the EPA often tries to get feedback from small businesses in the early stages of drafting a proposal.
For example, when the agency was working on gasoline desulfurization, he said, small refiners told him that the big companies were buying out all the construction companies that built the units.
The EPA has therefore decided to delay the implementation of the rule for small refiners by one year, an accommodation determined to have negligible impact on the environment.
Other rules did not have such an easy fix. Disagreements have arisen over Obama’s Clean Water Rule aimed at clarifying wetlands and waterways that are automatically protected under the Clean Water Act.
Perciasepe said the EPA could have done a better job upstream in trying to get people to buy into federal environmental regulations – for example, making sure small farmers understand that normal farming activities will continue to do so. ‘be exempt.
“I think it’s not inappropriate to think about how regulation can impact different populations not only of people, but also on businesses, and to look for ways to take that into account and act on it. be transparent about it, ”he said. “My experience is that if you do these things and bring them early and are transparent, it doesn’t impact the environment.”
He added, “I’m not saying this process can’t be abused by, say, a big company that comes up with its trade association to raise a heckle.”
But Perciasepe said he doubts the SBA panels will give way to more abuse than other parts of the regulatory process.
What is a small business anyway?
More generally, however, Goodwin argued that there is “a kind of zealous small business cult in America that seems almost theological, as opposed to, you know, grounded in concrete reality.”
They “have become a highly romanticized, almost mythological concept among the public and policymakers,” he argued in the 2013 report, “conjuring up images of little ‘mom and pop’ stores lining the idyllic main street of ‘a picturesque village. “
And no politician, Republican or Democrat, wants to be seen as hostile. Two weeks ago, in a vote on environmental disclosure legislation, HR 1187, lawmakers from both sides rose to the House to speak at length about the potential impact on small businesses.
But as Goodwin and others have pointed out, the government defines a small business as any business with fewer than 500 employees. This means that small businesses represent 99.9% of all businesses.
“The definition of small business is actually a little bit crazy,” Goodwin said. “If everyone is a small business, then no one is a small business.”