New CPR Issue Alert: The Small Business Charade

by Matt Shudtz

February 04, 2015

Tomorrow, the House is set to vote on the Small Business Regulatory Flexibility Improvements Act (SBRFIA), a piece of legislation that CPR Senior Policy Analyst James Goodwin has explained would “further entrench big businesses’ control over rulemaking institutions and procedures that are ostensibly intended to help small businesses participate more effectively in the development of new regulations.”

As Members of the House prepare for Thursday’s vote, CPR has something to add to their files: a new Issue Alert with details about how the Regulatory Flexibility Act is failing small businesses.  In The Small Business Charade: The Chemical Industry’s Stealth Campaign Against Public Health, CPR President Rena Steinzor, Senior Policy Analyst James Goodwin, and I explain how the American Chemistry Council (ACC) and other large trade associations manipulated the procedures outlined in the Regulatory Flexibility Act to protect their profits at the expense of the public interest—all while wasting taxpayers’ money and silencing legitimate small business input into the regulatory process. We take a close look at emails obtained through the Freedom of Information Act (h/t Center for Effective Government) and explore how ACC tried to manipulate OSHA’s ongoing efforts to better protect workers from respirable crystalline silica, a ubiquitous and under-regulated carcinogen.

In the Issue Alert, we make a case that real reforms for the Regulatory Flexibility Act and related procedures ought to be aimed at ensuring the Small Business Administration’s (SBA) Office of Advocacy is actually obtaining and promoting the interests of small businesses, rather than the interests of big businesses masquerading as small ones. We found, as the Government Accountability Office (GAO) did in its own investigation, little evidence that the SBA Office of Advocacy consults with the type of firms you think of when you hear “small business”—the mom-and-pop companies operating on small budgets and without access to teams of lawyers, lobbyists, and scientists who can help them understand sometimes complex regulations.

In fact, our analysis found:

  • One-quarter of the small entity representatives who participated in the Small Business Advocacy Review Panel were nominated by advocates linked to ACC.

  • ACC and its affiliates led discussions at “roundtable” meetings sponsored by the SBA Office of Advocacy, which the SBA Office of Advocacy later described as the primary source of information for its formal comments to OSHA.

  • OIRA granted ACC-affiliated advocates eight closed-door meetings to discuss the proposed rule.  Representatives from the SBA Office of Advocacy participated in six of the eight meetings.

  • One-third of the specific points that Advocacy raised in its formal comments on the rule overlap with points that ACC made in its formal comments.

In order for the SBA Office of Advocacy to comply with its statutory mandate and end its persistent misuse of taxpayer dollars, reforms are in order:

  • The SBA Office of Advocacy should establish and abide by new policies that ensure its staff work to advance the unique interests of small businesses within the bounds of occupational-safety, environmental, and consumer-protection laws.

  • Congress should increase its oversight of the SBA Office of Advocacy. 

  • The President should revoke Executive Order 13272, which gives the SBA Office of Advocacy too much sway over other agencies’ rulemaking processes.

On Thursday, Members of the House will vote on a bill that would expand the universe of proposed health, safety, and consumer protection rules subject to the Regulatory Flexibility Act and the Office of Advocacy’s meddling. The bill’s provisions would only increase the reckless misuse of taxpayer dollars and would in fact directly harm small businesses.  If SBFRIA’s supporters are serious about helping small businesses, then they should adopt reforms that will ensure that the SBA the Office of Advocacy properly exercises its existing authority.

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Matthew Shudtz, J.D., is the Executive Director of the Center for Progressive Reform. He joined CPR in 2006 as policy analyst, after graduating law school with a certificate in environmental law.

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