Olympia Snowe, Deregulation, and Her ‘Small’ Business Cover

This great country of ours is quite fond of its enduring myths: poor kids are able to become rich kids by working hard, the family farm feeds us a nutritious bounty, and small business is the engine that makes our economy sing. When most of us hear that musical phrase—smaaaall business—we think of the local florist, ice cream shop, or shoemaker. How startling, then, to discover that according to the Small Business Administration (SBA) a petroleum refinery employing 1,500 workers is also “small,” although of course not nearly so beautiful.

A couple of weeks ago in this space, I explained the plan Sens. Olympia Snowe (R-ME) and Tom Coburn (R-OK) had concocted to hold existing health and safety rules hostage by allowing the chief counsel of the SBA Office of Advocacy, an independent bureau within the SBA best known for its militant attacks on public health regulations, to unilaterally nullify regulations if it concludes that the sponsoring agencies fail to thoroughly review them to ensure that they did not overly inconvenience that refinery, or the 500-person tannery, 1,000-worker chemical plant, or 750-person explosive manufacturer that are also defined as “small businesses” under SBA rules. 

My blog post led to some not altogether flattering media attention in Senator Snowe’s home-state newspapers, prompting her to write a long op-ed defending her proposal to vest all that authority in the SBA, after which she apparently abandoned that particular mechanism for gumming up the regulatory works in favor of a new one. And now she’s trying to shoehorn her controversial amendment onto an otherwise bipartisan bill that provides subsidies to small businesses, a move that was called out on the Senate floor by Majority Leader Harry Reid.

The imperial-czar component of the original amendment is gone. Rather than allowing the SBA Office of Advocacy to put the rules in a choke hold, the revised amendment gives that job to inspectors general within the agencies whose actual job is to uncover waste, fraud, and abuse. Rather than being left alone to serve the taxpayers by carrying out this traditional and badly needed oversight function, the IGs would now be on patrol for regulators who are not kind enough toward that tannery, refiner, chemical manufacturer, and machine shop. And if they don’t like the way the regulator has considered the economic burden imposed on such polluters while reviewing an existing rule, the IGs can order – get this – pay cuts for the agency’s staff as a whole. So, the amendment states, 30 days after the inspector general of the U.S. EPA tells the agency that its review of the rule has not been kind enough to the refiner, “an amount equal to one percent of the amount appropriated for the fiscal year to the appropriations account of the agency that is used to pay salaries shall be rescinded.” 

This bizarre punishment is like having the internal affairs division of the local police department cut the salary for all beat cops because it does not like the way a couple of detectives have investigated a robbery or a murder. Would anyone who has a choice want to work in a place governed by such crazy and punitive rules? Besides, if agencies fail to complete the required reviews of existing rules to ensure that they are not unduly burdening small businesses, it is not because they are being obstinate or doing anything else worthy of punishment. Rather, it is because agencies lack the personnel and resources to carry out such reviews. Frankly, they lack the personnel and resources to carry out their affirmative statutory missions. The amendment not only ignores this problem, it would make it worse. In effect, it punishes agencies for not having enough personnel and resources by cutting their personnel and resources even further. Such a self-defeating policy defies all logic, unless, of course, the purpose is to hobble the ability of regulatory agencies to protect the public.

Last but not least, casting its net widely, quite apart from the requirement to “look back” at existing rules, the amendment requires agencies like EPA to consider the views of the SBA Office of Advocacy with respect to any “regulatory action,” present and future, So, for example, Maine is the regretful host to several Superfund toxic waste sites, one of which is a former tannery located in Saco. The site involves 212 acres of land contaminated by the indiscriminate dumping of chromium sludges, acid wastes, methylene chloride, and caustic substances. The company that made this mess was called the Saco Tannery Corp., which is now out of business. As mentioned earlier, under SBA rules, tanneries employing 500 or fewer workers qualify for small business treatment. It's likely the Saco facility would have qualified; tanneries in Maine typically do not employ more than a few hundred employees (when two Maine operations merged in 2007 to form the largest tannery in the country, the combined employment was just 565). Had the Snowe amendment been the law back when the Saco site was being considered for cleanup, the SBA Office of Advocacy might well have protested placement of the tannery site on the Superfund list, a result clearly to the detriment of Maine citizens who would live near a still-toxic site. 

Part of the nearly extinct breed of moderate Republicans, Snowe faces a potentially tough reelection battle and is busy guarding her right flank. As she’ll hopefully learn soon, though, the Pine Tree State is also proud of its pristine environment. It may not applaud the good senator’s determination to carry water for dirty businesses.