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Small-Business Advocate Plays Big Role in Rulemaking

By Cindy Skrzycki
Tuesday, January 11, 2005; Page E01

When federal regulators were considering a rule last summer to limit workers' exposure to cancer-causing hexavalent chromium, industry groups that use the compound to make pigment, dyes and chrome plating met with officials from the Office of Management and Budget. Also at the table, as a proponent for business, not government rulemakers, was a representative of the Small Business Administration's Office of Advocacy.

The SBA office was created in 1976 to be a government watchdog for small business and has become the place where small business has assumed an outsized role in the rulemaking process. With a staff of 40 and a budget of $8 million, it churns out its own economic analysis and research reports and takes positions for small business on hundreds of rulemakings.

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The Mercatus Center at George Mason University provides conservative analysis of rules.
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It also trains agencies how to comply with small-business requirements in regulations, helps run panels for small-business people who weigh in on major rules, and uses the courts to make sure small business gets its due from federal agencies.

"Even the practitioners are not totally aware of what is going on or the level of influence exerted," said Reece Rushing, associate director for regulatory policy at the Center for American Progress, which is headed by John D. Podesta, former chief of staff to President Bill Clinton. "I look at them as taxpayer-funded lobbyists for small business. They have a very privileged spot in the rulemaking process. . . . There is no public-interest representative. There is no Office of Advocacy for the Public Interest."

Andrew Langer, manager of regulatory policy for the National Federation of Independent Business, a leading lobby for small business, said there are established advocates for workers' safety, such as the AFL-CIO, and others for the environment. He said small business does not have the resources to be involved in every regulatory battle. "There are legions of folks on the other side," Langer said. "Advocacy does level the playing field."

According to its Web site, the Office of Advocacy has weighed in some 125 times since 2002, using letters, comments and court filings to telegraph its interests. The rules are as diverse as "critical habitat for riverside fairy shrimp" and bank lending rules. In its 2003 report, it claimed to have saved small business about $6.3 billion in regulatory costs.

"Because of White House attention to small business, our office has considerable influence on the process in this administration," said Thomas M. Sullivan, the office's chief counsel. Sullivan was executive director of the National Federation of Independent Business Legal Foundation before he joined the advocacy office in 2002.

He said criticism of his office is unfounded since small businesses bear a "disproportionate burden" of regulatory compliance costs. Changes that his office wins do not compromise the objectives of the rulemaking process, he added.

The office's clout increased in 1996 when Congress passed the Small Business Regulatory Enforcement Fairness Act, which provided judicial review of agency decisions regarding treatment of small business in rules. The law also mandated that the Environmental Protection Agency and the Labor Department's Occupational Safety and Health Administration convene small-business advisory panels to reviews rules that have a significant impact on small entities. Until then, agencies frequently did not pay special attention to small business, despite requirements to do so.

When panels convene under the 1996 law, small business gets an early bite at the regulatory apple. Before a rule is even in the proposal stage, the office recruits small-business owners to serve on Small Business Advocacy Review Panels. Participants are supplied with a draft of the rule and a preliminary regulatory analysis, which allows early insight into regulators' thinking.


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