Whose Interests Does the Office of Advocacy at the Small Business Administration Serve?

Jan. 29, 2013

This report examines the activities of an independent office within the Small Business Administration: the Office of Advocacy. The Office of Advocacy has responsibility for ensuring that federal agencies evaluate the small business impacts of the rules they adopt. Scientific assessments are not “rules” and do not regulate small business, yet the Office of Advocacy decided to comment on technical, scientific assessments of the cancer risks of formaldehyde, styrene, and chromium. By its own admission, Advocacy lacks the scientific expertise to evaluate the merits of such assessments.

The report analyzes correspondence and materials received through a Freedom of Information Act request made by staff at the Center for Effective Government. Our inquiry was driven by two questions. Why did the Office of Advocacy get involved in the debate over scientific assessments that do not regulate small business? Whose interests does the Office of Advocacy of the Small Business Administration actually serve?

We found that the Office of Advocacy’s comments on these assessments raised no issues of specific concern to small business and relied almost exclusively on talking points provided by trade associations dominated by big chemical companies. Between 2005 and 2012, the American Chemistry Council (ACC) and its members spent over $333 million lobbying Congress and federal agencies on, among other things, a protracted campaign to prevent government agencies from designating formaldehyde, styrene, and chromium as carcinogens. The Formaldehyde Council, Styrene Industry Research Council, and Chrome Coalition spent millions more. These groups asked the Office of Advocacy for assistance, and the Office became their willing partner.

We conclude that the Office of Advocacy’s decision to comment on scientific assessments of the cancer risks of certain chemicals constitutes a significant and unwarranted expansion of its role and reach beyond its statutory responsibilities. We recommend that Congress ask the Government Accountability Office (GAO) to investigate the Office of Advocacy and exert more rigorous oversight of its activities to ensure its work does not undermine the efforts of other federal agencies to fulfill the goals Congress has assigned them.

Key Findings:

• The Office of Advocacy hosts regular Environmental Roundtables attended by trade association representatives and lobbyists. The discussions and minutes are kept secret, although the consensus positions that emerge appear to inform the Office of Advocacy’s policy positions. These meetings violate the spirit, and perhaps the letter, of the Federal Advisory Committee Act.


• The Office of Advocacy staff made no effort to educate themselves on the science underlying the debates about the cancer risks of formaldehyde, styrene, and chromium or to verify the accuracy of the talking points provided to them by industry lobbyists before filing comments critical of the scientific conclusions in each assessment. Instead, the Office of Advocacy simply repackaged and submitted talking points provided by trade association lobbyists as formal comments.


• Correspondence between the Office of Advocacy and trade associations dominated by large chemical companies and their lobbyists suggests the Office became entangled in a major lobbying campaign to prevent the federal government from listing certain chemicals as known or probable carcinogens. E-mails suggest the Office of Advocacy may have violated the Anti-Lobbying Act and other lobbying restrictions.


• No small businesses objected to the scientific assessments or asked the Office of Advocacy to intervene in the cancer assessments. The Office of Advocacy made no effort to determine whether the positions it took represented small business views and interests. Moreover, since small businesses may produce substitutes for toxic chemicals, a cancer finding for existing chemicals could open up new markets for substitute chemicals produced by small businesses.


• No process or procedures seem to be in place to ensure that the activities of the Office of Advocacy are consistent with, and do not work to undermine, the statutory responsibilities of other agencies.

Recommendations:

• The Office of Advocacy should limit its work to regulatory activities affecting small business, as authorized by the Regulatory Flexibility Act and subsequent laws.


• Congress should ask GAO to investigate whether the Office of Advocacy’s Environmental Roundtables violate Federal Advisory Committee Act provisions.


• The Office of Advocacy should independently verify the factual claims it makes in comments to other federal agencies and should not comment on technical or scientific matters on which its staff have no expertise.


• Congress should ask GAO to investigate whether the activities of the Office of Advocacy represent impermissible lobbying by federal employees.


• The Office of Advocacy should develop procedures to verify that its policies represent the interests of small business. Its comments should be limited to offering a small business perspective that the regulating agency would not otherwise hear.


• Congress should exert more rigorous oversight over the Office of Advocacy to ensure its work does not delay or prevent other federal agencies from fulfilling their statutory goals, especially those scientific and regulatory agencies tasked with protecting the health of the American people.