PRESS RELEASE

-For Immediate Release-

November 12, 2014

Contact: Brian Gumm, bgumm@foreffectivegov.org, 202-683-4812

Gaming the Rules: Industry Interference Shuts Out Small Business Voices, Delays and Weakens Public Protections

New Report Faults Review Process that Masks Big Business Influence, Wastes Limited Agency Resources

WASHINGTON, Nov. 12, 2014—A new report released today by the Center for Effective Government finds that trade associations and their big business members are shutting genuine small business voices out of the federal rulemaking process and weakening some crucial public protections.

By law, the U.S. Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), and the Consumer Financial Protection Bureau (CFPB) are required to initiate a special small business review panel process if they believe a proposed standard may have a significant economic impact on small businesses. But Gaming the Rules: How Big Business Hijacks the Small Business Review Process to Weaken Public Protections shows that this process has been captured by trade associations and their large corporate members, rendering the process duplicative and wasteful.

The review panels include officials from the rulemaking agency, the White House Office of Information and Regulatory Affairs, and the Small Business Administration's Office of Advocacy, who consult with a group of small business representatives. But the small business representatives are sometimes members or staff of industry-wide trade associations, including corporate lawyers and lobbyists.

"These three regulatory agencies were created to protect American workers from workplace and environmental hazards and to safeguard consumers from abusive lending practices," said Katherine McFate, president and CEO of the Center for Effective Government. "If the small business review process was working the way it's supposed to, agencies and small businesses would be working together to ensure that we have the most effective public protections possible. Unfortunately, this process is just delaying the implementation of laws that Congress already passed."

The result: recommendations from the panels have not been limited to small business concerns, and in some cases health and safety standards have been weakened. The process diverts limited agency resources from protecting the public and can delay the implementation of crucial public protections.

"Big businesses and the trade associations that represent them have hijacked this process," said Frank Knapp, small business owner and president of the South Carolina Small Business Chamber of Commerce. "This effectively gives corporate interests early access to federal regulators and ensures that small business voices are not heard."

David Levine, President of the American Sustainable Business Council, said, "Despite the mandate of the Office of Advocacy, small business voices so critical to the process have been excluded. We and the more than 200,000 businesses we represent, and many others, stand ready with the vital perspective of innovative and responsible business owners who understand the value of smart regulations. The future of all industries depends on this."

The Office of Advocacy has a history of amplifying the perspectives of big businesses and trade associations. In a January 2013 report, the Center for Effective Government found that the office had interfered with scientific assessments of cancer-causing chemicals. During the assessment process, the office pushed the agenda of powerful chemical industry associations, including the American Chemistry Council. And just last month, the office attacked the EPA's "Waters of the U.S." rule that helps define the bodies of water the agency oversees. The office's criticisms echoed those of agribusiness and utilities.

"The problems we discovered with the small business review process demonstrate the way the Office of Advocacy has distorted its mission and is not serving as a voice for genuine small businesses," said Ronald White, Director of Regulatory Policy at the Center for Effective Government.

The Center for Effective Government recommends several steps agencies and the Office of Advocacy can take to improve the small business review process. These include:

Each agency should develop written eligibility criteria for the "small business" representatives who advise review panels to ensure the nominees are genuine small business owners.



The Office of Advocacy should help agencies identify qualified small business owners and staff to advise the panels instead of recommending trade association representatives as advisors.



Agencies should only consider changes to a rule that specifically address the impacts on genuine small businesses.

"The review process is intended to create an opportunity for input from small businesses," White said. "It should not serve as another avenue for big businesses and industry lobbyists to try to weaken critical public health, environmental, worker safety, and consumer finance protections."

The report is available at http://www.foreffectivegov.org/gaming-the-rules.

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