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89–537 PDF 2003

SMALL BUSINESS ADVOCACY IMPROVEMENT ACT

OF 2003

HEARING

BEFORE THE

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT 

& GOVERNMENT PROGRAMS

AND THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

WASHINGTON, DC, APRIL 1, 2003

Serial No. 108–9

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

SAM GRAVES, Missouri 

EDWARD SCHROCK, Virginia 

TODD AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

TRENT FRANKS, Arizona 

JIM GERLACH, Pennsylvania 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

CHRIS CHOCOLA, Indiana 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

NYDIA VELAZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

FRANK BALLANCE, North Carolina 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

CHARLES GONZALEZ, Texas 

GRACE NAPOLITANO, California 

ANIBAL ACEVDEO-VILA, Puerto Rico 

ED CASE, Haiwaii 

MADELEINE BORDALLO, Guam 

DENISE MAJETTE, Georgia 

JIM MARSHALL, Georgia 

MICHAEL RICHAUD, Maine 

LINDA SANCHEZ, California 

ENI FALEOMAVAEGA, American Samoa 

BRAD MILLER, North Carolina 

J. MATTHEW SZYMANSKI, Chief of Staff and Chief Counsel 

PHIL ESKELAND, Policy Director 

MICHAEL DAY, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT, AND GOVERNMENT PROGRAMS

TODD AKIN, Missouri, Chairman 

JIM DEMINT, South Carolina 

SHELLEY MOORE CAPITO, West Virginia 

JEB BRADLEY, New Hampshire 

CHRIS CHOCOLA, Indiana 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

TOM UDALL, New Mexico, Ranking 

Democrat 

DANNY DAVIS, Illinois 

CHARLES GONZALEZ, Texas 

GRACE NAPOLITANO, California 

ED CASE, Haiwaii 

MADELINE BORDALLO, Guam 

THOMAS BEZAS, Professional Staff Member 

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

ED SCHROCK, Virginia, Chairman 

ROSCOE BARTLETT, Maryland 

SUE KELLY, New York 

TRENT FRANKS, Arizona 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

CHARLES GONZALEZ, Texas, Ranking 

Democrat 

DONNA CHRISTENSEN, Virgin Islands 

ENI FALEOMAVAEGA, American Samoa 

ANIBAL ACEVEDO-VILA, Puerto Rico 

ED CASE, Haiwaii 

DENISE MAJETTE, Georgia 

ROSARIO PALMIERI, Senior Professional Staff Member and Subcommittee Coordinator 

(II) 

(III)

C O N T E N T S 

WITNESSES

Page 

Sullivan, Hon. Thomas M., Chief Counsel, SBA, Office of Advocacy .................. 3

Coratolo, Giovanni, U.S. Chamber of Commerce .................................................. 10

Neece, Allen, Small Business Legislative Council ................................................ 12

Langer, Andrew, National Federation of Independent Businesses ..................... 13

APPENDIX

Opening statements: 

Akin, Hon. W. Todd .......................................................................................... 23

Schrock, Hon. Ed .............................................................................................. 26

Prepared statements: 

Sullivan, Thomas M ......................................................................................... 27

Coratolo, Giovanni ............................................................................................ 35

Neece, Allen ...................................................................................................... 41

Langer, Andrew ................................................................................................ 44

(1)

THE SMALL BUSINESS ADMINISTRATION 

OFFICE OF ADVOCACY 

THE SMALL BUSINESS ADVOCACY 

IMPROVEMENT ACT OF 2003

Tuesday, April 1, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND

GOVERNMENT PROGRAMS

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

Washington, D.C. 

The Subcommittees met, pursuant to call, at 2:01 p.m. in Room 

2360, Rayburn House Office Building, Hon. W. Todd Akin, and Edward Schrock, [chairmen of the Subcommittees] presiding. 

Chairman AKIN. The Committee will come to order. 

Before we begin, I would like to say thanks to our different participants here, different members, and our guests, and I guess perhaps something that is on all of our minds, to recall the good people who are fighting for all of our freedom even today so that we 

can be here and deliberate and be involved in this great experiment in self-government that we all take part of. 

The Office of Advocacy is the voice for small business in government. And through the efforts of the Chief Counsel, that is current 

Mr. Tom Sullivan, who is with us, the views, and concerns, and interests of small businesses are advanced before Congress, the 

White House, federal regulatory agencies, and federal courts. The 

Office of Advocacy performs an invaluable service, saving small 

business literally millions of dollars every year. 

In an effort to increase the effectiveness of the Office of Advocacy, Mr. Schrock and I will be introducing the ‘‘Small Business 

Advocacy Improvement Act of 2003’’. This continues the effort that 

was begun some years ago by Missouri’s Senator Kit Bond, and 

sometimes make reference to how a senior member he is, which he 

does not appreciate, and more recently by our Chairman Mr. Manzullo. 

The legislation proposed to establish an independent line item for 

the Office of Advocacy in order to help establish the office’s independence; it enables the President to appoint the office’s General 

Counsel; and limits the Chief Counsel to serve only as long as the 

terms of the President by whom he or she was appointed. 

I look forward to the testimony of Mr. Sullivan and the other witnesses as we seek to improve the ability of the Office of Advocacy 

to support American small business, which the job engine of the 

U.S. economy. 

2

It is a cheerful topic that we are embarking on today just because, Mr. Sullivan, of the fantastic reputation that your office has 

already achieved, and we are very thankful for that. 

With that, I would like to recognize my minority member, Mr. 

Gonzalez, for comments. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. I do have 

a prepared statement, but in the interest of time and getting right 

to the testimony and the questions that will be following, I guess 

I wish just to express my own thanks and appreciation for Mr. Sullivan’s presence here and the fine work that he is doing, and of 

course, the members of the two respective Committees that have 

the appropriate jurisdiction. 

The question really comes down to independence, how do we 

achieve it. I think there is going to be some real basic questions 

that I know I would like to pose the counsel and to the other witnesses how we can achieve it in such a way that the best interests 

of all parties are actually served. 

But in the final analysis, it really is in the best interest of small 

businesses throughout this country which happens to be in the best 

interest of this country. 

Again, thank you very much, Mr. Chairman. 

Chairman AKIN. Thank you. It is a pleasure. 

And also, I would like to recognize my distinguished colleague, 

Mr. Schrock. 

Chairman SCHROCK. Well, thank you, Mr. Akin. I think I will follow on the heels on Mr. Gonzalez. I had a very, very, very long 

opening statement, but you are not going to hear it. 

I want to welcome Tom Sullivan. I noticed you said current Chief 

Counsel for Advocacy. That indicates he is going away. I hope that 

is not the case. So we are glad to have you here, and I am sure 

we will have some interesting questions for you later. Thank you. 

Chairman AKIN. Thank you, Mr. Schrock. 

And now our Chief Counsel of the Office of Advocacy. I had the 

pleasure of meeting Mr. Sullivan several weeks ago, and he had 

the pleasure of meeting my former home, the Missouri State Legislature, early this year. He recently testified there before the legislature in regard to our federal Reg Flex, which I happily support. 

And so for your comments, Mr. Sullivan. 

Mr. SULLIVAN. Thank you, Chairman Akin and Chairman 

Schrock and Mr. Gonzalez. 

In the interest of time, I would ask that I submit my formal 

statement for the hearing record, but then be able to summarize 

briefly before you this afternoon. 

Chairman AKIN. Thank you. I am sure—we have gotten word 

that there is a vote at about three o’clock, so we are eager to keep 

things moving along, and I certainly appreciate the brief comments 

of my colleagues here. 

Mr. SULLIVAN. Actually, I would like to summarize the statement, if I could. 

Chairman AKIN. Please do. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

I would like to be brief; not that brief. 

[Laughter.] 

Mr. SULLIVAN. Just over a year ago—

3

Chairman AKIN. He was ready for questions. 

[Laughter.] 

STATEMENT OF THE HONORABLE THOMAS M. SULLIVAN, Chief 

Counsel, SMALL BUSINESS ADMINISTRATION, OFFICE OF ADVOCACY 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

Just over a year ago I appeared before the Full House Committee 

to lend my support to similar legislation of what is going to be discussed today. It is still my belief that a budget line item is the best 

and most efficient way to ensure that the Office of Advocacy maintains its independence well beyond my tenure as Chief Counsel, 

and ensure that government continues to be accountable to small 

business through compliance with the Regulatory Flexibility Act, 

the Small Business Regulatory Enforcement Act, and President 

Bush’s Executive Order 13-272. 

I am borrowing from last year’s testimony when I say that the 

two bedrock principles that underline the Office of Advocacy’s ability to represent small businesses effectively are independence and 

flexibility. 

Advocacy’s accomplishments and challenges are documented in 

our annual report to Congress that was completed just about a 

month ago, and I would also like to submit a copy of that annual 

report for this hearing record. 

Chairman AKIN. It will be submitted. 

Mr. SULLIVAN. Our flexibility and independence have allowed us 

unprecedented access to rules in the earliest stages of the rulemaking process. This result of early intervention is often the delay, 

removal or alteration of otherwise unnecessary or burdensome regulations. 

Our regulatory intervention efforts resulted in a cost savings of $21 billion in fiscal year 2002 alone. 

Last night when I was cramming for this afternoon’s hearing I 

noticed that my predecessor, Jerry Glover, came before the Committee last year, and explained the return on investment of the Office of Advocacy by explaining that in Jerry Glover’s tenure as 

Chief Counsel for every dollar spent they recognized a return of 

$800. 

I am pleased to report that last year’s cost savings of $21 billion 

in foregone regulatory costs breakdown to a return on investment 

that for every dollar spent running our office, we saw a return of 

$2,712. 

Chairman AKIN. Do you sell stocks? 

[Laughter.] 

Mr. SULLIVAN. If you pay taxes, then you are buying what we do. 

One year ago President Bush stood before hundreds of our countries most successful women entrepreneurs just down the street at 

the Reagan International Center. He rolled out his small business 

plan. He committed to removing regulatory barriers that stifle job 

growth. The President is counting on my office to lead that effort, 

and the cost savings that we have already realized are a good start. 

Focusing our efforts in Washington is not enough. As part of our 

mandate to make legislative and policy proposals for eliminating 

excess or unnecessary regulations on small business, the Office of 

4

Advocacy has started a nationwide initiative to pursue implementation of regulatory flexibility at the state level. 

And as the Chair recognized, I have traveled to Jefferson City, 

Missouri, and am working with state legislator in Missouri and 

around the country so that they can realize the same types of cost 

savings that my office has realized here in Washington, D.C. 

Getting down to the budget process, really that is the focus of today’s hearing, a conundrum exists, and that that conundrum may 

threaten the future of advocacy and the important role that it 

plays. 

Under the current budget process the Chief Counsel must rely on 

budget decisions of the SBA administrator. Now, this Administrator, Hector Baretto, is one of the Office of Advocacy’s strongest 

supporters. His budget decision reflect the President’s priorities 

and the critical role that our office helps in fighting for small business. 

However, a day may come when future SBA administrators and 

Chief Counsels do not get along as well, and the current budget 

process is a dangerous one because the Office of Advocacy’s budget 

is too easily pillaged when administration priorities change. 

A budget line item for the Office of Advocacy would certainly 

help address the problems in that conundrum and a line item 

would provide assurance to small entities that they can continue to 

count on the Office of Advocacy as a strong and independent voice 

on their behalf. 

That concludes my summary, and I am happy to answer any 

questions that the Subcommittees may have.[The statement of Mr. 

Sullivan follows:] 

Chairman AKIN. I appreciate your testimony, and I think that is 

really the question before us is a question of how do we maintain 

that independence and somebody that is out there trying to make 

sure that as we do our rules and regulations that we are doing it 

in a way that does not create just tangles of red tape and everything. 

Along those lines, I guess my question would be, my understanding is is that your work is with new pieces of legislation and 

new rules and regulations that are being written as opposed to 

things that are already existing, and that the ombudsman works 

more on the stuff that is already here. 

Is that something where we really should be combining two functions of government together, or is there enough work to keep both 

of you busy? And what do you see in terms of structure there? 

What is going to be best for our small businesses? 

Mr. SULLIVAN. The Chairman correctly identifies the respective 

roles of my office and the Office of Ombudsman. Basically, my office is the before, working with agencies to make sure they treat 

small business fairly before the finalize rules and regulations. The 

Office of Ombudsman looks at what happens once the ink is dry, 

these rules are being enforced, and want to bring to the head of 

agencies’ attention any unfair treatment in the enforcement of 

those rules and regulations. 

I think you also correctly identify that there is plenty of work for 

both of our offices to do, but the distinction that is before the Committee now is our office’s independence and merging the two 

5

present the same type of conundrum where the ombudsman’s office 

reports directly to the SBA administrator, and does officially represent administration policy and how the rules and regulations are 

being enforced. 

Our office, to the contrary, can only speak on behalf of small 

business, and we feel as though that independence works best with 

the before and after scenario that works currently. 

I do need to add though that we have enhanced our ability to 

look at rules that are already on the books. We entered into a formal arrangement with the head of the White House Regulatory Office, John Graham, and have looked at rules that are on the books, 

and are now working with the agencies to look at over 267 rules, 

regulations and guidance documents that should be revised; 30 of 

which should be revised because of their specific impact on small 

business. 

And so we have gone beyond simply looking at the rules in the 

pipeline, and are looking at rules that are on the books that should 

be removed because small businesses are treated unfairly. 

Chairman AKIN. That is interesting. I did not know that you had 

made that additional progress, and thank you. 

Just one other quick question, and then I need to allow Mr. 

Udall to ask a question, if you have a question, or Mr. Gonzalez. 

Just roughly how many employees do you have and the overall 

size of your operation? 

Mr. SULLIVAN. Right now we have slots for 47 people in my office. That includes 37 officials in Washington, D.C. that are broken 

down largely in a regulatory arena, they are attorneys, and a research arena, who are economists. There are 10 throughout the 

country. In your home state, for instance, Wendall Bailey, we are 

honored to have Wendall Bailey as our regional advocate out in 

Missouri. And we have in each of the 10 regions, we do have a slot 

for regional advocates, and they are intended to be the eyes and 

ears for our office to help us prioritize on what issues are most important to small business. 

Chairman AKIN. Thank you very much. 

Mr. Udall, did you have a question? Do you want to go? 

Mr. UDALL. Yes. And Mr. Chairman, could I put my statement 

in the record, my opening statement. 

Chairman AKIN. It will be submitted. 

Mr. UDALL. Thank you very much. 

And my question has to do with the amicus curiae authority that 

you have in the disputes that are going on between the Department of Justice and your office. I mean, how can we make sure 

that you are really an independent voice in the courts for small 

business? What is your opinion on that? 

Mr. SULLIVAN. My opinion is that from the budget process that 

is one way to bolster our independence. When it comes to better 

independence in the courts, I think that that is a discussion that 

we will continue to have with the Subcommittees and the full Committees. 

There have been legislative concepts in the past that view giving 

our office more authority in the legal arena, and we are excited 

about that, but focusing from a legislative perspective now on the 

budget line item approach, and working with an executive order 

6

that does not get us to court, but does give more strength to the 

operations of our office. 

So the simple answer to Congressman Udall is we would like to 

work with the Committee to look at those options to bolster our 

independence in addition to bolstering the independence from a 

budget perspective, which is primarily the focus of my testimony 

this afternoon. 

Mr. UDALL. But at this point you are not supporting any particular approach with regard to the courts? 

Mr. SULLIVAN. That is accurate. We have not looked at legislation being drafted in the 108th Congress and saying this will bolster our legal authority from amicus curiae. 

Mr. UDALL. Thank you, Mr. Chairman. 

Chairman AKIN. Thank you. Mr. Schrock. 

Chairman SCHROCK. Thank you, Mr. Chairman. 

Tom, thank you for coming today. It is good to see you here. It 

is also good to see Giovanni Coratolo from the Chamber, and Andrew Langer from NFIB who were three participants in a round 

table I did a few weeks ago that I thought was very beneficial, so 

I am glad you are all here today participating. 

Let me just give you a quick story. I have been meeting with 

some small business people. I met with a businesswoman from Virginia Beach that I have known for quite a long time. And you talk 

about fairness, two things, she mentioned a lot of things, but two 

of them that got my attention was that big business, if they have 

business lunches, they are allowed to write off 100 percent of what 

they spend. Small businesses are allowed to only write off 50 percent. She does not get that, I do not get that either. 

She also said that OSHA showed up on her doorstep a couple of 

weeks ago, and walked in and said that they wanted to see a particular document, and they said, gosh, the lady that does that went 

to a dental appointment, she will be back in 45 minutes. They said, 

we do not care, we want to see it now or else. 

So in the 45 minutes they tore the office apart, could not find it. 

This other lady walked in and found it in a heartbeat. 

That kind of stuff is absolute nonsense, and somehow we have 

got to try to put a stop to that. And we just hear stories like that 

over and over again, and I continue to hear those every time I meet 

with somebody. 

Tom, some would argue that an independent line item might 

make your office an easy target for retributions. Mr. Udall, I think, 

kind of alluded to that. 

Do you think that is true? How would you respond to that? 

Mr. SULLIVAN. I would respond by clarifying to the Subcommittees that a line item absolutely makes our office more of a target, 

and that is a deliberate move, I think, on behalf of the Subcommittees and the full Committees. 

And the reason I say that it makes us more of a target, it I mean 

it in a positive way because the way our—

Chairman SCHROCK. You scared me there for a minute. 

[Laughter.[

Mr. SULLIVAN. I mean from a positive bulls eye and the excitement that you get when you hit the cork playing darts, not the 

other targets that we talk about. 

7

I point that out because our office’s legislative mandate, our priorities that we have to take in law say that we have to take the 

direction directly from small business. No matter what we do in my 

office small business has to ask us to get involved. And by making 

our budget process subjected more directly to the review by this 

Subcommittee, by the review of the Appropriations Committee, it 

makes us more directly responsible to the small business community. 

Chairman SCHROCK. Okay. So if we come to you, it is different 

than when a small business does? A small business comes to me 

like I just came to you with those two things. It is better from Mrs. 

Wood to come to you than it is for me? 

Mr. SULLIVAN. Mr. Schrock, we actually think that it is best both 

ways. 

Chairman SCHROCK. Okay. 

Mr. SULLIVAN. We consider our clients small business, bit I mean 

that in an expansive rather than a restrictive manner, that the 

Committees in the House and the Senate that represent small business. Every member of Congress who goes home will go home in 

a few weeks on recess, and visit small business, and brings back 

to my office things that we should be involved in. They are absolutely the client base that we respond to as well as the folks that 

you mentioned: Allen Neece, Andrew Langer and Giovanni 

Coratolo. 

I am honored to consider them friends and colleagues, and I consider it a compliment that I know all of them personally because 

we insist on that interaction to give my office direction. 

Chairman SCHROCK. Great. What other tools do you think are 

necessary to make you and your office more effective? 

Mr. SULLIVAN. In the last year since I have had the honor of 

being in this position, the biggest bang for the buck that we have 

gotten is the President’s leadership. 

I mean, for the President to announce his small business plan 

and turn directly to the Office of Advocacy and say, ‘‘I will give you 

an executive order that will help small business?’’

And then in August after going to Waco, Texas, signing that executive order and telling our office that it is not enough to criticize 

agencies, but you have to get into agencies and actually train them 

on how to do a better job considering their impact on small business. That tool, that pulpit for agencies to do a better job, because 

that is their boss telling them to do that in the executive order, has 

been tremendously effective and will continue to be effective. 

The other effective tool in our arsenal to achieve regulatory cost 

savings for small business is all of you. And when the President 

tells his agencies to report how they are going to do a better job 

considering small business, and they have responsibility of filing 

those reports with us and with you, and they do not, sometimes the 

oversight functions that you all are engaged with loosen that knot, 

so to speak, and actually get better responses. 

So I by all means view this as a three-pronged partnership with 

the President, my office, and this Committee to make sure that we 

are all going to try to take steps to help small business. 

So I would say that the constant interaction we have with this 

Committee and the wonderful staff members who all of you have 

8

have is a tremendous tool, and I am going to do everything I can 

to keep that interaction alive and working. 

Chairman SCHROCK. And I hope you will not hesitate to come to 

us at any time. 

Thank you, Mr. Chairman. 

Chairman AKIN. Thank you, Mr. Schrock. 

And Mr. Gonzalez. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. 

Mr. Sullivan, you have 47 people on the staff; is that right? Of 

those 47, how many are attorneys? 

Mr. SULLIVAN. I have the—

Mr. GONZALEZ. Formal legal training of some sort. 

Mr. SULLIVAN. If you will excuse me for one moment, I am going 

to lead back to Davit Voight in my office and actually get count if 

Mr. Gonzalez would like. 

Mr. GONZALEZ. Fine. 

Mr. SULLIVAN. Thank you. David advises me that there are approximately 16 attorneys on staff. I should also clarify to Mr. Gonzalez that there are 47 slots. 

Mr. GONZALEZ. Okay. 

Mr. SULLIVAN. And I make a particular point of saying that because one of those slots actually is the regional advocate for this 

area that is not filled yet. 

Mr. GONZALEZ. Okay. 

Mr. SULLIVAN. So 16 of those slots are attorneys. 

Mr. GONZALEZ. Would you say that your entity with the SBA is 

different from any other, and in this respect, whether it is ombudsman or anything, is that there is more of a legal take on this? 

You are obviously general counsel for advocacy, and that there 

is a relationship there, and one which requires probably greater 

training in the law, obviously if you are going to have 16 attorneys 

out of those particular slots. And I would like to focus in on that 

particular and very unique relationship that you have as basically 

the lawyer for small business, and that is the way I view you and 

your office in essence, going through the complexity of the regulatory system, what we enact, and of course, the consequences on 

how we can and do business in America. 

I would like to make that distinction, so I ask you, in essence, 

who is your client? If you are an advocate, for whom do you advocate? 

Mr. SULLIVAN. I would like to clarify at least kind of how I try 

to approach the attorneys on my staff, and that is not to make a 

distinction of greater or less legal training from the lawyers who 

are working for David Javgan, who is SBA’s general counsel, but 

more of kind of a counsellor role in the traditional counseling sense 

of what a lot of the attorneys are trained to do, at its most simple 

sense. The attorneys in our office connect small businesses with 

federal regulators. That is at the most basic sense of what we do 

in order for the agencies to comply with the mandates of the Regulatory Flexibility Act. So in that sense there is more of a main 

street education than a law school education. 

You had followed your observation, I think, with kind of a question about the training. If you could repeat that question with my 

understanding, I could probably best answer. 

9

Mr. GONZALEZ. What does your office lend itself to individuals 

who would have greater training in the way of regulatory scheme 

and such from a legal standpoint? 

Mr. SULLIVAN. Oh, you had asked about who we consider our clients to be? 

Mr. GONZALEZ. And then who is your client if you are an advocate? 

Mr. SULLIVAN. Our clients have to be small businesses, and I will 

share with you kind of how we operate in our office, and that is 

basically where someone comes to me and says, Tom, the Federal 

Communications Commission is not doing a good job considering 

their impact on small business before they finalize a rule. 

My first question is always who is asking for us to get involved, 

and generally the attorneys in my office say, well, these small business groups represented by the Chamber of Commerce and NFIB, 

NSBU, there is different interest groups, or even some of the small 

business owners themselves who have interacted with Tayl Phillips, for instance, who covers your part of the country, Mr. Gonzalez. And at that point we try to connect those small businesses 

into the process. 

So the answer to your question is who our clients are are small 

business. They range in their sophistication of the issues depending 

on the particular issue. For instance, there are small business owners who regularly talk with our office on Clean Air Act regulations 

that EPA is considering. These folks who are small business owners and produce small engines, some produce chemicals, possess a 

far greater engineering and legal sophistication than even some of 

the professionals at the Environmental Protection Agency. 

And then on the other end we have small businesses who own 

nursing homes do not have any sophistication other than they are 

remarkable professionals they have in caring for the elderly, who 

do not know what it means when OSHA puts out 100-page document on ergonomics. 

And we then walk very carefully with them step by step on what 

OSHA is trying to do, and then get back to OSHA to say you are 

going about it the wrong way. Here is a small business owner who 

knows about caring for the elderly. Build their common sense into 

the final legal document that constitutes a final rule. 

So that is how we cover the spectrum of who we consider our clients to be. 

Mr. GONZALEZ. And the last observation, I do not know if I have 

a real question, it is just that I could not agree more that to assure 

the independence that is required in order for you to be that advocate, which is very unique if you think in the scheme of things, we 

are going to have to start off with the purse strings, and make 

sure—you indicated, of course, you know, you are a target either 

way. It is just the lesser of a target, and getting more people involved, and to assure that type of independence. 

I know we have inquired other ways of doing it, and that is questions obviously for the future, and that I would like to engage you 

in informally with you or members of your staff is what else can 

we do. If we can achieve this, which we are not real sure but hopefully we will, what will be the next step. And thank you for your 

testimony. 

10

Mr. SULLIVAN. Thank you, Mr. Gonzalez, and you have my commitment to engage in either formal or informal dialogue to see how 

we can do best by small business. 

I wrote down, I think, at the beginning that that is ultimately 

our goal that you clarified in your opening statement, and that is, 

how can we ensure what is absolutely a unique office within the 

entire government, not only SBA, how do we maintain that independence and work towards even more independence to ultimately 

help small business. 

Chairman AKIN. Thank you, Mr. Sullivan. 

In the interest of time I am going to finish up with the first 

panel and call the second panel up now, if we could, please. That 

would be Giovanni Coratolo, Allen Neece and Andrew Langer. 

Good afternoon, gentlemen. In the interest of time, I am going 

to just introduce you quickly, and let each of you proceed with your 

testimony, and then I am going to open things up for questions. I 

think we have got somewhat limited schedule here this afternoon, 

so I thought maybe we would go a little faster if we went that 

route. 

And Mr. Coratolo, am I getting that more or less close for—

Mr. CORATOLO. That is close. 

Chairman AKIN. —a beginner? 

Mr. CORATOLO. That is great. 

Chairman AKIN. Thank you. You are the Director of Small Business Policy for the U.S. Chamber of Commerce, and the U.S. 

Chamber of Commerce is an underlying membership of 3 million 

members, 96 percent of which are small businesses. 

Mr. CORATOLO. Yes, sir. 

Chairman AKIN. And so we are delighted to welcome you today. 

STATEMENT OF GIOVANNI CORATOLO, DIRECTOR, SMALL 

BUSINESS POLICY - ECONOMIC POLICY DIVISION, UNITED 

STATES CHAMBER OF COMMERCE; ACCOMPANIED BY ALLEN 

NEECE, CHAIRMAN, SMALL BUSINESS LEGISLATIVE COUNCIL; ANDREW LANGER, MANAGER, REGULATORY POLICY, 

NATIONAL FEDERATION OF INDEPENDENT BUSINESSES 

STATEMENT OF GIOVANNI CORATOLO 

Mr. CORATOLO. Well, thank you, Chairman Akin, Chairman 

Schrock, and Ranking Member Udall and Ranking Member Gonzalez. It is a pleasure to be front of you. 

I am Giovanni Coratolo, Director of Small Business Policy for the 

U.S. Chamber of Commerce. And the Chamber commends the Subcommittees on having this hearing to explore the ways to improve 

the Office of Advocacy and create a stronger voice for our nation’s 

24 million small businesses. And I am going to try to summarize 

this because I have a written statement that is for the record. 

Over the past decade the importance of small businesses to the 

foundation of economic growth and prosperity has been unprecedented. As economic statistics confirm, maintaining a healthy environment for small business to proliferate contributes greatly to 

raising our standards of living. 

Unfortunately, as we have seen the growing importance and the 

vitality and stability of small business, we have also seen federal 

11

agencies continue to propose regulations that impose disproportionate burdens on the smaller employers. The cumulative cost of 

compliance with federal regulations can be formidable for many 

small business, and in some instances it may be fatal. 

As the proliferation of regulations affecting small business have 

increased over the years, so too has the Chief Counsel’s responsibilities under RFA, SBREFA, Executive Order 12-866, and the just 

recently Executive Order of 13-272. 

We have a growing necessity of a strong independent small business advocate with the Executive Branch of government armed 

with the tools to work effectively on behalf of small businesses. 

Even with the resources of the U.S. Chamber of Commerce, it is 

a daunting task to try to review all the regulations that agencies 

issue that have an impact on small business. 

Let me turn to some of the legislative proposals that can 

strengthen the office because that is why we are here. 

First, a specified line item for funding for the office within the 

President’s budget. In order to have a Chief Counsel that can provide a strong independent voice for small business separate line 

item funding is a must. Funding for the office must be directly related to the checks and balances of the budget process and not subject to internal political pressures of any federal agencies in pet 

projects. 

In conjunction with this, the responsibilities and duties of the 

host agency to provide support, such as phones, maintenance, office 

space, IT support, must be spelled out in order to provide a financial firewall between the two budgets. 

Second, provisions for continuity of leadership for the office during the changes of administration. Having the Chief Counsel continue serving for a specified length of time during a transition period reduces the likelihood of gaps in the leadership in the office. 

As we have seen recently in the past, vacancies in the position 

could have a negative impact in the momentum and morale within 

the office. Without a Chief Counsel in charge, the direction and resolve of the office is compromised. 

The regulatory process does not take a vacation when the office 

is vacant, and small businesses run the risk of not being properly 

represented. 

Third, there is a—we certainly want to give the office the power 

and authority to make a difference. There is a quirk in RFA and 

SBREFA that was handed down in the NAAQS case that actually 

did not, and that is the National Ambient Air Quality Standards 

case that did not give deference to the office’s amicus curiae brief. 

The office, there should be legislation introduced, and I am not 

sure that this would be the legislation for it, but there should be 

something introduced that makes the Office of Advocacy the agency 

responsible for making sure other agencies live up to the responsibilities under Chapter 6, Title V, which is Reg Flex. 

Also, we feel that another purpose of the Office of Advocacy that 

has not been stated here today is economic research. We find that 

when Congress knows of the impact that regulations have on small 

business and that they know the contribution small business make 

toward the economy they make better regulations and they make 

better legislation. 

12

So the Office of Advocacy provides a wealth of economic research 

data that allows us to make better decision as policy experts, and 

it allows you to make better laws. 

So that is something that we would like to see continue as a sub 

line item for research. There is an existing line item for economic 

research. We would like to see that continue so we can have some 

handle on it. 

In conclusion, the Chamber strongly encourages legislation that 

will provide independence, and we thank you very much for allowing us to testify here today. 

Chairman AKIN. Thank you, Mr. Coratolo, with just six seconds 

to spare. That is pretty good timing. 

And let us move ahead with your testimony, Mr. Neece, please. 

STATEMENT OF ALLEN NEECE 

Mr. NEECE. Thank you. Maybe, Mr. Chairman, he would yield 

me six seconds. 

[Laughter.] 

Mr. CORATOLO. Yield the balance. 

Mr. NEECE. Yield the balance of your time. 

Mr. Chairman, and Mr. Chairman, and members of the Committee. 

I am Allen Neece. I am the elected Chairman of the Small Business Legislative Council which is an association of associations consisting of 70 industry-specific professional and trade organizations 

representing small businesses. We operate by consensus, and we 

are concerned exclusively with small business issues as opposed to 

more broad-based issues. In other words, we do not spend a lot of 

time in foreign policy and other areas. 

We are delighted to have been invited to testify here today. And 

Mr. Chairman, I have a prepared statement, and I would ask that 

it be submitted for the record. 

Chairman AKIN. Without objection. 

Mr. NEECE. That being the case, I will try to confine my remarks 

to about two minutes. 

By way of background, I have had the pleasure of working in the 

public policy arena for about 35 years, addressing only small business issues. I happened to be with the Senate Small Business Committee when the enabling legislation for advocacy was enacted. I 

was involved with confirmation of the first advocate, Milton Stewart, who was a giant and mentored a lot of people who still work 

for Tom Sullivan in advocacy. So I have been around advocacy and 

its function for a long time. 

And in that capacity and on behalf of LBLC, I want to say we 

strongly endorse and support the measure that you indicated you 

are about to introduce, last year known as the Bond-Kerry bill. I 

guess this year over on the Senate side may soon be known as the 

Snowe-Kerry bill. We support the line item. We think that will 

greatly enhance advocacy’s independence within SBA, and will 

strengthen their hand as they work and advocate on behalf of 

small business throughout the rest of the federal government. 

Advocacy performs the most important function that there is for 

small business, far and above any other agency. Lots of other agencies may help small business, but they may also hurt. Advocacy 

13

only helps, and they have a terrific track record. Tom Sullivan is 

doing exception work, and we strongly endorse what he has been 

doing. He is really a model advocate, and we strongly endorse his 

testimony. 

There is one other item that we would urge your consideration, 

and that is that when there is a change of administrations, that 

the then serving advocate consider to serve until such time as the 

next administration would nominate his or her successor. 

There was a period some years ago when one administration 

waited three and a half years into the administration’s tenure before nominating and sending up a nomination for an advocate. That 

is certainly not germane to the current situation. But if you are 

going to address this one issue, we would urge that you address the 

other one. 

The last point is we hope you keep the bill clean. Do not add 

other ancillary provisions in there. We recognize that lots of other 

members and other organizations think that advocacy could be 

strengthened and improved maybe in some other areas, but we are 

realists. The political realities are from our perspective is this bill 

needs to be simple and clean to enhance its probability of passage. 

Legislation has been pending both before the House and the Senate in the last Congress, and we all were waiting with abated 

breath, but we are still here talking about. 

Thank you very much, Mr. Chairman, Mr. Chairman. 

Chairman AKIN. Thank you, Mr. Neece, appreciate your testimony. 

And now Mr. Langer. 

STATEMENT OF ANDREW LANGER 

Mr. LANGER. Thank you. Chairman Akin, Chairman Schrock, Mr. 

Udall and Mr. Gonzales. 

I want to thank you very much for the opportunity to appear before the Subcommittees once again. It is my pleasure to be here 

representing the National Federation of Independent Business and 

talk about making the SBA’s Office of Advocacy more independent. 

Just for a little background, the National Federation of Independent Business has 600,000 members nationwide. We have members in every state in the union, and we represent the full panoply 

of small businesses that are out there. We reflect generally the census statistics on small businesses. Our average member has five to 

seven employees, and 80 percent of our members have fewer than 

10 employees in their business. 

As you can imagine, as I have testified before, small businesses 

are obviously very different than big businesses. The regulatory 

costs are higher for our members than other businesses to the tune 

of, according to the Office of Advocacy’s own research, roughly 

$7,000 per employee per year. And advocacy is doing a stellar job 

on trying to reduce that number, and I want to talk briefly about 

that. 

I mean, the numbers really do speak for themselves. Under Tom 

Sullivan’s watch, $21 billion in savings last year to small businesses. I mean, that is an incredible number, staggering. That saving is passed on to our members so they can continue to be the enVerDate 0ct 09 2002 11:23 Oct 07, 2003 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\HEARINGS\89537.TXT NANCY
14

gines for economic growth and recovery that this nation desperately needs. 

The enactment of the Memorandum of Understanding between 

Tom’s office, Mr. Sullivan’s office and the Office of Information and 

Regulatory Affairs is almost unprecedented, and will go a long way 

towards strengthening the role of advocacy in dealing with not just 

the regulations that are coming down the pipeline, but regulations 

that are currently on the books, and I will talk about that in a moment. 

Oh, if I can just digress for a moment, and say that I have much 

lengthier remarks, and I would hope that they would be entered 

into the record. 

Chairman AKIN. Without objection. 

Mr. LANGER. Thank you. 

In our opinion, further independence can only strengthen 

advocacy’s role. The fact is that it could be insulated, as Mr. Sullivan himself has testified, from political game playing in the administration itself, the fact is that it would encourage and 

strengthen its bedrock principles of being incredibly flexible in 

dealing with the problem that small businesses face, and it would 

ensure that it has access to greater resources. 

The fact is the Office of Advocacy can certainly use greater resources, in our opinion. The burdens that businesses face today are 

only, frankly, getting worse as regulations increase. 

There are ever increasing numbers of regulations on the books, 

and giving advocacy greater resources, frankly, would allow them 

to do that job of trying to trim away the regulations that are already there. The fact is that they are dealing with problems that 

we bring up every day from our members, and our members are 

dealing with myriad problems, some of which have nothing to do 

with one another, and they come at them from all directions. 

You know, we are asked from time to time what one regulation 

is most problematic for our members, and the fact is there is not 

one. Our members are getting it from all ends. 

Chairman Schrock talked about a business in his district having 

an OSHA representative show up demanding a document that they 

just could not find for 45 minutes. We have had an example of a 

member calling us up saying that OSHA wanted to fine them for 

having an improper toaster in their business. I have got members 

calling me about fishing regulations, and problems with scientific 

studies there. I have got members calling about economic census 

problems and forms that they have gotten that are 15 pages long. 

And the fact is that when I think about those issues the people 

that I turn to immediately are the team that Tom has working for 

him; people like Susan Howell, and people like Kevin Bromberg, 

and people like Charlie Moraska. These are people that I deal with 

on a regular basis, and who go to the bat for our members time 

and time again, and I could think of nothing better than making 

that organization more independent and strengthening it. 

We believe that a line item is the right first step. We think that 

it will do the best to protect it immediately, and then we could talk 

about how to change things afterwards. 

I want to sum up by saying that the NFIB appreciates the opportunity to share its concerns with Congress. With costs of regulation 

15

being such a high priority for our 600,000 members, we are glad 

to have the Office of Advocacy working so hard to help them. They 

are dogged, they are relentless. The time has come to strengthen 

their ability to provide much needed assistance. 

Thank you once again, and I look forward to any questions that 

you might have. 

Chairman AKIN. Thank you, Mr. Langer. 

I have just one, and most of your testimony is right along the 

same lines, and you are suggesting that we need to give the independence and the flexibility to this office so they can really do their 

job without looking over their shoulder. 

I guess one, there is different ways you could try to accomplish 

that structurally. One of them might be that you could create an 

independent commission or something like that as opposed to an 

independent line item. I guess the FTC or the SEC has an independent commission. That would be a possible approach. Apparently you prefer the line item over that other kind of approach. 

And then I guess the other question I have is, when you do create a line item, you know, the President or OMB could just line the 

thing out as well. So you have chosen one way. You know, what 

is the balance if you consider those other alternatives? And that 

question is for any of the three of you or all three, however you 

want to do it. 

Mr. CORATOLO. Mr. Chairman, I will take a crack at that. As far 

as the commission goes, it is a step in the wrong direction. We feel 

that the advantage that advocacy has is it has flexibility to work 

quickly and decisively within the administration at the earliest 

stages of the regulatory process. 

You create a commission, you triple the costs needed to produce 

that commission, you expand government, and you slow down the 

process. A commission, in my understanding, would have majority 

as well as minority views on how to progress as far as regulatory 

process, so you would not get decisions made with the ease and 

flexibility that the current office has. 

More importantly, with the commission you lose the ability to 

work within the administration based on the Separation of Powers 

Act. So I mean you really lose all the good things that advocacy has 

on its side right now. 

As far as the independent line, you know, when you tell the story 

that advocacy has, it is easy to sell and defend that budget. We 

took the existing line item, which is only for economic research several years ago, and by telling the story of the Office of Advocacy 

we were able to increase that line item almost 35 percent based on 

that good story the advocacy had. Thank you. 

Mr. NEECE. Mr. Chairman, the idea of a commission is not new. 

It has been debated for the last 35 years, including back in the 

days with the first advocate. And the truth of the matter is there 

are some merits to a commission, and this is an issue that you are 

addressing, in my opinion, that there are a lot of grays and there 

are not that many black and whites. 

But from my personal perspective in talking with Frank Swain 

and Milton Stewart and Tom, our existing advocate, and Jerry 

Glover at great length about this issue, at the end of the day, and 

I was one of those as a staffer who wanted the advocate to be as 

16

independent as possible, so in effect he could figuratively tell the 

president to drop dead on a policy issue. 

But the reality is you cannot do that no matter how much—it 

does not matter what your political persuasion is, and what administration is in power. You need the support of the president because 

that advocate one, two, three, maybe four times during the course 

of a four-year administration is going to have to go to the well, and 

they are going to have to go to the White House, and they are 

going to have to ask for some help, and in my opinion, only the 

White House can make that cutting edge difference. 

If you are a commission, at the end of the day after yo have used 

the bully pulpit, and you cannot sway that agency to change their 

position, the only recourse you have is litigation. 

And if you are one agency, and that occurs every once in awhile 

between agencies, or they get caught up in litigation by a third 

party where they end up being on different sides, I think you wear 

advocacy down. They do not have the deep pockets, and you could 

litigate until the cows come home, but I do not think in the final 

analysis advocacy will prevail. And if advocacy does not prevail, 

small business did not prevail. 

So I think you need to give them as much independence with the 

budget short of cutting them loose and letting them adrift where 

they are swimming in a river all by themselves. There is more to 

it than that, but I think that is all we need for the moment. 

Chairman AKIN. I think you have answered my question. Unless 

you have an opposition position. 

Mr. LANGER. No, I do not have anything to add on the issue of 

the commission. I agree with my colleagues entirely. 

Just on the issue of the potential for having the office zeroed out, 

I think, (a) that is a risk that I would be willing to take on this. 

I think that any president or Office of Management and Budget so 

foolhardy as to zero out the Office of Advocacy would be immediately met with, you know the hue and cry from the small business community which again is the engine of this economy, and I 

do not think any president is going to ignore that, frankly. 

Chairman AKIN. Thank you very much. 

Mr. Udall, did you have a question? 

Mr. UDALL. Sure, Mr. Chairman. Thank you. 

In your view, and this is really all three of you, I guess, in your 

view what is the gravest problem facing the Chief Counsel for Advocacy in the absence of a line item in appropriations or the D.C. 

Circuit’s decision in the American Trucking Association case where 

the court stated that opinions of Chief Counsel for Advocacy on 

agency compliance with RIFRA is are not entitled to any weight? 

So which one of those do you see as the biggest problem and 

what is the way to fix it? 

Mr. NEECE. We both gave long-winded answer. 

Mr. LANGER. Yes. No, you guys did fine. I would like to—I think 

it is important to ensure that independence, but I would like to 

speak to the issue of deference for a moment. 

In light of the issue of the Chevron case many, many years ago, 

which allows that agency opinions are supposed to be given weight, 

I think that absolutely there needs to be a legislative fix giving the 

Office of Advocacy a similar amount of deference. 

17

The fact is that as we weigh cost and benefits of regulation there 

has got to be someone out there speaking for the costs in terms of 

these things. When you get professional civil servants who have 

never run a business, never been out in the business world who 

really do not understanding the real world impacts of what they 

are regulating and what they are doing, it is essential for that 

voice to be given equal weight or similar weight in court cases. 

But I still think that giving it its independence through a line 

item is of paramount importance, but, boy, that deference issue 

would be a great one to have. 

Mr. UDALL. Now, Mr. Langer, you are saying that we should do 

that legislatively then. 

Mr. LANGER. I think you have to do it legislatively. 

Mr. UDALL. You have to do it legislatively. 

Mr. LANGER. Now, understand, I am not speaking as a lawyer 

here because I am not a lawyer. But I have worked on enough environmental issues and worked with enough environmentalers in the 

past to understand the issue of deference and the issue the court 

has given it, and I do not think that courts are going to pay attention to it unless it does come down legislatively. I think it has to 

be that way. 

Mr. UDALL. Thank you very much. 

Do you other two have any comments? Okay, thank you. 

Chairman AKIN. Mr. Schrock. 

Chairman SCHROCK. Andrew, you are absolutely right what you 

said. In fact, I think something we learned during the round table 

was that there are agencies out there creating regulations in case 

something happens in the future. 

Mr. LANGER. Sure. 

Chairman SCHROCK. Which just exacerbates an already very difficult problem. 

Let me ask all of you, what happens to Tom’s office if this legislation is not passed? 

Mr. NEECE. Well, it is business as usual. I mean, from my perspective there is no great calamity here. What this is this is insurance. This is prophylactic. We have long sought a means by which 

advocacy is assured of a proper line item budget. That was not the 

case—I will be very specific—that was not the case in the last administration because the budget the way it now operates is the 

SBA administrator determines, they are the determinant, the administrator’s office determines what advocacy will have in terms of 

what is then submitted to OMB. 

There is no direct correspondence with OMB. Tom Sullivan or 

Jerry Glover or whoever it might be is completely out of the loop. 

In the last administration, when times get tough, and they often 

do and they are right now, SBA gets squeezed in its budget, and 

the SBA administrator looks around and says, all right, where is 

the soft underbelly, where can I cut a few dollars here as we gird 

our loins for battle and try to get more money, but in the meantime 

I have got to find resources for all these other programs that we 

deliver. 

And the one who is really defenseless is the advocate, and the 

advocate does not come up here and talk directly with the approVerDate 0ct 09 2002 11:23 Oct 07, 2003 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\HEARINGS\89537.TXT NANCY
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priations, with State, Justice, Commerce. He is supportive of the 

president’s budget. 

So at the end of the day if the SBA administrator does not give 

sufficient resources, the advocate is out of the look. That is where 

we—it is pretty simple. We simply want to correct that so the SBA 

when they send over their budget the advocate’s line item in that 

proposal to OMB has not been touched in any way, shape or form 

by the administrator. 

Chairman SCHROCK. Okay. 

Mr. LANGER. If I can just add to that briefly. 

Chairman SCHROCK. Sure. 

Mr. LANGER. I mean one need only look at the Office of Information and Regulatory Affairs over at the Office of Management and 

Budget, which is another entity that I—whose mission I support 

wholeheartedly, their budget since they were formed has pretty 

much—their staff has been cut, they have never been nearly as 

strong as they were when they were first founded, and that, to me, 

is the risk that we run with the Office of Advocacy. 

They are doing similar jobs on a parallel track, both of which are 

out there to protect the best interests of every day American who 

are working hard to keep this economy going, and my fear is that 

some day, again as the gird their loins for battle, that the Office 

of Advocacy gets cut. 

Chairman SCHROCK. The bottom line is it needs to be passed. 

Mr. LANGER. Yes. 

Chairman SCHROCK. Thank you, Mr. Chairman. 

Chairman AKIN. Thank you, Mr. Schrock. 

And Mr. Gonzalez. 

Mr. GONZALEZ. Thank you, Mr. Chairman. 

Ranking Member Nydia Velazquez last year would hold once a 

month a round table breakfast, and we would have from different 

private sectors representatives. I think you all may be familiar and 

participated, or some members did for sure. And what was always 

the forefront was regulatory relief and the costs and the burden 

that it places in doing business. 

When it was all said and done, it really was not being addressed 

prior to the adoption of any regulation, and it was not being done 

afterwards save and except for the work of the Office of Advocate. 

Who else—the first part of the question is, is there anyone else? 

If Tom does not do it, and I think Mr. Langer said no one looks 

at the cost side within this whole scheme other than Tom’s office, 

that is the first thing. 

The other concern is, and I am not real sure, in past we have 

not been successful in this particular endeavor. I am not absolutely 

certain why. Is there going to be an argument made that by having 

a separate line item, budget item for this particular office, that 

somehow you are doing something that is fundamentally changing 

that relationship? 

In essence, you are repealing a law that creates this particular 

entity within the SBA, and within the authority and with management of SBA, because I am just anticipating any arguments. 

And then if we do not do this, and everything remains exactly 

as it is, is a commission something that we should be looking to 

as an improvement over what we have now? 

19

Mr. CORATOLO. I can answer some of that. 

Mr. GONZALEZ. Yes, sir. 

Mr. CORATOLO. If you really look at the grand scheme of things 

as to regulatory reform, you have to really go way back into 1980, 

at the inception of the Regulatory Flexibility Act. And as it has 

transpired, Office of Advocacy was initiated in 1976, Reg Flex in 

1980, SBREFA strengthened Reg Flex, but there was a whole 

scheme of different parts that were interrelated. And all that advocacy actually orchestrates and makes complete the puzzle of regulatory—as far as the regulatory nature of agencies and what they 

have to do and comply in making sensitive their regulations to 

small business. 

So having advocacy, advocacy is the key. There is no other agency other than OIRA, and now we have a relationship between advocacy and OIRA on how they handle the small business regulations, 

which even strengthens that. It is an incremental step. As we have 

seen with the Executive Order 13-272, everything tends to be incrementally done as far as strengthening small businesses’ representation in front of the agencies. 

With that being said, having a line item for advocacy is the next 

incremental step in making sure that small businesses are correctly represented in front of the agencies. I do not think it is a 

radical change. I think it is an incremental step. A commission 

would be a radical change in the wrong direction in my opinion. 

Mr. NEECE. Mr. Gonzalez, I have one thing to add to that. 

The precedent has already been set in the Small Business Act. 

The inspector general is funded in a manner by which we are recommending you fund advocacy. The IG sends his budget to the administrator, it does not matter what that figure is it is included in 

the budget that the administrator then sends to OMB. The administrator has no discretion to add or subtract to the number given 

him by the IG, and that is what we are suggesting you do with advocacy. 

Mr. LANGER. I do not have anything to add to what my colleagues have said. 

Mr. GONZALEZ. Thank you very much. 

Chairman AKIN. If that is all the questions that we have, then 

I would like to thank, first of all, Mr. Sullivan, and then Mr. 

Coratolo, and Mr. Neece, and Mr. Langer for your time, and for my 

fellow colleagues, and with that we adjourn. 

[Whereupon, at 3:01 p.m. the Subcommittees were adjourned.] 

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