[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                                                   S. Hrg. 102-000 deg.
 
            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


                                 ______

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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           DONNA CHRISTENSEN, Virgin Islands
SAM GRAVES, Missouri                 DANNY DAVIS, Illinois
EDWARD SCHROCK, Virginia             CHARLES GONZALEZ, Texas
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVDEO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Haiwaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL RICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               ENI FALEOMAVAEGA, American Samoa
STEVE KING, Iowa                     BRAD MILLER, North Carolina
THADDEUS McCOTTER, Michigan

         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           TOM UDALL, New Mexico, Ranking 
SHELLEY MOORE CAPITO, West Virginia  Democrat
JEB BRADLEY, New Hampshire           DANNY DAVIS, Illinois
CHRIS CHOCOLA, Indiana               CHARLES GONZALEZ, Texas
STEVE KING, Iowa                     GRACE NAPOLITANO, California
THADDEUS McCOTTER, Michigan          ED CASE, Haiwaii
                                     MADELINE BORDALLO, Guam

                Thomas Bezas, Professional Staff Member

            Subcommittee on Regulatory Reform and Oversight

                     ED SCHROCK, Virginia, Chairman

ROSCOE BARTLETT, Maryland            CHARLES GONZALEZ, Texas, Ranking 
SUE KELLY, New York                  Democrat
TRENT FRANKS, Arizona                DONNA CHRISTENSEN, Virgin Islands
JEB BRADLEY, New Hampshire           ENI FALEOMAVAEGA, American Samoa
STEVE KING, Iowa                     ANIBAL ACEVEDO-VILA, Puerto Rico
THADDEUS McCOTTER, Michigan          ED CASE, Haiwaii
                                     DENISE MAJETTE, Georgia

  Rosario Palmieri, Senior Professional Staff Member and Subcommittee 
                              Coordinator

                                  (ii)

  
                            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


          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.
    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--
    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 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 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 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.
    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 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.
    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.
    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 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.
    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 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 engines 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 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 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.
    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 
appropriations, 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?
    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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