[House Report 107-433]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-433

======================================================================



 
            SMALL BUSINESS ADVOCACY IMPROVEMENT ACT OF 2002

                                _______
                                

  May 2, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Manzullo, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4231]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 4231) to improve small business advocacy, and for 
other purposes, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                         Purpose of Legislation

    The purpose of this legislation is to amend the Small 
Business Act to strengthen and improve the Office of Advocacy 
within the Small Business Administration and to ensure that 
there exists an entity in the executive branch that has the 
statutory independence and adequate financial resources to 
effectively advocate for and on behalf of small businesses.

                  Background and Need for Legislation

    There is abundant evidence, which has been the recurring 
focus of hearings of this Committee, that the Nation's small 
businesses continue to be burdened by excessive regulations and 
that this burden falls disproportionately upon small 
businesses. In his speech to the Women's Entrepreneurship 
Summit, held in Washington, D.C., March 19, 2002, the President 
underscored the complication encountered by small businesses in 
doing business and the excessive costs that needless 
regulations can place on small business concerns. In this 
respect the President stated:
    ``There are a lot of federal regulations that complicate 
the lives of small business people all across the country. The 
SBA [Small Business Administration] has calculated that the 
hidden costs of regulations to businesses with fewer than 20 
workers * * * comes down to $7000 per worker. That's a lot of 
money, particularly if you are trying to figure out ways to 
expand the employment base. And this is a drag on our economy. 
Hidden costs are a drag upon our economy.''
    The President has pledged to clean up the regulatory burden 
on small businesses. In line with this objective, an 
independent office of small business advocacy will help to 
ensure that federal agencies properly assess the impact of 
proposed regulations on the small business community and comply 
with the statutory obligations with respect to small business.
    It is essential to Congress in performing its 
constitutional duties and to the President in carrying out his 
small business objectives that there is an office that acts as 
an independent advocate for small businesses and can provide 
unbiased views of present and proposed regulations, without 
being restricted by the views or policies of the Small Business 
Administration or any other federal executive branch agency.
    To be effective, an office that acts as an advocate for 
small businesses requires sufficient resources to conduct 
creditable economic studies and research essential to an 
accurate evaluation of the impact of regulations on small 
businesses, the role of small business in the Nation's economy, 
and the barriers to the growth of small businesses. In the 
past, the Office of Advocacy has not had the necessary 
resources. This legislation helps to ensure that resources are 
available to support the independence of the office and to 
assure that the research, information, and expertise provided 
by an independent office of advocacy is a valid source of 
information and advice for Congress and the federal agencies 
with which the office will advocate for small businesses.

                         Summary of Legislation

    The legislation makes certain amendments, briefly reviewed 
in this summary, to Public Law 94-305 (15 U.S.C. 634a-634g) in 
order to strengthen and improve the Office of Advocacy. The 
Chief Counsel is to be appointed by the President, with the 
advice and consent of the Senate, without regard to political 
affiliation and solely on the grounds of fitness to perform the 
duties of the office. During the history of the Office of 
Advocacy, there have been extended periods where the position 
of Chief Counsel has been vacant. To provide some degree of 
continuity in office, a serving Chief Counsel may remain in 
office, at the pleasure of the incumbent President, for one 
year after a presidential term has expired.
    Small business concerns owned and controlled women, by 
veterans, and service-disabled veterans are added, as 
applicable, to those small business concerns named as requiring 
assistance as apart of the primary functions of the Office of 
Advocacy. Minority owned small businesses are included in the 
present provisions of the Act. In addition as a primary 
function, the Chief Counsel is empowered to make 
recommendations to the President and Congress with respect to 
issues and regulations affecting small businesses.
    As functions in addition to those presently mandated by 
statute, the Office of Advocacy will be required to maintain 
economic databases and share the information with Congress and 
the Small Business Administration, and to enter into a 
memorandum of understanding with the Small Business and 
Agriculture Regulatory Enforcement Ombudsman to provide for 
greater cooperation between the two offices.
    Independence of the Office of Advocacy is contingent upon 
needed resources which in the past have been diminished in the 
executive branch budgetary review process administered by the 
Office of Management and Budget. To ensure that such resources 
are provided, the Chief Counsel is required to transmit to the 
President annually estimated expenditures and proposed 
appropriations for the Office of Advocacy, which the President 
must include in the Budget without revision. This provision is 
not without precedent. Other independent agencies within the 
Executive Branch already have this authority, including the 
International Trade Commission, to insure that their decisions 
are truly independent and not influenced by any budgetary 
manipulations.
    The legislation would permit the appointment of two Deputy 
Chief Counsels, one responsible for regulations and the other 
for economic research and studies. The bill also defines the 
duties of regional advocates, one in each of the ten Federal 
regions. The Small Business Administration is required to 
provide adequate office space, equipment, and personnel to the 
Office of Advocacy.
    The Chief Counsel is specifically required to report to the 
President and Congress, at least annually, concerning federal 
agency compliance with the Regulatory Flexibility Act. The 
legislation reauthorizes the Office of Advocacy for a 3-year 
period, i.e., $10,000,000 for fiscal year 2003, $12,000,000 for 
fiscal year 2004, and $14,000,000 for fiscal year 2005.

                            Committee Action

    The Committee held two hearings, one on March 12, 2001, and 
another on March 20, 2002. Both hearings were directed at 
receiving testimony and reviewing draft legislation as to how 
to strengthen and make the Office of Advocacy more independent. 
Following these hearings, H.R. 4231 was introduced by 
Congressman Donald A. Manzullo (R-IL) for himself and 
Congresswoman Nydia Velazquez (D-NY) on April 16, 2002, and was 
referred to the Committee on Small Business. On April 17, 2002, 
the Committee on Small Business met to consider the bill. There 
were no amendments. The bill was ordered favorably reported by 
voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation. There was no 
recorded vote taken in connection with ordering H.R. 4231 
reported.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
Committee's oversight findings are reflected in this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives, and section 
308(a) of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included below.

         Statement of General Performance Goals and Objectives

    With respect to the requirements of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of this legislation are to: 
(a) reduce the unnecessary and excessive regulatory burden 
disproportionately placed on small businesses by certain 
federal agencies; (b) ensure that there exists an entity that 
has the statutory independence and adequate financial resources 
to effectively advocate for and on behalf of small businesses; 
(c) improve the effectiveness of the Small Business and 
Agriculture Regulatory Enforcement Ombudsman to resolve small 
business issues by working in cooperation with the Office of 
Advocacy; and, (d) collect and make available creditable 
economic studies, research, and expertise for the accurate 
assessment of the impact of regulations on small businesses, 
the role of small businesses in the Nation's economy, and the 
barriers of growth to small businesses.

           Statement of Congressional Budget Office Estimate

    With respect to the requirements of clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
402 of the Congressional Budget Act of 1974, the Committee has 
received the cost estimate for H.R. 4231 from the Director of 
the Congressional Budget office as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 29, 2002.
Hon. Donald Manzullo,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4231, the Small 
Business Advocacy Improvement Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Ken Johnson.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 4231--Small Business Advocacy Improvement Act of 2002

    H.R. 4231 would increase the amount authorized to be 
appropriated under current law for the Office of Advocacy 
within the Small Business Administration (SBA). The Office of 
Advocacy researches and assesses the effect of federal programs 
on small businesses and issues recommendations based on these 
findings.
    CBO estimates that implementing H.R. 4231 would cost $6 
million in 2003 and $32 million during the 2003-2007 period, 
assuming the appropriation of the authorized amounts. H.R. 4231 
would not affect direct spending or receipts; therefore, pay-
as-you-go procedures would not apply.
    H.R. 4231 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4231 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit). Based on information from the 
SBA, CBO estimates that the Office of Advocacy will spend about 
$7 million in 2002. However, under current law, only $1 million 
a year is authorized to be appropriated for the office for 
future years. H.R. 4231 would increase the authorization of 
appropriations for the office to $10 million in 2003, $12 
million in 2004, and $14 million in 2005. Estimated outlays are 
based on historical spending patterns.

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending for SBA's Office of Advocacy Under Current Law:
    Authorization Level \1\...............................        7        1        1        1        1        1
    Estimated Outlays \1\.................................        7        1        1        1        1        1
Proposed Changes:
    Authorization Level...................................        0        9       11       13        0        0
    Estimated Outlays.....................................        0        6       10       12        3        1
Spending for SBA's Office of Advocacy Under H.R. 4231:
    Authorization Level \1\...............................        7       10       12       14        1        1
    Authorization Level \1\...............................        7        7       11       13        4        2
----------------------------------------------------------------------------------------------------------------
\1\ The 2002 level is the estimated spending of the Office of Advocacy in that year.

    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 4231 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Previous CBO estimate: On March 7, 2001, CBO transmitted a 
cost estimate for S. 395, the Independent Office of Advocacy 
Act of 2001, as ordered reported by the Senate Committee on 
Small Business on March 1, 2001. S. 395 would authorize such 
sums as are necessary for the Office of Advocacy, while H.R. 
4231 would authorize specific amounts for 2003 through 2005.
    Estimate prepared by: Federal Costs: Ken Johnson; Impact on 
State, Local, and Tribal Governments: Susan Sieg Tompkins; and 
Impact on the Private Sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1994 
requires the report of any committee on a bill or joint 
resolution to include a statement of the extent to which the 
bill, or joint resolution is intended to preempt state, local, 
or tribal law. Except to the extent the Office of Advocacy is a 
federal entity, the Committee states that H.R. 4231 does not 
preempt any state, local, or tribal law.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8 of the Constitution of the United States, 
which grants to Congress the power to enact this bill.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    The short title is the ``Small Business Advocacy 
Improvement Act of 2002.''

Section 2. Findings and purpose

    The findings of Congress include the fact that excessive 
regulations promulgated and proposed by federal agencies 
continue to impose a disproportionate burden on small business; 
that an entity within the executive branch to effectively 
advocate for small business must be independent and not 
restricted by views of the Small Business Administration or any 
other federal executive branch agency; and, that to be 
effective such an independent office needs adequate resources 
to conduct creditable economic studies and research to be a 
valuable source of information and advice for Congress and the 
federal agencies with which the office will advocate on behalf 
of small businesses.
    The purpose of this Act are to: ensure that an entity 
exists that has statutory independence and adequate resources 
to effectively advocate for small businesses; require that the 
independent office keep Congress informed about issues and 
regulations affecting small business concerns and the necessity 
for corrective action by a regulatory agency or Congress; 
provide a separate authorization for appropriation for such an 
entity; and, create greater cooperation between the Small 
Business and Agriculture Regulatory Enforcement Ombudsman and 
the independent office is assisting small businesses in 
resolving issues plaguing one or more small businesses.

Section 3. Appointment of Chief Counsel for Advocacy

    The Chief Counsel for Advocacy is to be appointed by the 
President, with the advice and consent of the Senate, without 
regard to political affiliation and solely on the grounds of 
fitness to perform the duties of the office. An individual may 
not be appointed who was employed by the Small Business 
Administration during the 5-year period preceding the date of 
such individual's appointment.
    The position of Chief Counsel is raised from level IV to 
level III of the Executive Schedule. A Chief Counsel may remain 
in office, at the pleasure of the President, until a successor 
is nominated, but in no instance longer than one year from the 
end of a President's term. The present Chief Counsel is to 
continue to serve, but the pay increase will be applicable to a 
successor Chief Counsel.

Section 4. Primary functions of Office of Advocacy

    This section adds assistance to small business concerns 
owned and controlled by women and small business concerns owned 
and controlled by veterans as primary functions of the Office 
of Advocacy. Assistance to small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals, or minority enterprises, is already a primary 
function of the Office of Advocacy.
    As a new primary function, the office of Advocacy is 
required too make recommendations to Congress with respect to 
issues and regulations affecting small businesses and the 
necessity for corrective action by any federal agency or by 
Congress.

Section 5. Additional functions

    This section adds three additional functions to be 
performed by the Office of Advocacy which are: (1) maintain 
economic databases and make the information available to the 
Administrator of the Small Business Administration and to 
Congress; (2) carry out the responsibilities of the Chief 
Counsel under the Regulatory Flexibility Act; and, (3) enter 
into a memorandum of understanding with the Small Business and 
Agriculture Regulatory Enforcement Ombudsman concerning 
cooperation between the Ombudsman and the Office of Advocacy in 
assisting small businesses resolve issues involving federal 
agencies.
    The Chief Counsel is given the authority to transmit to the 
President the estimated expenditures and proposed 
appropriations for the Office of Advocacy, which shall be 
included by the President in the Budget without revision.

Section 6. Deputy Chief Counsels and regional advocates

    The Chief Counsel may appoint 2 persons to serve as Deputy 
Chief Counsels, one whose focus shall be in reducing the 
regulatory burden on small businesses and the other responsible 
for providing valid economic studies and reports. The Chief 
Counsel may also appoint 10 regional advocates, one in each of 
the Standard Federal Regions, as appropriate. The duties of the 
regional advocates shall include: (1) furthering the research 
efforts concerning small businesses; (2) interfacing with 
Federal agencies that regulate or do business with small 
businesses; (3) in coordination with the Small Business and 
Agriculture Regulatory Enforcement Ombudsman, assisting the 
functioning of regional small business fairness boards, 
including, where requested, helping small businesses to resolve 
matters that are subject of complaints made to such boards with 
respect to adverse Federal agency action; (4) assisting in 
disseminating information about programs and services that help 
small business concerns; and, (5) performing such other duties 
as the Chief Counsel shall assign.

Section 7. Overhead and administrative support

    The Administrator of the Small Business Administration is 
required to provide the Office of Advocacy with all necessary 
office space, together with such equipment, office supplies, 
communications facilities, and personnel and maintenance 
services, as may be needed.

Section 8. Reports

    The Chief of Counsel is required, not less than annually, 
to advise Congress and the Administrator of the Small Business 
Administration on whether Federal agencies are complying with 
the Regulatory Flexibility Act. The Chief Counsel may prepare 
and publish other reports as deemed necessary.

Section 9. Authorization for appropriations

    The amounts authorized to be appropriated are $10,000,000 
for fiscal year 2003, $12,000,000 for fiscal year 2004, and 
$14,000,000 for fiscal year 2005.

Section 10. Conforming amendments

    This section makes conforming amendments as required by 
changes in this Act to strengthen and improve the Office of 
Advocacy.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          ACT OF JUNE 4, 1976


                          (Public Law 94-305)

 AN ACT To amend the Small Business Act and Small Business Investment 
Act of 1958 to provide additional assistance under such Acts, to create 
a pollution control financing program for small business, and for other 
purposes.

           *       *       *       *       *       *       *


                   TITLE II--STUDY OF SMALL BUSINESS


                             establishment

  Sec. 201. (a) There is established within the Small Business 
Administration an Office of Advocacy. [The management of the 
Office shall be vested in a Chief Counsel for Advocacy who 
shall be appointed from civilian life by the President, by and 
with the advice and consent of the Senate.]
  (b) The management of the Office shall be vested in a Chief 
Counsel for Advocacy who shall be appointed from civilian life 
by the President, by and with the advice and consent of the 
Senate, without regard to political affiliation and solely on 
the ground of fitness to perform the duties of the office.
  (c) No individual may be appointed under subsection (b) if 
such individual has served as an officer or employee of the 
Small Business Administration during the 5-year period 
preceding the date of such individual's appointment.
  (d) Any Chief Counsel appointed after the date of the 
enactment of this subsection shall be paid at a rate not to 
exceed the rate of basic pay for level III of the Executive 
Schedule.
  (e) After the expiration of the term of a President, the 
Chief Counsel may continue to serve at the pleasure of the 
President for a period of not to exceed one year until such 
date as a successor to the Chief Counsel is nominated.

                                 study

  Sec. 202. The primary functions of the Office of Advocacy 
shall be to--
          (1) * * *

           *       *       *       *       *       *       *

          (6) determine financial resource availability and to 
        recommend methods for delivery of financial assistance 
        [to minority enterprises] to small business concerns 
        owned and controlled by socially and economically 
        disadvantaged individuals, to small business concerns 
        owned and controlled by women, and to small business 
        concerns owned and controlled by veterans, including 
        methods for securing equity capital, for generating 
        markets for goods and services, for providing effective 
        business education, more effective management and 
        technical assistance, and training, and for assistance 
        in complying with Federal, State, and local law;
          (7) evaluate the efforts of Federal agencies, 
        business and industry to assist [minority enterprises] 
        small business concerns owned and controlled by 
        socially and economically disadvantaged individuals, 
        small business concerns owned and controlled by women, 
        and small business concerns owned and controlled by 
        veterans;
          (8) make such other recommendations as may be 
        appropriate to assist the development and strengthening 
        of [minority and other small business enterprises] 
        small business concerns owned and controlled by 
        socially and economically disadvantaged individuals, 
        small business concerns owned and controlled by women, 
        small business concerns owned and controlled by 
        veterans, and other small businesses;
          (9) recommend specific measures for creating an 
        environment in which all businesses will have the 
        opportunity to [complete] compete effectively and 
        expand to their full potential, and to ascertain the 
        common reasons, if any, for small business successes 
        and failures;

           *       *       *       *       *       *       *

          [(11) advise, cooperate with, and consult with, the 
        Chairman of the Administrative Conference of the United 
        States with respect to section 504(e) of title 5 of the 
        United States Code; and]
          [(12)] (11) evaluate the efforts of each department 
        and agency of the United States, and of private 
        industry, to assist small business concerns owned and 
        controlled by veterans, as defined in section 3(q) of 
        the Small Business Act (15 U.S.C. 632(q)), and small 
        business concerns owned and controlled by [serviced-
        disabled] service-disabled veterans, as defined in such 
        section 3(q), and to provide statistical information on 
        the utilization of such programs by such small business 
        concerns, and to make appropriate recommendations to 
        the Administrator of the Small Business Administration 
        and to the Congress in order to promote the 
        establishment and growth of those small business 
        concerns[.]; and
          (12) make recommendations and submit reports to the 
        President, to the Chairmen and Ranking Members of the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate, and to the 
        Administrator of the Small Business Administration, 
        with respect to issues and regulations affecting small 
        businesses and the necessity for corrective action by 
        any Federal agency or by Congress.

                                 duties

          Sec. 203. (a) The Office of Advocacy shall also 
        perform the following duties on a continuing basis:
          (1) * * *

           *       *       *       *       *       *       *

          (4) represent the views and interests of small 
        businesses before other Federal agencies whose policies 
        and activities may affect small business; [and]
          (5) enlist the cooperation and assistance of public 
        and private agencies, businesses, and other 
        organizations in disseminating information about the 
        programs and services provided by the Federal 
        Government which are of benefit to small businesses, 
        and information on how small businesses can participate 
        in or make use of such programs and services[.];
          (6) maintain economic databases and make the 
        information contained therein available to the 
        Administrator of the Small Business Administration and 
        to Congress;
          (7) carry out the responsibilities of the Chief 
        Counsel under chapter 6 of title 5, United States Code; 
        and
          (8) enter into a memorandum of understanding with the 
        Small Business and Agriculture Regulatory Enforcement 
        Ombudsman regarding methods and procedures for 
        cooperation between the Ombudsman and the Office of 
        Advocacy and transmit a copy of such memorandum to the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate.
  (b) On or before October 15 of the year preceding the 
beginning of each fiscal year, the Chief Counsel shall transmit 
to the President the estimated expenditures and proposed 
appropriations for the Office of Advocacy, which shall be 
included by the President in the Budget without revision.

                            staff and powers

  Sec. 204. (a) In carrying out the provisions of this title, 
the Chief Counsel for Advocacy may--
          (1) * * *

           *       *       *       *       *       *       *

  (b)(1) The Chief Counsel may appoint 2 individuals to serve 
as Deputy Chief Counsels.
  (2) Notwithstanding any other provision of this section, the 
pay rate for each Deputy Chief Counsel may not exceed the rate 
of basic pay for level III of the Senior Executive Service.
  (3) Individuals appointed to positions under this subsection 
shall not be counted toward the limitation contained in 
subsection (a)(1) regarding the number of individuals who may 
be compensated at a rate in excess of the lowest rate for GS-15 
of the General Schedule.
  (c) The Chief Counsel may appoint regional advocates within 
each Standard Federal Region as appropriate. Such regional 
advocates shall--
          (1) assist in examining the role of small business in 
        the economy of the United States by identifying 
        academic and other research institutions that focus on 
        small business concerns and linking these research 
        resources to research activities conducted by the 
        Office of Advocacy;
          (2) assist in representing the views and interests of 
        small business concerns before Federal agencies whose 
        policies and activities may affect small business;
          (3) in coordination with the Small Business and 
        Agriculture Regulatory Enforcement Ombudsman, assist 
        the functioning of regional small business fairness 
        boards;
          (4) assist in enlisting the cooperation and 
        assistance of public and private agencies, businesses, 
        and other organizations in disseminating information 
        about the programs and services provided by the Federal 
        Government that are of benefit to small business 
        concerns and the means by which small business concerns 
        can participate in or make use of such programs and 
        services; and
          (5) carry out such duties pursuant to the mission of 
        the Office of Advocacy as the Chief Counsel may assign.

                   assistance of government agencies

  Sec. 205. (a) The Administrator of the Small Business 
Administration shall provide the Office of Advocacy with 
appropriate and adequate office space at central and field 
office locations of the Administration, together with such 
equipment, office supplies, communications facilities, and 
personnel and maintenance services as may be necessary for the 
operation of such offices.
  (b) Each department, agency, and instrumentality of the 
Federal Government is authorized and directed to furnish to the 
Chief Counsel for Advocacy such reports and other information 
as he deems necessary to carry out his functions under this 
title.

                                reports

  Sec. 206. [The Chief Counsel may from time to time prepare 
and publish such reports as he deems appropriate. Not later 
than one year after the date of enactment of this title, he 
shall transmit to the Congress, the President and the 
Administration, a full report containing his findings and 
specific recommendations with respect to each of the functions 
referred to in section 202, including specific legislative 
proposals and recommendations for administration or other 
action. Not later than 6 months after the date of enactment of 
this title, he shall prepare and transmit a preliminary report 
on his activities.]
  (a) Not less than annually, the Chief Counsel shall submit to 
the President, the Committee on Small Business of the House of 
Representatives, the Committee on Small Business and 
Entrepreneurship of the Senate, the Committee on Government 
Affairs of the Senate, the Committee on Government Reform of 
the House of Representatives, and the Committees on the 
Judiciary of the Senate and the House of Representatives, and 
the Administrator of the Small Business Administration a report 
on agency compliance with chapter 6 of title 5, United States 
Code.
  (b) In addition to the reports required by this title, the 
Chief Counsel may prepare and publish such other reports as the 
Chief Counsel determines appropriate.
  (c) The reports shall not be submitted to the Office of 
Management and Budget or to any other Federal agency or 
executivedepartment for any purpose prior to transmittal to the 
Congress and the President.

                             authorization

  Sec. 207. There are authorized to be appropriated [not to 
exceed $1,000,000] $10,000,000 for fiscal year 2003, 
$12,000,000 for fiscal year 2004, and $14,000,000 for fiscal 
year 2005 to carry out the provisions of this title. Any sums 
so appropriated shall remain available until expended.

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *



                          PART III--EMPLOYEES

           *       *       *       *       *       *       *


                     Subpart D--Pay and Allowances

           *       *       *       *       *       *       *


CHAPTER 53--PAY RATES AND SYSTEMS

           *       *       *       *       *       *       *



SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES

           *       *       *       *       *       *       *



Sec. 5314. Positions at level III

  Level III of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Solicitor General of the United States.

           *       *       *       *       *       *       *

          Chief Counsel for Advocacy, Small Business 
        Administration.

Sec. 5315. Positions at level IV

  Level IV of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Deputy Administrator of General Services.

           *       *       *       *       *       *       *

          [Chief Counsel for Advocacy, Small Business 
        Administration.]

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 311 OF THE SMALL BUSINESS ADMINISTRATION REAUTHORIZATION AND 
                         AMENDMENTS ACT OF 1990


SEC. 311. RURAL TOURISM TRAINING PROGRAM.

          The [Chief Counsel for Advocacy] Administrator of the 
        Small Business Administration shall conduct training 
        sessions on the types of Federal assistance available 
        for the development of rural small businesses engaged 
        in tourism and tourism-related activities. Such 
        training sessions shall be conducted in conjunction 
        with the Office of Rural Affairs (established pursuant 
        to section 26 of the Small Business Act) and 
        appropriate personnel designated by each district 
        office of the Administration.

           *       *       *       *       *       *       *

                              ----------                              


                  SECTION 30 OF THE SMALL BUSINESS ACT


SEC. 30. OVERSIGHT OF REGULATORY ENFORCEMENT.

  (a) * * *
  (b) SBA Enforcement Ombudsman.--
          (1) * * *
          (2) The Ombudsman shall--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) coordinate and report annually on the 
                activities, findings and recommendations of the 
                Boards to the Administrator and to the heads of 
                affected agencies; [and]
                  (E) provide the affected agency with an 
                opportunity to comment on draft reports 
                prepared under subparagraph (C), and include a 
                section of the final report in which the 
                affected agency may make such comments as are 
                not addressed by the Ombudsman in revisions to 
                the draft[.]; and
                  (F) enter into a memorandum of understanding 
                with the Office of Advocacy regarding methods 
                and procedures for cooperation between the 
                Ombudsman and the Office of Advocacy.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    Democrats strongly support the goal of providing the Office 
of Advocacy with a stronger voice in the formation of public 
policy across the federal government. At the same time, it is 
important to ensure the Office of Advocacy stays true to its 
core mission of providing support to small businesses and 
entrepreneurs. Other legislation that has been considered 
significantly expanded the authority and duties of the Office 
of Advocacy. The provisions in this legislation do not force 
Advocacy into a much greater role--which could lead to a 
decline in its effectiveness as an office.
    Congress established the Office of Advocacy to be an 
independent voice for small business in the formation of public 
policy across the federal government. Advocacy focuses on 
researching small business trends, characteristics, and 
contributions to the economy. It also monitors Executive Branch 
compliance with the Regulatory Flexibility Act.
    The Office of Advocacy's responsibilities regarding agency 
compliance with the Regulatory Flexibility Act are crucial to 
fulfilling the intent of the statute. Small Business Committee 
Democrats believe that the heart of the Regulatory Flexibility 
Act lies in its own inherent flexibility. The flexibility of 
the law is due to the fact that the Regulatory Flexibility Act 
statutory terms are necessarily vague. This allows agencies to 
tailor their regulatory alternatives and relief to their own 
rules or policies. Agency interpretations vary widely--some 
select a few regulations with obvious small business impacts 
for Regulatory Flexibility Act analyses, while others analyze 
the majority of their regulations but the analysis is usually 
very limited. The Office of Advocacy exists to patrol these 
interpretations and educate agencies about the implications 
their actions have on small business.
    Agency interpretations of the Regulatory Flexibility Act 
should be developed and enforced with serious consideration. 
The Regulatory Flexibility Act (RFA) as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA) is 
intended to give small businesses, small governments and small 
non-profit enterprises a special opportunity to participate in 
the development of regulations that significantly affect them. 
Agencies need to focus their efforts and resources on the 
select number of regulations that will have a truly significant 
impact on a substantial number of small businesses. If too many 
regulations are subject to the RFA's requirements, agencies 
will be less likely (and less able) to devote substantial 
resources to this task. Any RFA statutory clarifications should 
be clear and targeted. Democrats believe that granting an 
agency authority to define RFA/SBREFA terms or regulate certain 
provisions of the act will likely work against the interests of 
small businesses.
    The Chief Counsel has a dual responsibility. First, he/she 
must act as an independent watchdog for small business. Second, 
he/she is also part of the President's Administration. These 
two roles can be difficult to perform together without the risk 
of undue influence from the Small Business Administration 
(SBA), the Office of Management and Budget (OMB), or other 
federal agencies. The influences from these offices may 
compromise Advocacy's independence and freedom to take 
positions that support small business, but may be contrary to 
the Administration's policies or regulatory actions.
    Given the nature of Advocacy's job, it could be called upon 
to criticize federal government actions that are not in the 
best interest of small businesses. This could create a natural 
tension between the Office of Advocacy and OMB as well as other 
federal agencies. For this reason, we believe that the Office 
of Advocacy Improvement should have fiscal independence from 
the Administration. The Office of Advocacy Improvement Act of 
2002 stipulates that the budget request of the Chief Counsel 
will be included in the President's budget without change. 
Creation of a line item budget for the Office of Advocacy would 
have still required Advocacy to negotiate with OMB for 
resources through the budget pass-back process. This 
legislation allows the Administration (i.e., OMB) and the 
Office of Advocacy to be relieved from discussions regarding 
budget allocations.
    Earlier draft legislation granted the Office of Advocacy 
the authority to issue regulations governing federal agency 
compliance with the Regulatory Flexibility Act and promulgate 
federal regulations to carry out the functions and duties of 
the office. This would have been a significant expansion of the 
current reach of Advocacy's authority. Democrats do not support 
this effort because we believe it would dilute the mission of 
the Office of Advocacy.
    Previous legislative proposals have attempted to combine 
the functions of the National Ombudsman and the Office of 
Advocacy into a single, independent office. The Regulatory 
Flexibility Act and the Small Business Regulatory Enforcement 
Fairness Act have provisions relating to SBA's participation in 
the rulemaking activities of the federal government at two 
distinct phases: (1) during rule development and (2) after 
final rule promulgation (final passage).
    Congress directed the Office of Advocacy to participate in 
the development of regulations that are likely to significantly 
affect small businesses. This is accomplished through the Small 
Business Advocacy Review Panel process (prior to rule proposal) 
and through comments on proposed regulations during the public 
notice and comment period.
    To compliment the Office of Advocacy's efforts in the pre-
proposal phase of rulemaking, Congress created the Regulatory 
Ombudsman to report on the enforcement activities of federal 
agencies as they relate to small businesses after a regulation 
is finalized. The Regulatory Flexibility Act, as amended by the 
Small Business Regulatory Enforcement Fairness Act, directs the 
Ombudsman to work with each agency to ensure that small 
businesses are provided with a means to comment on the 
enforcement activity of that agency, keep the identity of the 
small business confidential, and rate agency responsiveness to 
small business concerns.
    Democrats recognize that working with federal agencies a 
different stages of rulemaking necessitates a different type of 
relationship with the agency and different types of skills and 
resources. These functions need to be specialized in order to 
be effective and they are best kept to different parts of the 
Small Business Administration so they each can be guaranteed 
adequate attention. In addition, the combination of pre- and 
post-rule functions could create a conflict of interest within 
a single office--if enforcement problems arise regarding a 
particular regulation, it could be said that the pre-rule 
advocates should have corrected this problem at the pre-rule 
stage.
    The funding levels provided in this legislation will enable 
the Office of Advocacy to move forward in its effort to improve 
and strengthen Advocacy's position and voice among the federal 
agencies. Committee Democrats believe these funds are necessary 
to support the Office of Advocacy's research functions to 
report small business trends, characteristics, and 
contributions to the economy.
    In summary, Democrats support these targeted provisions to 
make the SBA Office of Advocacy more independent from the 
Administration and OMB. Having an independent Office of 
Advocacy is more important than ever with an Administration 
that places such emphasis on big businesses.

                                                Nydia M. Velazquez.

                                  
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