SBA Office of Advocacy: Overview, History, and Current Issues

Summary: The Office of Advocacy (Advocacy) is an "independent" office within the U.S. Small Business Administration (SBA) that advances "the views and concerns of small businesses before Congress, the White House, federal agencies, the federal courts, and state and local policymakers as appropriate." The Chief Counsel for Advocacy (Chief Counsel) directs the office and is appointed by the President from civilian life with the advice and consent of the Senate.

Summary: Advocacy is a relatively small office with a relatively large mandate—to represent the interests of small business in the regulatory process, provide Regulatory Flexibility Act (RFA) compliance training to federal regulatory officials, produce and promote small business economic research to inform policymakers and other stakeholders concerning the impact of federal regulatory burdens on small businesses and the role of small businesses in the economy, and facilitate small business outreach across the federal government.

Summary: This report examines Advocacy's origins and the expansion of its responsibilities over time; describes its organizational structure, funding, functions, and current activities; and discusses recent legislative efforts to further enhance its authority. For example, during the 115th Congress, the House passed H.R. 5, the Regulatory Accountability Act of 2017 (Title III, Small Business Regulatory Flexibility Improvements Act), which would have expanded Advocacy's responsibilities. It would have revised and enhanced requirements for federal agency notification of the Chief Counsel prior to the publication of any proposed rule; expanded the required use of small business advocacy review panels from three federal agencies to all federal agencies, including independent regulatory agencies; empowered the Chief Counsel to issue rules governing federal agency compliance with the RFA; specifically authorized the Chief Counsel to file comments on any notice of proposed rulemaking, not just when the RFA is concerned; and transferred size standard determinations for purposes other than the Small Business Act and the Small Business Investment Act of 1958 from the SBA's Administrator to the Chief Counsel. The House passed similar legislation during the 114th Congress (H.R. 527).

Summary: The analysis suggests that Advocacy faces several challenges.

Summary: Advocacy, generally recognized as being an independent office, is housed within the much larger SBA which, given their statutorily overlapping missions as advocates for small businesses, makes it more difficult for stakeholders to recognize Advocacy as the definitive voice for small businesses. Chief Counsels tend to have relatively short tenures, creating continuity problems for Advocacy. The RFA does not define significant economic impact or substantial number of small entities, two key terms for triggering Advocacy's role under the RFA. The lack of clarity concerning these key terms makes it difficult for Advocacy to objectively determine agency compliance with the RFA and to train federal regulatory officials in how to come into compliance with the act. Advocacy often finds itself involved in ideological and partisan disputes concerning the outcome of federal regulatory policies for which it does not have the final say. Advocacy's ability to produce and promote economic research on small businesses and to engage in outreach activities, particularly outreach activities not directly related to its RFA role, is constrained by its relatively limited budgetary resources.

The Office of Advocacy (Advocacy) is an "independent" office within the U.S. Small Business Administration (SBA) that is responsible for advancing "the views and concerns of small businesses before Congress, the White House, federal agencies, the federal courts, and state and local policymakers as appropriate." The Chief Counsel for Advocacy (Chief Counsel) directs the office and is appointed by the President from civilian life with the advice and consent of the Senate. The Chief Counsel and Advocacy support the development and growth of American small businesses by

"intervening early in federal agencies' regulatory development processes on proposals that affect small entities and providing Regulatory Flexibility Act compliance training to federal agency policymakers and regulatory development officials; producing research to inform policymakers and other stakeholders on the impact of federal regulatory burdens on small businesses, to document the vital role of small businesses in the economy, and to explore and explain the wide variety of issues of concern to the small business community; and fostering a two-way communication between federal agencies and the small business community."

Advocacy has 55 staff members and received an appropriation of $9.120 million for FY2019.

Advocacy's responsibilities have expanded over time, and legislation has been introduced in recent Congresses to increase its authority still further. For example, during the 115 th Congress, the House passed H.R. 5 , the Regulatory Accountability Act of 2017 (Title III, Small Business Regulatory Flexibility Improvements Act), by a vote of 238-183. The bill would have, among other provisions,

During the 113 th Congress, these provisions were included in H.R. 2542 , the Regulatory Flexibility Improvements Act of 2013, and were later included in H.R. 2804 , the Achieving Less Excess in Regulation and Requiring Transparency Act of 2014 (ALERRT Act of 2014), which the House passed on February 27, 2014, and in H.R. 4 , the Jobs for America Act (of 2014), which the House passed on September 18, 2014. During the 114 th Congress, these provisions were included in H.R. 527 , the Small Business Regulatory Flexibility Improvements Act of 2015, which was passed by the House on February 5, 2015.

More recently, S. 83 , the Advocacy Empowerment Act of 2019, would empower the Chief Counsel to issue rules governing federal agency compliance with the RFA.

In addition, during the 114 th Congress, S. 2847 , the Prove It Act of 2016, which was reported by the Senate Committee on Small Business and Entrepreneurship, would have authorized the Chief Counsel to request the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) to review any federal agency certification that a proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities and, as a result, is not required to submit a regulatory flexibility analysis of the rule. If it is determined that the proposed rule would, if promulgated, have a significant economic impact on a substantial number of small entities, the federal agency would then be required to perform both an initial and a final regulatory flexibility analysis for the rule. The bill was reintroduced during the 115 th Congress ( S. 2014 , the Prove It Act of 2017).

The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA and directed the agency to "aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns." The SBA provided this advocacy function primarily through its administration of small business loan guaranty programs, contracting assistance programs, and management and training programs. The SBA Administrator serves as the lead advocate for small businesses within the federal government.

During the early 1970s, several small business organizations indicated at congressional hearings that they were not wholly satisfied with the SBA's advocacy efforts, especially in achieving regulatory relief for small businesses. Congress responded to these concerns by approving legislation ( P.L. 93-386 , the Small Business Amendments of 1974) authorizing the SBA Administrator to create an Office of Chief Counsel for Advocacy and to appoint a Chief Counsel for Advocacy. The Chief Counsel was to serve as a focal point for the agency's advocacy efforts.

P.L. 93-386 provided the Chief Counsel five duties:

1. serve as a focal point for the receipt of complaints, criticisms, and suggestions concerning the policies and activities of the Administration and any other federal agency that affects small businesses; 2. counsel small businesses on how to resolve questions and problems concerning the relationship of the small business to the federal government; 3. develop proposals for changes in the policies and activities of any agency of the federal government that will better fulfill the purposes of the Small Business Act and communicate such proposals to the appropriate federal agencies; 4. represent the views and interests of small businesses before other federal agencies whose policies and activities may affect small businesses; 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.

The SBA created the Office of Chief Counsel for Advocacy in October 1974, and designated each of the SBA's regional, district, and branch office directors as the advocacy director for their area. The Office of Chief Counsel was placed under the Office of Advocacy, Planning and Research, which was headed by an Assistant Administrator. Anthony Stasio, a long-time, career manager within the SBA, was named the first Chief Counsel. Three deputy advocate positions were subsequently created and staffed: deputy advocate for Advisory Councils, deputy advocate for Government Relations, and deputy advocate for Small Business Organizations. The SBA's Office of Chief Counsel for Advocacy was fully operational as of March 1, 1975.

As the Office of Advocacy began operations, several small business organizations lobbied Congress to provide the Chief Counsel greater independence from the SBA's Administrator. They argued that the SBA's Administrator reports to the White House and is subject to the OMB Director's influence. In their view, OMB, at that time, was more attuned to promoting the interests of large businesses than it was to promoting the interests of small businesses.

Congress responded to these concerns by passing P.L. 94-305 , to amend the Small Business Act and Small Business Investment Act of 1958. Enacted on June 4, 1976, Title II of the act enhanced the Chief Counsel's authority by requiring the Office of Advocacy to be established as a separate, stand-alone office within the SBA and by requiring the Chief Counsel to be appointed from civilian life by the President, by and with the advice and consent of the Senate.

retained Advocacy's five duties as identified in P.L. 93-386 ; specified that one of Advocacy's primary functions was to examine the role of small business in the American economy and the problems faced by small businesses and to recommend specific measures to address those problems; empowered the Chief Counsel, after consultation with and subject to the approval of the SBA Administrator, to employ and fix the compensation of necessary staff, without going through the normal competitive procedures directed by federal law and the Office of Personnel Management; specified that the Chief Counsel could obtain expert advice and other services, and hold hearings; directed each federal department, agency, and instrumentality to furnish the Chief Counsel with reports and information deemed by the Chief Counsel as necessary to carry out his or her functions; ordered the Chief Counsel to provide Congress, the President, and the SBA with information concerning his or her activities; and authorized to be appropriated $1 million for Advocacy, with any appropriated funds remaining available until expended.

It was at this time that the word independent began to be used to describe the Chief Counsel and the Office of Advocacy. However, Advocacy remained a part of the SBA and subject to the sitting Administration's influence. For example, at that time, Advocacy's budget was provided through the SBA's salaries and expenses account, which was approved by the SBA Administrator; Advocacy's annual staffing allotment was subject to the SBA Administrator's approval; and some senior staff within Advocacy were vetted by the White House personnel office prior to hiring.

Advocacy's Regulatory Oversight Role Expanded

Advocacy's duties were further expanded following enactment of P.L. 96-354 , the Regulatory Flexibility Act of 1980 (RFA, as amended). The RFA

establishes in law the principle that government agencies must analyze the effects of their regulatory actions on small entities−small businesses, small nonprofits, and small governments−and consider alternatives that would be effective in achieving their regulatory objectives without unduly burdening these small entities. Advocacy has the responsibility of overseeing and facilitating federal agency compliance.

The RFA's sponsors argued that federal agencies should be required to examine the impact of regulations on small businesses because federal regulations tend to be "uniform in design, permit little discretion in their implementation, and place a disproportionate burden upon small businesses, small organizations and small governmental bodies." As Alfred Dougherty Jr., director of the Federal Trade Commission's Bureau of Competition, testified at a congressional hearing:

First, even if actual regulatory costs are equal between competing large and small firms, small firms have fewer units of output over which to spread such costs and must include in the price of each unit a larger component of regulatory cost. Second, where small firms have smaller actual regulatory costs than large firms (as is generally the case), small firms remain at a competitive disadvantage because they are unable to take advantage of the "economies of scale" of regulatory compliance. Large firms generally already have extensive "in-house" data compilation and reporting systems and specialized staff accountants, lawyers and managers whose primary function is regulatory compliance. Small firms, by comparison, must either hire additional personnel or purchase expensive consulting services in order to acquire the necessary regulatory expertise.

Economist Milton Kafoglis, a member of the President Jimmy Carter's Council on Wage and Price Stability, testified that

There seem to be clear economies of scale imposed by most regulatory endeavors. Uniform application of regulatory requirements thus seems to increase the size [of the] firm that can effectively compete. The cost curve of the firm is shifted upward … [with] the small firms' cost curve shifting more than that of the dominant firms [thus] the share of the dominant firm will increase while that of small firms will decrease. As a result, industrial concentration will have increased. This … suggests that the "small business" [regulatory] problem goes beyond mere sympathy for the small businessman, but strikes at the heart of the established national policy of maintaining competition and mitigating monopoly.

As discussed below, the RFA requires federal agencies to assess the impact of their forthcoming regulations on s mall entities , which the act defines as small businesses, small governmental jurisdictions, and certain small not-for-profit organizations. The Chief Counsel is responsible for monitoring and reporting agencies' compliance with the act's provisions. The Chief Counsel also reviews and comments on proposed regulations and may appear as amicus curiae (i.e., friend of the court) in any court action to review a rule.

P.L. 111-240 , the Small Business Jobs Act of 2010, further enhanced Advocacy's independence by ending the practice of including Advocacy's budget in the SBA's Salaries and Expenses' Executive Direction account. Instead, the President is required to provide a separate statement of the amount of appropriations requested for Advocacy, "which shall be designated in a separate account in the General Fund of the Treasury." The Small Business Jobs Act also requires the SBA Administrator to provide Advocacy with "appropriate and adequate office space at central and field office locations, together with such equipment, operating budget, and communications facilities and services as may be necessary, and shall provide necessary maintenance services for such offices and the equipment and facilities located in such offices."

In recognition of its enhanced independence and separate appropriations account, Advocacy, for the first time, issued its own congressional budget justification document and annual performance report as part of the Obama Administration's FY2013 budget request. That document was presented in a new appendix accompanying the SBA's congressional budget justification document and annual performance report. Advocacy has continued to issue its own budget justification document in each of the Administration's subsequent budget requests.

Current Organizational Structure and Funding

As mentioned previously, Advocacy currently has 55 staff members: 4, including the Chief Counsel, in the Office of the Chief Counsel; 16 in the Office of Interagency Affairs (regulatory staff); 9 in the Office of Economic Research; 6 in the Office of Information; 13 in the Office of Regional Affairs (regional advocates); and 7 in the Administrative Support Branch. The Office of Advocacy's organizational chart is presented below, with its anticipated staffing level.

Advocacy received an appropriation of $9.120 million for FY2019. Staff salaries and benefits account for about 95% of Advocacy's budget, with the remainder used for economic research grants and direct expenses, such as subscriptions, travel, training, and office supplies.

Advocacy is responsible for monitoring and reporting on federal agency compliance with the RFA (5 U.S.C. §§601-612) and Executive Order 13272, Proper Consideration of Small Entities in Agency Rulemaking (August 13, 2002). Advocacy also comments on proposed rules and participates in small business advocacy review panels, among other activities.

As mentioned previously, the RFA (as amended) requires federal agencies to assess the impact of their forthcoming regulations on small entities, which the act defines as including small businesses, small governmental jurisdictions, and certain small not-for-profit organizations. According to Advocacy, the RFA

does not seek preferential treatment for small entities, require agencies to adopt regulations that impose the least burden on small entities, or mandate exemptions for small entities. Rather, it requires agencies to examine public policy issues using an analytical process that identifies, among other things, barriers to small business competitiveness and seeks a level playing field for small entities, not an unfair advantage.

Under the RFA, Cabinet departments and independent agencies as well as independent regulatory agencies must prepare a regulatory flexibility analysis at the time certain proposed and final rules are issued. The analysis must describe, among other things, (1) the reasons why the regulatory action is being considered; (2) the small entities to which the proposed rule will apply and, where feasible, an estimate of their number; (3) the projected reporting, recordkeeping, and other compliance requirements of the proposed rule; and (4) any significant alternatives to the rule that would accomplish the statutory objectives while minimizing the impact on small entities.

However, these analytical requirements are not triggered if the head of the issuing agency certifies that the proposed rule would not have a "significant economic impact on a substantial number of small entities." The RFA does not define significant economic impact or substantial number of small entities . As a result, federal agencies have substantial discretion regarding when the act's analytical requirements are initiated. In addition, the RFA's analytical requirements do not apply to final rules for which the agency does not publish a proposed rule.

The RFA also requires federal agencies to

publish a "regulatory flexibility agenda" each April and October in the Federal Registe r , listing regulations that the agency expects to propose or promulgate which are likely to have a significant economic impact on a substantial number of small entities; provide their regulatory flexibility agenda to the Chief Counsel and to small businesses or their representatives; retrospectively review rules that have or will have a significant impact within 10 years of their promulgation to determine whether they should be continued without change or should be amended or rescinded to minimize their impact on small entities; and ensure that small entities have an opportunity to participate in the rulemaking process.

In addition, the Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA), and the Consumer Financial Protection Bureau (CFPB) are required to convene a small business advocacy review panel (sometimes referred to as SBREFA panels) whenever they are developing a rule that is anticipated to have a significant economic impact on a substantial number of small entities. These panels consist of a representative or representatives from the rulemaking agency, OMB's Office of Information and Regulatory Affairs (OIRA), and the Chief Counsel. Information and advice from small entity representatives are solicited to assist the panel in understanding the ramifications of the proposed rule. The panel must be convened and complete its report, with recommendations, within a 60-day period. Finally, the RFA encourages the issuing agency to modify the proposed rule or initial regulatory flexibility analysis as appropriate, based on the information received from the panel.

The RFA also requires the Chief Counsel to monitor and report at least annually on agencies' compliance with the act. The Chief Counsel accomplishes this primarily by reviewing and commenting on proposed regulations and by participating in small business advocacy review panels. In addition, the Chief Counsel may appear as amicus curiae (i.e., friend of the court) in any court action to review a rule.

Executive Order 13272, Proper Consideration of Small Entities in Agency Rulemaking (August 13, 2002), requires federal agencies to make information publicly available concerning how they will comply with the RFA's statutory mandates. It also requires federal agencies to send to Advocacy copies of any draft regulations that may have an impact on a substantial number of small entities. Agencies must send these draft regulations to Advocacy at the same time the draft rules are sent to OIRA for review, or at a reasonable time prior to their publication in the Federal Register . Agencies must consider Advocacy's comments on the proposed rule and must address these comments in the final rule published in the Federal Register .

Executive Order 13272 requires Advocacy to

notify federal agencies concerning how to comply with the RFA, which is accomplished primarily through Advocacy's periodic publication of A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act and through Advocacy's compliance training program; report annually on federal agency compliance with the executive order, which is accomplished primarily through Advocacy's annual publication of Report on the Regulatory Flexibility Act ; and train federal regulatory agencies in how to comply with the RFA, which is accomplished through Advocacy's compliance training program.

Advocacy provided 17 official public comment letters to 20 federal agencies on a variety of proposed rules in FY2018. It also hosted 23 roundtable discussions in 16 states on proposed rules and regulatory topics. These roundtable discussions provided stakeholders an opportunity to share their views concerning the impact of proposed rules. Advocacy also provided training on RFA compliance to 132 federal officials at 6 rule-writing agencies.

Each year, Advocacy provides an estimate of the regulatory cost savings its activities provide to small businesses in the form "of foregone capital or annual compliance costs that otherwise would have been required in the first year of a rule's implementation." These estimates are based primarily on estimates from the federal agencies promulgating the rules, and, in some instances, from industry estimates.

Estimating the costs and benefits of federal regulations is methodologically challenging. For example, researchers must determine the baseline for measurement (i.e., what effects would have occurred in the absence of the regulation) and many regulatory cost estimates are based on aggregating the results of regulatory studies conducted years earlier. These studies often use different methods and vary in quality, making conclusions drawn from them problematic. Some observers, including OMB, doubt whether an accurate measure of total regulatory costs and benefits is possible. Moreover, in the case of Advocacy, estimating regulatory cost savings from its activities is even more challenging because it is nearly impossible to determine what changes to these regulations would have been made during the review and comment period if Advocacy did not exist.

Advocacy reported that its intervention in rules that were made final resulted in regulatory cost savings on behalf of small businesses of $255.3 million in FY2018.

Producing and Promoting Research on Small Businesses

Advocacy's Office of Economic Research "assembles and uses data and other information from many different sources to develop data products that are as timely and actionable as possible." These products typically relate "to the role that small businesses play in the nation's economy, including the availability of credit, the effects of regulations and taxation, the role of firms owned by women, minority and veteran entrepreneurs, factors that influence entrepreneurship, innovation and other issues of concern to small businesses."

In addition to sponsoring and conducting research on small business, Advocacy maintains web pages with links to

state economic profiles, which are compiled annually by Office of Advocacy staff and provide information concerning small businesses in the state, such as number of small businesses in the state, the number of people employed by those small businesses in the state, and various demographic information concerning the small business owners in the state; firm size economic data, which are compiled by Advocacy staff from the U.S. Bureau of the Census and the U.S. Bureau of Labor Statistics and provide information concerning various owner and business characteristics, such as the number of firms, number of establishments, employment, and annual payroll by the employment size of the business and by location and industry; quarterly economic bulletins, which are authored by Advocacy staff to examine trends in small business employment and lending; research projects which have been authored by Office of Advocacy staff, either by choice or by congressional mandate, and by others sponsored by Advocacy; fact sheets, which are authored by Office of Advocacy staff, covering various topics, such as gender differences in financing, the availability of health insurance among small businesses, and credit card financing; issue briefs, which are authored by Advocacy staff, covering various topics, such as veteran business owners and access to capital for women- and minority-owned businesses; and major sources of data collected by the federal government concerning small business.

Advocacy also provides funding to the Census Bureau to support the generation of business data by firm size; publishes "The Small Business Advocate," a newsletter summarizing Advocacy's research endeavors, which has more than 36,000 online subscribers; and publishes "The Small Business Economy," an annual report on the status of small businesses and their role in the national economy.

Advocacy published 20 contract and internal research and data reports in FY2018. These reports covered a variety of issues, including crowdfunding, the regulatory development process, nonemployer businesses, and state rankings by small business economic indicators.

In addition, Advocacy's economic research staff sponsored six "Small Business Economic Research Forums." These forums provide economists and researchers an opportunity "to discuss a key economic topic" and help "to keep Advocacy's staff up-to-date on the latest data and research from other agencies and researchers."

As mentioned previously, Advocacy engages in outreach activities related to its role with the RFA. For example, in FY2016, Advocacy participated in seven small business advocacy review panels (one with the Occupational Safety and Health Administration, two with the Consumer Financial Protection Bureau, and four with the Environmental Protection Agency) and one in FY2018 (with the Occupational Safety and Health Administration). In each case, Advocacy provided outreach to small business owners interested in sharing their views concerning the agency's proposed rule.

Advocacy also regularly sponsors roundtable discussions, conferences, and symposia to provide small business owners an opportunity to share their views on issues of concerns to them. For example, Advocacy's regional advocates regularly "interact directly with small businesses, small business trade associations, governors and state legislatures to educate them about the benefits of regulatory flexibility and testify at state-level legislation hearings on small business issues when requested to do so." Regional advocates also "work closely with the ten Regional Fairness Boards in their respective regions to develop information for the SBA's National Ombudsman, as provided for by the Small Business Regulatory Enforcement Fairness Act and alert businesses in their respective regions about regulatory proposals that could affect them."

The Chief Counsel also meets regularly with business organizations and trade associations, and participates in Advocacy roundtable discussions, conferences, and symposia. Advocacy's economists provide economic presentations at academic conferences, trade association meetings, think tank events, and other government-sponsored events.

Advocacy's regional advocates participated in 523 outreach events in FY2018. Advocacy's economists also made 18 presentations to academic, media, or other small business policy-related audiences.

As has been discussed, Advocacy's responsibilities have expanded over time. During the 115 th Congress, H.R. 5 , the Regulatory Accountability Act of 2017 (Title III, Small Business Regulatory Flexibility Improvements Act) was passed by the House. The bill would have increased Advocacy's authority still further. Specifically, H.R. 5 would have

Arguments for Expanding Advocacy's Authority

Advocates of expanding Advocacy's authority and role under the RFA argue that legislation is necessary to "close loopholes [in the RFA] and more effectively reduce the disproportionate burden that over-regulation places on small entities, thereby enhancing job creation and hastening economic recovery." They argue that

recent regulatory expansions and the future threat of further excessive federal regulation—such as under the waves of regulation occurring to implement the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act—have created immense regulatory burdens and uncertainty for the economy, chilling job creation, investment and economic growth and suppressing America's economic freedom and standing among the world's economies. These effects are particularly burdensome on small businesses—and since start-up firms are the source of net job creation in the U.S. economy it is only logical that the impact of these effects on small businesses contributes substantially to the economy's inability to create sufficient levels of new jobs.

Advocates of expanding the Office of Advocacy's authority also note that the Government Accountability Office (GAO) has found that the lack of a uniform definition for the terms significant economic impact , and substantial number of small entities contributes to inconsistent compliance with the RFA across federal agencies. They argue that GAO's findings are further evidence that the RFA needs to be amended.

Arguments Against Expanding Advocacy's Authority

Opponents of expanding Advocacy's authority and role under the RFA argue that the provisions being advocated are part of an "ongoing attack on federal regulation," presented under the guise of "pro-small business rhetoric, which will erect significant barriers to rulemaking that will hinder the promulgation of critical public health and safety protections." They argue that these provisions are

(1) based on the false premise that regulatory costs stifle economic growth and job creation; (2) threatens public health and safety by severely undermining federal agency rulemaking; (3) imposes additional duties on agencies while failing to provide for any additional resources to meet such burdens, and (4) allows more opportunities for industry to delay or defeat proposed rulemakings.

Opponents also argue that these provisions

do nothing to alleviate the purported burden on small entities of complying with federal regulations. In fact, it includes no provision that offers assistance to small entities, whether through subsidies, government guaranteed loans, preferential tax treatment for small firms, or fully funded compliance assistance offices. Instead, the bill merely aggrandizes the power of the SBA's Office of Advocacy and of the professional lobbying class in Washington.

The SBA's Office of Advocacy is a relatively small office with a relatively large mandate—to represent the interests of small business in the regulatory process, produce and promote small business economic research, and facilitate small business outreach across the federal government. It faces several challenges.

First, Advocacy is generally recognized as being an independent office, but it is housed within the SBA and remains subject to its influence through (1) its proximity to the agency and its organizational culture; (2) the budgetary process, which provides the SBA Administrator a role, albeit recently reduced, in determining Advocacy's budget; and (3) the sheer size of the SBA (more than 5,000 employees and an annual budget exceeding $700 million) relative to Advocacy which, given their statutorily overlapping missions as advocates for small businesses, makes it more difficult than would otherwise be the case for stakeholders to recognize Advocacy as the definitive voice for small businesses.

Second, Chief Counsels tend to have relatively short tenures (three years, eight years, one year, seven years, six years, four years, and one year). When they leave office, there have often been delays in naming a successor, creating continuity problems for Advocacy. For example, the position was filled on an interim basis by Claudia Rodgers, a long-time Advocacy senior staff member, from January 2015 (following Winslow Sargeant's departure) until Darryl L. DePriest's Senate confirmation on December 10, 2015. DePriest left office in January 2017. Major L. Clark, III, previously Assistant Chief Counsel for Procurement Policy for Advocacy, is currently filling the Chief Counsel's position on an interim basis. Chief Counsels leave office for various reasons, such as a change in Administration or for more lucrative positions in the private sector.

Third, one of Advocacy's primary functions is to monitor and report on federal agency compliance with the RFA, provide comments on proposed rules, and train federal regulatory officials to assist them in complying with the RFA's provisions. However, as GAO has noted, the RFA does not define significant economic impact or substantial number of small entities , two key terms for triggering Advocacy's role under the RFA. The lack of clarity concerning these key terms makes it difficult for Advocacy to objectively determine agency compliance with the RFA and also makes it more difficult for Advocacy to train federal regulatory officials in how to come into compliance with the act. GAO and others have recommended that Congress clarify the meaning of these terms. However, the RFA's original authors purposely decided not to provide a precise definition for these terms. They argued that the varying missions and constituencies served by federal agencies necessitated the provision of discretion to allow federal agencies to "determine what is significant to their programs and particular constituencies."

Fourth, Advocacy is subject to criticism from those who believe that it should be more aggressive in preventing federal regulations (i.e., from those who generally oppose federal regulations, especially regulations related to environmental issues and health care reform) and from those who believe that it should be less aggressive in this regard (i.e., from those who generally view federal regulations favorably, especially in addressing environmental and workplace safety issues). Thus, Advocacy often finds itself involved in ideological and partisan disputes concerning the outcome of federal regulatory policies for which it does not have the final say.

Finally, Advocacy's relatively limited budget restricts its ability to produce and promote economic research on small businesses and to engage in outreach activities, particularly outreach activities not directly related to its RFA role. It could be argued that Advocacy does not need additional resources for these endeavors because the SBA engages in these same activities. Once again, this reflects the challenges the Office of Advocacy faces as an independent office operating within a much larger federal agency with an overlapping mission.


The State and Local Role in Election Administration: Duties and Structures

Summary: States and localities share responsibility for most election administration duties. Exactly how responsibilities are assigned at the state and local levels varies both between and within states, but there are some general patterns in the distribution of duties. States typically have primary responsibility for making decisions about the rules of elections (policymaking). Localities typically have primary responsibility for conducting elections in accordance with those rules (implementation). Localities, with varying contributions from states, typically also have primary responsibility for paying for the activities and resources required to conduct elections (funding).

Summary: The structures of the state and local systems that conduct elections also vary between and within states. Common variations include differences related to the leadership of the system, the relationship between local election officials and the state, and the population size and density of the jurisdiction the system serves. The leadership of a state or local election system may be elected or appointed, and both the leaders and the methods used to select them may be partisan, bipartisan, or nonpartisan. State officials may have more or less direct influence over local election officials, and the extent of their influence may be affected by other structural features of the state's election systems, such as the methods used to select local officials. Finally, larger election jurisdictions have different administrative advantages and challenges than smaller ones, and more urban jurisdictions have different advantages and challenges than more rural ones. These differences between jurisdictions may be reflected in structural features of the election systems that serve them, such as how the systems allocate resources and where they find specialized expertise.

Summary: Understanding the duties and structures of state and local election systems may be relevant to Congress for at least two reasons. First, the way state and local election systems work can affect how well federal action on election administration serves its intended purposes. The effectiveness of federal action depends in part on how it is implemented. How it is implemented can depend, in turn, on how the state and local election systems that implement it work. Second, Congress can make or incentivize changes to the way state and local election systems work. Congress has a number of policy tools it can use to affect the administration of federal elections. The use of these tools can—either intentionally or unintentionally—affect the state and local election systems that administer federal elections.

Election administration attracted significant attention in 2000, when issues with the vote count delayed the results of the presidential race. Administrative issues have also been reported in subsequent election cycles. For example, issues with voter registration were reported in multiple states in 2016 and 2018.

Some responses to such reports focus on the rules of elections. The Help America Vote Act of 2002 (HAVA; P.L. 107-252 ; 116 Stat. 1666), for example, requires states to establish a uniform standard of what counts as a vote for each voting system they use (52 U.S.C. §21081(a)(6)), and bills have been introduced in recent Congresses to change how voter registration is handled.

Other responses focus on the systems that apply election rules. In the United States, that typically means state and local systems. The administration of elections in the United States is highly decentralized. Elections are primarily administered by thousands of state and local systems rather than a single, unified national system.

Understanding how those state and local systems work may be relevant to Congress for at least two reasons. First, the way state and local election systems work can affect how well federal action on election administration serves its intended purposes. Most federal action on election administration is carried out by state and local election systems. Interactions between the workings of those systems and federal actions can help determine how effective the federal actions are at achieving their objectives.

Second, Congress can require or encourage changes to the way state and local election systems work. Congress has a number of tools for influencing election administration policy. The use of these tools can—either intentionally or unintentionally—affect the workings of the state and local systems that administer federal elections.

This report is intended to help Congress understand how state and local election systems work and how their workings might relate to federal activity on election administration. It starts by describing the distribution of election administration duties at the state and local levels and the structures of the state and local systems that conduct elections. It then uses examples from past federal action on election administration to illustrate some of the ways the duties and structures of state and local election systems interact with federal activity. It closes by introducing some considerations that may be relevant to Members interested in election administration.

This report focuses on the administration of federal elections in the states by executive and legislative branches of state and local government. Much of the discussion applies to nonfederal as well as federal elections, but the report is intended explicitly to address only federal elections. The report also does not cover the federal role in administering federal elections, election administration in the U.S. territories, the role of law enforcement and the courts in election administration, or issues of constitutional or legal interpretation.

The typical federal election process has three main parts: voter registration, vote casting, and vote counting. This report focuses on those three parts of the process rather than on other aspects of campaigns and elections, such as campaign finance and redistricting.

Finally, the way federal elections are administered varies between and within states. A full accounting of the variations is beyond the scope of this report. Instead, the report describes general patterns and illustrates them with examples. Examples appear in text boxes like the box below, which describes the role the text boxes play in the report in more detail.

Distribution of State and Local Election Administration Duties

Election administration involves making decisions about the rules of elections, such as whether voters should be able to register online, whether they should be required to show photo identification at the polls, and whether election results should be audited. It also involves conducting elections in accordance with those decisions and paying for the activities and resources required to conduct them.

These three election administration duties can be described as

policymaking, implementation, and funding.

This section describes some common patterns in the distribution of these duties at the state and local levels.

In the U.S. system, states generally play the primary decisionmaking role in election administration. State legislatures, with input from their governors, can make state laws about the administration of elections and make or initiate election administration amendments to their state constitutions. State laws and constitutions can also delegate or defer responsibility for decisions about the administration of elections to other state or local officials and to voters.

The U.S. Constitution also provides for a federal role with respect to decisionmaking about elections, and Congress has exercised such powers in a number of instances. For more information about federal laws governing the state and local conduct of federal elections, see the Appendix .

Box 1 uses examples from voter registration to illustrate a number of these approaches to policymaking. It starts with a discussion of a registration policy enacted by the federal government and then describes an adjustment to the policy made, respectively, by a state legislature on the recommendation of a state executive branch official, by state executive branch officials, and by voters.

State and local officials may be granted decisionmaking authority explicitly by a variety of constitutional provisions, laws, charters, ordinances, and regulations at multiple levels of government. They may also be left discretion over policy details that are not specified in legislative or regulatory text. For example, states may set out general guidelines for voting technology and ballot design but leave decisions about exactly which machines to buy or how to lay out ballots to local officials.

Voters have a say in election administration measures that are referred to the ballot by their state legislatures. Some states also offer citizen initiatives or popular referendums, which voters can use to propose their own state election administration statutes or state constitutional amendments or to repeal or affirm election administration laws adopted by their state legislatures. Table 1 lists the citizen initiative and popular referendum options available to voters in states that offer such mechanisms, as presented by the Initiative & Referendum Institute at the University of Southern California in January 2019.

Box 2 uses examples from the November 2018 election to illustrate how states and voters have used ballot measures to make election administration policy. It describes a statewide proposal to enact automatic voter registration in Nevada that was initiated by citizens, and a statewide proposal to enact a voter ID requirement in North Carolina that was referred to the ballot by the state legislature.

Early U.S. elections were conducted almost entirely locally. Some states have departed from that tradition. For example, in Alaska, the state conducts elections above the borough level, and, in Delaware, all elections are conducted by the state.

Congress has also shifted some responsibility for conducting elections to the state level. For example, the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA; P.L. 99-410 ; 100 Stat. 924) requires states to designate a single state office to provide absent uniformed services and overseas voters with information about voter registration and absentee voting (52 U.S.C. §20302(b)). The NVRA requires states to designate a chief state election official to coordinate state responsibilities under the act (52 U.S.C. §20509), and HAVA requires chief state election officials to implement statewide voter registration lists and oversee development of plans for use of federal election administration funding (52 U.S.C. §21083(a)(1)(A); 52 U.S.C. §21005(a)).

However, the day-to-day implementation of election administration policy is still mostly handled by localities. For example, localities typically add eligible voters to the voter rolls; design and print ballots; recruit and train poll workers; select and prepare polling places; store and transport voting equipment; and count, canvass, and report election results.

The level of locality primarily responsible for conducting elections is typically the county, but there are some exceptions. The New England states, which have a strong tradition of township government, tend to assign primary responsibility to municipalities. Some states also split implementation duties between counties and municipalities.

Responsibility for implementing election administration policy may also be divided between offices or agencies at the same level of local government. For example, according to one scholarly source, as of 2015, localities in about one-third of states split responsibility for conducting elections between two or more offices or agencies. Table 2 lists the states identified by those scholars.

Election administration involves both intermittent and ongoing costs. Intermittent costs include irregular expenses like the costs of acquiring voting equipment. Ongoing costs include expenses that are linked to and recur with each individual election, such as the costs of printing ballots, paying poll workers, and transporting voting equipment to polling places, as well as expenses that are incurred whether or not there is an election, such as the costs of training election officials, maintaining voter registration lists, and providing IT support for online voter registration systems.

The federal government does not supply ongoing funding to states and localities to conduct elections. To date, Congress has authorized significant federal funding for state and local election administration in one bill: HAVA. HAVA authorized $3.65 billion for three main types of formula-based payments to states as well as additional funding for a number of smaller grant and payment programs (52 U.S.C. §§20901-20906; 52 U.S.C. §§21001-21072). Congress appropriated most of the $3.65 billion for the three types of formula-based payments between FY2003 and FY2010 and appropriated an additional $380 million in March 2018.

That means states and localities are responsible for most of the costs of conducting federal elections. Localities typically assume primary responsibility for those costs, with states contributing to varying degrees. All states have supplied or committed to supplying matching funds as required to receive federal HAVA funds (52 U.S.C. §21003(b)(5)(a)). All states but North Dakota, which does not have voter registration, have also contributed to establishing and maintaining the statewide voter registration lists required by HAVA (52 U.S.C. §21083(a)).

State contributions to other costs vary. Many states used HAVA funding to help replace or update voting technology, and some have put additional money from state coffers toward those expenses. Table 3 lists state contributions to the costs of acquiring voting equipment, as reported by the U.S. Government Accountability Office (GAO) in 2018.

Table 4 provides information from the same report about states' contributions to the costs of maintaining and operating voting equipment. As GAO uses the terms in the survey, operation costs "include things such as poll worker labor to set up equipment, postage for mailing absentee or vote-by-mail ballots, paper and printing supplies for paper ballots or voter-verified paper trails, and electricity to operate equipment during elections." Maintenance costs "include things such as labor to conduct maintenance between elections of any equipment hardware and software as well as any required parts."

Some states cover or contribute to the costs of training local election officials, and some share election-specific costs, such as printing ballots and transporting voting equipment. Box 3 uses five examples of cost-sharing arrangements for election-specific costs of federal elections to illustrate the range of approaches states have taken to such arrangements.

Structures of State and Local Election Implementation Systems

The structures of the state and local systems that conduct federal elections vary both between and within states. Common variations include differences related to the

leadership of the election system; relationship between local election officials and the state; and population size and density of the jurisdiction served by the system.

This section describes these structural variations.

The state and local election systems that conduct federal elections may be led by an individual, such as the state secretary of state or a town or county clerk; a group, such as a state elections commission or a county board of elections; or a combination of individuals or groups, such as a state secretary of state and state board of elections, or a city clerk and city registrar of voters.

Election system leadership may be chosen by voters or appointed by an authority such as the governor or state legislature. The selection method—and the leaders themselves—may be partisan, bipartisan, or nonpartisan.

Federal law requires states to designate a chief election official to carry out certain tasks. Table 5 lists the titles of chief state election officials, as reported to CRS by the EAC, and the methods of selecting them, as listed by the National Association of Secretaries of State (NASS) and the National Association of State Legislatures (NCSL).

The leadership types and selection methods of local election systems may vary within a state. Box 4 uses examples from Florida and Wisconsin to illustrate such variations. It describes the different causes of variation in the two states and a recent change in Florida to a more uniform selection process.

The leadership structures of both state and local systems can also change over time. Box 5 uses the two states from Box 4 to illustrate the types of changes states might make, how they might make them, and how frequently they might make them. It describes one change that was approved by voters as a ballot measure and a number of others that were enacted legislatively.

Another way in which the structures of election systems can vary is in the relationship between local election officials and the state. Some local election officials operate largely independently, whereas others rely on state officials or resources for some, most, or all basic functions. For example, as noted in " Funding ," states may provide some or all of the training for local election officials. As described in more detail in " Jurisdiction Size and Density ," local election officials who serve smaller or more rural jurisdictions may also depend on their states to provide specialized expertise, such as legal or technical know-how.

States also have varying types and degrees of influence over local election officials. Choices about other structural features, such as the method used to select the leadership of local election systems, can shape this aspect of the state-local relationship. For example, in some states, state officials appoint and can remove local election officials.

State officials in other states may have other options for influencing local officials. For example, state officials may have the power to initiate legal action against local officials, to provide or withhold funding for local election administration, or to certify and decertify voting systems. However, they tend to have less control over how local officials perform their election administration duties than state officials with appointment and removal authority. As described in more detail in " Compliance with Federal Requirements ," this dynamic may be especially pronounced for local officials who are popularly elected. Such officials are accountable primarily to voters rather than to the state.

Other structural variations between election systems derive from differences in the population size and density of the jurisdictions they serve. Some election jurisdictions reported serving fewer than 100 eligible registered voters in the 2016 election, for example, whereas Los Angeles County reported serving 6.8 million. The eligible registered voters in that county alone reportedly outnumbered the eligible registrants in each of 40 other states.

Election jurisdictions also differ in population density. For example, Los Angeles County is an urban center, and many small jurisdictions are rural.

Jurisdictions with different population sizes and densities have different election administration advantages and face different administrative challenges. For example, voter registration list maintenance is typically more straightforward in small jurisdictions because their lists are shorter and election officials are more likely to know registrants personally. Meanwhile, large jurisdictions tend to have larger tax bases and more resources.

Those differences between jurisdictions may be reflected in the internal structures of the election systems that serve them. One example of such a structural difference is the size and specialization of the system's staff. Larger jurisdictions, which typically have more personnel, may have much of the specialized expertise they need in-house. Smaller jurisdictions, which may have only one part-time employee dedicated to election administration, are more likely to rely on outside expertise. For example, according to law professors Steven F. Huefner, Daniel P. Tokaji, and Edward B. Foley, smaller jurisdictions in Illinois have looked to state attorneys for election law expertise and to voting equipment vendors for technical support.

Another type of difference related to jurisdiction size and density is variation in the allocation of system resources. A study prepared for the U.S. Election Assistance Commission in 2013 found that election officials in rural jurisdictions were more likely than their urban counterparts to use paid print advertising for voter outreach. Election officials in urban jurisdictions were more likely to use websites and social media.

Small jurisdictions may also allocate a larger share of their resources to meeting state and federal requirements than larger jurisdictions because there are often fixed start-up costs to required changes, and smaller jurisdictions may be less equipped to capitalize on economies of scale. For example, political scientists Heather M. Creek and Kimberly A. Karnes report, "There is a minimum cost to the acquisition and maintenance of voting technology that applies whether the district is purchasing 5 or 500 machines."

Interactions with the Federal Role in Election Administration

The duties and structures of state and local election systems can affect the implementation of federal election administration laws. Perhaps as a result, Congress has specified how states and localities should distribute certain election administration duties and structure certain elements of their election systems. Changes to the duties and structures of state and local election systems have sometimes also been side effects of other federal activity on election administration.

Selected Effects of State and Local Duties and Structures on Federal Action

This section provides examples of ways in which the distribution of election administration duties at the state and local levels and the structures of state and local election systems can affect the implementation of federal election administration law. These examples include federal efforts to affect the administration of elections through (1) requirements, (2) funding, and (3) information sharing.

Congress can use requirements to regulate how states and localities administer certain aspects of federal elections. How well such requirements serve their intended purposes depends in part on how closely states and localities comply with them.

How closely states and localities comply with federal requirements may, in turn, be affected by the duties and structures of the state and local election systems that implement them. For example, UOCAVA assigns responsibility for complying with some of its requirements to the states (52 U.S.C. §20302), but the tasks required for compliance are often handled by local officials. One scholar, law professor Justin Weinstein-Tull, indicates that this means that the officials who are held liable for compliance with UOCAVA requirements may differ from the officials who take or fail to take the actions needed to comply.

Box 6 provides an illustration of this phenomenon as reported by state officials in Alabama.

Timeliness and Tailoring of Federal Funding

The federal government can provide funding for state and local election administration, which may be conditional on the adoption of certain election administration policies or practices. How well such funding serves its intended purposes may depend in part on how timely it is and how well-tailored it is to its objectives.

Duties and structures of state and local election systems may affect how quickly federal funding is claimed and used and how well the uses to which it is put serve federal objectives. For example, HAVA has authorized payments to states to meet its requirements (52 U.S.C. §21007). It has directed those payments to be disbursed to states (52 U.S.C. §21001(a)) and charged chief state election officials with overseeing decisions about how to spend them (52 U.S.C. §21005(a)).

State election officials run federal elections in some states, but those states are the exception. As noted in " Implementation " and " Funding ," most states assign election administration implementation and funding duties to local officials. That means that the officials who receive HAVA funding and are charged with overseeing decisions about how to use it often differ from the officials who conduct and pay for the activities and resources it is intended to fund.

That has had at least two reported consequences. First, in some cases, it has reportedly delayed access to or use of some HAVA funds. Directing HAVA funding to states introduces opportunities for state-level delays, such as decisions by state officials to wait to claim the funds or requirements in state law to obtain approval to do so.

Second, some local officials have stated the view that their states' shares of HAVA funding were not put to what they considered the areas of greatest need. Box 7 provides examples of such consequences as described by state and local officials in Nevada, Minnesota, and Virginia.

Timeliness of Federal Information Sharing

Congress can require or facilitate information sharing with states and localities by federal agencies. As with funding, the effectiveness of federal information sharing may depend in part on how timely it is.

How quickly federal agencies share information with the appropriate state and local officials may be affected by the distribution of election administration duties at the state and federal levels. Box 8 provides an example of such an effect reported by NASS.

Selected Effects of Federal Action on State and Local Duties and Structures

Past federal action has resulted in both intentional and unintentional changes to state and local election systems. Some federal laws include provisions that are specifically designed to establish certain responsibilities for election administration at the state level. For example, the NVRA requires states to designate chief state election officials to coordinate state responsibilities under the act (52 U.S.C. §20509), and HAVA charges chief state election officials with implementing a statewide voter registration system (52 U.S.C. §21083(a)(1)(A)).

Federal regulation has reportedly also had the side effect of shifting the distribution of other election administration duties. For example, the agency-based registration requirements in the NVRA divide voter registration responsibilities between traditional election offices and offices that had not historically been involved in election administration, such as motor vehicle and public assistance agencies (52 U.S.C. §20504; 52 U.S.C. §20506). According to Hale, Montjoy, and Brown, "the need to pass implementing legislation and the complexity of legal and technical requirements" in federal laws such as HAVA and the NVRA has also "led many states to grant new or additional rule-making power" to their chief state election officials.

Congress has considered legislation—some of which has been enacted and some of which has not—that would change election rules or the state and local systems that implement them. The interactions between the duties and structures of state and local election systems and past federal actions suggest some considerations that may be relevant to future congressional consideration of proposals that would affect the administration of federal elections. The following questions may be of interest to Members as they consider making changes to election administration or maintaining current rules and structures:

How would any proposed change interact with the duties and structures of state and local election systems? Would the duties and structures of state and local election systems make a proposed change difficult to implement? Would the design of a proposed change need to be adjusted to accommodate variations between or within states? Which of the policy tools available to Congress is best suited to achieving the purpose of a proposed change? For example, would it be more effective to advance a proposed change with a federal requirement, or incentivize it via federal funding? How might the nature of the state and local system inform a proposed change? For example, if it is a federal requirement, who is charged with compliance; who is responsible for the tasks required for compliance; and what is the relationship between the two? If it is federal funding, to whom should it be distributed, and who should be involved in making decisions about how to use it? Would a proposed change have the effect, either intentionally or unintentionally, of altering the duties or structures of state or local election systems? If so, what are the advantages and disadvantages of such changes? Are there complications with a proposed change that are not specifically related to election administration? For example, could there be federalism-related issues with intervening in the relationships between states and their political subdivisions?

Appendix. Selected Federal Statutes Governing State and Local Administration of Federal Elections