U.S. Senate Committee on Small Business and Entrepreneurship Ranking Member Olympia J. Snowe (R-Maine) is urging Small Business Administration (SBA) Administrator Karen Mills to reconsider its incorrect interpretation of the State Trade and Export Promotion (STEP) grant program. The STEP program would provide grant funding to assist small businesses seeking to export, but according to SBA's interpretation, at least 10 states -- including Maine -- would be ineligible for the benefit. Joined by Committee Chair Mary Landrieu (D-La.), Senator Snowe specifically noted that Congress did not permit certain states to be excluded due to how their trade functions are organized and administered.
"As currently interpreted by the Agency, the guidelines for the program exclude states that operate their state international trade offices as 501(c)3 non-profits or quasi-public agencies, rather than pure state agencies," the Senators wrote. "As a result, more than a fifth of the United States would be excluded from applying for funding, including states like Arkansas, Florida, Hawaii, Iowa, Maine, Massachusetts, Ohio, Vermont, Virginia, and Wisconsin. It was not Congressional intent that so many states be excluded from participating in the program."
Senator Snowe specifically cited the Maine International Trade Center which, though organized as a 501(c)3 non-profit, is the only office within the state charged with promoting the state's business community internationally. Under the SBA's current interpretation of the law, Maine would be excluded from participating in the STEP program, potentially depriving thousands of small businesses from receiving critical assistance in bolstering their exporting activities.
"Maine and nine other states with public-private export development programs benefit from invaluable input of their business community as well as the support of the government economic development structure," said Wade Merritt, Vice President of MITC and current Vice President of the State International Development Organizations (SIDO). "Each of us has a strong track record of success - we certainly hope that the SBA will recognize this and allow those state programs that are organized in this way to benefit from the STEP grants. We appreciate Senator Snowe's efforts, not only for working tirelessly to create the program, but also for weighing in strongly so that programs like Maine's and others should be treated no differently than those of the other 40 states.
A copy of the letter is attached.
The Honorable Karen G. Mills
U.S. Small Business Administration
409 Third Street, SW
Washington, D.C. 20416
Dear Administrator Mills:
We write to you today reagrding the Small Business Administration's (SBA) interpretation of the statue authorizing the State Trade and Export Promotion (STEP) pilot grant program. As you know, this program was created by Section 1207 of the Small Business Jobs Act of 2010 (P.L. 111-240), and signed into law by the President on September 27, 2010. The STEP program is authorized to provide up to $90 million in grants to states over the next three years to facilitate the creation or expansion of small businesses export promotion programs, as well as to support specified small business export activities.
While we are generally pleased by the Administration's efforts to get this program up and running in a timely manner, we are concerned by other aspects pf the Agency's implementation with international trade agencies. We believe that this interpretation is in error and does not reflect Congressional intent of this provision of the statute as enacted.
As the original sponsors and architects of the enacting legislation, we purposely did not limit or require that state agencies must submit application to the STEP program in behalf of their respective states. The only limitations in the statue direct the SBA to restrict the number of applications to states to be proportional to date made available by the Department of Commerce, or as determined by the Associate Administrator of the Office of International Trade.
Relying on language from out Committee Report (Senate Report 111-34) accompanying the underlying legislation-S. 2862 the "Small Business Export Enhancement and International Trade Act of 2009"- that was both considered and unanimously approved by the Committee, as well as the statutory language authorizing the program, it is clear that the program was not designed to permit certain states to be excluded as a result of how their trade functions are organized and administered. Additionally, we would not that the enacting legislation included language expressly delegating authority to the Associate Administrator of the Office of International Trade to establish what materials must be included in applications and to award grants through the program. Materials and required information are entirely different from excluding states with international trade offices that receive state funding-and operate in conjunction with the state-but are not considered to be a state agency.
As currently interpreted by the Agency, the guidelines for the program exclude that operate their state international trade offices as 501(c)3 non-profits or quasi-public agencies, rather than pure state agencies. As a result, more than a fifth of the United States would be excluded from applying for funding, including states like Arkansas, Florida, Hawaii, Iowa, Maine, Massachusetts, Ohio, Vermont, Virginia, and Wisconsin. It was not Congressional intent that so many states be excluded from participating in the program.
For example, in Maine, the state legislature created the Maine International Trade Center (MITC), which is the only office within the state charged with promoting the state's business community internationally. The MITC's president is a state employee, appointed by Maine's Governor and confirmed by the State Senate. Despite this, the MITC is organized as 502(c)3 non-profit, as the state intended to merge public with private non-profit resources and initiatives. If the MITC is not allowed to apply for the STEP program due to their quasi-agency status, the small businesses of Maine will be denied this opportunity.
Additionally, in Arkansas, the Arkansas World Trade Center is designated by the Governor of Arkansas and the Arkansas Economic Development Commission to direct and facilitate export trade activities for the State. here again, Arkansas World Trade Center faces the same dilemma as MITC and several other state, and as the only organization in the state designated to oversee international trade there is no other state entity who would be eligible to apply.
From the examples described above, it appears that the SBA's current interpretation affects states located in all geographic regions of the United States. The goal of the STEP program is to promote new-to-market export opportunities for eligible small business concerns located in all states and not just those who incorporate their international trade offices as state agencies. The SBA's current interpretation would counteract the exact effect which Congress intended the program to have. Accordingly, we respectfully request that the SBA act quickly to address this issue by revising the current program requirements and enable all states to be eligible to apply for STEP funding
If you have any questions regarding this request, please contact Kim High from Senator Landrieu's staff or Meredith West from Senator Snowe's staff on the Committee at (202) 224-5175. We look forward to your prompt response an resolution of this important matter. Thank you again for your commitment to our nation's small businesses.
Mary L. Landrieu
Olympia J. Snowe