[House Report 113-288]
[From the U.S. Government Publishing Office]
113th Congress Rept. 113-288
HOUSE OF REPRESENTATIVES
1st Session Part 1
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REGULATORY FLEXIBILITY IMPROVEMENTS ACT OF 2013
_______
December 11, 2013.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 2542]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 2542) to amend chapter 6 of title 5, United States
Code (commonly known as the Regulatory Flexibility Act), to
ensure complete analysis of potential impacts on small entities
of rules, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 2
Background and Need for the Legislation.......................... 2
Hearings......................................................... 12
Committee Consideration.......................................... 12
Committee Votes.................................................. 12
Committee Oversight Findings..................................... 17
New Budget Authority and Tax Expenditures........................ 17
Congressional Budget Office Cost Estimate........................ 17
Duplication of Federal Programs.................................. 20
Disclosure of Directed Rule Makings.............................. 20
Performance Goals and Objectives................................. 20
Advisory on Earmarks............................................. 20
Section-by-Section Analysis...................................... 20
Changes in Existing Law Made by the Bill, as Reported............ 25
Dissenting Views................................................. 42
The Amendment
The amendment (stated in terms of the page and line numbers
of the introduced bill) is as follows:
Page 27, line 14, strike ``(6)'' and insert ``(9)''.
Purpose and Summary
The Regulatory Flexibility Improvements Act of 2013, H.R.
2542, provides needed reforms to the Regulatory Flexibility Act
of 1980 (RFA) and the Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA). The RFA and SBREFA attempted to
require agencies to account better for the impacts of proposed
regulations on small businesses and other small entities and to
tailor final regulations to minimize adverse impacts on these
entities, but have not commanded full agency compliance.\1\ The
RFIA updates the RFA and SBREFA to close loopholes and more
effectively reduce the disproportionate burden that over-
regulation places on small entities, thereby enhancing job
creation and hastening economic recovery.
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\1\See, e.g., U.S. General Accounting Office, Regulatory
Flexibility Act: Agencies' Interpretations of Review Requirements Vary,
GAO/GGD-99-55 (Apr. 2, 1999); U.S. General Accounting Office, Federal
Rulemaking: Agencies Often Published Final Actions Without Proposed
Rules, GAO/GGD-98-126 (Aug. 31, 1998); U.S. General Accounting Office,
Regulatory Flexibility Act: Status of Agencies' Compliance, GAO/T-GGD-
95-112 (Mar. 8, 1995).
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Background and Need for the Legislation
I. GENESIS AND EARLY HISTORY OF THE RFA
During the 1970's, Congress enacted numerous regulatory
statutes that dramatically increased the regulatory burden on
businesses--and especially on small businesses. Regulatory
requirements stifled innovation, limited small business growth,
and contributed to the general economic malaise that permeated
the latter half of the decade. Between 1970 and 1980, the
Federal Register more than quadrupled from a 20,000-page
publication for the arcana of the Federal Government to a
nearly 90,000-page blueprint for regulating many aspects of
modern American life.\2\
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\2\See Figure 2: Federal Register Pages: 1940-2010, in Susan E.
Dudley, ``Prospects for Regulatory Reform in 2011,'' Engage 11:1 (June
2011).
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In a series of hearings during the late 1970's, Congress
began to focus on the ever-growing burden Federal regulation
imposed upon small businesses. Small businesses reiterated two
major themes: (1) they were under-represented in Federal
regulatory proceedings; and (2) Federal agency efforts to
impose a ``one-size-fits-all'' body of regulation imposed
disproportionate burdens on small businesses.\3\ These findings
were supported and reinforced during the 1980 White House
Conference on Small Business.
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\3\The finding on disproportionate impact was substantiated by an
Office of Advocacy study in 1984; this was re-affirmed by a 2010 study.
See Nicole V. Crain & W. Mark Crain, ``The Impact of Regulatory Costs
on Small Firms,'' (Sept. 2010), available at http://www.sba.gov/sites/
default/files/rs371tot.pdf (last accessed July 25, 2011).
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To address these concerns, Congress enacted the RFA as an
additional component of a significantly broader mechanism to
control agency decision-making: the Administrative Procedure
Act of 1946 (APA). In general, the RFA requires Federal
agencies to prepare a regulatory flexibility analysis when
proposed and final rules are published in the Federal Register
that describes the rule's impact on small entities, including
on small businesses.\4\ These analytical requirements are not
triggered, however, if the head of the agency issuing the rule
certifies pursuant to section 605(b) of the Act that the rule
would not have a ``significant economic impact on a substantial
number of small entities,''\5\ an undefined term of art in the
RFA. The lack of a uniform definition for this term is a
shortcoming that the U.S. Government Accountability Office
(GAO) repeatedly has found contributes to inconsistent
compliance across Federal agencies.\6\ Further, although the
Congressional Research Service advises that the annual total
number of certifications by all agencies is not known (or even
knowable), the GAO has found that in the 3-year period after
SBREFA was enacted the certification rate at four EPA offices
increased from 78% to 96%.\7\ Thus, the EPA avoided complying
with the RFA and SBREFA by certifying more of its rules
pursuant to Section 605(b). Finally, agencies only need to
assess a new regulation's direct impact on small entities;
courts have held that indirect impacts are irrelevant under the
RFA.\8\
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\4\See 5 U.S.C. Sec. Sec. 603, 604.
\5\See id. Sec. 605(b).
\6\See, e.g., U.S. General Accounting Office, Regulatory
Flexibility Act: Key Terms Still Need to Be Clarified, GAO-01-669T
(Apr. 24, 2001), at 2 (``Over the past decade, we have recommended
several times that Congress provide greater clarity with regard to
these terms, but to date Congress has not acted on our
recommendations.'').
\7\U.S. General Accounting Office, Regulatory Flexibility Act:
Implementation in EPA Program Offices and Proposed Lead Rule, GAO-GGD-
00-193 (Sept. 2000), at 16.
\8\See, e.g., Mid-Tex Elec. Co-op., Inc. v. FERC, 773 F.2d 327, 343
(D.C. Cir. 1985) (``the legislative history [of the RFA] . . . also
gives rise to an inference that Congress did not intend to require that
every agency consider every indirect effect that any regulation might
have on small businesses in any stratum of the national economy.'').
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The RFA also requires each Federal agency to publish a
``regulatory flexibility agenda'' in the Federal Register twice
a year,\9\ similar to the Unified Agenda of Federal Regulatory
and Deregulatory Actions required by Executive Order 12866. The
Small Business Administration (SBA) Chief Counsel for Advocacy
is required to monitor and report on agency compliance, and is
authorized to appear as amicus curiae ``in any action brought
in a court of the United States to review a rule'' and to
present his or her views regarding the agency's compliance with
the RFA and the rule's impact on small entities.\10\ The RFA
also requires agencies to conduct decennial rule reviews to
identify whether the impact of rules on small entities can be
mitigated further.\11\ The effectiveness of this requirement
remains unclear, however, as indicated by inconsistent agency
practice.\12\
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\9\See 5 U.S.C. Sec. 602.
\10\See id. Sec. 612(a), (b).
\11\See id. Sec. 610.
\12\For example, the EPA only reviews rules that it previously
concluded had a significant economic impact on a substantial number of
small entities when the final rules were promulgated. The Department of
Transportation, on the other hand, interprets this section to require a
review of all of its rules. See U.S. General Accounting Office,
Regulatory Flexibility Act: Agencies' Interpretations of Review
Requirements Vary, GAO/GGD-99-55 (Apr. 2, 1999), at 24.
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From the time of enactment until 1996, agency compliance
with the RFA was at best sporadic. Agencies faced little threat
from non-compliance, since judicial review of regulatory
flexibility analyses was very limited, and an agency's
certification decision could not be challenged in court.\13\
Without the possibility of court orders, agencies only had to
comply when it would benefit their rulemakings or when they
could be cajoled by the Chief Counsel for Advocacy or OIRA.
Both the Committee on the Judiciary and the Committee on Small
Business held hearings at which witnesses confirmed the
systemic failure by many agencies to comply with the RFA.\14\
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\13\See, e.g., Thompson v. Clark, 741 F.2d 401, 405 (D.C. Cir.
1984); Colo. State Banking Bd. v. Resolution Trust Corp., 926 F.2d 931,
948 (10th Cir. 1991); Lehigh Valley Farmers v. Block, 640 F. Supp.
1497, 1520 (E.D. Pa. 1986), aff'd on other grounds, 829 F.2d 409 (3d
Cir. 1987).
\14\See, e.g., Strengthening the Regulatory Flexibility Act:
Hearing on H.R. 9 Before H. Comm. on Small Business, 104th Cong.,
Serial No. 104-5, at 45-46 (Jan. 23, 1995) (statement of James P.
Carty, Vice President, Small Manufacturers, National Association of
Manufacturers) (identifying instances where the EPA and Pension Benefit
Guaranty Corporation failed to comply with the RFA); Job Creation and
Wage Enhancement Act of 1995: Hearing on H.R. 9 Before the Subcomm. on
Comm. and Admin. Law of the H. Comm. on the Judiciary, 104th Cong.,
Serial No. 104-3, at 76 (Feb. 3 & 6, 1995) (statement of Benny L.
Thayer, President, National Association for the Self-Employed) (noting
that confusion under the RFA ``has led to an apparent belief on the
part of some agencies that compliance with the RFA is entirely
voluntary'').
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II. ENACTMENT OF SBREFA AND SUBSEQUENT HISTORY
Congress enacted SBREFA in response to this collective
disregard by Federal agencies, adding several important
features to the RFA: compliance guides, advocacy review panels,
and judicial review. Agencies must develop and publish
compliance guides for all rules for which the agency is
required to develop a final regulatory flexibility analysis.
The compliance guide explains the steps a small entity must
take to comply with new regulations.\15\ SBREFA authorized
direct judicial review of agency compliance with the RFA,
including challenges to agency certifications that a rule would
not have a ``significant economic impact on a substantial
number of small entities.''\16\ SBREFA also subjected certain
Internal Revenue Service interpretative regulations to the
RFA.\17\
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\15\See ``Contract with America Advancement Act,'' 104 P.L. 141,
Sec. 212 (Mar. 29, 1996); see also 5 U.S.C. Sec. 601 note.
\16\5 U.S.C. Sec. 610(a).
\17\The RFA only requires agency compliance if the regulation is
required to be issued pursuant to notice and comment pursuant to
Section 553 of the APA or some other statute. Interpretative
regulations are exempt from the notice and comment requirements. 5
U.S.C. Sec. 553(b)(A).
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With regard to advocacy review panels, Congress recognized
that, by the time a proposed rule is published for notice and
comment, the agency has substantial intellectual capital
invested in the proposed rule and is unlikely to change the
core of its proposal during the notice and comment period.\18\
Thus, under SBREFA, Congress required the Environmental
Protection Agency (EPA) and the Occupational Safety and Health
Administration (OSHA)--two of the agencies that most impact
small entities--to obtain input from small entities before
publishing a proposed rule that would have a significant
economic impact on a substantial number of small entities.\19\
The Dodd-Frank Wall Street Reform and Consumer Protection Act
further required the new Consumer Financial Protection Bureau
to convene advocacy review panels.\20\ Before publishing an
initial regulatory flexibility analysis, the agency is required
to notify the SBA's Chief Counsel for Advocacy and provide
information on the draft rule's potential impacts on small
entities. The Chief Counsel for Advocacy then assembles a panel
consisting of representatives from OIRA, the agency
promulgating the rule and the SBA. The panel gathers input from
small entities' representatives and issues a report within 60
days, which becomes part of the record.
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\18\In fact some would argue that the notice and comment period was
not a critical component of rational rulemaking but the keystone of
rationale rulemaking in which the agency uses the public comment
process to find further support for the foregone conclusion of its
proposed regulation.
\19\See 5 U.S.C. Sec. 609.
\20\See P.L. 111-203, Sec. 1100G(a) (July 21, 2010).
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Congressional intent notwithstanding, SBREFA's changes have
had only a modest effect on agency compliance.\21\ According to
the GAO, the most significant stumbling block to improved
compliance is the lack of definitions in the RFA and SBREFA for
the terms ``significant economic impact'' and ``substantial
number of small entities.'' GAO also noted that the threshold
determination of whether a rule will have a significant
economic impact on a substantial number of small entities is
critical to compliance with other RFA requirements, including
periodic review of rules under Section 610 and the receipt of
small-entity input under SBREFA prior to the publication of
proposed rules by EPA and OSHA.
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\21\See, e.g., Sarah E. Shive, If You've Always Done It That Way,
It's Probably Wrong: How the Regulatory Flexibility Act Has Failed To
Change Agency Behavior, and How Congress Can Fix It, 1 Entrepren. Bus.
L.J. 153, 164 (2006) (``[W]hile one Department of Labor official noted
that the judicial review permitted by the SBREFA would likely result in
a `significant impact,' judges have rarely ruled in favor of small
businesses, granting substantial deference to agencies in all but the
most egregious of cases.''); Christopher M. Grengs, Making the Unseen
Seen: Issues and Options in Small Business Regulatory Reform, 85 Minn.
L. Rev. 1957, 1973 (June 2001) (``Some observers expressed high
optimism about SBREFA's prospects for holding Federal agencies more
accountable for their treatment of small businesses. Although this
optimism was perhaps not entirely deserved, SBREFA has spurred moderate
progress in improving the regulatory treatment of small businesses. In
particular, since SBREFA's enactment in 1996, judicial review of
Federal agency action under SBREFA has proved to be a promising
lynchpin for remedying irrational or glaringly mistaken agency
action.''); Jeffrey J. Polich, Judicial Review and the Small Business
Regulatory Enforcement Fairness Act: An Early Examination of When and
Where Judges Are Using Their Newly Granted Power Over Federal
Regulatory Agencies, 41 Wm. & Mary L. Rev. 1425, 1426, 1461 (Apr. 2000)
(``A review of existing case law demonstrates that small entities have
prevailed using SBREFA in cases in which there was a gross violation of
Federal rulemaking procedures by an agency, but failed when using
SBREFA in cases in which the agency made some effort to comply with
those requirements. . . . The SBREFA amendments succeed in refining the
requirements of the RFA and, in particular, the judicial review
provision grants small businesses a weapon to insure that Federal
agencies comply with the RFA. Judicial deference to agency decisions,
however, limits the power of judicial review. In the end, true
regulatory relief depends upon the agencies' own commitment to fairness
and balance for the small businesses they regulate.'') (emphasis
added).
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President George W. Bush also recognized the problems with
RFA and SBREFA compliance in a 2002 speech:
Every agency is required to analyze the impact of new
regulations on small businesses before issuing them.
That is an important law. The problem is it is often
being ignored. The law is on the books; the regulators
do not care that the law is on the books. From this day
forward they will care that the law is on the books. .
. . We want to enforce the law.\22\
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\22\``President Unveils Small Business Plan at Women's
Entrepreneurship Summit,'' (Mar. 19, 2002), available at http://
georgewbush-whitehouse.archives.gov/news/releases/2002/03/20020319-
2.html (last accessed July 25, 2011).
Subsequently, the President issued Executive Order 13272,\23\
which required agencies to adopt standards for complying with
the RFA, to make those standards known to the public and to
give the Office of Advocacy the opportunity to comment on
proposed rules prior to publication in the Federal Register.
The Executive Order, however, did not address the RFA's
loopholes or prevent agencies from adopting strained
interpretations to avoid doing the required analysis.
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\23\67 Fed. Reg. 53,462 (Aug. 16, 2002).
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Courts similarly have not been the antidotes that the
authors of SBREFA contemplated. For example, courts have not
given agency compliance with the RFA the same searching
scrutiny that they have given to compliance with the National
Environmental Policy Act (NEPA),\24\ even though it was
expected that judicial review would have the same impact on
agency decision-making that it had on agency compliance with
NEPA.\25\ Agencies still have broad latitude to interpret and
implement the RFA.
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\24\Compare Associated Fisheries v. Daley, 127 F.3d 104, 112-18
(1st Cir. 1997) (holding SBREFA does not mandate courts to conduct a
substantive judicial review of final decisions), and U.S. Cellular
Corp. v. FCC, 254 F.3d 78, 88 (D.C. Cir. 2001) (``Regulatory
Flexibility Act, which requires Federal agencies to assess the impact
of their regulations on small businesses, is purely procedural in
nature, requiring nothing more than filing of statement demonstrating
good-faith effort to carry out its mandate.'') with Dubois v. U.S.
Dep't of Agric., 102 F.3d 1273, 1285 (1st Cir. 1996) (reviewing an
agency's compliance to NEPA requires a ```thorough, probing, indepth
[sic] review' and a `searching and careful' inquiry into the record'').
\25\Regulatory Flexibility Amendments Act of 1995 on S. 350:
Hearing Before S. Comm. on Small Business, 104th Cong., Serial No. 104-
103, at 24 (Mar. 8, 1995) (statement of Jere W. Glover, Chief Counsel
for Advocacy, U.S. Small Business Administration) (``A more substantial
and ongoing threat, potential judicial review of agency compliance with
the RFA, would certainly lead to scrupulous compliance with the RFA,
just as similar attentiveness is paid to the impact statement
requirements of the [NEPA].'').
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Testimony at hearings held by the Committee on Small
Business during the 106th, 107th and 108th Congresses supports
additional reform,\26\ revealing that considerable confusion
still reigns among agencies and that agencies still find ways
to avoid complying with the RFA, even after the enactment of
SBREFA.\27\ In the 109th Congress, H.R. 682 sought to achieve
most of the reforms contained in H.R. 527 and H.R. 2542. This
Committee's Subcommittee on Commercial and Administrative Law
and the Committee on Small Business both held hearings on H.R.
682.\28\
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\26\IRA Compliance with the Regulatory Flexibility Act: Hearing
Before the H. Comm. on Small Business, 108th Cong., 108-10 (May 1,
2003); Improving the Regulatory Flexibility Act: H.R. 2345: Hearing
Before the H. Comm. on Small Business, 108th Cong., Serial No. 108-62
(May 5, 2004); Can Improved Compliance with the Regulatory Flexibility
Act Resuscitate Small Healthcare Providers?: Hearing Before the H.
Comm. on Small Business, 107th Cong., Serial No. 107-53 (Apr. 10,
2002); Regulatory Reform Initiatives and Their Impact on Small
Business: Hearing Before the H. Comm. on Small Business, 106th Cong.,
Serial No. 106-60 (June 7, 2000).
\27\See, e.g., IRS Compliance with the Regulatory Flexibility Act:
Hearing Before the H. Comm. on Small Business, 108th Cong., Serial No.
108-10, at 38 (May 1, 2003) (statement of Juanita Millender-McDonald,
Member, House Comm. on Small Business) (``The IRS has generally avoided
the requirements of SBREFA, even though the law was, in part,
specifically written to address IRS compliance with the RFA.''); Can
Improved Compliance with the Regulatory Flexibility Act Resuscitate
Small Healthcare Providers?: Hearing Before the H. Comm. on Small
Business, 107th Cong., Serial No. 107-53, at 15 (Apr. 10, 2002)
(statement of Zachary Evans, President, National Association of
Portable X-Ray Providers) (``CMS refuses to consider the impact upon
our industry of their rulemaking, consult with us during the rulemaking
process, or in any way evaluate industry costs prior to setting our
reimbursement rates.''); Regulatory Reform Initiatives and Their Impact
on Small Business: Hearing Before the Comm. on Small Business, 106th
Cong., Serial No. 106-60, at 40 (June 7, 2000) (statement of Duncan
Thomas, President, National Association of Convenience Stores)
(explaining that SBREFA ``leads often to confusion, inadvertent
noncompliance and considerable expense'').
\28\The RFA at 25: Needed Improvements for Small Business
Regulatory Relief: Hearing on H.R. 682 Before the H. Comm. on Small
Business, 109th Cong., Serial No. 109-5 (Mar. 16, 2005); Regulatory
Flexibility Improvements Act: Hearing on H.R. 682 Before the H. Comm.
on the Judiciary, 109th Cong., Serial No. 109-134 (July 30, 2006).
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III. THE OBAMA ADMINISTRATION AND THE CONTINUING NEED
FOR REFORM
On January 18, 2011, President Obama issued a Presidential
Memorandum to agency heads entitled ``Regulatory Flexibility,
Small Business, and Job Creation,'' stating that his
``Administration is firmly committed to eliminating excessive
and unjustified burdens on small businesses, and to ensuring
that regulations are designed with careful consideration of
their effects, including their cumulative effects, on small
businesses.''\29\ The President also directed agency heads to
publish explanations of their decisions not to provide
regulatory flexibility for small businesses, if those decisions
were not based on legal limitations. The President's
memorandum, however, added nothing meaningful to existing
agency requirements, and it explicitly stated that the
memorandum did not create any legal rights. Even if it had, any
of its provisions could be revoked at any time, as it is merely
an executive memorandum, not a law.
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\29\``Presidential Memoranda--Regulatory Flexibility, Small
Business, and Job Creation,'' (Jan. 18, 2011), available at http://
www.whitehouse.gov/the-press-office/2011/01/18/presidential-memoranda-
regulatory-flexibility-small-business-and-job-cre (last accessed July
25, 2011).
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Meanwhile, the need for additional RFA reform has grown. In
2010, for example, Federal agencies promulgated 3,312 final
rules, while Congress passed and the President signed into law
only 385 statutes. Recently, the SBA reported that Federal
rulemaking imposed a cumulative burden of $1.75 trillion on our
economy--a figure that equaled fourteen percent of national
income.\30\ That burden, moreover, falls disproportionately on
small businesses:
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\30\Crain, supra note 3, at 6, 48.
While all citizens and businesses pay some portion of
these costs, the distribution of the burden of
regulations is quite uneven. The portion of regulatory
costs that falls initially on businesses was $8,086 per
employee in 2008. Small businesses, defined as firms
employing fewer than 20 employees, bear the largest
burden of Federal regulations. As of 2008, small
businesses face an annual regulatory cost of $10,585
per employee, which is 36 percent higher than the
regulatory cost facing large firms (defined as firms
with 500 or more employees).\31\
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\31\See id. at iv.
Another recent study found that ``[e]ach million-dollar
increase in the regulatory budget costs the economy 420 private
sector jobs.''\32\
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\32\T. Randolph Beard et al., Regulatory Expenditures, Economic
Growth and Jobs: An Empirical Study, Phoenix Center Policy Bulletin No.
28 (Apr. 2011), at 5, available at http://www.phoenix-center.org/
PolicyBulletin/PCPB28Final.pdf (last accessed July 25, 2011).
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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\33\ and the Dodd-Frank Wall Street Reform
and Consumer Protection Act\34\-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.\35\
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.\36\
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\33\111 P.L. 148 (Mar. 23, 2010).
\34\111 P.L. 203 (July 21, 2010).
\35\See, e.g., Editors, The Uncertainty Principle, Wall Street
Journal (July 14, 2010),
available at http://online.wsj.com/article/
SB100014240527487042882045753631626648357
80.html?KEYWORDS=rulemakings (last accessed July 25, 2011); Chamber of
Commerce, Jobs for America: an Open Letter to the President of the
United States, the United States Congress, and the American People
(July 14, 2010) (stating, e.g., that, substantially due to regulatory
uncertainty, American corporations are sitting on well over $1 trillion
that they could otherwise invest); Terry Miller & Kim R. Holmes,
``Mostly Free''--The Startling Decline of America's Economic Freedom
and What to Do About It, Heritage Foundation (July 14, 2010), available
at http://www.heritage.org/Research/Reports/2010/07/Mostly-Free-The-
Startling-Decline-of-Americas-Economic-Freedom-and-What-to-Do-About-It
(summary) (last accessed July 25, 2011); http://
thf_media.s3.amazonaws.com/2010/pdf/sr0082.pdf (full report) (last
accessed July 25, 2011); Terry Miller, The U.S. loses Ground on
Economic Freedom, Wall Street Journal (Jan. 13, 2011), available at
http://online.wsj.com/article/SB10001424052748703779704576074193214999
486.html?utm_source
=Newsletter&utm_medium=Email&utm_campaign=Heritage%2BHotsheet (last
accessed July 25, 2011); Heritage Foundation and Wall Street Journal,
2011 Index of Economic Freedom: Executive Highlights (Jan. 2011) at 6
(placing America as ninth in economic freedom among countries surveyed
and recording a further decline in U.S. economic freedom).
\36\Tim Kane, The Importance of Start-ups in Job Creation and Job
Destruction, Ewing Marion Kaufmann Foundation (July 2010) at 6,
available at http://www.kauffman.org/uploadedFiles/
firm_formation_importance_of_startups.pdf (last accessed July 25,
2011).
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Agencies continue to ignore their obligations under the
RFA. For example, EPA has found carbon dioxide to be a threat
to public health and welfare\37\ and initiated an inexorable
series of additional regulatory actions that, under existing
environmental laws, will impose large adverse impacts on small
businesses. EPA, however, refused to comply with the RFA--even
when the Chief Counsel for Advocacy pointed out to the EPA
Administrator (and, by copy, to OIRA) that EPA had failed to
convene advocacy review panels before imposing its rules,
failed to develop and evaluate regulatory alternatives to
minimize its actions' impacts on small businesses, and
inappropriately certified that its actions will not impact
small businesses.\38\ When former Judiciary Committee Chairman
Lamar Smith and Small Business Committee Chairman Sam Graves
brought to OIRA's attention their concerns over these
violations, the potential for EPA's regulations to impose
particularly heavy burdens on small businesses, and the need
for OIRA to intervene and assure RFA compliance, OIRA's
response was simply to refer the matter to EPA.\39\
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\37\``Endangerment and Cause or Contribute Findings for Greenhouse
Gases under Section 202(a) of the Clean Air Act,'' EPA Docket No. EPA-
HQ-OAR-2009-0171, RIN 2060-ZA14 (Dec. 7, 2009).
\38\Letter from Susan Walthall, Acting Chief Counsel, Office of the
Chief Counsel for Advocacy, Small Business Administration to the
Honorable Lisa Jackson, EPA Administrator, (Dec. 23, 2009) (letter on
file).
\39\Letter from Reps. Lamar Smith and Sam Graves to Cass R.
Sunstein, OIRA Administrator (Jan. 21, 2010); response letter from
Administrator Sunstein to Reps. Smith and Graves (Apr. 29, 2010)
(letters on file).
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Similarly, on January 25, 2011, OSHA announced that it had
temporarily withdrawn from OMB review a proposed rule on
injury-related employer recordkeeping. The stated reason for
the withdrawal was to ``seek greater input from small
businesses on the impact of the proposal.''\40\ Yet rather than
commit itself to full RFA/SBREFA compliance, OSHA promised to
hold a meeting ``to engage and listen to small businesses about
the agency's proposal'' and to ``conduct a stakeholder meeting
with other members of the public if requested.''\41\ This falls
well short of convening the advocacy review panel that OSHA is
required by law to hold.\42\
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\40\U.S. Dep't of Labor, Office of Public Affairs, News Release: US
Labor Department's OSHA temporarily withdraws proposed column for work-
related musculoskeletal disorders, reaches out to small businesses
(Jan. 25, 2011).
\41\Id.
\42\See 5 U.S.C. Sec. 609.
---------------------------------------------------------------------------
IV. CUMULATIVE HEARING RECORD ON THE REGULATORY FLEXIBILITY
IMPROVEMENTS ACT
On February 10, 2011, the Subcommittee on Courts,
Commercial and Administrative Law held a legislative hearing on
H.R. 527.\43\ Testimony was received from Rich Gimmell,
President of Atlas Machine & Supply, Inc.; Thomas M. Sullivan,
Counsel for Nelson, Mullins, Riley, Scarborough LLP; J. Robert
Shull, Program Officer of Worker's Rights for the Public
Welfare Foundation; and, Karen R. Harned, Executive Director of
the National Federation of Independent Business (NFIB).
---------------------------------------------------------------------------
\43\See ``Regulatory Flexibility Improvements Act of 2011''--
Unleashing Small Businesses to Create Jobs: Hearing on H.R. 527 Before
the Subcomm. on Courts, Commercial and Administrative Law of the H.
Comm. on the Judiciary, 112th Cong., Serial No. 112-16 (Feb. 10, 2011).
---------------------------------------------------------------------------
Mr. Gimmell, also representing the National Association of
Manufacturers, noted that the current recession had to that
point resulted in a loss of 2.2 million jobs in the
manufacturing sector.\44\ Mr. Gimmell called for ``more
detailed statements in the RFA process and requirements to
identify redundant, overlapping, or conflicting
regulations.''\45\ Incorporating this sort of ``lean thinking''
into the regulatory process would change the current wasteful
policy practices of most agencies and, in turn, improve the
economy by allowing businesses to create jobs and expand.\46\
---------------------------------------------------------------------------
\44\Id. at 56.
\45\Id.
\46\Id.
---------------------------------------------------------------------------
Mr. Sullivan testified, ``One size fits all Federal
mandates do not work when applied to small business; second,
small business face higher costs per employee to comply with
Federal regulation than their larger competitors, and, third,
small business is critically important to the American
economy.''\47\ According to Mr. Sullivan, H.R. 527 would enable
the Office of Advocacy to ensure that agencies properly
consider how their regulations impact small businesses, and
would provide clarity to courts on judicial review.\48\
---------------------------------------------------------------------------
\47\Id. at 65.
\48\Id. at 66.
---------------------------------------------------------------------------
According to Ms. Harned, ``[o]verzealous regulation is a
perennial cause for concern for small business owners and is
particularly burdensome in times like these when the Nation's
economy remains sluggish.''\49\ Including a $1.75 trillion cost
of regulations on the economy every year, Ms. Harned stated
that ``small businesses face an annual regulatory cost of
$10,585 per employee which is 36 percent more than the
regulatory cost facing businesses with more than 500
employees.''\50\ In opposition to H.R. 527, Mr. Shull alleged
the bill would ``paralyze the regulatory agencies we need to
protect the public and keep them from getting things done to
protect the public.''\51\
---------------------------------------------------------------------------
\49\Id. at 85.
\50\Id.
\51\Id. at 77.
---------------------------------------------------------------------------
The Committee on Small Business also held a legislative
hearing on H.R. 527.\52\ Testimony was received from Bill
Squires, Senior Vice President and General Counsel for
Blackfoot Telecommunications Group; David Frulla of Kelley Drye
& Warren LLP; Craig Fabian, Vice President of Regulatory
Affairs and Assistant General Counsel at the Aeronautical
Repair Station Association; and, Rich D. Draper, CEO of the Ice
Cream Club, Inc.
---------------------------------------------------------------------------
\52\See Reducing Federal Agency Overreach: Modernizing the
Regulatory Flexibility Act Before the H. Comm. on Small Business, 112th
Cong., Serial No. 112-007 (Mar. 30, 2011).
---------------------------------------------------------------------------
The Regulatory Flexibility Improvements Act was
reintroduced on June 27, 2013, as H.R. 2542, the ``Regulatory
Flexibility Improvements Act of 2013.'' On June 28, 2013, the
Subcommittee on Regulatory Reform, Commercial and Antitrust Law
held a legislative hearing on H.R. 2542.\53\ Testimony was
received from NFIB Exec. Dir. Harned; Carl Harris, co-founder
of Carl Harris Co., Inc., Kansas national area chairman for the
National Association of Home Builders, and president of the
Kansas Building Industry Association; Rosario Palmieri, Vice
President, Infrastructure, Legal and Regulatory Policy,
National Association of Manufacturers; and, Amit Narang,
Regulatory Policy Advocate, Public Citizen.
---------------------------------------------------------------------------
\53\See ``Legislative Hearing on H.R. 2542, the Regulatory
Flexibility Improvements Act of 2013'' Before the Subcomm. on
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the
Judiciary, 113th Cong., Serial No. 113-__ (June. 26, 2013) (hearing
record available at http://judiciary.house.gov/hearings/113th/
hear_06282013.html).
---------------------------------------------------------------------------
Ms. Harned testified that overzealous regulation remains a
constant concern, and that, as of June 20, 2013, 23 percent of
small businesses cited red tape as their most important
concern, second only to taxes.\54\ Ms. Harned emphasized that,
according to analysis of recent figures released by OIRA, the
costs imposed by new regulations under the Obama administration
in 2012 alone exceeded the costs of new regulations promulgated
by both the George W. Bush and Clinton administrations.\55\
Meanwhile, Ms. Harned stressed, job creation in the U.S. has
remained stagnant, and small businesses had reported a drop in
willingness to hire since November 2012.\56\ In Ms. Harned's
view, regulatory reform like the RFIA would ``go a long way''
towards resolving the adverse impacts of regulation on small
businesses, who are responsible for most job creation in the
economy.\57\
---------------------------------------------------------------------------
\54\Statement of Karen Harned at ``Legislative Hearing on H.R.
2542, the Regulatory Flexibility Improvements Act of 2013'' Before the
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H.
Comm. on the Judiciary, 113th Cong., Serial No. 113-__ at 2 (June. 26,
2013) (available at http://judiciary.house.gov/hearings/113th/
hear_06282013.html).
\55\Id. at 2-3.
\56\Id. at 3.
\57\Id.
---------------------------------------------------------------------------
Mr. Harris testified that the costs of regulation at all
levels account for 25 percent of the cost of new homes, and
that it can be very difficult for a small business to comply
with the myriad of regulations affecting its business.\58\
Based on his experience with the RFA and SBREFA, including as a
SBREFA small business review panelist, Mr. Harris testified
that the concepts of the RFA and SBREFA were constructive, but
that, under existing law, agencies too frequently reduced RFA
and SBREFA compliance to a ``check the box'' exercise that
produced insufficiently meaningful results.\59\ Mr. Harris
submitted that the RFIA's reforms to the RFA and SBREFA would
substantially contribute to the realization of these statutes'
promise.\60\
---------------------------------------------------------------------------
\58\Statement of Carl Harris at ``Legislative Hearing on H.R. 2542,
the Regulatory Flexibility Improvements Act of 2013'' Before the
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H.
Comm. on the Judiciary, 113th Cong., Serial No. 113-__ at 2 (June. 26,
2011) (available at http://judiciary.house.gov/hearings/113th/
hear_06282013.html).
\59\Id.
\60\Id.
---------------------------------------------------------------------------
Mr. Palmieri testified that nearly 95 percent of U.S.
manufacturers have fewer than 100 employees, and that ``to
compete on a global stage, manufacturing in the United States
needs policies that enable it to thrive and create jobs.''\61\
Mr. Palmieri directed the Subcommittee's attention to a 2011
study by the Manufacturers Institute and the Manufacturers
Alliance for Productivity and Innovation, which found that U.S.
manufacturers ``face a 20 percent structural cost burden
compared to nine major trading partners because of government
imposed policies, including regulations.''\62\ Mr. Palmieri
also cited recent evidence that 67 percent of manufacturers
cited an unfavorable business climate due to regulations and
taxes as a primary challenge that they faced.\63\ Mr. Palmieri
submitted that, when regulatory agencies did comply with the
RFA and SBREFA, positive results could occur, but that agencies
far too often were able to evade meaningful RFA compliance.\64\
Like Ms. Harned and Mr. Harris, he testified that the RFIA
would greatly help to solve this problem.\65\
---------------------------------------------------------------------------
\61\Statement of Rosario Palmieri at ``Legislative Hearing on H.R.
2542, the Regulatory Flexibility Improvements Act of 2013'' Before the
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H.
Comm. on the Judiciary, 113th Cong., Serial No. 113-__ at 3 (June. 26,
2011) (available at http://judiciary.house.gov/hearings/113th/
hear_06282013.html).
\62\Id. at 4.
\63\Id.
\64\Id. at 5-7.
\65\Id. at 6.
---------------------------------------------------------------------------
Mr. Narang, by contrast, submitted that, in his view, the
RFIA would slow down the regulatory process unnecessarily.\66\
In his view, a more productive path forward would be to provide
more compliance guidance and assistance to small businesses,
rather than additional analysis of regulations before they are
imposed.\67\
---------------------------------------------------------------------------
\66\Statement of Amit Narang at ``Legislative Hearing on H.R. 2542,
the Regulatory Flexibility Improvements Act of 2013'' Before the
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H.
Comm. on the Judiciary, 113th Cong., Serial No. 113-_ at 9 (June. 26,
2011) (available at http://judiciary.house.gov/hearings/113th/
hear_06282013.html).
\67\Id. at 10.
---------------------------------------------------------------------------
V. INCLUSION OF H.R. 585
In conjunction with the House's consideration of H.R. 527
during the 112th Congress, the House also considered a
companion bill, H.R. 585, the ``Small Business Size Standard
Flexibility Act of 2011.'' H.R. 585 amended the Small Business
Act by transferring certain size standard determination
functions from the Administrator of the Small Business
Administration (SBA) to the Office of the Chief Counsel for
Advocacy.
The reasons for this amendment are straightforward.
Currently, the SBA Administrator, pursuant to Sec. 3(a)(2) of
the Small Business Act (15 U.S.C. 632(a)(2), has the authority
to determine what constitutes a small business for the purposes
of the Small Business Act or any other Federal statute. If an
agency proposes to draft a regulation that adopts a size
standard different from one already adopted by the
Administrator in regulations that implement the Small Business
Act, the agency must obtain the Administrator's approval. To
consider approval, however, the Administrator requires a full
understanding of the regulatory regime that SBA's sister agency
proposes to implement, encompassing knowledge outside of the
SBA's ordinary expertise. The SBA's Office of the Chief Counsel
for Advocacy, however--an independent office within the SBA--
has such expertise, because it represents the interests of
small businesses in other agencies' rulemaking proceedings as
part of its responsibility to monitor agency compliance with
the RFA. It is therefore logical to transfer the limited
function of determining size standards of small businesses for
purposes other than the Small Business Act and Small Business
Investment Act of 1958 to the Office of the Chief Counsel for
Advocacy.
The Judiciary Committee and the Small Business Committee
share jurisdiction over the RFIA, meaning that both committees
may hold hearings on and markup the legislation. For efficiency
in the committees' and the House's consideration of related
issues, H.R. 2542 incorporates into the Regulatory Flexibility
Improvements Act the terms of the Small Business Size Standard
Flexibility Act, as passed by the House during the 112th
Congress.
Hearings
The Committee's Subcommittee on Regulatory Reform,
Commercial and Antitrust Law held 1 day of hearings on H.R.
2542, on June 28, 2013. Testimony was received from Karen R.
Harned, Executive Director, National Federation of Independent
Business; Carl Harris, co-founder, Carl Harris Co., Inc.,
Kansas national area chairman for the National Association of
Home Builders, and president of the Kansas Building Industry
Association; Rosario Palmieri, Vice President, Infrastructure,
Legal and Regulatory Policy, National Association of
Manufacturers; and, Amit Narang, Regulatory Policy Advocate,
Public Citizen, with additional material submitted by the
Associated Builders and Contractors, Inc.
Committee Consideration
On July 10, 2013, the Subcommittee on Regulatory Reform,
Commercial and Antitrust Law met in open session and ordered
the bill H.R. 2542 favorably reported, without amendment, by
voice vote, a quorum being present. On July 31, 2013, the
Committee met in open session and ordered the bill H.R. 2542
favorably reported without amendment, by a rollcall vote of 15
to 9, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 2542.
1. The amendment offered by Mr. Conyers strikes section 5
of H.R. 2542, which provides compliance-related rulemaking
authority to the Small Business Administration's Chief Counsel
for Advocacy and repeals waiver provisions of the RFA. The
amendment was defeated by a rollcall vote of 11-17.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Coble (NC)................................. X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL)..............................
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)............................... X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA).................................. X
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 11 17
------------------------------------------------------------------------
2. The amendment offered by Mr. Nadler adds requirements
that agencies identify direct and indirect benefits of covered
regulations. The amendment was defeated by a rollcall vote of
12-17.
ROLLCALL NO. 2
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Coble (NC).................................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL)..............................
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)............................... X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA).................................. X
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 12 17
------------------------------------------------------------------------
3. The amendment offered by Mr. Johnson exempts regulations
to implement the Patient Protection and Affordable Care Act
from the requirements of H.R. 2542. The amendment was defeated
by a rollcall vote of 5-11.
ROLLCALL NO. 3
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC)................................. X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................
Mr. King (IA)..................................
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)...............................
Mr. DeSantis (FL).............................. X
Mr. Smith (MO).................................
Mr. Conyers, Jr. (MI), Ranking Member..........
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC)..................................
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 5 11
------------------------------------------------------------------------
4. The amendment offered by Ms. Jackson Lee exempts Food
and Drug Administration regulations from the requirements of
H.R. 2542. The amendment was defeated by a rollcall vote of 8-
14.
ROLLCALL NO. 4
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Coble (NC)................................. X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................
Mr. King (IA).................................. X
Mr. Franks (AZ)................................
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)...............................
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC)..................................
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................
Mr. Jeffries (NY).............................. X
------------------------
Total...................................... 8 14
------------------------------------------------------------------------
5. The bill was reported by a rollcall vote of 15-9.
ROLLCALL NO. 5
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Coble (NC)................................. X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................
Mr. King (IA).................................. X
Mr. Franks (AZ)................................
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)...............................
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC)..................................
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)........................... X
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................
Mr. Jeffries (NY).............................. X
------------------------
Total...................................... 15 9
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 2542, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 5, 2013.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2542, the
``Regulatory Flexibility Improvements Act of 2013.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 2542--Regulatory Flexibility Improvements Act of 2013.
As ordered reported by the House Committee on the Judiciary
on September 5, 2013.
SUMMARY
H.R. 2542 would amend the Regulatory Flexibility Act (RFA)
by expanding the number of rules covered by the RFA and
requiring agencies to perform additional analysis of
regulations that affect small businesses. The legislation also
would provide new authorities to the Small Business
Administration's (SBA's) Office of Advocacy to intervene and
provide support for agency rulemaking.
CBO estimates that implementing H.R. 2542 would cost $45
million over the 2014-2018 period to expand the RFA, assuming
appropriation of the necessary funds. Enacting the bill could
affect direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant. Enacting H.R. 2542 would not
affect revenues.
H.R. 2542 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. 2542 is shown in the
following table. The costs of this legislation fall within
budget functions 370 (commerce and housing credit), 800
(general government), and all budget functions that include
agencies that issue regulations affecting small businesses.
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2014-2018
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level 5 9 12 12 12 50
Estimated Outlays 4 7 10 12 12 45
----------------------------------------------------------------------------------------------------------------
BASIS OF ESTIMATE
For this estimate, CBO assumes that the legislation will be
enacted near the start of fiscal year 2014, that the necessary
amounts will be appropriated each year, and that spending will
follow historical patterns for similar activities.
CBO is unaware of any comprehensive information on the
current level of spending for regulatory activities
governmentwide. However, according to the Congressional
Research Service, Federal agencies issue 3,000 to 4,000 final
rules each year. Most rules, regardless of size, are
promulgated by the Departments of Transportation, Homeland
Security, and Commerce, and the Environmental Protection Agency
(EPA). Most major rules (those with an estimated economic
impact on the economy of more than $100 million per year) are
issued by the Departments of Health and Human Services and
Agriculture, and EPA.
H.R. 2542 would broaden the definition of a ``rule'' for
rulemaking purposes to include agency guidance documents and
policy statements. The bill also would expand the scope of the
regulatory analysis for proposed and final rules to include an
examination of indirect economic effects on small businesses
and a more detailed analysis of the possible economic
consequences of the rule for small businesses. The legislation
defines indirect economic effects as any impact that is
reasonably foreseeable. The legislation also would require
agencies to prepare reports on the cumulative economic impact
on small businesses of new and existing regulations.
Implementing H.R. 2542 would increase the amount of
regulatory analysis that agencies would need to prepare and it
would expand the role of the SBA's Office of Advocacy, and the
Office of Management and Budget's Office of Information and
Regulatory Affairs (OIRA) in the rulemaking process. Finally,
the legislation would require more Federal agencies to use
panels of experts to evaluate regulations and to prepare
reports on the economic impact of proposed regulations on small
business.
Information from OIRA, SBA, and some Federal agencies
indicates that the new requirements would increase the cost to
issue a few hundred of the thousands of Federal regulations
issued annually. Based on that information, CBO estimates that
administrative costs in some regulatory agencies, the SBA's
Office of Advocacy, and OIRA would increase by a total of about
$12 million annually, subject to the availability of
appropriated funds. We expect that it would take about three
years to reach that level of effort.
PAY-AS-YOU-GO CONSIDERATIONS
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. Enacting H.R. 2542 could affect
direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 2542 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
state, local, or tribal governments.
ESTIMATE PREPARED BY:
Federal Spending: Matthew Pickford and Susan Willie
Impact on State, Local, and Tribal Governments: Melissa Merrell
Impact on the Private Sector: Paige Piper/Bach
ESTIMATE APPROVED BY:
Theresa A. Gullo
Deputy Assistant Director for Budget Analysis
Duplication of Federal Programs
No provision of H.R. 2542 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 2542 specifically directs
the Chief Counsel for Advocacy of the Small Business
Administration to conduct one rule making proceeding within the
meaning of 5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
2542 is intended to promote job creation, economic growth by
better protecting small entities from unnecessary Federal
regulatory burdens.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 2542 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short title; table of contents.
Section 1 provides that the Act may be cited as the
``Regulatory Flexibility Improvements Act of 2013.''
Sec. 2. Clarification and Expansion of Rules Covered by the Regulatory
Flexibility Act.
Subsection 2(a) expands the RFA and SBREFA to apply to all
rules within the meaning of 5 U.S.C. Sec. 551(4), except for
certain rules of particular applicability. The RFA currently
defines a ``rule'' as one that is issued pursuant to the notice
and comment rulemaking provisions of Section 553(b) of the APA.
The Committee believes this definition is unjustifiably narrow;
the definition of a ``rule'' under the RFA should be the same
as under the APA.
Subsection 2(b) clarifies the term ``economic impact.'' The
RFA requires agencies to prepare a regulatory flexibility
analysis if the agency determines that the rule will have a
``significant economic impact on a substantial number of small
entities.'' But this term is not defined in current law, and
courts have held that agencies do not need to consider indirect
economic impacts on small entities. The Committee doubts that
Congress originally intended the regulatory flexibility
analysis to be so limited. Indirect effects are no less
burdensome on small entities than direct effects. Moreover,
agencies already measure their regulations' indirect effects
under the National Environmental Policy Act, upon which the RFA
is modeled, and when performing the cost-benefit analysis
required by Executive Order 12,866. Section 2(b) thus clarifies
that the term ``economic impact'' covers both direct and
indirect effects that are reasonably foreseeable.
Subsection 2(c) clarifies that an agency must perform a
regulatory flexibility analysis when a proposed rule's effects
are significant but beneficial. Agencies interpret the current
law to require a regulatory flexibility analysis only when a
proposed rule has significant costs to small entities.
Requiring a regulatory flexibility analysis when a proposed
rule has significant benefits will encourage agencies to pick
the most beneficial alternative.
Subsection 2(d) adds tribal organizations to the list of
``small entities'' within the RFA's purview. The same
considerations that necessitate requiring agencies to perform
regulatory flexibility analyses when small governmental bodies
are concerned apply with equal force to tribal organizations.
Subsection 2(e) clarifies that the RFA applies to land
management plans developed by the U.S. Forest Service and the
Bureau of Land Management. This is the GAO's view, although the
Forest Service and the BLM disagree. Since these agencies
already collect economic data for NEPA reports, this
clarification will not be burdensome.
Subsection 2(f)(1) clarifies that the IRS must comply fully
with the RFA. The IRS has previously concluded that it is not
required to follow the RFA when issuing an ``interpretative''
rule outside of the notice-and-comment process. Adopted in
1996, SBREFA required the IRS to comply with the RFA when an
interpretative rule imposes a collection-of-information
requirement on a small entity. The IRS misinterprets this
statute to apply only when the taxpayer is required to complete
a brand new, never-used form. Section 2(f)(1) makes clear that
the IRS is required to comply with the RFA whenever the IRS
intends to codify a regulation in the Code of Federal
Regulations and the regulation (or statute that the regulation
is interpreting) imposes a collection-of-information
requirement. Moreover, the ensuing regulatory flexibility
analysis should not be limited to the cost associated with the
``collection of information''; rather, the ``collection of
information'' is a trigger for a full analysis of the rule's
economic effects. Section 2(f)(2)-(3) establishes that the
terms ``collection of information'' and ``recordkeeping
requirement'' have the same meaning under the RFA as under the
Paperwork Reduction Act.
Subsection 2(g) adopts the definition of ``small
organization'' under the RFA that the Equal Access to Justice
Act uses, focusing on the resources available to the
organization, i.e., its net worth and number of employees. The
current definition of ``small organization'' is unwieldy. Like
the RFA, one purpose of the EAJA is to protect small entities
from overzealous regulatory enforcement. Thus, both statutes
should define ``small organization'' in the same way. Section
2(g) extends the RFA's protections to local labor organizations
as well.
Sec. 3. Expansion of Report of Regulatory Agenda.
Section 3 expands the terms of 5 U.S.C. sec. 602, which
requires agencies to publish regulatory agendas every April and
October, including regulations that may have significant
impacts on substantial numbers of small entities. Section 3
requires the agendas to describe the North American Industrial
Classification System sectors primarily affected by the rules.
It also requires agencies and the SBA to publish plain language
summaries of the information in the agendas on their websites.
Sec. 4. Requirements for Providing More Detailed Analyses.
The NEPA, which was the model when Congress adopted the RFA
in 1980, requires agencies to develop a ``detailed statement''
regarding the environmental impact of a proposed rule. Courts
have interpreted the NEPA to require agencies to take a ``hard
look'' at environmental impacts. The RFA, however, only
requires agencies to develop a ``statement'' regarding the
impact of a new regulation on small entities.
After finding that agencies were not fulfilling their
responsibilities under the RFA, Congress amended it in 1996 to
allow for judicial review, to create the same compliance
incentives that exist under the NEPA. Unfortunately, courts
reviewing agency compliance with SBREFA and RFA have not
applied the same level of searching scrutiny as they have given
to compliance with the NEPA. Consequently, agencies are
performing the bare minimum of analysis to satisfy judicial
review, without focusing on the most important issue: how to
minimize the negative economic impact of regulations on small
entities.
Section 4 is intended to increase agency scrutiny directly,
by amending the statute, rather than indirectly, as was
attempted in SBREFA by adding a judicial review component.
Thus, Section 4(a) amends Section 603 by requiring the initial
regulatory flexibility analysis (``IFRA'') to contain a
``detailed statement'' rather than merely a ``statement''; by
striking the term ``succinct'' from Section 603(b)(2); by
striking the term ``where feasible'' from Section 603(b)(3);
and, by striking the phrase ``to the extent practicable'' from
Section 603(b)(5). Agencies exploit these terms to avoid
following the law's clear intent. Subsection 4(a) also adds a
new paragraph (6) to Section 603(b), requiring agencies to
consider the cumulative economic impact of the proposed rule in
light of existing rules. Finally, recognizing that a rule could
affect some small entities more than others, Section 4(a)(7)
requires agencies to describe any disproportionate economic
impact on a specific class of small entities.
Regarding the final regulatory flexibility analysis
(``FRFA''), Subsection 4(b)(1) amends Section 604 to require
the ``description'' and ``explanation'' required by Section
604(b)(4), (5) and (6) to be ``detailed.'' This comports with
the ``detailed statement'' required of agencies by NEPA. The
bill also requires agencies to describe in the FRFA any
disproportionate economic impact on a class of small entities.
Subsection 4(b)(2) closes an oversight in the RFA to require an
agency, when preparing an FRFA, to summarize all comments
received throughout the process, not just comments received in
response to an IFRA. Subsection 4(b)(3) updates the RFA
technologically by requiring agencies to post FRFAs online.
Subsection 4(c) allows agencies to satisfy the RFA by
making reference to already-completed analyses (for example,
under NEPA) that satisfy the RFA's criteria. If the necessary
analysis already has been completed, then there is no reason to
force an agency to go through the rote exercise of performing
it again. Nevertheless, agencies must cite to the pre-existing
analysis with specificity; vague or casual references will not
suffice. Thus, Section 4(c) requires the agency to identify the
``specific portion of another agenda or analysis.'' In the same
vein, when an agency certifies that a proposed rule will not
have a ``significant economic impact on a substantial number of
small entities,'' Section 4(d) requires the agency to give a
``detailed statement'' and to identify the supporting ``factual
and legal'' basis for the certification.
Finally, Subsection 4(e) makes quantifiable data (of the
caliber required under the Information Quality Act) the
standard for measuring the economic impact of a proposed rule
on small entities. This will make agencies' IRFAs and FRFAs
more transparent, including for courts at the judicial review
stage. If quantifiable data is unavailable then the agency must
provide a ``detailed statement explaining why quantification is
not practicable or reliable'' as well as ``a more general
descriptive statement'' of the rule's effects. The Chief
Counsel for Advocacy will have the authority to promulgate
regulations fleshing out these data quality standards.
Sec. 5. Repeal of Waiver Authority and Additional Powers of Chief
Counsel.
Section 5 empowers the Chief Counsel for Advocacy to make
rules governing agency compliance with the RFA. The status quo
of agency compliance with the RFA is best described as
inconsistent and recalcitrant. To address this problem, the
Chief Counsel will promulgate rules regarding agency compliance
within 270 days of enactment. This parallels the authority of
the Council on Environmental Quality to issue regulations
governing agency compliance with the NEPA. The Chief Counsel's
regulations will be promulgated according to notice-and-comment
rulemaking and consequently will receive Chevron deference.
Agencies can issue supplementary compliance protocols, but no
agency can overturn the Chief Counsel's compliance rules.
Section 5 clarifies that the Chief Counsel may intervene in
agency adjudications, like an amicus curiae, to advise the
agency of how its decision will affect small entities. The
Chief Counsel is not authorized to appeal any decision or
otherwise to act as counsel for the small entity concerned.
Section 5 also allows the Chief Counsel to file comments on any
notice of proposed rulemaking, which will strengthen the Chief
Counsel's role as the main advocate for small entities in all
Federal agency decision-making (not just when the RFA is
concerned).
Section 5 repeals agencies' authority to waive IRFAs and
delay FRFAs by 180 days in emergency situations. The waiver
provision of Section 608 of the RFA is redundant with Section
553 of the APA. The entire RFA process for determining the
impact of a rule on small entities--advocacy review panels,
IRFAs and FRFAs--is triggered by notice and comment rulemaking.
The RFA's current waiver provision is unnecessary in light of 5
U.S.C. Sec. 553(b)(B), which allows an agency to bypass notice
and comment rulemaking ``for good cause,'' which would apply in
an emergency.
Sec. 6. Procedures for Gathering Comments.
Section 6 clarifies, improves and expands the advocacy
review panel process. Currently, as amended by SBREFA, Section
609 requires OSHA and the EPA to hold advocacy review panels
before publishing an IRFA, to receive input directly from small
entities. The new Consumer Financial Protection Bureau also is
required to conduct advocacy review panels.
Building on these reforms, Section 6 expands the use of
advocacy review panels to all Federal agencies, including
independent regulatory agencies, for any major rule (as defined
by the Congressional Review Act) or for any rule that will have
a significant economic impact on a substantial number of small
entities. Section 6 clarifies the type of information the
agency must provide to the Office of Advocacy (with an
appropriate accommodation made for IRS rules) and describes the
content and focus of the report itself, which is to be drafted
by the Chief Counsel for Advocacy in consultation with other
panel members. Rather than simply listing concerns raised by
small entities in the panel process, the report should discuss
in detail the regulation's economic impact and analyze
alternatives that will minimize costs or maximize benefits.
Section 6 slightly reforms the panel's composition and
clarifies that the Office of Advocacy is solely responsible for
selecting small entity representatives to advise the panel.
Finally, Section 6 empowers the Chief Counsel for Advocacy to
waive the panel process when it is ``impractical, unnecessary,
or contrary to the public interest.''
Sec. 7. Periodic Review of Rules.
Section 7 reforms Section 610 to clarify how agencies must
perform the periodic regulatory review. The law as currently
written contains a number of ambiguities and shortcomings that
warrant clarification and revision. Section 7 requires agencies
to develop new periodic review plans within 180 days and to
publish these plans online. Section 7 clarifies that the agency
must review all rules that have a significant economic impact
on a substantial number of small entities--regardless of
whether the agency originally prepared an FRFA for the rule.
The trigger is whether the rule currently has a significant
economic impact on a substantial number of small entities.
Pursuant to this periodic review, the agency should amend
the rule as necessary to maximize its benefits or minimize its
costs to small entities, considering the factors given in the
new Section 610(d). Finally, the agency must report the results
of the review and publish in the Federal Register a list of
rules to be reviewed and request comments.
Sec. 8. Judicial Review of Compliance with the RFA.
Under Section 8, judicial review is available when the
agency publishes the final rule; the current law requires small
entities to wait until the ``final agency action'' is complete
before bringing suit alleging a violation of the RFA. Taken
together, Sections 8(a) and (b) ensure that small entities will
have prompt access to judicial review without procedural delays
from agency-imposed exhaustion requirements. Section 8(c) makes
appropriate conforming and technical corrections to Section
611. Lastly, Section 8(d) clarifies the Chief Counsel for
Advocacy's authority to file an amicus brief regarding agency
compliance with the RFA.
Sec. 9. Jurisdiction of Court of Appeals for Challenges to Rules
Implementing RFA.
Section 9(a) grants jurisdiction to the U.S. Court of
Appeals to review challenges by small entities to rules
promulgated by the Chief Counsel for Advocacy to implement the
RFA. Section 9(b) makes technical conforming amendments.
Section 9(c) clarifies the Chief Counsel's authority to file an
amicus brief in a lawsuit challenging an agency's compliance
with the Chief Counsel's rules implementing the RFA.
Sec. 10. Establishment and Approval of Small Business Concern Size
Standards by Chief Counsel for Advocacy.
Section 10 transfers from the SBA Administrator to the
Chief Counsel for Advocacy the function of determining size
standards of small businesses for purposes other than the Small
Business Act and Small Business Investment Act of 1958.
Sec. 11. Clerical Amendments.
Section 11 contains necessary clerical amendments to make
the U.S. Code consistent with the foregoing changes.
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 italics, existing law in which no change
is proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS
Sec.
601. Definitions.
* * * * * * *
[605. Avoidance of duplicative or unnecessary analyses.]
605. Incorporations by reference and certifications.
* * * * * * *
[607. Preparation of analyses.
[608. Procedure for waiver or delay of completion.]
607. Quantification requirements.
608. Additional powers of Chief Counsel for Advocacy.
Sec. 601. Definitions
For purposes of this chapter--
[(1) the term]
(1) Agency.--The term ``agency'' means an agency as
defined in section 551(1) of this title[;].
[(2) the term ``rule'' means any rule for which the
agency publishes a general notice of proposed
rulemaking pursuant to section 553(b) of this title, or
any other law, including any rule of general
applicability governing Federal grants to State and
local governments for which the agency provides an
opportunity for notice and public comment, except that
the term ``rule'' does not include a rule of particular
applicability relating to rates, wages, corporate or
financial structures or reorganizations thereof,
prices, facilities, appliances, services, or allowances
therefor or to valuations, costs or accounting, or
practices relating to such rates, wages, structures,
prices, appliances, services, or allowances;]
(2) Rule.--The term ``rule'' has the meaning given
such term in section 551(4) of this title, except that
such term does not include a rule of particular (and
not general) applicability relating to rates, wages,
corporate or financial structures or reorganizations
thereof, prices, facilities, appliances, services, or
allowances therefor or to valuations, costs or
accounting, or practices relating to such rates, wages,
structures, prices, appliances, services, or
allowances.
[(3) the term]
(3) Small business.--The term ``small business''
has the same meaning as the term ``small business
concern'' under section 3 of the Small Business Act,
unless an agency, after consultation with the Office of
Advocacy of the Small Business Administration and after
opportunity for public comment, establishes one or more
definitions of such term which are appropriate to the
activities of the agency and publishes such
definition(s) in the Federal Register[;].
[(4) the term ``small organization'' means any not-
for-profit enterprise which is independently owned and
operated and is not dominant in its field, unless an
agency establishes, after opportunity for public
comment, one or more definitions of such term which are
appropriate to the activities of the agency and
publishes such definition(s) in the Federal Register;]
(4) Small organization.--
(A) In general.--The term ``small
organization'' means any not-for-profit
enterprise which, as of the issuance of the
notice of proposed rulemaking--
(i) in the case of an enterprise
which is described by a classification
code of the North American Industrial
Classification System, does not exceed
the size standard established by the
Administrator of the Small Business
Administration pursuant to section 3 of
the Small Business Act (15 U.S.C. 632)
for small business concerns described
by such classification code; and
(ii) in the case of any other
enterprise, has a net worth that does
not exceed $7,000,000 and has not more
than 500 employees.
(B) Local labor organizations.--In the case
of any local labor organization, subparagraph
(A) shall be applied without regard to any
national or international organization of which
such local labor organization is a part.
(C) Agency definitions.--Subparagraphs (A)
and (B) shall not apply to the extent that an
agency, after consultation with the Office of
Advocacy of the Small Business Administration
and after opportunity for public comment,
establishes one or more definitions for such
term which are appropriate to the activities of
the agency and publishes such definitions in
the Federal Register.
[(5) the term]
(5) Small governmental jurisdiction.--The term
``small governmental jurisdiction'' means governments
of cities, counties, towns, townships, villages, school
districts, or special districts, and tribal
organizations (as defined in section 4(l) of the Indian
Self-Determination and Education Assistance Act (25
U.S.C. 450b(l))), with a population of less than fifty
thousand, unless an agency establishes, after
opportunity for public comment, one or more definitions
of such term which are appropriate to the activities of
the agency and which are based on such factors as
location in rural or sparsely populated areas or
limited revenues due to the population of such
jurisdiction, and publishes such definition(s) in the
Federal Register[;].
[(6) the term]
(6) Small entity.--The term ``small entity'' shall
have the same meaning as the terms ``small business'',
``small organization'' and ``small governmental
jurisdiction'' defined in paragraphs (3), (4) and (5)
of this section[; and].
[(7) the term ``collection of information''--
[(A) means the obtaining, causing to be
obtained, soliciting, or requiring the
disclosure to third parties or the public, of
facts or opinions by or for an agency,
regardless of form or format, calling for
either--
[(i) answers to identical questions
posed to, or identical reporting or
recordkeeping requirements imposed on,
10 or more persons, other than
agencies, instrumentalities, or
employees of the United States; or
[(ii) answers to questions posed to
agencies, instrumentalities, or
employees of the United States which
are to be used for general statistical
purposes; and
[(B) shall not include a collection of
information described under section 3518(c)(1)
of title 44, United States Code.
[(8) Recordkeeping requirement.--The term
``recordkeeping requirement'' means a requirement
imposed by an agency on persons to maintain specified
records.]
(7) Collection of information.--The term
``collection of information'' has the meaning given
such term in section 3502(3) of title 44.
(8) Recordkeeping requirement.--The term
``recordkeeping requirement'' has the meaning given
such term in section 3502(13) of title 44.
(9) Economic impact.--The term ``economic impact''
means, with respect to a proposed or final rule--
(A) any direct economic effect on small
entities of such rule; and
(B) any indirect economic effect on small
entities which is reasonably foreseeable and
results from such rule (without regard to
whether small entities will be directly
regulated by the rule).
(10) Land management plan.--
(A) In general.--The term ``land management
plan'' means--
(i) any plan developed by the
Secretary of Agriculture under section
6 of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16
U.S.C. 1604); and
(ii) any plan developed by the
Secretary of the Interior under section
202 of the Federal Land Policy and
Management Act of 1976 (43 U.S.C.
1712).
(B) Revision.--The term ``revision'' means
any change to a land management plan which--
(i) in the case of a plan described
in subparagraph (A)(i), is made under
section 6(f)(5) of the Forest and
Rangeland Renewable Resources Planning
Act of 1974 (16 U.S.C. 1604(f)(5)); or
(ii) in the case of a plan
described in subparagraph (A)(ii), is
made under section 1610.5-6 of title
43, Code of Federal Regulations (or any
successor regulation).
(C) Amendment.--The term ``amendment''
means any change to a land management plan
which--
(i) in the case of a plan described
in subparagraph (A)(i), is made under
section 6(f)(4) of the Forest and
Rangeland Renewable Resources Planning
Act of 1974 (16 U.S.C. 1604(f)(4)) and
with respect to which the Secretary of
Agriculture prepares a statement
described in section 102(2)(C) of the
National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)); or
(ii) in the case of a plan
described in subparagraph (A)(ii), is
made under section 1610.5-5 of title
43, Code of Federal Regulations (or any
successor regulation) and with respect
to which the Secretary of the Interior
prepares a statement described in
section 102(2)(C) of the National
Environmental Policy Act of 1969 (42
U.S.C. 4332(2)(C)).
Sec. 602. Regulatory agenda
(a) During the months of October and April of each year,
each agency shall publish in the Federal Register a regulatory
flexibility agenda which shall contain--
(1) * * *
(2) a summary of the nature of any such rule under
consideration for each subject area listed in the
agenda pursuant to paragraph (1), the objectives and
legal basis for the issuance of the rule, and an
approximate schedule for completing action on any rule
for which the agency has issued a general notice of
proposed rulemaking[, and];
(3) a brief description of the sector of the North
American Industrial Classification System that is
primarily affected by any rule which the agency expects
to propose or promulgate which is likely to have a
significant economic impact on a substantial number of
small entities; and
[(3)] (4) the name and telephone number of an
agency official knowledgeable concerning the items
listed in paragraph (1).
* * * * * * *
[(c) Each agency shall endeavor to provide notice of each
regulatory flexibility agenda to small entities or their
representatives through direct notification or publication of
the agenda in publications likely to be obtained by such small
entities and shall invite comments upon each subject area on
the agenda.]
(c) Each agency shall prominently display a plain language
summary of the information contained in the regulatory
flexibility agenda published under subsection (a) on its
website within 3 days of its publication in the Federal
Register. The Office of Advocacy of the Small Business
Administration shall compile and prominently display a plain
language summary of the regulatory agendas referenced in
subsection (a) for each agency on its website within 3 days of
their publication in the Federal Register.
* * * * * * *
Sec. 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this
title, or any other law, to publish general notice of proposed
rulemaking for any proposed rule, [or] publishes a notice of
proposed rulemaking for an interpretative rule involving the
internal revenue laws of the United States, or publishes a
revision or amendment to a land management plan, the agency
shall prepare and make available for public comment an initial
regulatory flexibility analysis. Such analysis shall describe
the impact of the proposed rule on small entities. The initial
regulatory flexibility analysis or a summary shall be published
in the Federal Register at the time of the publication of
general notice of proposed rulemaking for the rule. The agency
shall transmit a copy of the initial regulatory flexibility
analysis to the Chief Counsel for Advocacy of the Small
Business Administration. In the case of an interpretative rule
involving the internal revenue laws of the United States, this
chapter applies to interpretative rules published in the
Federal Register for codification in the Code of Federal
Regulations, but only to the extent that such interpretative
rules impose on small entities a collection of information
requirement[.] or a recordkeeping requirement, and without
regard to whether such requirement is imposed by statute or
regulation.
[(b) Each initial regulatory flexibility analysis required
under this section shall contain--
[(1) a description of the reasons why action by the
agency is being considered;
[(2) a succinct statement of the objectives of, and
legal basis for, the proposed rule;
[(3) a description of and, where feasible, an
estimate of the number of small entities to which the
proposed rule will apply;
[(4) a description of the projected reporting,
recordkeeping and other compliance requirements of the
proposed rule, including an estimate of the classes of
small entities which will be subject to the requirement
and the type of professional skills necessary for
preparation of the report or record;
[(5) an identification, to the extent practicable,
of all relevant Federal rules which may duplicate,
overlap or conflict with the proposed rule.]
(b) Each initial regulatory flexibility analysis required
under this section shall contain a detailed statement--
(1) describing the reasons why action by the agency
is being considered;
(2) describing the objectives of, and legal basis
for, the proposed rule;
(3) estimating the number and type of small
entities to which the proposed rule will apply;
(4) describing the projected reporting,
recordkeeping, and other compliance requirements of the
proposed rule, including an estimate of the classes of
small entities which will be subject to the requirement
and the type of professional skills necessary for
preparation of the report and record;
(5) describing all relevant Federal rules which may
duplicate, overlap, or conflict with the proposed rule,
or the reasons why such a description could not be
provided;
(6) estimating the additional cumulative economic
impact of the proposed rule on small entities beyond
that already imposed on the class of small entities by
the agency or why such an estimate is not available;
and
(7) describing any disproportionate economic impact
on small entities or a specific class of small
entities.
(c) [Each initial regulatory flexibility analysis shall
also contain a description of any significant alternatives to
the proposed rule which accomplish the stated objectives of
applicable statutes and which minimize any significant economic
impact of the proposed rule on small entities.] Each initial
regulatory flexibility analysis shall also contain a detailed
description of alternatives to the proposed rule which minimize
any adverse significant economic impact or maximize any
beneficial significant economic impact on small entities.
Consistent with the stated objectives of applicable statutes,
the analysis shall discuss significant alternatives such as--
(1) * * *
* * * * * * *
[(d)(1) For a covered agency, as defined in section
609(d)(2), each initial regulatory flexibility analysis shall
include a description of--
[(A) any projected increase in the cost of credit
for small entities;
[(B) any significant alternatives to the proposed
rule which accomplish the stated objectives of
applicable statutes and which minimize any increase in
the cost of credit for small entities; and
[(C) advice and recommendations of representatives
of small entities relating to issues described in
subparagraphs (A) and (B) and subsection (b).
[(2) A covered agency, as defined in section 609(d)(2),
shall, for purposes of complying with paragraph (1)(C)--
[(A) identify representatives of small entities in
consultation with the Chief Counsel for Advocacy of the
Small Business Administration; and
[(B) collect advice and recommendations from the
representatives identified under subparagraph (A)
relating to issues described in subparagraphs (A) and
(B) of paragraph (1) and subsection (b).]
Sec. 604. Final regulatory flexibility analysis
(a) When an agency promulgates a final rule under section
553 of this title, after being required by that section or any
other law to publish a general notice of proposed rulemaking,
[or] promulgates a final interpretative rule involving the
internal revenue laws of the United States as described in
section 603(a), or adopts a revision or amendment to a land
management plan, the agency shall prepare a final regulatory
flexibility analysis. Each final regulatory flexibility
analysis shall contain--
(1) * * *
(2) a statement of the significant issues raised by
the public comments in response to the initial
regulatory flexibility analysis (or certification of
the proposed rule under section 605(b)), a statement of
the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a
result of such comments;
* * * * * * *
(4) a detailed description of and an estimate of
the number of small entities to which the rule will
apply or [an explanation] a detailed explanation of why
no such estimate is available;
(5) a detailed description of the projected
reporting, recordkeeping and other compliance
requirements of the rule, including an estimate of the
classes of small entities which will be subject to the
requirement and the type of professional skills
necessary for preparation of the report or record;
(6) a detailed description of the steps the agency
has taken to [minimize the significant economic impact]
minimize the adverse significant economic impact or
maximize the beneficial significant economic impact on
small entities consistent with the stated objectives of
applicable statutes, including a statement of the
factual, policy, and legal reasons for selecting the
alternative adopted in the final rule and why each one
of the other significant alternatives to the rule
considered by the agency which affect the impact on
small entities was rejected; and
[(6) for a covered agency, as defined in section
609(d)(2), a description of the steps the agency has
taken to minimize any additional cost of credit for
small entities.]
(7) describing any disproportionate economic impact
on small entities or a specific class of small
entities.
[(b) The agency shall make copies of the final regulatory
flexibility analysis available to members of the public and
shall publish in the Federal Register such analysis or a
summary thereof.]
(b) The agency shall make copies of the final regulatory
flexibility analysis available to the public, including
placement of the entire analysis on the agency's website, and
shall publish in the Federal Register the final regulatory
flexibility analysis, or a summary thereof which includes the
telephone number, mailing address, and link to the website
where the complete analysis may be obtained.
Sec. 605. [Avoidance of duplicative or unnecessary analyses]
Incorporations by reference and certifications
[(a) Any Federal agency may perform the analyses required
by sections 602, 603, and 604 of this title in conjunction with
or as a part of any other agenda or analysis required by any
other law if such other analysis satisfies the provisions of
such sections.]
(a) A Federal agency shall be treated as satisfying any
requirement regarding the content of an agenda or regulatory
flexibility analysis under section 602, 603, or 604, if such
agency provides in such agenda or analysis a cross-reference to
the specific portion of another agenda or analysis which is
required by any other law and which satisfies such requirement.
(b) Sections 603 and 604 of this title shall not apply to
any proposed or final rule if the head of the agency certifies
that the rule will not, if promulgated, have a significant
economic impact on a substantial number of small entities. If
the head of the agency makes a certification under the
preceding sentence, the agency shall publish such certification
in the Federal Register at the time of publication of general
notice of proposed rulemaking for the rule or at the time of
publication of the final rule, along with a detailed statement
providing the factual and legal basis for such certification.
The agency shall provide such certification and statement to
the Chief Counsel for Advocacy of the Small Business
Administration.
* * * * * * *
[Sec. 607. Preparation of analyses
[In complying with the provisions of sections 603 and 604
of this title, an agency may provide either a quantifiable or
numerical description of the effects of a proposed rule or
alternatives to the proposed rule, or more general descriptive
statements if quantification is not practicable or reliable.
[Sec. 608. Procedure for waiver or delay of completion
[(a) An agency head may waive or delay the completion of
some or all of the requirements of section 603 of this title by
publishing in the Federal Register, not later than the date of
publication of the final rule, a written finding, with reasons
therefor, that the final rule is being promulgated in response
to an emergency that makes compliance or timely compliance with
the provisions of section 603 of this title impracticable.
[(b) Except as provided in section 605(b), an agency head
may not waive the requirements of section 604 of this title. An
agency head may delay the completion of the requirements of
section 604 of this title for a period of not more than one
hundred and eighty days after the date of publication in the
Federal Register of a final rule by publishing in the Federal
Register, not later than such date of publication, a written
finding, with reasons therefor, that the final rule is being
promulgated in response to an emergency that makes timely
compliance with the provisions of section 604 of this title
impracticable. If the agency has not prepared a final
regulatory analysis pursuant to section 604 of this title
within one hundred and eighty days from the date of publication
of the final rule, such rule shall lapse and have no effect.
Such rule shall not be repromulgated until a final regulatory
flexibility analysis has been completed by the agency.]
Sec. 607. Quantification requirements
In complying with sections 603 and 604, an agency shall
provide--
(1) a quantifiable or numerical description of the
effects of the proposed or final rule and alternatives
to the proposed or final rule; or
(2) a more general descriptive statement and a
detailed statement explaining why quantification is not
practicable or reliable.
Sec. 608. Additional powers of Chief Counsel for Advocacy
(a)(1) Not later than 270 days after the date of the
enactment of the Regulatory Flexibility Improvements Act of
2013, the Chief Counsel for Advocacy of the Small Business
Administration shall, after opportunity for notice and comment
under section 553, issue rules governing agency compliance with
this chapter. The Chief Counsel may modify or amend such rules
after notice and comment under section 553. This chapter (other
than this subsection) shall not apply with respect to the
issuance, modification, and amendment of rules under this
paragraph.
(2) An agency shall not issue rules which supplement the
rules issued under subsection (a) unless such agency has first
consulted with the Chief Counsel for Advocacy to ensure that
such supplemental rules comply with this chapter and the rules
issued under paragraph (1).
(b) Notwithstanding any other law, the Chief Counsel for
Advocacy of the Small Business Administration may intervene in
any agency adjudication (unless such agency is authorized to
impose a fine or penalty under such adjudication), and may
inform the agency of the impact that any decision on the record
may have on small entities. The Chief Counsel shall not
initiate an appeal with respect to any adjudication in which
the Chief Counsel intervenes under this subsection.
(c) The Chief Counsel for Advocacy may file comments in
response to any agency notice requesting comment, regardless of
whether the agency is required to file a general notice of
proposed rulemaking under section 553.
Sec. 609. Procedures for gathering comments
(a) * * *
[(b) Prior to publication of an initial regulatory
flexibility analysis which a covered agency is required to
conduct by this chapter--
[(1) a covered agency shall notify the Chief
Counsel for Advocacy of the Small Business
Administration and provide the Chief Counsel with
information on the potential impacts of the proposed
rule on small entities and the type of small entities
that might be affected;
[(2) not later than 15 days after the date of
receipt of the materials described in paragraph (1),
the Chief Counsel shall identify individuals
representative of affected small entities for the
purpose of obtaining advice and recommendations from
those individuals about the potential impacts of the
proposed rule;
[(3) the agency shall convene a review panel for
such rule consisting wholly of full time Federal
employees of the office within the agency responsible
for carrying out the proposed rule, the Office of
Information and Regulatory Affairs within the Office of
Management and Budget, and the Chief Counsel;
[(4) the panel shall review any material the agency
has prepared in connection with this chapter, including
any draft proposed rule, collect advice and
recommendations of each individual small entity
representative identified by the agency after
consultation with the Chief Counsel, on issues related
to subsections 603(b), paragraphs (3), (4) and (5) and
603(c);
[(5) not later than 60 days after the date a
covered agency convenes a review panel pursuant to
paragraph (3), the review panel shall report on the
comments of the small entity representatives and its
findings as to issues related to subsections 603(b),
paragraphs (3), (4) and (5) and 603(c), provided that
such report shall be made public as part of the
rulemaking record; and
[(6) where appropriate, the agency shall modify the
proposed rule, the initial regulatory flexibility
analysis or the decision on whether an initial
regulatory flexibility analysis is required.
[(c) An agency may in its discretion apply subsection (b)
to rules that the agency intends to certify under subsection
605(b), but the agency believes may have a greater than de
minimis impact on a substantial number of small entities.
[(d) For purposes of this section, the term ``covered
agency'' means--
[(1) the Environmental Protection Agency;
[(2) the Consumer Financial Protection Bureau of
the Federal Reserve System; and
[(3) the Occupational Safety and Health
Administration of the Department of Labor.
[(e) The Chief Counsel for Advocacy, in consultation with
the individuals identified in subsection (b)(2), and with the
Administrator of the Office of Information and Regulatory
Affairs within the Office of Management and Budget, may waive
the requirements of subsections (b)(3), (b)(4), and (b)(5) by
including in the rulemaking record a written finding, with
reasons therefor, that those requirements would not advance the
effective participation of small entities in the rulemaking
process. For purposes of this subsection, the factors to be
considered in making such a finding are as follows:
[(1) In developing a proposed rule, the extent to
which the covered agency consulted with individuals
representative of affected small entities with respect
to the potential impacts of the rule and took such
concerns into consideration.
[(2) Special circumstances requiring prompt
issuance of the rule.
[(3) Whether the requirements of subsection (b)
would provide the individuals identified in subsection
(b)(2) with a competitive advantage relative to other
small entities.]
(b)(1) Prior to publication of any proposed rule described
in subsection (e), an agency making such rule shall notify the
Chief Counsel for Advocacy of the Small Business Administration
and provide the Chief Counsel with--
(A) all materials prepared or utilized by the
agency in making the proposed rule, including the draft
of the proposed rule; and
(B) information on the potential adverse and
beneficial economic impacts of the proposed rule on
small entities and the type of small entities that
might be affected.
(2) An agency shall not be required under paragraph (1) to
provide the exact language of any draft if the rule--
(A) relates to the internal revenue laws of the
United States; or
(B) is proposed by an independent regulatory agency
(as defined in section 3502(5) of title 44).
(c) Not later than 15 days after the receipt of such
materials and information under subsection (b), the Chief
Counsel for Advocacy of the Small Business Administration
shall--
(1) identify small entities or representatives of
small entities or a combination of both for the purpose
of obtaining advice, input, and recommendations from
those persons about the potential economic impacts of
the proposed rule and the compliance of the agency with
section 603; and
(2) convene a review panel consisting of an
employee from the Office of Advocacy of the Small
Business Administration, an employee from the agency
making the rule, and in the case of an agency other
than an independent regulatory agency (as defined in
section 3502(5) of title 44), an employee from the
Office of Information and Regulatory Affairs of the
Office of Management and Budget to review the materials
and information provided to the Chief Counsel under
subsection (b).
(d)(1) Not later than 60 days after the review panel
described in subsection (c)(2) is convened, the Chief Counsel
for Advocacy of the Small Business Administration shall, after
consultation with the members of such panel, submit a report to
the agency and, in the case of an agency other than an
independent regulatory agency (as defined in section 3502(5) of
title 44), the Office of Information and Regulatory Affairs of
the Office of Management and Budget.
(2) Such report shall include an assessment of the economic
impact of the proposed rule on small entities, including an
assessment of the proposed rule's impact on the cost that small
entities pay for energy, and a discussion of any alternatives
that will minimize adverse significant economic impacts or
maximize beneficial significant economic impacts on small
entities.
(3) Such report shall become part of the rulemaking record.
In the publication of the proposed rule, the agency shall
explain what actions, if any, the agency took in response to
such report.
(e) A proposed rule is described by this subsection if the
Administrator of the Office of Information and Regulatory
Affairs of the Office of Management and Budget, the head of the
agency (or the delegatee of the head of the agency), or an
independent regulatory agency determines that the proposed rule
is likely to result in--
(1) an annual effect on the economy of $100,000,000
or more;
(2) a major increase in costs or prices for
consumers, individual industries, Federal, State, or
local governments, tribal organizations, or geographic
regions;
(3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on
the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and
export markets; or
(4) a significant economic impact on a substantial
number of small entities.
(f) Upon application by the agency, the Chief Counsel for
Advocacy of the Small Business Administration may waive the
requirements of subsections (b) through (e) if the Chief
Counsel determines that compliance with the requirements of
such subsections are impracticable, unnecessary, or contrary to
the public interest.
* * * * * * *
[Sec. 610. Periodic review of rules
[(a) Within one hundred and eighty days after the effective
date of this chapter, each agency shall publish in the Federal
Register a plan for the periodic review of the rules issued by
the agency which have or will have a significant economic
impact upon a substantial number of small entities. Such plan
may be amended by the agency at any time by publishing the
revision in the Federal Register. The purpose of the review
shall be to determine whether such rules should be continued
without change, or should be amended or rescinded, consistent
with the stated objectives of applicable statutes, to minimize
any significant economic impact of the rules upon a substantial
number of such small entities. The plan shall provide for the
review of all such agency rules existing on the effective date
of this chapter within ten years of that date and for the
review of such rules adopted after the effective date of this
chapter within ten years of the publication of such rules as
the final rule. If the head of the agency determines that
completion of the review of existing rules is not feasible by
the established date, he shall so certify in a statement
published in the Federal Register and may extend the completion
date by one year at a time for a total of not more than five
years.
[(b) In reviewing rules to minimize any significant
economic impact of the rule on a substantial number of small
entities in a manner consistent with the stated objectives of
applicable statutes, the agency shall consider the following
factors--
[(1) the continued need for the rule;
[(2) the nature of complaints or comments received
concerning the rule from the public;
[(3) the complexity of the rule;
[(4) the extent to which the rule overlaps,
duplicates or conflicts with other Federal rules, and,
to the extent feasible, with State and local
governmental rules; and
[(5) the length of time since the rule has been
evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area
affected by the rule.
[(c) Each year, each agency shall publish in the Federal
Register a list of the rules which have a significant economic
impact on a substantial number of small entities, which are to
be reviewed pursuant to this section during the succeeding
twelve months. The list shall include a brief description of
each rule and the need for and legal basis of such rule and
shall invite public comment upon the rule.]
Sec. 610. Periodic review of rules
(a) Not later than 180 days after the enactment of the
Regulatory Flexibility Improvements Act of 2013, each agency
shall publish in the Federal Register and place on its website
a plan for the periodic review of rules issued by the agency
which the head of the agency determines have a significant
economic impact on a substantial number of small entities. Such
determination shall be made without regard to whether the
agency performed an analysis under section 604. The purpose of
the review shall be to determine whether such rules should be
continued without change, or should be amended or rescinded,
consistent with the stated objectives of applicable statutes,
to minimize any adverse significant economic impacts or
maximize any beneficial significant economic impacts on a
substantial number of small entities. Such plan may be amended
by the agency at any time by publishing the revision in the
Federal Register and subsequently placing the amended plan on
the agency's website.
(b) The plan shall provide for the review of all such
agency rules existing on the date of the enactment of the
Regulatory Flexibility Improvements Act of 2013 within 10 years
of the date of publication of the plan in the Federal Register
and for review of rules adopted after the date of enactment of
the Regulatory Flexibility Improvements Act of 2013 within 10
years after the publication of the final rule in the Federal
Register. If the head of the agency determines that completion
of the review of existing rules is not feasible by the
established date, the head of the agency shall so certify in a
statement published in the Federal Register and may extend the
review for not longer than 2 years after publication of notice
of extension in the Federal Register. Such certification and
notice shall be sent to the Chief Counsel for Advocacy of the
Small Business Administration and the Congress.
(c) The plan shall include a section that details how an
agency will conduct outreach to and meaningfully include small
businesses for the purposes of carrying out this section. The
agency shall include in this section a plan for how the agency
will contact small businesses and gather their input on
existing agency rules.
(d) Each agency shall annually submit a report regarding
the results of its review pursuant to such plan to the
Congress, the Chief Counsel for Advocacy of the Small Business
Administration, and, in the case of agencies other than
independent regulatory agencies (as defined in section 3502(5)
of title 44) to the Administrator of the Office of Information
and Regulatory Affairs of the Office of Management and Budget.
Such report shall include the identification of any rule with
respect to which the head of the agency made a determination
described in paragraph (5) or (6) of subsection (e) and a
detailed explanation of the reasons for such determination.
(e) In reviewing a rule pursuant to subsections (a) through
(d), the agency shall amend or rescind the rule to minimize any
adverse significant economic impact on a substantial number of
small entities or disproportionate economic impact on a
specific class of small entities, or maximize any beneficial
significant economic impact of the rule on a substantial number
of small entities to the greatest extent possible, consistent
with the stated objectives of applicable statutes. In amending
or rescinding the rule, the agency shall consider the following
factors:
(1) The continued need for the rule.
(2) The nature of complaints received by the agency
from small entities concerning the rule.
(3) Comments by the Regulatory Enforcement
Ombudsman and the Chief Counsel for Advocacy of the
Small Business Administration.
(4) The complexity of the rule.
(5) The extent to which the rule overlaps,
duplicates, or conflicts with other Federal rules and,
unless the head of the agency determines it to be
infeasible, State, territorial, and local rules.
(6) The contribution of the rule to the cumulative
economic impact of all Federal rules on the class of
small entities affected by the rule, unless the head of
the agency determines that such calculations cannot be
made and reports that determination in the annual
report required under subsection (d).
(7) The length of time since the rule has been
evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area
affected by the rule.
(f) The agency shall publish in the Federal Register and on
its website a list of rules to be reviewed pursuant to such
plan. Such publication shall include a brief description of the
rule, the reason why the agency determined that it has a
significant economic impact on a substantial number of small
entities (without regard to whether it had prepared a final
regulatory flexibility analysis for the rule), and request
comments from the public, the Chief Counsel for Advocacy of the
Small Business Administration, and the Regulatory Enforcement
Ombudsman concerning the enforcement of the rule.
Sec. 611. Judicial review
(a)(1) For any rule subject to this chapter, a small entity
that is adversely affected or aggrieved by [final agency
action] such rule is entitled to judicial review of agency
compliance with the requirements of sections 601, 604, 605(b),
[608(b),] and 610 in accordance with chapter 7. Agency
compliance with sections 607 and 609(a) shall be judicially
reviewable in connection with judicial review of section 604.
(2) Each court having jurisdiction to review such rule for
compliance with section 553, or under any other provision of
law, (or which would have such jurisdiction if publication of
the final rule constituted final agency action) shall have
jurisdiction to review any claims of noncompliance with
sections 601, 604, 605(b), [608(b),] and 610 in accordance with
chapter 7. Agency compliance with sections 607 and 609(a) shall
be judicially reviewable in connection with judicial review of
section 604.
[(3)(A) A small entity]
(3) A small entity may seek such review during the period
beginning on the date of [final agency action] publication of
the final rule and ending one year later, except that, in the
case of a rule for which the date of final agency action is the
same date as the publication of the final rule, where a
provision of law requires that an action challenging a final
agency action be commenced before the expiration of one year,
such lesser period shall apply to an action for judicial review
under this section.
[(B) In the case where an agency delays the issuance of a
final regulatory flexibility analysis pursuant to section
608(b) of this chapter, an action for judicial review under
this section shall be filed not later than--
[(i) one year after the date the analysis is made
available to the public, or
[(ii) where a provision of law requires that an
action challenging a final agency regulation be
commenced before the expiration of the 1-year period,
the number of days specified in such provision of law
that is after the date the analysis is made available
to the public.]
* * * * * * *
Sec. 612. Reports and intervention rights
(a) * * *
(b) The Chief Counsel for Advocacy of the Small Business
Administration is authorized to appear as amicus curiae in any
action brought in a court of the United States to review a rule
or agency compliance with section 601, 603, 604, 605(b), 609,
or 610. In any such action, the Chief Counsel is authorized to
present his or her views with respect to compliance with this
chapter, chapter 5, and chapter 7, the adequacy of the
rulemaking record with respect to small entities and the effect
of the rule on small entities.
* * * * * * *
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
* * * * * * *
CHAPTER 158--ORDERS OF FEDERAL AGENCIES; REVIEW
Sec. 2341. Definitions
As used in this chapter--
(1) * * *
* * * * * * *
(3) ``agency'' means--
(A) * * *
* * * * * * *
(D) the Secretary, when the order is under
section 812 of the Fair Housing Act; [and]
(E) the Board, when the order was entered
by the Surface Transportation Board[.]; and
(F) the Office of Advocacy of the Small
Business Administration, when the final rule is
under section 608(a) of title 5.
Sec. 2342. Jurisdiction of court of appeals
The court of appeals (other than the United States Court of
Appeals for the Federal Circuit) has exclusive jurisdiction to
enjoin, set aside, suspend (in whole or in part), or to
determine the validity of--
(1) * * *
* * * * * * *
(6) all final orders under section 812 of the Fair
Housing Act; [and]
(7) all final agency actions described in section
20114(c) of title 49[.]; and
(8) all final rules under section 608(a) of title
5.
* * * * * * *
----------
SMALL BUSINESS ACT
* * * * * * *
SEC. 3. DEFINITIONS.
(a) Small Business Concerns.--
(1) * * *
(2) Establishment of size standards.--
[(A) In general.--In addition to the
criteria specified in paragraph (1), the
Administrator may specify detailed definitions
or standards by which a business concern may be
determined to be a small business concern for
the purposes of this Act or any other Act.]
(A) In general.--In addition to the
criteria specified in paragraph (1)--
(i) the Administrator may specify
detailed definitions or standards by
which a business concern may be
determined to be a small business
concern for purposes of this Act or the
Small Business Investment Act of 1958;
and
(ii) the Chief Counsel for Advocacy
may specify such definitions or
standards for purposes of any other
Act.
* * * * * * *
(C) Requirements.--Unless specifically
authorized by statute, no Federal department or
agency may prescribe a size standard for
categorizing a business concern as a small
business concern, unless such proposed size
standard--
(i) * * *
* * * * * * *
[(iii) is approved by the
Administrator.]
(iii) except in the case of a size
standard prescribed by the
Administrator, is approved by the Chief
Counsel for Advocacy.
(3) Variation by industry and consideration of
other factors.--When establishing or approving any size
standard pursuant to paragraph (2), the Administrator
or Chief Counsel for Advocacy, as appropriate shall
ensure that the size standard varies from industry to
industry to the extent necessary to reflect the
differing characteristics of the various industries and
consider other factors deemed to be relevant by the
Administrator or Chief Counsel for Advocacy.
* * * * * * *
(9) Judicial review of standards approved by chief
counsel.--In the case of an action for judicial review
of a rule which includes a definition or standard
approved by the Chief Counsel for Advocacy under this
subsection, the party seeking such review shall be
entitled to join the Chief Counsel as a party in such
action.
* * * * * * *
----------
SECTION 212 OF THE SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT
OF 1996
SEC. 212. COMPLIANCE GUIDES.
(a) Compliance Guide.--
(1) * * *
* * * * * * *
[(5) Agency preparation of guides.--The agency
shall, in its sole discretion, taking into account the
subject matter of the rule and the language of relevant
statutes, ensure that the guide is written using
sufficiently plain language likely to be understood by
affected small entities. Agencies may prepare separate
guides covering groups or classes of similarly affected
small entities and may cooperate with associations of
small entities to develop and distribute such guides.
An agency may prepare guides and apply this section
with respect to a rule or a group of related rules.]
(5) Agency preparation of guides.--The agency
shall, in its sole discretion, taking into account the
subject matter of the rule and the language of relevant
statutes, ensure that the guide is written using
sufficiently plain language likely to be understood by
affected small entities. Agencies may prepare separate
guides covering groups or classes of similarly affected
small entities and may cooperate with associations of
small entities to distribute such guides. In developing
guides, agencies shall solicit input from affected
small entities or associations of affected small
entities. An agency may prepare guides and apply this
section with respect to a rule or a group of related
rules.
* * * * * * *
Dissenting Views
INTRODUCTION
H.R. 2542, the ``Regulatory Flexibility Improvements Act of
2013,'' (RFIA) amends the Regulatory Flexibility Act\1\ (RFA)
in ways that will significantly hinder the promulgation of
critical public health and safety rules by Federal
administrative agencies. While H.R. 2542's proponents claim
that these changes to the RFA will ease the alleged burden of
regulatory compliance on small businesses and other small
entities, an examination of the bill's provisions makes clear
that the bill is really intended to slow down, if not halt,
most agency rulemaking.
---------------------------------------------------------------------------
\1\Pub. L. No. 96-354, 94 Stat. 1164 (codified at 5 U.S.C.
Sec. Sec. 601-612). The RFA requires Federal agencies to assess the
impact of proposed rules on ``small entities,'' which it defines as
either a small business, small organization, or small governmental
jurisdiction. The RFA requires agencies to prepare a regulatory
flexibility analysis at the time certain proposed and final rules are
promulgated. The analysis must: (1) describe the reasons why action by
the agency is necessary; (2) include a succinct statement of the
regulation's objectives and legal basis; (3) describe which small
entities are affected by the rule as well as provide an estimate of the
number of such entities so affected; (4) describe anticipated
reporting, recordkeeping, and other compliance requirements, (5)
identify any relevant Federal regulations that may duplicate, overlap,
or conflict with the rule, and (6) identify any significant
alternatives to the rule. This analysis is not required, however, if
the agency certifies that the rule will not have a ``significant
economic impact on a substantial number of small entities.''
---------------------------------------------------------------------------
In 1996, the RFA was amended by Small Business Regulatory Enforcement
Fairness Act of 1996, Pub. L. No. 104-121, Sec. 242, 110 Stat. 847, 857
(1996), to permit judicial review under certain circumstances of, among
other matters, an agency's regulatory flexibility analysis for a final
rule and any certification by an agency averring that a rule will not
have a significant economic impact on a substantial number of small
entities.
H.R. 2542 does nothing to help small businesses and other
small entities reduce compliance costs or to ensure agency
compliance with the RFA. Instead, the bill imposes numerous and
unnecessary burdens on agencies while ignoring the fact that
small businesses, like their larger counterparts, can
substantially impact the health and safety of their workers as
well as that of the general public.\2\ Small businesses, like
all businesses, provide services and goods that also affect our
lives and can carry the same risk of harm as the services and
goods that large businesses provide. It makes no difference to
someone who is breathing dirty air or drinking poisoned water
whether the hazards come from a small or large business.
---------------------------------------------------------------------------
\2\For example, workplace safety rules may impact tens of millions
of Americans who work for small businesses. As of 2008, there were 5.93
million small firms employing 120,903,551 workers, including 5,294,970
firms of 20 or fewer employees, employing 21,461,733 workers and
5,684,120 firms of 50 or fewer employees, employing 33,453,284 workers,
according to the SBA. See U.S. Census Bureau, Statistics of U.S.
Businesses, U.S. NAICS Sectors, small employment sizes, 2008, available
at http://www.census.gov/econ/susb/. There were 4,383 fatal
occupational injuries last year, according to the Bureau of Labor
Statistics. Press Release, U.S. Dep't of Labor Bureau of Labor
Statistics, National Census of Fatal Occupational Census of Fatal
Occupational Injuries in 2012 (Preliminary Results), Aug. 13, 2013,
available at http://www.bls.gov/news.release/pdf/cfoi.pdf.
Additionally, an analysis by the National Institute for Occupational
Safety and Health, the American Cancer Society, and Emory University's
School of Public Health estimates that after factoring in disease and
injury data ``there are a total of 55,200 US deaths annually resulting
from occupational disease or injury (range 32,200-78,200).''Kyle
Steenland et al., Dying for Work: The Magnitude of US Mortality from
Selected Cases of Death Associated with Occupation, 43 Am. J.
Industrial Medicine 461 (2003).
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Accordingly, we must oppose attempts like H.R. 2542 that
create an unacceptable barrier to agency rulemaking.
Specifically we are opposed to this legislation because it: (1)
is based on the false premise that regulatory costs stifle
economic growth and job creation; (2) will threaten 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 these
burdens; and (4) allows more opportunities for industry to
delay or defeat proposed rulemakings.
Consumer groups and organizations concerned with protecting
public health and safety have raised many of these same
concerns. The Coalition for Sensible Safeguards, a broad
coalition of 72 environmental, labor, and consumer
organizations, including the AFL-CIO, the American Federation
of State, County and Municipal Employees, the American Lung
Association, Consumer Federation of America, Consumers Union,
the League of Conservation Voters, Public Citizen, and the
Union of Concerned Scientists, strongly opposed substantially
similar legislation to H.R. 2542 in the 112th Congress.\3\
---------------------------------------------------------------------------
\3\The other organizations include: Alliance for Justice, American
Association of University Professors, American Federation of Teachers,
Americans for Financial Reform, American Rivers, American Values
Campaign, American Sustainable Business Council, BlueGreen Alliance,
Campaign for Contract Agriculture Reform, Center for Effective
Government, Center for Food Safety, Center for Foodborne Illness
Research and Prevention, Center for Independent Living, Center for
Science in the Public Interest, Citizens for Sludge-Free Land, Clean
Air Watch, Clean Water Network, Consortium for Citizens with
Disabilities, Countercorp, Cumberland Countians for Peace and Justice,
Demos, Economic Policy Institute, Edmonds Institute, Environment
America, Farmworker Justice, Free Press, Friends of the Earth, Green
for All, Health Care for America Now, In the Public Interest,
International Brotherhood of Teamsters, International Center for
Technology Assessment, International Union of United Automobile,
Aerospace, & Agricultural Implement Workers of America (UAW), Los
Angeles Alliance for a New Economy, Main Street Alliance, National
Association of Consumer Advocates, National Center for Healthy Housing,
National Consumers League, National Council for Occupational Safety and
Health, National Employment Law Project, National Lawyers Guild
Louisville Chapter, National Women's Health Network, National Women's
Law Center, Natural Resources Defense Council, Network for
Environmental & Economic Responsibility of the United Church of Christ,
New Jersey Work Environment Council, New York Committee for
Occupational Safety and Health, Oregon Peaceworks, People for the
American Way, Protect All Children's Environment, Reproductive Health
Technologies Project, Safe Tables Our Priority (S.T.O.P.), Service
Employees International Union, Southern Illinois Committee for
Occupational Safety and Health, The Arc of the United States, The
Partnership for Working Families, Trust for America's Health, U.S.
Camber Watch, U.S. PIRG, Union Plus, United Food and Commercial Workers
Union, United Steelworkers, Waterkeeper Alliance, Worksafe. See Letter
from 72 organizations to Representative John Conyers, Jr. (D-MI),
Ranking Member, Committee on the Judiciary (Nov. 29, 2011) (on file
with the United States House of Representatives, Comm. on the
Judiciary, Democrats).
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Moreover, the Obama administration issued a veto threat
against the earlier iteration of the RFIA in the 112th
Congress, explaining that the RFIA ``would impede the ability
of agencies to provide the public with basic protections, and
create needless confusion and delay that would prove disruptive
for businesses, as well as for state, tribal and local
governments.''\4\
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\4\Executive Office of the President, Office of Management and
Budget, Statement of Administration Policy for H.R. 527--Regulatory
Flexibility Improvements Act of 2011 (Nov. 29, 2011) (emphasis in
original), available at http://www.whitehouse.gov/sites/default/files/
omb/legislative/sap/112/saphr527r_20111129.pdf.
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We wholeheartedly agree with the Administration's
assessment of the RFIA and for the reasons discussed below, we
respectfully dissent and urge our colleagues to reject this
seriously flawed legislation.
BACKGROUND AND DESCRIPTION
I. BACKGROUND
Enacted in 1980, the RFA requires Federal agencies to
assess the impact of proposed regulations on ``small
entities,'' which the Act defines as either a small business,
small organization, or small governmental jurisdiction.\5\ The
RFA requires agencies to prepare a regulatory flexibility
analysis at the time certain proposed and final rules are
promulgated. The analysis must: (1) describe the reasons why
action by the agency is necessary; (2) include a succinct
statement of the regulation's objectives and legal basis; (3)
describe which small entities are affected by the rule as well
as provide an estimate of the number of such entities so
affected; (4) describe anticipated reporting, recordkeeping,
and other compliance requirements, (5) identify any relevant
Federal regulations that may duplicate, overlap, or conflict
with the rule, and (6) identify any significant alternatives to
the rule.\6\ This analysis is not required, however, if the
agency certifies that the rule will not have a ``significant
economic impact on a substantial number of small entities.''\7\
Whether a proposed rule will have such an impact is, therefore,
the threshold inquiry under the RFA.
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\5\5 U.S.C. Sec. 601(6) (2013).
\6\See 5 U.S.C. Sec. Sec. 603, 604 (2013).
\7\5 U.S.C. Sec. 605(b) (2013).
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In addition, the RFA requires each agency to publish twice
a year in the Federal Register a regulatory flexibility agenda
identifying regulations that have a significant economic impact
on a substantial number of small entities which the agency
expects to propose.\8\ Further, the RFA requires agencies to
conduct periodic reviews of rules having a significant economic
impact on a substantial number of small entities\9\ and to
ensure that small entities have an opportunity to participate
in the rulemaking process.\10\
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\8\5 U.S.C. Sec. 602 (2013).
\9\5 U.S.C. Sec. 610 (2013).
\10\5 U.S.C. Sec. 609 (2013).
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Congress amended the RFA in 1996 with the enactment of the
Small Business Regulatory Enforcement Fairness Act (SBREFA)\11\
to permit judicial review of an agency's regulatory flexibility
analysis for a final rule and of an agency's certification that
a rule would not have a significant economic impact on a
substantial number of small entities. SBREFA also requires that
proposed rules of the Environmental Protection Agency (EPA) and
the Occupational Safety and Health Administration (OSHA) be
subject to an advocacy review panel consisting of
representatives of the agency promulgating the rule, the Chief
Counsel for Advocacy of the Small Business Administration, and
the Office of Information and Regulatory Affairs (OIRA).\12\
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\11\Pub. L. No. 104-121, Sec. 242, 110 Stat. 847, 857 (1996).
\12\5 U.S.C. Sec. 609(b) (2013). The review panel requirement was
extended to the Consumer Financial Protection Bureau in 2010. See 5
U.S.C. Sec. 609(d) (2013).
---------------------------------------------------------------------------
II. DESCRIPTION
H.R. 2542's supporters contend that agencies have failed to
comply with the RFA. In response to this purported concern,
H.R. 2542 amends the RFA to expand the scope of its provisions
and impose new procedural and analytical requirements on
agencies whenever a rule is subject to the RFA.
First, H.R. 2542 expands the type of rules covered by the
RFA to include those that have a reasonably foreseeable
indirect effect on small entities, which is a highly
speculative requirement. It also includes documents like land
management plans and certain guidance documents under the
definition of ``rule,'' further expanding the RFA's scope.
Second, the bill would require agencies to provide more detail
and analysis in their initial and final regulatory analyses of
proposed and final rules. Third, H.R. 2542 repeals the
emergency authority that the RFA gives to agencies to waive or
delay an initial regulatory flexibility analysis or to delay a
final regulatory flexibility analysis. This provision will
prevent agencies from quickly responding to a public health or
safety emergency. Fourth, H.R. 2542 grants additional power to
the Small Business Administration's (SBA's) Chief Counsel for
Advocacy to promulgate rules governing agencies' RFA
compliance, to intervene in agency adjudications, and to file
comments on proposed rules. Fifth, the bill expands the use of
advocacy review panels to cover rules with a significant
economic impact on a substantial number of small entities that
are proposed by all agencies--not just rules issued by the EPA,
OSHA, and the Consumer Financial Protection Bureau (CFPB), as
is under current law--and would also apply to rules that would
be considered ``major rules'' regardless of whether such rules
would otherwise be subject to the RFA.
Sixth, H.R. 2542 amends the RFA's requirement that agencies
periodically review rules to require that agencies review all
rules that exist on H.R. 2542's enactment date. The bill would
also mandate that agencies amend or rescind those rules,
regardless of the review's findings. In addition, H.R. 2542
expands the availability of judicial review to include any
agency action taken to comply with the RFA, and not just
``final agency action,'' as is the case under current law.
Finally, H.R. 2542 grants exclusive jurisdiction to the Federal
courts of appeal to enjoin, set aside, suspend, or determine
the validity of all final rules concerning RFA implementation
that have been promulgated by the SBA's Chief Counsel for
Advocacy under the authority granted to it under this
legislation.
A detailed section-by-section analysis of H.R. 2542 appears
later in our dissenting views.
CONCERNS WITH H.R. 2542
I. H.R. 2542 IS BASED UPON THE FALSE PREMISE THAT REGULATIONS STIFLE
JOB CREATION
H.R. 2542 is based on the false premise that regulations
impose overwhelmingly burdensome costs on small businesses that
ultimately hampers economic growth and job creation. In
particular, H.R. 2542's supporters rely almost exclusively on
an SBA study conducted by economists Nicole and Mark Crain
(Crain study)\13\ which concluded that Federal regulations
impose a $1.75 trillion cost on all businesses and that a
disproportionate share of these costs are borne by small
businesses.\14\
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\13\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), available at
http://archive.sba.gov/advo/research/rs371
tot.pdf.
\14\H.R. 527, the ``Regulatory Flexibility Improvements Act of
2011''--Unleashing Small Businesses to Create Jobs: Hearing Before the
Subcomm. on Courts, Commercial and Administrative L. of the H. Comm. on
the Judiciary, 112th Cong. (2011) [hereinafter ``H.R. 527 Hearing'']
(prepared statements of Richard Gimmel, President, Atlas Machine &
Supply, Inc., on behalf of the National Association of Manufacturers,
pp. 4-5; Thomas Sullivan, former Chief Counsel for Advocacy, Small
Business Administration, p. 3; and Karen R. Harned, Executive Director,
Small Business Legal Center, National Federation of Independent
Businesses, unnumbered p. 1).
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The Crain study, however, has been thoroughly debunked for
exaggerating the costs of Federal rulemaking on small
businesses. For example, the Center for Progressive Reform
(CPR) notes that the $1.75 trillion cumulative burden cited by
the study fails to account for any benefits of regulation.\15\
CPR observes that the Office of Management and Budget (OMB)
estimated in 2008 that major rules imposed $46 billion to $54
billion in costs, but also produced $122 billion to $656
billion in benefits.\16\ Moreover, the Crain study's
methodology is flawed with respect to how it calculated
economic costs. The study, which relied on international public
opinion polling by the World Bank on how friendly a particular
country was to business interests, ignored actual data on costs
imposed by Federal regulation in the United States.\17\
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\15\Sid Shapiro, Ruth Ruttenberg, & James Goodwin, Setting the
Record Straight: The Crain and Crain Report on Regulatory Costs, Center
for Progressive Reform White Paper #1103
(Feb. 2011), available at http://www.progressivereform.org/articles/
SBA_Regulatory_Costs_
Analysis_1103.pdf.
\16\Id.
\17\Id.
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The Congressional Research Service (CRS)--which is
independent and nonpartisan--also conducted an extensive
examination of the Crain study and criticized much of its
methodology.\18\ CRS noted that the authors of the Crain study
themselves admitted that their study was ``not meant to be a
decision-making tool for lawmakers or Federal regulatory
agencies to use in choosing the `right' level of regulation. In
no place in any of the reports do we imply that our reports
should be used for this purpose. (How could we recommend this
use when we make no attempt to estimate the benefits?)''\19\
Accordingly, CRS concluded that ``a valid, reasoned policy
decision can only be made after considering information on both
costs and benefits'' of regulation.\20\
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\18\Curtis W. Copeland, Analysis of an Estimate of the Total Costs
of Federal Regulations, Congressional Research Service Report for
Congress, R41763 (Apr. 6, 2011).
\19\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to
the author of the CRS report).
\20\Id.
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The Crain study's failure to account for the net benefits
of regulation in general was particularly shortsighted given
the fact that regulation can result in net economic benefits
for business. For example, promulgation of OSHA's Cotton Dust
Standard resulted in the affected industry growing and
prospering in the aftermath of the rule's promulgation.\21\
Much of that growth and prosperity was the result of business
innovations relating to compliance with the rule.\22\ Indeed,
the costs of the rule ended up being much smaller than
predicted because of these innovations.\23\
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\21\Occupational Safety and Health Administration, Regulatory
Review of OSHA's Cotton Dust Standard, at 35-38 (Sept. 2000), available
at http://www.osha.gov/dea/lookback/cottondust_
final2000.pdf.
\22\Id.
\23\Id. at 38-39.
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Sally Katzen, a former OIRA Administrator during the
Clinton administration, noted in testimony before the Judiciary
Committee's Subcommittee on Courts, Commercial and
Administrative Law, that the OMB regularly finds that the
aggregate benefits of Federal regulations outweigh their
costs.\24\ Katzen noted that:
---------------------------------------------------------------------------
\24\The REINS Act--Promoting Jobs and Expanding Freedom by Reducing
Needless Regulations Hearing Before the Subcomm. on Courts, Commercial
and Administrative L. of the H. Comm. on the Judiciary, 112th Cong. 3
(2011) (prepared statement of Sally Katzen, former Administrator of the
Office of Information and Regulatory Affairs).
OMB's Report to Congress does include data on benefits,
and the numbers are striking: according to OMB, the
benefits from the regulations issued during the 10-year
period ranged from $128 billion to $616 billion.
Therefore, even if one uses OMB's highest estimate of
costs and its lowest estimate of benefits, the
regulations issued over the past 10 years have produced
net benefits of $73 billion to our society. This cannot
be dismissed as a partisan report by the current
Administration, because OMB issued reports with similar
results (benefits greatly exceeding costs) throughout
the George W. Bush administration (e.g., for FY 1998-
2008, major regulations cost between $51 and $60
billion, with benefits estimated to be $126 to $663
billion dollars). Given that the benefits of
regulations consistently exceed the costs, the need for
any legislation that would make the issuance of
regulations more difficult or time consuming is
certainly in question.\25\
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\25\Id.
OMB's draft 2013 Report to Congress further bolsters the
conclusion that the benefits of regulations far outweigh their
costs. It found that the ``estimated annual benefits of major
Federal regulations reviewed by OMB from October 1, 2002, to
September 30, 2012, for which agencies estimated and monetized
both benefits and costs, are in the aggregate between $193
billion and $800 billion, while the estimated annual costs are
in the aggregate between $57 billion and $84 billion.''\26\ The
draft 2013 report further noted that some benefits and costs
cannot be quantified or monetized.\27\
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\26\Office of Management and Budget, Draft 2013 Report to Congress
on the Benefits and Costs of Federal Regulations and Agency Compliance
with the Unfunded Mandates Reform Act, available at http://
www.whitehouse.gov/sites/default/files/omb/inforeg/2013_cb/
draft_2013_cost_
benefit_report.pdf.
\27\Id.
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Representative Jerrold Nadler (D-NY) offered an amendment
at the Committee's markup of H.R. 2542 that would have required
agencies to assess the indirect benefits of a rule as part of
the required regulatory flexibility analysis under H.R. 2542.
The Majority, however, opposed this amendment and it was
defeated by a 12 to 17 vote along party lines.
II. H.R. 2542 THREATENS PUBLIC HEALTH AND SAFETY BY UNDERMINING FEDERAL
AGENCY RULEMAKING
H.R. 2542 will undermine the ability of agencies to protect
public health and safety by imposing new and unnecessary
requirements on the rulemaking process and will force these
agencies to shift resources to this more complex, costly, and
time-consuming rulemaking process. The bill will prevent
agencies from effectively promulgating regulations designed to
protect Americans' health and safety.
A. LH.R. 2542's Elimination of Agencies' Waiver and Delay Authority
Undermines the Agencies' Ability To Respond To Emergencies
Section 5 of H.R. 2542 eliminates agencies' ability to
waive or delay any required initial regulatory flexibility
analysis or to delay any required final regulatory flexibility
analysis in the event of an emergency. By eliminating this
safeguard, H.R. 2542 undermines an agency's ability to respond
to emergency situations.
The override of an agency's authority to respond to
emergencies without having to first go through the arduous and
time-consuming task of review and analysis is absolutely wrong.
Federal agencies are charged with promulgating regulations that
impact virtually every aspect of our lives, including the air
we breathe, the water we drink, the food we eat, the cars we
drive, and the play toys we give our children.
At the Committee markup, Ranking Member John Conyers, Jr.
offered an amendment that would have preserved the waiver or
delay authority agencies have under current law to quickly
respond to emergencies, without being hampered or second-
guessed by others. The amendment was defeated by an 11 to 17
party-line vote.
B. LH.R. 2542's Expanded Use of Advocacy Review Panels Creates a
Serious Impediment To Agency Rulemaking
As discussed earlier, SBREFA\28\ amended the RFA to require
that rules proposed by the EPA and OSHA be subject to an
advocacy review panel consisting of a representative of the
agency promulgating the rule, the Chief Counsel for Advocacy of
SBA, and OIRA.\29\ The Dodd-Frank Act later added the CFPB to
this list of agencies subject to advocacy review panels.
Section 6 of H.R. 2542 significantly expands the reach of this
requirement to make it apply to rules proposed by all agencies.
In addition, section 6 would make the review panel requirement
apply to all major rules regardless of whether they have a
significant economic impact on a substantial number of small
entities, that is, regardless of whether the RFA would apply.
Under section 6, the review panel would review a proposed rule,
solicit and obtain input from business interests, and then
issue a report assessing the economic impact of the proposed
rule on small entities, including the energy cost impact, as
well as a discussion of regulatory alternatives. This report is
then to be made part of the rulemaking record, and the agency
must explain what, if anything, it did in response to the
report.
---------------------------------------------------------------------------
\28\Pub. L. No. 104-121, Sec. 242, 110 Stat. 847, 857 (1996).
\29\5 U.S.C. Sec. 609(b) (2013). The review panel requirement was
extended to the CFPB in 2010. See 5 U.S.C. Sec. 609(d) (2013).
---------------------------------------------------------------------------
By requiring the cumbersome review panel process to apply
to all agency rules having a significant economic impact on a
substantial number of small entities, as well as by requiring
this process to apply to all major rules--regardless of whether
they have such an impact--this provision will slow down the
rulemaking process and substantially empower business interests
to throw sand into the gears of rulemaking. The use of advocacy
review panels is already cumbersome. SBA's Office of Advocacy,
which was established with the express purpose of acting as an
independent advocate for business interests within the Federal
Government,\30\ is already able to delay the issuance of final
EPA, OSHA, and CFPB rules and to shape them in industry-
friendly ways.\31\ Expanding the use of these panels to include
all agencies and all rules that do not necessarily have a
significant economic impact on a substantial number of small
entities would guarantee that most rulemakings would be delayed
and reflect a less consumer-oriented perspective. Moreover,
this expansion of the review panel process takes it well beyond
the scope of the RFA.
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\30\Small Business Administration, Office of Advocacy, About Us,
available at http://www.sba.gov/category/advocacy-navigation-structure/
about-us.
\31\The Center for Progressive Reform prepared a report earlier
this year detailing the Office of Advocacy's role in politicizing
debates about regulation and ``funneling special interest pressure into
agency rulemakings, even though such interests have already had ample
opportunity to comment on proposed regulations.'' Sidney Shapiro &
James Goodwin, Distorting the Interests of Small Business: How the
Small Business Administration Office of Advocacy's Politicization of
Small Business Concerns Undermines Public Health and Safety, Center for
Progressive Reform White Paper #1302 (Jan. 2013), available at http://
www.progressivereform.org/articles/SBA_
Office_of_Advocacy_1302.pdf. Additionally, the Center for Effective
Government issued a report detailing how the Office of Advocacy
interfered with regulators' scientific assessments in order to promote
the interests of large chemical companies having nothing to do with
small business. Randy Rabinowitz, Katie Greenhaw, & Katie Weatherford,
Small Business, Public Health, and Scientific Integrity: Whose
Interests Does the Office of Advocacy at the Small Business
Administration Serve?, Center for Effective Government (Jan. 2013),
available at http://www.foreffectivegov.org/files/regs/office-of-
advocacy-report.pdf.
---------------------------------------------------------------------------
Amit Narang, Regulatory Policy Advocate for Public Citizen,
testified before the Subcommittee on Regulatory Reform,
Commercial and Antitrust Law (Subcommittee) that the ``dramatic
expansion'' of review panels under the RFIA ``will result in
these panels giving feedback on rules that have no application
and place no requirements on small businesses. Once again, the
RFIA stretches the boundaries of what is considered a
regulation that impacts small businesses to such a degree that
the distinction between what does and what does not impact
small businesses is rendered meaningless.''\32\ Mr. Narang
further noted that a Government Accountability Office report
detailing the ``glacially slow pace of rulemaking at OSHA
identified the SBREFA panel process as one of the factors
delaying OSHA, finding that it takes about 8 months of work for
OSHA to prepare for the panel''\33\ Greatly expanding use of
these panels can only cause similar rulemaking delays at other
agencies.
---------------------------------------------------------------------------
\32\H.R. 2542, the ``Regulatory Flexibility Improvements Act of
2013'': Hearing Before the Subcomm. on Regulatory Reform, Commercial
and Antitrust L. of the H. Comm. on the Judiciary, 113th Cong. (2013)
(statement of Amit Narang, Regulatory Policy Advocate, Public Citizen).
\33\Id.
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III. H.R. 2542 FORCES AGENCIES TO ENGAGE IN WASTEFUL, SPECULATIVE
ANALYSES
Section 2 of H.R. 2542 defines, among other things,
``economic impact'' to include any reasonably foreseeable
``indirect economic effect'' that a proposed rule may have on a
small entity. This provision would force agencies to conduct
highly speculative and labor-intensive assessments, all of
which could be subject to litigation by well-financed business
interests. In effect, H.R. 2542 could kill a rulemaking as a
result of ``paralysis by analysis.''
The bill's onerous requirements will prevent agencies from
engaging in effective rulemaking. As Mr. Narang testified
before the Subcommittee, the:
RFIA does little to clarify what constitutes, and more
importantly, what does not constitute an indirect
economic effect, giving agencies only the vague and
perfunctory guidance that it be ``reasonably
foreseeable.'' This ill-defined and indeterminate new
mandate will exert strong pressure on agencies to
engage in a guessing game of sorts as they attempt to
identify all possible indirect effects of a rule, an
enterprise akin to ordering a meteorologist to discern
the effects on Washington, D.C. weather of a butterfly
flapping its wings in Japan.\34\
---------------------------------------------------------------------------
\34\Id.
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A. LH.R. 2542 Imposes Additional Duties on Agencies, But Fails To
Provide Any Additional Funding for Agencies to Comply with
Burdensome New Requirements
In addition to requiring agency assessments of a rule's
indirect effects and expanding the use of advocacy review
panels, H.R. 2542 substantially increases other agency
responsibilities with respect to rulemaking. For example,
section 4 of the bill requires agencies, with respect to
regulatory analyses, to:
Lspecifically detail the required
descriptions;\35\
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\35\H.R. 2542, 113th Cong., Sec. 4(b)(1)(B) (2013).
Lprovide a detailed explanation of significant
issues raised by any public comments submitted in
response to the initial regulatory flexibility
analysis, provide the agency's assessment of the
issues, and explain any changes made in the proposed
rule as a result of such comments;\36\
---------------------------------------------------------------------------
\36\H.R. 2542, 113th Cong., Sec. 4(b)(1)(A) (2013).
Ldescribe any disproportionate economic impact
on small entities or a specific class of small
entities;\37\
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\37\H.R. 2542, 113th Cong., Sec. 4(a) (2013).
Lsupply a detailed statement--including the
factual and legal bases--of the reasons why an agency
has determined that a proposed or final rule will not
have a significant economic impact;\38\ and
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\38\H.R. 2542, 113th Cong., Sec. 4(d) (2013).
Lprovide in every instance (rather than simply
making discretionary, as under current law) a
quantifiable or numerical description of the effects of
a proposed rule and alternatives to a proposed rule or
a general description of such effects with a detailed
statement explaining why quantification is not
practicable or reliable.\39\
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\39\H.R. 2542, 113th Cong., Sec. 4(e) (2013).
These heightened responsibilities and other duties imposed
by H.R. 2542 will force agencies to expend already-strained
resources and incur considerable costs to implement the bill.
Not surprisingly, the Congressional Budget Office (CBO)
estimates that H.R. 2542 would cost American taxpayers $45
million between 2014 and 2018.\40\ Meanwhile, the CBO
identified no cost savings stemming from H.R. 2542.\41\
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\40\Congressional Budget Office, Cost Estimate for H.R. 2542, the
Regulatory Flexibility Improvements Act of 2013 (Sept. 5, 2013),
available at http://cbo.gov/sites/default/files/cbofiles/
attachments/hr2542.pdf.
\41\Id.
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B. LH.R. 2542 Would Overwhelm Agencies by Requiring Them To Conduct
Exhaustive Reviews of All Existing Rules
Section 7 of H.R. 2542 threatens to undermine agencies'
ability to fulfill their regulatory responsibilities by
requiring that all agencies review all rules--not just those
subject to the RFA--existing on the bill's enactment date
issued within 10 years of the publication of a required plan by
each agency for retrospective review. The review must consist
of a determination of whether these rules have a significant
economic impact on a substantial number of small entities,
regardless of whether they already went through a final
regulatory flexibility analysis previously.
As a result of this provision, agencies would be forced to
re-justify safeguards like regulations designed to ensure clean
air, clean water, food safety, automobile safety, and workplace
safety. Agencies will be forced to redirect their scarce
resources to meet this burdensome requirement.
To put this requirement in context, it should be noted that
there are currently more than 165,000 pages of regulations in
the Code of Federal Regulations, as well as several hundred
thousand guidance documents that could be subjected to H.R.
2542's look-back requirement. At a time when agencies are
already under strain with limited resources, they can ill-
afford this substantial increase in their workload. Meanwhile,
Congress continues to slash funding for critical child welfare,
indigent assistance, and law enforcement programs.
In addition, section 2 of H.R. 2542 expands the scope of
rules subject to the RFA by including land management plans as
well as rules pertaining to Tribal Organizations and certain
Internal Revenue Service interpretive rules. These types of
guidance documents traditionally are not ``rules'' subject to
the RFA. Expanding the scope of items subject to review will
require additional resources that would otherwise be used by
the agency to carry out its duties as delegated by Congress.
Further, section 7 imposes the absurd and wasteful
requirement that agencies amend or rescind all existing rules.
Specifically, section 7 of H.R. 2542 states that in ``reviewing
a rule, the agency shall amend or rescind the rule to minimize
any adverse significant economic impact on a substantial nuber
of small entities or disproportionate economic impact on a
specific class of small entities. . . .''\42\ In other words,
regardless of the findings of any review of existing
regulations, agencies must amend or rescind all existing rules,
even when the review finds there is no need to amend or rescind
a particular rule. Why require agencies to engage in a review
to determine whether a rule should be amended or rescinded if
amending or rescinding the rule is required regardless of what
the review would find? Taken literally, this provision would
force agencies to: (1) review the hundreds of thousands of
pages of rules and guidance documents existing on H.R. 2542's
enactment date, and (2) amend or rescind every rule in
existence on that date regardless of the review's findings. As
J. Robert Shull noted in testimony before the Subcommittee last
Congress, the mandatory ``amend or rescind'' provision requires
that ``the agency . . . embark upon new rulemakings for all of
those [existing] regulations.''\43\ While we find much of the
bill's provisions to be wasteful, surely, the sponsors of H.R.
2542 hopefully could not have intended to include this absurd
and monumental waste of taxpayer resources.
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\42\H.R. 2542, 113th Cong, Sec. 7 (2013) (emphasis added).
\43\The Regulatory Flexibility Improvements Act of 2011--Unleashing
Small Businesses to Create Jobs: Hearing Before the Subcomm. on
Commercial and Administrative L. of the H. Comm. on the Judiciary,
112th Cong. (2011) (statement of J. Robert Shull).
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IV. THE EXPANSION OF JUDICIAL REVIEW TO INCLUDE ALL AGENCY ACTIONS, AND
NOT JUST ``FINAL AGENCY ACTION,'' ALLOWS SPECIAL INTERESTS TO OBSTRUCT
RULEMAKING BY CHALLENGING AGENCY ACTION BEFORE A RULE IS FINALIZED
Section 8 of H.R. 2542 creates the opportunity for well-
funded anti-regulatory business interests to engage in
frivolous litigation. It does this by expanding the scope of
judicial review to include court challenges to agency actions
to issuance of a final rule, including agency compliance with
H.R. 2542's numerous, vague, speculative, and cumbersome
analytical and other requirements. Current law limits such
judicial review to final agency actions.
As Mr. Narang noted at the Subcommittee's hearing on H.R.
2542, the bill's expansion of judicial review to include
challenges to the adequacy of regulatory flexibility analyses
would open the door to endless litigation, stating, in the
context of discussing the bill's requirement that agencies
assess a rule's indirect effects, that:
the RFIA ensures that if agencies guess wrong on
indirect effects, regulated entities will have the
ability to draft the agency into court and overturn a
rule because the agency wasn't able to satisfy this new
and highly speculative mandate of determining all
indirect effects. Thus, the RFIA opens the floodgates
of litigation and transforms a statute that is supposed
to target rules that apply to small businesses into one
that forces agencies, by default, to assume that their
rules will in some indirect and attenuated fashion
apply to small businesses.\44\
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\44\H.R. 2542, the ``Regulatory Flexibility Improvements Act of
2013'': Hearing Before the Subcomm. on Regulatory Reform, Commercial
and Antitrust L. of the H. Comm. on the Judiciary, 113th Cong. (2013)
(statement of Amit Narang, Regulatory Policy Advocate, Public Citizen).
Similarly, Mr. Shull testified that the RFIA would
``dramatically'' expand the RFA's judicial review provisions
``to allow corporate special interests to challenge the
adequacy of analysis over a wide range of agency activities,
not limited to the `final agency actions' that normally are the
decision point that must be reached before an agency can be
dragged into court.''\45\
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\45\The Regulatory Flexibility Improvements Act of 2011--Unleashing
Small Businesses to Create Jobs: Hearing Before the Subcomm. on
Commercial and Administrative L. of the H. Comm. on the Judiciary,
112th Cong. (2011) (statement of J. Robert Shull).
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To address the threat to public health and safety posed by
the various provisions of H.R. 2542 outlined above,
Representative Hank Johnson (D-GA) offered at markup an
amendment that would have exempted rules implementing the
Patient Protection and Affordable Care Act from H.R. 2542. The
Majority opposed this amendment and it was defeated by a 5 to
11 party-line vote. Similarly, Representative Sheila Jackson
Lee (D-TX) offered an amendment that would have exempted rules
issued by the Food and Drug Administration from H.R. 2542. The
Majority opposed this amendment and it was defeated by an 8 to
14 party-line vote.
SECTION-BY-SECTION EXPLANATION
A section-by-section explanation of the bill's substantive
provisions follows. Section 2(a) amends 5 U.S.C. Sec. 601(2) to
provide that the term ``rule'' does not include a rule of
particular applicability related to rates, wages, corporate or
financial structures (or reorganizations thereof), prices,
facilities, appliances, services, or allowances.
Section 2(b) amends 5 U.S.C. Sec. 601 to define ``economic
impact''as any direct economic effect on small entities by a
proposed or final rule and any indirect economic effect on
small entities that is reasonably foreseeable and results from
such rule, without regard to whether small entities will be
directly regulated by the rule.
Section 2(c) amends 5 U.S.C. Sec. Sec. 603(c) and 604(a)(7)
to require each initial and final regulatory flexibility
analysis to contain a detailed description of alternatives to
the rule that minimize any significant adverse economic impact
or maximize any significant beneficial economic impact on small
entities.
Section 2(d) amends 5 U.S.C. Sec. 601(5) (which defines
small governmental jurisdiction) to expand its applicability to
tribal organizations.
Section 2(e) amends 5 U.S.C. Sec. Sec. 603(a) and 604(a) to
make the requirement to prepare an initial and final regulatory
impact analysis applicable to instances where an agency
publishes a revision or amendment to a land management plan or
issues a proposed rule made on the record after opportunity for
an agency hearing. In addition, section 2(e) amends 5 U.S.C.
Sec. 601 to define land management plan, revision of a land
management plan, and amendment of a land management plan.
Section 2(f)(1) amends 5 U.S.C. Sec. 603(a) with respect to
its requirement for an initial regulatory flexibility analysis
for Internal Revenue Service interpretative rules published in
the Federal Register for codification in the Code of Federal
Regulations the bill provides, to the extent that such
interpretative rules require small entities to collect
information. Section 603(a) applies to recordkeeping
requirements imposed by such rules on small entities, without
regard to whether such requirements are imposed by statute or
regulation.
Section 2(f)(2) amends 5 U.S.C. Sec. 601(7), which defines
the term ``collection of information'' to provide that the term
has the same meaning as set forth in 44 U.S.C.
Sec. 3502(3).\46\
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\46\Section 3502(3) defines ``collection of information'' as
follows:
(A) means the obtaining, causing to be obtained, soliciting, or
requiring the disclosure to third parties or the public, of facts or
opinions by or for an agency, regardless of form or format, calling for
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either--
(I) answers to identical questions posed to, or identical
reporting or recordkeeping requirements imposed on, ten or
more persons, other than agencies, instrumentalities, or
employees of the United States; or
(ii) answers to questions posed to agencies,
instrumentalities, or employees of the United States which
are to be used for general statistical purposes; and
(B) shall not include a collection of information described under
section 3518(c)(1).
44 U.S.C. Sec. 3502(3) (2013).
Section 2(f)(3) amends 5 U.S.C. Sec. 601(8), which defines
the term ``recordkeeping requirement'' ``as a requirement
imposed by an agency on persons to maintain specified
records.'' Section 2(f)(3) amends the definition to provide
that the term has the same meaning as set forth in 44 U.S.C.
Sec. 3502(13).\47\
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\47\Section 3502(13) defines ``recordkeeping requirement'' as
follows:
[A] requirement imposed by or for an agency on persons to maintain
---------------------------------------------------------------------------
specified records, including a requirement to--
(A) retain such records;
(B) notify third parties, the Federal Government, or the
public of the existence of such records;
(C) disclose such records to third parties, the Federal
Government, or the public; or
(D) report to third parties, the Federal Government, or the
public regarding such records[.]
Section 2(g) amends 5 U.S.C. Sec. 601(4), which defines the
term ``small organization'' as ``any not-for-profit enterprise
which is independently owned and operated and is not dominant
in its field, unless an agency establishes, after opportunity
for public comment, one or more definitions of such term which
are appropriate to the activities of the agency and publishes
such definition(s) in the Federal Register[.]'' Section 2(g)
provides that this term includes any not-for-profit enterprise
that ``as of the issuance of the notice of proposed
rulemaking'' does not exceed the specified size standard for
small business concerns established by the SBA Administrator
applicable to a classification code of the North American
Industrial Classification System, providing such enterprise has
a net worth of less than $7 million and has fewer than 500
employees. For a local labor organization, the definition
applies regardless of whether the organization is a part of a
national or international organization. These definitions do
not apply to the extent that an agency, after consulting the
Office of Advocacy of the Small Business Administration and
public comments, establishes its own definition of ``small
organization'' and publishes such definition in the Federal
register.
Section 3 amends 5 U.S.C. Sec. 602 by adding a requirement
for a brief description of the sector that is primarily
affected by a rule in its regulatory flexibility agenda and a
requirement that the agenda contain a plain-language summary to
be published on the agency's website within 3 days of its
publication in the Federal Register.
Section 4(a) amends 5 U.S.C. Sec. 603(b) to require an
initial regulatory flexibility analysis to contain a detailed
statement: (1) describing the reasons why the action by the
agency is being considered; (2) describing the objectives of
and legal basis for the proposed rule; (3) estimating the
number and type of small businesses to which the rule will
apply; (4) describing the rule's projected reporting,
recordkeeping, and other compliance requirements; (5)
describing all relevant Federal rules that may duplicate,
overlap, or conflict with the rule or the reasons why such
description was not provided; (6) estimating the rule's
additional cumulative economic impact on small entities beyond
that already imposed on the class of small entities (or an
explanation of why such an estimate is not available); and (7)
describing any disproportionate economic impact on small
entities or a specific class of small entities.
Section 4(b)(1) amends 5 U.S.C. Sec. 604(a), which sets
forth the requirements of a final regulatory flexibility
analysis, by requiring more detailed descriptions and
explanations specyfying that an agency describe any
disproportionate economic impact on small entities or a
specific class of small entities.
Section 4(b)(2) amends 5 U.S.C. Sec. 604(a)(2) to provide
that it applies to instances where the agency certifies a
proposed rule. Section 4(b)(3) amends 5 U.S.C. Sec. 604(b),
which requires an agency to make copies of the final regulatory
flexibility analysis available to the public and to publish it
(or a summary thereof) in the Federal Register. Section 4(b)(3)
expands this requirement to include posting the entire analysis
on the agency's website. In addition, the final analysis must
also include the telephone number, mailing address, and link to
the website where the complete analysis may be found.
Section 4(c) amends 5 U.S.C. Sec. 605(a), which provides
that an agency must be treated as having satisfied any
requirement regarding an agenda or regulatory flexibility
analysis, to require a cross-reference to the specific portion
of the other agenda or analysis that satisfies this
requirement.
Section 4(d) amends 5 U.S.C. Sec. 605(b), which permits an
agency, in lieu of complying with sections 603 and 604, to
certify that the rule will not have a significant economic
impact on a substantial number of small entities. As amended,
section 605(b) requires such certification to be accompanied by
a detailed statement providing the factual and legal basis for
it.
Section 4(e) amends 5 U.S.C. Sec. 607, which allows an
agency to provide either a quantifiable or numerical
description of the effects of a proposed rule or alternatives
to a proposed rule, or more general descriptive statements if
quantification is not practicable or reliable. This amendment
makes section 607 mandatory and specifies that in instances
where an agency provides a general descriptive statement, the
agency must also provide a detailed statement explaining why
quantification is not practicable or reliable.
Section 5(a) replaces current 5 U.S.C. Sec. 608, which
allows an agency to waive or delay the completion of some or
all of the requirements of section 603 (pertaining to initial
regulatory flexibility analyses) and to delay the requirements
of section 604 (pertaining to final regulatory flexibility
analyses), with a new provision allowing for additional powers
of the Chief Counsel for Advocacy of the Small Business
Administration.
New Section 608(a)(1) requires the Chief Counsel for
Advocacy to issue rules governing compliance with chapter 6,
after opportunity for notice and comment, within 270 days after
enactment of the RFIA. New section 608(a)(2) provides that an
agency may not issue rules that supplement those promulgated by
the Chief Counsel unless such agency has first consulted with
the Chief Counsel to ensure that the supplemental rules comply
with chapter 6 and the Counsel's rules.
New section 608(b) provides that the Chief Counsel,
notwithstanding any other law, may intervene in any
adjudication before any Federal agency (unless such agency is
authorized to impose a fine or penalty under such adjudication)
and may inform the agency of the impact that any decision on
the record may have on small entities. The provision prohibits
the Chief Counsel from initiating an appeal with respect to any
adjudication in which the Chief Counsel intervenes pursuant to
new section 613(b).
New section 608(c) authorizes the Chief Counsel to file
comments in response to any agency notice requesting comment,
regardless of whether the agency is required to file a general
notice of proposed rulemaking under 5 U.S.C. Sec. 553.
Section 6 replaces 5 U.S.C. Sec. 609(b), which sets out
procedures that an agency must follow prior to the publication
of an initial regulatory flexibility analysis. As amended,
section 609(b) requires the agency to provide to the Chief
Counsel for Advocacy with the following: (1) all materials
prepared by the agency in promulgating the proposed rule,
including any drafts of such rule (with certain exceptions);
and (2) information on the rule's potential adverse and
beneficial impacts on small entities that might be affected.
New section 609(c) requires that within 15 days of receipt
of such information, the Chief Counsel must identify small
entities or representatives thereof (or a combination of both)
for the purpose of obtaining advice, input and recommendations
about the rule's potential economic impact and compliance with
sections 603 or 605(b) of title 5. The Chief Counsel must also
convene a review panel staffed by an Office of Advocacy
employee and an employee for the agency promulgating the rule.
If the agency is not an independent regulatory agency, the
panel must also include an employee from OIRA.
New section 609(d) requires that within 60 days after the
panel is convened, the Chief Counsel must, after consultation
with the panel, submit a report to the agency (or to OIRA if
the agency is an independent regulatory agency). The report
must include an assessment of the proposed rule's impact on
small entities as well as a discussion of any alternatives that
will minimize adverse economic impacts on small entities.
In addition, section 6 mandates that the report become part
of the rulemaking record. In the publication of the proposed
rule, the agency must explain what actions, if any, the agency
took in response to such report.
Section 6 further provides that new section 609(e) applies
to a proposed rule if the OIRA Administrator or an agency head
(or delegate) determines that the rule is likely to result in
any of the following: (1) an annual effect on the economy of
$100 million or more; (2) a major increase in costs or prices
for consumers; individual industries; Federal, state, or local
governments; tribal organizations, or geographic regions; (3)
significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of
United States based enterprises to compete with foreign-based
enterprises in domestic and export markets; or (4) a
significant economic impact on a substantial number of small
entities.
Finally, section 6(f) permits the Chief Counsel for
Advocacy to waive the requirements of subsections (b) through
(e) of section 609 if the Counsel determines that compliance
with these requirements are impracticable, unnecessary, or
contrary to the public interest.
Section 7 amends 5 U.S.C. Sec. 610, pertaining to the
periodic review of rules. In addition to publishing a plan for
the periodic review of rules issued by an agency in the Federal
Register, the plan must also appear on the agency's website.
Section 7 requires the agency's head, rather than the agency,
to make the determination of whether the rule has a significant
economic impact on a substantial number of small entities. Such
determination must be made without regard to whether the agency
performed an analysis under section 604. Section 7 revises the
objectives of the determination to require consideration of
whether the rule maximizes any significant beneficial impacts
on a substantial number of small entities. If an agency head
determines that the periodic review cannot be performed within
the stated time frames, then section 7 permits the agency head
to so certify and extend the review period for 2 years after
publication of the notice of extension in the Federal Register.
In addition, such notice and certification must be provided to
the Chief Counsel and Congress. Section 7 also directs the
agency to amend or rescind a rule to minimize adverse
significant economic impact on a substantial number of small
entities or a disproportionate economic impact on a specific
class of small entities, or to maximize beneficial significant
economic impact on a substantial number of small entities.
As amended, section 610 requires an agency to annually
submit a report regarding the results of its review to Congress
and to OIRA, if the agency is an independent regulatory agency.
Section 7 requires the agency to include comments by the
Regulatory Enforcement Ombudsman and the Chief Counsel for
Advocacy. In addition, the agency must consider the rule's
contribution to the cumulative economic impact of all Federal
rules on the class of small entities affected by the rule,
unless the agency head determines that such calculations cannot
be made and reports that determination in the annual report
required under section 610(c).
In addition to publication in the Federal Register, section
7 requires each agency to publish a list of rules to be
reviewed on its website and to include an explanation of why
the agency determined such rules have a significant economic
impact on a substantial number of small entities. In addition,
this publication must request comments from the public, Chief
Counsel for Advocacy, and the Regulatory Enforcement Ombudsman
concerning enforcement of such rules.
Section 8(a) amends 5 U.S.C. Sec. 611(a)(1) to provide that
a small entity that is adversely affected or aggrieved by any
rule under chapter 6 is entitled to judicial review of agency
compliance. Section 611(a)(1) currently applies only to ``final
agency action.'' Section 8(b) amends 5 U.S.C. Sec. 611(a)(2) to
provide that a court may review a rule if publication of the
final rule constituted final agency action.
Section 8(c) amends 5 U.S.C. Sec. 611(a)(3) to provide that
the time within which judicial review may be sought begins from
publication of a final rule. It also specifies that the
exception applies in the case of a rule for which the date of
final agency action is the same date as the publication date of
the final rule.
Section 8(d) amends 5 U.S.C.Sec. 612(b), which authorizes
the Chief Counsel for Advocacy to appear as amicus curiae in
any action brought in a court of the United States to review a
rule. As amended, the provision permits the Chief Counsel to
also appear as amicus curiae in any action to review agency
compliance with sections 601, 604, 605(b), 609, or 610.
Section 9(a) amends 28 U.S.C. Sec. 2342 to give the United
States Court of Appeals (other than the United States Court of
Appeals for the Federal Circuit) exclusive jurisdiction to
enjoin, set aside, suspend, or to determine the validity of all
final rules under 5 U.S.C. Sec. 608(a) (as amended by this
Act).
Section 9(b) amends 28 U.S.C. Sec. 2341(3), which defines
the term, ``agency''. As amended, the definition includes the
Office of Advocacy of the Small Business Administration, when a
final rule is promulgated under section 608(a) of title 5 of
the United States Code (as amended by this Act).
Section 9(c) amends 5 U.S.C. Sec. 612(b), which sets out
certain intervention rights of the Chief Counsel for Advocacy
pertaining to matters under chapter 6. As amended, section
612(b) extends this provision to apply to compliance under
chapters 5 and 7, in addition to chapter 6.
Section 10 of the bill amends the Small Business Act to
give the SBA's Chief Counsel for Advocacy the authority to
establish small business size standards. This text is identical
to the text of H.R. 585, the Small Business Size Standard
Flexibility Act of 2011, from the 112th Congress, which was
referred to the Committee on Small Business and over which this
Committee did not have jurisdiction.
Section 11 makes a number of clerical amendments.
Section 12 amends SBREFA to require that agency guides be
written in plain language.
CONCLUSION
H.R. 2542 is the latest iteration of the Majority's ongoing
attack on Federal regulation. Since the beginning of the 112th
Congress, the Committee's Subcommittee on Regulatory Reform,
Commercial and Antitrust Law has held 22 hearings and
considered at least six bills designed to hobble Federal agency
rulemaking and to increase the influence of business interests
over the rulemaking process. The Majority's use of pro-small
business rhetoric cannot obscure the fact that H.R. 2542, like
previous anti-regulatory proposals, will erect significant
barriers to rulemaking that will hinder the promulgation of
critical public health and safety protections.
We share the Majority's belief that small business plays an
important role in our economy, but H.R. 2542 does 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. If the proponents of H.R. 2542
were serious about helping small entities deal with the
regulatory system, they would support instituting mechanisms
for small entities that actually help them participate directly
in rulemaking, without having to rely on Washington-based
intermediaries.
There are other meaningful ways to assist small businesses
and small entities to navigate the regulatory landscape that
would not threaten agencies' ability to protect public health
and safety. We urge our colleagues to shift their attention to
these alternatives and to oppose this ill-conceived
legislation.
John Conyers, Jr.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Melvin L. Watt.
Zoe Lofgren.
Sheila Jackson Lee.
Steve Cohen.
Henry C. ``Hank'' Johnson, Jr.
Karen Bass.