[Senate Report 115-194]
[From the U.S. Government Publishing Office]
Calendar No. 284
115th Congress } { Report
SENATE
1st Session } { 115-194
_______________________________________________________________________
SMALL BUSINESS REGULATORY FLEXIBILITY IMPROVEMENTS ACT OF 2017
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
WITH MINORITY VIEWS
to accompany
S. 584
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
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 14, 2017.--Ordered to be printed
_________
U.S. GOVERNMENT PUBLISHING OFFICE
79-010 WASHINGTON : 2017
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Catharine A. Bailey, Director of Governmental Affairs
Satya P. Thallam, Chief Economist
Margaret E. Daum, Minority Staff Director
Stacia M. Cardille, Minority Chief Counsel
Charles A. Moskowitz, Minority Senior Legislative Counsel
Katherine C. Sybenga, Minority Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 284
115th Congress } { Report
SENATE
1st Session } { 115-194
======================================================================
SMALL BUSINESS REGULATORY FLEXIBILITY IMPROVEMENTS ACT OF 2017
_______
December 14, 2017.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 584]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 584) 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, reports favorably thereon
with amendments and recommends that the bill, as amended, do
pass.
CONTENTS
Page
I. Purpose and Summary..............................................2
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................6
IV. Section-by-Section Analysis......................................7
V. Evaluation of Regulatory Impact.................................10
VI. Congressional Budget Office Cost Estimate.......................10
VII. Minority Views..................................................14
VIII.Changes in Existing Law Made by the Bill, as Reported...........19
I. Purpose and Summary
S. 584, the Small Business Regulatory Flexibility
Improvements Act (SBRFIA), follows previous attempts by
Congress to build into the Federal regulatory policymaking
process a voice for, and consideration of the potential impacts
on, small businesses, non-profits, and local governments. It
also addresses deficiencies in the extant laws by making more
robust the requirements and review mechanisms applicable to
agencies when contemplating rules which may have a significant
effect on small entities.
II. Background and the Need for Legislation
Small Business Act
The formal recognition of the unique impact of Federal
policy on small enterprises goes back to at least 1953 with the
establishment of the Small Business Administration via
enactment of the Small Business Act of 1953.\1\ That act
states, in describing the underlying goal of the legislation:
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\1\An Act to Create the Small Business Administration and to
Preserve Small Business Institutions and Free, Competitive Enterprise,
Pub. L. No. 83-163, 67 Stat., Title II.
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The essence of the American economic system of
private enterprise is free competition. Only through
full and free competition can free markets, free entry
into business, and opportunities for the expression and
growth of personal initiative and individual judgment
be assured. The preservation and expansion of such
competition is basic not only to the economic well-
being but to the security of this Nation. Such security
and well-being cannot be realized unless the actual and
potential capacity of small business is encouraged and
developed.\2\
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\2\Id. at Sec. 202.
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The Small Business Act, and its establishment of the Small
Business Administration (SBA), was a successor to previous
Federal efforts to aid small enterprises, including the
Reconstruction Finance Corporation\3\ and the Smaller War
Plants Corporation.\4\ These initiatives, along with the
earliest iteration of the SBA, had missions which concerned
primarily providing financing, facilitating credit, and
enhancing access to Federal projects and contracts for small
businesses and federal contractors. These early efforts,
however, did not explicitly address the issue of regulation's
disproportionate effect on small businesses.
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\3\Records of the Reconstruction Finance Corporation [RFC], Nat.
Archives, Sec. 234.1, https://www.archives.gov/research/guide-fed-
records/groups/234.html (The Corporation was established in 1932 and
eliminated via the Small Business Act).
\4\Active from 1942 through 1945 during World War II, id. at 240.1.
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Effect of regulation on small businesses
Regulations can have an overall aggregate effect that
differs from their particular effects on specific sectors or
types of entities, and, ``[t]he cost of government regulation
almost always includes both variable and fixed components, with
variable costs being a function of the size of the regulated
transaction.''\5\ In the simplest fixed cost case, where costs
are invariant to a firm's size or activity-level, such as a
one-time capital outlay for a smokestack scrubber,\6\ the
regulation will impose a proportionately higher cost on smaller
firms, with the proportionate cost of compliance decreasing in
firm size (or firm output). That is, a fixed cost will require
a larger share of the small firm's resources (labor or capital)
to be reallocated toward compliance and away from wages and
investment--the same cost will have a smaller effect the larger
the firm and the average cost (per employee or transaction) is
lower.
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\5\C. Steven Bradford, Does Size Matter? An Economic Analysis of
Small Business Exemptions from Regulation, 8 J. of Small and Emerging
Bus. L. 6 (2004).
\6\This is the canonical example, explored more in depth in, see,
e.g. id. at 7.
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Information costs--the costs to review and understand
regulations--can sometimes exhibit fixed cost
characteristics.\7\ A firm may need to hire lawyers, compliance
officers, or human resources managers to ensure compliance with
the regulatory framework applicable to their industry. While
these labor costs may be incurred on an hourly or part-time
basis, absent special considerations in the law, the firm
(large or small) is still responsible for knowing and complying
with all relevant portions of the body of regulations.\8\
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\7\Id. at 8-9.
\8\Office of Advocacy, U.S. Small Business Administration, Report
on The Changing Burden of Regulation, Paperwork, and Tax Compliance on
Small Business (1995), (``A significant body of knowledge must be
gained by a firm to determine whether a regulation applies to it,
whether it is in compliance, or what action must be taken to be in
compliance. For example, a firm must first learn that a form is
required by rule, determine if the firm is required to submit that
form, and then determine how to complete the form correctly. These
fixed information-gathering costs are the same for all firms, whether
large or small.'').
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One result of this phenomenon, consistent with the policy
statement contained in the Small Business Act,\9\ is an anti-
competitive effect: ``large fixed costs can lead to market
structures with fewer, larger firms (increased market
concentration)'' because ``[w]hen fixed costs increase
substantially, it requires that a firm have a larger output
level to maintain profitability.''\10\ Indeed, from one of the
largest single increases in Federal regulation\11\ came what
one prominent CEO of a large financial institution identified
as a ``moat'' defending his company from competition.\12\
Another prominent investment bank executive put it in more
direct terms when he identified the effects of regulatory
requirements as ``hav[ing] raised the barriers to entry.''\13\
The reason for this is because regulatory compliance often
entails differential impacts and economies of scale.\14\
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\9\An Act to Create the Small Business Administration and to
Preserve Small Business Institutions and Free, Competitive Enterprise,
Pub. L. No. 83-163, Sec. 202, 67 Stat. 4.
\10\Steven Hackett, Environmental and Natural Resource Economics:
Theory, Policy, and the Sustainable Society 154 (2d ed.) (2001).
\11\Patrick McLaughlin, Oliver Sherouse & Daniel Francis, Dodd-
Frank is One of the Biggest Regulatory Events Ever, QuantGov, https://
quantgov.org/charts/dodd-frank-is-one-of-the-biggest-regulatory-events-
ever.
\12\Joe Wiesenthal, The 4 Things That Worry Jamie Dimon . . . ,
Bus. Insider, Feb. 4, 2013, http://www.businessinsider.com/the-four-
things-that-worry-jamie-dimon-2013-2.
\13\Opinion, Regulation is Good for Goldman,Wall St. J., Feb. 11,
2015, https://www.wsj.com/articles/regulation-is-good-for-goldman-
1423700859, (citing comments made by Mr. Blankfein at an investor
conference).
\14\See, e.g., Marshall Lux & Robert Greene, The State and Fate of
Community Banking 13 (Mossaver-Rahmani Center for Business and
Government, M-RCBG Associate Working Paper Series, No. 37, 2015)
(``[T]he discrepancy in performance between large and small community
banks in part stems from the disproportionate cost of regulation on
smaller institutions.'').
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Variable costs are typically proportional (linear) or
decreasing (convex) in firm size. Consider a rule which
requires a construction company to provide a hardhat for each
jobsite employee--this cost increases at a rate directly
proportional to the number of employees. But a variable cost
may also be ``lumpy'' or discontinuous. For example a rule may
require providing one outdoor toilet per 50 employees--if a
firm has fewer than 50 employees, it has no way of
proportionately reducing its cost.\15\ Or consider a license
for a tax accounting program which may be subject to pricing
per user but not per usage, resulting in a relatively higher
cost for less intensive users of the product.
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\15\Bradford, supra note 6, at 7-8.
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Taken together, the fixed and certain variable components
of a regulation's costs can result in an economic outcome that
is suboptimal and to which policymakers should pay particular
attention. Numerous analysts have attempted to quantify the
scale of this differential regulatory impact.\16\ One
difficulty in doing so is fully accounting for the effective
``shadow price'' on the creation of new firms in the absence of
a regulation (or relaxing its requirements). In other words,
calculating the costs to a business to fully comply with a
regulation may only partially capture the rule's economic
effect because it does not account for those firms that may
have formed in the absence of those costs (the aforementioned
barriers to entry).\17\ And a growing body of literature points
toward the importance of new firms (moreso than small ones,
though most are by nature small at inception) for producing
jobs and economic growth.\18\
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\16\See, e.g., Nicole V. Crain & W. Mark Crain, Small Bus. Admin.,
The Impact of Regulatory Costs on Small Firms iv (2010) (``As of 2008,
small business 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).''); Ben Gitis & Sam
Batkins, Regulatory Impact on Small Business Establishments, American
Action Forum, (2015) (``The results . . . indicate that regulations
cumulatively have a highly regressive effect on businesses.'').
\17\Aggregate economic data may obscure underlying forgone economic
activity, such as a ``missing generation'' of new firms. See, e.g.,
Francois Gourio, Todd Messer & Michael Siemer, What is the economic
impact of the slowdown in new business formation?, 326 Chi. Fed. Letter
(2014); Leora Klapper, Luc Laeven & Raghuram Rajan, Entry regulation as
a barrier to entrepreneurship, 82 J. of Fin. Econ. 2006, (``We find
that costly regulations hamper the creation of new firms, especially in
industries that should naturally have high entry. These regulations
also force new entrants to be larger and cause incumbent firms in
naturally high-entry industries to grow more slowly.''); Lee
Branstatter, et. al., Do Entry Regulations Deter Entrepreneurship and
Job Creation? Evidence from Recent Reforms in Portugal, 124 The Econ.
J. 805 (2014); Jamal Ibrahim Haidar, The Impact of Business Regulatory
Reforms on Economic Growth, 26 J. of the Japanese and Int'l Economies
285 (2012); and James Bailey & Diana Thomas, Regulating Away
Competition: The Effect of Regulation on Entrepreneurship and
Employment (2015) (Mercatus Center working paper).
\18\See generally, Jason Wiens and Chris Jackson, Ewing Marion
Kauffman Foundation, The Importance of Young Firms for Economic Growth,
Entrepreneurship Policy Digest (2015); Alexander S. Kritikos,
Entrepreneurs and their impact on jobs and economic growth, IZA World
of Labor (2014); John Haltiwanger, Ron S. Jarmin & Javier Miranda, Who
Creates Jobs? Small versus Large versus Young, 95 The Rev. of Econ. and
Statistics 347 (2013); Ryan Decker, et. al., The Role of
Entrepreneurship in US Job Creation and Economic Dynamism, 28 J. of
Econ. Perspectives 3 (2014); Zoltan Acs and Catherine Armington,
Employment Growth and Entrepreneurial Activity in Cities, 38 Reg'l
Studies 911 (2004) (``Findings indicate that higher rates of
entrepreneurial activity were strongly associated with faster growth of
local economies.''); Andre van Stel, Empirical Analysis of
Entrepreneurship and Economic Growth (2006).
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Regulatory Flexibility Act
In 1980, Congress formally acknowledged this regulatory
effect phenomenon and passed the Regulatory Flexibility Act
(RFA) which placed into statute requirements that Federal
agencies consider the impacts on small entities of proposed
Federal regulations.\19\ The RFA formalized a longstanding
recognition of the potentially differential and
disproportionate impacts regulations may have on small entities
vis-a-vis large ones, and further ``establish[ed] as a
principle of regulatory issuance that agencies shall endeavor .
. . to fit regulatory and informational requirements to the
scale of the businesses, organizations, and governmental
jurisdictions subject to regulation.''\20\
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\19\Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164.
\20\Id., at Sec. 2(b). Here ``organizations'' refers to not-for-
profit enterprises.
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Among other things, the RFA outlines particular
considerations agencies must address as part of what it calls a
``regulatory flexibility analysis.''\21\ It requires agencies
to publicly preview likely forthcoming rules that are ``likely
to have a significant economic impact on a substantial number
of small entities'' in a semi-annual report,\22\ as well as
solicit public input as part of the rule's development.\23\ It
also directs the SBA's Chief Counsel for Advocacy to monitor
``agency compliance with'' the RFA and report thereon to the
President and Congress, as well as authorizes the Chief Counsel
``to appear as amicus curiae in any action brought in a court
of the United States to review a rule.''\24\
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\21\5 U.S.C. Sec. 603.
\22\Id. at Sec. 602.
\23\Id. at Sec. 609.
\24\Id. at Sec. 612.
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S. 584, the Small Business Regulatory Flexibility Improvements Act
SBRFIA aims to address perceived deficiencies in the RFA,
later amended by the Small Business Regulatory Enforcement
Fairness Act) in 1996.\25\ One issue with the RFA was that
``agency compliance . . . was at best sporadic'' because
``[a]gencies 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.''\26\
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\25\Contract with America Advancement Act of 1996, Pub. L. No. 104-
121, 110 Stat. 847, amended by U.S. Troop Readiness, Veterans' Care,
Katrina Recovery, and Iraq Accountability Appropriations Act, 2007,
Pub. L. No. 110-28, 121 Stat. 112.
\26\H.R. Rep. 114-12, pt. 1, at 4 (2015). citing 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).
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While RFA created a basic analytical lens and framework
through which to consider Federal policy impacts on small
businesses, the 1996 Act sought to alter the policymaking
structure whereby small businesses would have a more robust
voice in the process, for example, through establishment of
``small business advocacy review panels'' (so-called SBREFA
panels).\27\ It also included a requirement that agencies, when
they are required to publish a final regulatory flexibility
analysis, develop a ``compliance guide'' for each rule (or
group of related rules) which explain to small entities how to
comply. It also included judicial review for some agency
actions under the RFA in order to improve agency compliance.
Unfortunately, even these later ``changes have had only a
modest effect on agency compliance with regulatory flexibility
requirements.''\28\ As a witness at a recent Senate hearing put
it:
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\27\Id. at Sec. 244.
\28\Id. citing 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 Entrepreneurial
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.'').
While the Regulatory Flexibility Act requires
agencies to consider the effect of their actions on
small entities, agencies regularly neglect input from
the regulated community and, as a result, produce very
poor analysis. Even with these flaws, the rules go into
place and businesses are forced to divert precious
resources to lengthy and uncertain legal challenges.
Unfortunately there is no other way to hold agencies
accountable when they ignore the effects of regulation
on small businesses, and agencies are not required to
confirm their economic analysis with a respected,
neutral third party.\29\
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\29\Examining How Small Businesses Confront and Shape Regulations:
Hearing Before the S. Comm. on Small Bus. and Entrepreneurship, 115th
Cong., 115-21 (2017) (testimony of Randy Noel) (``Under the RFA and
subsequent amendments of the SBRFA, an agency may certify that a rule
is not expected to have a significant economic impact on a substantial
number of small entities. This allows the agency to skip the SBREFA
requirements. Unfortunately there is no check on whether the agency
certification of no impact on small businesses is correct.
Increasingly, agencies have improperly claimed that small businesses
were not affected by their proposed rule, even when that clearly was
not the case.'') (emphasis added).
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Another Congressional hearing witness put it thusly:
While the original Congressional intent and
subsequent additions/enhancements to the Regulatory
Flexibility Act (RFA) are to be lauded, the reality is
that far too often agencies either view compliance with
the Act as little more than a procedural ``check-the-
box'' exercise or they artfully avoid compliance by
other means.\30\
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\30\Hearing on H.R. 2542 Before the Subcomm. on Regulatory Reform,
Commercial and Antitrust Law of the H. Comm. on the Judiciary, 113th
Cong.113-29 (2013) (statement of Carl Harris).
SBRFIA seeks to strengthen the framework established in RFA
and the Small Business Regulatory Enforcement Fairness Act
while also narrowing avenues for agencies to de facto or even
explicitly avoid those acts' requirements. It does this in part
by providing more clarity through expanded definitions where
previously these were subject to agency's own interpretation,
providing for expanded judicial review of agency compliance
with RFA requirements, and expanded authorities for the SBA's
Office of Advocacy. The overall effect is to drive regulatory
agencies toward a process and analysis which meaningfully
accounts for--and to the extent possible accommodates--the
impact on small entities before finalizing a rule.
III. Legislative History
Senator James Lankford (R-OK) introduced S. 584 on March 8,
2017, with Senators James E. Risch (R-ID) and Chuck Grassley
(R-IA). Senators Orrin G. Hatch (R-UT), John Hoeven (R-ND), and
Pat Roberts (R-KS) later joined as cosponsors. The bill was
referred to the Committee on Homeland Security and Governmental
Affairs. The Committee considered S. 584 at a May 17, 2017
business meeting.
The Committee ordered S. 584 reported favorably on May 17,
2017, by a roll call vote of 8 yeas to 6 nays. Senators voting
in the affirmative were Johnson, McCain, Portman, Paul,
Lankford, Enzi, Hoeven, and Daines. Senators voting in the
negative were McCaskill, Tester, Heitkamp, Peters, Hassan, and
Harris. For the record only, Senator Carper voted nay by proxy.
Consistent with Committee Rule 11, the Committee reports the
bill with a technical amendment by mutual agreement of the
Chairman and Ranking Member.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section provides the bill's short title, the ``Small
Business Regulatory Flexibility Improvements Act.''
Section 2. Clarification and expansion of rules covered by the
Regulatory Flexibility Act
This section clarifies and expands the rules covered by the
Regulatory Flexibility Act by amending Section 601 of title 5
of the United States Code. This section defines ``economic
impact'' as any direct or indirect economic effect on small
entities; defines ``land management plan'' to mean any plan
developed by the Secretary of Agriculture under the Forest and
Rangeland Renewable Resources Planning Act of 1974 or Section
202 of the Federal Land Policy and Management Act of 1976;
defines ``revision'' and ``amendment;'' defines ``small
organization'' pursuant to a size standard established by the
Administrator of the Small Business Administration for entities
described by the North American Industrial Classification
System or, if this is not available, as any entity whose net
worth does not exceed $7,000,000 and 500 employees.
Section 3. Expansion of report of regulatory agenda
This section requires that the SBA describe which sector of
the North American Industrial Classification System is
primarily affected by any rule proposed by the agency that is
likely to have a significant economic impact on small entities.
Furthermore, within three days after an agency publishes a
regulatory flexibility agenda, it must publicize a plain
language summary of the agenda on its website. The SBA must
also publish on its website a plain language summary of each
regulatory flexibility agenda within three days of their
publication in the Federal Register.
Section 4. Requirements providing for more detailed analyses
This section lays out the requirements for what must be
included in a regulatory flexibility analysis. These analyses
must include (1) a description of the reasons the action is
being considered, (2) a description of the proposed rule's
objectives and legal basis, (3) an estimate of the number and
type of small entities the rule will apply to, (4) a
description of the compliance requirements of the proposed
rule, (5) a description of all potentially duplicate,
overlapping, or conflicting federal rules, (6) an estimate of
the added economic burden of the rule on small entities, (7) a
description of any disproportionate impact on small entities or
a specific class thereof, and (8) a description of any
hindrance on small entity's ability to have access to credit.
An agency may satisfy these requirements by cross-referencing
to a specific portion of another agenda required by law which
meets these stipulations. The agency shall also publish the
final regulatory flexibility analysis available on its website
and in the Federal Register. The agency shall further provide a
quantifiable description of the impacts of the proposed rule or
a statement as to why the effects are not quantifiable. This
section also includes changes to the syntax of 5 U.S.C. 604(a)
and 605(b).
Section 5. Repeal of waiver and delay authority; additional powers of
the Chief Counsel for Advocacy
This section mandates that Chief Counsel for Advocacy of
the SBA, after taking public comment, issue rules within 270
days of enactment of this bill to govern agency compliance with
the Regulatory Flexibility Act, and these rules cannot be
altered without the Chief Counsel's consultation. It further
empowers the Chief Counsel to intervene in any agency
adjudication and to file comments in response to any agency
notice requesting a statement.
Section 6. Procedures for gathering comments
This section requires that an agency, prior to making a
rule, must provide the Chief Counsel for Advocacy of the SBA
with (1) all materials prepared and utilized by the agency in
making the proposed rule, (2) information on the potential
economic effects of the proposed rule. Within 15 days of
receiving these materials, the Chief Counsel must (1) identify
the small entities from whom to solicit input about the
potential economic impact of the proposed rule and (2) convene
a review panel to review these materials consisting of an
employee from the SBA Office of Advocacy, an employee from the
agency making the rule and, in the case of an agency other than
an independent regulatory agency, an employee from the Office
of Information and Regulatory Affairs of OMB. Within 60 days of
this committee being convened, the Chief Counsel shall submit a
report to the agency including an assessment of the economic
impact of the proposed rule and this report shall become part
of the rule making record. This section applies to a proposed
rule if (1) its annual effect on the economy is $100,000,000 or
more, (2) it creates a major increase in costs or prices for
consumers, industry, or the government (3) it results in
significant adverse effects on competition, employment,
investment, productivity, innovation, or the ability for
American enterprises to compete in domestic markets, or (4) it
results in a significant economic impact on a substantial
number of small entities. The Chief Counsel can waive these
reporting requirements if he or she determines that compliance
is impracticable, unnecessary, or contrary to the public
interest. A small entity may request that the agency provide it
with all of the documentation discussed in this subsection
which will be delivered to the entity within ten days.
Section 7. Periodic review of rules
This section requires that, within 180 days, each agency
must publish in the Federal Register and place on its website a
plan for the periodic review of rules issued by the agency
which the agency head determines have a significant economic
impact to a substantial number of small entities. The purpose
of the review is to determine whether rules should be
continued, amended, or rescinded. The plan shall provide for
the review of all such agency rules currently existing within
ten years of the publication of the plan. If the agency head
deems this unfeasible, he or she will certify this in a
statement published in the Federal Register and may extend the
review for no longer than two years. The plan shall include
details on how the agency will include small businesses in the
process. Agencies shall amend or rescind rules to minimize any
adverse significant economic impact on a substantial number of
small entities. Each agency must submit an annual report with
the results of this review process and each year, each agency
must publish on its website a list of the rules to be reviewed.
Section 8. Judicial review of compliance with the requirements of the
Regulatory Flexibility Act available after publication of the
final rule
This section contains syntax changes for 5 U.S.C.
Sec. 611(a) and 5 U.S.C. Sec. 612(b).
Section 9. Jurisdiction of court of appeals over rules implementing the
Regulatory Flexibility Act
This section contains syntax changes for 28 U.S.C.
Sec. 2342, 28 U.S.C. Sec. 2341(3), and 5 U.S.C. Sec. 612(b).
Section 10. Establishment and approval of small business concern size
standards by Chief Counsel for Advocacy
This section establishes that the SBA Administrator may
specify standards by which a business concern can be determined
to be a small business concern for the purposes of this
legislation. This section further specifies that in the case of
an action for judicial review of a rule which includes
definitions or standards approved by the Chief Counsel, the
party seeking such a review shall be entitled to join as a
party in the action.
Section 11. Clerical Amendments
This section contains clerical edits to 5 U.S.C. Sec. 601,
5 U.S.C. Sec. 605, 5 U.S.C. Sec. 607, 5 U.S.C. Sec. 608, 5
U.S.C. Sec. 603(d), and 5 U.S.C. Sec. 604(a).
Section 12. Agency preparation of guides
This section requires SBA to use sufficiently plain
language in guides for affected small entities. The SBA shall
solicit input from these entities when developing guides.
Section 13. Comptroller General report
This section requires the Comptroller General of the United
States to publish a study within 90 days examining whether the
Chief Counsel of the SBA has the resources to carry out that
office's duties under this act.
Section 14. Waiver of fines for first-time paperwork violations by
small businesses
This section edits the procedure for fining a small
business for a first-time paperwork violation. A violation is a
first-time violation if the small business has not previously
violated any similar requirement by the same agency within five
years. The head of the agency will not impose a fine on a small
business for a first-time violation. This policy may be
excepted if the agency head determines that (1) the violation
can cause serious harm to the public interest, (2) failing to
impose a fine would impede with the detection of criminal
activity, (3) the violation is tax-related, (4) the violation
was not corrected on or before the 6-month anniversary of being
notified of their noncompliance, or (5) the violation presents
a danger to public health or safety. In the case of a danger to
public health and safety, the agency head may choose not to
impose a fine if the concern is corrected within 24 hours. To
determine whether to waive a fine in these cases, the agency
head shall consider all of the facts including (1) the nature
and seriousness of the violation, (2) whether the small
business has made a good faith effort to comply, and (3)
whether the small business has obtained a significant economic
benefit from the violation. Should the agency head not decide
to allow the small business 24 hours to correct the violation
and avoid a fine, the agency head shall notify congress
regarding this determination within 60 days of the imposition
of the fine.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 18, 2017.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 584, the Small
Business Regulatory Flexibility Improvements Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall,
Director.
Enclosure.
S. 584--Small Business Regulatory Flexibility Improvements Act
Summary: S. 584 would amend the Regulatory Flexibility Act
(RFA) to expand the number of rules covered by that act and to
require 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. Finally, S. 584 would require the Government
Accountability Office (GAO) to report on the implementation of
the bill.
CBO estimates that implementing S. 584 would cost $65
million over the 2017-2022 period, assuming appropriation of
the necessary funds. Enacting the bill could affect direct
spending by agencies not funded through annual appropriations
and would waive certain fines, which are recorded as revenues;
therefore, pay-as-you-go procedures apply. CBO estimates,
however, that any changes in direct spending and revenues would
not be significant.
CBO estimates that enacting S. 584 would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2028.
S. 584 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments.
If any federal agencies increase mandatory fees to offset
the costs of implementing the additional analysis required by
the bill, S. 584 would increase the cost of an existing mandate
on private entities to pay those fees. CBO expects that if fees
are increased as a result of the bill, the additional cost of
the mandate would fall well below the annual threshold
established in UMRA for private-sector mandates ($156 million
in 2017, adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary effect of S. 584 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 funding for agencies that
issue regulations affecting small businesses.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2017-2022
----------------------------------------------------------------------------------------------------------------
INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level............ 0 10 15 15 15 15 70
Estimated Outlays........................ 0 7 13 15 15 15 65
----------------------------------------------------------------------------------------------------------------
Basis of Estimate: For this estimate, CBO assumes that the
legislation will be enacted near the beginning of fiscal year
2017, 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. The Departments of Transportation, Homeland
Security, and Commerce, and the Environmental Protection Agency
(EPA) issue the most rules. 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 the EPA.
S. 584 would broaden the definition of a ``rule'' for
rulemaking purposes to include agency guidance 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 effect that is
reasonably foreseeable and would require agencies to prepare
reports on the cumulative economic impact on small businesses
of new and existing regulations.
Implementing S. 584 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 Information and Regulatory Affairs (OIRA) within the Office
of Management and Budget 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, the 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 an analysis of that information, CBO
estimates that administrative costs of some regulatory
agencies, the SBA and OIRA would eventually increase by a total
of about $15 million annually. That amount would cover
approximately 60 new employees at the SBA and OIRA as well as
additional administrative expenses for several other agencies.
We expect that it would take about two years to reach that
level of effort. The GAO report on the effect of the
legislation on the Office of Advocacy would cost less than
$500,000 to complete. Additional spending would be subject to
the availability of appropriated funds.
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. Pay-as-you-go procedures apply because enacting S.
584 could affect direct spending by agencies not funded through
annual appropriations and would decrease revenues by waiving
certain fines. CBO estimates, however, that any net increase in
direct spending by those agencies and the loss of revenues from
the waving of fines would not be significant.
Increase in long-term net direct spending and deficits: CBO
estimates S. 584 would not increase net direct spending or on-
budget deficits by more than $5 billion in any of the four
consecutive 10-year periods beginning in 2028.
Intergovernmental and private sector impact: S. 584
contains no intergovernmental mandates as defined in UMRA and
would not affect the budgets of state, local, or tribal
governments.
If any federal agencies increase mandatory fees to offset
the costs of implementing the additional analysis required by
the bill, S. 584 would increase the cost of an existing mandate
on private entities to pay those fees. CBO expects that if such
mandatory fees are increased as a result of the bill, the
additional cost of the mandate in any one year would fall well
below the annual threshold established in UMRA for private-
sector mandates ($156 million in 2017, adjusted annually for
inflation).
Estimate prepared by: Federal Spending: Matthew Pickford
and Stephen Rabent; Impact on state, local, and tribal
governments: Zach Byrum; Impact on the private sector: Paige
Piper/Bach.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
VII. Minority Views
----------
MINORITY VIEWS OF SENATORS CLAIRE McCASKILL, THOMAS R. CARPER, AND GARY
C. PETERS
Small businesses are the backbone of American communities.
They are the local car dealership, laundromat, and favorite
family restaurant. Small businesses are critical to creating
jobs and driving economic growth. That is why, when Congress
considers legislation it should always be our goal to consider
the impact on small businesses, and ensure a level playing
field so small businesses have the opportunity to thrive.
Unfortunately, the Small Business Regulatory Flexibility
Improvements Act of 2017 (SBRFIA) does not meet that standard.
This bill will introduce more uncertainty into the regulatory
process and make it more difficult to create that level playing
field.
Contrary to the rhetoric often heard, most small businesses
are not opposed to all forms of regulation. According to
polling conducted by Small Business Majority, nearly eight in
ten small employers agree regulations are important. These
business owners believe that regulations protect small
businesses from unfair competition and level the playing field
with big businesses so they can compete. The same poll found
that 86% of small employers feel that certain government
regulations play an important role and are necessary for a
modern economy.\1\ These polls are significant since the Small
Business Office of Advocacy finds that over 99% of all
businesses qualify as small businesses (using the basic
Advocacy definition of a small business being any business
entity with less than 500 employees).\2\
---------------------------------------------------------------------------
\1\Improving Small Business Input on Federal Regulations: Ideas for
Congress and a New Administration: Hearing Before the Subcommittee on
Regulatory Affairs and Federal Management, 115th Cong, Jan. 19, 2017
(testimony of LaJuanna Russell).
\2\``Frequently Asked Questions About Small Business,'' Small
Business Office of Advocacy, https://www.sba.gov/sites/default/files/
advocacy/SB-FAQ-2017-WEB.pdf
---------------------------------------------------------------------------
The focus of SBRFIA is to make changes and expand upon the
rulemaking and analytical requirements developed under the
Regulatory Flexibility Act (RFA) and the Small Business
Regulatory Enforcement Fairness Act (SBREFA). The majority's
committee report states that SBRFIA seeks to strengthen the RFA
framework while narrowing the ability of agencies to
inappropriately avoid these requirements. Further, the report
argues that SBRFIA drives regulatory agencies toward a process
where agencies meaningfully account for and, to the extent
possible, accommodate small entities when analyzing the impacts
of rules.\3\
---------------------------------------------------------------------------
\3\Supra, pt. 2
---------------------------------------------------------------------------
Unfortunately, in an attempt to accomplish those laudable
goals, SBRFIA injects vagueness and overly broad requirements
into a well-understood statute. The net result is uncertainty
for small businesses, and eventually harm to those small
businesses as the regulatory process becomes unable to
effectively meet their needs.
Agencies should always comply with the RFA when developing
rules, and agencies that incorrectly waive RFA requirements if
a rule does have a significant impact on a significant number
of small entities should be held accountable for their actions.
In fact, there are already substantial incentives for agencies
to properly certify rules. Entities that believe an agency has
improperly certified a rule, waiving RFA requirements, can
challenge the certification in federal court.\4\ This provides
the necessary check on agency actions and helps ensure RFA
compliance.
---------------------------------------------------------------------------
\4\5 U.S.C. 605(b).
---------------------------------------------------------------------------
The importance of benefits in the rulemaking process
In order to actually improve outcomes for small businesses,
reforms to the rulemaking process must take into account the
benefits of regulations in addition to the costs. While it is
easy to focus on the costs of regulations, the benefits are
just as important, since the benefits are the foundational
rationale behind requiring a group to incur any regulatory
costs at all. Accounting for the benefits of a regulation has
been enshrined in the regulatory process since President Reagan
issued Executive Order 12291 in 1981\5\ and the importance of
benefits in regulatory process was further solidified when
Executive Order 12866 was issued in 1993,\6\ that executive
order that has been reaffirmed and kept in effect by both
Democratic and Republican presidents. To focus on costs without
giving equal consideration to the benefits provided, as this
legislation does, is shortsighted and harmful to small
businesses.
---------------------------------------------------------------------------
\5\Exec. Order No. 12291. 46 C.F.R. 13193 (Feb. 17, 1981).
\6\Exec. Order No. 12866, 58 C.F.R. 51735 (Sept. 20, 1993).
---------------------------------------------------------------------------
Furthermore, the benefits should not be thought of as a
redistribution of power, but as a reduction of societal costs--
such as ensuring that a parent has a safe workplace or is
protected from exposure to hazardous chemicals. A serious
workplace injury to a parent who is unable to care for a young
child creates immeasurable harm to the family, but it also
means potentially significant societal burdens as well--
children may end up in foster care, or families may lose their
only income and be forced to rely on welfare benefits. These
types of regulatory benefits demonstrate the effectiveness of
regulations that mitigate the unavoidable risks our society
encounters every day. Throughout SBRFIA, there is an emphasis
on costs over benefits, which will hurt small businesses and
the entire regulatory process.
Any reform of the rulemaking process must also consider the
time it takes to promulgate a regulation. The rulemaking
process is now more time consuming than ever before, and
Administrative Law experts have been sounding the alarm for
years--with estimated promulgation times for significant
regulations taking up to eight years, in a best case
scenario.\7\
---------------------------------------------------------------------------
\7\See e.g. Shapiro, S., The Regulatory Accountability Act of 2011:
Way Too Much of a Good Thing, Administrative & Regulatory Law News,
37(3), 10-11 (2012).
---------------------------------------------------------------------------
Of the alterations SBRFIA makes to the federal regulatory
process, there are a number of concerns that deserve closer
examination, including the expansion of the definition of what
constitutes a rule, the true impact of analyzing indirect
effects, providing excessive authority to the Small Business
Office of Advocacy, the impact on public health and safety of
waiving certain paperwork requirements, and unnecessary
analytical requirements that will not improve regulations.
These five subjects do not represent the sum total of the
concerns with SBRFIA but do represent some of the most critical
problems that need to be addressed.
S. 584 Creates an overly-broad definition of covered rules
Under the SBRFIA definition of ``rules,'' direct final and
interim final rules would be subject to the expanded RFA
requirements, a significant change from current law. Most often
these types of rulemaking processes are utilized in emergency
situations, to protect public health and safety, and during
routine and noncontroversial rulemakings. They are important
tools that aid agencies in many situations and help protect the
public, and they are used in situations in which compliance
with the RFA would do nothing more than waste scarce
resources.\8\ SBRFIA also repeals the ability of agencies to
waive applicable RFA requirements when responding to an
emergency or when it would otherwise be impracticable.\9\
---------------------------------------------------------------------------
\8\Section-by-Section Analysis, S. 584, the Small Business
Regulatory Flexibility Improvement Act of 2017, Center for Progressive
Reform (hereinafter ``CPR Analysis'').
\9\S. 584, Sec. 2.
---------------------------------------------------------------------------
Additionally, SBRFIA would require many agency guidance
documents to go through the expanded RFA analytical
requirements--including, for the first time, documents that do
not have the force and effect of law since they are not
regulations.\10\ Agencies use guidance documents to clarify the
meaning of regulations, and businesses rely on these documents,
and the fast issuance of these documents, to ensure compliance
with complex regulations. Guidance can be used by both the
regulators and regulated to ensure that all parties understand
the requirements and responsibilities spelled out in regulatory
text. SBRFIA's departure from current practice would inevitably
cause significant delays in the issuance of guidance, leading
to less certainty for businesses.
---------------------------------------------------------------------------
\10\CPR Analysis.
---------------------------------------------------------------------------
In addition, agency guidance documents are already
regularly examined by the courts, and when these texts are
found to create additional burdens beyond those examined in the
underlying regulation, the action is struck down.\11\ As such,
codifying the additional RFA requirements in this bill would
add uncertainty without adding additional oversight.
---------------------------------------------------------------------------
\11\Agric. Retailers Ass'n v. U.S. Dep't of Labor & OSHA, 837 F.3d
60, 2016; Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199 (2015).
---------------------------------------------------------------------------
Taken together, these changes to current law regarding
direct and interim final rules and guidance documents will
significantly hamper an agency's ability to respond to
emergency situations and put a strain on agency resources. By
requiring that agencies complete a lengthy RFA analysis, even
when using these commonsense, well-understood and accepted
rulemaking procedures, agencies will likely abandon these
practices and, at best, needlessly subject the American people
to lengthened rulemaking and public risks.
S. 584 requires unbalanced analysis of indirect economic effects
SBRFIA's requirement to expand regulatory analysis to
include the indirect effects of regulation on small entities
represents a significant increase in the number of regulations
subject to the analytical requirements under the RFA, and could
potentially result in every regulation being subject to the
RFA. The bill does not clearly define ``indirect effects,''
saying only that the indirect effect should be ``reasonably
foreseeable and results from such rule (without regard to
whether small entities will be directly regulated by the
rule).''\12\ Under such a wide definition, even rules with only
very minor indirect impacts on small entities would have to
complete the same analytical analysis as rules with significant
impact on small entities. Since it was first enacted, and
through several legislative updates, the RFA was specifically
designed and targeted at the rules which had the most
significant direct impact on small entities.\13\ By changing
this standard, the original purpose of the RFA is lost.
---------------------------------------------------------------------------
\12\S. 584, Sec. 2.
\13\S. Rpt. 96-878 to accompany S. 299, which was signed into law
as P.L. 96-354 (1980).
---------------------------------------------------------------------------
Requiring so many additional rules to undergo such scrutiny
also threatens the quality of all regulatory actions. A
situation may very easily arise where agencies simply do not
receive the resources necessary to perform the required
analysis with the attention to detail required under this bill.
Even with additional appropriations to the agencies, such
detailed requirements will continue to elongate an already
backlogged process. This will undoubtedly create additional
delays which will further risk the public health and safety, as
well as a level playing field for small businesses, within our
Nation.
It is also notable that the bill actually refers to
``indirect economic effect'' rather than ``indirect effects.''
This is nothing more than an attack on the fair consideration
of both the costs and benefits of a proposed rule. Benefits, by
their nature, are not as easily quantifiable as costs to the
regulated entities, and many benefits are not 100 percent
economic in nature. Under this bill's requirement, it is not
difficult to see how agencies will be bound to consider
regulatory costs at a higher rate than the benefits to society.
As we already discussed, consideration of benefits in
regulatory analysis is critical to understanding the true
impact of a rule, and just looking at economic impacts presents
an incomplete analysis.
S. 584 provides excessive authority to the Office of Advocacy
SBRFIA gives wide-ranging authority to the Small Business
Office of Advocacy (Advocacy) to develop regulations regarding
agency implementation of the RFA, as amended by SBRFIA. This
would give Advocacy significant authority over rulemaking of
every federal agency, since potentially every rule would be
impacted by the RFA. It is not clear that Advocacy wishes to
have such authority, nor is it clear that giving it such
authority would improve regulatory outcomes for small
businesses. Recent actions taken by Advocacy have created doubt
in the decision-making ability and objectivity of the Office.
Advocacy recently chose to award an important research contract
to individuals who developed a previous report for Advocacy
that was debunked and eventually disclaimed by Advocacy because
it significantly overstated the costs of regulations.\14\ That
Advocacy would choose to pursue another critical regulatory
analysis research effort with the same individuals who
previously produced a widely debunked report\15\ gives rise to
concerns about Advocacy's judgement and ability to oversee
regulatory activity across the federal government.
---------------------------------------------------------------------------
\14\``Backlash to SBA Regulatory Research Contract Is Growing'',
Bloomberg BNA, By Cheryl Bolen, Nov. 2, 2017; and ``Controversial
Research Contract Faces Possible Bid Protest,'' Bloomberg BNA, By
Cheryl Bolen, Nov. 9, 2017.
\15\https://www.sba.gov/advocacy/impact-regulatory-costs-small-
firms.
---------------------------------------------------------------------------
S. 584 weakens enforcement of public health and safety requirements
SBRFIA also weakens public health and safety requirements
by amending the Paperwork Reduction Act (PRA) and creating a
requirement that agencies waive fines for a significant number
of paperwork violations. The definition of paperwork violations
under the PRA is broad and captures a significant number of
recordkeeping and reporting requirements, as well as
disclosures to third parties.\16\ For example, consider all of
the safety requirements of the asbestos standard in
construction and the provisions requiring the environmental
monitoring of exposures, the medical examinations of workers,
the communication of employers, and the training of workers.
Those requirements would be deemed paperwork under SBRFIA and
could therefore be waived, as could similar requirements.\17\
Agencies have considerable flexibility to waive paperwork
requirements for small businesses. For example, as part of the
Small Business Paperwork Relief Act of 2002, agencies can
aggressively seek out ways to reduce burdens for the smallest
businesses, those with fewer than 25 employees.\18\ However,
SBRFIA eliminates much of that flexibility and undermines
agencies' efforts to protect public health and safety.
---------------------------------------------------------------------------
\16\CPR Analysis.
\17\Asbestos in Construction Standard (29 CFR 1926.1101) (1218-
0134), U.S. Department of Labor, Occupational Safety and Health
Administration, August 2016.
\18\5 U.S.C. 3506.
---------------------------------------------------------------------------
These paperwork violations also cannot be accurately
defined as ``first-time'' violations since the legislative
language actually states that a business is eligible for a
waiver if they have not committed a similar violation in the
past five years.\19\ Even if a violation occurred more than
five years ago, a responsible business should take steps to
comply with the requirements, and waiving these requirements
removes an important incentive for businesses to do so.
---------------------------------------------------------------------------
\19\S. 584, Sec. 14.
---------------------------------------------------------------------------
S. 584 creates unnecessary analytical requirements
Throughout, SBRFIA features an expansion of analytical
requirements under the RFA. For example, it adds the term
``detailed'' to several requirements\20\ but invites
uncertainty by offering no explanation what constitutes a
detailed analysis. While such a change may seem
inconsequential, inside the courtroom legislative word choice
matters and can have lasting impacts.\21\ SBRFIA requires
consideration of the ``cumulative economic impact,'' and
``disproportionate economic impacts'' such overly broad terms
could very easily lead to additional rulemaking delays and
highly speculative analysis. Taken as a whole, these
requirements lead to what some have referred to as ``paralysis
by analysis,'' causing harm to businesses and families alike.
---------------------------------------------------------------------------
\20\Id.
\21\Senate Committee on Homeland Security and Governmental Affairs,
Subcommittee on Regulatory Affairs and Federal Management, The Unfunded
Mandates Reform Act: Opportunities for Improvement to Support State and
Local Governments. 114th Cong. (Feb. 24, 2016) (S. Hrg. 114-266).
---------------------------------------------------------------------------
Conclusion
Finally, we note that SBRFIA misses sufficient
consideration of key concepts that should be in any legislative
update of the RFA. First, the bill makes no provision regarding
how to provide agencies additional resources or capabilities to
produce the additional analysis called for in the bill.
Further, the bill does not provide enough focus or direction to
agencies regarding additional compliance assistance for small
entities. As noted earlier, small entities see the value in
regulations that level the playing field.\22\
---------------------------------------------------------------------------
\22\Senate Committee on Homeland Security and Governmental Affairs,
Subcommittee on Regulatory Affairs and Federal Management, Improving
Small Business Input on Federal Regulations: Ideas for Congress and a
New Administration, Testimony of LaJuanna Russell, 115th Cong (Jan. 19,
2017).
---------------------------------------------------------------------------
It should be our goal to have an effective, and transparent
regulatory process, and to ensure that process results in
common-sense regulations, which are promulgated in a timely
fashion, protect public health and safety, and maximize
benefits. We remain open to considering legislation that will
actually improve regulatory outcomes for small businesses, and
we look forward to such efforts in the future. However, we do
not believe this bill would improve the regulatory process, and
the superfluous analytical requirements would slow down an
already slow process without improving outcomes. For these
reasons we oppose S. 584 and urge our colleagues to join us in
opposition.
VIII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 584 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):
UNITED STATES CODE
* * * * * * *
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS
Sec.
601. Definitions.
602. Regulatory agenda.
603. Initial regulatory flexibility analysis.
604. Final regulatory flexibility analysis.
605. [Avoidance of duplicative or unnecessary analyses.] Incorporations
by reference and certifications.
606. Effect on other law.
607. [Preparation of analyses.] Quantification requirements.
608. [Procedure for waiver or delay of completion.] Additional powers of
Chief Counsel for Advocacy.
609. Procedures for gathering comments.
610. Periodic review of rules.
611. Judicial review.
612. Reports and intervention rights.
SEC. 601. DEFINITIONS.
* * * * * * *
[(1) the term](1) Agency.--The term ``agency'' means
an agency as defined in section 551(1) of this
title[;].
(2) Rule._The term ``rule''--
(A) has the meaning given the term in section
551(4); and
(B) does not include--
(i) a rule pertaining to the
protection of the rights of and
benefits for veterans or part 232 of
title 32, Code of Federal Regulations
(as in effect on July 1, 2014), or any
successor provisions thereto; or
(ii) a rule of particular (and not
general) applicability relating to
rates, wages, corporate or financial
structures or reorganizations thereof,
prices, facilities, appliances,
services, allowances therefor or to
valuations, costs or accounting, or
practices relating to such rates,
wages, structures, prices, appliances,
services, or allowances.
(3) 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;]
Small Organization._
(A) In general.--The term ``small
organization'' means any nonprofit enterprise
which, as of the issuance of a notice of
proposed rule making--
(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. 5304(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.] Collection of
information.--The term ``collection of
information'' has the meaning given the term in
section 3502 of title 44.
(8) Recordkeeping requirement.--The term
``recordkeeping requirement'' [means a requirement
imposed by an agency on persons to maintain specified
records.] has the meaning given the term in section
3502 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 (including
compliance costs and effects on revenue) 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 (A0(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. 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)).
* * * * * * *
Small Business Regulatory Fairness Act of 1996
* * * * * * *
SEC. 212. COMPLIANCE GUIDES.
(a) * * *
(1) * * *
* * * * * * *
(5) [Agency preparation of guides.--]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. 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.
* * * * * * *
SEC. 602. REGULATORY AGENDA.
(a) * * *
(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).
(b) * * *
[(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)(1) Not later than 3 days after the date on which an
agency publishes a regulatory flexibility agenda in the Federal
Register under subsection (a), the agency shall prominently
display on the website of the agency a plain language summary
of the information contained in the regulatory flexibility
agenda.
(2) The Office of Advocacy of the Small Business
Administration shall compile, by agency, and prominently
display on the website of the Small Business Administration a
plain language summary of each regulatory flexibility agenda
published under subsection (a) not later than 3 days after the
date of 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, 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[--] a detailed statement--
(1) [a description of the reasons why action by the
agency is being considered;] describing 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;] describing 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;] estimating the number and
type 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;] 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 requirements and the type of
professional skills necessary for preparation of the
report and record;
(5) [an identification, to the extent practicable, of
all relevant Federal rules which may duplicate, overlap
or conflict with the proposed rule.] 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;
(7) describing any disproportionate economic impact
on small entities or a specific class of small
entities; and
(8) describing any impairment of the ability of small
entities to have access to credit.
(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--
(d)[(1) For a covered agency, as defined in section
609(d)(2), each initial regulatory flexibility analysis] Each
initial regulatory flexibility analysis by an agency shall
include a description of--
[(A) any](1) any projected increase in the cost of
credit for small entities;
[(B) any](2) 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] (3) 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;
(3) * * *
(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 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)](7) [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[.]; and
(8) a detailed description of 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,
including placement of the entire analysis on the website of
the agency, and shall publish in the Federal Register the final
regulatory flexibility [such] analysis, or a summary thereof
which included 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 Federal agency shall be treated as satisfying
any requirement regarding the content of a regulatory
flexibility agenda or regulatory flexibility analysis under
section 602, 603, or 604 if the Federal agency provides in the
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 the 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 [statement
providing the factual basis for such certification.] detailed
statement providing the factual and legal basis for such
certification. The detailed statement shall include an economic
assessment or a summary thereof that is sufficiently detailed
to support the certification of the agency. The agency shall
provide such certification and statement to the Chief Counsel
for Advocacy of the Small Business Administration.
SEC. 606. * * *
SEC. 607. [PREPARATION OF ANALYSES] QUANTIFICATION REQUIREMENTS.
[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.]
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. [PROCEDURE FOR WAIVER OR DELAY OF COMPLETION] ADDITIONAL
POWERS OF CHIEF COUNSEL FOR ADVOCACY.
[(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.]
(a)(1) Not later than 270 days after the date of enactment
of the Small Business Regulatory Flexibility Improvements Act,
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
the 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 rule making 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 the 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.
(c) Not later than 15 days after the receipt of the
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
the 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, 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 the panel, submit a report to
the agency and, in the vase of an agency other than an
independent regulatory agency, the Office of Information and
Regulatory Affairs of the Office of Management and Budget.
(2) Each report described in paragraph (1) shall include an
assessment of the economic impact of the proposed rule on small
entities, including--
(A) an assessment of the impact of the proposed rule
on the cost that small entities pay for energy;
(B) an assessment of the impact of the proposed rule
on startup costs for small entities; and
(C) a discussion of any alternatives that will
minimize adverse significant economic impacts or
maximize beneficial significant economic impacts on
small entities.
(3) Each report described in paragraph (1) shall become
part of the rule making record. In the publication of the
proposed rule, the agency shall explain what actions, if any,
the agency took in response to the 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 delegate 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
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.
(g) A small entity or a representative of a small entity
may submit a request that the agency provide a copy of the
report prepared under subsection (d) and all materials and
information provided to the Chief Counsel for Advocacy of the
Small Business Administration under subsection (b). The agency
receiving such request shall provide the report, materials, and
information to the requesting small entity or representative of
a small entity not later than 10 business days after receiving
such request, except that the agency shall not disclose any
information that is prohibited from disclosure to the public
pursuant to section 552(b) of this title.
(h) In this section, the term ``independent regulatory
agency'' has the meaning given the term in section 3502 of
title 44.
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.]
(a) Not later than 180 days after the date of enactment of
the Small Business Regulatory Flexibility Improvements Act,
each agency shall publish in the Federal Register and place on
website of the agency a plan for periodic review of rules
issued by the agency which the head of the agency determined
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 states 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 website of the
agency.
(b) The plan shall provide for the review of all such
agency rules existing on the date of enactment of the Small
Business Regulatory Flexibility Improvements Act 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 Congress.
(c) The plan shall include a section that details how an
agency will conduct outreach to and meaningfully include small
businesses (including small business concerns owned and
controlled by women, small business concerns owned and
controlled by veterans, and small business concerns owned and
controlled by socially and economically disadvantaged
individuals (as such terms are defined in section 3 and section
8(d)(3)(C))) 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 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 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 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 determined 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 changes in the area
affected by the rule.
(f) Each year, each agency shall publish in the Federal
Register and on its website a list of rules to be reviewed
pursuant to such plan. The agency shall include in the
publication a solicitation of public comments on any further
inclusions or exclusions of rules from the list and shall
respond to such comments. 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--]
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.
(c) * * *
* * * * * * *
TITLE 15--COMMERCE AND TRADE
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
* * * * * * *
CHAPTER 14A--AID TO SMALL BUSINESS
* * * * * * *
SEC. 632. DEFINITIONS.
(a) * * *
(1) * * *
(2) * * *
(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 chapter or any other Act.] In
general.--
(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
(15 U.S.C. 661 et seq.); and
(ii) the Chief Counsel for Advocacy
may specify such definitions or
standards for purposes of any other
Act.
(B) * * *
(C) * * *
(i) * * *
(ii) * * *
(iii) [is approved by the
Administrator.] 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) * * *
(10) 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.
* * * * * * *
TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
* * * * * * *
CHAPTER 158--ORDERS OF FEDERAL AGENCIES; REVIEW
* * * * * * *
SEC. 2341. JURISDICTION OF COURT OF APPEALS.
As used in this chapter--
(1) * * *
(2) * * *
(3) * * *
(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.
Jurisdiction is invoked by filing a petition as provided by
section 2344 of this title.
* * * * * * *
TITLE 44--PUBLIC PRINTING AND DOCUMENTS
* * * * * * *
CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY
* * * * * * *
Subchapter I--Federal Information Policy
* * * * * * *
SEC. 3506. FEDERAL AGENCY RESPONSIBILITIES.
(a) * * *
* * * * * * *
(i) * * *
(j) Small Businesses.--
(1) Definitions.--In this subsection:
(A) First-time violation.--The term ``first-
time violation'' means a violation by a small
business concern of a requirement regarding
collection of information by an agency, where
the small business concern has not previously
violated any similar requirement regarding
collection of information by that same agency
during the 5-year period preceding the
violation.
(B) Small business concern.--The term ``small
business concern'' has the meaning given the
term in section 3 of the Small Business Act (15
U.S.C. 632).
(2) First-time violation.--
(A) In general.--Except as provided in
paragraph (3), in the case of a first-time
violation by a small business concern of a
requirement regarding collection of information
by an agency, the head of the agency shall not
impose a civil fine on the small business
concern.
(B) Determination.--For purposes of
determining whether to impose a civil fine on a
small business concern under subparagraph (A),
the head of an agency shall not take into
account any violation by the small business
concern of a requirement regarding collection
of information by another agency.
(C) Exception.--An agency may impose a civil
fine on a small business concern for a first-
time violation if the head of the agency
determines that--
(i) the violation has the potential
to cause serious harm to the public
interest;
(ii) failure to impose a civil fine
would impede or interfere with the
detection of criminal activity;
(iii) the violation is a violation of
an internal revenue law or a law
concerning assessment or collection of
any tax, debt, revenue, or receipt.
(iv) the violation was not corrected
on or before the date that is 6 months
after the date on which the small
business concern received notification
of the violation in writing from the
agency; or
(v) except as provided in paragraph
(3), the violation presents a danger to
the public health or safety.
(3) Danger to public health or safety.--
(A) In general.--In any case in which the
head of an agency determines under paragraph
(2)(C)(v) that a violation presents a danger to
the public health or safety, the head of the
agency may determine not to impose a civil fine
on the small business concern if the violation
is corrected not later than 24 hours after
receipt by the owner of the small business
concern of notification of the violation in
writing.
(B) Considerations.--In determining whether
to allow a small business concern 24 hours to
correct a violation under subparagraph (A), the
head of an agency shall take into account all
of the facts and circumstances regarding the
violation, including--
(i) the nature and seriousness of the
violation, including whether the
violation is technical or inadvertent
or involves willful or criminal
conduct;
(ii) whether the small business
concern had made a good faith effort to
comply with applicable laws and to
remedy the violation within the
shortest practicable period of time;
and
(iii) whether the small business
concern has obtained a significant
economic benefit from the violation.
(C) Notice to congress.--In any case in which
the head of an agency imposes a civil fine on a
small business concern for a violation that
presents a danger to the public health or
safety and does not allow the small business
concern 24 hours to correct the violation under
subparagraph (A), the head of the agency shall
notify Congress regarding the determination not
later than 60 days after the date on which the
civil fine is imposed by the agency.