[House Report 112-289]
[From the U.S. Government Publishing Office]
112th Congress Rept. 112-289
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
REGULATORY FLEXIBILITY IMPROVEMENTS ACT OF 2011
_______
November 16, 2011.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Smith of Texas, from the Committee on the Judiciary,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 527]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 527) 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 an amendment and recommends that
the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 8
Background and Need for the Legislation.......................... 8
Hearings......................................................... 15
Committee Consideration.......................................... 16
Committee Votes.................................................. 16
Committee Oversight Findings..................................... 20
New Budget Authority and Tax Expenditures........................ 21
Congressional Budget Office Cost Estimate........................ 21
Performance Goals and Objectives................................. 24
Advisory on Earmarks............................................. 24
Section-by-Section Analysis...................................... 24
Changes in Existing Law Made by the Bill, as Reported............ 29
Dissenting Views................................................. 43
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Regulatory
Flexibility Improvements Act of 2011''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Clarification and expansion of rules covered by the Regulatory
Flexibility Act.
Sec. 3. Requirements providing for more detailed analyses.
Sec. 4. Repeal of waiver and delay authority; additional powers of the
Chief Counsel for Advocacy.
Sec. 5. Procedures for gathering comments.
Sec. 6. Periodic review of rules.
Sec. 7. Judicial review of compliance with the requirements of the
Regulatory Flexibility Act available after publication of the final
rule.
Sec. 8. Jurisdiction of court of appeals over rules implementing the
Regulatory Flexibility Act.
Sec. 9. Clerical amendments.
SEC. 2. CLARIFICATION AND EXPANSION OF RULES COVERED BY THE REGULATORY
FLEXIBILITY ACT.
(a) In General.--Paragraph (2) of section 601 of title 5, United
States Code, is amended to read as follows:
``(2) Rule.--The term `rule' has the meaning given such term
in section 551(4) of this title, except that such term does not
include a rule of particular (and not general) applicability
relating to rates, wages, corporate or financial structures or
reorganizations thereof, prices, facilities, appliances,
services, or allowances therefor or to valuations, costs or
accounting, or practices relating to such rates, wages,
structures, prices, appliances, services, or allowances.''.
(b) Inclusion of Rules With Indirect Effects.--Section 601 of title
5, United States Code, is amended by adding at the end the following
new paragraph:
``(9) Economic impact.--The term `economic impact' means,
with respect to a proposed or final rule--
``(A) any direct economic effect on small entities of
such rule; and
``(B) any indirect economic effect on small entities
which is reasonably foreseeable and results from such
rule (without regard to whether small entities will be
directly regulated by the rule).''.
(c) Inclusion of Rules With Beneficial Effects.--
(1) Initial regulatory flexibility analysis.--Subsection (c)
of section 603 of title 5, United States Code, is amended by
striking the first sentence and inserting ``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.''.
(2) Final regulatory flexibility analysis.--The first
paragraph (6) of section 604(a) of title 5, United States Code,
is amended by striking ``minimize the significant economic
impact'' and inserting ``minimize the adverse significant
economic impact or maximize the beneficial significant economic
impact''.
(d) Inclusion of Rules Affecting Tribal Organizations.--Paragraph (5)
of section 601 of title 5, United States Code, is amended by inserting
``and tribal organizations (as defined in section 4(l) of the Indian
Self-Determination and Education Assistance Act (25 U.S.C. 450b(l))),''
after ``special districts,''.
(e) Inclusion of Land Management Plans and Formal Rulemaking.--
(1) Initial regulatory flexibility analysis.--Subsection (a)
of section 603 of title 5, United States Code, is amended in
the first sentence--
(A) by striking ``or'' after ``proposed rule,''; and
(B) by inserting ``or publishes a revision or
amendment to a land management plan,'' after ``United
States,''.
(2) Final regulatory flexibility analysis.--Subsection (a) of
section 604 of title 5, United States Code, is amended in the
first sentence--
(A) by striking ``or'' after ``proposed
rulemaking,''; and
(B) by inserting ``or adopts a revision or amendment
to a land management plan,'' after ``section 603(a),''.
(3) Land management plan defined.--Section 601 of title 5,
United States Code, is amended by adding at the end the
following new paragraph:
``(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
Interior under section 202 of the Federal Land
Policy and Management Act of 1976 (43 U.S.C.
1712).
``(B) Revision.--The term `revision' means any change
to a land management plan which--
``(i) in the case of a plan described in
subparagraph (A)(i), is made under section
6(f)(5) of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16 U.S.C.
1604(f)(5)); or
``(ii) in the case of a plan described in
subparagraph (A)(ii), is made under section
1610.5-6 of title 43, Code of Federal
Regulations (or any successor regulation).
``(C) Amendment.--The term `amendment' means any
change to a land management plan which--
``(i) in the case of a plan described in
subparagraph (A)(i), is made under section
6(f)(4) of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16 U.S.C.
1604(f)(4)) and with respect to which the
Secretary of Agriculture prepares a statement
described in section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C.
4332(2)(C)); or
``(ii) in the case of a plan described in
subparagraph (A)(ii), is made under section
1610.5-5 of title 43, Code of Federal
Regulations (or any successor regulation) and
with respect to which the Secretary of the
Interior prepares a statement described in
section 102(2)(C) of the National Environmental
Policy Act of 1969 (42 U.S.C. 4332(2)(C)).''.
(f) Inclusion of Certain Interpretive Rules Involving the Internal
Revenue Laws.--
(1) In general.--Subsection (a) of section 603 of title 5,
United States Code, is amended by striking the period at the
end and inserting ``or a recordkeeping requirement, and without
regard to whether such requirement is imposed by statute or
regulation.''.
(2) Collection of information.--Paragraph (7) of section 601
of title 5, United States Code, is amended to read as follows:
``(7) Collection of information.--The term `collection of
information' has the meaning given such term in section 3502(3)
of title 44.''.
(3) Recordkeeping requirement.--Paragraph (8) of section 601
of title 5, United States Code, is amended to read as follows:
``(8) Recordkeeping requirement.--The term `recordkeeping
requirement' has the meaning given such term in section
3502(13) of title 44.''.
(g) Definition of Small Organization.--Paragraph (4) of section 601
of title 5, United States Code, is amended to read as follows:
``(4) Small organization.--
``(A) In general.--The term `small organization'
means any not-for-profit enterprise which, as of the
issuance of the notice of proposed rulemaking--
``(i) in the case of an enterprise which is
described by a classification code of the North
American Industrial Classification System, does
not exceed the size standard established by the
Administrator of the Small Business
Administration pursuant to section 3 of the
Small Business Act (15 U.S.C. 632) for small
business concerns described by such
classification code; and
``(ii) in the case of any other enterprise,
has a net worth that does not exceed $7,000,000
and has not more than 500 employees.
``(B) Local labor organizations.--In the case of any
local labor organization, subparagraph (A) shall be
applied without regard to any national or international
organization of which such local labor organization is
a part.
``(C) Agency definitions.--Subparagraphs (A) and (B)
shall not apply to the extent that an agency, after
consultation with the Office of Advocacy of the Small
Business Administration and after opportunity for
public comment, establishes one or more definitions for
such term which are appropriate to the activities of
the agency and publishes such definitions in the
Federal Register.''.
SEC. 3. REQUIREMENTS PROVIDING FOR MORE DETAILED ANALYSES.
(a) Initial Regulatory Flexibility Analysis.--Subsection (b) of
section 603 of title 5, United States Code, is amended to read as
follows:
``(b) Each initial regulatory flexibility analysis required under
this section shall contain a detailed statement--
``(1) describing the reasons why action by the agency is
being considered;
``(2) describing the objectives of, and legal basis for, the
proposed rule;
``(3) estimating the number and type of small entities to
which the proposed rule will apply;
``(4) describing the projected reporting, recordkeeping, and
other compliance requirements of the proposed rule, including
an estimate of the classes of small entities which will be
subject to the requirement and the type of professional skills
necessary for preparation of the report and record;
``(5) describing all relevant Federal rules which may
duplicate, overlap, or conflict with the proposed rule, or the
reasons why such a description could not be provided;
``(6) estimating the additional cumulative economic impact of
the proposed rule on small entities beyond that already imposed
on the class of small entities by the agency or why such an
estimate is not available; and
``(7) describing any disproportionate economic impact on
small entities or a specific class of small entities.''.
(b) Final Regulatory Flexibility Analysis.--
(1) In general.--Section 604(a) of title 5, United States
Code, is amended--
(A) in paragraph (4), by striking ``an explanation''
and inserting ``a detailed explanation'';
(B) in each of paragraphs (4), (5), and the first
paragraph (6), by inserting ``detailed'' before
``description''; and
(C) by adding at the end the following:
``(7) describing any disproportionate economic impact on
small entities or a specific class of small entities.''.
(2) Inclusion of response to comments on certification of
proposed rule.--Paragraph (2) of section 604(a) of title 5,
United States Code, is amended by inserting ``(or certification
of the proposed rule under section 605(b))'' after ``initial
regulatory flexibility analysis''.
(3) Publication of analysis on website.--Subsection (b) of
section 604 of title 5, United States Code, is amended to read
as follows:
``(b) The agency shall make copies of the final regulatory
flexibility analysis available to the public, including placement of
the entire analysis on the agency's website, and shall publish in the
Federal Register the final regulatory flexibility analysis, or a
summary thereof which includes the telephone number, mailing address,
and link to the website where the complete analysis may be obtained.''.
(c) Cross-References to Other Analyses.--Subsection (a) of section
605 of title 5, United States Code, is amended to read as follows:
``(a) A Federal agency shall be treated as satisfying any requirement
regarding the content of an agenda or regulatory flexibility analysis
under section 602, 603, or 604, if such agency provides in such agenda
or analysis a cross-reference to the specific portion of another agenda
or analysis which is required by any other law and which satisfies such
requirement.''.
(d) Certifications.--Subsection (b) of section 605 of title 5, United
States Code, is amended--
(1) by inserting ``detailed'' before ``statement'' the first
place it appears; and
(2) by inserting ``and legal'' after ``factual''.
(e) Quantification Requirements.--Section 607 of title 5, United
States Code, is amended to read as follows:
``Sec. 607. Quantification requirements
``In complying with sections 603 and 604, an agency shall provide--
``(1) a quantifiable or numerical description of the effects
of the proposed or final rule and alternatives to the proposed
or final rule; or
``(2) a more general descriptive statement and a detailed
statement explaining why quantification is not practicable or
reliable.''.
SEC. 4. REPEAL OF WAIVER AND DELAY AUTHORITY; ADDITIONAL POWERS OF THE
CHIEF COUNSEL FOR ADVOCACY.
(a) In General.--Section 608 is amended to read as follows:
``Sec. 608. Additional powers of Chief Counsel for Advocacy
``(a)(1) Not later than 270 days after the date of the enactment of
the Regulatory Flexibility Improvements Act of 2011, the Chief Counsel
for Advocacy of the Small Business Administration shall, after
opportunity for notice and comment under section 553, issue rules
governing agency compliance with this chapter. The Chief Counsel may
modify or amend such rules after notice and comment under section 553.
This chapter (other than this subsection) shall not apply with respect
to the issuance, modification, and amendment of rules under this
paragraph.
``(2) An agency shall not issue rules which supplement the rules
issued under subsection (a) unless such agency has first consulted with
the Chief Counsel for Advocacy to ensure that such supplemental rules
comply with this chapter and the rules issued under paragraph (1).
``(b) Notwithstanding any other law, the Chief Counsel for Advocacy
of the Small Business Administration may intervene in any agency
adjudication (unless such agency is authorized to impose a fine or
penalty under such adjudication), and may inform the agency of the
impact that any decision on the record may have on small entities. The
Chief Counsel shall not initiate an appeal with respect to any
adjudication in which the Chief Counsel intervenes under this
subsection.
``(c) The Chief Counsel for Advocacy may file comments in response to
any agency notice requesting comment, regardless of whether the agency
is required to file a general notice of proposed rulemaking under
section 553.''.
(b) Conforming Amendments.--
(1) Section 611(a)(1) of such title is amended by striking
``608(b),''.
(2) Section 611(a)(2) of such title is amended by striking
``608(b),''.
(3) Section 611(a)(3) of such title is amended--
(A) by striking subparagraph (B); and
(B) by striking ``(3)(A) A small entity'' and
inserting the following:
``(3) A small entity''.
SEC. 5. PROCEDURES FOR GATHERING COMMENTS.
Section 609 of title 5, United States Code, is amended by striking
subsection (b) and all that follows through the end of the section and
inserting the following:
``(b)(1) Prior to publication of any proposed rule described in
subsection (e), an agency making such rule shall notify the Chief
Counsel for Advocacy of the Small Business Administration and provide
the Chief Counsel with--
``(A) all materials prepared or utilized by the agency in
making the proposed rule, including the draft of the proposed
rule; and
``(B) information on the potential adverse and beneficial
economic impacts of the proposed rule on small entities and the
type of small entities that might be affected.
``(2) An agency shall not be required under paragraph (1) to provide
the exact language of any draft if the rule--
``(A) relates to the internal revenue laws of the United
States; or
``(B) is proposed by an independent regulatory agency (as
defined in section 3502(5) of title 44).
``(c) Not later than 15 days after the receipt of such materials and
information under subsection (b), the Chief Counsel for Advocacy of the
Small Business Administration shall--
``(1) identify small entities or representatives of small
entities or a combination of both for the purpose of obtaining
advice, input, and recommendations from those persons about the
potential economic impacts of the proposed rule and the
compliance of the agency with section 603; and
``(2) convene a review panel consisting of an employee from
the Office of Advocacy of the Small Business Administration, an
employee from the agency making the rule, and in the case of an
agency other than an independent regulatory agency (as defined
in section 3502(5) of title 44), an employee from the Office of
Information and Regulatory Affairs of the Office of Management
and Budget to review the materials and information provided to
the Chief Counsel under subsection (b).
``(d)(1) Not later than 60 days after the review panel described in
subsection (c)(2) is convened, the Chief Counsel for Advocacy of the
Small Business Administration shall, after consultation with the
members of such panel, submit a report to the agency and, in the case
of an agency other than an independent regulatory agency (as defined in
section 3502(5) of title 44), the Office of Information and Regulatory
Affairs of the Office of Management and Budget.
``(2) Such report shall include an assessment of the economic impact
of the proposed rule on small entities and a discussion of any
alternatives that will minimize adverse significant economic impacts or
maximize beneficial significant economic impacts on small entities.
``(3) Such report shall become part of the rulemaking record. In the
publication of the proposed rule, the agency shall explain what
actions, if any, the agency took in response to such report.
``(e) A proposed rule is described by this subsection if the
Administrator of the Office of Information and Regulatory Affairs of
the Office of Management and Budget, the head of the agency (or the
delegatee of the head of the agency), or an independent regulatory
agency determines that the proposed rule is likely to result in--
``(1) an annual effect on the economy of $100,000,000 or
more;
``(2) a major increase in costs or prices for consumers,
individual industries, Federal, State, or local governments,
tribal organizations, or geographic regions;
``(3) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of
United States-based enterprises to compete with foreign-based
enterprises in domestic and export markets; or
``(4) a significant economic impact on a substantial number
of small entities.
``(f) Upon application by the agency, the Chief Counsel for Advocacy
of the Small Business Administration may waive the requirements of
subsections (b) through (e) if the Chief Counsel determines that
compliance with the requirements of such subsections are impracticable,
unnecessary, or contrary to the public interest.''.
SEC. 6. PERIODIC REVIEW OF RULES.
Section 610 of title 5, United States Code, is amended to read as
follows:
``Sec. 610. Periodic review of rules
``(a) Not later than 180 days after the enactment of the Regulatory
Flexibility Improvements Act of 2011, each agency shall publish in the
Federal Register and place on its website a plan for the periodic
review of rules issued by the agency which the head of the agency
determines have a significant economic impact on a substantial number
of small entities. Such determination shall be made without regard to
whether the agency performed an analysis under section 604. The purpose
of the review shall be to determine whether such rules should be
continued without change, or should be amended or rescinded, consistent
with the stated objectives of applicable statutes, to minimize any
adverse significant economic impacts or maximize any beneficial
significant economic impacts on a substantial number of small entities.
Such plan may be amended by the agency at any time by publishing the
revision in the Federal Register and subsequently placing the amended
plan on the agency's website.
``(b) The plan shall provide for the review of all such agency rules
existing on the date of the enactment of the Regulatory Flexibility
Improvements Act of 2011 within 10 years of the date of publication of
the plan in the Federal Register and for review of rules adopted after
the date of enactment of the Regulatory Flexibility Improvements Act of
2011 within 10 years after the publication of the final rule in the
Federal Register. If the head of the agency determines that completion
of the review of existing rules is not feasible by the established
date, the head of the agency shall so certify in a statement published
in the Federal Register and may extend the review for not longer than 2
years after publication of notice of extension in the Federal Register.
Such certification and notice shall be sent to the Chief Counsel for
Advocacy of the Small Business Administration and the Congress.
``(c) Each agency shall annually submit a report regarding the
results of its review pursuant to such plan to the Congress, the Chief
Counsel for Advocacy of the Small Business Administration, and, in the
case of agencies other than independent regulatory agencies (as defined
in section 3502(5) of title 44) to the Administrator of the Office of
Information and Regulatory Affairs of the Office of Management and
Budget. Such report shall include the identification of any rule with
respect to which the head of the agency made a determination described
in paragraph (5) or (6) of subsection (d) and a detailed explanation of
the reasons for such determination.
``(d) In reviewing a rule pursuant to subsections (a) through (c),
the agency shall amend or rescind the rule to minimize any adverse
significant economic impact on a substantial number of small entities
or disproportionate economic impact on a specific class of small
entities, or maximize any beneficial significant economic impact of the
rule on a substantial number of small entities to the greatest extent
possible, consistent with the stated objectives of applicable statutes.
In amending or rescinding the rule, the agency shall consider the
following factors:
``(1) The continued need for the rule.
``(2) The nature of complaints received by the agency from
small entities concerning the rule.
``(3) Comments by the Regulatory Enforcement Ombudsman and
the Chief Counsel for Advocacy of the Small Business
Administration.
``(4) The complexity of the rule.
``(5) The extent to which the rule overlaps, duplicates, or
conflicts with other Federal rules and, unless the head of the
agency determines it to be infeasible, State, territorial, and
local rules.
``(6) The contribution of the rule to the cumulative economic
impact of all Federal rules on the class of small entities
affected by the rule, unless the head of the agency determines
that such calculations cannot be made and reports that
determination in the annual report required under subsection
(c).
``(7) The length of time since the rule has been evaluated or
the degree to which technology, economic conditions, or other
factors have changed in the area affected by the rule.
``(e) The agency shall publish in the Federal Register and on its
website a list of rules to be reviewed pursuant to such plan. Such
publication shall include a brief description of the rule, the reason
why the agency determined that it has a significant economic impact on
a substantial number of small entities (without regard to whether it
had prepared a final regulatory flexibility analysis for the rule), and
request comments from the public, the Chief Counsel for Advocacy of the
Small Business Administration, and the Regulatory Enforcement Ombudsman
concerning the enforcement of the rule.''.
SEC. 7. JUDICIAL REVIEW OF COMPLIANCE WITH THE REQUIREMENTS OF THE
REGULATORY FLEXIBILITY ACT AVAILABLE AFTER
PUBLICATION OF THE FINAL RULE.
(a) In General.--Paragraph (1) of section 611(a) of title 5, United
States Code, is amended by striking ``final agency action'' and
inserting ``such rule''.
(b) Jurisdiction.--Paragraph (2) of such section is amended by
inserting ``(or which would have such jurisdiction if publication of
the final rule constituted final agency action)'' after ``provision of
law,''.
(c) Time for Bringing Action.--Paragraph (3) of such section is
amended--
(1) by striking ``final agency action'' and inserting
``publication of the final rule''; and
(2) by inserting ``, 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,'' after ``except that''.
(d) Intervention by Chief Counsel for Advocacy.--Subsection (b) of
section 612 of title 5, United States Code, is amended by inserting
before the first period ``or agency compliance with section 601, 603,
604, 605(b), 609, or 610''.
SEC. 8. JURISDICTION OF COURT OF APPEALS OVER RULES IMPLEMENTING THE
REGULATORY FLEXIBILITY ACT.
(a) In General.--Section 2342 of title 28, United States Code, is
amended--
(1) in paragraph (6), by striking ``and'' at the end;
(2) in paragraph (7), by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragpraph (7) the following new
paragraph:
``(8) all final rules under section 608(a) of title 5.''.
(b) Conforming Amendments.--Paragraph (3) of section 2341 of title
28, United States Code, is amended--
(1) in subparagraph (D), by striking ``and'' at the end;
(2) in subparagraph (E), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) the Office of Advocacy of the Small Business
Administration, when the final rule is under section
608(a) of title 5.''.
(c) Authorization To Intervene and Comment on Agency Compliance With
Administrative Procedure.--Subsection (b) of section 612 of title 5,
United States Code, is amended by inserting ``chapter 5, and chapter
7,'' after ``this chapter,''.
SEC. 9. CLERICAL AMENDMENTS.
(a) Section 601 of title 5, United States Code, is amended--
(1) in paragraph (1)--
(A) by striking the semicolon at the end and
inserting a period; and
(B) by striking ``(1) the term'' and inserting the
following:
``(1) Agency.--The term'';
(2) in paragraph (3)--
(A) by striking the semicolon at the end and
inserting a period; and
(B) by striking ``(3) the term'' and inserting the
following:
``(3) Small business.--The term'';
(3) in paragraph (5)--
(A) by striking the semicolon at the end and
inserting a period; and
(B) by striking ``(5) the term'' and inserting the
following:
``(5) Small governmental jurisdiction.--The term''; and
(4) in paragraph (6)--
(A) by striking ``; and'' and inserting a period; and
(B) by striking ``(6) the term'' and inserting the
following:
``(6) Small entity.--The term''.
(b) The heading of section 605 of title 5, United States Code, is
amended to read as follows:
``Sec. 605. Incorporations by reference and certifications''.
(c) The table of sections for chapter 6 of title 5, United States
Code, is amended--
(1) by striking the item relating to section 605 and
inserting the following new item:
``605. Incorporations by reference and certifications.'';
(2) by striking the item relating to section 607 and
inserting the following new item:
``607. Quantification requirements.'';
and
(3) by striking the item relating to section 608 and
inserting the following:
``608. Additional powers of Chief Counsel for Advocacy.''.
(d) Chapter 6 of title 5, United States Code, is amended as follows:
(1) In section 603, by striking subsection (d).
(2) In section 604(a) by striking the second paragraph (6).
Purpose and Summary
On February 8, 2011, Chairman Lamar Smith introduced H.R.
527, the Regulatory Flexibility Improvements Act of 2011 (``the
Act'' or ``the Bill''). The Bill reforms the Regulatory
Flexibility Act of 1980 (``RFA'') and the Small Business
Regulatory Enforcement Fairness Act of 1996 (``SBREFA''). The
RFA and SBREFA were passed to require agencies to account for
the impacts of proposed regulations on ``small entities''--and
on small businesses in particular--and to tailor final
regulations to minimize the impact on small business.
The need for reform is apparent from the increasing number
and scope of regulations issued by Federal regulatory agencies;
the disproportionate burden these regulations place on small
businesses; and, the failure of agencies heretofore to comply
fully with the RFA and SBREFA.\1\ The Act updates the RFA and
SBREFA to close loopholes and to reduce the disproportionate
burden that over-regulation places on small businesses, thereby
enhancing job creation and hastening economic recovery.
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\1\See, e.g., U.S. General Accounting Office, Regulatory
Flexibility Act: Agencies' Interpretations of Review Requirements Vary,
GAO/GGD-99-55 (Apr. 2, 1999); U.S. General Accounting Office, Federal
Rulemaking: Agencies Often Published Final Actions Without Proposed
Rules, GAO/GGD-98-126 (Aug. 31, 1998); U.S. General Accounting Office,
Regulatory Flexibility Act: Status of Agencies' Compliance, GAO/T-GGD-
95-112 (Mar. 8, 1995).
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Background and Need for the Legislation
Genesis and Early History of the RFA
During the 1970's, Congress enacted numerous regulatory
statutes that dramatically increased the regulatory burden on
businesses--and especially on small businesses. Regulatory
requirements stifled innovation, limited small business growth,
and contributed to the general economic malaise that permeated
the latter half of the decade. Between 1970 and 1980, the
Federal Register more than quadrupled from a 20,000-page
publication for the arcana of the Federal Government to a
nearly 90,000-page blueprint for regulating many aspects of
modern American life.\2\
---------------------------------------------------------------------------
\2\See Figure 2: Federal Register Pages: 1940-2010, in Susan E.
Dudley, ``Prospects for Regulatory Reform in 2011,'' Engage 11:1 (June
2011).
---------------------------------------------------------------------------
In a series of hearings during the late 1970's, Congress
began to focus on the ever-growing burden Federal regulation
imposed upon small businesses. Small businesses reiterated two
major themes: (1) they were under-represented in Federal
regulatory proceedings; and (2) Federal agency efforts to
impose a ``one-size-fits-all'' body of regulation imposed
disproportionate burdens on small businesses.\3\ These findings
were supported and reinforced during the 1980 White House
Conference on Small Business.
---------------------------------------------------------------------------
\3\The finding on disproportionate impact was substantiated by an
Office of Advocacy study in 1984; this was re-affirmed by a 2010 study.
See Nicole V. Crain & W. Mark Crain, ``The Impact of Regulatory Costs
on Small Firms,'' (Sept. 2010), available at http://www.sba.gov/sites/
default/files/rs371tot.pdf (last accessed July 25, 2011).
---------------------------------------------------------------------------
To address these concerns, Congress enacted the RFA as an
additional component of a significantly broader mechanism to
control agency decision-making: The Administrative Procedure
Act of 1946 (``APA''). In general, the RFA requires Federal
agencies, when proposed and final rules are published in the
Federal Register, to prepare a regulatory flexibility analysis
that describes the rule's impact on small entities, including
on small businesses.\4\ These analytical requirements are not
triggered, however, if the head of the agency issuing the rule
certifies, under Section 605(b) of the RFA that the rule would
not have a ``significant economic impact on a substantial
number of small entities,''\5\ an undefined term of art in the
RFA. The lack of a uniform definition for this term is a
shortcoming that the U.S. Government Accountability Office
(``GAO,'' formerly the U.S. General Accounting Office)
repeatedly has found contributes to inconsistent compliance
across Federal agencies.\6\ Further, although the Congressional
Research Service advises that the annual total number of
certifications by all agencies is not known (or even knowable),
the GAO has found that in the 3-year period after SBREFA was
enacted the certification rate at four EPA offices increased
from 78% to 96%.\7\ Thus, the EPA avoided complying with the
RFA and SBREFA by certifying more of its rules pursuant to
Section 605(b). Finally, agencies only need to assess a new
regulation's direct impact on small entities; courts have held
that indirect impacts are irrelevant under the RFA.\8\
---------------------------------------------------------------------------
\4\See 5 U.S.C. Sec. Sec. 603, 604.
\5\See id. Sec. 605(b).
\6\See, e.g., U.S. General Accounting Office, Regulatory
Flexibility Act: Key Terms Still Need to Be Clarified, GAO-01-669T
(Apr. 24, 2001), at 2 (``Over the past decade, we have recommended
several times that Congress provide greater clarity with regard to
these terms, but to date Congress has not acted on our
recommendations.'').
\7\U.S. General Accounting Office, Regulatory Flexibility Act:
Implementation in EPA Program Offices and Proposed Lead Rule, GAO-GGD-
00-193 (Sept. 2000), at 16.
\8\See, e.g., Mid-Tex Elec. Co-op., Inc. v. FERC, 773 F.2d 327, 343
(D.C. Cir. 1985) (``the legislative history [of the RFA] . . . also
gives rise to an inference that Congress did not intend to require that
every agency consider every indirect effect that any regulation might
have on small businesses in any stratum of the national economy.'').
---------------------------------------------------------------------------
The RFA also requires each Federal agency to publish a
``regulatory flexibility agenda'' in the Federal Register twice
a year,\9\ similar to the Unified Agenda of Federal Regulatory
and Deregulatory Actions required by Executive Order 12866. The
Small Business Administration (``SBA'') Chief Counsel for
Advocacy is required to monitor and report on agency
compliance, and is authorized to appear as amicus curiae ``in
any action brought in a court of the United States to review a
rule'' and to present his or her views regarding the agency's
compliance with the RFA and the rule's impact on small
entities.\10\ The RFA also requires agencies to conduct
decennial rule reviews to identify whether the impact of rules
on small entities can be mitigated further.\11\ The extent of
this requirement remains unclear, however, as indicated by
inconsistent agency practice.\12\
---------------------------------------------------------------------------
\9\See 5 U.S.C. Sec. 602.
\10\See id. Sec. 612(a), (b).
\11\See id. Sec. 610.
\12\For example, the EPA only reviews rules that it previously
concluded had a significant economic impact on a substantial number of
small entities when the final rules were promulgated. The Department of
Transportation, on the other hand, interprets this section to require a
review of all of its rules. See U.S. General Accounting Office,
Regulatory Flexibility Act: Agencies' Interpretations of Review
Requirements Vary, GAO/GGD-99-55 (Apr. 2, 1999), at 24.
---------------------------------------------------------------------------
From the time of enactment until 1996, agency compliance
with the RFA was at best sporadic. Agencies faced little threat
from non-compliance since judicial review of regulatory
flexibility analyses was very limited, and an agency's
certification decision could not be challenged in court.\13\
Without the possibility of court orders, agencies only had to
comply when it would benefit their rulemakings or when they
could be cajoled by the Chief Counsel for Advocacy or the
Office of Management and Budget's (``OMB'') Office of
Information and Regulatory Affairs (``OIRA''). Both the
Committee on the Judiciary and the Committee on Small Business
held hearings at which witnesses confirmed the systemic failure
by many agencies to comply with the RFA.\14\
---------------------------------------------------------------------------
\13\See, e.g., Thompson v. Clark, 741 F.2d 401, 405 (D.C. Cir.
1984); Colo. State Banking Bd. v. Resolution Trust Corp., 926 F.2d 931,
948 (10th Cir. 1991); Lehigh Valley Farmers v. Block, 640 F. Supp.
1497, 1520 (E.D. Pa. 1986), aff'd on other grounds, 829 F.2d 409 (3d
Cir. 1987).
\14\See, e.g., Strengthening the Regulatory Flexibility Act:
Hearing on H.R. 9 Before H. Comm. on Small Business, 104th Cong.,
Serial No. 104-5, at 45-46 (Jan. 23, 1995) (statement of James P.
Carty, Vice President, Small Manufacturers, National Association of
Manufacturers) (identifying instances where the EPA and Pension Benefit
Guaranty Corporation failed to comply with the RFA); Job Creation and
Wage Enhancement Act of 1995: Hearing on H.R. 9 Before the Subcomm. on
Comm. and Admin. Law of the H. Comm. on the Judiciary, 104th Cong.,
Serial No. 104-3, at 76 (Feb. 3 & 6, 1995) (statement of Benny L.
Thayer, President, National Association for the Self-Employed) (noting
that confusion under the RFA ``has led to an apparent belief on the
part of some agencies that compliance with the RFA is entirely
voluntary'').
---------------------------------------------------------------------------
Enactment of SBREFA and Subsequent History
Congress enacted SBREFA in response to this collective
disregard by Federal agencies, adding several important
features to the RFA: compliance guides, advocacy review panels,
and judicial review. Agencies must develop and publish
compliance guides for all rules for which the agency is
required to develop a final regulatory flexibility analysis.
The compliance guide explains the steps a small entity must
take to comply with new regulations.\15\ SBREFA also authorized
direct judicial review of agency compliance with the RFA,
including challenges to agency certifications that a rule would
not have a ``significant economic impact on a substantial
number of small entities.''\16\ SBREFA also subjected certain
Internal Revenue Service interpretative regulations to the
RFA.\17\
---------------------------------------------------------------------------
\15\See ``Contract with America Advancement Act,'' 104 P.L. 141,
Sec. 212 (Mar. 29, 1996); see also 5 U.S.C. Sec. 601 note.
\16\5 U.S.C. Sec. 610(a).
\17\The RFA only requires agency compliance if the regulation is
required to be issued pursuant to notice and comment pursuant to
Section 553 of the APA or some other statute. Interpretative
regulations are exempt from the notice and comment requirements. 5
U.S.C. Sec. 553(b)(A).
---------------------------------------------------------------------------
Congress recognized that, by the time a proposed rule is
published for notice and comment, the agency has substantial
intellectual capital invested in the proposed rule and is
unlikely to change the core of its proposal during the notice
and comment period.\18\ Thus, under SBREFA, Congress required
the Environmental Protection Agency (``EPA'') and the
Occupational Safety and Health Administration (``OSHA'')--two
of the agencies that most affect small entities--to obtain
input from small entities before publishing a proposed rule
that would have a significant economic impact on a substantial
number of small entities.\19\ The Dodd-Frank Wall Street Reform
and Consumer Protection Act further required the new Consumer
Financial Protection Bureau to convene advocacy review
panels.\20\ Before publishing an initial regulatory flexibility
analysis, the agency is required to notify the SBA's Chief
Counsel for Advocacy and provide information on the draft
rule's potential impacts on small entities. The Chief Counsel
for Advocacy then assembles a panel consisting of
representatives from OIRA, the agency promulgating the rule and
the SBA. The panel gathers input from small entities'
representatives and issues a report within 60 days, which
becomes part of the record.
---------------------------------------------------------------------------
\18\In fact, some would argue that the notice and comment period
was not a critical component of rational rulemaking but the keystone of
rationale rulemaking in which the agency uses the public comment
process to find further support for the foregone conclusion of its
proposed regulation.
\19\See 5 U.S.C. Sec. 609.
\20\See P.L. 111-203, Sec. 1100G(a) (July 21, 2010).
---------------------------------------------------------------------------
Congressional intent notwithstanding, SBREFA's changes have
had only a modest effect on agency compliance.\21\ According to
the GAO, the most significant stumbling block to improved
compliance is the lack of definitions in the RFA and SBREFA for
the terms ``significant economic impact'' and ``substantial
number of small entities.'' GAO also noted that the threshold
determination of whether a rule will have a significant
economic impact on a substantial number of small entities is
critical to compliance with other RFA requirements, including
periodic review of rules under Section 610 and the receipt of
small-entity input under SBREFA prior to the publication of
proposed rules by EPA and OSHA.
---------------------------------------------------------------------------
\21\See, e.g., Sarah E. Shive, If You've Always Done It That Way,
It's Probably Wrong: How the Regulatory Flexibility Act Has Failed To
Change Agency Behavior, and How Congress Can Fix It, 1 Entrepren. Bus.
L.J. 153, 164 (2006) (``[W]hile one Department of Labor official noted
that the judicial review permitted by the SBREFA would likely result in
a `significant impact,' judges have rarely ruled in favor of small
businesses, granting substantial deference to agencies in all but the
most egregious of cases.''); Christopher M. Grengs, Making the Unseen
Seen: Issues and Options in Small Business Regulatory Reform, 85 Minn.
L. Rev. 1957, 1973 (June 2001) (``Some observers expressed high
optimism about SBREFA's prospects for holding Federal agencies more
accountable for their treatment of small businesses. Although this
optimism was perhaps not entirely deserved, SBREFA has spurred moderate
progress in improving the regulatory treatment of small businesses. In
particular, since SBREFA's enactment in 1996, judicial review of
Federal agency action under SBREFA has proved to be a promising
lynchpin for remedying irrational or glaringly mistaken agency
action.''); Jeffrey J. Polich, Judicial Review and the Small Business
Regulatory Enforcement Fairness Act: An Early Examination of When and
Where Judges Are Using Their Newly Granted Power Over Federal
Regulatory Agencies, 41 Wm. & Mary L. Rev. 1425, 1426, 1461 (Apr. 2000)
(``A review of existing case law demonstrates that small entities have
prevailed using SBREFA in cases in which there was a gross violation of
Federal rulemaking procedures by an agency, but failed when using
SBREFA in cases in which the agency made some effort to comply with
those requirements. . . . The SBREFA amendments succeed in refining the
requirements of the RFA and, in particular, the judicial review
provision grants small businesses a weapon to insure that Federal
agencies comply with the RFA. Judicial deference to agency decisions,
however, limits the power of judicial review. In the end, true
regulatory relief depends upon the agencies' own commitment to fairness
and balance for the small businesses they regulate.'') (Emphasis
added.)
---------------------------------------------------------------------------
President George W. Bush also recognized the problems with
RFA and SBREFA compliance in a 2002 speech:
Every agency is required to analyze the impact of new
regulations on small businesses before issuing them.
That is an important law. The problem is it is often
being ignored. The law is on the books; the regulators
do not care that the law is on the books. From this day
forward they will care that the law is on the books. .
. . We want to enforce the law.\22\
---------------------------------------------------------------------------
\22\``President Unveils Small Business Plan at Women's
Entrepreneurship Summit,'' (Mar. 19, 2002), available at http://
georgewbush-whitehouse.archives.gov/news/releases/2002/03/20020319-
2.html (last accessed July 25, 2011).
Subsequently, the President issued Executive Order 13272,\23\
which required agencies to adopt standards for complying with
the RFA, to make those standards known to the public and to
give the Office of Advocacy the opportunity to comment on
proposed rules prior to publication in the Federal Register.
The Executive Order, however, did not address the RFA's
loopholes or prevent agencies from adopting strained
interpretations to avoid doing the required analysis.
---------------------------------------------------------------------------
\23\67 Fed. Reg. 53,462 (Aug. 16, 2002).
---------------------------------------------------------------------------
Courts similarly have not been the antidotes that the
authors of SBREFA contemplated. For example, courts have not
given agency compliance with the RFA the same searching
scrutiny that they have given to compliance with the National
Environmental Policy Act (``NEPA''),\24\ even though it was
expected that judicial review would have the same impact on
agency decision-making that it had on agency compliance with
NEPA.\25\ Agencies still have broad latitude to interpret and
implement the RFA.
---------------------------------------------------------------------------
\24\Compare Associated Fisheries v. Daley, 127 F.3d 104, 112-18
(1st Cir. 1997) (holding SBREFA does not mandate courts to conduct a
substantive judicial review of final decisions), and U.S. Cellular
Corp. v. FCC, 254 F.3d 78, 88 (D.C. Cir. 2001) (``Regulatory
Flexibility Act, which requires Federal agencies to assess the impact
of their regulations on small businesses, is purely procedural in
nature, requiring nothing more than filing of statement demonstrating
good-faith effort to carry out its mandate.'') with Dubois v. U.S.
Dep't of Agric., 102 F.3d 1273, 1285 (1st Cir. 1996) (reviewing an
agency's compliance to NEPA requires a ```thorough, probing, indepth
[sic] review' and a `searching and careful' inquiry into the record'').
\25\Regulatory Flexibility Amendments Act of 1995 on S. 350:
Hearing Before S. Comm. on Small Business, 104th Cong., Serial No. 104-
103, at 24 (Mar. 8, 1995) (statement of Jere W. Glover, Chief Counsel
for Advocacy, U.S. Small Business Administration) (``A more substantial
and ongoing threat, potential judicial review of agency compliance with
the RFA, would certainly lead to scrupulous compliance with the RFA,
just as similar attentiveness is paid to the impact statement
requirements of the [NEPA].'').
---------------------------------------------------------------------------
Testimony at hearings held by the Committee on Small
Business during the 106th, 107th and 108th Congresses support
additional reform,\26\ revealing that considerable confusion
still reigns among agencies and that agencies still find ways
to avoid complying with the RFA, even after the enactment of
SBREFA.\27\ In the 109th Congress, H.R. 682 sought to achieve
most of the reforms contained in H.R. 527. This Committee's
Subcommittee on Commercial and Administrative Law, and the
Committee on Small Business, both held hearings on H.R.
682.\28\
---------------------------------------------------------------------------
\26\IRA Compliance with the Regulatory Flexibility Act: Hearing
Before the H. Comm. on Small Business, 108th Cong., 108-10 (May 1,
2003); Improving the Regulatory Flexibility Act: H.R. 2345: Hearing
Before the H. Comm. on Small Business, 108th Cong., Serial No. 108-62
(May 5, 2004); Can Improved Compliance with the Regulatory Flexibility
Act Resuscitate Small Healthcare Providers?: Hearing Before the H.
Comm. on Small Business, 107th Cong., Serial No. 107-53 (Apr. 10,
2002); Regulatory Reform Initiatives and Their Impact on Small
Business: Hearing Before the H. Comm. on Small Business, 106th Cong.,
Serial No. 106-60 (June 7, 2000).
\27\See, e.g., IRS Compliance with the Regulatory Flexibility Act:
Hearing Before the H. Comm. on Small Business, 108th Cong., Serial No.
108-10, at 38 (May 1, 2003) (statement of Juanita Millender-McDonald,
Member, House Comm. on Small Business) (``The IRS has generally avoided
the requirements of SBREFA, even though the law was, in part,
specifically written to address IRS compliance with the RFA.''); Can
Improved Compliance with the Regulatory Flexibility Act Resuscitate
Small Healthcare Providers?: Hearing Before the H. Comm. on Small
Business, 107th Cong., Serial No. 107-53, at 15 (Apr. 10, 2002)
(statement of Zachary Evans, President, National Association of
Portable X-Ray Providers) (``CMS refuses to consider the impact upon
our industry of their rulemaking, consult with us during the rulemaking
process, or in any way evaluate industry costs prior to setting our
reimbursement rates.''); Regulatory Reform Initiatives and Their Impact
on Small Business: Hearing Before the Comm. on Small Business, 106th
Cong., Serial No. 106-60, at 40 (June 7, 2000) (statement of Duncan
Thomas, President, National Association of Convenience Stores)
(explaining that SBREFA ``leads often to confusion, inadvertent
noncompliance and considerable expense'').
\28\The RFA at 25: Needed Improvements for Small Business
Regulatory Relief: Hearing on H.R. 682 Before the H. Comm. on Small
Business, 109th Cong., Serial No. 109-5 (Mar. 16, 2005); Regulatory
Flexibility Improvements Act: Hearing on H.R. 682 Before the H. Comm.
on the Judiciary, 109th Cong., Serial No. 109-134 (July 30, 2006).
---------------------------------------------------------------------------
The Obama Administration and the Continuing Need for Reform
On January 18, 2011, President Obama issued a Presidential
Memorandum to agency heads entitled ``Regulatory Flexibility,
Small Business, and Job Creation,'' stating that his
``Administration is firmly committed to eliminating excessive
and unjustified burdens on small businesses, and to ensuring
that regulations are designed with careful consideration of
their effects, including their cumulative effects, on small
businesses.''\29\ The President also directed agency heads to
publish explanations of their decisions not to provide
regulatory flexibility for small businesses, if those decisions
were not based on legal limitations. The President's
memorandum, however, added nothing meaningful to existing
agency requirements, and it explicitly stated that the
memorandum did not create any legal rights. Even if it had, any
of its provisions could be revoked at any time, as it is merely
an executive memorandum, not a law.
---------------------------------------------------------------------------
\29\``Presidential Memoranda--Regulatory Flexibility, Small
Business, and Job Creation,'' (Jan. 18, 2011), available at http://
www.whitehouse.gov/the-press-office/2011/01/18/presidential-memoranda-
regulatory-flexibility-small-business-and-job-cre (last accessed July
25, 2011).
---------------------------------------------------------------------------
Meanwhile, the need for additional RFA reform has grown. In
2010, for example, Federal agencies promulgated 3,312 final
rules, while Congress passed and the President signed into law
only 385 statutes. Recently, the SBA reported that Federal
rulemaking now imposes a cumulative burden of $1.75 trillion on
our economy--a figure that equals 14 percent of national
income.\30\ That burden, moreover, falls disproportionately on
small businesses:
---------------------------------------------------------------------------
\30\Crain, supra note 3, at 6, 48.
While all citizens and businesses pay some portion of
these costs, the distribution of the burden of
regulations is quite uneven. The portion of regulatory
costs that falls initially on businesses was $8,086 per
employee in 2008. Small businesses, defined as firms
employing fewer than 20 employees, bear the largest
burden of Federal regulations. As of 2008, small
businesses face an annual regulatory cost of $10,585
per employee, which is 36 percent higher than the
regulatory cost facing large firms (defined as firms
with 500 or more employees).\31\
---------------------------------------------------------------------------
\31\See id. at iv.
Another recent study found that ``[e]ach million-dollar
increase in the regulatory budget costs the economy 420 private
sector jobs.''\32\
---------------------------------------------------------------------------
\32\T. Randolph Beard et al., Regulatory Expenditures, Economic
Growth and Jobs: An Empirical Study, Phoenix Center Policy Bulletin No.
28 (Apr. 2011), at 5, available at http://www.phoenix-center.org/
PolicyBulletin/PCPB28Final.pdf (last accessed July 25, 2011).
---------------------------------------------------------------------------
The future threat of excessive Federal regulation--such as
under the waves of regulation intended to implement the Patient
Protection and Affordable Care Act\33\ and the Dodd-Frank Wall
Street Reform and Consumer Protection Act\34\--have created
immense regulatory burdens and uncertainty for the economy,
chilling job creation, investment and economic growth and
suppressing America's economic freedom and standing among the
world's economies.\35\ These effects are particularly
burdensome on small businesses--and since start-up firms are
the source of net job creation in the U.S. economy, it is only
logical that the impact of these effects on small businesses
contributes substantially to the economy's inability to create
sufficient levels of new jobs.\36\ OIRA currently has under its
review 22 economically significant rules, which translates into
a minimum potential economic impact of $2.2 billion.\37\ In the
past 12 months, since the Dodd-Frank financial legislation was
enacted on July 21, 2010, OIRA has reviewed 125 economically
significant rules.\38\
---------------------------------------------------------------------------
\33\111 P.L. 148 (Mar. 23, 2010).
\34\111 P.L. 203 (July 21, 2010).
\35\See, e.g., Editors, The Uncertainty Principle, Wall Street
Journal (July 14, 2010), available at http://online.wsj.com/article/
SB10001424052748704288204575363162664835780.html?
KEYWORDS=rulemakings (last accessed July 25, 2011); Chamber of
Commerce, Jobs for America: an Open Letter to the President of the
United States, the United States Congress, and the American People
(July 14, 2010) (stating, e.g., that, substantially due to regulatory
uncertainty, American corporations are sitting on well over $1 trillion
that they could otherwise invest); Terry Miller & Kim R. Holmes,
``Mostly Free''--The Startling Decline of America's
Economic Freedom and What to Do About It, Heritage Foundation (July 14,
2010), available
at http://www.heritage.org/Research/Reports/2010/07/Mostly-Free-The-
Startling-Decline-of-Americas-Economic-Freedom-and-What-to-Do-About-It
(summary) (last accessed July 25, 2011); http://
thf_media.s3.amazonaws.com/2010/pdf/sr0082.pdf (full report) (last
accessed July 25, 2011); Terry Miller, The U.S. loses Ground on
Economic Freedom, Wall Street Journal (Jan. 13, 2011), available at
http://online.wsj.com/article/SB1000142405274870377970457607419321499
9486.html?utm_source=Newsletter&utm_medium= Email&utm_campaign =
Heritage%2BHot
sheet (last accessed July 25, 2011); Heritage Foundation and Wall
Street Journal, 2011 Index of Economic Freedom: Executive Highlights
(Jan. 2011) at 6 (placing America as ninth in economic freedom among
countries surveyed and recording a further decline in U.S. economic
freedom).
\36\Tim Kane, The Importance of Start-ups in Job Creation and Job
Destruction, Ewing Marion Kaufmann Foundation (July 2010) at 6,
available at http://www.kauffman.org/uploadedFiles/
firm_formation_importance_of_startups.pdf (last accessed July 25,
2011).
\37\Office of Information and Regulatory Affairs, List of
Regulatory Actions under Review, Reginfo.gov, available at http://
www.reginfo.gov/public/jsp/EO/eoDashboard.jsp (last accessed July 22,
2011).
\38\See id.
---------------------------------------------------------------------------
Agencies continue to ignore their obligations under the
RFA. For example, EPA has found carbon dioxide to be a threat
to public health and welfare\39\ and initiated an inexorable
series of additional regulatory actions that, under existing
environmental laws, will impose large adverse impacts on small
businesses. EPA, however, refused to comply with the RFA--even
when the Chief Counsel for Advocacy pointed out to the EPA
Administrator (and, by copy, to OIRA) that EPA had failed to
convene advocacy review panels before imposing its rules,
failed to develop and evaluate regulatory alternatives to
minimize its actions' impacts on small businesses, and
inappropriately certified that its actions will not affect
small businesses.\40\ When Chairman Smith and Small Business
Committee Chairman Sam Graves brought to OIRA's attention their
concerns over these violations, the potential for EPA's
regulations to impose particularly heavy burdens on small
businesses, and the need for OIRA to intervene and assure RFA
compliance, OIRA's response was simply to refer the matter to
EPA.\41\
---------------------------------------------------------------------------
\39\``Endangerment and Cause or Contribute Findings for Greenhouse
Gases under Section 202(a) of the Clean Air Act,'' EPA Docket No. EPA-
HQ-OAR-2009-0171, RIN 2060-ZA14 (Dec. 7, 2009).
\40\Letter from Susan Walthall, Acting Chief Counsel, Office of the
Chief Counsel for Advocacy, Small Business Administration to the
Honorable Lisa Jackson, EPA Administrator, (Dec. 23, 2009) (letter on
file).
\41\Letter from Reps. Lamar Smith and Sam Graves to Cass R.
Sunstein, OIRA Administrator (Jan. 21, 2010); response letter from
Administrator Sunstein to Reps. Smith and Graves (Apr. 29, 2010)
(letters on file).
---------------------------------------------------------------------------
Similarly, on January 25, 2011, OSHA announced that it had
temporarily withdrawn from OMB review a proposed rule on
injury-related employer recordkeeping. The stated reason for
the withdrawal was to ``seek greater input from small
businesses on the impact of the proposal.''\42\ Yet, rather
than commit itself to full RFA/SBREFA compliance, OSHA promised
to hold a meeting ``to engage and listen to small businesses
about the agency's proposal'' and to ``conduct a stakeholder
meeting with other members of the public if requested.''\43\
This response falls well short of convening the advocacy review
panel that OSHA is required by law to hold.\44\
---------------------------------------------------------------------------
\42\U.S. Dep't of Labor, Office of Public Affairs, News Release: US
Labor Department's OSHA temporarily withdraws proposed column for work-
related musculoskeletal disorders, reaches out to small businesses
(Jan. 25, 2011).
\43\Id.
\44\See 5 U.S.C. Sec. 609.
---------------------------------------------------------------------------
Hearings
On February 10, 2011, the Subcommittee on Courts,
Commercial and Administrative Law held a legislative hearing on
H.R. 527.\45\ Testimony was received from Rich Gimmell,
President of Atlas Machine & Supply, Inc.; Thomas M. Sullivan,
Counsel for Nelson, Mullins, Riley, Scarborough LLP; J. Robert
Shull, Program Officer of Worker Right's for the Public Welfare
Foundation; and, Karen R. Harned, Executive Director of the
National Federation of Independent Business (NFIB).
---------------------------------------------------------------------------
\45\See ``Regulatory Flexibility Improvements Act of 2011''--
Unleashing Small Businesses to Create Jobs: Hearing on H.R. 527 Before
the Subcomm. on Courts, Commercial and Administrative Law of the H.
Comm. on the Judiciary, 112th Cong., Serial No. 112-16 (Feb. 10, 2011).
---------------------------------------------------------------------------
Mr. Gimmell, also representing the National Association of
Manufacturers, noted that the current recession had to that
point resulted in a loss of 2.2 million jobs in the
manufacturing sector.\46\ Mr. Gimmell called for ``more
detailed statements in the RFA process and requirements to
identify redundant, overlapping, or conflicting
regulations.''\47\ Incorporating this sort of ``lean thinking''
into the regulatory process would change the current wasteful
policy practices of most agencies and, in turn, improve the
economy by allowing businesses to create jobs and expand.\48\
---------------------------------------------------------------------------
\46\Id. at 56.
\47\Id.
\48\Id.
---------------------------------------------------------------------------
Mr. Sullivan testified, ``One size fits all Federal
mandates do not work when applied to small business; second,
small business face higher costs per employee to comply with
Federal regulation than their larger competitors, and, third,
small business is critically important to the American
economy.''\49\ According to Mr. Sullivan, H.R. 527 would enable
the Office of Advocacy to ensure that agencies properly
consider how their regulations impact small businesses, and
would provide clarity to courts on judicial review.\50\
---------------------------------------------------------------------------
\49\Id. at 65.
\50\Id. at 66.
---------------------------------------------------------------------------
According to Ms. Harned, ``[o]verzealous regulation is a
perennial cause for concern for small business owners and is
particularly burdensome in times like these when the Nation's
economy remains sluggish.''\51\ Including a $1.75 trillion cost
of regulations on the economy every year, Ms. Harned stated
that ``small businesses face an annual regulatory cost of
$10,585 per employee which is 36 percent more than the
regulatory cost facing businesses with more than 500
employees.''\52\ In opposition to H.R. 527, Mr. Shull alleged
the bill would ``paralyze the regulatory agencies we need to
protect the public and keep them from getting things done to
protect the public.''\53\
---------------------------------------------------------------------------
\51\Id. at 85.
\52\Id.
\53\Id. at 77.
---------------------------------------------------------------------------
The Committee on Small Business also held a legislative
hearing on H.R. 527.\54\ Testimony was received from Bill
Squires, Senior Vice President and General Counsel for
Blackfoot Telecommunications Group; David Frulla of Kelley Drye
& Warren LLP; Craig Fabian, Vice President of Regulatory
Affairs and Assistant General Counsel at the Aeronautical
Repair Station Association; and, Rich D. Draper, CEO of the Ice
Cream Club, Inc.
---------------------------------------------------------------------------
\54\See Reducing Federal Agency Overreach: Modernizing the
Regulatory Flexibility Act Before the H. Comm. on Small Business, 112th
Cong., Serial No. 112-007 (Mar. 30, 2011).
---------------------------------------------------------------------------
Committee Consideration
On July 7, 2011, the Committee met in open session and
ordered the bill H.R. 527 favorably reported with an amendment,
by a rollcall vote of 18 to 8, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 527.
1. Amendment #7, offered by Mr. Cohen. The amendment
requires that a member of the public or a representative of a
public interest organization who is able to provide relevant
information about the economic and non-economic impact of a
proposed rule be added as a member of the review panels
contemplated in H.R. 527. Failed by a rollcall of 9-13.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren.....................................................
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler......................................................
Mr. Scott....................................................... X
Mr. Watt........................................................
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 9 13
----------------------------------------------------------------------------------------------------------------
2. Amendment #6, offered by Ms. Jackson Lee. The amendment
requires a GAO study of the potential impact of implementation
on agencies' resources, the rulemaking process and the
rulemaking in the event of an emergency. Failed by a rollcall
of 11-15.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly....................................................
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 11 15
----------------------------------------------------------------------------------------------------------------
3. Amendment #9, offered by Mr. Johnson. The amendment
creates an exception for any rulemaking to carry out the FDA
Food Safety Modernization Act. Failed by a rollcall of 10-16.
ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 10 16
----------------------------------------------------------------------------------------------------------------
4. Amendment #10, offered by Mr. Johnson. The amendment
creates an exception for any rulemaking to carry out the
Patient Protection and Affordable Care Act. Failed by a
rollcall of 10-15.
ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks......................................................
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 10 15
----------------------------------------------------------------------------------------------------------------
5. Amendment #12, offered by Mr. Nadler. The amendment
requires an agency to consider the direct and indirect benefits
of proposed rules. Failed by a rollcall of 8-17.
ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Chabot...................................................... X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan...................................................... X
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi...................................................
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 8 17
----------------------------------------------------------------------------------------------------------------
6. Reporting H.R. 527 as amended. The bill ensures complete
analysis of potential impacts on small entities of rules, and
for other purposes. Reported by a rollcall of 18-8.
ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman............................................. X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Chabot...................................................... X
Mr. Issa........................................................ X
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan...................................................... X
Mr. Poe.........................................................
Mr. Chaffetz.................................................... X
Mr. Griffin..................................................... X
Mr. Marino...................................................... X
Mr. Gowdy....................................................... X
Mr. Ross........................................................ X
Ms. Adams....................................................... X
Mr. Quayle...................................................... X
Mr. Conyers, Jr., Ranking Member................................ X
Mr. Berman......................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi...................................................
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch......................................................
Ms. Sanchez.....................................................
Ms. Wasserman Schultz...........................................
-----------------------------------------------
Total....................................................... 18 8
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 527, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 24, 2011.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 527, the
``Regulatory Flexibility Improvements Act of 2011.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 527--Regulatory Flexibility Improvements Act of 2011.
SUMMARY
H.R. 527 would amend the Regulatory Flexibility Act (RFA).
The bill would expand the number of rules covered by the RFA
and require agencies to perform additional analysis of
regulations that affect small businesses. Finally, the
legislation would provide new authorities to the Small Business
Administration's (SBA's) Office of Advocacy to intervene in
agency rulemaking.
CBO estimates that implementing H.R. 527 would cost $80
million over the 2012-2016 period to expand the RFA, assuming
appropriation of the necessary funds. Enacting the bill could
affect direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant. Enacting H.R. 527 would not
affect revenues.
H.R. 527 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of State, local, or tribal
governments.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 527 is shown in the
following table. The costs of this legislation fall within
budget functions 370 (commerce and housing credit), 800
(general government), and all budget functions that include
agencies that issue regulations affecting small businesses.
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2012-2016
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level 10 15 20 20 20 85
Estimated Outlays 8 14 18 20 20 80
----------------------------------------------------------------------------------------------------------------
BASIS OF ESTIMATE
For this estimate, CBO assumes that the legislation will be
enacted near the end of fiscal year 2011, that the necessary
amounts will be appropriated near the start of each fiscal
year, and that spending will follow historical patterns for
similar activities.
CBO is unaware of any comprehensive information on the
current costs of spending for regulatory activities
governmentwide. However, according to the Congressional
Research Service, Federal agencies issue 3,000 to 4,000 final
rules each year. Most are promulgated by the Departments of
Transportation, Homeland Security, and Commerce, and the
Environmental Protection Agency (EPA). Agencies that issue the
most major rules (those with an estimated economic impact on
the economy of more than $100 million per year) include the
Department of Health and Human Services, the U.S. Department of
Agriculture, and EPA.
H.R. 527 would broaden the definition of a ``rule'' for
rulemaking purposes to include agency guidance documents and
policy statements. The bill also would expand the scope of the
regulatory analysis for proposed and final rules to examine any
indirect economic effects on small businesses and to provide a
more detailed analysis of the possible economic consequences of
the rule to small businesses. The legislation equates indirect
economic effects with any impact that is reasonably
foreseeable. The legislation also would require agencies to
publicly report on the cumulative economic impact of any new
regulations on the costs of existing regulations to small
businesses. Implementing H.R. 527 would increase the number of
agencies that need to prepare regulatory analysis and also
would increase the role of the SBA's Office of Advocacy and the
Office of Information and Regulatory Affairs (OIRA) in the
rulemaking process. Finally, the legislation would require more
Federal agencies to use panels of experts to evaluate
regulations and to prepare reports on the economic impact of
proposed regulations on small business.
Information from OIRA, SBA, and some Federal regulatory
agencies indicates that the new requirements under the bill
would increase the cost to issue a few hundred of the thousands
of Federal regulations issued annually. Based on that
information, CBO estimates that requiring the additional
analysis would increase administrative costs to regulatory
agencies, the SBA's Office of Advocacy, and OIRA by $20 million
annually, subject to the availability of appropriated funds. We
expect that it would take about three years to reach that level
of effort.
Under current law and executive orders, all agencies must
prepare a regulatory analysis prior to issuing a final rule.
That analysis includes the purpose of the regulatory action,
the number and types of small businesses to which the rule will
apply, the projected reporting and compliance costs of the
rule, and any significant alternatives that would accomplish
the objectives of the rule while minimizing the economic impact
on small business and other activities.
An agency can waive the requirement for a part of the
regulatory analysis if it can certify that the proposed rule
will not have a significant economic impact on a substantial
number of small businesses. If a proposed rule is expected to
have a significant economic impact, the agency is required to
notify the Small Business Administration's Office of Advocacy
and provide it with an opportunity to comment on the rule. In
addition, EPA, the Occupational Safety and Health
Administration, and the Consumer Financial Protection Bureau
are required to convene panels of experts to evaluate any
proposed regulation that may have a significant economic
impact. Those panels consist of Federal employees from the
rulemaking agency, the Office of Management and Budget, and SBA
who work to ensure that small business viewpoints are
considered prior to the issuance of a final rule. Moreover,
under current law, agencies are required to periodically review
the economic impact of existing rules that may have an impact
on small businesses.
PAY-AS-YOU-GO CONSIDERATIONS
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. Enacting H.R. 527 could affect
direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 527 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
State, local, or tribal governments.
PREVIOUS CBO ESTIMATE
On August 24, 2011, CBO transmitted a cost estimate for
H.R. 527 as ordered reported by the House Committee on Small
Business on July 13, 2011. The pieces of legislation are
similar, and the CBO cost estimates are the same.
ESTIMATE PREPARED BY:
Federal Spending: Matthew Pickford
Impact on State, Local, and Tribal Governments: Melissa Merrell
Impact on the Private Sector: Paige Piper/Bach
ESTIMATE APPROVED BY:
Peter H. Fontaine
Assistant Director for Budget Analysis
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
527 will update the RFA and SBREFA to close loopholes and
reduce the disproportionate burden that over-regulation places
on small businesses thereby enhancing job creation and
hastening America's economic recovery.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 527 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
Section 1. Short title; table of contents.
This Act may be cited as the ``Regulatory Flexibility
Improvements Act of 2011.''
Section 2. Clarification and Expansion of Rules Covered by the
Regulatory Flexibility Act.
Section 2(a) expands the RFA and SBREFA to apply to all
rules within the meaning of 5 U.S.C. Sec. 551(4), except for
certain rules of particular applicability. The RFA currently
defines a ``rule'' as one that is issued pursuant to the notice
and comment rulemaking provisions of Section 553(b) of the APA.
The Committee believes this definition is unjustifiably narrow;
the definition of a ``rule'' under the RFA should be the same
as under the APA.
Section 2(b) clarifies the term ``economic impact.'' The
RFA requires agencies to prepare a regulatory flexibility
analysis if the agency determines that the rule will have a
``significant economic impact on a substantial number of small
entities.'' But this term is not defined in current law, and
courts have held that agencies do not need to consider indirect
economic impacts on small entities. The Committee doubts that
Congress originally intended the regulatory flexibility
analysis to be so limited.\55\ Indirect effects are no less
burdensome on small entities than direct effects. Moreover,
agencies already measure their regulations' indirect effects
under the National Environmental Policy Act,\56\ upon which the
RFA is modeled, and when performing the cost-benefit analysis
required by Executive Order 12,866. Section 2(b) thus clarifies
that the term ``economic impact'' covers both direct and
indirect effects that are reasonably foreseeable.
---------------------------------------------------------------------------
\55\See 126 Cong. Rec. S21458 (daily ed. Aug. 6, 1980) (section-by-
section analysis of S. 299, the Regulatory Flexibility Act of 1980:
``Agencies should not give a narrow reading to what constitutes a
`significant economic impact' for purposes of this section or other
sections in which the term is used.'').
\56\See 40 C.F.R. Sec. 1508.8.
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Section 2(c) clarifies that an agency must perform a
regulatory flexibility analysis when a proposed rule's effects
are significant but beneficial. Agencies interpret the current
law to require a regulatory flexibility analysis only when a
proposed rule has significant costs to small entities.
Requiring a regulatory flexibility analysis when a proposed
rule has significant benefits will encourage agencies to pick
the most beneficial alternative.
Section 2(d) adds tribal organizations to the list of
``small entities'' within the RFA's purview. The same
considerations that necessitate requiring agencies to perform
regulatory flexibility analyses when small governmental bodies
are concerned apply with equal force to tribal organizations.
Section 2(e) clarifies that the RFA applies to land
management plans developed by the U.S. Forest Service and the
Bureau of Land Management. This clarification reflects the
GAO's view of current law,\57\ although the Forest Service and
the BLM disagree. Because these agencies already collect
economic data for NEPA reports, this clarification will not be
burdensome.
---------------------------------------------------------------------------
\57\U.S. General Accounting Office, Congressional Review Act:
Application to the Tongass National Forest Land and Resource Plan, T-
OGC-97-54 (1997), at 2.
---------------------------------------------------------------------------
Section 2(f)(1) clarifies that the IRS must comply fully
with the RFA. The IRS has previously concluded that it is not
required to follow the RFA when issuing an ``interpretative''
rule outside of the notice-and-comment process. Adopted in
1996, SBREFA required the IRS to comply with the RFA when an
interpretative rule imposes a collection-of-information
requirement on a small entity. The IRS misinterprets this
statute to apply only when the taxpayer is required to complete
a brand new, never-used form. Section 2(f)(1) makes clear that
the IRS is required to comply with the RFA whenever the IRS
intends to codify a regulation in the Code of Federal
Regulations and the regulation (or statute that the regulation
is interpreting) imposes a collection-of-information
requirement. Moreover, the ensuing regulatory flexibility
analysis should not be limited to the cost associated with the
``collection of information;'' rather, the ``collection of
information'' is a trigger for a full analysis of the rule's
economic effects. Section 2(f)(2)-(3) establishes that the
terms ``collection of information'' and ``recordkeeping
requirement'' have the same meaning under the RFA as under the
Paperwork Reduction Act.
Section 2(g) adopts the definition of ``small
organization'' under the RFA that the Equal Access to Justice
Act uses, focusing on the resources available to the
organization, i.e., its net worth and number of employees. The
current definition of ``small organization'' is unwieldy. Like
the RFA, one purpose of the EAJA is to protect small entities
from overzealous regulatory enforcement. Thus, both statutes
should define ``small organization'' in the same way. Section
2(g) extends the RFA's protections to local labor organizations
as well.
Section 3. Requirements for Providing More Detailed Analyses.
The NEPA, which was the model when Congress adopted the RFA
in 1980, requires agencies to develop a ``detailed statement''
regarding the environmental impact of a proposed rule. Courts
have interpreted the NEPA to require agencies to take a ``hard
look'' at environmental impacts.\58\ The RFA, however, only
requires agencies to develop a ``statement'' regarding the
impact of a new regulation on small entities.
---------------------------------------------------------------------------
\58\See, e.g., Robertson v. Methow Valley Citizens Council, 490
U.S. 332, 350 (1989) (citing Kleppe v. Sierra Club, 427 U.S. 390, 410
n.21 (1976)).
---------------------------------------------------------------------------
After finding that agencies were not fulfilling their
responsibilities under the RFA, Congress amended it in 1996 to
allow for judicial review, to create the same compliance
incentives that exist under the NEPA. Unfortunately, courts
reviewing agency compliance with SBREFA and RFA have not
applied the same level of searching scrutiny as they have given
to compliance with the NEPA. Consequently, agencies are
performing the bare minimum of analysis to satisfy judicial
review, without focusing on the most important issue: how to
minimize the negative economic impact of regulations on small
entities.
Section 3 is intended to increase agency scrutiny directly,
by amending the statute, rather than indirectly, as was
attempted in SBREFA by adding a judicial review component.
Thus, Section 3(a) amends Section 603 by requiring the initial
regulatory flexibility analysis (``IFRA'') to contain a
``detailed statement'' rather than merely a ``statement;'' by
striking the term ``succinct'' from Section 603(b)(2); by
striking the term ``where feasible'' from Section 603(b)(3);
and, by striking the phrase ``to the extent practicable'' from
Section 603(b)(5). Agencies exploit these terms to avoid
following the law's clear purpose. Section 3(a) also adds a new
paragraph (6) to Section 603(b), requiring agencies to consider
the cumulative economic impact of the proposed rule in light of
existing rules. Finally, recognizing that a rule could affect
some small entities more than others, Section 3(a)(7) requires
agencies to describe any disproportionate economic impact on a
specific class of small entities.
Regarding the final regulatory flexibility analysis
(``FRFA''), Section 3(b)(1) amends Section 604 to require the
``description'' and ``explanation'' required by Section
604(b)(4), (5) and (6) to be ``detailed.'' This new requirement
comports with the ``detailed statement'' required of agencies
by NEPA. The bill also requires agencies to describe in the
FRFA any disproportionate economic impact on a class of small
entities. Section 3(b)(2) closes an oversight in the RFA to
require an agency, when preparing an FRFA, to summarize all
comments received throughout the process, not just comments
received in response to an IFRA. Section 3(b)(3) updates the
RFA technologically by requiring agencies to post FRFAs online.
Section 3(c) allows agencies to satisfy the RFA by making
reference to already-completed analyses (for example, under
NEPA) that satisfy the RFA's criteria. If the necessary
analysis already has been completed, then there is no reason to
force an agency to go through the rote exercise of performing
it again. Nevertheless, agencies must cite to the pre-existing
analysis with specificity; vague or casual references will not
suffice. Thus, Section 3(c) requires the agency to identify the
``specific portion of another agenda or analysis.'' In the same
vein, when an agency certifies that a proposed rule will not
have a ``significant economic impact on a substantial number of
small entities,'' Section 3(d) requires the agency to give a
``detailed statement'' and to identify the supporting ``factual
and legal'' basis for the certification.
Finally, Section 3(e) makes quantifiable data (of the
caliber required under the Information Quality Act\59\) the
standard for measuring the economic impact of a proposed rule
on small entities. This will make agencies' IRFAs and FRFAs
more transparent, including for courts at the judicial review
stage. If quantifiable data is unavailable then the agency must
provide a ``detailed statement explaining why quantification is
not practicable or reliable'' as well as ``a more general
descriptive statement'' of the rule's effects. The Chief
Counsel for Advocacy will have the authority to promulgate
regulations fleshing out these data quality standards.
---------------------------------------------------------------------------
\59\See ``Consolidated Appropriations Act, 2001,'' 106 P.L. 554,
Sec. 515 (Dec. 21, 2000).
---------------------------------------------------------------------------
Section 4. Repeal of Waiver Authority and Additional Powers of Chief
Counsel.
Section 4 empowers the Chief Counsel for Advocacy to make
rules governing agency compliance with the RFA. The status quo
of agency compliance with the RFA is best described as
inconsistent and recalcitrant. To address this problem, the
Chief Counsel will promulgate rules regarding agency compliance
within 270 days of enactment. This parallels the authority of
the Council on Environmental Quality to issue regulations
governing agency compliance with the NEPA.\60\ The Chief
Counsel's regulations will be promulgated according to notice-
and-comment rulemaking and consequently will receive Chevron
deference. Agencies can issue supplementary compliance
protocols, but no agency can overturn the Chief Counsel's
compliance rules.
---------------------------------------------------------------------------
\60\See Exec. Order 11,991, 42 Fed. Reg. 26,967 (May 24, 1977).
---------------------------------------------------------------------------
Section 4 clarifies that the Chief Counsel may intervene in
agency adjudications, like an amicus curiae, to advise the
agency of how its decision will affect small entities. The
Chief Counsel is not authorized to appeal any decision or
otherwise to act as counsel for the small entity concerned.
Section 4 also allows the Chief Counsel to file comments on any
notice of proposed rulemaking, which will strengthen the Chief
Counsel's role as the main advocate for small entities in all
Federal agency decision-making (not just when the RFA is
concerned).
Section 4 repeals agencies' authority to waive IRFAs and
delay FRFAs by 180 days in emergency situations. The waiver
provision of Section 608 of the RFA is redundant with Section
553 of the APA. The entire RFA process for determining the
impact of a rule on small entities--advocacy review panels,
IRFAs and FRFAs--is triggered by notice and comment
rulemaking.\61\ The RFA's current waiver provision is
unnecessary in light of 5 U.S.C. Sec. 553(b)(B), which allows
an agency to bypass notice and comment rulemaking ``for good
cause,'' which would apply in an emergency.
---------------------------------------------------------------------------
\61\See 5 U.S.C. Sec. 609(b) (Advocacy review panels: ``Prior to
publication of an initial regulatory flexibility analysis which a
covered agency is required to conduct. . . .''); 5 U.S.C. Sec. 603(a)
(IRFAs: ``Whenever an agency is required by [5 U.S.C. Sec. 553], or any
other law, to publish general notice of proposed rulemaking for any
proposed rule. . . .''); 5 U.S.C. Sec. 604(a) (FRFAs: ``When an agency
promulgates a final rule under [5 U.S.C. Sec. 553], after being
required by that section or any other law to publish a general notice
of proposed rulemaking. . . .'').
---------------------------------------------------------------------------
Section 5. Procedures for Gathering Comments.
Section 5 clarifies, improves and expands the advocacy
review panel process. Currently, as amended by SBREFA, Section
609 requires OSHA and the EPA to hold advocacy review panels
before publishing an IRFA, to receive input directly from small
entities. The new Consumer Financial Protection Bureau also is
required to conduct advocacy review panels.
Building on these reforms, Section 5 expands the use of
advocacy review panels to all Federal agencies, including
independent regulatory agencies, for any major rule (as defined
by the Congressional Review Act) or for any rule that will have
a significant economic impact on a substantial number of small
entities. Section 5 clarifies the type of information the
agency must provide to the Office of Advocacy (with an
appropriate accommodation made for IRS rules) and describes the
content and focus of the report itself, which is to be drafted
by the Chief Counsel for Advocacy in consultation with other
panel members. Rather than simply listing concerns raised by
small entities in the panel process, the report should discuss
in detail the regulation's economic impact and analyze
alternatives that will minimize costs or maximize benefits.
Section 5 slightly reforms the panel's composition and
clarifies that the Office of Advocacy is solely responsible for
selecting small entity representatives to advise the panel.
Finally, Section 5 empowers the Chief Counsel for Advocacy to
waive the panel process when it is ``impractical, unnecessary,
or contrary to the public interest.''
Section 6. Periodic Review of Rules.
Section 6 of H.R. 527 reforms Section 610 to clarify how
agencies must perform the periodic regulatory review. The law
as currently written contains a number of ambiguities and
shortcomings that warrant clarification and revision. Section 6
requires agencies to develop new periodic review plans within
180 days and to publish these plans online. Section 6 clarifies
that the agency must review all rules that have a significant
economic impact on a substantial number of small entities--
regardless of whether the agency originally prepared an FRFA
for the rule. The trigger is whether the rule currently has a
significant economic impact on a substantial number of small
entities.
Pursuant to this periodic review, the agency should amend
the rule as necessary to maximize its benefits or minimize its
costs to small entities, considering the factors given in the
new Section 610(d). Finally, the agency must report the results
of the review and publish in the Federal Register a list of
rules to be reviewed and request comments.
Section 7. Judicial Review of Compliance with the RFA.
Under Section 7, judicial review is available when the
agency publishes the final rule; the current law requires small
entities to wait until the ``final agency action'' is complete
before bringing suit alleging a violation of the RFA. Taken
together, Sections 7(a) and (b) ensure that small entities will
have prompt access to judicial review without procedural delays
from agency-imposed exhaustion requirements. Section 7(c) makes
appropriate conforming and technical corrections to Section
611. Lastly, Section 7(d) clarifies the Chief Counsel for
Advocacy's authority to file an amicus brief regarding agency
compliance with the RFA.
Section 8. Jurisdiction of Court of Appeals for Challenges to Rules
Implementing RFA.
Section 8(a) grants jurisdiction to the U.S. Courts of
Appeals to review challenges by small entities to rules
promulgated by the Chief Counsel for Advocacy to implement the
RFA. Section 8(b) makes technical conforming amendments.
Section 8(c) clarifies the Chief Counsel's authority to file an
amicus brief in a lawsuit challenging an agency's compliance
with the Chief Counsel's rules implementing the RFA.
Section 9. Clerical Amendments.
Section 9 contains necessary clerical amendments to make
the U.S. Code consistent with the foregoing changes.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS
Sec.
601. Definitions.
* * * * * * *
[605. Avoidance of duplicative or unnecessary analyses.]
605. Incorporations by reference and certifications.
* * * * * * *
[607. Preparation of analyses.
[608. Procedure for waiver or delay of completion.]
607. Quantification requirements.
608. Additional powers of Chief Counsel for Advocacy.
Sec. 601. Definitions
For purposes of this chapter--
[(1) the term]
(1) Agency.--The term ``agency'' means an agency as
defined in section 551(1) of this title [;].
[(2) the term ``rule'' means any rule for which the
agency publishes a general notice of proposed
rulemaking pursuant to section 553(b) of this title, or
any other law, including any rule of general
applicability governing Federal grants to State and
local governments for which the agency provides an
opportunity for notice and public comment, except that
the term ``rule'' does not include a rule of particular
applicability relating to rates, wages, corporate or
financial structures or reorganizations thereof,
prices, facilities, appliances, services, or allowances
therefor or to valuations, costs or accounting, or
practices relating to such rates, wages, structures,
prices, appliances, services, or allowances;]
(2) Rule.--The term ``rule'' has the meaning given
such term in section 551(4) of this title, except that
such term does not include a rule of particular (and
not general) applicability relating to rates, wages,
corporate or financial structures or reorganizations
thereof, prices, facilities, appliances, services, or
allowances therefor or to valuations, costs or
accounting, or practices relating to such rates, wages,
structures, prices, appliances, services, or
allowances.
[(3) the term]
(3) Small business.--The term ``small business''
has the same meaning as the term ``small business
concern'' under section 3 of the Small Business Act,
unless an agency, after consultation with the Office of
Advocacy of the Small Business Administration and after
opportunity for public comment, establishes one or more
definitions of such term which are appropriate to the
activities of the agency and publishes such
definition(s) in the Federal Register [;].
[(4) the term ``small organization'' means any not-
for-profit enterprise which is independently owned and
operated and is not dominant in its field, unless an
agency establishes, after opportunity for public
comment, one or more definitions of such term which are
appropriate to the activities of the agency and
publishes such definition(s) in the Federal Register;]
(4) Small organization.--
(A) In general.--The term ``small
organization'' means any not-for-profit
enterprise which, as of the issuance of the
notice of proposed rulemaking--
(i) in the case of an enterprise
which is described by a classification
code of the North American Industrial
Classification System, does not exceed
the size standard established by the
Administrator of the Small Business
Administration pursuant to section 3 of
the Small Business Act (15 U.S.C. 632)
for small business concerns described
by such classification code; and
(ii) in the case of any other
enterprise, has a net worth that does
not exceed $7,000,000 and has not more
than 500 employees.
(B) Local labor organizations.--In the case
of any local labor organization, subparagraph
(A) shall be applied without regard to any
national or international organization of which
such local labor organization is a part.
(C) Agency definitions.--Subparagraphs (A)
and (B) shall not apply to the extent that an
agency, after consultation with the Office of
Advocacy of the Small Business Administration
and after opportunity for public comment,
establishes one or more definitions for such
term which are appropriate to the activities of
the agency and publishes such definitions in
the Federal Register.
[(5) the term]
(5) Small governmental jurisdiction.--The term
``small governmental jurisdiction'' means governments
of cities, counties, towns, townships, villages, school
districts, or special districts, and tribal
organizations (as defined in section 4(l) of the Indian
Self-Determination and Education Assistance Act (25
U.S.C. 450b(l))), with a population of less than fifty
thousand, unless an agency establishes, after
opportunity for public comment, one or more definitions
of such term which are appropriate to the activities of
the agency and which are based on such factors as
location in rural or sparsely populated areas or
limited revenues due to the population of such
jurisdiction, and publishes such definition(s) in the
Federal Register[;].
[(6) the term]
(6) Small entity.--The term ``small entity'' shall
have the same meaning as the terms ``small business'',
``small organization'' and ``small governmental
jurisdiction'' defined in paragraphs (3), (4) and (5)
of this section [; and].
[(7) the term ``collection of information''--
[(A) means the obtaining, causing to be
obtained, soliciting, or requiring the
disclosure to third parties or the public, of
facts or opinions by or for an agency,
regardless of form or format, calling for
either--
[(i) answers to identical questions
posed to, or identical reporting or
recordkeeping requirements imposed on,
10 or more persons, other than
agencies, instrumentalities, or
employees of the United States; or
[(ii) answers to questions posed to
agencies, instrumentalities, or
employees of the United States which
are to be used for general statistical
purposes; and
[(B) shall not include a collection of
information described under section 3518(c)(1)
of title 44, United States Code.
[(8) Recordkeeping requirement.--The term
``recordkeeping requirement'' means a requirement
imposed by an agency on persons to maintain specified
records.]
(7) Collection of information.--The term
``collection of information'' has the meaning given
such term in section 3502(3) of title 44.
(8) Recordkeeping requirement.--The term
``recordkeeping requirement'' has the meaning given
such term in section 3502(13) of title 44.
(9) Economic impact.--The term ``economic impact''
means, with respect to a proposed or final rule--
(A) any direct economic effect on small
entities of such rule; and
(B) any indirect economic effect on small
entities which is reasonably foreseeable and
results from such rule (without regard to
whether small entities will be directly
regulated by the rule).
(10) Land management plan.--
(A) In general.--The term ``land management
plan'' means--
(i) any plan developed by the
Secretary of Agriculture under section
6 of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16
U.S.C. 1604); and
(ii) any plan developed by the
Secretary of Interior under section 202
of the Federal Land Policy and
Management Act of 1976 (43 U.S.C.
1712).
(B) Revision.--The term ``revision'' means
any change to a land management plan which--
(i) in the case of a plan described
in subparagraph (A)(i), is made under
section 6(f)(5) of the Forest and
Rangeland Renewable Resources Planning
Act of 1974 (16 U.S.C. 1604(f)(5)); or
(ii) in the case of a plan
described in subparagraph (A)(ii), is
made under section 1610.5-6 of title
43, Code of Federal Regulations (or any
successor regulation).
(C) Amendment.--The term ``amendment''
means any change to a land management plan
which--
(i) in the case of a plan described
in subparagraph (A)(i), is made under
section 6(f)(4) of the Forest and
Rangeland Renewable Resources Planning
Act of 1974 (16 U.S.C. 1604(f)(4)) and
with respect to which the Secretary of
Agriculture prepares a statement
described in section 102(2)(C) of the
National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)); or
(ii) in the case of a plan
described in subparagraph (A)(ii), is
made under section 1610.5-5 of title
43, Code of Federal Regulations (or any
successor regulation) and with respect
to which the Secretary of the Interior
prepares a statement described in
section 102(2)(C) of the National
Environmental Policy Act of 1969 (42
U.S.C. 4332(2)(C)).
* * * * * * *
Sec. 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this
title, or any other law, to publish general notice of proposed
rulemaking for any proposed rule, [or] publishes a notice of
proposed rulemaking for an interpretative rule involving the
internal revenue laws of the United States, or publishes a
revision or amendment to a land management plan, the agency
shall prepare and make available for public comment an initial
regulatory flexibility analysis. Such analysis shall describe
the impact of the proposed rule on small entities. The initial
regulatory flexibility analysis or a summary shall be published
in the Federal Register at the time of the publication of
general notice of proposed rulemaking for the rule. The agency
shall transmit a copy of the initial regulatory flexibility
analysis to the Chief Counsel for Advocacy of the Small
Business Administration. In the case of an interpretative rule
involving the internal revenue laws of the United States, this
chapter applies to interpretative rules published in the
Federal Register for codification in the Code of Federal
Regulations, but only to the extent that such interpretative
rules impose on small entities a collection of information
requirement[.] or a recordkeeping requirement, and without
regard to whether such requirement is imposed by statute or
regulation.
[(b) Each initial regulatory flexibility analysis required
under this section shall contain--
[(1) a description of the reasons why action by the
agency is being considered;
[(2) a succinct statement of the objectives of, and
legal basis for, the proposed rule;
[(3) a description of and, where feasible, an
estimate of the number of small entities to which the
proposed rule will apply;
[(4) a description of the projected reporting,
recordkeeping and other compliance requirements of the
proposed rule, including an estimate of the classes of
small entities which will be subject to the requirement
and the type of professional skills necessary for
preparation of the report or record;
[(5) an identification, to the extent practicable,
of all relevant Federal rules which may duplicate,
overlap or conflict with the proposed rule.]
(b) Each initial regulatory flexibility analysis required
under this section shall contain a detailed statement--
(1) describing the reasons why action by the agency
is being considered;
(2) describing the objectives of, and legal basis
for, the proposed rule;
(3) estimating the number and type of small
entities to which the proposed rule will apply;
(4) describing the projected reporting,
recordkeeping, and other compliance requirements of the
proposed rule, including an estimate of the classes of
small entities which will be subject to the requirement
and the type of professional skills necessary for
preparation of the report and record;
(5) describing all relevant Federal rules which may
duplicate, overlap, or conflict with the proposed rule,
or the reasons why such a description could not be
provided;
(6) estimating the additional cumulative economic
impact of the proposed rule on small entities beyond
that already imposed on the class of small entities by
the agency or why such an estimate is not available;
and
(7) describing any disproportionate economic impact
on small entities or a specific class of small
entities.
(c) [Each initial regulatory flexibility analysis shall
also contain a description of any significant alternatives to
the proposed rule which accomplish the stated objectives of
applicable statutes and which minimize any significant economic
impact of the proposed rule on small entities.] Each initial
regulatory flexibility analysis shall also contain a detailed
description of alternatives to the proposed rule which
minimize any adverse significant economic impact or maximize
any beneficial significant economic impact on small entities.
Consistent with the stated objectives of applicable statutes,
the analysis shall discuss significant alternatives such as--
(1) * * *
* * * * * * *
[(d)(1) For a covered agency, as defined in section
609(d)(2), each initial regulatory flexibility analysis shall
include a description of--
[(A) any projected increase in the cost of credit
for small entities;
[(B) any significant alternatives to the proposed
rule which accomplish the stated objectives of
applicable statutes and which minimize any increase in
the cost of credit for small entities; and
[(C) advice and recommendations of representatives
of small entities relating to issues described in
subparagraphs (A) and (B) and subsection (b).
[(2) A covered agency, as defined in section 609(d)(2),
shall, for purposes of complying with paragraph (1)(C)--
[(A) identify representatives of small entities in
consultation with the Chief Counsel for Advocacy of the
Small Business Administration; and
[(B) collect advice and recommendations from the
representatives identified under subparagraph (A)
relating to issues described in subparagraphs (A) and
(B) of paragraph (1) and subsection (b).]
Sec. 604. Final regulatory flexibility analysis
(a) When an agency promulgates a final rule under section
553 of this title, after being required by that section or any
other law to publish a general notice of proposed rulemaking,
[or] promulgates a final interpretative rule involving the
internal revenue laws of the United States as described in
section 603(a), or adopts a revision or amendment to a land
management plan, the agency shall prepare a final regulatory
flexibility analysis. Each final regulatory flexibility
analysis shall contain--
(1) * * *
(2) a statement of the significant issues raised by
the public comments in response to the initial
regulatory flexibility analysis (or certification of
the proposed rule under section 605(b)), a statement of
the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a
result of such comments;
* * * * * * *
(4) a detailed description of and an estimate of
the number of small entities to which the rule will
apply or [an explanation] a detailed explanation of why
no such estimate is available;
(5) a detailed description of the projected
reporting, recordkeeping and other compliance
requirements of the rule, including an estimate of the
classes of small entities which will be subject to the
requirement and the type of professional skills
necessary for preparation of the report or record;
(6) a detailed description of the steps the
agency has taken to [minimize the significant economic
impact] minimize the adverse significant economic
impact or maximize the beneficial significant economic
impact on small entities consistent with the stated
objectives of applicable statutes, including a
statement of the factual, policy, and legal reasons for
selecting the alternative adopted in the final rule and
why each one of the other significant alternatives to
the rule considered by the agency which affect the
impact on small entities was rejected; and
[(6) for a covered agency, as defined in section
609(d)(2), a description of the steps the agency has
taken to minimize any additional cost of credit for
small entities.]
(7) describing any disproportionate economic impact
on small entities or a specific class of small
entities.
[(b) The agency shall make copies of the final regulatory
flexibility analysis available to members of the public and
shall publish in the Federal Register such analysis or a
summary thereof.]
(b) The agency shall make copies of the final regulatory
flexibility analysis available to the public, including
placement of the entire analysis on the agency's website, and
shall publish in the Federal Register the final regulatory
flexibility analysis, or a summary thereof which includes the
telephone number, mailing address, and link to the website
where the complete analysis may be obtained.
[Sec. 605SEC. 605. AVOIDANCE OF DUPLICATIVE OR UNNECESSARY ANALYSES]
Sec. 605. INCORPORATIONS BY REFERENCE AND CERTIFICATIONS
[(a) Any Federal agency may perform the analyses required
by sections 602, 603, and 604 of this title in conjunction with
or as a part of any other agenda or analysis required by any
other law if such other analysis satisfies the provisions of
such sections.]
(a) A Federal agency shall be treated as satisfying any
requirement regarding the content of an agenda or regulatory
flexibility analysis under section 602, 603, or 604, if such
agency provides in such agenda or analysis a cross-reference to
the specific portion of another agenda or analysis which is
required by any other law and which satisfies such requirement.
(b) Sections 603 and 604 of this title shall not apply to
any proposed or final rule if the head of the agency certifies
that the rule will not, if promulgated, have a significant
economic impact on a substantial number of small entities. If
the head of the agency makes a certification under the
preceding sentence, the agency shall publish such certification
in the Federal Register at the time of publication of general
notice of proposed rulemaking for the rule or at the time of
publication of the final rule, along with a detailed statement
providing the factual and legal basis for such certification.
The agency shall provide such certification and statement to
the Chief Counsel for Advocacy of the Small Business
Administration.
* * * * * * *
[Sec. 607. Preparation of analyses
[In complying with the provisions of sections 603 and 604
of this title, an agency may provide either a quantifiable or
numerical description of the effects of a proposed rule or
alternatives to the proposed rule, or more general descriptive
statements if quantification is not practicable or reliable.
[Sec. 608. Procedure for waiver or delay of completion
[(a) An agency head may waive or delay the completion of
some or all of the requirements of section 603 of this title by
publishing in the Federal Register, not later than the date of
publication of the final rule, a written finding, with reasons
therefor, that the final rule is being promulgated in response
to an emergency that makes compliance or timely compliance with
the provisions of section 603 of this title impracticable.
[(b) Except as provided in section 605(b), an agency head
may not waive the requirements of section 604 of this title. An
agency head may delay the completion of the requirements of
section 604 of this title for a period of not more than one
hundred and eighty days after the date of publication in the
Federal Register of a final rule by publishing in the Federal
Register, not later than such date of publication, a written
finding, with reasons therefor, that the final rule is being
promulgated in response to an emergency that makes timely
compliance with the provisions of section 604 of this title
impracticable. If the agency has not prepared a final
regulatory analysis pursuant to section 604 of this title
within one hundred and eighty days from the date of publication
of the final rule, such rule shall lapse and have no effect.
Such rule shall not be repromulgated until a final regulatory
flexibility analysis has been completed by the agency.]
Sec. 607. Quantification requirements
In complying with sections 603 and 604, an agency shall
provide--
(1) a quantifiable or numerical description of the
effects of the proposed or final rule and alternatives
to the proposed or final rule; or
(2) a more general descriptive statement and a
detailed statement explaining why quantification is not
practicable or reliable.
Sec. 608. Additional powers of Chief Counsel for Advocacy
(a)(1) Not later than 270 days after the date of the
enactment of the Regulatory Flexibility Improvements Act of
2011, the Chief Counsel for Advocacy of the Small Business
Administration shall, after opportunity for notice and comment
under section 553, issue rules governing agency compliance with
this chapter. The Chief Counsel may modify or amend such rules
after notice and comment under section 553. This chapter (other
than this subsection) shall not apply with respect to the
issuance, modification, and amendment of rules under this
paragraph.
(2) An agency shall not issue rules which supplement the
rules issued under subsection (a) unless such agency has first
consulted with the Chief Counsel for Advocacy to ensure that
such supplemental rules comply with this chapter and the rules
issued under paragraph (1).
(b) Notwithstanding any other law, the Chief Counsel for
Advocacy of the Small Business Administration may intervene in
any agency adjudication (unless such agency is authorized to
impose a fine or penalty under such adjudication), and may
inform the agency of the impact that any decision on the record
may have on small entities. The Chief Counsel shall not
initiate an appeal with respect to any adjudication in which
the Chief Counsel intervenes under this subsection.
(c) The Chief Counsel for Advocacy may file comments in
response to any agency notice requesting comment, regardless of
whether the agency is required to file a general notice of
proposed rulemaking under section 553.
Sec. 609. Procedures for gathering comments
(a) * * *
[(b) Prior to publication of an initial regulatory
flexibility analysis which a covered agency is required to
conduct by this chapter--
[(1) a covered agency shall notify the Chief
Counsel for Advocacy of the Small Business
Administration and provide the Chief Counsel with
information on the potential impacts of the proposed
rule on small entities and the type of small entities
that might be affected;
[(2) not later than 15 days after the date of
receipt of the materials described in paragraph (1),
the Chief Counsel shall identify individuals
representative of affected small entities for the
purpose of obtaining advice and recommendations from
those individuals about the potential impacts of the
proposed rule;
[(3) the agency shall convene a review panel for
such rule consisting wholly of full time Federal
employees of the office within the agency responsible
for carrying out the proposed rule, the Office of
Information and Regulatory Affairs within the Office of
Management and Budget, and the Chief Counsel;
[(4) the panel shall review any material the agency
has prepared in connection with this chapter, including
any draft proposed rule, collect advice and
recommendations of each individual small entity
representative identified by the agency after
consultation with the Chief Counsel, on issues related
to subsections 603(b), paragraphs (3), (4) and (5) and
603(c);
[(5) not later than 60 days after the date a
covered agency convenes a review panel pursuant to
paragraph (3), the review panel shall report on the
comments of the small entity representatives and its
findings as to issues related to subsections 603(b),
paragraphs (3), (4) and (5) and 603(c), provided that
such report shall be made public as part of the
rulemaking record; and
[(6) where appropriate, the agency shall modify the
proposed rule, the initial regulatory flexibility
analysis or the decision on whether an initial
regulatory flexibility analysis is required.
[(c) An agency may in its discretion apply subsection (b)
to rules that the agency intends to certify under subsection
605(b), but the agency believes may have a greater than de
minimis impact on a substantial number of small entities.
[(d) For purposes of this section, the term ``covered
agency'' means--
[(1) the Environmental Protection Agency;
[(2) the Consumer Financial Protection Bureau of
the Federal Reserve System; and
[(3) the Occupational Safety and Health
Administration of the Department of Labor.
[(e) The Chief Counsel for Advocacy, in consultation with
the individuals identified in subsection (b)(2), and with the
Administrator of the Office of Information and Regulatory
Affairs within the Office of Management and Budget, may waive
the requirements of subsections (b)(3), (b)(4), and (b)(5) by
including in the rulemaking record a written finding, with
reasons therefor, that those requirements would not advance the
effective participation of small entities in the rulemaking
process. For purposes of this subsection, the factors to be
considered in making such a finding are as follows:
[(1) In developing a proposed rule, the extent to
which the covered agency consulted with individuals
representative of affected small entities with respect
to the potential impacts of the rule and took such
concerns into consideration.
[(2) Special circumstances requiring prompt
issuance of the rule.
[(3) Whether the requirements of subsection (b)
would provide the individuals identified in subsection
(b)(2) with a competitive advantage relative to other
small entities.]
(b)(1) Prior to publication of any proposed rule described
in subsection (e), an agency making such rule shall notify the
Chief Counsel for Advocacy of the Small Business Administration
and provide the Chief Counsel with--
(A) all materials prepared or utilized by the
agency in making the proposed rule, including the draft
of the proposed rule; and
(B) information on the potential adverse and
beneficial economic impacts of the proposed rule on
small entities and the type of small entities that
might be affected.
(2) An agency shall not be required under paragraph (1) to
provide the exact language of any draft if the rule--
(A) relates to the internal revenue laws of the
United States; or
(B) is proposed by an independent regulatory agency
(as defined in section 3502(5) of title 44).
(c) Not later than 15 days after the receipt of such
materials and information under subsection (b), the Chief
Counsel for Advocacy of the Small Business Administration
shall--
(1) identify small entities or representatives of
small entities or a combination of both for the purpose
of obtaining advice, input, and recommendations from
those persons about the potential economic impacts of
the proposed rule and the compliance of the agency with
section 603; and
(2) convene a review panel consisting of an
employee from the Office of Advocacy of the Small
Business Administration, an employee from the agency
making the rule, and in the case of an agency other
than an independent regulatory agency (as defined in
section 3502(5) of title 44), an employee from the
Office of Information and Regulatory Affairs of the
Office of Management and Budget to review the materials
and information provided to the Chief Counsel under
subsection (b).
(d)(1) Not later than 60 days after the review panel
described in subsection (c)(2) is convened, the Chief Counsel
for Advocacy of the Small Business Administration shall, after
consultation with the members of such panel, submit a report to
the agency and, in the case of an agency other than an
independent regulatory agency (as defined in section 3502(5),
United States Code), the Office of Information and Regulatory
Affairs of the Office of Management and Budget.
(2) Such report shall include an assessment of the economic
impact of the proposed rule on small entities and a discussion
of any alternatives that will minimize adverse significant
economic impacts or maximize beneficial significant economic
impacts on small entities.
(3) Such report shall become part of the rulemaking record.
In the publication of the proposed rule, the agency shall
explain what actions, if any, the agency took in response to
such report.
(e) A proposed rule is described by this subsection if the
Administrator of the Office of Information and Regulatory
Affairs of the Office of Management and Budget, the head of the
agency (or the delegatee of the head of the agency), or an
independent regulatory agency determines that the proposed rule
is likely to result in--
(1) an annual effect on the economy of $100,000,000
or more;
(2) a major increase in costs or prices for
consumers, individual industries, Federal, State, or
local governments, tribal organizations, or geographic
regions;
(3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on
the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and
export markets; or
(4) a significant economic impact on a substantial
number of small entities.
(f) Upon application by the agency, the Chief Counsel for
Advocacy of the Small Business Administration may waive the
requirements of subsections (b) through (e) if the Chief
Counsel determines that compliance with the requirements of
such subsections are impracticable, unnecessary, or contrary to
the public interest.
* * * * * * *
[Sec. 610. Periodic review of rules
[(a) Within one hundred and eighty days after the effective
date of this chapter, each agency shall publish in the Federal
Register a plan for the periodic review of the rules issued by
the agency which have or will have a significant economic
impact upon a substantial number of small entities. Such plan
may be amended by the agency at any time by publishing the
revision in the Federal Register. The purpose of the review
shall be to determine whether such rules should be continued
without change, or should be amended or rescinded, consistent
with the stated objectives of applicable statutes, to minimize
any significant economic impact of the rules upon a substantial
number of such small entities. The plan shall provide for the
review of all such agency rules existing on the effective date
of this chapter within ten years of that date and for the
review of such rules adopted after the effective date of this
chapter within ten years of the publication of such rules as
the final rule. If the head of the agency determines that
completion of the review of existing rules is not feasible by
the established date, he shall so certify in a statement
published in the Federal Register and may extend the completion
date by one year at a time for a total of not more than five
years.
[(b) In reviewing rules to minimize any significant
economic impact of the rule on a substantial number of small
entities in a manner consistent with the stated objectives of
applicable statutes, the agency shall consider the following
factors--
[(1) the continued need for the rule;
[(2) the nature of complaints or comments received
concerning the rule from the public;
[(3) the complexity of the rule;
[(4) the extent to which the rule overlaps,
duplicates or conflicts with other Federal rules, and,
to the extent feasible, with State and local
governmental rules; and
[(5) the length of time since the rule has been
evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area
affected by the rule.
[(c) Each year, each agency shall publish in the Federal
Register a list of the rules which have a significant economic
impact on a substantial number of small entities, which are to
be reviewed pursuant to this section during the succeeding
twelve months. The list shall include a brief description of
each rule and the need for and legal basis of such rule and
shall invite public comment upon the rule.]
Sec. 610. Periodic review of rules
(a) Not later than 180 days after the enactment of the
Regulatory Flexibility Improvements Act of 2011, each agency
shall publish in the Federal Register and place on its website
a plan for the periodic review of rules issued by the agency
which the head of the agency determines have a significant
economic impact on a substantial number of small entities. Such
determination shall be made without regard to whether the
agency performed an analysis under section 604. The purpose of
the review shall be to determine whether such rules should be
continued without change, or should be amended or rescinded,
consistent with the stated objectives of applicable statutes,
to minimize any adverse significant economic impacts or
maximize any beneficial significant economic impacts on a
substantial number of small entities. Such plan may be amended
by the agency at any time by publishing the revision in the
Federal Register and subsequently placing the amended plan on
the agency's website.
(b) The plan shall provide for the review of all such
agency rules existing on the date of the enactment of the
Regulatory Flexibility Improvements Act of 2011 within 10 years
of the date of publication of the plan in the Federal Register
and for review of rules adopted after the date of enactment of
the Regulatory Flexibility Improvements Act of 2011 within 10
years after the publication of the final rule in the Federal
Register. If the head of the agency determines that completion
of the review of existing rules is not feasible by the
established date, the head of the agency shall so certify in a
statement published in the Federal Register and may extend the
review for not longer than 2 years after publication of notice
of extension in the Federal Register. Such certification and
notice shall be sent to the Chief Counsel for Advocacy of the
Small Business Administration and the Congress.
(c) Each agency shall annually submit a report regarding
the results of its review pursuant to such plan to the
Congress, the Chief Counsel for Advocacy of the Small Business
Administration, and, in the case of agencies other than
independent regulatory agencies (as defined in section 3502(5)
of title 44) to the Administrator of the Office of Information
and Regulatory Affairs of the Office of Management and Budget.
Such report shall include the identification of any rule with
respect to which the head of the agency made a determination
described in paragraph (5) or (6) of subsection (d) and a
detailed explanation of the reasons for such determination.
(d) In reviewing a rule pursuant to subsections (a) through
(c), the agency shall amend or rescind the rule to minimize any
adverse significant economic impact on a substantial number of
small entities or disproportionate economic impact on a
specific class of small entities, or maximize any beneficial
significant economic impact of the rule on a substantial number
of small entities to the greatest extent possible, consistent
with the stated objectives of applicable statutes. In amending
or rescinding the rule, the agency shall consider the following
factors:
(1) The continued need for the rule.
(2) The nature of complaints received by the agency
from small entities concerning the rule.
(3) Comments by the Regulatory Enforcement
Ombudsman and the Chief Counsel for Advocacy of the
Small Business Administration.
(4) The complexity of the rule.
(5) The extent to which the rule overlaps,
duplicates, or conflicts with other Federal rules and,
unless the head of the agency determines it to be
infeasible, State, territorial, and local rules.
(6) The contribution of the rule to the cumulative
economic impact of all Federal rules on the class of
small entities affected by the rule, unless the head of
the agency determines that such calculations cannot be
made and reports that determination in the annual
report required under subsection (c).
(7) The length of time since the rule has been
evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area
affected by the rule.
(e) The agency shall publish in the Federal Register and on
its website a list of rules to be reviewed pursuant to such
plan. Such publication shall include a brief description of the
rule, the reason why the agency determined that it has a
significant economic impact on a substantial number of small
entities (without regard to whether it had prepared a final
regulatory flexibility analysis for the rule), and request
comments from the public, the Chief Counsel for Advocacy of the
Small Business Administration, and the Regulatory Enforcement
Ombudsman concerning the enforcement of the rule.
Sec. 611. Judicial review
(a)(1) For any rule subject to this chapter, a small entity
that is adversely affected or aggrieved by [final agency
action] such rule is entitled to judicial review of agency
compliance with the requirements of sections 601, 604, 605(b),
[608(b),] and 610 in accordance with chapter 7. Agency
compliance with sections 607 and 609(a) shall be judicially
reviewable in connection with judicial review of section 604.
(2) Each court having jurisdiction to review such rule for
compliance with section 553, or under any other provision of
law, (or which would have such jurisdiction if publication of
the final rule constituted final agency action) shall have
jurisdiction to review any claims of noncompliance with
sections 601, 604, 605(b), [608(b),] and 610 in accordance with
chapter 7. Agency compliance with sections 607 and 609(a) shall
be judicially reviewable in connection with judicial review of
section 604.
[(3)(A) A small entity]
(3) A small entity may seek such review during the period
beginning on the date of [final agency action] publication of
the final rule and ending one year later, except that, in the
case of a rule for which the date of final agency action is the
same date as the publication of the final rule, where a
provision of law requires that an action challenging a final
agency action be commenced before the expiration of one year,
such lesser period shall apply to an action for judicial review
under this section.
[(B) In the case where an agency delays the issuance of a
final regulatory flexibility analysis pursuant to section
608(b) of this chapter, an action for judicial review under
this section shall be filed not later than--
[(i) one year after the date the analysis is made
available to the public, or
[(ii) where a provision of law requires that an
action challenging a final agency regulation be
commenced before the expiration of the 1-year period,
the number of days specified in such provision of law
that is after the date the analysis is made available
to the public.]
* * * * * * *
Sec. 612. Reports and intervention rights
(a) * * *
(b) The Chief Counsel for Advocacy of the Small Business
Administration is authorized to appear as amicus curiae in any
action brought in a court of the United States to review a rule
or agency compliance with section 601, 603, 604, 605(b), 609,
or 610. In any such action, the Chief Counsel is authorized to
present his or her views with respect to compliance with this
chapter, chapter 5, and chapter 7, the adequacy of the
rulemaking record with respect to small entities and the effect
of the rule on small entities.
* * * * * * *
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
* * * * * * *
CHAPTER 158--ORDERS OF FEDERAL AGENCIES; REVIEW
Sec. 2341. Definitions
As used in this chapter--
(1) * * *
* * * * * * *
(3) ``agency'' means--
(A) * * *
* * * * * * *
(D) the Secretary, when the order is under
section 812 of the Fair Housing Act; [and]
(E) the Board, when the order was entered
by the Surface Transportation Board[.]; and
(F) the Office of Advocacy of the Small
Business Administration, when the final rule is
under section 608(a) of title 5.
Sec. 2342. Jurisdiction of court of appeals
The court of appeals (other than the United States Court
of Appeals for the Federal Circuit) has exclusive jurisdiction
to enjoin, set aside, suspend (in whole or in part), or to
determine the validity of--
(1) * * *
* * * * * * *
(6) all final orders under section 812 of the Fair
Housing Act; [and]
(7) all final agency actions described in section
20114(c) of title 49[.]; and
(8) all final rules under section 608(a) of title
5.
Jurisdiction is invoked by filing a petition as provided by
section 2344 of this title.
* * * * * * *
Dissenting Views
I. INTRODUCTION
H.R. 527, the ``Regulatory Flexibility Improvements Act of
2011,'' amends the Regulatory Flexibility Act\1\ (RFA) in ways
that will significantly hinder the promulgation of critical
public health and safety rules by Federal administrative
agencies--even in emergency situations--while failing to help
small businesses and other small entities reduce compliance
costs or to ensure agency compliance with the RFA.
Specifically, we oppose H.R. 527 because: (1) it is based on a
faulty study; (2) taken as a whole, it will severely undermine
Federal agency rulemaking, thereby threatening public health
and safety; (3) it fails to address shortcomings in current
law; (4) it offers no real assistance to small businesses in
complying with regulations; and (5) it imposes additional
duties on agencies while failing to provide any additional
resources to agencies.
---------------------------------------------------------------------------
\1\Pub. L. No. 96-354, 94 Stat. 1164 (codified at 5 U.S.C.
Sec. Sec. 601-612). The RFA requires Federal agencies to assess the
impact of proposed rules on ``small entities,'' which it defines as
either a small business, small organization, or small governmental
jurisdiction.The RFA requires agencies to prepare a regulatory
flexibility analysis at the time certain proposed and final rules are
promulgated. The analysis must: (1) describe the reasons why action by
the agency is necessary; (2) include a succinct statement of the
regulation's objectives and legal basis; (3) describe which small
entities are affected by the rule as well as provide an estimate of the
number of such entities so affected; (4) describe anticipated
reporting, recordkeeping, and other compliance requirements, (5)
identify any relevant Federal regulations that may duplicate, overlap,
or conflict with the rule, and (6) identify any significant
alternatives to the rule. This analysis is not required, however, if
the agency certifies that the rule will not have a ``significant
economic impact on a substantial number of small entities.''
---------------------------------------------------------------------------
In 1996, the RFA was amended by Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Sec. 242, 110 Stat.
847, 857 (1996), to permit judicial review under certain circumstances
of, among other matters, an agency's regulatory flexibility analysis
for a final rule and any certification by an agency averring that a
rule will not have a significant economic impact on a substantial
number of small entities.
Without question, small businesses play a major role in our
Nation's economy and in our society. They employ more than half
of all private sector workers\2\ and are among the principal
drivers of innovation and economic growth, producing 13 times
more patents than larger firms.\3\ Indeed, according to the
Small Business Administration (SBA), the vast majority of our
Nation's businesses are small businesses.\4\ Like their larger
counterparts, however, small businesses can substantially
impact the health and safety of their workers as well as that
of the general public.\5\ Accordingly, attempts to undermine
the ability of Federal agencies charged with protecting public
health and safety through the rulemaking process should be
strongly opposed.
---------------------------------------------------------------------------
\2\Small Business Administration, How Important Are Small
Businesses to the U.S. Economy? available at http://www.sba.gov/
advocacy/7495/8420.
\3\Id.
\4\In all, there are 29.6 million businesses in the United States,
of which 99.9% are ``small'' businesses. See U.S. Small Business
Administration, How Many Small Businesses Are There?, available at
http://www.sba.gov/content/how-many-small-businesses-are-there. It
should also be noted that not all small businesses are ``mom and pop''
operations. According to the SBA, a ``small business'' can be a firm
with up to 500 employees, although the definition varies by industry.
SBA looks to two different factors for determining what is a ``small
business'' based on the North American Industry Classification System
(NAICS) codes, which vary by industry. For some industries, the number
of employees over the past 12 months (e.g., ``petrochemical
manufacturers'' can have 1,000 employees and still be small businesses)
is determinative, and for other industries, SBA looks to revenue over
the past 3 years (e.g., ``packing and crating'' services can have $25.5
million in revenue and still be small businesses). The full table is
available at: http://www.sba.gov/sites/default/files/
size_standards_methodology.pdf.
\5\Workplace safety rules may impact tens of millions of Americans
who work for small businesses. As of 2008, there were 5.93 million
small firms employing 120,903,551 workers, including 5,294,970 firms of
20 or fewer employees, employing 21,461,733 workers and 5,684,120 firms
of 50 or fewer employees, employing 33,453,284 workers, according to
the SBA. See U.S. Census Bureau, Statistics of U.S. Businesses, U.S.
NAICS Sectors, small employment sizes, 2008, available at http://
www.census.gov/econ/susb/.
---------------------------------------------------------------------------
H.R. 527 must also be viewed as part of the Majority's
broader anti-regulatory agenda in the 112th Congress. To date,
the Committee's Subcommittee on Courts, Commercial and
Administrative Law (CCAL) has already held eight hearings
focusing on various ways to hobble Federal agency rulemaking
and to increase the influence of business interests over the
rulemaking process without actually improving the quality of
proposed rules.\6\ While the proponents of H.R. 527 claim that
the bill's purpose is to ease the burden of regulatory
compliance on small businesses and other small entities, an
examination of the bill's provisions makes clear that the bill
is really intended to slow down, if not halt, most agency
rulemaking. This explains why the Coalition for Sensible
Safeguards strongly opposes the bill. The Coalition consists of
nearly 60 labor and consumer organizations, including the AFL-
CIO, AFSCME, the American Lung Association, the Center for
Science in the Public Interest, the Consumer Federation of
America, the Consumers Union, the Economic Policy Institute,
the Environmental Defense Fund, Free Press, Friends of the
Earth, International Brotherhood of Teamsters, the UAW, the
National Council for Occupational Safety and Health, the
National Women's Law Center, Natural Resources Defense Council,
OMB Watch, People for the American Way, Public Citizen, the
Service Employees International Union, the Union of Concerned
Scientists, the United Food and Commercial Workers
International Union, and U.S. PIRG.\7\
---------------------------------------------------------------------------
\6\The Role of Social Security Administrative Law Judges: Hearing
Before the Subcomm. on Courts, Commercial and Administrative Law of the
H. Comm. on the Judiciary and Subcomm. on Social Security of the H.
Comm. on Ways and Means, 112th Cong. (2011); Formal Rulemaking and
Judicial Review: Protecting Jobs and the Economy with Greater
Regulatory Transparency and Accountability: Hearing Before the Subcomm.
on Courts, Commercial and Administrative Law of the H. Comm. on the
Judiciary, 112th Cong. (2011); Cost-Justifying Regulations: Protecting
Jobs and the Economy by Presidential and Judicial Review of Costs and
Benefits: Hearing Before the Subcomm. on Courts, Commercial and
Administrative Law of the H. Comm. on the Judiciary, 112th Cong.
(2011); Raising the Agencies' Grades--Protecting the Economy, Assuring
Regulatory Quality and Improving Assessments of Regulatory Need:
Hearing Before the Subcomm. on Courts, Commercial and Administrative
Law of the H. Comm. on the Judiciary, 112th Cong. (2011); The
Regulations From the Executive in Need of Scrutiny Act of 2011: Hearing
on H.R. 10 Before the Subcomm. on Courts, Commercial and Administrative
Law of the H. Comm. on the Judiciary, 112th Cong. (2011); The APA at
65--Is Reform Needed to Create Jobs, Promote Economic Growth and Reduce
Costs?: Hearing Before the Subcomm. on Courts, Commercial and
Administrative Law of the H. Comm. on the Judiciary, 112th Cong.
(2011); The Regulatory Flexibility Improvements Act of 2011- Unleashing
Small Businesses to Create Jobs: Hearing on H.R. 527 Before the
Subcomm. on Courts, Commercial and Administrative Law of the H. Comm.
on the Judiciary, 112th Cong. (2011) (hereinafter ``H.R. 527
Legislative Hearing''); The REINS Act--Promoting Jobs and Expanding
Freedom by Reducing Needless Regulations Hearing Before the Subcomm. on
Courts, Commercial and Administrative Law of the H. Comm. on the
Judiciary, 112th Cong. (2011).
\7\The other members of the Coalition, as of July 2, 2011, were:
Ability Production, Alliance for Justice, American Association of
University Professors, American Rivers American Values Campaign, ATTIC,
Inc., BlueGreen Alliance, Campaign for Contract Agriculture Reform
(CCAR), Center for Food Safety, Center for Independent Living of South
Florida, Inc., Citizens for Sludge-Free Land, Clean Air Watch,
Consortium for Citizens with Disabilities, CounterCorp, Cumberland
Countians for Peace & Justice, Demos, Edmonds Institute, Health Care
for America Now, In the Public Interest, International Center for
Technology Assessment, Jam On! Music Production & Recording, League of
Conservation Voters, Los Angeles Alliance for a New Economy, National
Center for Healthy Housing, National Consumers League, National
Employment Law Project, National Lawyers Guild, Louisville Chapter,
National Women's Health Network, Network for Environmental & Economic
Responsibility of United Church of Christ, New Jersey Work Environment
Council, New York Committee for Occupational Safety and Health
(NYCOSH), Oregon PeaceWorks, Protect All Children's Environment,
Reproductive Health Technologies Project, STOP Foodborne Illness
(Formerly known as Safe Tables Our Priority), Southern Illinois
Committee for Occupational Safety and Health, The Partnership for
Working Families, Union Plus, Worksafe.
---------------------------------------------------------------------------
For these reasons, and those discussed below, we
respectfully dissent and urge our colleagues to reject this
seriously flawed legislation.
II. DESCRIPTION OF H.R. 527
H.R. 527 expands the type of rules covered by the RFA to
include those that have a reasonably foreseeable indirect
effect on small entities. It also includes documents like land
management plans and certain guidance documents under the
definition of ``rule.'' Additionally, H.R. 527 would heighten
the level of detail that agencies must provide in their initial
and final regulatory analyses and adds additional analytical
requirements. H.R. 527 also repeals agencies' emergency
authority to waive or delay an initial regulatory flexibility
analysis or to delay a final regulatory flexibility analysis
and grants additional power to the SBA's Chief Counsel for
Advocacy to promulgate rules governing agencies' RFA
compliance, intervene in agency adjudications, and file
comments on proposed rules. H.R. 527 expands the use of
advocacy review panels to cover rules with a significant
economic impact on a substantial number of small entities that
are proposed by all agencies and would also apply to rules that
would be considered ``major rules.'' H.R. 527 also amends the
RFA's requirement that agencies periodically review rules to
also require that agencies review all rules that exist on H.R.
527's enactment date and amend or rescind those rules,
regardless of the review's findings. H.R. 527 expands the
availability of judicial review to include any agency action
taken to comply with the RFA, and not just ``final agency
action,'' as is the case under current law. Finally, H.R. 527
grants exclusive jurisdiction to the Federal courts of appeals
to enjoin, set aside, suspend, or determine the validity of all
final rules concerning RFA implementation that have been
promulgated by the SBA's Chief Counsel for Advocacy under the
authority granted to it by H.R. 527.
III. H.R. 527 IS BASED UPON A FAULTY STUDY
H.R. 527 is based on the faulty premise that regulation
imposes overwhelmingly burdensome costs on small businesses
that ultimately hamper economic growth and job creation. In
particular, H.R. 527's supporters rely almost exclusively on a
study by economists Nicole and Mark Crain (Crain study)\8\ that
concluded that Federal regulations impose a $1.75 trillion cost
on all businesses and that a disproportionate share of these
costs are borne by small businesses.\9\
---------------------------------------------------------------------------
\8\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), available at
http://archive.sba.gov/advo/research/rs371tot.pdf.
\9\H.R. 527 Legislative Hearing (prepared statements of Richard
Gimmel, President, Atlas Machine & Supply, Inc., on behalf of the
National Association of Manufacturers, pp. 4-5; Thomas Sullivan, former
Chief Counsel for Advocacy, Small Business Administration, p. 3; and
Karen R. Harned, Executive Director, Small Business Legal Center,
National Federation of Independent Businesses, unnumbered p. 1).
---------------------------------------------------------------------------
The Crain study, however, has been roundly criticized for
exaggerating the costs of Federal rulemaking on small
businesses. For example, the Center for Progressive Reform
(CPR) notes that the $1.75 trillion cumulative burden cited by
the study fails to account for any benefits of regulation.\10\
CPR observes that the Office of Management and Budget (OMB)
estimated in 2008 that major rules imposed $46 billion to $54
billion in costs, but also produced $122 billion to $656
billion in benefits.\11\ Moreover, the study's methodology is
flawed with respect to how it calculated economic costs. The
study, which relied on international public opinion polling by
the World Bank on how friendly a particular country was to
business interests, ignored actual data on costs imposed by
Federal regulation in the United States.\12\
---------------------------------------------------------------------------
\10\Sid Shapiro, Ruth Ruttenberg, & James Goodwin, Setting the
Record Straight: The Crain and Crain Report on Regulatory Costs, Center
for Progressive Reform White Paper #1103 (Feb. 2011).
\11\Id.
\12\Id.
---------------------------------------------------------------------------
The Congressional Research Service (CRS) also conducted an
extensive examination of the Crain study and criticized much of
its methodology.\13\ Moreover, CRS noted that the authors of
the Crain study themselves told CRS that their study was ``not
meant to be a decision-making tool for lawmakers or Federal
regulatory agencies to use in choosing the 'right' level of
regulation. In no place in any of the reports do we imply that
our reports should be used for this purpose. (How could we
recommend this use when we make no attempt to estimate the
benefits?)''\14\ CRS concluded that ``a valid, reasoned policy
decision can only be made after considering information on both
costs and benefits'' of regulation.\15\
---------------------------------------------------------------------------
\13\Curtis W. Copeland, Analysis of an Estimate of the Total Costs
of Federal Regulations, Congressional Research Service Report for
Congress, R41763 (Apr. 6, 2011).
\14\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to
the author of the CRS report).
\15\Id. The Economic Policy Institute also issued a critique of the
Crain study outlining additional concerns with the study's methodology
and data. See John Irons and Andrew Green, Flaws Call for Rejecting
Crain and Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not
Worth Repeating, Economic Policy Institute, July 19, 2011, available at
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
---------------------------------------------------------------------------
The Crain study's failure to account for the net benefits
of regulation in general was particularly shortsighted given
evidence that regulation can result in net economic benefits
for business. For example, promulgation of OSHA's Cotton Dust
Standard resulted in the affected industry growing and
prospering in the aftermath of the rule's promulgation.\16\
Much of that growth and prosperity was the result of business
innovations relating to compliance with the rule.\17\ Indeed,
the costs of the rule ended up being much smaller than
predicted because of these innovations.\18\
---------------------------------------------------------------------------
\16\Occupational Safety and Health Administration, Regulatory
Review of OSHA's Cotton Dust Standard, at 35-38 (Sept. 2000), available
at http://www.osha.gov/dea/lookback/cottondust
_final2000.pdf.
\17\Id.
\18\Id. at 38-39.
---------------------------------------------------------------------------
Sally Katzen, a former Administrator of the Office of
Information and Regulatory Affairs (OIRA) during the Clinton
Administration, noted in testimony before the CCAL Subcommittee
that OMB regularly finds that the aggregate benefits of Federal
regulation outweigh its costs.\19\ In words that are apt with
respect to consideration of H.R. 527, Katzen noted the
following in her prepared statement:
---------------------------------------------------------------------------
\19\The REINS Act--Promoting Jobs and Expanding Freedom by Reducing
Needless Regulations Hearing Before the Subcomm. on Courts, Commercial
and Administrative Law of the H. Comm. on the Judiciary, 112th Cong. 3
(2011) (prepared statement of Sally Katzen, former Administrator of the
Office of Information and Regulatory Affairs).
OMB's Report to Congress does include data on benefits,
and the numbers are striking: according to OMB, the
benefits from the regulations issued during the 10-year
period ranged from $128 billion to $616 billion.
Therefore, even if one uses OMB's highest estimate of
costs and its lowest estimate of benefits, the
regulations issued over the past 10 years have produced
net benefits of $73 billion to our society. This cannot
be dismissed as a partisan report by the current
administration, because OMB issued reports with similar
results (benefits greatly exceeding costs) throughout
the George W. Bush Administration (e.g., for FY 1998-
2008, major regulations cost between $51 and $60
billion, with benefits estimated to be $126 to $663
billion dollars). Given that the benefits of
regulations consistently exceed the costs, the need for
any legislation that would make the issuance of
regulations more difficult or time consuming is
certainly in question.\20\
---------------------------------------------------------------------------
\20\Id.
An amendment offered by Rep. Jerrold Nadler (D-NY) would
have required agencies to assess the indirect benefits of a
rule as part of the required regulatory flexibility analysis
under H.R. 527. The amendment was opposed by the Majority and
was not adopted.
IV. H.R. 527 WILL CAUSE FEDERAL AGENCY RULEMAKING TO BE SEVERELY
UNDERMINED, THEREBY THREATENING PUBLIC HEALTH AND SAFETY
H.R. 527 will overwhelm regulatory agencies with
unnecessary analytical requirements, reduced agency discretion
and flexibility, and numerous opportunities for business
interests to hamstring the rulemaking process. By shifting
resources to a more complex, costly, and time-consuming
rulemaking process, this legislation will prevent agencies from
effectively promulgating regulations designed to protect the
health and public safety of Americans.
The bill's onerous requirements will prevent agencies from
engaging in effective rulemaking. As the Minority witness
testified at the legislative hearing on H.R. 527, these new
mandates will prevent agencies from being able to engage in
effective rulemaking.\21\ Consumer advocates likewise are
concerned that H.R. 527 generally ``adds yet another analytical
layer to the rulemaking process, further complicating agencies'
abilities to implement statutes, fulfill their missions, and
serve the public interest.''\22\
---------------------------------------------------------------------------
\21\H.R. 527 Legislative Hearing (prepared statement of J. Robert
Shull) (hereinafter ``Shull statement'').
\22\OMB Watch, Statement on the Regulatory Flexibility Improvements
Act of 2011, on file with the House Committee on the Judiciary,
Minority staff.
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In recognition of these problems, Rep. Hank Johnson (D-GA)
offered at markup two amendments that would have exempted rules
implementing the FDA Food Safety Modernization Act and the
Patient Protection and Affordable Care Act from H.R. 527. The
Majority opposed both amendments and neither was adopted.
V. H.R. 527 FAILS TO ADDRESS SHORTCOMINGS IN CURRENT LAW UNDER THE RFA
Whether a rule has a ``significant economic impact on a
substantial number of small entities'' is the threshold inquiry
for determining whether the RFA applies to a proposed or final
rule. The RFA does not define ``significant economic impact''
or ``substantial number of small entities.'' These terms are
left to agencies to determine. Some critics suggest that
because of the undefined standard and the discretion that
agencies have to determine whether the standard is met,
agencies are essentially able to ``game the system'' and avoid
triggering RFA obligations.
To the extent that proponents of H.R. 527 contend that it
is needed because agencies currently do not apply the RFA in a
consistent manner, H.R. 527 does nothing to address that
concern. The Government Accountability Office (GAO) has on
several occasions noted that ``Congress may need to clearly
delineate--or have some other organization delineate--what is
meant by the terms `significant economic impact' and
`substantial number of small entities.'''\23\ H.R. 527,
however, fails to clarify either of these terms. Instead, the
bill serves to institutionalize a pro-business regime at the
expense of public health and safety. H.R. 527 does not concern
agency compliance with the RFA or assist small entities with
regulatory compliance. Rather, H.R. 527 is intended simply to
slow down rulemaking.
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\23\SBREFA Compliance--Is It the Same Old Story?: Hearing Before
the H. Comm. on Small Business, 107th Cong. 51 (2002) (statement of
Victor Rezendes, Managing Director--Strategic Issues Team, U.S.
Government Accountability Office).
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VI. H.R. 527 OFFERS NO REAL ASSISTANCE TO SMALL BUSINESSES IN COMPLYING
WITH REGULATIONS
H.R. 527 does nothing to alleviate the burden on small
entities of complying with Federal regulations. It includes no
provision that offers assistance to small entities, whether
through subsidies, government-guaranteed loans, preferential
tax treatment for small firms, or fully funded compliance
assistance offices. Instead, the bill merely aggrandizes the
power of the SBA's Office of Advocacy and of the professional
lobbying class in Washington. If the proponents of H.R. 527
were serious about helping small entities deal with the
regulatory system, they would support instituting mechanisms
for small entities that actually help them participate directly
in rulemaking, without having to rely on Washington-based
intermediaries.
VII. H.R. 527 IMPOSES ADDITIONAL DUTIES AND COSTS ON AGENCIES, BUT
FAILS TO AUTHORIZE ANY ADDITIONAL FUNDING OR OFFSET IMPLEMENTATION COST
H.R. 527 substantially increases the responsibilities of
agencies with respect to rulemaking. For example, section 3 of
the bill requires agencies, with respect to final regulatory
analyses, to:
Ldescribe significant issues raised by any
public comments submitted in response to the initial
regulatory flexibility analysis, provide the agency's
assessment of the issues, and explain any changes made
in the proposed rule as a result of such comments;\24\
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\24\H.R. 527, 112th Cong., Sec. 3(b)(1)(B) (2011).
Ldescribe in detail why an agency did not
provide an estimate of the number of small entities
anticipated to be affected by the rule;\25\
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\25\H.R. 527, 112th Cong., Sec. 3(b)(1)(C) (2011).
Lspecify that the required descriptions be
detailed;\26\
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\26\H.R. 527, 112th Cong., Sec. 3(b)(1)(D) (2011).
Ldescribe any disproportionate economic impact
on small entities or a specific class of small
entities;\27\
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\27\H.R. 527, 112th Cong., Sec. 3(b)(1)(E) (2011).
Lsupply a detailed statement--including the
factual and legal bases--of the reasons why an agency
has determined that a proposed or final rule will not
have a significant economic impact;\28\ and
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\28\H.R. 527, 112th Cong., Sec. 3(d) (2011).
Lprovide in every instance (rather than simply
making discretionary, as under current law) a
quantifiable or numerical description of the effects of
a proposed rule and alternatives to a proposed rule or
a general description of such effects with a detailed
statement explaining why quantification is not
practicable or reliable.\29\
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\29\H.R. 527, 112th Cong., Sec. 3(e) (2011).
These heightened responsibilities and other duties imposed
by the bill will force agencies--and, therefore, taxpayers--to
incur considerable costs to implement H.R. 527. In fact, the
Congressional Budget Office estimates that implementing H.R.
527 will cost taxpayers $80 million over fiscal years 2012
through 2016. H.R. 527, however, fails to authorize any funding
for agencies to pay for the additional responsibilities imposed
on them by the bill. Moreover, it violates House rules by
failing to include any offset for its $80 million cost.
Unfortunately, the Majority refused to even consider how much
implementation of H.R. 527 would cost taxpayers when it
rejected an amendment offered by Rep. Sheila Jackson Lee (D-TX)
that would have merely required a GAO study on the cost impact
on agencies of implementing H.R. 527.
VIII. OTHER CONCERNS WITH H.R. 527
A. H.R. 527's Elimination of Agencies' Waiver and Delay Authority
Undermines the Agencies' Ability To Respond To Emergencies
Section 4 of H.R. 527 eliminates agencies' ability to waive
or delay any required initial regulatory flexibility analysis
or to delay any required final regulatory flexibility analysis
in the event of an emergency. By eliminating this safeguard,
H.R. 527 threatens to undermine an agency's ability to respond
to emergency situations.
In place of the emergency waiver or delay authority, the
bill empowers the Chief Counsel for Advocacy to issue
regulations about how agencies in general should comply with
the Act. The absurdity of this scheme is evident with this
illustration: in the event of an epidemic E. coli or listeria
infection caused by some item in our Nation's food distribution
network, or if there is an imminent environmental disaster that
could be addressed systemically through regulation, H.R. 527
mandates that an agency's response must be to ask the Chief
Counsel for Advocacy at SBA for guidance on whether and how to
respond.
This override of an agency's authority to respond to
emergencies without having to first go through the arduous and
time-consuming task of review and analysis is simply wrong.
Federal agencies are charged with promulgating regulations that
impact virtually every aspect of our lives, including the air
we breathe, the water we drink, the food we eat, the cars we
drive, and the play toys we give our children.
Small businesses, like all businesses, provide services and
goods that also affect our lives. It makes no difference to
someone who is breathing dirty air or drinking poisoned water,
whether the hazards come from a small or large business.
At the Committee markup, Rep. John Conyers, Jr., the
Committee's Ranking Member, offered an amendment that would
have restored the waiver or delay authority that allowed
agencies to quickly respond to emergencies without being
hampered or second-guessed by others. The Majority opposed this
amendment and it was not adopted.
B. H.R. 527's Expanded Use of SBREFA Review Panels Creates a Serious
Impediment To Agency Rulemaking
SBREFA amended the RFA in 1996 to require proposed rules of
the Environmental Protection Agency (EPA) and the Occupational
Safety and Health Administration (OSHA) be subject to an
advocacy review panel consisting of representatives of the
agency promulgating the rule, the Chief Counsel for Advocacy of
SBA, and OIRA.\30\ Section 5 of H.R. 527 expands this
requirement to major rules. As a result, this provision will
greatly slow down the rulemaking process and substantially
empower business interests to throw sand into the gears of
rulemaking. While the Majority argues that there is a need for
greater public participation in the rulemaking process, section
5 evidences what they actually mean, namely, that they want to
give a greater opportunity to business interests to influence
the rulemaking process.
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\30\5 U.S.C. Sec. 609(b) (2010).
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The use of SBREFA panels is already cumbersome. SBA's
Office of Advocacy, essentially a taxpayer-funded lobby for
businesses and small entity representatives, is already able to
delay the issuance of final EPA and OSHA rules and to shape
them in industry-friendly ways. Expanding the use of these
panels to include all agencies and rules that do not
necessarily have a significant economic effect on a substantial
number of small entities would guarantee that most rulemaking
would grind to a halt. Moreover, expanding review panels to
rules that do not necessarily have a significant economic
effect on a substantial number of small entities takes this
review panel process beyond the scope of the RFA.
In an effort to lessen the pernicious impact of this
provision, Rep. Steve Cohen (D-TN), Ranking Member of the CCAL
Subcommittee, offered two amendments at markup. One amendment
would have required that the panels include a representative of
the public or a public interest organization to ensure that a
consumer perspective be heard in the consideration of proposed
rules by these review panels. The second amendment would have
raised the dollar threshold contained in section 5 from $100
million in annual economic effect to $250 million because the
$100 million threshold for determining what would constitute a
``major rule'' was set back in 1981. The $250 million threshold
reflected an adjustment for inflation, but would have captured
the same universe of rules as those that would have been
captured by the $100 million threshold in 1981. The Majority
opposed both amendments and they were not adopted.
C. H.R. 527 Forces Agencies To Engage in Wasteful, Speculative Analyses
Section 2 of H.R. 527 defines, among other things,
``economic impact'' to include any reasonably foreseeable
``indirect economic effect'' that a proposed rule may have on a
small entity. This provision would force agencies to conduct
highly speculative and labor-intensive assessments, all of
which could be subject to litigation by well-financed business
interests. The bill effectively would require an agency to
engage in a virtual guessing game to divine the indirect
effects of a proposed regulation, which, of course, would be
subject to judicial review. In effect, H.R. 527 could kill a
rulemaking as a result of ``paralysis by analysis.''
D. H.R. 527 Would Overwhelm Agencies by Requiring Them To Conduct
Exhaustive Reviews of All Existing Rules
Section 6 of H.R. 527 threatens to undermine ability of the
agencies to fulfill their regulatory responsibilities because
of its requirement that agencies review all rules existing on
bill's enactment date. The review must consist of a
determination of whether these rules have a significant
economic impact on a substantial number of small entities,
regardless of whether they already went through a final
regulatory flexibility analysis previously.
As a result of this provision, agencies would be forced to
re-justify safeguards like regulations designed to ensure clean
air, clean water, food safety, automobile safety, ensure
workplace safety. Moreover, this unlimited look-back
requirement is a wasteful expenditure of taxpayer dollars as it
forces agencies to redirect their scarce resources to meet this
unhelpful and burdensome requirement. This substantial increase
in the workload of the agencies would occur while Congress
continues to slash funding for critical child welfare, indigent
assistance, and law enforcement programs.
To put this requirement in context, it should be noted that
there are currently more than 165,000 pages of regulations in
the Code of Federal Regulations, as well as several hundred
thousand guidance documents, some of which could also be
subjected to H.R. 527's look-back requirement.
In addition, section 2 of H.R. 527 expands the scope of
rules subject to the RFA by including amendments to land
management plans as well as Indian tribes and Internal Revenue
Service recordkeeping requirements. These types of guidance
documents traditionally are not ``rules'' subject to the RFA.
Expanding the scope of regulations subject to review will
require resources to go to the review process that would
otherwise be used by the agency to carry out their duties as
delegated by Congress.
E. H.R. 527 Imposes an Absurd and Wasteful Requirement that Agencies
Amend or Rescind all Existing Regulations, Even If They Are Not
Burdensome or Unnecessary
Section 6 of H.R. 527 requires agencies to review all
existing rules to determine whether they should be amended or
rescinded to minimize significant adverse impacts on small
entities. The section also requires that agencies amend or
rescind a rule, regardless of the findings of its review.\31\
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\31\H.R. 527, 112th Cong, Sec. 6 (2011).
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On its face, this appears to be an absurd and wasteful
requirement. Why require agencies to engage in a review to
determine whether a rule should be amended or rescinded if
amending or rescinding the rule is required regardless of what
the review would find? Taken literally, this provision would
require agencies to: (1) review all rules existing on H.R.
527's enactment date, and (2) amend or rescind every rule in
existence on that date regardless of the review's findings.
While we find much of H.R. 527's provisions to be wasteful,
surely, the sponsors of H.R. 527 could not have intended to
include this absurd and monumental waste of taxpayer resources.
Giving the sponsors the benefit of the doubt, Rep. Nadler
offered an amendment to change the ``shall'' to a ``may'' to
correct this apparent drafting error. The Majority inexplicably
opposed Rep. Nadler's amendment. In opposing the amendment, the
Chairman claimed that agencies must be given less discretion to
determine their course of conduct under H.R. 527.
While reasonable minds can differ as to the extent to which
Congress should give agencies decision-making discretion, in
this case, the Chairman's contention is misplaced, as this
amendment had nothing to do with agency discretion. Rather, it
simply sought to avoid either requiring a pointless review of
rules or pointless changes to all existing rules.
F. The Expansion of Judicial Review to Include All Agency Actions, and
Not Just ``Final Agency Action,'' Allows Special Interests To
Obstruct Rulemaking by Challenging Agency Action Before a Rule
Is Finalized
Section 7 of H.R. 527 creates the opportunity for well-
funded anti-regulatory business interests to engage in
frivolous litigation. It does this by expanding judicial review
to include review of agency actions prior to final agency
action. At the hearing before the Subcommittee, the Minority
witness expressed concern that H.R. 527's expansion of judicial
review to include challenges to the adequacy of regulatory
flexibility analyses would simply open the door to endless
litigation.\32\ Current law limits judicial review to final
agency actions.
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\32\Shull statement, unnumbered p. 5.
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Cass Sunstein, the current OIRA Administrator, aptly
summarized concerns about expanding judicial review of agency
rulemaking when he stated that
while there is an important role for judicial review of
regulations, a significant expansion of judicial review
in rulemaking could create unintended complexity in the
regulatory system, preventing important rules from
taking effect. An increase in litigation and judicial
authority might also increase regulatory uncertainty,
which would be most unwelcome in the current economic
situation. At the same time, additional litigation and
uncertainty can undermine important safeguards of
public health, welfare, and safety, including
safeguards that prevent illnesses and deaths.\33\
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\33\Federal Regulation: A Review of Legislative Proposals, Part I:
Hearing Before the S. Comm. on Homeland Security and Government
Affairs, 112th Cong. 3 (2011) (statement of the Honorable Cass R.
Sunstein, Administrator, Office of Information and Regulatory Affairs,
Office of Management and Budget).
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IX. CONCLUSION
For the numerous reasons stated above, H.R. 527 is a flawed
piece of legislation. There are more meaningful ways to assist
small businesses and other small entities in navigating the
regulatory landscape without threatening agencies' ability to
protect public health and safety. We urge our colleagues to
shift their attention to these alternatives.
John Conyers, Jr.
Howard L. Berman.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Melvin L. Watt.
Zoe Lofgren.
Sheila Jackson Lee.
Steve Cohen.
Henry C. ``Hank'' Johnson, Jr.
Mike Quigley.