Overview
Title
To amend title 5, United States Code, to require greater transparency for Federal regulatory decisions that impact small businesses, and for other purposes.
ELI5 AI
The "Prove It Act of 2025" wants to make sure that when the government makes new rules that can affect small businesses, everyone can see how those decisions are made, and small businesses get to say if they think those rules are bad for them.
Summary AI
The "Prove It Act of 2025" aims to make federal regulatory decisions more transparent, particularly those affecting small businesses. It amends existing laws to ensure agencies consider both direct and indirect costs when creating new rules, and allows small businesses to petition for a review if they believe a proposed rule will economically harm them. The bill outlines a process for the Small Business Administration's Chief Counsel to review such petitions and requires federal agencies to publish guidance documents online for public feedback. It also specifies that if an agency fails to review a rule every ten years, the rule becomes ineffective unless reinstated after public commentary.
Published
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AnalysisAI
General Summary of the Bill
The "Prove It Act of 2025," formally known as H.R. 1163, is a proposed legislation that aims to enhance transparency in federal regulatory decisions, specifically those affecting small businesses. By amending Title 5 of the United States Code, the bill requires federal agencies to consider indirect costs when proposing rules that may impact small entities. A key feature is the establishment of a process whereby small businesses, or groups representing their interests, can petition for a review if they believe a rule could significantly affect them. The bill sets out guidelines for these reviews and also mandates that agencies publish guidance documents for rules with significant economic implications for small businesses.
Summary of Significant Issues
Several significant issues are highlighted within the bill:
Complexity for Small Entities: The bill details a complex petition and review process that may deter small businesses from participating due to its intricate demands and the need for specific details and proposed solutions.
Ambiguity in Definitions: Key terms such as "significant economic impact" and "substantial number of small entities" lack clear definitions, potentially leading to inconsistent application across different cases.
Review Process Efficiency: The bill imposes a 10-day timeframe for initial reviews by the Chief Counsel but does not specify a timeline for completing the full review process, which might result in inefficiencies and delays.
Penalties and Exemptions: The bill's penalization clause could create legal challenges by exempting small entities from a rule if a government agency fails to cooperate in the review process, thereby potentially undermining regulatory enforcement.
Reinstatement Criteria: There is a lack of specified criteria for rule reinstatement, raising concerns about procedural fairness and transparency, as agencies might bypass standard processes for reinstating rules.
Impact on the Public and Specific Stakeholders
Broad Public Impact:
The Prove It Act of 2025 could lead to increased regulatory accountability by requiring agencies to thoroughly consider and document the economic impact of their actions on small businesses. This has the potential to promote economic health and stability by ensuring regulations do not unintentionally burden small businesses, which are critical drivers of job creation and innovation.
Impact on Small Businesses:
Small businesses stand to benefit from the bill's focus on transparency and consideration of indirect costs. The ability to petition for reviews when they feel unfairly impacted could empower them to have a say in the regulatory process. However, the detailed and resource-intensive nature of filing petitions may disproportionately affect them, especially those with limited administrative or financial capacity to engage in such processes.
Impact on Federal Agencies:
Federal agencies would face increased responsibilities to account for indirect costs and review petitions, potentially without additional resources due to the "No additional funds" provision. This may strain agency capacities and impact their ability to efficiently uphold regulatory duties, especially if the volume of petitions is significant.
Impact on Regulatory Oversight:
Enhanced oversight and review mechanisms may improve the quality of regulations and prevent overly burdensome rules. However, the lax consequences for failing to meet review deadlines might lower compliance incentives for agencies, possibly affecting the overall efficacy and timely reevaluation of regulations affecting small businesses.
In conclusion, while the Prove It Act of 2025 presents an opportunity to refine regulatory impacts on small businesses and improve transparency, its success will largely depend on addressing the issues of complexity, resource demands, and clarity in definitions to ensure effective and equitable implementation.
Issues
The complexity and burden imposed on small entities to file a petition for review under Section 605A could discourage participation due to the intricate requirements for providing specific details, proposed solutions, and supporting data. This might disproportionately impact small businesses with limited resources and capabilities to navigate these demands.
Section 2 and Section 605A lack clear definitions for 'significant economic impact' and 'substantial number of small entities,' leading to potential inconsistencies in application of these terms, which could impact the effectiveness of the bill in genuinely protecting small businesses.
The 10-day timeframe for the Chief Counsel to make a prima facie review decision under Section 605A without specified deadlines for completing the entire review process for petitions might lead to inefficiencies and delays, causing uncertain waiting periods for small businesses.
The penalty clause in Section 605A (d)(4) could create legal complications by exempting non-compliant small entities from a final rule if an agency fails to cooperate in a review process, potentially undermining the rule of law and leading to uneven regulatory application.
The lack of detailed criteria under Section 4 for reinstating a rule raises concerns about procedural fairness and transparency, potentially allowing rules to bypass traditional notice and comment rulemaking processes, which might result in arbitrary reinstatement decisions.
Section 3's ambiguity regarding terms like 'other relevant documents' and the absence of a specified timeline for publishing guidance documents could result in inconsistencies in agency practices, potentially compromising the intent of transparency.
Failure to define consequences for agencies if review processes are not completed on time under Section 610 could lead to lax compliance and diminished accountability among regulatory bodies, impacting the effectiveness of regulatory oversight.
The logistical and participation format requirements of required meetings under Section 605A (d)(1)(B) are not specified, which could pose challenges for small businesses, particularly those that are widely dispersed geographically.
Without additional funding as per Section 5, the effective implementation of the act’s amendments could be jeopardized, especially given the resource-intensive nature of conducting detailed reviews and analyses as prescribed.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
This section specifies that the official short title of the legislation is the “Prove It Act of 2025.”
2. Initial regulatory flexibility analysis Read Opens in new tab
Summary AI
The section amends Chapter 6 of Title 5 of the U.S. Code to require agencies to consider indirect costs on small businesses when proposing rules and allows small entities to petition for a review if they believe a rule significantly impacts them. This section also outlines a review process by the Chief Counsel for Advocacy, including initial and full reviews, consultation opportunities, and potential penalties for non-compliant agencies, ensuring small business concerns are addressed in regulatory processes.
605A. Review procedures relating to initial regulatory flexibility analysis certifications Read Opens in new tab
Summary AI
The section outlines a process for small entities to challenge a government agency's claim that a new rule won't significantly affect them. If small businesses disagree, they can ask for a review, and if it merits, the rule may require further analysis to ensure it doesn't negatively impact them.
3. Publication of guidance Read Opens in new tab
Summary AI
Section 3 of the bill updates the U.S. Code to require that if a government agency believes a new rule will have a big economic effect on many small businesses, they must post all relevant guidance documents on the internet, and allow people to comment on them to give these businesses a chance to share their thoughts and concerns.
4. Review procedures for section 610 periodic review of rules Read Opens in new tab
Summary AI
The proposed changes to Section 610 of title 5 in the United States Code require agencies to review rules every 10 years, considering indirect costs among other factors. If an agency fails to conduct this review, the rule becomes ineffective until the agency publishes a notice and gathers public comments, potentially reinstating the rule within 180 days if deemed necessary.
5. No additional funds Read Opens in new tab
Summary AI
The section states that no new money will be provided to implement this Act or the changes it makes.