Overview
Title
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.
ELI5 AI
H. R. 421 is a bill that wants to make sure that new rules are checked to see how they might affect small businesses, helping them follow the rules without getting into trouble for small mistakes, while also making sure they don't hurt others.
Summary AI
The bill, H. R. 421, aims to amend the Regulatory Flexibility Act to ensure that federal rules undergo a comprehensive analysis of their effects on small businesses and other small entities. It requires detailed initial and final regulatory flexibility analyses, considers rules with both direct and indirect economic impacts, and mandates reviews of regulations affecting small entities. The bill also expands the power of the Small Business Administration’s Chief Counsel for Advocacy and sets up a plan for periodic rule reviews and improved procedures for gathering public comments. Additionally, it introduces measures like waiving fines for first-time paperwork violations by small businesses under certain conditions.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
The Small Business Regulatory Flexibility Improvements Act aims to amend existing laws to ensure that federal rules and regulations fully consider their impact on small businesses. It seeks to expand the scope of analysis under the Regulatory Flexibility Act, focusing on how rules affect small entities, including not just direct but also indirect impacts. The bill requires more detailed analysis in regulatory processes and mandates regular reviews of existing rules to assess their continued impact on small businesses.
General Summary
The bill proposes significant changes to how federal agencies must consider the effects of their rules on small businesses. This includes defining what constitutes an "economic impact," incorporating land management plans in analyses, and allowing the Chief Counsel for Advocacy to play a more pronounced role in the oversight of agency regulations. It outlines new procedures for agency rule-making, requiring more detailed public reporting and regulatory plans. Additionally, the bill aims to enhance transparency and accountability by requiring agencies to regularly review existing regulations to determine their impact on small entities.
Significant Issues
Several issues emerge within the proposed legislation:
Inclusion of Various Organizations: The bill includes "tribal organizations" under its scope, which could affect their autonomy and raises concerns about the clarity of implications for these groups.
Mandates on Agencies: Agencies are required to post information swiftly online and perform detailed analyses, possibly imposing strict timelines and challenging expectations on their existing internal processes.
Chief Counsel Interventions: The Chief Counsel for Advocacy's enhanced role allows for intervention in agency decisions, which might slow down agency functions and introduce potential for overreach.
Quantification of Economic Impacts: Determining "reasonably foreseeable" indirect economic impacts may present challenges, leading to inconsistencies in how different agencies conduct their analyses.
Judicial Review: Changes to judicial processes concerning compliance might affect the timing and implications of legal actions, complicating compliance efforts without sufficient clarification.
Variability in Definitions: The potential for ambiguous division of responsibilities in establishing small business standards might lead to inconsistencies or broad interpretations that vary across different departments.
Public Impact
Broadly, this bill could offer more robust protections and considerations for small businesses, reducing unnecessary regulatory burdens by ensuring rules are aligned with small entities' capabilities. If successfully implemented, increased transparency and regular reviews may lead to a more efficient regulatory environment conducive to innovation and competition.
Impact on Stakeholders
Small Businesses: The primary beneficiaries, small businesses might experience reduced compliance burdens and enhanced clarity in their operational environments. These changes aim to offer small businesses a fairer regulatory landscape fostering growth.
Government Agencies: Agencies may face increased administrative demands, potentially requiring additional resources or adjustments to comply with detailed analytical requirements and timelines. The shift could add pressure to meet transparency goals without compromising efficiency.
Tribal Organizations and Community Groups: These organizations might face changes or requirements impacting their operations or governance, necessitating careful consideration of their unique political and social contexts.
Legal and Regulatory Experts: With added complexity in regulations, there may be an increased demand for expertise to navigate the intricacies of compliance and the expanded responsibilities of involved parties.
In conclusion, the proposed bill offers comprehensive improvements to federal regulatory processes concerning small businesses, though it also poses challenges in terms of clarity and implementation across diverse governmental sectors. Its success will depend on how effectively these reforms are translated into concrete actions without inducing unwieldy bureaucracy or legal ambiguities.
Financial Assessment
The financial references within the H. R. 421 bill contain specific allocations and terms regarding small businesses. These are laid out in different sections of the bill and touch upon how financial thresholds and definitions are used in regulatory contexts.
Definition and Size Standards
One of the bill's key financial references is the definition of a "small organization." According to the amendments in Section 2, any nonprofit enterprise is considered a small organization if it has a net worth that does not exceed $7,000,000 and has not more than 500 employees. This numeric threshold is important as it determines which organizations can access certain regulatory protections and considerations under the Regulatory Flexibility Act.
Economic Impact and Rule Proposals
Section 6 of the bill discusses criteria for evaluating the economic impact of proposed rules. A rule is deemed significant if it results in an annual economic effect of $100,000,000 or more. This threshold helps to determine which rules must undergo detailed economic analyses and potentially require additional oversight.
Impact on Small Entities
The focus on economic impact is directly tied to concerns about consistency and transparency in regulatory processes. The financial thresholds set forth, such as the $100,000,000 impact rule, are aimed at identifying significant rules that could heavily affect small entities. Although these thresholds ensure major impacts are reviewed, the lack of specific guidelines for what constitutes a "significant economic impact" may lead to the varied application by different agencies, as mentioned in the issues section.
Waiver of Fines
Section 14 introduces a provision for waiving fines for first-time paperwork violations by small businesses. This approach acknowledges the potential financial burden on small businesses and creates a buffer for those who have not violated similar requirements previously. Exceptions are made where violations might endanger public health or safety, suggesting a balance between lenient financial policies and maintaining public welfare.
In summary, the bill employs financial thresholds and definitions to delineate the scope of regulatory processes involving small businesses. While these thresholds establish clarity over what qualifies as a significant impact or small organization, concerns about their application may lead to inconsistent regulatory reviews and financial outcomes for small enterprises.
Issues
The inclusion of 'tribal organizations' in Section 601(5) (Section 2) may impact the autonomy of these organizations, and the implications of this inclusion are not clearly defined, raising potential ethical and political concerns.
The provision allowing the Chief Counsel for Advocacy to intervene in any agency adjudication (Section 5) could potentially lead to administrative delays and might be seen as an overreach, affecting agencies' operational efficiency.
The definition of 'economic impact' in Section 601 (Section 2) includes indirect effects, but it is unclear how 'reasonably foreseeable' indirect effects will be quantified or assessed, leading to potential inconsistencies in application across different agencies.
The requirement for agencies and the Small Business Administration to post information on their websites within 3 days (Section 3) could impose a tight timeline that may not account for potential delays or variations in internal processes, affecting transparency and efficiency.
The potential for ambiguity in the division of responsibilities between the Administrator and the Chief Counsel for Advocacy regarding the definition and approval of small business size standards (Section 10) could lead to inconsistencies or overly broad interpretations.
The language throughout various sections (Sections 4, 5, 7, and 8) is complex, which may be difficult for the general public or small entities to understand without legal or professional assistance, potentially affecting public accessibility and agency accountability.
The amendment to Section 611(a) regarding judicial review (Section 8) might alter legal implications or timing of compliance without clear justification or explanation, raising concerns about its impact on legal processes.
The waiver provision in subsection (f) of Section 6 could allow for bypassing outlined procedures without clear, stringent criteria, which might lead to situations where important reviews are skipped, affecting regulatory oversight.
The absence of specific guidelines for determining 'significant economic impact' on small entities in Section 610 (Section 7) may lead to varied and subjective interpretations by different agencies, potentially affecting the consistency of regulatory reviews.
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
The first section of the Act provides its short title, stating that it can be referred to as the “Small Business Regulatory Flexibility Improvements Act”.
2. Clarification and expansion of rules covered by the Regulatory Flexibility Act Read Opens in new tab
Summary AI
The section clarifies and expands rules under the Regulatory Flexibility Act to include more detailed definitions of terms such as "rule," "economic impact," and "small organization." It also covers rules affecting veterans' rights, tribal organizations, land management plans, certain interpretive rules related to revenue laws, and establishes conditions under which rules with direct or indirect impacts on small entities must be analyzed.
Money References
- (g) Definition of small organization.—Section 601(4) of title 5, United States Code, is amended to read as follows: “(4) SMALL ORGANIZATION.— “(A) IN GENERAL.—The term ‘small organization’ means any nonprofit enterprise which, as of the issuance of a 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.
3. Expansion of report of regulatory agenda Read Opens in new tab
Summary AI
The proposed changes to Section 602 of title 5 in the United States Code require agencies to describe the industry sectors affected by new rules and make a plain language summary of regulatory agendas available on their websites soon after publication. The Small Business Administration must also display summaries on its site to assist in understanding the potential impacts on small businesses.
4. Requirements providing for more detailed analyses Read Opens in new tab
Summary AI
The section of the bill amends various parts of title 5, United States Code, to enhance the requirements for regulatory flexibility analyses. It requires more detailed statements and quantifications in both initial and final analyses, ensures public access to analyses by requiring their publication on agency websites, and mandates cross-referencing with other regulatory documents when applicable.
607. Quantification requirements Read Opens in new tab
Summary AI
Agencies must provide either a numerical summary of how a proposed or final rule might impact things, or a simpler explanation if numerical data isn't possible.
5. Repeal of waiver and delay authority; additional powers of the Chief Counsel for Advocacy Read Opens in new tab
Summary AI
The bill changes the powers of the Chief Counsel for Advocacy by letting them create rules that agencies must follow when complying with regulations affecting small businesses, and consult on any additional rules agencies propose. The Chief Counsel can also be involved in agency decisions impacting small businesses but cannot start an appeal, and they've made adjustments to related legal references to align with these changes.
608. Additional powers of Chief Counsel for Advocacy Read Opens in new tab
Summary AI
The section gives the Chief Counsel for Advocacy of the Small Business Administration the power to create, modify, and amend rules for how agencies must comply with a specific chapter, after a period for public notice and comment. Additionally, the Chief Counsel can participate in agency proceedings to highlight the effects on small businesses, and may provide feedback on agency proposals, but cannot appeal decisions in those cases.
6. Procedures for gathering comments Read Opens in new tab
Summary AI
The amendment to Section 609 of title 5 of the United States Code describes the process an agency must follow before publishing a proposed rule, including providing relevant materials to the Chief Counsel for Advocacy of the Small Business Administration and setting up a review panel to assess the economic impact on small entities. It also outlines circumstances under which these requirements can be waived, specifies what constitutes a significant proposed rule, and allows small entities to request related reports and information.
Money References
- “(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, the Federal Government, State or local governments, tribal organizations, or geographic regions; “(3) significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets; or “(4) a significant economic impact on a substantial number of small entities.
7. Periodic review of rules Read Opens in new tab
Summary AI
The section outlines a requirement for federal agencies to regularly review rules with significant economic impacts on small businesses, aiming to amend or repeal them if needed. It mandates agencies to consult with small businesses, report findings to Congress, and seeks public input on which rules should be prioritized for review.
610. Periodic review of rules Read Opens in new tab
Summary AI
The section requires each government agency to create and publish a plan for regularly reviewing its rules that significantly affect small businesses, within a specified timeframe. The plan must aim to determine if these rules should stay the same, be changed, or be removed, and it should include steps for involving small businesses in the review process. Agencies must report their findings to Congress every year and provide a list of rules to be reviewed for public comment.
8. Judicial review of compliance with the requirements of the Regulatory Flexibility Act available after publication of the final rule Read Opens in new tab
Summary AI
The section modifies the Judicial review process under the Regulatory Flexibility Act, making it possible to review compliance following the publication of the final rule. It also allows the Chief Counsel for Advocacy to intervene in certain cases regarding agency compliance with specific sections of the law.
9. Jurisdiction of court of appeals over rules implementing the Regulatory Flexibility Act Read Opens in new tab
Summary AI
The section amends the jurisdiction of certain courts and agencies over rules related to the Regulatory Flexibility Act. It specifies that the court of appeals can review new rules under section 608(a) of title 5, and the Office of Advocacy of the Small Business Administration has specified authority concerning these rules. Additionally, it allows for more oversight and input on how agencies comply with administrative procedures.
10. Establishment and approval of small business concern size standards by Chief Counsel for Advocacy Read Opens in new tab
Summary AI
The section outlines amendments to the Small Business Act, allowing both the Administrator and the Chief Counsel for Advocacy to define what qualifies as a small business. It also allows for legal challenges to these definitions, where the Chief Counsel can be directly involved in the case.
11. Clerical amendments Read Opens in new tab
Summary AI
This section makes clerical changes to title 5 of the United States Code, such as updating definitions related to "agency," "small business," "small governmental jurisdiction," and "small entity." It also updates the headings and table of sections for certain parts, including incorporating references, certifications, quantification requirements, and the Chief Counsel for Advocacy's additional powers, while simplifying language in related procedures.
605. Incorporations by reference and certifications Read Opens in new tab
Summary AI
The section called SEC. 605 in the bill talks about using references to other documents and the process for making official confirmations or certifications.
12. Agency preparation of guides Read Opens in new tab
Summary AI
The section explains that government agencies are responsible for creating guides to help small businesses understand new rules. These guides should be easy to read, and agencies can work with small business groups to distribute them and seek their input while developing the guides.
13. Comptroller General report Read Opens in new tab
Summary AI
The section requires the Comptroller General of the United States to complete and make public a study within 90 days of the law’s enactment. This study will determine if the Chief Counsel for Advocacy of the Small Business Administration has the necessary capacity and resources to perform their duties under the new law.
14. Waiver of fines for first-time paperwork violations by small businesses Read Opens in new tab
Summary AI
The bill section proposes that federal agencies should not impose fines on small businesses for first-time paperwork violations unless certain conditions are met. These conditions include potential harm to the public, interference with crime detection, tax law violations, failure to correct the error within six months, or risks to public health or safety. If a violation threatens public health or safety, the business may still avoid fines by correcting the issue within 24 hours, unless the agency decides otherwise, in which case Congress must be notified.