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 rules might affect small businesses, the people who make the rules have to be clear about how and why they do it. They also need to listen to small businesses if they think the rules might make things too hard for them.
Summary AI
S. 495, known as the "Prove It Act of 2025," aims to enhance transparency in federal regulatory decisions affecting small businesses. The bill proposes changes to Title 5 of the United States Code, requiring agencies to consider potential indirect costs that rules might impose on small entities. It establishes procedures for small entities to petition against certifications that claim rules will not significantly impact them and mandates reviews of such certifications. Additionally, it necessitates the publication of guidance documents for rules likely to impact small businesses and outlines consequences for agencies that fail to conduct periodic rule reviews.
Published
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AnalysisAI
General Summary of the Bill
The "Prove It Act of 2025" is a legislative proposal aiming to increase transparency in federal regulatory decisions that affect small businesses. The bill seeks to amend Title 5 of the United States Code by requiring agencies to evaluate not only the direct but also the reasonably foreseeable indirect costs of proposed rules on small entities. Moreover, it introduces a detailed mechanism for small businesses to object to regulatory certifications that claim a rule won’t significantly impact them. This is achieved through a petition and review process handled by the Small Business Administration's Chief Counsel for Advocacy. Additionally, the bill mandates periodic reviews of existing rules, sets forth requirements for publishing guidance on regulations impacting small businesses, and notably, states that no additional funds will be allocated for its implementation.
Summary of Significant Issues
One of the major issues with this bill is its complexity, particularly within the section 605A, which outlines the procedure for challenging a certification of no significant economic impact. The intricate steps and detailed petition requirements might deter small businesses from participating in the process. Moreover, the definitions of "significant economic impact" and "substantial number of small entities" are vague, possibly leading to inconsistent application across different agencies.
The bill also has a controversial penalty clause where, if an agency fails to cooperate or attend required meetings, the final rules will not apply to small entities. This might lead to legal challenges and regulatory gaps. Furthermore, the provision concerning the potential bypass of standard procedures when reinstating rules after periodic review could raise concerns about fairness and transparency.
Impact on the Public Broadly
The bill intends to increase government accountability and regulatory transparency, which could be beneficial for small businesses, encouraging a regulatory environment that considers their constraints. However, the legislation does not allocate new funds to meet its requirements, which might strain existing resources and hamper effective implementation.
While these changes aim to empower small businesses by giving them a louder voice in regulatory matters, the added complexity might overwhelm those without the resources or legal expertise to navigate the new processes. This issue may limit the broad public benefit intended by the bill, as the potential for increased bureaucratic hurdles could lead to delayed rulemaking and implementation, impacting the timeliness of regulatory protections and guidelines.
Impact on Specific Stakeholders
Small Businesses: The bill could greatly empower small businesses by offering them robust tools to challenge rules they perceive as detrimental. However, the complicated petition process might not be accessible to all small businesses, especially those with limited legal or financial resources, thus diluting its benefits.
Government Agencies: Agencies face new burdens under this legislation, requiring more detailed rule assessments and extended consultation processes with small entities. Without additional funding, the increased workload might detract from other core functions or delay regulatory actions.
Legal and Regulatory Experts: The bill could generate more work for legal advisors and consultants specializing in regulatory compliance as small businesses and agencies navigate the new requirements.
Large Businesses and Industries: These entities might experience indirect impacts as they often rely on clear, cohesive regulatory practices that could be stymied by delays in rulemaking. The bill's effects might lead to a regulatory environment that favors small entities, potentially altering competitive landscapes.
Overall, while the "Prove It Act of 2025" seeks to recognize and mitigate the regulatory impacts on small businesses, its practical implementation could face significant hurdles due to its procedural complexity and lack of additional funding. The balance of achieving transparency without imposing prohibitive barriers will be critical to its success.
Issues
The definition and handling of 'significant economic impact' and 'substantial number of small entities' is vague in sections 2 and 3, which might lead to inconsistent interpretation and application by various agencies, impacting the uniformity and predictability of regulatory reforms.
Section 605A(d)(4) introduces a penalty where the final rule does not apply to small entities if an agency fails to cooperate, which could lead to legal challenges and create gaps in compliance and enforcement, raising significant regulatory concerns.
The complexity and length of the review process outlined in section 605A, with multiple steps and detailed petition requirements, could discourage small entities from participation due to perceived difficulty and time burden, leading to limited feedback from those most impacted by regulations.
Section 610(d) allows for possible circumvention of the notice and comment procedures under section 553 if a rule is reinstated after going inactive, potentially raising concerns about bypassing procedural fairness and transparency in the rulemaking process.
The absence of specific deadlines for completing reviews and the lack of consequences in sections 2, 3, and 4, aside from initial steps, could lead to delays and inefficiencies, undermining the timeliness and effectiveness of regulatory reviews and adjustments.
The bill in section 5 states no additional funds are allocated for its implementation, potentially leading to resource constraints that could hinder effective enforcement and oversight, particularly given the increased responsibilities and processes imposed by the bill.
The process of conducting virtual or in-person meetings as required in section 605A(d)(1)(B) may impose logistical challenges and additional burdens on small entities, especially those not centrally located, adding complexity and delay to the review process.
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 outlines changes to Chapter 6 of Title 5, United States Code, requiring agencies to consider the potential indirect costs of a proposed rule on small entities and setting up a process for small entities to petition the Small Business Administration's Chief Counsel for Advocacy if they believe a rule will significantly impact them. It also details the procedures for reviewing these petitions, including initial assessments, possible full reviews, mandatory meetings, and potential penalties for agencies failing to participate, ensuring that rules with significant impacts on small entities are properly analyzed before implementation.
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.