The Honorable Rohit Chopra, Consumer Financial Protection Bureau — Committee on Small Business (February 22, 2023)

Summary

Letter dated February 22, 2023, from the Committee on Small Business to Rohit Chopra, Director of the Consumer Financial Protection Bureau, about the Bureau's implementation of the Regulatory Flexibility Act, the Small Business Regulatory Enforcement Fairness Act, and Executive Order 13272. The letter states that Republicans on the Committee wrote last Congress and that the Committee appreciated the narrative response. It says the Office of Advocacy wrote on January 6, 2022, that the Bureau's Initial Regulatory Flexibility Analysis for its Notice of Proposed Rulemaking on Small Business Lending Data Collection was insufficient. It requests documents and information by March 10, 2023.

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                                             February 22, 2023

The Honorable Rohit Chopra
Director
Consumer Financial Protection Bureau
1700 G St. N.W.
Washington, D.C. 20552

Dear Director Chopra:

        The Committee on Small Business is investigating the Consumer Financial Protection
Bureau’s (CFPB) implementation of the Regulatory Flexibility Act (RFA), the Small Business
Regulatory Enforcement Fairness Act (SBREFA), and Executive Order 13272 (EO13272).1
Republicans on this Committee wrote to you last Congress and we appreciated your narrative
response. We write today to request additional documents and information related to our
investigation.

         As mentioned in our last letter, the RFA, SBREFA, and EO13272 were designed to
provide small businesses notice of proposed agency rules that affected their business and provide
them the opportunity to participate in the process.2 Despite this stated goal, it seems that some
agencies are failing to properly implement these measures to the detriment of small businesses
across the country. In fact, your agency received a letter from the Office of Advocacy
(Advocacy) in the Small Business Administration (SBA) on January 6, 2022, noting that your
Initial Regulatory Flexibility Analysis (IRFA) for the Notice of Proposed Rulemaking on Small
Business Lending Data Collection was insufficient.3 Advocacy argued that you underestimated
the economic impact analysis and you failed to consider less costly alternatives.4

       As you are well aware, agencies across the federal government are provided discretion
when determining a regulation’s impact on the small businesses. Agencies are required to
produce an IRFA in proposed rules only after the agency determines the proposed rule is


1
  5 U.S.C.§§ 601-12; Pub. L. No. 104-121 (Mar. 29, 1996); Proper Consideration of Small Entities in Agency
Rulemaking, 67 Fed. Reg. 53,461 (Aug. 16, 2002).
2
  5 U.S.C.§§ 601-12.
3
  Letter from Major L. Clark, III, Deputy Chief Counsel, and Jennifer A. Smith, Asst. Chief Counsel, Office of
Advocacy, U.S. Small Bus. Admin., to Rohit Chopra, Dir., Consumer Fin. Protection Bureau (Jan. 6, 2022),
available at https://cdn.advocacy.sba.gov/wp-content/uploads/2022/01/20105345/FINAL_CFPB-Small-Business-
Lending-Data-Collection-for-Filing_1.6.22.pdf.
4
  Id.
The Honorable Rohit Chopra
February 22, 2023
Page 2 of 4

expected to have a “significant impact” on a “substantial number of small entities.”5 If not, the
agency simply certifies the rule will not have a significant economic impact on a substantial
number of small entities and provides a “factual basis for such certification.”6 That certification
is published in the Federal Register and reported to the Chief Counsel for Advocacy at SBA at
the time the proposed or final rule is published for public comment.7

        If the agency determines that the proposed rule will have a significant impact on a
substantial number of small entities, section 212 of SBREFA requires agencies to publish one or
more small entity compliance guides for each rule, or group of rules.8 Additionally, in the final
rule, the agency needs to publish a Final Regulatory Flexibility Analysis (FRFA) that includes
but is not limited to “a description of and an estimate of the number of small entities to which the
rule will apply or an explanation of why no such estimate is available.”9

       Small businesses across America deserve to know how the CFPB is working to consider
small businesses in their rulemaking process. We therefore request the following documents and
information, as soon as possible but no later than March 10, 2023:

    1. Provide all small entity compliance guides produced or in use at the agency within the
       last calendar year.

    2. Provide the name, docket number, and citation of all rules, proposed and final, that that
       the agency certified as having no significant impact on a substantial number of small
       entities from 2020 to present.

    3. All documents and communications relating to the agency’s determination of whether
       there was a “significant impact” on a “substantial number of small entities” for all
       proposed and final rules from 2020 until present.

    4. All documents and communications detailing any and all factors the agency considers
       when determining whether the proposed rule will have a “significant impact” on a
       “substantial number of small entities” and the weight of each factor given in the
       determination.

    5. All documents and communications relating to consideration of alternate rule proposals
       when the agency has determined a proposed or final rule has a substantial impact on a
       substantial number of small entities from 2020 until present.




5
  5 U.S.C. § 603(a).
6
  5 U.S.C. § 603(b).
7
  Id.
8
  Small Business Regulatory Enforcement Fairness Act, Pub. L. 104-121, § 212 (as amended by the Small Business
and Work Opportunity Act of 2007, Pub. L. 110-28 § 8302).
9
  5 U.S.C. § 604(a)(4).
The Honorable Rohit Chopra
February 22, 2023
Page 3 of 4

   6. All documents and communications relating to instances where input from mandated
      SBREFA panels compelled the agency to amend a proposed rule, with supporting
      documents, from 2020 to present.

   7. All documents and communications relating to the standards the agency uses to
      determine its “factual basis” to support a determination that a proposed rule would not
      have a significant impact on a substantial number of small businesses.

        To schedule the delivery of responsive documents or ask any related follow-up questions,
please contact Committee on Small Business Majority Staff at (202) 225-5821. The Committee
on Small Business has broad authority to investigate “problems of all types of small business”
under House Rule X. Thank you in advance for your cooperation with this inquiry.


                                            Sincerely,




_________________________                          _________________________
Roger Williams                                     Blaine Luetkemeyer
Chairman                                           Vice Chairman
Committee on Small Business                        Committee on Small Business



_________________________                          _________________________
Beth Van Duyne                                     Pete Stauber
Chairman                                           Member of Congress
Subcommittee on Oversight,                         Committee on Small Business
Investigations, and Regulations



_________________________                          _________________________
Dan Meuser                                         Jake Ellzey
Member of Congress                                 Member of Congress
Committee on Small Business                        Committee on Small Business
The Honorable Rohit Chopra
February 22, 2023
Page 4 of 4




_________________________                     _________________________
Marc Molinaro                                 Aaron Bean
Member of Congress                            Member of Congress
Committee on Small Business                   Committee on Small Business



_________________________
Nick LaLota
Member of Congress
Committee on Small Business



cc:   The Honorable Nydia M. Velasquez, Ranking Member
      Committee on Small Business

      The Honorable Dean Phillips, Vice Ranking Member
      Committee on Small Business


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