Regulatory Transparency for Small Businesses Act
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- Crpt 118Hrpt851
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- Crpt 118Hrpt851
Summary
House Report 118-851, Part 1, ordered to be printed December 10, 2024 in the 118th Congress, 2d Session, submitted by the Committee on Small Business to accompany H.R. 8033, the Regulatory Transparency for Small Businesses Act, together with minority views. The report states that the committee reports the bill favorably without amendment and recommends that it do pass. It states that the bill's purpose is to define a factual basis in section 605(b) of the Regulatory Flexibility Act and to require agencies to show their work when certifying that a rule will not have a significant economic impact on a substantial number of small entities. It records a hearing held May 22, 2024 and a markup on September 10, 2024 at which no amendments were offered. It also carries the Congressional Budget Office cost estimate, the required committee statements, and minority views opposing the bill.
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“Regulatory Transparency for Small Businesses Act.”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/crpt-118hrpt851/
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118TH CONGRESS REPT. 118–851
" HOUSE OF REPRESENTATIVES !
2d Session Part 1
REGULATORY TRANSPARENCY FOR SMALL BUSINESSES
ACT
DECEMBER 10, 2024.—Ordered to be printed
Mr. WILLIAMS of Texas, from the Committee on Small Business,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 8033]
The Committee on Small Business, to whom was referred the bill
(H.R. 8033) to amend title 5, United States Code, to clarify the in-
formation required to be included in a certification by an agency
that a rule will not have a significant economic impact on a sub-
stantial number of small entities, having considered the same, re-
ports favorably thereon without amendment and recommends that
the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 2
IV. Committee Consideration ........................................................................... 2
V. Committee Votes ......................................................................................... 2
VI. Section-by-Section of H.R. 8033 ................................................................. 5
VII. Congressional Budget Office Cost Estimate ............................................. 5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 5
IX. Oversight Findings & Recommendations .................................................. 5
X. Performance Goals and Objectives ............................................................ 5
XI. Statement of Duplication of Federal Programs ........................................ 6
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 6
XIII. Federal Mandates Statement ..................................................................... 6
XIV. Federal Advisory Committee Statement ................................................... 6
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XV. Applicability to Legislative Branch ........................................................... 6
XVI. Statement of Constitutional Authority ...................................................... 6
59–006
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XVII. Changes in Existing Law Made by the Bill, As Reported ....................... 6
XVIII. Minority Views ............................................................................................ 8
I. PURPOSE AND BILL SUMMARY
On April 17, 2024, Rep. Luetkemeyer along with Reps. Meuser,
Mann and Salazar introduced H.R. 8033. The purpose of H.R. 8033,
the ‘‘Regulatory Transparency for Small Businesses Act,’’ is to de-
fine a ‘‘factual basis’’ in section 605(b) of the Regulatory Flexibility
Act (RFA), and to require agencies to show their work when certi-
fying that a bill will not have a significant economic impact on a
substantial number of small entities.
II. NEED FOR LEGISLATION
When agencies are drafting proposed rules, they must determine
whether a rule will have a significant economic impact on a sub-
stantial number of small entities. If it does, then the agency must
complete an analysis under the RFA. If it does not, the agency
merely must certify that it does not.
Certifying saves the agency the headache of doing an analysis,
so often times despite the true impact of a rule, an agency will im-
properly certify that the rule will not have a significant impact de-
spite evidence to the contrary.
This legislation will require agencies to show their work when
certifying that a bill will not have a significant economic impact on
a substantial number of small entities to ensure that a proper cer-
tification done.
III. HEARINGS
In the 118th Congress, the Committee held one hearing exam-
ining the issues covered in H.R. 8033. On May 22, 2024, the Com-
mittee held a hearing titled ‘‘Burdensome Regulations: Examining
the Biden Administration’s Failure to Consider Small Businesses’’
which examined the impacts of the Biden Administration’s burden-
some regulatory landscape and explored ways to support small
businesses and overcome agencies’ noncompliance with the RFA.
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on September 10, 2024 and ordered H.R.
8033 reported to the House of Representatives. During the markup
no amendments were offered.
V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list the recorded votes on the mo-
tion to report legislation and amendments thereto. The Committee
voted to favorably report H.R. 8033 to the House of Representatives
at 2:24 PM.
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VI. SECTION-BY-SECTION OF H.R. 8033
Section 1: Short title
This bill may be cited as the ‘‘Regulatory Transparency for Small
Businesses Act.’’
Section 2: Information required to be included in a certification by
an agency that a rule will not have a significant economic im-
pact on a substantial number of small entities
When certifying that a rule will not have a significant economic
impact on a substantial number of small entities, the agency must
include the number of impacted small entities, a cost estimate for
implementation of the rule, whether these costs represent a signifi-
cant economic impact, the criteria used to make the determination,
and an estimate of the number of small entities which will experi-
ence a significant economic impact.
VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to clause 3(d)(1) of House rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of the
Congressional Budget Office pursuant to section 402 of the Con-
gressional Budget Act of 1974. The Committee has requested but
not received from the Director of the Congressional Budget Office
a cost estimate for the Committee’s provisions. Once available, the
cost estimate will be published in the Congressional Record.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX
EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. While the Committee has not received an
estimate of new budget authority contained in the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to Sec. 402 of the Congressional Budget Act of 1974, the Com-
mittee does not believe that there will be any additional costs at-
tributable to this legislation. H.R. 8033 does not direct new spend-
ing, but instead reallocates funding independently authorized and
appropriated.
IX. OVERSIGHT FINDINGS & RECOMMENDATIONS
In accordance with clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the over-
sight findings and recommendations of the Committee on Small
Business with respect to the subject matter contained in the H.R.
8033 are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
With respect to the requirements of clause 3(c)(1) of rule XIII of
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the Rules of the House of Representatives, the performance goals
and objectives of H.R. 8033 are to require agencies to include a de-
tailed analysis of how they reached their determination of whether
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a rule will have a significant economic impact on a substantial
number of small entities when considering whether or not they
must conduct a full regulatory flexibility analysis.
XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
of Representatives, no provision of H.R. 8033 is known to be dupli-
cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND
LIMITED TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal man-
dates prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act.
XIV. FEDERAL ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
XV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to clause 7 of rule XII of the Rules of the House, the
Committee finds that the authority for this legislation in Art. I, § 8,
cl.1 of the Constitution of the United States.
XVII. 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 omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
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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 (new matter is printed in italics
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and 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
* * * * * * *
§ 605. Avoidance of duplicative or unnecessary analyses
(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.
(b) Sections 603 and 604 of this title shall not apply to any pro-
posed 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 state-
ment providing the factual basis for such certification. The agency
shall provide such certification and statement to the Chief Counsel
for Advocacy of the Small Business Administration.
(c) In order to avoid duplicative action, an agency may consider
a series of closely related rules as one rule for the purposes of sec-
tions 602, 603, 604 and 610 of this title.
(d) The certification under subsection (b) shall include, at a min-
imum, the following:
(1) The approximate number of small entities, if any, im-
pacted by the rule, and an identification of any such small enti-
ty (including the North American Industry Classification Sys-
tem code, if applicable).
(2) An estimate of the total cost of implementing the rule, in-
cluding the cost of compliance with the rule, which may be
measured as an estimated percentage of the revenue of the
small entities determined to be impacted under paragraph (1),
or another reasonable measure of economic significance.
(3) A determination of whether the costs of compliance under
paragraph (2) represent a significant economic impact, and the
criteria used to make such determination.
(4) A determination of the number of small entities that will
experience a significant economic impact as a result of the rule,
whether that number is substantial, and the criteria used to
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make such determinations.
* * * * * * *
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MINORITY VIEWS
The bill would amend Section 605 of the Regulatory Flexibility
Act (RFA) to require agencies to include new requirements for the
certification that rules will not have a ‘‘significant economic impact
on a substantial number of small entities’’ (SEISNSE). The new re-
quired information would be:
• The approximate number of small entities impacted and
identification of any such small entity (including their NAICS
code);
• An estimate of total cost of implementing the rule, includ-
ing the cost of compliance with the rule, measured as percent-
age of revenue of the small entities (or other reasonable meas-
ure);
• A determination of whether those costs are significant, and
the criteria used to make the determination; and
• A determination of whether the number of small entities
that will experience a significant impact is substantial and the
criteria used to make the determination.
The bill is a solution in search of a problem. Under current law,
agencies are required to certify whether a rule would have a
SEISNSE and submit the certification and factual basis in the Fed-
eral Register at the time of the publication of the proposed and
final rule.1 If a certification is not adequate, courts will overturn
the rule. In amending the RFA to require a statement of factual
basis, Congress intended that agencies provide more than a
boilerplate and unsubstantiated statement. The factual basis has to
be meaningful.
The bill imposes a cost analysis requirement for every rule, not
just those that have a SEISNSE. While agencies include some of
these requirements in their factual basis, the requirement for an
estimate of the total cost of implementing the rule, including the
cost of compliance with the rule is not required for every rule. Only
economically significant rules are required to have a cost-benefit
analysis.2 The APA does not require economic analyses when rules
are proposed; and the RFA requires initial regulatory flexibility
analyses only on rules that will have a SEISNSE. Moreover, this
bill would extend the cost requirement to a vast majority of rules,
but not require agencies to calculate the benefits of the rules, which
is only half of the ledger. Even more troubling, the cost estimate
would be extended to all rules, even those that do not impact small
businesses. For example, the U.S. Coast Guard has published thou-
sands of rules in the Federal Register to declare safety zones for
public events, like firework displays or triathlons. It doesn’t make
sense to require the cost estimate for rules that will not impact
small businesses, and it is a waste of taxpayers’ dollars. Moreover,
the bill removes any flexibility given to agencies to determine the
most appropriate level of analysis.
The new procedural requirements to be included in the certifi-
cation are very detailed, frequently unavailable to agencies, and
provide no flexibility in instances where the information is difficult
1 OFF. OF ADVOCACY, A Guide for Government Agencies: How to Comply with the Regulatory
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Flexibility Act, U.S. SMALL BUS. ADMIN. (Aug. 2017), https://advocacy.sba.gov/wp-content/
uploads/2019/06/How-to-Comply-with-the-RFA.pdf.
2 CONG. RESEARCH SERV., COST BENEFIT ANALYSIS IN FEDERAL AGENCY RULEMAKING, 1–2
(Mar. 8, 2022).
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9
to obtain. As drafted, the provisions require agencies to identify
every specific small entity and provide an estimate of revenue for
each specific small entity impacted, which would be practicably im-
possible if the small entity is unknown. Congress created the rule-
making process to allow the public to provide agencies with infor-
mation necessary to make informed decisions. Moreover, the lan-
guage is inconsistent with the RFA in that it does not include lan-
guage like ‘‘to the extent practicable’’ or ‘‘where feasible’’ to take
into consideration a situation where the data is unknown,
unquantifiable, or unavailable.
In sum, this bill would require agencies with limited resources to
perform extremely detailed data and analytical requirements for
every rule, even if a rule would not have a significant impact on a
significant number of small businesses.
The bill provides no additional resources to agencies to conduct
a cost estimate for every rule or obtain the detailed information for
the certification. This requirement for detailed analysis for all rules
would detract from the quality of analysis for rules in which the
RFA is triggered.
The bill’s detailed requirements would also be subject to judicial
review. Specifically, the new subsection (d) would detail the re-
quirements for the certification in 605(b), and those certifications
are subject to judicial review under 611(a). In essence, if an agency
failed to comply with one of the new procedural requirements the
rule could be overturned.
The Majority is concerned that agencies are improperly certifying
that rules do not have a SEISNSE. It is important to note that the
Office of Advocacy (Advocacy), an independent agency, is respon-
sible for monitoring agencies’ compliance with the RFA. In testi-
mony before the Committee, Mr. Clark, the Acting Chief Counsel
of Advocacy stated, ‘‘our concern when an agency does, in fact, at-
tempt to certify a regulation that the certification has a factual
basis. And the factual basis should set forth reasons why they feel
that the impact is minimum or to no extent on small business. And
when agencies fail to give us the factual basis, we do bring it to
their attention.’’ 3
Moreover, with regard to DOL’s Walkaround Rule, Advocacy
didn’t state the certification was wrong, it just said that the agency
should conduct more outreach and better explain the impact of the
proposed rule on small businesses. In another instance, Advocacy
sent a comment letter to EPA raising concerns over the improper
certification of the rule requiring one-time reporting and record-
keeping requirements for Asbestos. In the final rule, the EPA pro-
vided an exemption to businesses with annual sales threshold of
$500,000 or less, in any calendar year from 2019 to 2022, saving
small businesses 144 million.4
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3 Reviewing the SBA’s Office of Advocacy Report on the Regulatory Flexibility Act, Hearing
Before the H. COMM. ON SMALL BUS., 118th Cong. (Jun. 22, 2023).
4 OFF. OF ADVOCACY, ANNUAL REPORT ON THE REGULATORY FLEXIBILITY ACT, (Jun. 2024).,
http://advocacy.sba.gov/wp-content/uploads/2024/06/RFA-FY23_final.pdf.
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For these reasons, I oppose the legislation.
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
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