September 28, 2000

Jamie Rappaport-Clark
Director
United States Fish and Wildlife Service
1849 C Street NW
Mail Stop 3012
Washington, DC 20240

RE:  Requirements for Regulatory Flexibility Act Compliance
     in Critical Habitat Designation

Dear Ms. Rappaport-Clark:

By way of introduction, the Office of Advocacy of the U.S.
Small Business Administration (SBA) was established by
Congress under Pub. L. No. 94-305 to represent the views of
small business before federal agencies and Congress.
Advocacy is also required by 612(a) of the Regulatory
Flexibility Act (RFA) (5 U.S.C.  601-612) to monitor agency
compliance with the RFA. The Chief Counsel of Advocacy is
authorized to appear as amicus curiae in regulatory appeals
from final agency actions, and is allowed to present views
with respect to compliance with the RFA, the adequacy of the
rulemaking record with respect to small entities, and the
effect of the rule on small entities.  Id.  On March 28,
1996, President Clinton signed the Small Business Regulatory
Enforcement Fairness Act (SBREFA), Pub. L. 104-121, which
made a number of significant changes to the RFA, the most
significant being provisions to allow judicial review of
agencies' compliance with the RFA. 5 U.S.C.  611.

Recently, the Fish and Wildlife Service (FWS) published the
following proposed rules in the Federal Register:

July 6, 2000   Endangerment and Threatened Wildlife and
          Plants; proposed Determination of Critical Habitat
          for Wintering Piping Plovers, Federal Register,
          Vol. 65, No. 130, p. 41782

July 6, 2000   Endangerment and Threatened Wildlife and
          Plants; proposed Determination of Critical Habitat
          for the Great Lakes Breeding Population of the
          Piping Plover, Federal Register, Vol. 65, No. 130,
          p. 41812

July 12, 2000  Endangerment and Threatened Wildlife and
          Plants; proposed Determination of Critical Habitat
          for the Morro Shoulderband Snail, Federal
          Register, Vol. 65, No. 134, p. 42962

The purpose of the proposed rules is to designate the
respective species as critical habitat pursuant to the
Endangered Species Act of 1973, as amended (ESA).

If the proposals were made final, Federal agencies would be
prohibited from funding, carrying out, or authorizing any
act that would destroy or adversely modify critical habitat.
According to FWS, the following activities have the
potential to destroy or adversely modify critical habitat:

     (1) Regulation of activities affecting waters of the
     United States by the U.S.Army Corps of Engineers under
     section404 of the Clean Water Act;
     (2) Regulation of water flows, water delivery, and
     diversion by Federal agencies;
     (3) Sale, exchange, or lease of lands owned by a
     Federal agency;
     (4) Road construction and maintenance and right-of-way
     designation;
     (5) Funding of low-interest loans to facilitate the
     construction of low-income housing by the Department of
     Housing and Urban Development;
     (6) Hazard mitigation and post-disaster repairs funded
     by the Federal Emergency Management Agency;
     (7) Promulgation of air and water quality standards
     under the Clean Air Act and the Clean Water Act and the
     cleanup of toxic waste and superfund sites under the
     Resource Conservation and Recovery Act (RCRA) and the
     Comprehensive Environmental Response, Compensation, and
     LiabilityAct by the U.S. Environmental Protection
     Agency;
     (8) Issuance of Endangered Species Act section
     10(a)(1)(B) permits by the Fish and Wildlife Service;
     and
     (9) Activities funded, carried out, or authorized by
     any Federal agency.

According to FWS, small entities carry out many of the
activities sponsored by Federal agencies within the proposed
critical habitat areas.  The activities are carried out by
small entities through contract, grant, permit, or other
Federal authorization.

Regulatory Flexibility Act Requirements

The RFA requires administrative agencies to consider the
effect of their actions on small entities, including small
businesses, small non-profit enterprises, and small local
governments.  See 5 U.S.C.  601, et. seq.; Northwest
Mining Association v. Babbitt, 5 F. Supp. 2d 9.  When an
agency issues a rulemaking proposal, the RFA requires the
agency to "prepare and make available for public comment an
initial regulatory flexibility analysis" which will
"describe the impact of the proposed rule on small
entities." 5 U.S.C.  603(a); Id..

Initial Regulatory Flexibility Analysis

The RFA requires agencies to consider the impact that a
proposed rulemaking will have on small entities.  If the
proposal is expected to have a significant impact on a
substantial number of small entities, the agency is required
to prepare an initial regulatory flexibility analysis
describing the reasons the action is being considered; a
succinct statement of the objectives of, and legal basis for
the proposal; the estimated number and types of small
entities to which the proposed rule will apply; the
projected reporting, recordkeeping, and other compliance
requirements, including an estimate of the small entities
subject to the requirements and the professional skills
necessary to comply; all relevant Federal which may
duplicate, overlap, or conflict with the proposed rule; and
the significant alternatives that accomplish the stated
objectives of the of the statues and that minimize any
significant economic impact of the proposed rule on small
entities.  5 U.S.C  603. The IRFA or a summary of the IRFA
shall be published in the Federal Register at the time of
the publication of general notice of proposed rulemaking.  5
U.S.C  603

In complying with section 603, an agency may provide either
a quantifiable or numerical description of the effects of a
proposed rule or alternatives to the proposed rule.  A more
general descriptive statement may be used if quantification
is not practicable or reliable. 5 U.S.C  607.

Certification In Lieu Of an IRFA

Section 605 of the RFA allows an agency to certify a rule,
in lieu of preparing an IRFA, if the proposed rulemaking is
not expected to have a significant economic impact on a
substantial number of small entities.  If the head of the
agency makes such a certification, the agency shall publish
such a certification in the Federal Register at the time of
the publication of the general notice of proposed rulemaking
along with a statement providing the factual basis for the
certification.  See 5 USC  605.

RFA Non-Compliance in Proposed Rulemakings

In the RFA sections of the three proposals, FWS states that
it will determine whether designation of critical habitat
will have a significant effect on a substantial number of
small entities.  In the economic analysis section of the
proposals, FWS states that it will conduct an analysis of
the economic impacts of the critical habitat designation
prior to a final determination.  Upon completion, FWS will
announce the availability of the draft economic analysis
with notice in the Federal Register and open a 30-day
comment period at that time.

Advocacy asserts that simply asserting that FWS will
determine whether designation of critical habitat will have
a significant effect on a substantial number of small
entities in the economic analysis is not sufficient for RFA
purposes.  Although the RFA does not require an agency to
perform a duplicative analysis of the impact, it does
require the agency to consider specific elements that may
not be required in ESA Section 4(a) economic analysis.
Whereas the RFA provides a detailed description of the
elements that the agency must consider in determining the
economic impact of a particular action on small entities,
the ESA merely states that economic impact shall be taken
into consideration.  16 U.S.C.  1533.  It is void of
specific requirements like the consideration of
alternatives, description of the industry, etc. that are
found in the RFA.

Moreover, the RFA requires that the IRFA or the summary of
the IRFA be published at the time of the proposal.  Advocacy
acknowledges that in the past we have advised FWS to make a
statement that the IRFA would be completed and published at
a later date.  However, the statement provided indicates
that an economic analysis that may not have all of the
elements of an IRFA will be prepared but not published.

Simply providing notice of availability is not sufficient
for RFA purposes.  The law requires the agency to publish
the IRFA or the summary of the IRFA for public comment.
Likewise, if the impact is not significant, the
certification, along with its factual basis must be
published.

Conclusion

The RFA is intended to ensure that an agency has sufficient
information to make regulatory decisions that are sensitive
to the economic impact of the action on small entities
during consideration of the rule and to take these impacts
into account before proposing a rule.  If the agency does
not perform the analysis until sometime after the
publication of the rule, it is not making a good faith
effort to comply with the RFA.  While Advocacy acknowledges
that on the issue of the Coastal California Gnatcatcher
Advocacy advised FWS to make a statement that the RFA
analysis would be published within 30 days of the proposal,
that was not meant to be a standard practice.  Advocacy was
only providing a temporary option for that regulation
because FWS had to comply with a court order.  FWS' decision
to use that approach systematically to address its RFA
obligations thwarts the intent of the RFA and denies the
public of the opportunity to review the material and make
meaningful comments.

Thank you for the opportunity to comment on this proposal.
If you have any questions, please feel free to contact us.
Please place a copy of these comments in the record of each
proposal.

Sincerely,

Jere W. Glover
Chief Counsel
Office of Advocacy

Jennifer A. Smith
Assistant Chief Counsel
for Economic Regulation