Report on the Regulatory Flexibility Act

FY 2005

Annual Report of the Chief Counsel for Advocacy on

Implementation of the Regulatory Flexibility Act and

Executive Order 13272

April 2006

The full text of this report is available on the Office of
Advocacy's Internet site at http://www.sba.gov/advo/.
Reprints in paper or microfiche are available for purchase
from the National Technical Information Service, 5285 Port
Royal Road, Springfield, VA 22161.

To the President
and the Congress
of the United States

I am pleased to present to Congress and the President this
Report on the Regulatory Flexibility Act, FY 2005. Included
in this report is the status of agency compliance with
Executive Order 13272. The Regulatory Flexibility Act of
1980 (RFA) requires agencies to consider the impact of their
rules on small entities and examine significant alternatives
that minimize small entity impacts. Similarly, Executive
Order 13272 (E.O. 13272) directs agencies to submit draft
rules that may have a significant economic impact on small
entities to the Office of Advocacy for review and to address
Advocacy's comments in the analysis accompanying the final
rule. It also requires the Office of Advocacy to train
regulatory agencies in how to comply with the RFA and E.O.
13272.
  September 2005 marked the 25th anniversary of the RFA.
The anniversary marked a significant milestone and gave us
the opportunity to look back at how the law has been working
and to look ahead toward making it work even better. On
September 19-20, 2005, exactly 25 years after the RFA was
signed, the Office of Advocacy convened a symposium with our
key partners in the implementation of the law. Our
invitation list included federal agency contacts, key
members of Congress, regulatory economists, e-regulation
developers, attorneys involved in RFA litigation, oversight
officials from the Office of Management and Budget,
officials involved in regulatory flexibility at the state
level, trade association representatives, and, most
important, small business people. We spent September 20 in
panel discussions on various aspects of how the law is
implemented, including e-rulemaking, regulatory research,
small business outreach, judicial review, and the process
for reducing existing regulatory burdens. Conference
participants had the opportunity to participate in the
training Advocacy has been offering to federal agencies on
proper RFA implementation. The RFA Symposium Conference
Proceedings are available on Advocacy's website at
http://www.sba.gov/advo/rfa_sym0905.pdf.
  In conjunction with the symposium, we released a new
Advocacy-sponsored study by Mark Crain on The Impact of
Regulatory Costs on Small Firms. The study shows that the
smallest firms bear the largest per-employee burden of
federal regulatory compliance costs. Firms with fewer than
20 employees annually spend $7,647 per employee to comply
with federal regulations, or 45 percent more than the $5,282
per employee spent by firms with 500 or more employees. The
report analyzes compliance costs for economic, workplace,
environmental, and tax regulations, and details regulatory
costs for five sectors: manufacturing, trade (wholesale and
retail), services, health care, and other (a residual
category). The study finds that the compliance cost per
employee for small manufacturers is at least double that for
medium-sized and large firms. The annual cost of U.S.
federal regulations totaled $1.1 trillion in 2004. The
report can be found on the Office of Advocacy website at
www.sba.gov/advo/research/regulation.html.
  The Office of Advocacy trained more than 20 agencies on
the RFA in accordance with the requirements of E.O. 13272 in
fiscal year (FY) 2005. Our office also submitted written
comments on a variety of agency rules, testified before
Congress on small business issues and potential legislative
changes to the RFA as well as agency compliance with the
RFA, and participated in Small Business Regulatory
Enforcement Fairness Act (SBREFA) panels focusing on three
EPA rules. The office worked successfully with seven states
to pass state regulatory flexibility legislation in 2005.
  In FY 2005, two cases were decided by the United States
Court of Appeals for the District of Columbia Circuit (D.C.
Circuit) related to the RFA. The first case was U.S. Telecom
Ass'n v. FCC, 400 F.3d 29 (D.C. Cir., March 11, 2005). In
February 2004, Advocacy filed a notice of intent to file a
"friend of the court" brief with the D.C. Circuit. In June
2004, Advocacy withdrew its notice of intent from the court
and reached a settlement with the Federal Communications
Commission (FCC). The FCC agreed to more fully consider
impacts on small business and to urge state regulators to
consider the concerns of small rural telecom providers that
seek waivers to the new portability rules. The other case
decided by the D.C. Circuit was National Association of Home
Builders v. United States Army Corps of Engineers, Case No.
04-5009 (D.C. Cir., July 29, 2005). Plaintiffs challenged
nationwide permits issued under the Clean Water Act because
the Corps did not conduct a flexibility analysis as required
by the RFA. The Corps argued that permits were not rules
subject to the Administrative Procedure Act (APA) or RFA.
The D.C. Circuit disagreed and ruled that permits of general
applicability are rules subject to the APA.
  Small entities continued to help us identify and
prioritize regulations that would significantly affect their
operations. Advocacy hosted numerous roundtables to gather
small entity input on the regulatory process and key rules.
Training small business stakeholders on the valuable tools
provided by the RFA and E.O. 13272 continued to help us
engage a broader advocacy community and leverage limited
resources.
  RFA training continues to improve agency compliance in
three important ways: 1) Improvements can be seen in agency
submission of draft rules to Advocacy for review through the
increased number of draft rules sent to Advocacy's email
notification system: notify.advocacy@sba.gov. 2)
Improvements in seeking assistance early in the rulemaking
process are evident in the increasing number of
conversations with agency rule writers willing to discuss
predecisional regulatory information with Advocacy lawyers
and economists in an effort to improve RFA compliance. 3)
Improvements in considering significant alternatives
following discussions with Advocacy and affected small
entities have occurred this year as some agency rules have
contained realistic alternatives to their regulations that
would benefit small entities.
  In 2005, Advocacy's involvement in agency rulemakings
helped secure $6.62 billion in first-year foregone
regulatory cost savings and $965 million in recurring annual
savings for small entities.
  In fiscal year 2006, Advocacy will continue to weave
small entities into the fabric of regulatory decisionmaking
at agencies. Facilitating communications between agencies
and small entities helps agencies achieve compliance with
the RFA and E.O. 13272 and, ultimately, reduce regulatory
burdens on small entities. Efforts to train agencies and
increased attention to small business impact analysis can
change how government treats small entities. We are seeing
results from a greater working knowledge of the RFA and the
Administration's commitment, voiced through E.O. 13272.

Thomas M. Sullivan
Chief Counsel for Advocacy

Contents

To the President and the Congress of the United Statesi
Introduction
1 An Overview of the Regulatory Flexibility Act and Related
Policy
  The RFA: A 25-Year History
  Historical Success Stories
  The Economics of the RFA
  Table 1.1 Then and Now: Small Business Economic Indicators
over 25 Years
  Training: Learning to Analyze Small Firm Impacts
2 Summary of FY 2005 Federal Agency Compliance with E.O.
13272 and the RFA
  Executive Order 13272 Compliance
  Table 2.1 RFA Compliance Training under E.O. 13272 in FY
2005
  RFA and SBREFA Implementation
  Table 2.2 Regulatory Comment Letters Filed by the Office
of Advocacy, Fiscal Year 2005
  Chart 2.1 Advocacy Comments by Key RFA Compliance Issue,
FY 2005
  Table 2.3 Regulatory Cost Savings, Fiscal Year 2005
  Table 2.4 Summary of Estimated Cost Savings, Fiscal Year
2005
3 Advocacy Review of Agency RFA Compliance in Fiscal Year
2005
  Department of Agriculture
  Department of Commerce
  Department of Defense
  Department of Education
  Department of Energy
  Department of Health and Human Services
  Department of Homeland Security
  Department of Housing and Urban Development
  Department of the Interior
  Department of Justice
  Department of Labor
  Department of State
  Department of Transportation
  Department of the Treasury
  Department of Veterans Affairs
  Environmental Protection Agency
  Federal Acquisition Regulation Council
  Federal Communications Commission
  National Archives and Records Administration
  Securities and Exchange Commission
  Small Business Administration
  Conclusion
4 State Flexibility: Small Business Regulatory Flexibility
Model Legislation Initiative
Success Stories
  Chart 4.1 Mapping State Regulatory Flexibility Provisions,
FY 2005
  Table 4.1 State Regulatory Flexibility, 2005 Legislative
Activity
  Table 4.2 State Regulatory Flexibility Legislation, Status
as of October 2005
Appendices
A Supplementary Tables
Table A.1 Cabinet Department RFA Procedures in Compliance
   with Section 3 (a) of E.O. 13272
  Table A.2 Federal Agencies Trained in RFA Compliance, FY
2003-2005
  Table A.3 SBREFA Panels through Fiscal Year 2005
  The Regulatory Flexibility Act
C Executive Order 13272
D Advocacy Legislative Priorities for the 109th Congress
E Abbreviations

Introduction

"The state of small business regulation has come a long way
since the enactment of the Regulatory Flexibility Act in
1980," said Chief Counsel for Advocacy Thomas M. Sullivan at
the Office of Advocacy's symposium on the 25th anniversary
of the Regulatory Flexibility Act, September 19, 2005. At
the symposium, much was said about the advances in small
business regulatory policy since 1980. For example:
  In a panel on e-rulemaking, Jeffrey Lubbers
  of American University talked about the benefits of
  electronic rulemaking as an opportunity for information
  dissemination, government transparency, and public
  participation.
  Susan Dudley of George Mason University
  noted in a regulatory research panel that the volume of
  regulations continues to increase and stressed that the
  RFA is significant as one of the first legislative
  requirements to analyze the impacts of new regulations.
  Todd McCracken of the National Small
  Business Association in a small business outreach panel
  said of the increased small business involvement in the
  RFA process, "There's a key qualitative significance to
  having real input from real businesses."
  Karen Harned of the National Federation
  of Independent Business Legal Foundation, speaking about
  the judicial review provision introduced in 1995, said
  she believes that the possibility of litigation means
  that agencies have progressed in their compliance.
  In a panel on reducing existing burdens,
  Howard Radzely of the U.S. Department of Labor urged
  small business owners to get involved in the process and
  voice their regulatory concerns about the 200 laws
  enforced by the department.
  In Chapter 1, Advocacy's Report on the Regulatory
Flexibility Act, FY 2005, takes a look at the developments
in the 25-year history of the RFA. Then the report focuses
on the substance of RFA and E.O. 13272 enforcement in Fiscal
Year 2005, examining Advocacy's role and overall trends in
Chapter 2, individual agency achievements and ongoing
challenges in Chapter 3, and developments in state
regulatory flexibility law in Chapter 4.

1 An Overview of the Regulatory Flexibility Act and Related
      Policy

The RFA: A 25-Year History

As soon as President Gerald Ford signed Public Law 94-305
creating the Office of Advocacy in June 1976, the important
work of paying attention to regulations' effects on small
firms came under the wing of the newly created independent
office. Part of Advocacy's mandate was explicitly to
"measure the direct costs and other effects of government
regulation on small businesses; and make legislative and
nonlegislative proposals for eliminating excessive or
unnecessary regulations of small businesses."
  In the fall of 1979, President Jimmy Carter added the
Small Business Administration to his Regulatory Council and
issued a memorandum to the heads of executive departments
and agencies. He said, "I want you to make sure that federal
regulations will not place unnecessary burdens on small
businesses and organizations," and directed agencies to
apply regulations "in a flexible manner, taking into account
the size and nature of the regulated businesses." Agencies
were to report on their efforts to the Office of Advocacy.
  Meanwhile, the House and Senate Small Business and
Judiciary Committees had been holding hearings on the
effects of regulation. Small business people cited evidence
that uniform application of regulatory requirements made it
difficult for smaller businesses to compete.
  By 1980, when delegates assembled for the first of three
White House Conferences on Small Business, the conference
report noted that "during the past decade, the growth of
government regulation has been explosive, particularly in
such areas as affirmative-action hiring, energy
conservation, and protection for consumers, workers, and the
environment. Small business people recognize that some
government regulation is essential for maintaining an
orderly society. But there are now 90 agencies issuing
thousands of new rules each year."
  Moreover, the report said, the new Office of Advocacy had
estimated that small firms spent $12.7 billion annually on
government paperwork. Among the conference recommendations,
the fifth highest vote-getter was a recommendation calling
for "sunset review" and economic impact analysis of
regulations, as well as a regulatory review board with small
business representation. The conference delegates
recommended putting the onus of measuring regulatory costs
on the regulatory agencies-to "require all federal agencies
to analyze the cost and relevance of regulations to small
businesses."

1980: The Regulatory Flexibility Act
The White House Conference recommendations helped form the
impetus for the passage, in 1980, of the Regulatory
Flexibility Act (RFA). The intent of the act was clearly
stated:
  "It is the purpose of this act to establish as a
principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives.of applicable
statutes, to fit regulatory and informational requirements
to the scale of businesses.To achieve this principle,
agencies are required to solicit and consider flexible
regulatory proposals and to explain the rationale for their
actions to assure that such proposals are given serious
consideration."
  The law directed agencies to analyze the impact of their
regulatory actions and to review existing rules, planned
regulatory actions, and actual proposed rules for their
impacts on small entities. Depending on the proposed rule's
expected impact, agencies were required by the RFA to
prepare an initial regulatory flexibility analysis (IRFA), a
certification, and/or a final regulatory flexibility
analysis (FRFA). Rules to be included in the agencies'
"regulatory agendas" were those likely to have a
"significant economic impact on a substantial number of
small entities."

Implementing the RFA
The Office of Advocacy was charged with monitoring agency
compliance with the new law. Over the next decade and a
half, the office carried out its mandate, reporting annually
on agency compliance to the president and the Congress. But
it was soon clear that the law wasn't strong enough. A
briefing paper prepared for the 1986 White House Conference
on Small Business noted: "The effectiveness of the
Regulatory Flexibility Act largely depends on small
business' awareness of proposed regulations and [their]
ability to effectively voice [their] concerns to regulatory
agencies. In addition, the courts' ability to review agency
compliance with the law is limited."
  The delegates recommended that the RFA be strengthened by
requiring agencies to comply and by providing that agency
action or inaction be subject to judicial review. President
Ronald Reagan's 1987 report on small business noted:
"Regulations and excessive paperwork place small businesses
at a disadvantage in an increasingly competitive world
marketplace.This Administration supports continued
deregulation and other reforms to eliminate regulatory
obstacles to open competition." But it would take an act of
Congress to make judicial review law-and reaching that
consensus needed more time.
  Regulations' effects on the economic environment for
competition also concerned President George H.W. Bush, whose
1992 message in the annual small business report noted: "My
Administration this year instituted a moratorium on new
federal regulations to give federal agencies a chance to
review and revise their rules. And we are looking at ways to
improve our regulatory process over the long term so that
regulations will accomplish their original purpose without
hindering economic growth."
  In September 1993, President Bill Clinton issued
Executive Order 12866, "Regulatory Planning and Review,"
designed, among other things, to ease the regulatory burden
on small firms. The order required federal agencies to
analyze their major regulatory undertakings and to take
action to ensure that these regulations achieved the desired
results with minimal burden on the U.S. economy.
  An April 1994 report by the General Accounting Office
reviewed the Office of Advocacy's annual reports on agency
compliance with the RFA and concluded: "The SBA annual
reports indicated agencies' compliance with the RFA has
varied widely from one agency to another. .the RFA does not
authorize SBA or any other agency to compel rulemaking
agencies to comply with the act's provisions."

The 1995 White House Conference and SBREFA
In June 1995, a third White House Conference on Small
Business examined the RFA's weaknesses. The Administration's
National Performance Review had recommended that agency
compliance with the RFA be subject to judicial review. Still
it had not happened.
  Once again, the White House Conference forcefully
addressed the problem. One of its recommendations fine-tuned
the regulatory policy recommendations of earlier
conferences, asking for specific provisions that would
include small firms in the rulemaking process.
  In October, the Office of Advocacy issued a report, based
on research by Thomas Hopkins, that estimated the total
costs of process, environmental, and other social and
economic regulations to be between $420 billion and $670
billion in 1995. The report estimated that the average cost
of regulation was $2,979 per employee for large firms with
500 or more employees and $5,532 per employee for small
firms with fewer than 20 employees.
  In March 1996, President Clinton acted on the 1995 White
House Conference recommendation that was taken up by
Congress, by signing Public Law 104-121, the Small Business
Regulatory Enforcement Fairness Act (SBREFA). The new law
gave the courts jurisdiction to review agency compliance
with the RFA. Second, it mandated that the Environmental
Protection Agency (EPA) and the Occupational Safety and
Health Administration (OSHA) convene small business advocacy
review panels to consult with small entities on regulations
expected to have a significant impact on them, before the
regulations were published for public comment. Third, it
reaffirmed the authority of the chief counsel for advocacy
to file amicus curiae (friend of the court) briefs in
appeals brought by small entities from agency final actions.

Executive Order 13272
In March 2002, President George W. Bush announced his Small
Business Agenda. The president gave a high priority to
regulatory concerns, including as a key feature of his
agenda the goal to "tear down the regulatory barriers to job
creation for small businesses and give small business owners
a voice in the complex and confusing federal regulatory
process."
  One key goal was to strengthen the Office of Advocacy by
creating an executive order that would direct agencies to
work closely with Advocacy in properly considering the
impact of their regulations on small business.
  In August 2002, President Bush issued Executive Order
13272. It requires federal agencies to establish written
procedures and policies on how they would measure the impact
of their regulatory proposals on small entities and to vet
those policies with Advocacy; to notify Advocacy before
publishing draft rules expected to have a significant small
business impact; and to consider Advocacy's written comments
on proposed rules and publish a response with the final
rule. E.O. 13272 requires Advocacy to provide notification
as well as training to all agencies on how to comply with
the RFA. These steps set the stage for agencies to work
closely with Advocacy in considering their rules' impacts on
small entities.

Implementing the Executive Order
As part of its compliance with E.O. 13272, the Office of
Advocacy first reported to the Office of Management and
Budget in September 2003. The report noted that Advocacy had
engaged agencies on E.O. 13272 and instituted an email
address (notify.advocacy@sba.gov) to make it easier for
agencies to comply with notification requirements. Advocacy
developed an RFA compliance guide, posted it on its website,
prepared training materials, and began training agencies
throughout the government.
  Nearly all of the cabinet agencies submitted written
plans for compliance to Advocacy and made their RFA
procedures publicly available. Advocacy has also developed a
Regulatory Alerts webpage at
http://www.sba.gov/advo/laws/law_regalerts.html to call
attention to important pending regulations that may affect
small entities. The final chapter on how much small
businesses and other small entities are benefiting from the
RFA as amended by SBREFA and supplemented by E.O. 13272 has
yet to be written. Legislation has been introduced to
further enhance the RFA. Advocacy believes that as agencies
adjust their regulatory development processes to accommodate
the RFA and E.O. 13272's requirements, the benefits will
accrue to small firms. Agencies are making strides in that
direction.
  

Regulatory Flexibility Timeline

June 1976  President Gerald Ford signs Public Law 94-305,
creating an Office of
           Advocacy within the U.S. Small Business
Administration charged, among                other things,
to "mea-sure the direct costs and other effects of federal
regulation
           small businesses and make legislative and
nonlegislative proposals for
           elimi--nating excessive or unnecessary
regulations of small businesses."

January 1980   The first White House Conference on Small
Business calls for "sunset
           review" and economic impact analysis of
regulations, and a regulatory
           review board that includes small business
representation.

September 1980 President Jimmy Carter signs the Regulatory
Flexibility Act, requiring
           agencies to review the impact of proposed rules
and include in published
           regulatory agendas those likely to have a
"significant economic impact on a            substantial
number of small entities."

October 1981   The Office of Advocacy reports on the first
year of RFA experience in
           testimony before the Subcommittee on Export
Opportunities and Special Small         Business Problems of
the U.S. House Of Representatives Committee on Small
Business.

February 1983  Advocacy publishes the first annual report on
agency RFA compliance.

August 1986    Delegates to the second White House
Conference on Small Business
           recommend strengthening the RFA by, among other
things, subjecting agency               compliance to
judicial review.

September 1993 President Bill Clinton issues Executive Order
12866, "Regulatory Planning             and Review,"
requiring each federal agency to "tailor its regulations to
impose         the least burden on society, including
businesses of different sizes."

June 1995  The third White House Conference on Small
Business asks for specific
           provisions to strengthen the RFA-including the
IRS under the law, granting
           judicial review of agency compliance, and
including small businesses in the            rulemaking
process.

March 1996 President Clinton signs the Small Business
Regulatory Enforcement Fairness
           Act, giving courts jurisdiction to review agency
compliance with the RFA,
           requiring the Environmental Protection Agency and
the Occupational Safety
           and Health Administration to convene small
business advocacy review panels,
           and affirming the chief counsel's authority to
file amicus curiae briefs in appeals              brought by
small entities from final agency actions.

March 2002 President George Bush announces his Small
Business Agenda, which promises         to "tear down
regulatory barriers to job creation for small businesses and
give                small business owners a voice in the
complex and confusing federal regulatory          process."

August 2002    President Bush issues Executive Order 13272,
"Proper Consideration of Small          Entities in Agency
Rulemaking," which requires federal agencies to establish
           written procedures to measure the impact of their
regulatory proposals on small
           businesses, and to consider Advocacy comments on
proposed rules, and
           requiring Advocacy to train agencies in the
requirements of the law.

December 2002  Advocacy presents model state regulatory
flexibility legislation to the
           American Legislative Exchange Council (ALEC) for
consideration by state
           legislators. ALEC endorses the model legislation,
and states begin adopting
           legislation modeled on the federal law.

May 2003   Advocacy issues A Guide for Government Agencies:
How to Comply with the             Regulatory Flexibility
Act.

September 2003 Advocacy presents its first report on agency
compliance with E.O. 13272,
           noting the start of Advocacy's agency training.

September 2005 In the 25th anniversary year of the RFA,
Advocacy cosponsors a symposium
           that looks back at the RFA's achievements and
challenges and looks ahead at
           possible improvements. Legislation is considered
in Congress to strengthen
           the RFA.

Historical Success Stories

SBREFA Review Panels Improve Rulemaking
In 1996, Congress fortified the Regulatory Flexibility Act
with the Small Business Regulatory Enforcement Fairness Act
(SBREFA). Among other things, SBREFA directed the
Environmental Protection Agency (EPA) and the Occupational
Safety and Health Administration (OSHA) to convene small
business review panels for regulations expected to have a
significant small business impact. These panels occur before
the rule is published for public comment. Significant
rulemaking improvements have resulted from the SBREFA panel
process.
  SBREFA review panels consist of representatives from the
agency, Advocacy, and the Office of Information and
Regulatory Affairs (OIRA) of the Office of Management and
Budget (OMB). The panel reaches out to small entities likely
to be affected by the proposal, seeks their input, and
prepares a report with recommendations for reducing the
potential small business impact. The agency may modify its
proposal in response to the panel report. (See Appendix A,
Table A.3 for a list of SBREFA panels through FY 2005.)

OSHA Panels
OSHA has convened seven panels since 1996. Two of the most
significant were on the Safety and Health Program rule and
the Ergonomics Program Standard. They demonstrate how small
business input early in the regulatory process can help
agencies see new ways to solve a problem through
regulation-by looking at equally effective alternatives that
minimize the harm to small business.
     Safety and Health Program Rule. In August 1998, OSHA
  notified Advocacy of its intent to propose a safety and
  health program rule. The proposal would have required
  employers to establish a workplace safety and health
  program to ensure compliance with OSHA standards and the
  "general duty" clause of the Occupational Safety and
  Health Act. Because the proposal covered nearly all
  employers (except those in construction and agriculture),
  a SBREFA panel was convened that included 19 small entity
  representative advisors. The panel report sent the
  message loud and clear to OSHA, OMB, and other federal
  agencies that realistic costs and accurate data must be
  used when promulgating regulations. As a result, this
  overly burdensome regulation never moved forward, and it
  was eventually removed from OSHA's regulatory agenda,
  saving small businesses billions in regulatory compliance
  costs.
     Ergonomics Standard. In March 1999, OSHA released a
  draft ergonomics standard and announced its intention to
  convene a SBREFA panel to discuss the potential impact on
  small businesses. The draft proposal covered every
  industry and business in the United States, except those
  in construction, maritime trades, and agriculture. Twenty
  small entity representatives (including 13 recommended by
  Advocacy) advised the panel. During the deliberations,
  the small entities expressed a number of concerns,
  especially about OSHA's estimates of the time and money
  required to comply. They provided OSHA with types of
  costs they felt were omitted and suggested that OSHA
  provide the assumptions it used when it proposed the
  standard in the Federal Register. The panel completed its
  report in April 1999. Congress repealed the ergonomics
  rule in March 2001. OSHA's subsequent decision to issue
  guidelines instead of creating a new ergonomics rule
  showed that the SBREFA panel process works. Advocacy
  estimated in 2001 that rescinding the ergonomics standard
  saved small businesses $3 billion. Other observers have
  estimated that the actual cost would have been up to 15
  times higher.

EPA Panels
EPA has convened 29 SBREFA panels since 1996. These panels
have improved the cost-effectiveness of planned
environmental rules and limited the adverse impact on small
entities, including two small communities. Two recent
successes are the panels on nonroad diesel engines and
construction and development runoff.
     Nonroad Diesel Engines and Fuel Rule. In summer
  2002, EPA notified Advocacy that it would propose further
  limits on emissions of nitrogen oxides and particulate
  matter from diesel-powered nonroad engines. These engines
  are used extensively in construction, agriculture, and
  other off-road applications. EPA also planned to
  dramatically reduce the allowable level of sulfur in
  diesel fuel used by nonroad engines. The rule was
  anticipated to have significant economic impacts on small
  equipment manufacturers who use diesel engines, and on
  small oil refiners and oil distributors. EPA convened a
  SBREFA panel with 20 small entity representative advisors
  who raised concerns about the technical and cost
  feasibility of EPA's proposed rule. The panel concluded
  that equipment manufacturers should be allowed to
  purchase current engines for several additional years,
  while redesigning their products to accommodate the newer
  engines. The panel also advised that expensive
  aftertreatment devices should not be required on engines
  with less than 25 horsepower. The SBREFA panel report
  recommendations, which were adopted by EPA in the final
  rule, allowed many small equipment manufacturers to stay
  in business and gave them valuable time to redesign their
  products to comply with the new requirements.
     Construction and Development Site Runoff.In June
  2002, EPA proposed a rule to reduce stormwater runoff
  from construction and development sites of one acre or
  more. The original proposal carried a price tag of almost
  $4 billion per year, and its requirements overlapped with
  existing state and local stormwater programs. Small
  businesses provided information about the rule's
  potential impact and offered other options. The panel
  concluded that the rule's requirements would add
  substantial complexity and cost to current stormwater
  requirements without a corresponding benefit to water
  quality. The panel recommended that EPA not impose the
  requirements, and focus instead on improving public
  outreach and education about existing stormwater rules.
  In March 2004, EPA announced it would not impose new
  requirements for construction sites. EPA found that a
  flexible scheme would permit state and local governments
  to improve water quality without an additional layer of
  federal requirements and without unduly harming small
  construction firms. In addition to the cost savings for
  small businesses, rescinding the original proposal saved
  new home buyers about $3,500 in additional costs.

EPA Conducted Two SBREFA Panels in 2005:
     Controlling the Interstate Transport of Air
  Pollution. In early 2005, EPA notified Advocacy that it
  planned to propose two related regulations to address
  situations where EPA acts to control emissions of air
  pollutants from power plants that are carried across
  state lines to a downwind state. On April 27, 2005, EPA
  convened a SBREFA panel with 16 small entity
  representative advisors, who raised concerns about the
  disproportionate cost burden the rule could impose on the
  58 small entities (primarily small community municipal
  utilities and cooperatives) that EPA estimated would be
  subject to the two rules. The panel considered several
  regulatory alternatives, and ultimately concluded that
  economic burdens on small entities would be minimized by
  a "cap and trade" program that allows companies to
  purchase and sell emission credits.
     Mobile Source Air Toxics Rule. In April 2005, EPA
  notified Advocacy that it was planning to propose a rule
  that would reduce emissions of benzene, a toxic air
  pollutant, from gasoline, portable gasoline containers,
  and certain highway vehicles. On September 7, 2005, EPA
  convened a SBREFA panel with 11 small entity
  representatives chosen from portable gasoline container
  manufacturers, small oil refiners, and vehicle
  manufacturers. The panel considered several regulatory
  alternatives, and ultimately recommended a number of
  regulatory flexibilities, including giving small entities
  additional time to comply and allowing limited hardship
  exemptions for small firms that demonstrate an inability
  to meet the full program requirements.

SBREFA Panels Work
These panels illustrate that the SBREFA panel process indeed
works to reduce the burdens on small entities. Because
agencies are required to convene these panels, small
businesses are able to shed light on agencies' underlying
assumptions, rationale, and data behind their draft
rulemaking. In the absence of SBREFA panels, these rules
would have been promulgated as originally drafted, costing
small businesses millions in unnecessary regulatory costs.
The panel reports allowed EPA and OSHA to examine
alternatives that accomplished their regulatory objectives
while protecting small businesses.

Legal History
SBREFA amended the RFA to allow small businesses for the
first time to seek judicial review of agency compliance with
the RFA. In addition to legal challenges brought by small
entities, the chief counsel for advocacy has the right under
the RFA to file amicus curiae (friend of the court) briefs
in RFA cases. These provisions were important in giving the
Office of Advocacy and the small business community recourse
when agencies were unresponsive to the law.

Hardrock Mining
On January 7, 1998, the Office of Advocacy filed an amicus
curiae brief. The case, Northwest Mining v. Babbitt, F.
Supp. 2d 9 (D.D.C. 1998) raised issues about a trade
association's standing to bring a claim under the RFA and
the Bureau of Land Management's (BLM) failure to use the
proper size standard for determining the number of small
businesses that may be harmed by the regulation.
  In May 1998, the District Court for the District of
Columbia agreed with Advocacy's arguments and ruled in favor
of the plaintiff. First, the court found that the RFA
extends the standing to trade associations to sue as small
entities. Small entity as defined in the RFA includes the
term "small organization," which means any not-for-profit
enterprise that is independently owned and operated and is
not dominant in its field. Since the plaintiff was a small
not-for-profit organization, it was a small entity and
therefore met the requirements for standing under the RFA.
  In terms of the agency use of an alternate size standard,
the court stated that the BLM's reasons for using another
size standard were "unconvincing in light of the clearly
mandated procedure of the RFA. The definitions section of
the RFA uses phrases such as ```small entity' shall have the
same meaning. Words such as these do not leave room for
alternate interpretations by the agency." It found that
since the BLM's certification did not observe the procedure
required by law, the plaintiff was entitled to relief.
Although the agency argued that maintenance of the rule was
necessary to save the environment, the court disregarded
that argument stating:
  "While recognizing the public interest in preserving the
environment, the Court also recognizes the public interest
in preserving the rights of parties which are affected by
government regulation to be adequately informed when their
interests are at stake and to participate in the regulatory
process as directed by Congress."

Sharks!
In December 1996, the National Marine Fisheries Service
(NMFS) of the Department of Commerce published a proposal to
reduce the existing shark fishing quota by 50 percent,
certifying that the reduction would not have a significant
impact on a substantial number of small entities. In January
1997, Advocacy questioned NMFS's decision to certify rather
than perform an initial regulatory flexibility analysis. In
its March 1997 final rule, NMFS upheld its original
decision, but prepared a final regulatory flexibility
analysis rather than certifying the rule.
  In May 1997, the Southern Offshore Fishing Association
brought suit against the Secretary of Commerce, challenging
the quotas through judicial review provisions of laws
including the RFA. Advocacy filed to intervene as amicus
curiae, but withdrew after the Department of Justice
stipulated that the standard of review for RFA cases should
be "arbitrary and capricious," a higher standard than
originally requested.
  In February 1998, the United States District Court for
the Middle District of Florida ruled that NMFS's
certification of "no significant economic impact" and the
FRFA failed to meet APA and RFA requirements. Noting
Advocacy's role as "watchdog of the RFA," the Court remanded
the rule and instructed the agency to analyze the economic
effects and potential alternatives. Further steps culminated
in the court issuing an injunction to NMFS from enforcing
new regulations until the agency could establish bona fide
compliance with the court's earlier orders.
  A later settlement involved a delay in any decisions on
new shark fishing quotas pending a review of current and
future shark stocks by a group of independent scientists. In
November 2001 that study was released, indicating that NMFS
had significantly underestimated the number of Atlantic
sharks.

Number Portability
In March 2005, the U.S. Court of Appeals for the D.C.
Circuit issued a ruling that strengthened the RFA and
provided needed relief to small businesses. In U.S. Telecom
Assoc. and CenturyTel, Inc. v. FCC, No. 03-1414 (D.C. Cir.,
decided March 11, 2005), the Court found that the Federal
Communications Commission had not complied with the RFA and
sent the rule, which concerned telephone number portability,
back to the agency with instructions to conduct a regulatory
flexibility analysis. The Court stayed enforcement of the
rule on small businesses until the agency finishes a
regulatory flexibility analysis. Advocacy decided against
filing an amicus brief after the FCC agreed to advise state
regulators to give small telecom providers more flexibility.
  The case is significant for three reasons. First, it
reaffirms the importance of the RFA in agency rulemaking.
Other claims in this case were dismissed as harmless error.
Only the claim that the FCC had failed to comply with the
RFA was upheld and sent back to the FCC. Second, this
decision was made by the D.C. Circuit, which is the
appellate court most likely to hear appeals from federal
agency rulemakings. The decision from this court that
upholds the RFA can be used in other appeals from other
agencies. Third, by staying the rules until the RFA analysis
is done, the D.C. Circuit provided immediate relief to the
small entities.

The Economics of the RFA

Office of Advocacy Indicators over the Years
When the Regulatory Flexibility Act was passed in 1980, the
cost of regulation was very much on the minds of economists
and policymakers. Cost studies from that time period show a
general consensus that small firms were being saddled with a
disproportionate share of the federal regulatory burden.
Then as now, one important tool for redressing the
disproportionate impact on small firms was through
implementation of the RFA.
  As the Office of Advocacy works with federal agencies
during the rulemaking process, it seeks to measure the
savings of its actions in terms of the compliance costs that
small firms would have had to bear if changes to regulations
not been made. The first year in which cost savings were
documented was 1998. Changes to rules in that year were
estimated to have saved small businesses $3.2 billion. In
2004, Advocacy actions saved small businesses more than $17
billion. Advocacy continues to measure its accomplishments
through cost savings.
  Ultimately, if federal agencies institutionalize
consideration of small entities in the rulemaking process,
the goals of the regulatory flexibility process and
Executive Order 13272 will be realized to a large degree,
and the amount of foregone regulatory costs will actually
diminish.
  Economics has provided a framework for regulatory actions
and for other public policy initiatives. What has been
Advocacy's impact in influencing public policy and
furthering research? Research by the Office of Advocacy and
others over the past two decades has advanced the
recognition that small firms are crucial to the U.S.
economy.
  The economy of 1980 and today differ greatly (Table 1.1).
Real gross domestic product (GDP) and the number of nonfarm
business tax returns have more than doubled since 1980. The
unemployment rate and interest rates are much improved, and
prices are higher, although inflation is significantly
lower. One constant, though, is the lack of timely, relevant
data on small businesses. The Office of Advocacy struggled
throughout much of its early existence to measure the number
of small firms accurately. The good news is that since 1988
the Census Bureau now has credible firm size data, in part
because of funding from the Office of Advocacy.
Despite the data obstacles, Advocacy research shows that
more women and minorities have become business owners since
1980. Small businesses are now recognized to be job
generators and the source of growth and innovation. Not only
are more than 99 percent of all employers small businesses,
but small firms are responsible for 60 to 80 percent of all
new jobs, and they are more innovative than larger firms,
producing 13.5 times as many patents per employee (see the
Office of
Advocacy's "Frequently Asked Questions" at
http://app1.sba.gov/faqs/faqindex.cfm?areaID=24).
  Research on small entities has gained more prominence,
and entrepreneurs are widely acknowledged as engines of
change in their regions and industries. The Office of
Advocacy will continue to document the contributions and
challenges of small business owners. Armed with these data,
policymakers will be able to better consider how government
decisions affect small businesses and the economy.

The Impact of Regulatory Costs on Small Firms
Regulatory policy involves difficult choices. Accurate data
on costs are essential to a complete understanding of the
tradeoffs involved. Even though the RFA first required
agencies to consider small business impacts separately 25
years ago, dependable cost estimates have often been hard to
come by.
  While measuring the costs of new regulations is a
prerequisite for improving regulatory policy, compliance
with the sum of all current regulations also places a heavy
burden on small businesses. Over the past 25 years,
significant gains have been made in measuring the impact of
regulatory compliance on small firms. During that time, the
Office of Advocacy has produced a series of research reports
on this topic, and the findings have been consistent:
compliance costs small firms more per employee than large
firms. The most significant series of analyses began in the
1990s when Thomas Hopkins first estimated the costs of
regulatory compliance for small firms. This research was
refined by Mark Crain and Hopkins in 2001, and most recently
by Crain in the 2005 study, The Impact of Regulatory Costs
on Small Firms. Crain's latest estimate shows that federal
regulations cost small firms nearly 45 percent more per
employee than large firms.
  The 2005 report distinguishes itself from previous
research by adopting a more rigorous methodology for its
estimate on economic regulation, and it brings the
information in the 2001 study up to date.
  The research finds that the total costs of federal
regulations have further increased from the level
established in the 2001 study, as have the costs per
employee. Specifically, the cost of federal regulations
totals $1.1 trillion, while the updated cost per employee is
now $7,647 for firms with fewer than 20 employees. The 2001
study showed small businesses with 60 percent greater
regulatory burden than their larger business counterparts.
The 2005 report shows that disproportionate burden shrinking
to 45 percent.
  Despite much progress since passage of the RFA 25 years
ago, significant work remains. The hurdles include
determining the total burden of rules on firms in specific
industries or imposed by specific federal agencies.
Estimates of these costs would help show policymakers the
marginal cost of adding new rules or modifying existing
ones; they would also help show the effects of repealing
rules that are no longer relevant, yet still cost small
businesses every year. Such analyses will become crucial as
the mountain of federal regulations continues to rise. The
future of small businesses will be affected by rulemaking
that uses the best data available to balance the costs and
benefits of regulation, while considering how additional
rules will affect small firms.
  

Table 1.1 Then and Now:

Small Business Economic Indicators Over 25 Years

                              1980  1985  1990  1995   2000  2005
Real gross domestic product   5.2   6.1   7.1   8.0    9.8   11.1
(trillions of dollars)
Unemployment rate (percent)   7.2   7.2   5.6   5.6    4.0   5.2
Consumer price index          82.4  107.6 130.7 152.4  172.2 193.4
(1982=100)
Prime bank loan rate          15.3  9.9   10.0  8.8    9.2   5.8
(percent)
Employer firms (millions)     --    --    5.1   5.4    5.7   5.7
                                                       (e)
Nonemployer firms (millions)  --    --    --    --     16.5  18.3
                                                       (e)
Self-employment,              8.6   9.3   10.1  10.5   10.2  10.6
unincorporated (millions)
Nonfarm business tax returns  13.0  17.0  20.2  22.6   25.1  29.3
(millions)
Note: All figures are seasonally adjusted unless otherwise
noted. Figures for "today" represent the latest data
available; 2005 data are year-to-date.
e = Estimate
Source: Federal Reserve Board; U.S. Department of the
Treasury, Internal Revenue Service; U.S. Department of
Commerce, Bureau of the Census and Bureau of Economic
Analysis; U.S. Department of Labor, Bureau of Labor
Statistics

Training: Learning to Analyze Small Firm Impacts

One key aspect of Executive Order 13272, "Proper
Consideration of Small Entities in Agency Rulemaking," is to
educate federal rulemakers on how to comply with the
Regulatory Flexibility Act. Since President Bush signed E.O.
13272 in August 2002, staff at over 40 agencies have been
trained.
  Agency staff-attorneys, economists, policymakers and
other employees involved in the regulation writing
process-come to RFA training with varying levels of
familiarity with the RFA, even though it has been in
existence for 25 years. Some are well versed in the law's
requirements, while others are completely unaware of what it
requires an agency to do when promulgating a regulation.
  The three-and-a-half hour session consists of discussion,
group assignments (in which participants review fictitious
regulations for small business impact), and a question-and-
answer session. Agency employees receive a hands-on approach
to the RFA and are able to see how the law's many
requirements work in a real-life regulatory setting. By the
end of the course there are always many revelations and
excited faces as agency staff realize what they have to do
to comply with the RFA and that Advocacy is there to help
them along the way.
  One of the most important themes throughout the course is
that the agency should bring Advocacy into the rule
development process early in the creation of a regulation.
Advocacy works closely with agencies to help them determine
whether a potential rule will have a significant economic
impact on a substantial number of small entities. Making
this determination is frequently where agencies make their
initial mistakes under the RFA. The training session helps
explain the steps rule writers need to take to make this
decision accurately. By considering the impact of their
regulations on small business from the beginning, agencies
are more likely to promulgate a rule that is less burdensome
with more effective compliance, while avoiding legal hassles
and delays for noncompliance with the RFA.
  Changing the culture of agency rule writers is a tall
order, but Advocacy's RFA training is already having an
impact on the way agencies approach rule development. Many
agencies that have been through training are now consulting
with Advocacy earlier in the process, exchanging draft
documents, and recognizing that if they lack the information
they need, Advocacy can help point them in the right
direction for small business data.
  
2. Summary of FY 2005 Federal Agency Compliance with E.O.

      13272 and the RFA

Executive Order 13272 Compliance

In August 2002, President Bush signed E.O. 13272,
recognizing the importance of small businesses and creating
additional RFA compliance requirements on federal regulatory
agencies. Section 3 of E.O. 13272 requires agencies to do
three things when promulgating regulations that affect small
entities.
  First, agencies are required to issue written policies
and procedures to ensure that they consider the potential
impact of their regulations on small businesses. These must
have been made publicly available in February 2003 (see
Appendix A, Table A.1 for citations to the agencies' RFA
policy websites).
  Second, E.O. 13272 requires agencies to notify Advocacy
of any draft rules that may have a significant economic
impact on a substantial number of small entities under the
RFA.
  The third requirement is that agencies address Advocacy's
written comments on a proposed rule in the agency's final
rule published in the Federal Register.
  While agency compliance with both the RFA and E.O. 13272
have improved, agencies still do not reach out to Advocacy
early enough in the rule development process to make a real
difference in the impact of the rule on small entities. As
agencies continue to make changes to their regulatory
development processes to accommodate E.O. 13272's
requirements, benefits to small entities will be seen. Some
agencies are making strides in that direction. These can be
seen in the cost savings this fiscal year. Advocacy
continues to stress the importance of agency compliance with
EO 13272 as another crucial step in consideration of the
impact of their rules on small entities and is hopeful that
real change as a result of the executive order will continue
to be seen.

RFA Training under E.O. 13272
In addition to the three agency requirements, E.O. 13272
requires Advocacy to conduct federal agency training in how
to comply with the RFA and the executive order. Advocacy has
trained more than half of the 66 federal agencies and
independent commissions identified as promulgating
regulations that affect small businesses (Table 2.1. See
Appendix A, Table A.2 for a complete list.)
  RFA training under E.O. 13272 is having a real impact on
agencies in a number of ways. One of the most important
effects of the training is a closer relationship between the
agency and the Office of Advocacy. As a result of the
training, agency rule writers, economists, attorneys, and
policymakers recognize that there is an office that can
assist them with their RFA and E.O. 13272 compliance. This
closer relationship has led to several agencies contacting
Advocacy earlier in the rule development process regarding
rules that may have a significant impact on a substantial
number of small entities. Early intervention leads to better
rules for small businesses.
  Another improvement as a result of the training in a few
agencies is a more detailed economic analysis. Where
Advocacy once saw one-paragraph certifications and economic
analyses without any alternatives, there are now more
substantiated certifications and IRFAs that at least
acknowledge an attempt to identify alternatives for small
businesses.
  Finally, the RFA training has increased agency use of
Advocacy's email notification system of draft rules that may
have a significant impact on a substantial number of small
entities. Most agencies are still not using the system;
however, the number is increasing as the ease of the system
and the monetary savings is more widely known. Some agencies
still insist on sending Advocacy paper copies of draft rules
that arrive weeks after they are published in the Federal
Register; however, those that utilize the system find it to
be a convenient method of compliance with E.O. 13272. While
these RFA training successes can be noted in some agencies,
most have yet to jump on the E.O. 13272 compliance
bandwagon. Advocacy has continued in FY 2005 to encourage
agencies to comply with E.O. 13272 through its RFA training
activities, including repeat training at some agencies for
new employees and those who missed the initial training.
This fiscal year, in addition to training regulatory
agencies, Advocacy held special sessions for trade
associations, congressional staff, state government
officials, and Advocacy's regional advocates.
  A web-based training module planned for FY 2006 will
enable Advocacy to reach agencies that have not yet been
available for training, as well as to receive electronic
course feedback on what agency employees have learned. With
continued training on the importance of complying with the
RFA and E.O. 13272, the number of regulations written with
an eye toward reducing the burden on small entities will
continue to grow.

Table 2.1 RFA Compliance Training under E.O. 13272 in FY

2005

Date    Agency/Organization                   Type
10/06/0 Federal Communications Commission     Independent
4       (second session)                      agency
                                            
10/20/0 Telecommunications trade associations Trade
4                                            associations
                                            
10/27/0 Department of Housing and Urban       Cabinet
4       Development                           department
                                            
11/10/0 Department of Energy                  Cabinet
4                                            department
                                            
11/15/0 Department of Health and Human        Unit within
4       Services,                             Cabinet
         Centers for Medicare and Medicaid   department
       Services                              
       
12/01/0 Department of Homeland Security       Units within
4         Transportation Security             Cabinet
       Administration                        department
         U.S. Coast Guard
       
12/15/0 Department of Commerce                Unit within
4         Patent and Trademark Office         Cabinet
                                             department
                                            
01/12/0 Department of Transportation          Units within
5         National Highway Traffic Safety     Cabinet
       Administration                        department
         Federal Highway Administration
       
01/26/0 Department of Agriculture             Unit within
5         Animal and Plant Health Inspection  Cabinet
       Service                               department
                                             
02/02/0 Department of Education               Cabinet
5                                            department
                                            
02/09/0 Department of Housing and Urban       Cabinet
5       Development                           department
       (second session)
       
02/16/0 Department of Homeland Security       Units within
5         Bureau of Customs and Border        Cabinet
       Protection                            department
         Bureau of Citizenship and
       Immigration Services
       
03/02/0 Federal Election Commission           Independent
5                                            agency
                                            
03/23/0 Access Board                          Independent
5                                            agency
                                            
04/06/0 Department of Defense                 Cabinet
5       Federal Acquisition Regulation        department
       Commission                            Independent
                                             agency
04/27/0 Federal Communications Commission     Independent
5       (third session)                       agency
       
05/11/0 Department of Commerce                Unit within
5         Office of Manufacturing Services    Cabinet
                                             department
05/18/0 Securities and Exchange Commission    Independent
5                                             agency
06/29/0 Federal Deposit Insurance Corporation Independent
5                                            agency
                                            
07/26/0 Small Business Administration Office  Advocacy
5       of Advocacy                           regional staff
       regional advocates (second session)   
                                            
09/19/0 Training held at RFA Symposium        Trade
5                                            associations,
                                            state officials,
                                            congressional
                                            staff,
                                            nonprofits,
                                            small busi-
                                            nesses,  federal
                                            agencies
  
  

RFA and SBREFA Implementation

The Office of Advocacy oversees the implementation of the
RFA and E.O. 13272. Following is a summary of Advocacy's FY
2005 efforts:
  Advocacy staff continued to review proposed regulations
and to send comment letters to agencies where appropriate.
Two dozen comment letters went to federal agencies in FY
2005 (Table 2.2).
  Comment letters went to 11 agencies in FY 2005, the
largest number to the Federal Communications Commission
(FCC) (Chart 2.2).
  As a result of Advocacy interventions, cost savings were
achieved for small businesses in 10 regulations that went to
the final stages in FY 2005 (Table 2.3).
  Of these regulations, four had been identified in OMB
Reports to Congress on the Costs and Benefits of Federal
Regulations as candidates for regulatory reform because of
their impact on small businesses.
  Efforts to reduce the regulatory burden resulted in FY
2005 foregone regulatory cost savings of $6.62 billion in
the first year and $965.6 million in annually recurring
savings (Table 2.4).

Table 2.2 Regulatory Comment Letters Filed by the Office of

Advocacy, Fiscal Year 2005*

Date     Agency     Comment Subject
10/04/04 FCC        Unbundled Access to Network Elements;
                  Review of the Section 251 Unbundling
                  Obligations of Incumbent Local Exchange
                  Carriers, WC Dkt. No. 04-313, FCC 04-179
                  
10/12/04 FWS        Notice of Availability of the Draft
                  Economic Analysis on the Proposed
                  Critical Habitat for the Santa Ana
                  Sucker; 69 Fed. Reg. 58876 (October 1,
                  2004 )
                  
11/17/04 FCC        Initial Regulatory Flexibility Analysis
                  for the Notice of Proposed Rulemaking in
                  Telephone Number Portability; CC Dkt. No.
                  95-116, FCC 04-217
                  
11/18/04 FWS        Notice of Availability of the Draft
                  Economic Analysis on the Proposed
                  Critical Habitat for the Riverside Fairy
                  Shrimp; 69 Fed. Reg. 61461 (October 19,
                  2004)
                  
12/15/04 FCC        Initial Regulatory Flexibility Analysis
                  for the Notice of Proposed Rulemaking in
                  Communications Assistance for Law
                  Enforcement Act and Broadband Access and
                  Services; ET Dkt. No. 04-295, FCC 04-187
                  
12/15/04 Commerce/B Notice of Proposed Rulemaking on Revised
        IS         Knowledge Definition, Revision of Red
                  Flags Guidance and Safe Harbor; 69 Fed.
                  Reg. 60829 (October 13, 2004)
                  
12/17/05 OSHA       Notice of Proposed Rulemaking on
                  Occupational Exposure to Hexavalent
                  Chromium; 69 Fed. Reg. 59306, (October 4,
                  2004)
                  
12/21/04 FCC        Ex Parte Letter regarding the regulatory
                  flexibility analysis for Developing a
                  Unified Intercarrier Compensation Regime;
                  CC Dkt. No. 01-92
                  
01/13/05 SBA        Advance Notice of Proposed Rulemaking:
                  Small Business Selected Size Standards
                  Issues; 69 Fed. Reg. 70197 (December 3,
                  2004)
                  
01/18/05 CMS        Agency Information Collection Activities;
                  Proposed Collection; Comment Request; 69
                  Fed. Reg. 67745 (November 19, 2004)
                  
02/04/05 DOJ/CRD    Advance Notice of Proposed Rulemaking;
                  Nondiscrimination on the Basis of
                  Disability in State and Local Government
                  Services; Nondiscrimination on the Basis
                  of Disability by Public Accommodations
                  and in Commercial Facilities; 69 Fed.
                  Reg. 58768 (September 30, 2004)
                  
02/07/05 EPA        Standard of Performance for New
                  Stationary Sources and Emission
                  Guidelines for Existing Sources: Other
                  Solid Waste Incineration Units; 69 Fed.
                  Reg. 71472 (December 9, 2004)
                  
02/25/05 GSA        Access to the Federal Procurement Data
                  System- Next Generation (FPDS-NG); 69
                  Fed. Reg. 77662 (December 28, 2004)
                  
03/08/05 FCC        Verizon's Petition for Forbearance from
                  Title II and the FCC's Computer Inquiry
                  Rules; WC Dkt. No. 04-440
                  
03/11/05 SEC        Extension of Compliance Dates for the
                  Final Rule, Management's Report on
                  Internal Control Over Financial Reporting
                  and Certification of Disclosure in
                  Exchange Act Periodic Reports of Non-
                  Accelerated Filers and Foreign Private
                  Issuers; 70 Fed. Reg. 11528 (March 8,
                  2005)
                  
03/29/05 FWS        Proposed Designation of Critical Habitat
                  for the Southwestern Willow Flycatcher;
                  69 Fed. Reg. 60706 (October 12, 2004)
                  
05/17/05 FCC        Ex Parte Letter Supporting the Extension
                  of the Stay of the Order Regarding Rules
                  and Regulations Implementing the
                  Telephone Consumer Protection Act (TCPA)
                  of 1991 (also known as the "Do-Not-Call"
                  and the "Do-Not-Fax" rule); CG Dkt. No.
                  02-278, FCC 03-153
                  
05/23/05 DOJ/CRD    Regulatory Alternatives Discussion on the
                  Advance Notice of Proposed Rulemaking;
                  Nondiscrimination on the Basis of
                  Disability in State and Local Government
                  Services; Nondiscrimination on the Basis
                  of Disability by Public Accommodations
                  and in Commercial Facilities; 69 Fed.
                  Reg. 58768 (September 30, 2004)
                  
05/23/05 FCC        Regulatory Flexibility Analysis for
                  Developing a Unified Intercarrier
                  Compensation Regime; CC Dkt. No. 01-92
                  
06/28/05 FAA        Revisions to Cockpit Voice Recorder and
                  Digital Flight Data Recorder Regulations;
                  70 Fed. Reg. 9751 (February 28, 2005)
                  
07/14/05 FWS        Reopening the Comment Period on Proposed
                  Designation of Critical Habitat for the
                  Southwestern Willow Flycatcher; 70 Fed.
                  Reg. 39227 (July 7, 2005)
                  
07/27/05 FCC        Regulatory Flexibility Analysis for
                  Special Access Rates for Price Cap Local
                  Exchange Carriers; WC Dkt. No. 05-25
                  
08/01/05 NMFS       Notice of Proposed Rulemaking, Fisheries
                  of the Exclusive Economic Zone off
                  Alaska; Groundfish Retention Standard; 70
                  Fed. Reg. 35054 (June 16, 2005)
                  
08/16/05 FCC        Initial Regulatory Flexibility Analysis
                  for Telephone Number Portability; CC Dkt.
                  No. 95-116
                  

*Note: The complete text of Advocacy's regulatory comments
is available on Advocacy's website,
http://www.sba.gov/advo/laws/comments/.

Chart 2.1 Advocacy Comments by Key RFA Compliance Issue, FY

2005 (percent)

Throughout Fiscal Year 2005, the Office of Advocacy advised
many agencies on how to comply with the RFA. Chart 2.1
illustrates the key concerns raised by Advocacy's comment
letters and prepublication review of draft rules. The chart
highlights areas for improved compliance based on Advocacy's
analysis of its FY 2005 comment letters and other regulatory
interventions summarized in this report.

Table 2.3 Regulatory Cost Savings, Fiscal Year 2005

Agency     Subject Description                    Cost Savings
USDA/      Mexican Avocado Import Program. The    $34.55
APHIS      final rule expands existing            million each
          regulations to allow distribution of   year, for the
          Mexican Hass avocados to 47 states     first two
          during all months of the year. The     years of the
          agency delayed distribution of the     rule. Source:
          avocados to California, Florida, and   APHIS.
          Hawaii (the 3 states that have all     
          avocado producers in the United States
          for the first two years of the rule).
          69 Fed. Reg. 69748 (November 30,
          2004).
          
EPA        Cooling Water Intake. The rule         $74 million
          requires facilities that have cooling  over a ten-
          water intake structures to install     year period,
          devices to protect fish and other      and an
          aquatic species from being killed by   annualized
          the intake structures. As a result of  cost savings
          a SBREFA review panel, EPA proposed an of $10.5
          exemption for facilities that have a   million.
          cooling water intake flow of 50        Source: EPA.
          million gallons per day or less. This  
          removes all small businesses from the  
          cooling water intake rule. Research
          available to the panel indicated that
          cooling water intake flow volumes
          below the 50 million gallon per day
          threshold are unlikely to affect fish
          or other aquatic species. 69 Fed. Reg.
          68444 (November 24, 2004). Note: This
          rule was identified in the OMB 2004
          Report to Congress on the Costs and
          Benefits of Federal Regulations as a
          candidate for regulatory reform
          because of its impact on small
          business.
          
EPA        Other Solid Waste Incinerators. The    $7.5 million
          rule requires new and existing         per year.
          incinerators at institutions such as   Source: EPA.
          schools, prisons, and churches to
          install state-of-the-art control
          equipment and meet costly permitting
          and operating requirements, or
          alternatively, to shut down their
          incinerators and send their sold waste
          to a landfill. EPA agreed to exempt
          several types of incinerators for
          which alternative disposal options are
          not feasible, including rural
          incinerators at institutions located
          more than 50 miles from an urban area
          where the operator can show that no
          other waste disposal alternative
          exists. 69 Fed. Reg. 71472 (December
          9, 2004).
          
FCC        Restriction on Fax Advertising.        $3.5 billion
          Advocacy and small businesses          initially and
          supported legislation that would       $711 million
          recognize a previous business          annually.
          relationship exemption. The Junk Fax   Source: FCC.
          Prevention Act of 2005 was signed into
          law by President Bush on July 9, 2005.
          Pub. L. No. 109-21, 119 Stat. 359
          (2005). Note: This rule was identified
          in the 2004 OMB Report to Congress on
          the Costs and Benefits of Federal
          Regulations as a candidate for
          regulatory reform because of its
          impact on small business.
          
NARA       Records Center Facility Standard. The  $63 million
          rule required extreme fire prevention  for the first
          and control measures at all records    year of the
          facilities. The 2005 final rule        rule.
          provides flexibility from some of the  Source: PRISM
          more stringent standards while still   International
          maintaining safety standards. 70 Fed.  .
          Reg. 50982 (August 29, 2005). Note:
          This rule was identified in the 2002
          OMB Report to Congress on the Costs
          and Benefits of Federal Regulations as
          a candidate for reform because of its
          impact on small businesses.
          
FWS        Designation of Critical Habitat for    Not
          the Bull Trout. FWS submitted a draft  available.
          final rule to Advocacy. The general
          scope of the rule was to designate
          certain areas as critical habitat to
          protect the bull trout. The final rule
          published by FWS included an exemption
          for impounded waters from the final
          designation of critical habitat. The
          exemption provided flexibility for
          small businesses with no impact on the
          species. 70 Fed. Reg. 56212 (September
          26, 2005).
          
MSHA       Diesel Particulate Matter Exposure in  $1.6 million
          Underground Metal and Nonmetal Mines.  per year.
          MSHA has proposed to revise its final  Source: MSHA.
          rule on diesel particulate matter by
          staggering the effective date over a
          five-year period to provide greater
          flexibility. The final rule mandated a
          reduced permissible exposure limit for
          diesel particulates in these mines
          from 400 micrograms per cubic meter of
          air to 160 micrograms per cubic meter
          of air. 70 Fed. Reg. 53280 (September
          7, 2005).
          
DOT/FMCSA  Hours of Service of Truckers. FMCSA    $200 million
          amended an earlier 2003 rule that had  in first year
          been remanded to the agency by the     and $200
          U.S. Court of Appeals for the D.C.     million
          Circuit, but left in effect by         annually.
          Congress pending final agency action.  Source:
          Advocacy urged FMCSA to reduce the     FMCSA.
          regulatory burdens on short-haul
          drivers by allowing some of them to
          drive two extra hours once per week
          (offset by rest time) as well as
          reducing recordkeeping requirements.
          FMCSA agreed to these changes. 70 Fed.
          Reg. 49978 (August 25, 2005). Note:
          This rule was identified in the 2004
          OMB Report to Congress on the Costs
          and Benefits of Federal Regulations as
          a candidate for regulatory reform
          because of its impact on small
          business.
          
SEC        Extension of Compliance for Periodic   $2.68 billion
          Reports. As required by the Sarbanes-  in first
          Oxley Act of 2002, SEC published final year.
          rules June 18, 2003, requiring         Source: FEI.
          businesses that raise funds from
          public investors to report on internal
          controls and audit procedures.
          Advocacy urged SEC to delay the first
          compliance deadline, and the SEC
          extended the deadline for one year. 70
          Fed. Reg. 56825 (September 29, 2005).
          

Table 2.4 Summary of Estimated Cost Savings, FY 2005

(Dollars)

Rule / Intervention            First-Year         Annual Costs
                              Costs
APHIS Mexican Avocado Import    34,550,000         34,550,000
Program1
EPA Cooling Water Phase III2    10,500,000         10,500,000
EPA Other Solid Waste           7,600,000          7,600,000
Incinerators2
DOD RFID3                       62,000,000        --
FCC Do not FAX4                 3,556,430,226      711,286,045
NARA Records Center Facility    63,000,000        --
Standards5
FWS Bull Trout Critical        --                 --
Habitat Designation6
MSHA Diesel Particulate         9,274,325          1,620,869
Matter7
DOT/FMCSA Hours of Service8     200,000,000        200,000,000
SEC Extension of Compliance9   2,680,000,000      --
TOTAL                           6,623,354,551      965,556,914
                                                  
1 Source: Animal and Plant Health Inspection Service (APHIS).
2 Source: Environmental Protection Agency (EPA).
3 Source: Department of Defense (DOD).
4 Source: U.S. Chamber of Commerce survey.
5 Source: PRISM International and National Archive and
Records Administration (NARA).
6 Note: Cost savings for this rule are not publicly available
because savings were accrued during the draft stage of the
rule.
7 Source: Mine Safety and Health Administration (MSHA).
8 Source: Federal Motor Carrier Safety Administration
(FMSCA).
9 Source: Calculations were based on data from a Financial
Executives International (FEI) survey.

Note: The Office of Advocacy generally bases its cost savings
estimates on agency estimates. Cost savings for a given rule
are captured in the fiscal year in which the agency agrees to
changes in the rule as a result of Advocacy's intervention.
Where possible, savings are limited to those attributable to
small businesses. These are best estimates. First-year cost
savings consist of either capital or annual costs that would
be incurred in the rule's first year of implementation.
Recurring annual cost savings are listed where applicable.

3. Advocacy Review of Agency RFA Compliance in Fiscal Year

      2005

As agencies grow in their familiarity with the RFA and E.O.
13272, and with the Office of Advocacy, compliance will come
more easily to the agencies. In monitoring agency
compliance, Advocacy has found that there is an increase in
the number of agencies that make a good-faith effort to
comply with the RFA. However, even agencies with generally
good RFA compliance from time to time fail to comply with
the RFA on particular rulemakings.

Department of Agriculture

E.O. 13272 Compliance
The Department of Agriculture (USDA) has made its policies
for considering small entity impacts when promulgating
regulations publicly available as required by section 3(a)
of E.O. 13272. As in previous years, two agencies within
USDA consistently notify Advocacy of rules that may have a
significant economic impact on small entities: the Animal
and Plant Health Inspection Service (APHIS) and the Grain
Inspection, Packers and Stockyard Administration (GIPSA).

Animal and Plant Health Inspection Service
     Issue: Mexican Hass Avocado Import Program. On
  November 30, 2004, APHIS published a final rule
  regulating the importation of Hass avocados into the
  United States. The rule contained a final regulatory
  flexibility analysis. The final rule expands existing
  regulations to allow distribution of Mexican Hass
  avocados to 47 states during all months of the year.
  APHIS shared the draft regulation with Advocacy prior to
  publication. The following description summarizes small
  business regulatory flexibility without compromising the
  confidentiality of interagency deliberations
    Concerned that small avocado producers in California,
  Florida, and Hawaii would be significantly affected by
  the proposal, Advocacy submitted confidential interagency
  comments to the agency. In the final rule, based on
  comments from regulated entities and Advocacy, APHIS
  decided to delay distribution of the avocados to
  California, Florida, and Hawaii for the first two years
  of the rule. The delay will allow small avocado producers
  in the affected states to better prepare for the change
  in market conditions and pricing. Cost savings amounting
  to $34.55 million each year for the first two years
  resulted from the flexibilities in this final rule.

     Issue: National Animal Identification System; Draft
  Strategic Plan and Draft Program Standards. On May 6,
  2005, APHIS published in the Federal Register a notice of
  availability of the Draft Strategic Plan and Draft
  Program Standards documents for the National Animal
  Identification System (NAIS). The NAIS will be a
  mechanism for tracking animals from birth to slaughter
  and is designed to enhance the U.S. response to disease
  outbreaks across different animal species. The program
  will trace animals during a disease outbreak and allow
  APHIS and the federal and state governments and private
  industry to minimize the impact of an outbreak on
  domestic and foreign markets. The documents outline the
  process of developing the NAIS and the agency's current
  understanding of how the system would work when
  implemented. In the notice, the agency solicited public
  feedback on various elements of the system. The following
  description summarizes coverage of small business
  flexibility under consideration without compromising the
  confidentiality of interagency deliberations.
    Advocacy is concerned that the standards, as written,
  could have a significant economic impact on a substantial
  number of small producers and slaughtering plants.
  Affected entities have informed Advocacy that the
  proposed NAIS standards do not adequately consider
  existing animal identification technology already in use
  by some in the affected industry and that implementing
  the system, especially the technology infrastructure,
  would be costly for small businesses. Additionally,
  industry personnel are concerned that the publication of
  the proposed system did not include an initial regulatory
  flexibility analysis; thus, the potential costs to the
  industry were not clearly outlined in the proposal.
    Because of extensive public interest, APHIS extended
  the comment period for the proposed system for an
  additional 30 days. In confidential interagency comments
  submitted to the agency, Advocacy shared industry
  concerns with APHIS. Advocacy also urged the agency to
  consider the potential economic impacts on small entities
  as well as alternatives to minimize the impact. APHIS has
  not completed work on the NAIS documents. Advocacy will
  continue to monitor this issue and to work with the
  agency to address small entity impacts.

Department of Commerce

E.O. 13272 Compliance
The Department of Commerce (DOC) complies with the
requirements of E.O. 13272. Its RFA policies are publicly
available in compliance with section 3(a), and DOC's
agencies notify Advocacy of draft rules as required by
section 3(b). For example, the National Marine Fisheries
Service (NMFS) routinely submits draft proposed and final
rules to the Office of Advocacy. NMFS did not publish any
final rules in FY 2005 that were the subject of any Advocacy
comments; therefore, NMFS' compliance with section 3(c)
cannot be assessed. As one of the agencies involved in
Advocacy's RFA training pilot program, NMFS was one of the
first agencies to receive RFA training.
  Advocacy also works with the Patent and Trademark Office
(PTO) at the Department of Commerce. The PTO regularly
submits to Advocacy draft proposed and final rules that may
have a significant economic impact on a substantial number
of small entities. In FY 2005, PTO staff participated in
Advocacy's RFA training program and began submitting draft
regulations to Advocacy's email notification system more
regularly. The agency expressed a willingness to work with
Advocacy earlier in the rulemaking process to ensure proper
completion of agency initial regulatory flexibility analyses
(IRFAs) and certifications. PTO did not publish any final
rules in FY 2005 that were the subject of any Advocacy
comment; therefore, compliance with section 3(c) of E.O.
13272 cannot be assessed. Advocacy plans to train the
remaining agencies at DOC in the next fiscal year.
  During the past year, Advocacy worked closely with the
Office of Manufacturing and Services at the Department of
Commerce. Although this office is not focused strictly on
small business issues, there is a similarity between the
Office of Advocacy's mission and the purpose of the
Manufacturing and Services office. To capitalize on this,
Commerce loaned an economist to the Office of Advocacy to
learn more about the regulatory process and, conversely, so
that Advocacy could benefit from greater use of Commerce
data in preparing regulatory flexibility analyses. There is
potential for future collaboration between the offices in
the area of impact analysis.

Bureau of Industry Standards (BIS)
     Issue: Revised Definition of "Knowledge" for "Red
  Flags" Guidance and Safe Harbor. On October 13, 2004, BIS
  published a proposed rule: Revised "Knowledge"
  Definition, Revision of "Red Flags" Guidance and Safe
  Harbor, designed to determine whether an exporter
  understood that it was violating exporting control rules.
  Current regulations apply a "high probability" standard
  that the exporters know that they are violating exporting
  controls. The proposed rule would:
   - revise the definition of knowledge for determining
    whether or not exporters know they are violating export
    controls;
   -    revise the Export Administration regulations to
    incorporate a "reasonable person" standard;
   - replace the phrase "high probability" with "more
    likely than not;"
   - update the "red flags" guidance to increase the number
    of circumstances identified as expressly creating a red
    flag of potential violations of the Export
    Administration regulations; and
   - create a safe harbor from certain knowledge-based
    violations if the exporter takes certain steps.
    BIS certified that the rule would not have a
  significant economic impact on a substantial number of
  small entities. The basis of the certification was that
  the proposal was a "mere clarification."
    Advocacy discussed the proposal with small entity
  representatives and submitted comments questioning
  whether the proposed change was a mere clarification.
  Advocacy noted that BIS was proposing to change the
  definition in a way that lowers the standard for
  establishing whether the exporter has knowledge of a
  potential export control violation. Small businesses that
  might not have been liable in the past could potentially
  be held liable for an export control violation under the
  proposed new standard and could incur more legal
  expenses, fines, and penalties.
    In addition, under the proposed "safe harbor"
  provision, businesses could learn whether BIS agrees with
  them that the transaction qualifies for a safe harbor.
  The provision was intended to help businesses avoid fines
  and penalties, which BIS believes would mitigate the
  impact of the rule. However, small business
  representatives are concerned that small businesses would
  have to wait for an extended period of time for an
  opinion. To prevent this, Advocacy asked BIS to give full
  consideration to alternatives from the industry, such as
  imposing a 30-day timeframe for BIS to provide an opinion
  on whether the transaction qualifies for a safe harbor.
  Advocacy also asked BIS to give full consideration to the
  suggestion that BIS allow for concurrent consideration of
  license applications while an exporter's request is
  pending a determination through the safe harbor process.
  This rule has not been finalized.

National Marine Fisheries Service
     Issue: Designation of Critical Habitat for 12
  Evolutionarily Significant Units of West Coast Salmon and
  Steelhead in Washington, Oregon, and Idaho. In 2000, the
  National Marine Fisheries Service designated critical
  habitat for salmon and steelhead across approximately
  150,000 miles of rivers, streams, and shores in the
  Pacific Northwest. The agency failed to consider the
  economic impacts of the designation of critical habitat
  on small entities as required by the RFA, instead
  attributing all costs from designating critical habitat
  to the earlier decision to list the species. In light of
  decisions by federal courts that rejected such
  attribution of costs to listing decisions, NMFS revisited
  the rulemaking. In addition, after the first designation
  of critical habitat, the U.S. Geological Survey made
  available to NMFS more detailed watershed maps, which
  allowed the agency to identify more accurately areas that
  should be designated as critical habitat.
    The agency withdrew the 2000 rulemaking
  and re-proposed the designation on June 14, 2004. The
  agency kept the comment period for the notice of proposed
  rulemaking open through October 30, 2004. In response to
  the designation of critical habitat for the salmon, small
  farmers, developers, ranchers and others raised concerns
  about the costs the rule would impose. On January 5,
  2005, NMFS published a final rule that included less than
  30,000 miles of the 2000 rule's original 150,000 miles of
  rivers, streams, and shores. In 2000, NMFS did not
  provide an estimate of the costs its original rule would
  impose on the public, but the agency did estimate the
  impacts of its 2005 rule. Though there is insufficient
  data to provide an estimate of the cost savings the final
  2005 rule represented over the original 2000 rule, it is
  likely that the reduction of critical habitat by 80
  percent represented major cost savings for small
  entities.
  
     Issue: Fisheries of the Exclusive Economic Zone Off
  Alaska; Groundfish Retention Standard. On June 16, 2005,
  NMFS published a proposed rule on Fisheries of the
  Exclusive Economic Zone Off Alaska; Groundfish Retention
  Standard. The proposed rule implements Amendment 79 to
  the Fisheries Management Plan for groundfish of the
  Bering Sea and Aleutian Islands. The purpose of the
  action is to reduce bycatch and improve utilization of
  groundfish harvested by catcher/processor trawl vessels.
  It implements an annual groundfish retention standard
  (GRS) as well as monitoring and enforcement measures for
  trawl catcher/processors greater than 125 feet.
    The catcher/processors for the groundfish industry
  contacted Advocacy regarding the size standard used for
  determining a small catcher processor. Instead of using
  the 500 employee size standard for floating factory ships
  in its initial regulatory flexibility analysis, NMFS used
  the $3.5 million annual volume standard for fish
  harvesting operations. Advocacy argued that without the
  appropriate size standard there was no way of knowing
  whether NMFS was correct in determining that none of the
  industry participants were small. The industry was also
  concerned about aspects of the proposal that were not
  recommended, like new monitoring and enforcement
  measures, a new observer schedule, and the installation
  of a new NMFS-approved scale. Advocacy asked NMFS to
  perform an economic analysis on the new aspects of the
  rule and publish the analysis for public comment. This
  rule has not been finalized.

Department of Defense

E.O. 13272 Compliance
The defense-related regulations of greatest interest to
small businesses are procurement regulations issued by the
Federal Acquisition Regulation (FAR) Council. The Department
of Defense (DOD) has procedures in place that comply with
section 3(a) of E.O. 13272. Consideration of small business
impacts in these rulemakings is covered by the policies and
procedures of the FAR Council, submitted to Advocacy by the
General Services Administration. The Department of Defense
has not published procedures that would apply to rulemakings
other than those considered by the FAR Council. In
compliance with section 3(b) of E.O. 13272, DOD submits
prepublication rulemakings for Advocacy consideration. DOD
did not publish any final rules in FY 2005 that were the
subject of any Advocacy written comments; therefore, DOD
compliance with section 3(c) cannot be assessed. DOD staff
received RFA training in FY 2005.

     Issue: Radio Frequency Identification Tags. The
  Department of Defense issued a proposed regulation on
  April 21, 2005, to amend the Defense Federal Acquisition
  Regulation Supplement by adding a requirement that
  packages be marked with passive radio frequency
  identification (RFID) tags. The change would require
  contractors to affix passive RFID tags at the case and
  palletized unit load levels when shipping packaged
  operational rations, clothing, individual equipment, and
  tools.
    Advocacy was involved in the confidential interagency
  deliberations of this rule. Advocacy's early involvement
  resulted in a detailed economic analysis of the impact of
  the rule on small entities. DOD also conducted outreach
  to the small business community. The outreach includes an
  ongoing training program for small businesses to develop
  the necessary tools and knowledge to comply with the new
  DOD acquisition requirements.
    The final rule was implemented on September 13, 2005.
  The flexibilities achieved in this final rule resulted in
  $62 million in first-year cost savings.

Department of Education

E.O. 13272 Compliance
The Department of Education (Education) has made its
policies and procedures publicly available as required by
section 3(a) of E.O. 13272. Education notifies Advocacy
through Advocacy's email notification system of draft rules
that may have a significant impact on a substantial number
of small entities, as required by section 3(b) of E.O.
13272. Education has not published any final rules in FY
2005 that were the subject of any Advocacy comments;
therefore, Education's compliance with section 3(c) cannot
be assessed. Education staff received RFA training in FY
2005.

Department of Energy

E.O. 13272 Compliance
The Department of Energy (DOE) has complied with section
3(a) of E.O. 13272 by making its policies and procedures
publicly available on its website. In FY 2005, DOE provided
Advocacy with all of its draft rules when they were sent to
OMB for review, in compliance with section 3(b) of the
Executive Order. Advocacy has not filed comments on any DOE
rules since the establishment of the section 3(c)
requirement. DOE staff received RFA training in FY 2005.

Department of Health and Human Services

E.O. 13272 Compliance
The Department of Health and Human Services (HHS) made its
policies and procedures publicly available as required by
section 3(a) of E.O. 13272. The Centers for Medicare and
Medicaid Services (CMS) and the Food and Drug Administration
(FDA), two agencies that often promulgate rules that affect
small businesses, did not consistently submit drafts of
rules pursuant to section 3(b) of E.O. 13272 in FY 2005.
Neither CMS nor FDA published final rules in FY 2005 that
were the subject of any Advocacy comments; therefore,
compliance with section 3(c) of E.O. 13272 cannot be
assessed. HHS staff received RFA training in FY 2005.

Centers for Medicare and Medicaid Services
  Issue: Agency Information Collection Activities;
  Proposed Collection; Comment Request. On November 19,
  2004, the Centers for Medicare and Medicaid Services
  published in the Federal Register a summary of proposed
  collections for public comment pursuant to section
  3506(c)(2)(A) of the Paperwork Reduction Act of 1995. In
  the summary, CMS sought comment on the national
  implementation and utilization of the Hospital Consumer
  Assessment of Health Plans Survey (HCAHPS). According to
  CMS the goal of the HCAHPS was to "offer consumers choice
  and create incentives for hospitals to improve
  performance in areas that are important to patients."
  Ultimately, CMS plans to publish the data obtained
  through HCAHPS to assist consumers in selecting hospitals
  that deliver high-quality care. Advocacy commented on the
  rule on January 18, 2005, citing its concern that the
  HCAHPS would place a significant economic and paperwork
  burden on hospitals, many of which are small entities.
  Advocacy suggested that CMS revisit its analysis of the
  paperwork burden associated with the survey and consider
  reducing the number of survey questions.

Food and Drug Adminis-tration
     Issue: Current Good Tissue Practice for
  Manufacturers of Human Cellular and Tissue-Base Products;
  Inspection and Enforcement-Final Rule. Advocacy reviewed
  this final rule prepublication via confidential
  interagency review. Advocacy commented publicly on the
  proposed rule on November 5, 2001, believing that the
  rule had the potential to affect small businesses
  negatively. The FDA took into account public comments
  filed in response to the proposed rule and reflected
  those comments in the economic analysis in the final
  rule. The final rule allowed affected entities
  significant flexibility in determining how to comply with
  the rule. The final rule also granted affected entities
  the ability to seek an exemption from, or propose an
  alternative to, a particular provision of the rule where
  appropriate. Cost savings are not available for this
  rule.

     Issue: Beverages: Bottled Water. On October 28,
  2004, Advocacy reviewed and commented through
  confidential interagency review on the FDA's proposed
  rule seeking to revise the allowable levels of arsenic in
  drinking water. As a result of Advocacy's early
  intervention, FDA sought comments in the published
  proposed rule on the profitability of small water
  manufacturers, on compliance costs, and on whether there
  were viable alternatives that would reduce the cost of
  the rule on small entities.

Department of Homeland Security

E.O. 13272 Compliance
The Department of Homeland Security (DHS) has made progress
in complying with E.O. 13272. DHS received its RFA training
in FY 2005, and it has posted its RFA policy on its website,
as required by section 3(a) of E.O. 13272. DHS did not
submit any draft rules to Advocacy in 2005. DHS has not
published final rules in FY 2005 that were the subject of
Advocacy comments; therefore section 3(c) of E.O. 13272
cannot be assessed.

Department of Housing and Urban Development

E.O. 13272 Compliance
The Department of Housing and Urban Development (HUD) made
its policies and procedures available to the public in the
timeframe required by section 3(a) of E.O. 13272. HUD
notified Advocacy of rules that may have a significant
impact on a substantial number of small entities as required
by section 3(b) of E.O. 13272. HUD received RFA training in
FY 2005. Advocacy and HUD developed a good working
relationship in FY 2005 through the Real Estate Settlement
Procedures Act (RESPA) roundtables Advocacy cosponsored with
HUD (see below) and the RFA training session.

     Issue: Real Estate Settlement Procedures Act:
  Simplifying and Improving the Process of Obtaining
  Mortgages to Reduce Settlement Costs to Consumers. In
  2002, HUD issued a proposed rule to revise the
  regulations implementing RESPA. The purpose of the
  proposal was to simplify and improve the process of
  obtaining home mortgages and to reduce settlement costs
  to consumers. The proposed rule was strongly opposed by
  small businesses throughout the real estate and
  settlement services industry.
    Advocacy filed comments on behalf of small business on
  October 28, 2002. Advocacy's comments suggested that HUD
  prepare a revised IRFA to provide information to the
  public about the industries affected by the proposal and
  alternatives to minimize the impact on small entities.
  Advocacy also emphasized its desire to continue working
  with HUD to ensure that improvements to the mortgage
  financing and settlement process are sensitive to the
  impact on small business.
    In March 2004, HUD withdrew the draft final RESPA rule
  from OMB review. In the with-drawal letter to OMB, HUD
  Secretary
  Alphonso Jackson stated that based on concerns from
  members of Congress and key members of consumer and
  industry groups he believed that it would be prudent for
  HUD to reexamine the RESPA rule before it is made final.
    In FY 2005, Advocacy worked with HUD to perform
  outreach to the small business community to discuss the
  impact of RESPA reform on small entities and to flush out
  less burdensome alternatives. In addition to attending
  roundtables that HUD held in Washington, D.C., on RESPA
  reform, Advocacy and HUD cosponsored three roundtables
  around the country. Members of every aspect of the real
  estate community were invited to participate in the
  roundtables held in Chicago, Fort Worth, and Los Angeles.
  Advocacy will continue working with HUD as it evaluates
  the information gained from the roundtables.

Department of the Interior

E.O. 13272 Compliance
The Department of the Interior (DOI) has made its policies
and procedures publicly available in compliance with section
3(a) of E.O. 13272. As required by section 3(b), DOI
notifies Advocacy of rules that it has determined could have
a significant economic impact on a substantial number of
small entities. Prior to publication of a rule, agencies
within DOI typically submitted notifications and a "record
of compliance" to Advocacy. DOI also utilized Advocacy's
email notification system to inform Advocacy of draft rules
that may affect small business.
  The Fish and Wildlife Service (FWS) continues to certify
its final designations of critical habitat for endangered
species as not having a significant economic impact on a
substantial number of small entities despite small business
views to the contrary voiced during the process. FWS has not
completed an IRFA or FRFA for its critical habitat
designations. This exception to DOI's attention to the RFA
and E.O. 13272 is of concern and Advocacy will continue to
work with FWS to improve its RFA and E.O. 13272 compliance.
Advocacy has commented on three final rules that were
published by FWS during fiscal year 2005-the final
designations of critical habitat for the Southwestern willow
flycatcher, the Santa Ana sucker, and the Riverside fairy
shrimp (see Table 2.2). FWS did respond to Advocacy's
comments, in compliance with section 3(c).

Fish and Wildlife Service
     Issue: Endangered and Threatened Wildlife Plants;
  Designation of Critical Habitat for the Bull Trout. FWS
  submitted a draft final rule to Advocacy that would
  designate areas as critical habitat to protect the bull
  trout. The final rule published by FWS included an
  exemption for impounded waters from the final designation
  of critical habitat, providing significant relief for
  small farmers and businesses in the affected area while
  preserving the protections intended in the critical
  habitat designation. Cost savings achieved in this rule
  cannot be determined because they are based on
  confidential FOIA-exempt material.

Department of Justice

E.O. 13272 Compliance
The Department of Justice (DOJ) has made its policies and
procedures publicly available as required by section 3(a) of
E.O. 13272. DOJ notifies Advocacy through Advocacy's email
notification system of draft rules that may have a
significant impact on a substantial number of small
entities, as required by section 3(b) of E.O. 13272. DOJ did
not publish any final rules in FY 2005 that were the subject
of any Advocacy comment; therefore, DOJ's compliance with
section 3(c) cannot be assessed. Staff at DOJ have not yet
received RFA training.

Department of Labor

E.O. 13272 Compliance
The Department of Labor (DOL) has made its policies and
procedures publicly available as required by section 3(a) of
E.O. 13272. Agencies within DOL notify Advocacy by mail and
by Advocacy's email notification system of rules that may
have a significant impact on a substantial number of small
entities, as required by section 3(b) of E.O. 13272. There
were no electronic notifications by OSHA or the Mine Safety
and Health Administration (MSHA). Neither OSHA nor MSHA
published any final rules during FY 2005 that were the
subject of any Advocacy comment; therefore, compliance with
Section 3(c) of E.O. 13272 cannot be assessed. Advocacy
submitted comments to OSHA on its proposed occupational
exposure to hexavalent chromium standard, but that rule has
yet to be finalized. OSHA and MSHA frequently participate in
Advocacy small business regulatory roundtables on
occupational safety and health and mine safety and health
issues. OSHA's Office of Small Business Assistance has been
proactive in discussing small business issues with Advocacy.
As part of the SBREFA process, OSHA has contacted Advocacy
to discuss rules that may have a significant economic impact
on a substantial number of small entities and where a SBREFA
panel is expected. The Department of Labor was previously
trained in RFA compliance.

Mine Safety and Health Administration
  Issue: Diesel Particulate Matter Exposure of Underground
  Metal and Nonmetal Mines Rule. MSHA proposed to revise
  its final rule on Diesel Particulate Matter Exposure of
  Underground Metal and Nonmetal Mines. The final rule
  mandated a reduced permissible exposure limit (PEL) for
  diesel particulates in underground metal and nonmetal
  mines from 400 to 160 micrograms per cubic meter of air
  (total carbon) effective on January 20, 2006. MSHA
  proposes staggering the effective date of the final
  regulation over a five-year period to provide greater
  flexibility to mine operators. Advocacy reviewed this
  rule prepublication via confidential interagency review.
  The rule would ease the regulatory burden on small mine
  operators, who argued that meeting the final exposure
  limit was not technologically feasible (using existing
  filter technology) and was unduly expensive.
    Advocacy raised this issue at several of its small
  business labor safety roundtables. The roundtables
  included presentations by both small business
  representatives and MSHA personnel. Advocacy also
  communicated directly with OMB and MSHA on a confidential
  interagency basis regarding this rule. The agency was
  convinced that technological feasibility issues justify
  the staggered implementation schedule. As a result of the
  flexibilities contained in this rule, first-year cost
  savings of $9.3 million and annual cost savings of $1.6
  million will be realized by small businesses.

Occupational Safety and Health Administration
     Issue: Occupational Exposure to Hexavalent Chromium
  Rule. OSHA has proposed to revise its existing standard
  for employee exposure to hexavalent chromium (Cr(VI))
  from the current level of 52 micrograms per cubic meter
  of air (for an 8-hour time-weighted average) to one
  microgram per cubic meter of air. Advocacy reviewed this
  rule prepublication via confidential interagency review.
  The rulemaking was mandated by the U.S. Court of Appeals
  for the Third Circuit. OSHA initiated a SBREFA panel
  process in 2003 that included conferring with
  representatives from affected small entities in several
  industries, including chemical, alloy, and pigment
  manufacturing, electroplating, welding, and aerospace.
    Advocacy participated in the SBREFA panel process and
  submitted detailed comments to the agency recommending a
  permissible exposure limit of 23 micrograms per cubic
  meter of air based on technological and economic
  feasibility. This issue has been the subject of
  presentations by small business representatives likely to
  be affected by the standard at several small business
  labor safety roundtables hosted by Advocacy. Advocacy has
  worked directly with OMB and OSHA in confidential
  interagency deliberations. The final permissible exposure
  limit is expected to be published in 2006.
 
     Issue: Electric Power Generation, Transmission, and
  Distribution Rule. OSHA has proposed to update the
  existing standard for the construction of electric power
  transmission and generation installations to make them
  more consistent with the more recently promulgated
  general industry standard. Advocacy reviewed this rule
  prepublication via confidential interagency review. The
  proposal would also make miscellaneous changes to both
  standards, including adding provisions related to the
  relationship between host employers and contractors, the
  requirements for flame-resistant clothing, training, and
  electrical protective equipment. OSHA initiated a SBREFA
  panel process in 2003 and obtained comments on its draft
  proposal from representatives of small entities that
  would be affected by the rule.
    Advocacy participated in the SBREFA panel process and
  has discussed the proposed rule at several of its small
  business labor safety roundtables. In addition, Advocacy
  recently hosted a conference call of the small entity
  representatives to obtain their input on the proposed
  rule and has also communicated directly with OMB and OSHA
  in confidential interagency deliberations. The final rule
  is expected to be published in 2006.
 
  Issue: Notice of Section 610 Review of Lead In
  Construction Standard. OSHA is undertaking a review of
  its lead in construction standard under Section 610 of
  the Regulatory Flexibility Act. Section 610 requires
  federal agencies to review their existing rules
  periodically to determine whether they should be
  continued without change, amended, or rescinded
  consistent with the underlying statute. OSHA's lead
  standard is designed to prevent occupational exposures to
  lead on construction sites. It applies to many small
  businesses in the construction industry that must comply
  with its worker protection requirements.
    Small business representatives from the residential
  remodeling industry presented issues at several small
  business labor safety roundtables hosted by Advocacy.
  Advocacy also hosted a specific small business roundtable
  on this issue, where small business representatives from
  affected industries and representatives from OSHA, HUD,
  and EPA (each has regulations concerning lead hazards)
  attended. Advocacy continues to monitor the rulemaking
  process.

Department of State

E.O. 13272 Compliance
The Department of State did not provide any draft rules to
Advocacy in 2005. Although the State Department has
solicited input from Advocacy on rulemakings in the past,
the State Department did not publish any final rules in FY
2005 that were the subject of Advocacy comment; therefore,
the State Department's compliance with section 3(c) cannot
be assessed.

Department of Transportation

E.O. 13272 Compliance
The Department of Transportation (DOT) has made its policies
and procedures publicly available as required by Section
3(a) of E.O. 13272. The Federal Highway Administration
(FHWA) and the National Highway Traffic Safety
Administration (NHTSA) were trained in RFA compliance in FY
2005. Agencies within DOT notify Advocacy in a timely
manner, through Advocacy's email notification system, of
draft rules that may have a significant economic impact on a
substantial number of small entities, as required by Section
3(b) of E.O. 13272. DOT submitted 10 electronic
notifications to Advocacy in FY 2005; however, it did not
notify Advocacy of the Federal Aviation Administration's
(FAA) proposed Washington, D.C., Special Flight Rules Area
rule as required by Section 3(b) of E.O. 13272. DOT agencies
did not finalize any rules during FY 2005 upon which
Advocacy filed comments; therefore, compliance with Section
3(c) of E.O. 13272 cannot be assessed. Advocacy submitted
comments to the Federal Aviation Administration on its
proposed revisions to cockpit voice recorder and digital
flight data recorder regulations, but that rule has yet to
be finalized. In addition, the Federal Motor Carrier Safety
Administration (FMCSA) finalized its Hours of Service of
Drivers rule. While the agency certified under the RFA that
the final rule would not have a significant economic impact
on a substantial number of small entities, the agency did
make several revisions to the rule that reduced regulatory
burdens on small short-haul drivers.

Federal Aviation Administration
  Issue: Revisions to Cockpit Voice Recorder and Digital
  Flight Recorder Regulations. FAA has proposed to require
  upgraded cockpit voice recorder (CVR) and digital flight
  data recorder (DFDR) equipment on all aircraft with 10 or
  more seats, including increased recording time for CVRs,
  an independent backup power source, separate CVR and DFDR
  containers, and increased data recording rates. The
  proposed rule would also require onboard recording of
  data-link communications if they are installed. FAA's
  proposed rule is based largely on recommendations from
  the National Transportation Safety Board (NTSB) and is
  intended to help improve the speed of aircraft accident
  investigations. FAA's proposed rule would apply to both
  large scheduled airlines and other small business
  segments of the aviation industry, such as on-demand air
  charters, fractional aircraft programs, and small
  regional carriers.
    Small business representatives affected by the rule
  raised issues at the small business aviation safety
  roundtable hosted by Advocacy. Advocacy filed a comment
  letter with the agency expressing concern that the
  agency's IRFA did not capture many small businesses that
  will be affected by the proposed rule, failed to use the
  correct SBA size standard, and did not consider less
  burdensome alternatives for small business.
    FAA is currently reviewing the comments on its proposed
  rule and is expected to issue a final rule in 2006.

Federal Motor Carrier Safety Administration
  Issue: Hours of Service of Drivers Rule. FMCSA issued a
  final rule on Hours of Service of Truckers. The final
  rule amended an earlier 2003 rule that was remanded to
  the agency by the U.S. Court of Appeals for the D.C.
  Circuit, but left in effect by Congress pending final
  agency action. Advocacy reviewed this rule prepublication
  via confidential interagency review. The final rule
  establishes requirements for commercial truck drivers,
  including maximum driving time, mandatory duty and off-
  duty time, recovery periods, and sleeper berth
  provisions, as well as new requirements for short-haul
  drivers. Approximately 70 percent of both the long-haul
  and short-haul sectors are small businesses.
    Small business representatives affected by the rule
  raised issues at several small business transportation
  safety roundtables hosted by Advocacy. Advocacy has
  worked directly with OMB and FMCSA in confidential
  interagency deliberations to resolve issues raised by the
  affected small entities.
    The agency decided to reduce the regulatory burdens on
  short-haul drivers by allowing some of them to drive two
  extra hours once per week (offset by rest time) as well
  as reduced recordkeeping requirements. These reduced
  burdens were justified because short-haul drivers return
  to their work-reporting location each night and operate
  within a 150-mile radius from that location. The agency
  found that short-haul drivers experience significantly
  fewer fatigue-related crashes than long-haul drivers.
  Cost savings of $200 million the first year and $200
  million annually resulted from the flexibilities
  contained in this rule.

Pipeline and Hazardous Materials Safety Administration

E.O. 13272 Compliance
In 2005, the Pipeline and Hazardous Materials Safety
Administration (PHMSA, formerly the Research and Special
Programs Administration or RSPA) submitted draft regulations
to Advocacy in compliance with section 3(b) of E.O. 13272.
Although not always consistent with its submissions, the
agency has expressed a desire to consult more frequently
with Advocacy on initial regulatory flexibility analyses and
certifications.
 
     Issue: Hazardous Materials: Safety Requirements for
  External Product Piping on Cargo Tanks Transporting
  Flammable Liquids. On December 30, 2004, PHMSA published
  a proposed rule that would limit the amount of flammable
  liquid that could be left in external product piping on
  cargo tank motor vehicles. External product piping,
  commonly known as wetlines, is the series of pipes
  located underneath cargo tank motor vehicles that are the
  conduit through which the tanks are loaded or unloaded
  with petroleum or other flammable products. After a tank
  truck is either filled or emptied, approximately 30-50
  gallons of product can remain in the wetlines. PHMSA's
  proposal established a new standard that limits to one
  liter or less the amount of flammable product that could
  remain in each wetline after drainage. After reviewing
  the proposed rule and conferring with affected entities,
  Advocacy determined that the rule essentially established
  a de facto requirement for cargo tank operators involved
  in the transport of flammable liquids to install either a
  manual or automatic purging device to meet the new
  standard.
    Recognizing that the proposed rule could have a
  significant economic impact on a substantial number of
  small entities, PHMSA completed an initial regulatory
  flexibility analysis (IRFA) for the proposed rule.
  Advocacy and affected small entities expressed concern
  that the IRFA did not adequately estimate the number of
  businesses that would be adversely affected by the
  regulation. On March 24, 2005, Advocacy hosted a
  roundtable to discuss the proposed rule and obtain data
  from industry personnel that would be affected. The
  industry informed Advocacy that the regulation would be
  extremely expensive to implement. In particular, industry
  representatives questioned the efficacy and ease of
  installation of the purging device discussed in the
  proposed rule.
    Although PHMSA has not finalized the rule, the agency
  has committed to working with Advocacy to address
  industry concerns and meet their obligation under the RFA
  to identify less burdensome alternatives in the final
  rule.
 
     Issue: Applicability of the Hazardous Materials
  Regulations to Loading, Unloading, and Storage. During
  fiscal year 2004, small entity representatives approached
  Advocacy to discuss PHMSA's final regulation on
  Applicability of the Hazardous Materials Regulations to
  Loading, Unloading, and Storage; Final Rule (HM-223).
  Although the rule was finalized in October 2003, it was
  not effective until June 1, 2005. Industries affected by
  the regulation filed appeals with PHMSA and notified
  Advocacy of their concerns.
    Industry representatives indicated that the final rule
  would either severely limit or terminate PHMSA's
  jurisdiction over the loading, unloading and storage of
  hazardous materials in transportation in areas that PHMSA
  has historically regulated and that the industry was
  comfortable with the agency's historical jurisdiction.
  Affected entities informed Advocacy that complying with
  the regulation would create extensive costs, complexity,
  and confusion, especially for small entities.
  Additionally, the industry was concerned that limiting
  the agency's jurisdiction would have an adverse impact on
  safety and would contribute to conflicting regulation by
  other federal agencies, and state and local
  jurisdictions.
    Advocacy used a research firm to complete a report that
  analyzed problems with the HM-223 regulation and
  recommend revisions. Advocacy shared the draft document
  with PHMSA, other federal agencies with jurisdiction over
  hazardous materials, and several industry peer reviewers.
  Industry commenters, PHMSA, and the other federal
  agencies submitted comments on the draft report to
  Advocacy in March 2005. On February 18, 2005, Advocacy
  participated as an observer at a meeting on HM-223
  between the Office of Management and Budget's Office of
  Information and Regulatory Affairs (OIRA), PHMSA
  personnel, and industry groups affected by the
  regulation.
    Despite the concerns raised by Advocacy in its report
  and the appeals presented by the industry, the agency
  published a final rule with little change on April 15,
  2005. The October 2004 regulation, as amended by the new
  final rule, was effective as of June 1, 2005. Advocacy is
  continuing to work with PHMSA and other federal agencies
  to address unresolved concerns about the final rule.
 
     Issue: Hazardous Materials: Transportation of
  Lithium Batteries. On April 2, 2002, PHMSA published a
  proposed rule regulating lithium batteries. The rule
  would require producers and transporters of lithium
  batteries to comply with stricter packaging and testing
  requirements. Concerned about the potential economic
  impact of the regulation, small entities affected by the
  rule contacted Advocacy. Advocacy's analysis of the
  regulation and discussions with regulated entities
  suggested that there were problems with the costs of the
  rule, the estimate of the number of small businesses
  affected, and the impact on annual revenues of affected
  small businesses. Advocacy questioned whether the
  agency's certification
  was appropriate.
    On August 22, 2003, after conferring with Advocacy,
  OIRA issued a return letter to the agency. In its letter,
  OIRA recommended that the agency either complete an
  initial regulatory flexibility analysis or provide a
  statement of factual basis for the certification in
  accordance with section 605 of the RFA. Additionally,
  Advocacy submitted interagency comments to the agency on
  the proposed rule.
    On June 15, 2005, PHMSA issued an IRFA for the proposed
  rule in the Federal Register. The agency addressed
  Advocacy's comments in the IRFA. Advocacy will continue
  to monitor this issue, as the agency has not taken final
  action on the rule.

Department of the Treasury

E.O. 13272 Compliance
The Department of the Treasury (Treasury) made its policies
and procedures available to the public as required by
section 3(a) of E.O. 13272. The agencies within Treasury
that most concern small business are the Internal Revenue
Service (IRS), the Office of the Comptroller of the Currency
(OCC), and the Office of Thrift Supervision (OTS).
  While the IRS has not notified Advocacy of any draft
proposed rules under section 3(b), Advocacy has been invited
to, and has participated in, several prepublication and some
predrafting meetings on IRS regulatory proposals regarding
potential effects on small business. Under section 3(c) of
E.O. 13272, the IRS has made reference to Advocacy comments
in general, but the comments were not attributed to
Advocacy. During FY 2005 Advocacy consulted with the IRS
about the RFA. Early in the year the IRS sent some rules to
Advocacy early in the process; however, as the year
progressed, fewer rules were submitted prepublication. IRS
did not publish any final rules in FY 2005 that were the
subject of any Advocacy comment; therefore, IRS' compliance
with section 3(c) cannot be assessed.
  Both OCC and OTS notify Advocacy in accordance with the
requirements of section 3(b). Advocacy did not file any
comments with OCC and OTS in FY 2005.

Department of Veterans Affairs

E.O. 13272 Compliance
The Department of Veterans Affairs (VA) continues to take a
position that most of its regulations do not affect small
entities. A review of E.O. 13272 notifications to Advocacy
will support this position. Notwithstanding, VA has fully
complied with E.O. 13272 by notifying Advocacy of proposed
regulatory actions that may have a significant impact on a
substantial number of small entities, as required by section
3(b) of E.O. 13272. The VA did not publish any final rules
in FY 2005 that were the subject of Advocacy comment;
therefore VA's compliance with section 3(c) cannot be
assessed.

Environmental Protection Agency

E.O. 13272 Compliance
The Environmental Protection Agency (EPA) has made its
comprehensive policies and procedures document available on
its website, in compliance with section 3(a) of E.O. 13272.
In FY 2005, EPA provided Advocacy with all of its draft
rules when they were sent to OMB for review in compliance
with section 3(b) of E.O. 13272. EPA addressed
Advocacy's comments in its final rules as required by
section 3(c) of E.O. 13272. EPA already has a high level of
compliance with the RFA and E.O. 13272, so they were able to
assist Advocacy in the development of the RFA training
program. Two training sessions for EPA staff were held in FY
2005.
 
  Issue: Clean Water Act Requirements for Industrial
  Cooling Water Intake Structures. On November 24, 2004,
  the EPA published a proposed Clean Water Act rule that
  would require facilities that have cooling water intake
  structures to install devices to protect fish and other
  aquatic species from being killed when they are pulled
  into intake structures. As originally conceived by EPA,
  the rule would have applied to more than 700 facilities,
  including more than 80 owned by small entities. As a
  result of the recommendations of a SBREFA review panel
  conducted in early 2004, EPA proposed an exemption for
  facilities that have a cooling water intake flow of 50
  million gallons per day or less. Research available to
  the panel indicated that cooling water intake flow
  volumes below the 50 million gallon per day threshold are
  unlikely to affect fish or other aquatic species. EPA's
  proposed exemption would remove almost all small entities
  from coverage by the cooling water intake rule. This
  exemption means annual cost savings to small businesses
  of $10.5 million.
 
     Issue: Clean Air Act Requirements for Institutional
  Incinerators. On December 9, 2004, the EPA published a
  proposed rule that would establish new air pollution
  control requirements for very small municipal waste
  combusters and for institutional waste incinerators that
  burn nonhazardous waste such as paper, cardboard, and
  food waste. The rule would require new and existing
  incinerators at institutions such as schools, prisons,
  and churches to install state-of-the-art control
  equipment and meet costly new permitting and operating
  requirements. Alternatively, EPA would require these
  institutions to shut down their incinerators and send
  their solid waste to landfills. Advocacy was concerned
  that EPA had not adequately considered the additional
  costs imposed on small communities and rural institutions
  to transport their solid wastes over long distances. As a
  result of Advocacy's intervention on behalf of these
  small entities, EPA agreed to propose an exemption for
  rural incinerators located more than 50 miles from an
  urban area. The exemption means cost savings to small
  firms of $7.6 million annually.

Federal Acquisition Regulation Council

E.O. 13272 Compliance
The policies and procedures required by section 3(a) that
were provided by DOD apply also to the FAR Council. While
the FAR Council has not provided Advocacy with notification
as required by E.O. 13272, Advocacy now has an open
invitation to attend the regulatory council's deliberations,
which provides Advocacy with access to the predecisional
deliberative rulemaking process. Advocacy has provided
confidential input on several predecisional regulations this
past fiscal year. One case is DFARS 2003-D101, Quality
Control of Aviation Critical Safety. The Office of Advocacy
worked very closely with OIRA and the DOD regulatory team to
improve the regulatory analysis. The FAR Council has had
several RFA training sessions, including a session in FY
2005 to increase its awareness and understanding of the RFA
requirements. The FAR Council did not publish final rules in
FY 2005 that were the subject of Advocacy comment; therefore
FAR Council compliance with section 3(c) cannot be assessed.
 
     Issue: Access to Federal Procurement Data System-NG.
  The Federal Procurement Data System (FPDS) is the primary
  database of the federal government for information
  relating to federal procurement. Reliable, timely, and
  quality information is a keystone in the decisionmaking
  process. Small entities especially rely on public data.
    On December 28, 2004, the Federal Acquisition
  Regulation (FAR) Council and the General Services
  Administration (GSA) published an interim final rule with
  request for comments establishing the rate to charge
  nongovernmental entities for a direct computer connection
  with the Federal Procurement Data System.
    The FAR Council and GSA issued this interim regulation
  under the good cause exception of the Administrative
  Procedure Act, citing the existence of urgent and
  compelling reasons to publish an interim rule prior to
  the opportunity for public comment.
    On February 7, 2005, Advocacy held a procurement
  roundtable to discuss, among other things, the accuracy
  of federal procurement data from the Federal Procurement
  Data System. This roundtable also discussed problems
  small users had in gaining access to the electronic
  system. Based on comments from small businesses, Advocacy
  filed written comments on February 25, 2005.
    Advocacy urged the FAR Council and GSA to make the
  summary procurement data free of charge and to improve
  upon the timeliness, quality, and reliability of the
  data.

Federal Communications Commission

E.O. 13272 Compliance
In response to E.O. 13272, the Federal Communications
Commission (FCC) sent Advocacy a letter about its commitment
to uphold the spirit of E.O. 13272 and to review its rules
for impacts on small entities. The FCC said it would not
make its policies and procedures publicly available,
contrary to the requirements of section 3(a) of E.O. 13272,
maintaining that as an independent agency, it is not covered
by E.O. 13272. The agency has reiterated its intent to abide
by the spirit of E.O. 13272 and to work with Advocacy in
training its rule writers on the RFA. The FCC consistently
mails Advocacy proposed and final rules that have a
significant impact on a substantial number of small
entities. The FCC does so after the rule has been adopted
and released to the general public, but before it is sent to
the Federal Register. This provides Advocacy with additional
time to review proposed rules before the comment deadline,
but does not entirely meet the requirements of E.O. 13272,
section 3(b). In FY 2005, the agency addressed Advocacy's
comments in final rules as required by section 3(c) of E.O.
13272. FCC staff received RFA training in FY 2005.
 
     Issue: Broadband Reporting. On November 9, 2004, the
  FCC issued a notice of proposed rulemaking (NPRM) for
  Local Competition and Broadband Reporting. The rule
  became effective in March 2005. In the NPRM, the FCC
  asked for comment on: (1) extending the local competition
  and broadband reporting program for five years beyond its
  current sunset in March 2005; and (2) revising the
  program to improve data collection on broadband
  deployment.
    The initial regulatory flexibility analysis
  accompanying the NRPM did not identify or analyze the
  impacts of the proposed reporting requirements on
  currently exempt small entities, nor did it identify or
  analyze significant alternatives that would meet the
  FCC's objective. Advocacy filed a comment recommending
  that the FCC consider simplifying the revised reporting
  form or establishing a short form for small carriers
  previously exempt from reporting. Advocacy urged the FCC
  to consider comments from small carriers on ways to meet
  its improved data gathering objectives while minimizing
  the impact on small entities.
    On November 12, 2004, the FCC issued a Report and Order
  that altered the FCC's local competition and broadband
  data reporting program and extended the program for five
  years. The new report eliminated existing reporting
  thresholds, required small businesses that were
  previously exempt to report their broadband deployment,
  and required service providers to report more detailed
  information on the speed of the broadband service
  deployed. In addition, the FCC simplified the reporting
  form proposed in the rule, which would lessen the burden
  on all entities required to submit reports. The FCC
  stated that these modifications would satisfy Advocacy's
  request while allowing the FCC to determine whether
  broadband is being deployed to all Americans.
 
     Issue: Communications Assistance for Law Enforcement
  Act. On August 9, 2004, the FCC issued a proposed rule to
  apply the Communications Assistance for Law Enforcement
  Act (CALEA) to packet-mode services, which are broadband
  Internet access service and Voice over Internet Protocol
  (VoIP). CALEA is designed to (1) preserve the ability of
  law enforcement agencies to carry out wiretaps and other
  properly authorized intercepts, (2) protect privacy, and
  (3) avoid impeding the development of new technologies.
  The FCC also proposed to limit the availability of
  compliance extensions and require carriers to deploy
  equipment that is CALEA-compliant.
    The FCC issued an IRFA as part of its proposed rule,
  but did not, in Advocacy's opinion, adequately analyze
  the impacts of the proposed rule on small businesses. On
  December 15, 2004, Advocacy filed a reply comment with
  the FCC on the applicability of the CALEA to packet-mode
  services, recommending that the FCC publish a revised
  IRFA for comment that would include the estimates of the
  costs small carriers will incur to be CALEA-compliant
  under the proposed rule. Small entities would then be
  able to comment on the accuracy of the estimates and ways
  to minimize the impact. Advocacy also recommended that
  the FCC develop alternative schemes to allow for the
  purchase and operation of equipment that will enable
  small telecommunications carriers to become compliant.
    On September 23, 2005, the FCC issued a Report and
  Order that required all facilities-based broadband
  Internet access providers and providers of interconnected
  VoIP service to be CALEA-compliant. The FCC rejected
  Advocacy's recommendation to complete an economic
  analysis by stating that it had described what the
  potential economic impact on small businesses would be.
  The FCC also rejected Advocacy's comments that the FCC
  had failed to provide significant alternatives, stating
  that the proposed rule combined with the IRFA
  appropriately identified all ways in which the FCC could
  lessen regulatory burdens on small entities. Accordingly,
  the FCC declined Advocacy's recommendation to publish a
  revised IRFA.
 
     Issue: Computer Inquiry Rules. On December 23, 2004,
  the FCC issued a public notice asking for comment on a
  petition filed by Verizon under Section 10 of the
  Telecommunications Act of 1996 asking the FCC to forbear
  from applying Title II regulations and the Computer
  Inquiry rules to broadband services offered by Verizon.
  Section 10 allows the FCC to forbear from applying any
  regulation to a telecommunications carrier if the FCC
  determines that:
  (1) enforcement of the regulation is not necessary to
  ensure that the charges and practices are just and
  reasonable and are not unreasonably discriminatory; (2)
  enforcement is not necessary for the protection of
  consumers; and (3) forbearance is consistent with the
  public interest.
    On March 8, 2005, Advocacy filed a reply comment with
  the FCC urging the FCC to conduct an economic analysis
  consistent with the RFA when considering Verizon's
  petition for forbearance. A thorough economic impact
  analysis would assist the FCC in answering whether or not
  a Section 10 petition is in the public interest. Advocacy
  encouraged the FCC to reach out to small entities,
  especially small Internet service providers (ISPs), to
  determine the economic impact Verizon's petition would
  have on them. The FCC can draw a significant amount of
  information from the initial comments from small ISPs,
  including the number of small ISPs affected and some
  general information on how they are affected.
    As of September 30, 2005, the FCC had not issued a
  final rule or a supplemental rulemaking.
 
     Issue: Intercarrier Compensation. On December 21,
  2004, Advocacy filed a letter with the FCC discussing its
  views on the analysis required of the FCC by the RFA on
  an expected regulatory proposal on Developing a Unified
  Intercarrier Compensation Regime. Intercarrier
  compensation is how telecom carriers reimburse each other
  for terminating telephone calls on each others' networks.
  The FCC is considering intercarrier compensation plans
  submitted by various coalitions and companies within the
  telecommunications industry. The FCC has been attempting
  to reform and unify the current system of compensation
  schemes for several years.
    As a guide to what issues the FCC should consider in
  the IRFA, Advocacy reviewed four of the industry
  compensation plans and spoke with representatives of
  several small telecom carriers and their organizations.
  Advocacy notified the FCC that a unified intercarrier
  compensation regime could have a significant impact on
  the cost recovery of small rural carriers. Advocacy also
  informed the FCC that small carriers, both rural and
  competitive, are less able to recover their costs through
  increased subscriber line charges. Small carriers
  recommend a cost-based compensation system rather than a
  system in which carriers terminate on other carriers'
  networks for no charge and recover the costs from their
  own customers.
    On March 3, 2005, the FCC issued a proposed rule on
  intercarrier compensation, officially asking for comment
  on the compensation schemes. The FCC took into account
  Advocacy's comments and grouped the plans into general
  categories in the IRFA and conducted an impact analysis
  on each category.
    On May 23, 2005, Advocacy filed an additional comment
  with the FCC in response to the FCC's proposed rule.
  Advocacy spoke with small telecommunications carriers and
  their representatives to identify issues that will have a
  significant impact on small businesses. These issues
  include: regulatory complexity, cost recovery,
  interconnection, and universal service. Advocacy
  presented these issues to the FCC and asked the agency to
  consider the impact each of the proposed plans would have
  upon small businesses. Advocacy presented significant
  alternatives based on its outreach. These alternatives
  included: making "bill and keep" optional, providing a
  minimum interconnection agreement rather than removing
  the requirement altogether, making universal service
  portable, and moving to a capacity-based interconnection
  regime.
    As of September 30, 2005, the FCC had not issued a
  final rule or a supplemental rulemaking.
 
     Issue: Restrictions on Fax Advertising. On July 3,
  2003, the FCC released a rule in the "do-not-call"
  proceeding, which the FCC initiated to curb intrusive
  telemarketing and promote consumer privacy. As part of
  the "do-not-call" rules, the FCC adopted a "do-not-fax"
  provision, which required any person to obtain prior
  express permission in writing, with a signature from the
  recipient, before sending an unsolicited fax
  advertisement. Unlike the general "do-not-call"
  provisions of the rule, the FCC removed the "established
  business relationship" exemption and did not grant an
  exception to trade associations or nonprofit
  organizations when communicating through a facsimile
  device to their members.
    Advocacy requested that the FCC revisit this decision
  in light of the economic impact on small businesses,
  small trade associations, and small nonprofit
  organizations (all within the small entity definition of
  the RFA). Specifically, Advocacy requested that the FCC
  reinstate the "established business relationship"
  exemption and the nonprofit exemption, create a
  presumption that membership in a trade association acts
  as consent, and clarify the definition of an unsolicited
  commercial advertisement. The FCC stayed the fax portion
  of their rule on August 18, 2003, and the established
  business relationship portion on October 3, 2003,
  resulting in a significant costs savings to small
  businesses.
    Small business trade associations worked with Congress
  to draft a bill that would make the established business
  relationship exemption permanent. Advocacy sent letters
  to the House of Representatives and the Senate
  encouraging Congress to pass legislation that would grant
  additional flexibility to small businesses. The House of
  Representatives passed a bill on July 20, 2004, while the
  Senate Commerce, Science, and Transportation Committee
  reported out an identical bill on July 22, 2004. After
  the full Senate failed to take action, the legislation
  was reintroduced in the 109th Congress.
    On August 10, 2004, business groups filed petitions
  with the FCC to extend the stay for an additional six
  months. Advocacy wrote a letter in support of the
  extension, saying that it would give Congress the
  opportunity to adequately consider the pending
  legislation and give the FCC an opportunity to clarify
  their rule. On October 1, 2004, the Federal
  Communications Commission granted a six-month extension
  (until June 30, 2005) of the stay of enforcement of the
  "do not fax" rules. As the deadline approached, business
  groups asked the FCC to extend the stay for another six
  months. On May 17, 2005, Advocacy filed a letter
  supporting the extension of the stay. The FCC granted the
  extension until January 7, 2006. Shortly after the
  extension, Congress passed the Junk Fax Prevention Act of
  2005 (P.L. 109-21) which President Bush signed into law
  on July 9, 2005. This bill codified the established
  business relationship exemption, allowing small
  businesses to fax their customers if they include an opt-
  out provision on the cover page. As a result of the
  legislation, small businesses saved more than $3.5
  billion initially and will save $711 million annually.
 
     Issue: Special Access Rates. On January 31, 2005,
  the FCC issued a proposed rule on Special access rates.
  Special access services are dedicated wires and other
  facilities that run directly between two customers or
  between a customer and a telecommunications carrier other
  than the incumbent carrier. The FCC considered modifying
  its rules in response to the expiration of the current
  regulatory scheme for price cap carriers, which was
  intended to run until June 30, 2005, but now will
  continue until the FCC adopts a subsequent plan.
    On July 27, 2005, Advocacy filed a reply comment with
  the FCC to discuss regulatory impacts and available
  alternatives in response to the FCC's proposed rule on
  special access rates. Advocacy agreed with the FCC's
  determination that this proposed rule will have a
  significant economic impact on a substantial number of
  small telecommunications carriers and urged the FCC to
  give careful consideration to alternatives that would
  minimize that impact.
    Advocacy presented alternatives based on its outreach
  to small businesses, including: use of a forward-looking
  model for setting price caps, use of downward pricing
  flexibility, revisiting FCC's cost studies, reliance on a
  surrogate rate, restriction on bundling, restriction on
  previous purchase level, restriction on length of term
  commitments, and restriction on terminating calls with
  competitors.
    As of September 30, 2005, the FCC had not issued a
  final rule or a supplemental rulemaking.
 
     Issue: Telephone Number Portability: Wireline-to-
  Wireless Porting. On April 22, 2005, the FCC issued a
  public notice containing an IRFA for an order which
  requires small rural telecommunications carriers to
  provide wireline-to-wireless telephone number
  portability. Porting is the transfer of a telephone
  number from one carrier to another at a customer's
  request. Wireline-to-wireless porting is the transfer of
  a number from a wireline carrier to a wireless carrier,
  and wireless-to-wireline porting is a transfer in the
  opposite direction. The FCC published the IRFA in
  response to a court order which held that the FCC had not
  complied with the RFA and directed the agency to conduct
  the analysis.(1)
    On August 16, 2005, Advocacy filed a comment in
  response to the IRFA. In its comment Advocacy said that
  the IRFA did not satisfy the requirements of the RFA, as
  the FCC did not provide any estimates on the costs,
  projected recordkeeping, or professional skills necessary
  to implement wireline-to-wireless number portability.
  Advocacy advised the FCC that its treatment of
  alternatives to minimize significant economic impact on
  small entities was deficient.
    To determine what alternatives the FCC should consider
  in the IRFA, Advocacy spoke with representatives of small
  telecommunications carriers and their trade associations
  and reviewed the comments by small businesses submitted
  during the course of the rulemaking. In its comment,
  Advocacy discussed the regulatory impacts on small rural
  wireline carriers and presented alternatives based on its
  outreach. These alternatives included: require physical
  interconnection for wireline-to-wireless number
  portability, waive the enforcement of wireline-to-
  wireless number portability, and exempt small rural
  wireline carriers from the portability requirement.
    Advocacy urged the FCC to consider the regulatory
  impact on small rural carriers and recommended that the
  FCC issue a supplemental IRFA with a more thorough
  analysis of the impacts and significant alternatives. As
  of September 30, 2005, the FCC had not issued a final
  regulatory flexibility analysis.
 
     Issue: Local Number Portability - Porting Interval.
  On September 16, 2004, the FCC issued a proposed rule
  that sought comment on a recommendation of the North
  American Numbering Council (NANC) that would reduce the
  intermodal porting interval. Intermodal porting is the
  transfer of a number from a wireline carrier to a
  wireless carrier at a customer's request. The NANC
  recommended a combination of two proposals, which it
  determined would result in a shorter porting interval.
  The NANC predicted that this would reduce the porting
  interval from 96 hours to 53 hours.
    The FCC issued an IRFA as part of its proposed rule.
  The FCC recognized that reducing the porting interval may
  require system upgrades and impose new obligations and
  costs on carriers. The agency sought comment on the
  impacts of the proposed rule on small telephone companies
  and ways to reduce the burden, pursuant to the RFA.
    Advocacy filed a comment with the FCC stating that the
  cost of requiring small telephone companies to comply
  with a shorter porting interval would outweigh the
  benefits of shortening the time their customers have to
  wait for their numbers to be ported from wireline to
  wireless phones in rural areas. Advocacy recommended that
  the FCC grant an exemption to small businesses because of
  the small number of porting requests received in rural
  areas and the expense to small telephone companies that
  must either rely on third parties or perform the ports
  manually.
    As of September 30, 2005, the FCC had not issued a
  final rule or a supplemental rulemaking.
 
     Issue: Unbundled Network Elements (UNEs). On August
  20, 2004, the FCC issued a proposed rule to determine
  which network elements under the Telecommunications Act
  of 1996 must be unbundled and made available by incumbent
  telecom carriers to competitive carriers to ensure that
  competitive carriers have access to essential network
  elements necessary for providing competitive telephone
  service.
    On October 4, 2004, Advocacy filed a comment with the
  FCC addressing two significant deficiencies in the IRFA.
  First, the FCC did not analyze the economic impact on
  small businesses of eliminating UNEs. Instead, the FCC
  listed small entities that would be affected, but posed
  the question of actual impact to the general public. The
  RFA encourages the FCC to conduct its own analysis and
  rely on public comment to improve the quality of analysis
  prior to making a final decision. To correct this
  deficiency, Advocacy recommended that the FCC issue a
  revised IRFA to analyze the impacts of this rule on small
  businesses.
    Second, the FCC did not identify or analyze
  alternatives to minimize the burden on small businesses
  in the IRFA. Advocacy spoke with several small
  competitive carriers about possible alternatives that
  would minimize the impact on small businesses. Advocacy
  identified alternatives that could help the FCC minimize
  the rule's small business impact.
    On Feb. 23, 2005, the FCC issued an order on remand
  modifying the FCC's unbundling rules and made unbundled
  access to transport and loops conditional upon the
  competitive deployment at a wire center or along routes.
  The FCC set forth specific transition plans to govern
  competitive carriers' migration from UNEs to alternative
  arrangements, where necessary. The FCC rejected
  Advocacy's recommendation that small entities were
  disadvantaged by any lack of specificity regarding
  specific results potentially resulting from this proposed
  rule. Instead, the FCC claimed that the proposed rule
  posed specific questions to commenters and solicited
  comment from all parties sufficient to comply with the
  RFA even though the FCC did not propose specific rules.
  With this justification, the FCC declined to issue a
  revised IRFA.
 
     Issue: Voice over Internet Protocol. On March 10,
  2004, the FCC issued a proposed rule on whether Internet
  Protocol (IP)-enabled services should be considered a
  telecommunications service or an information service and
  which regulatory scheme should be applied to this
  technology. On May 28, 2004, Advocacy filed comments with
  the FCC, noting that the proposed rule did not contain
  concrete proposals and was more akin to an advance notice
  of proposed rulemaking or a notice of inquiry. Because of
  the vagueness of the NPRM, the IRFA did not provide an
  analysis of proposed compliance burdens, consideration of
  alternatives, or discussion of overlapping regulations.
    Should the FCC decide to adopt regulations for IP-
  enabled services after consideration of the comments to
  the NPRM, Advocacy recommended that the FCC publish for
  public comment a further notice of proposed rulemaking
  with a revised IRFA to consider the impact of the
  proposed requirements on small entities, to provide
  analysis of significant alternatives that minimize the
  economic impact on them, and to review overlapping
  regulations.
    On June 3, 2005, the FCC released a report and order
  requiring providers of interconnected Voice over Internet
  Protocol (VoIP) service to supply enhanced 911
  capabilities to their customers. The FCC rejected
  Advocacy's recommendation that it issue a revised IRFA,
  stating that small entities had already received
  sufficient notice of the issues because the FCC
  considered the economic impact on small entities and what
  ways are feasible to minimize the burdens imposed on
  those entities, and, to the extent feasible, implemented
  those less burdensome alternatives.

National Archives and Records Administration

     Issue: Standards for Federal Record Centers. In
  August 2005, the National Archives and Records
  Administration (NARA) published a final regulation on
  Federal Record Centers. This final rule modifies NARA
  facility standards established by a final rulemaking in
  1999 for records storage facilities that house federal
  records. In the 1999 rulemaking process, Advocacy
  commented on the proposed rule and worked with NARA to
  improve its RFA compliance. Specifically, the 1999 rule
  required special roof construction, certification of
  multi-story structures, and fire protection system
  certification. The final rule abolished these
  requirements and simply requires that small entities
  comply with state and local building codes instead.
    The final August 2005 rule addresses records center
  industry concerns identified in the 2003 OMB Report to
  Congress on Costs and Benefits of Federal Regulations.
  Advocacy continued to work with NARA and the small
  business record center trade organizations in the
  finalization of the August 2005 rule. Cost savings in the
  amount of $63 million in the first year of the rule were
  achieved for small businesses.

Securities and Exchange Commission

E.O. 13272 Compliance
The Securities and Exchange Commission (SEC) has not made
public its written policies and procedures for the
consideration of small entities in its rulemaking as
required by section 3(a) of E.O. 13272. The SEC does
consistently notify Advocacy of rules which may have a
significant economic impact on a substantial number of small
entities, as required by section 3(b). The SEC did not
publish any final rules in FY 2005 that were the subject of
any Advocacy comment; therefore, SEC's compliance with
section 3(c) cannot be assessed.
 
     Issue: Advisory Committee on Smaller Public
  Companies. Small business representatives and Advocacy
  recommended to the SEC that the agency could benefit from
  the advice of a balanced committee of representatives of
  smaller public companies. This recommendation stemmed
  from a combination of recent changes to securities law
  and changed circumstances required by the Sarbanes-Oxley
  Act of 2002 (SOA). In January 2005, the SEC officially
  convened the SEC Advisory Committee on Smaller Public
  Companies, and assigned an office to support the
  committee's activities. Since its convening, the SEC's
  advisory committee has met several times, collected
  expert and small business testimony on securities law
  reform, and made preliminary recommendations to the SEC.
  The SEC has demonstrated a commitment to working with the
  public to balance the impacts of its regulatory actions
  on small businesses, and Advocacy looks forward to
  working with the SEC on the advisory committee's final
  recommendations.
 
     Issue: Extension of Small Public Company Compliance
  Deadline for New Internal Control Reporting Requirement.
  In response to one recommendation under consideration at
  the SEC's advisory committee, the SEC provided small
  businesses with an extension of time for implementation
  of Section 404 of the SOA to ensure that the advisory
  committee's final recommendations on Section 404 have
  time to be implemented. SEC's action is estimated to save
  nonaccelerated filers (smaller public companies)
  approximately $2.68 billion in first-year compliance
  costs.

Small Business Administration

E.O. 13272 Compliance
The Small Business Administration (SBA) provides Advocacy
with notification of draft rules that may have a significant
impact on a substantial number of small entities, as
required by section 3(b) of E.O. 13272. As a result of RFA
training and continued RFA discussions on draft rules, SBA
personnel have sought Advocacy input earlier in the
regulatory development process. SBA did not publish any
final rule in FY 2005 that was the subject of any Advocacy
comment; therefore, SBA's compliance with section 3(c)
cannot be assessed.
 
     Issue: Selected Size Standard Issues. On December 3,
  2004, SBA issued an advance notice of proposed rulemaking
  (ANPRM) in the Federal Register on Small Business
  Selected Size Standards Issues. This regulation attempted
  to seek comments on size standard issues not discussed in
  the March 2004 proposed restructuring of SBA's system of
  size standards. The ANPRM was seeking comments on whether
  there should be an exclusion from the affiliation rule
  with venture capital companies and how to best simplify
  size standards.
    Based on conversations with affected small businesses
  and a procurement roundtable held on April 4, 2004,
  Advocacy filed a written comment letter on January 13,
  2005. Advocacy urged SBA to seek public input on the need
  to streamline the duplicative regulatory impact analysis
  requirements that agencies must follow under the
  Regulatory Flexibility Act and SBA size standard
  regulations. SBA has not taken further action on this
  ANPRM.

Conclusion

Advocacy has seen the beginnings of a transformation in
regulatory flexibility analysis from a process that in 1980
relied primarily on paperwork and formal written comments to
a broader technology-enhanced process that allows for
earlier, more real-time, and more direct information
exchange among agency rule writers, the Office of Advocacy,
and affected small entities.
  A careful look at the last three years of RFA experience
since President Bush's announcement of E.O. 13272 indicates
signs of progress:
     As of the end of FY 2005, more than 40 agencies had
  been trained in how to comply with the RFA, and more
  agencies were taking the initiative to examine their
  rules for small entity impacts.
     Almost all Cabinet-level departments that issue
  regulations have adopted a written policy on how they
  will comply. Many have offices to help small businesses
  understand and comply with their regulations.
     As evidenced in a number of the 2005 cases reported
  here, the Office of Advocacy's involvement was much more
  likely to start at a proposal's prepublication stage, so
  that small entity concerns could be addressed earlier,
  resulting in more carefully targeted improvements to
  proposed rules.
     Agencies are responding to Advocacy's comments on
  proposed rules when they publish the final rules in the
  Federal Register.
     Technology played a key role in small entities'
  ability to comment earlier and more meaningfully on new
  regulatory proposals. Advocacy posted key regulatory
  proposals of interest to small businesses on its
  Regulatory Alerts page and provided for small entities to
  comment on regulations through regulations.gov at
  http://www.sba.gov/advo/laws/law_regalerts.html.
     SBREFA panels continued to give federal regulators
  new insights during the rule drafting stage into how
  their rules would affect small businesses and other small
  entities on the ground. Some agencies that are not
  required to use these panels are nevertheless meeting
  informally with small businesses in roundtables in an
  effort to determine the likely effects of their rules.
  Overall, regulatory development and sensitivity to
impacts on small entities have improved considerably since
the RFA was enacted in 1980. More improvements are needed:
new 2005 research indicates that the disproportionate
regulatory burden on small entities continues. Advocacy's
top legislative priority articulated in FY 2005 for the
109th Congress was to amend the RFA and SBREFA to improve
the regulatory climate for small businesses and "to give
small businesses a legitimate voice in the regulatory
process" (see Appendix D).
  At the September 2005 symposium, Chief Counsel for
Advocacy Thomas M. Sullivan noted "The past 25 years have
taught us that monitoring federal agency compliance is an
ongoing task, and it is something that advocates will be
doing 25 years from now as well." If the result is
regulations that are better designed to achieve their
mission with relatively less burden on small entities, the
effort will be well worthwhile.

4. State Flexibility: Small Business Regulatory Flexibility

      Model Legislation Initiative

While federal measures are in place to reduce regulatory
burdens on small businesses, the need for flexibility does
not stop at the federal level. At least 92 percent of
businesses in every state are small businesses, and they
bear a disproportionate share of regulatory costs and
burdens. However, sometimes because of their size, the
aggregate importance of small businesses to the economy is
overlooked. Because of this, it is very easy to fail to
notice the negative impact of regulatory activities on them.
Recognizing that state and local governments can be a source
of burdensome regulations on small business, Advocacy
drafted model regulatory flexibility legislation for the
states based on the federal Regulatory Flexibility Act.

"This bill is all about making life easier for our state's

small businesses, which is a big step forward in stimulating

job creation and economic growth in South Carolina.

Ultimately, though, letting those businesses keep more of

what they earn so they can reinvest in new people, new

equipment and new technologies is going to have the biggest

impact on our state's economy."

South Carolina Governor Mark Sanford

  
  The intent of Advocacy's model legislation is to foster a
climate for entrepreneurial success in the states so that
small businesses will continue to create jobs, produce
innovative new products and services, and bring more
Americans into the economic mainstream. Excessive regulation
can be reduced and the economy improved without sacrificing
important regulatory goals such as higher environmental
quality, greater travel safety, better workplace conditions,
and increased family financial security.
  According to Advocacy's state model legislation,
successful state-level regulatory flexibility laws should
address the following: 1) a small business definition that
is consistent with state practices and permitting
authorities; 2) a requirement that state agencies perform an
economic impact analysis on the effect of a rule on small
businesses before they regulate; 3) a requirement that state
agencies consider alternatives that are less burdensome for
small businesses while still meeting the agency's regulatory
goals; 4) a provision that requires state governments to
review existing regulations periodically; and 5) judicial
review to give the law "teeth."
  
 "Small business is the dynamo that powers our economy, and

every dollar a small business puts towards complying with

cumbersome government regulations is a dollar that cannot be

spent expanding the business, providing benefits or hiring

new employees. I sponsored HB 33 because I see smarter

regulations as an economic development tool and strongly

feel that we can add an awareness of the needs of small

businesses to the regulatory process without compromising

the health, safety, or welfare of the public."

Alaska State Representative Kevin Meyer

  
  Many states have some form of regulatory flexibility laws
on the books. However, many of these laws do not contain all
of the five critical elements addressed in Advocacy's model
legislation. Recognizing that some laws are missing key
components that give regulatory flexibility its
effectiveness, legislators continue to introduce legislation
to strengthen their current systems.
  Since 2002, 14 states have enacted regulatory flexibility
laws,(2)33 state legislatures have considered regulatory
flexibility legislation(3) and four executive orders have
been signed by governors implementing regulatory
flexibility.(4)
  In 2005, 18 states introduced regulatory flexibility
legislation.(5)Alaska Governor Frank Murkowski, Indiana
Governor Mitch Daniels, Missouri Governor Matt Blunt, New
Mexico Governor Bill Richardson, and Virginia Governor Mark
Warner signed regulatory flexibility legislation into law
and Arkansas Governor Mike Huckabee implemented regulatory
flexibility through an executive order in 2005.
  
"Adding judicial review is an important step forward for our

state's small businesses. Now the law has some teeth, and

that will help small business and state agencies work

together to produce good regulations that get the job done

without causing serious harm. It means a better business and

job creating climate for Missouri."

Scott George, President and CEO

of Mid American Dental & Hearing Center

in Mt. Vernon, MO

  
  Advocacy welcomes the opportunity to work with state
leaders on regulatory flexibility. The office's 10 regional
advocates located across the country help educate governors,
state officials, state legislators, and small business
representatives about the benefits of reducing state
regulatory burdens on small businesses.
  The text of Advocacy's model legislation, updated
versions of the state regulatory flexibility legislative
activity map and contact information for the regional
advocates can be found on the website
http://www.sba.gov/advo/ under "State Activities."

Success Stories

Colorado's Cork and Go Rule: Regulation 47-918
Under Colorado law, hotels and restaurants are permitted to
reseal, and allow a customer to remove from the premises, an
open bottle of partially consumed wine purchased at the
hotel or restaurant with some limitations.
  To implement this law, the Colorado Department of Public
Health and Environment (DPHE) proposed a rule amendment that
would require hotels and restaurants offering resealing of
opened bottles to purchase commercially manufactured
stoppers and sealable containers such as bags or boxes. The
overall cost of compliance for this regulatory proposal was
estimated at approximately $1,771,500 to $3,275,000.(6)
  A small business is defined under the Colorado
Administrative Procedure Act as having 500 or fewer
employees. More than 4,000 firms in the state operate with
an active liquor license and would have been affected by the
rule. Under Colorado's regulatory flexibility structure, the
Department of Regulatory Agencies (DORA) reviews proposed
rules affecting small businesses and can request that an
agency prepare an analysis of a proposed rule's economic
impact on small entities. In this circumstance, DORA asked
DPHE to determine the cost that would be incurred by small
businesses to comply with the proposed rule.
  DORA's review of the proposal found that the law under
which the rule was promulgated did not specify how bottles
were required to be re-corked, nor did it specify that
sealable containers, in addition to the stoppers, are
required. The Colorado Restaurant Association, on behalf of
its small members, objected to the rule on the basis that
the cost of compliance would be overly burdensome to the
regulated small entities.
  After discussions with DORA and the Colorado Restaurant
Association, and before going further with the rulemaking
process, DPHE agreed to revise its initial proposal. The
revised rule is a success for small business because it
provides an economical way for businesses to comply with the
rule. The final rule allows the use of the original cork to
re-cork the bottle. Businesses are still required to use
sealable bags, but are not required to incur the expense of
commercially manufactured stoppers and corks.
  DPHE, DORA, and small businesses worked together under
Colorado's regulatory flexibility law. DORA's small business
outreach was an important tool. Small businesses proved to
be an invaluable resource to the agency in determining which
alternatives might be less burdensome. The end result was a
cost savings to small business without compromising the
agency's objective. This example demonstrates how agencies,
as well as small businesses, can benefit by implementing a
comprehensive regulatory flexibility system.
  
  Chart 4.1 Mapping State Regulatory Flexibility
Provisions, FY 2005
  

Lizzy's Ice Cream: A Case for Common Sense Regulation
Under the Food Protection Program in the Massachusetts
Department of Public Health (MDPH), businesses transporting
frozen or refrigerated products are required to purchase or
lease a mechanically refrigerated vehicle (105 CMR 561.000).
This provision costs businesses approximately $50,000 per
truck and several thousand dollars annually in operating
costs.
  Nick Pappas decided to leave the corporate world and open
Lizzy's Ice Cream Parlor in Waltham, Massachusetts. Lizzy's
homemade "super premium" ice cream was a hit, and Nick
eventually decided to sell his product through supermarkets
around Greater Boston. As he was unable to afford a
mechanically refrigerated vehicle and would be making only a
small number of deliveries, he developed a system to operate
a refrigerator unit on his own truck using the truck's
existing power system. After conducting diligent research,
he determined that his approach was equally effective and
would save him thousands of dollars.
  Nick was unable to gain approval for his method from
MDPH. Not only was his evidence ignored, but there appeared
to be no rational or scientific basis for the standards
required by the agency. He found no studies justifying the
regulation and no supporting evidence of any citizens
sickened by ingesting improperly refrigerated ice cream.
  MDPH conducted hearings on updating their frozen dessert
regulations and Nick, along with other small business
owners, used the opportunity to voice concerns about the
adverse impact of the rule on their businesses. As a result
of the hearing, MDPH revised the regulations to allow anyone
proposing to use an alternative method for transporting
frozen or refrigerated products to apply for a variance,
accompanied by an explanation of how safe temperatures would
be maintained. Allowing small businesses affected by the
rule to present alternatives saved the small firms the
$50,000 for a new vehicle, plus the annual insurance and
operating costs.
  Although Massachusetts does not require any agency to
conduct a review or analysis of the impact of regulations on
small businesses, MDPH decided to employ this good
government practice. Other agencies, as well as small
businesses, would benefit greatly by implementing a similar
process. This can be accomplished by enacting a strong
regulatory flexibility law.
  Nick's story validates a key element of regulatory
flexibility, which is the requirement that agencies review
existing regulations periodically to determine whether they
should be continued without change, or be amended or
rescinded to minimize the economic impact of the rule on
small businesses. In the case resolved by the Massachusetts
Department of Public Health, a less burdensome alternative
was achieved for Lizzy's Ice Cream and other small firms
without compromising the health, safety, and welfare of
citizens.

Table 4.1 State Regulatory Flexibility 2005 Legislative

Activity

Seven states enacted regulatory flexibility legislation or an
executive order in 2005:

Alaska (HB33)        Missouri (HB576)      Virginia
                                         (HB1948/SB1122)
                                         
Arkansas (EO)        New Mexico (HB869)    
                    
Indiana (HB1822)     Oregon (HB3238)       
                    

Eighteen states introduced regulatory flexibility legislation
in 2005:

Alabama (HB 745)     Missouri (HB576)      Oregon (HB3238)
                                         
Alaska (HB33)        Montana (HB630)       Pennsylvania
                                         (HB236/SB842)
                                         
Hawaii (HB602/SB422) New Jersey            Tennessee
                    (A3973/S2754)         (HB279/SB1276)
                                         
Indiana (HB1822)     New Mexico            Utah (HB209)
                    (HB869/SB842)         
Iowa (SB65)          North Carolina        Virginia
                    (SB664)               (HB1948/SB1122)
                                         
Mississippi          Ohio (SB15)           Washington (HB1445)
(HB1472/SB2795)                           

Table 4.2 State Regulatory Flexibility Legislation, Status

as of October 2005

14 states and one territory have active regulatory
flexibility statutes:

Arizona          Michigan      North Dakota2  South Carolina 1
                                           
Connecticut1     Missouri      Oklahoma       Virginia
                                           
Hawaii           Nevada        Oregon         Wisconsin 2
                                           
Indiana          New York      Puerto Rico    
                             

28 states have partial or partially used regulatory
flexibility statutes:

Alaska           Illinois      Mississippi    Rhode Island1
                                           
Arkansas         Iowa          New Hampshire  South Dakota1
                                           
California       Kentucky1     New Jersey     Texas
                                           
Colorado2        Maine         New Mexico     Utah
                                           
Delaware         Maryland      North Carolina Vermont
                                           
Florida          Massachusett  Ohio           Washington
                s2                          
Georgia          Minnesota     Pennsylvania   West Virginia2
                                           

Eight states, two territories, and the District of Columbia
have no
regulatory flexibility statutes:

Alabama          Idaho         Montana        Virgin Islands
                                           
District of      Kansas        Nebraska       Wyoming
Columbia                                    
Guam             Louisiana     Tennessee      
                             
1. In 2004, the state enacted legislation or an executive
order that offered regulatory relief for state small
businesses.
2. In 2003, the state enacted legislation or an executive
order that offered regulatory relief for state small
businesses.

Appendix A Supplementary Tables

Table A.1 Cabinet Department RFA Procedures in Compliance

with Section 3(a) of E.O. 13272

Department            Document made available at:
Agriculture           www.ocio.usda.gov/directives/files/dr
                     /DR1512-001.pdf
                     
Commerce              www.ogc.doc.gov/ogc/legreg/testimon/1
                     08f/guidelines.htm
                     
Defense               DOD has not submitted procedures
                     separate from the FAR
                     Council/ GSA's submission.
                     
Education             www.ed.gov/legislation/FedRegister/fi
                     nrule/2003-2/051203d.html
                     
Energy                www.gc.doe.gov/rulemaking/eo13272.pdf
                     
Health and Human      www.hhs.gov/execsec/smallbus.html
Services              
Homeland Security     www.tsa.gov/public/display?theme=5
                     
Housing and Urban     www.hud.gov/offices/osdbu/policy/impa
Development           ct.cfm
                      
Interior              http://elips.doi.gov/elips/release/32
                     07.htm
                     
Justice               www.usdoj.gov/olp/execorder13272.pdf
                     
Labor                 www.dol.gov/dol/regs/guidelines.htm
                     
State                 The Department of State has not
                     submitted written procedures.
                     
Transportation        www.regs.dot.gov/docs/eo-13272.pdf
                     
Treasury              www.treas.gov/regs/2002-rfa-
                     compliance.pdf?IMAGE.X=24\
                     &IMAGE.Y=8
                     
Veterans Affairs      www.va.gov/OSDBU/library/eo13272.htm

Table A.2 Federal Agencies Trained in RFA Compliance, FY

2003-2005

In fulfillment of E.O. 13272, Advocacy trained regulatory
staff from the following federal departments and agencies on
how to comply with the Regulatory Flexibility Act from July
2003 through September 2005.

Department of Agriculture
     Animal and Plant Health Inspection Service
Department of Commerce
     National Oceanic and Atmospheric Administration
     Manufacturing and Services
     Patent and Trademark Office
Department of Education
Department of Energy
Department of Health and Human Services
     Centers for Medicare and Medicaid Services
     Food and Drug Administration
Department of Homeland Security
     Bureau of Citizenship and Immigration Services
     Bureau of Customs and Border Protection
     Transportation Security Administration
     United States Coast Guard
Department of Housing and Urban Development
     Community Planning and Development
     Fair Housing and Equal Opportunity
     Manufactured Housing
     Public and Indian Housing
Department of the Interior
     Bureau of Indian Affairs
     Bureau of Land Management
     Fish and Wildlife Service
     Minerals Management Service
     National Park Service
     Office of Surface Mining, Reclamation, and Enforcement
Department of Justice
     Bureau of Alcohol, Tobacco, and Firearms
Department of Labor
     Employee Benefits Security Administration
     Employment and Training Administration
     Employment Standards Administration
     Mine Safety and Health Administration
     Occupational Safety and Health Administration
Department of Transportation
     Federal Aviation Administration
     Federal Highway Administration
     Federal Motor Carrier Safety Administration
     Federal Railroad Administration
     National Highway Traffic Safety Administration
     Research and Special Programs Administration
Department of the Treasury
     Financial Crimes Enforcement Network
     Financial Management Service
     Internal Revenue Service
     Office of the Comptroller of the Currency
     Tax and Trade Bureau
Department of Veterans Affairs
Independent Federal Agencies
     Access Board
     Environmental Protection Agency
     Federal Communications Commission
     Federal Deposit Insurance Commission
     Federal Election Commission
     General Services Administration / FAR Council
     Securities and Exchange Commission
     Small Business Administration

Table A.3 SBREFA Panels through Fiscal Year 2005

                              Date    Report           Final
Rule Subject                Convened Complete NPRM 1   Rule
                                         d            Publishe
                                                     d
               Environmental Protection Agency
                              
Non-Road Diesel Engines      03/25/9  05/23/97  09/24/97 10/23/98
                            7                         
Industrial Laundries         06/06/9  08/08/97  12/12/97 Withdraw
Effluent Guideline           7                         n 2
                                                     
Stormwater Phase 2           06/19/9  08/07/97  01/09/98 12/08/99
                            7                         
Transport Equipment          07/16/9  09/23/97  06/25/98 08/14/00
Cleaning Effluent            7                         
Guideline

Centralized Waste Treatment  11/06/9  01/23/98  01/13/99 12/22/00
Effluent                     7                         
Guideline

Underground Injection        02/17/9  04/17/98  07/29/98 12/07/99
Control                      8                         
Class V Wells

Ground Water                 04/10/9  06/09/98  05/10/00 
                            8                 
Federal Implementation Plan                              
for                          06/23/9  08/21/98  10/21/98
Regional Nitrogen Oxides     8                 
Reductions
Section 126 Petitions        06/23/9  08/21/98  09/30/98 05/25/99
                            8                         
Radon in Drinking Water      07/09/9  09/18/98  11/02/99 
                            8                 
Long Term 1 Enhanced         08/21/9  10/19/98  04/10/00 01/14/02
Surface Water                8                         
Treatment

Filter Backwash Recycling    08/21/9  10/19/98  04/10/00 06/08/01
                            8                         
Light Duty Vehicles/Light                                
Duty Trucks                  08/27/9  10/26/98  05/13/99 02/10/00
Emissions and Sulfur in      8                         
Gasoline
Arsenic in Drinking Water    03/30/9  06/04/99  06/22/00 01/22/01
                            9                         
Recreational Marine Engines  06/07/9  08/25/99  10/05/01 11/08/02
                            9                 08/14/02 
                                             
Diesel Fuel Sulfur Control   11/12/9  03/24/00  06/02/00 01/18/01
Requirements                 9                         
Lead Renovation and          11/23/9  03/03/00           
Remodeling Rule              9        
Metals Products and          12/09/9  03/03/00  01/03/01 05/13/03
Machinery Effluent           9                         
Guideline

Concentrated Animals         12/16/9  04/07/00  01/12/01 02/12/03
Feedlots Effluent            9
Guideline

Reinforced Plastic           04/06/0  06/02/00  08/02/01 04/21/03
Composites                   0

                               Date   Report           Final
Rule Subject                 Convene Complete NPRM1    Rule
                                d        d            Publishe
                                                     d
                                                     
Stage 2 Disinfection         04/25/0  06/23/00           
Byproducts                   0        
Long Term 2 Enhanced         04/25/0  06/23/00  08/11/03 
Surface Water                0                 08/18/03
Treatment                                     
Emissions from Non-Road and  05/03/0  07/17/01  10/05/01 11/08/02
Recreational                 1                 08/14/02 
Engines and Highway                           
Motorcycles
Construction and             07/16/0  10/12/01  06/24/02 Withdraw
Development Effluent         1                         n3
Guideline                                             

Aquatic Animal Production    01/22/0  06/19/02  09/12/02 08/23/04
Industry                     2                         
Lime Industry-Air Pollution  01/22/0  03/25/02  12/20/02 01/05/04
                            2                         
Non-Road Diesel              10/24/0  12/23/02  05/23/03 06/29/04
Emissions-Tier 4 Rules       2                         
Cooling Water Intake         02/27/0  04/27/04  11/24/04 
Structures-Phase III         4                 
Facilities

Section 126 Petition (2005   04/27/0  06/27/05  08/24/05 
Clean Air                    5                 
Implementation Rule)

Federal Implementation Plan  04/27/0  06/27/05  08/24/05 
for Regional                 5
Nitrogen Oxides (2005 Clean
Air
Implementation Rule)

Mobile Source Air Toxics -   09/07/0                     
Control of                   5
Hazardous Air Pollutants
From Mobile Sources

        Occupational Safety and Health Administration
                              
Tuberculosis                 09/10/9  11/12/96  10/17/97 Withdraw
                            6                         n4
                                                     
Safety and Health Program    10/20/9  12/19/98  Withdraw 
Rule                         8                 n
                                             
Ergonomics Program Standard  03/02/9  04/30/99  11/23/99 
                            9                         11/14/00
                                                     5
                                                     
Electric Power Generation,   04/01/0  06/30/03  06/15/05 
Transmission,                3                 
and Distribution

Confined Spaces in           09/26/0  11/24/03           
Construction                 3        
Occupational Exposure to     10/21/0  12/19/03           
Respirable                   3        
Crystalline Silica Dust

Occupational Exposure to     01/30/0  04/20/04  10/04/04 
Hexavalent                   4                 
Chromium

1 Notice of proposed rulemaking (NPRM).
2 Proposed rule was withdrawn August 18, 1999. EPA does not
plan to issue a final rule.
3 Proposed rule was withdrawn on April 26, 2004. EPA does
not plan to issue a final rule.
4 Proposed rule was withdrawn on December 31, 2003. OSHA
does not plan to issue a final rule.
5 President Bush signed Senate J. Res. 6 on 03/20/01, which
eliminated this final rule under the Congressional Review
Act.

Appendix B The Regulatory Flexibility Act

The following text of the Regulatory Flexibility Act of
1980, as amended, is taken from Title 5 of the United States
Code, Sections 601-612. The Regulatory Flexibility Act was
originally passed in 1980 (P.L. 96-354). The act was amended
by the Small Business Regulatory Enforcement Fairness Act of
1996 (P.L. 104-121).

Congressional Findings and Declaration of Purpose

(a) The Congress finds and declares that -
(1) when adopting regulations to protect the health, safety
and economic welfare of the Nation, Federal agencies should
seek to achieve statutory goals as effectively and
efficiently as possible without imposing unnecessary burdens
on the public;
(2) laws and regulations designed for application to large
scale entities have been applied uniformly to small
businesses, small organizations, and small governmental
jurisdictions even though the problems that gave rise to
government action may not have been caused by those smaller
entities;
(3) uniform Federal regulatory and reporting requirements
have in numerous instances imposed unnecessary and
disproportionately burdensome demands including legal,
accounting and consulting costs upon small businesses, small
organizations, and small governmental jurisdictions with
limited resources;
(4) the failure to recognize differences in the scale and
resources of regulated entities has in numerous instances
adversely affected competition in the marketplace,
discouraged innovation and restricted improvements in
productivity;
(5) unnecessary regulations create entry barriers in many
industries and discourage potential entrepreneurs from
introducing beneficial products and processes;
(6) the practice of treating all regulated businesses,
organizations, and governmental jurisdictions as equivalent
may lead to inefficient use of regulatory agency resources,
enforcement problems and, in some cases, to actions
inconsistent with the legislative intent of health, safety,
environmental and economic welfare legislation;
(7) alternative regulatory approaches which do not conflict
with the stated objectives of applicable statutes may be
available which minimize the significant economic impact of
rules on small businesses, small organizations, and small
governmental jurisdictions;
(8) the process by which Federal regulations are developed
and adopted should be reformed to require agencies to
solicit the ideas and comments of small businesses, small
organizations, and small governmental jurisdictions to
examine the impact of proposed and existing rules on such
entities, and to review the continued need for existing
rules.

(b) It is the purpose of this Act [enacting this chapter and
provisions set out as notes under this section] to establish
as a principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives of the rule and of
applicable statutes, to fit regulatory and informational
requirements to the scale of the businesses, organizations,
and governmental jurisdictions subject to regulation. To
achieve this principle, agencies are required to solicit and
consider flexible regulatory proposals and to explain the
rationale for their actions to assure that such proposals
are given serious consideration.

Regulatory Flexibility Act

 601     Definitions
 602     Regulatory agenda
 603     Initial regulatory flexibility analysis
 604     Final regulatory flexibility analysis
 605     Avoidance of duplicative or unnecessary analyses
 606     Effect on other law
 607     Preparation of analyses
 608     Procedure for waiver or delay of completion
 609     Procedures for gathering comments
 610     Periodic review of rules
 611     Judicial review
 612     Reports and intervention rights

 601 Definitions
For purposes of this chapter -

(1) the term "agency" means an agency as defined in section
551(1) of this title;
(2) the term "rule" means any rule for which the agency
publishes a general notice of proposed rulemaking pursuant
to section 553(b) of this title, or any other law, including
any rule of general applicability governing Federal grants
to State and local governments for which the agency provides
an opportunity for notice and public comment, except that
the term "rule" does not include a rule of particular
applicability relating to rates, wages, corporate or
financial structures or reorganizations thereof, prices,
facilities, appliances, services, or allowances therefor or
to valuations, costs or accounting, or practices relating to
such rates, wages, structures, prices, appliances, services,
or allowances;
(3) the term "small business" has the same meaning as the
term "small business concern" under section 3 of the Small
Business Act, unless an agency, after consultation with the
Office of Advocacy of the Small Business Administration and
after opportunity for public comment, establishes one or
more definitions of such term which are appropriate to the
activities of the agency and publishes such definition(s) in
the Federal Register;
(4) the term "small organization" means any not-for-profit
enterprise which is independently owned and operated and is
not dominant in its field, unless an agency establishes,
after opportunity for public comment, one or more
definitions of such term which are appropriate to the
activities of the agency and publishes such definition(s) in
the Federal Register;
(5) the term "small governmental jurisdiction" means
governments of cities, counties, towns, townships, villages,
school districts, or special districts, with a population of
less than fifty thousand, unless an agency establishes,
after opportunity for public comment, one or more
definitions of such term which are appropriate to the
activities of the agency and which are based on such factors
as location in rural or sparsely populated areas or limited
revenues due to the population of such jurisdiction, and
publishes such definition(s) in the Federal Register;
(6) the term "small entity" shall have the same meaning as
the terms "small business," "small organization" and "small
governmental jurisdiction" defined in paragraphs (3), (4)
and (5) of this section; and
(7) the term "collection of information" -
  (A) means the obtaining, causing to be obtained,
soliciting, or requiring the disclosure to third parties or
the public, of facts or opinions by or for an agency,
regardless of form or format, calling for either -
     (i) answers to identical questions posed to, or
identical reporting or recordkeeping requirements imposed
on, 10 or more persons, other than agencies,
instrumentalities, or employees of the United States; or
     (ii) answers to questions posed to agencies,
instrumentalities, or employees of the United States which
are to be used for general statistical purposes; and
  (B) shall not include a collection of information
described under section 3518(c)(1) of title 44, United
States Code.
(8) Recordkeeping requirement - The term "recordkeeping
requirement" means a requirement imposed by an agency on
persons to maintain specified records.

 602. Regulatory agenda
(a) During the months of October and April of each year,
each agency shall publish in the Federal Register a
regulatory flexibility agenda which shall contain -
(1) a brief description of the subject area of any rule
which the agency expects to propose or promulgate which is
likely to have a significant economic impact on a
substantial number of small entities;
(2) a summary of the nature of any such rule under
consideration for each subject area listed in the agenda
pursuant to paragraph (1), the objectives and legal basis
for the issuance of the rule, and an approximate schedule
for completing action on any rule for which the agency has
issued a general notice of proposed rulemaking, and
(3) the name and telephone number of an agency official
knowledgeable concerning the items listed in paragraph (1).
(b) Each regulatory flexibility agenda shall be transmitted
to the Chief Counsel for Advocacy of the Small Business
Administration for comment, if any.
(c) Each agency shall endeavor to provide notice of each
regulatory flexibility agenda to small entities or their
representatives through direct notification or publication
of the agenda in publications likely to be obtained by such
small entities and shall invite comments upon each subject
area on the agenda.
(d) Nothing in this section precludes an agency from
considering or acting on any matter not included in a
regulatory flexibility agenda, or requires an agency to
consider or act on any matter listed in such agenda.

 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this
title, or any other law, to publish general notice of
proposed rulemaking for any proposed rule, or publishes a
notice of proposed rulemaking for an interpretative rule
involving the internal revenue laws of the United States,
the agency shall prepare and make available for public
comment an initial regulatory flexibility analysis. Such
analysis shall describe the impact of the proposed rule on
small entities. The initial regulatory flexibility analysis
or a summary shall be published in the Federal Register at
the time of the publication of general notice of proposed
rulemaking for the rule. The agency shall transmit a copy of
the initial regulatory flexibility analysis to the Chief
Counsel for Advocacy of the Small Business Administration.
In the case of an interpretative rule involving the internal
revenue laws of the United States, this chapter applies to
interpretative rules published in the Federal Register for
codification in the Code of Federal Regulations, but only to
the extent that such interpretative rules impose on small
entities a collection of information requirement.
(b) Each initial regulatory flexibility analysis required
under this section shall contain -
(1) a description of the reasons why action by the agency is
being considered;
(2) a succinct statement of the objectives of, and legal
basis for, the proposed rule;
(3) a description of and, where feasible, an estimate of the
number of small entities to which the proposed rule will
apply;
(4) a description of the projected reporting, recordkeeping
and other compliance requirements of the proposed rule,
including an estimate of the classes of small entities which
will be subject to the requirement and the type of
professional skills necessary for preparation of the report
or record;
(5) an identification, to the extent practicable, of all
relevant Federal rules which may duplicate, overlap or
conflict with the proposed rule.
(c) Each initial regulatory flexibility analysis shall also
contain a description of any significant alternatives to the
proposed rule which accomplish the stated objectives of
applicable statutes and which minimize any significant
economic impact of the proposed rule on small entities.
Consistent with the stated objectives of applicable
statutes, the analysis shall discuss significant
alternatives such as -
(1) the establishment of differing compliance or reporting
requirements or timetables that take into account the
resources available to small entities;
(2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for
such small entities;
(3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part
thereof, for such small entities.

 604. Final regulatory flexibility analysis
(a) When an agency promulgates a final rule under section
553 of this title, after being required by that section or
any other law to publish a general notice of proposed
rulemaking, or promulgates a final interpretative rule
involving the internal revenue laws of the United States as
described in section 603(a), the agency shall prepare a
final regulatory flexibility analysis. Each final regulatory
flexibility analysis shall contain -
(1) a succinct statement of the need for, and objectives of,
the rule;
(2) a summary of the significant issues raised by the public
comments in response to the initial regulatory flexibility
analysis, a summary of the assessment of the agency of such
issues, and a statement of any changes made in the proposed
rule as a result of such comments;
(3) 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;
(4) a description of the projected reporting, recordkeeping
and other compliance requirements of the rule, including an
estimate of the classes of small entities which will be
subject to the requirement and the type of professional
skills necessary for preparation of the report or record;
and
(5) a description of the steps the agency has taken to
minimize the significant economic impact on small entities
consistent with the stated objectives of applicable
statutes, including a statement of the factual, policy, and
legal reasons for selecting the alternative adopted in the
final rule and why each one of the other significant
alternatives to the rule considered by the agency which
affect the impact on small entities was rejected.
(b) The agency shall make copies of the final regulatory
flexibility analysis available to members of the public and
shall publish in the Federal Register such analysis or a
summary thereof.

 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 proposed 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 statement 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 sections 602, 603, 604 and 610 of this
title.

 606. Effect on other law
The requirements of sections 603 and 604 of this title do
not alter in any manner standards otherwise applicable by
law to agency action.

 607. Preparation of analyses
In complying with the provisions of sections 603 and 604 of
this title, an agency may provide either a quantifiable or
numerical description of the effects of a proposed rule or
alternatives to the proposed rule, or more general
descriptive statements if quantification is not practicable
or reliable.

 608. Procedure for waiver or delay of completion
(a) An agency head may waive or delay the completion of some
or all of the requirements of section 603 of this title by
publishing in the Federal Register, not later than the date
of publication of the final rule, a written finding, with
reasons therefor, that the final rule is being promulgated
in response to an emergency that makes compliance or timely
compliance with the provisions of section 603 of this title
impracticable.
(b) Except as provided in section 605(b), an agency head may
not waive the requirements of section 604 of this title. An
agency head may delay the completion of the requirements of
section 604 of this title for a period of not more than one
hundred and eighty days after the date of publication in the
Federal Register of a final rule by publishing in the
Federal Register, not later than such date of publication, a
written finding, with reasons therefor, that the final rule
is being promulgated in response to an emergency that makes
timely compliance with the provisions of section 604 of this
title impracticable. If the agency has not prepared a final
regulatory analysis pursuant to section 604 of this title
within one hundred and eighty days from the date of
publication of the final rule, such rule shall lapse and
have no effect. Such rule shall not be repromulgated until a
final regulatory flexibility analysis has been completed by
the agency.

 609. Procedures for gathering comments
(a) When any rule is promulgated which will have a
significant economic impact on a substantial number of small
entities, the head of the agency promulgating the rule or
the official of the agency with statutory responsibility for
the promulgation of the rule shall assure that small
entities have been given an opportunity to participate in
the rulemaking for the rule through the reasonable use of
techniques such as-
(1) the inclusion in an advanced notice of proposed
rulemaking, if issued, of a statement that the proposed rule
may have a significant economic effect on a substantial
number of small entities;
(2) the publication of general notice of proposed rulemaking
in publications likely to be obtained by small entities;
(3) the direct notification of interested small entities;
(4) the conduct of open conferences or public hearings
concerning the rule for small entities including soliciting
and receiving comments over computer networks; and
(5) the adoption or modification of agency procedural rules
to reduce the cost or complexity of participation in the
rulemaking by small entities.
(b) Prior to publication of an initial regulatory
flexibility analysis which a covered agency is required to
conduct by this chapter-
(1) a covered agency shall notify the Chief Counsel for
Advocacy of the Small Business Administration and provide
the Chief Counsel with information on the potential impacts
of the proposed rule on small entities and the type of small
entities that might be affected;
(2) not later than 15 days after the date of receipt of the
materials described in paragraph (1), the Chief Counsel
shall identify individuals representative of affected small
entities for the purpose of obtaining advice and
recommendations from those individuals about the potential
impacts of the proposed rule;
(3) the agency shall convene a review panel for such rule
consisting wholly of full time Federal employees of the
office within the agency responsible for carrying out the
proposed rule, the Office of Information and Regulatory
Affairs within the Office of Management and Budget, and the
Chief Counsel;
(4) the panel shall review any material the agency has
prepared in connection with this chapter, including any
draft proposed rule, collect advice and recommendations of
each individual small entity representative identified by
the agency after consultation with the Chief Counsel, on
issues related to subsections 603(b), paragraphs (3), (4)
and (5) and 603(c);
(5) not later than 60 days after the date a covered agency
convenes a review panel pursuant to paragraph (3), the
review panel shall report on the comments of the small
entity representatives and its findings as to issues related
to subsections 603(b), paragraphs (3), (4) and (5) and
603(c), provided that such report shall be made public as
part of the rulemaking record; and
(6) where appropriate, the agency shall modify the proposed
rule, the initial regulatory flexibility analysis or the
decision on whether an initial regulatory flexibility
analysis is required.
(c) An agency may in its discretion apply subsection (b) to
rules that the agency intends to certify under subsection
605(b), but the agency believes may have a greater than de
minimis impact on a substantial number of small entities.
(d) For purposes of this section, the term "covered agency"
means the Environmental Protection Agency and the
Occupational Safety and Health Administration of the
Department of Labor.
(e) The Chief Counsel for Advocacy, in consultation with the
individuals identified in subsection (b)(2), and with the
Administrator of the Office of Information and Regulatory
Affairs within the Office of Management and Budget, may
waive the requirements of subsections (b)(3), (b)(4), and
(b)(5) by including in the rulemaking record a written
finding, with reasons therefor, that those requirements
would not advance the effective participation of small
entities in the rulemaking process. For purposes of this
subsection, the factors to be considered in making such a
finding are as follows:
(1) In developing a proposed rule, the extent to which the
covered agency consulted with individuals representative of
affected small entities with respect to the potential
impacts of the rule and took such concerns into
consideration.
(2) Special circumstances requiring prompt issuance of the
rule.
(3) Whether the requirements of subsection (b) would provide
the individuals identified in subsection (b)(2) with a
competitive advantage relative to other small entities.

 610. Periodic review of rules
(a) Within one hundred and eighty days after the effective
date of this chapter, each agency shall publish in the
Federal Register a plan for the periodic review of the rules
issued by the agency which have or will have a significant
economic impact upon a substantial number of small entities.
Such plan may be amended by the agency at any time by
publishing the revision in the Federal Register. The purpose
of the review shall be to determine whether such rules
should be continued without change, or should be amended or
rescinded, consistent with the stated objectives of
applicable statutes, to minimize any significant economic
impact of the rules upon a substantial number of such small
entities. The plan shall provide for the review of all such
agency rules existing on the effective date of this chapter
within ten years of that date and for the review of such
rules adopted after the effective date of this chapter
within ten years of the publication of such rules as the
final rule. If the head of the agency determines that
completion of the review of existing rules is not feasible
by the established date, he shall so certify in a statement
published in the Federal Register and may extend the
completion date by one year at a time for a total of not
more than five years.
(b) In reviewing rules to minimize any significant economic
impact of the rule on a substantial number of small entities
in a manner consistent with the stated objectives of
applicable statutes, the agency shall consider the following
factors-
(1) the continued need for the rule;
(2) the nature of complaints or comments received concerning
the rule from the public;
(3) the complexity of the rule;
(4) the extent to which the rule overlaps, duplicates or
conflicts with other Federal rules, and, to the extent
feasible, with State and local governmental rules; and
(5) the length of time since the rule has been evaluated or
the degree to which technology, economic conditions, or
other factors have changed in the area affected by the rule.
(c) Each year, each agency shall publish in the Federal
Register a list of the rules which have a significant
economic impact on a substantial number of small entities,
which are to be reviewed pursuant to this section during the
succeeding twelve months. The list shall include a brief
description of each rule and the need for and legal basis of
such rule and shall invite public comment upon the rule.

 611. Judicial review
(a)  (1) For any rule subject to this chapter, a small
entity that is adversely affected or aggrieved by final
agency action is entitled to judicial review of agency
compliance with the requirements of sections 601, 604,
605(b), 608(b), and 610 in accordance with chapter 7. Agency
compliance with sections 607 and 609(a) shall be judicially
reviewable in connection with judicial review of section
604.
(2) Each court having jurisdiction to review such rule for
compliance with section 553, or under any other provision of
law, shall have jurisdiction to review any claims of
noncompliance with sections 601, 604, 605(b), 608(b), and
610 in accordance with chapter 7. Agency compliance with
sections 607 and 609(a) shall be judicially reviewable in
connection with judicial review of section 604.
(3)  (A) A small entity may seek such review during the
period beginning on the date of final agency action and
ending one year later, except that where a provision of law
requires that an action challenging a final agency action be
commenced before the expiration of one year, such lesser
period shall apply to an action for judicial review under
this section.
     (B) In the case where an agency delays the issuance of
a final regulatory flexibility analysis pursuant to section
608(b) of this chapter, an action for judicial review under
this section shall be filed not later than-
       (i) one year after the date the analysis is made
available to the public, or
       (ii) where a provision of law requires that an action
challenging a final agency regulation be commenced before
the expiration of the 1-year period, the number of days
specified in such provision of law that is after the date
the analysis is made available to the public.
(4) In granting any relief in an action under this section,
the court shall order the agency to take corrective action
consistent with this chapter and chapter 7, including, but
not limited to -
     (A) remanding the rule to the agency, and
     (B) deferring the enforcement of the rule against small
entities unless the court finds that continued enforcement
of the rule is in the public interest.
(5) Nothing in this subsection shall be construed to limit
the authority of any court to stay the effective date of any
rule or provision thereof under any other provision of law
or to grant any other relief in addition to the requirements
of this section.
(b) In an action for the judicial review of a rule, the
regulatory flexibility analysis for such rule, including an
analysis prepared or corrected pursuant to paragraph (a)(4),
shall constitute part of the entire record of agency action
in connection with such review.
(c) Compliance or noncompliance by an agency with the
provisions of this chapter shall be subject to judicial
review only in accordance with this section.
(d) Nothing in this section bars judicial review of any
other impact statement or similar analysis required by any
other law if judicial review of such statement or analysis
is otherwise permitted by law.

 612. Reports and intervention rights
(a) The Chief Counsel for Advocacy of the Small Business
Administration shall monitor agency compliance with this
chapter and shall report at least annually thereon to the
President and to the Committees on the Judiciary and Small
Business of the Senate and House of Representatives.
(b) The Chief Counsel for Advocacy of the Small Business
Administration is authorized to appear as amicus curiae in
any action brought in a court of the United States to review
a rule. In any such action, the Chief Counsel is authorized
to present his or her views with respect to compliance with
this chapter, the adequacy of the rulemaking record with
respect to small entities and the effect of the rule on
small entities.
(c) A court of the United States shall grant the application
of the Chief Counsel for Advocacy of the Small Business
Administration to appear in any such action for the purposes
described in subsection (b).

Appendix C

Executive Order 13272

Appendix D

Advocacy Legislative Priorities for the 109th Congress

The Office of Advocacy was established pursuant to P.L. 94-
305 to represent the views of small business before federal
agencies and Congress. Advocacy is an independent office
within the U.S. Small Business Administration (SBA), so the
views expressed by Advocacy do not necessarily reflect the
views of the SBA or the Administration.
  The Office of Advocacy's top legislative priority is to
give small businesses a legitimate voice in the regulatory
process.
  Advocacy's research shows that small businesses pay an
average of $7,647 per employee annually to comply with
federal regulations-45 percent more than large businesses.
Yet, small businesses generate 60-80 percent of all net new
jobs, represent 99.7 percent of employers, employ half of
all private sector employees, and innovate at a rate 13
times greater than large firms.
  For twenty-five years, the Regulatory Flexibility Act
(RFA) has required that agencies consider less burdensome
approaches to regulation in order to level the playing field
for small business. The RFA was amended in 1996 by the Small
Business Regulatory Enforcement Fairness Act (SBREFA). Among
other things, the 1996 amendments made agency small business
impact analysis subject to judicial review and required two
agencies, the Occupational Safety and Health Administration
(OSHA) and the Environmental Protection Agency (EPA),  to
seek direct input from small entities prior to issuing
regulatory proposals.
  Government has saved small entities billions of dollars
by following the RFA's direction and minimizing the impact
of regulatory mandates on small business. History has shown
that regulatory sensitivity towards small entities can be
achieved without sacrificing the underlying purpose of
environmental protection, workplace safety, border security,
and other governmental priorities.
  The 109th Congress has the opportunity to amend the RFA
and SBREFA to improve the regulatory climate for small
business. The following four amendments fill in loopholes
that currently reduce the effectiveness of both statutes.

I. Review of Existing Rules
The W. Mark Crain study on regulatory costs showed a cost to
Americans of $1.1 trillion. Much of that regulatory burden
falls on the business community. Since new regulations are
promulgated each year, the cumulative impact can be
staggering. It is necessary to evaluate existing regulations
periodically to minimize this impact.

Amendment:
Modify section 610 of the Regulatory Flexibility Act, 5
U.S.C.  601-612 (RFA), that requires federal agencies to
review 10-year-old regulations to assess their present-day
impact. Section 610 should be broadened so that agencies
review all rules periodically and not just those viewed as
significant when initially promulgated. This change would
encourage agencies to update their rules every 10 years to
ensure that regulatory protections reflect current
conditions.

II. Proper Consideration of Small Entities in Agency
Rulemaking
The President prioritized the need for government agencies
to consider their impact on small entities under the RFA
when he signed Executive Order 13272. Section 3 of the
Executive Order requires agencies to notify the Office of
Advocacy of draft rules that will have a significant
economic impact on a substantial number of small entities.
It also requires agencies to give appropriate consideration
to Advocacy's comments and address the comments in final
rules.

Amendment:
Codify section 3 of the Executive Order to ensure that the
President's attention to the impact of regulation on small
entities becomes a permanent part of how government
operates. This amendment will also ensure that independent
agencies comply with the RFA.

III. Help States Consider
Alternatives to Costly Regulation
The federal government sometimes issues regulations that
must be implemented by the states. When this happens,
federal agencies are not required to do the detailed
analysis of impacts and alternatives required under the RFA.
Instead, states with RFA-type laws on the books, and with
fewer resources than federal agencies, must do the analysis
themselves, resulting in what amounts to an unfunded
mandate. Under current law, agencies are only required to
analyze direct impacts, even though there may be foreseeable
and costly indirect impacts when states enforce federal
regulations.

Amendment:
Amend the RFA to ensure that agencies analyze the impact of
their rules on small entities and provide states with
regulatory alternatives that will enable states to meet
federal requirements while minimizing the impact on small
entities.

IV. Help Small Business Comply with Regulations
Sometimes small business noncompliance with federal
regulations is simply due to the fact that they do not
understand the regulations. The intent behind section 212 of
SBREFA was to ensure that small businesses had a way to
understand often complex and technical federal regulations.
Section 212 of SBREFA requires federal agencies to publish a
small business compliance guide for each final rule that has
a significant economic impact on a substantial number of
small entities. However, small businesses continue to be
frustrated with rules that are not published with adequate
compliance information.

Amendment:
Amend SBREFA to require that agencies publish plain language
small business compliance guides whenever a final rule
requires a final regulatory flexibility analysis (FRFA).
Agencies would also be required to report annually on their
efforts to comply with this section.

Appendix E Abbreviations

AED       automated external defibrillator
ALEC      American Legislative Exchange Council
AMS       Agricultural Marketing Service
ANPRM          advance notice of proposed rulemaking
APA       Administrative Procedure Act
APHIS          Animal and Plant Health Inspection Service
BIS       Bureau of Industry and Security
BLM       Bureau of Land Management
CALEA          Communications Assistance for Law Enforcement
Act
CMS       Centers for Medicare and Medicaid Services
CRD       Civil Rights Division (U.S. Department of Justice)
Cr(VI)         hexavalent chromium
CVR       cockpit voice recorder
DFDR      digital flight data recorder
DHS       Department of Homeland Security
DOC       Department of Commerce
DOD       Department of Defense
DOE       Department of Energy
DOI       Department of the Interior
DOJ       Department of Justice
DOL       Department of Labor
DORA      Department of Regulatory Agencies (Colorado)
DOT       Department of Transportation
DPHE      Department of Public Health and Environment
(Colorado)
E.O.      Executive Order
EPA       Environmental Protection Agency
FAA       Federal Aviation Administration
FAR       Federal Acquisition Regulation
FCC       Federal Communications Commission
FDA       Food and Drug Administration
FEI       Financial Executives International
FHWA      Federal Highway Administration
FMCSA          Federal Motor Carrier Safety Administration
FPDS      Federal Procurement Data System
FRFA      final regulatory flexibility analysis
FWS       Fish and Wildlife Service
FY        fiscal year
GDP       gross domestic product
GIPSA          Grain Inspection, Packers and Stockyard
Administration
GRS       groundfish retention standard
GSA       General Services Administration
HCAHPS    Hospital Consumer Assessment of Health Plans
Survey
HHS       Department of Health and Human Services
HUD       Department of Housing and Urban Development
IP        Internet Protocol
IRFA      initial regulatory flexibility analysis
IRS       Internal Revenue Service
ISP       Internet service provider
MDPH      Massachusetts Department of Public Health
MSHA      Mine Safety and Health Administration
NAIS      National Animal Identification System
NANC      North American Numbering Council
NARA      National Archives and Records Administratoin
NHTSA          National Highway Traffic Safety
Administration
NMFS      National Marine Fisheries Service
NPRM      notice of proposed rulemaking
NTSB      National Transportation Safety Board
OCC       Office of the Comptroller of the Currency
OIRA      Office of Information and Regulatory Affairs
OMB       Office of Management and Budget
OSHA      Occupational Safety and Health Administration
OTS       Office of Thrift Supervision
PEL       permissible exposure limit
PHMSA          Pipeline and Hazardous Materials Safety
Administration
P.L.      Public Law
PRISM          Professional Records and Information Services
Management International
PTO       Patent and Trademark Office
RESPA          Real Estate Settlement Procedures Act
RFA       Regulatory Flexibility Act
RFID      radio frequency identification
RSPA      Research and Special Programs Administration
SBA       Small Business Administration
SBREFA    Small Business Regulatory Enforcement Fairness Act
SEC       Securities and Exchange Commission
SOA       Sarbanes-Oxley Act
TCPA      Telephone Consumer Protection Act
UNEs      unbundled network elements
U.S.C.         United States Code
USDA      United States Department of Agriculture
VA        Department of Veterans Affairs
VoIP      Voice over Internet Protocol

Endnotes

1.  U.S. Telecom Ass'n v. FCC, 400 F.3d 29 (D.C. Cir. 2005)
stated that the FCC failed to comply with the RFA's
requirement to prepare a final regulatory flexibility
analysis regarding the order's impact on small entities and
remanded the order to the FCC to prepare a final regulatory
flexibility analysis.
2.  The states are Alaska, Colorado, Connecticut, Indiana,
Kentucky, Missouri, New Mexico, North Dakota, Oregon, Rhode
Island, South Carolina, South Dakota, Virginia, and
Wisconsin. Missouri enacted two laws.
3.  The states are Alabama, Alaska, California, Colorado,
Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana,
Iowa, Kansas, Kentucky, Mississippi, Missouri, Montana,
Nebraska, New Jersey, New Mexico, North Carolina, North
Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Texas, Utah, Virginia,
Washington, and Wisconsin.
4.  These states include Arkansas, Massachusetts, Missouri
(whose executive order was later superseded by
legislation), and West Virginia.
5.  The states are Alabama, Alaska, Hawaii, Indiana, Iowa,
Mississippi, Missouri, Montana, New Jersey, New Mexico,
North Carolina, Ohio, Oregon, Pennsylvania, Tennessee,
Utah, Virginia, and Washington.
6.  This number is approximate and based on the cost of a
commercially manufactured stopper, corks and overstocking
charges multiplied by the number of small businesses in
Colorado subject to the rule.