Report on theRegulatory Flexibility Act
FY 2007
Annual Report of the Chief Counsel for Advocacy
on Implementation of the Regulatory Flexibility Act
and Executive Order 13272
February 2008
The full text of this report is available on the Office of Advocacys 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 the fiscal year (FY) 2007 Report on the Regulatory Flexibility Act. Included in
this years edition is a report on agency compliance with Executive Order 13272 and the Regulatory Flexibility Act of 1980 (RFA), as
well as Advocacys new Regulatory Review and Reform (r3) initiative. The RFA requires agencies to review the prospective impact
of proposed rules on small entities and to consider significant alternatives that minimize small entity impacts. E.O. 13272 furthers
Advocacys mission by directing agencies to post their implementation procedures publicly and by requiring the Office of Advocacy
to train federal agencies in how to comply with the law.
    The Office of Advocacys success in enhancing agency understanding of the RFA has steadily increased because of our strong
commitment to RFA compliance training. In fulfillment of our five-year goal under E.O. 13272, we completed training for virtually all
federal agencies that regulate small businesses in FY 2007. On September 12, 2007, Advocacy Attorneys Claudia Rodgers and Keith
Holman and Regulatory Economist Joe Johnson conducted a multi-agency training session on the RFA in accordance with the
requirements of E.O. 13272. This session concluded the first round of training efforts begun in 2003, and to date Advocacy has
provided training to 58 federal rulemaking entities. In addition to training agencies, the office intervened in various small business
issues by submitting comments about key agency rules, testifying before Congress, participating in Small Business Regulatory
Enforcement Fairness Act (SBREFA) panels, advocating for legislative change on a number of small business concerns, and
responding to specific small business requests for assistance with vital issues.
    FY 2007 marked the culmination of Advocacys 15-year effort on behalf of small businesses seeking relief from the
Environmental Protection Agencys (EPAs) toxics release inventory (TRI) reporting. Our involvement in this rulemaking began with
the filing of a petition in 1991 and culminated on December 18, 2006, when the EPA expanded the number of TRI filings that qualify
for the shorter Form A. EPAs TRI reform creates an incentive for businesses to reduce toxic emissions and provides burden reduction
relief to small firms, while preserving the integrity of the publics right to know.
    While most of our work does not warrant front-page news coverage, there is usually at least one issue that captures national
attention. In 2007, that was small businesses concern with the Department of Homeland Securitys (DHSs) new rule, Final Safe
Harbor Procedures for Employers Who Receive a No-Match Letter. The rule requires employers to take certain steps upon receipt of
a letter from the Social Security Administration (SSA) indicating that an employees name and social security number in the SSA
database do not match. On September 18, 2007, Advocacy wrote to DHS to assist the agency in fulfilling its RFA requirements with
respect to this rule. Because the no-match rule would impose several costs and legal obligations on employers, working with DHS to
address these small business concerns was critical.
    Our progress in guiding agencies in how to consider the impact of rules on small entities and how to comply with the RFA has
increased with each agency communication. Some agencies have made the Office of Advocacy their first point of contact when
addressing small business concerns. Moreover, these agencies are strengthening their interaction with small businesses and the trade
associations that represent them. These outreach efforts have been furthered through meetings and roundtables hosted by Advocacy.
The coordination between small businesses and agencies has not only enhanced RFA compliance, but it also produced solid results in
cost savings for small businesses in FY 2007.
    The offices success is also measurable through our efforts to connect the small business community with state regulatory bodies
to assess the impacts of rules. Advocacy drafted model legislation based on the RFA to offer guidance to states in how to reduce the
regulatory burden imposed by state agencies. Since 2002, 37 states have considered regulatory flexibility legislation and 22 states have
implemented regulatory flexibility via executive order or legislation. This state-level awareness of the various regulatory impacts on
small business bolsters the RFAs long-term effectiveness. Our March 2007 conference in Kansas City, Missouri, Building a Better
Small Business Climate: State Regulatory Flexibility Best Practices, was a way to begin creating a community of small business
advocates whose day-to-day responsibilities involve making their states regulatory flexibility laws a success.
    Measuring the RFAs effectiveness is not limited to efforts involving new or proposed regulations. To fully address the regulatory
burden, agencies should also review existing rules that may have developed adverse economic impacts on small businesses over time.
Section 610 of the RFA recognizes this important need for regulatory review and directs agencies to consider whether their current
regulations are necessary. On August 16, 2007, Advocacy launched the Small Business Regulatory Review and Reform (r3) initiative,
designed to further the important goals of section 610. The r3 initiative is intended to help agencies pinpoint existing federal rules that
warrant review, and reform them if they are found to be ineffective, duplicative, or out of date. Advocacy believes that the r3 initiative
will be a useful tool for small businesses and agencies alike in improving the quality of reviews of existing regulations.
    Small businesses are the nations economic backbone, representing 99.9 percent of all employer firms and generating 60 to 80
percent of net new jobs annually over the past 10 years. Our office is dedicated to fostering a regulatory environment that enables
these small entities to further innovate in the dynamic U.S. marketplace. With new long-term objectives like our r3 initiative, and
cooperation from the federal agencies, we can work together to streamline the regulatory process and ensure that small businesses
remain a competitive force.
Thomas M. Sullivan
Chief Counsel for Advocacy
Contents
To the President and the Congress of the United States
1  An Overview of the Regulatory Flexibility Act and Related Policy
2  Improvements Needed in Agency Section 610 Compliance
  r3: Advocacys Regulatory Review and Reform Initiative Background
  Designing the r3 Initiative
  Outreach Effort and Nominations for Review / Reform
  The 2008 Top 10 r3 Rules for Review / Reform
  Next Steps
3 Federal Agency RFA Compliance and the Role of the Office of Advocacy
  RFA Training under E.O. 13272
  Measuring   Effectiveness
  Overview of RFA Implementation
  Chart 3.1 Advocacy Comments by Key RFA Compliance Issue, Fiscal Year 2007
  Table 3.1 Regulatory Comment Letters Filed by the Office of Advocacy, Fiscal Year 2007
  Table 3.2 Regulatory Cost Savings, Fiscal Year 2007
  Table 3.3 Summary of Cost Savings, Fiscal Year 2007
4 Advocacy Review of Agency RFA Compliance in Fiscal Year 2007
  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
  Architectural and Transportation Barriers Compliance Board
  Consumer Product Safety Commission
  Environmental Protection Agency
  Federal Acquisition Regulation Council
  Federal Communications Commission
  Securities and Exchange Commission
  Small Business Administration
  U.S. Agency for International Development
  Conclusion
5.  Small Business Regulatory Flexibility Model Legislation Initiative
  Puerto Ricos Ice Makers Benefit from Regulatory Flexibilty Law
  New Challenges and Opportunities
  Table 5.1 State Regulatory Flexibility Legislation, 2007 Legislative Activit
  Table 5.2 State Regulatory Flexibility Legislation, Status as of October 2007
  Chart 5.1 Mapping State Regulatory Flexibility Activity, Fiscal Year 2007
Appendices9
A  Supplementary Tables
  Table A.1 Federal Agencies Trained in RFA Compliance, FY 2003-2007
  Table A.2 SBREFA Panels through Fiscal Year 2007
B  Regulatory Review and Reform (r3) Top Ten Rules, 2008
C  RFA Section 610 Best Practices for Federal Agencies
D  The Regulatory Flexibility Act
E  Executive Order 13272
F  Abbreviations
1   An Overview of the Regulatory Flexibility Act and Related Policy in
Fiscal Year 2007
With the passage of the Regulatory Flexibility Act in 1980, Congress directed federal agencies specifically to consider the impact of
their regulations on small businesses and the economy.
    Over time, agencies began to certify that rules would not have an impact on small businesses, even as those businesses
complained about the crippling burden of increasing federal regulation. The RFA needed teeth, and in 1996, the passage of the Small
Business Regulatory Enforcement Fairness Act added the possibility of judicial review of agency actions to the mix. Some predicted a
flood of anti-regulation litigation under the new act, but those floodgates never opened. A small, steady stream of cases did emerge,
with some affirming agencies well-considered decisions and with others upholding challenges under the RFA where the agencies
clearly had not followed the law.
    Overall agency RFA performance improved with the additional requirements under SBREFA and the threat of judicial review. At
the same time, some agencies resisted the idea that consideration of small business interests should be part of their rulemaking culture.
In response, on March 19, 2002, President George W. Bush announced his Small Business Agenda, which included the goal of
tearing down the regulatory barriers to job creation for small businesses and giving small business owners a voice in the complex and
confusing federal regulatory process.
    On August 13, 2002, the President signed Executive Order (E.O.) 13272, titled Proper Consideration of Small Entities in Agency
Rulemaking. E.O. 13272 enhanced Advocacys RFA mandate by directing federal agencies to implement written procedures and
policies for measuring the economic impact of their regulatory proposals on small entities. It also required agencies to notify
Advocacy of draft rules expected to have a significant economic impact on a substantial number of small entities and to give every
appropriate consideration to any comments provided by Advocacy, including publishing a response to Advocacys comments in the
Federal Register. Under the executive order, the Office of Advocacy must provide periodic notification of the requirements of the
RFA, as well as training all federal agencies in how to comply with its provisions.
    After developing the curriculum for a hands-on training program, Advocacys staff began classroom training for agencies in 2003.
In May 2006, Advocacy made computer-based RFA training modules available to agencies so that agency employees could obtain
initial or refresher RFA expertise on demand. By late 2007, Advocacy had trained nearly all federal agencies, departments, and
independent commissions that write rules affecting small businesses.
    The SBREFA amendments to the RFA have been reasonably successful. In general, agencies are paying closer attention to their
RFA obligations. Some agencies submit their draft regulations to Advocacy early in the process to obtain feedback on their RFA
compliance and small business impact. Early interventions by Advocacy and improved agency compliance with the RFA have led to
less burdensome regulations.
    The RFA is achieving cost savings for small entities, yet more remains to be done to reduce the regulatory burden. In 2005, an
Office of Advocacy study prepared by Mark Crain on The Impact of Regulatory Costs on Small Firms determined that the overall
cost of federal regulation totals $1.1 trillion. The annual cost per employee for firms with fewer than 20 employees is $7,64745
percent higher than for their larger counterparts with 500 or more employees. In addition to Advocacys work, legislative action is
necessary to continue to lower regulatory costs and level the playing field for small entities.
    Small entities are limited in what they can do about burdensome regulations currently in existence. Legal avenues that can be pursued
to have these rules reviewed are costly and time consuming. The Office of Advocacy believes it is time for the next stage of RFA
development. That stage involves greater emphasis on the review of the impact of existing rules under Section 610 of the RFA, and the
appropriate consideration of existing rules nominated by small businesses for regulatory review and reform.
    The regulatory burden likely to be imposed by a single proposed rule may be bearable; that rule, when added to numerous existing
rules, may contribute to a crippling cumulative burden. Section 610 of the RFA requires agencies to periodically review their existing
rules that may have a significant economic impact on a substantial number of small entities. The purpose of the review is to determine
whether such rules should be continued without change, amended, or rescinded, consistent with the stated objectives of applicable
statutes. Agency compliance with section 610 has historically been poor.
    The automatic review of regulations afforded through section 610 was designed to ensure the removal of burdensome regulations
and save small entities and federal agencies the hassle of costly litigation to obtain relief. Limiting the review to the regulations the
agency deemed to have a significant economic impact at the time of promulgation is problematic. Since new regulations are
promulgated each year, the cumulative impact of regulations on small entities can be staggering, even if individually the regulations
may not have had a significant economic impact at the time they were promulgated.
    The Office of Advocacy recently unveiled its Regulatory Review and Reform Initiative (r3) to address the cumulative impact of
the federal regulatory burden. The r3 initiative is designed to identify and address existing federal regulations that should be revised
because they may be ineffective, duplicative, or out of date. This is a tool for small business stakeholders to suggest needed reforms
and includes the agency review process under Section 610. The r3 effort will monitor the progress that agencies make toward
achieving reforms. Federal agencies will do a better job of identifying and revising rules that need to be reformed because of r3.
2	Improvements Needed in Agency Section 610 Compliance
Section 610 of the Regulatory Flexibility Act requires agencies to review existing regulations to determine if they are outdated,
duplicative, or overly complex. Agency compliance has been spotty and lacks transparency. In an effort to increase compliance with
section 610 and to ensure that agencies conduct transparent reviews in general, the Office of Advocacy developed the Regulatory
Review and Reform (r3) initiative.
r3: Advocacys Regulatory Review and Reform Initiative
The r3 initiative is designed to identify and address existing federal rules that should be reviewed and may need reforming. r3 is a tool
for small business stakeholders to suggest needed reforms to regulations that are outdated, ineffective, duplicative, or otherwise in
need of review. r3 includes the process under section 610 of the Regulatory Flexibility Act (RFA) by which an agency considers
whether a current regulation is still needed, and the degree to which technology, economic conditions, or other factors have changed
since the regulation was first written. r3 also includes a process by which interested small business stakeholders can nominate existing
rules for review and potential reform, and monitor the progress that agencies make toward achieving those reforms.
Background
The cost of complying with federal regulatory requirements has grown dramatically since the early 1970s, and small businesses have
borne a disproportionate share of this regulatory burden. In 1979, the cost of federal regulations reached an estimated $100 billion,
representing a fivefold increase from the 1970 total. Recent estimates indicate that this cost has further expanded to $1.1 trillion, or
more than $10,000 per household in 2004more than the amount the average household spent on health insurance. The Office of
Advocacy has played a key role in voicing small business concerns about these rising costs. Advocacy has made significant progress
in working with federal agencies to improve their proposed rules by reducing their impacts on small entities while still accomplishing
their regulatory objectives.
    Beyond efforts to reduce the small entity impacts of proposed rules, Advocacy is undertaking new efforts to persuade federal
agencies to comply with the RFA by considering the impacts of their existing regulations. Section 610 of the RFA, enacted in 1980,
requires agencies to look at their existing regulations within 10 years to see if they are outdated, ineffective, or duplicative. Agency
compliance with section 610s periodic review requirement has varied substantially from agency to agency; some agencies review
few, if any, of their current rules. A Government Accountability Office (GAO) report released in August 2007 highlighted the need for
clearer standards and enhanced public participation in the section 610 review process.(1)
Designing the r3 Initiative
In response to the GAOs findings and concerns of small businesses, the r3 initiative was officially launched on August 16, 2007. The
Office of Advocacy designed the r3 initiative to (1) assist agencies and small business stakeholders to better understand and benefit
from section 610 reviews of existing rules, and (2) to give interested small entities the opportunity to nominate existing agency rules
for review and potential reform. The initiative is intended to encourage agencies to undertake more meaningful section 610 reviews,
and to consider tailoring similar reviews of existing rules conducted for other reasons to fit the section 610 criteria. Small business
stakeholders are encouraged to suggest rules that should be reviewed andif found to be outdated, ineffective, or duplicative
reformed.
    In October 2007, Advocacy developed and released a best practices document to assist agencies in meeting their section 610
obligations. This best practices document is included in this report in Appendix C.(2)
Outreach Effort and Nominations for Review/Reform
On October 16, 2007, the Office of Advocacy hosted an r3 roundtable to provide representatives from small business associations,
government, and academia an opportunity to learn about r3. The office also met with numerous small business groups to inform them
about the initiative and the process for submitting r3 review nominations. By the submission deadline, Advocacy had received a total
of 82 nominations for review and potential reform.(3)
The 2008 Top 10 r3 Rules for Review/Reform
After significant review and analysis of the 82 nominations received, the Chief Counsel for Advocacy selected the following
nominations as the 2008 Top 10 rules for review and potential reform, listed here in alphabetical order by agency(4)
*	Environmental Protection Agency (EPA): Update Air Monitoring Rules for Dry Cleaners to Reflect Current
Technology. EPA should revise outdated or inaccurate testing requirements so that modern dry cleaners can have a valid
method for demonstrating compliance.
*	EPA: Flexibility for Community Drinking Water Systems. EPA should consider expanding the ways for small
communities to qualify to meet alternative drinking water standards, provided that the alternative standards are protective of
human health and are approved by state authorities.
*	EPA: Simplify the Rules for Recycling Solid Wastes. EPA should simplify the rules for recycling useful materials that,
because of their current classification, must be handled, transported, and disposed of as hazardous wastes.
*	EPA: EPA Should Clearly Define Oil in its Oil Spill Rules. EPA should clarify the definition of oil in its oil spill
program, so that small facilities that store nonpetroleum-based products are not unintentionally captured by spill program
requirements.
*	Federal Aviation Administration (FAA): Update Flight Rules for the Washington, DC, Regional Area. FAA and other
agencies should review the flight restriction rule for the region surrounding Washington, DC, to determine whether the rule
could be revised to avoid harming small airports within the region.
*	Federal Acquisition Regulation (FAR) Council: Eliminate Duplicative Financial Requirements for Architect-
engineering Services Firms in Government Contracting. The duplicative retainage requirement should be removed or
reduced in architect-engineering services contracts, as has been done for other services.
*	Internal Revenue Service (IRS): Simplify the Home Office Business Deduction. The IRS should revise their rules to
permit a standard deduction for home-based businesses, which constitute 53 percent of all small businesses.
*	Mine Safety and Health Administration (MSHA): Update MSHA Rules on the Use of Explosives in Mines to Reflect
Modern Industry Standards. MSHA should update its current rules to be consistent with modern mining industry
explosives standards.
*	Occupational Safety and Health Administration (OSHA): Update OSHAs Medical/Laboratory Worker Rule. The
current rule should be reviewed to determine whether it can be made more flexible in situations where workers do not have
potential exposure to bloodborne pathogens.
*	Office of Federal Procurement Policy (OFPP): Update Reverse Auction Techniques for Online Procurement. The current
reverse auction techniques should be reviewed to determine whether a government-wide rule is necessary to create a more
consistent and predictable online process.
    The 2008 Top 10 rules were ultimately chosen on the basis of several factors: (1) whether the rule could reasonably be tailored to
accomplish its intended objectives while reducing the impact on small businesses or small communities; (2) whether the rule being
nominated has ever been reviewed for its impact on small entities; (3) whether technology, economic conditions, or other factors have
changed since the rule was originally written; (4) whether the rule imposes duplicative requirements; and (5) the overall importance of
the rule to small businesses and small communities.
    Some rules that were nominated were not selected as Top 10 rules because the Office of Advocacy is already working with
agencies to implement the suggested reform or the agency has indicated that the suggested reform is already under way. One such
nomination involved the recommendation that the National Highway Traffic Safety Administration (NHTSA) revise its Tire
Registration and Recordkeeping rule to allow tire dealers to register tire sales with an online form, rather than asking customers to
complete and mail a paper form. After Advocacy received the reform nomination, and was considering the nomination as a possible
Top 10 candidate, NHTSA proposed revisions to the Tire Registration rule that would accomplish the suggested reform.(5)
    Other nominations that were not chosen as 2008 Top 10 rules have given Advocacy valuable insight into the regulatory issues of
concern to small businesses, which will help Advocacy prioritize its regulatory agenda in 2008.
Next Steps
The Office of Advocacy will be working closely in 2008 with the agencies whose rules were selected for review/reform. To track
agency progress, the recommended reforms will be posted on Advocacys website, www.sba.gov/advo/r3, and monitored, and an
update on the status of the rules will be made available to the public twice a year. Advocacy encourages small businesses and their
representatives to follow the progress of the reviews/reforms and comment to the agencies on that progress. The r3 initiative will be a
useful tool for small businesses and agencies alike in reviewing existing regulations, and where appropriate, improving them.(6)
3  Federal Agency Compliance and the Role of the Office of Advocacy
In addition to the legal requirements of the Regulatory Flexibility Act itself, Executive Order 13272 sets forth additional compliance
requirements to assist federal agencies in promulgating rules that are clear and that minimize undue economic burdens on small
entities. Federal agencies must meet three requirements set forth under section 3 of E.O. 13272. First, they must consider the potential
economic impact of their regulations on small entities and publicly document their policies containing this critical analysis.(7) Second,
agencies must notify Advocacy of prepublication rules that may impose a significant economic impact on small businesses, either
when the rule is sent to the Office of Information and Regulatory Affairs (OIRA) or at a reasonable time prior to its publication.(8)  To
best facilitate prompt agency compliance with the electronic notice requirements of E.O. 13272, Advocacy created an email address:
notify.advocacy@sba.gov. Finally, E.O. 13272 requires the agencies to consider Advocacys comments and recommendations on a
proposed rule and to respond to Advocacys written comments in the final rule published in the Federal Register (9)
RFA Training under E.O. 13272
E.O. 13272 requires that Advocacy train every federal agency in how to comply with the RFA.(10)  When this task was given to
Advocacy in 2002, the office identified 66 departments, agencies and independent commissions that promulgate regulations affecting
small businesses. In FY 2007, Advocacy completed the mission of offering training to all of the important segments of the government
that have an impact on small businesses. Advocacy has trained numerous economists, attorneys, and regulatory and policy staff at
these agencies in how to consider the impact of their regulations on small entities before, during, and after the drafting of regulations.
    Advocacys success in RFA compliance training of regulatory and policy experts throughout the federal agencies over the past five
years has led to a greater willingness by the agencies to share draft documents with Advocacy. Advocacys training program has improved
agency analysis of the federal regulatory burden on small businesses and has enhanced the factual basis for agency certifications of rules.
Not all agencies are quick to consider small business impacts from the beginning of rule development, but these training sessions have
indeed made a difference to many agencies in their rule development process, and therefore ultimately they have made a difference to small
businesses.
    Advocacy continues to train agencies as requests continue to be made for additional and more detailed assistance on RFA
compliance. In the next phase of RFA training, Advocacy will be able to focus on agencies needing more training in the economic
analysis of small business impacts, while offering the training to employees who were unable to attend previous sessions. This
continued focus on the basics of the RFAthe importance of detailed economic analysis as an integral part of the public comment
period, the foundation of a factual basis as a requirement for a threshold analysis of a rules impact, and contemplating a rules impact
prior to a first draftwill continue to be important issues for Advocacys training team in the next fiscal year.
Measuring Effectiveness
In the FY 2006 annual report, the Office of Advocacy included a section on measuring its effectiveness following President Bushs
signing of E.O. 13272.(11)  Historically Advocacy has measured its achievements under the RFA through a calculation of regulatory
cost savings as reflected in final agency actions. The Office of Advocacy recognized that as it achieved more success in training
agencies about how to comply with the complexities of the RFA, its ability to demonstrate effectiveness based solely on a
measurement of cost savings would decrease. Therefore, the office undertook to modernize the measurement of effectiveness through
the use of a new database that better reflected the tools Advocacy uses to intervene in the rulemaking process. This years report lists a
number of rules for which Advocacy assisted the agencies in conducting small business impact analysis, but was unable to calculate
cost savings. Advocacy will continue its efforts to better measure and highlight the goal of increasing agency compliance with the
RFA and Executive Order 13272.
Overview of RFA Implementation
Advocacy continues to advance agency compliance with the RFA and E.O. 13272 by coordinating with attorneys and economists
throughout the rulemaking process and identifying key areas of concern (See Chart 3.1 and Tables 3.1, 3.2, and 3.3).
Chart 3.1 Advocacy Comments by Key RFA Compliance Issue, FY 2007 (percent)
In FY 2007, the Office of Advocacy provided comments to several agencies on how to comply with the RFA. Chart 3.1 illustrates key
concerns raised by Advocacys comment letters and prepublication review of draft rules. The chart highlights areas for improved
compliance based on Advocacys analysis of its FY 2007 comment letters and other regulatory interventions summarized in this report
Table 3.1 Regulatory Comment Letters Filed by the Office of Advocacy, Fiscal
Year 2007*
*See Appendix F for definitions of agency appreviations. The complete text of Advocacys regulatory comments is available on Advocacys website,
 www. sba.gov/advo/laws/comments/.
Date
Agency
Comment Subject
10/03/06
FWS
Comment letter regarding the proposed designation of critical habitat for the
contiguous United States Distinct Population Segment of the Canada Lynx,
71 Fed. Reg. 5515 (October 3, 2006).
10/25/06
FCC
Comment letter addressing the Missoula Plan for Intercarrier Compensation
Reform in response to the FCCs proposed rule on developing a Unified
Intercarrier Compensation Regime, FCC Docket No. 01-92 (March 3,
2005).
11/02/06
CPSC
Comment letter addressing the standards for the flammability of mattress
sets, 71 Fed. Reg. 13472 (March 15, 2007).
11/02/06
OSHA
Comment letter on OSHAs advance notice of proposed rulemaking on
Hazard Communication, 71 Fed. Reg. 53617 (September 12, 2006).
11/08/06
EPA
Comment letter regarding the proposed multisector general permit (MSGP)
for industrial facilities, 71 Fed. Reg. 408 (July 18, 2006).
11/09/06
Access
Board
Comment letter regarding the Americans with Disabilities Act (ADA)
Accessibility Guidelines for Passenger Vehicles, Reopening of Comment
Period, 71 Fed. Reg. 53630 (September 12, 2006).
12/07/06
FCC
Comment letter regarding the Service and Auction Rules for the 700 MHz
Auction, WT Dkt. No. 06-150 (August 10, 2006).
02/05/07
FAA
Comment letter regarding the proposed rule on production and
airworthiness approvals, parts marking, and miscellaneous proposals, 71
Fed. Reg. 58914 (October 5, 2006).
02/07/07
DHS
Comment letter regarding the proposed chemical facility antiterrorism
standards rule, 71 Fed. Reg. 58276 (December 28, 2006).
02/08/07
DOL
Comment letter in response to DOLs request for information on the Family
and Medical Leave Act of 1993, 71 Fed. Reg. 69504 (December 1, 2006).
02/16/07
CMS
Comment letter regarding the Medicaid program, prescription drugs, 71
Fed. Reg. 77174 (December 22, 2006).
02/21/07
SEC
Comment letter regarding the proposed rule on the Managers Report on
Internal Control over Financial Reporting, 71 Fed. Reg. 77635 (December
27, 2006).
03/02/07
EPA
Request for an extension of the public comment period regarding NPDES
Permit Fee Incentive for Clean Water Act Section 106 Grants, 72 Fed. Reg.
293 (January 4, 2007).
03/23/07
IRS
Comment letter regarding the NPRM on tax classifications of cigars and
cigarettes, 71 Fed. Reg. 62500 (October 25, 2006).
03/26/07
FCC
Comment letter regarding the FCCs video programming access rules, 72
Fed. Reg. 9289 (March 1, 2007).
03/30/07
FAA
Comment letter on the initial regulatory flexibility analysis for the proposed
rule regarding aircraft production and airworthiness approvals, parts making
and miscellaneous proposals, 72 Fed. Reg. 6968 (February 14, 2007).
05/10/07
FCC
Comment letter requesting that the FCC open a rulemaking to examine the
relevant market data on copper retirement.
05/14/07
EPA
Comment letter evaluating the EPAs NPDES Permit Fee Incentive for
Clean Water Act Section 106 Grants; Allotment Formula proposal; Fed.
Reg. 293 (January 4, 2007).
05/21/07
GSA
Comment letter regarding the NPRM on contractor code of ethics and
business conduct, 72 Fed. Reg. 7588 (February 16, 2007).
05/21/07
FCC
Letter in response to the FCCs request for comment on the 700 MHz
auction rules (April 27, 2007).
05/25/07
GSA
Comment letter regarding the NPRM on the Representations and
CertificationsTax Delinquency regulation, 72 Fed. Reg. 15093 (March
30, 2007).
05/25/07
SEC
Letter regarding the SEC failure to provide small public companies with an
extension of the date for compliance with Section 404 of the Sarbanes-
Oxley Act (May 23, 2007).
06/27/07
SEC
Comment letter on a proposed rule amending FAST and DRS Limited
Requirements for Transfer Agents, 72 Fed. Reg. 30648 (June 1, 2007).
08/03/07
FWS
Comment letter regarding the revised critical habitat designation proposed for
five endangered and two threatened mussels in four Northeast of Mexico
drainages, 72 Fed. Reg. 34215 (June 21, 2007).
08/08/07
FCC
Response to the FCCs request for comment to refresh the record in the
Special Access Notice of Proposed Rulemaking, 72 Fed. Reg. 40814 (July
25, 2007).
08/13/07
FCC
Comment letter regarding the Verizon Telephone Companys petition for
forbearance under 47 USC 160(c) from Title II and Computer Inquiry
Rules with respect to their broadband services, WC Docket No. 04-440
(July 30, 2007).
08/23/07
SEC
Comment letter on a proposed revision of the Eligibility Requirements for
Primary Security Offerings on Forms S-3 and F-3, 72 Fed. Reg. 35117
(June 26, 2007).
09/11/07
SEC
Comment letter regarding the SECs Small Company Regulatory Reporting
Relief and Simplification, 72 Fed. Reg. 39669 (July 19, 2007).
09/13/07
CMS
Comment letter regarding the surety bond requirement for suppliers of
durable medical equipment, 72 Fed. Reg. 42001 (August 1, 2007).
09/18/07
DHS
Comment letter regarding the final safe harbor procedures for employers
who receive a no match letter, 72 Fed. Reg. 45611 (August 15, 2007).
Table 3.2 Regulatory Cost Savings, Fiscal Year 2007
Agency
Subject Description
Cost
Savings/Impact
Measures
CMS
Durable Medical Equipment Competitive Bidding.
Pursuant to provisions in the Medicare Prescription Drug
Improvement and Modernization Act of 2003, the Centers
for Medicare and Medicaid Services (CMS) promulgated
a regulation creating a competitive bidding program
covering certain Medicare Part B durable medical
equipment (DME). Although this rulemaking is still
expected to have a significant impact on small DME
suppliers, Advocacy's suggestions to CMS throughout the
regulatory process helped to assure small DME supplier
participation in the bidding process. Some of these
suggestions included helping CMS draft a size standard
modification letter to the Small Business Administration
pursuant to the Small Business Act which reduced the
small business size standard for the rulemaking from $6.5
million to $3.5 million. This modification helped to ensure
that the smallest suppliers will have a chance to participate
in the bidding program. Additionally, CMS reserved 30
percent of the available DME business for small
businesses. If the 30 percent target is not met, CMS will
offer contracts to small suppliers with submitted bids that
are above, but closest to, the pivotal bid until the target
number is reached.
Because of the breadth of
the industries affected,
Advocacy has not been
able to calculate cost
savings attributable to
changes helpful for small
entities.
CPSC
Standards for the Flammability (Open Flame) of
Mattress Sets. On March 15, 2006, the Consumer Product
Safety Commission (CPSC) published the Consumer
Standards for the Flammability (Open Flame) of
Mattresses final rule in the Federal Register with an
effective date of July 1, 2007. The new standards
established performance criteria to assure that mattresses
exposed to an open flame would generate a smaller fire
with a slower growth rate, thereby reducing the chances of
a flash fire. Advocacy filed comments on the regulation
alerting CPSC to the rules potential negative impact on
small mattress manufacturers. As a result of Advocacy's
comments and those filed by small mattress
manufacturing firms, the CPSC used alternatives to
remove the need for the manufacturers to keep a sample of
the mattresses on site after testing.
These changes reduced the
economic burden on the
industry and resulted in
cost savings totaling
$198,445.
Source: CPSC economic
analysis
DHS
Safe Harbor Procedures for Employers Who Receive a
No-match Letter. On August 15, 2007, the Department of
Homeland Security (DHS) and its Bureau of Immigration
and Customs Enforcement (ICE) published a final rule
that would have required employers who receive a no-
match letter from the Social Security Administration
indicating a discrepancy between an employees name and
social security number to take certain actions to resolve
those discrepancies. If the employer and employee were
unable to correct the discrepancy within a specified time,
the employer would have been obligated to terminate the
employee or be deemed to have constructive knowledge
that the employee may be an unauthorized alien. DHS
certified that the rule would not have a significant
economic impact on a substantial number of small entities.
Following promulgation of the final rule, labor, civil
liberties, and business groups challenged the rule in
federal district court, arguing, among other things, that
DHS failed to comply with the RFA because the agency
did not have a "factual basis" for its certification and,
moreover, that the certification was erroneous because the
rule would have a significant impact on a substantial
number of small entities. The Office of Advocacy sent a
letter to DHS agreeing with this claim and offering to
assist DHS in curing the RFA defect in the rule. On
October 10, 2007, the Federal District Court for the
Northern District of California issued a preliminary
injunction prohibiting DHS from including requirements
contained in the final rule with the no-match letters
from the Social Security Administration. The Court's
decision acknowledged that the plaintiffs had raised
serious legal questions and would suffer irreparable harm
if the rule went into effect.
No cost savings estimates
are available for this rule
EPA
Hydrochlorofluorocarbon (HCFC) 22. On March 28,
2007, EPA published a final rule setting a compliance date
of September 1, 2009, instead of the proposed January 1,
2008, for the marine sector to transition from HCFC-22
(an ozone-depleting substance that is a member of the
hydrochlorofluorocarbon family) to other substitutes. The
rule previously in effect had allowed for a transition
extending to January 1, 2010, but EPA proposed to
accelerate the timetable based on new information to
January 2008. Advocacy supported the extension of time
for the marine sector because of their particular hardships.
Other sectors are required to meet the January 1, 2008,
date except for the extruded polystyrene foam sector,
which has a January 1, 2010, date.
This change would result
in unquantified savings for
up to 3,000 boat builders
(nearly all small firms)
who were having
difficulty meeting the
compressed timetable.
EPA
Toxics Release Inventory (TRI). On December 18, 2006,
the Environmental Protection Agency (EPA) signed a
final rule to expand the number of Toxics Release
Inventory filings that may be reported to EPA using the
shorter Form A. The final rule provides needed relief to
small businesses while maintaining the integrity of the
TRI database. This major small business achievement
marks the end of a 15-year effort that started with a
petition filed by the Office of Advocacy with EPA in
August 1991. Advocacy also filed supportive comments
on the EPA proposal in February 2006. This rule provides
the first significant small business relief from toxics
release inventory reporting since 1994. For chemicals that
are not persistent, bioaccumulative, and toxic (non-PBT),
the rule allows businesses to use the simpler reporting
form if their releases are no more than 2,000 pounds of
waste as part of an overall waste management limit of
5,000 pounds. By imposing the 2,000-pound cap on
releases for non-PBT chemicals, EPA is encouraging
businesses to rely on preferred waste management
methods, such as recycling and treatment, rather than
disposal and other releases. The rule would also extend the
use of Form A to businesses that manage less than 500
pounds of PBT chemicals and have zero emissions or
discharges to the environment.
This final rule is expected
to save 123,000 hours per
year by EPAs estimate or
about $5.9 million annually.
Source: EPA
EPA
Spill Prevention Control and Countermeasure (SPCC)
Rule. On December 12, 2006, the Environmental
Protection Agency (EPA) promulgated changes to its Spill
Prevention, Control and Countermeasure program. The
SPCC program is designed to prevent spills of oil into
waterways and to contain spills after they occur. Facilities
subject to the program must develop spill prevention plans
designed to prevent and minimize such discharges. In July
2002, EPA amended the SPCC program requirements for
hundreds of thousands of small businesses, farms,
manufacturers, and electrical facilities. EPA subsequently
agreed to postpone the effective date of the amended rule
while the agency studied several suggested burden
reduction approaches for small facilities and other SPCC
facilities. Advocacy filed comments in June 2004 and
February 2006. In the final rule, EPA utilized Advocacys
recommendations for revisions in two distinct areas: small
facilities (under 10,000 gallons aggregate capacity for oil)
and oil-filled equipment.
The changes reduce the
annual regulatory and
paperwork burden on
small facilities by $128
million, while increasing
overall compliance with
the SPCC program and
focusing facilities on
measures that prevent oil
spills from reaching
waterways.
Source: EPA
EPA
Guidance in Lieu of Rules to Reduce Volatile Organic
Compound (VOC) Emissions from Five Industrial
Sectors. On October 5, 2006, the Environmental
Protection Agency (EPA) promulgated control techniques
guidelines (CTGs) for the control of volatile organic
compounds emissions from each of five product
categories in consumer and commercial products. These
CTGs will provide guidance to the states concerning
EPAs recommendations for reasonably available control
technology level controls for these product categories.
Advocacy submitted comments on September 5, 2006,
supporting EPAs proposal to issue control techniques
guidelines, rather than promulgating formal rules, and
agreed that the CTG approach will result in additional
VOC emission reductions over the rule approach. These
rules will affect thousands of facilities, primarily small
businesses. As a result of EPAs outreach to the small
business community, the final CTGs provide a balance
between environmental protection and regulatory
flexibility.
Although savings are
estimated to be in the tens
of millions of dollars, the
results cannot be verified
at this time. The Office of
Advocacy is continuing to
seek reliable industry
estimates.
EPA
Definition of Solid Waste. On March 26, 2007, EPA
issued a supplemental proposal to its 2003 proposal,
which would exclude certain types of recycling activities
involving hazardous secondary materials from the federal
hazardous waste regulations. By removing unnecessary
regulatory controls over certain recycling practices, EPA
expects to make it easier to recycle hazardous secondary
material safely. Exclusions are now proposed for the
following:
  Materials that are generated and reclaimed under the
con-
    trol of the generator;
  Materials that are generated and transferred to another
   person or company for reclamation under specific condi-
   tions; and
  Materials that EPA deems nonwaste through a case-by-
case
    petition process.
EPA estimates about 4,600 facilities handling over a half
million tons of hazardous secondary materials annually
may be affected by this proposed rule. At Advocacys
request EPA expanded its approach from the 2003
proposal. The industry sectors that could be most affected
are chemical manufacturing, coating and engraving,
semiconductor and electronics manufacturing,
pharmaceutical manufacturing, and the industrial waste
management industry.
Annual cost savings of
$107 million are estimated
for the affected firms.
Source: EPA
.
EPA
Area Source Standard for Gasoline Distribution. On
November 9, 2006, the U.S. Environmental Protection
Agency (EPA) published a proposed Clean Air Act rule
that would require new emission controls for bulk gasoline
terminals, pipeline facilities, bulk gasoline plants, and
potentially gasoline stations. The proposal would reduce
hazardous air pollutants by requiring these sources to
install floating roofs and seals, or by improving work
practices such as leak detection and repair programs.
Advocacy recommended that EPA consult with several
affected small business representatives early in the
planning process. Based on comments and data received
from these parties, EPA proposed a less costly regulatory
approach than the agencys earlier preferred alternative of
vapor balancing of gasoline cargo tanks with bulk storage
tanks.
In total, the proposed rule
represents a one-time cost
savings of $117.2 million.
Source: EPA
EPA
Halogenated Solvent Cleaning Residual Risk Standard.
On May 3, 2007, EPA issued a final rule to revise emission
limits for facilities that use halogenated solvents such as
methylene chloride, trichloroethylene, and
percholorethylene to clean metal parts. The rule places new
restrictions on the amounts of solvent that can be used in
cleaning operations. Advocacy worked with a subgroup of
companies that use these solvents to clean metal tubes that
are long and that have extremely narrow diameters. These
specialty applications require cleaning with larger quantities
of solvent and are not suited to the emission control
techniques EPA has required for standard cleaning
operations. Based on feedback from Advocacy and small
businesses, EPA determined that the required emission
controls are not technically feasible for narrow-tube
operations.
EPAs decision to exempt
these operations from the
standard resulted in one-
time cost savings of $50
million.
Source: Halogenated
Solvents Industry
Association
EPA
Control of Emissions from Nonroad Spark-ignition
Engines and Equipment. On May 18, 2007, EPA
proposed a rule to control air pollution from gasoline-
powered engines and equipment below 50 horsepower.
These engines and equipment are primarily used in lawn
and garden applications and in the marine industry. The
proposed rule would affect many small manufacturers and
would require catalyst-based emission controls on some
engines, as well as evaporative emission controls for
boats. Because of concerns about the economic impacts of
the rule on small businesses and the technical feasibility of
proposed emission controls, EPA convened a Small
Business Regulatory Enforcement Fairness Act
(SBREFA) panel on August 17, 2006. Twenty-seven
small entity representatives (SERs) participated in the
panel and provided technical data to EPA about the
potential impacts of the rule, along with OMBs Office of
Information and Regulatory Affairs and the Office of
Advocacy. Based on recommendations from the panel,
EPA proposed granting small businesses extended
compliance deadlines, streamlined testing and certification
requirements, and hardship exemptions for small
businesses unable to comply by the deadline.
$36.4 million in first-year
cost savings and $5.6
million in recurring annual
cost savings.
Source: EPA
EPA
Pollution Control Standards for Iron and Steel
Foundries. On September 17, 2007, EPA published a
proposed rule establishing new air pollution control
standards for iron and steel foundries under the Clean Air
Act. The proposal would require foundries above a
specified melting capacity to install pollution control
equipment. Because of information received from small
business stakeholders, the Office of Advocacy persuaded
EPA to co-propose a higher melting capacity threshold
that would allow small foundries to operate without
installing new controls.
One-time cost savings
from this co-proposal are
an estimated $13.9
million, with an estimated
$2.8 million saved in
recurring operating and
maintenance costs.
Source: EPA
EPA
Clean Air Act, Particulate Matter National Ambient
Air Quality Standards. On September 21, 2006, EPA
revised the national standards for particulate matter (PM).
EPA lowered the daily standard for fine particles smaller
than 2.5 microns, but left the standards for coarse particles
(2.5 - 10 microns) unchanged. In addition, EPA indicated
that farming operations in rural areas could satisfy coarse
PM requirements by meeting state-based best management
practices (BMPs), rather than more stringent requirements.
Advocacy worked with the U.S. Department of
Agriculture and agricultural trade associations to support
EPAs flexible interpretation of farming requirements.
Cost savings for small
farms and other
agricultural operations are
estimated at $1 million in
the first year and ongoing.
Source: Industry
estimates.
EPA
Permit Fee Incentive for Clean Water Act Grant
Allotments.  On January 4, 2007, EPA proposed revisions
to the Clean Water Act, Section 106, grant allocation
formula to create a new incentive for states to fund
National Pollutant Discharge Elimination System
(NPDES) programs through fees paid by dischargers.
Many states currently do not require all dischargers,
including small entities, to pay the full costs of their
permitting programs through permit fees. Numerous state,
local, and small business organizations expressed
concerns that the proposed revision would result in
substantial permit fee increases and/or the loss of grant
monies, and that EPA had not adequately considered the
potential impact on states and small entities. On March 2,
2007, Advocacy requested that EPA extend the comment
period on the proposal for an additional 60 days, so that
small entities could gather more detailed information
about potential impacts. EPA extended the comment
period for 60 days, and on May 14, 2007, Advocacy
submitted a technical memorandum evaluating the
potential impacts on small entities. The technical
memorandum concluded that the rule was likely to have
an impact on states and small entities. Based on the
comments of Advocacy and small business
representatives, EPA has delayed finalizing the rule until
the late FY 2008 budget cycle.
The delayed
implementation of the rule
represents one-time cost
savings to small entities in
affected states of at least
$5.65 million.
Source: American Public
Power Association
FAA
National Air Tour Safety Standards (NATSS). On
October 22, 2003, the FAA published a proposed rule that
would establish new safety standards for commercial air
tour operators. The rule as proposed would eliminate
existing exceptions for commercial air tours conducted
under Title 14, Part 91 (small sightseeing operators) of the
Code of Federal Regulations. Part 91 exempts certain
nonstop sightseeing flight operators who use the same
airport for takeoff and landing and fly within a 25-mile
radius, from required Part 119 certification. The proposed
rule would have required all air tour operators to obtain
Part 119 certification. Advocacy worked closely with
affected small entities and trade associations to identify
the economic impacts of the proposed regulation. In April
2004, Advocacy submitted a public comment letter to the
agency expressing concern that many small air tour
operators would be unduly burdened by the cost of
obtaining Part 119 certification and would ultimately be
forced out of the market. The FAA published the NATSS
final rule on February 13, 2007, and made significant
changes to the final rule. The Part 91 exceptions are
maintained and operators must obtain a letter of
authorization (LOA) from the FAA instead of obtaining a
new certification.
FAAs decision to keep
the Part 91 exception and
eliminate some additional
provisions contained in the
proposed rule resulted in
$127.3 million in cost
savings.
Source: FAA
FCC
Customer Proprietary Network Information (CPNI).
On March 13, 2007, the FCC adopted its order and
released a further notice of proposed rulemaking to
strengthen the technology used by carriers to protect
confidential customer data. The order requires companies
to install specialized equipment to update their networks
to protect this information. Because of information
received from small business stakeholders, Advocacy filed
comments to persuade the FCC to provide the smallest
Voice over Internet Protocol (VoIP) providers with a six-
month extension to comply with this rule.
The estimated one-time
cost savings for this
extension are $6.2 million.
Source: Industry estimates
FCC
Implementation of the Cable Television Consumer
Protection and Competition Act of 1992, Development
of Competition and Diversity in Video Programming
Distribution: Section 628 (c)(5) of the Communications
Act: Sunset of Exclusive Contract Prohibition. Section
628(c)(2)(D) of the Communications Act of 1934, as
amended, generally prohibits exclusive contracts for
satellite cable programming or satellite broadcasting
between vertically integrated programmers and cable
operators. Small providers rely on this ban to prevent large
cable operators from blocking premium video
programming from them and negatively affecting their
ability to compete in the market. To express the concerns
of small entities, Advocacy sent a public comment letter to
the FCC on March 26, 2007. On September 11, 2007, the
FCC adopted its Report and Order and Notice of Proposed
Rulemaking (FCC 07-169; MB Docket No. 07-29; MB
Docket No. 07-198), which extended the ban on exclusive
contracts for five more years.
The savings to small
providers have not yet
been quantified.
FDA
Dietary Supplement Current Good Manufacturing
Practices. The Food and Drug Administration (FDA)
promulgated a rule requiring current good manufacturing
practice (CGMP) for dietary supplements. Advocacy has
been involved in the rulemaking since 1997 in an effort to
ensure that small dietary supplement manufacturers were
not unduly affected by the regulation. In summary,
Advocacys involvement helped to reduce testing
requirements under certain circumstances for small
businesses; more important, the rule includes a 36-month
delay for establishments with fewer than 20 employees
and a 24-month delay for establishments with more than
20 employees and fewer than 500.
These actions resulted in a
total of $364.6 million in
cost savings.
Source: FDA
FWS
Canada Lynx Critical Habitat Designation. In
November 2006, the U.S. Fish and Wildlife Service
(FWS) published a final critical habitat designation of
1,841 square miles on federal lands for the Canada lynx.
FWS originally proposed to designate 18,031 square miles
in February 2006. Responding to comments by Advocacy
and other small business entities, FWS excluded 16,190
square miles (more than 10 million acres) of private land
in Idaho, Maine, Minnesota, Montana, and Washington
because of biological studies, existing lynx management
programs, and economic factors.
FWSs exclusion of these
high-cost areas resulted in
$919 million in cost
savings.
Source: FWS
FWS
Alabama Beach Mouse Critical Habitat Designation.
On January 30, 2007, the U.S. Fish and Wildlife Service
(FWS) published a final critical habitat designation of
1,211 acres of coastal habitat in Baldwin County,
Alabama. Responding to comments by Advocacy and
small business entities, FWS excluded two developments
from the designation, Beach Club West and Gulf
Highlands.
FWSs exclusion of the
high-cost areas will save
$31.6 million in costs.
Source: FWS
FWS
Spikedace and Loach Minnow Critical Habitat
Designation. On March 2007, the U.S. Fish and Wildlife
Service (FWS) published a final critical habitat
designation of 522.2 river miles in New Mexico and
Arizona. Responding to comments by Advocacy and small
business entities, FWS excluded private lands in the lower
portion of the Verde River from the final critical habitat
designation because of economic factors.
FWSs exclusion of the
high-cost areas saved
$46.9 million in costs.
Source: FWS
HHS
Medicare Program; Reporting Hospital Quality Data
for FY 2008 Inpatient Prospective Payments System
Annual Payment Update Program - HCAHPS Survey).
On November 24, 2006, CMS published a rule that would
require hospitals to submit a survey to their patients in an
effort to assist patients in selecting hospitals that deliver
high-quality care. The effective date of the rule is January
1, 2007. Advocacy filed a public comment letter with
CMS on January 18, 2005, suggesting that the survey
requirement would prove onerous to hospitals (especially
rural ones) because it would increase their costs and
paperwork burden. Hospital representatives were
concerned that they would have to make substantial
changes to the survey most hospitals already used to
measure patient satisfaction and that patients would be
disinclined to return a substantially longer survey after
their discharge. As a result of Advocacys involvement
and that of industry, CMS reduced the number of survey
questions from 66 to 27, reduced the number of calls
required to complete the survey from 10 to 5, reduced the
number of mailings from 3 to 2, and, most important for
small hospitals, reduced the number of completed
questionnaires requirement from 300 to 100. CMS agreed
to offer training to hospitals and provided software on the
survey free of cost to hospitals.
These changes led to an
estimated $11.6 million in
first-year and recurring
cost savings to small
hospitals.
Source: CMS
HHS
Medicare and Medicaid Programs; Hospital
Conditions of Participation: Patients Rights. The rule,
which stemmed from CMS patient rights initiatives,
required all inpatient psychiatric hospitals to have a
physician or other licensed independent practitioner
evaluate a patient face-to-face within one hour after the
patient had been placed in restraints or seclusion. In July
1999, per a request by Congressman Saxby Chambliss,
Advocacy submitted comments to HHS on the interim
final rule that dealt with Medicare conditions of
participation, including standards for the use of patient
restraints in hospitals. Representative Chambliss
specifically requested Advocacys opinion whether the
agency had complied with the RFA in issuing the hospital
restraint rule. Advocacy concluded that the one-hour
restriction on the use of restraints could be burdensome
for rural hospitals in particular. HHS had not specifically
discussed the one-hour standard in the proposed rule and
did not analyze the impact of the one-hour evaluation
provision in the interim final rule. On the same date that
Advocacy sent its comments to Representative Chambliss,
a court decision was rendered (see National Association of
Psychiatric Health Systems v. Shalala, No. Civ. A. 99-
2025 GK, 2000 WL 1677210, D.D.C. Sept.14, 2000), that
essentially upheld the hospital restraint rule, but remanded
the rule to the agency and directed HHS to complete a
final regulatory flexibility analysis. The final rule was
published in the Federal Register on December 11, 2006,
with an effective date of January 8, 2007. Changes
included a revision to expand the type of practitioners
permitted to conduct the one-hour face-to-face evaluation
and changes to the training and staffing requirements.
Cost savings were generated from both changes made to
the rule and the delay in implementation (the interim final
effective date was March 23, 2001, but the rule was
stayed).
In the absence of
estimates, Advocacy is
using the upper range of
an estimate of the costs in
the comments to the rule
as a proxy for cost savings
in the amount of $750,000.
Source: HHS
PHMSA
Hazardous Materials: Transportation of Lithium
Batteries. On April 2, 2002, the Department of
Transportation, Pipeline and Hazardous Materials Safety
Administration (PHMSA) issued a proposed rule
regulating the transportation of lithium batteries. The
proposal required producers and transporters of lithium
batteries to adhere to more stringent packaging and testing
requirements. PHMSA certified the proposed rule, and
small entities affected by the proposal raised concerns
about the potential economic impact of the rule to
Advocacy. In August 2003, OMB and Advocacy
recommended that the agency either complete an IRFA or
provide a statement of factual basis for the certification
contained in the rule. In June 2005 PHMSA published an
IRFA for the proposed rule in the Federal Register which
addressed many of Advocacys concerns. On August 9,
2007, PHMSA issued the final rule on transportation of
lithium batteries. The FRFA considered eight possible
alternatives and adopted four, including exceptions for
small lithium batteries and for small production runs of
lithium batteries. Additionally, the agency provided for a
two-year implementation period.
The revisions adopted in
the final rule resulted in a
cost savings of $13.2
million.
Source: PHMSA
PTO
Changes to Practice for Continued Examination
Filings, Patent Applications Containing Patentably
Indistinct Claims, and Examination of Claims in
Patent Applications. On January 3, 2006, the U.S. Patent
and Trademark Office (PTO) published two proposed
rules that would reform the patent application and
prosecution process. The rule would restrict the number of
allowable representative claims in a patent application and
limited the number of continuation applications to one.
PTO certified that both rules would not have a significant
economic impact on a substantial number of small entities.
In April 2006, Advocacy submitted a public comment
letter to PTO on the proposed rules, advised the agency of
the potential impact of the rules on small entities, and
urged the completion of an IRFA. In response to
Advocacys comments, the agency performed an analysis
of the impacts of the proposed rules on small entities. On
August 21, 2007, the PTO issued a final rule that
combined both rules into a single rule package. In the final
rule, the agency considered Advocacys recommendations
and made some revisions to reduce the potential impacts
on small entities.
A full estimate of the
savings to small business
has not yet been assessed,
as most provisions remain
unquantifiable.
SEC
Management Guidance for Periodic Reports. As
required by the Sarbanes-Oxley Act of 2002, the
Securities and Exchange Commission (SEC) published
final rules on June 18, 2003, requiring businesses that
raise funds from public investors to report on internal
controls and audit procedures. Advocacy urged the SEC to
establish management guidance on the process of
evaluating internal controls for small public companies
that would focus on risks and clarify ambiguous terms. On
June 27, 2007, the SEC published a final rule adopting
management guidance and amendments to facilitate more
effective and efficient evaluations over internal controls
reporting. The SEC cited an estimate based on survey data
of 10 percent cost savings as a result of the management
guidance in the first year of implementation.
These changes represent
$561 million in cost
savings in the first year of
implementation.
Source: SEC
State
Exchange Visitor Program (J-1 Visa Program). On
June 19, 2007, the U.S. Department of State (State)
published an interim final rule on its Exchange Visitor
Program for Trainees and Interns. The initial proposed
rule would have imposed new requirements on designated
program sponsors in the J-1 visa program before they
could accept a participant into their program. The
proposed rule included special provisions related to
aviation flight training schools that would limit the ratio of
on-the-job training to classroom study and reduce the
maximum duration of the training program from 24 to 18
months. The provisions would have had a particularly
damaging effect on aviation flight schools, although State
certified that the rule would have no significant impact
under the RFA. After extensive outreach to the aviation
flight schools that operate under the J-1 visa program,
Advocacy submitted public comments on the proposed
rule stating that the agencys RFA certification was
improper because it failed to include a factual basis, and
recommended that State re-evaluate the costs and impacts
of the proposed rule on aviation flight schools. The nine
designated J-1 aviation flight schools said they would lose
all or most of their foreign students if the rule were
finalized as proposed. The final rule exempted the aviation
flight schools and left current rules governing them in
place.
First-year cost savings
total $22.2 million, and
annual ongoing cost
savings are $22.2 million.
Source: Affected flight
schools
USAID
Mentor-Protg Rule. On November 26, 2006, the U.S.
Agency for International Development (USAID) issued a
proposed regulation to amend its acquisition regulations to
encourage prime contractors to assist small disadvantaged
firms in enhancing their contract and subcontract
performance for federal agencies. The final regulation,
published on June 13, 2007, was modified to incorporate
the joint concerns expressed by SBA and the Office of
Advocacy. As a result, USAIDs rule will operate more
smoothly in conjunction with SBAs responsibilities in the
federal contracting arena.
The savings to small
businesses have not yet
been quantified.
Table 3.3 Summary of Cost Savings,
FY 2007 (Dollars)1
Rule/Intervention
First-
Year
Costs
 Annual
Costs
Durable Medical Equipment Competitive Bidding (CMS)2
Mattress Flammability Standards (CPSC)3
     198,445
Safe Harbor Procedures for Employees with a No-match Letter (DHS)2
HCFC 22 Final (EPA)2
Toxics Release Inventory Final Rule (EPA)4
5,900,000
5,900,000
SPCC Final (EPA)4
128,000,000
128,000,000
Volatile Organic Compound Emissions (EPA)2
Definition of Solid Waste (EPA)4
107,000,000
107,000,000
Area Source Standards for Gasoline Distribution (EPA)4
  117,200,000
Halogenated Solvent Cleaning Residual Risk Standard (EPA)5
  50,000,000
Control of Emissions from Nonroad Spark-ignition Engines and
    Equipment (EPA)4
     36,400,000
5,600,000
Clean Air Act, Pollution Controls, Iron and Steel Foundries (EPA)4
     13,900,000
2,800,000
Clean Air Act, Particulate Matter (EPA)12
   1,000,000
1,000,000
Permit Fee Incentive for Clean Water Act Grant Allotments (EPA)12
    5,650,000
National Air Tour Safety Standards (FAA)7
127,300,000
Customer Proprietary Network Information (CPNI) (FCC)8
6,176,000
Cable Television Consumer Protection and Competition Act (FCC)2
Dietary Supplement Rule (FDA)9
364,552,000
Canada Lynx Critical Habitat (FWS)10
919,000,000
Alabama Beach Mouse Critical Habitat Designation (FWS)10
31,600,000
Spikedace and Loach Minnow Critical Habitat Designation (FWS)10
46,900,000
HCAHPS Survey (HHS)11
11,600,000
11,600,000
One-Hour Rule (HHS)12
750,000
750,000
Lithium-ion Battery Rule (PHMSA)13
13,200,000
Patent Applications Containing Patentably Indistinct Claims (PTO)2
Management Guidance for Periodic Reports (SEC)14
561,000,000
Exchange Visitor Program (J-1 Visa Program) (State)15
22,215,250
22,215,250
USAID Mentor-protg Program2
TOTAL
  2,569,541,695
  284,865,250
 1  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 Advocacys intervention. Where
possible, the Office of Advocacy limits the savings 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 rules first year of
implementation. Recurring annual cost savings are listed where applicable.
 2   No estimates are available.
 3   Source: Consumer Product Safety Commission (CPSC) economic analysis.
 4   Source: Environmental Protection Agency (EPA).
 5  Source: Halogenated Solvents Industry Association.
 6   Source: American Public Power Association.
 7   Source: Federal Aviation Administration (FAA).
 8   Source: Industry comments.
 9   Source: Food and Drug Administration (FDA).
10  Source: Fish and Wildlife Service (FWS).
11  Source: U.S. Department of Health and Human Services (HHS).
12  Source: Industry estimate.
13  Source: Pipeline and Hazardous Materials Safety Administration (PHMSA).
14  Source: Securities and Exchange Commission (SEC)
15  Source: Affected flight schools.
4.  Advocacy Review of Agency RFA Compliance in Fiscal Year 2007
Since the enactment of the Regulatory Flexibility Act in 1980, the Office of Advocacy has been an independent voice for small business
in policy deliberations, working with agencies to examine how their regulatory proposals will affect small entities. In fiscal year 2007
(October 2006 through September 2007), the Office of Advocacy:
Held 14 Regulatory Flexibility Act training sessions with federal agencies, state officials, congressional staff, and small business
stakeholder organizations,
Reviewed 469 regulations to assess RFA compliance,
Convened 29 roundtables to solicit the opinions, views, priorities, and comments of small entity stakeholders on regulatory proposals,
Presented testimony or positions on pending legislation before Congress six times, and
Submitted 30 public comment letters to federal agencies on regulatory proposals.
The sum total of Advocacys involvement in the regulatory process is not easily calculated. However, this chapters count of
Advocacys public activities and descriptions of the offices involvement should provide an accurate account of how Advocacy worked
to achieve cost savings for small entities in FY 2007 and helped agencies comply with the RFA and E.O. 13272.
Department of Agriculture
E.O. 13272 Compliance
The U.S. Department of Agriculture (USDA) has made its policies for considering small entity impacts when promulgating
regulations publicly available; they are sometimes, but not always in full compliance with section 3(b) of the executive order. 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).
    Generally, the agencies submit draft regulations to Advocacys email notification system as well as to the advocate responsible
for reviewing its rules. On a few occasions, the Office of Management and Budgets Office of Information and Regulatory Affairs
(OIRA) personnel have notified Advocacy of draft regulations that were not submitted to Advocacy by APHIS.
    Advocacy continues to work with APHIS on its RFA compliance. The agency completes initial regulatory flexibility analyses
(IRFAs) and certifications for most of its rules; however, the quality of the IRFAs and certifications varies. In addition to submitting
draft proposals to Advocacy for review, APHIS regularly invites Advocacy to interagency briefings to discuss draft rules. In FY 2007,
the agency sought Advocacys assistance on regulatory issues prior to developing a proposed rule. APHIS did not publish a final rule
that was the subject of an Advocacy comment in FY 2007; thus, the agencys compliance with section 3(c) cannot be determined at
this time.
    Advocacy maintains an active interagency exchange with GIPSA. Advocacy did not file any formal written comments on GIPSA
rules in FY 2007; therefore GIPSA compliance with section 3(c) of the executive order cannot be assessed at this time.
Department of Commerce
E.O. 13272 Compliance
The Department of Commerce (DOC) continues to comply with the requirements of E.O. 13272. Its RFA policies are publicly available
in compliance with section 3(a) of E.O. 13272, and DOCs agencies notify Advocacy of draft rules as required by section 3(b) of E.O.
13272. For example, the National Marine Fisheries Service (NMFS) routinely submits draft proposed and final rules to the Office of
Advocacy. Similarly, in the last year, the United States Patent and Trademark Office (PTO) submitted draft rules to Advocacy in
compliance with the requirements of section 3(b) of E.O. 13272. The agency also complied with section 3(c) of E.O. 13272. In FY 2007,
the PTO published one final rule on which Advocacy had comments, and PTO responded to Advocacys comments in the final rule. As
one of the agencies involved in Advocacys RFA training pilot program, NMFS was one of the first agencies to receive RFA training
from the Office of Advocacy.
Patent and Trademark Office
Issue: Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims,
and Examination of Claims in Patent Applications. On January 3, 2006, the PTO published two proposed rules that would reform
the patent application and prosecution process. The proposed rules restricted the number of allowable representative claims for initial
review in a patent application to 10, unless accompanied by an examination support document (ESD). Further, the proposals reduced
the number of permissible continuation applications to one. Previously, applicants could complete an unlimited number of
continuation applications. The PTO certified that neither rule would have a significant economic impact on a substantial number of
small entities. In March 2006, Advocacy hosted a roundtable attended by patent attorneys, trade association representatives and PTO
personnel to discuss the two proposed rules. In April 2006, Advocacy submitted a public comment letter to the PTO advising the
agency of the potential impact of the rules on small entities. Advocacy also urged the PTO to complete an initial regulatory flexibility
analysis. In response to Advocacys comments, the agency performed an analysis of the impacts of the proposed rules on small
entities. After completing the analysis, PTO officials briefed Advocacy on the conclusions and shared the document with the office for
review and comment.
    On August 21, 2007, the PTO published a final rule in the Federal Register that combined the two proposals into a single rule
package. In the final rule, the PTO considered Advocacys comments and revised its initial proposals. The agency increased its
threshold for allowable claims to a total of 25, before requiring an ESD. Additionally, the final rule permits applicants to file up to
three continuation applications. The agencys decision to modify certain provisions in the proposed rule will result in significant, but
unquantifiable, cost savings for affected small entities.
Department of Defense
E.O. 13272 Compliance
The Federal Acquisition Regulation Council (FAR Council) promulgates procurement regulations that are government-wide and affect
small businesses. The FAR Council statutorily includes representation from the Department of Defense (DOD), the General Services
Administration (GSA), and the National Aeronautics and Space Administration (NASA). The DOD regulations, called the Defense
Federal Acquisition Regulation Supplement (DFARS), are specific to DOD and can only supplement the FAR Council regulations.
However, because the FAR Council and DOD regulatory processes are interrelated, DODs procedures comply with section 3(a) of
E.O. 13272. DOD submits prepublication rulemakings for Advocacy consideration in compliance with section 3(b) of E.O. 13272.
DOD did not publish any final rules in FY 2007 that were the subject of any written Advocacy comments; therefore, DOD compliance
with section 3(c) cannot be assessed. DODs staff received RFA training in FY 2005.
    Advocacy worked closely with OIRAs Defense regulatory team, providing significant interagency input on several regulations in
fiscal year 2007.
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 Advocacys 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
2007 that were the subject of any of Advocacys comments; therefore, Educations compliance with section 3(c) cannot be assessed.
Department of Energy
E.O. 13272 Compliance
The Department of Energy (DOE) continues to comply with section 3(a) of E.O. 13272 by maintaining its policies and procedures
concerning the Regulatory Flexibility Act on its website. In FY 2007, all of DOEs draft rules that were sent to the Office of
Management and Budget (OMB) for review were also sent to Advocacy, in compliance with section 3(b) of E.O. 13272. DOE did not
publish any final rules in FY 2007 that were the subject of Advocacys comments. Therefore, DOEs compliance with section 3(c) of
E.O. 13272 cannot be assessed.
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 the executive order. 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 2007.
    Two CMS rules that Advocacy commented on were made final in FY 2007. CMS was compliant with section 3(c) of the
executive order as it addressed Advocacys comments in the respective final regulatory flexibility analyses (FRFAs). None of the
FDAs rules that were the subject of Advocacys comments were made final in FY 2007, so Advocacy cannot comment on FDAs
compliance with section 3(c) of E.O. 13272. Advocacy will continue to work with HHS to improve its compliance with the executive
order.
Centers for Medicare and Medicaid Services
Issue: Medicaid Program; Prescription Drugs (Proposed Rule: 71 Fed. Reg. 77174, December 22, 2006; Final Rule: 72 Fed.
Reg. 39142, July 17, 2007). In December 2006, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule in
the Federal Register to codify requirements for drug manufacturers calculation and reporting of average manufacturer price (AMP)
under the Medicaid Drug Rebate Program, and revisions to existing regulations that set upper payment limits for certain covered
outpatient drugs. Pursuant to the Regulatory Flexibility Act, CMS correctly prepared an initial regulatory flexibility analysis (IRFA)
and readily acknowledged that the rule would have a significant impact on approximately 18,000 small retail pharmacies. CMS
admitted that the rule would result in payments to pharmacies and would likely reduce pharmacy revenues by about $800 million in
2007, and $2 billion annually by 2011. Advocacy filed comments outlining several concerns with the rules requirements believed
likely to have a negative impact on small independent pharmacies. As a result of Advocacys comments and those made by industry,
CMS chose to redefine the term of art, retail class of trade, in the definition of AMP by excluding sales to pharmacy benefit
managers and nursing home pharmacies. CMS hopes this redefinition will reduce the economic burden on small independent
pharmacies. The final rule was published July 17, 2007.
Issue: Medicare Program; Competitive Acquisition for Certain Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS) and Other Issues (72 Fed. Reg. 17992, August 10, 2007). On August 10, 2007, the Centers for Medicare and
Medicaid Services (CMS) published a proposed rule in the Federal Register titled Medicare Program; Competitive Acquisition for
Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Other Issues. The rule established and
implemented competitive bidding programs for certain Medicare-covered durable medical equipment. Advocacy was alerted by
concerned small DMEPOS suppliers that the regulation would have a significant negative economic impact on their industry.
Advocacy filed comments on the regulation in support of the CMS plan to create an alternative size standard that would allow more
small durable medical equipment (DME) suppliers to participate in the competitive bidding program. Advocacy also noted that CMS
had not analyzed how the rule would affect the small DME suppliers in the proposed rule. As a result, CMS included a final regulatory
impact analysis in the final rule, published August 10, 2007. Alternatives for the rule were 1) a requirement of CMS to ensure that 30
percent of the winning bids would be earmarked for small DME suppliers, 2) allowing small suppliers to network to make it easier for
them to win bids for supplying DME, and 3) permission for CMS to reduce the SBA size standard from $6.5 million to $3.5 million in
annual revenues to ensure that more small suppliers would be eligible to participate in the competitive bidding program.
Issue: Medicaid Program; Surety Bond Requirement for Suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS) (72 Fed. Reg. 42001, August 1, 2007). On August 1, 2007, the Centers for Medicare and Medicaid Services
published a proposed rule in the Federal Register titled Medicare Program; Surety Bond Requirement for Suppliers of Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies. The rule requires that any durable medical equipment supplier must furnish
CMS with a $65,000 surety bond. CMS noted in the rule that the public policy behind the regulation was to limit the Medicare
programs risk from fraudulent DME suppliers. On September 13, 2007, the Office of Advocacy filed a comment letter with CMS
after representatives from small DME suppliers approached Advocacy concerned that CMS had not adequately analyzed the
regulations economic impacts on their businesses. In its comment letter, Advocacy suggested that CMS do a better job analyzing the
rules economic impacts on DME suppliers pursuant to the RFAs requirements. Advocacy also provided CMS data and alternatives
suggested by many small DME suppliers. Advocacy hoped that the information would serve to reduce the rules burden on DME
suppliers. No information is available on the expected date of publication of the final rule
Department of Homeland Security
E.O. 13272 Compliance
The Department of Homeland Security (DHS) has made progress in complying with E.O. 13272. DHS has posted its RFA policy on
its website, as required by section 3(a) of E.O. 13272. The Transportation Security Administration (TSA) and the United States Coast
Guard were trained in RFA compliance in FY 2005. DHS did not submit all draft rules to Advocacy in FY 2007, as required by
section 3(b). DHS published one final rule in FY 2007 that was the subject of Advocacy comments, and addressed Advocacys
concerns in the final rule; therefore DHS has complied with section 3(c) of E.O. 13272.
Issue: DHS Final Chemical Facility Anti-Terrorism Standards Rule. DHS issued an interim final rule that requires chemical
facilities meeting a certain risk profile to complete an initial risk assessment screening through a secure DHS website. DHS will use
this information to determine whether the facility presents a high security risk. If it does, the facility must prepare and submit to DHS
a vulnerability assessment and site security plan. DHS will evaluate these submissions for compliance with certain risk-based
performance standards and conduct an inspection and audit of the facility.
    DHSs interim final rule implements section 550 of the Homeland Security Appropriations Act of 2007, which required DHS to
issue interim final regulations within six months of its passage. Advocacy submitted a comment letter to DHS recommending that the
agency prepare a formal regulatory flexibility analysis after publication of the interim final rule. Advocacy understands that Congress
authorized DHS to proceed without traditional notice and comment rulemaking, but believes the agency should prepare an IRFA if it
makes any subsequent revisions of the rule.
    DHS responded to Advocacys comment in the final rule, but declined to prepare a post-promulgation IRFA. The agency cited the
congressional instruction to issue an interim final rule as justification to bypass the traditional notice and comment rulemaking
process.
Issue: DHS Final Safe Harbor Procedures for Employers Who Receive a No-match Letter Rule. The Immigration Reform and
Control Act of 1986 (IRCA) makes it illegal for an employer to knowingly hire or continue to employ a person not authorized to work
in the United States. Under the final rule, employers who receive a no-match letter from the Social Security Administration (SSA)
indicating a discrepancy between an employees name and social security number would have to take certain actions to resolve those
discrepancies. If the employer and employee are unable to correct the discrepancy within a specified timeframe, the employer would
be obligated to terminate the employee or be deemed to have constructive knowledge that the employee may be an unauthorized
alien, which could lead to civil and criminal penalties.
    Advocacy did not submit formal comments to DHS during the comment period. Following issuance of the final rule, several labor
and civil rights groups filed a lawsuit against DHS claiming that the SSA database was unreliable as an immigration enforcement tool.
Several business groups intervened in the case, charging that DHS also failed to analyze the impact of the rule on small businesses in
accordance with the Regulatory Flexibility Act. In response to a request for assistance from these business groups, Advocacy sent a
letter to DHS supporting the RFA claim and offering to assist DHS in satisfying their requirements under the RFA.
    On October 10, 2007, a federal district court granted a preliminary injunction barring DHS from implementing the rule pending
further order. Further action is pending.
Department of Housing and Urban Development
E.O. 13272 Compliance
The Department of Housing and Urban Development (HUD) has made its policies and procedures available to the public in
compliance with section 3(a) of E.O. 13272. HUD has 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. HUD did not publish any
final rules in FY 2007 that were the subject of any Advocacy public comments; therefore, HUDs compliance with section 3(c) of
E.O. 13272 cannot be assessed.
Department of the Interior
E.O. 13272 Compliance
The Department of the Interior (DOI) has made the departmental manual listing the requirements and guidance to promote RFA
compliance publicly available in compliance with section 3(a) of E.O. 13272. As required by section 3(b), the National Park Service
(NPS) has continued to notify Advocacy of rules that it has determined could have a significant economic impact on a substantial
number of small entities. NPS did not submit any final rules in FY 2007 that were the subject of any of Advocacys comments;
therefore, NPSs compliance with section 3(c) of E.O. 13272 cannot be assessed.
    The U.S. Fish and Wildlife Service (FWS) does not notify Advocacy of any 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. FWS fails to prepare an IRFA or a
certification at the time of proposal, as required by the RFA. Advocacy believes that these delays in completing the necessary RFA
analysis hinder the ability of affected small entities to provide meaningful comment on the proposals impacts. 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 rulemaking process. FWS has not been
completing IRFAs or FRFAs for its critical habitat designations. FWS submitted two final rules in FY 2007 that were the subject of
Advocacy comments, and complied with section 3(c) of E.O. 13272 by responding directly to the comments.
U.S. Fish and Wildlife Service
Issue: Designation of Critical Habitat for the Spikedace and Loach Minnow. On December 20, 2005, FWS proposed to designate
633 stream miles of land in Arizona and New Mexico as critical habitat for the spikedace and loach minnow. FWS certified that the
proposed rule would not have a significant economic impact on a substantial number of small entities. On July 6, 2006, Advocacy
submitted a public comment letter to FWS, recommending revisiting the economic impacts of the proposed designations and
considering less burdensome alternatives. Responding to comments by Advocacy and other small business entities, FWS excluded
private lands in the lower portion of the Verde River from the final critical habitat designation because of economic factors. Based on
the FWS economic analysis, Advocacy believes that the agencys decision to eliminate these high-cost areas from its final designation
resulted in $46.9 million in cost savings over 20 years, discounted at 7 percent.(12)
Issue: Designation of Critical Habitat for the Canada Lynx. On November 9, 2005, FWS proposed to designate 26,935 square
miles (more than 17 million acres) of land for the Canada lynx. FWS subsequently revised this designation downward to 18,031
square miles of land in Idaho, Maine, Minnesota, Montana, and Washington.
    On September 11, 2006, FWS published a draft economic impact analysis and an initial regulatory flexibility analysis. In October,
Advocacy consulted with small business stakeholders and submitted a public comment letter recommending that FWSs IRFA and
economic analysis consider further impacts on small businesses. In particular, Advocacy was concerned about the economic impacts
on small entities in the timber industry in Maine, where 95 percent of the timberlands are privately owned and more than 6 million
acres were included in this critical habitat designation (CHD). Advocacy also commented that the FWSs analysis examined the costs
to landowners, but did not consider the costs to small builders and developers that would have incurred additional mitigation expenses
such as land use restrictions and increased costs of development. Responding to comments by Advocacy and other small business
entities, FWS excluded 16,190 square miles (more than 10 million acres) of private land because of biological studies, existing and
new lynx management conservation programs, and economic factors. FWSs exclusion of these high-cost areas resulted in $919
million in cost savings.
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 Advocacys 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 2007 that
were the subject of any Advocacy comment; therefore, DOJs compliance with section 3(c) cannot be assessed.
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.
The Mine Safety and Health Administration (MSHA), Occupational Safety and Health Administration (OSHA), Employment and
Training Administration (ETA), Employment Standards Administration (ESA), and Employee Benefits Security Administration
(EBSA) were trained in RFA compliance in FY 2004. Agencies within the Department of Labor notify Advocacy in a timely manner,
through Advocacys email notification system (OSHA) or by mail (MSHA), 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. DOL agencies did not finalize any rules in
FY 2007 upon which Advocacy filed comments; therefore, compliance with section 3(c) of E.O. 13272 cannot be assessed. Advocacy
submitted comments to OSHA on the advance notice of proposed rulemaking on hazard communication (Globally Harmonized
System of Classification and Labeling of Chemicals, or GHS); however, that rule has yet to be formally proposed. Advocacy
participated in a small business advocacy review panel on OSHAs draft proposal for cranes and derricks; however, that rule also has
yet to be proposed.
Issue: Family and Medical Leave Act. The Department of Labor (DOL) published the final regulations to implement the Family and
Medical Leave Act (FMLA) in 1995. Under the FMLA, eligible employees of employers with more than 50 employees may take
unpaid job-protected leave for up to 12 work weeks if they need time off for the birth or adoption of a child or for a personal or family
members serious health condition. On December 1, 2006, DOL requested comments from interested parties on their experience with
FMLA to provide a basis for ascertaining the effectiveness of the current regulations.
    On February 8, 2007, Advocacy submitted a public comment letter based on communication with small businesses, and
recommended that DOL complete a section 610 periodic review based on the responses the agency receives. Section 610 of the RFA
requires agencies to retrospectively review all regulations that have or will have a significant economic impact on a substantial
number of small entities within 10 years of their adoption as final rules. Advocacy believes that the FMLA imposes a significant
economic impact on a substantial number of small entities, and is therefore subject to 610 review. According to 2004 data from the
Small Business Administration, more than 200,000 small businesses with 50 employees or more are required to comply with the
FMLA. These entities employ in excess of 25 million employees, or 30 percent of covered employees.
    Based on small business input, Advocacy also recommended specific reforms of the FMLA that could minimize the regulatory
burden for small entities. Small businesses stated that they lack guidance on what constitutes a serious health condition, and sought
clarification about DOLs conflicting regulations and opinion letters on this definition. Small business representatives also voiced
concern with the intermittent leave provisions of FMLA, which allow employees to take separate blocks of time for a particular medical
reason. These entities commented that intermittent leave is the most costly and challenging aspect of the FMLA, because of the
difficulty in tracking these small increments of time and scheduling staff, and because of the number of unplanned and fraudulent
absences for minor or chronic conditions. DOL has published a report of the responses to this request for comments, but has not
proposed any amendments to the FMLA. DOL has not yet completed a 610 review.
Occupational Safety and Health Administration
Issue: OSHAs Notice of Availability of the Regulatory Flexibility Act Review of the Occupational Safety Standard for Lead in
Construction. OSHA reviewed its lead in construction standard under the RFAs section 610, which requires federal agencies
periodically to review their existing rules to determine whether they should be continued without change, amended, or rescinded
consistent with the underlying statute. OSHAs lead standard is designed to prevent occupational exposures to lead on construction
sites. The standard applies to many small businesses in the construction, renovation, and remodeling industries that are required to
comply with its worker protection requirements. Advocacy was notified of this review prior to publication.
    The Office of Advocacy discussed OSHAs lead in construction standard at several of its small business labor safety roundtables,
including presentations by small business representatives from the residential remodeling industry. Advocacy also hosted an issue-
specific small business roundtable on this issue, including representatives from regulated industries and from OSHA, HUD, and the
EPA (each of which has regulations concerning lead hazards). Advocacy filed a comment letter with OSHA recommending that
OSHA commence a public notice and comment rulemaking process to determine whether its lead standard could be made less
burdensome to small business.
    Following its section 610 review, OSHA declined to revise its rule or open a formal rulemaking process as Advocacy suggested.
OSHA did recommend additional training and outreach to improve compliance, and agreed to work with EPA and HUD to develop a
single training program that would encompass all three agencies requirements.
Department of State
E.O. 13272 Compliance
The Department of State (State) has made some progress in complying with E.O. 13272. While the State Department has not posted its
RFA policy on its website as required by section 3(a) of E.O. 13272, it was trained in RFA compliance in FY 2006. State did not
promulgate any draft rules that would have a significant economic impact on a substantial number of small entities in FY 2007;
therefore, the agency was in compliance with section 3(b). State published one final rule in FY 2007 that was responsive to comments
filed by Advocacy in compliance with section 3(c) of E.O. 13272.
Issue: Final Exchange Visitor Program; Trainees and Interns Rule. The Department of State issued a final rule on June 19, 2007,
for designating U.S. government, academic, and private sector entities to conduct educational and cultural exchange programs
pursuant to the Mutual Educational and Cultural Exchange Act of 1961, as amended (also called the Fulbright-Hays Act). Under this
statute, designated program sponsors under the J-1 visa program across a variety of industries facilitate the entry into the United States
of more than 275,000 exchange participants each year. The final rule imposed a variety of new requirements on designated program
sponsors before they could accept a participant into their exchange program. For example, designated program sponsors now must
verify the participants prior academic/work experience, English proficiency, and finances; conduct in-person interviews with
potential trainees in their home country; develop a detailed individualized training plan (Form DS-7002); and provide oversight,
counseling, and evaluations during the course of the exchange program. During the proposed rule period, several small aviation flight
schools contacted Advocacy and stated that several provisions related to aviation flight training schools that limit the ratio of on-the-
job training to classroom study (to a ratio of one month to four) and reduce the maximum duration of the training program from 24 to
18 months would be economically detrimental to them.
    The issue of the State Departments proposed rule was raised during Advocacys aviation safety roundtable. Advocacy submitted a
formal comment letter stating that the State Department had failed to comply with the RFA because its certification that the rule would
not have a significant economic impact on a substantial number of small businesses was improper, lacking a factual basis as required by
the RFA. Advocacy recommended that State either provide a factual basis for its RFA certification or prepare and publish an IRFA for
public comment before proceeding with the rule. Advocacy also recommended that State consider less burdensome alternatives for
aviation flight schools that would still meet the State Departments regulatory objectives.
    In response to Advocacys comments, the Department of State issued a final rule that exempted aviation flight schools from the
final rule and left existing regulatory requirements for that industry in place. Initial and annual recurring cost savings totaled $22.2
million.
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 Aviation Administration (FAA) was trained in RFA compliance in FY 2003. The Federal Motor Carrier Safety
Administration (FMCSA) and the Federal Railroad Administration (FRA) were trained in RFA compliance in FY 2004. The National
Highway Traffic Safety Administration (NHTSA) and the Federal Highway Administration (FHWA) were trained in RFA compliance
in FY 2005. Agencies within DOT notify Advocacy in a timely manner, through Advocacys 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.
    The administrator and senior officials at the Pipeline and Hazardous Materials Safety Administration (PHMSA) are interested in
collaborating more closely with Advocacy on the agencys regulations. Such an approach will help the agency improve its compliance
with section 3(b) of E.O. 13272. Currently, PHMSA contacts Advocacy only on regulations the agency has finalized. The agency
should notify Advocacy more consistently of draft rules that may have a significant economic impact on a substantial number of small
entities. Advocacy will continue to urge PHMSA to share draft rules with Advocacy. Because the agency did not finalize any rules on
which Advocacy submitted written comments, compliance with section 3(c) of the executive order cannot be assessed.
    DOT submitted one electronic notification to Advocacy in FY 2007; however, it did not notify Advocacy of the Federal Aviation
Administrations (FAA) proposed Aircraft Production and Airworthiness Approvals, Parts Marking, and Miscellaneous Proposals rule
as required by section 3(b) of E.O. 13272.
    DOT agencies finalized one rule (the FAA air tours rule) in FY 2007 upon which Advocacy filed comments; the agency
responded to Advocacys comments in compliance with section 3(c) of E.O. 13272.
    Advocacy submitted comments to the Federal Aviation Administration on its proposed Aircraft Production and Airworthiness
Approvals, Parts Marking, and Miscellaneous Proposals rule, and separately on the initial regulatory flexibility analysis for the rule
(published in the Federal Register after the proposed rule because the IRFA was not included in the original notice).
Federal Aviation Administration
Issue: FAAs Proposed Aircraft Production and Airworthiness Approvals, Parts Marking, and Miscellaneous Proposals Rule.
The proposed rule would change the certification procedures and identification requirements for aeronautical products and parts,
including standardizing the requirements for production approval holders, requiring production approval holders to issue airworthiness
approvals, requiring manufacturers to mark all parts and components, and revising export airworthiness approval requirements to
facilitate global harmonization. Some of the provisions (such as parts marking, quality systems, and shipping requirements) could be
costly for small businesses.
    The Office of Advocacy raised this issue at its small business aviation safety roundtable, and held a teleconference with affected
small businesses. Advocacy filed a formal comment letter recommending that the FAA reconsider several of the provisions in the
proposed rule. Advocacy also filed comments on the initial regulatory flexibility analysis for the rule, which was published after the
NPRM because it was not included in the original Federal Register notice. The final rule has not been published.
Issue: National Air Tour Safety Standards Final Rule. On October 22, 2003, the FAA published a proposed rule that would
establish new safety standards for commercial air tour operators. The rule eliminated existing exceptions for commercial air tours
conducted under Title 14, Part 91 of the Code of Federal Regulations. Part 91 exempts from Part 119 certification certain nonstop
sightseeing flight operators who use the same airport for takeoff and landing and fly within a 25-mile radius. The proposed rule
required all air tour operators to obtain Title 14, Part 119 certification. Advocacy worked closely with affected small entities and trade
associations to identify the economic impacts of the proposed regulation. In April 2004, Advocacy submitted a public comment letter
to the agency expressing concern that many small air tour operators could not afford the cost of obtaining Part 119 certification and
thus would be forced to exit the industry.
    The FAA published the National Air Tour Safety Standards final rule on February 13, 2007. The agency made significant changes
to the final rule; the Part 91 exceptions are maintained and operators must obtain a letter of authorization from the FAA instead of
obtaining a new certification. FAAs decision to keep the Part 91 exception and eliminate additional provisions contained in the
proposed rule resulted in $127.3 million in cost savings for small entities.
Pipeline and Hazardous Materials Safety Administration
Issue: Hazardous Materials: Transportation of Lithium Batteries. On April 2, 2002, PHMSA issued a proposed rule regulating
the transportation of lithium batteries. The proposal required producers and transporters of lithium batteries to adhere to more stringent
packaging and testing requirements. The agency certified the proposed rule under section 605(b) of the RFA. Small entities affected
by the proposal expressed their concerns to Advocacy about the potential economic impact of the proposed rule. Advocacys review of
the proposal uncovered problems with the costs of the rule for small businesses. In August 2003, the Office of Information and
Regulatory Affairs issued a return letter to PHMSA recommending that the agency either complete an initial regulatory flexibility
analysis or provide a statement of factual basis for the certification contained in the rule.
    In June 2005, the agency published an IRFA for the proposed rule in the Federal Register in which it addressed many of
Advocacys concerns. On August 9, 2007, PHMSA issued the final rule on transportation of lithium batteries. The final regulatory
flexibility analysis considered eight possible alternatives and adopted four. The agency adopted exceptions for small lithium batteries
and for small production runs of lithium batteries and provided for a two-year implementation period. The revisions adopted in the
final rule will result in a cost savings of $13.2 million for affected small entities.
Department of the Treasury
E.O. 13272 Compliance
The Department of the Treasury (Treasury) has made its policies and procedures available to the public in compliance with section
3(a) of E.O. 13272. Three agencies within Treasury create regulations of most concern to small businesses: the Internal Revenue
Service (IRS), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).
    While Treasury and the IRS have not notified Advocacy of any draft proposed rules under section 3(b) of E.O. 13272, Advocacy
has been invited to and has participated in several prepublication meetings on IRS regulatory proposals regarding potential effects on
small businesses. Both OCC and OTS notify Advocacy in accordance with the requirements of section 3(b) of E.O. 13272.
    In FY 2007, Advocacy held 11 RFA training sessions for IRS staff. Treasury and the IRS did not publish any final rules in FY
2007 that were the subject of Advocacy comments; therefore the compliance of Treasury and the IRS with section 3(c) of E.O. 13272
cannot be assessed. Advocacy did not file any comments with OCC or OTS in FY 2007.
Issue: Escrow Accounts, Trusts, and Other Funds Used During Deferred Exchanges of Like-Kind Property. On February 7,
2006, Treasury and the IRS published a proposed rule that would affect qualified intermediaries that facilitate exchanges of like-kind
property. The initial regulatory flexibility analysis published with the proposed rule concluded that the number of transactions
involving small businesses that will be affected and the full extent of the economic impact on small businesses could not be precisely
determined. Advocacys ongoing support encouraged Treasury and the IRS to publish a revised IRFA with a period for comment in
the Federal Register on March 20, 2007. On May 10, 2007, Advocacy submitted a public comment to Treasury and the IRS
commending them for the revised IRFA. The additional analysis in the revised IRFA affords affected taxpayers a clearer
understanding of the impact of the proposed regulations. The rule was still under consideration as of the end of FY 2007.
Issue: Tax Classification of Cigars and Cigarettes. On October 25, 2006, the Department of the Treasury, Alcohol and Tobacco
Tax and Trade Bureau (TTB) published a proposed rule under section 5702 of the Internal Revenue Code that would revise the
definition of cigarette to include certain types of little cigars that were not previously treated as cigarettes. Treasury and TTB
certified the proposed rule under the RFA and supported the certification by noting only that [t]he proposed regulations primarily
codify and clarify existing administrative tax classification principles and practices.
    Small businesses informed Advocacy that the little cigar reclassification as outlined in the proposed rules, if finalized, would
end their ability to market little cigars in both domestic and foreign markets. The change in product definition would cause many
little cigar producers products to be classified as cigarettes; this would trigger significant regulatory barriers at the state level and
would inhibit the little cigar producers ability to export little cigars.
    On March 23, 2007, Advocacy submitted a public comment to Treasury and TTB stating that the proposed rule in its current form
should not be certified under the RFA, and that small businesses in the little cigar industry have indicated that the proposed rule may
have a significant impact on some small businesses. Advocacy recommended that Treasury and TTB do one of two things to comply
with the RFA. First, Treasury and TTB could publish data supporting their certification under the RFA prior to moving forward with a
final rule. Alternatively, Treasury and TTB could develop an initial regulatory flexibility analysis and publish it in the Federal
Register with a period for comment. The comments were still under consideration as of the end of the fiscal year.
Department of Veterans Affairs
E.O. 13272 Compliance
The Department of Veterans Affairs (VA) complies with section 3(a) of E.O. 13272 by making its RFA policies available on line to
the public, while continuing to take a position that most of its regulations do not affect small entities. The VA fully complies with
section 3(b) of E.O. 13272 by notifying Advocacy of proposed rules that may have a significant economic impact on a substantial
number of small entities. Advocacy has reviewed these notifications for FY 2007, and verifies that most of the regulations did not
affect small entities. The VA did not publish any final rules in FY 2007 that were the subject of Advocacy comment; therefore,
theVAs compliance with section 3(c) of E. O. 13272 cannot be assessed.
Architectural and Transportation Barriers Compliance Board
E.O. 13272 Compliance
The Architectural and Transportation Barriers Compliance Board (Access Board) has not published written policies and procedures
that ensure that the potential impacts of agencies draft rules on small businesses are properly considered during the rulemaking
process, as required by section 3(a) of E.O. 13272. The Access Board did not issue any rules in fiscal year 2007 that it characterized as
having a significant economic impact on a substantial number of small entities. The Access Board did not publish any final rules in
FY 2007 that were the subject of any Advocacy comment; therefore, the Access Boards compliance with section 3(c) of 13272
cannot be assessed.
Issue: Americans with Disabilities Act Accessibility Guidelines for Large Passenger Vessels. In 2004, the Access Board released
draft guidelines on the application of the Americans with Disabilities Act (ADA) to large passenger vessels, defined in the guidelines
as passenger vessels permitted to carry more than 150 passengers or more than 49 overnight passengers. On July 7, 2006, the Access
Board released for public comment a revised draft of these ADA Guidelines for Large Passenger Vessels, and this version included all
ferries regardless of size and capacity. According to estimates by the Department of Transportation, the Small Business
Administration, and the Passenger Vessel Association, 95 percent of large passenger vessel owners are considered small businesses.
    On November 9, 2006, Advocacy submitted a public comment letter to the Access Board based on meetings with small business
representatives. These small entities supported the continued separation of large and small passenger vessels into separate ADA
guidelines and rulemaking, which follows the Coast Guards regulatory framework of allowing less burdensome requirements for
smaller passenger vessels with a capacity of less than 150 passengers. A concern for small entities was the inclusion of all ferries
regardless of size and passenger capacity in the 2006 version of the draft ADA Guidelines for Large Passenger Vessels; this expanded
scope frustrates the Coast Guards regulatory framework. The required level of accessibility in small ferries creates issues relating to
safety, cost, and overall structural difficulties. Small entities also sought clarification on issues such as the requirements for new and
existing vessels and the agencies that would be involved in future rulemaking.
    Advocacy recommended that the Access Board and pertinent government agencies ensure that future rulemaking on the ADA
Guidelines on Large Passenger Vessels comply with the Regulatory Flexibility Act.
Consumer Product Safety Commission
E.O. 13272 Compliance
The Consumer Product Safety Commission (CPSC) has complied with section 3(a) of E.O. 13272 by making its policies and
procedures with respect to the Regulatory Flexibility Act publicly available on its website. Draft rules were not consistently submitted
by the CPSC to Advocacy pursuant to section 3(b) of E.O. 13272 in FY 2007. The CPSC did not publish any final rules in FY 2007
that were the subject of Advocacy public comment; therefore compliance with section 3(c) of E.O. 13272 cannot be assessed.
Issue: Standards for the Flammability (Open Flame) of Mattress Sets (71 Fed. Reg. 13472, March 15, 2006). On March 15, 2006,
the CPSC published the Consumer Standards for the Flammability (Open Flame) of Mattresses final rule in the Federal Register, with
an effective date of July 1, 2007. The new standards established the performance requirements for mattresses exposed to an open flame.
CPSCs goal was to ensure that mattresses would generate a smaller fire with a slower growth rate, thereby reducing the chances of a
flash fire. Advocacy filed comments on the regulation, alerting the CPSC about the rules potential to have a negative impact on small
mattress manufacturing companies. As a result of Advocacys comments and those filed by small mattress manufacturers, the CPSC
made changes to the rule that altered the need for the manufacturers to keep samples of the mattresses on site after testing and allowed
small mattress manufacturers to pool their mattresses together for testing purposes. This change lessened the economic burden on the
industry. In addition, on November 2, 2006, Advocacy sent a letter to the CPSC asking that the agency comply with section 212 of the
Small Business Regulatory Enforcement Fairness Act (SBREFA) by providing small mattress manufacturers with a compliance guide
instructing the industry on how it is expected to comply with the final rule. The CPSC did in fact publish the compliance guide in which
it outlined the regulatory requirements of the mattress rule and how small entities could take steps to ensure that they were in
compliance with the regulation.
Environmental Protection Agency
E.O. 13272 Compliance
The  Environmental Protection Agency (EPA) has complied with section 3(a) of E.O. 13272 by making available on its website the
agencys policies and procedures concerning the Regulatory Flexibility Act. In FY 2007, EPA provided Advocacy with all of its draft
rules before or at the time they were sent to the Office of Management and Budget for review, in compliance with section 3(b) of E.O.
13272. EPA responded adequately to Advocacys public comment letters in FY 2007, in accordance with section 3(c) of E.O. 13272.
Issue: Definition of Solid Waste (Recycling). On March 26, 2007, EPA issued a supplemental proposal to its 2003 proposal, which
proposed to exclude certain types of recycling activities involving hazardous secondary materials from the federal hazardous waste
regulations. By removing unnecessary regulatory controls over certain recycling practices, EPA expects to make it easier to safely
recycle hazardous secondary material. EPA estimates about 4,600 facilities handling over a half million tons of hazardous secondary
materials annually may be affected by this proposed rule. The industry sectors that could face the largest impact are chemical
manufacturing, coating and engraving, semiconductor and electronics manufacturing, pharmaceutical manufacturing, and the
industrial waste management industry. EPA estimates the annual cost savings to be $107 million for the affected firms. At the request
of the Office of Advocacy, EPA expanded its approach from the 2003 proposal to encompass additional facilities by not limiting relief
to facilities that are recycling at the same facility or within the same standard industrial code.
Issue: Spill Prevention, Control and Countermeasure (SPCC). On December 26, 2006, EPA published a final rule governing the
Spill Prevention Control and Countermeasure (SPCC) rule for facilities that manage or use oil. In particular, EPA adopted streamlined
requirements for small facilities that handle a quantity of oil below a certain threshold, and for those facilities with oil-filled
equipment. In response to concerns from regulated facilities regarding the 2002 SPCC rule, EPA, in collaboration with the Office of
Advocacy, initiated a rulemaking to simplify the SPCC requirements. In June 2004, Advocacy developed a specific proposal to
address smaller oil facilities. Advocacy testified before Congress on the rule in December 2005 and submitted additional comments
February 10, 2006. The 2006 rule is largely an outgrowth of the 2004 plan developed by Advocacy.
    Small facilities with an aggregate oil capacity of under 10,000 gallons qualify for the streamlined small facility relief. Instead of
engaging a professional engineer to develop an SPCC plan, small facilities may self-certify their own plan. Additionally, small
facilities have increased flexibility for tank integrity testing and facility security requirements. In October 2007, EPA proposed
further flexibility for small facilities. With regard to the oil-filled equipment requirements, facilities are permitted to use an oil spill
contingency plan, in lieu of the more expensive secondary containment requirement around the equipment. EPA estimates the
savings for these and other revisions at $128 million per year, of which about 80 percent should accrue to small businesses.
Issue: Hydrochlorofluorocarbon (HCFC) 22. On March 28, 2007, EPA published a final rule setting a compliance date of September
1, 2009, instead of the proposed January 1, 2008, for the marine sector to transition from HCFC-22 (an ozone-depleting substance that
is a member of the hydrochlorofluorocarbon family) to other substitutes. This change would result in unquantified savings for up to
3,000 boat builders (nearly all small firms) who were having difficulty meeting the compressed timetable. The rule previously in effect
had allowed for a transition extending to January 1, 2010, but EPA proposed to accelerate the timetable to January 2008 based on new
information. Advocacy supported the extension of time for the marine sector because of their particular hardships. Other sectors are
required to meet the January 21, 2008, date except for the extruded polystyrene foam sector, which has a January 1, 2010, date.
Issue: Toxics Release Inventory (TRI). For more than two decades, Americans and the environment have benefited from the public
right-to-know provisions set forth by the Emergency Planning and Community Right to Know Act of 1986 (EPCRA). EPCRA
established the toxics release inventory (TRI), which requires companies to make a yearly report using the Form R to the
Environmental Protection Agency (EPA) of their handling, management, recycling, disposal, and allowable discharges of listed
chemicals. Five years after EPCRA was enacted, the Office of Advocacy petitioned the EPA to develop streamlined reporting
requirements for small-volume chemical users. Small businesses have consistently voiced their concerns to Advocacy that the TRI
program imposes substantial paperwork burdens with little corresponding environmental benefit, especially for thousands of small
businesses that have zero emissions or discharges of hazardous chemicals to the environment.
    On December 22, 2006, EPA issued the TRI burden reduction rule, which would allow more firms to use the short form A, first
developed in 1994. Under the new rule, businesses that do not emit or discharge highly hazardous chemicals can use the short form.
Only the top environmental performers will benefit by being able to use the short form A, thus providing an incentive to reduce or
eliminate pollution. Although it did not go as far as some small businesses would prefer, Advocacy supports the EPA reforms. The
final rule strikes an appropriate balance by allowing meaningful burden relief while at the same time continuing to provide valuable
information to the public. As a result of the changes, small businesses would save an estimated $5.9 million in first-year and $5.9
million in annually recurring costs. As of the end of FY 2007, federal legislation was pending that would eliminate the EPA reform.
Issue: Guidance in Lieu of Rules to Reduce Volatile Organic Compound (VOC) Emissions from Five Industrial Sectors
Toxics Release Inventory (TRI). On October 5, 2006, the Environmental Protection Agency (EPA) promulgated control techniques
guidelines (CTGs) for the control of volatile organic compounds (VOC) emissions from each of five product categories in consumer
and commercial products. These CTGs provide guidance to the states concerning EPAs recommendations for reasonably available
control technology (RACT) level controls for these product categories.
    Advocacy worked with EPA and the affected small business associations to help EPA formulate the proposal. EPA agreed to
raise the proposed exemption level for several expensive add-on requirements from 2.5 tons per year to 25 tons per year, making the
controls cost-effective for hundreds of facilities. In addition, the solvent cleaning requirements were made more flexible by the
additions of exemptions and exclusions based on two sets of California rules. These revisions will affect thousands of facilities,
which are primarily small businesses. EPA issued this guidance, instead of a national rule, because it can achieve greater emission
reductions given the statutory restrictions on rules governing consumer and commercial products. Advocacy submitted comments on
September 5, 2006, supporting EPAs proposal, and agreed that the CTG approach would result in additional VOC emission
reductions over the rule approach. As a result of EPAs outreach to the small business community, the final CTGs provide a balance
between environmental protection and regulatory flexibility. No cost savings estimates are available.
Issue: Area Source Air Toxics Standard for Iron and Steel Foundries. On September 17, 2007, EPA published a proposed rule
establishing new air pollution control standards for iron and steel foundries under the Clean Air Act. The proposal would require
foundries above a specified melting capacity to install air pollution control equipment. Because of information received from small
business stakeholders, the Office of Advocacy persuaded EPA to co-propose a higher melting capacity threshold that would allow
small foundries to operate without installing new controls. The estimated one-time cost savings from this co-proposal are estimated to
be $13.9 million. The recurring operating and maintenance costs saved are estimated to be $2.8 million.
Issue: Halogenated Solvent Cleaning Residual Risk Standard. On May 3, 2007, EPA issued a final rule setting revised emission
limits for facilities that use halogenated solvents such as methylene chloride, trichloroethylene, and percholorethylene to clean metal
parts. The rule places new restrictions on the amounts of solvent that can be used in cleaning operations. Advocacy worked with a
subgroup of companies that use halogenated solvents to clean metal tubes that are long and that have extremely narrow diameters.
These specialty applications require cleaning with larger quantities of solvent and are not suited to the emission control techniques
EPA has required for standard cleaning operations. Based on feedback from Advocacy and the narrow-tube manufacturers,
overwhelmingly small businesses, EPA determined that the required emission controls are not technically feasible for narrow-tube
operations. EPAs decision to exempt these operations from the standard resulted in one-time cost savings of $50 million.
Issue: Area Source Air Toxics Standard for Gasoline Distribution. On November 9, 2006, the EPA published a proposed Clean
Air Act rule that would require new emission controls for bulk gasoline terminals, pipeline facilities, bulk gasoline plants, and
potentially for gasoline stations. The proposal would reduce hazardous air pollutants by requiring these sources to install new
equipment such as floating roofs and seals, or by adopting work practices such as leak detection and repair programs. The Office of
Advocacy persuaded EPA to consult with several affected small business representatives early in the planning process. Based on
comments and data received from these parties, EPA proposed a less costly regulatory approach than the agencys earlier preferred
alternative. In total, the proposed rule represents a one-time cost savings of $117.2 million, as compared with the original approach.
Issue: Control of Emissions from Nonroad Spark-Ignition Engines and Equipment. On May 18, 2007, EPA proposed a rule to
control air pollution from gasoline-powered engines and equipment below 50 horsepower. These engines and equipment are primarily
used in lawn and garden applications and in the marine industry. The proposed rule would require catalyst-based emission controls for
some engines, as well as evaporative emission controls for boats. Many of the manufacturers that would be affected by the proposed
rule are small businesses. Because of concerns about the impacts of the rule on small businesses and the technical feasibility of
proposed emission controls, EPA convened a SBREFA panel on August 17, 2006. Twenty-seven small entity representatives (SERs)
participated in the panel and provided technical data to EPA about the impacts of the rule. Based on recommendations from the panel,
EPA proposed to allow small businesses extended compliance deadlines, streamlined testing and certification requirements, and
hardship exemptions for small businesses unable to comply by the deadline. Small spark ignition engine and equipment makers are
anticipated to have first-year cost savings of $6.4 million and second-year cost savings of $6.2 million. Stern-drive and inboard engine
and boat builders have first- and second-year cost savings of $9.1 million (per year) for engine, boat, and evaporative (EVAP)
systems. High performance marine engine builders, which were exempted from the new requirements because their products cannot
be made compliant, have first-year and recurring cost savings of $5.6 million and will avoid a total loss of sales revenue. Total first-
year cost savings are $20.7 million.
Issue: Clean Air Act, Particulate Matter National Ambient Air Quality Standards. On September 21, 2006, EPA revised the
national standards for particulate matter (PM). EPA lowered the daily standard for fine particles smaller than 2.5 microns, but left the
standards for coarse particles (2.5 - 10 microns) unchanged. In addition, EPA indicated that farming operations in rural areas could
satisfy coarse PM requirements by meeting state-based best management practices (BMPs), rather than more stringent requirements.
Advocacy worked with the U.S. Department of Agriculture and agricultural trade associations to support EPAs flexible interpretation
of farming requirements. The final standard is estimated to result in cost savings for small farms and other agricultural operations of
$1 million per year on an ongoing basis.
Issue: Permit Fee Incentive for Clean Water Act Grant Allotments. On January 4, 2007, EPA proposed revisions to the Clean
Water Act, section 106 grant allocation formula to create a new incentive for states to fund National Pollutant Discharge Elimination
System (NPDES) programs through fees paid by dischargers. Many states currently do not require all dischargers, including small
entities, to pay the full costs of their permitting programs through permit fees. Numerous state, local, and small business organizations
expressed concerns that the proposed revision would result in substantial permit fee increases and/or the loss of grant monies. These
groups also told Advocacy that they believed EPA had not adequately considered the potential impact on states and small entities. On
March 2, 2007, Advocacy requested that EPA extend the comment period on the proposal for an additional 60 days, so that small
entities could gather more detailed information about potential impacts. EPA extended the comment period for 60 days, and on May
14, 2007, Advocacy submitted a technical memorandum prepared by its consultant evaluating the potential impacts on small entities.
The technical memorandum concluded that the rule was likely to have an impact on states and small entities. Based on the comments
of Advocacy and small business representatives, EPA delayed finalizing the rule for several months. The delayed implementation of
the rule represents one-time cost savings to small entities in affected states of at least $5.65 million.
Federal Acquisition Regulation Council
E.O. 13272 Compliance
The policies and procedures required by RFA section 3(a) issued by the Department of Defense apply also to the Federal Acquisition
Regulation (FAR) Council. The FAR Council has complied with section 3(b) by making its deliberations and predecisional
deliberative rulemaking processes available to the Office of Advocacy. Advocacy commented on a number of the preproposed FAR
rules that may have a significant economic impact on a substantial number of small entities in FY 2007. The Office of Advocacy
coordinated closely with OIRA and the FAR Council to improve the regulatory analysis process. Advocacy also hosted several RFA
training sessions to increase the Councils understanding of the RFA requirements. The FAR Council did not publish final rules in FY
2007 that were the subject of Advocacy comments; therefore, the FAR Councils compliance with section 3(c) of E.O. 13272 cannot
be assessed.
Issue: Representations and Certifications, Tax Delinquency. On May 25, 2007, the Office of Advocacy submitted comments on
the proposed rule to require contractors to certify their tax delinquency status to the federal government, state and local governments,
and any other jurisdictions including foreign governments. The proposed regulation would require the contractor to certify that he or
she does or does not have a tax liability for federal, state, local, and/or foreign jurisdictions. This certification requirement will be a
part of the contactors official representations and certification agreement that is a material component of the executed contract
between the government and the contractor. This level of mandatory compliance without clear definitions may increase small
businesses costs of doing business with the government. Moreover, small businesses will be required to have knowledge of local and
foreign tax regulations. The comment period has closed on this proposed regulation and Advocacy is working with the FAR Council
on the final regulation.
Issue: Contractor Code of Ethics. On May 21, 2007, the Office of Advocacy submitted comments on the proposed rule to require
contractors to implement a code of ethics. Advocacy strongly recommended that the FAR Council publish an initial regulatory
flexibility analysis as required by section 603 of the Regulatory Flexibility Act. Advocacy further urged the Council to give careful
consideration to the need for reasonable alternatives for small business compliance with the proposed regulation and to review the
flowdown provision of this proposed regulation as it applies to small business subcontractors. In view of the apparent lack of data on
small business subcontractors, Advocacy recommended delaying the flowdown requirement to these contractors. The comment period
has closed, but the Office of Advocacy continues to work to ensure that the final regulation is responsive to the concerns of small
entities.
Federal Communications Commission
E.O. 13272 Compliance
The Federal Communications Commission (FCC) continues to exhibit inconsistent compliance with E.O. 13272. In FY 2005, the FCC
sent Advocacy a letter maintaining that as an independent agency it is not required to comply with E.O. 13272, but is committed to
uphold the spirit of the law by examining its rules for small entity impacts.
    The FCC has not made its policies and procedures to promote RFA compliance publicly available as required by section 3(a) of
E.O. 13272. The FCC partially complies with section 3(b) by notifying Advocacy of proposed rules that may have a significant
economic impact on a substantial number of small entities. This notice is sent by mail following the adoption and release of the rule
and prior to the rules publication in the Federal Register. However, the commission still does not provide Advocacy with its draft
rules as required by section 3(b).
While the FCC does publish IRFAs and FRFAs for its rulemakings, they are inadequate because they consistently lack a proper
economic analysis of how the rule will affect small entities. Additionally, the FCC does not provide meaningful alternatives as
required by the RFA, and fails to address the alternatives offered by small businesses in their comments.
    Advocacy has continued to offer the FCC assistance in complying with the RFA, and FCC staff received RFA training in 2005. In
FY 2007 Advocacy filed six comment letters on telecommunications issues that would affect the small business community. The FCC
has not addressed Advocacys comments in their final rules. Accordingly, Advocacy continues to work with the FCC on its
compliance with section 3(c), to engage the FCC early in the rulemaking process, and to provide FCC bureaus with additional RFA
training.
Issue:  Customer Proprietary Network Information (CPNI). The FCC adopted an order and issued a further notice of proposed
rulemaking (FNPRM) on March 13, 2007, for customer proprietary network information (CPNI). The final rule requires
telecommunications carriers to upgrade their networks to enhance the protection of confidential customer data. Advocacy
communicated the concerns of small voice-over Internet protocol (VoIP) providers that the initial compliance timeline would impose
an unnecessary economic burden on small carriers. Advocacy recommended that the FCC extend the timeline by six months to allow
these small providers to comply with the regulation without exerting a negative economic impact on these nascent companies. In its
order, the FCC granted this extended compliance timeline, saving small VoIP providers more than $6 million in estimated cost
savings.
Issue: Video Programming Access. On September 11, 2007, the FCC adopted a Report and Order and Notice of Proposed
Rulemaking on the ban on exclusive video programming contracts. Section 628 (c)(2)(D) of the Communications Act of 1934, as
amended, generally prohibits exclusive contracts for satellite cable programming or satellite broadcasting between vertically
integrated programmers and cable operators. Small providers of this programming explained to Advocacy that the ban on exclusive
contracts is critical to their existence, because it prevents large cable operators from unnecessarily withholding premium video
programming and impeding their ability to compete in the market. To express the concerns of these small entities, Advocacy sent a
public comment letter to the FCC on March 26, 2007, recommending that it extend the ban for at least three years, if not the full five
years previously granted. The FCC kept the ban on exclusive contracts in place for an additional five years, which yielded
unquantifiable cost savings for these small video programming providers.
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. However, the SEC consistently notifies Advocacy through
Advocacys 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). Advocacy commented on two final rules published by the SEC in FY 2007, both related to
amendments to the Sarbanes-Oxley Act of 2002. The first final rule was published December 15, 2006, and extended the compliance
dates for nonaccelerated filers, or small public companies with a public float of less than $75 million. The second final rule, published
June 20, 2007, adopted management guidance and amendments to the internal controls reporting requirements of the Sarbanes-Oxley
Act. The SEC complied with section 3(c) of E.O. 13272, as both of these final rules addressed Advocacy comments.
Issue: The Sarbanes-Oxley Act Section 404 Requirements. In 2003, the SEC adopted rules implementing section 404 of the
Sarbanes-Oxley Act, which required public companies to submit a management report and an external auditor report on their internal
controls, or company safeguards against fraudulent and mistaken transactions and annual financial reports. Based on concerns raised
by Advocacy and other small business stakeholders, the SEC reexamined the costs inherent in complying with section 404 and
delayed the implementation date for small businesses with a public float of less than $75 million. However, accelerated filers, or larger
companies with a public float of above $75 million, had to comply with section 404 and reported problems because of the lack of
management guidance. These larger companies also faced difficulties with the rules onerous one-size-fits-all auditing standard that
resulted in excess costs and redundancies.
    In 2006, the SECs Advisory Committee on Smaller Public Companies recommended that the SEC defer the implementation of
the new section 404 internal control reporting requirements until an adequate framework is in place to account for the differences in
size between smaller and larger companies. Advocacy submitted a public comment letter supporting the advisory committees
recommendations and citing evidence that section 404 reporting requirements would impose a disproportionate cost on smaller public
companies and may restrict a new generation of small innovative companies from seeking capital in the U.S. capital markets.
Advocacy urged the SEC to provide flexibility for small companies to comply with section 404.
    In response to these recommendations, the SEC published a final rule on December 15, 2006, granting smaller public companies a
five-month extension for the management assessment report and a 17-month extension for the auditors report. Advocacy submitted
two comment letters to the SEC, supporting the proposed extensions and providing recommendations on management guidance that
the SEC was developing on section 404. In December, the SEC also released management guidance for section 404, and the Public
Company Accounting Oversight Board (PCAOB) released for public comment a new auditing standard designed to address concerns
with the Sarbanes-Oxley Act. Advocacy held a small business roundtable on these two proposals in January 2007. Advocacy
submitted a comment letter in February 2007 supporting these proposals but recommending that the SEC and the PCAOB provide a
further extension for smaller public companies to clarify provisions of these proposals and to determine whether these proposals
would actually solve the problem of scalability and high costs in internal controls reporting for smaller public companies. In April
2007, Advocacy submitted a statement with these concerns to the U.S. Senate Committee on Small Business and Entrepreneurship at a
hearing on the impact of the Sarbanes-Oxley Act on small businesses.
    On June 27, 2007, the SEC published a final rule adapting its management guidance and amendments to facilitate more efficient
evaluations of internal controls reporting. Based on SEC data, these changes could lead to an estimated $561 million in cost savings in
the first year of implementation. On July 25, 2007, the SEC approved the PCAOBs new audit standard for internal control over
financial reporting.
Issue: Smaller Public Company Regulatory Reforms. In summer 2007, Advocacy submitted public comment letters on two SEC
proposals that will reform the regulatory process for smaller public companies.
Forms S-3 and F-3. On August 23, 2007, Advocacy submitted a comment letter supporting the SECs proposal to increase the
eligibility requirements for Forms S-3 and F-3 to public companies with a public float below $75 million. Currently these short
forms are limited to companies with more than $75 million in public float, and these forms allow companies to incorporate past and
future filings by reference and to utilize shelf registrations. Shelf registrations allow companies to register securities before any
specific offering, and to release delayed or continuous offerings without waiting for additional SEC action. According to the SEC,
almost 5,000 small public companies that filed annual reports in 2006 had a public float below $75 million.
    Several small business representatives were concerned that this proposal would limit these small entities with a public float below
$75 million from selling more than 20 percent of their public float in offerings over a period of 12 calendar months. These small
businesses were concerned that this arbitrary restriction limits their ability to raise capital in the public markets. Advocacy
recommended that the SEC consider raising the 20 percent limit for smaller public companies utilizing these short forms. Based on
small business input, Advocacy also recommended that the SEC take this opportunity to extend the use of Form S-3 and F-3 for
transactions involving secondary offerings or securities for the account of any person other than the issuer. On September 24, 2007,
Advocacy took part in a smaller public companies roundtable with small business representatives at the SECs Government Business
Forum. This group formally submitted two recommendations on Forms S-3 and F-3 that mirrored Advocacys comments. The SEC
has not finalized this rulemaking.
Regulation S-B. On September 11, 2007, Advocacy submitted a public comment letter supporting an SEC proposal to expand the
eligibility for scaled disclosure and reporting requirements under Regulation S-B by small public companies with a public float of $25
million to $75 million.
    Advocacy recommended that the SEC consult with the Small Business Administration about updating this small business size
standard, as required by the Small Business Act. Based on conversations with small business representatives, Advocacy also
recommended that the SEC reconsider the proposals elimination of Regulation S-B forms. This proposal would require these smaller
public companies to utilize a modified and more complicated version of the regular registration forms. Advocacy recommended that
the SEC provide a two-year phase-in period to allow users the choice of the Regulation S-B forms or the modified regular registration
forms, and that the SEC perform an analysis to measure the costs of the modified regular registration forms. The SEC has not finalized
this proposal.
Issue: Proposed Rule on Securities Transfer Agents. On June 27, 2007, Advocacy submitted a public comment letter to the SEC
recommending that it commence proceedings to disapprove a proposed rule change by the Depository Trust Company (DTC), which
would amend the Fast Automated Securities Transfer (FAST) and Direct Registration System (DRS) limited requirements for transfer
agents.
    The FAST program allows for the transfer of securities without the need for physical delivery of securities, reducing the risk of
loss or other mishandling of certificates. Major exchanges require that issuers be eligible for processing through the DRS; registration
as a FAST agent is needed for DRS participation. The proposed rule would require securities transfer agents to become DRS-eligible,
if they are not already, and to participate immediately in FAST. Additionally, the rule would require increases in insurance coverage.
It specifies new requirements for vaults within which certificates must be stored, and would prohibit transfer agents from using certain
forms of business relationships that are now commonly used. The proposed rule also requires an independent evaluation of internal
controls, even though SEC rules already require such a report.
    Advocacy believes that the rule will have a disproportionate impact on small businesses and their ability to compete to the extent
that these businesses will no longer be able to offer their services as securities transfer agents. The DTC has not provided an economic
analysis of this proposed rule, as required by the Regulatory Flexibility Act. Advocacy recommended that the SEC disapprove the
rules proposed by the DTC until such time as a reasonable alternative can be developed that would minimize the impact on small
transfer agents. The SEC has not yet approved or disapproved this DTC proposed rule.
Small Business Administration
E.O. 13272 Compliance
SBA has made significant efforts to stay in compliance with E.O. 13272. SBAs procedures comply with section 3(a) of E.O. 13272.
SBA submits draft rulemakings for Advocacys consideration in compliance with section 3(b) of E.O. 13272. As a result of RFA
training and continued RFA discussions on draft rules, SBA personnel have utilized Advocacy input earlier rather than later in the
regulatory development process. Advocacy has not filed written comments on any proposed SBA rules that have been made final in
FY 2007. Therefore, SBAs compliance with section 3(c) of 13272 cannot be assessed.
U.S. Agency for International Development
Issue: To Create a Small Business Mentor-Protg Acquisition Program. On November 26, 2006, the U.S. Agency for
International Development (USAID) issued a proposed regulation to amend its acquisition regulations to encourage USAID prime
contractors to assist small disadvantaged firms certified by the U.S. Small Business Administration (SBA) under section 8(a) of the
Small Business Act, other small disadvantaged businesses, historically Black colleges and universities and other minority institutions
of higher learning, and women-owned small businesses in enhancing their capabilities to perform contracts and subcontracts for
USAID and other federal agencies.
    Several of the key provisions of the proposed program were in conflict with the statutory authority of SBA and would be
confusing and costly to eligible small businesses. The final regulation was published on June 13, 2007, and included modifications to
incorporate joint concerns expressed by SBA and the Office of Advocacy. The final regulation recognized the lack of this authority by
removing this provision. The final regulation was also revised in recognition of a lack of authority to waive the SBAs affiliation
requirements. The savings to small businesses have not yet been quantified.
Conclusion
The regulatory process continues to challenge small industry stakeholders to work together with state and federal agencies to ensure
that complex rulemakings do not unduly burden small businesses in the marketplace. The Office of Advocacy has become an
important part of the rulemaking process by connecting government agencies with the private sector, and by raising awareness and
promoting a better understanding of the federal regulatory impact among small entities.
    In FY 2007, targeted efforts such as Advocacys federal training, state outreach, and r3 initiatives further enhanced agencies
understanding of the RFA and their ability to consider what regulatory alternatives would best reduce the impact of rulemakings on small
entities, while meeting or improving their regulatory objectives.  Advocacy continued to be involved in the rulemaking process at the
prepublication stage, building upon progress made in past years. The office assisted various government offices by providing key
economic data on small businesses affected by certain rules, and regularly consulted with these offices to offer guidance on their
interagency review under E.O. 12866. Advocacys involvement over the past year has helped save small entities more than $2.5 billion in
regulatory costs.
    The Office of Advocacys interaction with federal agencies has also resulted in improved agency compliance with E.O. 13272. Many
agencies use the recommendations provided by Advocacy to alleviate some of the costs of regulations for small businesses. The agencies
also provide Advocacy with advance notice of rules that will have a significant economic impact on a substantial number of small entities.
    Moving forward, Advocacy will continue to focus its efforts on training agencies so that they fully understand the RFAs
requirements and can better evaluate the regulatory burden on small entities. A commitment to reviewing not only proposed rules, but
existing regulations that may have outlived their intended effect will further mitigate regulatory costs for small businesses.
5.  Small Business Regulatory Flexibility Model Legislation Initiative
In December 2002, Advocacy presented model regulatory flexibility legislation for the states based on the federal Regulatory
Flexibility Act.(13) The intent of the model legislation is to foster a climate for entrepreneurial success in the states.
    The American Legislative Exchange Council (ALEC) adopted the legislation as a model bill, and numerous state legislators,
stakeholders, and small business advocacy organizations have pursued its passage in various states. Those organizations include the
National Federation of Independent Business (NFIB), state chambers of commerce, the U.S. Chamber of Commerce, the Small
Business & Entrepreneurship Council (SBEC), and the National Association for the Self-Employed (NASE).
    According to Advocacys state model legislation, successful state-level regulatory flexibility laws address the following areas:
(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 business before they regulate; (3) a requirement that state
agencies consider less burdensome alternatives for small businesses that still meet the agencys regulatory goals; (4) a provision that
forces state governments to review all of their regulations periodically; and (5) judicial review to give the law teeth.
    Since 2002, 37 state legislatures have considered regulatory flexibility legislation(14) and 23 states have implemented regulatory
flexibility by executive order or legislation.(15)
    In 2007, 13 states introduced regulatory flexibility legislation: Alabama (HB 84), Arkansas (SB 55/HB 1147), Connecticut (SB
1179), Hawaii (SB 188), Illinois (HB 302), Maine (LD 905), Massachusetts (HB 189/SB 133), Mississippi (HB 1229), Montana (SB
148), New Jersey (A 2327/SB 1335), Tennessee (SB 55/HB 1276), Texas (HB 3218/HB 3430/SB 700), and Washington (HB 1525).
Bills were signed into law in Arkansas, Hawaii, Maine, Tennessee, Texas and Washington (See Tables 5.1 and 5.2 and Chart 5.1).
    The following is a real-world example that demonstrates the value to small businesses of regulatory flexibility at the state level.
Puerto Ricos Ice Makers Benefit from Regulatory Flexibility Law
Puerto Ricos Regulatory Flexibility Act (Law Number 454Ley de Flexibilidad Administrativa y Reglamentaria para el Pequeo
Negocio) requires agencies and departments to perform periodic reviews of existing regulations. In 2007, Puerto Ricos Department of
Health conducted one such review at the request of small business owners and the Ice Makers Association. The resulting rule change
has been an improvement for small business owners and the islands public health.
    Ice manufacturing is an important industry in Puerto Rico. Ice is an essential product for an island whose economy is driven in large
part by tourism. In addition, Puerto Rico is prone to power outages, leaving businesses and residences to rely on bagged ice.
    Puerto Ricos Rule 6090, Reglamento General de Salud Ambiental, is meant to ensure that commercially produced ice is clean
and uncontaminated. To ensure this, the rule requires bags that hold ice to be clear, allowing the entire bag to be easily inspected. The
Department of Health interpreted the rule to mean that bags must be completely transparent, with no labeling whatsoever. In the
course of inspecting ice plants, health inspectors would confiscate any bags printed with a company logo and issue fines for rule
violations.
    Business owners and the Ice Manufacturing Association met with Puerto Ricos Office of the Small Business
Advocate/Ombudsman to discuss the situation and see if there was any hope for improvement. The representatives contended that a
transparent bag with printing on one side still allowed a clear view of a bags entire contents. They also pointed out another issue of
concern to the Department of Health: many ice manufacturers on the island were operating on the black market and not complying with
any health or safety laws. Tests of ice at the point of sale had sometimes found illegally high levels of bacteria; a rule that prohibited
identifying labeling actually made it more difficult for the Department of Health to ascertain the source of contaminated ice and stem
public health concerns.
    The Small Business Advocate submitted a formal request for review of the regulation and arranged for Department of Health and
ice industry representatives to meet. After a thorough review and receipt of comments from business owners, the Department of
Health agreed to modify the regulation to permit printing on one side of a transparent plastic bag, and it eliminated the associated fine.
The result was a win for both the agency and small ice manufacturers. Businesses could legally place their logo on one side of the ice
bag and still allow enough visible surface to ensure the cleanliness of the bags contents.
New Challenges and Opportunities
In states that have passed regulatory flexibility laws, the Office of Advocacy works with the small business community, state
legislators, and state government agencies to assist with implementation and to ensure the laws effectiveness. This has brought new
opportunitites for the model legislation initiative.
    In March 2007, Advocacy organized a conference in Kansas City, Missouri, Building a Better Small Business Climate: State
Regulatory Flexibility Best Practices. The purpose of this event was to bring together state policymakers, government officials, and
small business advocacy groups from across the country to share the tools and methodologies that have been developed to successfully
implement state regulatory flexibility laws. The conference served as a means to begin creating a community of practitioners whose
day-to-day responsibilities involve making their states regulatory flexibility law a success. Continuing to build and facilitate
communications among this community will be a focus of Advocacy over the next year.
    Also at this conference Advocacy released a state best practices publication, State Guide to Regulatory Flexibility for Small
Businesses. This guide includes information on what regulatory flexibility is and why it matters, the importance of educating
regulatory officials and small businesses about regulatory flexibility laws, how to prepare the small business economic impact and
regulatory flexibility analysis, the importance of creating transparency in the rulemaking process and documenting the success of state
regulatory flexibility, and examples of state regulatory flexibility programs.(16)
    The Office of Advocacy is strengthened by regional advocates located in the Small Business Administrations 10 regions across
the country. These accomplished individuals are the chief counsel for advocacys direct link to small business owners, state and local
government bodies, and organizations that support the interests of small entities. The Regional Advocates help identify regulatory
concerns of small businesses by monitoring the impact of federal and state policies at the grassroots level. Their work goes far to
develop programs and policies that encourage fair regulatory treatment of small businesses and help ensure their future growth and
prosperity.
Table 5.1 State Regulatory Flexibility Legislation, 2007 Legislative Activity
6 states enacted regulatory flexibility legislation in 2007
Arkansas (SB 55/HB 1147)
Maine (LD 905)
Texas (HB 3430)
Hawaii (SB 188)
Tennessee (SB 55/HB 1276)
Washington (HB 1525)
13 states introduced regulatory flexibility legislation in 2007
Alabama (HB 84)
Maine (LD 905)
Tennessee (SB 55/HB 1276)
Arkansas (SB 55/HB 1147)
Massachusetts (HB 189/SB 133)
Texas (HB 3218/HB 3430/SB 700)
Connecticut (SB 1179)
Mississippi (HB 1229)
Washington (HB 1525)
Hawaii (SB 188)
Montana (SB 148)
Illinois (HB 302)
New Jersey (A 2327/SB 1335)
Table 5.2 State Regulatory Flexibility Legislation, Status as of October 2007
13 states and one territory have active regulatory flexibility statutes
Arizona
Missouri
Oklahoma
Virginia
Colorado
Nevada
Oregon
Wisconsin
Connecticut
New York
Puerto Rico
Indiana
North Dakota
South Carolina
29 states have partial or partially used regulatory flexibility statutes
Alaska
Iowa
New Hampshire
Texas
Arkansas
Kentucky
New Jersey
Utah
California
Maine
New Mexico
Vermont
Delaware
Maryland
Ohio
Washington
Florida
Massachusetts (E.O.)
Pennsylvania
West Virginia
Georgia (EO)
Michigan
Rhode Island
Hawaii
Minnesota
South Dakota
Illinois
Mississippi
Tennessee (E.O.)
8 states, 2 territories, and the District of Columbia have no regulatory flexibility statutes
Alabama
Idaho
Montana
Virgin Islands
District of Columbia
Kansas
Nebraska
Wyoming
Guam
Louisiana
North Carolina
Chart 5.1 Mapping State Regulatory Flexibility Activity, FY
2007
Appendix A
Supplementary Tables
Table A.1 RFA Training in Federal Agencies, FY 2003-2007
In fulfillment of E.O. 13272, Advocacy trained regulatory staff from the following federal departments and agencies in how to comply
with the Regulatory Flexibility Act from July 2003 through September 2007.
Department of Agriculture
	Animal and Plant Health Inspection Service
	Agricultural Marketing Service
	Grain Inspection, Packers, and Stockyards Administration
	Forest Service
	Rural Utilities Service
Department of Commerce
	National Oceanic and Atmospheric Administration
	National Telecommunications and Information Administration
	Office of Manufacturing Services
	Patent and Trademark Office
Department of Education
Department of Energy
Department of Health and Human Services
	Center 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
	Federal Emergency Management Administration
	Transportation Security Administration
	United States Coast Guard
Department of Housing and Urban Development
	Office of Community Planning and Development
	Office of Fair Housing and Equal Opportunity
	Office of Manufactured Housing
	Office of 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
	Drug Enforcement Administration
	Federal Bureau of Prisons
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
	Federal Transit Administration
	Maritime Administration
	National Highway Traffic Safety Administration
	Research and Special Programs Administration
	Surface Transportation Board
Department of the Treasury
	Alcohol and Tobacco Tax and Trade Bureau
	Financial Crimes Enforcement Network
	Financial Management Service
	Internal Revenue Service
	Office of the Comptroller of the Currency
Department of Veterans Affairs
Independent Federal Agencies
	Architectural and Transportation Barriers Compliance Board
	Consumer Product Safety Commission
	Commodity Futures Trading Commission
	Environmental Protection Agency
	Farm Credit Administration
	Federal Communications Commission
	Federal Deposit Insurance Commission
	Federal Election Commission
	Federal Housing Finance Board
	Federal Reserve System
	Federal Trade Commission
	General Services Administration / Federal Acquisition Regulation Council
	National Credit Union Administration
	Nuclear Regulatory Commission
	Pension Benefit Guaranty Corporation
	Securities and Exchange Commission
	Small Business Administration
	Trade and Development Agency
Table A.2 SBREFA Panels through Fiscal Year 2007
Environmental Protection Agency
Nonroad Diesel Engines
03/25/97
05/23/97
09/24/97
10/23/98
Industrial Laundries Effluent
   Guideline
06/06/97
08/08/97
12/12/97
Withdrawn2
Stormwater Phase 2
06/19/97
08/07/97
01/09/98
12/08/99
Transport Equipment Cleaning
   Effluent Guideline
07/16/97
09/23/97
06/25/98
08/14/00
Centralized Waste Treatment
   Effluent Guideline
11/06/97
01/23/98
01/13/99
09/10/03
12/22/00
Underground Injection Control
   Class V Wells
02/17/98
04/17/98
07/29/98
12/07/99
Ground Water
04/10/98
06/09/98
05/10/00
11/08/06
Federal Implementation Plan for
   Regional Nitrogen Oxides
   Reductions
06/23/98
08/21/98
10/21/98
04/28/06
Section 126 Petitions
06/23/98
08/21/98
09/30/98
05/25/99
Radon in Drinking Water
07/09/98
09/18/98
11/02/99
Long Term 1 Enhanced Surface
   Water Treatment
08/21/98
10/19/98
04/10/00
01/14/02
Filter Backwash Recycling
08/21/98
10/19/98
04/10/00
06/08/01
Light Duty Vehicles/Light Duty
   Trucks Emissions And Sulfur
    in Gasoline
08/27/98
10/26/98
05/13/99
02/10/00
Arsenic in Drinking Water
03/30/99
06/04/99
06/22/00
01/22/01
Recreational Marine Engines
06/07/99
08/25/99
10/05/01
08/14/02
11/08/02
Diesel Fuel Sulfur Control
   Requirements
11/12/99
03/24/00
06/02/00
01/18/01
Lead Renovation and
   Remodeling Rule
11/23/99
03/03/00
01/10/06
Metal Products and Machinery
   Effluent Guideline
12/09/99
03/03/00
01/03/01
05/13/03
Concentrated Animal Feedlots
    Effluent Guideline
12/16/99
04/07/00
01/12/01
02/12/03
Reinforced Plastics Composites
04/06/00
06/02/00
08/02/01
04/21/03
Stage 2 Disinfection Byproducts
04/25/00
06/23/00
08/18/03
01/04/06
Long Term 2 Enhanced Surface
   Water Treatment
04/25/00
06/23/00
08/11/03
01/05/06
Emissions from Nonroad and
   Recreational Engines and
   Highway Motorcycles
05/03/01
07/17/01
10/05/01
08/14/02
11/08/02
Construction and Development
   Effluent Guideline
07/16/01
10/12/01
06/24/02
Withdrawn
Aquatic Animal Production Industry
01/22/02
06/19/02
09/12/02
08/23/04
Lime IndustryAir Pollution
01/22/02
03/25/02
12/20/02
01/05/04
Nonroad Diesel Emissions
   Tier 4 Rules
10/24/02
12/23/02
05/23/03
06/29/04
Cooling Water Intake Structures
   Phase III Facilities
02/27/04
04/27/04
11/24/04
06/15/06
Section 126 Petition (2005 Clean Air
   Implementation RuleCAIR)
04/27/05
06/27/05
08/24/05
04/28/06
Federal Implementation Plan for
   Regional Nitrogen Oxides (CAIR)
04/27/05
06/27/05
08/24/05
04/28/06
Mobile Source Air Toxics 
   Control of Hazardous Air
   Pollutants From Mobile Sources
09/07/05
11/08/06
03/29/06
02/26/07
Nonroad Spark-ignition Engines /
   Equipment
08/17/06
10/17/06
05/18/07
Occupational Safety and Health Administration
Tuberculosis
09/10/96
11/12/96
10/17/97
Withdrawn4
Safety and Health Program Rule
10/20/98
12/19/98
In process
Ergonomics Program Standard
03/02/99
04/30/99
11/23/99
 11/14/005
Electric Power Generation,
   Transmission, and Distribution
04/01/03
06/30/03
06/15/05
Confined Spaces in Construction
09/26/03
11/24/03
Occupational Exposure to
   Respirable Crystalline Silica Dust
10/21/03
12/19/03
Occupational Exposure to
   Hexavalent Chromium
01/30/04
04/20/04
10/04/04
02/28/06
Cranes and Derricks in Construction
06/18/06
10/17/06
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 March 20, 2001, which eliminated this final rule under the Congressional Review Act.
Appendix B
Regulatory Review and Reform (r3) Top 10 Rules, 2008*
*Alphabetical by agency
Update Air Monitoring Rules for Dry Cleaners to Reflect Current
Technology
Agency
Environmental Protection Agency (EPA)
Submitter
Small Business Environmental Assistance Program / Small Business Ombudsman
(SBEAP / SBO) National Steering Committee
Description
The Clean Air Acts New Source Performance Standard (NSPS) for petroleum
dry cleaners, 40 CFR 60.624, requires operators to perform an initial test to
verify that the dry cleaning machine is operating properly. Additionally, Clean Air
Act rules governing perchloroethylene (perc) dry cleaners, 40 CFR 63.321,
require operators to use a halogenated hydrocarbon detector capable of detecting
concentrations of perc of 25 parts per million (ppm) or greater to perform weekly
inspections of their dry cleaning equipment.
Small entities
affected
Virtually all of the 28,000 dry cleaners in the United States are small businesses.
Regulatory burden
The required NSPS testing method was developed before the modern closed-loop
dry cleaning technology became widespread. The testing method requires an
operator to open the machine to sample the emissions. However, most modern
machines are closed-loop machines that will automatically shut down if any of the
components are disconnected. Dry cleaners cannot conduct the required test in the
manner specified by the rule. Similarly, halogenated hydrocarbon detectors
typically measure ounces of refrigerant rather than ppm and most are not
calibrated to detect perc at concentrations down to 25 ppm. Dry cleaners using
these detectors therefore cannot meet the 25 ppm sensitivity requirement.
Proposed burden
reduction
EPA should (1) update the outdated NSPS testing methods to reflect current
equipment that is in use in the modern dry cleaning industry, (2) clarify in 40 CFR
63.321 that hydrocarbon detectors for perc are not required to have a sensitivity
down to 25 ppm.
Small entity
benefits
When outdated or inaccurate testing methods are revised, dry cleaners will have a
method for demonstrating compliance that fits the modern equipment they use.
Advocacy contact
Keith Holman, advocacy@sba.gov
Flexibility for Community Drinking Water Systems
Agency
Environmental Protection Agency (EPA)
Submitter
National Rural Water Association
Description
The 1996 Amendments to the Safe Drinking Water Act established a process to
allow small drinking water systems that cannot meet EPAs national drinking
water standards to meet an alternative standard. Under 40 CFR142.303(a) and
(b), the drinking water system must demonstrate that the alternative standard is
protective of human health and is necessary to avoid financial hardship for the
community where the system is located, and that the state regulatory agency
agrees with the alternative standard. EPA considers a communitys ability to pay
when it determines how much a small system must spend to meet the national
standards.
Small entities
affected
Tens of thousands of small, often rural communities with limited resources to
install and operate the treatment equipment.
Regulatory burden
No small drinking water system has ever qualified to obtain an affordability
variance. Small systems are currently required to spend up to $500 per household
to meet the national standards, a severe strain in many localities. These
communities may also be forced to spend large sums of money to address trace
contaminants, such as iron, that have very little potential for serious health
impacts.
Proposed burden
reduction
EPA should consider alternative methods for determining affordability, including
using different percentages of median household income in the community. If a
systems cost exceeds a communitys ability to pay, the standard would be
deemed unaffordable, and the system could qualify for a variance if the state
approves and the alternative standard remains protective of human health.
Small entity
benefits
Small, rural communities would have greater flexibility to commit resources
toward the issues of greatest importance to the community.
Advocacy contact
Kevin Bromberg, advocacy@sba.gov
Simplify the Rules for Recycling Solid Waste
Agency
Environmental Protection Agency (EPA)
Submitter
iSi Environmental Services, Synthetic Organic Chemical Manufacturers
Association, National Paint and Coatings Association
Description
Current hazardous waste management regulations, 40 CFR Parts 260 and 265,
govern facilities that store, treat, or dispose of hazardous wastes. Currently many
useful materials that could otherwise be reused are required to be handled,
transported, and disposed of as hazardous wastes.
Small entities
affected
Hundreds of thousands of businesses, primarily in manufacturing, are subject to
the hazardous waste standards. Many of these facilities are engaged in recycling
hazardous wastes, including solvents recovery.
Regulatory burden
The hazardous waste standards are far more stringent, complex, and costly than
those required for materials being recovered for reuse.
Proposed burden
reduction
EPA is now considering less stringent standards for materials being recycled,
including solvents that are recovered onsite. EPA should adopt a definition of
solid waste that would eliminate certain forms of recycled materials from being
considered hazardous wastes, allowing them to be recycled more easily.
Small entity
benefits
The approach will affect more than 20,000 facilities and will reduce costs, while
still protecting the environment and encouraging recycling rather than the use of
virgin materials.
Advocacy contact
Kevin Bromberg, advocacy@sba.gov
EPA Should Clearly Define Oil in its Oil Spill Rules
Agency
Environmental Protection Agency (EPA)
Submitter
American Chemistry Council (ACC), National Paint and Coatings Association
(NPCA)
Description
The Spill Prevention, Control, and Countermeasure (SPCC) rules, 40 CFR, Part
112, govern the prevention and response requirements applicable to facilities that
store oil where there is a potential threat of a release of oil to navigable waters.
Small entities
affected
The SPCC rules affect hundreds of thousands of small businesses; a new
definition of oil would affect the regulatory status of nonpetroleum oils and
chemicals at more than 10,000 small firms.
Regulatory burden
The rule has been in place since 1973, and many facilities are unsure whether a
given product is considered oil or not, and therefore whether the SPCC rules
apply. In June 2007, ACC and NPCA requested that EPA provide some additional
guidance as to the definition of oil to eliminate ambiguity in the current broad
definition. The current definition relies on the creation of an oil sheen or
discoloration on surface watera very broad definition that relies on the
judgment of the person making the observation and a variety of other factors. EPA
has also moved away from the Coast Guard list of materials that are considered oil
Proposed burden
reduction
The ACC urges the EPA to return to the 1975 decision tree procedure developed
by the EPAs Office of Water, as well as the Coast Guards list. This decision tree
supported a distinction between materials thought to be oil generated at petroleum
refineries, and agricultural product processing materials and chemicals created
through processing in the chemical production and related industries. The Coast
Guard approach relies on this decision tree procedure.
Small entity
benefits
According to the nominator, more than 10,000 small facilities with products that
are not petroleum-based oil could be relieved from the burdens of meeting the
SPCC rules, which were designed to prevent oil spills.
Advocacy contact
Kevin Bromberg, advocacy@sba.gov
Update Flight Rules for the Washington, DC, Metropolitan Area
Agency
Federal Aviation Administration (FAA), U.S. Department of Transportation
Submitter
David Wartofsky, Potomac Airfield
Description
Following the events of September 11, 2001, the FAA issued an emergency rule
establishing an air defense identification zone (ADIZ) for the region surrounding
Washington, DC. The emergency rule imposed a 15-mile flight restricted zone
(FRZ) and a 30-mile ADIZ emanating from Reagan National Airport. In 2005, the
FAA proposed to make the emergency rule permanent (70 Fed. Reg. 45,250,
August 4, 2005). The rule, if finalized, would impose flight operation
requirements on aircraft operations within that area, including requirements that
aircraft operators (1) file and activate a flight plan before entering (or re-entering)
the restricted area; (2) maintain two-way radio communication with air traffic
control; and (3) obtain and display a discrete transponder code while operating
within the area. The FAA has concluded that while these restrictions are likely to
cause considerable burdens to both air traffic control and the aviation sector
within the affected area, they are needed for security reasons.
Small entities
affected
Three small airports in the FRZ and a number of other airports in the ADIZ are
significantly affected by these restrictions. Further, the restrictions have caused a
significant economic impact on the region as a whole.
Regulatory burden
The FRZ and ADIZ have significantly restricted aviation within the Washington,
DC, region, including limiting flights to and from the three small airports in the
FRZ. It is likely that all three of these airports (and any aviation companies
operating at the airports) will go out of business if the rules are finalized. The rule
also affects some 150 other airports and numerous businesses operating in the
ADIZ.
Proposed burden
reduction
A review of the flight restriction rule could identify provisions that are
unnecessary, inefficient, or outdated for affected small entities. The submitter has
suggested a variety of alternatives, including an expandable FRZ that could be
extended in a time of heightened security. By conducting a coordinated review of
the rule, the FAA, the Department of Homeland Security, the Department of
Defense, and the Secret Service would be able to determine whether the rule could
be improved, while continuing to provide adequate security. A full analysis of
both the security benefits and the economic impacts should be completed prior to
finalizing any rule.
Small entity
benefits
Review and potential revision of the flight restriction rule could help small entities
have a more predictable use of aviation space and could enhance economic
activity within the Washington, DC region.
Advocacy contact
Bruce Lundegren, advocacy@sba.gov
Eliminate Duplicative Financial Requirements for Architect-
Engineering Services Firms in Government Contracting
Agency
Federal Acquisition Regulation Council (FAR Council)
Submitter
Council on Federal Procurement of Architectural and Engineering Services
(COFPAES)
Description
The existing regulation, 48 CFR 52.232-10, provides for a 10 percent withholding
or retainage of fees on firms providing fixed-price architectural-engineering
services.
Small entities
affected
Currently more than 230,000 small architectural and engineering (A&E) firms are
in the federal procurement system.
Regulatory burden
The current provision is counter to the Brooks Act, which allows A&E firms and
the procuring agency to meet to discuss the design and scope of services before
bidding on the work. In some government contracts, the retainage is in addition to
bonding requirements. Retainage restricts the cash flow of small businesses, with
very little benefit to the government.
Proposed burden
reduction
The FAR Council should consider removing this provision or reducing the
percentage from 10 to 5, as it has done for other services.
Small entity
benefits
A change in this regulation will help increase the cash flow of small A&E firms
that contract with the federal government. This change should also encourage
more firms to enter the federal procurement market, with concomitant
improvements in the quality of services.
Advocacy contact
Major Clark, advocacy@sba.gov
Simplify the Home Office Business Deduction
Agency
Internal Revenue Service (IRS), U.S. Department of the Treasury
Submitter
National Association for the Self-Employed (NASE) and Eric Blackledge,
Blackledge Furniture
Description
Internal Revenue Code section 280A(c)(1) permits a deduction for a home office
if it is the principal place of business of the taxpayer, used exclusively for
business, or used to meet with patients, clients, or customers. However, current
IRS regulations do not provide a concise definition of the elements of section
280A(c)(1). In the absence of final regulations describing how to qualify for and
calculate the deduction, IRS policies and case law have made it more complicated
for a home-based business owner to learn how to obtain the exemption.
Small entities
affected
Home-based businesses constitute 53 percent of all small businesses.
Regulatory burden
The requirements to qualify for and calculate the deduction are confusing for
taxpayers and do not account for changes in technology that affect the way
business is conducted. Consequently, many at-home workers do not take
advantage of the home office business deduction.
Proposed burden
reduction
The IRS should revise the rules to permit a standard deduction for home-based
businesses. Similar to the Form 1040 standard deduction, the home office
business deduction should be optional. Taxpayers who wish to claim the home
office deduction could choose to continue to follow the current home office
deduction rules or they could choose the new standard deduction.
Small entity
benefits
Home-based business owners would have a simplified, less burdensome way of
taking advantage of the home office business deduction.
Advocacy contact
Dillon Taylor, advocacy@sba.gov
Update MSHA Rules on the Use of Explosives in Mines to
Reflect Modern Industry Standards
Agency
Mine Safety and Health Administration (MSHA), U.S. Department of Labor
Submitter
Institute of Makers of Explosives and the International Society of Explosives
Engineers
Description
MSHA regulations, 30 CFR, Parts 56, 57, and 77, govern the use of explosives in
various types of mines, including surface metal and nonmetal mines, underground
metal and nonmetal mines, and surface coal mines. The overriding purpose is to
promote safety. Key provisions include storage, transportation, use, detonation,
maintenance, and other issues. The Part 77 regulations have been in place since
1971, while the Parts 56 and 57 regulations were last updated in 1996. According
to the submitter, the rules are outdated and need to be reformed to comport to
current industry standards.
Small entities
affected
According to the submitter, some 29,000 mines operate in the United States, 95
percent of which are small businesses. Nearly every mine is affected by the rule.
Regulatory burden
The burdens are both technical and safety-related. According to the submitter,
current MSHA rules do not address some fundamental aspects of explosive safety,
such as electronic detonation. The submitter notes that a small business could
receive a citation for operating in conformity with current industry best practices,
which are not consistent with MSHAs outdated rules.
Proposed burden
reduction
The submitter would like MSHA to update its regulations consistent with current
industry standards as well as with OSHAs more up-to-date regulations on
explosives.
Small entity
benefits
The submitter believes the change would reduce compliance costs and improve
safety by providing greater clarity and consistency.
Advocacy contact
Bruce Lundegren, advocacy@sba.gov
Update OSHAs Medical / Laboratory Worker Rule
Agency
Occupational Safety and Health Administration (OSHA), U.S. Department of Labor
Submitter
Scott George, Mid-America Dental and Hearing Center
Description
OSHAs Bloodborne Pathogens Standard, 29 CFR 1910.1030, is designed to
protect workers from exposure to bloodborne pathogens (viruses and other
microorganisms) such as hepatitis B virus (HBV), and hepatitis C virus (HCV).
These exposures result primarily from needlestick and other sharps-related
injuries as well as from other employee exposures to blood. The rule requires any
employer with workers exposed to blood or other potentially infectious materials
to implement an exposure control plan for the worksite. The plan must describe
how an employer will use a combination of engineering and work practice
controls; ensure the use of personal protective clothing and equipment; and
provide training, medical surveillance, hepatitis B vaccinations, and signs and
labels, among other provisions.
Small entities
affected
The rule affects every small business health care office and lab.
Regulatory burden
The rule makes no provision for medical facilities where employees have very
limited exposure to blood, such as dental labs. The submitter states that the risk of
employee illness in many circumstances is extremely low and that compliance with
the rule costs billions of dollars, needlessly driving up the cost of medical care.
Proposed burden
reduction
The submitter would like the rule to be reviewed and the requirements tiered to
be more flexible depending on the amount of blood and bodily fluids present at
the facility. The submitter believes the current rule is more appropriate for
facilities that deal with larger amounts of blood and bodily fluids, such as trauma
centers, but not for some small health care facilities.
Small entity
benefits
The submitter believes the review and potential revision would result in cost
savings to small health care facilities and would lower health care costs overall.
Advocacy contact
Bruce Lundegren, advocacy@sba.gov
Update Reverse Auction Techniques for Online Procurement of
Commercial Items
Agency
Office of Federal Procurement Policy (OFPP), Office of Management and Budget
Submitter
Fairness in Procurement Alliance
Description
In the federal governments procurement system, the live electronic reverse
auction technique was designed as a contracting tool to provide contracting
officers with flexibility to make contract awards in a timely manner. Bidders who
use the technique submit their bids through an online intermediary and are
informed of competitors prices but not their identity. Bidders offer successively
lower prices until no lower price is offered. The agency must then decide whether
it will make the award. Some current techniques used by contracting officers may
have the unintended result of circumventing Federal Acquisition Regulation
(FAR) Part 19, which requires agencies to set aside certain dollar threshold
contracts for small businesses. The problem exists because no specific FAR
regulation instructs contracting officers in how to use the reverse auction tool.
Small entities
affected
All federal small business prime contractors are affected by this process.
Regulatory burden
Small business prime contractors are being subjected to acquisitions processes
that may vary from agency to agency. This variability may impose unnecessary
costs to compete on small business prime contractors.
Proposed burden
reduction
The OFPP should review the reverse auction technique and consider structuring a
federal government-wide rule that continues to provide the contracting officer with
the flexibility embedded in reverse auctions while not conflicting with the well
established FAR Part 19, which lays out small business competition requirements.
Small entity
benefits
A well-defined regulation for reverse auctions will provide the small business
federal contractor the business template necessary to measure the cost to
compete burdens and benefits associated with contract bidding.
Advocacy contact
Major Clark, advocacy@sba.gov
Appendix C
Section 610 of the Regulatory Flexibility Act: Best Practices   for Federal
Agencies
Introduction
Section 610 of the Regulatory Flexibility Act (RFA)(17) requires federal agencies to review regulations that have a significant
economic impact on a substantial number of small entities(18) within 10 years of their adoption as final rules. These periodic rule
reviews are a mechanism for agencies to assess the impact of existing rules on small entities and to determine whether the rules should
be continued without change, or should be amended or rescinded, consistent with the objectives of applicable statutes. Agency
compliance with section 610s periodic review requirement has varied substantially from agency to agency since 1980.(19) While some
agencies systematically review all of their existing rules, other agencies review few, if any, of their current rules. Agencies also vary
considerably in the amount of public involvement they allow, and the amount of information they provide to the public about their
reviews.
    The Office of Advocacy, an independent office within the U.S. Small Business Administration (Advocacy), has previously given
relatively little guidance to agencies on section 610. In 2003, pursuant to the requirements of Executive Order 13,272,(20) Advocacy
issued a general guide on how to comply with the RFA, including section 610.(21) The 2003 guide did not, however, address
commonly asked questions about section 610, such as the timing and scope of reviews, how the public can be involved, and how
agencies should communicate with the public about their reviews. The 2003 guide also did not provide examples of retrospective
reviews that were, in Advocacys view, conducted properly.
    This best practices document is intended to provide Advocacys interpretation of section 610 of the RFA and answer common
questions about conducting retrospective reviews of existing regulations in a transparent manner. Advocacy intends this document to
supplement the 2003 RFA guide; like the 2003 guide, it was developed to meet Advocacys continuing responsibility under Executive
Order 13272 to notify agency heads from time to time of the requirements of the [RFA].(22)
The statutory text of 5 U.S.C. Section 610
 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 will have a significant economic impact upon a substantial
number of small entities. Such a 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.
Legislative history of the RFA relating to section 610
Statements made during the 1980 debate on the Regulatory Flexibility Act demonstrate that Congress intended for section 610 to be a
mechanism that requires agencies to periodically re-examine the regulatory burden of their rules vis--vis small entities, considered in
the light of changing circumstances.(23) This view was also reflected in Advocacys initial 1982 guidance explaining the then-new
RFA, which stated that
The RFA requires agencies to review all existing regulations to determine whether maximum flexibility is being provided to
accommodate the unique needs of small businesses and small entities. Because society is not static, changing environments and
technology may necessitate modifications of existing, anachronistic regulations to assure that they do not unnecessarily impede
the growth and development of small entities.(24)
    Put simply, the objective of a section 610 review is like the goal of many other retrospective rule reviews(25)  to determine
whether an existing rule is actually working as it was originally intended and whether revisions are needed. Has the problem the rule
was designed to address been solved? Are regulated entities (particularly small entities) able to comply with the rule as anticipated by
the agency? Are the costs of compliance in line with the agencys initial estimates? Are small businesses voicing continuing concerns
about the difficulty they have complying with the rule? The section 610 review is an excellent way to address these questions.
When is a section 610 review necessary?
Is a section 610 review necessary even if the current rule did not impose a significant economic impact on a substantial number of
small entities at the time the rule was promulgated? In some cases, yes. Even if an agency was originally able to certify properly under
section 605 of the RFA that a rule would not have a significant economic impact on a substantial number of small entities,(26)
changed conditions may mean that the rule now does have a significant impact and therefore should be reviewed under section 610.
For example, there may be many more small businesses that are subject to the rule now than when the rule was promulgated. The cost
of compliance with a current rule may have sharply increased because of a required new technology. If there is evidence (such as new
cost or burden data) that a rule is now having a significant economic impact on a substantial number of small entities, including small
communities or small nonprofit organizations, Advocacy believes that the agency should conduct a section 610 review.
    Advocacy is aware that some agencies interpret section 610 not to require the periodic review of rules that were originally
certified when they were promulgated as having no significant economic impact on a substantial number of small entities. This narrow
interpretation of the section 610 review requirements discounts several important considerations. First, evidence of significant current
impacts to small entities from an existing rule may call into question the accuracy of the original determination that the rule would
have no significant impact. Second, as time passes and the agency (along with regulated small entities) are better able to measure and
understand the impacts of a regulation, it benefits the agency to use the periodic review process to update their rules and perform
regulatory housekeeping. Third, limiting section 610 reviews only to rules that were found to have a significant economic impact on
a substantial number of small entities at the time of promulgation would severely undercut section 610. EPA and OSHA, for
examplewhich between them determine that at most one or two rules each year will have such an impactwill exclude each of the
hundreds of other rules promulgated annually which may now significantly affect small entities from section 610 review. Given the
legislative history of section 610, it is very difficult to believe that Congress intended this outcome. Finally, a reading of the plain
language of section 610 supports Advocacys interpretation. If Congress meant to limit periodic reviews, it would have simply
required agencies to review rules that had a significant impact, rather than rules which have a significant impact.
    An agency may learn about the current impacts of an existing rule through complaints from small entities or petitions for a section
610 or other retrospective review of the rule. If these complaints and/or petitions are founded on reliable cost and impact data, the
agency will have a clear indication that small entities are now being affected by the rule.
Scope of the review: What should be included?
Once an agency has determined that an existing rule has a significant economic impact on a substantial number of small entities at the
present time, the agencys section 610 review should, at a minimum, address each of the five factors listed in section 610(b)(1)-(5):
Whether or not there is a continuing need for this rule, consistent with the stated objectives of the applicable statutes;
Whether the public has ever submitted comments or complaints about this rule;
The degree of complexity of this rule;
Whether some other federal or state requirement accomplishes the same regulatory objective as this rule; and
The length of time since the agency has reviewed this rule, and/or the extent to which circumstances have changed which may affect
regulated entities.
    Particular attention should be paid to changes in technology, economic circumstances, competitive forces, and the cumulative
burden faced by regulated entities. Has the impact of the rule on small entities remained the same?
    Section 610(b) requires an agency to evaluate and minimize any significant economic impact of a rule on a substantial number of
small entities in a manner consistent with the stated objectives of applicable statutes. To accomplish this, agencies may want to use
an economic analysis similar to the initial regulatory flexibility analysis (IRFA) under section 603 of the RFA, taking into account the
limitations on data availability and limited agency resources.(27) Agencies have the discretion to place significant weight on other
relevant factors, in addition to the types of economic data required by an IRFA. These other factors include an agencys experience in
implementing the rule, as well as the views expressed over time by the public, regulated entities, and Congress. With the benefit of
actual experience with a rule, the agency and other interested parties should be in a good position to evaluate potential improvements
to the rule. Several factors deserve attention here such as the benefits achieved by the regulation, unintended market effects and
market distortions, unusually high firm mortality rates in specific industry subsectors, and widespread noncompliance with reporting
and other paperwork requirements. Thus, a useful review should go beyond obvious measures such as ensuring that regulatory
requirements are expressed in plain language and that paperwork can be filed electronically. The analysis should be aimed at
understanding and reducing burdens that unnecessarily impact small entities.
    As a matter of good practice, the section 610 analysis should be based on relevant data, public comments, and agency experience.
The agency should make use of available data and data supplied by the public, and indicate the sources of the data. To the extent that
an agency relies on specific data to reach a conclusion about the continuing efficacy of a rule, the agency should be able to provide
that data. The agency should explain its assumptions so that stakeholders can understand its analysis.
Timing of the review: When does the agency have to start and finish?
The language of section 610 specifies that the review should take place within 10 years after the date a rule is promulgated. While
agencies need to gain some experience with a rule before undertaking a retrospective review, the review may take place prior to the 10-
year mark. If an agency substantially revises a rule after its initial promulgation, it is arguable as to whether the 610 review may be
delayed to correspond to the revision date. Advocacy would not likely object to a revision of the date, but agencies should seek input
from Advocacy on this point.
    Section 610 does not specifically set a limit on the amount of time for a rule review. Some agencies have reported that they spend
more than a year on each section 610 review. It is within an agencys discretion to determine how much time it needs to spend on
retrospective rule reviews. Advocacy recognizes that section 610 reviews may take more than a year in order to permit adequate time
to gather and analyze data, to allow public comment, and to consider those comments in the review. Of course, some reviews could
take less time, based on the complexity of the issues and the nature of the regulated industry.
    Agencies may wish to take advantage of the opportunity afforded in section 605(c) of the RFA to consider a series of closely
related rules as one rule for periodic review purposes. An agency can accomplish a comprehensive section 610 review of closely
related rules, satisfying the requirements of the RFA while potentially reducing the agency resources required.
How should agencies communicate with interested entities about section 610
reviews they are conducting?
Section 610(c) of the RFA requires agencies to publish in the Federal Register a list of the rules they plan to review in the upcoming
year. Agencies use the Unified Regulatory Agenda for this purpose.(28) This listing requirement is intended to give small entities
early notice of the section 610 reviews so that they will be ready and able to provide the agency with comments about the rule under
review. As a practical matter, however, agencies often give stakeholders no other information about the ongoing status of a section
610 review, what factors an agency is considering in conducting the review, how comments can be submitted to the agency, or,
ultimately, the factual basis on which the agency made its section 610 review findings.
    Agencies should communicate with interested entities about the status of ongoing section 610 reviews, as well as those they have
completed, to enhance transparency. This information may be most efficiently communicated via an agency website or other
electronic media, and should inform interested parties of their ability to submit comments, as well as the agencys commitment to
consider those comments. Several agencies already utilize web-based communications as an outreach tool during section 610
reviews.(29)
    Insights about an existing regulation received from regulated entities and other interested parties should be a key component of a
retrospective rule review. By making the review process transparent and accessible, agencies are more likely to identify improvements
that will benefit all parties at the conclusion of the review. Advocacy can help agencies who wish to communicate with small entity
stakeholdersby hosting roundtables, working through trade groups, and getting a specific message to a targeted audience. Advocacy
is ready to assist agencies in their outreach efforts.
Can other agency retrospective rule reviews satisfy the requirements of section 610?
Yes. Agencies that undertake retrospective rule reviews to satisfy other agency objectives may also be able to satisfy the periodic
review requirement of section 610, as long as the rule reviews are functionally equivalent. For example, agencies that evaluated a
current regulation pursuant to the Office of Management and Budgets 2002 publicly-nominated rule reform process(30) or OMBs
manufacturing rule reform process(31) could qualify as section 610 reviews, if they otherwise met the criteria for section 610 review.
Similarly, agencies that undertook retrospective reviews of their regulatory programs because of complaints or petitions from
regulated entities could qualify as section 610 reviews  as long as the review includes the minimum factors required by section 610.
The best way for agencies to get credit for a section 610 review in these circumstances is to communicate adequately with
stakeholders, and with Advocacy.
Examples
 In Advocacys view, what are some recent retrospective rule reviews (conducted pursuant to section 610 or otherwise) that have been
successful?
Federal Railway Administrations Section 610 Review of Railroad Workplace Safety. On December 1, 2003, the Department of
Transportations Federal Railroad Administration completed a section 610 review of its railroad workplace safety regulations.
After determining that the workplace safety regulations had a significant economic impact on a substantial number of small
entities, the FRA examined the rules in light of section 610s review factors. Although the FRA did not recommend any
regulatory change as a result of this review, the agency provided a good description of its analysis of the workplace safety
regulations under each review factor and its conclusions. See
www.fra.dot.gov/downloads/safety/railroad_workplace_safety.pdf.
EPAs RCRA Review.  As a result of public nominations for reforms to the Environmental Protection Agencys hazardous waste
management program under the Resource Conservation and Recovery Act (RCRA), EPA evaluated the program and identified
duplicative requirements, such as forcing filers to submit reports to multiple locations when one location is adequate. By reducing
or eliminating these procedures after public notice and comment, EPA enabled regulated entities to collectively save up to $3
million per year while preserving the protections of the RCRA program. The retrospective review was successful because it
involved a detailed review of the programs requirements and costs, based on years of practical experience. The agency considered
technical changes such as computerization that have made some of the older paperwork requirements redundant, and found ways to
modernize the program to reflect current realities. See 71 Fed. Reg. 16,862 (April 4, 2006).
OSHA Excavations Standard. In March 2007, the Occupational Safety and Health Administration (OSHA) completed a section 610
review of its rules governing excavations and trenches. These standards had been in place since 1989, and were designed to
ensure that trenches do not collapse on workers and that excavated material does not fall back into a trench and bury workers. In
the review, OSHA did a good job of seeking public input on how and whether the rule should be changed. While the agency
ultimately decided that no regulatory changes to the standard were warranted, it did determine that additional outreach and worker
training would help continue the downward trend of fewer deaths and injuries from trench and excavation work. OSHA
concluded that its current excavations standard has reduced deaths from approximately 90 per year to about 70 per year. See 72
Fed. Reg. 14,727 (March 29, 2007).
FCC Section 610 Review of 1993-1995 Rules. In May 2005, the Federal Communications Commission undertook a section 610
review of rules the Commission adopted in 1993, 1994, and 1995 which have, or might have, a significant economic impact on a
substantial number of small entities. The FCC solicited public comment on the rules under review, explained the criteria it was
using to review the rules, and gave instructions on where to file comments. This approach was transparent because the agency
allowed adequate time for comments (three months) and gave interested parties sufficient information to prepare useful
comments. See 70 Fed. Reg. 33,416 (June 8, 2005).
How can agencies get section 610 assistance from the Office of Advocacy?
The Office of Advocacy is ready to assist agencies that are planning a retrospective review of their regulations to ensure that the
review fully meets the requirements of section 610. Discussions with the Office of Advocacy are confidential interagency
communications, and Advocacy staff members are ready to assist. For more information about this guidance, or for other questions
about compliance with section 610, please contact Advocacy at (202) 205-6533.
Appendix D
The Regulatory Flexibility Act
Appendix E
Executive Order 13272
Appendix F
Abbreviations
ACC		American Chemistry Council
Access Board	Architectural and Transportation Barriers Compliance Board
ADA		Americans with Disabilities Act
ADIZ		air defense identification zone
A&E		architecture and engineering
ALEC		American Legislative Exchange Council
AMP		average manufacturer price
ANPRM		advance notice of proposed rulemaking
APA		Administrative Procedure Act
APHIS		Animal and Plant Health Inspection Service
BMP		best management practices
CAIR		Clean Air Act (2005) Implementation Rule
CFR		Code of Federal Regulations
CGMP		current good manufacturing practice
CHD		critical habitat designation
CMS		Centers for Medicare and Medicaid Services
COFPAES	Council on Federal Procurement of Architectural and Engineering Services
CPNI		customer proprietary network information
CPSC		Consumer Product Safety Commission
CTGs		control techniques guidelines
DFARS		Defense Federal Acquisition Supplement
DHS		Department of Homeland Security
DME		durable medical equipment
DMEPOS		durable medical equipment, prosthetics, orthotics, and supplies
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
DOT		Department of Transportation
DRS		Direct Registration System
DTC		Depository Trust Company
EBSA		Employee Benefits Security Administration
Education		Department of Education
E.O.		Executive Order
EPA		Environmental Protection Agency
EPCRA		Emergency Planning and Community Right to Know Act
ESA		Employment Standards Administration
ESD		examination support document
EVAP		evaporative systems
ETA		Employment and Training Administration
FAA		Federal Aviation Administration
FAR		Federal Acquisition Regulation
FAST		fast automated securities transfer
FCC		Federal Communications Commission
FDA		Food and Drug Administration
Fed. Reg.		Federal Register
FHWA		Federal Highway Administration
FIP		federal implementation plan
FMCSA		Federal Motor Carrier Safety Administration
FMLA		Family and Medical Leave Act of 1993
FNPRM 		further notice of proposed rulemaking
FRA		Federal Railroad Administration
FRFA		final regulatory flexibility analysis
FRZ		flight restricted zone
FWS		Fish and Wildlife Service
FY			fiscal year
GAO		Government Accountability Office
GHS		Globally Harmonized System of Classification and Labeling of Chemicals
GIPSA		Grain Inspection, Packers and Stockyard Administration
GSA		General Services Administration
HBV		hepatitis B virus
HCAHPS		Hospital Consumer Assessment of Healthcare Providers and Systems
HCFA		Health Care Financing Agency, now renamed, see CMS
HCFC		hydrochlorofluorocarbon
HCV		hepatitis C virus
HHS		Department of Health and Human Services
HUD		Department of Housing and Urban Development
ICE		Bureau of Immigration and Customs Enforcement
IRCA		Immigration Reform and Control Act of 1986
IRFA		initial regulatory flexibility analysis
IRS		Internal Revenue Service
LOA		letter of authorization
MHz		megahertz
MSGP		multisector general permit
MSHA		Mine Safety and Health Administration
NASA		National Aeronautics and Space Administration
NASE		National Association for the Self-Employed
NATSS		national air tour safety standards
NFIB		National Federation of Independent Business
NHTSA		National Highway Traffic Safety Administration
NMFS		National Marine Fisheries Service
NPCA		National Paint and Coating Association
NPDES		National Pollutant Discharge Elimination System
NPRM		notice of proposed rulemaking
NPS		National Park Service
NSPS		New Source Performance Standard
OCC		Office of the Comptroller of the Currency
OFPP		Office of Federal Procurement Policy
OIRA		Office of Information and Regulatory Affairs
OMB		Office of Management and Budget
OSHA		Occupational Safety and Health Administration
OTS		Office of Thrift Supervision
PCAOB		Public Company Accounting Oversight Board
perc		perchloroethylene
PHMSA		Pipeline and Hazardous Materials Safety Administration
P.L.		Public Law
PM		particulate matter
ppm		parts per million
PTO		Patent and Trademark Office
r3				Regulatory Review and Reform initiative
RACT		reasonably available control technology
RFA		Regulatory Flexibility Act
SBA		Small Business Administration
SBEAP		Small Business Environmental Assistance Program
SBEC		Small Business & Entrepreneurship Council
SBO		small business ombudsman
SBREFA		Small Business Regulatory Enforcement Fairness Act
SEC		Securities and Exchange Commission
SER		small entity representative
SPCC		Spill Prevention Control and Countermeasures
SSA		Social Security Administration
State		Department of State
Treasury		Department of the Treasury
TRI		toxics release inventory
TSA		Transportation Security Administration
TTB		Alcohol and Tobacco Tax and Trade Bureau
USAID		U.S. Agency for International Development
U.S.C.		United States Code
USDA		United States Department of Agriculture
VA		Department of Veterans Affairs
VOC		volatile organic compound
VoIP		Voice over Internet Protocol
ENDNOTES
1.   The report is available at: www.gao.gov/new.items/d07791.pdf.
2.   The best practices guide is also available at www.sba.gov/advo/r3.
3.   A list of all 82 r3 nominations can be found at www.sba.gov/advo/r3.
4.   For detailed information about the Top 10 r3 rules, see Appendix B of this report.
5.   See 73 Fed. Reg. 4157 (January 24, 2008).
6.   For more information, visit the Office of Advocacys r3 website at www.sba.gov/advo/r3.
7.   Exec. Order No. 13272  3(a). See Table A.1 in Appendix A for a summary of compliance with section 3(a) of E.O. 13272.
8.   Exec. Order No 12866, 58 Fed. Reg. 51,735 (Sept. 30, 1993) triggers a review by OIRA of any significant regulatory action.
9.   Id. at  3(c).
10.  Exec. Order No. 13272  2(b).
11.  E.O. 13272 made it easier for Advocacy to comment early on in federal agency rulemaking, and it required that Advocacy train agencies on how to
comply with the Regulatory Flexibility Act.
12.  Because all of the cost savings do not occur immediately, or within the first year, to obtain a total cost figure it is necessary to discount costs that occur in
the future to make them comparable to costs today. OMBs rule is to use 7 percent as the primary, conservative figure.?
13. The text of Advocacys model legislation, updated versions of the state regulatory flexibility legislative activity map and the regional advocates contact
information can be found on the Office of Advocacy website at www.sba.gov/advo/laws/law_modeleg.html. ?
14. These states include Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Maine, Massachusetts, Michigan, 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. ?
15.  These states include Alaska, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Indiana, Kentucky, Maine, Massachusetts, Missouri, North Dakota, New
Mexico, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.??
16.  A copy of the guide is available on Advocacys website at www.sba.gov/advo/laws/rfa_stateguide07.pdf. ?
17.  5 U.S.C.  610 (2000).
18.  Small entities include small businesses that meet the Small Business Administration size standard for small business concerns at 13 CFR  121.201,
small governmental jurisdictions with a population of less than 50,000, and small organizations that are independently owned not-for-profit enterprises and
are not dominant in their field.  See 5 U.S.C.  601(3)-(5).?
19.  See, for example, Government Accountability Office, Reexamining Regulations: Opportunities Exist to Improve Effectiveness and Transparency of
Retrospective Reviews (GAO-07-791), July 2007; General Accounting Office, Regulatory Flexibility Act: Agencies Interpretations Vary (GAO/GGD-99-
55) April 1999. See also Michael R. See, Willful Blindness: Federal Agencies Failure to Comply with the Regulatory Flexibility Acts Periodic Review
Requirement  and Current Proposals to Invigorate the Act, 33 Fordham Urb. L.J. 1199-1255 (2006).?
20.  Exec. Order No. 13272  2(a), 67 Fed. Reg. 53,461 (Aug. 13, 2002) (Advocacy . . . shall notify agency heads from time to time of the requirements of
the [RFA], including by issuing notifications with respect to the basic requirements of the Act . . . )
21.  Office of Advocacy, How to Comply with the Regulatory Flexibility Act: A Guide for Government Agencies (May 2003) available at
www.sba.gov/advo/laws/rfaguide.pdf
22.  Exec. Order No. 13272  2(a), 67 Fed. Reg. 53,461 (Aug. 13, 2002).?
23.  House Debate on the Regulatory Flexibility Act, 142  Cong. Rec. H24,575, H24,583-585 (daily ed. Sept. 8, 1980) At least once every 10 years, agencies
must assess regulations currently on the books, with a view toward modification of those which unduly impact on small entities. (Statement of Rep.
McDade) [A]gencies must review all regulations currently on the books and determine the continued need for any rules which have a substantial impact
on small business. (Statement of Rep. Ireland).  Similarly, the section-by-section analysis of the periodic review provision of S. 299, which became the
RFA, notes that the required factors in a section 610 review mirror the evaluative factors in President Carters Executive Order 12044, Improving
Government Regulations.  Exec. Order 12044, 43 Fed. Reg. 12,661 (March 24, 1978).  Pursuant to that Executive Order, President Carter issued a
memorandum to the Heads of Executive Departments and Agencies in 1979, further instructing federal agencies:  As you review existing regulatory and
reporting requirements, take particular care to determine where, within statutory limits, it is possible to tailor those requirements to fit the size and nature
of the businesses and organizations subject to them.  President Jimmy Carter, Memorandum to the Heads of Executive Departments and Agencies,
November 16, 1979.
24.  Office of Advocacy, The Regulatory Flexibility Act
(October 1982).
25.  Typical agency-initiated retrospective regulatory reviews
include post-hoc validation studies, reviews conducted 	pursuant to petitions for rulemaking or reconsideration, 	paperwork burden reviews, and
reviews undertaken to 	advance agency policies.?
26.  See 5 U.S.C.  605(b).?
27.  See 5 U.S.C.  603.  Indeed, the legislative history of S.299, which became the RFA, notes that [i]n reviewing existing rules, agencies should follow the
procedures described in sections 602-609 [of the RFA] to the extent appropriate.  142 Cong. Rec. H24,575, H24,583-585 (daily ed. Sept. 8, 1980).  In the
context of a section 610 review, the elements of an IRFA analysis that should be present include a discussion of the number and types of small entities
affected by the rule, a description of the compliance requirements of the rule and an estimate of their costs, identification of any duplicative or overlapping
requirements, and a description of possible alternative regulatory approaches.  See also Office of Advocacy, How to Comply with the Regulatory
Flexibility Act: A Guide for Government Agencies (May 2003) at 29-40, available at www.sba.gov/advo/laws/rfaguide.pdf ?
28.  The Unified Regulatory Agenda can be accessed at 	 www.reginfo.gov.
29.  See, e.g., www.osha.gov, www.epa.gov and  www.dot.gov and search for RFA section 610.?
30.  See Table 9, New Reforms Planned or UnderwayRegulations and Table 10, New Reforms Planned or UnderwayGuidance Documents in Informing
Regulatory Decisions:  2003 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal
Entities (September 2003) at 26-34; available at www.whitehouse.gov/omb/inforeg/2003_cost_ben_final_rept.pdf.?
31.  See Regulatory Reform of the U.S. Manufacturing Sector (2005).?