69–010 

Calendar No. 484 

114TH CONGRESS REPORT " ! SENATE 2d Session 114–420 

THE PROVE IT ACT OF 2016 

DECEMBER 20, 2016.—Ordered to be printed 

Filed, under authority of the order of the Senate of December 10 (legislative day, 

December 9), 2016 

Mr. VITTER, from the Committee on Small Business and 

Entrepreneurship, submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany S. 2847] 

The Committee on Small Business and Entrepreneurship, to 

which was referred the bill (S. 2847), to require greater transparency for Federal regulatory decisions that impact small businesses having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. 

i. introduction 

The Prove It Act of 2016 (S. 2847) was introduced by Senator 

Ernst on April 25, 2016. 

The Prove It Act of 2016 authorizes the Chief Council of the 

Small Business Administration (SBA) to request the Office of Information and Regulatory Affairs of the Office of Management and 

Budget to review any federal certification on a proposed rule. The 

Chief Council’s ability to review any proposed rule gives him/her 

the power to check the rule for its economic impact on a substantial number of small entities. 

ii. history (purpose & need for legislation) 

At every point of our history, the need for increased transparency 

is very apparent in many levels and agencies within our governVerDate Sep 11 2014 06:58 Jan 03, 2017 Jkt 069010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR420.XXX SR420

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ment. For small business entities working with the federal government, The Prove It Act of 2016 addresses the need for a check on 

federal agencies when they develop rules and certifications. S. 2847 

mimicked the process of reviewing federal rules from the National 

Environmental Policy Act (NEPA). This act specifically looks to the 

Council on Environmental Quality (CEQ) and uses its process of 

settling a dispute between agencies for the Environmental Impact 

Statement. The process that is laid out in NEPA incentivizes agencies to collaborate on the Environmental Impact Statement before 

it would become a problem. The need for this legislation was also 

apparent when the SBA Office of Advocacy testified to the Senate 

Small Business Committee on April 25, 2016 that the Environmental Protection Agency (EPA) incorrectly certified the Waters of 

the U.S. rule. The SBA concluded that the rule should have included a small business panel to better address the concerns for 

small entities in the rule. 

iii. hearings & roundtables 

In the 114th Congress, issues related to The Regulatory Flexibility Act (RFA) and the implantation of the Waters of the U.S. 

rule were discussed in the Senate Committee on Small Business in 

full committee hearing. On April 27, 2016 the Committee held a 

hearing titled, ‘‘Drowning in Regulations: The Waters of the U.S. 

Rule and the Case for Reforming the RFA.’’ This hearing examined 

the implementation of the RFA and how it was designed to ensure 

that agencies would include small business input. This law was designed for input but some agencies would take actions to circumvent the law through loopholes and misinterpretation. The 

hearing included a witness from the SBA’s Office of Advocacy who 

presented a variety of agency failures of implantation of the RFA. 

iv. description of bill 

The bill authorizes the Chief Council of the Small Business Administration to request the Office of Information and Regulatory 

Affairs of the Office of Management and Budget to review any federal agency certification to a federal rule to ensure that it will not 

have a significant economic impact on small entities. The bill outlines that if the Chief Council wants to review an agency’s rule 

they must be published in the Federal Register and on the website 

of the SBA Office of Advocacy. The Chief Council must also include 

any documentation that he/she furnished during the notice and 

comment period of the proposed rule and they must also explain 

why they disagree with the certification and provide factual information to why they do. 

v. committee vote 

In compliance with rule XXVI (7)(b) of the Standing Rules of the 

Senate, the following vote was recorded on May 11, 2016 

A motion to adopt the Prove It Act, a bill to require greater 

transparency for Federal regulatory decisions that impact small 

businesses without amendment was reported favorably to the Senate with the following Senators present: Senators Vitter, Risch, 

Scott, Ernst, Ayotte, Shaheen, Cantwell, Cardin, Heitkamp, Markey, Booker, Coons, Hirono, and Peters. 


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vi. cost estimate 

In compliance with rule XXVI (11)(a)(1) of the Standing Rules of 

the Senate, the Committee estimates the cost of the legislation will 

be equal to the amounts discussed in the following letter from the 

Congressional Budget Office: 

MAY 24, 2016. 

S. 2847 would authorize the Small Business Administration 

(SBA) to request that the Office of Management and Budget (OMB) 

review federal agency certifications that their proposed regulations 

would have no significant effect on small entities. CBO estimates 

that implementing S. 2847 would cost $10 million over the 2017– 

2021 period. 

Under current law, federal agencies are required to publish in 

the Federal Register an analysis of the impact of their proposed 

rules on small entities, such as small businesses, not-for-profits, 

and local governments, and to propose alternative regulations to 

minimize any significant economic impacts that may result. Agencies are exempt from this requirement if the head of the agency 

certifies that the rule, if promulgated, would not have a significant 

economic impact on a substantial number of small entities. Currently, OMB reviews executive agencies’ analyses of economically 

significant rules (those likely to result in an annual effect on the 

economy of $100 million or more). 

S. 2847 would authorize SBA to request that OMB review agency 

certifications if SBA disagrees with an agency’s findings. OMB 

would be required to review analyses of the impact of the rules, including independent agency rules and those determined to be not 

economically significant. If OMB determined that the proposed rule 

would have a significant economic impact on small entities, the federal agency would be required to submit a full analysis of the impact of their proposed rule on small entities. 

On the basis of information from SBA and OMB about the current review process for agency rules, CBO estimates that implementing S. 2847 would result in approximately 30 to 40 additional 

reviews by OMB each year, the majority of which would be rules 

that are not economically significant. Currently, about 35 OMB analysts each review approximately 10 to 15 rules per year. CBO estimates that implementing S. 2847 would cost $2 million per year for 

each of fiscal years 2017–2021 for three to four additional OMB 

staff to review SBA petitions and for additional administrative activities by agencies to prepare additional analysis for some of the 

rules identified by the SBA. 

Because enacting S. 2847 could affect direct spending by agencies 

not funded through annual appropriations, pay-as-you-go procedures apply. CBO estimates, however, that any net change in 

spending by those agencies would be negligible. Enacting S. 2847 

would not affect revenues. CBO estimates that enacting S. 2847 

would not increase net direct spending or on-budget deficits in any 

of the four consecutive 10-year periods beginning in 2027. 

S. 2847 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 


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vii. evaluation of regulatory impact 

In compliance with rule XXVI(11)(b) of the Standing Rules of the 

Senate, it is the opinion of the Committee that no significant additional regulatory impact will be incurred in carrying out the provisions of this legislation. There will be no additional impact on the 

personal privacy of companies or individuals who utilize the services provided. 

viii. section-by-section analysis 

Section 1. Short title 

This section provides for the title, ‘‘The Prove It Act of 2016.’’ 

Section 2. Review procedures relating to initial regulatory flexibility 

analysis certifications 

This section gives the Chief Council of the SBA the ability to 

submit a request for review to the Administrator of the Office of 

Information and Regulatory Affairs (OIRA) for any federal agency’s 

certification. This power is given so if the Chief Council disagrees 

with the publishing agency, the Chief Council has the power to review the rule and whether or not it would have a significant economic impact on a number of small entities. For the Chief Council 

of the SBA to conduct a review they must publish the request for 

review in the Federal Register and on the SBA Office of Advocacy 

website, attach proper documentation and comments made during 

the comment period of the proposed rule by the Chief Council, and 

provide a factual statement as of why the Chief Council disagrees 

with the proposed rule. After the request is published in the Register, the federal agency in question has ten days to submit a response. 


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(5) 

MINORITY VIEWS 

S. 2847, the ‘‘Prove It Act of 2016,’’ authorizes the Chief Counsel 

of the Small Business Administration to request the Office of Information and Regulatory Affairs (OIRA) to review any federal agency 

certification to a federal rule to ensure it will not have a significant 

economic impact on small entities. 

The Ranking Member of the Senate Committee on Small Business and Entrepreneurship opposes S. 2847 because it has not been 

thoroughly vetted; it creates duplicative processes; and creates additional requirements for agencies without providing the necessary 

resources to achieve them. 

I. DESCRIPTION

S. 2847 gives the Small Business Administration’s Office of Advocacy authority to request an additional review of an agency’s evaluation regarding a rule’s impact on small entities from the Office 

of Information and Regulatory Affairs (OIRA). S. 2847 would also 

require the Office of Information and Regulatory Affairs to respond 

publicly when the Office of Advocacy requests a review of an agency’s certification that a rule would not have a significant economic 

impact on a substantial number of small entities. The Office of Information and Regulatory Affairs review must then be made public 

within forty days. 

II. BACKGROUND

The U.S. Small Business Administration’s Office of Advocacy is 

an independent office that influences the federal rulemaking process through several activities, including outreach to small businesses about proposed regulations and providing formal comments 

to Congress and federal agencies on proposed legislation and regulations. At times, the Office of Advocacy may disagree with a federal agency’s decision to certify that a given rule will not have a 

significant economic impact on a substantial number of small entities. 

Generally, the Regulatory Flexibility Act requires all federal 

rulemaking agencies to: (1) analyze the economic impact of proposed regulations when there is likely to be a significant economic 

impact on a substantial number of small entities; (2) consider regulatory alternatives that will achieve the agency’s goal while minimizing the burden on small entities; and (3) make their analysis 

available for public comment. Agencies are exempt from these requirements if the agency ‘‘certifies’’ that the rule would not have 

a ‘‘significant economic impact on a substantial number of small 

entities.’’ 


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III. CONCERNS

The Ranking Member is concerned that the Committee has not 

fully vetted this legislation, which would significantly alter the federal rulemaking process. As a result, the Ranking Member does not 

believe the Committee understands the full extent of the legislation’s impact on the ability of agencies to craft necessary rules. 

The Ranking Member is also concerned that the process set forth 

in S. 2847 creates a duplicative framework for regulatory review. 

Currently, the Office of Information and Regulatory Affairs regularly reviews most rules before they are made final. The additional 

process set forth by S. 2847 would duplicate those efforts, while 

causing unnecessary delays, and creating additional costs. 

S. 2847 also fails to provide any additional resources for agencies 

to meet the new duplicative requirements. As a result, the measure 

could delay necessary rulemakings. 

IV. CONCLUSION

The Ranking Member believes that poorly crafted regulations can 

result in an excessive burden on small businesses. Unlike large 

companies, small firms often do not have the time and resources 

to devote to understanding new rules or complying with them. 

At the same time, well-crafted regulations have the potential to 

encourage innovation and entrepreneurship, while addressing critical threats to public health, the environment and safety. 

The Ranking Member believes that, as the Committee considers 

reforms to the rulemaking process, the Committee should do so in 

a way that does not stop important rules that protect the public. 

For these reasons, the Ranking Member respectfully dissents and 

opposes this bill, which was opposed by all Minority members of 

the Committee. 

Æ 


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