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[House Report 106-643]
[From the U.S. Government Publishing Office]

106th Congress                                            Rept. 106-643
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
      SMALL BUSINESS REVIEW PANEL TECHNICAL AMENDMENTS ACT OF 1999

                                _______
                                

                  May 25, 2000.--Ordered to be printed

                                _______
                                

    Mr. Talent, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1882]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 1882) to amend provisions of law enacted by the 
Small Business Regulatory Enforcement Fairness Act of 1996 to 
ensure full analysis of potential impacts on small entities of 
rules proposed by certain agencies, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                Purpose

    The purpose of H.R. 1882 is to amend provisions of law 
enacted by the Small Business Regulatory Enforcement Fairness 
Act of 1996 to ensure the full analysis of potential impacts on 
small entities of rules proposed by certain agencies. 
Specifically, it makes several technical amendments to the 
small business advocacy review panel process, which is codified 
in section 609 of the Regulatory Flexibility Act (Chapter 6 of 
Title 5, United States Code). It also adds the Internal Revenue 
Service as one of the covered agencies that must convene small 
business advocacy review panels.

                          Need For Legislation

    The development of H.R. 1882 has been a two-year effort 
spearheaded by the work of the Subcommittee on Regulatory 
Reform and Paperwork Reduction and the Subcommittee on 
Government Programs and Oversight, which have held three joint 
hearings on the Small Business Advocacy Review Panel Process. 
The Subcommittees also commissioned a General Accounting Office 
(GAO) report that examined how the panel process was being 
implemented. The oversight hearings by the Subcommittees, as 
well as the GAO report, revealed several areas in which the 
panel process could be clarified and strengthened. H.R. 1882 
reflects these changes.
    The General Accounting Office interviewed a number of small 
entity representatives who had participated in the panel 
process. Based on these interviews, as well as input from the 
participating agencies, the GAO report contained several 
suggestions about how the panel process could be strengthened. 
These suggestions primarily focused on the following four 
issues: (1) adjusting the time frames in which the panels are 
conducted, (2) ensuring that there is an adequate mix of 
representatives from the small entities that could be affected 
by the rule, (3) enhancing the methods that the panels used to 
gather comments, and (4) improving the background materials 
provided by the regulatory agencies.
    Issues of panel process timing were one area that GAO 
highlighted. Several small entity representatives who had 
participated in the panel process said that they would have 
liked to have had more advance notice of panel meetings and 
telephone conference calls with the panels. Some of these 
representatives said that short advance notice had prevented 
them from participating in certain efforts. One individual, who 
had been identified as a possible small entity representative, 
said that short notice of these meetings prevented him from 
participating in the panel process at all. Most of those who 
voiced this concern said that they would have liked additional 
notice for panel meetings and telephone conference calls to 
avoid conflicts with other scheduled commitments.
    Other small entity representatives that were interviewed 
said that they felt that they were not given enough time to 
study the materials that were provided to them by the covered 
agency. Many of these small entity representatives also said 
that an additional one to two weeks would have allowed them to 
consult with others (e.g., members of their professional 
associations) before providing comments. One small entity 
representative said that requiring comments from the 
representatives shortly after they receive materials from the 
agencies prevents them from providing the panels with an in-
depth perspective regarding the draft rule.
    To address these concerns, H.R. 1882 requires the covered 
agency to wait at least 30 days after information is provided 
to the small entity representatives before convening a review 
panel in order to provide time to review the materials that are 
provided to them and to make any necessary scheduling 
adjustments.
    Another issue raised by the GAO report was the composition 
of individuals who are chosen to be small entity 
representatives (SERs). A consensus emerged that the best mix 
of small entity representatives is one that includes both 
individual small business owners and representatives from 
associations and other regulatory consultants that represent 
the interests of small entities. The individual small business 
owners provide valuable ``hands-on'' insights, while 
association representatives and other regulatory consultants 
generally have more resources available to devote to examining 
the proposed rule and have, in many cases, more expertise to 
understand the often technical nature of proposed regulations.
    H.R. 1882 addresses this by ensuring that the agency has 
the authority to identify both sets of individuals to 
participate as small entity representatives. Additionally, 
requiring the Chief Counsel for Advocacy to concur with each 
small entity representative chosen by the agency, as the 
legislation does, provides an added check on the selection 
process to help ensure that a good mix of SERs is identified.
    Another issue that was raised as a result of the GAO report 
was the method that the review panels use to collect advice and 
recommendations from the small entity representatives. For the 
most part, the review panels have relied on telephone 
conference calls with the SERs to gather input during the panel 
process. While most SERs said that they viewed telephone 
conference calls as an efficient way for the review panel to 
gather comments, others felt that telephone conference calls 
limited the amount of discussion that could take place between 
themselves and the panel.
    Most of these small entity representatives also expressed a 
preference for face-to-fact meetings instead of telephone 
conference calls because they believed the discussions would be 
fuller and would provide greater value to the panels. When 
telephone conference calls were used, some small entity 
representatives said they found it confusing when there were 
numerous participants on the phone at once. One of these 
representatives, for example, suggested setting an agenda to 
clarify participation in the telephone conference calls.
    H.R. 1882 helps to address this issue by requiring the 
review panel to accommodate requests for face-to-face oral 
presentations. This will help to ensure that the small entity 
representatives who wish to devote the time and resources to 
making face-to-face presentations will have the ability to 
participate to the fullest extent. It also recognizes that 
conference calls are still probably the most efficient way to 
gather recommendations in a timely manner, and allows review 
panels the ability to continue using the current method of 
obtaining comments from the SERs.
    One issue that was raised by the GAO report, but was not 
addressed in the legislation was the issue of what materials 
the agency should provide to the small entity representatives 
and the review panel. Many small entity representatives who 
have participated on panels said the materials that the 
agencies provided to them about the draft rules permitted an 
intelligent and informed discussion of the rules' potential 
effects on small entities. However, other representatives said 
they believed that the materials that the regulatory agencies 
provided could have been improved, indicating that they 
believed the materials were too vague or did not provide enough 
information regarding the potential economic impact on small 
entities.
    The Committee considered specifying what material were 
expected to be given to the small entity representatives. 
However, because there was no consensus as to what exact 
materials would be appropriate, the Committee did not address 
this issue in the legislation, leaving the agencies to continue 
providing materials in the manner that they currently do. 
Nevertheless, the Committee does expect the agency to provide 
materials that will allow the SERs to be meaningful 
participants in the panel process. This includes, when the 
information is available, a description of the major components 
of the draft proposed rule; regulatory alternatives that the 
agency is considering; economic analyses, and other data on the 
cost, cost effectiveness, and benefits of the proposed rule; 
and a description of the number and type of small entities 
affected.
    The Committee also recognizes that this type of information 
is now always available for review, particularly given the time 
constraints that the panel must operate under and the time 
constraints that the rulemaking process often imposes. 
Therefore, it is the hope of the Committee that the agencies 
represented on the review panel will work collaboratively to 
determine what information is necessary and available for 
review both by the panel and the small entity representatives. 
It is also expected that the covered agency will provide 
additional material when requested to do so after the review 
panel has been convened, provided that the materials requested 
are reasonable and accessible.
    The final major change that H.R. 1882 makes is that it 
requires the Internal Revenue Service (IRS) to meet the 
requirements of the panel process. The addition of the IRS to 
this process reflects the many complaints that this Committee 
has received from small businesses across the nation that the 
IRS, when developing regulations, repeatedly ignores small 
businesses' unique requirements. It is also done with the 
understanding that the IRS has historically been abysmal in 
meeting the requirements of the Regulatory Flexibility Act.
    By extending the SBREFA panel process to the IRS, we are 
helping small businesses deal with one of the most troublesome 
agencies they face. The IRS places one of the largest burdens 
on small businesses. The goal of H.R. 1882 is to bring the IRS 
regulation-making process into the light of day, and open it up 
to discussion. Small businesses must be allowed to participate 
in the dialogue. They must be a part of the process. Anything 
less is unfair--especially when it involves an institution like 
the IRS, which has a major impact on small businesses.
    It is the Committee's hope that adding the IRS as a covered 
agency under the panel process will reinforce to the agency the 
strong desire of the Congress to see that they fully consider 
the impact of their regulations on small businesses. This is 
something that the Committee will continue to monitor in the 
future.

                            Committee Action

    The Committee on Small Business has held a series of 
hearings that examined the small business advocacy review panel 
process that was established by the Small Business Regulatory 
Enforcement Fairness Act (SBREFA). These hearings were held 
jointly by the Subcommittee on Regulatory Reform and Paperwork 
Reduction and the Subcommittee on Government Programs and 
Oversight. They span a time period of over two years.
    The first of these hearings was held over two days, On 
April 15 and April 17, 1997. The hearing focused on the need 
for good science in rulemaking and the use of cost-benefit and 
risk analysis as essential management tools in the regulatory 
process. The hearing also focused on the implementation and 
performance of the Environmental Protection Agency (EPA), the 
Occupational Safety and Health Administration (OSH), and the 
Small Business Administration (SBA) Chief Counsel for Advocacy 
of the statutory requirements of the small business advocacy 
review panel process. The new provisions added by SBREFA to the 
Regulatory Flexibility Act required EPA and OSHA to implement a 
panel process for considering and responding fairly to the 
advice and recommendations of small businesses concerning the 
impact and efficacy of proposed regulations.
    This first hearing was comprised of four panels. The first 
panel included distinguished scientists that emphasized the 
need for good science in rulemaking and the availability of 
scientific expertise in the United States. The second and third 
panels included a number of small business owners who 
underscored the adverse economic impacts that ill-conceived 
regulations can have on the small business community. The 
fourth panel was comprised by government witnesses, including: 
Jere W. Glover, Chief Counsel for Advocacy, Small Business 
Administration; Thomas E. Kelly, Chair, Small Business 
Advocacy, Environmental Protection Agency; Robert Burt, Office 
of Regulatory Analysis, U.S. Department of Labor, and Keith 
Cole of the law firm of Beveridge & Diamond.
    The testimony of the fourth panel focused solely on how the 
advocacy review panel requirements were being implemented. Both 
the provisions of the panel process that were working well, as 
well as the ones where difficulties were being experienced were 
highlighted.
    The second joint subcommittee hearing was held on March 18, 
1998. This hearing focused generally on the need for good 
science and common sense rulemaking and the unfair financial 
burdens borne by small businesses all over the Nation as a 
result of unscientific, impractical, and unnecessary 
regulations. More specifically, it examined how the small 
business advocacy review panel process was working at the 
Environmental Protection Agency, the Occupational Safety and 
Health Administration, and the Small Business Administration.
    In addition to receiving testimony from a number of 
individuals who had participated in a small business advocacy 
review panel, the Subcommittees heard once again from the 
representatives of the agencies with responsibility for 
implementing the review panels. The witnesses included Jere W. 
Glover, Chief Counsel for Advocacy, Small Business 
Administration; Thomas E. Kelly, Chair, Small Business 
Advocacy, Environmental Protection Agency; and Greg Watchman, 
Deputy Assistant Secretary, Occupational Safety and Health 
Administration, U.S. Department of Labor. There was a consensus 
among the witnesses that the panel process was working fairly 
well, and should be continued. However, there were also a 
number of issues that were raised that demonstrated where 
changes to the panel process were worthy of consideration. 
Specifically, the Office of Advocacy of the Small Business 
Administration was of the view that the panel process provided 
new leverage in its efforts to ensure that the regulatory 
culture among the agencies fully understood the problems caused 
small businesses by arbitrary and ill-conceived regulations. 
Additionally, both EPA and OSHA indicated that they found merit 
in the panel process.
    The final joint hearing on this issue was held on March 11, 
1999. The hearing was comprised of one panel of witnesses that 
had direct experience with the small business advocacy review 
panel process. The hearing focused on past experiences with 
actual review panels that had been convened by EPA and OSHA. It 
also examined draft legislation that had been developed to 
amend the panel process requirements of the Regulatory 
Flexibility Act.
    The one other resource that the Committee used in its 
development of H.R. 1882 was a report that was completed by the 
General Accounting Office (``Regulatory Reform: Implementation 
of the Small Business Advocacy Review Panel Requirements,'' 
GAO-GGD-98-36, March 1998).
    This report responded to requests that EPA's and OSHA's 
implementation of SBREFA's advocacy review panel requirements 
be examined. GAO's specific objectives were to (1) determine 
whether EPA and OSHA had applied the advocacy review panel 
requirements to all rules that they proposed between June 28, 
1996 and June 28, 1997, that may have a significant economic 
impact on a substantial number of small entities; (2) determine 
whether the EPA and OSHA panels, the regulatory agencies 
themselves, and SBA's Chief Counsel for Advocacy followed the 
statute's procedural requirements for panels convened between 
June 28, 1996 and November 1, 1997, and whether there were 
differences among the panels in how the statute's requirements 
were implemented; (3) identify the changes, if any, that EPA 
and OSHA made to notices of proposed rulemaking as a result of 
the panels' recommendations; and (4) identify any suggestions 
that agency officials and small entity representatives may have 
regarding how the advocacy review panel process could be 
improved.
    The Committee was pleased with the analysis and the 
recommendations that GAO developed as a result of its 
examination of agency practices. In particular, GAO offered 
suggestions that focused on four primary issue areas: (1) 
adjusting the time frames in which the panels are conducted, 
(2) ensuring that there is an adequate mix of representatives 
from the small entities that could be affected by the rule, (3) 
enhancing the methods that the panels used to gather comments, 
and (4) improving the background materials provided by the 
regulatory agencies. These comments were based on 
recommendations from both small entity representatives and 
agency officials, and were a primary source of information for 
the development of H.R. 1882.
    H.R. 1882 was introduced on May 20, 1999. On May 25, 1999, 
the Committee on Small Business met for the purpose of 
considering and reporting H.R. 1882. H.R. 1882 was introduced, 
considered as read, and opened for amendment. No amendments 
were offered. Chairman Talent moved to pass H.R. 1882 and 
report it to the House. At 2:15 p.m., by voice vote, a quorum 
being present, the Committee passed the bill, H.R. 1882, and 
ordered it reported.

                      Section-By-Section Analysis

Section 1. Short title

    Designates the bill as the ``Small Business Review Panel 
Technical Amendments Act of 1999.''

Section 2. Findings and purposes

    (a) The Congress finds the following:
    (1) A vibrant and growing small business sector is critical 
to creating jobs in a dynamic economy.
    (2) Small businesses bear a disproportionate share of 
regulatory costs and burdens.
    (3) Federal agencies must consider the impact of their 
regulations on small businesses early in the rulemaking 
process.
    (4) The Small Business Advocacy Review Panel process that 
was established by the Small Business Regulatory Enforcement 
Fairness Act of 1996 has been effective in allowing small 
businesses to participate in rules that are being developed by 
the Environmental Protection Agency and the Occupational Safety 
and Health Administration.
    (b) The purposes of this Act are the following:
    (1) To provide a forum for the effective participation of 
small businesses in the Federal regulatory process.
    (2) To clarify and strengthen the Small Business Advocacy 
Review Panel process.
    (3) To expand the number of Federal agencies that are 
required to convene Small Business Advocacy Review Panels.

Section 3. Ensuring full analysis of potential impacts on small 
        entities of rules proposed by certain agencies

    Section 3 rewrites section 609(b) of the Regulatory 
Flexibility Act (Chapter 6 of Title 5, United States Code), 
making several technical amendments to small business advocacy 
review panel process.
    First, it clarifies who has responsibility for choosing the 
small entity representatives (SERs). The current statute allows 
both the Chief Counsel for Advocacy and the agency to identify 
small entity representatives. This dual appointment method 
causes confusion and weakens accountability over the small 
entity representative appointment procedure. The legislation 
corrects this by specifying that it is the agency's 
responsibility to choose the small entity representatives, but 
requires the Chief Counsel to concur with each SER identified 
by the agency.
    Second, it clarifies that the covered agency cannot convene 
the review panel until at least 30 days after the covered 
agency transmits information about the draft proposed rule to 
the small entity representatives. This is designed to address 
the problem that small entity representatives identified of not 
having enough time to review the information that was provided 
to them. Under this change, the small entity representatives 
would have at least 30 days to review the information provided 
to them. This change would also give the agency promulgating 
the rule some flexibility in deciding when to convene its 
review panel, while at the same time not unnecessarily delaying 
the process.
    Third, it clarifies that a small entity representative 
shall have the opportunity to give an oral presentation to the 
review panel if the small entity representative so desires.
    Fourth, it changes the way in which the final report of the 
review panel is handled. Currently, there is no requirement 
that the report of the review panel be printed in the Federal 
Register. Nor is there any requirements as to when the report 
of the review panel should be made public as part of the 
rulemaking record. As a practical matter, not everyone can come 
to Washington, DC, to inspect a covered agency's rulemaking 
record. The legislation merely requires that the report of the 
review panel be printed in the Federal Register within 120 
days. A number of those who have participated in the panel 
process have complained that they did not know whether their 
advice and recommendations were addressed by the covered agency 
because the panel report was not made public in a timely 
manner. The legislation corrects this situation by requiring a 
covered agency to print the report of the review panel in the 
Federal Register together with the notice of proposed 
rulemaking, or as a separate item if the notice of proposed 
rulemaking occurs more than 120 days after the report is 
completed.

Section 4. Definitions

    Section 4 amends section 609(d) of the Regulatory 
Flexibility Act (Chapter 6 of Title 5, United States Code) to 
include the Internal Revenue Service of the Department of the 
Treasury as one of the covered agencies that must convene small 
business advocacy review panels. Currently, the advocacy review 
panel requirements only apply to the Environmental Protection 
Agency and the Occupational Safety and Health Administration of 
the Department of Labor.
    Section 4 also defines the term ``small entity 
representative'' to mean a small entity, which is already 
defined in the Regulatory Flexibility Act, or an individual or 
organization that represents a small entity. This clarification 
was made in the legislation to underscore the fact that 
representatives from small business associations and other 
trade groups, as well as regulatory consultants, often have 
more resources and expertise available to participate in the 
panel process than do individual and small entities. There is 
no disagreement that actual small business owners bring 
experience and insights that are vital to a successful review 
panel. However, representatives of trade associations and other 
regulatory consultants who represent the interests of small 
entities can also be valuable participants that should not be 
excluded from the panel process.

Section 5. Effective date

    This section states that the changes made by H.R. 1882 
shall take effect ninety days after the legislation is enacted.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 28, 1999.
Hon. James M. Talent,
Chairman, Committee on Small Business,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1882, the Small 
Business Review Panel Technical Amendments Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
and Cynthia Dudzinski.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1882--Small Business Review Panel Technical Amendments Act of 1999

    CBO estimates that implementing H.R. 1882 would cost about 
$2 million each year over the 2000-2004 period, assuming 
appropriation of the necessary amounts. H.R. 1882 would not 
affect direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply. The bill 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.
    Under the Small Business Regulatory Enforcement Fairness 
Act of 1996 (SBREFA), the Environmental Protection Agency (EPA) 
and the Occupational Safety and Health Administration (OSHA) 
must convene panels, prior to publishing regulations, to 
analyze the potential impact of those regulations on small 
businesses. Panels consist of employees of the agency proposing 
the regulation, the Small Business Administration (SBA), and 
the Office of Management and Budget (OMB). Panels collect 
advice from representatives of the small business that would be 
affected and submit a report to the agency proposing the 
regulation.
    H.R. 1882 would amend SBREFA to include the Internal 
Revenue Service (IRS), thus requiring that agency to convene 
panels to analyze some of the regulations it intends to issue. 
The bill also would change the panel process by allowing small 
business representatives to make oral presentations to panels, 
extending the period of review, requiring agencies to print 
reports by panels in the Federal Register, and making agencies 
provide more information.
    Based on the number of regulations the IRS expects to issue 
each year and the experiences of EPA and OSHA, CBO estimates 
that implementing H.R. 1882 would cost the IRS less than $2 
million a year. (We expect that the bill would apply to fewer 
than 10 IRS regulations each year.) In addition, CBO estimates 
that implementing the changes to the panel review process would 
cost EPA, OSHA, OMB, and SBA less than $500,000 a year.
    The CBO staff contacts are Mark Hadley and Cynthia 
Dudzinski. This estimate was approved by Robert A. Sunshine, 
Deputy Assistant Director for Budget Analysis.

                        Committee Cost Estimate

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments to the Regulatory 
Flexibility Act contained in H.R. 1882 will not increase 
appropriations over the next five fiscal years. Furthermore, 
pursuant to clause 3(d)(2)(A) of rule XIII of the Rules of the 
House of Representatives, the Committee estimates that 
implementation of H.R. 1882 will not significantly increase 
administrative costs. This is consistent with the estimate of 
the Congressional Budget Office.

                Discharge by Committee on the Judiciary

                     U.S. House of Representatives,
                                Committee on the Judiciary,
                                      Washington, DC, May 26, 1999.
Hon. James Talent,
Chairman, Committee on Small Business,
U.S. House of Representatives, Washington, DC.
    Dear Chairman Talent: I am writing to you regarding H.R. 
1882, legislation that was ordered reported by your Committee 
on May 25, 1999. As you know, H.R. 1882 was referred to both 
the Committee on the Judiciary and your Committee because its 
provisions fall within the Rule X jurisdiction of each of our 
committees.
    The Judiciary Committee does not object to the substance of 
H.R. 1882 as ordered reported by your committee. In fact, the 
language of the bill was developed through consultation between 
our respective staffs, and reflects the judgment of this 
committee. For this reason, and in order to expedite scheduling 
of this legislation on the House floor, the Committee is 
willing to be discharged from further consideration of the 
bill. However, this does not in any way waive this Committee's 
jurisdiction over the bill or related legislation, or over the 
general subject matters contained in the bill which fall within 
this Committee's jurisdiction. I also reserve the right to 
request that Members of the Judiciary Committee be appointed to 
serve on any conference committee appointed with respect to 
this legislation.
    Thank you for your continued cooperation in this and other 
matters falling within our joint jurisdiction.
            Sincerely,
                                             Henry J. Hyde,
                                                          Chairman.

                           Oversight Findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 1882.
    In accordance with clause (2)(b)(l) of the rule X of the 
Rules of the House of Representatives, the oversight findings 
and recommendations of the Committee on Small Business with 
respect to the subject matter contained in H.R. 1882 are 
incorporated into the descriptive portions of this report.

                 Statement of Constitutional Authority

    Pursuant to clause 3(d)(l) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

               SECTION 609 OF TITLE 5, UNITED STATES CODE

Sec. 609. Procedures for gathering comments

  (a)  * * *
  [(b) Prior to publication of an initial regulatory 
flexibility analysis which a covered agency is required to 
conduct by this chapter--
          [(1) a covered agency shall notify the Chief Counsel 
        for Advocacy of the Small Business Administration and 
        provide the Chief Counsel with information on the 
        potential impacts of the proposed rule on small 
        entities and the type of small entities that might be 
        affected;
          [(2) not later than 15 days after the date of receipt 
        of the materials described in paragraph (1), the Chief 
        Counsel shall identify individuals representative of 
        affected small entities for the purpose of obtaining 
        advice and recommendations from those individuals about 
        the potential impacts of the proposed rule;
          [(3) the agency shall convene a review panel for such 
        rule consisting wholly of full time Federal employees 
        of the office within the agency responsible for 
        carrying out the proposed rule, the Office of 
        Information and Regulatory Affairs within the Office of 
        Management and Budget, and the Chief Counsel;
          [(4) the panel shall review any material the agency 
        has prepared in connection with this chapter, including 
        any draft proposed rule, collect advice and 
        recommendations of each individual small entity 
        representative identified by the agency after 
        consultation with the Chief Counsel, on issues related 
        to subsections 603(b), paragraphs (3), (4) and (5) and 
        603(c);
          [(5) not later than 60 days after the date a covered 
        agency convenes a review panel pursuant to paragraph 
        (3), the review panel shall report on the comments of 
        the small entity representatives and its findings as to 
        issues related to subsections 603(b), paragraphs (3), 
        (4) and (5) and 603(c), provided that such report shall 
        be made public as part of the rulemaking record; and
          [(6) where appropriate, the agency shall modify the 
        proposed rule, the initial regulatory flexibility 
        analysis or the decision on whether an initial 
        regulatory flexibility analysis is required.]
  (b)(1) Before the publication of an initial regulatory 
flexibility analysis that a covered agency is required to 
conduct under this chapter, the head of the covered agency 
shall--
          (A) notify the Chief Counsel for Advocacy of the 
        Small Business Administration (in this subsection 
        referred to as the ``Chief Counsel'') in writing;
          (B) provide the Chief Counsel with information on the 
        potential impacts of the proposed rule on small 
        entities and the type of small entities that might be 
        affected; and
          (C) not later than 30 days after complying with 
        subparagraphs (A) and (B)--
                  (i) with the concurrence of the Chief 
                Counsel, identify affected small entity 
                representatives; and
                  (ii) transmit the information referred to in 
                subparagraph (B) to the identified small entity 
                representatives for the purposes of obtaining 
                advice and recommendations about the potential 
                impacts of the draft proposed rule.
  (2)(A) Not earlier than 30 days after the covered agency 
transmits information pursuant to paragraph (1)(C)(ii), the 
head of the covered agency shall convene a review panel for the 
draft proposed rule. The panel shall consist solely of full-
time Federal employees of the office within the covered agency 
that will be responsible for carrying out the proposed rule, 
the Office of Information and Regulatory Affairs of the Office 
of Management and Budget, and the Chief Counsel.
  (B) The review panel shall--
          (i) review any material the covered agency has 
        prepared in connection with this chapter, including any 
        draft proposed rule;
          (ii) collect advice and recommendations from the 
        small entity representatives identified under paragraph 
        (1)(C)(i) on issues related to paragraphs (3), (4), and 
        (5) of section 603(b) and section 603(c); and
          (iii) allow any small entity representative 
        identified under paragraph (1)(C)(i) to make an oral 
        presentation to the panel, if requested.
  (C) Not later than 60 days after the date a covered agency 
convenes a review panel pursuant to this paragraph, the review 
panel shall report to the head of the covered agency on--
          (i) the comments received from the small entity 
        representatives identified under paragraph (1)(C)(i); 
        and
          (ii) its findings regarding issues related to 
        paragraphs (3), (4), and (5) of section 603(b) and 
        section 603(c).
  (3) The head of the covered agency shall print in the Federal 
Register the report of the review panel under paragraph (2)(C), 
by the earlier of--
          (A) 120 days after the date the head of the covered 
        agency receives the report; or
          (B) as part of the publication of the notice of 
        proposed rulemaking for the proposed rule.
  (4) Where appropriate, the covered agency shall modify the 
draft proposed rule, the initial regulatory flexibility 
analysis for the draft proposed rule, or the decision on 
whether an initial regulatory flexibility analysis is required 
for the draft proposed rule.

           *       *       *       *       *       *       *

  [(d) For purposes of this section, the term ``covered 
agency'' means the Environmental Protection Agency and the 
Occupational Safety and Health Administration of the Department 
of Labor.]
  (d) For the purposes of this section--
          (1) the term ``covered agency'' means the 
        Environmental Protection Agency, the Occupational 
        Safety and Health Administration of the Department of 
        Labor, and the Internal Revenue Service of the 
        Department of the Treasury; and
          (2) the term ``small entity representative'' means a 
        small entity, or an individual or organization that 
        represents a small entity.

           *       *       *       *       *       *       *

                                  
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