United States General Accounting Office 

GAO Report to the Ranking Minority Member 

Committee on Small Business and 

Entrepreneurship, U.S. Senate 

December 2001 REGULATORY 

REFORM 

Compliance Guide 

Requirement Has Had 

Little Effect on 

Agency Practices 

GAO-02-172

Contents


Letter 

Results in Brief


Background


Objectives, Scope, and Methodology


Agencies Did Not Develop Compliance Guides for Some Covered


Rules 

Agencies Varied in Development, Timing, and Distribution of 

Compliance Guides 

Conclusions 

Matters for Congressional Consideration 

Agency Comments and Our Evaluation 

1 

2 

3 

6 

10 

25 

34 

35 

37 

Appendix I Comments From the Federal Communications 

Commission 41 

Appendix II Comments From the Securities and Exchange 

Commission 43 

Appendix III	 Comments From the Department of Health and Human 

Services 46 

Tables 

Table 1: Number of Final Rules Published in Calendar Years 1999 

and 2000 That Agencies Considered Covered by Section 

212 of SBREFA 15 

Table 2: Number of Covered Rules for Which Agencies Provided 

Guidance Documents and Number of Documents Provided 17 

Table 3: Number of Covered Rules With Compliance Requirements 

Whose Related Documents Met Section 212 Requirements 22 

Page i GAO-02-172 Small Entity Compliance Guide Requirements 
United States General Accounting Office 

Washington, DC 20548 

December 28, 2001


The Honorable Christopher S. Bond


Ranking Minority Member


Committee on Small Business and Entrepreneurship


United States Senate


Dear Senator Bond:


Small businesses comprise a significant portion of the United States’


economy, accounting for 99 percent of all businesses, about 50 percent of


the gross domestic product, and about 53 percent of the private industry’s


workforce. However, small businesses and other small entities (small


governments and small nonprofit organizations) can be disproportionately


affected by federal agencies’ regulatory requirements, and agencies may


inadequately consider the impact of those requirements on small entities


when the requirements are implemented. In March 1996, Congress passed


the Small Business Regulatory Enforcement Fairness Act (SBREFA) (5


U.S.C. 601 note), which was intended to, among other things, “simplify the


language of Federal regulations affecting small businesses” and “develop


more accessible sources of information on regulatory and reporting


requirements for small businesses.” Section 212 of SBREFA requires


agencies to publish one or more compliance guides for each rule or group


of related rules for which the agency is required to prepare a final


regulatory flexibility analysis (FRFA) under the Regulatory Flexibility Act


(RFA). The relevant sections of the RFA (codified at 5 U.S.C. 604 and 605)


generally require agencies to prepare a FRFA for every final rule for which


a general notice of proposed rulemaking (NPRM) is required unless the


head of the agency certifies that the rule will not have a “significant


economic impact on a substantial number of small entities.”1


You asked us to examine the implementation of section 212 of SBREFA in


selected agencies. Specifically, you asked us to (1) determine whether the


agencies have published small entity compliance guides for each covered


rule published in selected years, and (2) describe how the agencies


1

In this report, we will refer to rules that the agencies have determined will not have a 

significant economic impact on a substantial number of small entities as rules that will not 

have “a significant impact on small entities.” 

Page 1 GAO-02-172 Small Entity Compliance Guide Requirements 
Results in Brief 

developed the guides and made them available to small entities affected by 

the rules. We focused our review on final rules published during calendar 

years 1999 and 2000 by six federal agencies: the Department of Commerce 

(DOC), the Centers for Medicare and Medicaid Services (CMS)2

 and the 

Food and Drug Administration (FDA) within the Department of Health and 

Human Services (HHS), the Environmental Protection Agency (EPA), the 

Federal Communications Commission (FCC), and the Securities and 

Exchange Commission (SEC). All of these agencies except EPA were 

selected based on the frequency with which they prepared FRFAs. 

Section 212 does not appear to have had much of an impact in the 

agencies and years that we examined, and its implementation has varied 

across and sometimes within the agencies. The statute gives agencies 

broad discretion to decide which of their rules require compliance guides, 

what has to be in the guides, how they are developed, when they have to 

be published, and how they are distributed to affected small entities. Using 

that discretion, an agency could legally exclude all of its rules from 

coverage by the statute, designate a previously published document as its 

small entity compliance guide, or develop and publish a guide with no 

input from small entities years after the covered rule takes effect. Some of 

the ineffectiveness and inconsistency in the implementation of section 212 

are traceable to the broad discretion provided to agencies in the RFA 

regarding the term “significant economic impact on a substantial number 

of small entities.” Although a single, rigid definition of this term may not 

be feasible, we believe that some additional clarity can be provided. Other 

problems with the compliance guide requirement are traceable to section 

212 itself. We offer suggestions on how Congress may wish to amend the 

statute to make clear when agencies must prepare a compliance guide 

under section 212 and the meaning of key terms in the statute. 

None of the agencies in our review provided us with guidance documents 

that met all of the statutory requirements for all of their 1999 and 2000 

final rules that they said were covered by section 212. The agencies said 

that they did not provide documents for some of the rules because they 

had no compliance requirements, the requirements had not taken effect, or 

the rules were so clear that a compliance guide was not needed. The 

documents that EPA and FDA provided to us for their covered rules with 

active compliance requirements met all of the nondiscretionary provisions 

2

Prior to 2001, CMS was the Health Care Financing Administration. 

Page 2 GAO-02-172 Small Entity Compliance Guide Requirements 
in section 212. However, almost 90 percent of the documents that the 

other agencies provided for their covered rules with compliance 

requirements did not meet all of the statute’s requirements. Specifically, 

many of the documents were not designated as small entity compliance 

guides and/or did not explain what small entities had to do to comply with 

the associated rule. Some of the documents appeared to have been 

prepared for reasons unrelated to section 212, and the agencies identified 

those documents as small entity compliance guides only in response to our 

inquiry. Notably, the agencies varied widely in the types of rules they 

considered covered by section 212. Some of the agencies (e.g., FCC and 

SEC) established low coverage thresholds and included rules that they 

viewed as having little or no effect on small entities. EPA, on the other 

hand, established a high coverage threshold, excluding virtually all of the 

agency’s final rules from coverage by section 212. Some of the agencies 

had difficulty determining which of their previously issued rules were 

covered by the compliance guide requirement. 

The responsibility for developing the compliance guides was decentralized 

to the rule-writing units in all of the agencies that we contacted. The 

agencies generally indicated that they attempted to put their compliance 

guides in “plain language”—just as they have for all of their regulatory 

materials. The guidance documents that the agencies gave us were often 

published on the agencies’ web sites. In other respects, though, the 

development, timing, and distribution of the guidance documents varied 

among the agencies. Some agencies consulted small entities during the 

development of their guides, but others did not. Some of the documents 

were published before the final rules were published, while others were 

not published until after the rules had taken effect. In addition to the 

agencies’ web sites, modes of distribution included direct mailing, 

electronic list servers, use of agency/regional offices, and workshops. 

Background	 The basic elements of the federal rulemaking process are spelled out in the 

Administrative Procedure Act (APA), as codified in section 553 of title 5, 

United States Code. The APA generally requires agencies to (1) publish an 

NPRM in the Federal Register, (2) allow interested persons an opportunity 

to participate in the rulemaking process by providing “written data, views, 

or arguments,” and (3) publish the final rule 30 days before it becomes 

effective. However, the APA allows agencies to issue final rules without 

the publication of an NPRM in certain situations, such as for rules dealing 

with foreign or military affairs; interpretative rules; and rules of agency 

organization, procedure, or practice. It also permits non-NPRM rulemaking 

when the agency determines for “good cause” that notice and comment 

Page 3 GAO-02-172 Small Entity Compliance Guide Requirements 
procedures are “impracticable, unnecessary, or contrary to the public 

interest.” When agencies use the good cause exception, the APA requires 

them to explicitly say so and provide an explanation for the exception’s 

use. Two specific applications of the good cause exception are known as 

“direct final” and “interim final” rulemaking.3

 In August 1998, we estimated 

that about half of the nearly 4,700 final regulatory actions published during 

1997 were published without NPRMs, and that some of the agencies’ 

explanations for why the good cause exception was used were not clear or 4 understandable. 

Congress has added requirements to the federal rulemaking process 

several times during the past 25 years. For example, the RFA was enacted 

in 1980 in response to concerns about the effect that federal regulations 

can have on small entities. The act (5 U.S.C. 604 and 605) requires agencies 

to prepare regulatory flexibility analyses when publishing proposed or 

final rules—but only for rules that require an NPRM. In our August 1998 

report on non-NPRM rulemaking, we estimated that in more than 500 final 

rules published in 1997 without a notice, the agencies specifically stated 

that a regulatory flexibility analysis was not required because the action 

was not preceded by an NPRM.5

 Also, an agency does not have to prepare 

an analysis when the agency certifies that the rule will not have a 

significant impact on small entities. (See 5 U.S.C. 605(b).) However, the 

statute does not define the terms “significant economic impact” or 

“substantial number of small entities.” As a result, agencies have broad 

discretion in defining these terms, and their definitions vary widely.6

 Under 

the RFA (5 U.S.C. 612), the Small Business Administration’s (SBA) Chief 

Counsel for Advocacy is responsible for monitoring agencies’ compliance 

with the act. We have recommended several times in the past 10 years that 

SBA or some other entity be given the authority and responsibility to 

3

Direct final rulemaking involves agency publications of a rule in the Federal Register with 

a statement that the rule will be effective on a particular date unless an adverse comment is 

received within a specified period of time. If an adverse comment is filed, the direct final 

rule is withdrawn and the agency must publish the rule as a proposed rule. In interim final 

rulemaking, the agency issues a final rule without an NPRM that is generally effective 

immediately, but with a post-promulgation opportunity for the public to comment, and an 

opportunity for the agency to be persuaded by those comments and revise the rule. 

4

Federal Rulemaking: Agencies Often Published Final Actions Without Proposed Rules 

(GAO/GGD-98-126, Aug. 31, 1998). 

5

See GAO/GGD-98-126. 

6

Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for Small 

Governments (GAO/HRD-91-16, Jan. 11, 1991). 

Page 4 GAO-02-172 Small Entity Compliance Guide Requirements 
define key terms in the RFA.7

 Legislation currently under congressional 

consideration—the Agency Accountability Act of 2001 (S. 849)—could 

provide some of the definition that we believe is needed. It directs the SBA 

Chief Counsel for Advocacy to promulgate a rule defining the terms 

“significant economic impact” and “substantial number of small entities.” 

One of the reasons that SBREFA was enacted in 1996 was to strengthen 

the implementation of the RFA. As previously noted, section 212 of 

SBREFA requires federal departments and agencies to publish one or 

more small entity compliance guides for each rule or group of related rules 

for which the agency is required to prepare a FRFA. Because this 

provision in SBREFA was built on the FRFA determination, all of the 

discretion inherent in the RFA regarding whether to do an analysis also 

applies to whether compliance guides must be developed. Section 212 

requires the guides to (1) be published, (2) be designated as “small entity 

compliance guides,” and (3) explain the actions a small entity is required 

to take to comply with an associated final rule. However, it gives agencies 

broad discretion in other areas. For example, it says agencies “may” 

prepare separate guides covering groups or classes of similarly affected 

small entities, and “may” cooperate with associations of small entities to 

develop and distribute the guides. Agencies are given “sole discretion” in 

the use of plain language in the guides. The statute does not indicate when 

the guides must be developed or how they must be published. 

The small entity compliance guides developed pursuant to section 212 of 

SBREFA are only one part of a wide range of compliance assistance 

provided by federal agencies. Earlier this year we issued a report 

describing, among other things, agencies’ efforts to use information 

technology to provide compliance assistance.8

 For example, we noted that 

EPA has partnered with industry associations, environmental groups, 

universities, and other government agencies to create 10 compliance 

assistance centers for specific sectors, many of which are heavily 

populated with small entities. Agency officials told us that other statutes 

also require compliance assistance efforts, and that many of their 

compliance assistance efforts predate SBREFA. Also, section 213 of 

7

See GAO/HRD-91-16; Regulatory Flexibility Act: Status of Agencies’ Compliance 

(GAO/GGD-94-105, Apr. 27, 1994); and Regulatory Reform: Implementation of the Small 

Business Advocacy Review Panel Requirements (GAO/GGD-98-36, Mar. 18, 1998). 

8

Regulatory Management: Communication About Technology-Based Innovations Can Be 

Improved (GAO-01-232, Feb. 12, 2001). 

Page 5 GAO-02-172 Small Entity Compliance Guide Requirements 
Objectives, Scope,


and Methodology


SBREFA requires agencies regulating the activities of small entities to 

establish a program for responding to inquiries from small entities 

concerning compliance with the agencies’ statutes and regulations. 

The objectives of our review were to (1) determine whether the agencies 

we included in our review have published small entity compliance guides 

for each covered rule published in selected years, and (2) describe how 

the agencies developed the guides and made them available to small 

entities affected by the rules. Federal agencies issue thousands of final 

rules each year, and SBREFA had been in effect for more than 5 years at 

the start of our review. Determining whether each rule issued during this 

5-year period required a section 212 compliance guide would have been an 

extremely difficult and time-consuming effort. Therefore, as agreed with 

your office, we decided to focus our review on the final rules issued by 

certain agencies during calendar years 1999 and 2000. We selected those 

years because they were the most recent complete years for which data 

were available, and because agencies could reasonably be expected to 

have put their section 212 procedures in place by the start of this period 

(more than 2 years after the passage of SBREFA). 

To select the agencies for our review, we initially contacted SBA’s Office 

of Advocacy and asked if they had data showing which agencies published 

the most final rules with a FRFA. However, SBA officials said they had no 

such data, and were not aware that such data were available. We then 

obtained data from the Regulatory Information Service Center (RISC) 

showing which agencies most frequently reported in recent editions of the 

Unified Agenda of Federal Regulatory and Deregulatory Actions that their 

final rules required a FRFA.9

 Specifically, we asked RISC to identify entries 

listed in the “completed action” fields in the five editions of the Unified 

Agenda from April 1999 through April 2001 for which the agencies said a 

regulatory flexibility analysis was required. According to the Unified 

Agenda, completed actions are supposed to include all final rules issued 

since the last Agenda edition 6 months earlier. Therefore, completed 

actions in the April 1999 through April 2001 editions of the Unified Agenda 

9

RISC is part of the General Services Administration but works closely with the Office of 

Management and Budget to provide the President, Congress, and the public with 

information on federal regulatory policies. RISC publishes the Unified Agenda twice each 

year, which provides for uniform reporting of data on regulatory activities under 

development throughout the federal government. 

Page 6 GAO-02-172 Small Entity Compliance Guide Requirements 
should reflect final rules published in calendar years 1999 and 2000, and 

the regulatory flexibility analyses for those rules should reflect FRFAs. 

The RISC data indicated that four departments and agencies—DOC, HHS, 

FCC, and SEC—accounted for more than 54 percent of the Unified Agenda 

entries during this period in which the agencies indicated a regulatory 

flexibility analysis was required. The Unified Agenda entries for DOC were 

only from the National Oceanic and Atmospheric Administration (NOAA). 

DOC officials told us that, in general, only two agencies within the 

department regulate the activities of small entities—NOAA and the Bureau 

of Export Administration. However, they said that the Bureau of Export 

Administration’s regulations are not subject to the notice and comment 

provisions of the APA or any other law because the regulations relate to 

military and foreign affairs functions, and are therefore exempt from the 

requirements of the RFA. As a result, our review within DOC focused 

solely on NOAA. The Unified Agenda entries for HHS were almost all from 

FDA and CMS, so we considered them separate agencies for purposes of 

our review. We included EPA in our review at the suggestion of the 

requester. 

We also used the Unified Agenda data to address the first part of objective 

one—to identify each final rule published by the selected agencies in 

calendar years 1999 and 2000 that appeared to be covered by the 

requirements of section 212. If the agency indicated in the Unified Agenda 

that a regulatory flexibility analysis was required for a completed action, 

and if the action was a final rule that was published during 1999 or 2000, 

we tentatively considered it a covered rule. We also did a Lexis/Nexis 

search to identify any additional final rules for which a FRFA appeared to 

have been prepared, and obtained a copy of each final rule identified 

through either the Unified Agenda or Lexis/Nexis to confirm that a FRFA 

had been prepared and that the rule had been published during the 

specified time frame. In developing our lists of covered rules, we 

consulted with staff in SBA’s Office of Advocacy. We then met with 

officials in the selected agencies, shared our tentative lists of covered 

rules, and asked the officials to add to or subtract from the lists as they 

believed appropriate. We accepted any final rule that the agencies 

indicated was covered as long as it was published during 1999 or 2000 and 

had an NPRM. We also asked the agencies to provide copies of any small 

entity compliance guides that they had produced for each covered rule. 

Finally, we used a GAO database to identify the total number of final rules 

Page 7 GAO-02-172 Small Entity Compliance Guide Requirements 
and substantive and significant final rules that each agency issued during 

the covered time frames.10 

Some of the rules that the agencies said were covered by section 212 did 

not appear to have compliance requirements. Therefore, to determine 

whether the documents provided for each covered rule met the 

compliance guide requirements in section 212, we focused our analysis on 

those rules that appeared to have compliance elements. We examined the 

documents that the agencies provided for each such rule and determined 

whether each document met the three requirements in section 212: (1) the 

agency shall designate such publications as “small entity compliance 

guides,” (2) the agency shall publish the guide, and (3) the guides shall 

explain the actions a small entity is required to take to comply with a rule 

or group of rules. Because key terms in these requirements are not defined 

in the act, we developed working definitions of those terms. 

•	 We considered a document to be “designated” as a small entity compliance 

guide if it (1) was entitled “small entity compliance guide” or (2) had been 

otherwise designated by the agency (e.g., a statement by the agency in the 

document or elsewhere that the guide was prepared pursuant to section 

212 and/or satisfies that section’s requirements). 

•	 We considered a compliance guide to be “published” if it was a written 

document that was either provided directly to all affected small entities or 

otherwise made available to all affected small entities (e.g., via the 

internet). 

•	 We considered a document to have “explained” the actions that small 

entities are required to take to comply with the related rule if it contained 

at least some discussion of the rule’s requirements. General background 

information about a rule or a program would not meet the standard. 

10The Unified Agenda defines a significant rulemaking action as one that the agency 

anticipates will be reviewed under Executive Order 12866 as well as other rules that are 

considered important and a priority by the agency head. The executive order defines a 

significant rule in a number of ways, including rules that have an annual effect on the 

economy of $100 million or more, that create a serious inconsistency with an action 

planned by another agency, or that raise novel legal or policy issues. The Unified Agenda 

defines a substantive action as one that has substantive impacts but the magnitude of the 

impact is less than significant. GAO maintains a regulatory database pursuant to its 

responsibilities under section 801(a)(2)(A) of title 5, United States Code. 

Page 8 GAO-02-172 Small Entity Compliance Guide Requirements 
We interviewed agency officials in each of the selected agencies to address 

our second and third objectives of describing how the agencies developed 

the guides and made them available to small entities. Specifically, we 

asked what guidance the agencies had developed regarding section 212, 

what entities within the agencies were primarily responsible for the 

development and/or review of the guides, and the general procedures that 

were followed in the preparation and dissemination of the materials 

developed. We also reviewed any written materials that the agencies 

provided on these subjects, searched the agencies’ web sites for relevant 

documents, and reviewed some of the guides provided for covered rules in 

the first objective to identify trends in their development and publication. 

This review focused on six selected agencies and cannot be used to 

characterize implementation practices of section 212 of SBREFA in other 

agencies. In fact, five of the six agencies in our review (all except EPA) 

were selected because they appeared to prepare more FRFAs than other 

federal agencies. Therefore, in that respect, they may be among the best 

federal agencies in terms of RFA implementation. We focused on these 

agencies because the trigger for the implementation of section 212 is the 

publication of a rule that requires a FRFA. Furthermore, we believe these 

six federal agencies can illustrate any variation in the implementation of 

section 212 among other agencies. 

We generally did not validate the reliability of the information that 

agencies provided, and we generally did not evaluate the appropriateness 

of agency decisions of what is a covered rule under section 212. However, 

during our review we discovered several errors in the information that 

agencies provided to RISC for the Unified Agenda, and notified RISC of 

those errors.

11 RISC, in turn, notified federal agencies of our concern. Also, 

our questioning of the agencies’ initial determinations of covered section 

212 rules led to some modifications of their initial determinations. This 

report discusses the implementation of the specific requirement in 

SBREFA that agencies publish small entity compliance guides; it does not 

discuss the extent to which small entities use those guides or how useful 

the guides are to small entities that access them. We conducted our work 

between May 1, 2001, and September 1, 2001, at the headquarters offices of 

EPA, FCC, FDA, CMS, NOAA, and SEC in accordance with generally 

accepted government auditing standards. 

11Accuracy of Information in the Unified Agenda (GAO-01-1024R, July 27, 2001). 

Page 9 GAO-02-172 Small Entity Compliance Guide Requirements 
We provided a draft of this report to the Secretaries of Commerce and 

HHS, the Commissioners of FCC and SEC, and the Administrator of EPA 

for their review and comment. The comments that we received are 

reflected in the “Agency Comments and Our Evaluation” section and in 

appendixes I-III of this report. 

Agencies Did Not 

Develop Compliance 

Guides for Some 

Covered Rules 

The agencies varied in the type of rules they believed required a FRFA 

and, therefore, a section 212 small entity compliance guide. EPA 

established a high threshold for when a FRFA was required, and therefore 

certified all but 5 of the agency’s more than 1,000 final rules published in 

the target years. FCC and SEC, on the other hand, established a much 

lower threshold, preparing FRFAs for rules that had little or no effect on 

small entities or that only had positive economic effects. None of the 

agencies provided us with guidance documents that met all of the 

statutory requirements for all of their covered rules. In explanation, the 

agencies said that the compliance requirements for some of the rules 

without guides had not taken effect, some of those requirements were 

clear without compliance guides, and some of the rules did not contain 

compliance requirements applicable to small entities. The guidance 

documents that the agencies provided for rules with compliance 

requirements varied in the degree to which they met the requirements in 

the statute. Few of the documents provided were designated as small 

entity compliance guides, many did not explain what small entities had to 

do to comply, and some were not published. 

Agencies Defined 

“Covered Rule” Differently 

The first step in determining whether the selected agencies had published 

small entity compliance guides for each covered rule was identifying the 

covered rules in each agency. Section 212 of SBREFA states that a 

compliance guide must be published for each rule or group of related rules 

that require a FRFA. The RFA (5 U.S.C. 604) generally requires agencies to 

prepare a FRFA for all final rules for which they are required to prepare an 

NPRM. However, the act (5 U.S.C. 605(b)) gives agencies broad discretion 

in determining which rules they can certify as not requiring a FRFA 

because they will not have a significant impact on small entities. Because 

section 212 was built upon the RFA and is triggered by the preparation of a 

FRFA, the same broad discretion applies to the compliance guide 

requirement. 

The six agencies in our review have very different views regarding the type 

of rules that required the preparation of a FRFA and, therefore, the 

development of a small entity compliance guide. 

Page 10 GAO-02-172 Small Entity Compliance Guide Requirements 
•	 FCC and SEC have established a relatively low threshold for what rules 

required a FRFA, resulting in the preparation of FRFAs for many of their 

rules. For example, in response to our inquiry, SEC provided us with a list 

of covered rules published in 1999 and 2000 that included not only rules 

that the agency believed may have a significant impact on small entities 

(six rules), but also rules whose primary impact was on large or foreign 

entities (six rules), rules that were primarily deregulatory or permit 

voluntary cooperation (eight rules), and rules that were expected to have 

little or no impact on a substantial number of small entities (seven rules). 

SEC officials pointed out that the language in the RFA is “permissive” in 

nature, allowing (but not requiring) agencies to certify rules out of the 

FRFA process. Therefore, they said, if SEC elects not to certify a rule, the 

agency is technically required to prepare a FRFA and a section 212 

compliance guide. FCC officials said their agency takes a somewhat 

similar position, electing to prepare a FRFA for rules that have minimal 

adverse or even positive impacts on small entities—even when 

certification was possible. A January 1998 internal memo prepared by the 

agency’s Office of Communications Business Opportunities says that 

agency staff should prepare a FRFA for every final rule that requires notice 

and comment that is not certified. The memo states that there is “no case 

law that identifies the ‘trigger’ level of ‘significant economic impact’ or 

‘substantial number of small entities,’” but notes SBA’s Office of Advocacy 

advises that an analysis should be prepared whenever the rule’s impact 

cannot be described as de minimis. 

•	 In contrast to the policies in place at FCC and SEC, EPA has established a 

relatively high threshold for which of its rules require a FRFA. Although 

the agency’s guidance on the RFA and SBREFA gives agency staff 

substantial discretion in determining whether a rule is eligible for 

certification, it also provides numerical guidelines using different mixes of 

economic impacts and the number and percent of affected small entities to 

help them make that determination. For example, the guidelines indicate 

that EPA staff should prepare a FRFA for any final rule that imposes 

compliance costs amounting to 3 percent of annual revenues on 1,000 or 

more small entities. On the other hand, the guidelines indicate that EPA 

staff can presume a rule is eligible for certification if it imposes 

compliance costs of less than 1 percent of annual revenues on any number 

of small entities. Therefore, if a rule imposes $10,000 in compliance costs 

on 10,000 small businesses, the guidelines indicate that EPA staff can 

presume that the rule does not have a significant impact on small entities 

Page 11 GAO-02-172 Small Entity Compliance Guide Requirements 
and certify it as long as those costs do not represent at least 1 percent of 

the businesses’ annual revenues.12 

•	 NOAA’s policy on when agency employees should prepare a FRFA 

changed during the period covered by our review. Until August 2000, 

NOAA had what appeared to be a relatively high FRFA threshold. Under 

that policy, NOAA considered a substantial number of small entities to be 

more than 20 percent of the industry, and said a rule should be considered 

to have a significant economic effect if it is likely to (1) reduce gross 

revenues by more than 5 percent, (2) increase total production costs by 

more than 5 percent, (3) cause small entities to incur compliance costs 10 

percent higher than compliance costs of large entities, or (4) cause 2 

percent of small entities to cease business operations. However, in August 

2000, NOAA established less numerically driven guidelines for making 

RFA determinations. Those guidelines delineate two general criteria to 

consider in determining the significance of regulatory impacts— 

disproportionality and profitability. Specifically, the guidelines state that a 

rule should not be certified if it places a substantial number of small 

entities at a significant competitive disadvantage in relation to large 

entities, or if the rule significantly reduces the profitability of a substantial 

number of small entities. They indicate that the term “substantial number” 

depends on the context, but generally means “more than just a few.” The 

guidelines describe the significance of profit reduction in terms of the 

affected firms’ ability to meet both short-term and long-term obligations. If 

the costs or reductions in revenue imposed by the regulation cannot be 

absorbed by the firm or passed on to its customers, the guidelines indicate 

that the agency should not certify the rule. 

•	 FDA officials told us that the agency has no formal definition or generally 

accepted numerical criteria regarding what rules require a FRFA. 

However, they indicated that, in practice, the agency generally uses a 

relatively low FRFA threshold. When in doubt, the officials indicated that 

FDA staff will err on the side of doing an analysis. 

•	 CMS officials did not provide us with a clear definition of what the agency 

considers a covered rule. One CMS official told us that because most of 

the entities affected by the agency’s rules were small, the agency 

12See Regulatory Flexibility Act: Implementation in EPA Program Offices and Proposed 

Lead Rule (GAO/GGD-00-193, Sept. 20, 2000). As detailed in that report, until SBREFA was 

enacted in 1996, EPA had established a very low FRFA threshold, preparing the analysis for 

rules that had any impact on any small entities. 

Page 12 GAO-02-172 Small Entity Compliance Guide Requirements 
considered every “economically significant” rule (e.g., those with a $100 

million impact on the economy) to have a significant impact on small 

entities, and therefore to require a FRFA.13 However, CMS prepared FRFAs 

for some rules that were not economically significant, and certified some 

rules that were economically significant as not having a significant impact 

on small entities. In several of the agency’s 1999 and 2000 covered rules, 

CMS said that it considered all hospitals to be small entities, and 

considered a small entity in the health care sector to be one with less than 

$5 million in annual revenues. 

One area in which several of the agencies clearly differed was whether 

they should prepare a FRFA (and therefore a compliance guide) for a rule 

that is expected to have a significant positive economic impact on a 

substantial number of small entities. As previously noted, many of the 

rules for which FCC and SEC prepared a FRFA were deregulatory in 

nature, permitting small entities to take actions that they were previously 

not permitted to take. However, EPA officials said that they did not believe 

that a FRFA was required when rules are deregulatory and/or have 

positive economic effects, pointing out that the RFA requires an agency to 

describe steps it has taken to minimize the impact of the rule on small 

entities. Why, they asked, should an agency take steps to minimize a 

positive economic impact on small entities? SBA’s Office of Advocacy’s 

implementation guide to the RFA states that “Congress apparently 

considered the term ‘significant’ neutral with respect to whether the 

impact benefits or harms small businesses, therefore suggesting the need 

to consider both in an analysis.” However, SBA also notes that “[s]everal 

agencies have taken issue with the Office of Advocacy’s interpretation of 

significant economic impact.” 

Several of the agencies also differed in whether preparation of a 

“voluntary” FRFA—i.e., an analysis for a rule that the agency could have 

certified as not having a significant impact on small entities—triggers the 

requirement for a section 212 small entity compliance guide. Some 

officials indicated that their agencies may prepare these voluntary FRFAs 

to help ensure that the rule won’t be overturned via judicial review and/or 

to provide greater transparency of the rulemaking process. Both FCC and 

13The Unified Agenda, referencing Executive Order 12866, defines an economically 

significant regulatory action as one that “may have an annual effect on the economy of $100 

million or more or will adversely affect in a material way the economy, a sector of the 

economy, productivity, competition, jobs, the environment, public health or safety, or 

State, local, or tribal governments or communities.” 

Page 13 GAO-02-172 Small Entity Compliance Guide Requirements 
SEC officials viewed these voluntary FRFAs as triggering the requirements 

of section 212. However, NOAA officials said that voluntary FRFAs do not 

trigger the requirements of section 212 because the rules do not 

technically “require” the preparation of a FRFA. There were also 

differences within one of the agencies with regard to this issue. FDA 

officials said that in the Center for Food Safety and Applied Nutrition, the 

preparation of a voluntary FRFA triggers the requirement for a section 212 

compliance guide. However, they said that in other FDA centers the 

preparation of a voluntary FRFA would not trigger section 212. 

Agencies Said Many of 

Their Final Rules Did Not 

Require Compliance 

Guides 

As table 1 illustrates, the agencies varied widely in the number of their 

rules that they considered covered by the section 212 compliance guide 

requirement. The first column in table 1 shows the number of final rules 

that each selected agency published in the Federal Register during 

calendar years 1999 and 2000. However, some agencies produce a large 

number of routine or administrative rules that may have little or no effect 

on small entities.14 There are no readily available and reliable data on how 

many of these agencies’ final rules affect small entities. Nevertheless, to 

provide some perspective, the second column of the table shows the 

number of final rules that the agencies published during the target years 

that were substantive or significant—and therefore more likely to have a 

significant impact on small entities. Finally, the third column shows the 

number of final rules that the agencies said required a small entity 

compliance guide under section 212 of SBREFA. 

14The Unified Agenda indicates that “routine and frequent” rules represent recurring 

applications of a regulatory program and do not alter the body of the regulation. 

Informational or administrative rules pertain to matters not central to the agency’s 

regulatory mandate, but inform the public of the actions taken. 

Page 14 GAO-02-172 Small Entity Compliance Guide Requirements 
Table 1: Number of Final Rules Published in Calendar Years 1999 and 2000 That 

Agencies Considered Covered by Section 212 of SBREFA 

Number of 

substantive/ 

significant final rules 

published 

Number of final rules 

agencies considered 

covered by section 

212 of SBREFA 

Number of final rules 

Agency published

DOC/NOAA 559 176 51 

HHS/FDA 222 45 10 

HHS/CMS 51 32 

EPA 1183 100 

FCC 481 121 128 

SEC 46 35 27 

Source: GAO rules database (final rules and substantive/significant rules) and agency officials 

(covered rules). 

The reasons why the agencies did not consider some of their rules covered 

by section 212 can be traced back to the requirements in the RFA. For 

example, some of the rules that the agencies published were interim or 

direct final rules. Because these rules were published without an NPRM, 

the issuing agencies were not required to prepare a FRFA. Consequently, 

because a FRFA was not required, section 212 did not apply to the rules. 

Also, the extent to which the agencies considered their rules to be covered 

varied in direct proportion to the agencies’ policies regarding when a 

FRFA should be prepared. For example, EPA (which established a high 

threshold for when rules require a FRFA) considered a much smaller 

proportion of both its final rules and its substantive final rules as requiring 

compliance guides than any of the other agencies.15 In contrast, FCC and 

SEC (which established relatively low FRFA thresholds) considered a 

substantial portion of their final rules to be covered by the section 212 

requirement. 

In some cases, only certain components of the selected agencies published 

rules that they considered covered by section 212. As previously noted, 

15Strict adherence to the numerical guidelines in EPA’s guidance document would have 

resulted in even fewer covered rules. For example, in its December 22, 2000, centralized 

waste treatment final rule (65 Fed. Reg. 81242), EPA estimated that 53 small companies 

would experience compliance costs amounting to more than 1 percent of sales, and 30 

would experience costs of greater than 3 percent of sales. Although EPA could have 

certified the rule (because fewer than 100 small entities would experience these effects), it 

elected to use the discretion permitted in the guidance and prepare a compliance guide. 

Page 15 GAO-02-172 Small Entity Compliance Guide Requirements 

8 

5 
Agencies Had Difficulty 

Identifying Covered Rules 

DOC officials said that the only agency within the department whose rules 

typically could require a FRFA was NOAA. Within NOAA, only the 

National Marine Fisheries Service (NMFS) published final rules during 

1999 and 2000 that the agency said required a FRFA (and thus a section 

212 compliance guide). Similarly, within EPA, only two of the four major 

program offices (the Office of Air and Radiation and the Office of Water) 

published rules with a FRFA during the target years. The other two major 

program offices (the Office of Pollution, Pesticides and Toxic Substances 

and the Office of Solid Waste and Emergency Response) certified all of the 

hundreds of final rules that they published in 1999 and 2000 as not having 

a significant impact on small entities. 

Some of the agencies had difficulty determining which of their previously 

published final rules were covered by section 212. 

•	 In June 2001, we provided FCC with a list of 46 final rules that the agency 

had published during 1999 and 2000 and that we had tentatively identified 

as covered by the requirements of section 212. In July 2001, FCC officials 

indicated that they did not believe 5 of the rules on our list were subject to 

section 212, thereby reducing the list to 41 rules. In early August 2001, FCC 

officials compiled a more comprehensive list of 142 rules that they 

believed were covered, reinstating some of the rules that they had 

previously eliminated. Later in August 2001, after consultations with us, 

FCC officials removed 14 rules from the covered rule list. In total, FCC 

officials changed their minds on at least 18 rules, sometimes two or more 

times. 

•	 CMS officials were also unsure which of their rules published during the 

target period were covered by the compliance guide requirement. One 

agency official initially said that section 212 applied to all of the agency’s 

economically significant rules, but we pointed out that CMS had prepared 

FRFAs for some non-economically significant rules and had certified some 

economically significant rules as not having a significant impact on small 

entities. The official then identified 91 CMS rules as covered, but some of 

the listed rules were published after 2000, some had been certified, some 

had no NPRM, and some were not even final rules. After we discussed the 

problems concerning the list of rules, the official agreed that eight of the 

rules on the list appeared to be covered by section 212. 

•	 SEC officials initially said that 24 of the agency’s final rules published in 

1999 and 2000 were covered by section 212, but later amended the total to 

27 rules. 

Page 16 GAO-02-172 Small Entity Compliance Guide Requirements 
Agencies Did Not Provide We asked agency officials in each of the agencies to provide copies of any 

Guidance Documents for Some small entity compliance guides that they developed for each rule they 

Covered Rules considered covered by section 212 of SBREFA. As table 2 shows, by the 

end of our audit work, most of the agencies provided at least one guidance 

document (and sometimes numerous documents) for most of the covered 

rules. However, only the SEC provided documents for all of the agency’s 

covered rules. 

Table 2: Number of Covered Rules for Which Agencies Provided Guidance 

Documents and Number of Documents Provided 

Agency 

Number of covered Number of 

Number of final rules rules for which guidance 

considered covered agencies provided at documents 

by section 212 of least one guidance provided for all 

SBREFA document covered rules 

DOC/NOAA/NMFS 51 44 

HHS/FDA 10 2 

HHS/CMS 8 0 

EPA 5 3 

FCC 128 125 

SEC 27 27 

Note: After our audit work was completed, CMS provided copies of instructions issued to Medicare 

contractors. An agency official said that these contractors repackage the information for inclusion in 

their provider bulletins. Also, on September 25, 2001, FDA published a third small entity compliance 

guide covering the agency’s January 6, 2000, final rule on dietary supplements (65 Fed. Reg. 

1000)—after our audit work was completed. 

Source: GAO analysis of agency submissions. 

We asked officials in the agencies why compliance guides were not 

available for certain covered rules, some of which were published more 

than 2 years earlier. In some cases, the officials said that guides were not 

yet necessary because the rules’ compliance requirements had still not 

taken effect. For example, EPA officials said that compliance guides for 

two of the agency’s five covered rules were not yet needed because the 

rules’ requirements did not take effect until 2003 and 2004.16 Similarly, FDA 

officials said that the compliance date for its March 1999 labeling rule had 

been extended to May 2003 for small entities, therefore extending the date 

16The compliance requirements for “Control of Air Pollution from New Motor Vehicles: Tier 

2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements” (65 Fed. 

Reg. 6698 (Feb. 10, 2000)) do not occur until 2004. The requirements for “National Primary 

Drinking Water Regulations; Radionuclides” (65 Fed. Reg. 76708 (Dec. 7, 2000)) take effect 

in 2003. 

Page 17 GAO-02-172 Small Entity Compliance Guide Requirements 

52 

2 

0 

3 

407 

95 
by which a small entity compliance guide was needed for this rule as well 

as three other related rules.17 In addition, FDA officials pointed out that 

many of the provisions in the agency’s December 1999 rule on prescription 

drug marketing do not take effect until April 1, 2002.18 

In other cases, the agencies indicated that compliance guides might not be 

needed for certain rules because their compliance requirements were 

obvious. For example, NMFS officials said that some of their covered rules 

were very straightforward (e.g., banning fishing within a particular 

geographic area, or prohibiting the use of certain types of fishing gear). In 

those cases, they said, it was unclear what more a compliance guide could 

do to explain what small entities must do to comply with the rule.19 

Similarly, FDA officials said that the actions required for three of the 

agency’s covered rules were “unambiguously clear.” For example, the 

officials said that FDA’s August 2000 topical antifungal rule merely added 

the word “most” to the indications on the label for these products.20 As a 

result, the label now is required to say “cures most athlete’s foot” instead 

of “cures athlete’s foot.” 

Although EPA had prepared or was in the process of preparing a 

compliance guide for each of its covered rules, an EPA official also told us 

that it was not clear that a small entity compliance guide was useful or 

necessary for every rule that requires a FRFA. In some cases, the official 

said, the regulated community is well aware of how to comply with the 

rule, and the guide is just a restatement of current industry practices. In 

other cases, the official said the rule simply bans a particular activity, and 

a guide explaining the ban is unnecessary. For example, one part of EPA’s 

class V injection well rule prohibited the development of new wells.21 The 

17For the final rule, see 64 Fed. Reg. 13254 (March 19, 1999). For the extension in the 

compliance date, see 65 Fed. Reg. 38191 (June 20, 2000). 

18See 64 Fed. Reg. 67720 (Dec. 3, 1999). FDA said the compliance guide for this rule is 

currently scheduled for publication in December 2001. 

19However, in some straightforward rules, NMFS developed brief guidance materials. For 

example, NMFS developed a one-page guidance document for a January 27, 1999, rule 

prohibiting the use of driftnets in Atlantic swordfish fishery (64 Fed. Reg. 4055). The 

document was sent to permit holders, indicated that NMFS had issued the rule, and said 

“no vessel with a driftnet on board may retain a swordfish.” 

20See 65 Fed. Reg. 52302 (Aug. 29, 2000). 

21See 64 Fed. Reg. 68546 (Dec. 7, 1999). 

Page 18 GAO-02-172 Small Entity Compliance Guide Requirements 
official said that it was not clear what additional guidance was needed 

with regard to this type of prohibition. 

Other agencies indicated that compliance guides were not appropriate or 

necessary for some of their covered rules because the rules had no 

compliance requirements applicable to small entities. For example: 

•	 One CMS official said that four of the agency’s eight covered rules were 

“rate setting” rules, establishing the rates that CMS would pay for 

particular services under the Medicare program. For example, a November 

2000 rule published revisions to the Medicare physician fee payment 

schedule for calendar year 2001.22 The official said it was illogical to 

require CMS to prepare a compliance guide for rules that did not have 

compliance requirements applicable to small entities. 

•	 At least six of the NMFS covered rules appeared to have no compliance 

requirements applicable to small entities. For example, the agency stated 

in one rule that it “has no specific requirements for regulatory compliance; 

it essentially sets an enforceable performance standard (do not take listed 

fish) that applies to all entities and individuals.”

23 In another rule, NMFS 

said that it only established year-long quotas for the purpose of closing for 

certain types of fish in the northeastern United States, and “does not 

establish any requirements for which a regulated entity must come into 

compliance.”

24 

•	 Nine of the SEC covered rules appeared to have no compliance 

requirements applicable to small entities. Five of these nine rules primarily 

affected large entities (e.g., national security exchanges) or foreign entities 

(e.g., foreign issuers of securities). Two other rules without compliance 

requirements were deregulatory in nature or permitted voluntary 

cooperation. SEC said that the two remaining rules without compliance 

requirements had little or no impact on small entities. For example, one of 

the rules amended SEC’s Freedom of Information Act and Privacy Act 

rules to conform to current statutes, case law, and administrative practice, 

and, according to SEC, “will not impose any additional reporting, 

22See 65 Fed. Reg. 65376 (Nov. 1, 2000). 

23See 65 Fed. Reg. 42422, 42473 (July 10, 2000). 

24See 64 Fed. Reg. 1139, 1141 (Jan. 8, 1999). 

Page 19 GAO-02-172 Small Entity Compliance Guide Requirements 
recordkeeping, or other compliance requirements.”

25 

•	 Fifty-eight of the FCC rules did not appear to have compliance 

requirements applicable to small entities. For example, FCC stated in the 

FRFA summary for one of its rules that it “merely clarifies an existing 

requirement imposed on accounting authorities. It, therefore, does not 

alter the reporting, recordkeeping or other compliance requirements of 

certified accounting authorities in the maritime mobile, maritime mobile 

satellite, aeronautical and other satellite-based radio services.”

26 

In some cases, the agencies offered other explanations for why 

compliance guides had not been prepared for covered rules. For example, 

FDA officials said that, as of September 1, 2001, a compliance guide for its 

January 2000 final rule on dietary supplements had been drafted and was 

being reviewed.27 The rule took effect in February 2000. The officials said 

that resource constraints and other priorities had prevented the 

preparation of the guide prior to its effective date. 

Guidance Documents 

Provided for Most Covered 

Rules Did Not Meet All of 

the Requirements in 

Section 212 

Section 212 gives the agencies broad discretion with regard to the 

development and content of the required compliance guides. For example, 

it says that the agency “may” prepare separate guides for groups of 

similarly affected small entities, and “may” cooperate with associations of 

small entities in the development and distribution of the guides. However, 

section 212 does contain three requirements: (1) the agency must “publish” 

the guides, (2) the agency must “designate” the publications as “small 

entity compliance guides,” and (3) the guides must “explain the actions a 

small entity is required to take to comply with a rule or group of rules.” 

The section does not specify how the agencies should “publish,” 

“designate,” or “explain” the actions required. 

We initially intended to examine each of the guidance documents that the 

agencies provided to us for each of the identified covered rules in terms of 

these three statutory requirements. However, as previously noted, some of 

the agencies’ covered rules had no compliance requirements applicable to 

25See 65 Fed. Reg. 55180 (Sept. 13, 2000). 

26See 64 Fed. Reg. 40774 (July 28, 1999). 

27As previously noted, a compliance guide was issued for this rule after our audit work was 

completed. 

Page 20 GAO-02-172 Small Entity Compliance Guide Requirements 
small entities. Because it seemed inappropriate to include these types of 

rules in this part of our review, we focused our analysis on the rules that 

explicitly had compliance requirements applicable to at least some small 

entities. For each such rule, we determined whether the guidance 

documents provided to us by the agency: 

•	 had been “designated” as small entity compliance guides (i.e., had been 

entitled as such, or had been otherwise “designated” by the agency [such 

as a statement by the agency in the document or elsewhere that a guide 

was prepared pursuant to section 212 or satisfies its requirements]); 

•	 had been “published” (i.e., was a written document that was either 

provided directly to all affected small entities or otherwise made available 

to all affected small entities); and 

•	 explained the actions a small entity (or anyone else) had to do to comply 

with the rule or group of related rules. We considered any substantive 

discussion of the rules’ requirements to meet the standard. 

Table 3 presents the results of our analysis. Overall, the six agencies 

provided at least one guidance document during our review that met all 

three requirements in section 212 of SBREFA for 21 (about 14 percent) of 

their 153 covered rules with compliance requirements. The documents for 

76 of these rules (about 50 percent) were not designated as small entity 

compliance guides, but otherwise met the statutory requirements. 

Page 21 GAO-02-172 Small Entity Compliance Guide Requirements 
Table 3: Number of Covered Rules With Compliance Requirements Whose Related Documents Met Section 212 Requirements 

Number of rules Number of rules Number of rules 

with compliance with compliance with documents that 

requirements for requirements for were not 

Number of covered Number of rules which agencies which at least one “designated” but 

rules published in with small entity provided at least document met all met other 

calendar years compliance one guidance three requirements requirements in 

Agency 1999 and 2000 requirements document in section 212 section 212 

DOC/NOAA/NMFS 51 46 44 15 

HHS/FDA 10 10 2 2 

HHS/CMS 8 4 0 0 

EPA 5 5 3 3 

FCC 128 70 70 0 

SEC 27 18 18 1 

Total 229 153 137 21 

Note: After our audit work was completed, FCC developed a page on the agency’s Office of 

Communications and Business Opportunity web site that listed the internet locations of the guidance 

documents the agency identified to us as their small entity compliance guides for the agency’s 

covered rules published in 1999 and 2000. On that page, FCC said it had “designated the following 

educational materials to be “small entity compliance guides” under (SBREFA).” See 

www.fcc.gov/ocbo/guides.pdf. 

Source: GAO analysis of agency submissions. 

The table also illustrates that the agencies varied in the extent to which 

the guidance documents met the three statutory requirements. All three of 

the documents that EPA provided for three of its five covered rules with 

compliance requirements appeared to meet all three statutory criteria. 

Each EPA document was published on the agency’s SBREFA web site 

(www.epa.gov/sbrefa), each was entitled “small entity compliance guide,” 

and each described in great detail the steps that small entities and others 

had to take to comply with the rules’ requirements. Similarly, the guidance 

documents for 2 of FDA’s 10 covered rules with compliance requirements, 

although much less detailed than those developed by EPA, also appeared 

to meet all of the statutory requirements. In contrast, none of the more 

than 200 FCC guidance documents that the agency provided for 70 

covered rules with compliance requirements appeared to meet all of the 

statutory criteria. The documents for 38 of these rules were not designated 

as small entity compliance guides, but otherwise met the statutory 

requirements. The documents for another 32 FCC rules appeared to be 

deficient in other ways (i.e., were not published and/or did not explain the 

compliance actions required). The documents that SEC provided were 

only somewhat more likely to meet the statutory criteria. SEC provided 

nearly 70 guidance documents for its 18 covered rules with compliance 

requirements, but the documents for only 1 of the 18 rules appeared to 

Page 22 GAO-02-172 Small Entity Compliance Guide Requirements 

25 

0 

0 

0 

38 

13 

76 
Designation 

Publication 

meet all of the statutory requirements. On the other hand, the documents 

for 13 of the 18 SEC rules were published and explained what small 

entities had to do to comply with the related rule. We concluded that the 

documents for 15 of the 46 NMFS covered rules with compliance 

requirements met all of the requirements. However, the documents for 

most of the remaining NMFS rules were published and explained 

compliance requirements. 

Many of the guidance documents we received from some agencies were 

not “designated” as small entity compliance guides. They often were not 

entitled as such, did not reference section 212 or SBREFA, and were not 

otherwise designated by the agencies. They also often appeared to be 

generic documents that generally related to the overall topic of the rules, 

but did not mention the rules specifically and/or were not directed at small 

entities or any individuals or organizations subject to the rules’ 

requirements. For example: 

•	 More than 90 of the undesignated documents that FCC provided were 

news releases, public notices, consumer facts, or consumer information 

notices. Nine documents were notices or agendas for upcoming meetings 

or events. Some of the documents did not mention the rule for which FCC 

associated them as compliance guides, some bore no relation to the rule, 

and some were published weeks or even months in advance of the rule. 

•	 Many of the undesignated documents that SEC provided were general fact 

sheets, media briefings, press releases, standard application forms and 

instructions, speeches, and staff legal bulletins. As was the case with the 

FCC rules, many of the SEC documents did not mention the associated 

final rules, and some were published in advance of the rules. 

•	 Some of the documents that NMFS provided were also not designated as 

small entity compliance guides. NMFS officials noted that most of the 

entities affected by the agency’s rules are small businesses, and some of 

those businesses may consider the term “small entity compliance guide” to 

be derogatory in that they do not consider themselves small. 

Most of the documents that the agencies provided for the covered rules 

were, in some sense, “published.” For example, all of the EPA and FDA 

compliance documents, and most of the SEC and FCC documents, had 

been published on the agencies’ web sites. Many of the documents that 

NMFS identified as compliance guides were published in the preamble to 

the final rule or were mailed to all affected entities. However, a few of the 

Page 23 GAO-02-172 Small Entity Compliance Guide Requirements 
Explanation 

documents that the agencies provided did not appear to have been 

published in any form. 

•	 SEC provided us with letters about an August 1999 rule involving the Year 

2000 problem that were sent to the heads of federal banking regulators. 

However, there was no indication that these letters were sent to 

organizations that were affected by the rule. Also, one of the documents 

that SEC provided for a March 1999 rule revising a part of Regulation D 

was entitled “4 Town Hall meetings in Seattle, Kansas City.” However, SEC 

did not indicate that any documents related to these meetings were 

prepared, much less published. 

•	 Several of the documents that FCC provided to us were forms or 

application materials. However, FCC did not indicate whether any of these 

documents were published or were otherwise sent to or made available to 

all small entities. 

Most notably, however, many of the documents provided by certain 

agencies did not accomplish the basic task that is contemplated by section 

212 of SBREFA—i.e., explain the actions that small entities had to take to 

comply with the rules’ requirements. 

•	 The guidance documents that FCC provided for 31 of its 70 covered rules 

with compliance requirements (136 of the 210 documents) did not explain 

the compliance actions required. The documents for many of these rules 

were the previously mentioned public notices, fact sheets, and consumer 

information bulletins as well as notices of upcoming meetings, workshops, 

or other events. In some cases, the documents provided did not directly 

apply to the covered rule. For example, FCC gave us three guidance 

documents for its October 1999 rule on telecommunications carriers’ use 

of customer proprietary network information.28 However, all three 

documents were published before the rule was published, and two were 

notices of meetings involving different but related rules. None of the three 

documents explained what actions small entities had to take to comply 

with the covered rule. 

•	 The documents that NMFS gave us for several covered rules did not 

explain small entities’ compliance requirements. As was the case with 

FCC, some of these documents did not directly relate to the final rules. For 

28See 64 Fed. Reg. 53944 (Oct. 5, 1999). 

Page 24 GAO-02-172 Small Entity Compliance Guide Requirements 
example, NMFS provided us with a June 1999 fishery bulletin that agency 

officials described as the compliance guide for a November 1999 rule on 

coral reef resources of Puerto Rico and the U.S. Virgin Islands.29 The 

bulletin predated the final rule by 5 months, and was a request for 

comments on the proposed rule, not the final rule. 

•	 The guidance documents provided for 5 of the 18 SEC covered rules with 

compliance requirements did not adequately explain the actions that 

affected entities were required to take. For example, although the 

guidance document provided for a November 2000 rule on the delivery of 

proxy statements and information statements to households contained a 

brief general description of the scope and content of the rule, it did not 

identify what actions affected entities needed to take to satisfy the rule’s 

requirements.30 

Agencies Varied in Section 212 generally does not require agencies to develop or distribute 

the small entity compliance guides in any particular way or at any

Development, Timing, particular time. Although the statute says agencies “may cooperate with 

and Distribution of


Compliance Guides


associations of small entities to develop and distribute such guides,” it 

does not require them to do so. The responsibility for developing the 

guides was decentralized in most of the agencies in our review, and some 

of the agencies developed their guides without substantial input from 

small entity representatives. The timing of the documents varied, with 

some published before the final rule was issued and others not published 

until after the rules took effect. The agencies generally used the same 

procedures to ensure that their guides were written in plain language as 

they had for their other regulatory materials, but the agencies varied in 

how they publicized and distributed the guides they developed. 

Agencies’ Section 212 In order to determine how the selected agencies’ small entity compliance 

Guidance Varies	 guides were developed, we asked officials in each agency whether any 

section 212 guidance or procedures had been developed. The guidance 

that they identified varies in terms of its specificity, accuracy, 

completeness, and availability. EPA’s guidance is the most detailed, and is 

located in chapter 5 of the agency’s March 1999 revised interim guidance 

on the RFA and SBREFA. (A copy of this document is available at 

29See 64 Fed. Reg. 60132 (Nov. 4, 1999). 

30See 65 Fed. Reg. 65736 (Nov. 2, 2000). 

Page 25 GAO-02-172 Small Entity Compliance Guide Requirements 
www.epa.gov/sbrefa.) The guidance includes sections describing, among 

other things, what individuals and organizations should participate in the 

development of the compliance guides, when the guide should be 

developed, and questions to ask reviewers. The guidance also includes a 

template developed by an agency workgroup to help EPA staff in 

developing the guides, including standard language within certain sections 

that they can use. Suggested standard headings and subheadings for the 

guides include “who should use this guide,” “how do I obtain a complete 

copy of the rule,” “how can I tell if I am subject to this rule,” “when do I 

need to comply,” and “what do I need to do to comply.” 

FDA’s guidance on the preparation of small entity compliance guides is 

not as extensive as EPA’s guidance and is not available on the agency’s 

web site. The guidance includes a one-page question-and-answer 

document that briefly describes, among other things, when the guides are 

required and the legal consequences of failing to issue a guide. The 

guidance also includes a one-page “Checklist For Small Entity Compliance 

Guides” that describes four “requirements “ and four “optional” features. 

However, two of the listed requirements—that the guides be “written in 

sufficiently plain language that it is likely to be understood by affected 

small entities” and that they will be “available at the time of publication of 

the final rule”—are not imposed by section 212 of SBREFA. 

Other agencies prepared guidance on section 212 that is even less detailed, 

or had no guidance at all. For example, NMFS officials said that their 

agency’s guidance on the statute is contained in the agency’s economic 

analysis guidelines. The relevant portion of those guidelines essentially 

repeats the statute, noting, for example, that compliance guides must be 

prepared when the agency is required to prepare a FRFA for a rule or 

group of related rules and must explain the actions a small entity is 

required to take to comply with the rule/rules. The guidelines do not 

specifically mention that the publications must be designated as small 

entity compliance guides. 

Responsibility For 

Developing Guides Is 

Usually Given to Agency 

Rule Writers 

The agencies in our review generally delegated the responsibility for 

developing small entity compliance guides to the bureau or office 

responsible for writing the associated rule. For example, EPA’s March 

1999 guidance document states that “the lead rule-writing office is 

responsible for developing the rule-specific compliance guide as part of 

the rulemaking process.” However, the guidance indicates that numerous 

other offices (e.g., EPA’s Small Business Ombudsman, regional offices, 

and the Small Business Advocacy Chair’s staff) can also be called upon to 

Page 26 GAO-02-172 Small Entity Compliance Guide Requirements 
provide assistance and support, or to develop sections of the compliance 

guides. In addition, the EPA guidance says that the small entity 

compliance guides should be reviewed by the agency’s Office of General 

Counsel and the Office of Enforcement and Compliance Assistance. 

Officials in the other agencies indicated that they used similarly 

decentralized guidance development procedures. For example, FCC 

officials said the agency’s bureaus and offices with rulemaking 

responsibilities develop compliance guide materials. These bureaus or 

offices determine the nature and level of additional guidance that small 

entities and the public need to understand and follow the rules. The 

materials developed are then subject to review at the highest levels of the 

bureaus or offices. FDA officials said that there is no single approach to 

developing the guides within the agency, with each of FDA’s major centers 

(e.g., the Center for Food Safety and Applied Nutrition) given great 

flexibility for the development of small entity compliance guides under 

their jurisdiction. They said that responsibility for the preparation of the 

guide generally lies with the original rule writer within those centers. 

NMFS officials said that each of the service’s regional offices has been 

granted the flexibility to determine their own practices for developing and 

publicizing the compliance guides. Within those regions, they said the 

Division of Sustainable Fisheries is primarily responsible for preparing the 

guides, working in coordination with the Regional Fishery Management 

Councils and Highly Migratory Species Division at NOAA Headquarters. 

Ultimately, though, the officials said the guides are developed during the 

preparation of the final rules by those working on the rules and related 

documents. 

Small Entity Input to 

Guides Varied Across the 

Agencies 

Section 212 says that agencies “may cooperate with associations of small 

entities to develop and distribute such guides,” but does not require the 

involvement of small entities in either process. Some of the agencies 

indicated that they attempt to contact small entities during the 

development of their compliance guides, sending them drafts and 

obtaining comments before publication of the guides. For example, EPA’s 

March 1999 guidance states that “[s]mall entity representatives should 

typically be involved in reviewing the draft compliance guide after the rule 

is promulgated so that we have the benefit of their comments and advice 

in preparing the final version of the guide.” However, the guidance goes on 

to say that EPA staff “will need to balance such review with equal concern 

for timely issuance of the guide.” In “unusual circumstances” in which the 

outline of the guide is clear before proposal, the guidance says that draft 

compliance guides can be released to small entity representatives prior to 

Page 27 GAO-02-172 Small Entity Compliance Guide Requirements 
the rule’s promulgation. The EPA guidance suggests obtaining input from 

the small entity representatives who participated in the SBREFA advocacy 

review panel process during the development of the proposed rule,31 and 

asking such questions as whether the format of the guide is appropriate, 

whether the guide is clear and easy to read, and whether it accurately 

describes the rule as published. 

EPA officials said that this outreach process was used in the development 

of the agency’s three small entity compliance guides for the covered rules 

in our review. For one of the rules, EPA officials said they sent formal 

letters to 11 stakeholder groups soliciting their review and comment on a 

draft of the compliance guide, 3 or 4 of which responded. One of the 

groups that responded represented only small entities; the others 

represented entities of varying sizes, including small ones. On another 

rule, EPA officials said some small entity representatives were consulted 

that had been small entity representatives for the SBAR panel. Similarly, 

NMFS officials said that commercial and recreational groups (e.g., the 

Maine Lobstermen’s Association and the Coastal Conservation 

Association) are consulted in the development of their guides. 

However, some of the other agencies indicated that they did not directly 

involve small entities in the development of some of their guides. For 

example, FCC said that most of their compliance guide materials are 

written without the direct assistance of associations of small entities. 

However, they said that if small entities file comments in a specific 

rulemaking proceeding, those comments are taken into account in the 

preparation of the compliance guide materials. Similarly, FDA officials 

said that the Center for Food Safety and Applied Nutrition did not consult 

with small entities during the preparation of the two compliance guides. 

They said that the input the center had received during the process of 

developing the rules was sufficient, and additional clarification from small 

entities was not needed. 

Timing of Guides’ Section 212 does not indicate when small entity compliance guides must 

Publication Varied	 be published. Although both FDA and EPA have indicated when their 

guides should be published, the agencies did not publish any of their 

guides within those timeframes. 

31The advocacy review panel requirements in SBREFA were codified in 5 U.S.C. 609. For a 

description of the initial implementation of this requirement, see GAO/GGD-98-36. 

Page 28 GAO-02-172 Small Entity Compliance Guide Requirements 
•	 A checklist that FDA developed at the time SBREFA was passed states 

that a compliance guide “will be available at the time of publication of the 

final rule.” However, FDA did not publish compliance guides for any of the 

agency’s 10 covered final rules by their dates of publication. Notably, the 

compliance guides that FDA had published at the time of our review for 2 

of the agency’s 10 covered rules were both published in July 2001—after 

we notified FDA that we were beginning our study.32 FDA officials said 

that the guides had been in development for some time, but their 

publication was accelerated because of our review. 

•	 EPA’s March 1999 guidance on the RFA and SBREFA states that agency 

staff should “make every effort to issue the guide within two months of the 

promulgation of the final rule.” However, all three of the compliance 

guides published at the time of our review were issued more than 2 

months after the final rules were published. For example, EPA’s interstate 

ozone transport rule was published in May 1999, but the related 

compliance guide was not published until August 2000.33 The agency’s 

class V injection wells rule was published in December 1999, but the 

compliance guide was not published until November 2000.34 EPA officials 

also told us that guides for the other covered rules would not be published 

until more than 2 months after the rules were published.

35 For example, 

the agency’s tier II motor vehicle emissions rule was published in February 

2000, but the small entity compliance guide for the rule is not expected to 

be published until March 2002.36 The effective dates for four of the five 

EPA covered rules had passed by the time the related compliance guides 

were published. However, EPA officials pointed out that the compliance 

requirements for some of these rules do not take effect until well after the 

32The two rules were FDA’s March 16, 1999, food labeling rule (64 Fed. Reg.12887), and 

December 5, 2000, shell egg labeling rule (65 Fed. Reg.76092). 

3364 Fed. Reg. 28250 (May 25, 1999). 

3464 Fed. Reg. 68546 (Dec. 7, 1999). 

35Although not technically part of our review, EPA’s RFA/SBREFA tracking system 

indicated that one rule published by EPA’s Office of Prevention, Pesticides and Toxic 

Substances in August 1996 (prior to the period covered by our review) had a projected 

small entity compliance guide issuance date of October 2001—more than 5 years after the 

final rule was published. 

3665 Fed. Reg. 6698 (Feb. 10, 2000). 

Page 29 GAO-02-172 Small Entity Compliance Guide Requirements 
rules’ effective dates. For example, the emission requirements in the tier II 

rule (with an effective date of April 2000) do not take effect until 2004.37 

The timing of the compliance guides for the covered rules published by the 

other agencies in our review varied markedly. Some of the documents that 

the agencies provided were published before the final rules were 

published—in some cases months or even years earlier. For example, one 

of the documents that FCC provided for its June 2000 final rule on 

competitive bidding in the narrowband personal communication services 

was a “Narrowband Fact Sheet” that was published more than 6 years 

before the rule was published.38 In contrast, other documents that the 

agencies characterized as small entity compliance guides were not 

published until some time after the related rules took effect—sometimes 

months or even years later. For example, three of the documents that FCC 

characterized as compliance guides for its April 1999 final rule designed to 

promote competition in the advanced services market were public notices 

for the release of FCC Form 477 that were published between 1 and 2 

years after the rule’s June 1999 effective date.39 

Section 212 gives the agencies broad discretion to ensure that their 

compliance guides are written in “plain language.” Officials in most of the 

agencies told us that they attempt to write all of their regulatory materials 

(e.g., the rules themselves, guidance documents, and other materials) in 

plain language. Several of the agencies cited a June 1, 1998, presidential 

memorandum entitled “Plain Language in Government Writing,” which 

requires that agencies use plain language in all documents that explain 

how to obtain a benefit or service or comply with a regulation. For 

example, FCC said that it adopted a five-step action plan to implement the 

plain language initiative, including training for FCC staff and identification 

of regulatory initiatives appropriate for plain language writing. Sometimes 

the agencies indicated that clarity in guidance is statutorily mandated. For 

example, FDA noted that the Food and Drug Administration 

Modernization Act of 1997 required the agency to amend its “good 

guidance practice” regulations to make the agency’s procedures for 

development, issuance, and use of guidance documents clear to the public. 

Agencies Said Guides Used 

Plain Language 

37EPA delayed the implementation of this rule for small entities pursuant to the 

recommendation of the agency’s small business advocacy review panel. 

3865 Fed. Reg. 35843 (June 6, 2000). 

3964 Fed. Reg. 23229 (Apr. 30, 1999). 

Page 30 GAO-02-172 Small Entity Compliance Guide Requirements 
EPA said that all of its guides were in “plain language” except for the guide 

prepared for engineers responsible for certifying non-road diesel engines. 

EPA said that although this guide was more technical than the others, the 

language was appropriate for the intended audience. In at least one of the 

rules (the motor vehicle waste rule), EPA used “readability” software and 

consulted with a plain language specialist. Also, reviewers from outside 

the agency (e.g., American Trucking Association) were asked for 

suggestions on how to use language the target audiences could 

understand. 

DOC and NMFS officials told us that each rule writer and compliance 

guide reviewer is expected to pay attention to section 212’s plain language 

provisions. They noted that the guides are often drafted in a question-andanswer format that simplifies complicated regulatory text, and include 

illustrations when appropriate. Similarly, FDA officials said the two guides 

published at the time of our review were both developed by the Center for 

Food Safety and Applied Nutrition in a question-and-answer format to 

ensure readability. However, they emphasized that each center has the 

flexibility to take whatever steps they believe are necessary to achieve this 

goal. 

Agencies 

Publicize/Distribute 

Guides in Various Ways 

The agencies included in our review varied with regard to how their small 

entity compliance guides were publicized and distributed. EPA’s March 

1999 guidance states that agency staff should provide copies of the 

compliance guides to staff of the Small Business Advocacy Chair; the 

Office of the Small Business Ombudsman; the Office of Regional and 

State/Local Relations; and the Office of Communications, Education and 

Public Affairs, who will distribute copies to their small entity contacts. In 

addition, the guidance says that the compliance guides should be included 

in the agency’s Enhanced Public Access system, which makes agency 

guidance documents related to statutory or regulatory requirements 

electronically available. All three of the compliance guides that have been 

published for the rules included in our review were available on EPA’s 

SBREFA web site. Otherwise, though, the specific methods by which EPA 

distributed the three compliance guides varied. EPA officials provided the 

following examples. 

•	 Compliance guides for the centralized wastewater treatment rule were 

distributed to small entities at workshops (250 compact discs) and via email prior to their availability on the agency’s web site. 

Page 31 GAO-02-172 Small Entity Compliance Guide Requirements 
•	 Compliance guides for the interstate ozone transport rule were sent to the 

agency’s regional offices and cognizant state offices, and they were 

responsible for making copies available to affected small entities. 

•	 Compliance guides for the motor vehicle waste rule were provided to the 

agency’s 10 regional offices, which distributed 8,000 copies to small 

entities, the small business ombudsman, and various industry associations 

(e.g., the American Trucking Association and the National Automobile 

Dealers Association). Some regions have provided special training on the 

rule and guide. At the time of our review, EPA was developing a video as 

another means of reaching affected small entities. 

FCC officials said that the agency uses a number of mechanisms to 

publicize its compliance guides, most notably a web site maintained by 

FCC’s Consumer Information Bureau (CIB). (See www.fcc.gov/cib.) CIB 

was established in 1999 and has overall responsibility for ensuring the 

public’s understanding of and compliance with the Commission’s 

regulatory requirements. A comprehensive listing of all FCC consumer 

documents and pertinent internet links for each document is available on 

this web site. FCC also said that each bureau and office of the FCC also 

“prominently” features compliance guide materials on their internet home 

pages.40 

SEC officials said that the processes they use to publicize and distribute 

the guides vary from rule to rule. They said available processes include 

media briefings, postings of “hot topics” to the agency’s web site, mailings 

to affected small entities, and speeches at meetings and conferences. They 

said that if the compliance guide is in the preamble to the related rule, the 

Federal Register is the mode of distribution. 

FDA officials said the agency generally publishes its designated small 

entity compliance guides on its web site and includes a notice of 

availability in the Federal Register. They indicated that additional 

distribution varies among FDA’s five centers because of the diverse nature 

of the industries and small entities that each center regulates. For 

40As previously noted, after our audit work was completed FCC developed a page on the 

agency’s Office of Communications and Business Opportunity web site that listed the 

internet locations of the guidance documents the agency identified to us as their small 

entity compliance guides for the agency’s covered rules published in 1999 and 2000. On that 

page, FCC said it had “designated the following educational materials to be “small entity 

compliance guides” under (SBREFA).” See www.fcc.gov/ocbo/guides.pdf. 

Page 32 GAO-02-172 Small Entity Compliance Guide Requirements 
example, we were told that certain guides under development for rules to 

be issued by the Center for Drug Evaluation and Research will be 

distributed by electronic mail using an existing list serve database of small 

entities commonly impacted by the Center’s regulations. 

NMFS officials said that NOAA Fisheries and Councils keep a registry of 

all permit holders, industry groups, and interested parties. Using that 

information, they said compliance guides are generally mailed to all those 

to whom the rule will apply and to others who have expressed interest. 

They said the guides are also made available at sites frequently visited by 

constituents, such as docks, bait and tackle shops, and on web sites.41 

However, our review indicated that NMFS practices with regard to the 

rules published in 1999 and 2000 varied by region within the agency. For 

example: 

•	 The Alaska region included a “small entity compliance guide” section in 

the preamble of some of the final rules. The region usually took no other 

action to publicize or distribute these guides, relying on small entities and 

others to find them in the Federal Register notices. However, in one case a 

synopsis of the local area management plan for the halibut fishery in Sitka 

Sound was reduced to fit on a laminated card suitable for posting on 

fishing vessels. 

•	 The guides developed for certain covered rules by the Northeast, 

Northwest, and Southwest regions were standard form letters provided to 

each holder of fishing permits in certain fisheries. For example, on 

December 6, 1999, the Northeast regional administrator sent a standard 

form letter to each permit holder containing a detailed summary of the 

“American Lobster Fishery Regulations.” 

•	 The Southeast region issued guides in the form of notices or bulletins 

containing a summary of the rule with the phone number, fax number, and 

e-mail address of an information contact. For example, a June 13, 2000, 

“Southeast Fishery Bulletin” announced the approval of a new rule 

prohibiting certain types of fishing in certain areas in the south Atlantic to 

protect and facilitate the recovery of Oculina coral.42 

41NMFS also noted other general outreach efforts, such as public information meetings 

about new regulations and distribution by NOAA special agents and officers of materials 

when they board vessels and visit fish dealers. 

4265 Fed. Reg. 37292 (June 14, 2000). 

Page 33 GAO-02-172 Small Entity Compliance Guide Requirements 
Conclusions Section 212 does not appear to have had much of an impact in the 

agencies and years that we examined, and its implementation has varied 

across and sometimes within the agencies. Some of the statute’s 

ineffectiveness and inconsistent implementation is traceable to previously 

identified concerns with the implementation of the RFA—the statute upon 

which the compliance guide requirement is based. Other concerns with 

and variations in the statute’s implementation are traceable to section 212 

itself. 

The RFA gives agencies broad discretion to decide which of their rules 

require a FRFA, and therefore a compliance guide. For example, an agency 

can decide that there is “good cause” not to prepare an NPRM for a final 

rule, and thereby avoid having to prepare a FRFA or a compliance guide. If 

an NPRM was prepared, an agency can also avoid preparing a FRFA or a 

compliance guide by certifying that the final rule does not have a 

significant impact on small entities, with agencies allowed to determine 

when a rule reaches that threshold. Given this broad discretion, it is not 

surprising that the agencies in our review varied with regard to when a 

FRFA (and thus a small entity compliance guide) was required. For 

example, some of the agencies considered rules with a positive impact on 

small entities to trigger the requirements of the RFA and section 212; other 

agencies did not consider such rules to require a FRFA or a compliance 

guide. Some of the agencies indicated that preparation of a voluntary 

FRFA would trigger the requirements of section 212; other agencies said a 

compliance guide was required only when a FRFA was required, not when 

voluntarily provided. 

Section 212 also gives agencies broad discretion in how its provisions are 

implemented. Agencies can decide when compliance guides should be 

published, how they are developed, what they contain, and how they are 

distributed to affected small entities. Therefore, an agency could designate 

a previously published document as its small entity compliance guide for a 

covered rule, or develop and publish a guide with no input from small 

entities years after the rule takes effect. Again, given this amount of 

discretion, it is not surprising that the agencies in our review varied in how 

section 212 was implemented. For example, some of the documents that 

the agencies gave us were prepared before the associated rules were 

published, but others were not published until well after the rules’ 

compliance requirements took effect. Some of the agencies contacted 

small entities during the development of their guides, while others did not. 

The agencies also varied in the extent to which they satisfied the three 

nondiscretionary provisions in section 212—that the guides be published, 

Page 34 GAO-02-172 Small Entity Compliance Guide Requirements 
Matters for 

Congressional 

Consideration 

designated as small entity compliance guides, and explain what small 

entities have to do to comply with the related rule. For example, the 

agencies with the broadest view regarding the coverage of the RFA and 

section 212—FCC and SEC—often provided us with documents that they 

characterized as small entity compliance guides that were not designated 

as such and, most troubling of all, did not explain the actions small entities 

needed to take to comply with the covered rules. Many of the documents 

did not mention the associated rule, section 212, or small entities; they 

were generic descriptions of the program or topic addressed by the rule. It 

appeared that many of the documents that these agencies provided were 

prepared for reasons unrelated to section 212, and the agencies identified 

those documents as small entity compliance guides only in response to our 

inquiry. In contrast, EPA—the agency that had the narrowest view of the 

scope of the RFA and section 212, excluding almost all of its rules from 

coverage—provided us with documents for three rules that appeared to 

have been prepared in recognition of the compliance guide requirement 

and meticulously described how to satisfy the rules’ provisions. 

As we have said many times in the past, we believe that there needs to be 

greater clarity and consistency with regard to how key terms in the RFA 

are defined and implemented. Such clarity and consistency becomes even 

more important when RFA determinations serve as the trigger for 

requirements such as section 212. The requirement in S. 849 directing the 

SBA Chief Counsel for Advocacy to promulgate a rule to define the terms 

“significant economic impact” and “substantial number of small entities” 

can go a long way toward defining what rules require a FRFA and, 

therefore, require a small entity compliance guide. Although a single, rigid 

definition may not be feasible for all agencies or even all rulemaking 

within a single agency, the rule could establish some reasonable 

parameters and provide useful examples of what types of regulatory 

effects should and should not be considered “significant” and how broadly 

those effects must be felt to be considered affecting a “substantial” 

number of small entities. 

We also believe that changes are needed with regard to the requirements 

in section 212. For example, to address the question of whether an agency 

must prepare a compliance guide when it prepares a voluntary FRFA, 

section 212 could be amended to require a guide whenever the agency 

does not certify the rule under section 605(b) of title 5, United States 

Code. Doing so would exclude rules for which a FRFA was prepared 

(either voluntary or otherwise) but that the agency ultimately certified as 

not having a significant impact on small entities. 

Page 35 GAO-02-172 Small Entity Compliance Guide Requirements 
Section 212 could also be clarified regarding its applicability to rules that 

have no compliance requirements. Some of the rules that agencies issue 

have no compliance requirements but require a compliance guide because 

they have a significant impact on small entities and require a FRFA. We do 

not believe that agencies should be required to prepare compliance guides 

for these types of rules. Therefore, the language in section 212 could be 

changed to limit its application to rules that agencies do not certify under 

subsection 605(b) of title 5 and that have compliance requirements 

applicable to small entities. 

We also believe that Congress can strengthen the implementation of 

section 212 by clarifying other key terms in the statute, either by directly 

amending the statute or by directing some other entity to provide such 

clarity. For example: 

•	 Section 212 currently says that agencies must “designate” the publications 

prepared under the section as small entity compliance guides. However, 

the form in which those designations should occur is not clear. If Congress 

wants agencies to make “small entity compliance guides” part of these 

publications’ titles, Congress could change the word “designate” in the 

statute to “entitle.” Consistent use of this phrase in the title could make it 

easier for small entities to locate the guides that the agencies develop. On 

the other hand, if Congress envisions another meaning to the term 

“designate,” it could direct some other entity to clarify the issue. 

•	 Section 212 currently says agencies “shall publish” the guides, but does not 

indicate where they should be published. At least one agency has 

published the guides as part of the preamble to the subject rule, thereby 

requiring affected small entities to read the Federal Register to obtain the 

guides. If Congress does not want agencies to publish the guides in this 

manner, it could require publication in some venue separate from the rule. 

Although publication on the agencies’ web sites has certain advantages, 

other more proactive forms of publication could also be permitted and 

encouraged (e.g., sending the guides out to affected parties). 

•	 Section 212 also does not indicate when the compliance guides should be 

published—before the related final rule is published, coincident with the 

publication of the rule, or even before the rule takes effect. We do not 

believe that compliance guides should be published prior to the 

publication of a final rule, as changes to rules are sometimes made at the 

last minute. Neither do we believe that agencies should wait to publish 

compliance guides until the compliance requirements for their final rules 

take effect. Agencies could be instructed to publish the compliance guides 

Page 36 GAO-02-172 Small Entity Compliance Guide Requirements 
coincident with or as soon as possible after the final rule is published, 

provided that the guides must be published no later than the effective date 

of the rule’s compliance requirements. 

• If Congress decides to limit the applicability of section 212 to uncertified 

Agency Comments


and Our Evaluation


rules with compliance requirements applicable to small entities, Congress 

could also clarify what is meant by the term “compliance requirements.” 

Part of this clarification could include delineation of how relatively 

straightforward compliance requirements should be treated. For example, 

if an NMFS rule simply bans fishing within a particular geographic area, 

should the agency prepare a compliance guide? If so, the guide could be 

very short, essentially taking the form of a public notice. 

Therefore, if Congress wishes to clarify and strengthen the implementation 

of section 212 of SBREFA, we recommend that Congress consider 

amending the language in section 212 to limit its application to rules that 

the agencies did not certify under subsection 605(b) of title 5 and that 

contain compliance requirements applicable to small entities. We also 

recommend that Congress clarify, or give the responsibility and authority 

to some other entity to clarify, key terms in the section such as 

“designate,” “publish,” and, if the previous recommendation is accepted, 

“compliance requirements.” 

On November 13, 2001, we sent a draft of this report to the Secretaries of 

Commerce and Health and Human Services, the Chairmen of the FCC and 

the SEC, and the Administrator of EPA for their review and comment. EPA 

officials told us that they had no comments on the report. In a letter dated 

December 7, 2001, the Secretary of Commerce said that the Department 

had no substantive comments on the report. 

On November 30, 2001, the Managing Director of the FCC provided us with 

written comments on the draft report, which are reproduced in appendix I. 

The Managing Director said that “in our view, the FCC has met the goals of 

section 212,” and the agency “goes beyond the requirements of section 212 

in offering guidance to small entities.” He said that the FCC has long 

issued guidance on its rules to ensure that all entities understand what is 

required of them, and noted the agency’s use of its web site and other 

mechanisms to distribute guidance materials. However, the Managing 

Director’s comments did not directly address any of the draft report’s 

findings regarding the FCC’s implementation of section 212 or the report’s 

conclusions or recommendations. Also, it is not clear how the Managing 

Director can contend that FCC “goes beyond the requirements of section 

Page 37 GAO-02-172 Small Entity Compliance Guide Requirements 
212” when none of the more than 200 guidance documents that the agency 

provided for 70 of its covered rules met all of the requirements in section 

212. 

On November 30, 2001, the General Counsel of the SEC provided us with 

written comments on the draft report, which are reproduced in appendix 

II. The General Counsel first identified several SEC small business 

initiatives, and then addressed the draft report’s conclusions and 

recommendations. He said that they were pleased with the draft report’s 

conclusion that the preparation of a FRFA may not be the most accurate 

trigger for determining when an agency should prepare a SBREFA 

compliance guide, noting that no inference can be drawn about a rule’s 

impact on small entities simply because an agency prepared a FRFA. The 

SEC General Counsel also said that they “do not necessarily disagree” with 

the report’s conclusion that SBREFA may warrant clarification. 

Nevertheless, he said that agencies should retain flexibility and discretion 

on how best to formulate small entity guidance and on when to issue 

guidance. For example, he noted that some rules raise implementation 

issues only after they go into effect, so an agency should have discretion 

with regard to the timing of its SBREFA guidance. However, as we said in 

the draft report, we believe that agencies should not wait to publish 

compliance guides until after the compliance requirements for their final 

rules take effect. If agencies were required to publish the guides 

coincident with the publication of the final rule, nothing would prevent the 

agency from issuing subsequent guidance in the event that questions arise 

during implementation. 

In a letter dated December 7, 2001, the Inspector General of HHS 

transmitted the Department’s comments on the draft report, which are 

reproduced in appendix III. In those comments, the Department thanked 

us for pointing out its inconsistent application of the FRFA requirements 

in the RFA and acknowledged that CMS does not publish the small entity 

compliance guides required by section 212. Nevertheless, the Department 

suggested “that it would be of more value to assess the efforts and actions 

of the Federal agencies included in GAO’s study to...develop more 

accessible sources of information on regulatory and reporting 

requirements for small businesses.” The Department also said that it 

would be “more beneficial and useful to assess the small entity 

community’s awareness of, reaction to, and assessment of information 

that CMS makes available to them.” The Department described a number 

of CMS efforts to apprise regulated entities of their responsibilities, and 

said it “believes these efforts go well beyond the simple publication of a 

compliance guide.” However, as requested, our objectives were to (1) 

Page 38 GAO-02-172 Small Entity Compliance Guide Requirements 
determine whether the agencies have published small entity compliance 

guides for each covered rule published in selected years, and (2) describe 

how the agencies developed the guides and made them available to small 

entities affected by the rules. Therefore, the Department’s suggestions are 

beyond the scope of our review. 

The Department also said that it believes that FDA is using appropriate 

definitions of the terms “significant” and “substantial” as triggers for 

section 212, and that it would be difficult to develop definitions that work 

for different agencies with vastly different types of rulemaking. We did not 

indicate in our draft report that FDA was using inappropriate definitions of 

those terms. We did say that, although a single, rigid definition for these 

terms may not be feasible for all agencies or all rulemaking, a definition 

could establish some reasonable parameters that the agencies could use. 

In the absence of those parameters, agencies can conclude that rules that 

impose thousands of dollars in compliance costs on thousands of small 

entities do not represent a “significant” economic impact on a “substantial” 

number of small entities, thereby avoiding the requirements in the RFA 

and SBREFA. 

Finally, pursuant to a suggestion from the Department, we changed the 

draft report to note that a statement that FDA’s compliance guides should 

“be available at the time of the publication of the final rule” was contained 

in a “checklist” developed at the time SBREFA was passed, not in the 

agency’s official, one-page “guidance document.” However, we did not 

accept the Department’s suggestion that we eliminate other portions of the 

draft report indicating that FDA did not publish any of its covered rules by 

the dates the rules were published, and that the publication dates for two 

guides were accelerated because of our review. In its comments on the 

draft, the Department agreed that congressional clarification of section 

212 might be useful with regard to when the compliance guides should be 

published. 

As arranged with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days after the 

date of this report. At that time, we will send copies of this report to the 

Chairman, Senate Committee on Small Business; the Chairman and 

Ranking Minority Member, House Committee on Small Business; the 

Secretaries of Commerce and Health and Human Services; the 

Administrator of EPA; and the Chairmen of the FCC and the SEC. We will 

also make copies available to others on request. 

Page 39 GAO-02-172 Small Entity Compliance Guide Requirements 
If you have any questions concerning this report, please call me or Curtis


Copeland at (202) 512-6806. Key contributors to this assignment were John


Tavares and Matthew Ebert.


Sincerely,


Victor S. Rezendes


Managing Director, Strategic Issues


Page 40 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix I: Comments From the Federal 

Communications Commission 

Page 41 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix I: Comments From the Federal 

Communications Commission 

Page 42 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix II: Comments From the Securities 

and Exchange Commission 

Page 43 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix II: Comments From the Securities 

and Exchange Commission 

Page 44 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix II: Comments From the Securities 

and Exchange Commission 

Page 45 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

Page 46 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

Page 47 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

Page 48 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

Page 49 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

Page 50 GAO-02-172 Small Entity Compliance Guide Requirements 
Appendix III: Comments From the 

Department of Health and Human Services 

(450049) Page 51 GAO-02-172 Small Entity Compliance Guide Requirements 

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