Testimony 

Before the Subcommittee on 

Commercial and Administrative Law, 

Committee on the Judiciary, House of 

Representatives 

United States Government Accountability Office

GAO 

REGULATORY 

FLEXIBILITY ACT 

Congress Should Revisit 

and Clarify Elements of the 

Act to Improve Its 

Effectiveness 

Statement of J. Christopher Mihm 

Managing Director, Strategic Issues 

For Release on Delivery

Expected at 11:30 a.m. EDT 

Thursday, July 20, 2006

 

GAO-06-998T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

July 20, 2006

REGULATORY FLEXIBILITY ACT

Congress Should Revisit and Clarify 

Elements of the Act to Improve Its 

Effectiveness 

Highlights of GAO-06-998T, a testimony 

before the Subcommittee on Commercial 

and Administrative Law, Committee on the 

Judiciary, House of Representatives 

Federal regulation is one of the 

basic tools of government used to

implement public policy. In 1980, 

the Regulatory Flexibility Act 

(RFA) was enacted in response to 

concerns about the effect that

regulations can have on small 

entities, including small businesses,

small governmental jurisdictions, 

and certain small not-for-profit 

organizations. Congress amended

RFA in 1996, and the President

issued Executive Order 13272 in 

2002, to strengthen requirements

for agencies to consider the impact 

of their proposed rules on small 

entities. However, concerns about 

the regulatory burden on small 

entities persist, prompting 

legislative proposals such as H.R.

682, the Regulatory Flexibility 

Improvements Act, which would 

amend RFA. 

At the request of Congress, GAO 

has prepared many reports and 

testimonies reviewing the 

implementation of RFA and related

policies. On the basis of that body 

of work, this testimony 

(1) provides an overview of the basic 

purpose and requirements of RFA,

(2) highlights the main 

impediments to the Act’s 

implementation that GAO’s reports 

identified, and (3) suggests

elements of RFA that Congress 

might consider amending to

improve the effectiveness of the 

Act. GAO’s prior reports and 

testimonies contain 

recommendations to improve the 

implementation of RFA and related

regulatory process requirements. 

RFA established a principle that agencies should endeavor to fit their 

regulatory requirements to the scale of small entities. Among other things, 

RFA requires regulatory agencies to assess the impact of proposed rules on 

small entities, consider regulatory alternatives that will accomplish the 

agencies’ objectives while minimizing the impacts on small entities, and 

ensure that small entities have an opportunity to participate in the 

rulemaking process. Further, RFA requires agencies to review existing rules 

within 10 years of promulgation that have or will have a significant impact 

on small entities to determine whether they should be continued without 

change or amended or rescinded to minimize their impact on small entities. 

RFA also requires the Chief Counsel for Advocacy of the Small Business 

Administration (Office of Advocacy) to monitor agencies’ compliance. In 

response to Executive Order 13272, the Office of Advocacy published 

guidance in 2003 on how to comply with RFA. 

In response to congressional requests, GAO reviewed agencies’ 

implementation of RFA and related requirements on many occasions, with 

topics ranging from specific statutory provisions to the overall 

implementation of RFA. Generally, GAO found that the Act’s results and 

effectiveness have been mixed; its reports illustrated both the promise and 

the problems associated with RFA. On one hand, RFA and related 

requirements clearly affected how federal agencies regulate and produced 

benefits, such as raising expectations regarding the analytical support for 

proposed rules. However, GAO also found that compliance with RFA varied 

across agencies, within agencies, and over time. A recurring finding was that 

uncertainties about RFA’s requirements and key terms, and varying 

interpretations by federal agencies, limited the Act’s application and 

effectiveness. 

GAO’s past work suggests that Congress might wish to review the 

procedures, definitions, exemptions, and other provisions of RFA to 

determine whether changes are needed to better achieve the purposes 

Congress intended. In particular, GAO’s reports indicate that the full 

promise of RFA may never be realized until Congress revisits and clarifies 

elements of the Act, especially its key terms, or provides an agency or office

with the clear authority and responsibility to do so. Attention should also be 

paid to the domino effect that an agency’s initial determination of whether 

RFA is applicable to a rulemaking has on other statutory requirements, such 

as preparing compliance guides for small entities and periodically reviewing 

existing regulations. GAO also believes that Congress should reexamine not 

just RFA but how all of the various regulatory reform initiatives fit together 

and influence agencies’ regulatory actions. Recent developments, such as 

the Office of Advocacy’s RFA guidance, may help address some of these 

long-standing issues and merit continued monitoring by Congress. 

www.gao.gov/cgi-bin/getrpt?GAO-06-998T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to contribute to your review of H.R. 682, the

Regulatory Flexibility Improvements Act, and your continuing general 

agenda to review administrative law, process, and procedure issues. In my

statement today, I will summarize findings from our past body of work on 

the Regulatory Flexibility Act (RFA),1

 which H.R. 682 would amend, and 

related policies. Specifically, I will provide an overview of the basic 

purpose and requirements of RFA, highlight the main impediments to the 

Act’s implementation that our work identified, and suggest elements of 

RFA that Congress might consider amending to improve the effectiveness 

of the Act. 

In brief, RFA was enacted in response to concerns about the effect that 

federal regulations can have on small entities. Among other things, RFA 

prompts regulatory agencies to analyze the potential effects of their rules 

on small entities, consider alternatives to reduce the burden of those rules, 

and ensure that small entities have an opportunity to participate in the 

rulemaking process. In response to congressional requests, we have 

reviewed RFA’s implementation on many occasions over the years. Our 

reports illustrated both the promise and the problems associated with the 

Act, with a recurring theme being the varying interpretations of RFA’s 

requirements by federal agencies. Although some progress has been made 

to address issues we identified, the full promise of RFA may never be

realized until Congress clarifies key terms and definitions in the Act, such

as “a substantial number of small entities,” or provides an agency or office

with the clear authority and responsibility to do so. It is also important to 

keep in mind the domino effect that an agency’s initial determination of 

whether RFA is applicable to a rulemaking has on other statutory 

requirements, such as preparing compliance guides for small entities and 

periodically reviewing existing regulations. 

 1

5 U.S.C. §§ 601-612. 

Page 1
Federal regulation is one of the basic tools of government. Agencies issue 

thousands of rules and regulations each year to implement statutes 

enacted by Congress. The public policy goals and benefits of regulations 

include, among other things, ensuring that workplaces, air travel, foods, 

and drugs are safe; that the nation’s air, water, and land are not polluted; 

and that the appropriate amount of tax is collected. The costs of these 

regulations are estimated to be in the hundreds of billions of dollars, and 

the benefits estimates are much higher.2

 Given the size and impact of 

federal regulation, Congresses and Presidents have taken a number of 

actions to refine and reform the regulatory process within the past 25 

years.3

RFA and Related 

Requirements Are 

Intended to Promote 

Attention to 

Regulations’ Effects 

on Small Entities 

In September 1980, RFA was enacted in response to concerns about the 

effect that federal regulations can have on “small entities,” defined by the 

Act as including small businesses, small governmental jurisdictions, and 

certain small not-for-profit organizations. As we have previously noted, 

small businesses are a significant part of the nation’s economy, and small 

governments make up the vast majority of local governments in the United 

States.4

 However, there have been concerns that these small entities may 

be disproportionately affected by federal agencies’ regulatory

requirements. RFA established the principle that agencies should 

endeavor, consistent with the objectives of applicable statutes, to fit 

regulatory and informational requirements to the scale of these small 

entities. 

RFA requires regulatory agencies—including the independent regulatory 

agencies—to assess the potential impact of their rules on small entities. 

Under RFA, an agency must prepare an initial regulatory flexibility 

analysis at the time a proposed rule is issued unless the head of the agency 

determines that the proposed rule would not have a “significant economic 

 2

The Office of Management and Budget reported that the estimated quantified and 

monetized annual benefits of the major federal regulations it reviewed from October 1995

through September 2005 range from $94 billion to $449 billion, while estimated annual 

costs range from $37 billion to $44 billion. See Office of Management and Budget, Draft 

2006 Report to Congress on the Costs and Benefits of Federal Regulations (Washington,

D.C.: April 2006). 

3

See GAO, Regulatory Reform: Prior Reviews of Federal Regulatory Process Initiatives 

Reveal Opportunities for Improvements, GAO-05-939T (Washington, D.C.: July 27, 2005)

for summary descriptions of major regulatory reform initiatives implemented since 1980.

4

GAO, Regulatory Reform: Implementation of the Small Business Advocacy Review Panel

Requirements, GAO/GGD-98-36 (Washington, D.C.: Mar. 18, 1998). 

Page 2
impact upon a substantial number of small entities.”5

 Further, agencies 

must consider alternatives to their proposed rules that will accomplish the 

agencies’ objectives while minimizing the impacts on small entities. The 

Act also requires agencies to ensure that small entities have an 

opportunity to participate in the rulemaking process and requires the 

Chief Counsel for Advocacy of the Small Business Administration (Office 

of Advocacy) to monitor agencies’ compliance. Among other things, RFA 

also requires regulatory agencies to review, within 10 years of

promulgation, existing rules that have or will have a significant impact on 

small entities to determine whether they should be continued without 

change or amended or rescinded to minimize their impact on small 

entities. 

Congress amended RFA with the Small Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA). 6

 SBREFA made certain agency actions 

under RFA judicially reviewable. Other provisions in SBREFA added new 

requirements. For example, SBREFA requires agencies to develop one or

more compliance guides for each final rule or group of related final rules 

for which the agency is required to prepare a regulatory flexibility 

analysis, and it requires agencies to provide small entities with some form 

of relief from civil monetary penalties. SBREFA also requires the 

Environmental Protection Agency (EPA) and the Occupational Safety and 

Health Administration to convene advocacy review panels before 

publishing an initial regulatory flexibility analysis. 

More recently, in August 2002, President George W. Bush issued Executive 

Order 13272, which requires federal agencies to establish written 

procedures and policies on how they would measure the impact of their 

regulatory proposals on small entities and to vet those policies with the 

Office of Advocacy. The order also requires agencies to notify the Office of

Advocacy before publishing draft rules expected to have a significant 

small business impact, to consider its written comments on proposed 

rules, and to publish a response with the final rule. The order requires the 

Office of Advocacy to provide notification of the requirements of the Act 

and training to all agencies on how to comply with RFA. The Office of 

 5

RFA generally applies only where notice and comment rulemaking under the 

Administrative Procedure Act (APA) is required. When promulgating a final rule, agencies

must also prepare a final regulatory flexibility analysis unless the agency finds that the rule

will not have a significant economic impact on a substantial number of small entities. 

6

5 U.S.C. § 601 note. 

Page 3
Advocacy published guidance on the Act in 2003 and reported training 

more than 20 agencies on RFA compliance in fiscal year 2005.7

In response to congressional requests, we have reviewed agencies’ 

implementation of RFA and related requirements on many occasions over 

the years, with topics ranging from specific statutory provisions to the 

overall implementation of RFA.8

 Generally, we found that the Act’s overall

results and effectiveness have been mixed. This is not unique to RFA; we 

found similar results when reviewing other regulatory reform initiatives, 

such as the Unfunded Mandates Reform Act of 1995.9

 Our past reports 

illustrated both the promise and the problems associated with RFA. RFA 

and related requirements have clearly affected how federal agencies 

regulate, and we identified important benefits of these initiatives, such as 

increasing attention on the potential impacts of rules and raising 

expectations regarding the analytical support for proposed rules. 

However, a recurring theme in our findings was that uncertainties about 

RFA’s requirements and varying interpretations of those requirements by 

federal agencies limited the Act’s application and effectiveness. 

GAO Reviews Found 

that Varying 

Interpretations of 

RFA Requirements 

Hampered Effective 

Implementation of the 

Act 

Some of the topics we reviewed, and our main findings regarding 

impediments to RFA’s implementation, are illustrated in the following 

examples: 

• We examined 12 years of annual reports from the Office of Advocacy 

and concluded that the reports indicated variable compliance with RFA 

across agencies, within agencies, and over time—a conclusion that the 

Office of Advocacy also reached in subsequent reports on 

implementation of RFA (on the 20th and 25th anniversaries of RFA’s 

enactment).10 We noted that some agencies had been repeatedly

characterized as satisfying RFA requirements, but other agencies were 

 7

See U.S. Small Business Administration, Office of Advocacy, A Guide for Government 

Agencies: How to Comply with the Regulatory Flexibility Act (Washington, D.C.: May

2003). 

8

A list of related GAO products appears at the end of this statement. 

9

2 U.S.C. §§ 658-658(g), 1501-1571. See GAO, Federal Rulemaking: Past Reviews and

Emerging Trends Suggest Issues That Merit Congressional Attention, GAO-06-228T 

(Washington, D.C.: Nov. 1, 2005) and GAO-05-939T. 

10See GAO, Regulatory Flexibility Act: Status of Agencies’ Compliance, GAO/GGD-94-105 

(Washington, D.C.: Apr. 27, 1994). 

Page 4
consistently viewed as recalcitrant. Agencies’ performance also varied 

over time or varied by offices within the agencies. We said that one 

reason for agencies’ lack of compliance with RFA requirements was 

that the Act did not expressly authorize the Small Business 

Administration (SBA) to interpret key provisions and did not require 

SBA to develop criteria for agencies to follow in reviewing their rules. 

• We examined RFA implementation with regard to small governments 

and concluded that agencies were not conducting as many regulatory 

flexibility analyses for small governments as they might, largely 

because of weaknesses in the Act.11 Specifically, we found that each 

agency we reviewed had a different interpretation of key RFA 

provisions. We also pointed out that RFA allowed agencies to interpret 

whether their proposed rules affected small governments and did not 

provide sufficiently specific criteria or definitions to guide agencies in 

deciding whether and how to assess the impact of proposed rules on 

small governments. 

• We reviewed implementation of small business advocacy review panel 

requirements under SBREFA and found that the panels that had been 

convened were generally well received.12 However, we also said that 

implementation was hindered—specifically, that there was uncertainty 

over whether panels should have been convened for some proposed 

rules—by the lack of agreed-upon governmentwide criteria as to 

whether a rule has a significant impact. 

• We examined other related requirements regarding agencies’ policies 

for the reduction and/or waiver of civil penalties on small entities and 

the publication of small entity compliance guides.

13 Again, we found 

that implementation varied across and within agencies, with some of 

the ineffectiveness and inconsistency traceable to definitional 

problems in RFA. All of the agencies’ penalty relief policies that we 

reviewed were within the discretion that Congress provided, but the 

 11See GAO, Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for 

Small Governments, GAO/HRD-91-16 (Washington, D.C.: Jan. 11, 1991). 

12See GAO, Regulatory Reform: Implementation of the Small Business Advocacy Review 

Panel Requirements, GAO/GGD-98-36 (Washington, D.C.: Mar. 18, 1998). 

13See GAO, Regulatory Reform: Implementation of Selected Agencies’ Civil Penalty Relief 

Policies for Small Entities, GAO-01-280 (Washington, D.C.: Feb. 20, 2001), and Regulatory 

Reform: Compliance Guide Requirement Has Had Little Effect on Agency Practices, 

GAO-02-172 (Washington, D.C.: Dec. 28, 2001). 

Page 5
policies varied considerably. Some policies covered only a portion of 

agencies’ civil penalty enforcement actions, and some provided small 

entities with no greater penalty relief than large entities. The agencies 

varied in how key terms were defined. Similarly, we concluded that the 

requirement for small entity compliance guides did not have much of 

an impact, and its implementation also varied across, and sometimes 

within, agencies. 

• RFA is unique among statutory requirements with general applicability 

in having a provision, under section 610, for the periodic review of 

existing rules. However, it is not clear that this look-back provision in 

RFA has been consistently and effectively implemented. In a series of 

reports on agencies’ compliance with section 610, we found that the 

required reviews were not being conducted.14 Meetings with agencies to 

identify why compliance was so limited revealed significant differences 

of opinion regarding key terms in RFA and confusion about what was 

required to determine compliance with RFA. At the request of the 

House Committee on Energy and Commerce, we have begun new work 

examining the subject of regulatory agencies’ retrospective reviews of 

their existing regulations, including those undertaken in response to 

Section 610, and will report on the results of this engagement in the 

future. 

We have not yet examined the effect of Executive Order 13272 and the 

Office of Advocacy’s subsequent guidance and training for agencies on 

implementing RFA. Therefore, we have not done any evaluations that 

would indicate whether or not those developments are helping to address 

some of our concerns about the effectiveness of RFA. 

While RFA has helped to influence how agencies regulate small entities, 

we believe that the full promise of the Act has not been realized. The 

results from our past work suggest that the Subcommittee might wish to 

review the procedures, definitions, exemptions, and other provisions of 

RFA, and related statutory requirements, to determine whether changes 

are needed to better achieve the purposes Congress intended. The central 

theme of our prior findings and recommendations on RFA has been the 

need to revisit and clarify elements of the Act, particularly its key terms. 

Although more recent developments, such as the Office of Advocacy’s 

Key Terms and 

Provisions of RFA 

Should Be Revisited 

and Clarified 

 14 See, for example, GAO, Regulatory Flexibility Act: Agencies’ Interpretations of Review 

Requirements Vary, GAO/GGD-99-55 (Washington, D.C.: Apr. 2, 1999). 

Page 6
detailed guidance to agencies on RFA compliance, may help address some 

of these long-standing issues, current legislative proposals, such as H.R. 

682, make it clear that concerns remain about RFA’s effectiveness—for 

example, that agencies are not assessing the impacts of their rules or 

identifying less costly regulatory approaches as expected under RFA—and 

the impact of federal regulations on small entities. 

Unclear terms and definitions can affect the applicability and effectiveness 

of regulatory reform requirements. We have frequently cited the need to

clarify the key terms in RFA, particularly “significant economic impact on 

a substantial number of small entities.” RFA’s requirements do not apply if

an agency head certifies that a rule will not have a “significant economic 

impact on a substantial number of small entities.” However, RFA neither 

defines this key phrase nor places clear responsibility on any party to 

define it consistently across the government. It is therefore not surprising, 

as I mentioned earlier, that we found compliance with RFA varied from 

one agency to another and that agencies had different interpretations of 

RFA’s requirements. 

We have recommended several times that Congress provide greater clarity 

concerning the key terms and provisions of RFA and related requirements, 

but to date Congress has not acted on many of these recommendations. 

The questions that remain unresolved on this topic are numerous and 

varied, including: 

• Does Congress believe that the economic impact of a rule should be 

measured in terms of compliance costs as a percentage of businesses’ 

annual revenues, the percentage of work hours available to the firms, 

or other metrics? 

• If so, what percentage or other measure would be an appropriate 

definition of “significant?” 

• Should agencies take into account the cumulative impact of their rules 

on small entities, even within a particular program area? 

• Should agencies count the impact of the underlying statutes when 

determining whether their rules have a significant impact? 

• What should be considered a “rule” for purposes of the requirement in 

RFA that agencies review rules with a significant impact within 10 

years of their promulgation? 

Page 7
• Should agencies review rules that had a significant impact at the time 

they were originally published, or only those that currently have that 

effect? 

• Should agencies conduct regulatory flexibility analyses for rules that 

have a positive economic impact on small entities, or only for rules 

with a negative impact? 

It is worth noting that the Office of Advocacy’s 2003 RFA compliance 

guide, while reiterating that RFA does not define certain key terms, 

nevertheless provides some suggestions on the subject. Citing parts of 

RFA’s legislative history, the guidance indicates that exact standards for 

such definitions may not be possible or desirable, and that the definitions 

should vary depending on the context of each rule and preliminary 

assessments of the rule’s impact. For example, the guidance points out 

that “significance” can be seen as relative to the size of a business and its 

competitors, among other things. However, the guidance does identify 

factors that agencies might want to consider when making RFA 

determinations. In some ways, this mirrors other aspects of RFA, such as 

section 610, where Congress did not explicitly define a threshold for an 

agency to determine whether an existing regulation should be maintained, 

amended, or eliminated but rather identified the factors that an agency 

must consider in its reviews.15 We do not yet know whether or to what 

extent the guidance and associated training has helped agencies to clarify 

some of the long-standing confusion about RFA requirements and terms. 

Additional monitoring of RFA compliance may help to answer that 

question. Congress might also want to consider whether the factors that 

the Office of Advocacy suggested to help agencies define key terms and 

requirements are consistent with congressional intent or would benefit 

from having a statutory basis. 

I also want to point out the potential domino effect of agencies’ 

determinations of whether or not RFA applies to their rules. This is related 

to the lack of clarity on key terms mentioned above, the potential for 

agencies to waive or delay analysis under RFA, and the limitation of RFA’s 

 15In conducting their reviews of existing rules under section 610, agencies are to consider 

the following factors: (1) the continuing need for the rule; (2) the nature of complaints or

comments received concerning the rule from the public; (3) the complexity of the rule; (4) 

the extent to which the rule overlaps, duplicates, or conflicts with other federal rules and, 

to the extent feasible, with state and local government rules; and (5) the length of time 

since the rule has been evaluated or the degree to which technology, economic conditions,

or other factors have changed since adoption of the rule. 

Page 8
applicability to only rules for which there was a notice of proposed 

rulemaking. The impact of an agency head’s determination that RFA is not 

applicable is not only that the initial and final regulatory flexibility 

analyses envisioned by the Act would not be done, but also that other 

related requirements would not apply. These requirements include, for 

example, the need for agencies to prepare small entity compliance guides, 

convene SBREFA advocacy panels, and conduct periodic reviews of 

certain existing regulations. While we recognize, as provided by the 

Administrative Procedure Act, that notices of proposed rulemaking are not 

always practical, necessary, or in the public interest, this still raises the 

question of whether such exemptions from notice and comment 

rulemaking should preclude future opportunities for public participation 

and other related procedural and analytical requirements. Our prior work 

has shown that substantial numbers of rules, including major rules (for 

example, those with an impact of $100 million or more), are promulgated 

without going through a notice of proposed rulemaking.16

We also believe it is important for Congress to reexamine, not just RFA, 

but how all of the various regulatory reform initiatives fit together and 

influence agencies’ regulatory actions. As I previously testified before this

Subcommittee, we have found the effectiveness of most regulatory reform 

initiatives to be limited and that they merit congressional attention.17 In 

addition, we have stated that this is a particularly timely point to 

reexamine the federal regulatory framework, because significant trends 

and challenges establish the case for change and the need to reexamine 

the base of federal government and all of its existing programs, policies, 

functions, and activities.18

Our September 2000 report on EPA’s implementation of RFA illustrated 

the importance of considering the bigger picture and interrelationships 

between regulatory reform initiatives.19 On the one hand, we reported 

about concerns regarding the methodologies EPA used in its analyses and 

 16See, for example, GAO, Federal Rulemaking: Agencies Often Published Final Actions 

Without Proposed Rules, GAO/GGD-98-126 (Washington, D.C.: Aug. 31, 1998). 

17GAO-06-228T. 

18See GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005) and GAO-05-939T. 

19See GAO, Regulatory Flexibility Act: Implementation in EPA Program Offices and

Proposed Lead Rule, GAO/GGD-00-193 (Washington, D.C.: Sept. 20, 2000). 

Page 9
its conclusions about the impact on small businesses of a proposed rule to

lower certain reporting thresholds for lead and lead compounds.20 The 

bigger picture, though, was our finding that after SBREFA took effect 

EPA’s four major program offices certified that almost all (96 percent) of

their proposed rules would not have a significant impact on a substantial 

number of small entities. EPA officials told us this was because of a 

change in EPA’s RFA guidance prompted by the SBREFA requirement to 

convene an advocacy review panel for any proposed rule that was not 

certified. Prior to SBREFA, EPA’s policy was to prepare a regulatory 

flexibility analysis for any rule that the agency expected to have any 

impact on small entities. According to EPA officials, the SBREFA panel 

requirement made continuation of the agency’s more inclusive RFA policy 

too costly and impractical. In other words, a statute Congress enacted to

strengthen RFA caused the agency to use the discretion permitted in RFA 

to conduct fewer regulatory flexibility analyses.21

In closing, I would reiterate that we believe Congress should revisit 

aspects of RFA and that our prior reports have indicated ample 

opportunities to refine the Act. Despite some progress in implementing 

RFA and other regulatory reform initiatives since 1980, it is clear from the 

introduction of H.R. 682 and related bills that Members of Congress 

remain concerned about the impact of regulations on small entities and 

the extent to which the rulemaking process encourages agencies to 

consider ways to reduce the burdens of new and existing rules, while still 

achieving the objectives of the underlying statutes. 

Mr. Chairman, this concludes my prepared statement. Once again, I

appreciate the opportunity to testify on these important issues. I would be 

pleased to address any questions you or other Members of the 

Subcommittee might have at this time. 

 20EPA had certified that the proposed rule would not have a significant impact and, 

therefore, did not trigger RFA’s analytical and procedural requirements. Although we raised

questions, we concluded that the analytic methods that EPA’s program office used in its

original and revised economic analysis, as well as the conclusions the office drew as a 

result of those analyses, were within the discretion provided by both RFA and EPA

guidance. 

21We made no new recommendations in GAO/GGD-00-193, but we referred to our prior

recommendations, noting that clarifying what Congress intends the term “significant 

economic impact on a substantial number of small entities” to mean would make the

implementation of RFA more consistent and help to prevent concerns about how agencies 

are implementing the Act. 

Page 10
Contact and 

Acknowledgements 

If additional information is needed regarding this testimony, please 

contact J. Christopher Mihm, Managing Director, Strategic Issues, on (202) 

512-6806 or at mihmj@gao.gov. Tim Bober, Jason Dorn, Andrea Levine, 

Latesha Love, Joseph Santiago, and Michael Volpe contributed to this 

statement. 

Page 11
Page 12

Related GAO Products 

Federal Rulemaking: Past Reviews and Emerging Trends Suggest Issues

That Merit Congressional Attention. GAO-06-228T. Washington, D.C.: 

November 1, 2005. 

Regulatory Reform: Prior Reviews of Federal Regulatory Process 

Initiatives Reveal Opportunities for Improvements. GAO-05-939T. 

Washington, D.C.: July 27, 2005. 

Regulatory Flexibility Act: Clarification of Key Terms Still Needed. 

GAO-02-491T. Washington, D.C.: March 6, 2002. 

Regulatory Reform: Compliance Guide Requirement Has Had Little 

Effect on Agency Practices. GAO-02-172. Washington, D.C.: December 28, 

2001. 

Federal Rulemaking: Procedural and Analytical Requirements at OSHA 

and Other Agencies. GAO-01-852T. Washington, D.C.: June 14, 2001. 

Regulatory Flexibility Act: Key Terms Still Need to Be Clarified. GAO-01-

669T. Washington, D.C.: April 24, 2001. 

Regulatory Reform: Implementation of Selected Agencies’ Civil Penalty 

Relief Policies for Small Entities. GAO-01-280. Washington, D.C.: 

February 20, 2001. 

Regulatory Flexibility Act: Implementation in EPA Program Offices and 

Proposed Lead Rule. GAO/GGD-00-193. Washington, D.C.: September 20, 

2000. 

Regulatory Reform: Procedural and Analytical Requirements in Federal 

Rulemaking. GAO/T-GGD/OGC-00-157. Washington, D.C.: June 8, 2000. 

Regulatory Flexibility Act: Agencies’ Interpretations of Review 

Requirements Vary. GAO/GGD-99-55. Washington, D.C.: April 2, 1999. 

Federal Rulemaking: Agencies Often Published Final Actions Without 

Proposed Rules. GAO/GGD-98-126. Washington, D.C.: August 31, 1998. 

Regulatory Reform: Implementation of the Small Business Advocacy 

Review Panel Requirements. GAO/GGD-98-36. Washington, D.C.: March 

18, 1998. 
Regulatory Reform: Agencies’ Section 610 Review Notices Often Did Not 

Meet Statutory Requirements. GAO/T-GGD-98-64. Washington, D.C.: 

February 12, 1998. 

Regulatory Flexibility Act: Agencies’ Use of the October 1997 Unified 

Agenda Often Did Not Satisfy Notification Requirements. GAO/GGD-98-

61R. Washington, D.C.: February 12, 1998. 

Regulatory Flexibility Act: Agencies’ Use of the November 1996 Unified

Agenda Did Not Satisfy Notification Requirements. GAO/GGD/OGC-97-

77R. Washington, D.C.: April 22, 1997.

Regulatory Flexibility Act: Status of Agencies’ Compliance. GAO/GGD94-105. Washington, D.C.: April 27, 1994. 

Regulatory Flexibility Act: Inherent Weaknesses May Limit Its 

Usefulness for Small Governments. GAO/HRD-91-16. Washington, D.C.: 

January 11, 1991. 

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