CS

ON

ECONOM

INNOVAT OPEI Regulatory Development Series 

Final Guidance for EPA Rulewriters: Regulatory Flexibility Act

as amended by the Small Business Regulatory Enforcement Fairness Act 

EPA’s Action 

Development Process 

NOTICE

The statements in this document are intended solely as guidance. This document is not intended, nor can it be

relied upon, to create any rights enforceable by any party in litigation with the United States. EPA may decide to

follow the guidance provided in this document, or to act at variance with the guidance, based on its analysis of the

specific facts presented. This guidance may be revised without public notice to reflect changes in EPA's

approach to implementing the Regulatory FlexibilityAct or to clarify and update text. In fact, such changes have

been made to this guidance since the November 30, 2006 signature of the SBAC and are reflected in this version

of the guidance.

November 2006 

UNITED STATES ENVIRONMENT PROTECTION AGENCY 

Washington D. C. 20460 

Nov. 30, 2006 

Office of Policy, 

Economic and Innovation 

MEMORANDUM

SUBJECT:	 Transmittal of Final GuidanceEPARulewriters:RegulatoryFlexibilityAct as

Amended by the SmallBusiness andRegulatoryEnforcementFairnessAct

FROM:	 Alexander Cristofaro 

Small BusinessAdvocacy Chair 

TO:	 AssistantAdministrators 

RegionalAdministrators 

General Counsel 

I am pleased to provide you with the document referenced above. This revised guidance reflects 

the Agency's accumulated experience with the RFA, as amended by SBREFA, since we issued the 

previous guidance on March 29, 1999. This new edition retains much of the substance of the 1999 edition, 

while significantly expanding chapters on screening analysis and adding a new chapter on preparing the 

initial and final regulatory flexibility analyses. 

As we did earlier, we have prepared this revised guidance for EPA managers and staff to use 

flexibly and with considerable judgment. We have discovered no single "magic formula" that applies 

equally to all situations. Even so, we are confident EPA employees will find this document even more 

helpful than its predecessor in sorting through the variety of issues we can expect to encounter 

considering the unique needs of small entities subject to environmental rules. 

Attachment 

cc:	 Steering Committee Representatives 

Regional Regulatory Contacts 

Send comments on the guidance to me c/o Joan Rogers 

• E-mail: rogers.joanb@epa.gov 

• Telephone: 202-564-6568 

• U.S. mail: mail code 1803A@ 1200 PennsylvaniaAvenue, NW, Washington, DC 20460 

• Fax: 202-564-0965 
How to Use 

This Guidance 

A Quick Glimpse at this Guidance and the RFA Process 

The purpose of this Guidance is to help you, the rulewriter, understand how the 

requirements of the Regulatory Flexibility Act (RFA) as amended by the Small Business 

Regulatory Enforcement Fairness Act (SBREFA) fit into the Agency's Action Development 

Process. 1 The Agency refers to the RFA as amended by SBREFA simply as the RFA. 

When EPA initiates a regulatory development action, RFA compliance should be near the
 

top of the list of issues you address in your project plan or Analytic Blueprint. 2 This guidance
 

outlines the analytical and sequential process that will apply to most rules subject to the RFA.
 

Figure 1 illustrates the RFA process for proposed rules and Figure 2 illustrates the RFA process
 

for final rules.
 

Assessing a Rule's Economic Impact on Small Entities. Once you have determined that your 

rule is subject to the RFA (i.e., you are required to publish a notice of proposed rulemaking under 

the APA or any other statute), the first thing you need to do for RFA compliance is to determine 

what, if any, impact your rule may have on small entities. To do this, you need to perform a 

screening analysis on your proposed and final rules. Screening analyses are discussed in detail in 

Chapter 2 of this guidance. 

Preparing the Initial and Final Regulatory Flexibility Analyses. These are analyses of 

economic impacts on small entities that you must prepare if you do not certify that your rule does 

not have a significant economic impact on a substantial number of small entities (SISNOSE). 

These analyses are discussed in detail in Chapter 3. 

Implementing Small Entity Outreach. If the screening analysis indicates that your rule may have 

1 See EPA's Action Development Process: Guidance for EPA Staff on Developing Quality Actions, June 30, 2004. EPA's 

Action Development guidance can be found at EPA's Action Development Process Library site 

http://intranet.epa.gov/adplibray. 

2 See Guidelines for Preparing Analytic Blueprints, June 28, 2004, (available at http://intranet.epa.gov/adplibrary or 

contact OPEI 

i 
some impact on some small entities, or you find that you need more information to make that 

determination, Chapter 4 will provide you with guidance for identifying and engaging in a 

dialogue with representatives of small entities that may be subject to the rule under development. 

Small Business Advocacy Review Panels. If the screening analysis of your rule indicates that 

the rule is likely to have a SISNOSE, you should plan to prepare for a Small Business Advocacy 

Review Panel. In Chapter 5 you will find detailed information about how you should go about 

complying with the requirement that the Agency convene a Small Business Advocacy Review 

Panel for proposed rules which are likely to have a SISNOSE. 

Small Entity Compliance Guides. If you must prepare a final regulatory flexibility analysis for 

your final rule (i.e., you do not certify the rule as not having a significant economic impact on a 

substantial number of small entities), the RFA also requires you to prepare a small entity 

compliance guide. Chapter 6 answers questions regarding what constitutes such a guide and 

gives guidance for designing a small entity compliance guide. 

Ongoing Informal Small Entity Guidance . When planning for the post-promulgation stage of 

your rule, refer to the discussion in Chapter 7 regarding the RFA provision on giving informal 

advice to small entities in response to inquiries. 

Periodic Review of Rules. RFA section 610 requires a periodic review of promulgated rules 

which have or will have a significant economic impact on a substantial number of small entities. 

Chapter 8 explains the Agency's strategy for continued compliance with this requirement. 

Please note: This guidance is not a binding Agency procedural rule. In determining and 

mitigating impacts on small entities, we anticipate that there will be many situations in which 

Agency staff and management must exercise considerable judgment. Nevertheless, we intend this 

guidance to provide you with an analytic and sequential structure that should be sufficient for 

most covered rulemakings. Should you come across a situation that does not appear to be 

discussed in this guidance, or a situation where an approach other than that suggested by this 

guidance makes sense, you need to consult with your Regulatory Steering Committee 

representative, the Small Business Advocacy Chair in the Office of Policy, Economics and 

Innovation (OPEI), and attorneys from the Office of General Counsel (OGC). 

This guidance was developed for practical use. Occasionally, it repeats information 

already introduced in order to increase its accessibility and utility to a rulewriter working under 

pressure and looking to find adequate guidance on a particular point quickly. Some readers 

might find the narrative occasionally redundant for this reason. Even so, we strongly urge all 

users of the guidance to review it in its entirety before embarking on a rulemaking likely to 

directly regulate small entities. 

This document supersedes and revokes all prior Agency guidance on the Regulatory 

Flexibility Act. This guidance incorporates the information on preparing initial and final 

regulatory flexibility analyses that was contained in the EPA Guidelines for Implementing the 

Regulatory Flexibility Act, April 1992. That information is contained in a new Chapter 3 in this 

guidance. In addition, a revised Chapter 2 based on the Agency's continuing implementation of 

the RFA is included. A few minor editorial changes have been made to other chapters such as 

deleting outdated contact information and updating footnote references to other documents. 

Please direct any questions to the Small Business Advocacy Chair's staff in the Office of 

Regulatory Policy and Management of OPEI. ii 
RFA PROCESS OVERVIEW FOR PROPOSED RULES


Figure 1
 

Initiative

Action

Development1 

Initial Analytic


Assessment


Perform


Screening


Analysis2


[Chapter 2] 

Any

Adverse

Impact on

Any Small

Entity?	 

Likely

To Certify

Rule? 3 

NO YES 

Outreach

To Small

Entities

[Chapter4] 

YES NO 

PREPARE IRFA4 

Prepare for

SBAR

Panel5

[Chapter 5] 

Convene

SBAR Panel

[Chapter 5] 

Complete

Panel

Report

[Chapter 5] 

Prepare

NPRM

Package

for OMB

Review

Draft


Certification


Statement &


Factual


Explanation

Thereof

[Chapter 2] 

May Need to


Prepare NPRM


Package for


OMB Review
 

Prepare


NPRM


Package


for Agency


Signature and


Routing to


Federal


Register
 

Notes:


General: References to "Chapters" in the flowchart refer to the chapters in this guidance document. See Table of Contents.


1 Only rules subject to notice-and-comment requirements are subject to the regulatory flexibility analysis requirements of the RFA. See Chapter 1 and 2 for more


details.

2 It may be appropriate to start outreach to small entities before or concurrent with performing a screening analysis. See Chapter 2 for more details.

3 It is EPA's policy to assess impacts on small entities and minimize impacts to the extent feasible. If you do not have enough information to determine with confidence

that the Agency can certify (no SISNOSE), proceed with "NO."

4 Under the RFA, you must prepare an IRFA and meet other requirements for your rule proposal, unless the Administrator certifies that the rule "will not, if

promulgated, have a significant economic impact on a substantial number of small entities." See Chapter 1 for general information and Chapter 3 for more detailed

information on preparation of an IRFA. A decision to convene a Panel is not a commitment to prepare an IRFA (or a FRFA for rule promulgation), nor does it prevent

EPA from certifying your proposed or final rule if its substance so warrants.

5	 Although the preparation of the IRFA and the term of the Panel are represented here as concurrent activities, in reality, there is no firm linkage in timing for the two

tasks. However, the two tasks may inform each other and the IRFA should not be completed until the panel report is signed. 

iii 
RFA Process Overview for Final Rules

Figure 2 

Final Rule is


Publish in


Federal
 

Issue

Compliance

Guide 

[Chapter 6] 

Provide

Ongoing

Informal Small

Entity

Guidance 

[Chapter 7] 

Draft Final


Rule:


Consider


Comments &


Select


Alternatives
 

Certify

Final

Rule? 1 NO 

YES 

Prepare

FRFA 2 

Prepare FRM

Package for OMB

Review

And/or

Agency Signature

and Routing to

Federal Register Prepare Compliance

Guide 

[ ] Chapter 6

Periodic Review


Rules Which


Have a


Significant


Economic


Impact on a


Substantial


Number of Small


Entities
 

[Chapter 8]
 

Draft

Certification

Statement &

Factual

Explanation

Thereof 

[Chapter 2] 

Notes:


General: References to "Chapters" in the flowchart refer to the chapters in this guidance document. See Table of Contents.


1 If you have not gone through the SBAR Panel process for rule proposal, but think that you may not be able to certify your final rule, consult with your OGC attorney.

2 Under the RFA, you must prepare a FRFA and meet other requirements for your rule, unless the Administrator certifies that the rule will not have a significant

economic impact on a substantial number of small entities. See Chapter 1 for general information and Chapter 3 for more detailed information on preparation

of a FRFA. 

iv 
List of Acronyms 

APA Administrative Procedure Act 

CFR Code of Federal Regulations 

FRFA Final Regulatory Flexibility Analysis 

IRFA Initial Regulatory Flexibility Analysis 

NPRM Notice of Proposed Rulemaking 

OPA Office of Public Affairs (EPA) 

OCIR Office of Congressional and Intergovernmental Relations (EPA) 

OECA Office of Enforcement and Compliance Assurance (EPA) 

OGC Office of General Counsel (EPA) 

OIRA Office of Information and Regulatory Affairs (OMB) 

OMB Office of Management and Budget 

OPEI Office of Policy, Economics and Innovation (EPA) 

ORPM Office of Regulatory Policy and Management (EPA) 

RFA Regulatory Flexibility Act 

RMD Regulatory Management Division (EPA) 

SBA Small Business Administration 

SBAC Small Business Advocacy Chair (EPA) 

SBAR Small Business Advocacy Review 

SBO Small Business Ombudsman (EPA) 

SBREFA Small Business Regulatory Enforcement Fairness Act 

SER Small Entity Representative 

SISNOSE Significant economic Impact on a Substantial Number Of Small Entities 

v 
Table of 

Contents 

How to Use This Guide .............................................................................................................................................. i
 

List of Acronyms ......................................................................................................................................................v
 

Chapter 1 

Introduction to the Regulatory Flexibility Act ........................................................................................................1
 

1.1 What is the RFA?.............................................................................................................................1
 

1.2 What is SBREFA? ............................................................................................................................1
 

1.3 What Do I Need to Know about the RFA and SBREFA?......................................................................1
 

1.4 What is EPA's Policy for Implementing the RFA? ..............................................................................2
 

1.5 What Rules Are Subject to the RFA? .................................................................................................3
 

1.6 What Part of RFA Compliance is Judicially Reviewable?....................................................................4
 

1.7 What is in this Guidance?................................................................................................................6
 

1.8 What are the RFA Procedural Requirements for Rule Proposal? .........................................................7
 

1.9 What are the RFA Procedural Requirements for Final Rule Promulgation?.........................................8
 

1.10 How Does this Guidance Differ from the 1999 Revised Interim Guidance? ........................................8
 

Chapter 2
 

RFA/SBREFA Screening Analysis: Assessing Impacts on Small Entities .................................................................9
 

2.1
 RFA: The Basics ..............................................................................................................................9
 

2.2
 What is a Screening Analysis and Why Should I Do One?................................................................10
 

2.3
 Is a Screening Analysis Needed for My Rule? ..................................................................................11
 

2.4
 What Basic Steps Make up a Screening Analysis? ............................................................................11
 

2.5
 Step 1: Determining Which Small Entities are Subject to the Rule's Requirements............................12
 

2.6
 Step 2: Determining Appropriate Measures of Economic Impacts ...................................................18
 

2.7 Step 3: How Should I Use the Screening Analysis to Determine If a Rule May Be Certified under the
 

RFA? ............................................................................................................................................22
 

2.8
 Step 4: What Should I Do after Assigning My Rule to a Category? ....................................................29
 
Chapter 3
 

Preparing the Initial and Final Regulatory Flexibility Analyses ............................................................................31
 

3.1	 What are IRFAs and FRFAs? ..........................................................................................................31
 

3.2	 What is the Relationship Between the IRFA/FRFA and a Rule's Broader Economic Analysis?.............33
 

3.3	 What is the Relationship of the IRFA/FRFA to the SBAR Panel Process?............................................34
 

3.4	 How Do I Prepare an IRFA? ...........................................................................................................35
 

3.5	 How Do I Prepare a FRFA?.............................................................................................................39
 

Chapter 4
 

Implementing Small Entity Outreach: Informing, Listening, Responding ..........................................................43
 

4.1	 Small Entity Outreach: The Basics .................................................................................................43
 

4.2	 What Does "Outreach" Mean? .......................................................................................................44
 

4.3	 Is Small Entity Outreach Subject to FACA?.....................................................................................44
 

4.4	 Should I Coordinate My Stakeholder Involvement Activities?.........................................................45
 

4.5	 What Kind of Outreach Does the RFA Require? ..............................................................................45
 

4.6	 Where Can I Get Assistance with My Small Entity Outreach? ..........................................................46
 

4.7	 What Steps Can I Take to Reach Small Entities? ..............................................................................48
 

4.8	 Where Can I Get More Information? ..............................................................................................50
 

Chapter 5
 

The Small Business Advocacy Review Panel Process for Proposed Rules ..............................................................51
 

5.1	 What is a Small Business Advocacy Review Panel? ..........................................................................51
 

5.2	 What are the Statutory Panel Requirements? ..................................................................................51
 

5.3	 What Help is Available to Me in Preparing for a Panel? ....................................................................53
 

5.4	 What Circumstances Require EPA to Convene a Panel?...................................................................55
 

5.5	 Can I Request a Waiver from the SBAR Panel Process?.....................................................................56
 

5.6	 When Should We Convene a Panel?...............................................................................................57
 

5.7	 What Should Be Done Before My Panel Can Be Convened? .............................................................57
 

5.8	 What Can I Expect from Panel Review? ..........................................................................................64
 

5.9	 Consideration of the Panel Report During Development of the Proposed Rule and Initial
 

Regulatory Flexibility Analysis ......................................................................................................67
 

Chapter 6 

Small Entity Compliance Guides ...........................................................................................................................69
 

6.1 EPA's Approach to Small Entity Compliance Guides.......................................................................69
 

6.2 What is the Goal in Writing a Compliance Guide?...........................................................................71
 

6.3 Who Participates in the Development of a Compliance Guide? .......................................................71
 
6.4 When Should I Develop a Compliance Guide? ...............................................................................72
 

6.5 What Sorts of Questions Should I Ask My Small Entity Reviewers?..................................................72
 

6.6 How Do I Document Development of the Guide? ...........................................................................72
 

6.7 Who Can Help Me with Distribution?............................................................................................73
 

6.8 How Do We Ensure that Compliance Guides are Kept Up to Date? ..................................................73
 

6.9 Template for Compliance Guides ..................................................................................................74
 

Chapter 7
 

Ongoing Informal Small Entity Guidance .............................................................................................................81
 

7.1 Overview of EPA's Section 213 Program.........................................................................................81
 

7.2 List of Compliance Assistance Resources........................................................................................83
 

Chapter 8
 

Periodic Review of Final Rules as Required by RFA Section 610 ...........................................................................85
 

8.1 Introduction.................................................................................................................................85
 

8.2 What's a Section 610 Review?........................................................................................................85
 

8.3 Are there Some Rules that are not Certified by EPA that will not have a Section 610 Review? .............86
 

8.4 How Do We Identify and Track Rules for Review?...........................................................................86
 

8.5 Scheduling Section 610 Reviews ...................................................................................................87
 

8.6 Must We Review a Rule More than Once? .......................................................................................87
 

8.7 What If a Rule has been Subsequently Amended?...........................................................................87
 

8.8 Do We Review a Rule or a CFR Part or Section? ...............................................................................87
 

8.9 Conducting the Review.................................................................................................................88
 

8.10 Does the Line-by-line Review also Satisfy Section 610 Requirements? .............................................89
 

8.11 Announcing the Results of the Review ...........................................................................................89
 

8.12 Follow-up to the Section 610 Review.............................................................................................89
 

8.13 Example of "Prerule" Semi-annual Regulatory Agenda Entry ..........................................................89
 

8.14 Example Entry for Completed Section 610 Review.........................................................................91
 

8.15	 Section 610 Judicial Review ..........................................................................................................92
 

Figure 1 RFA Process Overview For Proposed Rules ............................................................................................iii
 

Figure 2 Process Overview For Final Rules ..........................................................................................................iv
 

Figure 3 Screening Analysis Overview ...............................................................................................................14
 

Figure 4 Small Business Advocacy Review Panel Process for Proposed Rules .......................................................54
 

Figure 5 Small Entity Compliance Guides .........................................................................................................70
 

8
 Table 1 Recommended Quantitative Metrics for Economic Impact Screening Analyses .......................................21
 

Table 2 Example SISNOSE Certification Decision Process...................................................................................24
 

Chapter 1 

Introduction to the 

Regulatory Flexibility Act 

1.1 What is the RFA? 

President Carter signed the Regulatory Flexibility Act (RFA) into law on September 19, 

1980. In enacting the law, the Congress found that "uniform Federal regulatory and reporting 

requirements have in numerous instances imposed unnecessary and disproportionately 

burdensome demands ... upon small [entities]. . . [T]he practice of treating all regulated 

[entities] as equivalent may lead to inefficient use of regulatory agency resources, enforcement 

problems and, in some cases, to actions inconsistent with the legislative intent of health, safety, 

environmental and economic welfare legislation." 3 

The RFA imposes both analytical and procedural requirements on EPA and other federal 

agencies. The analytical requirements call for EPA to carefully consider the economic impacts 

our rules will have on small entities. The procedural requirements are intended to ensure that 

small entities have a voice when EPA makes policy determinations in shaping its rules. Together, 

these requirements ensure that EPA carefully considers the effect our regulations may have on 

small entities. However, the RFA's analytical and procedural requirements do not require EPA to 

reach any particular result regarding small entities. 

1.2 What is SBREFA? 

SBREFA is the Small Business Regulatory Enforcement Fairness Act, a regulatory reform th statute passed by the 104 Congress and signed into law by President Clinton on March 29, 

1996. SBREFA (Pub Law No. 104-121) enacted a variety of provisions, including several 

amendments to the Regulatory Flexibility Act, 5 U.S.C. section 601 et seq, of particular 

importance to EPA rulemakings. The Agency refers to the RFA as amended by SBREFA simply as 

the RFA, but there are other SBREFA provisions as well. 

1.3 What Do I Need to Know about the RFA and SBREFA? 

In short, with respect to the Regulatory Flexibility Act (RFA), SBREFA established certain 

formal procedural and analytical requirements (detailed below) for the limited number of rules 

3 Regulatory Flexibility Act, Pub. L. No. 96-354, Sec. 2(a) (5 USC § 601 note). 1 
The Regulatory

Flexibility Act (RFA)

was amended by the

Small Business

Regulatory

Flexibility Act

(SBREFA) in 1996.

The Agency refers to

the RFA as amended

by SBREFA simply as

the RFA.

developed by EPA with the potential to impose a significant economic impact on a substantial 

number of small entities.4 More specifically, as a rulewriter, if your rule may impose a significant 

economic impact on a substantial number of small entities (see Chapter 2) you most likely will 

be required to prepare a formal analysis of the potential adverse economic impacts on small 

entities, participate in a Small Business Advocacy Review Panel (proposed rule stage), and 

prepare a Small Entity Compliance Guide (final rule stage). 

SBREFA also made other changes to Agency regulatory practice as it affects small entities. 

Many Agency actions under the RFA are now judicially reviewable, including decisions to certify 

a rule as not having a significant economic impact on a substantial number of small entities, the 

preparation of a regulatory flexibility analysis and periodic review of 

final rules. SBREFA's other provisions include Subtitles A through C, 

relating to enforcement of federal laws and regulations with respect to The Regulatory small entities, and Subtitle E, wholly unrelated to the small entity Flexibility Act (RFA) provisions of the rest of SBREFA, which provides for Congressional was amended by the review of virtually all final rules. 5 

Small Business 

The purpose of the RFA is "to fit regulatory and informational Regulatory 

requirements to the scale of the businesses, organizations and Enforcement 

governmental jurisdictions subject to the regulation." 6 To achieve this Fairness Act 

principle, agencies are required to "solicit and consider flexible (SBREFA) in 1996. regulatory proposals and to explain the rationale for their actions to The Agency refers to assure that such proposals are given serious consideration." 7 The RFA the RFA as amended does not require an agency to necessarily minimize a rule's impact on by SBREFA simply as small entities if there are legal, policy, factual or other reasons for not 

doing so. The RFA requires only that agencies determine, to the extent the RFA. 

feasible, the rule's economic impact on small entities, explore regulatory 

options for reducing any significant economic impact on a substantial 

number of such entities, and explain their ultimate choice of regulatory approach. 

1.4 What is EPA's Policy for Implementing the RFA? 

Since its enactment in 1980, the RFA has required every federal agency to prepare 

regulatory flexibility analyses for any rule for which the agency is required to issue a notice of 

proposed rulemaking under the Administrative Procedure Act or any other statute unless the 

agency certifies that the rule "will not, if promulgated, have a significant economic impact on a 

4	 The Regulatory Flexibility Act definition of small entities includes small businesses, small governments and small 

organizations. The RFA references the definition on small business found in the Small Business Act, which 

authorizes the Small Business Administration (SBA) to further define small business by regulation. The SBA's 

small business definitions are codified at 13 CFR section 121.201. More information on the definition of “small” 

can be found in Chapter 2. 

5	 For more information, see the document entitled Congressional Review Act, Guidance for Rule Writers, June 1998, 

available from OPEI or on EPA's Action Development Process Library intranet site: 

http://intranet.epa.gov/adplibrary 

6 Regulatory Flexibility Act, Pub. L. No. 96-354, Sec. 2(a) (5 USC § 601 note) 

7 Id. 

2 
substantial number of small entities." One important function of this guidance is to establish 

workable guidelines for determining if a particular rule will have a "significant economic impact" 

on a "substantial number" of small entities. Prior to the enactment of SBREFA, EPA exceeded the 

requirements of the RFA by preparing regulatory flexibility analyses for every rule that would 

have any impact on any number of small entities, regardless of the size of impact or the number 

of small entities affected. That policy was embodied in the EPA Guidelines for Implementing the 

Regulatory Flexibility Act guidance document dated April 1992 (1992 RFA Guidance). 8 

When SBREFA became law in 1996, we developed additional procedures for full 

compliance with SBREFA's multiple and various provisions. To ensure the Agency gave top 

priority to this effort, a cross-Agency Task Force was established to develop comprehensive 

procedures for our implementation of SBREFA. The efforts of the Task Force were reflected in the 

EPA Interim Guidance for Implementing the Small Business Regulatory Enforcement Fairness Act and 

Related Provisions of the Regulatory Flexibility Act guidance document dated February 5, 1997 

(1997 Interim SBREFA Guidance) and the subsequent "Revised Interim Guidance for EPA 

Rulewriters: Regulatory Flexibility Act as Amended by the Small Business Regulatory Enforcement 

Fairness Act dated March 29, 1999. 

It remains EPA policy that program offices should assess the direct adverse impact 

of every rule on small entities and minimize any adverse impact to the extent feasible, 

regardless of the magnitude of the impact or number of small entities affected. In view of 

the changes made by SBREFA, however, the Agency decided to implement the RFA as written; 

that is, a regulatory flexibility analysis as specified by the RFA will not be required simply 

because the rule has some impact on some number of small entities. Instead, such analyses will 

be required only in cases where we will not certify that the rule will not have a significant 

economic impact on a substantial number of small entities. This approach allows us to manage 

our resources such that we can consider the potential small entity impacts of all rules while 

preparing full regulatory flexibility analyses for those rules warranting such analyses under the 

RFA. 

The SBREFA amendments also directed agencies to name a Small Business Advocacy 

Chairperson (SBAC) to act as permanent chair of their review Panels. EPA's Small Business 

Advocacy Chair is responsible for convening Small Business Advocacy Review (SBAR) Panels 

and, among other things, overseeing policy decisions regarding certification that a rule will not 

have a significant economic impact on a substantial number of small entities. Chapter 5 provides 

detailed information on the SBAR Panel process. 

1.5 What Rules Are Subject to the RFA? 

As a threshold matter, the RFA requirement to prepare a regulatory flexibility analysis or a 

8 This 2006 Guidance document supersedes and revokes all prior Agency guidance on the Regulatory Flexibility Act. 

3 
certification of no significant economic impact on a substantial number of small entities applies 

only to: 

� under the 

Administrative Procedure Act (APA) or any other statute, and 

proposed rules subject to notice-and-comment rulemaking requirements 

� final rules promulgated under the notice-and-comment rulemaking 

requirements of the APA. 

Exempt from the RFA requirement to prepare either a regulatory flexibility analysis or a 

certification are: 

�	 Agency actions that are not rules (e.g., orders or adjudications), and 

�	 rules that the Agency is not required by statute to propose before promulgating. 

Most EPA rulemakings are subject to section 553 of the APA, which generally requires 

that an agency issue a notice of proposed rulemaking and take comment on a rule before issuing 

it. The APA, however, exempts from notice-and-comment requirements: 

�	 rules of agency organization, procedure or practice that do not substantially affect the 

rights of non-agency parties; 

�	 rules for which the agency finds "for good cause" that notice and an opportunity to 

comment are "impracticable, unnecessary, or contrary to the public interest;" and 

�	 rules relating to agency management or personnel or to public property, loans, grants, 

benefits or contracts. 

It should be noted that "direct final rules" (i.e., rules that the Agency issues without first 

proposing them, that are withdrawn if anyone files an adverse comment) are generally subject to 

notice-and-comment requirements and are therefore subject to the RFA requirements in this 

guidance. For more information on direct final rulemaking see, Direct Final Rulemaking: Guidance 

for EPA Rule Writers, available on EPA's Action Development Process Library intranet site: 

http://intranet.epa.gov/adplibrary. 

The procedures for some EPA rulemakings are governed by other statutes. For example, 

many Clean Air Act (CAA) rulemakings are subject to the procedural requirements of section 

307(d) of the CAA instead of the APA. In such cases, you should consult those statutes and your 

OGC attorney. 

1.6	 What Part of RFA Compliance is Judicially Reviewable? 

Judicial review is the process whereby an adversely affected person can challenge an EPA 

final regulatory action in Federal court if the statute so allows and ask the court either to vacate 

4 
or stay enforcement of the rule. During review of a rule, EPA must demonstrate that we complied 

with not only the substantive statutory requirements of the implementing statute (e.g., the Clean 

Air Act), but also with requirements contained in procedural statutes, such as the APA and RFA. 

During judicial review, EPA also must demonstrate that our interpretation of the law is 

reasonable in areas that we had discretion and that we had a rational basis for our regulatory 

decision. 

The SBREFA Amendments to the RFA added provisions that now allow a small entity that 

is adversely affected by a final rule to seek review in court of an agency's compliance with the 

following RFA requirements: 

� Section 601 - Establishing an alternative definition for small businesses, small 

governmental jurisdictions, and/or small non-profit organizations; 

� Section 604 - Final regulatory flexibility analysis (FRFA); 

� Section 605(b) - Certification of the proposed or final rule and the factual basis for the 

certification; 

� Section 608(b) - Delaying the completion of a FRFA for up to 180 days due to an 

emergency; and 

� Section 610 - Periodic review of final rules that were not certified within ten years of 

promulgation. 

The RFA gives a reviewing court broad discretion in deciding what the appropriate 

remedy should be if the court finds an agency has not complied with the RFA's requirements 

(e.g., consulting with the Small Business Administration and providing notice and an 

opportunity for comment before establishing an alternative small business definition or 

preparing a meaningful FRFA). Such remedies may include vacating and/or remanding the rule 

to the agency for further action or deferring enforcement of the rule against small entities. 

Thus, even if you have fulfilled the requirements of your implementing statute, have 

reasonably interpreted those statutory requirements in areas in which the agency has discretion 

to do so, have explained on the record your rationale for selecting the option you did, but you 

fail to comply with one or more RFA requirements or fail to adequately explain your 

conclusions, a reviewing court could decide to vacate, remand, or stay the rule on that basis. 

Indeed, one agency previously had a rule vacated for basing its RFA analysis on an alternative 

small entity definition it did not establish properly. 

In addition, a rule may be challenged if the agency fails to adequately respond to adverse 

comments challenging any aspect of the rule. This applies to an agency's failure to respond to 

comments on the agency's certification, the factual basis for the certification, or the initial 

regulatory flexibility analysis. 

5 
1.7 What is in this Guidance? 

The purpose of this Guidance is to help you, the rulewriter, to understand how the 

requirements of the RFA fit into the Agency's Action Development Process. 9 

When EPA initiates a regulatory development action, RFA compliance should be near the 

top of the list of issues you address in your project plan or Analytic Blueprint. 10 This guidance 

outlines the analytical and sequential process that will apply to most rules subject to the RFA. 

Figure 1 illustrates the RFA process for proposed rules and Figure 2 illustrates the RFA process 

for final rules. 

Assessing a Rule's Economic Impact on Small Entities. Once you have determined that your 

rule is subject to the RFA (i.e., you are required to publish a notice of proposed rulemaking 

under the APA or any other statute), the first thing you need to do for RFA compliance is to 

determine what, if any, impact your rule may have on small entities. To do this, you need to 

perform a screening analysis on your proposed and final rules. Screening analyses are discussed in 

detail in Chapter 2 of this guidance. 

Preparing the Initial and Final Regulatory Flexibility Analyses . These are analyses of 

economic impacts on small entities that you must prepare if you do not certify that your rule 

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

(SISNOSE). These analyses are discussed in detail in Chapter 3. 

Implementing Small Entity Outreach . If the screening analysis indicates that your rule may 

have some impact on some small entities, or you find that you need more information to make 

that determination, Chapter 4 will provide you with guidance for identifying and engaging in a 

dialogue with representatives of small entities that may be subject to the rule under 

development. 

Small Business Advocacy Review Panels. If the screening analysis of your rule indicates that 

the rule is likely to have a SISNOSE, you should plan to prepare for a Small Business Advocacy 

Review Panel. In Chapter 5 you will find detailed information about how you should go about 

complying with the requirement that the Agency convene a Small Business Advocacy Review 

Panel for proposed rules which are likely to have a SISNOSE. 

Small Entity Compliance Guides. If you must prepare a final regulatory flexibility analysis for 

your final rule (i.e., you do not certify the rule as not having a significant economic impact on a 

substantial number of small entities), the RFA also requires you to prepare a small entity 

compliance guide. Chapter 6 answers questions regarding what constitutes such a guide and 

gives guidance for designing a small entity compliance guide. 

9	 EPA's Action Development Process: Guidance for EPA Staff on Developing Quality Actions, June 30, 2004. EPA's Action 

Development guidance can be found at EPA's Action Development Process Library intranet site: 

http://intranet.epa.gov/adplibrary. 

10	 See Guidelines for Preparing Analytic Blueprints, June 28, 2004, (available at http://intranet.epa.gov/adplibrary) or 

contact OPEI. 6 
Ongoing Informal Small Entity Guidance . When planning for the post-promulgation stage of 

your rule, refer to the discussion in Chapter 7 regarding the RFA provision on giving informal 

advice to small entities in response to inquiries. 

Periodic Review of Rules. RFA section 610 requires a periodic review of promulgated rules 

which have or will have a significant economic impact on a substantial number of small entities. 

Chapter 8 explains the Agency's strategy for continued compliance with this requirement. 

Please note: This guidance is not a binding Agency procedural rule. In determining and 

mitigating impacts on small entities, we anticipate that there will be many situations in which 

Agency staff and management must exercise considerable judgment. Nevertheless, we intend this 

guidance to provide you with an analytic and sequential structure that should be sufficient for 

most covered rulemakings. Should you come across a situation that does not appear to be 

discussed in this guidance, or a situation where an approach other than that suggested by this 

guidance makes sense, you need to consult with your Regulatory Steering Committee 

representative, the Small Business Advocacy Chair in the Office of Policy, Economics and 

Innovation (OPEI) and attorneys from the Office of General Counsel (OGC). 

1.8 What are the RFA Procedural Requirements for Rule Proposal? 

If the RFA APPLIES to your rule and your screening analysis indicates your rule most 

likely WILL NOT have a significant economic impact on a substantial number of 

small entities: 

Certification statement and statement of factual basis. You must prepare a certification statement 

and a statement of factual basis supporting the certification that your rule will not have a 

significant economic impact on a substantial number of small entities. The RFA section 605(b) 

requires you to publish in the Federal Register "a statement providing the factual basis for such 

certification." That certification and the factual basis for the certification are subject to judicial 

review. Accordingly, it is important that you provide sufficient detail in your factual basis to 

explain why the Agency is certifying the rule. 

~OR~ 

If the RFA APPLIES to your rule and your rule most likely WILL have a significant 

economic impact on a substantial number of small entities: 

Initial Regulatory Flexibility Analysis. Generally, the RFA requires EPA to prepare an Initial 

Regulatory Flexibility Analysis (IRFA) for each proposal, unless the Administrator certifies that 

the rule, if promulgated, will not have a significant economic impact on a substantial number of 

small entities (see Figure 1). 

~AND~ 

Small Business Advocacy Review Panels. Under the RFA, EPA must convene a Small Business 

Advocacy Review Panel for a rule under development, unless the Agency certifies that the rule 

will not impose a significant economic impact on a substantial number of small entities. Each 7 
Panel includes representatives from the Small Business Administration, the Office of 

Management and Budget, and EPA. The Panels conduct outreach to individuals representative of 

small entities likely to be subject to the rule and prepare a report to the EPA Administrator for 

each rulemaking on the potential small entity impacts of the rule and on potential ways to 

reduce those impacts (see Figure 1). More detailed information on the Small Business Advocacy 

Review Panel process is contained in Chapter 5. 

1.9 What are the RFA Procedural Requirements for Final Rule Promulgation? 

If the RFA APPLIES to your rule and your analysis along with any information or analysis 

developed since the proposal indicates your rule WILL NOT have a significant economic 

impact on a substantial number of small entities: 

Certification statement and statement of factual basis. You must prepare a certification statement 

and a statement of factual basis to support the certification that your rule will not impose a 

significant economic impact on a substantial number of small entities. The RFA section 605(b) 

requires you to publish in the Federal Register "a statement providing the factual basis for such 

certification." Under SBREFA, that certification and the factual basis for the certification are 

subject to judicial review. Accordingly, it is important that you provide sufficient detail in your 

factual basis to explain why the Agency is certifying the rule. 

~OR~ 

If based on your analysis, you are not certifying that your rule WILL NOT have a 

significant economic impact on a substantial number of small entities: 

Final Regulatory Flexibility Analysis. For each rule that EPA promulgates and does not certify as 

not having a significant economic impact on a substantial number of small entities, the Agency 

must prepare a Final Regulatory Flexibility Analysis (FRFA; see Figure 2). Importantly, RFA 

requires that each FRFA summarize the significant issues raised by public comments on the 

IRFA, assess these issues, and describe any changes made in response to the public comments. 

~AND~ 

Small Entity Compliance Guide. For each final rule where RFA requires preparation of a FRFA, 

the Agency must also issue a small entity compliance guide providing a Plain Language 

explanation of how to comply with the regulation (see Figure 2). More guidance on developing a 

small entity compliance guide can be found in Chapter 6. 

1.10 How Does this Guidance Differ from the 1999 Revised Interim Guidance? 

This guidance incorporates the information on preparing initial and final regulatory flexibility 

analyses that was contained in the EPA Guidelines for Implementing the Regulatory Flexibility Act, 

April 1992. That information is contained in a new Chapter 3 in this guidance. In addition, a 

revised Chapter 2 based on the Agency's continuing implementation of the RFA is included. A 

few minor editorial changes have been made to other chapters such as deleting outdated contact 

information and updating footnote references to other documents. 8 
The Regulatory

Flexibility Act

(RFA) was

amended by

the Small

Business

Regulatory

Chapter 2 

RFA/SBREFA Screening Analysis: 

Assessing Impacts on Small 

Entities 

This chapter describes the screening process for determining whether a regulatory 

flexibility analysis or a certification of no significant economic impact on a substantial number of 

small entities (SISNOSE) should be prepared for a proposed or final rule. 

2.1 RFA: The Basics 

The purpose of the Regulatory Flexibility Act (RFA) is to ensure that, in developing rules, 

agencies identify and consider ways of tailoring regulations to the size of the regulated entities. 

The RFA does not require an agency to minimize a rule's impact on small entities if there are legal, 

policy, factual or other reasons for not doing so. The RFA generally requires that for certain rules, 

you: 

 determine, to the extent feasible, the economic impact on small entities subject to the 

rule, 

 explore regulatory options for reducing any significant economic 

Impacts on Small Entities
 

SISNOSE 

ignificant 

economic 

mpact on a 

ubstantial 

umber 

f 

mall 

ntities 

S 

I 

S 

N 

O 

S 

E 

impact on a substantial number of such entities, and 

 explain your ultimate choice of regulatory approach. 

This chapter, and Chapter 3, provide you with guidance on how to 

comply with the analytical requirements of the RFA and EPA's policy for 

implementing those requirements. In many respects, the advice and 

direction provided here go beyond what the law requires, and instead 

reflect Agency policy about how best to ensure that small entity concerns 

are considered in the rulemaking process.

Unless the Agency certifies that a rule subject to the RFA will not have a SISNOSE, 

sections 603 and 604 of the RFA require that you prepare a regulatory flexibility analysis meeting 

the applicable statutory requirements. More information on preparation of regulatory flexibility 

analyses can be found in Chapter 3. It bears repeating, however, that even where the Agency 

9 
 

 

certifies that a rule will not have a SISNOSE, EPA's policy is to make an assessment of the 

rule's direct adverse impact on any small entities, to engage the potentially regulated 

entities in a dialog regarding the rule, and to minimize the impact of the rule on small 

entities to the extent feasible while remaining consistent with applicable statutory 

requirements. As always, program managers should determine what level of outreach is 

appropriate given the expected level of impact. 

2.2 What is a Screening Analysis and Why Should I Do One? 

Once you have determined that your rule is subject to the RFA (see Chapter 1 and 

Section 2.3 of this Chapter), it is most important for you to determine if your rule may have a 

SISNOSE. Generally, this determination is made by conducting a "screening analysis." For 

purposes of the RFA, a screening analysis is an assessment of the potential economic impacts of a 

rule on small entities and generally indicates whether you can certify the rule as not having a 

SISNOSE. Under the RFA and SBREFA, you must either: 

Certify that the rule will not have a SISNOSE (5 U.S.C. section 605(b)); or 

Undertake the following activities: 

- prepare a regulatory flexibility analysis (5 U.S.C. sections 603-604), see 

Chapter 3; 

- convene a Small Business Advocacy Review Panel (5 U.S.C. section 609), 

see Chapter 5; and 

- prepare a Small Entity Compliance Guide (SBREFA section 212, PL 104­

121 as amended by Pub. L. Number 110-28), see Chapter 6. 

The RFA does not analytically define the terms significant or substantial with regard to 

extent of economic impact and number of small entities affected. In this chapter we suggest 

guidelines for determining if a particular rule may have a SISNOSE. We recognize that there can 

be no one-size-fits-all methodology for making this determination. Therefore, we recommend 

specific approaches but leave you the flexibility to use alternative methods or reach different 

conclusions where appropriate in the context of a particular rule. However, remember that the 

rationale underlying your ultimate conclusions should be included in the rulemaking record and 

is judicially reviewable. 

2.2.1 Is a Screening Analysis the Same as a Regulatory Flexibility Analysis? 

It is important to note that a screening analysis is not the same as an initial or final 

regulatory flexibility analysis (IRFA/FRFA). IRFA/FRFAs analyze a rule's economic impact on 

small entities, including alternative regulatory or policy options that would minimize significant 

economic impacts. Chapter 3 describes the requirements related to IRFAs and FRFAs. The 

Agency must prepare an IRFA/FRFA for rules that are subject to the RFA unless the Agency 

certifies that the rule will not have a SISNOSE (5 U.S.C. sections 603-605). A screening analysis, 

therefore, serves as a means by which EPA determines and documents its decision to either 

certify that a rule will not have a SISNOSE or prepare the IRFA/FRFA, convene a Small Business 

Advocacy Review Panel, and prepare a Small Entity Compliance Guide. It may also be used to 

10 
provide the required factual basis for a certification of no SISNOSE. 

2.2.2	 How is a Screening Analysis Different from the Economic Analysis 

Described in Executive Order 12866? 

The difference between a screening analysis and the broader economic analysis described 

in Executive Order (E.O.) 12866 11 is that a screening analysis focuses exclusively on economic 

impacts to small entities, while a broader economic analysis focuses on costs and benefits to 

society as a whole. 

When a general economic analysis is conducted for a rule (e.g., it is a "significant 

regulatory action" under E.O. 12866), the screening analysis can be conducted as part of the 

larger economic analysis, provided that the information on small entity impacts is set out clearly. 

Each economic analysis performed for a given rule should strive to make consistent assumptions 

and interpretations of results. However, in cases where different approaches call for alternative 

assumptions, those differing assumptions should be highlighted and the reasons for using them 

should be clearly explained.12 

2.3	 Is a Screening Analysis Needed for My Rule? 

Only rules that are required to undergo notice and comment under the Administrative 

Procedure Act (APA), or other applicable statutes, are subject to the requirements of the RFA (5 

U.S.C. sections 603-604). Therefore, if your rule is not required by statute to undergo notice and 

comment, it is not subject to the RFA and you do not need to prepare a regulatory flexibility 

analysis or a certification of no SISNOSE. See Section 1.5 for a more complete discussion of 

which rules require notice and comment. 

However, as a matter of Agency policy, even if your rule is not subject to the RFA, to the 

extent that you foresee that your rule will have an adverse economic impact on small 

entities, you should assess those impacts and make efforts to minimize them through 

consultation with the small entities likely to be regulated, while remaining consistent with 

applicable statutory requirements. In addition, even if your rule is not subject to the RFA, the 

preambles to the proposed and final rules should include a "Regulatory Flexibility" section that 

explains why the rule is not subject to the RFA. 

2.4	 What Basic Steps Make up a Screening Analysis? 

If you have determined that your rule is subject to the RFA, you should conduct a 

11	 For more information on Executive Order 12866's economic analysis - see EPA's Action Development Process 

Library intranet site: http://intranet.epa.gov/adplibrary/statutes.htm#ombreview 

12	 For example, the simple screening methods outlined in this Chapter assume that affected entities absorb the full cost of 

the regulation, while the broader economic analysis may assume some cost pass-through. An analyst choosing to 

examine cost pass-through to inform the SISNOSE determination should adopt assumptions that are consistent with 

relevant assumptions made in other economic analyses conducted for the rule. 

1
screening analysis to determine if you can certify the rule as not having a SISNOSE. This section 

provides an overview of the four basic steps that make up a screening analysis. This approach is 

also illustrated in Figure 3 . More details on specific components of the approach are provided in 

Sections 2.5 through 2.8. Generally, this screening analysis process is applicable to both the 

proposed and final versions of your rule, since the RFA requires that a regulatory flexibility 

analysis or a certification be prepared for each version (5 U.S.C. sections 603-604). 13 The four 

steps in the screening analysis process are: 

Step 1 Determine which small entities are subject to the rule's requirements (see Section 

2.5); 

Step 2 Select appropriate measures for determining economic impacts on these small 

entities and estimate those impacts (see Section 2.6); 

Step 3 Determine whether the rule may be certified as not having a SISNOSE (see 

Section 2.7); and 

Step 4 Document the screening analysis and include the appropriate RFA statements 

in the preamble (see Section 2.8). 

2.5 Step 1: Determining Which Small Entities are Subject to the Rule's Requirements 

The first step in the screening analysis process is determining which, if any, small entities 

are subject to the rule's requirements. This step involves three activities: 

·	 Identify the entities or types of entities (regardless of size) subject to the rule's 

requirements (Section 2.5.1); 

·	 Define "small" for each type of entity (Section 2.5.2); and 

·	 Determine whether it is likely that any of the entities subject to the rule's 

requirements are small (Section 2.5.3). 

2.5.1 Identify the Types of Entities Subject to the Rule's Requirements 

It is likely that the types of entities regulated by the rule were identified during the 

development of the rule and preparation of the primary economic analysis. For a screening 

analysis, you should re-examine these entities to identify those small entities that are subject to 

13	 If a program is not planning to certify that a proposed or final rule does not have a SISNOSE, then a screening 

analysis is not required because a regulatory flexibility analysis will be prepared. Frequently, however, the 

screening analysis is a necessary step in determining whether to certify a rule as not having a SISNOSE. 

12 
 

 

 

the rule's requirements. 

The determinative question is "who is subject to the requirements of the rule?" If a small 

entity will have obligations imposed on them directly by the rule, then the small entity is subject 

to the requirements of the rule and it should be included in the RFA screening analysis. If a small 

entity does not have an obligation imposed on them directly by the rule, it should not be 

included in the analysis. This is true even if the entities are included in the rule's broader 

economic analysis, either for purposes of complying with Executive Order 12866 or the 

Unfunded Mandates Reform Act. Given that the SISNOSE determination is subject to judicial 

review, it is important to limit the screening analysis to what is needed to make the 

SISNOSE determination.14 

Further, you should analyze who is subject to the requirements of the rule even if the rule 

is either not immediately enforceable or does not impose immediately applicable requirements on 

those subject to the rule. You should perform this analysis as long as you know: (1) who will be 

regulated; and (2) what requirements will be imposed. For example, the promulgation of effluent 

limitations guidelines in the water program does not result in imposition of requirements on 

direct dischargers until the limitations are included as conditions in the discharger's NPDES 

permit. Either EPA or States must take some action before a specific discharger must comply with 

the requirements. We can, however, generally develop this screening assessment (and a 

Regulatory Flexibility Analysis if needed) because EPA must include conditions implementing 

guidelines in any permits it issues and State laws generally must be at least as stringent as EPA's. 

Moreover, EPA knows who will be regulated (we define that in each effluent limitation guideline). 

We can perform a screening analysis premised on a reasonably clear prediction as to who will be 

regulated and with what economic impact. 

2.5.2 Define "Small" for Each Type of Entity 

The RFA provides separate definitions for what constitutes "small" for three types of 

entities: 

small businesses 

small governmental jurisdictions, and 

small organizations. 

14 EPA believes that only rules that will have a direct significant adverse economic impact on a substantial number of 

small entities that are subject to the rule require an IRFA or FRFA, since the purpose of both analyses is to identify 

adverse impacts on small entities and discuss regulatory alternatives that minimize significant economic impacts on 

small entities (see 5 U.S.C. section 603-604). Thus, rules that relieve regulatory burden, or otherwise have a positive 

net economic effect on the small entities subject to the rule, do not require an IRFA or FRFA. 

13 
Screening Analysis Overview


Figure 3
 

Step 1

(Section 2.5) 

Identify the types of

entities (regardless of

size) that are subject to

the rule

Define “small” for each

type of entity

Are any

small entities

subject to the

rule? 

NO
 

Step 2

(Section 2.6) 

YES Select measure(s) for assessing

economic impacts and estimate

impacts 

Step 3

(Section 2.7) 

YES
 

Should

the rule be certified as having

no SISNOSE under

RFA?

Assign rule to a

SISNOSE

certification category 

NO
 

Step 4


(Section 2.8)


Document the Analysis
 

Certify the rule as having no

SISNOSE and provide a

statement of factual basis for why

no small entities are subject to the

regulation

Certify the rule as having no

SISNOSE and provide a

statement of factual basis

Conduct activities required for

rules that are not certified as

having no SISNOSE (see

Chapters 3-6) 

14 
Under the RFA the Agency can adopt alternative definitions for small business, small 

organization and small governmental jurisdiction provided that the agency follows procedures 

set out in the statute (5 U.S.C. section 601). Section 2.5.5 discusses when it may be appropriate 

to apply an alternative definition and the procedures to follow when establishing an alternative 

definition. 

What is a "small business"? 

The RFA incorporates and uses the definition of "small business" found in the Small 

Business Act (5 U.S.C. section 601(3)). The Small Business Act authorizes the Small Business 

Administration (SBA) to define "small business" by issuing regulations. The SBA periodically 

reviews and reissues these definitions. SBA has established size standards for various types of 

economic activities, or industries, under the North American Industry Classification System 

(NAICS). These size standards generally define small businesses based on the number of 

employees or annual receipts. The current version of SBA's size standards can be found at 

http://www.sba.gov/size. Note that the SBA definition of a small business applies to a firm's 

parent company and all affiliates as a single entity. 

What is a "small governmental jurisdiction"? 

The RFA defines "small governmental jurisdiction" as the government of a city, county, 

town, township, village, school district, or special district with a population of less than 50,000 

(5 U.S.C. section 601(5)). For the purposes of the RFA, States and tribal governments are not 

considered small governments. 

What is a "small organization”? 

The RFA defines "small organization" as any "not-for-profit enterprise which is 

independently owned and operated and is not dominant in its field" (5 U.S.C. section 601(4)). 

2.5.3	 Determine Whether Any of the Entities Subject to the Rule are Small 

In determining whether any small entities are subject to your rule's requirements, you 

should first group the entities subject to the rule by type (i.e., business, government, nonprofit 

entity). Next, for each type of entity, apply the definition of "small," or an appropriate alternative 

definition that the Agency has adopted or intends to adopt in accordance with the procedures 

established by the RFA (see Section 2.5.5). 

2.5.4	 What is the Relationship Between the Definition of "Small" Used in the 

Analysis and the Definition (if any) Used in the Rule? 

Some rules may include special provisions to minimize economic impacts on certain 

classes or categories of entities otherwise subject to the particular rule. These classes or categories 

may, in some cases, include or be limited to small entities or subsets of small entities. In cases 

where the universe of entities to which such provisions apply is not limited to "small entities" as 

15 
 

defined in the RFA, the provisions of such rules may employ a definition of small entity for those 

entities subject to the special provisions that is different from the definition used for the RFA 

analysis. This is acceptable since the definitions are used for different purposes. The RFA does 

not require regulatory relief to be granted to small entities. For example, it may be the case that 

only a subset of the small entities captured in the screening analysis' definition faces significant 

economic impacts. In such a case, the rule might provide relief to only the subset of small entities 

most in need of special treatment. You do not need to propose an alternative size standard under 

the RFA to provide regulatory flexibility to a subgroup of the small entities most affected by the 

rule. 

It may also make sense to define "small" for environmental regulatory purposes in terms 

other than revenue or number of employees--the common SBA size measures for characterizing 

business entities. For example, the regulations for permitting concentrated animal feeding 

operations (CAFOs) require only that animal feeding operations designated as "small CAFOs" 

must obtain permits. EPA's regulations define "small CAFOs" in terms of, among other things, 

the numbers of animals they confine, rather than revenues or employees, because the number of 

animals relates to the degree of environmental impact. While such an environmentally relevant 

definition may not correlate exactly with the definition used in the regulatory flexibility analysis, 

it may nonetheless offer an environmentally appropriate way to provide relief to most "small 

entities" as defined by the RFA. In the case of the CAFO rules, while a few small entities are 

regulated as large CAFOs because they happen to confine large numbers of animals, the 

regulatory definition of small CAFO nonetheless excludes from coverage hundreds of thousands 

of animal feeding operations that are "small" both in terms of the degree of their environmental 

impact and in terms of the SBA size standards. 

2.5.5 Alternative Small Entity Definitions 

Section 601 of the RFA allows you to establish an alternative definition of small for the 

entities subject to your rule when the definition is "appropriate to the activities of the agency." An 

alternative definition of small governmental jurisdiction must also be based on "such factors as 

location in rural or sparsely populated areas or limited revenues due to population of such 

jurisdiction" (5 U.S.C. section 601(5)). 

2.5.5.1 In What Situations Should I Consider Establishing an Alternative Small 

Entity Definition? 15

In general, there are several situations in which an alternative definition may be 

appropriate: 

SBA's size standards are not most appropriate for considering impacts on small entities subject to 

the rule. Section 601(3) of the RFA adopts the SBA size standards established under 

15	 When developing and applying alternative definitions of small business, small government and small nonprofit 

organization, you should be careful to develop alternative definitions that do not confuse small entities with entities of 

any size that emit a small volume of pollution. It may be appropriate for the Agency to provide regulatory flexibility or 

relief to small-volume polluters on general policy grounds, but the focus of the RFA is on entities whose size or 

resources are small in comparison to other entities of their type. 16 
 

 

The Regulatory

Flexibility Act (RFA)

was amended by the

Small Business

Regulatory

Flexibility Act

(SBREFA) in 1996.

The Agency refers to

the RFA as amended

by SBREFA simply as

the RFA.

section 3 of the Small Business Act (15 U.S.C. 632) which are primarily intended to 

determine whether a business entity is eligible for government programs and preferences 

reserved for small businesses (13 CFR 121.101), i.e., the SBA size standards are primarily 

intended to "seek to ensure that a concern that meets a specific size standard is not 

dominant in its field of operation" (13 CFR 121.102(b)). See also section 632(a)(l) of the 

Small Business Act. You may determine that the SBA size standard for some industrial 

sectors are not generally the best standards to use in assessing the potential impacts on 

small businesses. For example, in some industrial sectors, businesses that are considered 

large multi-national companies in other contexts (such as when regulated under the 

Federal Insecticide, Fungicide and Rodenticide Act or Toxic Substances Control Act) may 

qualify as small businesses when applying SBA size standards that are based on number 

of employees. 

The Act's definitions are difficult to implement given methodological or data limitations of the 

analysis. You may be limited in the precision with which you can apply a size definition 

because of data or methodology used for the analysis. For example, a rule may cover 

businesses in many different industries encompassing many different SBA size categories. 

Using the SBA size definition specific to each industry may be methodologically difficult. 

The applicable environmental statute already employs a suitable alternative definition. In these 

instances, the program may prefer to use the definition contained in the applicable 

environmental statute not only in the rule itself, but also in the RFA analysis. For 

example, the Safe Drinking Water Act has numerous provisions for separate requirements 

for "small systems," which are defined in terms of the number of customers served, not 

employees or revenue of businesses, or the population of the governmental jurisdiction. 

Another example of a statutory-specific definition of "small business" is the one found in 

the Pesticide Registration Improvement Act of 2003 (PRIA). Under PRIA, a small business 

is defined in terms of both its number of employees and its annual global gross revenues 

from pesticides. 

2.5.5.2 What Procedures Should I Follow to Establish an Alternative Small Entity 

Size Standard? 

The RFA specifies procedures for adopting an 

alternative definition. For all alternative definitions you 

must publish the alternative definition in the Federal 

Register and provide an opportunity for public comment (5 

U.S.C. section 601). For alternative definitions of "small 

business" you must also consult with the Chief Counsel for 

Advocacy of the SBA (5 U.S.C. section 601(3)). Your 

consultation may include a letter to SBA's Chief Counsel for 

Advocacy. Document any consultation with SBA to establish 

an alternative small business size standard (e.g., letters, 

email, phone conversations) and place the documentation 

in the rulemaking docket. 

To Establish an 

Alternative Definition of 

"Small": 

Provide an opportunity 

for public comment; 

Publish the alternative 

definition in the 

and 

Consult with the Chief 

Counsel for Advocacy of 

the SBA (for alternative 

definitions of "small 

business"). 

Federal

Register,

If you plan to adopt an alternative definition, it is 1
 

 

 

extremely important to comply with these specific procedures. At least one federal agency has 

had a rule vacated for basing its RFA analysis on an alternative small entity definition it did not 

properly establish. In addition, remain cognizant of the timing of the establishment of an 

alternative definition in relation to a Panel (if required), so as not to exclude any small entities 

from the Panel process by prematurely employing an alternative definition. In light of these 

potential pitfalls, it is imperative that you consult with your Regulatory Steering Committee 

representative and the Small Business Advocacy Chair staff before you proceed with the 

adoption or use of an alternative definition . If you decide not to adopt a proposed alternative 

definition, you should use the SBA size standards or other previously established alternative 

small entity definition for your rulemaking. 

You should specify clearly in the rulemaking notice in which an alternative definition is 

proposed whether you are proposing to use the alternative definition for: 

that particular rulemaking only,
 

that rulemaking and any subsequent amendments, or
 

that rulemaking as well as all subsequent rulemakings regulating the same small entities
 

under the same authority.
 

If you fail to clearly state the applicability of the alternative definition to later 

rulemakings in your original notice or proposed rule, you may have to repeat the process of 

adopting the alternative definition for subsequent rules (i.e., give notice, take comment and, for 

an alternative definition of "small business," consult with SBA). Once an alternative definition is 

established for a particular set of rules, be sure to use that definition for all of those rules unless 

you adopt a different definition. Adopting a new alternative definition will involve the same 

process described above. Re-establishing a previous definition also requires notice and 

opportunity for public comment and may require consultation with SBA if re-establishing a 

definition for "small business." 

2.6 Step 2:Determining Appropriate Measures of Economic Impacts 

The analytic objective of your screening analysis is to allow you to determine whether or 

not you may certify your rule as not having a SISNOSE. The RFA does not establish a formula for 

estimating the economic impact of a rule on small entities. Nor does it define the terms 

significant or substantial as they pertain to the extent of economic impact and the number of 

small entities affected. Based on past experience, we've identified several methods or quantitative 

measures that may be used to assess economic impact on small entities. You have the flexibility 

to select the most appropriate method for your rulemaking. 16 

For purposes of the screening analysis, the question for the rulewriter is: can we properly 

certify that the rule, if promulgated, will not impose a SISNOSE. To answer this question, you 

16 Regardless of the analytic methods you use, you should explain your reasons for selecting the methods in the 

documentation of the analysis. 

18 
should address two subquestions: 

1) What is the best way to measure a rule's economic impacts on affected
 

entities?
 

2) What level of economic impact (i.e., threshold), on what number of small entities 

is sufficient to establish that there may be a SISNOSE and the rule should thus not be 

certified? 

This section discusses what you should do to answer the first subquestion. Section 2.7 addresses 

the second sub-question. 

In addition to this guidance document, the Agency has published a comprehensive 

manual on conducting economic analysis, Guidelines for Preparing Economic Analyses (September 

2000), which is available at http://www.epa.gov/economics . Chapters 8 and 9 of the Guidelines 

provide a comprehensive discussion of methods for estimating costs and economic impacts of 

proposed regulations. The Guidelines also discuss methods for considering equity and 

distributional concerns as part of the economic analysis of the rule. The economic impacts on 

small entities are discussed as a specific subset of total impacts. You should refer to the Guidelines 

for an in-depth discussion of these methods. 

2.6.1 The Role of Qualitative Analysis 

Before beginning a quantitative analysis of the economic impact of the rule on small 

entities, you should qualitatively think through the actions a small entity will have to take to 

comply with the rule and how those actions might differ from those taken by large companies. 

For example, will small entities incur the same initial compliance costs - such as for buying and 

installing equipment, establishing new procedures, and/or record keeping - as large entities, or 

are initial costs likely to be proportionate to the size of the company? Will initial compliance 

costs be high enough that entities will need to obtain financing and, if so, do small entities have 

the same access to financing as large entities? Will small entities have to obtain access to 

professional or administrative services that large entities might maintain "in-house?” 

Although the broader economic analysis for a rule may identify and include some 

separate cost elements for small entities, the economic analysis may not identify every 

meaningful aspect of costs to small entities (see Section 2.2.2 for more information on the 

relationship between the broader economic analysis and the screening analysis). A 

comprehensive qualitative assessment provides a good foundation for quantitative analysis of the 

regulation. A thorough understanding of the compliance procedures will help you develop 

meaningful quantitative analyses of the rule, such as selecting appropriate methods for 

estimating economic impacts, collecting relevant data, and using professional judgement to 

compensate for missing data. A thorough, qualitative analysis of small entities' compliance 

actions, and associated costs, provides the foundation for the SISNOSE determination. 

If a qualitative assessment indicates that you may not be able to certify your rule, you 

may choose to prepare an IRFA (and, later, FRFA) on that basis and avoid the need for a detailed, 19 
quantitative screening analysis, although the IRFA (or FRFA) itself will require some quantitative 

information. IRFAs and FRFAs are discussed in Chapter 3. Where a qualitative assessment indicates 

that a rule will not have a SISNOSE, you may be able to certify the rule on that basis or you may 

need to conduct a quantitative analysis to confirm the results of the qualitative assessment. For 

example, where the information necessary to conduct a quantitative analysis is not reasonably 

available, it may be appropriate to certify the rule based on the qualitative assessment alone. 

Because the decision to certify a rule may be judicially reviewable, you should prepare a 

quantitative analysis whenever possible to support a decision to certify. You should consult your 

Regulatory Steering Committee representative and the Small Business Advocacy Chair when 

you anticipate relying solely on a qualitative analysis to certify a rule. 

2.6.2 Quantitative Analysis 

Assessment of economic impacts on small entities can include many different factors, such 

as the cost of compliance relative to the entities' income or assets, the ability of the entities to pass 

compliance costs through to customers or suppliers, and the relative economic impacts on small 

entities compared to those on large entities. 17 The most appropriate method for a particular 

screening analysis will usually depend on the data available and on the methodology used for the 

economic analysis of the rule. In general, more detailed analysis requires more data and resources. 

Therefore, it is preferable to start with a relatively simple methodology and add more complexity as 

needed to reach an acceptable level of confidence in the determination of whether the rule may 

have a SISNOSE. 

The simplest method of screening for economic impacts on small entities is the direct 

compliance cost method. This method may be used as an initial screening analysis. More 

sophisticated analyses can be conducted later to refine the estimate if a determination about 

SISNOSE is not clear from the initial analysis (see Section 2.7.4 for more information on additional 

analysis). 

Under the direct compliance cost method, the compliance costs faced by small entities 18 

(estimated as the capital, operating, maintenance, administrative, and other direct compliance costs 

associated with the rule) are compared to one or more financial statistics (e.g., sales, profits, 

operating expenditures) of the regulated small entities. Annualizing the compliance costs is 

appropriate when a stream of cash flows or a large capital expenditure is involved with compliance. 

There are several variations of this method that differ by the financial statistic used as the basis of 

comparison. Selection of the appropriate financial statistics depends on the type of small entity 

being regulated and the availability of financial data on those small entities. 

Conceptually, we believe that a profits test represents the most accurate screening analysis 

17 Note that an analysis of relative impacts should not be used as the sole basis for certifying a rule as not having a 

SISNOSE. The phrase "significant economic impact on a substantial number of small entities" describes an 

absolute measure of economic impacts on small entities, not one that is relative to economic impact on large 

entities. Nevertheless, an analysis of relative economic impacts can be useful to characterize the distribution of 

effects. 

18 Chapter 9 of EPA's Guidelines for Preparing Economic Analyses provides more information on estimating compliance 

costs. 20 
for determining whether a regulation will pose a significant economic burden on small 

businesses. However, because of procedural and operational issues associated with the 

implementation of a profits test, a sales test remains our preferred quantitative guideline at this 

time. Because data on profits are limited, especially for small businesses, routine use of a profits 

test would require us to estimate profits for small businesses where there are currently 

insufficient data. A summary of preferred and alternative metrics for estimating the economic 

impacts on each type of small entity (businesses, governments, nonprofit organizations) is 

presented in Table 1. 

TABLE 1:	 Recommended Quantitative Metrics for Economic Impact Screening Analysesa 

( indicates preferred measures) 

SMALL BUSINESSES 

Sales Test Annualized compliance costs as a percentage of sales

Cash Flow Test Debt-financed capital compliance costs relative to current cash flow

Profit Test Annualized compliance costs as a percentage of profits

SMALL GOVERNMENTAL JURISDICTION 

Revenue Test Annualized compliance costs as a percentage of annual government

revenues

Income Test Annualized compliance costs to household (per capita)

percentage of median household (per capita) income

as a

SMALL NONPROFIT ORGANIZATIONS 

Annualized compliance costs as a percentage of annual Expenditure Test operating expenditures

Asset Test Annualized compliance costs as a percentage of total assets

a The selection of threshold values for determining whether a given level of economic impact constitutes

a "significant economic impact" is discussed in Section 2.7.1.

While you may choose to apply any of the suggested measures based on the type of 

information available, the table indicates a preferred guideline for each type of small entity: 

For small businesses - annualized compliance cost as a percentage of sales; 19 

For small governments - annualized compliance cost as a percentage of annual 

government revenues; and 

For small nonprofit organizations - annualized compliance cost as a percentage of annual 

operating expenditures. 

19 When sales data are unavailable, revenue or receipts (though technically different than sales) can usually serve as 

a reasonable proxy for sales. 2
2.7	 Step 3: How Should I Use the Screening Analysis to Determine If a Rule May Be 

Certified under the RFA? 

Each of the measures shown in Table 1 will yield quantitative estimates of the economic 

impact on the small entities subject to the rule. The question addressed in this section is how to 

interpret those values in the context of determining whether your rule may be certified as "no 

SISNOSE". Since there can be no single formula to produce a consistently appropriate answer, 

the Agency encourages program offices to consider the unique factors associated with a 

particular rulemaking in order to reach a conclusion appropriate to the case at hand. To assist 

you with this process, EPA has developed general guidelines for determining when a rule can be 

certified as not having a SISNOSE. 

Under the Agency's general guidelines, rules are assigned to one of three SISNOSE 

certification categories based on a comparison of the economic impacts (e.g., one or more 

measures such as those listed in Table 1) to specific thresholds established based on the 

circumstances of your rule and the number of entities with impacts above the threshold(s). The 

thresholds you define for the circumstances of your rule define what level of impact is 

considered significant and the number of small entities that is considered substantial. Sections 

2.7.1 and 2.7.2 discuss how you may define the significant impact and substantial number 

thresholds. Comparing the magnitude of the impacts, and the number of small entities facing the 

impacts, to the thresholds will determine which SISNOSE certification category you assign to 

your rule. The SISNOSE certification categories are as follows: 

Presumed No	 The rule is presumed not to have a significant economic impact on a 

substantial number of small entities. However, your Assistant SISNOSE: 

Administrator may exercise discretion to prepare an analysis of the 

economic impacts of the rule on small entities.20 

Uncertain - No No presumption applies. You may consult with the Small Business 

Presumption: Advocacy Chair (SBAC) if you believe that your rule should be certified as 

not having a SINOSE. 

Presumed The rule is presumed to be ineligible for certification . Unless you can 

Ineligible for demonstrate, through further analysis, that the rule nonetheless should be Certification: certified as not having a SISNOSE, you should contact the SBAC through 

your Regulatory Steering Committee representative, prepare a regulatory 

flexibility analysis, and participate in a Small Business Advocacy Review 

Panel. 

Table 2 represents an example of a decision process you may use to determine whether 

your rule may have a SISNOSE (i.e., which category to assign to your rule). The thresholds 

displayed in Table 2 are 1% and 3% for determining the significance of the economic impact on 

20	 The terms IRFA and FRFA are used only for rules that are not certified. If a rule is certified as not having a SISNOSE and 

you perform an analysis that contains some or all of the required elements of and IRFA or FRFA, the documentation of 

your analysis should be titled "Small Entity Flexibility Analysis" and not IRFA or FRFA. 

22 
small entities, and 100 and 1000 and/or 20% for determining if the number of small entities 

impacted is substantial. These thresholds are only examples. No bright line exists for 

determining whether a given set of economic impacts constitutes a SISNOSE. The RFA does not 

define the terms significant or substantial as they pertain to the extent of economic impact and the 

number of small entities affected. EPA has not established fixed definitions for the terms, 

reflecting the practical difficulty of stipulating what would uniformly represent a significant 

economic impact or a substantial number in every regulatory circumstance. Even when EPA 

issues a rule adhering to the full procedural and analytic requirements of the RFA (i.e., without 

certification), the Agency does not state the rule positively will impose a SISNOSE, since it may 

or it may not. In such cases, we simply refrain from certifying it. 

As in the example decision process in Table 2, you determine the numerical thresholds 

that are appropriate to the circumstances of your rule. The thresholds represent three factors that 

may be considered in making your SISNOSE determination. The three factors are: 

(1) magnitude of economic impact that may be experienced by regulated small entities; 

(2) total number of regulated small entities that may experience the economic impact; and 

(3) percentage of regulated small entities that may experience the economic impact. 

The first factor relates to defining a numerical threshold for the significance of the 

economic impact and is discussed in Section 2.7.1. The second and third factors relate to the 

numerical thresholds for substantial number of small entities and are discussed in Section 2.7.2. 

23 
TABLE 2: Example SISNOSE Certification Decision Processa 

Economic Impact Number of Small 

Entities Subject to 

the Rule and 

Experiencing Given 

Economic Impact 

Percent of All Small 

Entities Subject to 

the Rule That are 

Experiencing Given 

Economic Impact 

Certification 

Categoryb 

Less than 1% for all 

affected small entities 

Any number Any percent Presumed No SISNOSE

1% or greater for one 

or more affected small 

entitiesc 

Fewer than 100 Less than 20% Presumed No SISNOSE

Fewer than 100 20% or more Uncertain - No

Presumption

100-999d Less than 20% Presumed No SISNOSE

100-999 20% or more Uncertain - No

Presumption

1000 or more Any percent Uncertain - No

Presumption

3% or greater for one 

or more affected small 

entities 

Fewer than 100 Less than 20% Presumed No SISNOSE

Fewer than 100 20% or more Uncertain - No

Presumption

100-999d Less than 20% Uncertain - No

Presumption

100-999 20% or more Presumed Ineligible for

Certification

1000 or more Any percent Presumed Ineligible for

Certification a This table and the numbers in it are given only as examples of the decision process and thresholds that may be

chosen for a particular rule. The certification decision should not be solely based upon the application of this table

nor should this table be referenced in your preamble. Additional information and other factors may be relevant in

deciding whether to prepare a regulatory flexibility analysis or certify under the RFA.

b There may be cases in which the extent of the impact on small entities (measured in quantitative or qualitative

terms) is particularly severe, even though the total number of small entities experiencing that impact is small (i.e.,

fewer than 100 or 20%). In such cases, the lead office should consider placing the rule in a category more applicable

to the situation.

c For purposes of applying this portion of the table, the number of small entities that will experience an impact of 1%

to 3% should be aggregated with the number of small entities that will experience an impact of 3% or greater. The

total number of small entities that will experience an impact of 1% or greater should be used here in order to

determine whether the number of small entities so impacted is large enough to warrant preparation of a regulatory

flexibility analysis.

d As the number of small entities that will be affected by a rule by more than 1% or 3% of sales or revenues

approaches 1000 in number, the substantial number guidelines of 20% of affected small entities may become less

relevant in determining whether a regulatory flexibility analysis or a certification should be prepared.

24 
2.7.1 Is the Level of Economic Impact on Small Entities Significant? 

In the suggested decision process in Table 2, the first step in assigning a rule to a 

category, is defining a lower and upper threshold for each of the economic impact measures that 

have been estimated. The thresholds you define should establish whether the level of economic 

impacts faced by the small entities can be presumed as not significant. The variations of 

economic impact measures, regulatory requirements, and characteristics of potentially affected 

small entities is too great to allow EPA to establish threshold values for each measure that could 

be employed in Table 1. This section, therefore, discusses factors you should consider when 

establishing threshold values for your screening analysis. 

The lower economic impact threshold is particularly important because it is used to 

screen out rules that generally will not have a significant economic impact and, therefore, can be 

presumed not to require an IRFA/FRFA (i.e., if all small entities subject to a rule face economic 

impacts less than the lower threshold, then the rule may be assigned to the Presumed No 

SISNOSE Category). For this reason the lower economic impact threshold should be set 

conservatively, at a level that precludes any reasonable possibility that a rule placed in the 

Presumed No SISNOSE Category might later be found to impose a "significant economic impact 

on a substantial number of small entities." The upper threshold defines a level of economic 

impact that would be unquestionably significant for a small entity. 

In analyzing previous rules, EPA has often defined the lower threshold as compliance 

costs of 1% of sales and the higher threshold as compliance costs of 3% of sales as shown in the 

example in Table 2. The example thresholds provided in Table 2 are for illustrative 

purposes only and are not meant to imply a uniform standard. It is the responsibility of 

each program to identify appropriate thresholds for a particular rule and set of regulated 

small entities. 

There are several types of information that can help you identify the appropriate 

threshold values. For example, profits can be a better indicator of ability to pay than sales. 

Moreover, variation in profit-to-revenue ratios exists across industries. Therefore, the magnitude 

of impacts defined as the lower and upper threshold for a particular rulemaking may take into 

consideration the average profit margins of the affected small entities and the ability of the 

entities to pass compliance costs to either customers or suppliers. To the extent that these types 

of information are available, you may wish to use them to inform your selection of appropriate 

thresholds. 

2.7.2 Are a Substantial Number of Entities Facing a Significant Economic Impact? 

Consideration of the number of small entities facing regulatory costs is dependent on the 

characteristics of the affected industry or group of small entities being regulated. One hundred 

small businesses may represent a small fraction of the total number of small businesses in some 

sectors, such as gasoline service stations, while the total number of small businesses in some 

niche markets may be less than a dozen. For this reason, analysts should examine both the total 

25 
number and percentage of regulated small entities experiencing significant economic impacts 

when determining whether a "substantial number" of small entities may be significantly 

impacted. 

While the number thresholds provided in Table 2 are typical of those used in many past 

screening analyses, circumstances of a particular rule may cause an analyst to define thresholds 

differently. For example, there may be cases where the extent of economic impact (measured in 

quantitative or qualitative terms) is particularly severe, even though the number of affected small 

entities totals considerably fewer than 100 - or 20% - of all regulated small entities. In such 

cases, the lead office should consider not certifying the rule, but rather placing it in the 

Uncertain - No Presumption or Presumed Ineligible for Certification categories. Indeed, in the 

past the Agency has employed such discretion by choosing not to certify a proposed rule that 

directly regulated only a small number of small businesses, but with compliance costs 

considerably greater than 3% of sales. Likewise, the relative importance of the two measures of 

the number of small entities impacted can vary with the situation. For example, as the total 

number of small entities bearing "significant" costs approaches a number like 1000, the 

relevance of the 20% threshold becomes far less significant. 

It is important to remember that these numbers and the process outlined in Table 2 

are only guidelines for assessing whether a rule may have a SISNOSE. They suggest 

categories that support presumptions. Agency management should exercise its own judgment in 

deciding whether to certify a particular rule. 

2.7.3 What If My Rule Affects a Variety of Different Entities? 

While a decision on whether to certify the rule is made based on consideration of the 

impacts on all small entities subject to the rule, your analysis should consider economic impacts 

on each of the three types of small entities that may be affected: small businesses, small 

governmental jurisdictions, and small nonprofit organizations. While many rules affect only a 

single type of small entity (e.g., small businesses), they might affect a variety of entities within 

the type (e.g., businesses in different industries). Other rules may affect more than one type of 

small entity (e.g., small businesses and small nonprofit organizations). This section describes 

how your analysis should account for situations in which a variety of different entities are 

affected. Section 2.7.3.1 addresses situations for which the variety is contained within a single 

type of small entity (e.g., only small businesses). Section 2.7.3.2 addresses situations in which 

affected small entities are of different types (e.g., small businesses and small governmental 

jurisdictions). 

2.7.3.1 Economic Impacts on Entities Within a Type Should Be Aggregated 

A rule may apply to more than one kind of business, government, or nonprofit 

organization. For example, a rule may apply the same requirements to dry cleaners and auto 

body shops. In assessing the economic impact of such a rule on "small business," it may be 

appropriate to analyze the rule's impact on each kind of business separately, particularly where 

the rule may impose significantly higher costs on some kinds of businesses than on others. 

26 
However, for the purposes of deciding whether to prepare a regulatory flexibility analysis or to 

certify no SISNOSE, the impacts of the rule on the two types of business should be aggregated 

and the decision based on the aggregated impact. 

When both a decrease and increase in burden will occur to exactly the same entities, it is 

appropriate to consider the net impact on those small entities. However, when a rule will reduce 

burdens on some small entities and create or increase burden on others, these should not be 

netted (even if all the affected entities fall within the same industry). In this case, only the 

adverse impacts are relevant to the SISNOSE determination. 

2.7.3.2	 Economic Impacts on Entities of Different Types Should Be Assessed Both 

Separately and Aggregated 

Where the rule will apply to more than one type of small entity (i.e., small businesses, 

small governments, and small nonprofit organizations), you should analyze the economic impact 

separately for each type of entity subject to the rule. For example, for a rule that will impose the 

same (or substantially similar) requirements on small businesses and small governments, you 

should analyze the rule's impact on small businesses using an economic measure appropriate to 

small businesses, and analyze the impact on small governments using an economic measure 

appropriate to small governments. You should then determine categories separately for each type 

of entity. The rule will thus be categorized twice - once for its impact on small businesses and a 

second time for its impact on small governments. 

Where a rule applies to more than one type of small entity, and impacts have been 

analyzed for each type of small entity separately, one further analytic step is required to 

categorize the rule. This involves applying the total number and percentage thresholds to the 

aggregate number of small entities affected by the rule. These steps are necessary because the 

screening process uses total numbers as well as percentages to assess whether the rule is eligible 

for certification. The total numbers provide a suggested floor and ceiling for considering 

numbers of small entities that may be impacted above or below the suggested thresholds. For 

example, a rule imposing "significant" economic impacts on over 1000 small entities is presumed 

to meet the substantial number threshold, even if that number represents less than 20% of 

affected small entities. 

The total number threshold should be chosen as indicative of a substantial number not 

only with respect to any one type of small entity, but with respect to all small entities taken 

together. Thus, for the example thresholds displayed in Table 2, a rule with an impact of 2% of 

sales, revenues or assets with respect to 334 small businesses, 334 small governments and 334 

small organizations, where 334 is less than 20% of each type of small entity, would be 

categorized as Presumed No SISNOSE if each type of entity were examined separately. However, 

the rule would actually fall into the Uncertain - No Presumption category since more than 1000 

small entities may be significantly affected by the rule. 

For some rules, the issue of applying the matrix to each type of small entity may be a two 

step process - that is, you should apply the matrix separately to different kinds of small 

2
businesses, small governments, or small nonprofits. A rule may, for example, apply the same 

requirements to dry cleaners and auto-body shops, but the rule's economic impact may be much 

greater on one than on the other kind of business. As indicated above, it would be appropriate in 

such a case to analyze the impact of the rule separately for the two kinds of business. For 

purposes of deciding whether to prepare a regulatory flexibility analysis or a certification, 

however, the impacts of the rule, once assessed for the two kinds of business, should be 

aggregated and the aggregate fed into the matrix. Please note that if your rule is certified, the 

Agency is assuring the public that the rule will not impose a significant economic impact on a 

substantial number of small entities of all types taken together. It is not appropriate to prepare 

separate certifications for small businesses, small governments, and small non-profit 

organizations. 

2.7.4	 What Additional Information Can I Provide to Decision-makers When the 

Rule Falls into the "Uncertain - No Presumption" SISNOSE Category? 

When the simple direct compliance cost screening method produces an uncertain answer 

to the question of whether your rule can be certified as not having a SISNOSE, you may wish to 

consider doing additional analysis in order to provide a better picture of whether the economic 

impact on small entities is significant or substantial. The decision to conduct more analysis, and 

what type and level of analysis, will depend on many factors including: qualitative information 

that points to the rule being certified or not, data availability, and resource or time constraints. 

Some analyses that may be helpful in refining an "Uncertain - No Presumption" SISNOSE 

category are an analysis of cost pass-through, use of or examination of profits or profit margins, 

measurement of the financial health of entities, or comparing the relative impacts on small 

entities versus large entities. While the simple initial screen for economic impacts typically 

assumes that entities are not able to shift some of the burden of higher costs onto consumers, an 

estimate of cost pass-through can reveal if entities are facing the full burden of the direct 

compliance costs. When data on profits is available, that information may be used directly, by 

applying a profit test (see Table 1), or indirectly, by using information on profit margins to 

inform your selection of appropriate thresholds (see Section 2.6.1) for use with other measures 

(e.g., cost as a percentage of sales). The financial literature contains many methods of predicting 

firm (or other entity) health and or closures. Finally, a comparison of a rule's impact on small 

entities versus large entities may reveal whether the impacts are disproportionately burdensome 

to the small entities.21 More information on these analyses and others can be found in Chapter 9 

of the Guidelines for Preparing Economic Analyses. 

2.7.5	 What Other Issues Should I Consider? 

2.7.5.1 Data Issues 

If you are unable to obtain adequate information regarding the entities affected by your 

21	 Note that this type of analysis should not be used as the sole basis for certifying a rule as not having a SISNOSE. The 

phrase "significant economic impact on a substantial number of small entities" describes an absolute measure of 

economic impacts on small entities, not one that is relative to economic impact on large entities. Nevertheless, an 

analysis of relative economic impacts can be useful to characterize the distribution of effects. 28 
rule, one option is to model such information based on other available data or on reasonable 

proxies. For example, you may choose to use quantitative information on another type of small 

entity whose behavior and financial characteristics are similar to those subject to the rule. 

Another example might entail the creation of baseline financial characteristics for a set of small 

entities drawing upon and adjusting quantitative information available for larger entities in the 

same industrial or governmental sector. In general, where quantitative information is sought, the 

goal is to obtain the type of data that allow for the most reliable form of quantitative analysis to 

be used. But where data limitations persist, you should identify and consider other reliable 

alternatives. 

2.7.5.2 Baseline Compliance with Existing Regulations 

In calculating the costs the rule will impose on small entities, you should presume full 

compliance with all existing applicable statutory or regulatory requirements. For example, if the 

new rule is designed to address widespread non-compliance with an existing rule, you should 

not assume full compliance with the existing rule, as this could undermine the basis for the new 

rule. Generally, in the case of a rule revising an existing rule, you should assess only the 

incremental cost of the rule revision. In such cases, you should consult with your Regulatory 

Steering Committee representative, the SBAC, and the OGC attorney for your rule before 

conducting the analysis. This issue is discussed more fully in Chapter 5 of the Guidelines for 

Preparing Economic Analysis. 

2.7.5.3 Evaluating Multiple Regulatory Approaches or Options 

When you plan to propose multiple regulatory alternatives (i.e., two or more approaches 

from among which one will be selected for promulgation in the final rule), you preferably 

should conduct a screening analysis on each of the proposed alternatives, but, at a minimum, 

you should analyze the alternative that most likely would have the greatest economic impact on 

small entities. 

Similarly, if you plan to propose a single regulatory approach but seek comment on 

variations of that approach or on different approaches altogether, you should analyze not only 

the proposed approach but also the most potentially burdensome variation or approach that has 

a significant chance of being promulgated. You should contact your Regulatory Steering 

Committee representative and your OGC attorney if you are uncertain about the appropriate 

scope of the alternatives or approaches to include in the screening analysis for your proposed 

rule. 

2.8 Step 4: What Should I Do after Assigning My Rule to a Category? 

2.8.1 Document the Screening Analysis 

For many rules, full documentation of the screening analysis will be contained within the 

larger economic analysis prepared for the rule. If this is not the case, the screening analysis 

should be documented in the same manner as any good economic analysis by fully describing 

the data and methods used, assumptions made, uncertainties and limitations involved, and 

29 
 

 

 

 

 

conclusions reached. If you are certifying a rule as not having a SISNOSE, you must describe the 

factual basis for the certification within the preamble for the rule. 22 (See 5 U.S.C. section 605(b)) 

The text included in the preamble does not have to contain the complete documentation of the 

screening analysis (see 5 U.S.C. section 605(a)), but should at least present a summary of the 

findings and cite the document where the full documentation can be found. 23 The certification 

and statement of factual basis you include in the preamble to a final rule are subject to judicial 

review. 

2.8.2 What Other Steps are a Part of the RFA Process? 

For rules that can be certified as not having a SISNOSE, a certification statement and 

justification must be prepared (see 5 U.S.C. section 605(b)) and included in the preamble for the 

rule (see Section 2.7.1 above). When a rule will not be certified, you should consult with both 

your SB AC staff and Regulatory Steering Committee representative (see 

http://intranet.epa.gov/adplibrary/ for contact information). These representatives will help guide 

you and your rule through the RFA process, including: 

preparing the screening analysis (this Chapter);
 

preparing an IRFA or FRFA (see Chapter 3);
 

conducting outreach (see Chapter 4);
 

convening a Panel (see Chapter 5); and
 

preparing a small entity compliance guide (see Chapter 6).
 

22	 Please see the Rulewriter's Guide: Preamble Templates for the Regulatory Flexibility Act (RFA), (Office of Policy, Economics 

and Innovation, Regulatory Management Division, December 2004) for more guidance on writing the RFA section of a 

preamble. 

23 The terms "IRFA" and "FRFA" are included only in rules that are not certified. If a rule is certified as not having a 

SISNOSE and you perform an analysis that contains some or all of the required elements of an IRFA or FRFA , the 

documentation of your analysis should be titled "Small Entity Flexibility Analysis" and not IRFA or FRFA. 30 
Chapter 3 

Preparing the Initial and 

Final Regulatory Flexibility 

Analyses 

3.1 What are IRFAs and FRFAs? 

An Initial Regulatory Flexibility Analysis (IRFA) and a Final Regulatory Flexibility 

Analysis (FRFA) are the analyses of economic impacts on small entities that you must prepare 

unless your rule is certified as not having a significant economic impact on a substantial number 

of small entities (SISNOSE). See 5 U.S.C. sections 603 and 604. This chapter explains these 

analyses, how they are performed and information that the RFA requires each to contain. 

What is an IRFA? 

Section 603 of the Regulatory Flexibility Act (RFA) requires agencies to prepare an initial 

regulatory flexibility analysis (IRFA) for proposed rules that are subject to the RFA unless the 

agency certifies that the rule will not have a SISNOSE.24 As noted in Section 1.5, only proposed 

rules subject to notice-and-comment rulemaking requirements under the Administrative 

Procedure Act (APA) or any other statute are subject to the requirements of the RFA. An IRFA 

describes the economic impact of the proposed rule on small entities and any significant 

alternatives to the proposed rule that would accomplish the objectives of the rule while 

minimizing significant economic impacts on small entities. 

An IRFA ensures that the agency has explicitly considered small entities before the 

requirements of the rule are finalized. It is not simply a stand-alone paperwork exercise. In most 

cases, IRFAs must be made available for public comment along with the proposed rule. 25 

Although an IRFA is not subject to judicial review, it is important that you carefully prepare each 

required component of the analysis. 

24 Chapter 2 describes the process for determining if a rule can be certified as not having a SISNOSE. 

25 Section 608(a) of the RFA authorizes agencies to waive or delay the completion of an IRFA if the agency publishes a 

finding that the rule is being promulgated in response to an emergency that makes compliance or timely compliance with 

the IRFA requirement impracticable. The finding must be supported by reasons and published in the Federal Register by 

the time the final rule is published. 

Final Regulatory Flexibility Analyses
 

3
What is a FRFA? 

Section 604 of the RFA requires agencies to prepare a final regulatory flexibility analysis 

(FRFA) for final rules that are promulgated under the notice-and-comment rulemaking 

requirements of the Administrative Procedure Act (APA) after a notice of proposed rulemaking 

required by the APA or any other law, unless the agency certifies that the rule will not have a 

SISNOSE. A FRFA is similar, but not identical, to an IRFA. While both types of analysis contain 

some similar elements, there are several requirements specific to a FRFA. One such requirement 

is that the FRFA must summarize and respond to comments received on the IRFA. 

A FRFA documents the Agency's consideration of alternatives to minimize economic 

impacts on small entities. In most cases, the FRFA must be prepared in time for it to be available 

to the public when the final rule is published (see 5 U.S.C. section 604)26 The FRFA is subject to 

judicial review so it is crucial that you carefully complete each required component of the 

analysis. 

Are the IRFA and FRFA Solely Quantitative Analyses? 

No. The IRFA and FRFA contain both quantitative and qualitative information and 

describe several factors in addition to the potential economic impacts of a proposed or final rule 

on small entities. The central focus of the IRFA is to present the opportunities for, and outcomes 

of, alternative regulatory or policy options that could minimize the rule's potentially significant 

economic impacts on small entities subject to the rule. The purpose of the IRFA is to provide the 

decision maker with an analytic framework to inform the ultimate decision on the final rule and 

provide the public with information on the alternatives considered by the agency. The central 

focus of the FRFA is to describe the considerations particularly those related to small entity 

impacts underlying the ultimate decision on the final rule. The IRFA and FRFA include 

discussions of program design and scope issues, as well as quantitative economic analysis (see 

Sections 3.4.1 and 3.5.1 for the specific required elements of an IRFA and FRFA). 

Both the IRFA and FRFA usually contain quantitative information about the potential 

economic impacts of the rule on small entities. Section 607 of the RFA indicates that as an 

agency complies with the requirement to prepare an IRFA or FRFA, it "may provide either a 

quantifiable or numerical description of the effects of a proposed rule or alternatives to the 

proposed rule, or more general descriptive statements if quantification is not practicable or 

reliable." The Agency's approach should be based on factors such as the quality and quantity of 

available information and the anticipated economic impact on small entities that are subject to 

the rule. The quantitative information estimated by the screening analysis may be included as 

part of the IRFA or FRFA (see Chapter 2 for information on screening analyses). 

26 Section 608(b) of the RFA allows the agency head to delay completion of the FRFA for up to 180 days after publication 

of the final rule in the Federal Register if the agency publishes a finding that the final rule is being promulgated in 

response to an emergency that makes compliance or timely compliance with the FRFA requirement impracticable. The 

finding must be supported by reasons and published in the Federal Register by the time the final rule is published. If the 

FRFA has not been prepared within 180 days, the rule lapses and cannot be repromulgated until the FRFA has been 

completed. 32 
3.2	 What is the Relationship Between the IRFA/FRFA and a Rule's Broader Economic 

Analysis? 

While the RFA may require an IRFA or FRFA for a rule, Executive Order (E.O.) 12866 

may call for a broader economic analysis of a rule. 27 The focus of the IRFA and FRFA is the 

impact of the rule's requirements on the small entities that are subject to the rule, while the 

focus of an E.O. 12866 economic analysis, on the other hand, is social costs and benefits 

aggregated across all entities and individuals, not just those directly subject to the rule. 28 This 

broader focus provides a picture of the rule's impact on society as a whole. 29 This difference in 

focus derives from the different objectives of the mandates for the two types of analyses. Please 

note, however, that an E.O. 12866 economic analysis may contain a small entity impact section 

that may be written to satisfy the IRFA/FRFA requirements of the RFA. 

Another difference in the analyses is that the RFA requires EPA to identify and consider 

(but not necessarily adopt) alternatives that minimize a rule's significant economic impacts on 

small entities subject to the rule.30 The RFA, however, does not require the agency to adopt the 

alternative that has the least impact on small entities. E.O. 12866, on the other hand, encourages 

agencies, when legally permissible, to adopt the regulatory alternative that maximizes the net 

benefit to society. An E.O. 12866 analysis can encompass all economic impacts attributable to 

the rule, whether experienced by large or small entities, whether imposed directly or 

experienced indirectly downstream from the compliance activity, or whether borne by parties 

subject to the rule or other parties not bound by enforceable requirements. 31 Although these 

requirements differ, they are generally consistent. Indeed, the alternative that achieves statutory 

and regulatory objectives while minimizing economic impacts under the RFA may be identical to 

the alternative that imposes the least burden on society. In some cases, however, the lead office 

may find that the E.O. 12866 broader economic analysis and the IRFA/FRFA analysis point to 

different options. Such issues should be resolved on a case-by-case basis, in consultation with 

the Office of General Counsel (OGC) and the Small Business Advocacy Chair (SBAC). 

Another difference between IRF A/FRFAs and E.O. 12866 economic analyses is the rules 

to which they apply. E.O. 12866 requires agencies to prepare economic analyses for all rules 

deemed to be "significant regulatory actions," which are defined as any regulatory action likely 

to result in a rule that may: 

27 Other statutes also may require the analysis of economic impacts. For example, the Safe Drinking Water Act and Clean 

Water Act both require EPA to consider the economic achievability or affordability of regulatory options when 

developing limitations and standards. 

28 Note that section 605(a) of RFA allows agencies to prepare IRFA/FRFAs "in conjunction with or as a part of any other 

agenda or analysis required by any other law if such other analysis satisfies the IRFA/FRFA provisions." 

29 See EPA's Guidelines for Preparing Economic Analysis (September 2000) for methods of estimating a rule's benefits 

and costs. The Guidelines can be accessed on the internet at 

http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html. 

30 Section 603(c) requires an IRFA to describe the alternatives while section 604(a)(5) requires a FRFA to state why 

any significant alternatives which affect the impact on small entities were rejected. 

31 Note that E.O. 12866 also requires consideration of "any adverse effects on the efficient functioning of the 

economy, private markets (including productivity, employment, and competitiveness)..." This may also entail impact 

analysis. 

33 
(1)	 Have an annual effect on the economy of $100 million or more or 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; 

(2)	 Create a serious inconsistency or otherwise interfere with an action taken or 

planned by another agency; 

(3)	 Materially alter the budgetary impact of entitlements, grants, user fees, or loan 

programs or the rights and obligations of recipients thereof; or 

(4)	 Raise novel legal or policy issues arising out of legal mandates, the President's 

priorities, or the principles set forth in this E.O. 

The RFA, on the other hand, requires preparation of IRFAs and FRFAs only for noticeand-comment rules that are subject to the RFA and are not certified as having no SISNOSE. 32 It is 

possible, therefore, that a rule may be subject to the RFA's analytic requirements while not being 

a "significant regulatory action" or vice versa. 

3.3 What is the Relationship of the IRFA/FRFA to the SBAR Panel Process? 

A Small Business Advocacy Review Panel (SBAR Panel or Panel) is required for all 

proposed rules for which EPA is required to prepare an IRFA (5 U.S.C. section 609(b)). 33 The 

IRFA and the Panel share a common objective: to consider opportunities for minimizing a rule's 

significant economic impacts on small entities. The Panel provides an additional means for small 

entities to provide input into certain EPA rulemakings and to ensure that the unique concerns of 

small entities are carefully considered during the rulemaking process. The FRFA documents how 

the input received through the Panel and IRFA processes were used to arrive at a final rule. 

The RFA requires the Agency to consider the Panel Report and, where appropriate, to 

modify the proposed rule, the IRFA, or the decision on whether an IRFA is required (5 U.S.C. 

section 609(b)). While you are not required to provide the Panel with a copy of the draft IRFA ­

indeed, the Panel typically convenes before the IRFA has yet been assembled in draft - the Panel 

process can be enhanced through the review of preliminary estimates or qualitative descriptions, 

where available, of the universe of small entities to which the proposed rule will be applicable; 

requirements of the proposed rule; Federal rules which may duplicate, overlap or conflict with 

the proposed rule; and information on significant alternatives that still accomplish the statutory 

objective of the proposed rule. 

The IRFA should document the results of the Panel process and its role in the Agency's 

deliberations. You should also summarize the substantive Panel recommendations, and the 

32 The terms "IRFA" and "FRFA" are used only in rules that are not certified as having no SISNOSE. If a rule is 

certified as not having a SISNOSE, the documentation of your analysis should be titled "Small Entity Flexibility 

Analysis" and not IRFA or FRFA even if the documentation contains all the elements required of an IRFA or FRFA. 

33 Guidance on the Small Business Advocacy Review Panel is provided in Chapter 5. 

34 
Agency's actions in response to them, in the RFA section of the preamble of your proposed rule.
 

3.4 How Do I Prepare an IRFA? 

This section discusses the components of an IRFA and considerations in preparing an 

IRFA. Section 3.4.1 outlines the elements of an IRFA required by section 603 of the RFA. Section 

3.4.2 discusses different types of analyses that program offices may consider doing in order to 

enhance the information provided in an IRFA. Guidance on how to assemble the IRFA and 

proposed rule preamble appear in Section 3.4.3. 

3.4.1 Required Elements of an IRFA 

The RFA states that an IRFA "shall describe the impact of the proposed rule on small 

entities" (5 U.S.C. section 603(a)) and lists several elements that each IRFA shall contain. The 

statutory language for each required element of an IRFA, as codified by 5 U.S.C. section 603, is 

presented below. Remember that if the information is contained in the preamble to the proposed 

rule or another rulemaking document, you do not need to repeat it in the IRFA, rather you can 

reference the discussion in the other document (see 5 U.S.C. section 605). 

Element 1:	 Description of the reasons why action by the agency is being considered (5 

U.S.C. section 603(b)(l)) 

Element 2:	 Succinct statement of the objectives of, and legal basis for, the proposed rule 

(5 U.S.C. section 603(b)(2)) 

Element 3:	 Description of and, where feasible, an estimate of the number of small 

entities to which the proposed rule will apply (5 U.S.C. section 603(b)(3)) 

The IRFA should at a minimum identify, by North American Industry Classification 

System (NAICS) code, the small entities subject to the rule and the size standard for each type of 

small entity. 34 See Section 3.4.2 for a discussion of supplemental analysis that may enhance your 

description of small entities subject to the rule. 

Most of the information required for Element 3 may be available from the RFA screening 

analysis (see Chapter 2), if one was conducted. Other sources of information may include the 

E.O. 12866 economic analysis, impact analyses prepared pursuant to other statutes, technical 

background documents, and risk analysis, if any of these were prepared for the rule. Whatever 

the source of information used, it should be well documented within the IRFA. If you are not 

able to provide an estimate of the number of small entities, you should provide an explanation of 

the reasons for this omission. 

Element 4:	 Description of the projected reporting, record keeping and other compliance 

requirements of the proposed rule, including an estimate of the classes of 

small entities which will be subject to the requirement and the type of 

34 See Section 2.5.2 on defining "small" for each type of small entity. If applicable, a description of the steps taken to 

develop an alternative definition of small for the small entities should be included in the IRFA (see Section 2.5.5). 

35 
professional skills necessary for preparation of the report or record (5 U.S.C. 

section 603(b)(4)) 

This element of your IRFA, a description of the proposed rule's requirements, should 

provide details of the impacts on the small entities that will be subject to the proposed rule, as set 

forth in section 603(a) of the RFA. Analysts have generally provided estimates of the proposed 

rule's costs on the small entities subject to the rule to describe the small entity impacts of the 

proposed rule. To address this element, you may refer to the costs estimated for your rule's RFA 

screening analysis (see Chapter 2), or other analyses prepared for the proposed rule (see 5 U.S.C. 

section 605(a)). For example, if an Information Collection Request is prepared for a rule, estimates 

of the costs and administrative burdens associated with reporting and record keeping and the 

professional skills needed to prepare required reports or records may be obtained from the 

paperwork burden analysis prepared under the Paperwork Reduction Act. Section 3.4.2 discusses 

supplemental analyses you may choose to consider for enhancing your description of the proposed 

rule's impacts on small entities. 

If you plan to propose multiple regulatory alternatives (i.e., two or more approaches, one of 

which will be selected for promulgation in the final rule), you should describe the impacts to small 

entities of each of the proposed alternatives or, at a minimum, of the alternative that would likely 

have the greatest economic impact on small entities. Similarly, if you plan to propose a single 

regulatory approach, but also seek comment on variations of that approach or on different 

approaches altogether, you should ordinarily describe not only the proposed approach, but also the 

potentially most burdensome variation. 

Element 5: Identification, to the extent practicable, of all relevant federal rules which 

may duplicate, overlap or conflict with the proposed rule (5 U.S.C. section 

603(b)(5)) 

Many EPA rules complement requirements imposed by other EPA rules or rules 

promulgated by other Federal Agencies. EPA's authority and responsibility intersect with those of 

many other Federal Agencies and Departments (e.g., OSHA, Transportation, Energy, Interior). In 

principle, these controls should all work together to create a comprehensive system of 

environmental management. Each agency should, therefore, coordinate its regulatory requirements 

with those already in place. The lead OGC attorney for your rulemaking can assist in identifying 

duplicate, overlapping, or conflicting rules. These may also be identified through the Panel process 

(see Section 5.2). 

Element 6:	 Description of any significant alternatives to the proposed rule which 

accomplish the stated objectives of applicable statutes and which minimize any 

significant economic impact of the proposed rule on small entities. 

Consistent with the stated objectives of applicable statutes, the analysis shall discuss 

significant alternatives such as: 

�	 the establishment of differing compliance or reporting requirements or timetables 

that take into account the resources available to small entities; 

�	 the clarification, consolidation, or simplification of compliance and reporting 

requirements under the rule for such small entities; 36 
� the use of performance rather than design standards; and 

� an exemption from coverage of the rule, or any part thereof, for such small entities. (5 

U.S.C. section 603(c)). 

Element 6 requires the IRFA to describe significant alternatives to the rule which 

accomplish the stated objectives of applicable statutes and which minimize significant impacts of 

the proposed rule on small entities. Discussion of regulatory options included in the rule (see 

Element 4 above) may already include one or more "significant alternatives." 

How Many Significant Alternatives Do I Need to Consider? 

By law, an IRFA need only explore significant regulatory alternatives "which accomplish the 

stated objectives of applicable statutes and which minimize any significant economic impact of 

the proposed rule on small entities" (section 603(c) (emphasis added)). At a minimum the IRFA 

should describe any significant alternatives that meet this criteria. The internal rulemaking process 

or the RFA Panel process may identify other regulatory mechanisms that could minimize the 

significant economic impact on small entities. 

What if the Statute Is Very Prescriptive in the Type of Regulatory Option to Be Used for Achieving 

its Environmental Goal? 

The lead office, working with OGC, should determine whether the objectives of the statute 

may be achieved in more than one manner. In many cases even when a statute appears to be 

prescriptive, there still may be ways to minimize economic impacts on small entities. 

If it is determined that the statute does not allow the Agency to consider regulatory 

alternatives at all, the RFA still requires the Agency to prepare an IRFA. In such cases, the lead 

office should prepare an explanation as to why the Agency is precluded from considering 

regulatory options. This IRFA, although shorter and simpler than an analysis designed to consider 

alternatives, would contain all of the sections required by the RFA. 

If the statute does not preclude the agency from pursuing regulatory options designed to 

minimize adverse economic impacts, the lead office should prepare an IRFA as described in this 

section. 

How Much Analysis Do I Need to Conduct on Each Regulatory Option? 

The primary purpose of the analysis is to provide the decision maker with information that 

will facilitate the choice of a sound regulatory option. As with the rest of the required elements of 

an IRFA, qualitative descriptions will suffice when quantitative information is not practically 

available (5 U.S.C. section 607). A qualitative analysis might include: a description of the 

alternative requirements, the small entities to which they would apply and a qualitative discussion 

of the change in the number of small entities that would experience significant economic impacts. 

As data, time, and resources allow, programs may wish to pursue some of the quantitative analysis 

described in the next section (3.4.2). 

3.4.2 Supplemental Analysis 

In some instances, a supplemental analysis may provide a more detailed picture of the 

3
economic impacts on small entities than is required by the RFA. Preparing such supplemental 

analyses may take significant additional time and resources. However, in some instances the 

information obtained through supplemental analysis may be useful. The decision to undertake 

such analyses depends on the quality and quantity of available data, the severity of a rule's 

anticipated economic impact on small entities subject to the rule, and the potential consequences 

of additional delay in the regulatory schedule. This section summarizes some different types of 

small entity impact analyses that go beyond what is required by the RFA, and may provide 

information helpful to understanding the impacts on small entities in a broader context. 

In addition to the description required by Element 3, the lead office may wish to consider 

segmenting the affected entities along lines that are useful for distinguishing among those that are 

more and less susceptible to the economic impacts of the proposed regulation. For example, if an 

industrial category consists of a collection of firms having disparate financial characteristics (e.g., 

annual sales) or operating characteristics (e.g., processes used or pollution generated), it would be 

preferable to examine the economic impacts in a framework that accounts for this variability. The 

goal is to provide as detailed a picture as possible of the small entities that will be affected by the 

proposed regulation. Failure to distinguish properly among small entities may lead to an 

overstatement or understatement of the anticipated economic impacts of the regulation or to 

missed opportunities to minimize the economic impacts on small entities. 

An evaluation of the pollution contributed by small entities relative to other entities being 

regulated is another example of a supplemental analysis. This information may highlight how 

reducing the burden on small entities is compatible with the environmental goals of the rule (e.g., 

when small entities make a relatively small contribution to the environmental problem being 

addressed) or why regulatory accommodations for small entities should not be granted in a 

particular instance (e.g., when an environmental problem is arising from the actions of an 

industry or sector that is made up primarily of small entities). 

A supplemental analysis related to Element 4 may include a comparison of the costs of 

compliance for small and large entities to determine if small entities are affected 

disproportionately. Other estimated impacts that may be presented are the ability of small entities 

to pass on these costs in the form of price increases or user fees; the effects on profitability or the 

ability to provide services; or effects (if any) on closures, production, and employment in each 

class. While the RFA does not require an IRFA to discuss these impacts, providing this 

information may provide a more detailed picture of how small entities are affected by the 

proposed rule. 

The descriptions of significant alternatives described under Element 6 may be expanded by 

providing estimates for each alternative of the change in costs of the requirements on small 

entities; the change in pollution contribution of the small entities subject to the rule relative to 

other entities being regulated; and the changes in other measures of economic impact such as 

closures, production levels, employment or profit. As previously mentioned, the provision of this 

type of detailed analysis for alternatives will depend on data, time and resource constraints as well 

as on the anticipated impact on small entities of the proposed rule and alternatives described. 

3.4.3 Assembling the IRFA and Preamble 

38 What Should Be the Format of the IRFA? 
The IRFA may be prepared as a stand-alone document or a chapter in the E.O. 12866 

economic analysis, if one has been prepared. In either case, it should include distinct sections for 

each of the requirements specified in the RFA, as discussed above. If you do not include text for 

one or more sections in the IRFA because it is included in another document supporting the rule 

(such as the preamble or a broader economic analysis), you should explicitly reference and 

summarize the other text. 

Do I Have to Repeat Text Included in Other Regulatory Support Documents? 

No. The statute allows agencies to avoid duplicating effort by performing the required 

analyses in conjunction with, or as part of, any other analyses, if the other analyses satisfy the 

requirements of the RFA (5 U.S.C. section 605(a)). Several of the IRFA requirements will 

generally be met by other analyses or documents prepared for the proposed rulemaking, such as 

the RFA screening analysis, the E.O. 12866 economic analysis, or the preamble. In lieu of 

repeating text from these documents, you may cross-reference the relevant portions of the 

documents and summarize their conclusions in the relevant sections of the IRFA. 

Should the IRFA Be Discussed in the Preamble to the Proposed Rule? 

Yes. The IRFA should be summarized in the Statutory and Executive Order Reviews 

section of the proposed rule's preamble. The summary of the IRFA should note, in particular, the 

ways in which the Agency designed the proposed rule to reduce burdens on small entities. The 

full IRFA should be placed in the rulemaking docket and the preamble summary should indicate 

where the IRFA can be found. 

What Else Should Be in the Preamble with Respect to Small Entities? 

Besides summarizing the IRFA when a rule is not certified as not having a SISNOSE, the 

Statutory and Executive Order Reviews section of the preamble should also describe or 

summarize the actions the Agency took to involve small entities in the rule's development, 

including outreach to small entity stakeholders (see Chapter 4) and convening of a SBAR Panel 

(see Chapter 5). 

3.5 How Do I Prepare a FRFA? 

This section discusses the components of a FRFA and considerations in preparing a FRFA. 

As FRFAs are judicially reviewable, each section must be completed carefully. Section 3.5.1 

outlines the elements of an FRFA required by section 604 of the RFA. Guidance on how to 

assemble the FRFA and final rule preamble appear in Section 3.5.2. 

To the extent that the final rule does not differ from the proposed rule and the Agency 

obtained little or no additional information relevant to the analysis of the rule, the FRFA can 

repeat or cross-reference applicable sections of the IRFA. 

3.5.1 Required Elements of a FRFA 

The statutory language for each required element of a FRFA, as codified by 5 U.S.C. 

section 604, is presented below. Remember that if the information is contained in the preamble 

to the proposed rule or another rulemaking document, you do not need to repeat it in the FRFA, 39 rather you can reference the discussion in the other document (see 5 U.S.C. section 605(a)). 
Element 1:	 Succinct statement of the need for, and objectives of, the rule (5 U.S.C. 

section 604(a)(l)) 

Element 2:	 Summary of the significant issues raised by the public comments in response 

to the initial regulatory flexibility analysis, a summary of the assessment of 

the agency of such issues, and a statement of any changes made in the 

proposed rule as a result of such comments (5 U.S.C. section 604(a)(2)) 

The RFA requires that a FRFA summarize the significant issues raised by public 

comments on the IRFA, summarize the agency's assessment of such issues, and describe any 

changes the agency made in response to the comments. To the extent that the program office 

prepares a single response-to-comments document for the whole rule that accomplishes 

these objectives, the FRFA may rely on and cross-reference that document. 

Element 3: Description of and an estimate of the number of small entities to which 

the rule will apply or an explanation of why no such estimate is 

available (5 U.S.C. section 604(a)(3)) 

This description is likely to be an updated version of the corresponding section of the 

IRFA. If you are not able to provide an estimate of the number of small entities, you must 

provide an explanation of the reasons why not. 

Element 4:	 Description of the projected reporting, record keeping and other compliance 

requirements of the rule, including an estimate of the classes of small entities 

which will be subject to the requirement and the type of professional skills 

necessary for preparation of the report or record (5 U.S.C. section 604(a)(4)) 

This section of the FRFA should discuss the option selected for the final rule. Other 

options considered may be discussed in the last section (see Element 5 below). Completion of 

this section should involve only updating the description in the IRFA to incorporate any changes 

to the requirements of the final rule relative to those of the proposed rule. 

Element 5: Description of the steps the agency has taken to minimize the significant 

economic impact on small entities consistent with the stated objectives of 

applicable statutes, including a statement of the factual, policy, and legal 

reasons for selecting the alternative adopted in the final rule and why each 

one of the other significant alternatives to the rule considered by the agency 

which affect the impact on small entities was rejected (5 U.S.C. section 

604(a)(2)) 

The most critical component of the FRFA is the requirement that an agency explain the 

"factual, policy and legal reasons" for selecting the regulatory approach promulgated in the final 

rule and for rejecting "each one of the other significant alternatives to the rule considered by the 

agency which affect the impact on small entities." 

While the RFA does not require that an agency necessarily minimize regulatory burdens 

on small entities, it does require that the agency describe the "steps the agency has taken to 

minimize the significant economic impact on small entities consistent with the stated objectives 

of applicable statutes." It is, therefore, important to thoroughly document all considerations of 

alternatives to reduce significant economic impacts on small entities, as well as any small entity 40 
outreach conducted (see Chapter 4) and the SBAR Panel process (see Chapter 5). To the extent 

this requirement is met by the main body of the preamble of the final rule, the FRFA may crossreference that text. 

3.5.2 Assembling the FRFA and Preamble 

What Should Be the Format of the FRFA? 

The FRFA may be prepared as a stand-alone document or as a chapter in the E.O. 12866 

economic analysis, if one has been prepared. If you do not include text for one or more sections 

in the FRFA because it is included in another rule support document (such as the preamble or 

broader economic analysis), you should explicitly reference and summarize the other text. In 

either case, it should include distinct sections for each of the requirements specified in the RFA, as 

discussed above. 

Do I Have to Repeat Text Included in Other Regulatory Support Documents? 

No. The statute allows agencies to avoid duplicating effort by performing the required 

analyses in conjunction with or as part of any other analyses, if the other analyses satisfy the 

requirements of the RFA. Several of the FRFA requirements will generally be met by other 

analyses or documents prepared for the proposed rulemaking, such as the RFA screening analysis, 

broader economic analysis, or the preamble. In lieu of repeating text from these documents, you 

may cross-reference the relevant portions of the documents and summarize the conclusions of the 

analysis in the FRFA (5 U.S.C. section 605(a)). 

Should the FRFA Be Discussed in the Preamble? 

Yes. The FRFA should be summarized in the Statutory and Executive Order Reviews 

section of the final rule's preamble. The summary of the FRFA should note, in particular, the ways 

in which the Agency reduced the economic impact of the final rule on small entities. The full 

FRFA must be placed in the rulemaking docket and the preamble summary should indicate where 

the FRFA can be found (5 U.S.C. section 604(b)). 

What Else Should Be in the Preamble with Respect to Small Entities? 

Besides summarizing the FRFA, the Statutory and Executive Order Reviews section of the 

final rule's preamble should describe the actions the Agency took to ensure that small entities had 

a meaningful opportunity to comment on the rule. That section should also reference the sections 

of the proposed rule's preamble describing the SBAR Panel convened for the rule, if applicable 

(see Chapter 5). This information regarding the Agency's outreach efforts helps the Agency 

prepare the report used when it submits the rule to Congress and the Government Accountability 

Office under the congressional review provisions of the Congressional Review Act (CRA) 5 U.S.C. 

sections 8O1-8O8.35 

The CRA was enacted by Subtitle E of the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 

sections 801-808). All final rules must be assessed to determine if the Congressional review requirements apply 

whether or not the final rule has any effect on small entities. EPA guidance on the CRA, "Congressional Review 

Act: Guidance for Rulewriters" (July 1998) can be accessed at EPA's intranet website, "Action Development 

Process Library," http://intranet.epa.gov/adplibrary. 4

35 

The Regulatory

Flexibility Act

(RFA) was

amended by the

Small Business

Regulatory

Flexibility Act

Chapter 4 

Implementing Small Entity 

Outreach: Informing, 

Listening, Responding 

4.1 Small Entity Outreach: The Basics 

The Small Business Regulatory Enforcement Fairness Act (SBREFA) amended the 

Regulatory Flexibility Act (RFA) to bolster the RFA's requirements that agencies provide small 

entities with a meaningful opportunity to participate in the development of rules that may 

significantly affect them. EPA's success in carrying out our obligations under the RFA requires 

early and continuing interaction with small entities throughout the regulatory development 

process. The RFA process, and your interactions with small entities in general, should be a 

genuine dialogue with meaningful engagement and exchange of ideas and information. The goal 

of small entity outreach is to ensure promulgation of a rule that is tailored to achieve a specific 

environmental goal while taking into account the particular concerns of small entities. 36 

It is important that outreach to small entities occur as early as possible in regulation 

development. Indeed, it will often be appropriate to start outreach before or concurrently with 

performance of a preliminary screening analysis (see Figure 1). Early outreach and 

accommodation of small entity issues has proven to have a substantial positive impact on the 

quality of our regulations. First, small entities can often fill gaps in our knowledge and 

Early outreach and 

accommodation of 

small entity issues 

has proven to have 

a substantial 

positive impact on 

the quality of 

regulations. 

experience to provide alternate, less burdensome regulatory options 

that can accomplish a stated environmental goal. Second, you can 

gain support for the regulatory option ultimately selected by bringing 

small entities into the process early on, listening and responding to 

their concerns, and having that input influence the direction of your 

rule. When you believe that is unlikely that you will be able to certify 

that your rule, if promulgated, will not have a significant economic 

impact on a substantial number of small entities (SISNOSE), this 

early involvement should also include OGC and staff to the Agency's 

Small Business Advocacy Chair (SBAC). At a later point it will be 

Outreach: Informing, Listening, Responding
 

36 As a practical matter, most of the outreach we describe in this chapter will take place in the pre-proposal phase 

of the rule development process. While further outreach may be appropriate in the post-proposal stage, any 

contact with small entities at that time is subject to the same ex-parte restrictions that govern all external contacts 

once the public comment period closes. 43 
appropriate to involve the Small Business Administration's (SBA) Office of Advocacy and the 

Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs. 

Detailed below is a strategy outlining how you can identify and engage in dialogue with 

representatives of small entities that may be subject to your rule. 

4.2 What Does "Outreach" Mean? 

According to the EPA Manual on Consultative Processes,37 

Outreach is a means by which the Agency keeps its constituencies - those who are 

interested in or affected by its action - informed about what it is doing, what it is 

planning, and what its needs are. Outreach is basic communication. In addition to 

informing those affected of the Agency's activities, outreach also encourages and 

provides the means by which members of the public can communicate their needs and 

desires to the Agency so they may be taken into account when making decisions. 

In sum, outreach includes informing potentially regulated parties about EPA's regulatory 

plans, listening to their concerns and suggestions about how the rule may affect them, and 

responding through appropriate action to meet environmental objectives while minimizing 

unnecessary burden. 

There are many forms and styles available for providing information to small entities 

potentially subject to a rule, including: 

� public announcements � magazine and journal articles 

� interviews � speeches 

� informal and formal meetings � dockets, and 

� web sites and list serves · � press releases. 

While each of these methods of communication can be used to transmit necessary 

information to members of the public, simply providing notice of EPA's intent is not enough. 

Adequate outreach also requires that we seek opportunities for genuine engagement that places the 

Agency in a position to hear from and respond to small entities. 

4.3 Is Small Entity Outreach Subject to FACA? 

Some forms of outreach are regulated by statute. Specifically, the Federal Advisory 

Committee Act (FACA) establishes requirements for the convening and operating of an official 

advisory committee. However, many groups are exempt from FACA coverage including: factfinding and information exchange groups, meetings with persons providing individual advice or 

recommendations (as opposed to collective advice or recommendations); and meetings with 

groups of people to interactively discuss and debate individual opinions or recommendations. 38 

EPA Manual on Consultative Processes: Better Decisions Through Consultation and Collaboration, Draft - October 1998. 

38 For more information on FACA and other public involvement, see http://www.epa.gov/publicinvolvement. 44 

37 
The Regulatory

Flexibility Act (RFA)

was amended by the

Small Business

Regulatory Flexibility

Act (SBREFA) in 1996.

The Agency refers to

the RFA as amended

A stakeholder 

involvement process is 

not an end in itself; it 

is a means to a better, 

more widely accepted 

decision. 

EPA Manual on 

Consultative Processes 

-

Outreach in compliance with the RFA has commonly occurred in the form of information 

exchanges. According to the EPA Manual on Consultative Processes , information exchanges 

primarily seek to enhance the parties' understanding of the situation. During information 

exchanges, at least one side will be providing information or advice to the other and oftentimes 

there will be an exchange of views or concerns. Importantly, the participants involved in 

information exchanges are not expected to reach agreement. Sections 4.4 and 4.6 (below) 

provide more specific information on where to get assistance with your outreach efforts and steps 

to take to reach small entities . 

4.4 Should I Coordinate My Stakeholder Involvement Activities? 

You are strongly encouraged to coordinate your 

stakeholder activities and allow these distinct processes -- e.g., 

internal workgroup, peer review, FACA committee, SBAR Panel 

-- to inform each other. Although each group has its own policies 

and procedures, they do not take place in isolation; indeed, they 

may have overlapping membership. Moreover, every stakeholder 

activity is based on relationships, and the relationships you 

develop rely on trust. Consequently, you are likely to have 

greater success if you demonstrate a willingness to share 

information not only with your stakeholders but also between 

your stakeholder groups to nurture that trust. Beyond the 

importance of these considerations, you should make the most 

of your time and resources. As you invest time at the outset of your 

rulemaking to develop an Analytic Blueprint or other planning document for your rule, you 

should be able to recognize some efficiencies in coordinating some of your stakeholder activities. 

For example, if you engage a contractor to assist you in identifying participants for a FACA 

committee, as part of the same effort, the contractor may be able to identify a group of potential 

small entities for a SBAR Panel. Similarly, outreach documents prepared for one group may be 

appropriate for your other stakeholders. 

4.5 What Kind of Outreach Does the RFA Require? 

The RFA requires an agency to "assure that small entities have been given an opportunity 

to participate in the rulemaking" process for any rule that "will have a significant economic 

impact on a substantial number of small entities." 5 U.S.C. section 609(a). The RFA also directs 

us to ensure small entity participation through the reasonable use of techniques such as those 

listed in section 609(a), as follows: 

� use of computer networks to solicit and receive comments; 

� publication of general notice of proposed rulemaking in publications likely to be 

obtained by small entities; 

� direct notification of interested small entities; 

45 
� conduct of open conferences or public hearings concerning the rule for small entities; 

� inclusion in an advance notice of proposed rulemaking, if issued, of a statement that 

the proposed rule may have a significant economic effect on a substantial number of 

small entities, and 

�	 the adoption or modification of agency procedural rules to reduce the cost and 

complexity of participation in the rulemaking for small entities. 

SBREFA strengthened the RFA's outreach provisions in two principal ways. First, the RFA 

now requires EPA to convene a Small Business Advocacy Review Panel (SBAR Panel or Panel) 

prior to proposing a rule for which we are required to prepare an IRFA (i.e., those rules for 

which EPA does not certify that the rule will not, if promulgated, have a SISNOSE). As described 

in detail in Chapter 5, the Panels are required to consult with representatives of small entities 

that will be subject to the rule. Second, the amended RFA allows small entities adversely affected 

by the final rule to sue agencies in court for failure to comply with specified RFA provisions, 

including section 609(a), which requires agencies to assure that small entities have an 

opportunity to participate in rulemakings that will have a SISNOSE. 

4.6 Where Can I Get Assistance with My Small Entity Outreach? 

You should first consult your Regulatory Steering Committee representative to determine 

what resources are available to you within your program office. EPA also has several offices that 

may be able to assist you with outreach throughout different stages of rule development. EPA's 

Small Business Ombudsman (SBO) can provide support and assistance in your outreach 

activities to small entities. The SBO maintains an updated list of key small entity contacts, which 

will be made available to you upon request. These small entity contacts include: 

�	 national small entity trade association executives and contact persons; 

�	 contacts for the CAA State section 507 Program, including the Small Business 

Ombudsman, Small Business Assistance Program, and the Compliance Advisory 

Panels; and 

�	 EPA Regional Small Business Liaisons. 

Additional support and assistance with outreach and development of small entity contacts 

is available from the Office of Public Affairs (OPA) and the Office of Congressional and 

Intergovernmental Relations (OCIR). Also, OCIR supports a small town FACA group, the Small 

Community Advisory Subcommittee of the Local Government Advisory Committee. OCIR 

assistance may include: 1) help creating an outreach strategy to support the rulemaking; 2) 

supporting the distribution of information; and 3) help developing and maintaining a 

comprehensive list of small entity contacts for use by individual program offices. 

The RFA defines "small governmental jurisdiction" as the government of a city, county, 

town, township, village, school district, or special district with a population of less than 50,000 

46 
(5 U.S.C. section 601(5)). There are about 40,000 such small governmental jurisdictions in the 

United States, with 33,000 of those having populations of less than 10,000. Broken down 

further, roughly 26,000 governmental jurisdictions have populations under 2,500. All told, over 

90% of U.S. governmental jurisdictions have populations under 50,000. 39 

In addition to experiencing many of the problems and concerns that affect large cities, 

small governmental jurisdictions in the U.S. often face other hardships due to their individual 

characteristics and situations. Small governmental jurisdictions often experience disproportionate 

impacts from Federal regulations, particularly with regard to the cumulative impact of 

environmental regulations. In many small jurisdictions, while the pressure for services and 

infrastructure maintenance and repair continues to grow, the capacity to provide all necessary 

services remains quite limited. Over one-third of small governmental jurisdictions in the U.S. 

have no employees, while others operate on part-time assistance from dedicated citizens. These 

communities most often have no engineering or environmental management capacity of their 

own. Their limited financial resources due to small tax bases and often declining economic 

activity only serve to further exacerbate the problem. 

These are but a few of the reasons why RFA-mandated consultation with small 

governmental jurisdictions is so important. With the Small Community Advisory Subcommittee's 

finding that EPA should increase direct involvement of small jurisdictions in the regulatory 

process, the Agency is prepared to ensure that RFA-mandated consultation is carried out with 

optimal effectiveness. While timely, substantive involvement of small governmental jurisdictions 

in the regulatory process will involve additional preparation and early outreach, such efforts will 

invariably reduce costs later in the process and produce rules that small jurisdictions can more 

reliably implement. With this in mind, the Office of Congressional and Intergovernmental 

Relations' guide entitled Planning for Intergovernmental Outreach and Consultation can serve as a 

valuable resource in your consultation efforts. To obtain the guidance and consult about small 

governmental jurisdictions and outreach to them, contact OCIR's Intergovernmental Relations 

Team. 

In addition to these general resources, each program office is encouraged to develop and 

maintain a comprehensive contact list of small entity representatives, keyed to their program area 

of responsibility. These could include: 

�	 small business trade associations; and 

�	 organizations representing townships, counties and municipalities, and decisionmaking individuals within these organizations (public and private non-profit). 

You could use this contact list to help identify knowledgeable individuals who may serve 

as small entity representatives for your rulemaking. 

EPA's Small Business Advocacy Chair (SBAC) is responsible for overseeing policy 

decisions regarding certifying that a rule will not have a SISNOSE, as well as decisions to convene 

Results of the 1994 EPA Survey of Small Local Governments, September 1997. 39 

4
a Small Business Advocacy Review Panel. The SBAC and SBAC staff are responsible for 

coordination of SBAR Panels, including communication with SBA and OMB and Panel logistics. 

4.7 What Steps Can I Take to Reach Small Entities? 

The following sections outline some suggested steps you can take in developing a 

proposed rule, particularly if it appears that it may not be possible to certify that your rule will 

not have a SISNOSE. As noted above, you should also check with your Regulatory Steering 

Committee representative to explore what resources are available to you within your own 

program office. 

4.7.1 Contact SBAC Staff 

If you believe that it may not be possible to certify your rule as not having a SISNOSE 

(according to the screening analysis in Chapter 2), you should contact the SBAC staff through 

your Regulatory Steering Committee representative. The SBAC staff will work to provide you 

with the support and service needed to make each SBAR Panel process as efficient and productive 

as possible. SBAC staff can advise you on how the Panel process can fit into your rulemaking 

schedule, potential inclusion of SBA and OMB in outreach efforts, and the implications of the 

results of your screening analysis, among other things. 

4.7.2 Identify and Contact Small Entities 

Stakeholders are those who have an interest -- direct or indirect -- in the action the 

Agency is planning to take. Small entities --those that meet the statutory definition of small 

business, small government or small non-profit enterprise--are a subset of your broader 

stakeholder group. 40 As part of your outreach efforts, you should make informal contact with 

potential small entities to confirm their small entity status. 

There is an important distinction to note at this time between small entities which should 

be included as stakeholders through your broader outreach efforts and official Small Entity 

Representatives for a Small Business Advocacy Review Panel process. Official Small Entity 

Representatives are chosen through a process of consultation with the EPA Small Business 

Advocacy Chair and the Small Business Administration. This process is described in more detail 

in Chapter 5. While small entities with whom the Agency has consulted from the beginning are 

the chief candidates to serve later as official advisors to a Panel, small entities do not become 

official Small Entity Representatives (known as SERs) until they are officially designated as 

such by the Small Business Advocacy Chair. The formal selection of Small Entity 

Representatives is made after SBA's response to formal notification from the SBAC, which is 

typically very close to the time a Panel convenes. 

4.7.3 Consider Drafting Informal Notification to SBA 

During the outreach process, if you believe that your rule may not be able to be certified 

40 See Chapter 2 for more information on the definition of 'small entity.’ 48 
as not having a SISNOSE (according to the screening analysis in Chapter 2), you should consider 

drafting an informal notification to the Small Business Administration. You should route both 

informal and formal notifications, as well as any communications regarding potential RFA issues, 

through your Regulatory Steering Committee representative to the SBAC. Section 5.7.2 provides 

more information on drafting an informal notification. Outreach to small entities or informal 

notification to SBA do not represent an EPA finding that your rule will have a significant 

economic impact on a substantial number of small entities, nor does it commit you to preparing 

a regulatory flexibility analysis or convening a Small Business Advocacy Review Panel. Small 

entities can provide input to help the Agency ultimately determine if either of these activities are 

required. Further, they can offer ideas to help the agency formulate alternatives that achieve your 

environmental objective and do not impose a SISNOSE. 

4.7.4 Conduct Outreach to Small Entities (i.e., substantive engagement) 

It is clear from the specific requirements set forth by the RFA that Congress intended 

agencies to provide small entities with a meaningful opportunity to participate in the 

development of rules that may significantly affect them. One of the keys to fostering productive 

participation is effective outreach and exchange of information. In conducting small entity 

outreach, you should distribute sufficient information to your small entity representatives about 

your regulation so that they can provide you with informed feedback on the elements of an Initial 

Regulatory Flexibility Analysis under section 603 of the RFA which Congress identified in 

SBREFA as key issues. Those elements are: 

� A description of, and where feasible, an estimate of the number of small entities to 

which the proposed rule will apply; 

� A description of projected reporting, recordkeeping, and other compliance 

requirements of the proposed rule, including an estimate of the classes of small 

entities which will be subject to the requirements and the type of professional 

skills necessary for preparation of the report or record; 

� An identification, to the extent practicable, of all relevant Federal rules which may 

duplicate, overlap, or conflict with the proposed rule; and 

� A description of any significant alternatives to the proposed rule which 

accomplish the stated objectives of applicable statutes and which minimize any 

significant economic impact of the proposed rule on small entities. 

For small entities, it is advisable to request comments in writing since these will be used 

later as part of your SBAR Panel convening document or as documentation of your factual basis 

for a certification of no SISNOSE (see also Keep Records section, below). You may want to 

include the SBAC and staff, OMB, and SBA in your outreach efforts. Much of the success of 

previous SBAR Panel processes can be attributed to the level of familiarity that the Small Entity 

Representatives and the Panel members (described in Chapter 5) have gained with provisions 

under consideration for the regulation, as well as with the program staff developing the 

regulation, prior to convening the Panel. 

So long as you ensure genuine engagement with small entities, you can include this 49 
responsibility as part of your overall outreach efforts. EPA's guidance on stakeholder 

involvement, EPA's Public Involvement Policy (http://www.epa.gov/publicinvolvement/policy2003/ 

index.htm) offers guidance as to what process to use for public involvement in your rulemaking 

and what steps to take to maximize your outreach efforts. Sections 4.2 and 4.5 (above) list some 

suggested venues for small entity outreach. In conducting outreach to small entities, however, it 

is important to ensure these parties have an opportunity to address their concerns separately and 

specifically to the Agency. While small entities may participate in public meetings designed for a 

broader group of participants, such a forum should provide an opportunity for EPA to hear 

separately and particularly from smaller interests. A particular reason that the Congress passed, 

and the President signed SBREFA was to "level the playing field" by affording smaller interests a 

chance to be heard independently from competing interests, including large entities likely to be 

regulated. 

4.7.5 Keep Records 

For any rule for which the Agency is required to prepare a Regulatory Flexibility Analysis 

(see Chapter 3), you are responsible for keeping a record of your outreach efforts and including 

that record in the rulemaking docket for purposes of judicial review. It is crucial for you to 

demonstrate and document a pattern of dialogue with and outreach to all interested stakeholders 

with particular attention to the interests of small entities that may be subject to your regulation. 

For each meeting, formal or informal, with your stakeholders you should take notes regarding 

the major topics of discussion and create meeting summaries. You should append any materials 

you distribute or present, including agendas, outreach packages, fact sheets, and overheads to 

your meeting summaries. 

It is also a good practice to maintain a file documenting outreach even for rules not 

requiring an IRFA. This will allow the program to demonstrate its adherence to the Agency's 

standing policy of outreach and, when feasible, accommodation of small entities in any rule to 

which they will be subject. In addition, since the Agency can be judicially challenged on the 

factual basis it presents supporting its certification that a rule does not impose a SISNOSE, such 

documentation may prove necessary to demonstrate how the Agency considered small entities' 

concerns in reaching its decision to certify. 

4.8 Where Can I Get More Information? 

For more information, you can contact your office's Regulatory Steering Committee 

representatives, EPA's Small Business Advocacy Chair (OPEI), staff to the Small Business 

Advocacy Chair (OPEI), and EPA's Small Business Ombudsman Program. 

50 
Chapter 5 

The Small Business Advocacy 

Review Panel Process for 

Proposed Rules 

5.1 What is a Small Business Advocacy Review Panel? 

A Small Business Advocacy Review Panel (SBAR Panel or Panel) is an additional means 

for small entities to provide input into certain EPA rulemakings to ensure that the unique 

concerns of small entities are carefully considered during the rulemaking process. The Small 

Business Regulatory Enforcement Fairness Act (SBREFA) amended the Regulatory Flexibility 

Act (RFA) to require EPA to convene a SBAR Panel for any proposed rule for which EPA is 

required to prepare an initial regulatory flexibility analysis (IRFA). 

The RFA requires that we prepare an IRFA for all rules for which EPA is required by 

statute to publish a NPRM unless the agency certifies that the rule "will not, if promulgated, 

have a significant economic impact on a substantial number of small entities (SISNOSE)."41 If 

an IRFA is required for a proposed rule under the RFA, we must also convene a SBAR Panel. 

Each Panel consists of representatives from EPA, the Small Business Administration, and the 

Office of Management and Budget. Although the statutory name for the Panel refers only to 

small businesses, each Panel must solicit and consider the concerns of all small entities 

directly regulated by the rule, including small governmental jurisdictions and small 

nonprofit organizations, in addition to small businesses. 

5.2 What are the Statutory Panel Requirements? 

Since the RFA was enacted in 1980, RFA section 609 has required all agencies to facilitate 

small entities' participation in rulemakings that will have a significant economic impact on a 

substantial number of small entities (see Chapter 4 for further discussion of general outreach 

provisions). SBREFA expanded RFA section 609 to require EPA to convene SBAR Panels to 

ensure that small entity representatives are involved in the development of certain rules. 42 

41 Because the term 'significant economic impact on a substantial number of small entities' is cumbersome, it is 

commonly called a "SISNOSE". When we determine that there will not be a significant adverse economic impact 

on a substantial number of small entities, we call that a "No SISNOSE" finding or "making the RFA certification.” 

42 The Occupational Health and Safety Administration is also subject to the Panel requirement. 

Review Panel Process for Proposed Rules
 

5
Under RFA section 609(b), we must convene a Small Business Advocacy Review Panel for 

any rule for which the Agency is required to prepare an IRFA. If we exercise our discretion to 

make the RFA certification (i.e., certify that a proposed rule will have No SISNOSE), we do not 

need to convene a Panel. Even if we convene a Panel, EPA may defer the decision to certify a 

rule until after a Panel has concluded its work. Also, RFA section 609(c) authorizes us to 

convene a Panel for a rule that we intend to certify, but that we believe may have "a greater than 

de minimis impact on substantial number of small entities." Section 609(b) requires that the 

Panel process occur before publication of the IRFA, which must be made publicly available at 

the same time the proposed rule is published, except in cases of emergency. Accordingly, we 

generally must convene a Panel before a rule is proposed. 

Section 609(b) establishes the following statutory framework for the Panel process: 

� For any rule subject to the Panel requirement, EPA is to notify the Chief Counsel for 

Advocacy of the Small Business Administration (SBA) and provide the SBA Chief Counsel 

with information on the potential impact of the proposed rule on small entities and the 

type of small entities that might be affected. 

� The SBA Chief Counsel has 15 days from receiving notification of a proposed rule to 

identify individuals representative of the small entities likely to be regulated by the rule. 

� EPA is to convene a review Panel consisting of full-time federal employees, including 

representatives of the Agency office responsible for developing the rule, the Office of 

Management and Budget's Office of Information and Regulatory Affairs (OIRA), and the 

SBA Chief Counsel. 

only 

� The Panel is to review any material EPA has prepared in connection with the rulemaking, 

including any draft proposed rule, and collect the advice and recommendations of each 

individual small entity representative selected by EPA, after consultation with the SBA 

Chief Counsel for Advocacy, on issues related to specific elements of an IRFA for the 

proposed rule under development. The specific elements of an IRFA are: 

a description of, and where feasible, an estimate of the number of small entities to 

which the proposed rule will apply; 

a description of projected reporting, recordkeeping and other compliance 

requirements of the proposed rule, including an estimate of the classes of small 

entities which will be subject to the requirement and the type of professional skills 

necessary for preparation of the record or report; 

an identification, to the extent practicable, of all relevant Federal rules which may 

duplicate, overlap or conflict with the proposed rule; and 

a description of any significant alternatives to the proposed rule which accomplish 

the stated objectives of applicable statutes and which minimize any significant 

economic impact of the proposed rule on small entities. 

52 
�	 Not later than 60 days after EPA convenes the Panel, the Panel must report on the 

comments of the small entity representatives and the Panel's findings with regard to the 

issues related to the IRFA elements listed above. The Panel Report must be included in the 

rulemaking record. 

�	 In light of the Panel Report, the Agency is to modify, where appropriate, the proposed 

rule, the IRFA or the decision on whether an IRFA is required. 

5.3 What Help is Available to Me in Preparing for a Panel? 

First, you should check with your Regulatory Steering Committee representative to see 

what resources are available to you within your own program office. EPA's Office of Policy, 

Economics and Innovation has created this guidance document and a variety of other supporting 

documents (e.g. checklists, worksheet and SBAR Panel manual) which should answer most of 

your procedural and substantive questions about the SBAR Panel process. OPEI also has a team 

of RFA experts who serve as staff to the SBAC to help you manage your Panel and answer 

questions before, throughout and after the Panel process. The team contact information can be 

found at: http://epa.gov/sbrefa/staff.htm. 

5.3.1	 How Can this Guidance Help Me with My Panel? 

This chapter provides you with a step-by-step approach to implementing the SBAR Panel 

requirement. Our suggested approach is further illustrated in Figure 4. While the SBREFA 

amendments to the RFA establish the basic outline of the Panel process (described below), it also 

leaves us with discretion to determine many details of that process, including when to convene a 

Panel prior to proposing a rule. EPA has, therefore, developed a suggested process that will 

typically involve small entity representatives early in the rulemaking process. Early involvement 

helps ensure that small entity comments and insights inform EPA's thinking about 

fundamental issues of rule design and scope, as well as more specific issues posed by the 

particular regulatory program at issue. 

This Guidance reflects agency policy and practice in implementation of the RFA. At the 

same time, we recognize the need for flexibility in implementing the RFA. Some rules subject to 

the Panel requirement may have developed in such a way that the Panel process must take place 

later in the rulemaking process than this guidance suggests. Nevertheless, this suggested 

process should work in most situations. 

Our suggested Panel process is divided into several parts. You may not need to complete 

each part of the process if, during the course of rule development, you (or, more accurately, your 

Assistant Administrator, who is responsible to the Administrator for the certification decision) 

determine that your rule will not have a SISNOSE. However, even if your rule will not have a 

SISNOSE (i.e., you are making the RFA certification), but may have some impact on one or more 

small entities, it is important for you to engage in consultation with the relevant small entity 

stakeholders (see Chapter 4 on small entity outreach). 

53 
Small Business Advocacy Review Panel Process for Proposed Rules
 

Figure 4
 

Contact SBAC

Staff via Your

SC Rep.

[Section 5.7] 

Informal


Notification to


SBA


[Section 5.7.2] 

Continue Small


Entity Outreach


[Section 5.7.1 &

Chapter 4] 

Likely to

Certify

Rule?1 

NO

YES

Draft Certification Statement &


Factual Explanation Thereof


[Chapter 2] 

Consider SBA’s


Input & Finalize


List of SERs


[Section 5.7.4] 

Conduct Outreach to


SERs


[Section 5.7.5] 

Prepare for SBAR

Panel

[Sections 5.7.6 &

5.7.7] 

Convene


SBAR Panel


[Section 5.8.1] 

Formal


Notification to


SBA


[Section 5.7.3] 

Complete Panel


Report


[Section 5.8.4] 

Notes:

General: References to “Sections” in the flowchart refer to the sections in Chapter 5 in this guidance document [see Table of Contents). In addition, references

to “Chapters” in the flowchart refer to the chapters in this guidance document.

It is EPA's policy to assess impacts on small entities and minimize impacts to the extent feasible. If you do not have enough information to determine with

confidence that the Agency can certify (no SISNOSE), proceed with “NO.” The decision to certify can be made at any time before proposal. 

1 

54 
5.3.2	 Who Will Help Me with My Panel? 

Under SBREFA section 244(b), 43 SBAR Panels are chaired by a Small Business Advocacy 

Chair designated by EPA's Administrator. The Chair is responsible for implementing the Panel 

review process. The Small Business Advocacy Chair heads a small staff (SBAC staff) who mainly 

work on RFA issues. 

The SBAC staff can help you in several ways. Two of the most important are: 

�	 the SBAC staff serve as EPA's experts in the Panel process, providing support to 

program offices in resolving both complex and day to day issues; and 

�	 the SBAC staff provide support for many of the mechanics of convening and 

operating the Panel. 

A Small Business Advocacy Chair staff member will be assigned to work with you on your 

Panel. We encourage you to make contact with the SBAC staff as early as possible in the rule 

development process. This staff-level informal contact should also include your Regulatory 

Steering Committee representative. You should also check with your Regulatory Steering 

Committee representative to explore what resources are available to you within your own 

program office. 

5.4	 What Circumstances Require EPA to Convene a Panel? 

The first step you must take to determine whether we must convene a Panel is to conduct 

the screening analysis detailed in Chapter 2. As noted above, unless you can certify that your 

proposed rule will not have a SISNOSE, you must prepare an Initial Regulatory Flexibility 

Analysis, and EPA must convene a Panel prior to proposal. Because the determination to convene 

a Panel can have a significant impact on your rulemaking schedule, you should identify the 

rule's potential impact on small entities as soon as possible. After the screening analysis is 

completed, you should consult with your Regulatory Steering Committee representative and the 

SBAC and SBAC staff. At this early stage, you should consider ways of structuring the rule to 

avoid any undue burden on small entities while still meeting the environmental objective of the 

statute. In doing so, you may find that it may be possible to certify the rule as not having a 

SISNOSE. 

As stated in Chapter 2, we believe that only rules which may have a direct significant 

adverse economic impact on a substantial number of small entities require an IRFA, since the 

primary purpose of the IRFA is to identify and address regulatory alternatives "which minimize 

any significant economic impact of the proposed rule on small entities." (RFA section 603, 

emphasis added). Thus, if your rule will exclusively relieve regulatory burden, or otherwise have 

43 Pub. L. No. 104-121, Sec. 244(b). SBREFA has several provisions that are not codified into the RFA but that still 

have an impact upon RFA implementation. SBREFA section 244(b) is one such provision. 

55 
The Regulatory

Flexibility Act (RFA)

was amended by the

Small Business

Regulatory

Flexibility Act

(SBREFA) in 1996.

EPA'S decision to 

convene a Panel is not a 

commitment to prepare 

an IRFA (for rule 

proposal) or a FRFA (for 

rule promulgation ) nor 

does it prevent you 

from certifying your 

proposed or final rule. 

a positive economic effect on the small entities subject to the rule,
 

your rule may be certified and, therefore, you are not required to
 

prepare an IRFA or convene a Panel.
 

In any case, our decision to convene a Panel is not a 

commitment to prepare an IRFA (for rule proposal) or a FRFA (for 

rule promulgation), nor does it prevent EPA from certifying your 

proposed or final rule if its substance so warrants. In fact, each step 

in the RFA process, from informal notification through completion 

of the Panel Report, leaves open the prospect that your rule can be 

certified as not having a SISNOSE, should the provisions of your 

rule change or new information be discovered. For example, you 

may adopt Panel recommendations that would result in a proposed rule no longer having a 

SISNOSE. In that case, EPA could properly certify the rule and you would not be required to 

complete an IRFA. 

5.5 Can I Request a Waiver from the SBAR Panel Process? 

Under RFA section 609(e), EPA may request that the SBA Chief Counsel for Advocacy 

waive the Panel requirement for a rule. The SBA Chief Counsel may grant a waiver if he or she 

finds that convening a Panel would not advance the effective participation of small entities in the 

rulemaking process. (Note, however that the waiver applies only to the requirement to convene a 

Panel; it does not relieve you from preparing an IRFA or notifying the SBA Chief Counsel of the 

rule nor does it relieve the SBA Chief Counsel from identifying small entity representatives.) 

The SBA Chief Counsel will consider the extent to which you have already consulted with 

small entity representatives and taken their concerns into account; "special circumstances 

necessitating prompt issuance of the rule;" and whether the Panel process would provide the 

small entity representatives involved in the process a competitive advantage over other small 

entities. Before granting the waiver, the SBA Chief Counsel must consult with OMB and the small 

entity representatives identified by the SBA Chief Counsel after receiving formal notification of 

the rule. The SBA Chief Counsel must also provide you with a written explanation of the waiver 

decision for the rulemaking record. 

Your waiver request must be submitted through your Regulatory Steering Committee 

representative to the Agency SBAC. EPA will only request the waiver of a Panel requirement in 

exceptional circumstances (e.g., when a rule is subject to a near-term legal deadline) or when you 

have already engaged in extensive outreach to representatives of potentially regulated small 

entities such that a Panel would be demonstrably redundant. 

Even if the Agency decides to request a waiver, you, in cooperation with your Regulatory 

Steering Committee representative and SBAC staff contact, will still need to complete the formal 

notification step of the process as outlined below. The SBAC will also informally notify the SBA 

Chief Counsel of the Agency's intent to request a waiver before formally requesting it. If the SBA 

Chief Counsel grants the waiver, you are not required to complete the remaining steps of the 

Panel process, but you should conduct as much outreach as time permits or as appropriate under 

the circumstances. 56 
5.6 When Should We Convene a Panel?
 

It is EPA's policy to convene Panels relatively early in the proposed rule development 

process to give the Panel the best opportunity to inform decision makers during the initial stages 

of rule development (i.e., prior to option selection). This is balanced with the need for sufficient 

shape and development such that the small entity representatives and the Panel members will 

have adequate information to critically appraise EPA's intention. Generally, the Agency SBAC will 

consult the other standing Panel members with respect to an appropriate time to convene a 

Panel. However, no matter when in the regulatory development process a Panel is convened, the 

Panel's final report must be completed within 60 days of convening the Panel. EPA expects that 

the Panel process will normally be concluded well in advance of Final Agency Review (or 

equivalent stage for Tier 3 rules), in order to be most useful to the development of the proposed 

rule. 

5.7 What Should Be Done Before My Panel Can Be Convened? 

Once you determine that we must convene a Panel for your rule, you should make 

contact with the SBAC staff through your Regulatory Steering Committee representative to find 

out who you will be working with on your Panel. You should share information about your 

expectations for the Panel process and the rulemaking schedule. Bear in mind that the Panel 

itself should take no more than the 60 days provided by the statute to conduct its review; 

however, the entire Panel process-- once begun in earnest with focused small entity 

outreach, through SBA notifications, preparation for and convening of the Panel and 

completion of the Panel Report -- will usually take between four and ten months. The 

amount of time is dependent on the complexity of the rule and the amount of outreach done 

prior to the initiation of the Panel process. This time line may result in a change your rulemaking 

schedule or resource commitments. When negotiating court schedules, program staff and 

management should take into consideration the time and resources that may be needed to 

comply with the RFA Panel requirement. The Agency does not recommend asking for an 

extension of any court-ordered deadlines solely to comply with the RFA Panel requirements, so it 

is vital that the program fully consider these responsibilities in setting its initial rulemaking 

schedule. 

Prior to convening a Panel, the typical steps include: 

� identifying and making contact with small entity representatives (SERs) among your 

stakeholders; 

� providing informal notification of the Panel to SBA and OMB; 

� creating a dialogue with your SERs; 

� providing formal notification of the Panel to SBA and OMB; 

� hosting a final pre-Panel outreach meeting with the SERs to which SBA and OMB are 

invited; 

� participating in one or more pre-Panel meeting(s) with SBA and OMB staff to discuss 

5
The Regulatory Flexibility

Act (RFA) was amended by

the Small Business

Regulatory Flexibility Act

(SBREFA) in 1996. The

available data, materials for the SERs and other related issues; and 

� creating a convening document for the Panel. 

You, as the program office representative or rulewriter, are responsible for each of these 

steps (discussed further below). Your SBAC staff contact and your Regulatory Steering Committee 

representative are available to give you support, review drafts and provide you with examples of 

documents from previous Panels. 

It is very important for you to keep records of all your small entity outreach efforts. An 

important part of convening your Panel will be demonstrating that your office has worked with 

small entities throughout development of the rule. When you begin to involve SBA and OMB in 

your small entity outreach efforts, it is important to ensure that your SBAC staff contact is also 

provided with any outreach material, notices, or announcements. Your SBAC staff contact keeps 

the Agency's official record of the Panel process including all communication between Panel 

members regarding Panel issues. 

5.7.1 Identify and Contact Small Entity Representatives 

After it is determined that you will need to convene a Panel and you make contact with 

the SBAC staff through your Regulatory Steering Committee 

representative, your next step in the Panel process is to identify 

potential small entity representatives that may be formally 

appointed later in the process. Small entity representatives 

(SERs) are typically a subset of your broader stakeholder group 

-- those representative of small entities likely to be directly

subject to your regulation. Specifically, EPA prefers that SERs 

be owner-operators of small businesses, small organizations or 

small government officials 44 potentially subject to the rule. 

Other representatives, such as trade associations that 

exclusively or at least primarily represent potentially regulated small entities may serve as small 

entity representatives. Persons other than owner-operators who wish to act as SERs are evaluated 

on a case by case basis. To avoid the appearance of conflict of interest, you should apply a 

general “reasonable person" rule, that is, ask yourself if a “reasonable person” would conclude 

that this potential representative is capable of truly representing only the interests of small 

entities. 

For each rule, or group of related rules, 45 you should identify as early as possible what 

types of small entities are likely to be directly and adversely affected by the rule, and what those 

44	 Small businesses are defined by the Small Business Administration through the Small Business Act (codified at 13 

CFR 121.201). See Chapter 2 for more information on the definition of 'small entity' for RFA purposes. 

45	 RFA section 605(c) permits, but does not require, EPA to "consider a series of closely related rules as one rule for 

Small entity representatives 

(SERs) are typically a subset of 

your broader stakeholder 

group - those representative 

of entities likely to be 

subject to your 

regulation. 

small

directly

the purposes of preparing an IRFA. In certain circumstances, it may also be appropriate to convene one Panel to 

consider a series of closely related rules as well. 

58 
adverse impacts are apt to be (to the extent feasible at this early stage). An important resource for 

the Panel process will be the list of small entities that you developed under Chapter 4 to support 

your rulemaking activities generally. Once you identify candidate SERs, you must contact them to 

confirm their small entity status and ask if they would agree to serve as a small entity 

representative for your Panel, if so requested. Unless the program is in a position to sponsor 

necessary travel, each SER is responsible for his or her own expenses. It is advisable to let any 

potential SERs know what to expect from the Panel process. The SBAC staff have developed 

information sheets that will answer questions such as: 

Why Does EPA Need Small Entity Representatives? 

What Is an EPA Small Entity Representative? 

Who Is Eligible to be a Small Entity Representative? 

Who Chooses Small Entity Representatives? 

At What Stage in the Rulemaking Does the Panel Process Occur? 

What Will Being a Small Entity Representative Entail? 

What Will Be Done with Small Entity Input? 

How Can I Get More Information? 

Fact sheets and other supporting documents are available on the RFA/SBREFA website 

(http://www.epa.gov/sbrefa ). You may distribute these fact sheets as part of your outreach 

materials. More information and ideas regarding small entity outreach are detailed in Chapter 4. 

Although this stage of the process will most likely take place before your rule is drafted, you 

should provide each potential SER with an outline describing the important components of your 

rule and any significant alternative approaches under consideration. Indeed, these early 

discussions with your potential SERs may bring to light other ways of structuring the rule to 

avoid any significant economic impact on a substantial number of small entities, in which case a 

Panel need not be convened. 

To the extent that comments from potential SERs (or any other information) confirm the 

rule is likely to have impacts warranting preparation of an IRFA, you must continue to prepare 

for the Panel process. If comments received or changes made to the rule so warrant, it may still 

be possible to certify your rule. You should always consult with the SBAC staff and your 

Regulatory Steering Committee representative if you stop preparations for a Panel. 

5.7.2 Prepare Informal Notification to SBA 

Once you complete your screening analysis and it has been determined that your rule 

may have a significant economic impact on a substantial number of small entities, through your 

Regulatory Steering Committee representative, you must request that the Agency SBAC give the 

SBA Chief Counsel informal notification that EPA is developing a rule that may be subject to the 

Panel requirement, and that EPA may shortly ask SBA to nominate small entity representatives 

59 
according to the statutory procedure. This preliminary notification is a courtesy to the Chief 

Counsel for Advocacy in order to provide SBA time to inform itself about the rule and review its 

own list of small entity contacts. At this time, the SBAC will provide the SBA Chief Counsel with 

a program office staff contact (normally this will be the workgroup chair), and will also ask for an 

SBA staff contact. Typically, the SBAC sends the informal notification via e-mail, with a courtesy 

copy also directed to OMB. Keep in mind that SBAC staff are always available to facilitate 

communication with SBA staff. Again, because the office of the SBAC is responsible for keeping 

the Agency's record for each Panel, you should copy them on any written exchanges with SBA 

and OMB regarding the Panel process. Also note your informal notification should be approved 

by your management and OGC attorney before you send it forward for SBAC staff review. 

You will need to draft the informal notification for the SBAC to transmit to SBA. The 

informal notification could include: 

� the title of the rule, 

� requested Panel convening date and projected NPRM date, 

� the statutory authority for this action and the environmental objective, 

� an explanation of any alternatives that are or have been under serious 

consideration, 

� the potential impacts of the rule on small entities, and 

� a list of any potential SERs already identified. 

SBAC staff are available to help you with this task and a model informal notification is 

available from the SBAC staff. 

5.7.3 Prepare Formal Notification to SBA 

To the extent that it continues to appear that your rule may have significant economic 

impacts on a substantial number of small entities, you should work through your Regulatory 

Steering Committee representative to request that the Agency SBAC provide formal notification 

to the SBA Chief Counsel that a rule is being developed that may be subject to the Panel 

requirement. EPA transmits the formal notification in hard copy under the SBAC's signature with 

a courtesy copy directed to OMB. Formal notification triggers the SBA Chief Counsel's statutory 

obligation to nominate small entity representatives within 15 days of receiving the notification. 

Formal notification does not commit the Agency to convening a Panel. The program office may 

still learn as a result of further consultations with small entity representatives and the SBA Chief 

Counsel's Office, or further analysis, that the rule will not have a SISNOSE, and thus neither an 

IRFA nor a Panel would be required. 

Beyond the basic rule identifying information, you should provide the SBAC with the 

following information for the formal notification: 

� a description of the problem the rule is trying to solve; 

60 
�	 a list of the types of small entities likely to be affected; 

�	 a list of potential small entity representatives you've already identified, if any; 

�	 any material you have already shared with small entity representatives; and 

�	 preliminary rulemaking schedule (e.g., preferred convening Panel date, proposed 

publication date, any court deadlines, etc.,) 

The notice, prepared by you for the SBAC, will emphasize that the request to identify small 

entity representatives does not represent an EPA finding that the rule will necessarily have a 

SISNOSE, nor does it commit EPA to preparing a formal regulatory flexibility analysis or 

convening a formal Small Business Advocacy Review Panel. The formal notification should be 

reviewed and approved by your management and OGC attorney before it is forwarded to SBAC 

staff. A sample of a formal notification to the SBA Chief Counsel is available from the SBAC staff. 

5.7.4	 Respond to SBA Input; Complete Recommendations for Small Entity 

Representatives 

In response to your formal notification to SBA, you will receive a list of suggested SERs 

from SBA's Chief Counsel for Advocacy through the Agency SBAC. If EPA's outreach has been 

strong, the Chief Counsel may identify individuals with whom the Agency has already been 

consulting, and possibly add new names from SBA's own experience. After consultation with your 

SBAC staff contact and SBA staff on the names under consideration, you should recommend an 

official list of SERs for appointment by the SBAC. You should take great care to ensure that SERs 

are truly representing small entities likely to be directly regulated by the rule under consideration. 

It is better to take time to confirm a small entity's status than to be forced to exclude someone 

later if he or she is not eligible. As stated earlier, EPA prefers that SERs be owner-operators or 

officials of small entities potentially subject to the rule. Other representatives such as trade 

associations that exclusively or primarily represent potentially regulated small entities may serve as 

SERs, and SBA's Chief Counsel for Advocacy has sometimes nominated such representatives (see 

Section 5.7.1 for more discussion of SER selection). 

While the RFA authorizes the SBAC to select the SERs for the Panel process, you should 

ordinarily include the SERs identified by the SBA Chief Counsel among those you recommend for 

appointment unless you discover any reason that one or more should be considered ineligible. You 

should consult with your SBAC staff contact before deciding whether or not to recommend any 

SBA-suggested representative for the official list. You can include among your recommendations 

additional small entities not suggested by SBA, but ultimately it is desirable that EPA reach 

consensus with the SBA Chief Counsel on the roster of small entity representatives. The SBAC will 

rely heavily on the Program's recommendations in appointing SERs for the Panel. 

5.7.5	 Conduct Outreach to Small Entity Representatives 

In preparation for a Panel, you may need to conduct outreach to potentially regulated small 

entities. This outreach meeting should be conducted well in advance of the convening Panel date. 

Panel members (SBA, OMB, and SBAC) should be invited to the meeting. Your SBAC contact can 

assist you in this coordination. 6
There is additional information regarding small entity outreach in Chapter 4. 

�	 You should provide the SERs with enough information about the rule for them to 

be able to judge the likely impacts of the rulemaking on small entities. Outreach 

materials could include any draft of the rule or preamble text, if such materials 

are available. 

�	 You should solicit information, advice and recommendations on issues relating to 

the specific elements of an initial regulatory flexibility analysis (listed in Section 

5.2) from each SER. 46 

�	 You should encourage SERs to put their comments and suggestions in writing for 

inclusion in the convening document and your rulemaking record. 

�	 You should keep detailed records of the SERs' participation for later use in 

developing the rule and any regulatory flexibility analysis or certification for the 

rule. The outreach process may lead to, and help substantiate, a determination 

that the rule will not have a significant economic impact on a substantial number 

of small entities. Also, document your outreach efforts. 

If the outreach process indicates that there will be no significant adverse economic impact 

on a substantial number of small entities, it may be possible to certify your rule. In that case, the 

remaining steps of the Panel process would no longer apply to your rule. 

5.7.6	 Prepare a Convening Document for the Panel 

The convening document is critical to the operation of a Panel. It provides the context 

and analytical framework for the Panel's deliberations and much of the Panel's report will be 

based upon the convening document you prepare. By following the outline suggested below, you 

will reduce the amount of work you must do to complete the Panel Report. The organization 

outlined below has been used for most of the previous Panel Reports, so it offers the benefit of 

being familiar to the standing Panel members (i.e., the Chair, OMB and SBA). The convening 

document should include the following information in approximately the following order: 

1. Introduction; 

2. Background and Regulatory History; 

3. Overview of Proposal Under Consideration; 

4. Applicable Small Entity Definitions; 

5. Small Entities that May Be Subject to the Proposed Regulation; 

46	 Small entity representatives can be consulted individually, particularly since the RFA requires that the Panel 

collect the advice and recommendations of "each" representative. If, however, you choose to consult with small 

entity representatives as a group, be careful not to solicit a group recommendation because issues under the 

Federal Advisory Committee Act (FACA) may be raised. 62 
6. Summary of Small Entity Outreach; 

7. List of Small Entity Representatives; and 

8. Summary of Input from Small Entity Representatives. 

Typically, there are two opportunities for written SER comments, once during the 

outreach process, and once during the Panel process. The Agency typically provides outreach 

materials to the potential SERs in advance of the outreach meeting, and sets a deadline of about 

two weeks subsequent to the meeting for the written comments. Written comments are normally 

scheduled to arrive at least two weeks before the Panel convening, allowing the Agency to 

develop materials for the Panel, after being informed by the written comments. 

You should attach copies of any materials previously shared with the SERs and the 

written comments submitted by the small entity representatives to EPA as an appendix to the 

convening document. The convening document should not contain a discussion of the 

regulatory option or options actually selected by the Agency, since this document generally 

should be prepared before such decisions are made. The convening document should be 

forwarded to the SBAC staff assigned to your Panel at least one week prior to the convening date 

for the Panel. The SBAC staff are also available to review drafts of your convening document. A 

sample of a convening document and template are available from the SBAC staff. 

5.7.7 Consider a Pre-Panel Meeting with SBA and OMB 

Several program offices have consented to pre-Panel meetings with SBA and OMB to 

discuss information needs, and we have found this to be an increasingly valuable planning step. 

SBA and OMB tend to request a great deal of background information that they consider 

potentially relevant to developing significant alternatives to minimize burdens on small entities. 

SBREFA charges the Panel to review "any material the Agency has prepared in connection with 

this chapter." 47 At a minimum, SBA and OMB typically expect to review any materials that 

describe the regulatory alternatives under consideration (to which small entities would be 

subject), their environmental rationale and/or benefits, and the costs they would impose on 

small parties, as well as the analysis and methods supporting these descriptions and estimates. 

OMB and SBA normally expect to review such information if reasonably available and accurate, 

to enable the Panel members to make informed decisions. Such materials could also include 

narrative discussions of the advantages and disadvantages of these approaches. These materials, 

or a subset of these materials, may also be provided to the SERs as part of the outreach package. 

Since the full range of data and analysis needed to construct a publishable IRFA may not 

become available until relatively late in the rulemaking, the "materials the agency has prepared," 

as well as their stage of completion and level of supporting detail at the time of convening, will 

vary from rule to rule. In effect, the Panel encounters the rulemaking as a work in progress, with 

the opportunity to affect its future development to avoid unnecessary burden on small entities. 

47 “This chapter" refers to the RFA itself and suggests the elements of an IRFA, which include "a description of any 

significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and 

which minimize any significant economic impact of the proposed rule on small entities.” 63 
EPA supports the Panel's thorough, meaningful consideration of such impacts and the design of 

justifiable accommodations for small entities. We seek to provide the Panel with whatever 

information may be available to promote those objectives, and it has been our practice to 

respond generously to SBA's and OMB's requests for existing data, reports, and surveys. 

Nevertheless, because each rule presents its own special circumstances bearing on what 

information is both available and relevant for the Panel's review, a preliminary meeting to 

consider what materials the Panel will receive, as well as what may be suitably provided to our 

non-Federal advisors, may be useful in clarifying the expectations of all members. See further 

discussion of data needs under 5.8.2 below. 

5.8 What Can I Expect from Panel Review? 

Each Small Business Advocacy Review Panel is chaired by the Agency Small Business 

Advocacy Chair (SBAC). The three other statutory Panel members are: 

1. an EPA senior manager from the program office developing the rule; 

2. the SBA Chief Counsel for Advocacy; and 

3. the Administrator of OMB's Office of Information and Regulatory Affairs. 

Each of these officials signs the final Panel Report, though, as a practical matter, one or 

more may be represented by a designee during a portion of the Panel's deliberations. The Panel 

member representing the EPA program should be a senior manager familiar with your rule who 

has the authority to negotiate the program's position on potential regulatory alternatives for small 

entities. Remember, small entity representatives (SERs) are not members of the Panel -­

they provide input to the Panel, but by statute the Panel comprises only Federal employees, as 

identified above. 

5.8.1 When is the Panel Officially Convened? 

The SBAC convenes the Panel at the first formal meeting of the Panel members. The SBAC 

sets the convening date in coordination with all the Panel members through consultation 

facilitated by the SBAC staff. The convening document and a program office presentation on the 

regulation are generally used as the main vehicles for initiating review. Once the Panel convenes, 

it is critical that all Panel members review the same set of information. Accordingly, during a 

Panel, all communication to the Panel members should be channeled through the SBAC's staff. 

Materials not for public release can be marked deliberative and circulated to Panel 

members as Federal employees. Such materials are intended to be kept confidential and are 

not be released to the public nor included as part of the Panel Report. 

5.8.2 What Information Am I Required to Provide to the Panel? 

The program office Panel member should be prepared to negotiate with SBA and OMB on 

the type and amount of data and supporting information that is needed to support the Panel's 

discussions. We have found that a pre-convening meeting(s) can provide a useful forum for 

arriving at workable understandings on this matter, but unexpected issues can arise during the 

60-day Panel term as well. SBA and OMB sometimes request information and analyses that have 

not yet been performed. As detailed below, according to the statute, the Panel is to review any 64 
existing RFA-related materials and any draft proposed rule, if those materials have been prepared 

by the time the Panel convenes. The RFA does not require EPA to develop materials or 

perform analyses specifically for the Panel process. 

The following describes the information the RFA requires you to provide to the Panel: 

�	 Draft regulatory text - Section 609(b)(4) states that "the Panel shall review any 

material the agency has prepared in connection with this chapter, including any 

draft proposed rule." While this language does not require EPA to prepare a draft 

proposed rule prior to convening a Panel, if you convene the Panel after you have 

prepared a draft NPRM, you must provide it to the Panel members; 

�	 Economic impact data - Section 609(b)(l) requires EPA to provide SBA 

"information on the potential impacts of the proposed rule on small entities and 

the type of small entities that might be affected." Section 609(b)(l) does not 

specify the requisite level of analysis of the potential impacts. EPA does not 

believe the RFA requires you to prepare a full economic analysis of potential 

impacts for the Panel process, nonetheless, EPA clearly must provide some 

information - either quantitative or qualitative - on the potential impacts; 

�	 Regulatory Alternatives - Section 603(c) requires the IRFA to include "a 

description of any significant regulatory alternatives to the proposed rule which 

accomplish the stated objectives of applicable statutes and which minimize any 

significant economic impact of the proposed rule on small entities." [Emphasis 

added] The RFA does not require you to prepare for comment by the Panel what 

essentially would be a draft IRFA for all regulatory alternatives you have 

identified. You do, however, need to describe in sufficient detail, including some 

analysis of the impact on small entities and environmental benefits, each 

significant regulatory alternative you have identified that accomplishes the 

statutory mandate. It is important to note that the Panel process precedes and is 

intended to contribute to the development of the IRFA, not the reverse; and 

�	 Technical and legal supporting materials - Pursuant to subsection 603(b)(2), an 

IRFA must address the legal basis for a proposed rule. However, section 603(b)(2) 

is not one of the expressly enumerated subsections on which the Panel is to 

collect advice and recommendations. Since the RFA places the legal basis for the 

proposed rule outside the purview of the Panel, the RFA does not require EPA to 

provide such information to the Panel. 

Although the above list describes what the RFA does and does not require you to provide 

to the Panel, as a matter of policy, EPA typically provides information beyond the statutory 

minimum. When doing so, you should consult with staff to the SBAC and establish clearly that 

the provision of such information is not statutorily mandated. In previous Panel processes, 

several EPA program offices have made it a practice to provide requested information to the 

Panel as long as the information has been cleared by OGC for public release or otherwise would 

have been provided to any requestor. We have also honored requests for materials not already 

prepared if fulfilling the request would not consume excessive resources or delay the 

rulemaking/Panel schedule. 

65 
It is vital that program regulatory staff remain in close consultation with its own 

management to ensure that its provision of non-statutory information is neither 

inappropriately restrictive nor unacceptably intrusive on the program organization's 

internal priorities and schedules. SBAC staff can be helpful to you in establishing how the 

Agency has viewed and treated similar requests for information in other Panel settings. (See 

5.7.7 for further discussion of how we typically anticipate such requests and determine whether 

and when the Agency can fulfill them.) 

5.8.3 Panel Outreach to Small Entity Representatives 

The RFA also tasks the Panel with performing its own outreach to the Small Entity 

Representatives. Typically, this consists of a meeting with the SERs, either in person or via 

teleconference. Prior to this meeting, the Panel generally sends a letter from the SBAC inviting 

SERs to the outreach meeting and a package of information that provides them with additional 

information about the rule for them to be able to judge the likely impacts of the rulemaking on 

themselves and other small entities. The Panel agrees on the content, but development of this 

outreach package is the responsibility of the EPA program office responsible for the rule. The 

outreach letter will request written comments from each small entity representative on the four 

elements of an IRFA (see Section 5.2) as well as other issues identified by the Panel. The program 

office should try to anticipate what information the Panel would like to provide to the SERs and 

develop the SER outreach package prior to convening the Panel. We encourage you to circulate 

the draft outreach package to the Panel members within one week of convening. The outreach 

materials are circulated and agreed upon by all Panel members before they are sent out under the 

signature of the SBAC. An example of an outreach package is available from SBAC staff. 

At the outreach meeting, chaired by the SBAC, the program office is generally responsible 

for a brief presentation on the proposal under consideration and the remainder of the time is 

devoted to feedback from and dialogue with the SERs. The program office is responsible for 

creating a summary of this meeting for inclusion in the Panel Report. The SER outreach 

meeting should generally take place within the first 30 days of the Panel process. 

5.8.4 Panel Deliberations and Generating the Panel Report 

The Panel generally meets very soon after the SER outreach meeting to discuss the SER 

comments. It is useful at this point, for each Panel member to be able to bring to the table 

proposals for regulatory options that may minimize economic impacts on small entities. Panel 

deliberations can occur through a series of face-to-face meetings of the Panel members (or their 

designees), conference calls, e-mail exchanges or facsimile transmissions. Deliberations generally 

center around the language that will be contained in the Panel Report. You should be prepared 

to devote a significant amount of time and effort to drafting materials for your SBREFA Panel, 

especially toward the end of the 60-day process. The program office has the primary 

responsibility for drafting the Panel Report . The first complete draft of the Panel Report is 

based primarily on SBA and OMB's input (based on the SER comments) to the convening 

document. Each of the Panel members will sign the completed Panel Report, therefore, each 

Panel member has a vested interest in the specifics of the Panel Report language. The program 

office Panel member should be prepared to negotiate with OMB and SBA on Panel 

recommendations; this could require a substantial amount of time as well as direct, immediate 

feedback from management. 

66 
By statute, the Panel only has 60 days from the date it is convened to produce its official 

final report. The Panel is not required to take the full 60 days, and should issue its report as soon 

as possible to provide timely input to the development of the proposed rule. The Panel need not 

reach consensus in order to issue a final report; the views of each of the members can simply be 

reflected in that report. When possible, the report should state matters of Panel agreement, but 

no Panel member is under compulsion to agree to any position. Indeed, any member may demur 

and even insert into the Panel Report a contrary position, with the knowledge that the Report 

will be part of the public record offered for comment when the proposed rule is published. Since 

an EPA program office representative signs the Panel Report, it is generally recognized that any 

recommendations agreed upon by the entire Panel are acceptable to the Agency, whether as 

modifications to the regulatory proposal, or as issues to be discussed in the preamble. Even 

if there are subsequent data findings or circumstances that warrant a change in EPA's 

position after the Panel closes, it is important to discuss the Panel's recommendations and 

the Agency's response in the NPRM . The program office Panel member should not agree to any 

Panel recommendation if it appears that the Agency cannot implement it. The final Panel Report 

will not contain a discussion of the option or options actually selected by the Agency, since the 

report will normally be prepared before such decisions are made. 

5.9	 Consideration of the Panel Report During Development of the Proposed Rule and 

Initial Regulatory Flexibility Analysis 

The RFA requires the Agency to consider the Panel Report in selecting proposed 

regulatory options to address small entity concerns, and where appropriate, to modify the 

proposed rule, the initial regulatory flexibility analysis or the decision on whether an initial 

regulatory flexibility analysis is required. As stated earlier, it is generally recognized that any 

recommendations agreed upon by the entire Panel will be addressed in the proposed rule unless 

unforseen circumstances intervene between completion of the Panel Report and the time of 

proposal. You should document the results of the outreach and Panel process, and their role in 

the Agency's deliberations in the initial regulatory flexibility analysis prepared for the rule. You 

should integrate the substantive Panel recommendations into your preamble text in the 

appropriate sections and also summarize these results in the Regulatory Flexibility section of the 

preamble of your proposed rule. The Regulatory Management Division of EPA's Office of Policy, 

Economics and Innovation, which is responsible for the review of regulations prior to OMB 

review and signature by the Administrator, will, in conjunction with OGC, ensure that your 

preamble language is sufficient. 

EPA's policy is to keep the Panel Report confidential until the rule is proposed, since 

we consider its recommendations to be protected under the Federal deliberative process. 

Upon proposal, the Panel Report must be placed in the docket for the rulemaking so that it 

will be accessible to all parties interested in the rulemaking. 

6

CHAPTER 6 

Small Entity 

Compliance Guides 

6.1 EPA's Approach to Small Entity Compliance Guides 

When the Agency is required to prepare a regulatory flexibility analysis for a final rule, 

SBREFA section 212 48 also requires the Agency to: 

 prepare and publish one or more documents regarding such a rule or group of 

rules as small entity compliance guides and specifically "entitle such publications 

as small entity compliance guides;" 

 explain in the compliance guide actions that a small entity must take to comply 

with a rule or group of rules; 

 distribute the guides to small entities through "comprehensive sources of 

information;” 

 post the guide in an easily identified location on the website of the agency and 

publish each guide - “on the same date as the date of publication of the final rule 

(or as soon as possible after that date);” and “not later than the date on which the 

requirements of that rule become effective;” and 

 report annually on the agency’s compliance. 

While compliance guides are not judicially reviewable, they may be considered as 

evidence of the reasonableness or appropriateness of any penalties or damages in any civil or 

administrative action against a small entity. Accordingly, the statute gives us broad discretion with 

regard to implementing these requirements particularly in regard to designation, development 

and distribution of the guides. Although guides are required only for final rules for which a 

regulatory flexibility analysis was prepared, rulewriters should start their planning for the guide 

48 Pub. L. No. 104-121, Sec. 212. SBREFA has several provisions that are not codified into the RFA but that still have 

an impact upon RFA implementation. SBREFA section 212 is one such provision. SBREFA section 212 has also been 

amended by Pub. L. Number 110-28. 69 
Small Entity Compliance Guides


Figure 5
 

Get Input from

Agency Workgroup,

in particular from

OECA & OGC

[Section 6.3]

Prepare Final Rule &


Plan for Guide


Development &


Distribution


[Sections 6.4 & 6.6] 

Lead Rule- Writing Office


Prepare Draft


Compliance Guide1
 

[Section 6.9] 

Small Entity


Review


[Section 6.3] 

Finalize Guide & Get


Concurrence from Both


OGC & OECA


[Section 6.3] 

Issue Compliance Guide


ASAP; Preferably within 2


Months of Promulgation


[Section 6.4] 

Distribute & Keep


Up-To-Date


[Sections 6.7 & 6.8] 

Notes:

General: References to “Sections” in the flowchart refer to the sections in Chapter 6 in this guidance document (see Table of Contents).

If you are doing an Analytic Blueprint you should include plans for developing the Guide, including a timeline, and the resources needed. If there is no Blueprint,

you should integrate Compliance Guide development into your action or work plan. 

1 

70 
during the proposed rule phase. Timing is discussed further in Section 6.4 

The sections that follow describe how the Agency has chosen to exercise this discretion, 

the specifics of which may not necessarily be required by SBREFA. As we continue to gain 

experience, we may issue additional guidance. Figure 5 illustrates our approach to developing a 

small entity compliance guide. 

6.2 What is the Goal in Writing a Compliance Guide? 

As mentioned above, SBREFA section 212 requires the Agency to prepare and publish one 

or more documents as small entity compliance guides for a rule or group of rules for which 

we've prepared a final regulatory flexibility analysis and specifically "entitle such publications as 

small entity compliance guides." Beyond meeting the statutory obligation, the primary goal of the 

guide is to help small entities--whether they are small businesses, small governments or small 

non-profit organizations--to comply with the regulation. You should therefore write your guide 

using language suitable for a non-technical audience. President Clinton's memorandum of June 

1, 1998 entitled "Plain Language in Government Writing," directs agencies to use plain language 

in all documents that explain how to obtain a benefit or service or comply with a regulation. You 

should focus your guide on what a small entity will need to know to comply with your 

regulation and minimize the inclusion of any other information (see the template in section 6.10, 

below). While small entities are the primary audience for the guides, some of the compliance 

information may also be applicable to large entities and you may choose to present these 

similarities/differences as you develop your guide. 

6.3 Who Participates in the Development of a Compliance Guide? 

The lead rule-writing office is responsible for developing the rule-specific compliance 

guide as part of the rulemaking process. You should have your draft guide reviewed by both the 

Office of General Counsel attorney assigned to your rule and by a representative from OECA. 

Your regulatory development workgroup, as well as representatives from SBO, OPPT's Pollution 

Prevention Division, regional offices and the SBAC's staff can also provide assistance/support, or 

develop sections of the guide, as appropriate. If your regulatory development workgroup does 

not include representatives of the appropriate offices, you should work through your Regulatory 

Steering Committee representative to identify such individuals. 

Small 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. Generally, draft compliance guides should not 

be released to outside parties prior to the rule's promulgation. In those unusual circumstances 

where the outline of the compliance guide is clear to you at pre-proposal, then you may seek 

review and feedback from small entity stakeholders at that stage. You should share the draft 

compliance guide and solicit comment from small entity stakeholders after promulgation, but 

will need to balance such review with equal concern for timely issuance of the guide. 

Before issuing a compliance guide, obtain concurrence from both OGC and OECA. 

Normally, you can ask members of your workgroup from these offices to ensure that appropriate 

levels of management in their offices approve the draft. (OGC and OECA will determine the level 

of concurrence from their offices.) 

7
 

 

 

 

6.4 When Should I Develop a Compliance Guide?
 

You should integrate development of the guide into the rulemaking process. Generally, you 

should begin work on your guide as soon as you have enough information to do so. This point 

will vary from rule to rule; sometimes it is clear even before the rule is proposed, and in other 

cases not enough is known until just prior to final promulgation. In either event, you should plan 

to devote time during the rulemaking process for development of a guide. However, the 

Agency will not ask for an extension of any court-ordered deadlines in order to complete 

compliance guides. 

Keep in mind that the goal is to make the guide available after promulgation in sufficient 

time for it to be of practical help to small entities in evaluating and implementing their compliance 

options before the compliance deadline. It is required that the guide be published “not later 

than the date on which the requirements of that rule become effective.” In any case, you 

should make every effort to issue the guide within two months of the promulgation of the final 

rule. 

The constraints on outside participation during the final rule phase in development of the 

guide leave a relatively short time after promulgation to both take comment from small entity 

stakeholders and issue the final guide. This makes advance planning and drafting essential. 

Tip:Identify your small entity reviewers early in the process. You may want to consider 

using those small entity representatives who participated in the Panel process during the 

development of the proposed rule. 

If the issuance of your guide may be delayed beyond a month or two, you should issue a 

Fact Sheet or other brief description of the rule as an interim measure. If your rule has a distant 

compliance date (e.g., two years or more), closer to the compliance date you may want to ensure 

the information in your compliance guide is still current and re-issue the guide, if appropriate. 

6.5 What Sorts of Questions Should I Ask My Small Entity Reviewers? 

Some suggestions include: 

Is the format appropriate? 

Is the guide clear and easy to read and understand? (use Plain Language-refer to 

http://intranet.epa.gov/plainlanguage) 

Does the guide accurately describe the rule as published? 

Is the guide useful in planning for compliance? 

6.6 How Do I Document Development of the Guide? 

If you are doing an Analytic Blueprint, it should include plans for developing a small entity 

compliance guide, including a time line, and the resources needed. If there is no Blueprint, you 

72 
 

 

 

 

 

 

 

 

should integrate development of a compliance guide into your action or work plan. Submit a 

schedule for development and completion of a compliance guide when you submit your final 

rule to the Administrator for signature. Include your distribution strategy for the guide in your 

Communications Plan. Information related to the development of the guide will be tracked in 

OPEI's Rule and Policy Information and Development System (RAPIDS). Lead offices are also 

encouraged to develop internal methods for tracking the development of the guides. 

6.7 Who Can Help Me with Distribution? 

In addition to internal office distribution mechanisms, you should provide copies of your 

completed guides to the 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 Public 

Affairs. These offices will distribute the guide to their small entity contacts. (You should ensure, 

to the extent it is feasible, that these offices do not have duplicate distribution lists.) Other small 

business assistance providers include: 

State Technical Assistance Programs for Pollution Prevention; 

State Small Business Assistance Programs; 

Small Business Development Centers; 

Trade Associations; 

Professional Organizations; and 

the Small Business Administration, USDA and OSHA. 

In addition, your small entity compliance guide must be made available to the public and 

must be made available to Congress through the Courtesy Copy Policy (CCP). Please refer to 

EPA's Action Development Process: Guidance for EPA Staff on Developing Quality Actions , June 30, 

2004. EPA's Action Development guidance can be found at EPA's Action Development Process 

Library intranet site: http://intranet.epa.gov/adplibrary. 

6.8 How Do We Ensure that Compliance Guides are Kept Up to Date? 

As a statutory matter, compliance guides may have evidentiary uses in litigation so it is 

important that guides are reviewed and revised as needed. The guide should be revised when 

the rule for which it was developed is revised. It is the responsibility of the lead office to ensure 

compliance guides are kept current. 

Other circumstances that may cause you to revise the compliance guide include: 

Changes in the rule which affect compliance. 

Comments from the public suggesting revisions, or from OECA based on their 

73 
 

 

 

The Regulatory Flexibility Act (RFA) was amended by the Small

Business Regulatory Flexibility Act (SBREFA) in 1996. The Agency

refers to the RFA as amended by SBREFA simply as the RFA.

experience in enforcing the regulation. 

Litigation citing a guide as a reason to challenge the appropriateness of proposed 

penalties. 

You should include in every compliance guide the following disclaimer on the cover 

page of your guide. 

NOTICE 

This guide was prepared pursuant to section 212 of the Small Business Regulatory 

Enforcement Fairness Act of 1996 ("SBREFA"), Pub. L. 104-121 as amended by 

Pub. L. Number 110-28. THIS DOCUMENT IS NOT INTENDED, NOR CAN IT BE 

RELIED UPON, TO CREATE ANY RIGHTS ENFORCEABLE BY ANY PARTY IN 

LITIGATION WITH THE UNITED STATES. The statements in this document are 

intended solely as guidance to aid you in complying with [insert name of your 

rule and its CFR citation]. EPA may decide to revise this guide without public 

notice to reflect changes in EPA's approach to implementing [insert the name of 

your rule] or to clarify and update text. To determine whether EPA has revised this 

guide and/or to obtain copies, contact EPA's [insert Small Business 

Ombudsman Office and phone number and name of program office that 

issued the rule and its main phone number and/or website address]. The full 

text of the rule is available online at: [insert name of your website]. 

Note: OECA may, at a later date, develop sector-specific, multimedia guides which would 

integrate rule-specific guides. OECA will notify program offices if and when it undertakes this project 

and will coordinate development of such guides through the Agency’s Regulatory Steering Committee. 

You also should send a copy of your compliance guide to EPA’s Small Business 

Ombudsman’s office and place the most current guide in the appropriate docket, on a special 

secion in EPA’s internet page or other electronic bulletin boards. 

6.9 Template for Compliance Guides 

An Agency workgroup has developed the following template to help you in structuring 

your compliance guide, and you should use it in accordance with the guidance given earlier in 

the chapter. While SBREFA does not mandate a particular format, we urge you to use this 

template so that we may have general consistency across the Agency and to assure that significant 

compliance issues are adequately covered. If your rule does not, for some reason, lend itself to 

this template, you may use it as a checklist to ensure that all potentially relevant compliance 

issues are covered. 

The template is organized as follows: 

Non-italicized text indicates sections which should normally be included in the 

compliance guide. 

Italicized text indicates standard language which you may choose to use if it is 

74 
 

appropriate to your rule. You should adapt this standard language to the specifics of 

your rule as necessary. 

Program offices have lead responsibility unless otherwise designated in bold. 

Please make your best effort to write your guide in plain language (see EPA's intranet site 

http://intranet.epa.gov/plainlanguage) 

[Insert standard publication header, including the date and appropriate publication number] 

SMALL ENTITY COMPLIANCE GUIDE 

[insert title of rule or program...] 

NOTICE 

This guide was prepared pursuant to section 212 of the Small Business Regulatory Enforcement 

Fairness Act of 1996 ("SBREFA"), Pub. L. 104-121 as amended by Pub. L. Number 110-28. 

THIS DOCUMENT IS NOT INTENDED, NOR CAN IT BE RELIED UPON, TO CREATE ANY 

RIGHTS ENFORCEABLE BY ANY PARTY IN LITIGATION WITH THE UNITED STATES. The 

statements in this document are intended solely as guidance to aid you in complying with 

[insert name of your rule and its CFR citation]. EPA may decide to revise this guide without 

public notice to reflect changes in EPA's approach to implementing [insert the name of your 

rule] or to clarify and update text. To determine whether EPA has revised this guide and/or to 

obtain copies, contact EPA's [insert Small Business Ombudsman Office and phone number 

and name of program office that issued the rule and its main phone number and/or website 

address] . The full text of the rule is available online at: [insert name of your website]. 

INTRODUCTION 

This document is published by the Environmental Protection Agency (EPA) as our official 

compliance guide for small entities, as required by the Small Business Regulatory Enforcement Fairness 

Act of 1996. Before you begin using the guide you should know that the information in this guide was 

compiled and published on [INSERT PUBLICATION DATE]. EPA is continually improving and 

upgrading its rules, policies, compliance programs, and outreach efforts. You can determine whether EPA 

has revised or supplemented the information in this guide by calling [INSERT HOTLINE NUMBER OR 

INTERNET ADDRESS]. 

Who Should Use this Guide? 

1. To the extent possible, the guide should identify all the types/categories of small entities that 

will be subject to the rule's requirements. Bear in mind that other entities may be indirectly 

affected but may not be required to comply. This section needs to make this distinction clear 

to the reader. 

Tip: Use the compliance table from the "Summary" section of your 

rule's preamble to convey this information. Be sure to modify it if 

necessary to target small entities. 

2. In many cases, the guide will also be useful to larger entities subject to the rule. You may wish 

75 
to point out any similarities or differences at this stage but you should not go into great detail 

on this subject. 

What does the Guide Cover? 

How do I use the Guide? 

How do I Obtain a Complete Copy of the Rule? 

List an 800 number, Federal Register citation or the Government Information 

Locator Service. 

WHAT DOES THE REGULATION REQUIRE? 

What environmental/human health issue(s) does this rule address and why it is 

important? 

Summary of the New Regulation 

1.	 Using plain English, summarize the rule in a narrative format. This should be a 

simplified adaptation of the issues you discussed in the rule's preamble. 

2.	 Additionally, provide a visual description (e.g., chart or flowchart) of the rule's 

requirements as it applies to small entity operations or processes. "Operations" include 

traditional facility-based operations and non-traditional based operations such as farms, 

communities or schools. 

Compliance Timetable 

Identify in easy-to-read format (e.g., flowchart, time line, timetable) compliance dates for 

notifications and other requirements. 

How Does this Regulation Relate to Other Federal, State, and Local Requirements? 

1.	 Each Program should develop specific template language concerning program delegations 

and relationships to other requirements generally, or, where appropriate, referring back 

to general provisions applicable to all regulations in a subgroup to which the new 

regulation belongs (e.g., New Source Performance Standards under the Clean Air Act). 

Programs have the flexibility to expand this section as appropriate, to address this issue 

more specifically. 

2.	 Meanwhile, this suggested template language which may be appropriate in many cases: 

This compliance guide explains your federal compliance obligations with respect to_____ rule. 

There may be other state or local requirements which apply to you which are different from, or 

more stringent than, the federal requirements. For example, some environmental statutes allow 

EPA to delegate environmental programs to a state. The state may then promulgate its own rules 

which may supersede the federal requirements. For more information on the rules that apply in 

your State, please contact [INSERT CONTACT POINT]. 

76 
 

 

STEP-BY-STEP PROCEDURES FOR COMPLIANCE WITH THIS RULE 

This is where you break down the rule into discrete subject areas using a step-by-step, 

question/answer approach. Questions in this section will depend on the particular rule. All the 

following questions are EXAMPLES of the types of questions that may be appropriate to include. 

How can I tell if I am subject to this rule? 

What requirements am I subject to? 

When do I need to comply ? (elaborate on flowchart, as appropriate) 

What do I need to do to comply? 

Be sure to address such questions as: 

How does this rule affect my existing permit?
 

How much will it cost to comply with this rule?
 

What, when and how must I monitor or test?
 

What records do I need to keep and for how long?
 

Include sample forms and calculations. 

What, when and to whom must I report? 

Include sample forms. 

How do I minimize harm if I think I am out of compliance? (Program lead/OECA 

support) 

Where do I go for help? 

Give information on federal, State and local contacts, Agency hotlines, or State Small 

Business Assistance Program contacts. 

What is pollution prevention and how can it affect my operations? (OPPT 

lead) 

1.	 Discuss pollution prevention and its benefits, including how it may be used to 

help a facility/operation save money and/or possibly avoid regulation. 

2.	 To the extent that there are other pollution prevention opportunities, including 

those which may make good business sense or could exempt a small entity from 

certain requirements, the program, with support from OPPT, has the option to 

expand this section and include this information. 

Are there opportunities for flexibility or waivers? 

7
 

 

 

If this is applicable in a given rule, these opportunities can be highlighted here. For example, 

there are circumstances in which the Safe Drinking Water Act allows temporary variances or 

exemptions from maximum contaminant levels. 

OPTIONAL QUESTIONS AND ANSWERS ABOUT FACILITY/ OPERATIONS/ 

PROCESSES 

Here you want to anticipate questions of potential concern to the regulated community, 

including how the rule fits into the overall regulatory program. Questions will depend on the 

rule; the questions below are only EXAMPLES. [Tip : A self-audit checklist can be very helpful to 

small entities and may be used alone or in conjunction with a question and answer format.] 

How do I conduct a self-audit of my facility/firm/operation to help me evaluate 

whether I am in compliance with this rule? 

Provide Self-Audit Checklist (Program/OECA) 

What are the implications of this rule for my existing permits? 

Adapt this to your particular rule or program. 

How Does this Rule Change How I Handle/ Store Wastes? (if
 

guide was written for RCRA rule)
 

THE COMPLIANCE ASSURANCE PROCESS (OECA LEAD) 

This section should describe in clear, non-threatening terms why compliance is important, 

the potential consequences of violating the law, and how the entity can work with us to identify 

and correct its compliance problems, often without the need for a formal enforcement action or 

penalty. 

Draft this section to ensure that small entities understand: 

how EPA determines compliance 

what they must do if they discover a violation, and 

the available compliance assistance/enforcement options. 

Include only information that is directly relevant to the rule. You may attach more 

detailed information, or information you feel may be helpful, in an Appendix. 

How Is My Operation's Compliance With Environmental Requirements
 

Determined?
 

Discuss compliance assistance, inspections, self-monitoring and the role of citizens. 

If I Discover a Violation, How Can I Work With The Agency to Correct It? 

Discuss compliance incentives policies: Small Communities Policy, Policy on 

Compliance Incentives for Small Businesses, Self-Disclosure Policy. 

78 
If the Agency Discovers a Violation, What Might Be Its Response? 

To maximize compliance, EPA implements a balanced program of compliance 

assistance, compliance incentives, and traditional law enforcement. EPA knows that small 

businesses which must comply with complicated new statutes or rules often want to do the 

right thing, but may lack the requisite knowledge, resources, or skills. Compliance 

assistance information and technical advice helps small businesses to understand and meet 

their environmental obligations. Compliance incentives, such as our Small Business Policy, 

encourage persons to voluntarily discover, disclose, and correct violations before they're f

identified by the government. EPA s strong law enforcement program protects all of us by 

targeting persons who neither comply nor cooperate to address their problems. 

EPA uses a variety of methods to determine whether businesses are complying, 

including inspecting facilities, reviewing records and reports, and responding to citizen 

complaints. If we learn a person is violating the law, EPA (or a State, if the program is 

delegated) may file an enforcement action seeking penalties of up to $[INSERT 

STATUTORY MAXIMUM AMOUNT], per violation, per day. The proposed penalty in a 

given case will depend on many factors, including the number, length, and severity of the 

violations, the economic benefit obtained by the violator, and its ability to pay. EPA has 

policies in place to ensure penalties are calculated fairly. These policies are available to the 

public. In addition, any company charged with a violation has the right to contest EPA's 

allegations and proposed penalty before an impartial judge or jury. 

In summary, EPA recognizes that we can achieve the greatest possible protection by 

encouraging small businesses to work with us to discover, disclose, and correct violations. That's 

why we've issued self-disclosure, small business, and small community policies to eliminate or 

reduce penalties for small and large entities which cooperate with EPA to address compliance 

problems. In addition, we've established compliance assistance centers to serve over a million 

small businesses. For more information on these and other EPA programs for small businesses, 

please contact [INSERT POINT OF CONTACT]. 

What is the legal status of this guide? 

A judge can look at a compliance guide in determining what penalty is appropriate and
 

reasonable, although the content of the guide cannot otherwise be reviewed by the court.
 

In this Compliance Guide, we have tried to make clear what you must do to comply with 

the applicable law and regulation. This is the minimum required by SBREFA. You '11 notice, 

however, that here and there we have also included suggestions for alternative approaches that 

may make compliance easier and possibly even reduce costs. We hope you find this presentation 

of regulatory requirements useful and the additional information helpful in reaching and 

maintaining compliance. 

APPENDIX 

Glossary of Environmental Terms 

Define terms which are relevant to the rule but which may be too basic to be defined in 

the rule itself. For example, "permit," "pollution prevention," "process." 

79 
Where to Obtain More Information
 

This section gives supplemental information. Examples might include other existing 

quality compliance guidance, pollution prevention guidance, pollution prevention case 

studies, other media contacts, trade associations, or university assistance programs. 

How Useful Was This Guide? 

Each guide should solicit feedback from users as to the usefulness, readability, and 

improvements needed for the guide. 

80 
Chapter 7 

Ongoing Informal 

Small Entity Guidance 

This chapter provides a brief overview of our informal small entity compliance program 

and list of compliance assistance tools. This information is provided here to help you 

understand what resources are available to assist you in your small entity compliance 

assistance efforts. 

7.1 Overview of EPA's Section 213 Program 

Section 213 of the Small Business Regulatory Enforcement and Fairness Act (SBREFA) 

requires us to: 1) provide guidance to small entities "whenever appropriate in the interest of 

administering statutes and regulations", 2) establish a program for providing the guidance, and 3) 

issue a report to Congress regarding the program. Under section 213(a), we are required to answer 

inquiries from small entities regarding compliance with all Agency statutes and final regulations. In 

particular, we are required to provide advice based on the application of the law to specific sets of 

facts supplied by small entities. This advice and guidance can be considered as evidence of the 

reasonableness or appropriateness of penalties sought against a small entity. 

EPA's Informal Guidance Program consists of four main components:
 

· the EPA Small Business Ombudsman (SBO), located at EPA Headquarters;
 

· regional small business liaisons, who serve as local resources to assist small entities who
 

contact the EPA regional offices; 

· various hotlines and clearinghouses that serve entities of any size, including large 

percentages of small entities; and 

· technical and program staff located throughout Headquarters and the regions who are 

available to answer questions in their subject area or who refer small entities to the 

appropriate State and local resources. 

In designing this program, EPA's guiding principles were to: 1) ensure the accessibility of the 

Small Entity Guidance
 

8
The Regulatory Flexibility

Act (RFA) was amended

by the Small Business

Regulatory Flexibility Act

(SBREFA) in 1996. The

informal guidance program to the small entity community, and 2) avoid duplication with existing 

activities. As provided in section 213(b), we have applied existing functions and personnel in 

creating the program. By incorporating our Small Business Ombudsman (SBO) and other existing 

services into the core of the Agency's Informal Guidance 

Program, we have been able to achieve both goals. Informal small entity advice 

and guidance can be 

The SBO is already well-known in the small entity considered as evidence of the 

reasonableness or community, serving as a "first-stop shop" for multi-media appropriateness of penalties compliance information. The SBO administers a free hotline sought against a small entity. handling approximately 1,100 to 1,500 calls per month, 

answering fact-specific compliance questions, distributing 

supporting documentation, and providing information on 

additional sources of assistance. Callers may remain anonymous at their own discretion. In addition 

to these calls to the hotline, SBO staffers respond to another 1,000 or more calls annually that are 

made directly to their desks. 

In addition to the SBO, EPA has numerous other resources to answer compliance questions 

from small entities, such as the small business liaisons, program-specific hotlines and 

clearinghouses, and technical and program media staff, some of which are listed below. For example, 

we sponsor approximately 89 hotlines and clearinghouses throughout Headquarters and the 

regions, which are available to customers of any size, including small entities. 

We have a long history of developing authoritative materials to aid the regulatory community 

in its compliance efforts. These documents include such items as Sector Notebooks, Plain English 

Guides, and Fact Sheets. Through the issuance of such documents, you can often preclude the need 

for a small entity to contact us with a related inquiry. In addition to these written materials, you can 

make numerous resources easily accessible through the main EPA home page (www.epa.gov) or 

through your program office web site. 

If you provide informal guidance to small entities, whether as a technical or program expert 

answering questions in your field of expertise or via a hotline or clearinghouse, you should be aware 

that the Office of General Counsel has provided guidance that applies to all EPA personnel providing 

informal guidance regarding the kinds of assurances EPA can make about the confidentiality of 

information provided by callers to EPA hotlines. As a matter of law, the Agency generally is unable to 

guarantee that any information received by EPA personnel or hotline staff will remain "confidential." 

As stated in EPA's SBREFA section 213 Report to Congress, it is EPA's position that callers to an 

Agency hotline who request compliance assistance may choose to remain anonymous. Callers 

speaking with program or technical experts may similarly choose to remain anonymous. This means 

that the caller is not required to provide specific information such as her/her name, phone number, 

or address, that could be used to identify the caller. The caller may simply choose to provide 

whatever information is necessary to describe his/her situation and to seek EPA's assistance in 

answering their questions. Anonymity, however, is not the same as confidentiality. For instance, EPA 

staff may not suggest or guarantee that (1) the information provided would not be viewed by other 

parts of EPA; or (2) the information would not be released by EPA to a third party if it were the subject 

of a Freedom of Information Act request. 

82 
7.2 List of Compliance Assistance Resources 

EPA offers small businesses a wide variety of compliance assistance resources and tools designed 

to assist small businesses in complying with federal and state environmental laws. These resources can 

help businesses understand their obligations, improve compliance and find cost-effective ways to 

comply through the use of pollution prevention and other innovative technologies. You and your 

management should assess which of these venues would be the most effective means to provide small 

entity compliance assistance regarding your rule. 

Websites. EPA offers a great deal of compliance assistance information and materials for small 

businesses on the following Websites: 

EPA's Home Page www.epa.gov 

EPA's Enforcement Policy and Guidance www.epa.gov/compliance 

EPA's Office of Enforcement and Compliance www.epa.gov/compliance 

Home Page 

EPA's Small Business Assistance Programs http://www.epa.gov/smallbusiness 

EPA' Small Business Compliance Policy www.epa.gov/Compliance/resources/ 

policies/incentives/smallbusiness/sbcp2000.pdf 

EPA's Small Business Ombudsman www.epa.gov/sbo 

Small Business Home Page www.smallbiz-enviroweb.org 

Hotlines. EPA sponsors approximately 89 hotlines and clearinghouses that provide free and 

convenient avenues to obtain assistance with environmental requirements. The Small Business 

Ombudsman Hotline can provide you with a list of all the hot lines and assist you with determining 

which hotline will best meet your needs. Key hotlines that may be of interest to you include: 

Clean Air Technical Center (919) 541 -0800 

RCRA/UST/CERCLA Hotline (800) 424-9346 

Safe Drinking Water (800) 426-4791 

Small Business Ombudsman (800) 368-5888 

Stratospheric Ozone/CFC Information (800) 296-1996 

Toxic Substances and Asbestos Information (202) 554-1404 

Wetlands Hotline (800) 832-7828 

Compliance Assistance Centers. EPA has established national compliance assistance centers, 

in partnership with industry, academic institutions, and other federal and state agencies, that 

provide on-line and fax back assistance services in several industry sectors heavily populated with 

small businesses. You can access each center directly at: 

83 
http://www.epa.gov/compliance/assistance/centers/index.html.
 

Agriculture 1-888-633-2155 or 

http://www.epa.gov/compliance/assistance/ 

sectors/agriculture.html 

Automotive 1-888-GRN-LINK 

www. ccar-greenlink. org 

Local Governments 1-877-TO-LGEAN 

www.lgean.org 

Metal Finishing www.nmfrc.org 

Paints and Coatings www.paintcenter.org 

Printing 1-888-USPNEAC 

www.pneac.org 

Transportation 1-888-459-0656 

www.transource. org 

State Agencies. Many state agencies have established compliance assistance programs that 

provide on-site as well as other types of assistance. Please contact your local state environmental 

agency for more information. EPA's Small Business Ombudsman can provide you with state agency 

contacts by calling (800) 368-5888. 

Compliance Policies Incentive. EPA's S mall Business Policy and Small Communities 

Policy are intended to promote environmental compliance among small businesses by providing 

incentives such as penalty waivers and reductions for participation in compliance assistance 

programs, and encouraging voluntary disclosure and prompt correction of violations. These 

policies can not be applied to enforcement actions that have already been initiated. 

84 
Chapter 8 

Periodic Review of Final 

Rules as Required by RFA 

Section 610 

8.1	 Introduction 

The Regulatory Flexibility Act (RFA) generally requires agencies to examine the impact of 

their proposed and final regulations on small entities. 49 Under section 610, the RFA also requires 

that agencies review rules which have or will have a significant economic impact on a substantial 

number of small entities (SISNOSE) within ten years of promulgation. The Small Business 

Regulatory Enforcement Fairness Act (SBREFA), enacted in 1996, added a judicial review 

provision to the RFA, which means the Agency can be challenged in court as to its compliance 

with the provisions of this section on a rule-by-rule basis. 

This chapter provides information on: 

� identifying rules subject to review, 

� performing a section 610 review, 

�	 ensuring your review meets section 610 requirements, and 

� publishing your results. 

8.2	 What's a Section 610 Review? 

In general, a section 610 review involves: 

�	 identifying a promulgated rule that was not certified, (i.e. did not contain a finding that 

there was no SISNOSE);50 

�	 determining if the rule should be amended, rescinded, or left unchanged, based on five 

statutorily prescribed factors; and 

49 Small entities are defined as small businesses, small governments, and non-profits that are not dominant in their 

Rules as Required by RFA Section 610
 

field, see Chapter 2 for more information . 

“Certification" means that the Agency determined that the rule had no SISNOSE, and stated this to be the case
 

in the published rule, see Chapter 1 for more information.
 

50 85 
�	 documenting the review and conclusions within 10 years of the date the rule was 

promulgated. 

8.3	 Are there Some Rules that are not Certified by EPA that will not have a Section 610 

Review? 

Yes. For EPA rules issued in 1992-1997, EPA went beyond the requirements of the RFA by 

preparing regulatory flexibility analyses for rules that would have any adverse impact on any 

number of small entities, regardless of the size of impact or number of small entities. In effect, 

many rules that we would otherwise have certified as not having a SISNOSE were not formally 

certified during this time period. After the RFA was amended in 1996 by the Small Business 

Regulatory Enforcement Fairness Act (SBREFA), EPA returned to its earlier practice of formally 

certifying rules with no SISNOSE under the RFA while continuing to offer outreach and 

accommodation to regulated small entities for those rules. EPA has identified eight rules issued 

before SBREFA was passed that were not formally certified yet do not and will not have a 

SISNOSE. EPA has determined that these eight rules are not subject to section 610 review, and, 

even if a section 610 review were conducted, revision of the rules would not be warranted. The 

rules were published in EPA's Regulatory Plan and semi-annual Regulatory Agenda, Spring 2003 

(Published May 19, 2003). 

8.4	 How Do We Identify and Track Rules for Review? 

Final rules that have or will have a significant economic impact on a substantial number 

of small entities (SISNOSE) are subject to section 610 review. Following promulgation of the final 

rule that EPA does not certify as not having a SISNOSE, we identify the rule in our Agency's 

database, the Rule and Policy Information and Development System (RAPIDS), as a rule that will 

require a Section 610 review. 

EPA tracks rules that may be subject to section 610 reviews through the use of an 

electronic section 610 Tracking Report in EPA's Rule and Policy Information and Development 

System (RAPIDS). The Report consists of three categories, as follows: 

I.	 Rules for which EPA has announced section 610 reviews, either completed or under way. 

Rules are listed in this category once an entry has been published in the semi-annual 

Regulatory Agenda announcing the section 610 review. This category tracks the rule title, 

date of final publication, initiation and completion dates of the section 610 review and 

the review decision, 

II.	 Rules that do not require section 610 reviews, and 

III.	 Rules that will need a section 610 review within ten years of promulgation. Rules are 

listed in this category if the rule is subject to notice-and-comment and promulgated 

without being certified. This category tracks the rule title, date of final publication, and 

review due date. 

EPA's Office of Policy, Economics and Innovation (OPEI) monitors the rules tracked in 

86 
this database. 

8.5 Scheduling Section 610 Reviews 

The RFA requires that we complete the review by the tenth year anniversary date of final 

publication. You may undertake a review any time within ten years of publication of the original 

final rule. Conducting the review close to the ten-year anniversary, however, allows a more 

focused perspective on any changed impacts on small entities. 

We will use the semi-annual Regulatory Agenda (published in the Federal Register) to 

provide public notice of the review. You must complete the review within one year of that public 

notice. The RFA does not require that you initiate or complete any regulatory action to amend or 

rescind the rule within that year, if it is determined that such action is necessary. 

8.6 Must We Review a Rule More than Once? 

There is no requirement to review a rule more than once. After you complete a review, 

and decide to rescind the rule, amend the rule or leave the rule unchanged, that completes the 

obligation under section 610. 

8.7 What If a Rule has been Subsequently Amended? 

The original, final rule as published in the Federal Register is the basis for section 610 

review. In some cases, a subsequent amendment may eliminate impacts on small entities so that 

there is no longer a SISNOSE. Under these circumstances, when the original rule comes up for 

its section 610 review, you must be able to adequately document the elimination of the 

SISNOSE, and publish this finding in the "Completed Actions" section of the semi-annual 

Regulatory Agenda. 

If an amendment reduces, but does not eliminate, a SISNOSE, then you should evaluate 

the need for a section 610 review based on current guidelines for SISNOSE thresholds (see 

Chapter 2). 

If a subsequent amendment has created, rather than eliminated, a SISNOSE based on 

current guidelines for SISNOSE thresholds , then the rule must be reviewed within ten years 

of the date of the published amendment. 

8.8 Do We Review a Rule or a CFR Part or Section? 

The RFA explicitly stipulates a review by rule, rather than by sections or parts in the 

Code of Federal Regulations (CFR). While we recognize that rules subsequently become 

amalgamated into the CFR and may lose their individual identity, the final rule as published in 

the Federal Register remains the basis for section 610 reviews. You will need to decide on a caseby-case basis if the rule can be sufficiently separated from its context in the CFR to do an 

adequate review. You may decide to include additional regulatory material to conduct a coherent 

and meaningful review. 

8
8.9 

(1) 

(2) 

1. 

2. 

Conducting the Review 

Once you have determined that your rule: 

is subject to the RFA, and 

was not certified, either at the time of promulgation or when amended, you are ready to 

conduct the section 610 review. 51 Bear in mind that section 610 does not require that you 

initiate a regulatory action to rescind or amend a rule within the one-year review period. 

It only requires that you complete the review in that time frame, publish your 

determination, and explain the basis for your decision. 

To conduct a section 610 review follow the three steps described below: 

Before you begin your review, develop an entry for each rule for the "Prerule" section of 

the Unified Agenda (also known as the semi-annual Regulatory Agenda), indicating that 

you will be conducting this review over the next year, and requesting public comment. 

You should also indicate in the abstract the length of the public comment period. 

Normally, this is 60 to 90 days. Contact your Regulatory Steering Committee 

representative for specific information about the semi-annual Regulatory Agenda exercise. 

The "Prerule" entry must: 

� state your intent to review the rule under section 610; 

� give a brief description of the rule; 

� explain the need for and legal basis of the rule; and 

� invite public comment on the factors listed below. 

You must specifically address and ask the public for comment on the following factors 

when performing a review under section 610: 

�	 the continued need for the rule; 

�	 the nature of complaints or comments received concerning the rule from the 

public since promulgation; 

�	 the complexity of the rule (i.e., can you make the rule less complex so that small 

entities can comply more easily?); 

�	 the extent to which the rule overlaps, duplicates or conflicts with other Federal 

rules, and, to the extent feasible, with State and local governmental rules; and 

�	 the length of time since the rule has been evaluated or the degree to which 

technology, economic conditions, or other factors have changed in the area 

affected by the rule. (Evaluate these factors to the extent that they affect small 

51	 Over time, EPA's definition of SISNOSE has evolved to meet new statutory and administrative requirements, 

and therefore the threshold for performing a regulatory flexibility analysis has changed as well. If your section 

610 rule does not meet current guidelines for SISNOSE, you should take this into account when conducting 

the section 610 review, e.g., if a final regulatory flexibility analysis was performed under a more expansive 88 reading of SISNOSE, you should note this in a justification for letting a rule stand. For guidance on SISNOSE, 

see Chapter 2. 
entities, not the entire regulated universe.) 

See Section 8.13 for an example of a "Prerule" section 610 entry in the semi-annual 

Regulatory Agenda. 

3.	 You must explicitly consider all of these factors in your review, and document the results, 

either positive or negative. The results of the review - either to rescind, amend or leave the 

rule unchanged - are published in the "Completed Actions"section of the semi-annual 

Regulatory Agenda and are placed in your program office docket. 

8.10	 Does the Line-by-line Review also Satisfy Section 610 Requirements? 

A line-by-line reinvention review qualifies as a section 610 review if you address the 

required factors stated above, request public comments, and adequately document the review. 

Contact your Regulatory Steering Committee representative or OGC if you are not sure that the 

review meets the section 610 requirements. In most cases you will need to develop a separate 

"Prerule" entry for the section 610 portion of the line-by-line review, and proceed with an 

independent analysis. 

8.11	 Announcing the Results of the Review 

The results of this review -- either to rescind, amend or leave the rule unchanged -- will 

be published in the "Completed Actions" section of the semi-annual Regulatory Agenda one year 

from the time it was identified in the "Prerule" section of the semi-annual Regulatory Agenda. 

You should use the "long form", i.e., the one that allows an abstract, so that you can explain your 

determinations. Supporting documents should be placed in the public docket. (See Section 8.14 

for an example of a "Completed Action" entry in the semi-annual Regulatory Agenda.) 

8.12	 Follow-up to the Section 610 Review 

You should follow any decision to amend or rescind the rule with an entry in the 

"Prerule" or "Proposed Rules" section of a subsequent semi-annual Regulatory Agenda 

8.13	 Example of "Prerule" Semi-annual Regulatory Agenda Entry 

The following example is intended to be used as a guide, not a template. 

To initiate a 610 Review, you should prepare a semi-annual Regulatory Agenda entry by 

completing an Action Initiation Form (AIF). Each office has different procedures for preparing 

and submitting their AIF's. Your Regulatory Steering Committee representative can tell you what 

the procedure is for your office. Regulatory Steering Committee members are listed in the 

"Contacts" section of the Action Development Process Library. The address is: 

http://intranet.epa.gov/adplibrary. 

Title: ACCIDENTAL RELEASE PREVENTION REQUIREMENTS: RISK MANAGEMENT 

PROGRAMS UNDER THE CLEAN AIR ACT, SECTION 112(R)(7) (SECTION 610 REVIEW) 

Priority: Substantive, Nonsignificant 

89 
Legal Authority: 42 USC 7412 (r)
 

CFR Citation: 40 CFR 68
 

Legal Deadline: None
 

Abstract:
 

The Agency promulgated the Accidental Release Prevention Requirements on June 20, 1996 (61 

FR 31668). The regulations apply to all stationary sources with processes that contain more than 

a threshold quantity of a regulated substance. Processes are divided into three categories based on 

the potential for offsite consequences associated with a worst-case accidental release; accident 

history; or compliance with the prevention requirements under OSHA's Process Safety 

Management (PSM). Processes that have no potential impact on the public in the case of an 

accidental release have minimal requirements. For other processes, sources must implement a 

risk management program that includes more detailed requirements for hazard assessment, 

prevention, and emergency response. Processes in industry categories with a history of accidental 

releases and processes already complying with OSHA's PSM are subject to prevention program 

requirements that are virtually identical to parallel elements of the OSHA standard. All other 

processes are subject to streamlined prevention requirements. All sources must prepare a risk 

management plan based on the risk management programs established at the source. The sources 

submit the plan to EPA. The first submission was on June 20, 1999. Some sources re-submitted 

their plans or revised their plans after the first submission. The second submission was due on 

June 20, 2004. There are approximately 15,000 sources subject to the accidental release 

prevention regulations. This new entry in the Regulatory Agenda announces that EPA will review 

this regulation pursuant to section 610 of the Regulatory Flexibility Act (RFA) (5 U.S.C. 610). 

EPA solicits comments on the following factors: (1) The continued need for the rule; (2) the 

nature of complaints or comments received concerning the rule from the public since 

promulgation; (3) the complexity of the rule; (4) the extent to which the rule overlaps, duplicates 

or conflicts with other Federal rule, and to the extent feasible, with State and local governmental 

rules; and (5) the length of time since the rule has been evaluated or the degree to which 

technology, economic conditions, or other factors have changed in the area affected by the rule. 

In the Agency's view, there is a continued need for the rule because it calls on sources to reduce 

the probability and adverse consequences of accidental releases of substances that have the 

potential to cause immediate harm to public health and the environment, and stimulates 

dialogue between industry and the public to improve accident prevention and emergency 

response practices. The Agency has received few complaints about this rule from small 

businesses. The Agency has developed many guidance documents to help small entities comply 

with the rule. Efforts were made to minimize the burden and complexity of the rule by taking a 

tiered approach. In other words, entities with complex processes have to follow more rigorous 

requirements and those with simple processes follow only some of the requirements. EPA 

believes that there is no conflict or overlap between this rule and any other rule except for 

OSHA's PSM rule as indicated above. This is the first time the rule has been evaluated under the 

RFA section 610. EPA has established a public docket for this effort, Docket No. OAR-2005­

0166 at http://www.epa.gov/edocket. 

Timetable: 

Action Date 

Begin Review 10/00/05 

Comment Period End 01/00/06 

End Review 04/00/06 

Regulatory Flexibility Analysis Required : No
 

Small Entities Affected: No
 

Government Levels Affected: None 90 
____________________________________________________________________________ 

Additional Information : SAN No. 5018 

Agency Contact: Sicy Jacob, Environmental Protection Agency, Solid Waste and Emergency Response, 5104A, 

Washington, DC 20004 Phone: 202 564-8019 Fax: 202 564-2625 Email: jacob.sicy@epa.govVanessa Rodriguez, 

Environmental Protection Agency, Solid Waste and Emergency Response, 5104A, Washington, DC 20460 Phone: 

202 564-7913 Fax: 202 564-2625 Email: rodriquez.vanessa@epa.gov RIN: 2050-AG26 

8.14 Example Entry for Completed Section 610 Review 

The following example is intended to be used as a guide, not a template. 

All of EPA's semi-annual Regulatory Agenda entries are submitted to OMB via EPA's Rule 

and Policy Information and Development System (RAPIDS). Your pre-rule entry announcing the 

review (Regulatory Agenda Review Form) is still in RAPIDS. Update your abstract to indicate the 

results of your review. Insert the date the review ended, and insert either "Rule will remain in 

effect without modification", or "New rulemaking started, see SAN # ( insert SAN# of newly 

started rulemaking.) Each office has a different system for updating and submitting Agenda 

entries. Your Regulatory Steering Committee representative will give you appropriate instructions 

when it is time to prepare your semi-annual Regulatory Agenda entry. 

Title: LEAD; REQUIREMENTS FOR LEAD-BASED PAINT ACTIVITIES IN TARGET HOUSING 

AND CHILD-OCCUPIED FACILITIES (Completion of a SECTION 610 REVIEW) 

Priority: Info./Admin./Other 

Legal Authority: TSCA 402 and 404; 15 USC 2682; 15 USC 2684 CFR 

Citation: 40 CFR 745 subpart L; 40 CFR 745 subpart Q 

Legal Deadline: None 

Abstract: In August, 1996, the Environmental Protection Agency (EPA) promulgated regulations 

under section 402 of the Toxic Substances Control Act (TSCA) to ensure that individuals 

conducting lead-based paint activities in target housing and child-occupied facilities are properly 

trained and certified, that training programs providing instruction in such activities are 

accredited and that these activities are conducted according to reliable, effective and safe work 

practice standards. EPA also finalized a Federal regulation under section 404 of TSCA that allows 

States and Indian tribes to seek authorization to administer and enforce the regulations 

developed under section 402 for the training and certification of individuals conducting LBP 

activities and the accreditation of training programs for LBP activities in 1996 (August 29, 1996, 

61 FR 45778). EPA performed an analysis of the potential impacts on small entities and 

determined that this action is likely to have a modest adverse economic impact on a substantial 

number of small entities. The TSCA section 404 regulations became effective August 29, 1998. 

The final rule then provided for an additional phase- in period for the requirements for training 

program accreditation, individual and firm certification, and work practice standards. 

Regulations for accreditation of training programs became effective on March 1, 1999. 

Regulations for certification of individuals and firms became fully effective on March 1, 2000. 

EPA is reviewing the 1996 regulation pursuant to section 610 of the Regulatory Flexibility Act (5 

USC 610). The purpose of this review is to determine whether the rule should be continued 

without change, or should be amended or rescinded, to minimize economic impacts on small 

entities while still complying with the provisions of the Toxic Substances Control Act (TSCA). 9
EPA has already solicited comment on the continued need for the rule; the complexity of the 

rule; the extent to which it overlaps, duplicates, or conflicts with other Federal, State, or local 

government rules; and the degree to which technology, economic conditions or other relevant 

factors have changed since the rule was promulgated. No comments were received, and EPA has 

concluded that the rule needs no revisions at this time to minimize impacts on small entities. See 

EPA Docket ID number OPPT-2003-0015 at www.epa.gov/edocket. 

Timetable: 

Action Date FR Cite 

Final Action 1 08/29/96 61 FR 45778 

Begin Review 05/27/03 68 FR 30942 

Comment Period End 12/22/03 68 FR 73 543 

End Review 12/13/04 69 FR 73889 

Regulatory Flexibility Analysis Required: No 

Small Entities Affected: No 

Government Levels Affected: None 

Additional Information: SAN No. 4788, EDocket No. OPPT-2003-0015; 

Agency Contact: Cindy Wheeler, Environmental Protection Agency, Office of Prevention, 

Pesticides and Toxic Substances, 7404T, Washington, DC 20460 Phone: 202-566-0484 Fax: 202 

566-0470 Email: wheeler.cindy@epamail.epa.gov Julie Simpson, Environmental Protection 

Agency, Office of Prevention, Pesticides and Toxic Substances, 7404T, Washington, DC 20460 

Phone: 202-566-1980 Fax: 202 566-0471 

Email: simpson.julie@epamail.epa.gov 

RIN: 2070-AD65 

8.15 Section 610 Judicial Review 

The 1996 SBREFA amendments to the RFA gave small entities adversely affected by a rule 

the right to seek judicial review of our compliance with the requirements of section 610. A 

reviewing court has wide discretion in deciding what the appropriate remedy should be for an 

Agency's failure to comply with section 610, including remanding the rule or deferring 

enforcement of the rule against small entities, unless the court finds that continued enforcement 

of the rule is in the public's interest. 

92 
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