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80–166 2013

REGULATING THE REGULATORS—REDUCING 

BURDENS ON SMALL BUSINESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

MARCH 14, 2013 

Small Business Committee Document Number 113–005 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missour 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

SBREP-219 with DISTILLER

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. David Schweikert ........................................................................................... 1 

Hon. Yvette Clarke .................................................................................................. 1 

WITNESSES 

Winslow Sargeant, Ph.D., Chief Counsel for Advocacy, United States Small 

Business Administration, Washington, DC ....................................................... 2 

Marc D. Freedman, Executive Director, Labor Law Policy, United States 

Chamber of Commerce, Washington, DC ........................................................... 14 

Carl Harris, Vice President and General Manager, Carl Harris Co., Inc., 

Wichita, KS, on behalf of the National Association of Home Builders ............ 16 

Rena Steinzor, Professor, University of Maryland Carey Law School, Baltimore, MD .............................................................................................................. 17 

APPENDIX 

Prepared Statements: 

Winslow Sargeant, Ph.D., Chief Counsel for Advocacy, United States 

Small Business Administration, Washington, DC; Report on the Regulatory Flexibility Act FY 2012; and Letter to Hon. Schweikert and 

Hon. Clarke ................................................................................................... 27 

Marc D. Freedman, Executive Director, Labor Law Policy, United States 

Chamber of Commerce, Washington, DC .................................................... 106 

Carl Harris, Vice President and General Manager, Carl Harris Co., Inc., 

Wichita, KS, on behalf of the National Association of Home Builders ..... 115 

Rena Steinzor, Professor, University of Maryland Carey Law School, Baltimore, MD .................................................................................................... 125 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

Letter from Associated Builders and Contractors, Inc. (ABC), Kristen 

Swearingen, Senior Director, Legislative Affairs ....................................... 199 

Letter from Thomas Sullivan, Former Chief Counsel for Advocacy and 

Jere Glover, Former Chief Counsel for Advocacy ....................................... 200 

Letter from the National Automatic Merchandising Association (NAMA), 

Carla Balakgie, FASAE, CAE, President and CEO, NAMA ..................... 202 

Letter from National Federation of Independent Business (NFIB), Susan 

Eckerly, Senior Vice President, Public Policy ............................................. 204 

Letter from National Roofing Contractors Association (NRCA), Bruce 

McCrory, Kiker Corp., Mobile, AL, President, NRCA ................................ 206 

Letter from NTCA-The Rural Broadband Association, Tom Wacker, Vice 

President of Government Affairs ................................................................. 208 

Letter from American Trucking Associations (ATA), David J. Osiecki, 

Senior Vice President ................................................................................... 210 

Letter from Trade Groups ................................................................................ 212 

Letter from the National Association of the Remodeling Industry (NARI), 

Mary Busey Harris, CAE, Executive Vice President ................................. 215 

Letter from the National Restaurant Association, Angelo I. Amador, Esq., 

Vice President, Labor & Workforce Policy and Ryan P. Kearney, Manager, Labor & Workforce Policy ................................................................... 217 

Letter from the National Retail Federation (NRF), David French, Senior 

Vice President, Government Relations ........................................................ 218 

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IV 

Additional Material for the Record—Continued 

Letter from the Small Business & Entrepreneurship Council (SBE Council), Karen Kerrigan, President & CEO ...................................................... 220 

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(1) 

REGULATING THE REGULATORS—REDUCING 

BURDENS ON SMALL BUSINESS 

Thursday, March 14, 2013 

HOUSE OF REPRESENTATIVES

COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND

REGULATIONS

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. David Schweikert 

[chairman of the subcommittee] presiding. 

Present: Representatives Schweikert, Bentivolio, Chabot, Clarke, 

and McLane Kuster. 

Chairman SCHWEIKERT. Good morning. I want to welcome everyone to our Subcommittee. And Ranking Member Clarke, I look 

forward to this. I am learning lots of things. I had the opportunity 

to read everyone’s testimony last night, and at today’s hearing we 

are going to focus on the Regulatory Flexibility Act (RFA), analyze 

the impacts of these regulations and the mechanics and the advocacy you do for small business. 

Once again, in much of the reading last night, there was the constant theme of the danger of a regulation that is maybe ‘‘one size 

fits all’’ and yet how radically different the sizes of our business organizations are across our country. There is one thing I am going 

to personally sort of keep as a theme and look for, is I found in 

much of this binder a lack of sort of data. Here is the flow. Here 

is how we actually make the decision. 

Dr. Sargeant, as you give us your testimony and then we engage 

in some of the conversation, my understanding is you may have a 

few thousand rule sets that are ultimately floating across your 

desk. How do you triage that? How do you make a decision that 

these are the 40 or 50 that are most impactful? And in reality, you 

are not going to catch everything, but I am sort of curious of your 

methodology. And also suggestions from you and the rest of the 

witnesses on how we can make the process work even better. Remember, this is a law that has been around since the late Carter 

Administration. In that time set, the world has changed a lot. 

What do we do to continue to make this work for our small businesses out there? 

Ranking Member? 

Ms. CLARKE. Thank you, Mr. Chairman. And thank you for 

your indulgence this morning. When you are in the minority you 

wear multiple caps. I happen to also be a ranking member on 

Homeland Security, and we had a briefing this morning. 

It is wonderful to be here and to have you here, Dr. Sargeant, 

to give us your perspective. (To the Chairman) I would like to 

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2 

thank you for holding today’s important hearing. Our nation’s regulatory structure is absolutely vital in protecting the public. The fact 

is, without regulations our air would be less pure, our water unsafe 

to drink, and employee would potentially be subject to unsafe and 

hazardous working conditions. That said, most evidence points to 

a disproportional impact on small businesses with regards to regulatory compliance. Our small businesses and entrepreneurs simply 

do not have the economies of scale to mitigate the costs that large 

corporations do in this regard. 

With that in mind, Congress passed the Regulatory Flexibility 

Act to ensure that the concerns of small firms were taken into account during the regulatory process. Past concerns regarding agency failure to initiate a regulatory flexibility analysis of a pending 

rule makes monitoring performance in this area critical. Agencies 

have certified that a proposed rule would not have a significant impact on small businesses when the exact opposite becomes evident 

after the fact. In some cases, analysis by the agencies have been 

lacking altogether; thus, limiting the effectiveness of the law and 

shortchanging America’s entrepreneurs. For this act to maintain its 

legitimacy, it is vital that its processes and requirements be used 

appropriately to make regulations more targeted, efficient, and effective. 

For small businesses, regulation can be a two-sided coin. While 

no entrepreneur wants to pay more or comply with unnecessary 

rules, effective regulation can prevent unfair practices that will 

benefit large companies at the expense of our small business community causing harm to the public interest. In that regard, our 

goal should not be the short-sighted removal of all regulations but 

rather make the process smarter, fairer, and one that protects the 

public good while minimizing the impact on our nation’s small 

businesses. 

Again, I thank you, Mr. Chairman. And I yield back. 

Chairman SCHWEIKERT. Thank you. Doctor, I know you have 

testified before, but also for our future witnesses, mechanics are 

fairly simple. You know, five minutes, green light start, yellow 

light go faster, red light, an idiosyncrasy, and this will be for everyone, I am going to let you finish at least your thought. And with 

that, Dr. Sargeant, let me do a quick introduction for you. 

Dr. Winslow Sargeant was appointed by President Obama and 

confirmed by the United States Senate as the sixth chief counsel 

advocate for the United States Small Business Administration. The 

Chief Counsel for Advocacy is charged with monitoring agency compliance with the Regulatory Flexibility Act and is required to annually report to Congress on his findings. Welcome. Your five minutes 

begins. 

STATEMENT OF WINSLOW SARGEANT, PH.D., CHIEF COUNSEL 

FOR ADVOCACY, UNITED STATES SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C. 

Mr. SARGEANT. Chairman Schweikert, Ranking Member 

Clarke, and Members of the Subcommittee, I am Dr. Winslow 

Sargeant, chief counsel for advocacy. Thank you for the invitation 

to appear before you today to discuss the important issue of agency 

compliance with the Regulatory Flexibility Act or RFA. 

SBREP-219 with DISTILLER

3 

Congress created the Office of Advocacy in 1976 to be a voice for 

small business within the federal government. Advocacy’s mission 

is to advance the views, concerns, and interests of small business 

before Congress, the White House, federal agencies, federal courts, 

and policymakers. We work with federal agencies in the rule-making process to implement the requirements of the RFA. Under the 

RFA, agencies must consider the effects of their proposed rules on 

small businesses. When an agency finds that a proposed rule may 

have a significant economic impact on a substantial number of 

small entities, the agency must consider significant alternatives 

that would minimize the burden on small entities while still 

achieving the original goal of the regulation. 

Advocacy works with federal agencies in a number of ways to improve their RFA compliance and to ensure the concerns of small 

businesses are considered during the rulemaking process. Much of 

Advocacy’s work with agencies is at the confidential preproposal 

stage when agencies are working through the regulatory development process. Advocacy continues to expand its stakeholder outreach by hearing directly from small firms and their representatives. This also gives agency rule writers a chance to hear particular small business concerns. In total, we have convened 84 

roundtables since I became chief counsel. 

Advocacy sends public comment letters that explain small business concerns about certain regulations and other proposals to 

agencies when warranted. As chief counsel, I have signed more 

than 90 public comment letters on a variety of topics. Three agencies are required to conduct a panel to gather comments from small 

entity representatives on a proposed regulation when it may have 

a significant economic impact on small businesses. They are EPA, 

OSHA, and now the CFPB. These panels include representatives 

from the rulemaking agency, OIRA and Advocacy. In the last two 

years, we have participated in a dozen Small Business Regulatory 

Enforcement Fairness Act (SBREFA) panels, including the first 

three panels ever by the CFPB. 

Having generally explained how the Office of Advocacy works 

with agencies, I am pleased to report that agencies continued to 

improve their compliance with the RFA in fiscal year 2012. A detailed analysis of this compliance can be found in Advocacy’s report 

on the Regulatory Flexibility Act fiscal year 2012 which I delivered 

to Congress last month. I ask that a copy of this report be submitted in its entirety into the record. Agency compliance with the 

RFA pays real dividends to America’s small businesses. In fiscal 

year 2012, Advocacy’s RFA work saved small businesses $2.4 billion in first year regulatory costs and another $1.2 billion in annually recurring costs. 

The RFA and bipartisan efforts to enhance it have made this 

critical small business law more effective in reducing the regulatory burdens on small entities when regulations are still in the 

development stage. The willingness of agencies to attend the 

roundtables at Advocacy and hear directly from small businesses 

has been a welcome development resulting in improved agency 

compliance with the RFA. We have learned through our more than 

30 years of experience with the RFA that regulations are more effective when small firms are part of the rulemaking process. The 

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4 

result of enhanced agency cooperation with Advocacy and improved 

agency compliance with the RFA benefits small business, their regulatory environment, and the overall economy. 

Finally, I was invited here to testify on agency compliance with 

the RFA. I understand testimony in the second panel contains numerous misrepresentations of my office. I would like to reserve the 

right to respond in detail in the record to these inaccurate allegations. 

Thank you again for the opportunity to testify on the important 

work the Office of Advocacy does on behalf of small businesses. I 

would be happy to take any questions you might have. 

Chairman SCHWEIKERT. Thank you, Doctor. 

And do understand, when we finish up the hearing I believe 

these Committees have, what, five days for any additional written 

testimony. So if you hear something that you think needs more detailed explanation, please give it to us. 

Doctor, you and I started a conversation as we were passing in, 

and first was the methodology of how you do your job. It is 2013. 

There is literally a few thousand rule sets out there in some type 

of promulgation. How do you decide what you are going to focus 

on? 

Mr. SARGEANT. Well, Chairman Schweikert, there are a number of ways that the Office of Advocacy is engaged in making sure 

that the rules that are at the preproposal stage and also those that 

are being proposed that we are in touch to make sure that we are 

on top of all the right issues. We have a number of regional advocates who are out in the field who are in touch with small businesses. We hear their concerns. Under the RFA, when a rule will 

have a significant economic impact on a substantial number of 

small entities—now that is the determination by an agency themselves, not the Office of Advocacy—the agency must contact us to 

let us know that this rule is coming and they believe it is going 

to have a significant economic impact. So that is one way. They 

have to notify us that this rule is coming. 

We also have a number of attorneys in the office that work directly with their counterparts at the agency, so they tell us what 

rules are coming. There is a regulatory agenda that is published, 

so we kind of see that is one input that we have as a roadmap of 

what is coming down the pike. So there are many ways that we are 

in touch. 

Chairman SCHWEIKERT. In our time of doing this, and so you 

have a methodology where the agencies are telling you this is going 

to cost a certain amount and you are trying to track, have you had 

the experience where the feedback you are getting from outside advocacy groups are telling you dramatically different dollars, burden 

compared to what you are actually being told from the agency? And 

how do you split that sort of arbitrage? How do you make that decision? How do you triage that? 

Mr. SARGEANT. Well, what we do, it is important for us to have 

firsthand contact with those who are going to be impacted by these 

rules. When a rule is proposed we will reach out. There are many 

ways that we will reach out to trade associations, to actual small 

businesses themselves to gauge from them how this rule will impact their business. And from that we may have a roundtable 

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5 

where we will invite the agencies themselves to come and to share 

with us and with small business owners why this rule is necessary 

and how it will impact them. 

Chairman SCHWEIKERT. Do you often run into the experience 

where the vision between sort of the small businesses or small 

business advocacy groups and what the agency is a chasm? 

Mr. SARGEANT. Well, that is why I have signed more than 90 

comment letters in terms of that there are times where what we 

are hearing from small business owners in terms of what the impact of those rules will be, and what we are hearing from those 

who are actually writing the rules, there is a disconnect. In our report, one of the main reasons we may write a comment letter is 

that we believe that there may be a certification that this rule will 

not have a significant economic impact, but what we are hearing 

is that it will. And so that is where the disconnect will be. So that 

is the feedback that we will give to the rule writers. 

Chairman SCHWEIKERT. Doctor, do you believe your feedback 

is being respected by many of those regulatory agencies? 

Mr. SARGEANT. Well, we generally have a good working relationship with agencies. They tend to do a good job. Under Executive Order 13272, that was signed by George W. Bush, agencies are 

required to respond to what we write. And so when we say in writing that we believe this rule will have this effect, they have to come 

back and just give some feedback. 

Chairman SCHWEIKERT. Only two others. One may not be as 

quick as the other. 

You have been working with the CFPB? 

Mr. SARGEANT. Yes. 

Chairman SCHWEIKERT. Wide swath regulatory authority from 

the community lender to the community bank. First, how has that 

relationship been for you, your organization? Do you feel you are 

getting input? But also seeing how they are a new regulatory organization, do you see the discipline being built for them to actually 

take your feedback and understand and listen? 

Mr. SARGEANT. We have a good relationship with CFPB. And 

I guess one of the benefits of a new agency is that we can help to 

train them. And so what we did when the agency was formed 

under Dodd-Frank, and as you know under Dodd-Frank they are 

now one of the three covered agencies that must conduct panels. 

And so what we did, even before they started to write rules, we 

would invite folks from CFPB to come over to the Office of Advocacy so we can walk them through what the RFA is, how to conduct 

a panel, what are some of the best practices. And so far there have 

been three panels. And we work with them on who they should invite. Of course, it is up to the agencies themselves in terms of who 

will be invited to the panel, but we do have a say as one of three 

heads that will be part of the panel. And so out of the three panels, 

the feedback that I have gotten from small businesses, they are 

pleased that their input has been taken seriously. 

Chairman SCHWEIKERT. Okay, Doctor. And the last one, and 

this is sort of, and for the panel as we go through this year, it sort 

of becomes a universal question I would like to ask, and it may be 

from the statute you operate under or the rule sets you have built 

for yourselves, what works? What does not work? If you could walk 

SBREP-219 with DISTILLER

6 

in right now and say ‘‘I wish this was changed in my statute that 

would make us more effective,’’ what would you change? 

Mr. SARGEANT. Well, the RFA has been around for more than 

30 years, and we feel that it has worked well. But of course, there 

are always ways that one could tweak it to actually make it more 

effective. And so under my legislative priorities I have submitted 

three recommendations to strengthen the RFA. One is dealing with 

the SBREFA panel process. What we see under 609(b) is that when 

I am notified that a panel will take place there is a 15-day gap that 

a panel can actually start. What we are saying is that for the SERs 

or for those who are going to be part of the panel, they need to 

have the data so they can contribute. It does not make sense to 

have a panel and then those who are at the table are not able to 

see the data and see why this rule is being crafted. So we believe 

that by having a gap of say, maybe, 60 days, then the agency will 

have more time to make sure that the data gets out to those that 

will be on the panel. So that is one. 

Two, under the RFA Section 610, every year agencies are required to look at rules that are 10 years old to see whether or not 

those rules are needed. There is not a systematic process in terms 

of how each agency goes through that. One agency can say, well, 

we looked at the rule. It looks good. And then, and so believe—— 

Chairman SCHWEIKERT. And you wrote about this in the past? 

Mr. SARGEANT. Yes. 

Chairman SCHWEIKERT. Were you not sort of writing also that 

you were concerned how many agencies may or may not really be 

doing it? 

Mr. SARGEANT. Yes. And so there should be a systematic process. So under 610, we believe that one should have a systematic 

process to look at the rules that are more than 10 years old and 

to see whether or not those rules are needed. But also look at the 

cost benefit is because a rule goes into effect because we are trying 

to achieve some regulatory action. Let us see what has taken place 

and see whether or not that rule is needed. So that is two. 

Third, the RFA deals with direct impacts on small business, but 

we also know that there is what we call the near, foreseeable indirect effects. There are those that might be affected by new products 

and services, and so one may say, well, it is not a direct effect but 

we can see that what we call the circle, that one circle out, that 

there is an effect. And so we want agencies, and so when we train 

agencies in terms of how to comply with the RFA, we also tell 

them, yes, the language says you have to consider the direct effect 

on small entities. But also, we also want you to look at what is the 

near foreseeable indirect effect as well. 

Chairman SCHWEIKERT. All right. Thank you, Doctor. Ranking 

Member. 

Ms. CLARKE. Thank you, Mr. Chairman. And let me welcome 

Dr. Sargeant to the Subcommittee today once again. I would like 

to take a moment just to express my appreciation to you and your 

staff and your New York regional advocate, Terry Coaxum to inquiries from my office in the past, and I look forward to continuing 

that work in relationship over the course of the 113th Congress. 

Just as a follow-up to your last response to our chairman, some 

say the biggest loophole in the RFA is the fact that it does not reSBREP-219 with DISTILLER

7 

quire agencies to analyze indirect impacts. Legislation has been approved by this Committee in the last two congresses that would 

have required agencies to consider foreseeable indirect impact of 

regulations or small firms. Would you be supportive of such a 

change to the RFA? And why? 

Mr. SARGEANT. Yes, I would be supportive. And we actually 

train agencies under Executive 13272, we are charged to train 

agencies on how to comply with the RFA. And in our training we 

tell them, yes, the RFA states you have to consider the direct effects, but we also have asked them to consider also what you call 

the foreseeable. Because we recognize that there is an impact. And 

when we talk with small business owners themselves, they see that 

their products, their services have been impacted by a particular 

regulation. And so I would be supportive of making sure that agencies take into account what we call the foreseeable. 

I also know that agencies, when you say—because we can measure what the direct impact is—once you say indirect effects, that 

is what I call this broad loop. So that is why we focus on what is 

called the near foreseeable. It is close. At some point everything 

could be tied in. And so I would be supportive and I would welcome 

the opportunity to work with you on how we can define what are 

the near foreseeable indirect effects. 

Ms. CLARKE. Wonderful. And I think our chairman is interested 

in looking at how we can get that done. 

My second question is twofold. Could you first give us a broader 

picture of your progress in ensuring the agencies are fully complying with the RFA? And then secondly, in requesting further 

compliance can you explain to us the effect of sequester that the 

sequester will have on the Office of Advocacy’s ability to carry out 

its mission with regards to the regulatory burden on small businesses? 

Mr. SARGEANT. Each year we put out a report on agency compliance with the RFA, and I have submitted for the record which 

agencies. Most agencies do a good job but some, we continue to 

work with them and we are pleased that the president, under Executive Order 13563, has mandated that agencies work with Advocacy to make sure that rules that are coming down the pike that 

they, yes, they can promote health and safety, but also take into 

account the impact of those rules on small business. And so we 

have support from the administration, and so we work with agencies to make sure that they understand the RFA and we train 

them. And so we also have roundtables. Roundtables that are open 

to the public. We invite officials from the agencies so they can hear 

directly from small businesses. And so that is one way that we 

work with agencies on how they can comply. 

With regard to the sequester, yes, we have been significantly impacted by the sequester. We have been hit roughly about 5.2 percent in terms of our budget, and so we are going to lose about 

$460,000. And although we are not going to lose people or I do not 

have to furlough people, we are going to take a big hit to our research budget. 

This office is founded on two goals. It is our research and the 

regulatory mandate. We believe that good research leads to sound 

regulation, but you have to have the research. So by not having 

SBREP-219 with DISTILLER

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that funding, we are going to lose roughly six to seven research reports that we would normally put out and so that is the concern 

I have because we believe that good data leads to sound regulation. 

Ms. CLARKE. Then finally, one of the ongoing concerns with the 

RFA has been the ability of agencies to continually forgo the requirement in section 610 that requires periodic review of the rules. 

How is President Obama’s Executive Order 13563, which requires 

retrospective agency review of regulations meshing with the requirement of this section? 

Mr. SARGEANT. Well, we were pleased that Executive Order 

13563 came out because what it did is that it reminded agencies 

that this is a requirement and it dovetailed very nicely with 610. 

And so we have been working with OIRA. We have been working 

with agencies. We have shared with agencies rules that are on the 

books right now that we have heard from small businesses that are 

problematic or they have concerns with. And so we continue to 

work with agencies. We were pleased that Executive Order 13579 

not only dealt with those that are part of the Executive branch, but 

also the independent agencies because the independent agencies 

sometimes feel that they do not have to comply with the RFA. And 

so that was a recommendation. We were pleased that E.O. 13563 

and E.O. 135610 reminded agencies you must comply with retrospective review. And also, there has been great outreach by us to 

work with agencies on how to comply. And so we are seeing more 

progress. We are seeing more agencies asking us to help them, to 

train them, and so we have been very busy these past couple of 

years. We have trained more than 100 staffers per year now on 

how to comply with the RFA. So I do believe that there is a desire 

to look at rules that are on the books. So that has been working 

well. 

Ms. CLARKE. Very well. Thank you so much, Dr. Sargeant. And 

I yield back, Mr. Chairman. 

Chairman SCHWEIKERT. Thank you, Ranking Member. And 

my friend from Michigan. Five minutes. 

Mr. BENTIVOLIO. Thank you, Mr. Chairman. 

As I traveled throughout my district in Michigan, business leaders tell me the same thing over and over again—it is too hard to 

start or expand my small business because I can barely understand 

how to comply with the latest regulations that have come out of 

Washington. And they are right. 

Over the last four years the number of business regulations has 

skyrocketed and the result has been the worst economic recovery 

in nearly a century. We have had such a weak economic growth 

that I am not even sure we can call it a recovery. The millions of 

people still out of work sure have not recovered. I once believed 

that this was a nation of laws; instead, I find this is not a nation 

of laws, rather a nation of regulations. A ‘‘regunation’’ if you will. 

My question, Dr. Sargeant, is, well, I had a few businessmen tell 

me that once they are complying or working with a regulatory 

agency after they have worked six months or a year the executive 

changes—there are changes and that kind of thing—and then the 

new person that comes in to replace the old executive has a whole 

set or new set of regulations they want these businesses to adhere 

SBREP-219 with DISTILLER

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to. Do you see this as a problem? And if so, how would we correct 

that? 

Mr. SARGEANT. Well, what we try to do is to work with agencies to make sure that they understand how a particular rule will 

impact small businesses. But we also work with agencies because 

we do not block rules or make rules less effective, but we work 

with agencies so that they achieve their regulatory goal. But also 

work with agencies in terms of compliance. Because what we hear 

many times is that small businesses, they want to comply but 

sometimes they do not know how. And so there is a provision within the RFA that when you put forth a rule, that you should also 

put forth a document on how to comply with the rule. And so with 

our regional advocates who are out in the field, we work directly 

with small businesses. We also recognize that rules, yes, we focus 

at the federal level, but there are also rules at the local and state 

level. And as a small business owner, as someone who has run a 

small business, I did not look at a rule, okay, this is a federal rule, 

this is state, this is a local rule, I looked at it as a rule and how 

am I going to comply? And so that is why we work with states on 

how to enact a state version of the RFA. 

My predecessor worked hard on how to make sure that there is 

a process that when rules are put forth, even at the state level, 

that there is feedback from small entities, but also there is a way 

to comply. And once that is a process, we hope that as people 

change that that process is clear, transparent, and predictable. 

Mr. BENTIVOLIO. So what does a business do if, for instance, 

and I do not really think you answered my question. A business is 

working with a branch of regulatory agency and the executive 

comes in and says I want to focus on these regulations and then 

six months or a year later another person replaces that person at 

the regulatory agency and comes up with a whole new agenda. And 

so sometimes, according to my small businesses that I have talked 

to at my small business roundtables in my community and my district, say that, well, they have a whole set of different rules and 

it is kind of like they have to drop what they are doing trying to 

comply with one set to go in with a different set. Do you understand? 

Mr. SARGEANT. Yes. Well, that is part of the regulatory agenda 

because each year, twice a year, agencies are required under the 

RFA to put forth what rules they are going to work on. And if the 

rule will have a significant economic impact on a substantial number of small entities, that is the language, they have to contact us. 

They are required to put what is called an IRFA. That is part of 

the RFA. They need to do the analysis to say how this rule will impact small entities. And so there is a process that must be followed 

and it is through the RFA. And that is where we get to comment. 

We work with agencies to make sure that small entities will have 

a say within the process. So the RFA works when agencies work 

with us and we reach out to agencies to bring in small entities so 

they can have a say. 

Mr. BENTIVOLIO. Thank you very much, Doctor. I yield back 

my time. 

Chairman SCHWEIKERT. Thank you. And to my good friend 

from New Hampshire, Ms. Kuster. 

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10 

Ms. MCLANE KUSTER. Thank you very much. Thank you, Mr. 

Chairman and Ranking Member Clarke. And Chairman 

Schweikert, I did enjoy participating with you in the panel on 

small business leaders operating online. I am proud of the folks 

from New Hampshire that were doing that good work. 

I am new to this Subcommittee, and I am excited to join with my 

colleagues from both parties to conduct oversight over the Executive branch and work with you to provide relief to overregulated 

small businesses. I think we all recognize that the government 

alone does not create jobs but that it is the responsibility of government to foster the conditions for small businesses to grow to higher 

and to succeed. In my state of New Hampshire, 90 percent of new 

jobs come from small businesses. But unfortunately, as we all 

know, poorly thought out regulations can all too often have the opposite impact, creating uncertainty and stifling economic growth. 

So in today’s hyperpartisan political climate I am hopeful, and it 

sounds as though the Committee does have measures that we can 

all agree on to alleviate the burden and protect the public with important regulations. 

So I am just going to ask some very basic questions. In your experience, Dr. Sargeant, what are examples of some of the successes 

and accomplishments in your office that you are most proud of that 

might give us an example of how your office provides assistance in 

the process in a successful example? 

Mr. SARGEANT. Well, thank you for your support of the office. 

There are a number of ways that we engage small business, and 

if I was to look back at some of the successes we have had, with 

regard to regulation, it may take a little while for the process to 

be complete. But we can say that through the RFA and the work 

we have done, we have had a fair amount of success. 

One that I can point to is something called the 3 percent withholding that was actually passed in 2005. This was a rule that said 

that on all federal contracts, 3 percent would be withheld until the 

IRS checked to make sure that taxes were paid by small businesses. Now, we believe that you have to pay your taxes, but when 

you work with the federal government, when you think of 3 percent, because these contracts, there is not a huge amount of margin. And so the 3 percent was taken off the top and there was no 

process of how long this would take for the IRS to do their job. This 

would put a lot of small businesses actually in debt or they would 

have to turn down the contract. And so we were pleased by working with small entities that this was repealed by Congress in 2012. 

We also can cite what we call the IRS Home Office deduction. We 

were pleased, not to pick on the IRS, but we were pleased that the 

home office deduction, 52 percent of all small businesses are homebased businesses. And it was not a clear process of how you took 

into account that home office deduction. We are pleased that the 

IRS just recently made it clear, made it transparent such that you 

can, up to $1,500, you can deduct. And we have heard from homebased businesses, we have heard from small businesses this is a 

huge win because we know that more and more people are starting 

companies from home and they are not just staying at home but 

they will grow. And so those are just two of many examples that 

we have had so far, and we are pleased that our process, that the 

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way that we work with federal agencies, that there has been a successful outcome. 

Ms. MCLANE KUSTER. Right. Good. Well, thank you. 

Now, part of my district is very rural. So rural, in fact, that we 

are still on dial-up in this day and age. So you can imagine the 

burden on small businesses. I say, you know, you have a customer 

on the line and then you have to say, ‘‘Let me put you on hold 

while I go look on the Internet on another phone line.’’ So I am just 

curious if you have experience with your committee, I mean, with 

your agency about the unique burdens on small businesses in rural 

communities, and particularly with regard to compliance over the 

Internet or paperwork production where compliance involves Internet access. 

Mr. SARGEANT. Yes, we have heard of concerns. And we know 

firsthand, and I know firsthand because I have lived in rural communities that it is important to have access to the web. And so we 

put out a study. We were charged by Congress to do what is called 

a broadband study a couple years ago. And in the study it showed 

that those in rural areas paid more money for less service for 

broadband. And this really complicates it because we all do not 

choose to live in cities but this also adds to what we call brain 

drain where people who would like to live in rural communities, if 

you want to live next to a lake or live where you want to live and 

also run a business, you must be able to tap into broadband. And 

so we are concerned. And so we have shared this report with the 

FTC and those who oversee broadband to let them know that our 

nation, those who want to live in rural communities, must be able 

to get access to affordable and accessible broadband because it 

helps our economic environment, but it also will cut down on all 

this congestion. There are a number of benefits and so, yes, we are 

concerned that those who live in rural communities have to pay 

more for less. 

Ms. MCLANE KUSTER. Great. Thank you very much. 

Chairman SCHWEIKERT. Thank you, Ms. Kuster. 

I just have a couple others. We were sort of sharing before. I 

have sort of a personal fixation in my couple years around here of 

how much sort of decision-making we do in this body on sort of 

folklore and not data and facts. And so first, walk me through a 

little bit of your process just so I am sort of understanding the disciplines and the mechanics within the office. 

A few thousand rule sets in promulgation of some sort and somehow, as you shared with me earlier the agency said they believe 

this costs this, this costs this, you have trade associations that may 

have a very different view, but you choose 50 of them. Now those 

are within your process. Do you mechanically start to do a cost 

benefit? I mean, what is the next step you do internally to analyze 

those and decide is this something you need to be fairly bold about 

and write about? What do you do? 

Mr. SARGEANT. Yes. What we do, Mr. Chairman, we will reach 

out to small businesses to ask them. This is a rule that is being 

proposed. How will this impact you? So we are pleased that we 

have regional advocates around the country because the majority 

of businesses are outside of Washington, D.C., so we must hear 

what is going on, and we also know that it is not a one-size-fitsSBREP-219 with DISTILLER

12 

all but it is not a ‘‘one region fits all.’’ What may happen in the 

Northeast may be different than what happens in the Southwest. 

And so once we hear from small entities how this rule will impact them, we will actually have a roundtable. We will bring officials from the agencies. We will bring those who have different 

points of view to share in terms of how this rule will impact. And 

also, we ask the agencies to share the data, if they have it, on why 

they came up with this number, and then we will ask those who 

are at the table to share what they have. Share with the agency 

officials your number. 

Chairman SCHWEIKERT. Dr. Sargeant, that is almost to the 

point. 

So you are getting sort of a presentation of how they did their 

cost benefit? 

Mr. SARGEANT. Yes. Yes. 

Chairman SCHWEIKERT. Do you have an internal mechanism 

to vet that? Do you have a statistician sitting in the back who has 

built a brilliant spreadsheet and is dicing things up? I am just sort 

of curious how you get there. 

Mr. SARGEANT. What we do is we work with small entities 

themselves to try to get some numbers from them. We do have our 

own research and sometimes there is a nice fit but sometimes it is 

just more of a global fit how this will impact small business. So we 

ask the agencies themselves. It is up to the agency to share what 

they have in terms of data, but also we will reach out to trade associations for them to share what they have. So that is how we hope 

to come together. 

Chairman SCHWEIKERT. So in some ways you become sort of 

an aggregator of information from the agency, trade associations, 

individuals who believe they are going to be affected? 

Mr. SARGEANT. Yes, because we have a research budget, but 

for us to do that research in such a short manner with the rules, 

it would be very, very difficult for us to do it within a timely manner. So it is important for us. We take our direction from the small 

business. So we want to hear from them. 

Chairman SCHWEIKERT. You said something before about your 

15-day window and wishing you had 60. 

Mr. SARGEANT. Well, that is for the SBREFA panel process. 

Chairman SCHWEIKERT. Okay, so that is the next tier. 

Mr. SARGEANT. Yeah. Once I have been notified then they can 

start a panel within 15 days. And we believe, and I believe that 

you should give more time to the agencies but also to the representative who will serve on those panels so they can digest the 

data so they can come prepared to talk. 

Chairman SCHWEIKERT. So in your internal flow, okay, so the 

next step after you have done your aggregation of sort of cost benefit, you have a couple of economists on staff? 

Mr. SARGEANT. Yes. 

Chairman SCHWEIKERT. That are doing some dicing, what 

they believe the economic impact is, not necessarily the cost benefit? 

Mr. SARGEANT. Yes. Well, that is part of it. Yes. 

Chairman SCHWEIKERT. And do they use a particular mechanics or methodology or approach? 

SBREP-219 with DISTILLER

13 

Mr. SARGEANT. Well, you typically use cost benefit analysis. 

You work with the agency themselves to say, well, who did you talk 

to? How were you able to quantify this number? We can understand costs; sometimes benefits are hard to quantify. And so we are 

charged under the RFA to only look at costs. So that is what we 

focus on and how this rule will impact cost-wise. And so that is 

where we share with the agency and say, well, we believe that you 

have certified this rule or you have underestimated the cost because we have spoken to these businesses around the country. 

Chairman SCHWEIKERT. Okay. So you do that as part of your 

sort of economic model? 

Mr. SARGEANT. Yes. 

Chairman SCHWEIKERT. Last, Dr. Sargeant, before you actually sort of spoke of the concentric rings, you know, the one step 

out where it may not only affect the small business but may actually affect the small business’s supplier I guess is how you were ultimately trying to understand that sort of outward effect? Share 

with me where would you find that? How do you grab that and pull 

that into your analysis? 

Mr. SARGEANT. Well, what we try to do when we train agency 

officials under the RFA, we talk about what we call the foreseeable 

economic impact or the indirect impact. And so if this rule is going 

to impact say, like you said, the suppliers, a product, or a service, 

what we want them to do is to try to capture that because that is 

not, as you mentioned with regard to the ring, that is a tightly coupled ring. That is close. That is not a huge loop. And so what we 

do is we give them some recommendations on products or services 

or work environment, how this rule will impact. And so that is the 

type of feedback, that is the type of training that we give to agency 

officials. 

Chairman SCHWEIKERT. Doctor, I appreciate your time with 

us. If you ever find yourself on the Hill and (a) you want actually 

good coffee, come to my office. And this for everyone, we have a 

froufrou cappuccino machine. Pay for it personally. And second of 

all, if you ever happen to be on the Hill I would love to sort of flowchart your mechanics. Part of this is trying to understand. In my 

vision of the world there is a difference between doing a cost benefit analysis and an economic analysis because over here you sometimes find the law of unintended consequences. This is sort of the 

cost implementation compared to alternatives. Because I know you 

do not get to override a rule but sometimes you and I have seen 

occasions where if the agency was writing the rule in this direction 

it would have been more impactful in society than the approach 

they are taking. And I do not know if you get listened to in that 

fashion. 

Mr. SARGEANT. Well, I would welcome the opportunity to have 

my team come over and go through the process because we train 

more than 100 officials each year. Many staff members from the 

Hill will come to our training sessions, so we could walk you 

through and would welcome such a dialogue. 

Chairman SCHWEIKERT. I genuinely would like to learn more 

about what you do and how we can, you know, the impact on small 

business, that is where we need to find much of our job creation. 

So thank you, sir. 

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Mr. SARGEANT. Okay, thank you. 

Chairman SCHWEIKERT. Doctor, I want to thank you for your 

testimony. You are excused. And now we are going to move on to 

our second panel. 

Chairman SCHWEIKERT. We are about to begin the second 

panel. I am sure you all heard the discussion. I think actually almost everyone here has testified before. Green, start; yellow, go 

faster; red, we will let you sort of finish your thought. 

The first witness in our second panel will be Marc Freedman, the 

executive director of Labor Law Policy at the U.S. Chamber of 

Commerce. He primarily focuses on workplace and employment 

regulatory issues. Before coming to the Chamber more than eight 

years ago, Mr. Freedman was the regulatory counsel for the Senate 

Small Business Committee and examined agency compliance with 

the Regulatory Flexibility Act. Welcome. 

Is it tradition to just do one at a time? All right, your five minutes begins. 

STATEMENTS OF MARC FREEDMAN, EXECUTIVE DIRECTOR, 

LABOR LAW POLICY, UNITED STATES CHAMBER OF COMMERCE; CARL HARRIS, VICE PRESIDENT AND GENERAL 

MANAGER, CARL HARRIS COMPANY, TESTIFYING ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME BUILDERS; 

RENA STEINZOR, PROFESSOR, UNIVERSITY OF MARYLAND 

CARE LAW SCHOOL 

STATEMENT OF MARC FREEDMAN 

Mr. FREEDMAN. Thank you, Mr. Chairman. Good morning, 

Chairman Schweikert and Ranking Member Clarke. 

Thank you for inviting me to testify this morning on the value 

of the Regulatory Flexibility Act and the regulatory process. 

This morning I would like to focus my remarks on examples 

where OSHA and other Department of Labor agencies under the 

current administration did not take advantage of the RFA and 

SBREFA in their rulemaking. Note that I said ‘‘did not take advantage.’’ 

Compliance with the Regulatory Flexibility Act enhances the 

rulemaking process, assuming that the goal is to produce regulations that will have the maximum beneficial impact with a minimal 

burdensome impact. The key is that the RFA and SBREA create 

channels for input from small entities that will be affected by the 

proposed regulations. When agencies seek this input and respect 

those small entities that will be subject to the regulation, all parties come out ahead. 

As we have heard from Dr. Sargeant, the RFA requires agencies 

to assess impacts on regulations on small entities and investigate 

less burdensome alternatives, and in the case of OSHA, EPA, and 

now the CFPB, conduct small business review panels unless the 

agency can certify that the regulation will not have a significant 

economic impact on a substantial number of small entities. 

For those agencies not required to conduct small business panels, 

the RFA’s affirmative outreach requirement applies. Specifically 

Section 609(a) directs agencies to ‘‘assure that small entities have 

been given an opportunity to participate in the rulemaking.’’ 

SBREP-219 with DISTILLER

15 

Te timing of the small business input is an important feature of 

this process. Proposed regulations are not like proposed legislation 

which can be very fluid and undergo many changes before being 

enacted. When an agency proposes a regulation, they are not saying let us have a conversation about this issue; they are saying this 

is what we intend to put in effect unless there is some very good 

reason we have overlooked why we cannot. By getting direct feedback about how a regulation will affect those covered by it, the 

agency can make changes before the proposal is issued. 

There is one more important point I want to make about the impact of the RFA. It does not force an agency to change their rulemaking, nor does it authorize the SBA Office of Advocacy to change 

or block an agency’s rulemaking, even if the agency is ignoring 

Advocacy’s advice. The RFA merely sets out a process; it does not 

specify the outcome. 

Unfortunately, OSHA under this Administration has displayed a 

certain resistance to taking advantage of the SBREFA process. In 

several rulemakings, OSHA could have clearly benefitted if they 

had been willing to use the Small Business Panel Review Process 

that the Act lays out. One of OSHA’s first rulemakings under this 

administration sought to reinforce their intention to pursue enforcement, even for those employers who are truly doing the right 

thing by asking for help from OSHA in identifying hazards in the 

workplace. As this rulemaking explicitly and exclusively deals with 

small businesses, OSHA would have benefitted from hearing directly about their views on it. Had they done so, they would have 

heard that small businesses would be less comfortable entering into 

the consultation program if this rulemaking is completed. Getting 

that message with that clarity at that time might have steered 

OSHA away from proposing this regulation. 

Another rulemaking where OSHA suffered for not conducting a 

small business panel is the high profile rulemaking to add a column to the OSHA 300 recordkeeping log to track musculoskeletal 

disorders (MSDs)—the injuries associated with ergonomics. In January 2011, OSHA withdrew the final regulation from the Office of 

Information and Regulatory Affairs to get input directly from small 

businesses. The agency conducted three teleconferences with small 

businesses to hear directly from them about their concerns with 

this rulemaking, exactly what would have happened if the agency 

had conducted the Small Business Panel at the outset. If OSHA 

had taken advantage of the SBREFA procedures, this regulation 

might very well be in place by now. 

Similarly, other DOL agencies besides OSHA have avoided the 

RFA by tremendously underestimating costs. Most notably, the Office of Labor and Management standards in their persuaded rulemaking and the Employment Training Administration in its H2B 

program rulemaking. Time does not permit me to discuss these in 

detail but they are covered in full in my statement. 

Thank you very much for the opportunity to participate in this 

hearing this morning. I will be glad to answer any questions. 

Chairman SCHWEIKERT. Thank you, Mr. Freedman. 

Our next witness is Carl Harris. Mr. Harris is the co-founder of 

Carl Harris Company, a small specialty contracting firm in Wichita, Kansas, I have family in Derby, that erects structural steel and 

SBREP-219 with DISTILLER

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precast concrete for residential and commercial buildings. He is 

testifying on behalf of the National Association of Home Builders. 

Welcome. You have five minutes. 

STATEMENT OF CARL HARRIS 

Mr. HARRIS. Good morning. Chairman Schweikert, Ranking 

Member Clarke, and Distinguished Members of the Committee, my 

name is Carl Harris. I am co-founder of the Carl Harris Company. 

We are based out of Wichita. We have about 20 employees. I am 

also a member of the National Association of Home Builders 

(NAHB) and president of the Kansas Building Industry Association. Thank you for the opportunity to be here today to talk about 

the impact of regulations on small homebuilders. 

As a small businessman operating in a heavily-regulated industry, I understand how difficult it can be for a small builder to operate a successful, thriving business that provides the highest level 

of health, safety, and welfare for its employees. The sheer volume 

of regulations is not the only problem. Often, regulations are crafted without respect to the size of the regulated entities. Congress 

appropriately acknowledged this unique burden when in 1980 it 

passed the Regulatory Flexibility Act, the RFA, and subsequently 

amended it to include the Small Business Regulatory Enforcement 

Fairness Act. With the RFA, Congress intended for regulations to 

be crafted to the scale of the businesses while achieving the goals 

of the rule. This was an admirable aim. However, in practice it 

does not appear to be working as intended. 

I have had the fortune of representing the residential construction industry in a number of small business review panels over the 

years. I have seen firsthand how agencies great the RFA process 

as nothing more than a procedural, check-the-box exercise, and 

worse still, artfully avoid complying with certain parts altogether. 

For example, in 2008, OSHA proposed the Cranes and Derricks 

Rule, which was intended to protect workers from the hazards associated with hoisting equipment in construction. For the development of this rule, OSHA relied on the negotiated rulemaking program. I participated as a small entity representative (SER) on the 

review panel that followed. Several SERs, myself included, raised 

concerns about the feasibility of various aspects of the rule, which 

was clearly designed for large, commercial construction applications. I personally put forward an effective, common sense alternative that would save lives and keep low the cost of compliance 

for small entities. 

Unfortunately, it seems my feedback fell on deaf ears. The problem was that it was not until after the negotiated rulemaking process was complete that OSHA convened the Small Business Advocacy Review Panel. So by the time we were brought in, the rule 

had already been determined, and not surprisingly, OSHA was not 

inclined to modify it based on the panel. Had small business been 

consulted earlier in the process, perhaps OSHA could have developed a more workable rule for small entities, thereby reducing the 

cost and the burdens associated with compliance. And as it was, 

the process seemed little more than a procedural hurdle with little 

interest from OSHA to make changes based on the feedback received. 

SBREP-219 with DISTILLER

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Other times small business representatives are left in the dark, 

brought in with insufficient information to allow us to evaluate regulatory options and provide alternatives. This was the case in 2010 

when I participated in a Small Entity Review Panel that looked at 

a proposed federal regulation covering stormwater discharges from 

developed sites. EPA, in preparation for the panel, failed to provide 

sufficient detailed information about the upcoming rule. As a result, we had no way to estimate the compliance costs or provide 

meaningful feedback to reduce the regulatory burden on small 

businesses. Several SERs provided written comment to the effect 

and suggested that the agency’s failure to provide sufficient information was a violation of SBREFA. 

When agencies are unprepared to provide small entity review 

panelists with the information and data necessary to evaluate the 

cost and compliance obligations, the process breaks down. Not only 

do participants like myself question the value of their participation, 

but the entire regulatory program loses its legitimacy and clearly 

undermines Congress’s intent. 

These are just a couple of examples that illustrate the need for 

improving the way agencies conduct the required reviews of proposed regulations under RFA. Doing so would result in far more efficient regulation and reduce compliance costs for our small businesses. As Congress looks for ways to improve agency compliance 

with RFA, we look forward to working with legislators on the most 

effective ways to help America’s small businesses. 

Thank you for the opportunity to testify today. 

Chairman SCHWEIKERT. Thank you, Mr. Harris. 

Ms. Clarke. 

Ms. CLARKE. Thank you, Mr. Chairman. I have the honor and 

privilege of introducing Ms. Steinzor. She is a professor of law at 

the University of Maryland’s Francis Key Carey School of Law. She 

has taught courses in administrative law and written extensively 

in the area of federal regulatory policy, particularly in regard to 

health, safety, and the environmental regulation. She is also the 

president of the Center for Progressive Reform, which is a nationwide network of scholars that focuses on federal regulatory matters. Prior to her academic career she was a partner in the Washington, D.C. law firm of Spiegel & McDiarmid which counseled federal, state, and municipal clients on regulatory compliance. We 

would like to welcome you this morning and hear from you at this 

time. Thank you. 

STATEMENT OF RENA STEINZOR 

Ms. STEINZOR. Thank you very much for giving me an opportunity to testify today. 

I could not agree more with the Subcommittee’s overhang mission: strengthening the role of small business in repairing an economy ruined by deregulated, too-big-to-fail financial institutions. Big 

business uses small business as a kind of human shield, conflating 

the two sectors distinctly different needs and pushing for deregulation that could further endanger the economy and public health. 

A case in point is the SBA Office of Advocacy, which has consciously diverted its limited, taxpayer-funded resources from helping small business toward pursuing the complaint du jour of the 

SBREP-219 with DISTILLER

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very large companies that call the shots at the American Chemistry Council, the National Association of Manufacturers, and the 

U.S. Chamber of Commerce. These activities raise the disturbing 

prospect that the Office of Advocacy has broken the law. In fact, 

I hope that the evidence I put before you today will motivate you 

to ask the GAO to investigate whether the Office of Advocacy has 

complied with laws that bar federally funded agencies from lobbying and require it to conduct its affairs in the sunshine. From 

what we can tell, the office routinely intervenes in rulemakings 

with only tangential effects on its constituency, allowing Fortune 

500 companies to set its agenda, do its research, and provide the 

substance of its comments. 

Consider for example a series of e-mails exchanged between 

Kevin Bromberg of the Office of Advocacy and David Fisher of the 

American Chemistry Council. The two were discussing an aggressive lobbying campaign that large chemical manufacturers had 

mounted against the National Toxicology Program’s proposal to declare formaldehyde as a known carcinogen. This is a scientific finding, not a regulation, but formaldehyde’s manufacturers were adamant. Fisher wrote, ‘‘I suspect the delay in the assessment will not 

get to the press because it has been delayed already for months, 

so any further delay would be a nonissue.’’ Bromberg responded, ‘‘It 

is probably better for now that I keep the National Toxicology Program contact in the dark.’’ 

Such skullduggery not only provides assistance to Fisher’s multibillion dollar clients at the taxpayers’ expense; it violates the fundamental principle that the Office of Advocacy should work within 

the government to find better ways for small businesses, its only 

legitimate constituency, to comply with the regulations the same 

government is writing. Between 2005 and 2012, the American 

Chemistry Council and its members spent over $333 million lobbying Congress and federal agencies. The last thing these giants 

need is a taxpayer subsidy. 

As for violations of Sunshine Laws, the Office of Advocacy hosts 

regular environmental roundtables that feature presentations by 

lobbyists and lawyers for Fortune 500 companies. They occur behind closed doors and their agendas, attendance lists, and minutes 

are not published. Nevertheless, the roundtables result in positions 

that are adopted as policy by the office. Two weeks ago a senior scientist from the Environmental Defense Fund attempted to participate in a roundtable but he was told that he could listen to the discussion but not speak. The roundtable consisted of presentations by 

Nancy Beck, a former White House Office of Information and Regulatory Affairs staffer who now works for the American Chemistry 

Council, and Robert Fensterheim, a former American Petroleum Institute staffer who now works at the RegNet/IRIS Forum, an industry group dedicated to undermining EPA’s integrated risk information system. 

Self-righteous crusaders against regulation have become accustomed to telling only half the story to the American people. They 

pretend that exaggerated regulatory costs are the only result of the 

system and ignore its considerable benefits. Conversely, they suggest that if we dismantle the regulatory system we would suffer no 

negative consequences and instead reap a windfall and save money. 

SBREP-219 with DISTILLER

19 

My testimony furnishes additional detailed information about the 

benefits of regulation. Thank you. 

Chairman SCHWEIKERT. Thank you. 

Now, a handful of questions. Mr. Freedman, you were with the 

Senate Small Business for how many years? 

Mr. FREEDMAN. Just over five years. 

Chairman SCHWEIKERT. In that time, because you probably 

sat through a number of these hearings, if you right now were looking for bottlenecks in the law that would actually help both advocacy for small business but also a mechanism for dealing with rule 

sets that are coming and trying to find what is rational both from 

a cost and benefits standpoint but also from an economic modeling 

standpoint, where do you see the bottleneck? 

Mr. FREEDMAN. Thank you, Mr. Chairman. 

I think I look at it this way. The critical part of the Regulatory 

Flexibility Act process is the go/no-go decision that focuses on the 

significant economic impact on a substantial number of small entities. And agencies have the flexibility to define those key terms as 

they wish—significant impact and substantial number of small entities. And agencies will go all over the map, even within their own 

agencies between rulemakings they will define things differently. 

And I think what might be helpful here is some type of consistency 

or at least some type of guidance to the agencies to say this is how 

we think you should define things or these are the factors you 

should take into effect. 

And if I could just finish that point, Dr. Sargeant raised some of 

the things I think could be helpful. For instance, the inclusion of 

indirect impacts. There has been some legislation offered previously on this point. My thought is it would be helpful to be specific about what kind of indirect impacts should be included. 

So, for instance, in the EPA world, states implement a lot of the 

requirements that the EPA lays out. The fact that the states implement those requirements is lost in the context of an indirect impact. So if that is the case, that should be brought into the discussion and those impacts should be captured going towards the question of a significant economic impact. 

Chairman SCHWEIKERT. Mr. Freedman, would you go as far as 

trying to create a better box and how you define cost benefit, how 

you define, I mean, economic impact? Because in our office over the 

last couple months, we have tried to collect some mechanisms from 

different agencies. And I find sometimes they have, some it is almost anecdotal. Tell me a story. And others it is, we want to do 

math. 

Mr. FREEDMAN. And cost benefit is a term that many people 

use. It frequently comes up in the context of the regulatory process 

and regulations. It is a very hard concept to nail down. I am not 

going to try and sit here and tell you that Congress in its wisdom 

can tell you exactly what a cost benefit analysis—— 

Chairman SCHWEIKERT. I never used the words wisdom and 

Congress in the same sentence. 

Mr. FREEDMAN. Fair enough. It is a tough subject. And I think 

what might be helpful is to try and steer the agencies either 

through legislation or as Dr. Sargeant was describing, the training 

process embedded in the Executive Order 13272 to help agencies 

SBREP-219 with DISTILLER

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get to this point of appreciating the impact and recognizing the 

goal of trying to capture it and be honest about it. 

I think part of the discussion here is attitudinal. Agencies take 

a position. They want to do a reg. We have seen it time and again, 

and they do not want somebody else telling them how to do it. And 

somehow, and I do not know if it is the silver bullet here, that attitude needs to change. And I think the 13272 process is very helpful 

with that and a good start, but it really has to keep reinforcing it. 

Particularly now that we are coming into the second term of administration, people change, new people are in place. You have to 

keep reinforcing that type of approach. 

Chairman SCHWEIKERT. But in some ways, for some of us it 

is just sort of the standard of practice. So we sort of, whether I 

agree with you or disagree with you, at least I understand how you 

got there and I know what I am objecting to. Or agreeing to. 

Mr. FREEDMAN. Let me make one more quick point. And this 

is in my full statement. The problems with the agency compliance 

with the Regulatory Flexibility Act and SBREFA stretch back over 

several administrations. And this really is not a specifically Republican or Democrat example. We have seen it—— 

Chairman SCHWEIKERT. Well, the framework comes from the 

late Carter Administration? 

Mr. FREEDMAN. That is correct. 

Chairman SCHWEIKERT. So. 

Mr. FREEDMAN. Right. But I mean, we have seen examples of 

agencies that did not take these issues seriously in several different administrations and different parties. 

Chairman SCHWEIKERT. Okay. Mr. Harris, welcome from 

beautiful Wichita. Do you have a lot of snow? 

Mr. HARRIS. Not anymore. We had 60 degrees there yesterday. 

Chairman SCHWEIKERT. Okay, good. 

Mr. HARRIS. And I came to this. 

Chairman SCHWEIKERT. Because my wife is going to make me 

visit the relatives and when you are from Scottsdale— 

Mr. HARRIS. There you go. 

Chairman SCHWEIKERT. We do not go when there is snow. 

This is sort of a one-off but I have been trying to get my head 

around a briefing I had yesterday. Do you do much concrete cutting? 

Mr. HARRIS. Yes, I do. 

Chairman SCHWEIKERT. Are you familiar there may be an 

EPA rule set out there where even the dust you create from the 

concrete cutting? 

Mr. FREEDMAN. Silica. 

Chairman SCHWEIKERT. Maybe. 

Mr. FREEDMAN. Both OSHA and EPA in regard to silica. 

Chairman SCHWEIKERT. Okay. I am walking through a group 

in a construction family. So sanding down drywall, cutting concrete, sanding, I mean, how many different elements? I mean, even 

down to the sandpaper you use. Would—— 

Mr. FREEDMAN. Those are, as I understand, the drywall in regard to silica, there is not silica in drywall cement, but in the areas 

that we do precast concrete, when footings and foundations are not 

done correctly and remediation has to be done, we understand. We 

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train for that at our local builders association how we would protect our workers in regard to that. We have tried to work closely 

with OSHA and the silica standard and how would be the best 

practices to deal with that and what might trigger those things. 

But we just got to get in—we have got to get small business involved in the regulatory process as early as possible because we 

truly are the experts in the field. I mean, you see a cloud of dust. 

You may see danger. We see that all the time. We just need to tell 

you what we do and how we can do it better and safer as opposed 

to have that come from outside. 

Chairman SCHWEIKERT. Okay. All right. With that, Ms. 

Clarke. 

Ms. CLARKE. Thank you very much, Mr. Chairman. 

My first question is to Professor Steinzor. Mr. Harris, in his testimony, stated that his organization believes that ‘‘the RFA should 

be amended to include judicial review of the panel requirements to 

ensure agencies here to the law.’’ What are your thoughts on that 

proposal? 

Ms. STEINZOR. There is a longstanding doctrine in administrative law that does not bring you to court until an agency has issued 

a final agency action. And as I understand, the way this would 

work you would be allowed to take the agency into court mid-rulemaking. And this would cause a lot of extra delay, which also has 

costs. I mean, we forget that so often that the longer it takes to 

promulgate a rule, the more people are exposed to whatever the 

harm the rule is trying to address. So there are costs on both sides, 

and I would urge you to be cautious about that kind of approach. 

Ms. CLARKE. So we are trying to weigh costs and costs essentially. For the small business, the idea that a particular rule could 

mean them being able to really be effective in whatever work it is 

that the rule is going to be applying to is a challenge for that company. On the other hand, the rule is being promulgated because 

there is a particular harm that an agency may be trying to address 

that can cost as well. And so the time factor there becomes the 

challenge on both sides. 

Ms. STEINZOR. I could not agree more. You have put it beautifully. I would only say that I completely favor finding ways to 

make regulations more tolerable for small businesses. But if workers get sick they cannot come to work and that is also a very costly 

problem. And some of the regulations, especially ones that the Office of Advocacy has been focusing on, are so large that they are 

really not aimed at small business at all. Some of EPA’s air pollution rules, as I say in my testimony, would save millions of lost 

days at work which can only help small businesses because people 

will not have cardiac problems, they will not have asthma attacks, 

et cetera. 

Ms. CLARKE. Very well. 

Ms. STEINZOR. Help the economy. 

Ms. CLARKE. Very well. Very well. 

The second question is to you again, Professor Steinzor. The 

Crane and Crane study has been widely cited for its estimates of 

the regulatory burden facing small businesses. What is your opinion of the study, and do you believe that it is credible enough to 

be relied on by this Committee? 

SBREP-219 with DISTILLER

22 

Ms. STEINZOR. No, I do not believe that it has any credibility. 

It has been dismantled by our organization, the Economic Policy 

Institute, the Congressional Research Service, the White House Office of Information and Regulatory Affairs, anybody who has looked 

at it cannot replicate the results. And the Economic Policy Institute, in particular, got the data and tried to reverse engineer the 

calculations and was unable to even come close. 

One of the aspects in that study is a poll that was taken, a survey of business leaders around the world, and the World Bank 

which conducted the survey said it should not be used in that way. 

So I would urge you not to—there are better analyses. 

Ms. CLARKE. Very well. And let me just, Mr. Chairman, if you 

will indulge me, I have one final question for Mr. Freedman. 

In your discussion of OSHA’s GHS rule, you state that ‘‘the agency loaded it up’’—that is your quote—’’with other provisions that 

did not make sense for small businesses but that do increase safeguards for the workers which is actually OSHA’s mission.’’ Would 

you care to clarify or is it your view that OSHA should give small 

businesses’ views priorities over workers when it develops its regulations? 

Mr. FREEDMAN. Thank you, Congressman Clarke. 

It is my view that OSHA should follow the regulatory process 

and make sure that anything that is in a final rule was proposed 

first and that terms in the regulations are clear and understandable by small businesses and are not open traps for small businesses so that OSHA has an opportunity to just come in and enforce without the small businesses knowing what they have to comply with. It is also my view that if OSHA is going to insert a hazard into a regulation, that everyone understands the definition of 

that hazard and that it is not an open-ended, as I said, trap for 

small businesses. These things can be done in the name of protecting employees and in the name of giving small businesses a fair 

chance to understand the regulation. 

Ms. CLARKE. So just as a follow-up, and I am going to close 

here, I am just trying—if I am a regulatory agency and my main 

function is to make sure that workers are protected, you are saying 

that there needs to be an overlay or a view that looks at small 

business in the context of protecting workers? I am trying to figure 

out if I were an agency person and I am concerned about the 

health and welfare of the employees, how you balance out those 

concerns in terms of how you view it because their goal is not to 

necessarily be concerned about the business as much as it is the 

employees of the business. So how would you sort of reconcile that? 

Mr. FREEDMAN. Well, if I may, Congresswoman, I would ask 

you think about this in terms of the businessperson trying to figure 

this out. If OSHA puts in a requirement that is an open-ended requirement that they will not know whether they satisfied and it is 

just a trap for enforcement, how does that serve anybody’s good? 

Or how does that serve anybody’s goals? 

What we are looking here for in the context of OSHA regulations 

is clarity and well-supported regulations. The more OSHA focuses 

on those models, the better the outcome will be, the more employers and small businesses will know what they are required to do, 

the more they can protect their employees. If you just throw out 

SBREP-219 with DISTILLER

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a hazard that is not defined, and the one in the discussion here is 

combustible dust, then what is an employer to do? They do not 

know what that means. There is no definition of that. You cannot 

expect an employer to protect against something they do not know 

how to understand. This is just not fair. It does not get to the end 

goal. So I understand your concern from the agency’s perspective, 

but the agency needs to operate within certain parameters. And 

that is the focal point of the regulatory process. 

Ms. CLARKE. Okay. We want to just drill in a little bit more on 

this. How do you define ‘‘open traps’’? Do you believe that OSHA 

is a rogue agency just looking to entrap and punish small business? 

Mr. FREEDMAN. No. I would never describe OSHA as a rogue 

agency. 

Ms. CLARKE. Okay. 

Mr. FREEDMAN. I think in the current administration they 

have placed a very explicit emphasis on enforcement. I think some 

of their regulatory approaches have gone towards the idea of increasing their opportunity for enforcement. As I mentioned in the 

discussion about the cooperative agreements rulemaking, that was 

about telling small businesses that they were going to be subject 

to enforcement even though they are bringing OSHA in, asking for 

help in identifying hazards. 

In the context of the GHS regulation that we are discussing here, 

they included a provision called Hazards Not Otherwise Classified. 

That is an open-ended concept. It means that an employer will not 

be able to tell when they have satisfied all the hazards that OSHA 

may have in mind. That is what I mean when I talk about traps. 

That is what I mean when I talk about OSHA putting in provisions 

that are geared towards enforcement more than they are towards 

safety. 

Ms. CLARKE. So the whole idea of clarity and definition is what 

ultimately makes it a hospitable business environment? 

Mr. FREEDMAN. It will certainly aid in increasing compliance 

and therefore adding to workplace safety. 

Ms. CLARKE. Very well. Thank you, Mr. Freedman. 

Thank you, Mr. Chairman. 

Chairman SCHWEIKERT. Thank you, Ms. Clarke. 

Mr. BENTIVOLIO. Am I getting close in pronouncing it right? 

Mr. BENTIVOLIO. You did it perfect. 

Chairman SCHWEIKERT. Wow. 

Mr. BENTIVOLIO. Bentivolio. You have got to sing it when you 

say it. Thank you very much, Mr. Chairman. 

Mr. Harris, I am sitting here formulating what it is like to be 

a contractor. Single family homes, multi, like apartments? 

Mr. HARRIS. Single family, multi-family, small commercial 

shopping, small shopping centers, school additions, whatever I can 

do to make a living. 

Mr. BENTIVOLIO. I understand. Nothing like the smell of fresh 

excavated dirt. 

Mr. HARRIS. Agreed. 

Mr. BENTIVOLIO. The sound of concrete coming down a chute. 

Right? And then you have the carpenters’ fresh cut lumber, circular 

saws, a symphony in construction. It smells like an economy growing. And each one of those different facets of construction is a conSBREP-219 with DISTILLER

24 

tractor, a subcontractor working for you. Now, are you responsible 

for that subcontractor following regulations? And what is the procedure you go through, if so, to ensure that they comply with these 

regulations so you will not be shut down? 

Mr. HARRIS. First of all, I must let you know that I am an 

OSHA outreach trainer for a satellite training facility which is located in our local homebuilders association. As we reach out to 

other small businesses to make sure that they have the information and training. Each subcontractor is responsible for their own 

health and safety. I am responsible for the culture of safety and 

health on that project. OSHA kind of recognizes that in what they 

call their multi-employer worksite rules. We have not seen a lot of 

enforcement that go up the chain but we tried to put forth the culture of safety, health, and welfare on every jobsite and filter down 

to our subcontractors. We realize, through the help of the National 

Association of Homebuilders and our local builders association that 

training is what the needs are. 

And if I could kind of answer Congressman Clarke’s question. If 

we have reasonable regulations, we have higher participation and 

compliance. So actually, we could save more lives with more reasonable regulation than if we have a hard and fast regulation that 

everybody is going to ignore because it does not make any sense. 

So that is where we think with enough early information, a chance 

to work in the process, which is what this does, we have a better 

chance of getting wound regulation that works on the jobsite. 

Mr. BENTIVOLIO. That is terrific. 

As a small business owner trying to do your best to comply with 

EPA and OSHA rules, what is your greatest fear in dealing with 

those agencies? 

Mr. HARRIS. Surprises. A businessman cannot have surprises. I 

do not have the time to constantly monitor the Federal Register to 

see what is going down. We rely on our trade associations to help 

us find out what information is out there. No business likes surprises. We are planning for the future. We are estimating projects 

out there. We really want to work to that betterment and work 

within all the regulations that are out there. Surprises are what 

we cannot handle. If we have an opportunity to work with clarity 

on the development of these regulations then we can let our members know, I can let my friends know, and we can all work within 

the rules. 

Mr. BENTIVOLIO. Thank you very much, Mr. Harris. I yield 

back my time. 

Chairman SCHWEIKERT. Thank you. With that, thank you. 

I did have just a couple odds and ends. And Mr. Freedman, one 

more time. If I have the good Doctor come and sit down in my office and we start to flowchart sort of how his process works, and 

some of this is as much making sure that the law is up-to-date for 

how we are passing information today. What would you inject into 

that conversation? 

Mr. FREEDMAN. Do you mean with respect to how Advocacy 

functions and the process? 

Chairman SCHWEIKERT. And how we are doing today, because 

I am still trying to get my head around this thing. I have a few 

thousand rule sets that affect small business. Are they capturing 

SBREP-219 with DISTILLER

25 

and are they focusing on what is rational to focus on for small business? 

Mr. HARRIS. Thank you, Mr. Chairman. And I am going to take 

the opportunity of your question to respond to something that Professor Steinzor mentioned. And that is her criticism of the idea of 

bringing in a provision that would allow small businesses to challenge an agency certification mid-rule. And she is certainly correct 

that agency actions have to be final before they can go to court. 

The value of, first of all, what you could do is describe that agency 

certification as a final action; therefore, making it subject to judicial review. And the point here is to preserve the timing of the 

small business input in the process so that you do not have to wait 

several years until the rule goes final and everything is baked in 

the cake at that point, to then say, well, way back then the agency 

did a bad certification and therefore, they should be challenged. 

The point is to be able to challenge the agency action at the time 

when it is still relevant to the process. And so the idea of creating 

an opportunity, and it could be written in a way that would be very 

narrow, very time sensitive, and would not disrupt the process in 

any tremendous way, but it is important that that decision gets attention at the time that it is made so that the input from small 

businesses can be brought into the process at the time it is most 

important. 

Chairman SCHWEIKERT. Okay. Thank you, Mr. Freedman. But 

that is partially where I was trying to go is a true understanding 

of sort of the flow chart, the mechanics, and when triggers are hit 

because we had the good Doctor before saying there are certain 

things he wished he had 60 days within the SBREFA process concept. 

Mr. FREEDMAN. And I think his point was well taken. Part of 

the discussion in the SBREFA panel process is that you are talking 

with people who are out there making a living, like Mr. Harris, 

who are not regulatory specialists. And you are asking them to look 

at a proposed regulation with supporting analyses and understand 

it in the context of this discussion, and that is just not what they 

do for a living. That is not even easy for me. And so giving them 

some more time to come up to speed on that discussion I think 

would help their participation in the process. And Mr. Harris has 

been in those panels himself, so he can probably tell you more 

about what would be helpful in that regard. 

Chairman SCHWEIKERT. Ms. Steinzor, is my little fixation on 

just understanding the linearity, if that is a word, of the process 

appropriate? 

Ms. STEINZOR. I think it is very appropriate and I would suggest to you that what you may want to pursue with Dr. Sargeant 

is exactly the question that you keep asking—how are these 

rulemakings selected? We only know what we could get from a 

Freedom of Information Act request to the Office of Advocacy, and 

what the information that we got back from that shows is that the 

office is in touch with a lot of large company lobbyists and that is 

how it makes it choices. And that when it takes a position it does 

not ask anybody in small business. 

Chairman SCHWEIKERT. Because I actually even read the advocacy piece. 

SBREP-219 with DISTILLER

26 

Ms. STEINZOR. Right. 

Chairman SCHWEIKERT. To say that that is how they make 

their decisions, I do not think there is any actuarial data that says 

that, but they get the information. We will give you that. But to 

actually say one is one, I think there is not data that says that. 

Ms. STEINZOR. I would love to know if they do any surveys of 

small businesses to identify what rules are the most problem, if 

they make those a priority, if they are even in touch with small 

businesses that have problems. 

Chairman SCHWEIKERT. Okay. And the question part is fine. 

It is rational to say one is the cause of the effect. I would always 

be very careful of sort of anecdotal leaps. 

So Mr. Harris, you get the last word and then we are all running 

off to our next panels that we are all supposed to be on. 

Mr. HARRIS. What would be wrong, and again, just a country 

boy asking, what would be wrong with assuming that small business is affected with every regulation and then go from there and 

make them prove that they are not as opposed to you have to prove 

that they are affected significantly and with enough numbers. So 

I mean, almost it works out being like the Miranda regulation. You 

cannot do anything until you do this. 

Chairman SCHWEIKERT. Why is it always the country boy gets 

the best line at the end of the get-together? It often works that 

way. 

I want to thank the witnesses today. For much of this, this is 

also the education of a new member like myself on the committee. 

And I have been trying to read everything I can get my hands on. 

And this is actually for my brothers and sisters on the panel and 

anyone else in the room. I will read anything. I am fairly voracious. 

Send it our way. And when agencies fail to actually comply with 

the Regulatory Flexibility Act, let us face it. Our economy suffers, 

our economic growth suffers, and our job creation suffers. 

The Committee will continue to exercise our oversight responsibilities to ensure that federal agencies comply with the RFA, and 

we will consider ways to strengthen this important statute and 

make sure it is also relative to today and not basically 30-plus 

years ago when it was originally drafted. 

And I ask unanimous consent that members have five legislative 

days to submit written statements and supporting materials for the 

record. Hearing no objection. One day someone is going to object 

and I am going to have no idea what to do. And with that so ordered, the panel is adjourned. 

[Whereupon, at 11:44 a.m., the Subcommittee was adjourned.] 

SBREP-219 with DISTILLER

27 

A P P E N D I X 

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Insert offset folio 27 here 80166.001

Testimony of 

Winslow Sargeant, Ph.D. 

Chief Counsel for Advocacy 

U.S. Small Business Administration 

United States House of Representatives 

Committee on Small Business 

Subcommittee on Investi'gati'onsJ Oversi'ght and 

Regulations 

Date: March 14,2013 

Time: 10:00 AM 

Location: 2360 Rayburn House Office Building 

Topic: Regulating the Regulators-Reducing 

Burdens on Small Business 
28 

Chairman Schweikert, Ranking Member Clark, and Members of 

the Subcommittee, I am Dr. Winslow Sargeant, Chief Counsel for 

the Office of Advocacy at the U.S. Small Business Administration. 

Thank you for the invitation to appear before you today to discuss the critical issue of agency compliance with the Regulatory 

Flexibility Act (RFA). 

The Office of Advocacy was created in 1976 to be a voice for 

small business within the federal government. Advocacy advances 

the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and policymakers. We work with federal agencies in the rulemaking process 

to implement the requirements of the RFA. 

The RFA requires federal agencies to consider the effects of their 

proposed rules on small businesses and other small entities, including small governments and small nonprofits. When an agency finds 

that a proposed rule may have a significant economic impact on a 

substantial number of small entities, it must undertake an analytical process to consider significant alternatives that would minimize the burden on small entities while still achieving the original 

goal of the regulation. 

How Advocacy Helps Agencies Comply 

The Office of Advocacy works with federal agencies in a number 

of ways to improve their RFA compliance and to ensure that the 

particular concerns of small businesses are considered during the 

federal rulemaking process. 

RFA Training 

As required in Executive Order 13272, Advocacy must train 

agencies on how to comply with the RFA. In addition to the officials previously trained at more than 60 agencies and subagencies, 

we have trained nearly 350 additional key agency officials in RFA 

compliance during my tenure. In FY 2012, we published an expanded and updated edition of A Guide for Government Agencies: 

How to Comply with the Regulatory Flexibility Act. Increased and 

improved RFA training leads to better agency rulemakings, which 

results in increased regulatory compliance. 

Interagency Communications 

Much of Advocacy’s work with agencies is at the confidential, 

pre-proposal stage, when agencies are working through the regulatory development process. When warranted, Advocacy sends 

agencies public comment letters that take into account small business concerns about specific regulations and other proposals. I have 

signed more than 90 such letters on topics including proposed revisions to the definition of solid waste, small business perspectives 

on the Paperwork Reduction Act, Small Business Innovation Research size regulations, and comments on regulations related to the 

Real Estate Settlement Procedures and Truth in Lending Acts 

(RESPA–TILA). 

SBREFA Panels 

SBREP-219 with DISTILLER

29 

The RFA as amended by SBREFA and the Dodd-Frank Wall 

Street Reform and Consumer Protection Act also specifies that 

three agencies must conduct a SBREFA panel for gathering comments on a proposed regulation when it may have a significant economic impact on small businesses. The three agencies are the Environmental Protection Agency, the Occupational Safety and Health 

Administration (OSHA), and the Consumer Financial Protection 

Bureau (CFPB). The panels are required to include representation 

from the rulemaking agency, the Office of Management and Budget’s Office of Information and Regulatory Affairs, and the Office of 

Advocacy. The panels solicit information from small entity representatives (SERs), who represent the small businesses likely to 

be affected by the proposed rule. The law requires a SBREFA panel 

to be convened and complete its report with recommendations within a 60-day period. 

Since SBREFA was passed in 1995, the three agencies have conducted SBREFA panels on 55 regulations. In the last two years, we 

have participated in a dozen panels, including the first three panels ever by the CFPB. We provided support to the CFPB for the 

panels on RESPA-TILA, mortgage servicing, and mortgage loan 

origination rules and were able to work with the agency to provide 

small business flexibilities. 

Roundtables 

In an effort both to hear directly from small businesses and their 

representatives and to give federal agency rule writers a change to 

hear specific small business concerns, 2012, which I delivered to 

Congress last month. I ask that a copy of this report be submitted, 

in its entirety, into the record. 

Executive Order 13272 

I also am pleased to report that in FY 2012 agencies continued 

to improve their compliance with E.O. 13272, which was signed in 

August 2002 by President George W. Bush. Some of the provisions 

of the executive order became law under the Small Business Jobs 

Act of 2010. 

E.O. 13272 requires Advocacy to notify agencies of the requirements of the act, provide compliance training, and submit comments to agencies and the Office of Information and Regulatory Affairs (OIRA) on agency regulations. Agencies in turn must establish 

written policies and procedures for RFA compliance and notify Advocacy of any draft rules with a significant economic impact on a 

substantial number of small entities. Where Advocacy has provided 

written comments, agencies must give appropriate consideration to 

these comments and publish their response in the Federal Register 

with the final rule. 

Executive Order 13563 and RFA Section 610 

In 2011, President Obama provided Advocacy with additional 

tools to improve the regulatory development process. Executive 

Order (E.O.) 13563 and E.O. 13579 instructed agencies to develop 

a plan for periodic retrospective review of all existing regulations 

SBREP-219 with DISTILLER

30 

1See http://www.whitehouse.gov/21stcenturygov/actions/21st-century-regulatory-system. 

with the intention of reducing the cumulative regulatory burden. In 

response, Advocacy continues to expand its stakeholder outreach. 

We have convened 84 roundtables on a variety of topics since I became chief counsel, including 32 in FY 2012. Many of the 

roundtables featured significant involvement from agency officials. 

For example, we held several roundtables with OSHA, where 

senior OSHA officials were present, on small business perspectives 

related to labor safety issues. 

We also held a series of roundtables in several regions around 

the country to solicit input from small business research and technology stakeholders about the SBA’s proposed regulations implementing the revised Small Business Innovation Research program. 

These small business roundtables help ensure that the voices of 

small businesses and other small entities are heard by officials 

whose actions will make a difference in the regulatory environment 

in which they operate. 

Compliance 

Having generally explained how the Office of Advocacy works 

with agencies, I would like to address agency compliance with their 

RFA responsibilities. I am pleased to report that agencies continued to improve their compliance with the RFA in FY 2012, bolstered by President Obama’s focus on the need for regulatory review and emphasis on the special concerns of small businesses in 

the rulemaking process. A detailed analysis of this compliance can 

be found in Advocacy’s Report on the Regulatory Flexibility Act FY 

agencies developed plans, some with significant public input, and 

published these plans online. The White House also posted the 

plans and agency updates online.1

Cost Savings 

Agency compliance with Advocacy’s RFA efforts pays real dividends to America’s small businesses. In FY 2012, Advocacy’s RFA 

activities resulted in small businesses saving $2.4 billion in firstyear regulatory costs and another $1.2 billion in annually recurring 

costs. 

It is important to note that these estimated annual cost savings 

are derived primarily from regulatory cost estimates from the agencies themselves. Cost savings are captured in the year in which the 

agency’s rulemaking is affected by Advocacy’s intervention; and the 

total varies from year to year. Over the two and half years of my 

tenure, Advocacy’s work with federal agencies has saved small 

businesses $17 billion in new first-year regulatory costs. 

Concluding Remarks 

The passage of laws amending the RFA and the Executive Orders reinforcing it have made this critical small business law more 

effective in reducing the regulatory burdens of small entities 

early—when the regulations are still in the development stage. 

Agencies’ willingness to attend Advocacy roundtables and hear the 

SBREP-219 with DISTILLER

31 

concerns of small businesses has been a welcome development that 

has resulted in improved agency compliance with the RFA. 

We have learned through our experience with the RFA that regulations are more effective when small firms are part of the rulemaking process. The result of enhanced agency cooperation with 

the Office of Advocacy and improved agency compliance with the 

RFA benefits small businesses, the regulatory environment, and 

the overall economy. 

Thank you again for the opportunity to testify on the important 

work the Office of Advocacy does on behalf of small businesses. I 

would be happy to take any questions. 

SBREP-219 with DISTILLER

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SBREP-219 with DISTILLER


Insert offset folio 32 here 80166.002

II 

the voice of smail business in 

Report on the 

Regulatory Flexibility Act 

FY 2012 

Annual Report of the Chief Counsel for Advocacy 

on Implementation of the Regulatory Flexibility Ad 

and Executive Order 13272 

February 2013 
33 

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Insert offset folio 33 here 80166.003

Created by Congress in 1976, the Office of Advocacy of the U.S. Small Business Administration (SBA) 

is an independent voice for small business within the federal government. Appointed by the President 

and confirmed by the U.S. Senate, the Chief Counsel for Advocacy directs the office. The Chief Counsel 

advances the views, concerns, and interests of small business before Congress, the White House, federal 

agencies, federal courts, and state policy makers. Economic research, policy analyses, and small business 

outreach help identifY issues of concern. Regional Advocates and an office in Washington, DC, support 

the Chief Counsel's efforts. 

For more information on the Office of Advocacy, visit http://www.sba.gov/advocacy, or call (202) 205~ 

6533. Receive email notices of new Office of Advocacy information by signing up on Advocacy's Listservs at http://www.sba.gov/updates. 
34 

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Insert offset folio 34 here 80166.004

To the President and the Congress of 

the United States 

The Office of Advocacy is pleased to present to 

the President and Congress the fiscal year (FY) 

2012 Report on the Regulatory Flexibility Act. 

Tn this report. we discuss federal agencies' FY 

2012 compliance with the Regulatory Flexibility 

Act of 1980 (RFA). and Executive Order (E.O.) 

13272. The RFA requires federal agencies to 

review proposed regulations that would have a 

significant impact on sma1l entities-small busi~ 

nesses, small governmental jurisdictions, and 

small nonprofits-and to consider significant 

alternatives that would minimize the regulatory 

burden on them while achieving the rules' purposes. 

In FY 2012, Advocacy's RFA efforts helped 

save $2.4 billion in first-year regulatory costs for 

small entities. while ensuring that agencies were 

able to meet their regulatory goals. In the current economic climate, minimizing unnecessary 

regulatory burdens on the small business sector 

so that small businesses are free to create muchneeded jobs is among the highest priorities of the 

Office of Advocacy. 

Thanks to the Small Business Regulatory 

Enforcement Fairness Act (SBREFA) and later 

laws and executive orders. the RFA has become 

more effective in reducing small firms' regulatory burden. President Obama has given us additional tools to improve the regulatory development process. Tn particular, E.G. 13563 requires 

federal agencies to create a systematic process 

for reviewing rules with an eye toward reducing 

the regulatory burden. 

Regulations are more effective when small 

firms are part of the rulemaking process. To 

assist federal agencies in complying with the 

RF A. Advocacy trains agency personnel in RFA 

compliance, issues comment letters on proposed 

regulations, and participates in Small Business 

Regulatory Enforcement Fairness Act (SBREFA) 

panels. In fiscal year 2012, we updated our RFA 

Report on the Regulatory Flexibility Act, FY 2012 

training manual to reflect recent changes. The 

new edition of A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act is available online for use by federal 

rule writers and small business stakeholders. 

The office furthers the goal of reducing the 

regulatory burden on small entities through congressional testimony, advocacy for legislative 

refonn. and vital economic research on small 

business issues. To ensure that information about 

our initiatives on behalf of small businesses is 

accessible to both government and nongovernmental entities, Advocacy uses web-based tools 

such as email alerts, regulatory alerts, the newsletter, The Small Business Advocate, and social 

media including a blog, Twitter, and Facebook. 

We welcome your support of Advocacy's 

efforts on behalf of the dynamic small business 

sector. 

Winslow Sargeant, Ph.D. 

Chief Counsel for Advocacy 

Charles Maresca 

Director of1nteragency Affairs 
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Contents 

To the President and the Congress of the United States 

1 History and Overview of the Regulatory Flexibility Act 

The RF A and Executive Order 13272: Compliance and the Role of the 

Office of Advocacy 3 

Executive Order 13272 Implementation 3 

Interagency Communications 4 

Roundtables 4 

Judicial Review of the RFA 8 

Chart 2.1 Number o/Specific Comments in Advocacy Comment Letters. FY 2012 9 

rhart 2.2 Advocacy Comments: Major Reasons IRFAs Were Inadequate, FY 2012 10 

Chart 2.3 Advocacy Comments: A.fajar Reasons Certifications Were fmproper, FY 2012 10 

Table 2.1 RegulatDlY Comment Letters Filed by the Office a/Advocacy, FY 2012 11 

Table 2.2 Regulatory Cost Savings, FY 2012 

Table 2.3 Summary a/Cost Savings, FY 2012 

3 Advocacy Review of Agency RFA Compliance in Fiscal Year 2012 

14 

18 

19 

Regulatory Agendas 19 

The SBREFA Panel Process 19 

Retrospective Review of Existing Regulations 19 

RFA Compliance by Agency and Issue 20 

Department of Agriculture, Animal and Plant Health Inspection Service 20 

Department or the Interior, Bureau orLand Management 20 

Department orthe Interior, Fish and Wild lire Service 2] 

Department of Justice 21 

Department of Labor 21 

Department orthe Treasury, Internal Revenue Service 23 

Consumer Financial Protection Bureau 23 

Environmental Protection Agency 24 

Federal Communications Commission 26 

Securities and Exchange Commission 27 

Compliance with E.O. 13272 and the Small Business Jobs Act 28 

Table 3.1 Agency Compliance with the Small Busines.dohs Act 0/2010 and 

E.O 13272, FY 2012 29 

Conclusion 30 

Appendix A Supplementary Tables 31 

Table A.I Federal Agencies Trained in RFA Compliance, 2003-2012 31 

Table A.2 RFA Related Cose Law, FY 2012 34 

Table A.3 SBREFA Panels through Fiscal Year 2012 38 

iii Report on the Regulatory flexibility Act, fY 2012 
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Appendix B The Regulatory Flexibility Act 

Congressional Findings and Declaration of Purpose 

Regulatory Flexibility Act 

§ 601. Definitions 

§ 602. Regulatory agenda 

§ 603. Initial regulatory flexibility analysis 

§ 604. Final regulatory flexibility analysis 

§ 605. Avoidance of duplicative or unnecessary analyses 

§ 606. Effect on other law 

§ 607. Preparation of analyses 

§ 608. Procedure for waiver or delay of completion 

§ 609. Procedures for gathering comments 

§ 610. Periodic review of rules 

§ 611. Judicial review 

§ 612. Reports and intervention rights 

Appendix C Executive Order 13272 

Appendix D Executive Order 13653 and Memorandum 

Appendix E Executive Order 13579 

Appendix F Executive Order 13610 

Appendix G Abbreviations 

iv Report on the Regulatory Flexibility Act, FY 2012 

43 

43 

44 

44 

45 

45 

46 

47 

47 

47 

47 

48 

49 

50 

51 

53 

55 

61 

63 

65 
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1 History and Overview of the Regulatory 

Flexibility Act 

In 1964, a guide for small business owners de* 

scribed how government affects the economic environment for businesses, noting that the actions of 

the federal government, whether through legislation 

or "an administrative ruling of an Executive Department or regulatory agency, can mean literally life or 

death to a business enterprise.,,1 

As part of the effort to promote better policies 

for small businesses, Congress in 1974 established 

the position of Chief Counsel for Advocacy within 

the Small Business Administration.2 In 1976, this 

provision was expanded to create the independent 

Office of Advocacy headed by a presidential appointee, thus strengthening the Chief Counsel's 

ability to be an effective small business advocate.) 

In 1980, the White House Conference on Small 

Business made recommendations that led directly to 

the passage of the Regulatory Flexibility ACt." The 

RFA established in law the principle that government agencies must consider the effects of their regulatory actions on small entities, and where possible 

mitigate them. Where the imposition of one-sizefits-all regulations had resulted in disproportionate 

effects on small entities. it was hoped that this new 

approach would result in less burden for these small 

entities while still achieving the agencies' regulatory goals. 

I William Ruder and Raymond Nathan. The Businessman s GUIde to Washington, Englewood Cliffs, NJ: PrenticeHall, Inc., t 964, L 

2 PL 93-386, the Small Business Act of 1974, directed Ute 

SBAAdministratorto "designate an individual within 

the Administration to be known as the Chief Counsel for 

Advocacy to ... represent the views and interests of small 

businesses before other Federal agencies whose policies 

and activities may affect small businesses,'· 

PL 94-305. 

4 Sec Appendix B. 

Report on the Regulatory Flexibility Act. FY 2012 

Under the RFA, agencies provide a small business impact analysis. known as an initial regulatory 

flexibility analysis (IRFA), with every proposed rule 

published for notice and comment, and a final regulatory flexibility analysis (FRFA) with every final 

rule. When an agency can determine that the rule 

would not have a "significant economic impact on 

a substantial number of small entities," the head of 

the agency may certify to that effect and forego the 

IRFA and FRFA requirements. 

The RF A requires the Chief Counsel to report 

on an annual basis on agency compliance with the 

RFA. The 1980 statute authorized the Chief Counsel 

to appear as amicus curiae in any action to review a 

rule. Compliance with the RFA was not reviewable, 

however. 

In 1994 the Government Accountability Office 

(GAO) reported that, based on Advocacy's annual 

reports, it had concluded that agency compliance 

with the RFA varied widely across the agencies. 

The 1995 White House Conference on Small Business recommended strengthening the RFA, and in 

1996 President Clinton signed the Small Business 

Regulatory Enforcement Fairness Act (SBREFA). 

This new law provided for judicial review of agency 

compliance with key sections of the RFA. It also 

established a requirement that the Environmental 

Protection Agency (EPA) and the Occupational 

Safety and Health Administration (OSHA) con~ 

vene panels consisting of the head of the agency, 

the Administrator of the Office of Management 

and Budget's Office of Information and Regula~ 

tory Affairs (OIRA), and the Chief Counsel for 

Advocacy, whenever the agencies were developing 

a rule for which an IRFA would be required. These 

panels meet with representatives of the affected 

small business community to review the agencies' 

plans, including any draft proposals and alternative 

approaches to those proposals, and to provide in-
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sight on the anticipated impact ofthe rule on small 

entities. The panels issue a report, including any 

recommendations for providing flexibility for small 

entities. 

In August 2002, President Bush signed Executive Order 13272, which required Advocacy to 

notify the leaders of the federal agencies from time 

to time of their responsibilities under the RFA.5 The 

executive order also requires Advocacy to provide 

training to the agencies on how to comply with the 

law, and to report annually on agency compliance 

with the E.O. Agency compliance is detailed in the 

remainder of this report. 

Finally, the executive order requires that the 

agencies provide "in any explanation or discussion 

accompanying publication in the Federal Register," 

a response to any written comment it has received 

on the rule from Advocacy. The requirement of 

early notification has since been codified by the 

Small Business Jobs Act of20IO. Also in 2010, as 

part of the Dodd-Frank Act, Congress created the 

Consumer Financial Protection Bureau (CFPB) and 

included the new agency with EPA and OSHA as an 

agency required to convene panels under SBREFA. 

When President Obama issued Executive Order 

13563, Improving Regulation and Regulatory Review. he imposed new requirements of heightened 

public participation, consideration of overlapping 

regulatory requirements and flexible approaches, 

and ongoing regulatory review. 6 E,O. 13563 was 

accompanied by a presidential memorandum, 

Regulatory Flexibility, Small Business and Job 

Creation. This memo reminded the agencies oftheir 

responsibilities under the RF A, and directed them 

'"to give serious consideration" to reducing the regulatory impact on small business through regulatory 

flexibility. and to explain in writing any decision not 

to adopt flexible approaches. 

On May II, 2012. President Obama issued 

Executive Order 13610, Identifying and Reducing 

Regulatory Burdens, which established regulatory 

See Appendix L 

See Appendix D. 

2 Report on the Regulatory Flexibility Act. FY 2012 

review as a rulemaking policy, and also established 

public participation as a key element in the retrospective review ofregulations.7 E.O, 13610 also 

established as a priority "initiatives that would 

reduce unjustified regulatory burdens or simplify 

or harmonize regulatory requirements imposed on 

small business," and ordered the agencies to "give 

consideration to the cumulative effects" of their 

own regulations, 

With this emphasis on the principles of regulatory review and sensitivity to the special concerns 

of small businesses in the rulemaking process, federal agencies have increased their efforts to comply 

with the Regulatory Flexibility Act. 

Sec Appendix F. 
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2 The RFA and Executive Order 13272: 

Compliance and the Role of the 

Office of Advocacy 

Oversight of compliance with both the Regulatory Flexibility Act and Executive Order 13272 

is the responsibility of the Office of Advocacy. 

Legislative improvements to the RFA and executive orders have required greater Advocacy 

involvement in the federal rulemaking process. 

As agencies have become more familiar with the 

role of Advocacy and have adopted the cooperative approach Advocacy encourages, the office 

has had more SUccess in urging burden-reducing 

alternatives. In FY 2012, this more cooperative 

approach yielded $2.4 billion in foregone regulatory costs (Tables 2.2 and 2.3). 

The provisions ofE.O. 13272 have given 

Advocacy and federal agencies additional tools 

for implementing the RFA, and as noted, parts of 

the executive order have recently been codified. 

Executive Order 13272 

Implementation 

E.O. 13272 was signed in 2002, making this executive order now ten years old. In many ways, 

its few requirements have changed how many 

agencies draft their proposed regulations and 

how they consider the potential impacts of their 

regulatory actions on small business. 

Under E.O. 13272, federal agencies are required to make publicly available information on 

how they take small businesses and the RFA into 

account when creating regulations. By the end of 

2003, most agencies had made their RFA policies 

and procedures available on their websites. 

Agencies must also send to Advocacy copies 

of any draft regUlations that may have a significant economic impact on a substantial number 

3 Report on the Regulatory Flexibility Act, FY 2012 

of small entities. They are required to do this at 

the samc time such rules are sent to the Office of 

Management and Budget's Office ofinformation 

and Regulatory Affairs (OIRA) or at a reasonable 

time prior to publication in the Federal Register. 

E.O, 13272 says that agencies must give 

appropriate consideration to Advocacy's written 

comments on a proposed rule and must address 

these comments in the final rule published in the 

Federal Register. This section of the E,O. was 

codified in 2010 as an amendment to the RFA 

by the Small Business Jobs Act, Most agencies 

complied with this provision in FY 2012, 

The Office of Advocacy has three duties 

under E.O. 13272. First, Advocacy must noti/)' 

agencies of how to comply with the RFA. This 

was first accomplished in 2003 through the publication of A Guide for Government Agencies: 

How to Comply with the Regulatory Flexibility 

Act. A revised version of this guide was provided to agencies in 2009 and the 2012 revision 

incorporated the later amendments to the RFA. 

The guide is available on Advocacy~s website at 

http://www.sha,gov/contentlguidegovernment .. agencies-how-comply-withregulatory-flexihility-act-O, 

Second, Advocacy must report annually 

to OIRA on agency compliance with the three 

agency provisions. In fiscal year 2012, overall 

agency compliance with E.O. 13272 was good 

and. in some agencies, improved. However, a 

few agencies continue to ignore the requirements 

and fail to provide Advocacy with copies oftheir 

draft regulations. A summary of agencies' FY 

2012 compliance with E.O, 13272 can be found 

in Chapter 3, Table 3.1. 
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Finally, Advocacy is required to train federal regulatory agencies in how to comply with 

the RFA.In fiscal year 2012. Advocacy trained 

nearly 200 agency employees in RFA compliance. After ten years ofE.O. 13272, RFA 

training continues to be a crucia1 tool in instilling small business consideration into the drafting of regulations that will affect them. Agencies 

that have had RFA training are more willing 

to work with Advocacy during the rulemaking 

process and have a clearer understanding of the 

nuances of RF A compliance. Advocacy con~ 

tinues to work with the regulatory agencies to 

encourage them to consider the impact of their 

regulations on small entities from the beginning 

of rule development. 

Interagency 

Communications 

Meetings and training sessions are some ofthe 

means by which Advocacy stays in contact with 

federal agencies on behalf ofthe small business 

community. Advocacy's work with federal agen~ 

cies has increased in scope and effectiveness as 

its training program has grown and as agencies 

have become more open to the assistance the 

office can lend. In FY 2012. Advocacy's communications with agencies included 28 formal comment letters (Charts 2.1-2.3 and Table 2.1 ). 

More effective regulations that avoid excessive burdens on small firms are the result of these 

efforts. See the cost savings examples in Tables 

2.2 and 2.3. 

Roundtables 

Advocacy has continued to develop its use of 

stakeholder roundtables, both to hear the concerns of small businesses and to provide federal 

agencies a means to hear those concerns. In FY 

2012 Advocacy built on its practice of inviting 

agency heads, rule writers, and policy directors to 

these roundtables. Agenoy officials have reported 

to Advocacy that these roundtables have been 

4 Report on the Regulatory Flexibility Act, FY 2012 

helpful to them in addressing the requirements 

of the RF A, increasing agency access to small 

businesses. and improving agency understanding 

of economic impacts on small businesses. In FY 

2012, Advocacy hosted 32 roundtables on a variety of topics; the following roundtables featured 

significant involvement from agency officials. 

Environment: Chemical Disclosure Rule. At 

this roundtable on October 21, 20 II, Ellie Clark 

of the EPA Office of Pollution Prevention and 

Toxies described the final rule requirements of 

the Chemical Disclosure Rule, which requires 

manufacturers and reporters of chemicals to 

report chemical inventories in 2012. There was 

considerable discussion about whether firms 

would be able to complete the electronic reporting by the regulatory deadline, and about the difficulty of reporting on waste chemicals that are 

recycled into valuable products. Eventually. EPA 

did extend the deadline by several months, based 

on the concerns raised at this meeting. 

Environment: Underground Storage Tanks. 

On January 27. 2012, Carolyn Hoskinson, Director of the Underground Storage Tank Office 

at EPA, presented information about the EPA's 

pending proposal to update the existing underground storage tank (UST) regulations that have 

been basically unchanged since 1988. At the 

discussion. industry panicipants raised concerns 

about EPA's planned action to subject a new 

class of wastewater treatment (WWT) tanks to 

UST requirements. This led to a more informed 

collaboration between EPA and stakeholders 

about the types ofWWT tanks that were subject 

to the requirements. EPA subsequently produced 

a lengthy paper to address this issue in the rulemaking. The final rule is still pending. 

Federal Procurement. On July 19,2012, Advocacy held a roundtable in Albuquerque, New 

Mexico, to discuss regulatory issues affecting 

small business participation in federal procurement programs. Representatives from SBA and 
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other federal agencies participated in this event, as Infrastructure Protection and the Ammonium 

well as staff from several congressional offices. Nitrate Security Program attended the roundtable 

Finance: Integrated Mortgage Disclosures 

and Mortgage Loan Originator Compensation. The Office of Advocacy hosted financial 

roundtables on July 3 I, 2012, and September 

26,2012, where Consumer Financial Protection Bureau (CFPB) officials listened to small 

entity concerns and answered questions about 

the CFPB's proposed rulemakings on Integrated 

Mortgage Disclosures under the Real Estate 

Settlement Procedures Act (RESPA or Regulation X) and the Truth in Lending Act (TILA or 

Regulation Z), as well as the Mortgage Loan 

Originator Compensation proposed rulemaking. 

The Dodd-Frank Act requires the CFPB, in the 

former rulemaking. to establish new disclosure 

requirements and forms to combine the require~ 

ments of RESPA and TILA for most closed-end 

consumer credit transactions secured by real 

property. The latter rulemaking would implement 

statutory changes to Regulation Z's current loan 

originator compensation provisions. Roundtable 

participants discussed concerns about the way 

the CFPB was combining the statutory requirements and the economic burden and workability 

ofthe potential changes. 

Finance: Mortgage Servicing. On September 

21, 2012, CFPB listened to small entity concerns and answered questions on a conference 

call about its proposed rule making on mortgage 

servicing. Small entities are concerned that they 

may have to implement changes to correct problems that were not caused by them. The changes 

may be burdensome and are not within the small 

entity business model. 

Homeland Security: Proposed Ammonium 

Nitrate Security Program Rule. On Tuesday, 

N~vember 22, 20 II, Advocacy hosted a small 

business roundtable on the Department ofHome~ 

land Security's (DHS) Proposed Ammonium 

Nitrate Security Program Rule. DHS staff from 

5 Report on the Regulatory Flexibility Act, FY 2012 

and provided a background briefing on the proposed rule and answered questions from small 

businesses in attendance. DHS's proposed rule 

would regulate the sale and transfer of ammonium nitrate pursuant to section 563 ofthe fiscal 

year 2008 Department of Homeland Security 

Appropriations Act, which seeks to prevent the 

use of ammonium nitrate in acts of terrorism. 

Advocacy followed up by submitting formal 

public comments to DHS outlining small busiw 

ness perspectives on the proposed rule. 

Incorporation by Reference. Advocacy hosted 

small business roundtables on January 20 and 

May 9, 2012, to discuss the Incorporation by 

Reference (IBR) issue. At the roundtable on 

January 20, Emily Schleicher Bremer, an attor~ 

ney advisor from the Administrative Conference 

ofthe United States (ACUS), provided the briefing on the ACUS recommendation on lBR, and 

small entity stakeholders discussed the issue. 

At the roundtable on May 9, representatives from the Department of Transportation, 

the National Archives and Records Administra~ 

tion, and multiple interested industries presented 

and discussed several ongoing issues, including 

the ACUS recommendation to encourage IBR, 

the Office of the Federal Register's receipt of 

a rulemaking petition to define key tenus associated with the practice, and OMB's request 

for comment on possible changes in its current 

IB R guidance. Advocacy organized a follow-up 

meeting with small business stakeholders and 

OMB to discuss small business perspectives 

on rBR. Advocacy also filed public comments 

with both the Office of the Federal Register and 

OMB, outlining small business perspectives on 

the rBR issue. 

Minimum Wages and Overtime ror Compan M 

ion Care Workers. In February 2012, Advocacy 

hosted a small business roundtable on the Department of Labor's proposed rule that would 
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require some companion care workers to be paid 

minimum wages and overtime under the Fair Labor Standards Act (FLSA). DOL representatives 

Michael Hancock, Assistant Administrator for 

Policy at the Wage and Hour Division, and William Lesser, Deputy Associate Solicitor for the 

Division of Fair Labor Standards, provided an 

overview of the proposed revisions and answered 

questions. Participants expressed concern that 

DOL underestimated the costs of the overtime 

requirements. particularly costs for overnight 

shifts and live~in workers, and presented regulatory alternatives. Advocacy followed up by submitting public comments to DOL outlining small 

business feedback on the proposed rule. DOL has 

not finalized this rulemaking. 

Motor Carrier Safety: Comprehensive Safely 

Assessment Program. On February 14, 2012. 

Advocacy hosted a small business roundtable 

on the Federal Motor Carrier Safety Administration's (FMCSA) Comprehensive Safety Assessment (CSA) Program. FMCSA Administrator 

Anne Ferro and key CSA program staff attended 

the roundtable and provided a background briefing about the program. including information 

about CSA's new Safety Measurement System 

(SMS) and its new Behavior Analysis and Safety 

Improvement Categories (BASICs). CSA is a 

FMCSA initiative to improve large truck and 

bus safety and ultimately reduce crashes, inju~ 

des, and fatalities related to commercial motor 

vehicles. Industry stakeholders asked questions 

and expressed concerns about the CSA program, 

including its usefulness and reliability. 

Occupational Safely and Health (OSHA): 

Proximity Detection Systems Rule and Mine 

Safely and Health Management. On November 

l8, 2011, Roslyn Fontaine,Acting Director of 

the Office of Standards, Regulations and Variances, presented a regulatory update from the 

Mine Safety and Health Administration (MSHA) 

covering MSHA's proposed Proximity Detection Systems rule and its proposal for safety and 

6 Report on the Regulatory Flexibility Act. FY 2012 

health management programs for mines. OSHA 

staff attended the roundtable to observe and participate with small businesses in the discussion. 

OSHA: Globally Harmonized System. On 

March 30, 2012, Dorothy Dougherty, Director, Directorate of Standards and Guidance, and 

Maureen Ruskin. Director of Chemical Hazards 

- Metals, from OSHA provided a briefing and 

answered questions about the final GHS rule. 

Other topics on the agenda included discussions 

of OSHA's new Memorandum on Employer 

Safety Incentive and Disincentive Policies, and 

an update on key pending MSHA rulemakings, 

including Examinations of Work Areas. Patterns 

of Violations, and Respirable Coal Mine Dust 

Practices. 

OSHA: Illness and Injury Prevention Programs. At the May 9, 2012, roundtable (see 

Incorporation by Reference discussion), William 

Perry, Deputy Director of the Directorate of 

Standards and Guidance in OSHA, led a discussion of OSHA's plan for convening a SBREFA 

panel on its contemplated Illness and Injury Prevention Programs (12P2). 

OSHA: Labor Safety Issues. Advocacy's 

roundtables on May 18, August 10, and September 21, 2012, focused on small business 

perspectives related to labor safety issues. Cass 

R. Sunstein, Administrator of the Office ofInformation and Regulatory Affairs within the 

Office of Management and Budget, spoke at the 

first roundtable. Chief Counsel for Advocacy 

Winslow Sargeant introduced Administrator Sun~ 

stein, OSHA Directorate of Construction Director Jim Maddox and key program staff attended 

the roundtable on September 21 and listened to 

stakeholder concerns. 

OSHA: Cranes and Derricks in Construction 

Final Rule. On September 12, 2012, Advocacy 

hosted a small business roundtable on OSHA's 

Cranes and Derricks in Construction final rule. 
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Jim Maddox, Director of OSHA's Directorate taxes while many online retailers do not. Other 

of Construction, and key program staff attended small businesses expressed concern with the disthe roundtable, provided a background briefing, proportionate burden that small online retailers 

and listened to stakeholder concerns about the would face in comparison with large online reissue. Small businesses were concerned with taBers if required to collect and remit sales taxes. 

new OSHA guidance suggesting that no operator Small business representatives recommended that 

may operate a crane ofa capacity greater than policymakers and legislators consider exempting 

that upon which they have been properly tested small online retailers from collecting and remitand certified. The concern was that such an in- ting taxes from internet sales. 

terpretation could mean that currently trained 

and certified operators may no longer be au tho- Small Business Pension-Related Issues. Adrized to operate cranes they are currently operat- vocacy hosted a roundtable on March 21, 2012, 

ing. Advocacy has conducted several follow-up where staff from the IRS and Treasury met with 

activities. small business stakeholders to discuss pensionSmall Business Innovation Research Program. 

In FY 2012, Advocacy hosted several roundtables in Washington, D.C. and in the Small 

Business Administration's 10 regions to discuss 

the Small Business Innovation Research (SBIR) 

program. On May 28, 2012, Advocacy held a 

roundtable in Washington, DC, to discuss proposed regulations to implement the revised SBIR 

program. Representatives from the House and 

Senate Small Business Committees, the Small 

Business Office of Technology. and the National 

Academy of Sciences served as panelists for this 

roundtable. On June 18 and June 28, 2012, SBA 

Office of Technology Associate Administrator 

Sean Greene spoke at roundtables Advocacy 

hosted in Austin, Texas, and Boston. Massachusetts. The purpose of these roundtables was to 

inform and to solicit input from small business 

research and development stakeholders regarding 

the SBA proposed SBIR program regulations. 

Advocacy hosted a third roundtable on this topic 

on July 9,2012, in New Orleans. Louisiana. 

Taxation on Internet Commerce. Congressional 

staff attended both small business tax roundtables 

on the issue of taxation on internet commerce on 

February 23, 2012, and May 3, 2012. Some small 

business stakeholders contended that it is unfair 

for businesses which have a physicallocatlon to 

be responsible for collecting and remitting sales 

7 Report on the Regulatory Flexibility Act, FY 2012 

related issues affecting small businesses. Small 

business representatives discussed the burdens 

associated with the "use it or lose it rule," which 

prohibits any contribution or benefit under a 

health flexible spending account (FSA) from 

being used in a subsequent plan year or period 

of coverage. A fier the roundtable, on May 30, 

2012, the IRS issued Notice 2012-40, providing guidance on health FSAs. The IRS notice 

requested comments on the potential modification or elimination of the use it or lose it rule for 

health FSAs. 

Voluntary Fiduciary Correction Program. On 

July 20, 2012, Advocacy hosted a roundtable 

where staff from the Employee Benefits Security 

Administration (EBSA) met with small businesses to discuss the voluntary fiduciary correction 

program, fee. filing, and electronic disclosure, 

and multiple employer plans and state-based employer plans. Small business stakeholders voiced 

concerns about EBSA's apparent new position 

on brokerage windows, which allow retirement 

plan participants to control certain investments 

made with their contributions. A fier the roundtable, on July 30, 2012, EBSA issued a revised 

guidance that addressed the small business concerns on brokerage windows. 
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Judicial Review of the 

RFA 

In 2012, the courts reiterated the findings of 

previous RFA cases and Congress/In National 

Association of Home Builders v. EPA, 682 F. 3d 

1032 (D.C. Cir. 2012), the court reviewed the 

issue of whether an agency's failure to convene 

a small business advocacy review panel before 

issuing a new rule was judicially reviewable. 

The court reiterated its findings in Allied Local 

& Regional Manufacturers Cauclls v. EPA, 215 

F.3d 61 (D.C.Cir. 2000) and said that the court 

<"has no jurisdiction to review challenges" to 

an agency's compliance with section 609(b). In 

Florida Wildlife Federation. Inc. v. Jackson, 853 

F. Supp. 1138 (N.D. Florida 20 12), the court addressed the issue of indirect impacts and restated 

that when a rule's only effect on small entities 

will be indirect, an agency may properly make a 

certification. In National Restaurant Association 

v. Solis, 2012 WL 1921115 (D.D.C. 2012), the 

court reiterated that the requirements of the RFA 

are ""purely procedural." 

J n addition, in Louisiana Forestry Association v. Solis, 2012 WL 3562451 (E.D. Pa. 2012), 

the court relied on the Senate committee report 

to address the RF A's requirement that an agency 

consider alternatives when promulgating rules. 

The court stated that Congress emphasized that 

the RFA does not require an agency to adopt a 

rule establishing differing compliance standards. 

exemptions, or any other alternative to the pro· 

posed rule. It requires that an agency, having 

identified and analyzed significant alternative 

proposals, describe those it considered and 

explain its rejection of any which, if adopted. 

would have been substantially less burdensome 

on the specified entities. Evidence that such an 

alternative would not have accomplished the 

stated objectives of the applicable statutes would 

sufficiently justifY the rejection of the alternative. 

7 For more detail, see Table A.2 in Appendix A. 

8 Report on the Regulatory Flexibility Act, FY 2012 

Moreover, in International Internship 

Programs v. Napolitano, 853 F. Supp. 2d 86 

(D.D.C. 2012), the court addressed the issue of 

agency decisions that were not "rules" under 

the RFA and found that in such an instance 

there is no claim for relief under the RFA. In 

addition, the court detennined that an agency 

is not required to conduct a periodic smalJ 

entity impact analysis pursuant to 5 USC §61 0 

ifthe agency certified under §605(b) that the 

regulation would not have a significant economic impact on a substantial number of small 

entities. 
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Chart 2.1 Number of Specific Comments in 

Advocacy Comment Letters, FY 2012 

12 a Improper certification 

,,'nadequate/missing IRFA 

10 

Inadequate analvsis of small 

entity impacts 

8 11. Significant alternatives not 

considered 

lI! Small entity outreach needed 

6 

.. Comment period too short 

4 Incorrect SiZE or cfass of entity 

Agency commended 

2 

Other'" 

0 

·"Other" comments include a variety of concerns; for exampll!, that the rule will have a negative 

impact or a significant economic impact on a substantial number of small entities. that further research or discussion 

was needed, that industry representatives provided specific commenrs, that small entity burdens should be re-cvaluated, 

etc 

9 Report on the Regulatory Flexibility Act, FY 2012 
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10 

Chart 2.2 Advocacy Comments: Major Reasons 

IRFAs Were Inadequate, FY 2012 (percent) 

50% 

Report on the Regulatory flexibility Act. fY 2012 

IIIIIrn::orrect size or class of 

entity 

l1li Il'Iadeqllateanaiysis of 

small entity impacts 

l1li Agency shollid do or 

should have done anlRfA 
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Table 2.1 Regulatory Comment Letters Filed by 

the Office of Advocacy, FY 2012 

Vv hele 

[),lte i\genc;. lule Published 

10/312011 DOT Comments on FAA's Draft Standard Operating 76 Fed. Reg. 54528 

Procedures (SOP) of the Aircraft Certification 

Service (AIR) Process for the Sequencing of 

Certification and Validations Projects. 

1015/2011 EPA Comments on EPA's Integrated Risk Informa- nla 

tion System Program and the Toxicological Review of Hexavalent Chromium. 

101712011 DOE Energy Conservation Program: Energy Conser~ 76 Fed. Reg. 43941 

vation Standards for Direct Heating Equipment. 

I O/lI/ZO II FWS Designation of Revised Critical Habitat for 76 Fed. Reg. 50542 

Southwestern Willow Flycatcher. 

10/2012011 EPA Proposed Revisions to the Definition of Solid 76 Fed. Reg. 44094 

Waste. 

1012512011 SEC Conflict Minerals, File Number S7-40-10. 75 Fed. Reg. 80948 

11I2212011 HHS Comments on the Department of Health and 76 Fed. Reg. 210 

Human Services, National Toxicology Pro~ 

gram's Report on Carcinogens. 

12/1/2011 DHS Comments on the Department of Homeland Se- 76 Fed. Reg. 46908 

curity's Proposed Ammonium Nitrate Security 

Program Rule. 

12/612011 USDA Traceability for Livestock Moving Interstate. 76 Fed. Reg. 50082 

1121120lZ EOP Impact of Reverse Auctions on Small Busi- nla 

nesses, 

212112012 EPA Non-hazardous Secondary Materials that are 76 Fed. Reg. 80452 

Solid Waste. 

311212012 DOL Application of the Fair Labor Standards Act to 76 Fed. Reg. 81190 

Domestic Service, Notice of Proposed Rulemaking. 

11 Report on the Regulatory Flexibility Act, FY 2012 
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Where 

l),lte ,\gl'n~) I ille Published 

3/12/2012 EPA Comments on EPA's Proposed Rule, National 77 Fed. Reg. 6628 

Emission Standards for Hazardous Air Pollutant Emissions: Hard and Decorative Chromium 

Electroplating and Chromium Anodizing Tanks; 

and Steel Pickling-HCI Process Facilities and 

Hydrochloric Acid Regeneration Plans. 

3/14/2012 EPA EPA's Integrated Risk Information System's nla 

Toxicological Review of Hexavalent 

Chromium. 

3/27/2012 ACUS Comments on Small Business Perspective on nla 

the Paperwork Reduction Act. 

412/2012 DOJ Delaying the Compliance Date for Certain Re- 77 Fed. Reg. 16196 

quirements of the Regulations implementing 

Titles II and 1lI of the Americans with Disabilities Act. 

5/1/2012 ACUS Comments on the Review of Regulatory Analy- nla 

sis Requirements and the April 24 Draft 

Recommendations. 

5/22/2012 FCC Comments on Proposed Mobile Device interop- 75 Fed. Reg. 9210 

erability in the Lower 700 MHz bands. 

61112012 OMB Comments on Request for Information on Fed- 77 Fed. Reg. 19357 

eral Participation in the Development and Use 

of Voluntary Consensus Standards and in Conformity Assessment Activities. 

6/1/2012 NARA Comments on Petition for Rulemaking on 77 Fed. Reg. 11414 

"Incorporation by Reference" and "'Reasonably 

Available." 

6/28/2012 NOAA Comments on Proposed Sea Turtle Conserva~ 77 Fed. Reg. 27411 

tion Rule Imposing New Shrimp Trawling Requirements. 

7/5/2012 FWS Endangered and Threatened Wildlife and Plants; 77 Fed. Reg. 32483 

Revised Critical Habitat for the Northern Spotted Owl; Proposed Rule and Availability of 

Supplementary Documents. 

12 Report on the Regulatory Flexibility Act. FY 2012 
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Vy here 

Date \gene) I !tie Published 

7/912012 CFPB Reopening of Comment Period and Request for 77 Fed. Reg. 33120 

Comment on Truth in Lending (Regulation Z). 

7/16/2012 SBA Comments on Proposed Small Business Innova- 77 Fed. Reg. 28510 

tion Size Regulations. 

7/24/2012 IRS Notice 2012-40, Potential Modification ofUse nla 

lt or Lose It Rule. 

8/3012012 CFPB Integrated Mortgage Disclosures under the Real 77 Fed Reg. 51116 

Estate Settlement Procedures Act (Regulation 

X) and the Truth in Lending Act (Regulation Z). 

911012012 BLM Oil and Gas: Well Stimulation, Including Hy- 77 Fed Reg. 27691 

draulic Fracturing on Federal Indian Lands. 

9/17/2012 State Small Business Innovation Research. nla 

nla = not applicable. 

See Appendix G for definitions of agency abbreviations. 

\3 Report on the Regulatory Flexibility Act, FY 2012 
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Table 2.2 Regulatory Cost Savings, FY 2012 

Cost Sd\ 111 us , c\UI.'IlC\ Subject DcscriptlOI] - - . Impact i\lcasures 

DOL H-2B Wage Methodology Rule, 75 Fed. Reg. 61578. In The first delayed imOctober 20 I 0, the Department of Labor published a proposed rule increasing wage rates for employees working 

under H~2B visas. The wage rates were to take effect in 

March 20 II. DOL extended the effective date to November 30, 201 I. citing small business concerns and Advocacy's comment letters. This resulted in savings for small 

businesses. In FY 2012, congressional action delayed the 

implementation of this rule twice, resulting in total cost 

savings of more than $ 1.1 billion. First, President Obama 

signed appropriations bills in November and December 

2011 that included language prohibiting any FY 2012 

federal funding to enforce the H-2B wage rule until October 1,2012. In addition, on September 28, 2012, the 

President signed into law H.1. Res. 117, which provides 

fiscal year 2013 appropriations for continuing projects 

and activities of the federal government through Wednesday, March 27, 2013. Under Sec. 101(a) ofH.1. Res. 117, 

the DOL lacks the appropriated funds to implement the 

H-2B rule increasing the wage rates. 

14 Report on the Regulatory Flexibility Act, FY 2012 

plementation resulted 

in $703 million in 

one-time cost savings 

for small businesses. 

The second delayed implementation 

from H.1. Res. 117 

resulted in a one-time 

cost savings to small 

businesses of$406.75 

million. 

In total, small business saved one-time 

costs of$ 1.1 0975 billion as a result of the 

delays. 
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DOT 2010-2011 Hours a/Service Rule RIN 2126-AB26. On The changes to the 

EPA 

Tuesday. December 27. 20 II, the Federal Motor Car- final rule resuited in 

rier Safety Administration (FMCSA) finalized its Hours annual cost savings 

of Service (HOS) for Drivers rule. The proposed rule, for small businesses of 

which was published on December 29, 2010, would $815 million. 

have reduced the daiJy maximum driving limit, reduced 

the maximum on-duty time limit, instituted mandatory 

breaks. and altered the current 34-hour restart provision. 

Following publication of the proposed rule, Advocacy 

hosted a small business roundtable (attended by the 

FMCSA Administrator and staff) on February 9, 2011, 

to discuss the proposed rule and obtain small business 

input. Advocacy also attended FMC SA's public listening 

session on the proposed rule on February 17,2011, and 

filed public comments on February 25, 2011. Advocacy's 

comments reflected the concerns of small business representatives in the trucking industry. Advocacy's comments recommended that FMCSA consider retaining its 

current regulations, assess potential unintended effects, 

and consider other costs and operational impacts before 

proceeding. The final rule made several changes from the 

proposed rule; most notably, it left the existing II-hour 

daily driving hours limit in place, left the existing 14-

hour daily duty hours in place, and reduced the limitations on the 34~hour restart period. 

2012 Construction General Permit (Final Rule) 77 FR The revisions made to 

/2866 (Feb. 29, 2012). In February 2012, the Environ- the requirements cremental Protection Agency published the Construction 

General Permit (Final Rule), which requires all construction activities disturbing more than one acre to install 

special controls and measures to limit the amount of ero~ 

sion that goes into U.S. waters as a result of storm water 

runoff. Advocacy worked closely with EPA and industry 

on revising the required controls to be less costly and 

more cost-effective during interagency review of the 

draft final rule. 

ated cost savings to 

small entities amounting to $150 million 

in the first year and 

annually. 

15 Report on the Regulatory Flexibility Act. FY 2012 
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Cost S,n IIlL'.S 

'\L'.enL\ Subject DeSCrl t)tlOl1 I t 'I ~ ~ - t mpac iV easlires 

EPA National Emission Standards/or Hazardous Air 

Pollutants/or Reciprocating Internal Combustion 

Engines (June 2012). In June 2012, the Environmental Protection Agency published a proposal to 

revise the current air pollution requirements for existing stationary reciprocating internal combustion 

engines (RICE), which include diesel-fuel/compression ignition (CI) engines and gas-fired/spark ignition (SI) engines. Advocacy had earlier proposed 

that existing SI and Cl engines in areas remote 

from human activity not be subject to emissions 

standards. catalyst retrofits, and testing requirements. Instead, Advocacy suggested that EPA adopt 

management practices that would include periodic 

inspection and replacement of maintenance items, 

such as engine oil and filter, spark plugs, hoses, and 

belts. The June proposal adopted Advocacy's suggestion for SI engines in remote areas. An engine 

would generally be considered to be in a sparsely 

populated area if there are five or fewer bUildings 

intended for human occupancy within 0.25 mile 

distance of the engine. Under the current rule, the 

capital and annual costs for four-stroke SI engines 

above 500 HP are estimated by EPA at $310 million 

and $150 million, respectively. Under the new proposal, the capital and annual costs are estimated at 

$30 million and $12 million respectively. 

16 Report on the Regulatory Flexibility Act. FY 2012 

The cost savings from 

the new proposal for 

modifying the rule for 

ST engines are estimated at $138 million 

annually. 
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('ost S::\\ 111,,5 

{\"CIlC\ Subject DCSL'III)llllll I t M ~ ~ J IllpdC C,lsurcs 

SBA 

DOJ 

Small Business Size Standards: Professional, Scientific and Technical Services. On February 10. 2012, the 

Small Business Administration (SBA) published the 

final regulation concerning its periodic review of size 

standards. For NAICS code 54 (Professional, Scientific, 

and Technical Services), the SBA size standard threshold 

pre-proposal was at $4.5 million. SBA proposed increasing it to $19 million. Based on SBA's own assessment, it 

received about 1,200 comments addressing the proposed 

changes. Advocacy, in meetings with industry and trade 

groups, proposed an alternative size standard threshold 

between $5 million and $14 million. In the final regulation, SBA decided to set the size standard threshold for 

NArCS code 54 at $7 million. 

Amendment of Americans with Disabilities Act 

Title TTl Regulations. On September 15,2010, the 

For codes 541310 (Architectural Services), 

541330 (Engineering 

Services), and 541370 

(Surveying and Mapping), annual small 

business cost savings 

totaled $134.5 million. 

The extension of the 

compliance date leads 

Department of Justice published a final rule that to $99.6 million in 

amends the agency's regulations implementing Title one-time cost savings 

III of the Americans with Disabilities Act (ADA). for small businesses. 

Requirements for swimming pools. wading pools, 

and spas were to be implemented on March IS, 

2012, On January 31, 2012, DOJ released guidance 

on these pool requirements, in particular, pool lift 

rules. Small businesses contacted Advocacy and 

DOJ regarding this guidance document, seeking an 

extension ofthe compliance date due to this new 

guidance document. On March 15, 2012, DOJ extended the compliance date by 60 days and sought 

public comment. Advocacy submitted a comment 

letter recommending a further extension of the compliance date. 001 extended the compliance date to 

March 15,2013. 

See Appendix G for definitions of agency abbreviations. 

17 Report on the Regulatory Flexibility Act. FY 2012 
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Table 2.3 Summary of Cost Savings, FY 2012 

(dollars)l 

I 11 sl-\ (.'.1r ' Rule Inlcl\clltiOIl C()~ts ,\nllu.li (osts 

H-2B Wage Rule (DOL)' 705,779,726 

2010-20 II Hours of Service Rule (DOT)' 815,000,000 815,000,000 

2012 Construction General Permit (EPA)' 150,000,000 150,000,000 

National Emissions Standards for Hazardous Air 

Pollutants for Reciprocating Internal Combustion 

Engines (EPA)' 138,000,000 138,000,000 

Small Business Size Standards,: Professional, 

Scientific, and Technical Services (SBA)' 134,457,859 134,457,859 

H-2B Wage Rule (DOL)' 406,750,000 

Amendment of Americans with Disabilities Act Title 

II and Title III Regulations (DOl)' 99,658,231 

TOTAL 2,449,645,816 1,237,457,859 

L The Office of Advocacy generally bases its cost savings estimates on agency estimates. Cost savings tor a given 

rule arc captured in the fiscal year in which the agency agrees to changes in the rule as a result of Advocacy's intcr~ 

ventioo. Where possible, cost savings are limited to those attributable to small business. These are best estimates. 

First·year cost savings consist of either capital Of annual costs that would be incurred in the rule's first year of 

implementation. Recurring aIlnual cost savings are listed where applicable. 

2. Source: Advocacy calculations based on DOL Regulatory Impact Analysis (RIA). 

3. Source: Exhibit 8-2 Final DOT RIA. 

4. Source: 77 FR 12866 (February 29, 2012) 

5. Source: EPA RIA. Pfl. 4-10, www.rpa.gov/ltn/atw/ricr/ricrpg.html. 

6. Source: Industry analysis and FPDS data pull on 10/03/2012. 

7. Source: DOL analysis. 

8, Source: 001 Small Business hnpact Analysis. 

18 Report on the Regulatory Flexibility Act, FY 2012 
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3 Advocacy Review of Agency RFA 

Compliance in Fiscal Year 2012 

The following section provides an overview of 

RFA and Executive Order 13272 compliance 

by the agencies, as well as reports on individual 

agencies' compliance for fiscal year 2012. 

Regulatory Agendas Section 602 of the RFA requires that in April 

and October each agency publish a regulatory 

flexibility agenda in the Federal Register. This 

agenda must provide specific information about 

the subject of any rule which the agency anticipates proposing, if that regulation is likely to 

have a significant economic impact on a substantial number of small entities. Section 602 requires 

the agencies to provide these agendas to the 

Chief Counsel for Advocacy for comment. It also 

requires the agencies to provide the agendas directly to small businesses or their representatives 

through publications "likely to be obtained" by 

small businesses, and to solicit comment on the 

agendas from small entities who wilJ be subject to 

the listed regulations. These regulatory agendas 

are useful for putting small entities on notice of 

forthcoming regulations~ and they are often the 

subject of discussion at Advocacy roundtables. 

In FY 2012, regulatory flexibility agendas 

were published in the Federp/ Register on Febru~ 

ary 13, 2012, Agendas were provided to Advocacy on that date. 

The SBREFA Panel 

Process 

Section 609 of the RFA requires a "covered agen~ 

cy" to convene a small business advocacy review 

(SBAR or SBREFA) panel whenever a draft 

regulation is anticipated to have a significant eco~ 

nomic impact on a substantial number of small 

entities, Wilh the passage of the Dodd-Frank Act 

19 Report on the Regulatory Flexibility Act. FY 2012 

in 20ID, the Consumer Financial Protection Bureau joined the Occupational Safety and Health 

Administration and the Environmental Protection 

Agency as the only covered agencies in the fed· 

eral government. Since t 996, Advocacy has par· 

ticipated in 55 SBREFA panels, which are composed of representatives of the covered agency, 

Advocacy, and OMB's Office of Information and 

Regulatory Affairs, In FY 2012, the CFPB conducted three panels, EPA initiated one new panel, 

and OSHA conducted no SBREFA panels, Panels 

to date are listed in Appendix Table A.3. 

Retrospective Review of 

Existing Regulations RFA Section 610 requires federal agencies to 

examine existing rules for regulatory burden on 

small entities. The purpose of the review, which 

must be performed within to years for final rules 

that have a significant economic impact on a sub~ 

stantial number of small entities, is "'to determine 

whether such rules should be continued without 

change, or should be amended or rescinded, consistent with the stated objectives of applicable 

statutes, to minimize any significant economic 

impact of the rules upon a substantial number of 

such small entities."s Agencies report planned 

section 610 reviews in the fall semiannual Uni· 

fied Agenda of Regulatory and Deregulatory 

Actions.9 As noted earlier, President Obama has 

endorsed a broader review of existing regulations 

to make regulations more effective and less burdensome. Executive Order 13563, signed January 

18, 20ll, instructed agencies to develop a plan for 

g 5 U.S.c. 610(,) 

The Unified Agenda is available online at www. 

reginro.gov. Section 610 reviews can be found using 

the 'Advanced Search' feature. 
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periodic retrospective review of all existing regu~ 

lations and E.O. 13579, signed July It, 2011, said 

that independent agencies should also promote 

the goals outlined in E.O. 13563." OMB issued a 

series of memoranda implementing this require· 

ment.!! In response, agencies developed plans, 

some with the benefit of significant public input, 

and published these plans online, 12 The White 

House has posted the plans and agency updates 

online.!3 

The Office of Advocacy provided comments 

through OMB on agency plans and will monitor 

agency compliance with their plans, including 

the continuation of periodic reviews beyond this 

initial implementation period. Advocacy also 

welcomes input from small entities to help identify future reguJatOl)' candidates for retrospective 

review, 

RF A Compliance by 

Agency and Issue 

Department of Agriculture, 

Animal and Plant Health 

Inspection Service 

Issue: Identification and Documentation of 

the Traceability of Livestock Moving Inter~ 

stale. On Auguslll, 2011, the Animal and Planl 

Health Inspection Service (APHIS) proposed to 

establish national official identification and docu~ 

10 See Appendices 0 and E. 

11 M-II-IO, Executive Order 13563, "Improving 

Regulation and Regulatory Review" (February 2, 

2011), M-l t -19, "Retrospective Analysis or Existing 

Sigmficant Regulations" (April 25, 20(1), and M-II25, Final Plans for Retrospective Analysis of Existing 

Rules (June 14,2011). 

12 For example, EPA posted its plan at http://www.epa. 

gov/improvingrt~uJationsl. DOT posted information 

on its regulatory portal, http://regs.dDLgov/rdrospectivereview.htm. 

13 hltp:/Iwww.whitehouse.gov121stcenturygov! 

actions/ll st-century-regulatory-system , 

20 Report on the Regulatory flexibility Act. fY 2012 

mentation requirements for the traceability of 

livestock moving interstate. Under the proposed 

rule, livestock. such as cattle and poultry, that 

are moved in interstate transit are required to be 

officially identified with a tag and accompanied 

by an interstate certificate of veterinary inspection or other documentation. Small businesses 

were concerned that APHfS had concluded that 

the rule would not have a significant economic 

effect on a substantial number of small businesses. Small businesses were particularly concerned that the agency did not consider the costs 

associated with the time. labor. and equipment 

needed to comply. Advocacy wrote a public 

comment letter encouraging APHIS to conduct 

more outreach to the cattle community and 

publish an initial regulatory flexibility analysis 

for this rule that includes estimates of the time, 

labor, and equipment costs that small cattle op· 

erations will incur from having to tag all cattle. 

A finat rule has not yet been proposed. 

Department of the Interior, 

Bureau of Land Management 

Issue: Managing Flowback Water from Hydraulic Fracturing Operations. On May 11,2012, the 

Bureau of Land Management (BLM) proposed a 

rule requiring detailed plans for managing flow~ 

back water from hydraulic fracturing operations, 

public disclosure of chemicals used in hydraulic 

fracturing operations, and confirmation that 

wells used in fracturing meet certain construction standards including requiring cement 

bond logs on surface casings. Several smal1 

businesses indicated that BLM's assumptions 

regarding the processes of well stimulation and 

hydraulic fracturing underestimate the costs that 

will be incurred by businesses under this rule. 

Advocacy published a comment letter encouraging BLM to consider less costiy and less pre· 

scriptive alternatives to the proposed rule and to 

publish a revised economic analysis and TRF A. 

A final rule has not yet been proposed. 
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Department of the Interior, 

Fish and Wildlife Service 

Issue: Designation of Critical Habitat for the 

Northern Spotted Owl (NSO). In February 

2012. the Fish and Wildlife Service (FWS) proposed a revised critical habitat designation for 

the NSO on more than 13 million acres in California, Oregon, and Washington, including more 

than I million acres of private land. On June t, 

2012, FWS released an economic analysis on the 

NSO critical habitat designation. FWS has certified that the proposed critical habitat designation 

will not have a significant economic impact on a 

substantial number of small entities. Small businesses contacted Advocacy, citing concern that 

FWS's certification undercounts the number of 

small businesses affected by the rule and underestimates the economic impact ofthis rule on 

small business. Tn a public comment letter, Advocacy encouraged FWS to reevaluate the economic impacts of its critical habitat designation 

on smaH businesses, so that the agency can better 

analyze regulatory alternatives that minimize the 

impact ofthis rulemaking, FWS has not finalized 

the rulemaking. 

Department of Justice 

Issue: Americans with Disabilities Act Regulations on Public Pools and Spas. In September 20 I 0, the Department of Justice (DOJ) 

published a final rule that amends the agency's 

regulations implementing Title III of the Americans with Disabilities Act (ADA), Title 1JI sets 

standards for making buildings accessible for 

people with disabilities and requires existing 

facilities to remove barriers that conflict with 

these standards when such modifications are 

'''readily achievable," The provisions regarding 

accessible entry and exit to existing swimming 

pools, wading pools, and spas were to be implemented on March 15. 2012. 

On January 31, 2012, DOJ released guidance on these pool requirements, Small businesses contacted Advocacy and DOJ regarding 

21 Report on the Regulatory Flexibility Act, FY 2012 

this guidance document, seeking an extension of 

the compliance date, On March 15.2012, DOJ 

extended the compliance date by 60 days and 

sought public comment on further extensions. 

Advocacy submitted a public comment letter recommending an extension of the compliance date. 

DOJ extended the compliance date to March 

15,2013. The extension of the compliance date 

led to $99.6 miHion in one-time cost savings for 

small businesses. 

Department of Labor 

Issue: H-2B Visa Wage Rule. In October 2010, 

the Department of Lab or (DOL) released a proposed rule that changed the methodology for 

calculating the wages ofH-2B visa workers, increasing these wages by $1.23 to $9.72 per hour. 

The H-2B visa program provides employers facing a shortage of seasonal workers a legal method to temporarily hire nonagricultural foreign 

workers. Some of the top industries that utilize 

the H-2B program are landscaping, lodging, construction, restaurants. and seafood processing. 

Advocacy has consistently worked with 

small businesses on the H-2B wage rule, holding 

two roundtables and writing five public comment letters to DOL citing the negative impact 

the wage increase will have on small businesses. 

Based on Advocacy's involvement in this issue, 

DOL has provided multiple extensions of the 

effective date ofthis rule, postponing its imp)e~ 

mentation date until November 30, 2011 < In FY 

2012. congressional action delayed the implementation of this rule twice. In November and 

December 20 II. President Obama signed two 

appropriations bills that included language pro· 

hi biting any FY 2012 federal funding to enforce 

the H-2B wage rule until October I. 20l2. In 

September20l2, President Obama signed another appropriations bill that included language prohibiting funding ofthe H-2B rule until March 27, 

2013. These delays in implementation resulted in 

one-time cost savings to small businesses of over 

$1.I billion. 
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Issue: Fair Labor Standards Act (FLSA) Applieation to Domestic Service. In December 

2011, the Department of Labor released a proposed rule that would require some companion 

care workers, such as those hired by staffing 

agencies, to be paid minimum wages and overtime under the FLSA. Companion care workers 

are nonmedical aides who provide in-home assistance to the elderly and infirm; these workers are 

currently exempt from FLSA requirements. The 

proposed rule would limit the companion care 

exemption to those employed by the family or 

household using those services. Advocacy held a 

small business roundtable in which small staffing 

agencies expressed concern that the overtime pay 

requirements will add significant burdens and 

costs, particularly for overnight shifts and live-in 

workers. In a public comment letter, Advocacy 

recommended that DOL publish a supplemental 

initial regulatory flexibility analysis (IRFA) to 

reevaluate the impact of this rule on small busi~ 

ness, and consider regulatory alternatives to this 

rulemaking that would accomplish the agency's 

goals without harming small businesses. DOL 

has not finalized this rulemaking. 

Issue: Application of the Longshore and HarN 

bor Workers Compensation Act. The American 

Recovery and Reinvestment Act of2009 (ARRA) 

contained amendments to the Longshore and 

Harbor Workers Compensation Act (LHWCA), a 

federal program that requires employment injury 

protection for workers injured on the navigable 

waters of the United States or adjoining areas. 

The ARRA exempted all entities conducting repair and dismantling of recreational vessels from 

LHWCA insurance, provided that their workers are subject to coverage under a state workers' compensation law (which is significantly 

less expensive). Before this change, the statute 

exempted only vessels under 65 feet in length. 

Small businesses and members of Congress contacted Advocacy citing concerns that DOL's 2011 

regulations implementing the ARRA actually 

increased the number of manufacturers, builders, 

and repair shops required to buy federal insurance 

22 Report on the Regulatory Flexibility Act. FY 2012 

because it created a more restrictive definition of 

"'recreational vessel." Small businesses were also 

concerned with another provision that set confusing parameters for when an employee doing both 

recreational and commercial repair work would 

be required to obtain LHWCA coverage. In December 2011, DOL released a final rule that adopted regulatory alternatives suggested by Advocacy and small business groups, which minimize 

the economic impact of this rulemaking. This rule 

resulted in small business cost savings that were 

unquantifiable. 

Issue: Nondisplacement of Qualified Workers 

under Service Contracts. Tn March 2010, DOL 

released a proposed rule that implements Execu~ 

tive Order 13495, which slates that the federal 

government's procurement interests in economy 

and efficiency are served when a winning contractor and subcontractor (successor contractors) to a federal service contract hire the losing 

contractor's (predecessor contractor) employees. 

This rule requires that any federal service contract and contract solicitations over $100.000 in· 

elude a clause that requires successors and their 

subcontractors to offer qualified employees of 

the predecessor contractor a right of first refusal 

of employment. 

Small business stakeholders expressed 

concern that there may be problems with implementing this executive order that may add to 

the compliance costs and regulatory burdens for 

small contractors. In particular, small contractors 

were concerned that the deadlines outlined in the 

proposal may have a negative impact on a suc· 

cessor contractor's ability to perform a follow·on 

contract. 

Based on an Advocacy public comment letter, DOL adopted flexibilities in these deadlines. 

DOL also clarified the interaction ofthis rule 

with current federal requirements. such as those 

under SBNs HUBZone program and the Department of Homeland Security's Employment Eligibility Verification (E-VerilY) Program. This rule 

resulted in small business cost savings that were 

unquantifiable. 
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Department of the Treasury, 

Internal Revenue Service 

Issue: Potentia) Modification orUse It or Lose 

It Rule. On May 30, 2012, the Internal Revenue 

Service (IRS) issued Notice 2012-40 to provide 

guidance for health flexible spending accounts 

(health FSAs). Among other things, the IRS notice requests comments on the potential modifi· 

cation or elimination of the "use it or lose it rule" 

for health FSAs. The use it or lose it rule prohib~ 

its any contribution or benefit under an FSA from 

being used in a subsequent plan year or period of 

coverage. Thus, under this rule, unused amounts 

in the health FSA are forfeited at the end of the 

plan year. The IRS notice observed that, under 

changes in tax law pursuant to the Patient Protection and Affordable Care Act of 20 I 0, the use it 

or lose it rule may no longer be necessary. 

On July 24, 2012, Advocacy submitted a 

public comment letter commending the IRS for 

issuing Notice 2012~40 and considering eliminating a rule that burdens small business. Advocacy's comment letter recommended that the IRS 

revoke the use it or lose it rule. Instead ofrequiring the forfeit of unused amounts in a health FSA 

at the end of a plan year, Advocacy suggested 

that the IRS should permit an employer to give 

plan participants the choice of receiving the 

unused taxable cash or making a tax-deferred 

contribution to the employer's Internal Revenue 

Code section 401(k), section 403(b), or section 

457(b) plan. 

Consumer Financial 

Protection Bureau 

Issue: Qualified Residential Mortgages. On 

July 9, 2012, the Office of Advocacy submitted a public comment letter to the Consumer 

Financial Protection Bureau (CFPB) on the reopening ofthe comment period on Regulation Z; 

Docket No.CFPB-20 12-0022 Truth in Lending 

as it pertains to qualified residential mortgages 

(QRM). This matter was originally proposed by 

23 Report on the Regulatory Flexibility Act. FY 2012 

the Board of Governors ofthe Federal Reserve 

on May 11,2011. The proposed rule addressed 

the new ability-to-repay requirements that will 

apply to consumer credit transactions secured by 

a dwelling. It also addressed the definition of a 

qualified mortgage (QM). In the QM proposal, 

the Federal Reserve set forth two alternatives: 

Alternative I would provide for a legal safe harbor from the ability to repay requirements; Alternative 2 would provide a rebuttable presumption 

of compliance. Small banks expressed concerns 

about the definition of QM. Advocacy asserted 

that community banks would no longer originate 

mortgage loans ifthe rules provided only a rebuttable presumption of compliance. A safe harbor, on the other hand, would allow small lenders 

to operate within known boundaries and allow 

consumers to obtain affordable loans. Advocacy 

encouraged the CFPB to give full consideration 

to the comments from small banks. 

In addition, the CFPB requested comment 

on new data that the CFPB received from the 

Federal Housing Finance Agency. The CFPB 

proposed to use the data to analyze whether a 

lender complied with the ability-to-repay requirements. The CFPB asserted that loan performance, as measured by the delinquency rate, was 

an appropriate metric to evaluate whether a consumer had the ability to repay those loans at the 

time the loan was made. Advocacy questioned 

that assertion because a consumer's circumstances may have changed after a loan was made. 

Issue: Integrated Mortgage Disclosures under 

the Real Estate Settlement Procedures Act 

(Regulation X) and the Truth in Lending Act 

(Regulation Z) (RESPAffILA). On August 30, 

2012, the Office of Advocacy submitted a public 

comment letter to the CFPB on the proposed rule 

on Integrated Mortgage Disclosures under the 

Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation 

Z) (RESPAITILA). The comment focused on 

the proposed amendment to 12 CFR § 1026.4, 

which revises the test for determining the finance 
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charge for residential mortgage loans. The pro~ 

posed amendments to section 1026.4 replace the 

current "some fees in, some fees out" approach 

to the finance charge with a simpler, more inclusive test based on the general definition of 

finance charge in T1LA section 106(a). Under 

proposed section t 026.4, the current exclusions 

from the finance charge would be largely elimi~ 

nated for closed-end transactions secured by real 

property or a dwelling. Advocacy expressed concern that the proposed revisions could result in 

small community banks exiting the marketplace, 

leading to less competition and higher prices for 

consumers. This rule was the subject of a Small 

Business Regulatory Enforcement Fairness Act 

panel that convened on February 21,2012. In 

light ofthe information that the CFPB gleaned 

from the small banking industry representatives, 

Advocacy suggested that the CFPB consider alternatives to these proposed changes. 

Advocacy also expressed concerns about 

the lack of adequate notice because small entities that relied solely on the Federal Register for 

their information had less than 10 business days 

to submit comments. As a result, the comment 

deadline was extended to November 6, 2012, to 

coincide with the remainder of the proposal. 

Environmental Protection 

Agency 

Issue: Proposed Revisions to the Definition of 

Solid Waste (Recycling) Final Rule_ On October 20, 2011, Advocacy submitted a public comment letter on the proposed revisions to the 2008 

final rule regarding the Environmental Protection 

Agency's (EPA) Revisions to the Definition of 

Solid Waste (DSW). The 2008 final rule excludes 

certain secondary materials from regulation as 

hazardous under three very specific circum~ 

stances, including when materials are transferred 

to another company for recycling under specific 

conditions. These regulatory alternatives significantly reduced small business costs. EPA essen24 Report on the Regulatory Flexibility Act. FY 2012 

tially proposed to eliminate the exclusion for the 

so-called transfer-based exclusion, and to make 

significant modifications to the legitimate recy~ 

cling requirements. 

Advocacy submitted a public comment letter stating that EPA should allow implementation 

of the 2008 final rule with some small revisions. 

The 2008 DSW final rule was crafted from 16 

years of compromise and litigation between 

industry stakeholders, environmental organiza~ 

tions, and EPA. Advocacy urged EPA to retain 

the 2008 final rule provisions, particularly those 

related to the transfer-based exclusion and the 

requirements for legitimate recycling. 

EPA conducted an extensive risk analysis 

of the 2008 rule prior to the final rule being 

promulgated, and concluded that there would 

be no net risks to future environmental and human health and safety from the rule. Advocacy 

believes that the 2008 rule will yield substantial 

economic savings to tens of thousands of small 

business generators, welt in excess of EPA's current estimate, while still meeting the statutory 

goals of protecting human health and the environment and promoting recycling. EPA has not 

yet issued a new revised rule. 

Issue: Proposed Revisions to Nonbazardous 

Secondary MateTials that aTe Solid Waste 

(NHSM). On February 21, 2012, Advocacy submitted a public comment letter on the proposed 

revisions to the final rule regarding nonhazardous materials that are solid waste when used as 

fuels. The rule was promulgated on March 21, 

2011. Nonhazardous secondary materials are 

materials that are left over after an industrial or 

other process. In many cases, these materials are 

burned in boilers as fuel. This use of secondary 

materials in boilers is a form of recycling that 

avoids the expense of sending these secondary materials to a landfill, paying for substitute 

fuel, and contributing to the release of additional 

greenhouse gases. Ifthe material is determined to 

be a "nonwaste," then the burning of the material 
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is regulated under the industrial boilers rule. If 

the material is determined to be a "'solid waste," 

then the boiler is regulated as a commercial industrial solid waste incinerator (CISWI), which 

is regulated under a separate, more stringent air 

pollution standard, generally making it impracticable for combustion. 

EPA's failure to designate certain fuels as 

non wastes would require disruption of manufac~ 

turing processes at many sites, including cement 

kilns, steel mills, paper mills, and other manufacturing plants. Advocacy asked EPA to make 

the non waste designation for (1) off-specification 

used oil, (2) pulp and paper processing residuals, 

(3) scrap tires in stockpiles. (4) animal manure, 

(5) treated wood, and (6) pulp and paper sludges, 

Advocacy did not see a clear difference between 

these wastes and the nonwaste secondary materials proposed by EPA. EPA has not yet issued a 

new final rule. 

Issue: National Emissions Standards for Hazardous Air Pollutant Emissions: Hard and 

Decorative Chromium Electroplating and 

Chromium Anodizing Tanks. On March 12, 

2012, Advocacy submitted a public comment letter to the EPA on the supplemental notice of proposed rulemaking. National Emissions Standards 

for Hazardous Air Pollutant Emissions: Hard and 

Decorative Chromium Electroplating and Chromium Anodizing Tanks. EPA's notice presented a 

neW technology and a new residual risk analysis 

that would result in stricter emissions limits for 

hexavalent chromium. Although EPA had certified that the proposed action would not have a 

significant economic impact on a substantial 

number of small entities, Advocacy was concerned that the certification lacked a sufficient 

factual basis. Also, EPA had not demonstrated 

that the proposed requirements were teChnically 

feasible because of a lack of data on the use of 

alternatives to perfluorooctyl sulfonates (PFOS) 

fume suppressants. At Advocacy's request, EPA 

collected further data from small businesses and 

included studies on the effectiveness, availability 

25 Report on the Regulatory Flexibility Act, FY 2012 

and cost of non~PFOS fume suppressants. EPA 

signed the final rule on September 19,2012. 

Issue: SBREFA Panels. In 2011, EPA convened 

two panels that Were not completed. EPA has 

subsequently published proposed andlor final 

rules within the scope of these panels, after 

making the required certifications under section 

605(b). 

Greenhouse Gas Emissions from Electric 

Utilities. In January 2011. EPA signed a settlement agreement requiring EPA to propose green~ 

house gas (OHO) emission standards for new 

and existing coal~fired electric utilities. 14 The 

Office of Advocacy filed public comments on the 

settlement agreement, raising conCerns about the 

amount of time allowed for regulatory develop~ 

ment, including SBREFA panelsY EPA convened a SBREFA panel in June 20 II." Advocacy 

objected in writing to the convening because 

EPA was, at that time, unprepared to discuss its 

regulatory approach or altematives. l1 EPA met 

with small entity representatives in the context 

of the panel, but ceased work on the panel soon 

afterwards. No panel report has been prepared. 

EPA published a proposed rule for GHG emission standards for new coal~fired electric utilities 

in Apri12012. certifying that the rule would have 

no significant economic impact on a substantial 

number of small entities. 18 EPA has not an~ 

14 See bttp:llwww.epa.gov!atrqualify/cpslsdtlement. 

html. 

15 See http://www.5.ba.gov/contentJ1etter~dated. 

011911.environmental-protection-agency. 

16 Although EPA lists its SBREFA panels on its public 

website (http://epa.goY/sbrefa/sblir-panels.html), 

the listing for "Greenhouse Gas Emissions from Electric Utility Steam Generating Units" no longer appears 

on the site. 

17 See http://www.sba.goY/contentlletter-dated06132011-environmental~protection-agency. 

18 See http://yosemite.epa.gov/opcilRuleGate.osf/ 

(LookupRIN)/2060-AQ9J for more information on 

the status ofGHG emission standards for new coalfired electric utilities. 
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nounced plans to propose GHG emission stan~ 

dards for existing coal-fired electric utilities. 19 

Emissions from Petroleum Refineries. [n 

January 20 II, EPA signed a settlement agreement requiring EPA to propose GHG emission 

standards for new and existing petroleum refineries." In August 2011, EPA convened a SBREFA 

panel encompassing this and other emission 

standards under consideration, including a reconsideration of New Source Performance Standards 

(NSPS) issued in 2008 and the NESHAP Risk 

and Technology Review required under Clean 

Air Act section 112.21 Advocacy again objected 

in writing.22 EPA met with small entity representatives, but soon after ceased work on the panel. 

No panel report has been prepared. Tn September 

2012, EPA published a final rule resolving the 

reconsideration of the 2008 NSPS, certifJdng 

that the rule would have no significant economic 

impact on a substantial number of small entities." Also in September 2012, EPA submitted to 

OMB for review under Executive Order 12866 a 

draft proposed rule, which, by EPA's description, 

would cover the remaining issues except GHG 

emission standards.H 

Federal Communications 

Commission 

Issue: Broadband Competition. On May 22. 

2012, the Office of Advocacy submitted a com19 See http://yosemite.epa.gov/opeilRuleGate.nsf/ 

(lookupRIN)12060-ARJJ for more infonnation on 

the status ofGHG emission standards for existing 

coal-fired electric utilities. 

20 See http://www.epa.gov/airquality/cps/seUlement. 

html 

21 See http://epa.gov/sbrefa/rtfinery.html. 

22 See http://www.sba.gov/contentlleUer-dated08042011-environmental·protection*agenc)', 

23 77 F.R. 56422 (September 12,2012) 

24 See http://yosemite.epa.gov/opeilRuleGate.nsf/ 

byRP.oI/2060-AQ75 

26 Report on the Regulatory Flexibility Act, FY 2012 

ment to the Federal Communications Com~ 

mission (FCC) regarding several proceedings 

involving attempts to support competition in the 

broadband marketplace. The comments focused 

on (I) the FCC's notice of proposed rulemaking 

promoting interoperability in the 700 MHz commercial spectrum, (2) the FCC's ongoing special 

access proceeding, and (3) an industry petition 

for examination of the FCC's rules regarding 

copper retirement. 

700 MHz Interoperability. Currently, there are 

two distinct sets of technical specifications for 

devices operating in the Lower 700 MHz spectrum band, resulting in a lack of interoperability 

between devices operated by different service 

providers within the band. In 2009, an alliance 

consisting of four Lower 700 MHz A Block Ii· 

censees filed a petition for rulemaking requesting 

the FCC to require that all mobile devices for the 

700 MHz band be capable of operating over all 

frequencies in the band. In April 2012, the FCC 

issued a notice of proposed rulemaking seeking 

to resolve whether a single, unified band class 

for devices in the Lower 700 MHz band would 

result in hannful interference with the operations 

of Lower 700 MHz Band C Block licensees, and 

whether such interference can be mitigated. In 

public comments to the FCC, Advocacy echoed 

concerns that the lack of700 MHz interoperability is preventing full and productive use of 

valuable spectrum to deploy mobile broadband, 

particularly in rural areas. Advocacy urged 

the FCC to move forward with a final rule, if 

technologically feasible, that would provide for 

interoperability in the lower 700 MHz spectrum 

by requiring all lower 700 MHz licensees to provide only devices that are capable of operating in 

Band Class 12. No final rule has been issued. 

Special Access. Special access services are the 

broadband '''last mile" facilities through which 

applications travel to reach businesses and the 

cell towers that transmit these applications to 

wireless devices. These facilities are largely 
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owned by incumbent local exchange carriers (lLECs such as AT&T, Verizon, and Century Link! 

Qwest). Competitive carriers must tease access 

to these facilities in order to provide services 

to their customers. In recent years, competitive 

carriers have petitioned the FCC to reexamine 

its special access rules to ensure that the rates, 

terms, and conditions available to competitive 

carriers for special access are fair and reason· 

able. Advocacy provided public comments to the 

FCC about the importance of special access for 

ensuring a competitive broadband marketplace 

that offers small business consumers affordable, 

high-quality business broadband services, and 

encouraged the FCC to move forward in addressing the concerns raised by competitive carriers. 

The FCC recently suspended its pricing flexibility rules and will not be granting further instances 

of pricing flexibility until it has thoroughly reviewed its special access rules. It has also initiated a long-awaited mandatory data request from 

carriers regarding special access rates that will 

inform the review of its rules. 

Legacy CoppeT Retirement. In many cases~ 

legacy copper wire infrastructure provides the 

only last mile facility connecting many business customer locations. FCC regulations grant 

competitive carriers the right to lease wholesale 

access to copper loops from IlECs so that they 

can offer Ethernet and DSL broadband services 

to business customers. \Vhen flECs install new 

fiber connections, they often retire their legacy 

copper loops. In so doing, they eliminate the only 

alternative to the IlEe fiber connection. which is 

not subject to the same FCC open access requirements as copper. In its public comment letter to 

the FCC, Advocacy repeated its concerns shared 

by small businesses that allowing IlECs to retire 

copper loops without regard to effects on competition may be impeding the ability of small business consumers to get access to affordable, high 

speed broadband. Advocacy encouraged the FCC 

to engage with competitive and incumbent carriers to determine what can be done to fix some 

27 Report on the Regulatory Flexibility Act. FY 2012 

ofthese issues in a way that allows incumbent 

carriers to retire unused copper without harming 

consumers, many of which are small businesses. 

The FCC has not yet indicated that it intends to 

move forward on this issue. 

Securities and Exchange 

Commission 

Issue: Conflict MineTals. On December 23. 

2010, the Securities and Exchange Commission (SEC) issued a proposed rule that would 

require businesses that file with the SEC and 

manufacture products that require tin, tantalum, 

tungsten, and gold to report whether the miner~ 

als originated in the Democratic Republic of 

Congo (DRC) or a neighboring country. Under 

the proposed rule, if a business discovers that its 

minerals do originate in the DRC or one of its 

neighbors, more reporting would be required. 

The businesses would be required to report on 

the measures they took to exercise "due diligence" on the source and chain of custody of the 

minerals. The proposed rule would also require 

businesses to provide independent verification 

of these steps through an independent private 

sector audit ofthe reporting. 

In the proposed rule's initial regulatory 

flexibility analysis, the SEC estimated that approximately 793 small entities would be subject 

to the proposal. The proposed rule stated that 

the costs of compliance are "difficult to assess 

but are likely insignificant." On October 6, 

2011, the SEC issued a notice to extend the period to submit comments for the proposed rule 

until November 1,2011. 

Small business stakeholders had been in 

contact with Advocacy to express concern about 

the proposed rule. Small businesses contended 

that the SEC underestimated both the costs the 

proposed rule will impose and the number of 

small businesses that would be affected. Most 

small businesses that would be subject to the 

proposed rule participate in a complex supply 

chain composed of numerous other businesses. 
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The proposed rule would affect most manufacturers of electronics, aerospace, automotive, 

jewelry, health care devices, and industrial machinery. Even firms that do not necessarily file 

with the SEC might be affected if they were part 

of the supply chain to SEC-filing companies for 

these metals. Because the SEC did not take into 

account the complexity of supply chains and the 

number of small firms that are part of those supply chains, it appeared that the SEC had underestimated the number of small firms that would 

be affected by the proposed rule. On October 25, 

2011, Advocacy filed a public comment letter 

recommending that the SEC publish an amended 

IRF A that would more accurately describe the 

costs and burdens of the proposed rule. and more 

accurately detail the number of small entities that 

would be affected. 

Compliance with E.O. 

13272 and the Small 

Business Jobs Act Table 3.1 displays agency compliance with E.O. 

13272's three agency requirements:25 

"issue written procedures and policies ... " 

(Section 3(a)). 

"[ n]otilY Advocacy of any draft rules that 

may have a significant economic impact on 

a substantial number of small entities under 

the Act" (Section 3(b)). 

'''[g]ive every appropriate consideration to 

any comments provided by Advocacy regarding a draft rule" (Section 3(c». 

25 The 2010 SRJA strengthened E.O, 13272 section 3fc) 

hy requiring agencies to include in their final regulatory flexibility analysis "the response of the agency to 

any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response 

to the proposed rule, and a detailed statement of any 

change made to the proposed rule in the final rule as a 

result of the comments; 

28 Report on the Regulatory Flexibility Act, FY 2012 
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Table 3.1 Agency Compliance with the Small Business 

Jobs Act of2010 and E.O. 13272, FY 2012 

DC1dltlllcnt \VrJtten NOtlf: Response to (OI1l111<:nts 

I Proccdur"s ,\dvOCdC: (ollllllcnts 

Agriculture 

Commerce 

Defense 

Education 

Energy 

Geneml Services 

Administration 

Health and Human Services 

Homeland Security 

Housing and Urban 

Development 

Interior 

Justice 

Labor OSHAIMSHA 

State 

Transportation 

Treasury 

Veterans Affairs 

"j 

"j 

"j 

"j 

"j 

X 

"j 

"j 

"j 

29 Report on the Regulatory Flexibility Act, FY 2012 

x x 

"j 

"j 

X X 

"j "j 

~ "j 

"j 

"j "j 

"j 

"j 

Does not notify 

Advocacy of draft 

rules and infre~ 

quently gives Advocacy appropriate consideration 

in comments. 

The Fish and 

Wildlife Service 

does not notifY 

Advocacy of rules 

that will have a 

significant impact 

on small entities 

(3)(b)) and consistently does not 

respond adequately to Advocacy's 

comments (3(c)). 
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Dc ),11 tll1<2nt \\ nltel1 Notl t) R~spol1se to l (lll1ll1Cnts 

f I'loccdurcs ,\d\oc,]C: lomments 

Other Agencies 

Consumer Financial -J 

Protection Bureau 

Consumer Product Safety -J -J 

Commission 

Environmental Protection -J -J 

Agency 

Equal Employment -J -J 

Opportunity Commission 

Federal Acquisition -J -J 

Regulation Council 

Federal Communications ~ -J 

Commission 

Federal Reserve Board X -J 

National Labor Relations X -J 

Board 

Securities and Exchange X -J 

Commission 

Small Business -J 

Administration 

Advocacy cannot evaluate compliance since the agency did not publish any final rules upon which Advocacy com~ 

mented. 

The agency complied with the requirement. 

X The agency did not comply with the requirement. 

- Not applicable in FY2012, 

Conclusion 

In FY 2012, most agencies continued to comply with the requirements of the RFA and E.O 

13272. Advocacy's training has helped additional 

agencies understand and comply with the analytical process mandated by the RFA to produce 

better and more informed regulatory decisions. 

The agencies~ willingness to attend Advocacy 

roundtables and hear the concerns of small businesses has been a welcome development; the 

inexplicable circumstances that led to the late 

publication of the agencies' regulatory flexibility 

agendas will need to be addressed. The Office 

of Advocacy will continue working with federal 

agencies to ensure that they fulfill their obligations under the RFA, white meeting their regulatory goals. 

30 Report on the Regulatory Flexibility Act, FY 2012 
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Appendix A Supplementary Tables 

Table A.l Federal Agencies Trained in RFA Compliance, 2003-2012 

As required by E.O. 13272. the Office of Advocacy has offered training to the following federal departments and agencies in how to comply with the Regulatory Flexibility Act. 

Department of Agricu Iture 

Animal and Plant Health Inspection Service 

Agricultural Marketing Service 

Grain Inspection, Packers, and Stockyards Administration 

Forest Service 

Rural Utilities Service 

Department of Commerce 

National Oceanic and Atmospheric Administration 

National Telecommunications and Information Administration 

Office of Manufacturing Services 

Patent and Trademark Offi ce 

Department of Defense 

Defense Logistics Agency 

Department of the Air Force 

Department of the Army, Training and Doctrine Command 

United States Strategic Command 

Department of Education 

Department of Energy 

Federal Energy Regulatory Commission 

Department of Health and Human Services 

Center for Disease Control and Prevention 

Center for Medicare and Medicaid Services 

Food and Drug Administration 

Indian Health Service 

Department of Homeland Security 

Federal Emergency Management Agency 

Transportation Security Administration 

United States Citizenship and Immigration Service 

United States Coast Guard 

United States Customs and Border Protection 

Department of Housing and Urban Development 

Office of Community Planning and Development 

Office of Fair Housing and Equal Opportunity 

Office of Manufactured Housing 

Office of Public and Indian Housing 

31 Report on the Regulatory Flexibility Act, FY 2012 
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Table A.2 RF A Related Case Law, FY 2012 

National Association of Home 

Builders v. EPA, 682 F. 3d 

1032 (D.C. Cir. 2012). 

rn 2008, the Environmental Protection Agency 

(EPA) issued a rule regulating renovation and 

remodeling activities that create health hazards 

arising from lead paint. The rule had an opt~out 

provision that exempted owner~occupied housing 

from a rule regulating renovation and remodeling 

activities that created health hazards arising from 

lead paint if the homeowner certified that no 

pregnant women or young children lived there. 

In 2010, EPA amended the rule to eliminate the 

opt~out provision. The National Association of 

Home Builders (NAHB) petitioned for review of 

the amended rule on the grounds that it violated 

the Administrative Procedure Act (APA) and that 

EPA failed to convene a small business advow 

cacy review panel before issuing the new rule, 

in violation ofthe RFA. It should be noted that 

EPA convened such a review panel prior to promulgating the original Renovation Rule. It did 

not do so again before issuing the amended rule. 

The plaintiffs asserted that this failure violated 

the RFA. 

The court found that the RFA rendered the 

plaintiff's claim unreviewable. Section 611(c) 

of the RFA provides that "[cjompiiance or noncompliance by an agency with the provisions of 

this chapter shall be subject to judicial review 

only in accordance with this section:~ 5 USC 

§ 611(c) (emphasis added). Section 611(a) (2) 

grants this court "jurisdiction to review any 

claims of noncompliance with sections 60 I, 604, 

605(b). 608(b) and 610. The section further provides that <'[a]gency compliance with sections 

607 and 609(a) shall be judicially reviewable in 

connection with judicial review of section 604." 

Absent from these lists of reviewable claims is 

a claim alleging noncompliance with section 

609(b)--the provision that requires the conven34 Report on the Regulatory Flexibility Act. FY 2012 

32 Report on the Regulatory Flexibility Act, FY 2012 

lng of small business advocacy review panels. 

The court reiterated its findings in Allied Local 

& Regional Manufacturers Caucus v. EPA 215 

F.3d 61 (D.C.Cir. 2000) that the court "has no 

jurisdiction to review challenges" to an agency's 

compliance with that section. 

The plaintiffs argued that even if they could 

not directly obtain review of agency compliance 

with section 609(b), the statute authorizes review 

of compliance with the final regulatory flexibility analysis requirement. They asserted that the 

court could regard the failure to convene a panel 

as a failure that renders the final regulatory flexibility analysis defective. The court disagreed 

because section 611( a)(2) expressly authorizes 

judicial review of agency compliance with sections 607 and 609(a) in connection with judicial 

review of section 604, but does not authorize 

review of compliance with section 609( b }-even 

in connection with a section 604 claim. 

The plaintiffs also asserted that the failure 

to convene a review panel was arbitrary and 

capricious. The court stated that the RFA grants 

jurisdiction to review claims of noncompliance 

with section 604, the final regulatory impact 

analysis provision, "in accordance with" the APA 

in determining whether the agency complied 

with the overall requirement that an agency's 

decision making be neither arbitrary nor capricious. However, this applies in matters that may 

best be described as quasi-procedural rather than 

procedural. Such issues focus not on the kind of 

procedure that an agency must use to generate a 

record, but rather on the kind of decision making 

record the agency must produce to survive judicial review. These requirements flow not from 

the APA's procedural dictates, but from its substantive command that agency decision making 

not be arbitrary or capricious. Since a small business advocacy review panel is a purely procedural device, courts may not, under the guise of the 

APA's arbitrary-and-capricious review standard, 
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Independent Federal Agencies 

Access Board 

Consumer Financial Protection Bureau 

Consumer Product Safety Commission 

Commodity Futures Trading Commission 

Environmental Protection Agency 

Farm Credit Administration 

Federal Communications Commission 

Federal Deposit Insurance Corporation 

Federal Election Commission 

Federal Housing Finance Agency 

Federal Maritime Commission 

Federal Reserve System 

Federal Trade Commission 

General Services Administration / FAR Council 

National Credit Union Administration 

Nuclear Regulatory Commission 

Pension Benefit Guaranty Corporation 

Securities and Exchange Commission 

Small Business Administration 

Trade and Development Agency 

33 Report on the Regulatory Flexibility Act, FY 2012 
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Table A.2 RF A Related Case Law, FY 2012 

National Association of Home 

Builders v. EPA, 682 F. 3d 

1032 (D.C. Cir. 2012). 

Tn 2008, the Environmental Protection Agency 

(EPA) issued a rule regulating renovation and 

remodeling activities that create health hazards 

arising from lead paint. The rule had an opt~out 

provision that exempted owner~occupied hOllsing 

from a rule regulating renovation and remodeling 

activities that created health hazards arising from 

lead paint if the homeowner >:ertified that no 

pregnant WOmen or young children lived there. 

In 2010, EPA amended the rule to eliminate the 

opt~out provision. The National Association of 

Home Builders (NAHB) petitioned for review of 

the amended rule on the grounds that it violated 

the Administrative Procedure Act (APA) and that 

EPA failed to convene a small business advocacy review panel before issuing the new rule, 

in violation ofthe RF A. It should be noted that 

EPA convened such a review panel prior to promulgating the original Renovation Rule. It did 

not do so again before issuing the amended rule. 

The plaintiffs asserted that this failure violated 

the RFA. 

The court found that the RFA rendered the 

plaintiff's claim unreviewable. Section 611(c) 

of the RFA provides that "[c]ompliance or noncompliance by an agency with the provisions of 

this chapter shall be subject to judicial review 

only in accordance with this section." 5 USC 

§ 611(c) (emphasis added). Section 611(a) (2) 

grants this court "jurisdiction to review any 

claims of noncompliance with se>:tions 60 I, 604, 

605(b), 608(b) and 610. The section further provides that "[a]gency compliance with sections 

607 and 609(a) shall be judicially reviewable in 

connection with judicial review of section 604." 

Absent From these lists of reviewable claims is 

a claim alleging noncompliance with section 

609(b)---the provision that requires the conven34 Report on the Regulatory Flexibility Act, FY 2012 

jng of small business advocacy review panels. 

The court reiterated its findings in Allied Local 

& Regional Manufacturers Caucus v. EPA 215 

F.3d 61 (D.C.Cir. 2000) that the court "has no 

jurisdiction to review challenges" to an agency's 

compliance with that section. 

The plaintiffs argued that even ifthey could 

not directly obtain review of agency compliance 

with section 609(b), the statute authorizes review 

of compliance with the final regulatory flexibility analysis requirement. They asserted that the 

court could regard the failure to convene a panel 

as a failure that renders the final regulatory flexibility analysis defective. The court disagreed 

because section 611(a)(2) expressly authorizes 

judicial review of agency compliance with sections 607 and 609(a) in connection with judicial 

review of section 604, but does not authorize 

review of compliance with section 609(b )--even 

in connection with a section 604 claim. 

The plaintiffs also asserted that the failure 

to convene a review panel was arbitrary and 

capricious. The court stated that the RF A grants 

jurisdiction to review claims of noncompliance 

with section 604, the final regulatory impact 

analysis provision., "in accordance with'" the APA 

in determining whether the agency complied 

with the overall requirement that an agency's 

decision making be neither arbitrary nor capricious. However, this applies in matters that may 

best be described as quasi-procedural rather than 

procedural. Such issues focus not on the kind of 

procedure that an agency must use to generate a 

record, but rather on the kind of decision making 

record the agency must produce to survive judicial review. These requirements flow not from 

the APA's procedural dictates, but from its substantive command that agency decision making 

not be arbitrary or capricious. Since a small business advocacy review panel is a purely procedural device, courts may not, under the guise of the 

APA's arbitrary-and-capricious review standard, 
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impose procedural requirements that the APA's 

procedural provisions do not themselves impose. 

Thus, courts may not, under the guise of APA 

review, enforce compliance with a procedural 

requirement that the Rf A clearly excludes from 

judicial review. 

Florida Wildlife Federation, 

Inc. v. Jackson, 853 F. Supp. 

1138, (N.D. Florida 2012). 

Environmental groups brought actions against 

the Environmental Protection Agency (EPA) 

and numerous state environmental agencies 

challenging both the EPA administrator's determination that a numeric nutrient standard fOf 

Florida's lakes and flowing waters was needed 

to replace the state's narrative standard, as well 

as a rule adopting a numeric nutrient standard. 

The plaintiffs asserted that EPA violated the 

RFA by preparing a certification rather than issu~ 

ing an initial or final regulatory flexibility analysis. The court found that EPA's certification was 

unassailable because the rule and its numeric 

nutrient criteria only indirectly have an impact 

on small entities. The direct effect is on the state 

of Florida. It will fall to the state to implement 

the criteria. When a rule's only effect on small 

entities will be indirect, an agency may properly 

make a certification. 

International Internship 

Programs v. Napolitano, 853 

F. Supp. 2d 86 (D.D.C. 2012). 

The sponsor of a cultural exchange program 

brought action against the Department of Homeland Security (DHS). the United States Citizenship and Immigration Services (USClS) and 

others, alleging defendants violated the APA and 

the RFA in denying its petitions for cultural visas 

for participants in an international internship 

program. 

Q-l visas were introduced to create an in~ 

temational cultural exchange program in order 

35 Report on the Regulatory Flexibility Act. FY 2012 

to enhance the knowledge of diversity in other 

cultures. In 1992, USCIS published a final rule 

to implement Q-l visas. As part of the final 

publication, USCIS certified that the rule would 

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

conceded that users complied with the RF A 

when it first promulgated Q~I visas. However, 

the plaintiff asserted that USCIS amended the 

Q~ 1 visa regulations when it denied the petitions 

for cultural visas. The court denial of the spon~ 

sor's petitions for cultural visas did not effectively amend regulations governing cultural visas 

Of promulgate a rule, so as to require an Rf A 

analysis. At most, the denials represent interpretive rules (USCIS interpreted each statutory 

component as part of its review of the visa petitions). uscrs's decisions were not "rules" under 

the RFA; therefore, the piaintifffailed to state a 

claim for relief under the RFA. 

In addition, the court rejected the plaintitrs 

assertion that USCIS was required to conduct a 

periodic small entity impact analysis pursuant to 

5 USC §610. By certifying under §605(b) that 

the regulations will not have a significant economic impact on a substantial number of small 

entities, USCIS exempted itself from the periodic 

reviews. 

Louisiana Forestry 

Association v. Solis, 2012 WL 

3562451 (E.D. Pa. 2012). 

Employer associations brought action to challenge a Department of Labor (DOL) regulation 

governing the calculation of the minimum wage 

that U.S. employers had to offer in order to re~ 

cruit unskilled, nonagricultural foreign workers 

as part of the H-28 visa program. The employer 

associations argued that DOL failed to perform a 

reasonable, good faith Rf A analysis. They assert~ 

ed that DOL: (I) failed adequately to consider 

the impact the wage rule would have on small 

entities; and (2) failed to consider reasonab1e al~ 

ternatives to the proposed rule. 
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The court found that both contentions lacked 

merit. The court stated that the scope of the RF A 

analysis is determined by the substantive law 

under which the rule was issued. Section 604(a) 

(6) ofthe RFA requires that the agency provide 

"a description of the steps the agency has taken 

to minimize the significant economic impact 

on small entities consistent with the stated objectives of the applicable statutes." (Emphasis 

added). Citing Senate Report 96-878, the court 

further explained that the RFA's legislative history makes clear that its requirements ··are not 

intended as a basis for a substantive challenge 

to the exercise of discretion by the agency in 

determining what rule ultimately to promulgate," 

and that it should not be construed in a way that 

weakens "legislatively mandated goals in the 

name of cost reduction." 

In the present case, the statute's stated goal 

was to provide for the admission ofH-2B workers if unemployed persons capable of performing 

such service or labor could not be found in the 

United States. The court was of the opinion that 

DOL reasonably concluded that adopting a standard that would permit small businesses to pay 

their H-2B workers wages below the prevailing 

wage as calculated by the rule's methodology 

would likely have an adverse effect on the wages 

of U.S. workers, which would contradict the objectives of the statute. 

In terms of alternatives, the plaintiffs pointed to several alternatives raised in comments on 

the notice of proposed rulemaking that the DOL 

did not specifically address in its final regulatory 

flexibility analysis and argued that DOL erred in 

failing to consider those alternatives. The court 

stated that section 604 of the RFA requires that 

an agency explain "why each one of the other 

significant alternatives to the rule considered 

by the agency which affect the impact on small 

entities was rejected." However, in enacting 604, 

Congress emphasized that it does not require 

that an agency adopt a rule establishing differing 

compliance standards, exemptions, or any other 

alternative to the proposed rule. It requires that 

36 Report on the Regulatory Flexibility Act, FY 2012 

an agency, having identified and analyzed significant alternative proposals, describe those it considered and explain its rejection of any which, 

if adopted, would have been substantially less 

burdensome on the specified entities. Evidence 

that such an alternative would not have accomplished the stated objectives of the applicable 

statutes would sufficiently justify the rejection of 

the alternative. 

In the present case, DOL considered nine 

proposed alternatives and addressed the remaining comments in a general paragraph. In that 

paragraph, DOL explained that it rejected those 

alternatives because they would "at worst reduce 

and at best not improve the efficiency and consistency of the prevailing wage determination 

process, or would directly or indirectly adversely 

affect the wages of U.S. workers who might take 

H-2B jobs." The court further stated that the 

plaintiffs offered no arguments as to why, in their 

opinion, the DOL did not reasonably reject each 

of the proposed alternatives that they list on efficiency grounds or because they would have an 

adverse effect on the wages of U.S. workers, in 

contravention ofthe stated objectives of the statute. Thus, the court found that DOL's explanation of its rejection of those alternatives satisfied 

the RFA's requirements. 

National Restaurant 

Association v. Solis, 2012 WL 

1921115 (D.D.C. 2012). 

National trade and industry associations whose 

members employed tipped employees brought 

action against the Department of Labor alleging 

that the APA and the RFA were violated in promulgating a regulation concerning an employer's 

obligation to inform tipped employees ofthe "tip 

credit" requirements of the Federal Labor Standards Act. The plaintiffs asserted that the defendants violated the APA by failing to conduct a 

regulatory flexibility analysis in connection with 

the final rule. In the final rule, the agency stated: 
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[B]ecause the final rule will not impose any 

measurable costs on employers, both large and 

small entities, the Department has determined 

that it would not have a significant economic 

impact On a substantial number ofsmall entities 

within the meaning of the Regulatory Flexibility 

Act .... The Department certified to the Chief 

Counsel for Adyocacy to this effcct at the time 

the NPRM was published. The Department re· 

ceived no contrary comments that questioned the 

Department's analysis or conclusions in this re~ 

gard. Consequently, the Department certifies once 

again pursuant to 5 USC §604 that the revisions 

heing implemented in connection with promul· 

gating this final rule will not have a significant 

economic impact on a substantial number of 

small entities. Accordingly, the Department need 

not prepare a regulatory flexibility analysis. 

The plaintiffs asserted that the certifica· 

tion was arbitrary and capricious because it was 

made without the benefit of comments about the 

compliance costs associated with the new rule. 

The plaintiffs also noted that there was nothing 

in the administrative record indicating that DOL 

considered the costs to small businesses of pro· 

viding the required notice or the costs of addi· 

tional recordkeeping or that DOL contemplated 

the potential economic exposure to many small 

businesses to regulatory violations and enforce· 

ment actions. Plaintiffs submitted that if they had 

had proper notice of the rule prior to its prom~ 

ulgation. they would have "ovenNhelmed the 

agency with information about the cost behind 

this proposal." 

The court disagreed. It stated that the 

original rule would have required employers to 

inform employees oftheir intention to take the 

tip credit. so it is difficult to understand why the 

final rule's requirement that employers inform 

employees of the additional requirements of section 3(m) would impose a significant financial 

burden. In response to the court's questions at 

the hearing, the plaintiffs explained that the final 

rule was particularly burdensome because it re37 Report on the Regulatory Flexibility Act, FY 2012 

quires employers to inform employees whenever 

the tip credit changes, so a poster or one·time 

written information sheet would not do. They 

asserted that all restaurant employers have been 

deprived ofthe opportunity to explain to the 

Department and show the Department the cost 

associated with the proposed rule. The court disagreed with the plaintiffs because the regulations 

in existence prior to the promulgation of the final 

rule already required successive communications 

with employees when the tip credit changed and 

the employers did not call for this requirement to 

be changed in their comments. 

The court held that DOL complied with the 

requirements of the RFA when it concluded that 

no regulatory flexibility analysis was necessary 

because the rule would not have an impact on a 

substantial number of small entities. In doing so, 

it reiterated that the requirements of the RFA are 

"purely procedural." Although the RFA "directs 

agencies to state, summarize, and describe, the 

Act in and of itself imposes no substantive constraint on agency decision-making." 
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Table A.3 SBREFA Panels through Fiscal Year 2012 

Dale f),ltt: I Inal Rule 

Rule Convened (Uillplelcd NI'R\J I'uhhhed 

Environmental Protection Agency 

Nonroad Diesel Engines 

Industrial Laundries Effluent 

Guidelinel 

Stonnwater Phase II 

Transportation Equipment Cleaning 

Effluent Guidelines 

Centralized Waste Treatment Effluent 

Guideline 

UIC Class V Wells 

Ground Water 

FIP for Regional NOx Reductions 

Section 126 Petitions 

Radon in Drinking Water 

Long Tenn I Enhanced Surface Water 

Treatment 

Filter Backwash Recycling 

Arsenic in Drinking Water 

Recreational Marine Engines 

:I< See Appendix F for abbreviations, 

NPRM= notice of proposed rulemaking 

03/25/97 05/23/97 

06/06/97 08/08/97 

06/19/97 08/07/97 

07/16/97 09/23/97 

1II06/97 01123/98 

02/17/98 04117198 

04/10/98 06/09/98 

06123/98 08/21198 

06/23/98 08/21/98 

07/09/98 09118198 

08/21/98 10/19/98 

08/21/98 10119198 

03/30/99 06/04/99 

06107/99 08/25/99 

I Proposed rule withdrawn August 18, 1999; EPA does not plan to issue a final rulc. 

2 Proposed rule withdrawn April 26,2004: EPA does not plan to issue a final rule. 

3 EPA has ceased action on this panel. 

09/24/97 

12/17/97 

Oll09/98 

06125198 

01/13199 

09/10/03 

07/29/98 

05/10100 

10121/98 

09/30/98 

11102/99 

04110100 

04110100 

06/22/00 

10105101 

08114/02 

4 Proposed rule withdrawn December 31, 2003: OSHA does not plan to issue annal rule. 

10123198 

12/08/99 

08/14100 

12122/00 

12107199 

11108106 

04/28106 

05125199 

01114102 

06108101 

Oll22101 

11/08/02 

S Integrated Mortgage Disclosures under the Real E'itate Settlement Procedures Act (RESPA or Regulation X) and the Trulh 

in 1 ,ending Act (TItA or Regulation Z). 

38 Report on the Regulatory Flexibility Act, FY 2012 
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Datc Datc I 111,11 Ruk 

Rulc COl1\cllcd (ll111pktcd NI'R\J Published 

LDV /LOT Emissions and Sulfur 08/27/98 10/26/98 05/13/99 02110/00 

in Gas 

Diesel Fuel Sulfur Control Il/t2/99 03/24/00 06/02/00 01118101 

Requirements 

Lead Renovation and Remodeling 11/23/99 03/03100 01110/06 

Rule 

Metals Products and Machinery 12/09/99 03/03/00 01/03/01 05113103 

Concentrated Animal Feedlots 12/16/99 04107/00 01112101 02112/03 

Reinforced Plastics Composites 04/06/00 06102/00 08102/01 04/21103 

Stage 2 Disinfectant Byproducts 04/25/00 06/23/00 08/11103 01104106 

Long Tenn 2 Enhanced Surface 08118/03 01105106 

Water Treatment 

Construction and Development 07116/01 10/12/01 06/24102 

Effluent Limitations Guidelines! 

Nonroad Large SI Engines, Recreation 05/03101 07117/01 10/05/01 1II0S/02 

Land Engines, Recreation Marine 08/14/02 

Gas Tanks and Highway 

Motorcycles 

Aquatic Animal Production Industry o 1I22/02 06119/02 09/12/02 08/23/04 

Lime Industry -Air Pollution 01/22/02 03/25/02 12/20/02 01/05104 

Nonroad Diesel Engines - Tier IV 10/24102 12/23102 OS/23103 06/29104 

Cooling Water Intake Structures 02/27/04 04/27/04 11124/04 06/15106 

Phase III Facilities 

'" Sec Appendix F for abbreviations. 

NPRM= notice of proposed rulcmaking 

I Proposed rule withdrawn August! 8, 1999; EPA does not plan to issue a final rule. 

2 Proposed rule withdrawn April 26, 2004: EPA dDes not plan to. issue II final rulc. 

3 EPA has cea~ed actio.n o.n this panel. 

4 Proposed rule withdrawn December 31,2003; OSHA dDes not plan to. issue a final rule 

Integraled Mortgage Discl().sur~s under me Real Eslale Settlement Procedures Act (RESPA or Regulation X) and the Trulh 

in Lending Act (T1LA Dr Regulatio.n Z). 

39 Report on the Regulatory Flexibility Act, FY 2012 
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DatIC D,lle final Rule 

Ruk (omened COl1lpi.:kd NI'R~l Published 

Section 126 Petition (2005 CAIR 

Rule) 

FIP for Regional Nox/So2 (2005 

CAIRRule) 

Mobile Source Air Toxies 

Nonroad Spark-ignition Enginesl 

Equipment 

Total Coliform Monitoring (TCR 

Rule) 

Renewable Fuel Standards 2 (RFS2) 

Revision of New Source Perfonnance 

Standards for New Residential 

Wood Heaters 

National Emission Standards for 

Hazardous Air Pollutants for Coaland Oil-fired Electric Utility Steam 

Generating Units 

Stonnwater Regulations Revision to 

Address Discharges from Developed 

Sites 

Formaldehyde Emissions from Pressed 

Wood Products 

* See Appendix F for abbreviations 

NPRM"'" notice of proposed rulemaking 

04/27/05 

04/27/05 

09107105 

08/17/06 

01/31/08 

07/09/08 

08/04/10 

10127/10 

12/06/10 

02/03/11 

06/27/05 

06/27105 

11/08105 

10117106 

01131108 

09105108 

10/26111 

03/02/11 

10104111 

041041ll 

I Proposed rule withdrawn August 18, 1999; EPA does not plan to issue a -final rule. 

2 Proposed fule withdrawn April 26, 2004: EPA does not plan to issue a final rule 

3 EPA has ceased action on this panel. 

08/24/05 

08/24/05 

03/29106 

05/18/07 

07114110 

05/26109 

Proposed rule withdrawn December 31,2003: OSHA does not plan to issue a final rule. 

04/28/06 

04/28106 

02/26107 

10108108 

03/26/10 

Integrated Mortgage Disclosures under the Real Estate Settlement Procedwes Act (RESPA or Regulation X) and the Truth 

in Lending Act (TILA or Regulation Z). 

40 Report on the Regulatory Flexibility Act. FY 2012 
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Dall: Dall: f 111<11 Rule 

Rule COl1\ened (olllpkied NPRl'v! PublJ,hed 

National Emission Standards for 

Hazardous Air Pollutants (NESHAP) 

Risk and Technology Review (RTR) 

for the Mineral Wool and Wool 

Fiberglass Industries 

06/02/11 

Greenhouse Gas Emissions from Electric 06109/11 

Utility Steam Generating Units' 

Control of Air Pollution From Motor 

Vehicles: Tier 3 Motor Vehicle 

Emission and Fuel Standards 

Petroleum Refinery Sector Risk and 

Technology Review and New 

Source Perfonnance Standards 

Long Tenn Revisions to the Lead and 

Copper Rule 

08104/11 

08104/11 

08/14/12 

to/26/11 

10114111 

Occupational Sarety and Health Administration 

Tuberculosis4 

Safety and Health Progrnm Rule 

Ergonomics Program Standard 

Confined Spaces in Construction 

Electric Power Generation. 

Transmission. and Distribution 

Occupational Exposure to 

Crystalline Silica 

... See Appendix F for abbreviations 

NPRM= notice of proposed rulemaking 

09/10/96 11/12196 

10/20/98 12119198 

03/02/99 04/30/99 

09126103 1lI24/03 

04101103 06130103 

10/20103 12119/03 

I Proposed rule withdrawn August 18, 1999; EPA does not plan 10 issue a final rule. 

2 Proposed rule withdrawn April 26, 2004; EPA does nOl plan to issue a final rule. 

3 EPA has ceased action on this panel. 

10/17/97 

11123199 

11128/07 

06/15105 

4 Proposed rule withdrawn December 31, 2003; OSIIAdoes not plan to issue a final rule. 

11114100 

5 Integrated Mortgage Disclosures under lIle Real E~tate Settlement Procedures Act (RESPA or Regulation X) and the Truth 

in Lending Act (TfLA or Regulation Z). 

41 Report on the Regulatory Flexibility Act, FY 2012 
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D,lle Delle 1 lIlell Rule 

Rule COIl\cned lOl11pkted NPR\l Published 

Occupational Exposure to 01/30104 04120104 

Hexavalent Chromium 

Cranes and Derricks in Construction 08/18106 10/17/06 

Occupational Exposure to Beryllium 09/17/07 01/15/08 

Occupational Exposure to Diacetyl and 05/05/09 07/02/09 

Food Flavorings Containing Diacetyl 

Consumer Financial Protection Bureau 

Integrated Mortgage Disclosures under 02121112 

RESPAfflLA' 

Mortgage Servicing 04/09/12 

Residential Mortgage Loan Origination 05109112 

+ See AppendiX F for abbreviations. 

NPRM= notice of proposed rulcmaking 

04/23/12 

06/11112 

07/12/12 

I Proposed rule withdrawn August 18, 1999; EPA does not plan to issue a final rule 

2 Proposed rule withdrawn April 26, 2004; EPA does not plan to issue a final rule, 

3 EPA has ceased action on this panel. 

10104104 

10109/08 

08/23/12 

09117/12 

09/07/12 

Proposed rule withdrawn December 31. 2003; OSHA does not plan to issue a final rule 

02/28/06 

08109110 

5 fntegrated Mortgage Disclosures under the Real Estat.: SeUlemenl Procedures Act (RESPA or Regulation X) and the Truth 

in Lending Act (TILA or Regulation Z). 

42 Report on the Regulatory Flexibility Act. FY 2012 
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Appendix B 

The Regulatory Flexibility Act 

The following text ofthe Regulatory Flexibility 

Act of 1980, as amended, is taken from Title 5 of 

the United States Code, sections 601-612, The 

Regulatory Flexibility Act was originally passed 

in 1980 (P,L, 96-354), The act was amended by 

the Small Business Regulatory Enforcement 

Fairness Act of 1996 (P,L, 104-121), the DoddFrank Wall Street Reform and Consumer Protection Act (P,L, 111-203), and the Small Business 

Jobs Act of 2010 (P.L. 111-240), 

Congressional Findings and 

Declaration of Purpose 

(aJ The Congress finds and declares that-

(I) when adopting regulations to protect the 

health, safety and economic welfare of the Nation, Federal agencies should seek to achieve 

statutory goals as effectively and efficiently as 

possible without imposing unnecessary burdens 

on the public; 

(2) laws and regulations designed for application to large scale entities have been applied 

uniformly to small businesses, small organizations, and small governmental jurisdictions even 

though the problems that gave rise to government action may not have been caused by those 

smaller entities; 

(3) uniform Federal regulatory and reporting requirements have in numerous instances 

imposed unnecessary and disproportionately 

burdensome demands including legal. accounting and consulting costs upon small businesses, 

small organizations. and small governmental 

jurisdictions with limited resources; 

(4) the failure to recognize differences in 

the scale and resources of regulated entities 

has in numerous instances adversely affected 

competition in the marketplace, discouraged 

43 Report on the Regulatory Flexibility Act, FY 2012 

innovation and restricted improvements in 

productivity; 

(5) unnecessary regulations create entry 

barriers in many industries and discourage 

potentia! entrepreneurs from introducing beneficial products and processes; 

(6) the practice of treating all regulated 

businesses, organizations, and governmental 

jurisdictions 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; 

(7) alternative regulatory approaches 

which do not conflict with the stated objec~ 

tives of applicable statutes may be available 

which minimize the significant economic 

impact of rules on small businesses, small 

organizations, and small governmental jurisdictions; 

(8) the process by which Federal regulations are developed and adopted should be reformed to require agencies to solicit the ideas 

and comments of small businesses, small or~ 

ganizations, and small govemmentaljurisdic~ 

tions to examine the impact of proposed and 

existing rules on such entities, and to review 

the continued need for existing rules. 

(b) It is the purpose ofthis Act [enacting this 

chapter and provisions set out as notes under 

this section] to establish as a principle ofregulatory issuance that agencies shall endeavor, 

consistent with the objectives of the rule and 

of applicable statutes, to fit regulatory and 

infonnational requirements to the scale of the 

businesses, organizations, and governmental 

jurisdictions subject to regulation. To achieve 
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this principle, agencies are required to solicit and 

consider flexible regulatory proposals and to explain the rationale for their actions to assure that 

such proposals are given serious consideration. 

Regulatory Flexibility 

Act 

§ 601 Definitions 

§ 602 Regulatory agenda 

§ 603 Initial regulatory flexibility analysis 

§ 604 Final regulatory flexibility analysis 

§ 605 Avoidance of duplicative or unnecessary 

analyses 

§ 606 Effect on other law 

§ 607 Preparation of analyses 

§ 608 Procedure for waiver or delay of completion 

§ 609 Procedures for gathering comments 

§ 610 Periodic review of rules 

§61l Judicial review 

§ 612 Reports and intervention rights 

§ 601. Definitions 

For purposes of this chapter -

(I) the term "agency" means an agency as 

defined in section 551 ( I) ofthis title; 

(2) the term "rule" means any rule for which 

the agency publishes a general notice of proposed rulemaking pursuant to section 553(b) of 

this title, or any other law, including any rule of 

general applicability governing Federal grants 

to State and local governments for which the 

agency provides an opportunity for notice and 

public comment, except that the term "rule" does 

not include a rule of particular applicability relating to rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, 

appliances. services, or allowances therefor or 

to valuations, costs or accounting, or practices 

relating to such rates, wages, structures, prices, 

appliances, services, or allowances; 

44 Report on the Regulatory Flexibility Act. FY 2012 

(3) the term "small business" has the 

same meaning as the term "small business 

concern" under section 3 of the Small Busiw 

ness Act, unless an agency, after consultation 

with the Office of Advocacy of the Small 

Business Administration and after opportunity 

for public comment, establishes one or more 

definitions of such term which are appropriate 

to the activities of the agency and publishes 

such definition(s) in the Federal Register; 

(4) the term "small organization" means 

any not-for-profit enterprise which is independently owned and operated and is not dominant in its field, unless an agency establishes, 

after opportunity for public comment, one or 

more definitions of such term which are appropriate to the activities of the agency and 

publishes such definition(s) in the Federal 

Register; 

(5) the term "'small governmentaljurisdiction" means governments of cities, counties, 

towns, townships, villages, school districts, or 

special districts, with a popUlation of less than 

fifty thousand, unless an agency establishes, 

after opportunity for public comment, one or 

more definitions of such term which are appropriate to the activities of the agency and 

which are based on such factors as location 

in rural or sparsely populated areas or limited 

revenues due to the popUlation of such jurisdiction, and publishes such definition(s) in the 

Federal Register; 

(6) the term "small entity" shall have the 

same meaning as the terms '''small business," 

.... small organization" and "small governmental 

jurisdiction" defined in paragraphs (3). (4) 

and (5) of this section; and 

(7) the term "'collection of information"-

(A) means the obtaining, causing to 

be obtained, soliciting. or requiring the disw 

closure to third parties or the public, of facts 

or opinions by or for an agency, regardless of 

form or format, calling for either-

(i) answers to identical questions 

posed to, or identical reporting or recordkeeping requirements imposed on, 10 or more 
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persons. other than agencies, instrumentalities, or 

employees ofthe United States; or 

(ii) answers to questions posed to 

agencies, instrumentalities~ or employees of the 

United States which are to be used for general 

statistical purposes; and 

(B) shall not include a collection ofin~ 

formation described under section 351S(c){ I) of 

title 44, United States Code. 

(S) Recordkeeping requirement- The term 

"recordkeeping requirement" means a require· 

ment imposed by an agency on persons to main· 

tain specified records. 

§ 602. Regulatory agenda 

(a) During the months of October and April 

of each year, each agency shall publish in the 

Federal Register a regulatory flexibility agenda 

which shall contain -

(I) a brief description of the subject area of 

any rule which the agency expects to propose or 

promulgate which is likely to have a significant 

economic impact on a substantial number of 

small entities; 

(2) a summary of the nature of any such rule 

under consideration for each subject area listed 

in the agenda pursuant to paragraph (1), the ob~ 

jectives and legal basis for the issuance ofthe 

rule, and an approximate schedule for compIet· 

ing action on any rule for which the agency has 

issued a general notice of proposed ruJemaking. 

and 

(3) the name and telephone number of an 

agency official knowledgeable concerning the 

items listed in paragraph (1). 

(b) Each regulatory flexibility agenda shall be 

transmitted to the Chief Counsel for Advocacy of 

the Small Business Administration for comment, 

if any. 

(c) Each agency shall endeavor to provide notice 

of each regulatory flexibility agenda to small entities or their representatives through direct notification or publication of the agenda in publications likely to be obtained by such small entities 

45 Report on the Regulatory Flexibility Act. FY 2012 

and shall invite comments upon each subject 

area on the agenda. 

(d) Nothing in this section precludes an agency from considering or acting on any matter 

not included in a regulatory flexibility agenda, 

or requires an agency to consider or act on 

any matter listed in such agenda. 

§ 603. Initial regulatory 

flexibility analysis 

(a) Whenever an agency is required by section 

553 of this title, or any other law, to publish 

general notice of proposed rulemaking for 

any proposed rule, or publishes a notice of 

proposed rulemaking for an interpretative rule 

involving the internal revenue laws of the 

United States, the agency shall prepare and 

make available for public comment an initial 

regulatory flexibility analysis. Such analysis 

shall describe the impact of the proposed rule 

on small entities. The initial regulatory flexibility analysis or a summary shall be published in the Federal Register at the time of 

the publication of general notice of proposed 

rulem.king for the rule. The agency shall 

transmit a copy of the initial regulatory flexibility analysis to the Chief Counsel for Advocacy of the Small Business Administration. 

In the case of an interpretative rule involving 

the internal revenue laws of the United States, 

this chapter applies to interpretative rules published in the Federal Register for codification 

in the Code of Federal Regulations, but only 

to the extent that such interpretative ru1es impose on small entities a collection of inforrna~ 

tion requirement. 

(b) Each initial regulatory flexibility analysis 

required under this section shall contain-

(1) a description of the reasons why action by the agency is being considered; 

(2) a succinct statement of the objectives 

of, and legal basis for, the proposed rule; 
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(3) a description of and, where feasible. an 

estimate of the number of small entities to which 

the proposed rule will apply; 

(4) a description of the 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 ofpro~ 

fessional skills necessary for preparation of the 

report or record; 

(5) an identification, to the extent practicable, 

of all relevant Federal rules which may duplicate, overlap or conflict with the proposed rule. 

(c) Each initial regulatory flexibility analysis 

shall also contain 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. 

Consistent with the stated objectives of applicable statutes. the analysis shall discuss significant 

alternatives such as-

(1) the establishment of differing compliance 

or reporting requirements or timetables that take 

into account the resources available to small entities; 

(2) the clarification. consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; 

(3) the use of performance rather than design 

standards; and 

(4) an exemption from coverage of the rule, 

or any part thereof, for such small entities. 

(d) (I) For a covered agency, as defined in section 609(d)(2), each initial regulatory flexibility 

analysis shall include a description of-

(A) any projected increase in the cost of 

credit for small entities; 

(B) any significant alternatives to the 

proposed rule which accomplish the stated objectives of applicable statutes and which minimize 

any increase in the cost of credit for small entities; and 

(C) advice and recommendations ofrep~ 

resentatives of small entities relating to issues 

46 Report on the Regulatory Flexibility Act. FY 2012 

described in subparagraphs (A) and (8) and 

subsection (b). 

(2) A covered agency. as defined in section 609(d)(2), shall, for purposes of complying with paragraph (I )(C}-

(A) identify representatives of small 

entities in consultation with the Chief Counsel 

for Advocacy of the Small Business Administration; and 

(B) collect advice and recommendations from the representatives identified under 

subparagraph (A) relating to issues described 

in subparagraphs (A) and (8) of paragraph (1) 

and subsection (b). 

§ 604. Final regulatory 

flexibility analysis 

(a) When an agency promulgates a final rule 

under section 553 of this title, after being 

required by that section or any other law to 

publish a general notice of proposed rulemaking, or promulgates a final interpretative rule 

involving the internal revenue laws of the 

United States as described in section 603(a), 

the agency shall prepare a final regulatory 

flexibility analysis. Each final regulatory flexibility analysis shall contain -

( I ) a statement of the need for, and objectives of, the rule; 

(2) a statement of the significant issues 

raised by the public comments in response 

to the initial regulatory flexibility analysis. a 

statement of the assessment ofthe agency of 

such issues, and a statement of any changes 

made in the proposed rule as a result of such 

comments; 

(3) the response of the agency to any 

comments filed by the Chief Counsel for 

Advocacy of the Small BusinessAdministration in response to the proposed rule, and a 

detailed statement of any change made to the 

proposed rule in the final rule as a result of the 

comments; 
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(4) a 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) a description of the projected reporting, 

record keeping and other compliance require~ 

ments of the rule, including an estimate ofthe 

classes of small entities which will be subject 

to the requirement and the type of professional 

skills necessary for preparation ofthe report or 

record; 

(6) a 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; 

(6)t for a covered agency, as defined in section 609(d)(2), a description of the steps the 

agency has taken to minimize any additional cost 

of credit for small entities. 

(b) The agency shall make copies ofthe final 

regulatory flexibility analysis available to members of the public and shall publish in the Federal Register such analysis or a summary thereof .. 

§ 605. Avoidance of 

duplicative or unnecessary 

analyses 

(a) Any Federal agency may perform the analyses required by sections 602, 603, and 604 of this 

title in conjunction with or as a part of any other 

agenda or analysis required by any other law if 

such other analysis satisfies the provisions of 

such sections. 

(b) Sections 603 and 604 of this title shall not 

apply to any proposed or final rule if the head of 

I So in .original. Two paragraphs (6) were enacted. 

47 Report on the Regulatory Flexibility Act. FY 2012 

the agency certifies that the rule will not, if 

promulgated, have a significant economic impact on a substantial number of small entities. 

If the head ofthe agency makes a certification under the preceding sentence, the agency 

shall publish such certification in the Federal 

Register at the time of publication of general 

notice of proposed rulemaking for the rule 

or at the time of publication of the final rule. 

along with a statement providing the factual 

basis for such certification. The agency shall 

provide such certification and statement to 

the Chief Counsel for Advocacy of the Small 

Business Administration. 

(c) In order to avoid duplicative action. an 

agency may consider a series of closely re~ 

lated rules as one rule for the purposes of sections 602, 603, 604 and 610 of this title, 

§ 606. Effect on other law 

The requirements of sections 603 and 604 of 

this title do not alter in any manner standards 

otherwise applicable by law to agency action. 

§ 607. Preparation of 

analyses 

In complying with the provisions of sections 

603 and 604 of this title, an agency may 

provide either a quantifiable or numerical description of the effects ofa proposed rule or 

alternatives to the proposed rule, or more general descriptive statements if quantification is 

not practicable or reliable. 

§ 608. Procedure for waiver 

or delay of completion 

(a) An agency head may waive or delay the 

completion of some or all of the requirements 

of section 603 ofthis title by publishing in 

the Federal Register, not later than the date of 

pUblication of the final rule, a written finding, 

with reasons therefor, that the final rule is be~ 

ing promulgated in response to an emergency 
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that makes compliance or timely compliance 

with the provisions of section 603 ofthis title 

impracticable. 

(b) Except as provided in section 605(b), an 

agency head may not waive the requirements 

of section 604 of this title. An agency head may 

delay the completion ofthe requirements of sec~ 

tion 604 of this title for a period of not more than 

one hundred and eighty days after the date of 

publication in the Federal Register of a final rule 

by publishing in the Federal Register, not later 

than such date of publication, a written finding, 

with reasons therefor, that the final rule is being 

promulgated in response to an emergency that 

makes timely compliance with the provisions 

of section 604 of this title impracticable. If the 

agency has not prepared a final regulatory analysis pursuant to section 604 ofthis title within one 

hundred and eighty days from the date ofpublication ofthe final rule. such rute shall lapse and 

have no effect. Such rule shall not be repromulgated until a final regulatory flexibility analysis 

has been completed by the agency. 

§ 609, Procedures for 

gathering comments 

(a) When any rule is promulgated which will 

have a significant economic impact on a sub--

stantial number of small entities, the head of the 

agency promulgating the rule or the official of 

the agency with statutory responsibility for the 

promulgation of the rule shaH assure that small 

entities have been given an opportunity to participate in the rulemaking for the rule through the 

reasonable use of techniques such as-

(I) the 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; 

(2) the publication of general notice of proposed rulemaking in publications likely to be 

obtained by small entities; 

48 Report on the Regulatory Flexibility Act, FY 2012 

(3) the direct notification of interested 

small entities; 

(4) the conduct of open conferences or 

public hearings concerning the rule for small 

entities including soliciting and receiving 

comments over computer networks; and 

(5) the adoption or modification of agency 

procedural rules to reduce the cost or complexity of participation in the rulemaking by 

small entities. 

(b) Prior to publication of an initial regulatory 

flexibility analysis which a covered agency is 

required to conduct by this chapter-

(I) a covered agency shall notilY the 

Chief Counsel for Advocacy of the Small 

Business Administration and provide the 

Chief Counsel with information on the poten~ 

tial impacts ofthe proposed rule on small en~ 

tities and the type of small entities that might 

be affected; 

(2) not later than 15 days after the date of 

receipt of the materials described in paragraph 

(1), the Chief Counsel shall identilY individuals representative of affected small entities for 

the purpose of obtaining advice and recom~ 

mendations from those individuals about the 

potential impacts of the proposed rule; 

(3) the agency shall convene a review 

panel for such rule consisting wholly offull 

time Federal employees of the office within 

the agency responsible for carrying out the 

proposed rule. the Office of Information and 

Regulatory Affairs within the Office of Management and Budget, and the Chief Counsel; 

(4) the panel shall review any material the 

agency has prepared in connection with this 

chapter, including any draft proposed rule, 

collect advice and recommendations of each 

individual small entity representative identified by the agency after consultation with the 

Chief Counsel, on issues related to subsec~ 

tions 603(b), paragraphs (3), (4) and (5) and 

603(c); 

(5) not later than 60 days after the date 

a covered agency convenes a review panel 
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49 

pursuant to paragraph (3), the review panel shall 

report on the comments of the small entity representatives and its findings as to issues related 

to subsections 603(b), paragraphs (3), (4) and 

(5) and 603(c), provided that such report shall 

be made public as part of the rulemaking record; 

and 

(6) where appropriate, the agency shall 

modify the proposed rule. the initial regulatory 

flexibility analysis or the decision on whether an 

initial regulatory flexibility analysis is required. 

(c) An agency may in its discretion apply subsection (b) to rules that the agency intends to certify 

under subsection 605(b), but the agency believes 

may have a greater than de minimis impact on a 

substantial number of small entities. 

(d) For purposes of this section, the term "covered agency" means 

(1) the Environmental Protection Agency, 

(2) the Consumer Financial Protection Bureau of the Federal Reserve System, and 

(3) the Occupational Safety and Health Administration of the Department of Labor. 

(e) The Chief Counsel for Advocacy, in consultation with the individuals identified in subsection 

(b)(2), and with the Administrator of the Office 

offnformation and Regulatory Affairs within the 

Office of Management and Budget. may waive 

the requirements of subsections (b)(3), (b)(4), 

and (b)(5) by including in the rulemaking record 

a written finding, with reasons therefor. that 

those requirements would not advance the effective participation of small entities in the rulemaking process. For purposes of this subsection, the 

factors to be considered in making such a finding 

are as follows: 

(1) In developing a proposed rule, the extent 

to which the covered agency consulted with individuals representative of affected small entities 

with respect to the potential impacts of the rule 

and took such concerns into consideration. 

(2) Special circumstances requiring prompt 

issuance of the rule. 

Report on the Regulatory Flexibility Act, FY 2012 

(3) Whether the requirements ofsubsec~ 

tion (b) would provide the individuals identified in subsection (b)(2) with a competitive 

advantage relative to other sman entities. 

§ 610, Periodic review of 

rules 

(a) Within one hundred and eighty days after 

the effective date of this chapter, each agency 

shall publish in the Federal Register a plan 

for the periodic review of the rules issued 

by the agency which have or will have a significant economic impact upon a substantial 

number of small entities. Such plan may be 

amended by the agency at any time by publishing the revision in the Federal Register. 

The purpose of the review shall be to determine whether such rules should be continued 

without change, or should be amended or rescinded, consistent with the stated objectives 

of applicable statutes, to minimize any significant economic impact of the rules upon a 

substantial number of such small entities. The 

plan shall provide for the review of aJi such 

agency rules existing on the effective date of 

this chapter within ten years of that date and 

for the review of such rules adopted after the 

effective date of this chapter within ten years 

of the publication of such rules as the final 

rule. lethe head of the agency determines that 

completion ofthe review of existing rules is 

not feasible by the established date, he shall 

so certify in a statement published in the Federal Register and may extend the completion 

date by one year at a time for a total of not 

more than five years. 

(b) In reviewing rules to minimize any significant economic impact of the rule on a 

substantial number of sman entities in a manner consistent with the stated objectives of 

applicable statutes, the agency shaH consider 

the following factors-

(I) the continued need for the rule; 
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(2) the nature of complaints or comments 

received concerning the rule from the public; 

(3) the complexity of the rule; 

(4) the extent to which the rule overlaps, 

duplicates Or conflicts with other Federal rules, 

and, to the extent feasible, with State and local 

governmental rules; and 

(5) the length oftime 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. 

(c) Each year, each agency shall publish in the 

Federal Register a list of the rules which have 

a significant economic impact on a substantial 

number of small entities, which are to be reviewed pursuant to this section during the succeeding twelve months. The list shaH include a 

brief description of each rule and the need for 

and legal basis of such rule and shall invite public comment upon the rule. 

§ 611. Judicial review 

(a) 

(l) For any rule subjectto this chapter, a 

small entity that is adversely affected or aggrieved by final agency action is entitled to judicial review of agency compliance with the requirements of sections 601, 604, 605(b), 608(b), 

and 610 in accordance with chapter 7. Agency 

compliance with sections 607 and 609(a) shall be 

judicially reviewable in connection with judicial 

review of section 604. 

(2) Each court having jurisdiction to review 

such rule for compliance with section 553, or 

under any other provision oflaw, shall have 

jurisdiction to review any claims of noncompli" 

ance with sections 601, 604, 605(b), 608(b), 

and 610 in accordance with chapter 7. Agency 

compliance with sections 607 and 609(a) shall be 

judicially reviewable in connection with judicial 

review of section 604. 

(3) (A) A small entity may seek such review 

during the period beginning on the date offinal 

agency action and ending one year tater, except 

SO Report on the Regulatory Flexibility Act, FY 2012 

that where a provision oflaw requires that an 

action challenging a final agency ac;tion be commenced before the expiration of one year, such 

lesser period shall apply to an action for judicial 

review under this section. 

(8) In the case where an agency delays 

the issuance ofa final regulatory flexibility analysis pursuant to section 608(b) of this chapter, an 

action for judicial review under this section shall 

be filed not later than-

(i) one year after the date the analy~ 

sis is made available to the public. or 

(ii) where a provision of law requires 

that an action challenging a final agency regula~ 

tion be commenced before the expiration of the 

l~year period, the number of days specified in 

such provision oflaw that is after the date the 

analysis is made available to the public. 

(4) In granting any relief in an action under 

this section, the court shall order the agency to 

take corrective action consistent with this chapter 

and chapter 7, including, but not limited to-

(A) remanding the rule to the agency, 

and 

(8) deferring the enforcement of the rule 

against small entities unless the court finds that 

continued enforcement of the rule is in the public interest. 

(5) Nothing in this subsection shall be construed to limit the authority of any court to stay 

the effective date of any ruJe or provision thereof 

under any other provision oflaw or to grant any 

other relief in addition to the requirements of this 

section. 

(b) In an action for the judicial review of a rule, 

the regulatory flexibility analysis for such rule, 

including an analysis prepared or corrected pursuant to paragraph (a)(4), shall constitute part of 

the entire record of agency action in connection 

with such review. 

(c) Compliance or noncompliance by an agency 

with the provisions of this chapter shall be subject to judicial review only in accordance with 

this section. 
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(d) Nothing in this section bars judicial review 

of any other impact statement or similar analysis 

required by any other law ifjudiciaJ review of 

such statement or analysis is otherwise permitted 

by law. 

§ 612. Reports and 

intervention rights 

(a) The Chief Counsel for Advocacy ofthe Small 

Business Administration shall monitor agency 

compliance with this chapter and shall report at 

least annually thereon to the President and to the 

Committees on the Judiciary and Small Business 

of the Senate and House of Representatives. 

(b) The Chief Counsel for Advocacy of the Small 

Business Administration is authorized to appear 

as amicus curiae in any action brought in a court 

of the United States to review a rule. In any such 

action, the Chief Counsel is authorized to present 

his or her views with respect to compliance with 

this chapter, the adequacy ofthe rulemaking record with respect to small entities and the effect 

ofthe rule on small entities. 

(c) A court of the United States shall grant the 

application of the Chief Counsel for Advocacy 

of the Small Business Administration to appear 

in any such action for the purposes described in 

subsection ( b). 

51 Report on the Regulatory Flexibility Act, FY 2012 
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Appendix C 

Executive Order 13272 

The President 

Presidential Documents 

Executive Order 13272 of August 13, 2002 

Proper Consideration of Small Entities in Agency Rulemaking 

By the authority vested in me as President by the Constitution and the 

laws of the United States of America, it is hereby ordered as follows: 

Set.1ion 1. General Requirement';, Each agency shall establish procedures 

and po1ide.~ to promote wmpliam;e wilh the Regulatory Flexibility Act, 

as amended (5 U.S.C. 601 ct seq.) (the "Act"), Agenr:ks shall thoroughly 

reviHW dean rules to as::wss and take appropriato account of tho potential 

imp<lGt on small businesses. small governnumtal jurisdictions, anrl small 

organizations. as provided by the Act. The Chief COllnsel for Advocacy 

of the Small Hnsiness Administration (AdVocacy) shall remain available 

to advise agencies in performing that review consishmt with the provisions 

of the Act. 

Sec. 2. Responsibilities of Advocacy. Consistent with the requirements of 

the Act. other applicable law, and Executive Order 12865 of September 

30,1993, as amended, Advocacy: 

(al shall notify aw~ncy hmuls from timn to timll of th(~ r()fJuin~ments of 

the A{;t. including by issuing notitit:ations with respect to the bask requirements of the Act within 90 days of the date of this order; 

(b) shall provide training to agencies on compliance with the Act; and 

{cl may provide comment on draft mles to tlle ageocy that has proposed 

or intends to propose the nIles and to the Office of Information and Regulatory Affairs of the Office of Management and Budget (OIRA). 

Sec. 3. ResponsibiUties of Federal Agencies. Consistent with the reqnirements 

of the Act and applicable law, agencies shall: 

(a) Within 180 days of the date of this order, issne written procedures 

and policies, consistent with the Act, to ensure that the potential impacts 

of agencies' draft mles on small busincs:;cs, small governmental jurisdictions, 

and small organizations are properly considered during the rulemaking process. Agency heads shall submit, no later than 90 days from the date of 

this order, their written procedures and policies to Advocacy for comment 

Prior to issuing final proceduffis and policies, agencies shall consider any 

such comments received within 60 days from the date of the submission 

of the agencies' procedures and policies to Advocacy. Except to the extent 

otherwise specifically provided by statute or Executive Order, agencies shall 

make the final procedures and policies availahle to the public through 

the Internet or olher easily accessible means; 

{h} Notify Ad"'ocacy of any draft niles that may have a significant economic 

impact on a substantial number of small entities under the Act. Such notifications shall be made (i) when the rlgency submits a draft mle to OlRA 

under Executive Order 12866 if that order requires such submission, or 

(ii) if no submission to OIRA is so required, at a reasonable time prior 

to publication of the rule by the agency; and 

(cl Gi,'e every appropriate consideration to auy comments provided by 

Advocacy regarding a draft mle. Consistont with applicable law and appropriate protection of execntive deliberations and legal privileges, an agency 

shall include, in any explanation or discussion accompanying publication 

in the Federal Register of a final mIe, the agency's response to any written 

comments suhmitted by Advocacy on the proposed rule that preceded the 

53 Report on the Regulatory Flexibility Act, FY 2012 
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final rule; provided, howaver, that such inclusion is not required if the 

head of thr. agem;y certlfies that the puhlic interest is not served therehy 

Agencies and Advocacy may, to the extent permitted by law, engage in 

an exchange of data and research, as appropriate, to foster the purposes 

of the Act 

Sec. 4. Definitions. Terms defined in section 601 of title 5, United States 

Code. including the term "agency," shall have the same meaning in this 

order. 

Sec. 5. PIl~Selvation of Authority Nothing in this order silall be construed 

to impair or affect the authority of the Administrator of the Small Busioesli 

Administration to supervise the Small Business Administration as provided 

10 the first scntom:c of sCLiion 2(bj(1) of Public Law /35-{J!)53H (15 ll.S.c. 

633(bj{1)j. 

Sec. Ii. ReportilJg. For the pm'pose of promoting compliance with this order. 

Advocacy shall submit a report not le~~ than annually to the Director of 

the Office of Management and Budget on the extent of compliance with 

this order by agencies 

Sec. 7. Confidentiality. Consi..,qtent with existing law, Advocacy may publicly 

disdo~[) information that it r(!{;eivr.~ from the a~enr.ir.s in the I':nUfSr. of 

carrying out this order only to the extent that slich information already 

has been la\-vful\y and publicly disdosr.d by OIRA or the reJevant ruleruaking 

agency. 

Ser.. 8, Judiciu] Review. This order io: intended only to improve the intllmal 

management of the Federal Government. This order is not intended to, 

amI dor.s not, r:reate any right or benefit, suhstantive or procedural. enfnrceable at law or equity, against the United States, its deparunents, agencies, 

or oUler entities, its officers or employees, or any other persoH. 

THE WHITE HOUSE, 

August 13,2002. 

54 Report on the Regulatory Flexibility Act, FY 2012 
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AppendixD 

Executive Order 13653 and Memorandum 

FedBl'ai Kegi81B1' 

Vol. 76, No. 14 

Ffid~y, Janllary 21. 2.011 

Title lThe President 

3621 

Presidential Documents 

Executive Order 13563 of January 18, 2011 

Improving Regulation and Regulatory Review 

By the authority vested in me as Presidont by the Constitution and the 

laws of the United Stlltes of America, and in order to improve regulation 

and regulatory review, it is hereby ordered 9S follows; 

Section 1. GelwmJ Principles of Regulation. (a) Our regulatory system musl 

protect public health, welfare, safety. and our environment while promoting economic growth, innovation, competitiveness, and job creation. It must 

be basad on the best available science, It must allow for public participation 

and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must idontify and use thll best, most innovative, and Joast 

burdensome tools for achiovlng regulatory ends. It must take into account b~nefits and costs, both quantitative and qualitative. It must (II1sure that 

regulations are accessible, comislont, writton in plain language, and easy 

to understand. It must measure, and seek to improve, the actual results of regulatory requirements. 

an~) ~~~~it~~~:r ;~v:~r~;~~~~:~;o~Z~ r;e~~y~~;;h:eYi~~c~hla~\:~:c~~;:b: lished in Executive Order 12866 of September 30, 1993. As stated in that 

Executive Order and to tho extont permitted by law, each agency must, among other things: (1) propose or adopt a regulation only upon a reasonlld 

determination that its benefits justify its costs (recognizing that some benefits ami costs are difficult to quantify); (2) tailor its regulations to impose the 

loast bumen on sodety, consistent with obtaining regulatory objectives, taking 

into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) sclocl, in choosing among alternative regulatory 

approaches, tho/i.e approaches that maximize net benefits (including potential economic, environmental. public health and safety, and other advantages; 

distributive impacts; and equity}; (4) to the extent feasible, specify perfonnance objectives, rather than spccifying the behavior or manner of compliance 

thai rogulated entities must adopt: and (5) identify and assess available alternatives to direct regulation, including providing economic incentives 

to encourage the dosired behavior, such as user fees or marketable permits, 

or providiog information upon which choices can be made by the public. 

(cl In applying these principles, each agency is directed to use the best available techniques to quantify anticipated present and future benefits and 

costs as accurately as possible. Where appropriate and permitted by law, each agency may consider (and discuss qualitatively) values that are difficult 

or impossiblo to quantify, including equity. human dignity, fairness, and distributive impacL~. 

Sec, 2. Public Participation. (al Regulations shall be adopted through a 

f:~::d,t~~\~~:~:!~ f~~~~l~ ~~~~~~::!~e:t ~~t~~:~~~~'t~:~~:~i~~~h~:~l~ of information and perspectives among Stale, local, and tribal officials. ex· perts in relevant diSCiplines, affected stakeholders in the private sector, 

and the public as a whole. 

(b) To promote that open exchange, each agency, consistent with Executive 

Order 12866 and other applicable legal requirements, shall endeavor to provide the public with ao opportunity to participate in the regulatory 

process. To the extent feasible and permitted by lew, each agency shaH 

afford the public iii meaningful opportunity to comment through the Internet on any proposed regulation, with a comment period that should generally 

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3822 Federal Register/Vol, 76. No. 14/Frirlay, January 21, 20ll/Presidential Documents 

be at least 60 days. To the extent feasible and pormittod by law. each agoncy shall also provide, for both proposed and final rules, timely online 

access to the rulemaking docket on rogulations.gov, induding relevant sci· 

entific and technical findings, in an open format that can be easily searched and downloaded. For proposed rules, such access shall include, to the 

extent feasible and permitted by law. an opportunity for public comment 

on all pertinent parts of the rulemaking docket, including relevant scientific and technical findings. 

{Cl Defore issuing a notice of proposed rulemaking, each agency, where 

feasible and appropriate, shall seek Iha views of those who are likely to 

be affected, including those who are likely to benefit from and those who are potentially suhject to such rulemaking. 

Sec. 3. Integration and Innovotj(m. Some seetON! and industries face a signifi· 

cnnt number of regulatory requirements, some of whic:h may be redundant, inconsistent, or overlapping. Greater .. . 

duce these requirements, thus reducing costs and 

nizing rutes. In devoloping regulatory actions and approaches. each agency shaH attempt to promote 

plification, and harmonization. Each agency shaH also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote 

innovation. 

Sec. 4. Flexible Approaches. Where relevant, feasible, and consistent with 

regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and main~ 

tain nexibility and freedom of choice for the puhlic. These approaches include warnings, appropriate default rules, and disclosure requirements 

as Well as provision of information to the public in a form that is clear and intelligible. 

Sec. 5. Science. Consistent with the President's Memorandum for the Heads of Executive Departments and Agencies, "Scientific Integrity" (March 9, 2009), 

~f~n~ssc~~!t!1~:~~nt~~~~~~~f:~1 ~~~~rr!~~~~ a~~a~~o~~~~;~ ut~ed ~ij:~~i;~~ the agency's regulatory actions. 

Sec. 6. Rctrospoctive Analyses of Existing Rules. (a) To facilitate the periodic 

review of existing signit1cllnt regulations, agencies shall consider how best 

to promote retrospective analysis of mles that may be outmoded, ineffective, 

insufficient, or axcessively burdensome, and to modify, streRmline, expand, or repeal them in accordance with what has been learned. Such retrospectivo 

analyses, including supporting datu, should be reloased online whenever pOSSible. 

(b) Within 120 days of the date of this order, each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary 

plan, consistent with law and its resources and regulatory priorities, under 

which the agency will periodically review its existing significant regulations to detennine whether any such regulations should be modified, streamlined, 

expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives. 

Sec. 7. General Provisions. (a) For purposes of this order, "agency" shall have the meaning set forth in section 3(b) of Executive Order 12866. 

(b) Nothing in this order shall be construed to impair or otherwise affect: 

(iJ aothority granted by law to a department or agency, or the head thereof; or 

(ii) functions of the Director of the Office of Management and Budget 

r.l:llating to budgotary, administrative, or legislative proposals, 

(cl This order shall be implemented consistent with applicable law and suhject to tha availability of appropriations. 

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Bdlmgcocle 3195-Wl...f' 

(d) This order i.s not intended to, and does not, create any right or 

benefit, substantivB or procedural, enforceable at law or in equity by any 

party against the United Slates, its departmonts, agencies, or entities, its 

officers, employees, or agents, or any other person. 

THE WHITE HOUSE, 

January 18, 2011. 

<3<P--

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Federal RegistedVol. 76, :'\0. 14/Yriday, January 21, 2U11iPresidential DOl::umeots 3821 

Presidential Documents 

Memorandum of January to, 2011 

Regulatory Flexibility, Small Business, and Job Creation 

Memorandum for the Heads of Executive Departments and Agencies 

Small businesses play an essential role in the American economy; thoy 

help to fuel productivity, economic growth, and job crooUon. More than 

half of all Americans working in the privata sector either are employed by a small business or own one. During a recent I5-year period, small 

businesses created more than 60 percent of all new jobs in the Nation. 

Although small businosses and new companies provide the foundntions 

for economic growth and job creation, they have faced severe challenges 

as a result of the recession. One consequenco has been the loss of significant numbors of jobs. 

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-{j1Z, establishes a deep 

national commitment to achieVing statutory goals without imposing unnecessary burdens on the public. The RFA emphasizes the importance of recognizing "differences in the scale and resources of regulated entities" and of considering "alternative rogulatory approaches> .. which minimize the 

significant economic impact of rules on small businesses, small organizations, and small governmental jurisdictions." 5 V.S.c. 601 note. 

To promote its central goals, the RFA imposes a series of requirements 

designed to ensure thut agencies produce regulatory flexibility analyses that 

give careful consideration to the effects of their regulations on small busi· nesses and explore significant alternatives in order to minimize any significant economic impact on small businesses. Among other things, the RF A 

requires that wh~m an agency proposing a rule with such impact is required 

to provide notice of the proposed rule, it must also produce an initial regulatory flexibility analysis that includes discussion of significant alternatives. Significant alternatives include the use of performance rather than 

design standards: simplification of compliance and reporting requirements 

for small businesses: establishment of different timetables that take into 

account the resources of small businesses; and exemption from coverage for small businesses. 

Consistent with the goal of open government. the RFA also encourages public parHcipation in and transparency about tho rulemaking process. 

Among other things, the statute requires agencios proposing rules with a significant economic impact on smull businesses to provide an opportunity 

for public comment on any required initial regulatory flexibility analysis, 

and generally requir[ls agendas promulgating final rules with such significant 

economic impact to rospond, in a final regulatory l1exibility analysis, to 

comments filed by the Chief Counsel for Advocacy of the Small Business Administration. 

My Administration is firmly committed tn eliminating excessive and unjustified burdens on small businesses, and to ensuring that regulations are de- signed with careful consideration of their effects, induding their cumulative 

effects, on small businesses. Executive Order 12666 of September 30, 1993, 

as amendml, states, "Each agency shall tailor its regulations to imposo the 

least burden on society. including individuals, businesses of differing sizes, and other entities (including small communities and goverumeutal entities), 

consistent with obtaining the regulatory objectives, taking into account. 

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among other things, and to the extent practicable, the costs of cumulative 

regulations." 

In the current economic environment, it is especially important for agendes 

to design regulations in a cost~effective manner consistent with the goals 

of promoting economic growth, innovation, competitiveness. and job creation. 

Accordingly, I hereby direct executive departments and agencies and request 

independent agencies, when initiating rulemaking that will have a significant 

economic impact on a substantial number of small entities. to give serious 

consideration to whetbf'.f and how it is appropriate, consistent witb law 

and regulatory objectives, to reduce regulatory burdens on small husinesses, 

through increased fleXibility. As the RF A recognizes, such Oexibility may 

take many fonns, including: 

• extended compliance dates that take into account the resources available 

to small entities; 

• performance standards ratber than design standards; 

• simplification of reporting and compliance requirements (as, for example, 

through streamlined forms and electronic filing options); 

• different requirements for large and small firms; and 

• partial or total exemptions. 

I further direct that whenever an executive agency chooses, for reasons 

other than legal limitations, not to provide such flexibility in a proposed 

or final rule that is likely to have a significant economic impact on a 

substantial numLer of small entities, it should explicitly justify its decision 

not to do so in the explanation that accompanies that proposed or final 

rule. 

Adherence to these requirements is designed to ensure that regulatory actions 

do not place unjustified economic hurdens on small business owners and 

other small entities. If regulations are preceded by careful analysis, and 

subjected to public conunent, they are less likely to be based on intuition 

and guesswork and more likely to be justified in ligbt of a clear understanding 

of the likely consequences of alternative courses of action. With that undl:!r~ 

standing, agencies will be in a better pusilion to protect t1w puhlic while 

avoiding excessive costs and paperwork. 

This memorandum is not intended to, and does not, create any right or 

benefit, substantive or procedural, enforceable at law or in equity by any 

party against the United States, its departments, agencies, or entities, its 

officers, employees, or agents, or any other person. Nothing in this memorandum shaH be construed to impair or othenvise affect the functions of 

the Director of the Office of Management and Budget relating to budgetary, 

administrative, or legislative proposals. 

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~'llcoll--21}..-11: IN'Jaml 

BiUing cods 1111J-{11-J> 

The Director of the Office of Management and Budget is aulh\.lrized and 

directed to publish this memorandum in the Federal Register. 

THE WHITE HOUSE, 

Washington, January 18,2011 

~ 

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Appendix E 

Executive Order 13579 

Federal1tegister 

Vol. 76, No. 135 

Thursday, July 14., 2011 

ntle J_ 

The President 

41587 

Presidential Documents 

Executive Order 13519 Qf July 11, l011 

Regulation and Independent Regulatory Agencies 

By the authority vestBd in me as President by the Constitution and the 

laws of the United States of America, and in order to improve regulation and regulatory review. it is hereby ordered as follows: 

Section 1. Policy. (a) Wise regulatory decisions depend on public participation and on careful analysis of the likely consoquences of regulation. Such 

decisions are infonned and improved by allowing interested members of 

the public to have a meaningful opportunity to participate in rulemaking. 

To the extent permitted by law, such decisions should be made only after 

consideration of their costs and benefits (both quantitative and qualitative). 

{b} Executive Order 13563 of January 18, 2011, "Improving Regulation 

and Regulatory Review," directed to executive agencies, was meant to 

produce a regulatory system that protects "public heaJth, welfare, safety, 

and our environment while promoting economic growth, innovation, competitiveness, Gnd job creation." Independent regulatory agencies, no less 

than executive agencies, should promob) that gonl. 

(c) Executive Order 13563 set out general requirements directed to execu· 

tive agencies concerning public participation, integration and innovation, 

flexible approaches, and science. To the extent permitted by law, independent 

regulatory agencies should comply with these provisions as well. 

Sec, 2. Retrospective Analyses of b'xisting RuJes. {al To facilitate the periodic 

review of existing significant regulations, independent regulatory agencies 

should consider how bost to promote retrospective analysis of rules that 

may be outmoded, ineffective, insufficient, or exceSSively burdensome, and 

to modify, streamlina, expand, or repeal them in accordance with what 

has been learned. Such retrospective analyses, including supporting data 

and evaluations, should be released online whenever possible. 

(bJ Within 120 days of the date of this order, each independent regulatory 

agency shonld develop and release to the public a plan, consistent with 

law and reflecting its resources and regulatory priorities and processes, 

under which the agency will periodically review its existing significant 

regulations to determine whether any such regulations should be modified, 

streamlined, (Ixpanded, or repealed so as to make the agency's regulatory 

program more effective or less burdensome in achieving the regulatory objectives. 

Sec, 3, General Provisions. (a) For purposes of this order, "executive agency" 

shall have the meaning set forth for the term "agency" in section 3tb) 

of Executive Order 12866 of September 30, 1993, and "indepeodent regulatory agency" shall bave tbe meaning set forth 10 44 U.S.C. 3502(5). 

(b) Nothing in this order shaH be construed to impair or otharwise affect: 

(0 authority granted by law to a department or agency, or the head 

thereof: or 

(ii) functions of the Director of the Office of Management and Budget 

relating to budgetary, administrative, 01" legislative proposals. 

(c) This order shall be implemented consistent with applicablo law and 

subject to the availability of appropriations, 

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Mhng COd6 319~-Wl-P 

(d) This order is not intended to, and does not, create any right or 

benefit, substantivo or procedural, enforceable at law or in equity by any 

party aRainst the United States, its departments, agencies. or entities, its 

officers, employees. or agants, or any ather persan. 

THE WHITE HOUSE, 

July 11, 2011. 

~ 

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Appendix F 

Executive Order 13610 

Fedel'1l.l Regl,ll1r 

Vol. 77, No. ~B 

Monday. May 14,2012 

Title 3-

The President 

28469 

Presidential Documents 

Executive Order 13610 of May 10, 2D12 

Identifying and Reducing Regulatory Burdens 

By the authority vested in me as President by the Constitution and the 

laws of the United States of America, and in order to modernize our rogulatory system and to reduce unjustified regulatory burdens and costs, it 

is hereby ordered as follows: 

$e(;tion 1. Policy. Regulations play an indispensable role in protecting public 

health, welfare, safety, and our environment, but they can also impose 

significant burdens and costs, During challenging economic times, we should 

be especially careful not to impose unjustified regulatory requirements. For 

this reason, it is particularly important for agencies to conduct retrospectivo 

analyses of existing rules to examine whether they remain justified and 

whether they should be modified or streamlined in light of changed circumstances, including the rise of new technologios. 

Executive Order 13563 of January 18, 2Dll (Improving Regulation and Regulatory Review), states that our regulatory system "must measure, and seek 

~~;~f~~:~x:~~t~~~u~r~:~u~;~i~::sa~:~~I~s r~~~i:::::l~tSt'~ JoonS~~~~t:i~~t! exercise. but to engage in "periodic review of existing significant regulations." 

Pnrsuant to section 6(b) of that Executive Order, agencies are required to 

develop retrospective review plans to review existing significant regulations 

in order to "determine whmher any such regulations should be modified, 

streamlined, expanded, or repealed." The purpose of this requirement is 

to "make the aFlency's regulatory program more effective or less burdensome 

in achieving the regulatory objectives." 

In response to Executive Order 13563, agencies have developed and made 

available for public comment retrospective review plans that identify over 

five hundred ioitiatives. A small fmction of those initiatives, already finalized 

or formally proposed to the public, are anticipated to eliminate billions 

of dollars in regulatory costs and tens of millions of hours in annual paperwork burdens, Significantly larger savings are anticipated as the plans are 

implemented and as action is taken on additional initiatives. 

As a matter of longstanding practice and to satisfy statutory obligations, 

many agencie!l engaged in periodic review of existing regulations prior to 

the issuance of Executive Order 13563. But further steps should be taken, 

consistent with Jaw, agency resources, and regulatory priorities, to promote 

public participation in retrospective review, to modernize our regulatory 

system. and to institutionalize regular assessment of significant regulations. 

Se&:;, 2. Public Participation in Retrospective Review. Members of the puhlic. 

including those directly and indirectly affected by regulations, as well as 

State, local. and tribal governments, have important information about the 

actual effects of existing regulations. For this reason, and consistent with 

Executive Order 13563, agencies shall invite, on a regular basis (to be determinod by tho agency head in consultation with the Office of Information 

and Regulatory Affairs (DIRA»). public suggestions about regulations in need 

of retrospective review and about appropriate modifications to such rogulations. To promote an open eXchange of information, retrospective analyses 

of regulations, including supporting data, shall be released to the public 

online wherever practicable. 

Sec, 3. Setting Priorities. In impiementinFl and improving their retrospoctive 

review plans, and in considering retrospective review suggestions from the 

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public. agencies shall give priority, consistent with law, to those initiatives that will produce significunt quantifiable monetary savings or significant 

quantifiable reductions in paperwork burdens while protecting public health, 

welfare, safety, and our anvironment. To the extent practicable and permitted by law, agencies shall also give special consideration to initiatives that 

would reduce unjustified regulatory burdens or simplify or harmoniz.e regu- latory requirements imposed On small businesses. Consistent with Executive 

Order 13563 and Executive Order 12866 of September 30. 1993 (Regulatory Plarming and Review), agencies shall give consideration to the cumulative 

effects of their own regulations. including cumulative burdens, and shall 

to the extent practicable and consistent with law give priority to reforms 

that would make significant progress in reducing those burdens while pro- tecting public healtb, welfare. safety, and our emirorunent. 

Sec. 4, AccountabiUty. Agencies shall regularly report on the stntus of their 

retrospective review efforts 10 DlRA. Agency reports should de.9cribe progress. 

anticipated accomplishments. and proposed tirneline.9 for relevant actions, with an emphasis on the priorities described in section 3 of this order. 

Agendes shall submit draft reports to DIRA on September 10, 2012, and 

on the second Monday of January and July for each year thereafter. unless 

directed otherwise through subsequent guidance from OIRA. Agencies shall make final reports available to the public within a reasonable period (not 

to exceed three weeks from the date of submission of draft reports to DlRA). 

Sec. 5. General Provisions. (a) For purposes of this order. "agency" mBans 

any authority of the united Stetes that 1.9 an "agency" under 44 U.S.C. 3502(1), other than those considered to be independent regulatory agencies, 

as defined in 44 U.S.C. 3502(5). 

(b) Nothing in this order shall be construod to impair or otherwise affect: 

(il the- authority granted by law to a department or agency, or the head theroof;or 

(Ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administretive, or legislative proposals. 

(c) This order shall be implemented consistent with applicable law and 

subject to the availability of appropriations. 

(d) This ardor is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any 

party against the United States, its departments, ugencics. or entities, its 

officers. employees, or agents, or any other person. 

THE WHITE HOGSE, 

May 10, 2012. 

~ 

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Appendix G Abbreviations 

A&E 

ACUS 

ADA 

AIR 

ANPRM 

APA 

APHIS 

ARRA 

BASICs 

BLM 

CAIR 

CFPB 

CI 

CISWI 

CMS 

CSA 

DHS 

DOE 

DOl 

DOJ 

DOL 

DOT 

DRC 

DSW 

EBSA 

E.O. 

EOP 

EPA 

EPCA 

FCC 

FIP 

FLSA 

FMC SA 

FRFA 

FSA 

FWS 

FY 

GAO 

GHG 

GHS 

HHS 

HOS 

architecture and engineering 

Administrative Conference of the United States 

Americans with Disabilities Act 

Aircraft Certification Service 

advance notice of proposed rulemaking 

Administrative Procedure Act 

Animal and Plant Health Inspection Service 

American Recovery and Reinvestment Act 

Behavior Analysis and Safety Improvement Categories 

Bureau of Land Management 

clean air interstate rule 

Consumer Financial Protection Bureau 

compression ignition 

Commercial and Industrial Solid Waste Incineration (rule) 

Centers for Medicare and Medicaid Services 

Comprehensive Safety Assessment Program 

Department of Homeland Security 

Department of Energy 

Department of the Interior 

Department of Justice 

Department of Labor 

Department of Transportation 

Democratic Republic of Congo 

definition of solid waste 

Employee Benetits Security Administration 

Executive Order 

Executive Office of the President 

Environmental Protection Agency 

Energy Policy and Conservation Act 

Federal Communications Commission 

federal implementation plan 

Fair Labor Standards Act 

Federal Motor Carrier Safety Administration 

final regulatory flexibility analysis 

flexible spending account 

Fish and Wildlife Service 

fiscal year 

Government Accountability Office 

greenhouse gas 

Globally Harmonized System (ofclassitication and labeling of chemicals) 

Department of Health and Human Services 

hours of service 

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I2P2 

IBR 

ILEC 

IRFA 

IRS 

LDV/LDT 

LHWCA 

MHz 

MSHA 

MSO 

NAHB 

NARA 

NESHAP 

NHSM 

NOAA 

NPRM 

NSO 

NSPS 

NTTAA 

OIRA 

OMB 

OSHA 

PFOS 

P.L. 

QM 

QRM 

RESPA 

RFA 

RIA 

RICE 

SBA 

SBfR 

SBJA 

SBREFA 

SEC 

SI 

SMS 

SOP 

State 

TILA 

Treasury 

USCIS 

USDA 

UST 

WWT 

injury and illness prevention programs 

Incorporation by Reference 

incumbent local exchange carrier 

initial regulatory flexibility analysis 

Internal Revenue Service 

light-duty vehicles I light-duty trucks 

Longshore and Harbor Workers Compensation Act 

megahertz 

Mine Safety and Health Administration 

Musculoskeletal Reporting rule 

National Association of Home Builders 

National Archives and Records Administration 

National Environmental Standards for Hazardous Air Pollutants 

nonhazardous secondary materials 

National Oceanic and Atmospheric Administration 

notice of proposed rulemaking 

northern spotted owl 

New Source Performance Standards 

National Technical Transfer Advancement Act 

Office oflnfonnation and Regulatory Affairs 

Office of Management and Budget 

Occupational Safety and Health Administration 

perfluoroocytl sulfonates 

Public Law 

qualified mortgage 

qualified residential mortgage 

Real Estate Settlement Procedures Act 

Regulatory Flexibility Act 

regulatory impact analysis 

reciprocating internal combustion engines 

Small Business Administration 

Small Business Innovation Research 

Small Business Jobs Act 

Small Business Regulatory Enforcement Fairness Act 

Securities and Exchange Commission 

spark ignition 

Safety Measurement System 

standard operating procedure 

Department of State 

Truth in Lending Act 

Department of the Treasury 

United States Citizenship and Immigration Service 

United States Department of Agriculture 

underground storage tanks 

wastewater treatment tank 

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Advocacy: the voice of small business in government 

March 20, 2013 

The Honorable David Schweikert, Chairman 

U.S. House of Representatives Small Business Committee, 

Subcommittee on Investigations, Oversight and Regulations 

2361 Rayburn House Office Building 

Washington, D.C. 20515 

The Honorable Yvette Clarke, Ranking Member 

U.S. House of Representatives Small Business Committee 

Subcommittee on Investigations, Oversight and Regulations 

B-343C Rayburn House Office Building 

Washington, D.C. 20515 

Dear Chairman Schweikert and Ranking Member Clarke: 

Let me begin by thanking you and the House Small Business Subcommittee on Investigations, 

Oversight and Regulations for the March 14,2013, hearing to examine the compliance of federal 

agencies with the Regulatory Flexibility Act (RFA) and the efforts of the Office of Advocacy to 

hold agencies accountable. As a former small business owner and entrepreneur myself, I also 

want to thank you for your strong, continued support for the nation's many small businesses and 

the work Advocacy does on their behalf. 

As you know, Congress created the Office of Advocacy in 1976 as an independent office tasked 

with advancing the views, concems and interests of small businesses before Congress, the White 

House, federal agencies, federal courts and state policy makers. Then, in 1980, Congress passed 

the Regulatory Flexibility Act (RF A) and directed the Office of Advocacy to monitor 

compliance with the new law. The RF A asks federal agencies to try and minimize the impact of 

proposed federal regulations on small businesses. Specifically, when a federal agency designates 

that a proposed rule or regulation will have a "significant economic impact on a substantial 

number of small entities," the RFA directs them to consider altematives to reduce this impact. 

Advocacy's role, as set by the RFA, is not to block rules and regulations or make them less 

effective. Instead, we work with federal agencies to find alternatives that accomplish the 

agency's mission, while easing the regUlation's burden on small businesses - an approach I have 

worked hard to ensure our office always pursues. 

409 3rd Street, SW' Me 3114' Washington, DC 20416' 202/205-6533 ph' 202/205-6938 fax 

www.sba.gov/advocacy 
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The RF A is an important law that helps federal agencies adopt sound regulations, while also 

minimizing those regulations' impact on smaIl businesses. Spanning across Republican and 

Democratic Administrations, the Office of Advocacy has saved small businesses more than $85 

billion in first-year regulatory costs over the last decade through its work with federal agencies 

and the RFA. These savings help agencies achieve their regulatory goal, while also allowing 

small businesses to spend more time and money growing their business. 

As I mentioned in my opening remarks at the March 14 hearing, I wanted to respond to the later 

testimony of Rena Steinzor, president of the Center for Progressive Reform (CPR), who used the 

RF A hearing as an opportunity to launch inaccurate allegations against the Office of Advocacy 

and the work we do on behalf of small businesses. While I admire Ms. Steinzor's passion, I 

believe her testimony and the Center for Progressive Reform's report are inaccurate and 

represent a fundamental misunderstanding of our office. 

Ms. Steinzor accuses the Office of Advocacy of "consciously diverting its limited, taxpayerfunding resources away from helping truly small businesses understand and comply with 

regulatory requirement toward pursuing the complaint dujour of the very large companies ... " 

Our congressional mandate is to focus on easing a regulation's burden on small businesses as the 

regulation is going through the regulatory process and not to provide compliance assistance. The 

rule-making agencies themselves are tasked with helping small businesses comply with the rules 

and regulations after they are issued. CPR makes this complaint throughout its report, and, while 

we support any additional help for smaIl businesses, Advocacy must focus its limited, taxpayerfunding resources to remain within the bounds of our congressional mandate. 

Ms. Steinzor also complains that we ignore the needs of small businesses - a frequent criticism 

throughout her testimony and CPR's report. Again, these allegations are completely inaccurate. 

Small businesses make up about 99 percent of all businesses in this country, and so Advocacy 

listens to and works with a wide array of entrepreneurs and small business groups. Advocacy's 

staff and regional advocates stationed across the country regularly visit small businesses to speak 

with owners; attend issue conferences and seminars; host or attend roundtable discussions; speak 

frequently with regulatory and economic experts; and often see firsthand how regulations affect 

small businesses. Similar to how Members of Congress depend on their district staff, field 

representatives and caseworkers to be their eyes and ears on the ground, our regional advocates 

fill this same important role. 

Additionally, throughout my tenure as Chief Counsel, I have visited more than 30 states to speak 

with smaIl business owners and the Office of Advocacy has held more than 3,000 meetings or 

roundtable discussions with small businesses, entrepreneurs and key stakeholders. In fact, one 

small business owner who spoke at the March 14 hearing alongside Ms. Steinzor - Carl Harris of 

the Carl Harris Company in Wichita, Kansas -later said in an interview with the Washington 

Business Journal that the Office of Advocacy has done "a great job" in representing the interests 

of small companies in the regulatory process. 
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As part of Advocacy's overall outreach efforts, our office regularly convenes roundtable 

discussions, all of which are open to the public, to learn about upcoming or pending regulations 

and other issues of concern to small entities (e.g. small businesses, small organizations and small 

govemmental jurisdictions). Ms. Steinzor and CPR continue to label these important discussions 

as "secret and closed-door" meetings and suggest they violate the Federal Advisory Committee 

Act (FACA). Again, Ms. Steinzor is incorrect and, I believe, misunderstands the role these 

roundtables playas part of our overall outreach efforts. 

Advocacy's roundtables do not violate FACA, because these roundtables are not designed to 

fonnulate consensus recommendations for the office, nor are any such recommendations the 

"preferred" source of advice for office policies - two important criteria established in FACA. 

The Office of Advocacy sought and received an opinion several years ago from the SBA Office 

of General Counsel to ensure the roundtable discussions were in full compliance with the law -

and we remain in full compliance today. 

Advocacy invites and welcomes all perspectives at these roundtables - including input from 

small business owners, trade associations, regulatory experts and staff and leadership from 

federal agencies and Congress - that can help Advocacy better understand potential impacts on 

small businesses and to propose solutions. On many occasions, representatives and heads of the 

regulatory agencies themselves and staff from many congressional offices are present at these 

meetings and we welcome their participation. 

To preserve frank and open discussion, Advocacy has a long-standing policy to ask that press not 

attend and the infonnal discussions similarly not be disclosed to the press. However, members 

of the press are on roundtable distribution lists, receive copies of presentations and other 

materials distributed at the roundtables and regularly report on the public presentations. 

Ms. Steinzor also suggests that Advocacy is breaking the law when we advocate the views of 

small businesses throughout the regulatory process, which she claims is in violation of the AntiLobbying Act - a law that prohibits some fonns of lobbying by federal employees. Again, this 

accusation represents a fundamental misunderstanding of our office. In fact, Congress created 

the Office of Advocacy to advance and advocate the views, concerns and interests of small 

businesses before Congress, the White House, federal agencies, federal courts and state policy 

makers. So, we are required by law to advise federal agencies and Congress about small 

business issues. To do so, Advocacy uses broad outreach to small businesses, sound economic 

research and expert policy analyses, all of which help identify small business concerns so 

entrepreneurs can focus on running their business, creating jobs and strengthening their 

communities. 

In the discussions about the size of small businesses, Ms. Steinzor claims that Advocacy's small 

business size standards are too broad. The Office of Advocacy does not set the definition of a 

small business. Under the Small Business Act, small businesses are defined by the U.S. Small 

Business Administration Office of Size Standards; Advocacy and the agencies are required by 

law to use those standards. 
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Finally, Ms. Steinzor and CPR claim Advocacy takes "consistently hostile" stances on regulatory 

proposals and tries to undercut the work of rule-making agencies. Again, these accusations 

represent a complete misunderstanding of our office. I strongly believe regulations serve an 

important role in our economy and our society, from helping to ensure we have clean air and 

water, to making toys safer for children and to protecting the health and safety of employees 

while at work. Advocacy's role, as mandated by Congress, is not to block rules and regulations 

or make them less effective; rather, our role is to work with regulators and Congress to get the 

same result they want from the regulation, while easing that regulation's burden on small 

businesses. We believe rules and regulations are stronger and more effective when small 

businesses are part of the rule-making process. Our principal goal is and always has been to 

improve the regulation and not to block it. 

Thank you again for the March 14th hearing on the Regulatory Flexibility Act and for letting me 

respond to the recent accusations made against the Office of Advocacy. While we disagree with 

Ms. Steinzor's testimony and the CPR report, I always welcome constructive criticism on how 

the Office of Advocacy can be improved. As this office's Chief Counsel, I ensure you that we 

will continue our work advocating the views and concerns of small businesses throughout the 

federal government and will, to the best of our ability, meet the duties and responsibilities given 

to us by your committee and the U.S. Congress. 

Sincerely, 

rJ~~ Winslow Sargeant, Ph.D. 

Chief Counsel for Advocacy 
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Insert offset folio 106 here 80166.076

ON: 

TO: 

BY: 

DATE: 

Statement 

of the 

U.S. Chamber 

of Commerce 

Regulating the Regulators- Reducing Burdens on Small 

Business 

House Committee on Small Business, Subcommittee on 

Investigations, Oversight and Regulations 

Marc Freedman, the United States Chamber Of Commerce 

March 14, 2013 

The Chamber's mission is to advance human progress through an economic~ 

political .... d social system based on individual freedom, 

incentive, initiative, opportunity and responsibillty. 
107 

The U.S. Chamber of Commerce is the world’s largest business 

federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local 

chambers and industry associations. 

More than 96% of Chamber member companies have fewer than 

100 employees, and many of the nation’s largest companies are also 

active members. We are therefore cognizant not only of the challenges facing small businesses, but also those facing the business 

community at large. 

Besides representing a cross-section of the American business 

community with respect to the number of employees, major classifications of American business—e.g., manufacturing, retailing, services, construction, wholesalers, and finance—are represented. The 

Chamber has membership in all 50 states. 

The Chamber’s international reach is substantial as well. We believe that global interdependence provides opportunities, not 

threats. In addition to the American Chambers of Commerce 

abroad, an increasing number of our members engage in the export 

and import of both goods and services and have ongoing investment 

activities. The Chamber favors strengthened international competitiveness and opposes artificial U.S. and foreign barriers to international business. 

Positions on issues are developed by Chamber members serving 

on committees, subcommittees, councils, and task forces. Nearly 

1,900 businesspeople participate in this process. 

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108 

Mr. Chairman, Madam Ranking Member, thank you for inviting 

to testify this morning on the value of the Regulatory Flexibility 

Act in the regulatory process. I am Marc Freedman, and I serve as 

the Executive Director for Labor Law Policy at the U.S. Chamber. 

In that role I work on several important workplace and employment regulatory areas, most notably OSHA, the FMLA, and the 

FLSA. Before coming to the Chamber more than eight years ago, 

I was the Regulatory Counsel for the Senate Small Business Committee with the primary responsibility of overseeing agency compliance with the Regulatory Flexibility Act as modified by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA). 

This morning I would like to focus my remarks on examples 

where OSHA and other Department of Labor agencies under the 

current administration did not take advantage of the RFA and 

SBREFA in their rulemakings. Note that I said ‘‘did not take advantage.’’ The Reg Flex Act and SBREFA can be potent tools for 

agencies to help them develop better, more tailored regulations. Instead of seeing these laws as opportunities to get insightful input, 

too often agencies see these laws as obstacles in the rulemaking 

process to be overcome. 

The Regulatory Flexibility Act and SBREFA Enhance 

Rulemakings 

The RFA and SBREFA are common sense additions to the rulemaking process which, at their core, just ask agencies to respect 

the small businesses that will be subject to their regulations. The 

RFA requires that agencies conduct analyses on the impact regulations will have on small entities, or in the case of OSHA, EPA, and 

now the CFPB, small business review panels, unless the agency 

can ‘‘certify’’ that the regulation will not have a ‘‘significant economic impact on a substantial number of small entities.’’ Compliance with the Regulatory Flexibility Act enhances the rulemaking 

process—assuming that the goal is to produce regulations that will 

have the maximum beneficial impact with a minimal burdensome 

impact. 

As I have reviewed agency rulemakings over the years, I have 

seen many agencies go to some lengths to avoid conducting these 

analyses. The dispute often arises in the context of the ‘‘factual 

basis’’ agencies are required to provide to support their certification. In some rulemakings I have reviewed, this factual basis is 

either absent, or the agency uses a declarative tautological statement that the proposed regulation will not have a significant economic impact on a substantial number of small entities to support 

the certification that the regulation will not have a significant economic impact on a substantial number of small entities. Often 

agencies seriously underestimate the cost impacts of a regulation. 

In some cases this can also mean ignoring industries affected. I 

should point out that these problems of agency adherence to the requirements of the RFA are not unique to any specific administration or party—they span several administrations of both political 

parties. 

The key is that the RFA and SBREFA create channels for input 

from small entities that will be affected by the proposed regulaSBREP-219 with DISTILLER

109 

tions. When agencies seek this input, and respect those small entities that will be subject to the regulation, all parties come out 

ahead. Beyond the requirements for small business review panels 

that apply to OSHA, EPA, and the CFPB, the RFA’s affirmative 

outreach requirement applies to all other agencies subject to the 

Administrative Procedure Act’s requirement for notice and comment rulemaking. Section 609(a) directs agencies to ‘‘assure that 

small entities have been given an opportunity to participate in the 

rulemaking...through the reasonable use of techniques such as—(3) 

the direct notification of interested small entities.’’ As the Regulatory Flexibility Act and even SBREFA were enacted before the 

advent of the internet, this requirement is considerably easier now 

than when these laws were passed, and accordingly there is even 

less reason why agencies should avoid doing this. Too many times 

agencies think that publishing a proposed regulation in the Federal 

Register constitutes some form of affirmative outreach. 

In addition to requiring certain steps if an agency cannot certify 

a regulation, the RFA always allows an agency to voluntarily engage in the outreach and analysis steps specified by the RFA and 

SBREFA even if an agency is able to certify that the trigger 

threshold has not been met. 

There is one more important point I would like to make about 

the impact of the RFA: it does not force an agency to change their 

rulemaking, nor does it authorize the SBA Office of Advocacy to 

change or block an agency’s rulemaking, even if that agency is ignoring Advocacy’s advice. The RFA merely sets out a process but 

it does not specify the outcome. 

Examples of OSHA Rulemakings Where A SBREFA Panel 

Would Have Made A Difference 

Unfortunately, OSHA under this administration has displayed a 

certain resistance to taking advantage of the SBREFA process. In 

various examples, OSHA could have clearly benefited if they had 

been willing to use the small business panel review process that 

the act lays out. And in each of these cases, there would have been 

no delay in moving the rulemakings forward. 

Early in this administration, OSHA initiated several 

rulemakings without availing themselves of the benefits from the 

small business panel reviews. In each case they certified that these 

rulemakings did not trigger SBREFA but in each case the agency 

would have benefited from using the small business panel review 

even if the certification was valid. 

One of the first rulemakings from this OSHA was one to ‘‘clarify’’ 

when small businesses who voluntarily enter into the on-site consultation program—that is they ask for help from OSHA in identifying hazards in their workplace—would be subject to enforcement. 

Traditionally, there is a fire wall between the consultation and enforcement programs. This cooperative agreements rulemaking 

sought to reinforce that OSHA was going to look for opportunities 

to pursue enforcement even for those employers who are truly 

doing the right thing. 

OSHA certified that this proposed regulation would not trigger 

SBREFA, but as it explicitly and exclusively deals with small busiSBREP-219 with DISTILLER

110 

nesses, OSHA would have benefited from hearing directly from 

small businesses about their views on this rulemaking. Indeed, not 

conducting a small business review panel for this rulemaking reveals the lack of concern this OSHA has for the impact of their actions on small businesses. Had they done so, they would have 

heard that small businesses would be less comfortable entering into 

the consultation program if this rulemaking is completed. Getting 

that message with that clarity at that time, might have steered 

OSHA from proposing this regulation. The Chamber filed comments making this point, as did the SBA Office of Advocacy. 

Reducing participation in this program may be one of OSHA’s 

goals as Secretary Solis and then Acting Assistant Secretary Jordan Barab made explicitly clear in speeches during that period that 

they wanted to emphasize enforcement and deemphasize cooperative agreements and other approaches that did not rely on enforcement. 

The only regulatory agenda for 2012, issued in late December, indicates that this rulemaking is scheduled to be finalized in April. 

Another rulemaking where OSHA suffered for not conducting a 

small business panel review is the high profile rulemaking to add 

a column to the OSHA 300 recordkeeping log to track musculoskeletal disorders (MSDs)—the injuries associated with ergonomics. 

OSHA certified this regulation as not having a significant economic 

impact on a substantial number of small entities, based on their 

claim that compliance with this would only take five minutes. 

OSHA severely underestimated the impact of this rulemaking by 

ignoring the fact that small businesses would now be held accountable for determining whether an MSD is work related—a potentially complicated and uncertain analysis. The Chamber urged 

OSHA to conduct the small business review plan, but OSHA declined to do so. 

In July 2010, OSHA submitted a final regulatory package to 

OIRA for review but in January 2011, OSHA was forced to withdraw the regulation from OIRA and instructed to get more input 

from small businesses. This resulted in the agency conducting 

three teleconferences with small businesses to hear directly from 

them about their concerns with this rulemaking—exactly what 

would have happened if the agency had conducted the small business panel review at the early stages of the rulemaking. If OSHA 

had taken advantage of the SBREFA procedures, this regulation 

might very well be in place by now. Instead, it is languishing on 

the long term action list and is blocked from moving forward because of an appropriations rider. 

The last OSHA rulemaking I want to bring up is the Globally 

Harmonized System for Classification and Labeling—GHS for 

short. This is a sweeping regulation that modifies how producers 

of hazardous chemicals and downstream users of those products 

must label them for hazards and train employees on those hazards. 

The rulemaking was actually started in the Bush administration. 

Again, OSHA declined to conduct a SBREFA panel claiming that 

any costs related specifically to complying with the new regulation 

would be onetime adjustments from compliance with the precursor 

Hazard Communication Standard and therefore, the impact was 

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1This rulemaking has also been cited by the Obama administration as part of the regulatory 

‘‘look back’’ effort intended to review old regulations and modify or eliminate them. OSHA’ claim 

that this regulation will save $2.5 billion over five years is a significant part of the overall savings claimed by this effort. 

minimal and did not warrant the small business panel review. 

OSHA did claim to voluntarily comply with the other requirements 

of SBREFA by responding to the issues covered under an Initial 

Regulatory Flexibility Analysis or IRFA, but they stopped short of 

conducting the small business review panel. 

In fact, OSHA claimed this regulation would result in substantial 

net savings to employers because it would eliminate the need to 

produce two sets of labels and safety data sheets when selling products into international markets. OSHA claims that this regulation 

will save just over $550 million net of costs annually.1 Even if this 

calculation is accurate, and we think there are several reasons why 

it is not, this amount when spread over OSHA’s estimate of the 

number of affected establishments of 5.4 million produces an annual net benefit of about $100. 

The sad point is that this was a regulation that everyone agreed 

should happen. The Bush administration initiated it, Republicans 

in Congress had called for it, and this was supposed to be the low 

hanging fruit. Unfortunately, when this administration decided to 

take on this rulemaking, they loaded up the regulation with various provisions that do not make sense or were not even in the proposal: 

• OSHA created a new hazard category for Hazards Not 

Otherwise Classified—a catch all that means employers 

will never know if they have labeled and trained for all the 

hazards that OSHA expects. 

• OSHA inserted coverage for combustible dust into the 

final regulatory text without putting it in the proposed test 

despite the fact that OSHA does not have a regulatory definition for this hazard and is actually conducting a separate rulemaking to develop a standard on combustible 

dust. 

• OSHA specified that the deadline for employers to 

have their training program in place would be a year before the deadline for producers to update their labels and 

safety data sheets—the very material that will be the 

focus of the training programs. 

These and other problems would have been made known to 

OSHA during a small business panel review if OSHA had not certified this regulation as not triggering SBREFA, or had decided to 

voluntarily conduct the panel. As several of these issues are now 

being litigated, learning about these problems before the regulation 

was proposed might have saved OSHA and the Department considerable resources and insured a smoother implementation. 

The timing of the input that comes from a small business panel 

is an important feature of this process. Once a regulation is proposed, an agency is restricted in how much they can change it before it becomes final. Proposed regulations are not like proposed 

legislation which can be very fluid and go through several 

iterations and changes before being enacted. When an agency proSBREP-219 with DISTILLER

112 

poses a regulation, they are not saying ‘‘let’s have a conversation 

about this issue,’’ they are saying, ‘‘this is what we intend to put 

into effect unless there is some very good reason we have overlooked why we cannot.’’ By giving an agency direct feedback about 

how a regulation will affect those covered by it, the agency can 

learn about problems before they get locked into the regulation. 

Examples Where OSHA SBREFA Panels Are Helpful 

As an example of the positive benefits from OSHA conducting a 

small business review panel, consider the rulemaking to revise the 

crystalline silica standard. In 2003, OSHA conducted a panel to 

take input on how this revision would affect small businesses. Silica is present in a very wide array of workplaces, in particular in 

construction which is dominated by small businesses. One point 

made by the small businesses in that review was that reducing the 

exposure limit would create tremendous burdens and is likely not 

even technologically feasible. Significantly, they told OSHA that 

the problem was not an exposure limit that was too high, but that 

the current exposure limit is too frequently ignored. Because of the 

review, interested parties were able to see what OSHA was considering and what is likely at OIRA under review as a proposed regulation which has triggered widespread alarm and concern. This administration claims to want to be the most transparent ever; conducting these panels is one of the best ways to achieve that goal. 

Another example of where an OSHA SBREFA panel will be beneficial is the anticipated panel for OSHA’s Injury and Illness Prevention Program, or I2P2, rulemaking. This will be OSHA’s most 

sweeping rulemaking ever; it will require all employers to implement safety and health programs according to criteria OSHA will 

establish. To OSHA’s credit, the agency has committed to conducting the SBREFA small business panel review. Several times 

last year OSHA indicated this process would be getting under way, 

but it has not yet. When it does, interested parties beyond just 

those participating in the panel review will be able to learn what 

OSHA has in mind and see their draft economic analysis. Former 

SBA Advocacy Chief Counsel Jere Glover has told me that this 

process of OSHA showing their cards is perhaps the most significant benefit of this process. 

Examples Where OSHA Should Have Done Rulemakings 

Complete with SBREFA Panels 

Not only has this OSHA given short shrift to the RFA/SBREFA 

process when it has conducted rulemakings, but there are also examples where the agency should have gone through rulemaking 

but did not. Had they done rulemakings in these examples, they 

would have been well served to conduct small business review panels. 

In October 2010, OSHA proposed to change the interpretation for 

the term ‘‘feasible’’ as it applies under the Noise Reduction Standard. Before this proposal, employers had broad leeway to use personal protective equipment such as noise canceling headphones or 

ear plugs, as long as they provided adequate protection. Under the 

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interpretation, ‘‘feasibility’’ would be reinterpreted to mean anything that did not cause a business to go out of business. The result 

would be to force many employers to redesign their workplaces to 

install costly engineering controls or implement costly and inefficient administrative controls so that employees would only work 

short periods and be rotated in and out of the hazard. 

As this was merely an interpretation, and not a rulemaking, it 

was not subject to the requirements of SBREFA. OSHA published 

the new interpretation for comment, but did not conduct any of the 

analyses associated with a rulemaking such as costs or impact on 

small businesses. Thankfully, in January 2011, OSHA was forced 

to withdraw this interpretation due to an uproar as more and more 

businesses learned about it and determined what the impact would 

be. An independent economic analysis, because OSHA had not done 

one, suggested the impact on the economy would be more than $1 

billion. 

The most recent example of a policy change where OSHA should 

have done a rulemaking but did not was the memo to regional administrators from Deputy Assistant Secretary Richard Fairfax on 

March 12, 2012. This memo laid out various scenarios that could 

constitute violations of the whistleblower protections. Included in 

these scenarios was the use of safety incentive program that focus 

on rates of injuries reported. This memo thus created a consequence to employers using these types of plans where neither the 

statute nor any regulation establish a prohibition on these plans or 

discuss when they are appropriate. Because this creates a new 

legal consequence for employers, this would have been better handled through a rulemaking where OSHA would reveal the data and 

evidence that supports this measure, rather than just stating 

blithely that ‘‘OSHA has observed that the potential for unlawful 

discrimination under all of these policies may increase when management or supervisory bonuses are linked to lower reported injury 

rates.’’ 

Examples of Other Agencies that Erroneously Avoided 

RFA Compliance 

In addition to OSHA not taking advantage of the RFA/SBREFA 

procedures to enhance their rulemakings, other DOL agencies have 

similarly avoided the RFA. Most notable have been the Office of 

Labor Management Standards in its ‘‘Persuader’’ rulemaking and 

the Employment and Training Administration in its rulemaking 

changing how the H–2B visa program would work. 

In the ‘‘Persuader’’ rulemaking, that would severely restrict the 

availability of the ‘‘advice’’ exemption for reporting under the Labor 

Management Reporting and Disclosure Act, OLMS certified that 

the proposed regulation would not have ‘‘a significant economic impact on a substantial number of small entities’’ based solely on the 

number of NLRB representation and decertification elections held. 

The proposed regulations would, however, greatly expand the requirement for employers and their consultants to file and thus the 

Department grossly under estimated the cost to employers. The Department estimated that the total cost before filing would be merely $825,866. The Chamber’s more detailed economic analysis howSBREP-219 with DISTILLER

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ever showed that the proposed rule will impose a first year cost 

burden on the economy of between $910.1 million to $2.2 billion 

and subsequent annual costs of between $285.9 million to $793.1 

million. 

Similarly, the Employment and Training Administration dramatically under estimated the cost of the major changes they proposed to the H–2B visa program which is heavily used by small 

businesses. The Chamber’s economic analysis shows that the Department’s estimated first year cost of the proposed rule increases 

from the published amount of $2.1 million to a revised total of 

$53.1 million, and the subsequent years’ annual costs increase from 

the published amount of $810,000 per year to a revised total cost 

of $50.81 million per year. The undiscounted total cost over ten 

years increases from the published total of $9.35 million to a revised ten-year total of $509.39 million. The ETA claimed that it did 

not have adequate data to provide a more accurate estimate of the 

costs. The only reason the ETA did not have this data is that it 

did not try to develop it. This was a case where the agency should 

have followed the instructions from Section 609(a) to assure participation from small entities. 

Conclusion 

The Regulatory Flexibility Act and the Small Business Regulatory Enforcement Fairness Act exist to help agencies improve 

their rulemakings, not to impede them. If agencies welcomes the 

input of small businesses as a source of real world understanding 

these regulations would likely be more narrowly tailored without 

sacrificing the agency mission or regulatory objective. In the interest of transparency, OSHA should conduct more small business 

panel review and other agencies should look for more direct ways 

to develop the input of small businesses consistent with Section 

609(a). 

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n 

... ... NAHB~ 

Testimony of 

Carl Harris 

On Behalf Of the 

National Association of Home Builders 

Before the 

United States House of Representatives 

Committee on Small Business 

Subcommittee on Investigations, Oversight, and Regulations 

Hearing on 

"Regulating the Regulators - Reducing Burdens on Small Business" 

March 14, 2013 
116 

1 5 U.S.C. 601–612 

2 5 U.S.C. 603(a). 

3 5 U.S.C. 603(c). 

On behalf of the more than 140,000 members of the National Association of Home Builders (HAHB), I appreciate the opportunity to 

submit this testimony. My name is Carl Harris. I am a builder 

from Wichita, Kansas, and co-founder of Carl Harris Co., Inc. As 

a specialty contracting firm founded in 1985 we employ approximately twenty individuals and are engaged in a variety of residential and light-commercial construction applications. I also serve as 

a national area chairman for the National Association of Home 

Builders and am the 2013 President of the Kansas Building Industry Association. 

As a small businessman operating in a heavily regulated industry, I understand how difficult (and often costly) it can be to comply 

with the myriad of government regulations that apply to my dayto-day work. As a frequent industry representative in the statutorily-mandated small business feedback portion of the regulatory 

rulemaking process, I am well aware of the role small businesses 

play in informing regulators of the potential burdens borne by 

small business with new regulations. I am also aware of the 

strengths and weaknesses inherent to the process. 

While the original Congressional intent and subsequent additions/enhancements to the Regulatory Flexibility Act are to be 

lauded, the reality is that far too often agencies either view compliance with the Act as little more than a procedural ‘‘check-the-box’’ 

exercise or they artfully avoid compliance by other means. Agencies 

should seek to partner with small entities to help create more efficient, more effective regulations and, in so doing, reduce the compliance costs for small businesses. I am pleased that the Subcommittee is focusing today on the impacts of regulation on small 

businesses. 

The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA)1 requires federal agencies 

to consider the effect of their actions on small entities, including 

small businesses, small non-profit enterprises, and small local governments. When an agency issues a rulemaking proposal, the RFA 

requires the agency to ‘‘prepare and make available for public comment an initial regulatory flexibility analysis. Such analysis shall 

describe the impact of the proposed rule on small entities.’’2

The RFA states that an initial regulatory flexibility analysis 

(IRFA) shall address the reasons that an agency is considering the 

action; the objectives and legal basis of the rule; the type and number of small entities to which the rule will apply; the projected reporting, record keeping, and other compliance requirements of the 

proposed rule; and all federal rules that may duplicate, overlap, or 

conflict with the proposed rule. The agency must also provide a description of any significant alternatives to the proposed rule which 

accomplish the stated objectives of applicable statutes which minimize any significant economic impact of the proposed rule on small 

entities.3

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4 5 U.S.C. 605. 

5 5 U.S.C. 604. 

6 5 U.S.C. 604(a). 

7 5 U.S.C. 609. 

8Section 1100G of Dodd-Frank amendment § 609(b) to add CFPB to the list of agencies. 

9 5 U.S.C. 609(b)(1) through (6). 

10 5 U.S.C. 609(c). 

Section 605 of the RFA allows an agency, in lieu of preparing an 

IRFA, to certify that a rule is not expected to have a significant 

economic impact on a substantial number of small entities. If the 

head of the agency makes such a certification, the agency must 

publish the certification in the Federal Register along with a statement providing the factual basis for the certification.4 The agency 

must then prepare a final regulatory flexibility analysis (FRFA) for 

publication with the final rule.5 The FRFA must include a succinct 

statement of the need for, and the objectives of, the rule, a description of and the estimate of the number of small entities to which 

the rule will apply, a description of the projected reporting, recordkeeping, and other compliance requirements of the rule, and a description the steps the agency has taken to minimize the significant 

economic impacts on small entities consistent with the stated objectives and the factual, policy, and legal reasons why the selected option was chosen and the alternatives rejected.6

In addition, under the 1996 amendments to the RFA, known as 

the Small Businesses Regulatory Enforcement Fairness Act 

(SBREFA)7, when the Occupational Safety and Health Administration (OSHA) or Environmental Protection Agency (EPA) is required 

to prepare an IRFA 8, they must first notify the Chief Counsel for 

Advocacy of the Small Business Administration (‘‘Advocacy’’) and 

provide Advocacy with information on the potential impacts of the 

proposed regulation on small entities and the type of small entities 

that may be affected. Advocacy must then identify individual representatives of affected small entities for the purpose of obtaining 

advice and recommendations about the potential impacts of the 

proposed rule, and the agency must convene a review panel made 

up of the agency, Advocacy, and the Office of Management and 

Budget to review the materials the agency has prepared (including 

any draft proposed rule), collect advice and recommendations of the 

small entity representatives and issue a report on the comments of 

the small entity representatives and the findings of the panel. Following this process, the agency shall modify the proposed rule, the 

IRFA, or the decision on whether an IRFA is required.9 While 

there are exceptions to the requirement to conduct a SBREFA 

panel, these are limited to situations where the agency certifies 

that the rule will have a minimal impact.10

Small Entity Input Considered After the Negotiated Rule 

In 2008, OSHA proposed the Cranes and Derricks Rule, which 

was intended to protect workers from the hazards associated with 

hoisting equipment in construction. For the development of this 

rule, OSHA relied on the negotiated rulemaking process, wherein 

the rule is developed by a committee comprised of individuals who 

represent the interests of those who will be significantly affected by 

the rule. 

SBREP-219 with DISTILLER

118 

Unfortunately it wasn’t until after the negotiated rulemaking 

process was complete that OSHA convened a Small Business Advocacy Review Panel to evaluate the potential impact of the rule on 

small entities. I was fortunate to have participated as a small entity representative in the review of the proposed Safety Standard for 

Cranes and Derricks in Construction. Several Small Entity Representatives (SERs), myself included, raised concerns at the time 

that the Cranes and Derricks proposal did not differentiate between crane applications on residential construction sites and large 

commercial construction sites. As a result, any rule issued with 

this fundamental oversight would disproportionately impact small 

entities. 

I use cranes almost every day for our residential and light commercial work. We use cranes to set large trusses, steel framing for 

greater clear heights and greater open spaces, and precast concrete 

pieces including floors over basements and safe rooms. 

I personally put forward an effective, feasible alternative that 

would save lives and reduce injuries in a more cost-effective way 

by developing regulations for crane operator certification which are 

appropriate to the equipment that is being used and the risks presented by that equipment. This included principles of what should 

be required for crane operators: employer training for the specific 

equipment in use, employer assessment of the conditions of the job 

site, and the equipment and certification by the employer that the 

training has been completed. 

Again, it is unfortunate that small businesses were not brought 

in until after the rule had already been developed through the negotiated rulemaking process. As it was, the process seemed little 

more than a procedural hurdle with little interest from OSHA to 

make changes based on the feedback received. 

Poor Economic Analysis and the True Costs to Small Entities 

In 2010, OSHA proposed revising its Occupational Injury and Illness Recordkeeping regulation to include additional reporting requirements on work-related musculoskeletal disorders (MSDs). 

While OSHA certified, in accordance with the Regulatory Flexibility Act (RFA), that the proposed recordkeeping rule would ‘‘not 

have a significant impact on a substantial number of small entities,’’ industry groups urged OSHA to solicit further input on the 

impact of the proposed rule on small businesses by convening 

Small Business Advocacy Review Panel, as mandated by the RFA. 

However, in lieu of a proper small business panel, OSHA convened 

a series of teleconferences in 2011, which I participated in, to reach 

out to the small business community for input on the proposal. 

During the teleconferences, I raised the concern that the proposed rule would result in additional costs to small employers 

which OSHA had not yet considered. Recording MSDs entails far 

more than simply placing a check mark in the MSD column. It requires a thorough investigation to correctly classify MSDs. Most 

employers in the home building industry are generally not qualified 

to assess such work-related illnesses. Only qualified medical perSBREP-219 with DISTILLER

119 

11http://www.osha.gov/pls/oshaweb/owadisp.show—document?p—table=NEWS— 

RELEASE&p—id=19158 12 EPA’s stormwater rule was identified in the December 2010 Unified Agenda notice as 

‘‘Stormwater Regulations Revisions To Address Discharges From Developed Sites.’’ See 75 Fed. 

Reg. 79851, December 20, 2010. 

sonnel can analyze MSD injuries—I certainly do not have this medical expertise and very few home builders have medical degrees. 

Therefore, evaluating each MSD case would be very time consuming for employers, particularly small ones. This evaluation 

would likely take several hours to several days—not minutes as 

OSHA suggests—to consult with qualified medical personnel, review medical records and reports, and determine whether the MSD 

is new, work-related, or otherwise recordable. This would result in 

significantly increased costs to small businesses. 

As a result of not engaging small businesses earlier and in a 

more comprehensive manner, OSHA failed to account for the true 

impact this proposed rule would have on small entities and their 

employees. OSHA has since temporarily withdrawn the proposed 

Recordkeeping rule citing the need for ‘‘greater input from small 

businesses on the impact of the proposal.’’ 11 I, along with NAHB, 

welcome the prospect of partnering with OSHA on the proposed 

rule in the hopes of developing a better, more workable rule for 

small entities that takes into account the true costs associated with 

compliance. 

Failure to Engage Small Entities in a Meaningful Way 

Improving the way the agencies conduct the required reviews of 

proposed regulations under RFA would result in far more efficient 

regulations and reduced compliance costs for small businesses. 

Unfortunately, agencies often either fall to comply with the RFA 

by ignoring the statutory obligation to convene a small entity review panel or convene a panel but fail to provide SERs sufficient 

information concerning the proposed rule to allow them to evaluate 

regulatory options or provide alternatives. 

This was the case for a small entity review panel on which I recently served that reviewed a proposed federal regulation covering 

stormwater discharges from developed sites. EPA, in preparation 

for the panel, failed to provide sufficient detailed information about 

the upcoming rule.12 As a result, NAHB members serving as SERs 

were unable to estimate compliance costs or identify ways to reduce 

the regulatory burden upon small businesses. Several SERs provided written comment that the lack of information made providing 

meaningful input difficult and noted that the agency’s failure to 

provide sufficient information was a violation of SBREFA. Despite 

these concerns, EPA concluded the small entity review panel in December 2010. 

This experience highlights a reoccurring limitation of the current 

RFA/SBREFA process—namely that the federal agencies often view 

compliance as largely a procedural function during the federal rulemaking process and not—as Congress intended—an opportunity to 

reduce the burden of regulations on small businesses. When agencies are unprepared to provide small entity review panelists with 

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13 75 Fed. Reg. 24802, 24812 (May 6, 2010). The agency estimated that the removal of the 

Opt-Out provision would result in $500 million in costs in the first year, but projected this 

amount would decrease to $200 million each year once the agency certified a test kit that satisfied the RRP Rule’s criteria for accurately measuring the presence of lead in paint at regulated 

levels. However, no such test kit has been identified and therefore these cost savings have not 

been realized. 

pliance obligations, the process breaks down. Not only do the participants question the value of their participation, but the entire 

regulatory program loses its legitimacy and clearly undermines 

Congress’s intent. 

Failure to Comply with the SBREFA Panel Requirements 

While going through the procedural motions and failing to provide the small business community with the necessary tools to provide meaningful, constructive feedback is a significant problem, far 

more problematic are the occasions when agencies obviate their responsibility to convene review panels, thus removing a small business entirely from the equation. This was the case when EPA failed 

to convene a review panel as the agency sought to amend its Lead 

Renovation, Repair, and Painting (RRP) rule. 

The RRP Rule requires for-hire contractors that conduct renovation activities in residences built before 1978 to obtain certification 

from EPA; use ‘‘lead-safe work practices’’ designed to contain and 

minimize dust created during the renovation activity; and maintain 

records on these activities. Shortly after finalizing the RRP Rule in 

2008, as a result of a settlement agreement EPA reached with public interest advocates, EPA proposed amending the regulation to remove the ‘‘Opt-Out Provision.’’ The opt-out provision allowed homeowners to authorize their contractor to use traditional work practices under certain circumstances, resulting in significant cost savings. 

Removing the opt-out provision more than doubled the number 

of homes subject to the RRP Rule to 78 million and EPA estimated 

the cost of this action to be $500 Million annually.13 However, the 

costs are far greater because of EPA’s flawed economic analysis, 

which significantly underestimated the true compliance costs. The 

agency initially estimated that compliance costs would add $35 to 

a typical remodeling job; yet for a typical window replacement 

project the cost ranges from $90 to $160 per window opening, easily adding more than $1,000 to each project. Moreover, an EPA Inspector General’s (IG) report, published on July 25, 2012, found 

that the EPA failed to use accurate or even reliable information on 

the likely costs of changes to the RRP rule on small entities. More 

specifically, the report called on EPA to review both the original 

RRP rule and the removal of the Opt-Out provisions using RFA 

Section 610 authorities: 

‘‘We have identified only a few aspects of EPA’s complex 

benefits-costs analysis that are limited. However, we believe 

these aspects limit the reliability of EPA’s estimates of the 

rule’s costs and benefits to society. The Administration’s 

2011 Executive Order [E.O. 13563] and Section 610 of the 

Regulatory Flexibility Act provide EPA an opportunity to 

review the Lead Rule to determine whether it should be 

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14 Id. at 24815. 15The Congressional Research examined 45 regulations it characterized as satisfying OMB’s ‘‘significance’’ threshold of $100 million annual effect on the U.S. economy in a report addressing 

the rate of issuing regulations during the first Obama Administration. Regulations: Too Much, 

Too Little, or On Track?, http://www.fas.org/sgp/crs/misc/R41561.pdf (last visited Mar. 5, 2013). 16Section 611(a)(1) states: ‘‘For any rule subject to this chapter, a small entity that is adversely affected or aggrieved by final agency action is entitled to judicial review of agency compliance with the requirements of sections 601, 604, 605(b), 608(b), and 610 in accordance with 

chapter 7. Agency compliance with sections 607 and 609(a) shall be judicially reviewable in connection with judicial review of section 604.’’ 17 16 U.S.C. § 1636(2) 

modified, streamlined, expanded, or repealed in light of the 

known limitations in the rule’s underlying cost and benefit 

estimates.’’ 

EPA acknowledged during the initial rulemaking that the OptOut Rule substantially impacted a significant number of small entities and complied with the RFA’s regulatory flexibility analysis reporting requirements. However, EPA refused to convene a new 

panel. Instead, EPA relied on a panel convened more than a decade 

earlier for the original RRP Rule. EPA stated ‘‘that reconvening the 

Panel would procedurally duplicative and is unnecessary given that 

the issues here were within the scope of those considered by the 

Panel.’’ 14

In the 17 years since the RFA was amended by SBREFA to include the panel requirement, EPA has convened approximately 43 

panels. According to a recent report issued by the Congressional 

Research Service (CRS), EPA issued nearly the same number of 

significant regulations during the first Obama Administration.15 It 

defies belief that so few EPA regulations have met the threshold 

under SBREFA and these numbers illustrate how reluctant agencies are to comply with the law. 

Contributing to the lack of EPA’s compliance with the RFA is the 

absence of an enforcement mechanism. While section 611 of the 

RFA provides for judicial review of some of the act’s provisions, it 

does not permit judicial review of section 609(b), which contains 

the panel requirement.16 NAHB believes that the RFA should be 

amended to include judicial review of the panel requirement to ensure agencies adhere to the law. 

Many of the deficiencies found in EPA’s RRP rule could have 

been addressed if EPA complied with both the letter and spirit of 

the RFA. Ultimately, because they didn’t convene a panel, EPA 

was unable to produce a workable rule and has unnecessarily burdened small entities. 

Underestimating Impacts to Avoid Statutory Requirements 

Under the Endangered Species Act (ESA), the U.S. Fish and 

Wildlife Service and National Oceanic and Atmospheric Administration (collectively referred to as ‘‘the Service’’) can prohibit the 

issuance of any federal permit if the Service determines the proposed activity may result in the ‘‘adverse modification’’ of critical 

habitat.17 Congress, recognizing the potential economic impact of 

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18 16 U.S.C. § 1633(b)(2) 19 50 CFR § 402.14 (2012) 20GAO Report (2003) Endangered Species: Despite Consultation Improvement Efforts in the 

Pacific Northwest, Concerns Persist about the Process, GAO–03–949T, Executive Summary. 21GAO Report (2003) Endangered Species: Despite Consultation Improvement Efforts in the 

Pacific Northwest, Concerns Persist about the Process, GAO–03–949T, page 12 22GAO Report (2003) Endangered Species: Despite Consultation Improvement Efforts in the 

Pacific Northwest, Concerns Persist about the Process, GAO–03–949T, page 12 

ical habitat. Congress also gave the Service the authority to exclude any area from a ‘‘final’’ critical habitat designation, provided 

the Service determines the economic costs resulting from critical 

habitat designation outweighs the biological benefits to the species.18

While the Service is required to comply with the RFA, they frequently will adopt the stance that small entities are not significantly impacted by a proposed critical habitat designation, and certify as such. The designation of critical habitat directly impacts 

land developers, builders, states, and local governments by restricting their ability to undertake otherwise lawful land use activities. 

The designation of critical habitat by the Service is unlike other 

ESA regulatory restrictions in that the Service can designate private property as critical habitat regardless of whether a federally 

protected species will ever occupy the property in question. For 

NAHB members, the designation of critical habitat by the Service 

has a significant economic impact on their land development 

projects and their businesses. As explained further below, the designation of critical habitat triggers a complex federal permitting 

process known as the ESA Section 7 consultation process that can 

result in the Service prohibiting otherwise lawful land use activities if the Service determines proposed activities may result in adverse modification of critical habitat. 

The ESA’s Section 7 consultation process often significantly impacts small businesses and is fraught with permitting delays, increased costs and land use extractions. While the Service’s regulations say the ESA Section 7 formal consultation process should 

take no longer than four and half months (135 days) to complete, 

the Service routinely fails to complete the consultation process 

within its own prescribed permitting deadlines.19 For example, the 

U.S. General Accounting Office (GAO) conducted an audit of ESA 

Section 7 consultations permits performed in the Pacific Northwest 

in 2003 following the Service’s decision in the late 1990’s to list as 

‘‘endangered’’ over 20 subpopulations of salmon species. GAO’s 

audit found the Service routinely exceeded the Section 7 permitting 

timeframes for formal consultation by many months and in some 

cases years.20 Homeowners living near Seattle, Washington waited 

over two years for the Service and the Army Corps of Engineers 

(Corps) to complete ESA Section 7 formal consultations for a CWA 

Section 404 wetland permits (needed to install private boat docks 

on Lake Washington.21 In the case of the homeowners, GAO estimated the economic impact from the Section 7 permitting delay for 

the federal wetlands permits to be approximately $10,000 per 

homeowner.22 While understandably outrageous, these types of permitting delays are common for NAHB members whose projects 

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23 70 Fed. Reg. § 46934 (August 11, 2005) 24 70 Fed. Reg. § 46954 (August 11, 2005) 25 72 Fed. Reg. § 72010 (December 19, 2007) 26 72 Fed. Reg. § 72067 (December 19, 2007) 27 67 Fed. Reg. § 71032 (November 27, 2002) 28FWS. 2000. Chapter 1: The Cactus Ferruginous Pygmy-Owl: Taxonomy, Distribution, and 

Natural History. Retrieved on March 11, 2013. Available at http://www.fs.fed.us/rm/pubs/ 

rmrs—gtr043/rmrs—gtr043—005—015. 

occur in areas designated by critical habitat and require a Section 

404 permit. 

Despite these examples of significant economic impacts on small 

entities, the Service routinely claims that the RFA does not apply 

when designating critical habitat. Three examples of past critical 

habitat designations where the Service has certified the RFA does 

not apply are: 

• Vernal Pools (crustaceans and plants)—FWS finalized the designation of over 800,000 acres of land across San Diego and Riverside counties in California.23 According to FWS’s ESA § 4(b)(2) economic analysis the potential economic impact on residential construction activities could be upward of $800 million dollars. However, the FWS ‘‘certified’’ the RFA does not apply because ‘‘not a 

substantial number of small entities’’ will be impacted by the proposed rule.24

• California Coastal Gnatcatcher (bird)—FWS proposed to designate as critical habitat about 200,000 acres located across Los 

Angeles, Orange, San Bernardino, Riverside, and Ventura counties.25 Again under economic analysis required under the ESA 

§ 4(b)(2) FWS found an economic impact of greater than $880 million dollars—a majority of the economic impact occurring due to future residential development. However again FWS ‘‘certified’’ the 

RFA does not apply since ‘‘not a substantial number of small entities will be impacted.’’26

• Cactus Ferruginous Pygmy-Owl (bird)—FWS proposed to designate as critical habitat over 1.2 million acres encompassing the 

entire Tucson, Arizona metropolitan area.27 The Service’s sweeping 

critical habitat designation for the pygmy-owl was outrageous considering only 18 known owls existed in the entire area. That mean 

each of the 18 known owls would have greater than 66,000 acres 

of critical habitat much of it located on private lands. Biologists 

have since shown that these owls typically require anywhere between 50–290 acres each.28 Once again the Service’s own ESA economic analysis found staggering economic impacts upon NAHB 

members and local governments including $545 million dollars decline in housing production, a loss of $68 million dollars in local 

taxes and fees from reduced residential construction, and most importantly the loss of 2,748 of construction jobs all over a ten year 

period. Shockingly the Service again certified the RFA did not 

apply since not a substantial number of small entities would be impacted. 

Conclusion 

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29 Regulatory Flexibility Act of 1980 (P.L. 96–354) 

Congress, in crafting the RFA, clearly intended for all covered 

federal agencies to carefully consider the proportional impacts of 

federal regulations on small businesses. 

‘‘It is the purpose of this Act to establish as a principle 

of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and applicable statutes, to fit regulatory and informational requirements to 

the scale of the businesses, organizations, and governmental jurisdictions subject to regulations. To achieve this 

principal, agencies are required to solicit and consider 

flexible regulatory proposals and to explain the rationale 

for their actions to assure that such proposals are given serious consideration.’’29

Unfortunately, all too often federal agencies view RFA compliance as either a technicality of the federal rulemaking process or, 

worse yet, as unnecessary. In an effort to ensure that regulations 

are crafted in accordance with the Congressional intent of the RFA, 

I urge Congress to seek out ways to improve agency compliance 

with the Regulatory Flexibility Act. 

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CPR!!!! 

PIlOGIlIIIIVI IlIPOIlM 

TESTIMONY OF 

Rena Steinzor 

Professor, University of Maryland Carey School of Law 

and 

President, Center for Progressive Refonn (www.progressiverefonn.org) 

before the 

Committee on Small Business 

Subcommittee on Investigations, Oversight and Regulations 

U.S. House of Representatives 

Hearing on 

Regulating the Regulators-Reducing Burdens on Small Business 

March 14,2013 

Mr. Chainnan, ranking member Clarke, and members ofthe subcommittee, I appreciate 

the opportunity to testify today on the benefits for small business of regulations that protect 

public health, worker and consumer safety, and the environment. 

I could not agree more with the Subcommittee's overarching mission: strengthening the 

role of small business in repairing an economy ruined by rampant speculation and the excessive 

greed of financial institutions that Attorney General Eric Holder has embarrassingly implied are 

too big to prosecute. Rather than take an honest look at how weak regulation allowed Wall 

Street to engineer the 2008 crash, big business uses small business as a kind of human shield, 

conflating the distinctly different needs in the two sectors and pushing for deregulation that could 

further endanger the economy and public health. 

A case in point is the Small Business Administration's (SBA) Office of Advocacy, which 

has consciously diverted its limited, taxpayer-funded resources away from helping truly small 

business understand and comply with regulatory requirement toward pursuing the complaint du 

jour of the very large companies that call the shots at the American Chemistry Council, the 

National Association of Manufacturers, and the U.S. Chamber of Commerce. These activities 

raise the di.~turbjng prospect that the Office of Advocacy has broken the law. In fact, 1 hope 

that the evidence I put before you today will motivate you to ask the Government Accountability 

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Office (GAO) to investigate the SBA Office of Advocacy regarding its compliance with laws 

that (I) bar federally funded agencies from lobbying Congress and (2) require it to conduct its 

affairs in the sunshine. We hope you will also ask GAO to investigate how the Office of 

Advocacy ensures that its intervention in individual rulemakings genuinely advance the interests 

of truly small businesses. From what we can tell, it routinely intervenes in rulemakings with 

only tangential effects on its constituency. 

I am a law professor at the University of Maryland Carey School of Law and the 

President of the Center for Progressive Reform (CPR) (http://www.progressivereform.org/). 

Founded in 2002, CPR is a network of sixty scholars across the nation dedicated to protecting 

health, safety, and the environment through analysis and commentary. We have a small 

professional stafffunded by foundations. I joined academia mid-career, after working for the 

Federal Trade Commission for seven years and the House Energy and Commerce Committee for 

five years. For seven years, I served as the lawyer for small, publicly-owned electric systems 

that have much in common with the businesses under your jurisdiction. My work on 

environmental regulation includes four books, and over thirty articles (as author or co-author). 

My most recent book, published by the University of Chicago Press, is The People's Agents and 

the Battle to Protect the American Public: Special Interests, Government, and Threats to Health, 

Safety, and the Environment, co-authored with Professor Sidney Shapiro of Wake Forest 

University's School of Law, which comprehensively analyzes the state of the regulatory system 

that protects public health, worker and consumer safety, and natural resources, and concludes 

that these agencies are under-funded, lack adequate legal authority, and consistently are 

undermined by political pressure motivated by special interests in the private sector. I have 

served as consultant to the Environmental Protection Agency (EPA) and testified before 

Congress many times. 

My testimony today makes four points: 

Small business deserves assistance regarding compliance with regulatory requirements 

and the SBA Office of Advocacy ought to provide this assistance rather than operating 

as an institutionalized opponent of regulations targeted by its big business cronies. 

Two recent reports by CPR and the Center for Effective Government reveal that the 

Office of Advocacy systematically ignores the needs of small business and instead 

operates, largely in secret, as a loyal foot soldier in the big business campaign against 

regulation. 

Regulation is vital to the quality of life we take for granted in America, saving lives, 

preserving health, and safeguarding the natural environment for our children. 

If anything, our regulatory system is dangerously weak, and Congress should focus on 

reviving it rather than eroding public protections. 

The Disgraceful Track Record of the SBA Office of Advocacy 

As you are no doubt aware, Congress established the SBA in 1953 to safeguard the 

interests of small business in an economy buffeted by World War II and the Korean War. 

Legitimate concerns about the competitive disadvantages that small business faced during 

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wartime motivated the establishment of broadly based effort to ensure small business access to 

federal procurement contracts and to conduct specialized outreach to women, people of color, 

and veterans. 

The SBA Office of Advocacy was created in 1976 to represent small business before 

federal agencies. To the extent that the Office of Advocacy's role in the rulemaking process is to 

ensure that the concerns of truly small businesses are raised before agencies, this limited mission 

makes sense. After all, truly small businesses don't have the resources to represent their interests 

in Washington. And those interests are often quite distinct from the big business with which 

they compete. 

Unfortunately, the Office of Advocacy has strayed far from this mission, as explained in 

two particularly shocking investigative reports I have attached to my testimony. The reports 

reveal that the SBA Office of Advocacy has systematically consorted with big business to pursue 

an agenda of undercutting health, safety and environmental agencies without considering at any 

point whether the way its staff spend their time confers any benefit on small business. The 

Office of Advocacy succeeds only in echoing the complaints voiced by well-heeled lobbyists 

representing the wealthiest companies and most powerful trade groups in the country. 

Meanwhile, the legitimate concerns of truly small businesses continue to be drowned out. 

The first report, authored by the Center for Effective Government (CEG), describes how 

the Office of Advocacy hosts regular "Environmental Roundtables" that are attended by trade 

association representatives and lobbyists. The meetings are held at law firms that represent 

organizations like the American Chemistry Council, and feature presentations by lobbyists and 

lawyers who represent Fortune 100 companies. They occur behind closed doors and their 

agendas, attendance lists, and minutes are not published. Nevertheless, the roundtables result in 

positions that become the Office of Advocacy's policy positions. 

Alerted by the CEG's report, environmental organization representatives attempted to 

participate in a roundtable, but were told that they could listen to the discussion but were not 

allowed to speak. (See Richard Denison, Environmental Defense Fund, "A mission corrupted: 

Your tax dollars pay for ACC to coach big industry on how to undercut EPA's IRIS program," 

http://blogs.edf.org/nan otechnol ogvl20 13/03/05/ a-m iss ion-corrupted-your-tax -dollars-pay-foracc-to-coach-big-industry-on-how-to-undercut-epas-iris-programD The roundtable consisted of 

presentations by Nancy Beck, a former White House Office of Information and Regulatory 

Affairs (OIRA) staffer who now works for the American Chemistry Council, and Robert 

Fensterheim, a former American Petroleum Industry staffer who now works at the RegNetlIRIS 

Forum, an industry group dedicated to undermining EPA's Integrated Risk Information System 

(IRIS). 

The IRIS program compiles toxicological profiles of chemicals sold in large quantities in 

commerce, or otherwise threatening public health and the environment. Its profiles do not have 

regulatory effect, although large chemical manufacturers are very sensitive to their potential to 

reveal a chemical's toxicity. Given all the decisions that affect small business today, it is 

mystifying why the chemical industry's campaign against IRIS implicates the interests of more 

than a tiny handful of small businesses and, in fact, the CEG report finds no evidence that the 

Office of Advocacy received any request or comment from its ostensible constituency before 

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pursuing these issues. As the CEO report explains, these activities, especially the sponsorship of 

the secretive roundtables, appear to violate the Federal Advisory Committee Act (FACA). 

Correspondence received in response to a CEO Freedom of Information Act (FOIA) 

request reveals that the SBA Office of Advocacy played a leading role in the American 

Chemistry Council's crusade to halt the Department of Health and Human Service's National 

Toxicology Program's efforts to list chemicals as "known" or "probable" carcinogens, in 

probable violation of the Anti-Lobbying Act and other lobbying restrictions. Once again, there is 

no evidence that the Office of Advocacy consulted with any small businesses in emphasizing 

these issues. 

The Center for Progressive Reform (CPR) report, released in tandem with the CEO's 

investigative findings, found that the Office of Advocacy defines "small" businesses as any oil 

refinery that has up to 1,500 employees and any chemical plant that has up to 1,000 employees. 

This strange approach allows it to push for preferential regulatory treatment for relatively large 

firms that do not conform to any common sense understanding of what a "small business" is. 

This approach further obscures its efforts to win approval from big business in regulatory battles 

that have at best a marginal impact on small business interests. As just one example, CPR 

reports on the Office of Advocacy's enthusiastic participation in a rulemaking designed to reduce 

emissions of hazardous air pollutants such as arsenic, lead, and formaldehyde from coal-fired 

power plants. The Office of Advocacy argued to the EPA that the rule should be cut back to 

cover only mercury emissions. Its arguments closely tracked those made in a 200-page 

submission from the Southern Company, the fourth largest utility in the country. 

CPR's report makes a crucial observation with regard to the Office of Advocacy's 

aggressive deregulatory efforts: by taking consistently hostile stances to health and safety 

rulemaking proposals, it sacrifices any opportunity to work with the agencies in an effort to 

mitigate the impact of the proposals on truly small businesses. We understand the reasons for 

this approach, and they aren't pretty. Rewriting the comments prepared by big law firms for 

even bigger companies is far easier than rolling up your sleeves and working with agency 

officials to design innovative compliance alternatives. 

The report recommends that the Office of Advocacy restore its focus on helping truly 

small businesses-that is, those firms with 20 or fewer employees. Second, it recommends a 

new mission for the Office of Advocacy: promoting win-win regulatory solutions that help small 

businesses achieve protective regulatory standards without undermining their ability to compete 

with larger firms. 

The Benefits of Regulation 

Self-righteous crusaders against regulation have become accustomed to telling only half 

the story to the American people: they pretend that exaggerated regulatory costs are the only 

result of the system, and ignore its considerable benefits. Conversely, they suggest that if we 

dismantled the regulatory system, we would suffer no negative consequences and instead reap a 

windfall in saved money. This devious approach is like setting out to balance a family budget, 

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stockpiling all the available money (pay checks, investments, or social security), and ignoring 

whatever you are able to buy (a place to live, leisure pursuits, or a college education). 

What does it mean to leave the benefits side of the ledger blank? Because the benefits of 

regulation are spread throughout the population, to every man, woman, and child in Americaregardless of class, race, background, or ethnicity-this myopic focus on the costs to regulatory 

industries raises the question of which group of citizens is more important-stockholders and 

brokers or everyday people who need clean air and water, safe workplaces and products, and 

financial and health care systems free of price gouging and other forms of fraud. Should the 

second group risk grave harm so that the first group can maximize profits, or is there a better 

way? 

Just ask anyone whose life was saved by a seat belt, whose children escaped brain 

damage because the EPA took lead out of gas, who turns on the faucet knowing the water will be 

clean, who takes drugs for a chronic illness confident the medicine will make them better, who 

avoided having their hand mangled in machinery on the job because an emergency switch was 

there to cut off the motor, who has taken their kids on a trip to a heritage national park to see a 

bald eagle that was saved from the brink of extinction-the list goes on and on. 

The simple fact is that people need to be healthy enough to go to work and school. To 

use the example of the benefits achieved by the EPA, the agency that has served as the poster 

child for supposed regulatory excess: in 2010, clean air rules saved 164,300 adult lives. By 

2020, they will save 237,000 lives annually. These rules save 13 million days of work loss due 

to pollution-related illnesses like asthma, and 3.2 million days of school loss. By 2020, they will 

save 17 million work loss days and 5.4 million school loss days. The economic value of Clean 

Air Act regulatory controls are estimated to be $2 trillion annually by 2020, dwarfing $65 billion 

in compliance costs. l 

Previous Congresses did not pass the Clean Air and Water Acts, drug and food safety 

laws, and the Occupational Health and Safety Act simply to annoy industry. You took action so 

that this country does not regress to a time when our rivers caught fire, our cars exploded on rear 

impact, ours workers contracted liver cancer from breathing in benzene, and the industrial zones 

of our cities and towns were smothered under a blanket of chemical haze. The legacy of 

regulation is not economic ruin, but the possibility that our grandchildren will be better off than 

their parents' generation. 

Revitalizing Regulation 

A series of catastrophic regulatory failures have focused attention on the troubled 

condition of regulatory agencies assigned to protect public health, worker and consumer safety, 

and the environment. The destructive convergence of funding shortfalls (many agency budgets 

have stagnated or declined while the size of their has grown), political attacks from Congress and 

even the White House, and outmoded legal authority (decades-old statutes that only allow for 

miniscule penalties for egregious worker safety violations, for instance) have set the stage for 

ineffective enforcement and unsupervised industry self-regulation. From the Deepwater Horizon 

I See ENVTL. PROTECTION AGENCY, THE BENEFITS AND COSTS OF THE CLEAN AIR ACT FROM 1990 TO 2020 (Mar. 

20 II), available at http://www.epa.gov/oar/sect8I2/febII/fuUreport.pdf. 

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spill in the Gulf of Mexico that killed eleven and caused grave environmental and economic 

damage, to the worst mining disaster in 40 years at the Big Branch mine in West Virginia with a 

death toll of29, the signs of regulatory dysfunction abound. Peanut paste tainted by salmonella, 

glasses imprinted with the Shrek logo contaminated by cadmium and sold at McDonald's, Code 

Red smog days when parents are warned to keep their children indoors, the Vioxx recall-at the 

bottom of each well-publicized event is an agency unable to do its job and a company that could 

not be relied upon to put the public interest first. 

Consider the example of compounding pharmacies left virtually unregulated by state 

pharmacy boards and the Food and Drug Administration (FDA). A compounding pharmacy in 

Massachusetts sold drugs contaminated with meningitis to clinics and hospitals nationwide. The 

bad medicine has killed 48 and sickened 666, shaking public confidence to its core. In a rare 

display of honesty, FDA Commissioner Margaret Hamburg told the Reuters news service: "Over 

the years, there has been substantial debate within Congress about the appropriate amount of 

FDA oversight and regulation of compounding pharmacies. But unfortunately, there has been a 

lack of consensus and many challenges from industry." And David Kessler, who served as FDA 

Commissioner during the Clinton Administration, speculated that the deeply discordant tensions 

of the presidential election affected the FDA's performance: "Everyone is closed down right 

now," he said. "People are being very careful. No one wants to make a mistake." Compounding 

pharmacies make 40 percent of the injectable drugs administered in medical facilities across the 

country. Yet other than excoriating Commissioner Hamburg, Congress has done nothing to 

improve the oversight of the industry. 

As this incident illustrates, the agencies do their best to appear as if they are operating 

normally, when any close observer reaches the unavoidable conclusion that they are being 

prevented from achieving their statutory mission of protecting the public in an effective and 

timely manner. When industrial activities go wrong, the responsible agency's harshest critics 

vilifY the regulators first, overlooking or making excuses for the corporate executives whose 

negligence caused the disaster. The result is an excruciating Catch-22: regulators are de-funded 

and de-fanged, but held to impossible standards when corporate negligence inevitably emerges. 

The real question for Congress is how to revive the agencies assigned to protect the American 

people, not how to demoralize their staffs, cut their budget, and squelch their rules. 

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by CPR Member Scholar Sidney Shapiro 

and CPR Policy Analyst James Goodwin 
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CENTER FOR 

PROGRESSIVE REFORM 

WHm PAPER #1302 

January 2013 

Acknowledgments 

The Center for 

Progresdve Reform 

is grateful to the 

Public Welfare 

Foundation for its 

generous support of 

CPR's work. 

Center for P.'nrlr~,cc,lv .. Reform 

About the Center for Progressive Reform 

Founded in 2002, the Center for Progressive Reform is a '501 (c)(3) nonprofit research and 

educational organization comprising a net\vork of scholars across the nation dedicated to 

protecting health, safety, and the environment through analysis and commentary. CPR 

believes sensible safeguards in these areas serve important shared values, including doing the 

best we can to prevent harm to people and the environment, distributing environmental 

harms dnd benefits r;lirly. and protecting the earth t()t hHnre generations. CPR rejecrs the 

view that the economic efficiency of private m,lrkets should be rhe only value used to guide 

government action. Rather, CPR supports thoughtful government action and reform to 

advance the well-being of human life and the environment. Addition.ally, CPR believes 

people playa crucial role in ensuring both privare and public sector decisions that result 

in improved protection of consumers, public health and safery, and me environment. 

Accordingly, CPR supportS ready public access to the CourtS, enhanced public participation, 

and improved public access to information. CPR is grateful to the Public Welfure 

Foundation for funding this white paper. 

This ,:",h!te paper is ~ (x?t,l~bo~ativ~ eff'9rt ~f the following iqdivid~afs! ~i~'S~pko 

holgs the, University DistingUished Chait in Law at the Wake ,Fore~t Un,werst:>' ~c~qo~ 

ofI..a~ ,an~ i~ a member 'Of the Board ofJ?i~ect~rs of ~e ~:enter fOr, Progressive ,Rt;&>rm. 

James Goodwin is 1.\ Policy AnalySt with the Center 'for Progre~sive Reform. 

For more inl-ormation "bour the authors, see page 29. 

www.progrcssivereform.of.g 

For general information, email info@progressivereform.org. 

© 2013 Center for Progressive Reform. 
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Executive Summary 

It's likely that few out<;ide of Washington have heard of the Small Business Administration's 

(SBA) Office of Advocacy, bur this tiny and largely unaccountable office has quietly become 

a highly influential player in rhe federal regulatory system, wielding extraordinary authority 

over the workplace safety standards employers must follow, the quantity of air pollution 

factories can emit, and the steps that food manufanurers must take to prevent conta.mination 

of the products that end up on the nation's dinner tahles. 

'The Office exercises this authority by superintending agency compliance with an expanding 

universe of analytical and procedural requirements-imposed by a steady stream of statutes 

and executive orders issued during the past three decades-that purportedly seek to ensure 

that agencies account for small business interests in their regulatory decision-making. 

Controversial rules can quickly become mired in this procedural muck, and an agency's 

f.lilure to carry out every last required analysis with sufficient detail and documentation 

can spell doom lor even the most important safeguards. This system provides. the Office of 

Advocacy with a powerful lever for slowing down rules or dictating their subsrance. 

The Office of AdvoC3(.j"S role in the regularory system bears a striking resemhLlOce to that 

played by the Whi[e House Office oflnformation and Regulatory Afl-airs (OIRA). Bmh 

operare (Q similar elfect, functioning as an anti-regulatory force from within the regularory 

structure, blocking, delaying, and diluting agency efforts to protect public heahh and safety. 

Moreover, both offices have entry into the regulatory process on tbe strength of seemingly 

neulml principles and poticy g-oals-prommion of economic efficiency and protection or 

small husiness:, respectively. But in acmal practice, hoth office" serve to politicize the process, 

funneling special interest pressure inro agency rulemakings, even though such interests 

have already had ample opportunity to comment on proposed regulations. Despite these 

similarities, however, OIRA receives the bulk of attention from polkymakers, the media, and 

the public. 

1his r~port shines Iig.ht on the Office ofAdvocdcy's ami-regulatory work, t'xamining how 

ils participation in the rulemaking process further degrades an alre-..tdy weakened regulatory 

system. As a preliminary matter, the nominal objecrive of (he Office of Advocacysubsidizing small businesses through preferential regulatory treatmem1-is based on a 

needless and destructive tradeoff; the governmem has several polky oprions for promoting 

small businesses without sacrificing public health and. safety. 1he Office of Advocacy 

nevertheless devotes much of its time and resources to blocking, delaying, or diluting 

regulatory safeguards or to supporting general anti-regulatory attacks from industry and its 

allies in Congress. In shon, blocking regularions has hecome the Office of Advocacy's de 

/acto top priority, and its commitment to this goa! has led the Office to engage in matters 

that have little or nothing to do with advancing small business interests or with ensuring that 

federal policy reHects the unique needs of chese firms. 
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2 Center for Reform 

More specifically. the repon hnds that the Office of Advocacy: 

Pursues an inherently flawed mission that needlessly sacrifices public health 

and safety; 

Adds several unnecessary roadhlocks to the fulemaking process. preventing agencies 

from achieving their respective missions of helping people and the environment 

in an effective and timely manner; 

Sponsors anti-regulatory research designed to bolster politicized attacks against 

the U.s. regulatory system; 

Testifies at wngressional hearings aimed at advancing politicized attacks against 

regulations that are inconvenient to well-connected corporate interests; 

Takes advantage of overly broad small business size standards to weaken regulations 

for large firms; 

Enables trade association lobbyists to subvert its small business outreach efforts; 

Inrerferes wirh llgency scientific determinations despire lacking both the legal 

authoriry and relevant expertise to do so; and 

Pmhes for rule changes that would benefit large firms instL--ad of narrowly tailoring its 

recommendations so that tbey help only truly small businesses. 

The report concludes by identifying several rdorms that would enable the Office of Advocacy 

to work constructively with regulatory agencies during the rulemaking process to advance 

small business interests without undermining those agencies' mission of protecting public 

heahh ,md safelY. 'fhese recommendations are summarized in Table 1. 
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Table 1: R«ommendatlons fol' Reforming the Office of Advocacy 

• Congress: should' amend th~ Office 9f A~~cacy's authorizing statutes to focus on 

promoting striaU busiri~ss "c(,Htlpetittveness'F instead of on rfl:!ucing regulatory !tnpacts 

tlrbutdens. 

'" Congres~ should provide., the SBA with,additional1egat authorities to. e,stablis~ new 

subsidy pro9!ams that affirmatively as:~ist small bUsinesses meet effective regulatory 

standards without undermining their competitiveness. 

• Congress should establish and funy fund a network of small business regulatory 

compliance assistance offices. 

'" C~ngress should significantly increase age.m.:y budgets so that they can effectively 

account for sm~1 buslness (oncerns in futemakil1gs without hindering their ability to 

move f'()rw~rd: with needed safeguards . 

• ' Tile Office of Advocacy should identify and implement regulatory solutions that will 

't.n~ble smaU busiti,esses to meet strong pubtic health ar:td safe.ty stand~rds wnJI-E! r~maihing c~mpetitive with larger firms. At <Ii min)mum~ the:S~HoluttOfl:s should 

indude regulatory comp~ianc:e a.sshtance, finding opportunities to partne~ small 

businesses in ,mutually beneficial ways, and securing subsidized loans to cover 

comJ:lIiance costs . 

.. The Office- of AdVocacy should develop new guidance that helps agencies better 

address smaU business Cbncerns in rulemakings by working toward win.-win regulatory 

sofutions, 

• The President should reyoke 'Executive Order 13272, 'which empowers the Office of 

Advocacy to work With QUiA to' interfere in agency rules . 

.., Congress should rev-he the Office of Advocacy's smalJ business si.tce-stahdards 

so that they (1) focus: on truly small businesses (/.('., those with 20 or fewer employees) 

and (2) pre~ent the Offk~ from ';Vorki~9 on behalf of aU fifms~ regar~less of size, 

that work hi industrial sectors tha~'pose a high fisk to public health and ,safety. 

• Congtess should prohibit the Office of Advocacy fr-om working with non .. small 

businesses and shoold establish legal mechanisms for ensuring that this pl"'<>hibitlon is 

observed . 

.. congress sholdd conduct more frequent and thorough overSight of the Office of 

Advocaq, 

3 
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In recent years, corporate interests and their anti-regulatory allies in Congress have 

championed several bills that would enhance the Office of Advocacy's power to prevent 

agencies from carrying out their statutory missions of protecting public health and safety. 

Two hills-the R~ula(Ory Flexibility Improvements Act and the Freedom from Restrictive 

Excessive Executive Demands and Onerous Mandates Act-would require agencies [0 

complete several new analytical and procedural requirements purportedly aimed at reducing 

regulatory hurdens on small businesses. 1he bills would empower the Offlee of Advocacy 

to monitor agency compliance with these requirements, bolstering its ability to interfere in 

individual rulemakings. A third bill, the Clearing Unnecessary Regulatory Burdens Act, 

would authorize the Office of Advocacy to second~gues$ agency civil enforcemenr actions 

against small businesses for certain first-time violations of regulatory reporting requirements. 

lhese bills are part of the broader wave of anti-regulatory attacks that has dominated the 

political landscape ever since the Republican Party's success in the 2010 congressional 

elections. \Vhen launching these attacks, anti-regulatory advoCltes frequently invoke smallbusiness concerns. Small business has become a highly romanticized, almost myrhological 

concept among the public and policymakers alike, evoking images of small "mom and pop" 

stores lining the idyllic Main Street of some quaint vlllage. Because no politician wants to 

run (he risk of being painted as "anti-small business," anti-regulatory advocates have worked 

tirelessly to promote their cause as essential to helping small businesses. Moreover, recent 

high profile catastrophes involving in,ldequateiy regulared large businesses-including the 

BP oil spill and the Wall Street financi,ll collapse-have provided .1nti~regulatory advocates 

with additional imperus to adopt the frame of small business to advance their agenda. In 

this atmosphere, proposals to expand the powers of the reliably anti-regulatory Office of 

Advocacy have become especially attractive to policymakers intent on weakening the nation's 

already fragile regularory system. 
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Background: The Pervasive Problem 

of Under-Regulation 

TI,e United States faces a problem of under-regulation. Tht: regulatory system is supposed 

to protect public health and safety against unacceptable risks, bur the dc:structive 

convergence of inadequate resources, political interference, and outmoded legal authority 

often prevents regulatory agencies from fulfilling this task in a timely and effective manner. 

Unsupervised industry "self-regulation" has tilled the resulting vacuum, yidding predictably 

catastrophic results. 

Evidence of inadequate regulation and enrorcement abounds-From the Rr oil spill 

in the Gulf of Mexico to the Upper Rig Branch Mine disaster that claimed the lives 

of29 men; from the decaying natural gas pipeline networks running beneath our homes 

to the growing risk of imported food tainted with salmonella, borwism, or other 

contaminants showing up on grocery store shelves. And, of course, inadequate regulation 

of the financial services industry triggered the current economic recession and left millions 

unemployed, finandaHy ruined, or both. 

The proliferation of analytical and procedural requirements in the ru!emaking process 

is a significant cause of this dysfunction.1 Regulatory agencies must negotiate these analytical 

hurdles, even as their statutory responsibilities expand and their hudgets remain constant 

or shrink. As agencies grow more "hoUowed~out"-s[retched thin hy the demands of 

doing more with less-their pursuit of new safeguards hecomes subject to increasing delays, 

while many critical tasks are never addressed at all.,l Careful analysis is important, but the 

regu1acory proce.~<; has already become so ossified by needless procedures and analyses that 

rulemakings commonly require between four and eight years to complete:! Many of these 

analyses and procedures also providc powerful avcnues for political interference in individual 

rulemakings, as the Office of Information and R~gulatory Affairs' (OIRA) centralized 

regulatory review process clearly illustrates.' A recent CPR study found that OIRA 

frequently uses this review process to delay or wt."aken rules following dosed-door meetings 

with corporate lobbyists."' 

5 
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Page 6 Center for Prolliressiive Reform 

The Office of Advocacy Pushes the Regulatory 

Process Toward Less Effective Regulation 

Since its creation, rhe Office of Advocaq's role in [he ndemaking process has continually 

expanded, providing it with numerous opportunities to intervene in and potemially 

undermine individual ruiemakings, Congress created the OfFice to represent small business 

in the regulatory system and to advocate for reduced regulation of small business. From 

this limited mandate to ,ldvocate on behalf of sma!1 businesses, (he Olfice has morphed into 

an instimrionalized opponent of regulation, slowing the regulatory process and diluting 

the protection of people and the environment against unreasonable risks. Yet, there is 

insufficient public recognition of how the Office participaccs in (he rulemaking process 

,lOd why its participation ends up making it more difficult for agencies to reduce safery. 

health and environmental risks. In addition, the Office engages in activitics that holster 

political attacks on regulation, such as publishing estimates of regulatory costs that are 

wildly inaccurate, and ,hat fly in The face of estimates &om other agencies of government 

\"'ith considerably greater expertise in the area. Such activities are frequently undertaken 

in conjunction with interest groups and trade associations that represent large business, 

not small oncs. At times it is difficult to find any dilTerence ben.'1een the positions taken 

by the Office and those taken by such prominent regulatory opponents as the U.S. 

Chamber of Commerce. 

Significantly. when the Office interferes in agency c/torts to do the people's business-chat 

is, implemenr and enIDrce duly enacted legislation-it does so free of virtually any puhlic 

accountability mechanisms. "n,c Office is housed within, bue institutionally insulated from 

the Small Businesses Administration (SBA), a federal agency that supports America's small 

business sector through subsidized loans, preferential government contracting, and other 

assistance programs, As sUl;:h, no chain of command connects the Office to either the head 

of the SBA or the President.- At the same time, Congress has shirked its responsibility to 

provide meaningful oversight of the Office's activities. While Office of Advocacy officials 

have tesrified at dozens of hearings in the last 16 years. only four of those hearings could be 

described as oversight hearings for the Office:'! (In reality. two of those four hearings focused 

on supposed weaknesses in the Office:s lega! authorities and proposals for strengthening those 

authorities, rather than critically evaluating its performance.) By comparison, Congress has 

held dozens of oversight hearings for the EPA in the last year alone. Becau.<;e of the lack 

of active oversight, Con~rcss has no way to keep track of the OfEcc's participation in the 

regulatory process or to ensure rhat it is not abusing its authority to intervene in rules to 

benefit politically powerful corporate inrerests at the expensive of public health and safety. 
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A Flawed Mission: Needlessly Sacrificing Public Health 

and Safety 

Preferential regulatory treatment for small business can include regulatory exemptions; 

less stringent or delayed regulatory requirements; and relax("<i enforcement for regulatory 

violations, such as waived or reduced penalties. As with other subsidies that small businesses 

receive-such as subsidized loans, tax breaks, and preferential government procurement 

and contracting polides'l-preferential regulatory treatment makes it easier for people 

to start and sustain small businesses. Dut it also enables these businesses to avoid taking 

responsibility for pollution, workplace risks, or any other socially harmful byproducts of theiT 

activities. Tn other words, preferential regulatory treatment involves an explicit policy choice 

to shift the costs of these social harms from small businesses (0 the general public. 

Governments typically subsidize an activity hecause they want more of the benefirs thar rhe 

activity produces. Accordingly, policymakers typically justi(v small business subsidies on the 

grounds tbat these businesses generate greater job growth and innovation as compared to 

non-small businesses. As numerous studies have demonstrated, however, small businesses 

actually create very few jobs on net, and the evidence is at best mixed as to whether these 

firms create more innovation (however that concept is defined and measured).Hl 

W'hatever jobs or other economic benefits small businesses do create come at a certain 

societal price. As Professor Richard Pierce oflhe George Washington University Law 

School has pOinted out, preferential regulatory treatment tor small businesses can be 

"sociaUy destructive," because such firms produce greater amounts of many social harms 

as compared to their larger counterpam-including dangerous workplaces, instances of 

racial discrimination, and air and water pollmion. 11 For example. one study found that the 

risk of a fatal work-related accident is 500 times greater for employees of small bw;inesses 

than for employees of large businesses. In addition, small businesses are less likely than 

their larger counterparts to reduce their social harms in the absence of enforcemem-backed 

regulation. \2 Since the cost of reducing social harms is often disproportionately greater for 

small businesses, they have a srronger economic incentive to avoid pursuing reductions as 

much as possible. Further, both reputadonal concerns and fear oflawsuits are less likely to 

motivate small businesses to reduce their social harms. Because many small businesses work 

in relatively anonymity, they tend not to suffer significant reputational costs when they arc 

caught poHuting or operating a dangerous workplace. Typically lacking "deep pockets," 

small businesses also tend not to be attractive defendants, even when their sodaHy harmful 

activities have dearly injured others. 

7 
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Preferential regulatory treatment doesn't just let small businesses ofF the hook for the social 

harms they create; it cart also enable larger businesses to avoid taking responsibility for their 

sodal harms as well. U When smaH firms are excmptd From regulation, larger businesses 

have a strong incentive to try to game the system by outsourcing their morc socially harmful 

activities to them. 

~Ihese concerns expose the fundamental Ha.w in thl! Office's core mission: Its work to weaken 

regulatory requirements for small husinesses comes at toO high a cost in terms of increased 

risks to publk health, safety, and the environment. Preferential regulatory treatment is the 

worst kind of suhsidy to provide for small husinesses, since, as compared to larger firms, they 

oftcn produce disproportionately greater amounts of thc kind of social harms that regulations 

arc meant ro alleviate, To the extent that the Office succeeds at securing preferential 

regulatory treatment for small businesses, it is affirmatively promotin?; the uniquely 

disproportionate amount of social harms they create. 

The Office of Advocacy Creates Roadblocks to Effective 

Regulation 

Passed by Congress in 1976, Pub. L. 94-305 14 ereated the Office of Advocacy and charged 

it with representing small husinesses before federal agencies. With the pa'>sage of the 

Regulatory Flexibility Act15 (Reg-Flex) in 1980, Congress made preferential regulatory 

treatment of small businesses an explicit goal of the rulemaking process and empowered rhe 

Office to push agencies to pursue this gOJ.L The enactment of the Small Business Regulatory 

Enforcement Fairness Act (SBREFA) in 1996 and the issuance of Execurive Order 13272 

by George W. Bush in 2002 has funher slrenglhened rhe Office's role as an opponent of 

effective regulation. 

Using its authority under Pub. L. 94-305, Reg-Flex, and Executive Order 13272, the 

Office has employed compliance guidance, re~ularory comments, and congressional 

communications to push agencies to delay, weaken, or abandon crucial ru!emakings. 

The ReglJlatory FlexibilIty Act~ AnalytIcal Requirement$ 

Reg-flex requires agencies to perform several resource-inrensive and time-consuming analys~s 

of their rules m assess their porential impacts on small businesses. These analyses, layered 

as they are on top of the existing morass of regulatory-impact analyses, create an additional 

banc:ry of procedural obstacles, further contrihuting to the ossification problem (hat already 

prevents agencies from developing effective new saf-eguards in a timely Etshion. 
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Reg-Flex's analytical requirements apply only if: prior to proposing Ihe rule, the agency finds 

that it would have a "significant economic impact" on a large number of small businesses, 

a concept that the Act fails to define. Otherwise, the agency em "t::t:rtifY" that the rule 

will not have such an impact, exempting it from the statute's remaining requiremenrs. For 

rules found to have a significant impact, [he agency must prepare two different "regulatory 

flexibility" analyses, an "initial" analysis for the proposed version of the rule and a "final" one 

for the final version. 

11-te two regulatory Aexlbility am. lyses provide an inherently distorted picture of the 

regulations being assessed-one that is heavily biased against protective safeguards. Agencies 

must focus exclusively on the ru!e's potentia! costs on small businesses; the rule's benelltsthe reason the agency is developing the rule at aU--are ignored. In addition, the agency 

must evaluate possible alternatives that would "minimize" rhe rule's costS for small businesses. 

Among rhe alternatives that agencies must consider are rules that exempt small businesses, 

impose weaker standards, or phase in regulatory requirements over a longi!r timeline. Again, 

benefirs are ignored: Such analysis automatically disregards any alternatives that would 

provide greater protections at equal or only slighter grearer cost to small busineses. 

Within 10 years of rheir completion, significant impact rules mUst go through sciH a third 

analysis-the Reg-Flex periodic look~back requirement. Reg-Flex requires that agencies 

review these rules to determine whether they sbould be eliminated or amended to "minimize" 

costs on small husiness. Again, this one-sided, anti-regulatory analytical rramework ignores 

regulatory benefits and does not allow agencies to consider expanding rules that have proved 

to be successful. 

r l Reg-Fkx's Look-Back kequlrement: The keal Record 

A recent CPR study reviewed the Reg-Flex look-backs lor nearly 40 

Environmental Protection Agency and Occupational Safety and Health 

Administration regulations and found that nearly every one had (onduded 

tha, the, regulalions were stilt necessary and, did not ad~ersety impact small 

businesses_ 

9 
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10 Center for Pr'Dalre5'sl~'e Reform 

In 1996, Congress amended Reg~Flex to make agency compliance with several 

of its provisions-including certification that a rule will not have a significant impact 

on small businesses-judicially reviewable. 11l1S amendment makes aU agency analyses 

pan of the record for judicial review, and it authorizes reviewing courts to reject a rule 

on the sale basis that the agency had failed to adequately comply with onc of the Act's 

procedural requirements. 

Guidance on Complying with the Regulatory Flexibility Act 

Responding fa Execntive Order 13272'5 requirement (hat the Office of Advoc<lcy "train" 

agencies on how fO comply with Reg-Flex, the Office has issued a guidance document 

in which it spells out in great detail its excessively strict interpretation of Reg-Flex's 

requiremems. (The Office mOSt ret:endy updated and expanded the document in May 

of2012.) For example, in the guidance, the Office seeks to strongly discourage agencies 

from certifying their rules (i.e., formally conduding that the rules will not have a 

significant impact on small businesses, thereby exempting (hem from Reg-Flex's procedural 

requirements) by demanding that they build a virtually bulletproof record to SUppOTt 

the certification, induding providing specific data on how many husinesses the rule would 

affect and what et:onomic effect the rule would have on those businesses. 16 In so doing, 

the Office sought to expand the range of rules subjecr fO its inAuence (i.e., by increasing 

the number or rules subject to Reg-Flex procedural requirements that the Office oversees). 

Moreover, generating such data about a rule's potential impacts so early in a rule making 

is nearly impossible even under the best circumstances. Nevertheless, whenever agencies 

are unahle to satisfy the Office's strict certification record requirement, rhe guide advises 

agencies to conduct an initia! regulatory Aexibility analysis or even conduct a full-blown 

advanced notice of proposed ruiemaking, procedures that add months to the process 

and waste scarce agency resources. 

Remarkably, in the guidance, the ORice also directs agencies to consider in their initial 

regulatory flexibility analysis regul,atory alternatives fhat arc nor \!Ven within an agency's 

legal authority to adopt. So, for example, the Oiliee would encourage an agency to develop 

a rule that requires small husinesses to test a piece of safety equipment only once a year, 

even though the underlying statute mandates that sllch equipment bl! tested at least twice a 

year. -{he guidaO(:e imposes this requirement even though Reg-Flex does not authorize it. 

Instead, the Act stipulates that any alrernatives (hat agencies consider to minimize costs for 

small businesses must still meet applicable "statutory objectives.''!" In clear contradiction of 

Reg-Flex's plain language, rhe Office asserts in rhe guidance "thar: [he IRFA [initial regulatory 

Aexibili!y analy~isl is designed to explore less burdensome alternalives and nOt simply those 

alternadves it is legally permitted to implement."!8 
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Regulatory Comments 

Pursuant to its authority under Pub. L. 94-305 co represent sma!! businesses before federal 

agencies, the Office of Advocacy frequently commeO(s on agencies' proposed rules in order [0 

criticize agencies for not following its t'xcessively strict interpretation of Reg-Flex's procedural 

requirements. 1? In its recenr comments, the Office typically invokes the strict interpretation 

of these provisions that it has oudined in its Reg-Flex compliance guidance document. 

Invariably. the Etults lh,1f lIle Office of Advocacy ,lsserts are <limed either ,It incrc.J.sing 

the procedural burdens of Reg-Flex's requirements-and thus adding more delay 

ro a rulemaking-or at weakening agency rules outright. 'D1C Office might claim thar 

an agency has improperly certified that its rule will not have a large impact on :.maH hllsiness 

(and thus is nat subject to Reg-flex's requirements). Or it might claim that the agenc..y 

has nat properly carried out required Reg-Flex analyses, perhaps alleging that an agency 

hasn't included enough detail or factual evidence, or that the agency has underestimated 

a rule's costs or has failed to considered adequate weaker alternatives. For example, in its 

recent comments on the U.S. fish and Wildlife Services' (f'XTS) proposed rule that revises 

the agency's critical habitat designation f~)r the Northern Sported Owl, the Office argued that 

the FWS's evidentiary record in support of cenification lacked [he necessary spedfic dara and 

detail called for in irs compliance guidance document.~n With such comments, the Office 

seeks to use procedural hurdles of its own creation as a way (0 hamstring federal regulators 

working to fulfill their statutory obligations to regulate within their areas of expenisc. 

Through Executive Order 13272, the President has given the Office's comments special 

weight, making it difficult for an agency to dismiss the comments, even when they lack 

merit. The Order directs agem:il..'s to "[glive eVtCry appropriate consideration" to these 

comments. "[he Order rutther requires tlut agencies spedfically respond 10 any of the 

Office's written comments in (he preamble to the final rule. 

Many reviewing COutts take the Office's comments as powerful evidence that an agency has 

tailed to comply with Reg-Flex, though these couns are otherwise not obliged to defer 

to the Office's imerprecarions of Reg-Flex's provisions.11 For example, a federal district court 

rejected a National Marine Fisheries Service (NMFS) rule setdng commercial fishing quotas 

Cor Atlantic shark species after finding lilac the agency had fiiled to comply with various 

Reg-Flex proceduresY (As noted above, agency compliance with Reg-Flex's provisions is 

judiciaHy reviewable, and courts have the authority to reject rules jf they determine thar an 

agency has hilled to adequately comply with one or more or these provisions.) "nle court's 

analysis in SUppOH of this finding relied heavily on [he commems char the Office submitted 

during the rulemaking process."-I 

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Reports to Congress and Congressional Testimony 

Reg-Flex and Executive Order 13272 direct the Office of Advocacy to monitor and repon 

to Congress annually on agency compliance with Reg-Flex's requirements. In these reports, 

the Office provides detailed critiques of each agency's purported failures to implement RegFlex in accordance with the Otfice~<; strict interpretation of the Act's provisions. For example, 

In its most recent report, the Office of Advocacy faulted the initial regu!'l.tory flexibiliry 

analysis that the Pood and Drug Administration (FDA) performed for its proposed rules 

requiring dietary information laheling for chain restaurant menus and vending machines. 

arguing that the agency's analysis undere..<;timated both the numher of small businesses the 

rules would impact and the tegulatory costs the rules would impose on those businesses.2

.j 

1h~' FDA developed these rules to implement twO provisions in the Patient Protection and 

Affordable Care Act (PPACA)-the 2010 healrh cafe s~tem reform law. One objective of 

the PPACA was to reduce overall health care costs in the United States. and these provisions 

were aimed at helping Americans to adopt healthiet diets, which in turn would enable them 

to avoid potentially expensive medical problems in the future. 

For agencies eager to avoid attracting unwanted attention from congressional members 

ideologically opposed to theit statutory mission, the threat of negative repons from the 

Office can have a strong coetcive on their activities. Many agencies take self .. defeating 

pteemptive actions, such as preparing overly elabotate or unrequired analyses or drafting 

inappropriately weak rules-actions that waste scarce agency resources and dilute 

public health and sJJety protections. The Office's negative report regarding the FDA's 

implementation of these twO controversial provisions in the PPACA undoubtedly has 

supplied welcome ammunition to congressional Republicans who continue to wage a fullscale assault on the law.~~ lhe fear of attracting (his kind oFbad publicity likely pushes rhe 

FDA and others agencies engaged in implementing the health care reform law to be overly 

cautious with their Reg-Flex compliance, even when detrimental to the public interest. 

In addition to the annual repottS, Office of Advocacy officials also testifY at congressional 

hearings ro complain about what they claim are failmes by agencies to properly fulfill 

Reg-Flex requirements. For L'Xample, in April of 20 11. the Deputy Chief Counsel for 

the Office of AdYocacy resdfied at a House Oversighr Committee hearing dedicatt.'Cl to 

attacking the Environmental Protection Agency's (EPA) greenhouse gas regulations. In her 

testimony, the Deputy Chief Counsel argued that the EPA had failed to comply witb several 

requirements, including criticizing the factual basis the agency supplied to justify certifying 

its first vehiclt> efficiency standard as not having a significant impact on small businesses."6 

As with the annual reports, tbe threat of negative publidcy from Office of Advocacy 

testimony can push agencies to overcompensate in their Reg-rlex compliance efforts .. 
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Small Business Regulatory Enforcement Filirne.ss Act Panels 

-Ibe 1996 Small Business Regulatory Enforcement Fairness Act (SBREFA) amended 

Reg~F!ex to require the EPA and the Occupational Safety and Health Administration 

(OSHA) to give specially assembled small business pands a chance to oppose proposed 

rules before the rest of the public even has a <.:hance to see them. Following the passage of 

the Dodd-Frank Wall Street reform bill, congressional Republicans quickly enacted a bill 

that subjected the Consumer Financial Protection Bureau (CFPB), an agency created by the 

Dodd-Frank statute to help implement many of its reform provisions, to the SBREFA panel 

requirement as well. 

"The three agencies must undertake the SBREFA panel process f()f an planned rules that are 

predicted to have a significant impact on small businesses-the same trigger for the various 

other Reg-Flex analytical requirements. However, as with the Reg-Flex requirements, an 

agency need not undertake the SBREFA panel process ifit formally cerlifies that its planned 

rule will not have a significant impact on small businesses. As noted above, an agency's 

decision to certifY is subject to judicia! review. Given that the Office has set such a high bar 

tor justifYing certification, the thre-;u of judicial review can strongly discourage agencies From 

certifying a rule, even when this step would he appropriate, 

In some cases, the Office has pressured agencie.: into undertaking the functional equivalent 

of a SBREFA pane!, even though [heir planned rule plainly would nor have a significant 

impact on small businesses. For insfance, OSHA huckled under Office of Advoc.1CY pressure 

and conducted a pseudo-SBREFA pand process for irs then-planned "300 log MSD column" 

rule, which would have added a column to the required injury and illness recording form 

so that employers can keep track of their workers' employment-related musculoskeletal 

injuriesY' OSHA went through this process even though the rule's projected costs would 

amount to a mere $4.00 per employer in its first year and $0.67 every year thereafter. 28 

Much like the OHicc of Inforrnatiun and Regulatory Affairs' (OIRA) centralized review 

process, the SBREFA pand process focuses on weakening rules because the panels are 

dominated hy interests opposed to strong regulatory requirements. Beside the rulemaldng 

agency represematives, each SBREFA pane! must include rhe Chief Counsel of the Office 

of Advocacy (i.e., the individual who heads the Olfiee), OIRA olficiah. and small husiness: 

"representatives." The Office works with these other outside participants to criticize ;111 

agency's rule with the goal of weakening it. At the end of the process, the panel prepares a 

report compiling an of the criticisms of rhe draft rule, which is rhen included in tbe official 

rulemaking record. 

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Reg-Flex requires that a rulemaking agency respond to the criticisms included in the 

panel's report, and a failure to do so can provide a reviewing court with a hasis to reject 

(he underlying rule. l1is process contributes fa the ossiflcarion of the rulemaking process, 

mentioned earlier, and it can creact a potent incentive for an agency to weaken the rule rather 

than mount a time-consuming defense of a stronger rule. which would require producing an 

elaborate analysis to respond to all the criticisms raised in the SBREFA panel report. 

SBREFA panel-related delays can add up to a year to the rulemaking process if not 

longer. These delays come on top oCthe several months of delay that the other Reg-Flex 

requirements introduce into the tulemaking process. By law, the formal panel period is 

supposed to last around two months. But, eager to avoid extensive criddsm during the 

SBREFA panel process. agencies frequently spend months revising their planned rules 

and any underlying economic analyses prior to convening the formal panel. For example. 

preparations for the SBREFA panel process appear to have delayed OSHA's work on the 

Injury and Illness Prevention Program (I2P2) rule by more than a year. In June of201I, 

the agenL), had planned to convene a SBREFA panel for its rule by the end of the month. 

Eventually, OSHA pushed this date back to January of2012 and then March of2012.29 

According ro Office of Advocacy records, OSHA still has not convened chiS panel,30 

bringing the total delay to 16 monrhs and counting. 

CentralIzed Regulatory Review at the Office of Information 

and Regulatory Affairs 

Executive Order 13272 directs the Office or Advocacy to work closely with OIRA-another 

institution that serves to weaken regulation, as previous CPR reporrs have discussedwhen intervening in agency rules. "Ihc Office frequently rakes advanrage of (he Order's 

aurhorization to meet with OIRA to raise concerns ahout proposed agency rules. Iu fact, 

a 2012 report from CPR on OrRA meerings wilh outside advocates found that the Office 

participated in 122 of the 1,080 reported meetings (or more than 11 percent) tbat OIRA 

held over the to-year period covered in the CPR srudy.JI TIle Office was hy br the moSt 

frequent non-White House participanr in OIRA meetings and attended more than three 

times the numhet of meetings anended hy the mosr active industry participant, the American 

Chemistry Council (39 meetings). ~2 

~nlis Exccurive Ordcr builds off of a March 2002 Memorandum of Understanding, which 

esrablishes a tormal pannership between the Office and OIM to strictly enforce Reg-Flex's 

procedural requiremems to "achieve a reduction" in regulatory burdens for small businesse..<;.J3 

The Memorandum directs tbe Office tD seek OIRNs assistance in pushing agencies to 

take corrective action-including more detailed analyses, evaluating addirionalless costly 

alternatives, or even adopting a less costly alrernative-when the Office determines that they 

have failed [0 satisfy irs strict interpretation of Reg-Flex's requirements. Given that OIM 

has the power to reject the rules it reviews, agencies are unlikely to ignore its demands for 

Reg-Flex-related corrective actions. As such, OIRA provides powerful reinforcement in the 
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unlikely event lhal the Office is unable to extract these corrective actions on its own. 

The Memorandum also deputizes OIRA to ,lid ill monitoring agency compliance with 

Reg-Flex requirements as part afits norma! regulatory review activities. Whenever 

01RA determines that an agency has likely ElileJ to satist}r the Office of Advocacy's "triet 

interpretation of any Reg-Flex requirements, it must then work with the Office to push 

the offending agency [0 rake corrective action. 

Participation In Lawsuits Challenging Rules 

Reg-Flex authorizes the Office of Advocacy to join in lawsuits brought by industry to 

challenge agency rules, enabling it [0 push the reviewing coun to reject rules for failing 

to satisfy applicable Reg-Flex procedural requirements.·H TIlese lawsuits create the highly 

unusual scenario in whiL-h one office within the Executive Branch is actively engaged 

in a It!gally binding effort to undermine an action taken by another office within the 

Executive Branch. 

lhe Office of Advocacy has already participated in several lawsuits in which the revie\ving 

court returned the rule to the agency to bring the underlying analyses into compliance with 

one or morc of Reg-Flex's provisions.·» Tn response to these adverse rulings, agencies must 

undertake new and more detailed analyses, delaying the implememation of their rules and 

using up scarce agency resources. 

The Office of Advocacy Bolsters Political Attack~ on Regulations 

[n addition to the previous rulemaking-related activities, the Office of Advocacy has raken 

actions to buttress the attacks that industry and its allies in Congress have waged against 

the U.S. regulawry system "L~ a whole. 

Spons.oring Ant;~Reguliltory Res.earch 

Over the years, the Office or Advocacy has doled om taxpayer money to sponsor several 

research projects hrazenly designed to advance the cause of further weakening the U,S. 

regulatory :.ystem, Non-governmental researchers carry out these projectS under contracts 

awarded hy thi:: Office with linle in the way of oversight or peer review, 

The most egregious OtTice of Advocacy*sponsored research projecf was the 20 I 0 study 

by economists Nicole Crain and Mark Crain, whkh purported to find that the annual 

cost offederal regulations in 2008 was about $1.75 triHion. 16 AS.1 CPR white paper first 

found, 17 and a separate evaluation by the non*partisan Congressional Research Service 

later confirmed,.lS Crain and Crain were only able (0 achieve this outlandish cost figure by 

employing faulty models, bi.lsed assumptions, and erroneous dam, The report's myriad 

mcchodoiogical defects aU have a distinctly anti-regulawry hias, each leading inevitably 

to oversrated cost calculations. Beyond these methodological defects, the Crain and Crain 

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cos'ts--absurdty high coSt estimates, in fact-while 

ignoring benefits provides J.O picture of the regulatory system that is 

skewed against aU safeguards, no matter how critical they are for protecting public 

health and safety 

The Office's Aawcd management of the Crain ,tnt! Crain reporr contract was equally 

dismrbing. "nll! contract titiled to require the report's anthors to disclose all of the 

repon's underlying data, models, assumptions, and calculations, making it impossible 

co independently vcrifY rhe integrity of the report's findings. In addidon, the Office of 

Advocacy's peer review process for the report was woefully inadequate: One reviewer raised 

significant concerns with the report's underlying tlH.·thodology which wefe never addressed 

while rhe other's review consisted of only the following II-word comment: "{ looked it over 

and it's ferri/ie. nothing to add. Con~rats[.]"w 

Despite the Crain and Crain report's dubious provenance, regulatory opponents routinely 

cite its findings when attacking the U.S. regulatory system or pushing for legislation that 

would undermine agencies' ability to carry out their mission of protecting public health and 

sa~ery. The report's biased frame and risibly overs,3ted findings are tailor-made to support 

the false conservative narrative that eliminating regulatory safeguards will translare into 

economic growth and job creation. For example, the House Commirree on Oversight and 

Government Reform, which has held dozens of ami-regulatory hearings since the committee 

returned to Republican control, cited the C'.lin and Crain report dnd its f1ndings exrensively 

in a February 2011 srudy, which attempts to make the specious atgument thar pending 

regulations are sriAing job creation."o Similarly, Sen. Rand Paul (R-KY) invoked rhe Crain 

and Crain report when arguing for the Regularions from the Executive in Need of Scrutiny 

Act, a hill he sponsored that would eHectivdy shut the regulatory system down by hlocking 

all major regulations unless a majority in both Houses of Congress voted wirhin 90 days to 

approve them. ,11 

Partlc/patlng In Ant/~Regulatory CongreSSional Hearlng$ 

Office of Advocacy officials have long served a5 loyal allies in Congress's anti-regulatory 

hearings, consistently delivering testimony thar reinforces the political case for weakening 

regulations and further hobbling the regulatory sysrem. As noted, rhese officials frequently 

testify to criticize agency compliance with Reg-Flex procedural requirements, but the same 

testimony is also broadly critical of the regulatory system as a whole, echoing the talking 

points rypically found in {he testimony ofindusrry representarives or in the opening 

statements of anti-regulatory Members of Congress. For example, the head of the Office of 

Advocacy during the George W. Rush Adminisrrarion testified ar a 2005 House Commirtee 

on Government Reform bearing focused on attacking various EPA regulations. His 

testimony helped advance the transparently political agenda of rhe hearing by strongly 
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criticizing EPA regulations as unduly burdensome-while conspicuously ignoring their 

henefirs--,lnd by advocating for rolling them b,ICk.42 

Office of Advocacy officials have also testified at hearings to support passage of severa! 

pending anti-regulatory bills. In his testimony at a 2006 hearing. for example, the then head 

of the Office of Advocacy asserted that the Office "supports the goals of" a proposed bill 

that would amend Reg-Flex's procedural and analytical requirements to make them more 

burdensome for agencies to comp!eteY 

The Office of Advocacy Engages in Anti-Regulatory Activities 

Unrelated to Helping Small Businesses 

Ole focal point of the Office of Advocacy's institutional mission has evolved from seckin['.: 

preferential regulatory treatment for small businesses to opposing aU regulations. Aided 

and abetted by industry groups and their poUtica! aUies, the Office pursues this mission by 

working to block regularions opposed by large corporate interests and attempting ro interfere 

in the scientific underpinning of agency regulations. 

The Offlce of AdvociJcy~s Small Business Size Standards Are Overly Broad 

For the purposes ofimplementing Reg~Flex, the Office of Advocacy employs a definition 

of "small business" that is a fur cry from tbe common understanding of that term's meaning. 

Instead of being based on a single number (for example, any firm with 20 or fewer 

employees), the definirion is acnwlly d complex scheme that sets varying size standards 

for each industrial sector within the economy. jq Critically, these standards are hased on 

the relative size of different firms within each given industry, and, as a result, (he "small 

husinesses" in industries th.n comprise mostly large-sized firms can be huge. In some sectors. 

the definition of small business includes flrms that employ more than 1,000 workers. 

For cxampk, the Office considers a petroleum refinery to he a "small business" as long as it 

employs fewer than 1,500 workers. Similarly, chemical plants rhat employ fewer than 1,000 

workers arc a "small business" in the Office's eyes. 

Because of these overly broad small business size standards, the Office is ,lble to push 

for preferential regu!arory rrcatmem for relatively large firms, firms far bigger than the 

term "small business" suggests. For example, in August of2011, (he Office submitted 

commentS on the EPA's proposed rule to reduce hazardous air pollution for fossil fuel-based 

power plants criticizing the agency's efforts to comply with several Reg-Flex procedural 

requirements, including the SBREFA pand process. Among other things, the Office 

argued that tbe EPA had not adequately considered potentially less burdensome regulatory 

alternatives for "small business" power plams in its initial regulatory flexibility .lnalysis. i5 

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Trade Association LobbyIsts Subvert the Offlce of Advocacy~s Small Business 

OUtreach Efforts 

In addition, large corporate interests have supplied representatives for SBREFA panels. For 

example, a lobbyist from the American Farm Bureau-a politically powerful trade group that 

typically works to advance the interests of industrial-scale farms-recently served as a "small 

business'" representative on the SBREFA panel for the EPA's 2010 update to its renewable 

fuel standard program,'l" By permitting orgafIizations such as [he American Farm Bureau 

to participate in SBREFA pands, thl! Office of Advocacy has stretched the concept of smaH 

business representative beyond all recognition. 1he American Farm Bureau's membership 

includes several industria.l-scale agriculture operations that would not meet even the Office's 

f!;enerolls definition of small business. And, the interests ofthese industrial-scale operations 

often dictate the organization's political agenda, even when those interests are antithetical 

to those of genuinely small farms.~';" For example, the catastrophic droughts that affected 

much of tbe United States this past summer provided a glimpse of the harsh impacts that 

climate change will have on America's small farmers. Nevertheless, the American Farm 

Bureau worked tirelessly to help defear the 2009 climate change bill that would have curbed 

greenhouse gas emissions through a comprehensive cap-and-trade system. ,8 

In SOme cases, the small business representatives who participate in SBREFA pands come 

at the suggestion oflobhyists for large trade associations, such a.<; the National ,A.ssociation 

of Home Builders, whose members include large corporarions that do not meet the Office's 

small husiness size standards:~'J This practice raises the concern that lohbyists operating to 

advance the interests oflarge corporations improperly use small businesses representatives as 

surrogates to attack rules they oppose, enabling these corporate interests to avoid incurring 

any potential political COStS for opposing safeguards that are otherwise popular with the 

general public. 

~Ihe parricipation of large corporate interests defeats the objective ofSBREFA pandsnamely, to gathl!r the perspective of small business on pending regulations that would 

otherwise not he available in the dhsem_e of these pdnds. ·These pands offer small businesses 

a critical opportunity to offer their unique concerns regardinj:!; a planned rnk>-an 

opporruniry that is all the more important because large corporate interests have come to 

dominate every other step in the rulemaking process, including notice-and~comment and 

Ontl\'s centralized review. 50 By permitting lobbyisL.'i for trade associations and other large 

corporart' groups take part ill SBREFA panels, the Office risks allowing the voke of truly 

small businessl!s to be drowned out at this stage of the rulemaking process as well. 
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The Office of AdVt>cacy Interferes with Agency Sclentlfk Determlnatlont 

TI,e Office of Advocacy frequently operates outside its legal authority and scicmific expertise 

by weighing in on agencies' purely scientific determinations. For example, in October 

0[,2011. the Oft}ce submitted regulatory comments criticizing the EPA's Integrated Risk 

Information System (IRIS) program. 'i! A frequent target of industry attacks. IRIS 

is a centralized database that gathers human health risk assessments for various 

environmental contaminants, which the EPA can use to set regulatory standards.)} 

Specifically, the Office criticized the data and models that the EPA had used in its [RIS risk 

assessment for the harmful chemical hexavalent chromium, and it urged the agency to revise 

its assessment, a proce:>s that would waste scarce resource" and delay the final assessment by 

severJI months. 111e OHice also recommended thar rhe EPA reform rhe endre IRIS program, 

arguing that it lacked "objectivity" and adequate "scientific rigor."5J Such recommendations 

are hlf beyond the expertise of the Office and have unique imerests of small business. 

'TI1.cy do, however, bear a striking resemhlance to the arguments char industry lobbyists 

make about IRIS assessments. 

1he Office intervenes in these kinds of scientific dewrmimuions despite the fact ihat rhey 

do not independently impose any regulatory requirements, and thus have no real impact 

on small businesses. In June of2009, the Office intervened in the EPA's proposed 

greenhouse ga.,<; endangerment finding, whicb did norhing more than certifY the tederal 

government's official finding that greenhouse gases "endanger public health and welfare" 

by contributing to glob'll climate change. Nevertheless, the Office argued in its comments 

thar the EPA should abandon the effort comp!etelyY 111e comments added nothing 

cons[Tucrive CO the EPA's endangerment nnding effortS, riiling to address any of the scientific 

questions at issue. Instead, the Office devoted its comments to arguing that the Clean Air 

Act's regulatory programs were not weI! suited to regulating greenhouse gases and might 

disproportionately harm small businesst.·s-aU hypothetical and unrelated matters that would 

be better addressed in comments on any actual Clean Air Act rules aimed at regulating 

greenhouse gases. Again. such argumems were not grounded in ,my expertise the Office 

might bave, or in any unique small business interest, but they did comport whb big-business 

criticisms or the EPA's finding. 

The Office's decision to move into regulatory science is Elf removed from its statutory 

mission fa argue for pre.ferential regulatory treatment for small business. This interest 

in attacking regulatory science can only be understood as lhe Office .lssuming the role 

of arguing against more stringent regulation in all forums that may relate to regulatory 

protections, even ones where the agency has no expertise. 

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The Office of Advocacy PuiMS for Weaker Regulatory Requirements for 

Large Businesses 

The Office of Advocacy commonly seeks to weaken (he requirements of proposed rules 

tor aU affected entities, rather than seeking rule changes chat ,1\"e tailored to reducing adverse 

impacts on small hrms only. Fnr example, in its comments on dlt.:: EPA's proposed rule 

fO limit hawrdous dir pollutants from 011- and coal-tlJeled power plants, the Office criticized 

the agency for not considering as a regulatory alternative a rule that would merely limit 

pla.nts' mercury emissions. Remarkably, the Office recommended {hat this drastically scaledback rule apply to all power plants, regardless of their size.}~ Such an alternative would 

provide no unique preferential regulatory treatment for "small" power plants. It would also 

leave unregulated all of the other toxic air pollutants that power plants release-including 

arsenic, lead, and formaldehyde-in clear violation of the Clean Air Act. % While this 

altcrnative would certainly reduce regulatory COSts for small power plams, irs primary effecr 

would be to provide a huge regulatory subsidy to the large power plants that dominate the 

electricity generating induslry. Here again, the OHice ofiereJ commentary that could Just 

have easily been written by big-business or special interest lobbyists, rather than focusing on 

an smail-business interest in the proposed regulations. 

1l1C Office also trequently Joins representatives of the largesl corporations <lnd trade 

groups in meetings with OIRA officials to push for rule changes that would benefit large 

businesses. For example, in July of2010 an Office ofAdvoClCY official attended <l meeting 

with the U.S. Chamber of Commerce, the Narional Association of Manufacturers, and 

the National Association ofl-fome Builders to try to pusb OIRA to block OSHA's 300 log 

MSD column rule_)7 In Oerober of2006 an Office of Advocacy official ,mended a meeting 

with ExxonMobil, (he American Chemistry Council, and Bayer Corporation to push for 

(:hanges to the EPA's pending rule to revise its definition of solid waste under the Resource 

Conservation and Recovery Act. 

In many cases, weaker regulatory rcquirernem.~ for large firms can actually have the perverse 

effect of harming SOlan businesses-rather dun helping them-and thus directly conflicts 

with the Office's rn·lssion. Regulatory subsidies for large firms can make it even more difficult 

for small husinesses to remain competitive, inhibiting people's ability to stan these firms and 

sustain them over the long run. 
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Helping Small Businesses While Promoting 

Public Health and Safety: It's Time to Reform 

the Office of Advocacy 

A New Mission: Promoting WIn-Win Regulatory Solutions 

111c role of the Office of Advocacy should be to develop "win-win" regulatory solutions that 

help small husinesses meet the high regulatory standards needed to protect public health 

and ql-ety, instead oftowering those standards fCH them. In other words, the Oflice should 

seek to protect small businesses "competitiveness" without undermining public health and 

safety. In many cases, the costs of complying with regulations can put small businesses at 

a competitive disadvantage with larger husinesses, which are bettt'r equipped to pass many 

of these costs along to their consumers. Larger businesses are also able to afford attorneys, 

engineers, accountants, and other compliance consultants, who can help them devise cheaper 

ways to fulfill regulatory requirements. 

Providing small businesses with preferential regulatory treatment helps them remain 

competitive with larger firms, but it comes at the expense of puhlie health and safety. In 

effect, preferential regulatory treatment suhsidiz.es small businesses by passing on to the 

public the socially harmful impacts of their activities, such as air and water poUurion, 

hanrdous working conditions, and unreasonahly dangerous consumer products. fn contrast, 

the Office's current approach of working to reduce reguLuory burdens across the board for 

all firms reduces regulatory impacts on smaU businesses, bm does nothing to promote sma!! 

husiness competitiveness. 1his approach also likely undermines regulatory saieguards more 

severdy than would an approach that merely focuses on providing preferential regulatory 

treatment to smaH businesses alone. 

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Fortunately, if the public agrees that small businesses need to be subsidized, policy makers 

have an alternative strategy: They C,Hl promote small business competitiveness by 

affirmatively helping them (0 meet effective public health anu safety standards. "fhe Office 

should use its role in the regulatory process to explore and promote creative solutions for 

achieving this goal. Such creative solutions could include: 

Providing monetary assistance to truly small businesses 50 that they can meet 

higher regulatory standards. Monetary assistance could include direct subsidies 

to cover part or aU of the costs of equipment upgrades required for regulatory 

compliance. Alternatively, the Office could work to obrain suhsidized loans to help 

small businesses defray regulatory compliance COSts. 

Expanding regulatory compliance assistance programs. SBREFA established 

several compliance assistance programs, including requiring agencies to produce 

"compliance guides" for eat:h of [heir rules du( have ;l significant impact on small 

husinesses.'i'l "These compliance guides describe the rule and explain what actions 

small businesses need. to take to comply. Congress can help improve the effectiveness 

of compliance guides by providing agencies with full funding to produce and 

distribute them. In addition, Congress can establish local offices throughout 

the country staffed with compliance consultants {hat can help small businesses 

understand their obligations under different regul.ltions. To he effective, Congress 

must ensure that the nerwork of compliance consultant offices is fully Funded. 

Partnering small businesses to promote beneficial synergies on regulatory 

compliance. TIte Office could explore differcnr ways of partnering snlall businesses 

that will help them meet regulatory obligations in mutuaHy beneficial ways. For 

example, the Office could help establish a cooperative of sma!! businesses within a 

given location, which could share the cost of compliance as.<;istanct! services. such 

as those provided hy accountants or engineering consultants. Alternatively, the 

OHice could establish partnerships that build ofr the Small Business Administration's 

(SBA) preferential government procurement and contracting policies fur helping 

small businesses. for example, if a small business requires special services, such 

.15 accounting. fO comply with a regulation, then rhe Office could explore ways w 

partner that bu.siness with another small firm that provides those special services. In 

this way, the Office can assure that one small business's compliance with regulations 

help to create a profitable market for another sma!! business. 
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To achieve these reforms, Congress will need to: 

Amend rhe primary stamtory aurhorides under which rhe Office OpErateS (P. Law, 

94-305 and Reg-Flex) to replace their fOcus on reducing small busim:sses' regulatory 

COStS with a new focus on promoting win-win regulatory solutions that ensure small 

husiness competitiveness withom undermining public health and safery; 

Expand the Office's legal authority as necessary to enable it to explore and promote 

win-win regulatory alternatives that help small businesses meet high regulatory 

standards while maintaining competitiveness; 

Provide the SBA with additional legal authorities to establish and implement Hew 

win-win regulatory subsidy programs that affirmatively assist small busincs.'\es remain 

competitive while meeting high regulatory standards; 

Establish and fully fund a network of small business regulatory compliance assistance 

offices; and 

Increase agency budgets so that they afe able to carry out Reg-Flex analyses and 

compliance assistance guides without displacing critical resources needed to advance 

theiT statutory mission of protecting public health, safety, and the environment. 

In addition, the Office will need [0: 

Significantly overhaul its Reg-Flex compliance guide for agendes, so that it helps 

them to work toward creative win-win regulatory solutions that enable small 

businesses (Q remain competitive while meeting high regulatory standards and 

Work with small businesses to develop and promote win-win regulatory solutions 

in comments on proposed regulations, SBREFA pands, lawsuits, and sponsored 

research. SBREFA panels in particular will be critkal [or gathering the unique views 

of small bu<;inesses for identifjring how pending regulations might inhibit their ability 

LO compete and tor developing innovative solutions rt)r hdping these firms to meet 

high rebrulatory standards while remaining competitive. 

Finally, the President should revoke Executive Order 13272. Given its strong anti-regulatory 

culture, OIRA is unlikdy to provide the Otl-ice with much aSslst,lOce in identifying ways to 

help small businesses meet regulatory standards needed to protect public health, safety, and 

the environment. [nsti.Cad, OIRA willlikdy continue to push the Office to weaken J.gcncy 

rules, even where potential win-win regulatory solutions are appropriate and av-ailable. 

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Restored Focus: Helping Truly Small Businesses Only 

lhe Office of Advocacy has become a potent anti~rcgu!atory force, working to block, delay, 

and dilute all regulations, even those that do not have a clear impact on small businessc-'i. 

Whatever the policy goals are rhat might justify shielding smaH businesses from fulfilling 

their regulatory obligations, they certainly do not extend to larger businesses. Accordingly, 

the Office should restrict its actions to helping truly small businesses only. 

'1'0 accomplish this goal, Congress wil! need to do the following: 

Enact legislation that revises the SBA's small business size standards, The new size 

standards should define a small business as any firm whh 20 or Fewer employeesregardless of which industry the firm is in-rather than basing the definition on the 

rdative size of different firms within each given indusny, as the current size standards 

do. 111i5 revision would not only hetter align the regulatory defInition for small 

business with tht' popular understanding of that term, it would better dfccruate rhe 

policy goals that the government seeks to achieve by providing truly small businesses 

with preFerential regulatory treatment. In addition, the small size standards should 

exclude certain indusrria! categories that pose an inherently high risk to public health 

and safety, such as tbe dry cleaning industry. Businesses in these exempted industrial 

categories should not qualifY for win~win regulatory subsidy programs, even if they 

have 20 or fewer employers, because their activities are too harmful to public health 

and safety. 

Enact legislation that prohibits large corporate interests from participating in or 

using small busine.'iS surrogates to participate in SBREFA pands. To participate 

in SBREFA panels, a business mUSf first qualifY as a small business tmder the revised 

small business size standard. '10 make this mandare enforceable, the law should 

further require all businesses that participate in SBREfA panels 10 certify that tbey 

borh meet the revised small business standard and are not acting as agents for any 

business or rrade group that does not meer the revised small business standard. 

Congress should declare that making ,1 raise statement in this certification is a crime 

under 18 USc. §1001. Furthermore, Congress should bar for at least three years 

,my business that makes a raIse statement in (he cerrificadon from participating in 

any future SBREFA panels and from qualifYing for aoy win-win regularory subsidy 

pro!,,:rams established and implemented either by the Office or hy the SBA. 

Conduct more frequent and thorough oversight. The House and Senate 

committees \vifh primary jurisdicdon over (he Office-presently, the House 

Small Business Committee and {he Senate Small Business and Entrepreneurship 

Committee-should endeavor to conduct at least one oversight hearing for the Office 

every year. One of the goals of these oversight committee hearings should be to 

ensure that the Office is limirinf!; its activities to belping only businesses that meet the 

revised small business size standard. 
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Again, the President can reinforce these refOrms by f{."Voking Executive Order 13272. 

Because alRA has such a strong anti-regulatory culture, any continued coHaboration with 

OIRA will likely encourage the Office ro continue working to block, delay, and diluttc 

regulations for businesses llot meeting the revised smaH business size standard. 

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26 

Endnotes 

rt:!n Ie CUrt.EN, TnF. FEllERAL Rm EMAKING PROCESS, 

Center for ProCllressllve Reform 

<} J'tv: Pierce, j"pm note 1, ~(')40-4:!. 

It T'krce"upnJ not(' 1, <It 5'57~60, 

11 Uat'562-68. 

u !d. at 'i70-74. 

H 1'5 U,S,c, §§6J.h634g. 

" RLlluLltory Flexibility A.:t, ') USc. §§601-612, 

,6 OFf.l)l.'Auvoc. U.S SMAI.LBt's. AfJMIN., A G!'IDE HH 

A(;tNCms; How TO COM!'tY WITH THE REGlII.ATORY 

'7 S,'c5 USc. §603(c), 

18 ()H. OF ADvoe .• RFA GUDt, Jlfpm nOtc 16,at38. 

,~ In Fim:d Year 2011, {he Office ofAdvnc.tcy;ubmittcd 

uve!' 50 (ommem leUCf$. See OFF. OF Anvoc.. L! S, 

SMAI.L Bm. AD~HN .• Rr.rORTON 11lE R[Gt:I~\rOllY 

F! FXlBIUIT ACT, FY lOll: ANNUAl. RF.!'()RT OFTHl'. 

CmEF COUN'>n fOR Anvoc.\~:)' ON IMPLEMF.NnnON 
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Center for Progressive Reform 

}.l &,.id<atI435. 

14 Off. OF ADVOC. FYU){f RfA RH(lin, mpra. !lote19, at 

Lt 

JI ')teinmrctal, &hindC1ortdD{J(m,S/lpmn{)w6,a~26. 

l-l MatiS. 

27 
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28 

which ale cmJogued at U CER §12L201. 

,t, FINA!. REPORT or THE S~f,\LL BV;>lNf'iS ADV\)CACY 

Rfvmw P"'XEt O!'.l ErA's P1N.lNHl PROPOSED Rut!' 

RrGl'tATJON OF Ft'El_~ ANn h!l'L AootnVFS: RFNlCW,\/:H,l', 

h'l:.! SrANlM.IW l'ROGR.AM 8·9 (2008). 

~1 .x .. FINA\' Rf.I'ORT Of TIff $\ur t BeSINFSS AnvocM'.Y 

REVIEW P.\;>;ELON EPA's i'LAI'NfO PROPOS~'o RULE, 

IHO·&~fD PAINT; CFIITlFlCATION AND TR..\!;';ING; 

RENOVATlON AND RFMODFl fr-lG RV.QU!RfME-NI'i ,30 

(2000). 

Center for Proolressiive Reform 

,I ld,atJ-4. 
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Center for Pr.~alre~~I,,'e Reform 

About the Authors 

Sidney Shapiro holds the University Distinguished Chair in Law at 

the Wake Forest University School ofww and is a member of the 

Board of Directors of the Center for Progressive Reform. Professor 

Shapiro has taught and written in the areas of administrative law, 

regulatory law and polley, environmental policy, and occupational 

safety and health law for 25 years. Professor Shapiro has heen 

an actiVl: parricipanc in efforts to improve heahh, safety, and 

environmental quality in the United Stares. He has testified hefore 

congressional committees on administrative law and occupational 

safety and health issues. 

James Goodwin works with CPR's "Regulatory Polic-y" and "Clean 

Science" issue groups. Mr. Goodwin joined CPR in May 0[2008. 

Prior to joining CPR, Mr. Goodwin worked as a legal intern for the 

Environmental Law Institute and EcoLogix Group, Inc. His articles 

on human rights and environmenrallaw and policy have appeared 

in the Mich{'{/lJI Journal of Public A/fairs and the New England l.aw 

Rt:lliew. 

29 
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To see more of CPR's work or to contribute, 

visit CPR's website at _.p-rogresslvereform.org. 

4SS Massachusetts Avenue, NW 

RETURN UNDfUVERABLES TO: 

Center for Progressive Reform 

4SS Massachusetts Avenue, NW 

# lS0·S13 

Washington, DC 20001 

# 150·S13 

Washington, DC 20001 

202·747·0698 (phone/fax) 
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Small Businesses, Public Health, and Scientific Integrity: 

Whose Interests Does the Office of Advocacy 

at the Small Business Administration Serve? 

2013 

EFFECTIVE 

GOVERNMENT 
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Authors: 

Randy Rabinowitz, Director of Regulatory Policy 

Katie Greenhaw, Regulatory Policy Analyst 

Katie Weatherford, Regulatory Policy Analyst 

Contributors: 

Katherine McFate, President and CEO 

Brian Gumm, Communications Director 

About Center for Effective Government 

Our mission is to build an open, accountable government that invests in the common good, 

protects people and the environment, and advances the national priorities defined by an 

active, informed citizenry. 

To ensure government is effective and responsive to the priorities of the American people, 

we conduct policy research and develop policy proposals; create tools to encourage citizen 

participation and government accountability; and build broad-based coalitions to advance 

these values. To ensure the American people understand the vital role of government, we 

produce and disseminate educational tools and communications materials. 

Individuals and organizations wishing to quote, post, reprint, or otherwise redistribute this 

report, in whole or in part, are permitted to do so if they provide attribution to Center for 

Effective Government as the original publisher. 

To contribute to Center for Effective Government, please visit 

http:// community.foreffectivegov.orgl donate. 
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Small Businesses, Public Health, and Scientific Integrity: 

Whose Interests Does the Office of Advocacy 

at the Small Business Administration Serve? 
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Executive Summary 

This report examines the activities of an independent office within the Small Business 

Administration: the Office of Advocacy. The Office of Advocacy has responsibility for ensuring 

that federal agencies evaluate the small business impacts of the rules they adopt. Scientific 

assessments are not "rules" and do not regulate small business, yet the Office of Advocacy decided 

to comment on technical, scientific assessments of the cancer risks of formaldehyde, styrene, and 

chromium. By its own admission, Advocacy lacks the scientific expertise to evaluate the merits of 

such assessments. 

The report analyzes correspondence and materials received through a Freedom of 

Information Act request made by staff at the Center for Effective Government. Our inquiry 

was driven by two questions: Why did the Office of Advocacy get involved in the debate over 

scientific assessments that do not regulate small business? Whose interests does the Office of 

Advocacy of the Small Business Administration actually serve? 

We found that the Office of Advocacy's comments on these assessments raised no issues 

of specific Concern to small business and relied almost exclUSively on talking points provided by 

trade associations dominated by big chemical companies. Between 2005 and 2012, the American 

Chemistry Council (ACC) and its members spent over $333 million lobbying Congress and 

federal agencies on, among other things, a protracted campaign to prevent government agencies 

from deSignating formaldehyde, styrene, and chromium as carcinogens. The Formaldehyde 

Council, Styrene Industry Research Council, and Chrome Coalition spent millions more. These 

groups asked the Office of Advocacy for assistance, and the Office became their willing partner. 

We conclude that the Office of Advocacy's decision to comment on scientific assessments 

of the cancer risks of certain chemicals constitutes a significant and unwarranted expansion of 

its role and reach beyond its statutory responsibilities. We recommend that Congress ask the 

Government Accountability Office (GAO) to investigate the Office of Advocacy and exert more 

rigorous oversight of its activities to ensure its work does not undermine the efforts of other 

federal agencies to fulfill the goals Congress has assigned them. 

Key Findings: 

~ The Office of Advocacy hosts regular Environmental Roundtables attended by trade 

association representatives and lobbyists. The discussions and minutes are kept secret, 

although the consensus positions that emerge appear to inform the Office of Advocacy's 

policy positions. These meetings violate the spirit, and perhaps the letter, of the Federal 

Advisory Committee Act. 
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2 

~ The Office of Advocacy staff made no effort to educate themselves on the science underlying 

the debates about the cancer risks of formaldehyde, styrene, and chromium or to verify the 

accuracy of the talking points provided to them by industry lobbyists before filing comments 

critical of the scientific conclusions in each assessment. Instead, the Office of Advocacy 

simply repackaged and submitted talking points provided by trade association lobbyists as 

formal comments. 

~ Correspondence between the Office of Advocacy and trade associations dominated by large 

chemical companies and their lobbyists suggests the Office became entangled in a major 

lobbying campaign to prevent the federal government from listing certain chemicals as known 

or probable carcinogens. E-mails suggest the Office of Advocacy may have violated the AntiLobbying Act and other lobbying restrictions. 

~ No small businesses objected to the scientific assessments or asked the Office of Advocacy 

to intervene in the cancer assessments. The Office of Advocacy made no effort to determine 

whether the positions it took represented small business views and interests. Moreover, since 

small businesses may produce substitutes for toxic chemicals, a cancer finding for existing 

chemicals could open up new markets for substitute chemicals produced by small businesses. 

~ No process or procedures seem to be in place to ensure that the activities of the Office of 

Advocacy are consistent with, and do not work to undermine, the statutory responsibilities of 

other agenCies. 

Recommendations: 

~ The Office of Advocacy should limit its work to regulatory activities affecting small business, 

as authorized by the Regulatory Flexibility Act and subsequent laws. 

~ Congress should ask GAO to investigate whether the Office of Advocacy's Environmental 

Roundtables violate Federal Advisory Committee Act provisions. 

~ The Office of Advocacy should independently verify the factual claims it makes in comments 

to other federal agencies and should not comment on technical or scientific matters on which 

its staff have no expertise. 

~ Congress should ask GAO to investigate whether the activities of the Office of Advocacy 

represent impermissible lobbying by federal employees. 

~ The Office of Advocacy should develop procedures to verify that its policies represent the 

interests of small business. Its comments should be limited to offering a small business 

perspective that the regulating agency would not otherwise hear. 
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;.. Congress should exert more rigorous oversight over the Office of Advocacy to ensure its work 

does not delay or prevent other federal agencies from fulfilling their statutory goals, especially 

fhose scientific and regulatory agencies tasked with protecting the health of the American 

people. 

3 
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4 

Introduction 

Americans have long 

championed small husinesses. 

According to the u.s. Census 

Bureau, about 5,821,277 businesses 

with fewer than 100 employees 

are operating in the U.S. today, 

employing about 35 percent of the 

workforcel The federal government 

has been actively supporting small 

businesses since 1953, when the 

Small Business Administration was 

established to provide them with 

subsidized loans and assistance. 

Over the years, survey after survey has shown that a majority of Americans - across the political 

spectrum - believes that government should continue to provide assistance and support to small 

businesses. 2 

Surveys also show broad support for federal efforts to protect public health.' The public 

expects the government to keep tainted food and medicines off store shelves. They want cancercausing chemicals regulated, air pollution controlled, and the safety of our water supplies ensured. 

In fact, most Americans believe that existing regulations need to be better enforced.' There is no 

reason that these two popular functions of government should conflict. 

Yet our investigation, based on correspondence and materials provided through Freedom 

oflnformation Act requests, has unearthed activities by a little-known independent office within 

the Small Business Administration the Office of Advocacy that is working to undermine 

efforts by federal scientists to identify public health hazards and ensure that American families 

are protected from cancer-causing substances. These assessments do not regulate the activities of 

small business and seem far outside the Office's mission - to represent the views and interests of 

small businesses to other federal agencies. 

1 See Statistics about Business Size (including Small Business). U.S. Census Bureau, http'!/wwwcensus gQv/econlsmaUbus htmI 

(iastvisitcd Jan. 14,2013). 

2 See, e.g., SMALl. BUSINESS MAJORITY, OPINION POLL; SMALL BUSINESS VIEWS ON TAXES AND THE ROLE or- GOVERNMENT 

(OCT. 25. 2012), h 'www i . ri r m n~ in r . ~ ~ - m n h (finding 

that "the majority 0 small businesses believe government can play an effective role in helping small businesses thrive . 

3 See COALITION FOR SF.NSIHt.R SAFEGUARDS, SUMMARY OF I,AXE RF.,sF.ARCH PARTNERS 2011 RF.GUl,ATORY RRSF.ARCH (2011), 

http://viWwsensiblesafeguards OI:g/assets/dQcuments/css-h:p-summarypdf (summarizing the findings of a national poll conducted 

May 2011), 

4 Id. 
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Specifically, the Office of Advocacy sought to block the publication of scientific 

assessments of the risks of cancer developed by the National Toxicology Program and the 

Environmental Protection Agency's Integrated Risk Information System. When cancer 

assessments are delayed or stopped, it means more Americans will be exposed to substances that 

can kill. Delay costs lives. 

Moreover, a recent survey of a representative sample of small business owners (businesses 

with under 100 employees) suggests that the positions taken by the Office of Advocacy do not 

represent the views of the constituency on whose behalf it is supposed to advocate.' About 60 

percent of small business owners reported that they believe "exposure to toxic chemicals in dayto-day life" is a very serious or somewhat serious threat today; 75 percent supported "stricter 

regulation of chemicals produced and used in everyday products"; 94 percent said "companies 

using chemicals of concern to human health should disclose their presence to customers and 

the pUblic"; and 92 percent said there should be "a public, easily accessible database identifying 

chemicals of high concern to human and environmental health:' The survey mirrored the 

demographics of small business owners: three quarters of the respondents were male; 82 percent 

were white; half identified as Republican and 23 percent as Independents.' 

The activities of the Office of Advocacy described in this report represent an unwarranted 

expansion of its jurisdiction, extending its reach well beyond the statutory responsibilities 

assigned to the Office under the Regulatory Flexibility Act and subsequent legislation. The Office 

of Advocacy operates with little oversight by the Small Business Administration, the White 

House, or Congress. Its effort to expand its jurisdiction to weigh in on toxic hazards threatens 

important health programs deSigned to inform the public and federal regulatory agencies about 

health risks. 

ihre;;t~ ~::;,~re~~l~;~th:"~~~~~;:~~ ~~~;; ~~~~l~t~~~t ::t~r~~t~;~di~cl=~~~ ~l~o~i1 ~~:i~l!rs~~~v:a~~~ :~~~~~fe';t~; 

~~r~~~ ;:r~;~~'/f~r"tih~~~~~~~~Tr ~~:' 4~~~~~~ne~f ;~~l}OB:~~~~/~~~he~~a~~e~~}~s~I~:~!\~uA:~~;:c~'1~l~~~~~bka~~'sJ;e~s Council (ASBC) (Sept 2012), http'/Iasbcoundlorg/node/846. 

6 Id. 
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6 

1. Federal Government Support for Small Businesses and the 

Office of Advocacy 

Congress established the 

Small Business Administration 

(SBA) as a separate, executive 

branch agency in 1953 to 

provide businesses "which are 

independently owned and operated 

and which are not dominant in their 

field of operation" with financial 

assistance, such as government-backed loans.' For the next two decades, this cabinet-level agency 

responded to requests for assistance by business. 

In 1974, when Congress amended the Small Business Act, it created the office of Chief 

Counsel for Advocacy within the Small Business Administration "to represent the views and 

interests of small businesses before other Federal agencies whose policies and activities may affect" 

small businesses.' Two years later, in 1976, the Office of Advocacy became an independent office 

within SBA, headed by the Chief Counsel for Advocacy. The Chief Counsel is appointed by the 

president and confirmed by the Senate' As head of an independent office, the Chief Counsel 

is not required to submit his reports and comments to the SBA Administrator or to the White 

House Office of Management and Budget (OMB) for review or approvaLIO 

Since the Office was established, its statutory authority has grown. In 1980, Congress 

passed the Regulatory Flexibility Act (RFA), which requires every federal agency to assess and 

mitigate the impact of proposed and final rules on small business consistent with its statutory 

mission and gave the Office of Advocacy the responsibility for overseeing agency compliance with 

this new mandate.lI 

7 Stephen L. Kelcti & Joseph A. Maranto, Pl,mning a Full-Scale. Audit of the Small Business Administration, 10 GAO REVIEW 51 

(1975), available at http·/larchivegaogoy!otherpdO/091092pdf. 

S Small Business Amendments Act of1974, Pub. L. No. 93-386, sec. 10, ~ 5(c)(4), 88 Stat 742, 749 (1974), amen.ded by Smilll 

"Business Act and Small Hu.<;iness Investment Act of 1958, amendments. Pub. L No. 94·305, tit. 2, § 201, 90 Stat. 663, 668 (1976) 

(cunent version at 15 US.c. ~ 634c( 4) (2006)). 

9 Small Business Act and Small Business Investment ALt of 1958, amendments, Pub. L. No. 94-305, 90 Slat. 663 (1976) (currenl version at 15 US.c. ~ 634a-f(2006)). 

10 15 US.c. § 634(1). 

11 OFl'tCE OF ADVOCACY, US. SMAU~ BWiTNESS ADMINISTRATION, REPORT ON TilE REGULATORY FLEXIBILITY ACT FY 2011: 

ANNUAL REPORT OF THE CHIEF COUNSEL FOR ADVOCACY ON IMPLEMENTATION OF THE REGUl.ATORY FLEXIBILITY ACT AND 

EXECUTIVE ORDER 13272, all (2012) [hereinafter OFFICE OF ADVOCACY REPORT ON THE REGULATORY FLEXIBILJTY ACT fY 

20 II], available at http'/lwwwIDa goy/sites/default/filcslil regtlx 0 pdf. 
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Congress again expanded its statutory responsibilities in 1996 when it enacted the Small 

Business Regulatory Enforcement Fairness Act (SBREFA).12 Among other provisions, this law 

required the Occupational Safety and Health Administration (OSHA) and the Environmental 

Protection Agency (EPA) to convene small business review panels for every proposed rule that 

will have a "significant economic impact on a substantial number of small entities."" The head 

of the agency, the head of the Office ofInformation and Regulatory Affairs (OIRA) (an office 

within OMB), and Chief Counsel for Advocacy are required to attend each panel and meet with 

representatives of "small entities" to review new rules the agency may propose and the agency's 

analysis of the impact the rule may have on small businesses. The panel then suggests ways the 

agency can mitigate the impact on small business. The SBREFA process delays development of 

workplace safety and environmental rules conSiderably. 

In 2002, President George W. Bush further expanded the Office of Advocacy's 

responsibilities through Executive Order 13272.14 Under this executive order, all federal agencies 

were reqUired to notify the Office of Advocacy earlier in the rulemaking process of rules 

that could potentially have a Significant effect on small businesses. This was intended to give 

agencies more time to adequately consider and respond to comments submitted by the Office of 

Advocacy.ls The Small Business Jobs Act of 20 1 0 codified these new requirements. 

The Office of Advocacy's budget for FY 2012 was $9.12 million. It has a staff of 46. By 

comparison, OIRA, a key office in OMB responsible for reviewing the rules proposed by all 

executive agencies, had a staff of 45 in FY 2012. 16 

As its budget and staff have grown, the Office of Advocacy has moved beyond 

commenting on how regulations impact small business to questioning the merits of scientific 

assessments of toxic hazards. This substantial expansion of Advocacy's role is well beyond its 

statutory responsibility or substantive expertise. 

!;diO~~~~5DU~~~C~.S l~Cft~~~~.~nEdn~~rIT~~~)t< Fairness Act of 1996, Pub. L. No. 104-121, 110 Stat 857 (1996) (codified in scattered 

13 OFFICE OF ADVOCACY REPORT ON THE REGULATORY Fl.EXlBH.ITY ACT FY 2011. supra note 11, at 1-3. lhe Dodd-Frank 

Wall Street Reform and Consumer Protection Actof2010 also provided that the Consumer Financial Protection Bureau must conduct Small Business Advocacy Review (SBAR) panels when proposing economically significant rules. [do at 2. 

14 Exec. Order No. 13272,3 C.ER. 247 (2003). available at http://www.forcffcctivcgov.orgffilcs/rcgs/hlxarylcoI3272.pdf. 

15 OFFICF. OF AnvocAcy RF.PORT ON THE REGUl.ATORY Fuxnm.lTY ACT FY 2011, supra note 11, at 2-3. 

16 OFFICE OF ADVOCACY, US. SMALL BUSINESS ADMINISTRATION, CONGRESSIONAL BUDGET JUSTIFICATION FY 2013. at 6, 

available at hnp'lIwww sba.gov/sitesb.lefaulllfiles/fi'es/3~508%20C()mpliant%2QfY%2Q20 13%200ffice%20or%20Advocacy%20 

CBl%28 1 %29.;o4f. 

7 
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8 

2. Protecting the Public from Cancer-causing Chemicals: 

Scientific Assessments of Health Risks 

A number oflaws have been 

passed directing federal agencies 

to protect the public from health 

hazards and to reduce the cancer 

risks posed by toxic substances. 

For example, the Clean Air Act 

requires EPA to reduce particulates 

in the air based on science showing 

their presence increases the risk 

of respiratory diseases. Congress 

directed the Consumer Product 

Safety Commission (CPSC) to ban 

lead in toys after it was shown that 

ingesting lead could cause brain and organ damage in infants. Congress required the Food and 

Drug Administration (FDA) to ban the use of certain preservatives if they are shown to cause 

cancer. 

However, scientific evidence about the effects of chemicals on human health is cumulative. 

It is rare for a Single study or two to provide definitive proof of increased cancer risks. 

Scientists rely on controlled experiments with animals to predict a chemical's effect in humans. 

Epidemiological studies may indicate, but rarely prove, an association between exposure and 

harm for several reasons. Epidemiological studies with adequate statistical power to detect small 

increases in common cancers require the collection of data and analysis of effects among large 

groups of exposed people. They cannot be completed until enough time has passed for latent 

effects to be detected. And, accurate data on past exposures is rarely available; reconstructed data 

may not accurately reflect past exposures. Because of this, determining what amount of exposure 

to what chemicals causes cancer inevitably requires scientists to make informed judgments. 

Rather than asking each federal agency tasked with protecting the public's health to 

conduct its own evaluations of the scientific evidence on carcinogens, several agencies are 

tasked with evaluating scientific information and disseminating their conclusions to other 

federal agencies and the public. Two of these programs are the National TOXicology Program 

in the Department of Health and Human Services (HHS) and the Integrated Risk Information 

System in EPA. Neither program sets emission standards for chemical discharges or enforces 

health or safety standards later set by other agencies. Their role is to be an "honest broker" 

of scientific studies. However, because labeling a substance a cancer-causing agent can have 

adverse consequences in the market and lead to stricter regulation down the road, chemical 

manufacturers watch this process carefully, challenge research findings, and develop their own 

research to promote alternative hypotheses about cancer causation. 
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The National Toxicology Program Report on Carcinogens 

The Public Health Service Act of 1978 directs the Secretary of Health and Human Services 

to prepare a Report on Carcinogens every other year that identifies substances with the potential 

to cause cancer.l7 The National Toxicology Program (NTP) prepares the report to be issued on 

behalf of the Secretary of HHS, who then communicates this information to the American people 

to ensure they can make informed decisions about where they live and work. 

The report has two classifications: 54 substances are classified as known to be a human 

carcinogen; 186 substances are classified as reasonably anticipated to be a human carcinogen." A 

substance is known to be a human carcinogen if there is "sufficient evidence of carcinogenicity 

from studies in humans, which indicates a causal relationship between exposure to the agent, 

substance, or mixture, and human cancer:'" A substance is reasonably anticipated to be a human 

carcinogen if there is some evidence of carcinogenicity from studies in humans, evidence of 

carcinogenicity from animal studies, or other evidence to suggest a substance causes cancer. The 

Report on Carcinogens only puts substances into these broad categories; it does not quantitatively 

estimate the risk of cancer. 

Because manufacturers fear that classifying a substance as a "known carcinogen" can 

reduce its use, public officials have developed a thorough and scrupulous process for determining 

what substances should be placed on the list. The NTP permits anyone to suggest a chemical 

should be put on the list, removed, or reclassified. Once NTP decides to evaluate a nominated 

substance, it conducts a comprehensive review of the evidence of its carcinogenicity. This draft 

background document is submitted to an expert panel for peer review and is put online to allow 

the public to comment. After peer review comments are incorporated into a revised report on 

the substance, it is published again, and the public can again comment. The final background 

document is then further reviewed by two interagency scientific review groups. Taking all 

this feedback into account, NTP prepares a draft "substance profile" and classification listing 

recommendation, which is then reviewed by its own Board of Scientific Counselors (BSC). The 

BSC solicits comments and holds a public hearing; it then reports on whether the scientific 

information in the draft substance profile is technically correct, clearly stated, and supports the 

classification recommendation. Only after this process has been completed is the new Report on 

Carcinogens published. 20 

17 Community Mental Health Centers Act, Amendments, Pub. L. No. 95-622, Sec. 262(b)(4), 92 Stat 3412, 3434-35 (1978) 

(codified as amended at 42 U.S.c. § 241(h)(4) (2006)). 

18 NAT'I, TOXICOLOGY PROGRAM, US, DEP'T OF HEALTH & HUMAN SERVICES, THE REPORT ON CARCINOGENS: KEY POINTS; 

121"11 EDITION (2011), available at http://www.nichs.nih gov/hcalth/matcrials/rCPQl"t on carcinogens 12th edition the 508 pdf. 

j~15:2fB~C93~gA~nH!:;~~~!;~1J~~~e{~'2~~n.TOXicology Program, http://ntp niehs nih gov/?ohjectid=47R37760~FI F6~975E-

;i~CC ~~~~C~~~~~~t!~~~: "i~Oh!~~dfel~~~~~~~~sfO~ ~:brj~o~~!%e:n~O!nCd~flft\~~~;ee~ef~:ile~.l Carcinogens several times 

9 
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10 

These procedures mean that a great deal of time is required to complete a new edition of 

the Report on Carcinogens. Large chemical companies who make the chemicals being evaluated 

and the trade associations of which they are members commented repeatedly on the 12th Report, 

which was published in 2011. In fact, their comments dominated the debate at NTP over which 

chemicals should be listed as carcinogens. 

The Environmental Protection Agency's Integrated Risk Information System Assessments 

Another major database of information about chemical toxicity is the Integrated 

Risk Information System (IRIS) at EPA, which contains information on the health effects of 

environmental contaminants.21 IRIS assessments evaluate the scientific data on chemical hazards 

and calculate acceptable exposure levels - the level below which no health effects are expected 

(known as the reference dose or reference concentration in air). The IRIS reference dose may be 

used by other EPA programs in determining the dose of a chemical to which the public may be 

exposed. 

The IRIS database contains profiles for over 550 chemicals. Like the NTP Report on 

Carcinogens, the assessments are the result of an extensive, multi -step review process. A new 

IRIS assessment involves a comprehensive literature review, multiple opportunities for public 

comment, rigorous peer review of draft background documents, and final review by independent 

experts and other agency staff. The entire process takes at least two years (and often longer). The 

final IRIS assessment is posted online along with the summary, toxicological review, and EPA 

responses to comments received. 

NTP and IRIS provide citizens with important information about the cancer hazards 

Americans face. Neither NTP nor IRIS assessments produce rules or regulations that govern 

business activity. Yet the Office of Advocacy at the SBA intervened in both the NTP and the 

IRIS assessment processes. We investigated how and why interventions related to three specific 

chemicals - formaldehyde, styrene, and chromium - occurred. 
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The Center for Effective Government's Investigation 

The Center for Effective Government (formerly OMB Watch) filed several Freedom of 

Information Act requests with the Office of Advocacy in the spring of 20 12. One request asked 

for documents relating to Advocacy's comments on NTP's 12'h Report on Carcinogens and the 

risks posed by formaldehyde and styrene. Another FOIA request asked for documents relating to 

the Office of Advocacy's comments on EPA's IRIS risk assessment for chromium. Advocacy staff 

forwarded some documents responsive to our request. After we discovered a number of missing 

documents, staff searched their files again and proVided more relevant documents. Advocacy 

claims the only documents not disclosed were intra- or interagency deliberative documents 

withheld under FOIA exemption 5." The Office did not proVide the Center for Effective 

Government with a list of withheld documents. 

For each of the three chemical assessments investigated, the debate over the 

carcinogenicity of each substance has been going on for decades and involves complex, technical 

evaluations of toxicological and epidemiological data. 1be large manufacturing companies that 

produce these chemicals have spent tens of millions of dollars disputing the scientific evidence 

showing increased cancer risks. The Office of Advocacy admits it has no scientific expertise in 

this area, yet it chose to intervene in these proceedings. In each of the cases we examined, we 

asked: 

Who asked the Office of Advocacy to intervene in these chemical assessments? 

What efforts did Office of Advocacy staff make to educate themselves on the science 

underlying the debates about the health risks of these chemicals? 

What efforts did the Office of Advocacy make to determine the interests of small 

businesses in these issues (i.e., whether small businesses felt this was a priority for them 

and/or the impact that a Cancer designation for these chemicals would have on small 

businesses)? 

22 FOIA exemption 5 allows the government to withhold information that concerns communications within or between agencies that are protected by legal privileges including the attorney-work product privilege ami deliberative process privilege. See Frequently Asked Questions, FOIA.gov, htqr/lwwwfQia goy/faq html (last visited Jan. 9, 2013). 

11 
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3. The Office of Advocacy's Interventions in Scientific Debates 

About Public Health and Toxic Chemicals 

In each of the cases 

discussed below, a growing body of 

scientific evidence documented the 

cancer risks of the chemical agents. 

But as the research evidence grew, 

so too did the lobbying efforts of 

large producers. It appears that 

the Office of Advocacy became 

inappropriately and impermissibly 

entangled in these lobbying 

campaigns. Before moving into 

three case studies of these activities, 

a word is needed about the Office 

of Advocacy's Roundtables because they seem to playa critical role in shaping the priorities of the 

Office. 

The Roundtables 

Our research suggests that the Office of Advocacy began holding regular roundtables on 

different subjects with industry groups around 1990. According to its reports, "Some roundtables 

have been scheduled as regularly recurring events, such as Advocacy's monthly roundtable 

on environmental rules and Advocacy's occupational safety roundtable, which is generally 

bimonthly. Other roundtables, such as those concerning transportation and homeland security, 

have been held quarterly, while still others have been held on an ad hoc basis:'" 

The Office of Advocacy issues the invitations to its roundtables, which are usually held 

at the law offices of a firm representing a participating trade association. From correspondence 

and reports we have obtained," it seems that trade association representatives and lobbyists 

sometimes directly ask to give presentations at the roundtables." In other cases, Advocacy staff 

have worked with trade association staff to plan presentations, asking for input on the agenda, the 

presenters, and the title." 

23 OFFICE OF AOVOCACY, U.S. SMALL BUSINESS ADMINISTRATION, REPORT ON TIlE REGULATORY FLEXltHLlTY ACT FY .2008: 

ANNUAL REPORT OF THE CHIEF COUNSEL FOR ADVOCACY ON IMPLEMENTATION OF THE REGULATORY FLEXIBILITY ACT ,\ND 

Exv.CUTIVF. ORDER 1}272, at 2 (2009), available athttp<lIwwwshagovtsites/de£ault/files/fileMORregflxpdf. 

24 The Office of AdvQca0' provided the environmental roundtable e-mail list. although it is not the most current version and 

~~~cO~-I~:~h7cir r~~::s:~~~~~sif~~ fh:t;~e~~~~hCo~;o~~~e ~:~:ra~~~;~::~~~~~o~i~~ ;~~~~ch:~~~ab~~J~~~~f:cl~zrs Association made presenta.tions. Other miscellaneous roundtable documents were provided as well. 

2S E-mail from Randy Schumacher, registered lobbyist for ACe, to Kevin L Bromberg, Office of Advocacy (Mar. 16,20 ll) ("I 

spoke to Ann earlier this week about presenting the Cr6 research at your upcoming roundtable, Did she indicate she would like to 

be part or the program?"). 

26 R~mail from Kevin L. Bromhcrg. Office of Advocacy, to Charlie Grizzle.lobhyiest for the Formaldehyde Council. and Tim 
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Most attendees at the roundtables represent trade associations that have large corporate 

members, as well as small business members. Advocacy does not require that attendees 

represent small businesses. In one e-mail, a staff member at the Office of Advocacy told a 

lobbyist for General Electric that he was invited to attend a Labor Safety roundtable as long as he 

"maintain[ed1 a small business perspective! ;_),,27 Several small business groups perceived to be 

liberal or aligned with Democrats were not on the e-mail invitation lists for roundtables held in 

2010 and 2011.'" 

The discussions at the roundtables are closed to the press, and participants are told 

they cannot publicly comment on the discussions." Any party may report to its membership 

what it said, but participants are asked not to report what other participants say or to repeat 

what representatives of the Office of Advocacy say. Our investigation suggests that Advocacy's 

positions on policy issues grow out of the discussion at these roundtables. 

The documents from the roundtables obtained through our Freedom ofInformation 

Act requests and interviews conducted with participants suggest that presentations on the 

three chemical assessments were dominated by the interests of large chemical manufacturers. 

The presentations strongly criticized the science showing cancer risks; no competing views 

were presented. Nor was there an effort to determine how cancer assessments may impact 

small businesses within a certain industry or whether such an assessment might open 

markets for substitute chemicals. The assumption seems to be that a cancer assessment that 

adversely affects a big chemical company will adversely affect small businesses. From the 

materials we were provided and from interviews, we found no evidence that "[s1mall business 

representatives" initiated conversation at the roundtables on "the difficulties posed by chemical 

risk characterizations at the Department of Health and Human Services (HHS) and at the 

Environmental Protection Agency"" as the Office of Advocacy later claimed. 

~~;l::~c~:~~~~?f;n~: ~ha~r;~ :;t~~;~~~~:d7>irt~~~~I~i~ti~~~h ~}'~o~Uo~j~;t ~~~~{i~~u!/:~~ ~h:~I?c~~ftw~~ld~~a~~~~~~~d;-n a for.maldehyde update also - if you could handle it. I would list that separately. " .. Jim we wn add an additional speaker with yau if you like. Please review the time frames also,"); E-mail from Kevin L Bromberg to David Fischer, ACe, Ann Mason, ACe, 

and loho Schweitzer, ACMA (June 28, 201 l) (''I'm thinking of two presenters on the NTP process for styrene and formaldehyde 

- and to contrast this process with the IRIS risk assessment pro\:ess, and the merits oflhe science controversies - [or an hour 

slot on the 291h, Thoughts?"); E-mail from David Fischer to Kevin L. Bromberg, Ann Mason, and John Schweitzer (July 6, 2011) 

i~~f~~!I~~ih;d~i~~~~~~gw~!Pafs~O~~~a~~~l~~~;~~e;~:~cll~ii~!~~~J:~~Cgt~~~a~:n7~~~s~~~sC~h~SI~? ~~1~~u~h~!~~~~t redundancy and inconsistency in hazard/risk assessment within the federal govt. In particular, is the RoC sti~l r.elevant? Thank~:'); E-mail from John Schweitzer to Kevin J.. 8~omberg (July II, 2011) ("We've got a toxlco\ogi.st s.tanding by for the July 29 SBA 

Roundtable. .. ,"); E-maIl from jobn.schweltzer to Kevin L. Bromberg (July22,2011) ("'1 v.nlllikely prescnt the slyrene issue next 

week, instead of Jim Bus. Since NTP is not particinating, we don't need to employ our big 'science guns:"); E-mail from Kevin L. 

~~~:lt:bfet~c~:ru1e~if~~J~~n1J~h2~ ~~~~di~ff~r\~~~~;~e2~:I~~ ~~~~~~S;d::~t,~~yions for tbe title of Advoca(;y's environmental 

27 F.-mail from Bruce E. Lundegrcn, Office of Advocacy, to Pat K. Casano, General Electric (Jan. 10,2011), 

~~er~~~rst~:~~~~~b~:~~s~~~;:~~~~~8~~~ei~~~t~O~s:t~~~dn~eCEon~~~~~e~~~1 i~~~Jt~hil~~~s Committee on April 25. 2012. 

29 See E-mail from Kevin 1. Bromber~, Office of Advocacy. to John Schweitzer, ACMA {Aug. 1. 201 0, In editing a press 

~l~h~ed~~~~~i~~t ~~ ~~:~~~~gl::~~i;h~~r~!;rt~hk~e;ec~t~tfd~~;~~~ :~~ f~e~~~~~ :~ t~~~o~~~:!:~n-(:~:th~tbao~~~~e~f~U Roundtable notices}. Participants arc free. however, to make known their own comments." 

30 OFFICE OF AnVOCACY REPORT ON THE RF.GUI,ATORY FUXnHI,ITY ACT FY 2011. supra note 11, at 5, 

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When a federal agency relies on a group of outside advisors to formulate policy, the 

process is supposed to be governed by the Federal Advisory Committee Act (FACA).31 This law is 

designed to "limit the influence of special interests" in the public policy decision making process. 

The law requires that meetings of advisory groups be open to the public and that advisory 

committees be balanced. 

The Office of Advocacy's roundtables may represent improperly constituted advisory 

committees. Advocacy invites a group of private citizens to regularly meet and solicits their input 

on policy positions. The Office of Advocacy appears to rely on the "consensus views" expressed 

during these meetings to formulate the positions it takes. Yet Advocacy conducts the roundtables 

behind closed doors and does not disclose records of what is said. Clearly, the roundtables are 

incompatible with the goals of FACA. 

The Formaldehyde War 

Formaldehyde is a colorless, flammable, strong-smelling chemical that is used as 

an adhesive, disinfectant, and preservative. It is found in the home in products such as 

particleboard, plywood, and glues. Exposure to formaldehyde can cause sensory and skin 

irritation and chemical sensitivity. Workers who produce or use formaldehyde are exposed to 

greater levels than the general public." In 1981, formaldehyde was listed as reasonably anticipated 

to be a human carcinogen in the NTP Report on Carcinogens. 

The early evidence of the relationship between formaldehyde and cancer actually came 

from the Chemical Industry Institute of Toxicology (CIIT), a research group founded by 11 

large chemical companies." In 1979, it reported that rats exposed to formaldehyde contracted 

cancer. Shortly after this finding, and a strategy memo put out by a Georgia-Pacific health 

and safety official," the CUT shifted its focus to conducting research shOWing that humans 

metabolize formaldehyde differently than rats, so that given the same level of exposure, people 

absorb less formaldehyde than rats. Risk assessments based on actual cancer incidence among 

formaldehyde-exposed workers show risks 50 times higher than those predicted by CUT's 

models." A lobbying effort to block the regulation of formaldehyde as a cancer-causing substance 

was funded by the Formaldehyde Institute. 

31 FACA rules apply when an assemblage of individuals that includes at least one non-federal employee (a) is working as a 

~(~)f2~~~)~b) is "established or utilized" by agency (c) to provide "advice or recommendations" to tnc agency. 5 U.S.C App. 2 § 

;~rJ?~i&~;&T(iI~t:::e~!~~tr::earg, ~~~f);r fr::~a7d:~Y~:~(~~~S~f~~t~~~~~s~(~~=i~~~CWTrv:~fi~n~h:'}7!:~~~ei~~};~~shl tQPlcs/fQrmaldt:;hydel (last updated Mar. 3, 2012). 

33 DAN FAGIN ET At., TOXIC DeCEJ'TlON: How THE CHEMICAL INDUSTRY MANIPULATES SCIENCE, BENDS THE LAW, AN[) 

ENDANGERS YOUR HEALTH 47 (1996). 

~~mp~~i~:g~h~h!~~>b~~~b;~~~clnO:h~Qfi:h~~~~~1;~:~:e~~f ~~~~~~n~~~s ;t1fei~~be::.~ ~/ili~n~!:7~%~~~:~~1~~~~d~icat Institute. See Formaldehyde lidded to "Known Car' by Koch Brothers, Chemical [ndustry, Democracy Now (June l4, 2011), available 

6 a ~ 

(Oct. 7. 2012.7,09 AM). 

3S FAGIN ET AL., supra note 33. at 76. 
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Based on the NTP assessment in 1981, the Occupational Safety and Health 

Administration (OSHA) sought to regulate workplace exposure to formaldehyde. Industry 

opposition was so intense that a new exposure limit was only published in response to a court 

order.36 OSHXs final standard, not issued until 1987, fully considered, and rejected, the industry 

theory; instead, OSHA concluded that formaldehyde posed a significant cancer risk to exposed 

workers.}7 

EPA also set out to evaluate formaldehyde's risks. In the 1980s, its risk assessment 

accepted the industry theory that formaldehyde posed little cancer risk to humans,38 even though 

EPXs own Science Advisory Board warned the agency against this approach in 1992.39 

Over the past two decades, a growing body of human epidemiology studies has 

consistently shown upper airway and blood cancers among workers exposed to formaldehyde. 

In fact, the International Agency for Research on Cancer (!ARC) designated formaldehyde a 

"probable human carcinogen" as early as 1987 and in 2006 concluded that there is "sufficient 

evidence in humans" that formaldehyde causes cancer of the nasal passages and "strong but not 

sufficient" evidence for a causal association between leukemia and formaldehyde.'o 

By 2008, a paper by EPA concluded that the industry risk model showing minimal human 

risk was "unsupportable:'" As a result, EPA revised its formaldehyde risk assessment in 2009, 

concluding, as had IARC, that formaldehyde is known to cause cancer of the nasal passages and 

leukemia. 

36 UAW v. Donovan, 756 E2d 162 (D.C CiT. 1985), 

37 UAW v. Pend~rSI:ass, 878 F.2d 389 (D.C Ci~. 1989). Although both OSHA and the courts rejected the formaldehyde 

~a~~~7~;iRlr'):~;e;~;J;~:oI~~ur~;~;t~ill~h~~d~~~~fu;~~d~h;d~~s:~d~~~sB~~r~l~~i~~f;~o:~~~~bu~nf~:b~~~~;Y OIRA's analysis of tne costs and benefits offormaldchrJc regulation has been thoroughly discn:Jilc8. See Lisa Heinzerling, 

Regulatory Costs of Mythical Proportions, 107 YALE L. . 1981 (1998). 

38 See FAGIN ET AL., supra note 33. at 89-9l. 

39 rd, at 73. 

~ON~~t~A~~~n~ ~~:~~:~:~~~~~c~rA~:I~~~::;:;'~!~::~> ~:~!o:{(!to~~)~ ::;I~~I;~~tBh:Yf~~:on~:;~/)i~~Af~~NGI Monographs/voI88/mono88.pd( 

41 Franklin MiTer, Risky Business: Formi';t Your Opinion Regard~ Cancer arid Fonnaldehyde, THE SYNERGIST, Apr. 2009, at 32 

~~H~~~~~~~~ ~;~~~toc: ~~~~~~;jI~ZAL ~¥~~~~ Bl¥io6~~~). otivated Modd for Formaldehyde-Induced Respiratory Cancer 

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Producers immediately began a campaign to block the new IRIS risk assessment. Initially, 

the Formaldehyde Institute led the light against designating formaldehyde as a carcinogen, but 

it disbanded in 1993 after documents showing the industry's research strategy of obfuscating 

formaldehyde's risks were produced during discovery in a lawsuit seeking damages for illnesses 

caused by formaldehyde exposure. The Formaldehyde Council assumed its role as the dominant 

industry trade association in 1995. It was dominated by big chemical companies that were 

manufacturing formaldehyde." In 2010, it ceased operations at the same time that the American 

Chemistry Council (ACe) formed a Formaldehyde Panel funded by Georgia-Pacilic (owned by 

Koch Industries) and Hexion Specialty Chemicals.43 Beginning in 2010, efforts to block the IRIS 

and NTP assessments of formaldehyde, at federal agencies and in Congress, were led by lobbyists 

for the ACe. 

Sen. David Vitler (R-LA) put a hold on an EPA nominee until the agency asked the 

National Academy of Sciences (NAS) to review the IRIS formaldehyde risk assessment shortly 

after a lobbyist for the Formaldehyde Council held a fundraiser on the senator's behalf" Koch 

Industries and a Formaldehyde Council lobbyist also gave generous campaign contributions to 

other senators leading the effort to delay the assessment." Responding to this political pressure, 

EPA requested the review, which NAS published in April2011.46 The NAS review affirmed EPXs 

conclusion that formaldehyde was a known human carcinogen, causing upper airway cancers, but 

directed EPA to restate its reasons for concluding that formaldehyde caused leukemia in humans. 

EPA has not released revisions to its formaldehyde IRIS assessment since the NAS review was 

completed. 

~c c~~~r·I~::u~fa~~:~:~~da~h§~go~~O~nt~lb~~U~~ ~~~~ rr:n~~b~r~:!~~t~~~~li~Priili~~o:a~i~~~iitb~i~~~s~~~~~~ ~~c Formaldehyde Council's governing body. 

43 See ACe Forms New Formaldehyde Panel. American Chemistry Council, htqrllwww.americanchemistry.com/ll:\12. 

44 Joaquin Sapien, How Senator Viner Battled the EPA over Formaldehyde's Link to Cancer, PTOPublica (Apr. 15,2010,2:30 AM), 

http·U .... 'WWpropublica org/articlefhow-senator-daviJ-yitter-battied-foanaldehyde-link-to-cancer. 

~~ns. ~~'h~;i~~~J t~~:rfndustries and Charles Grizzle, a lobbyist for the Formaldehyde Council, to campaign contributions to 

46 COMMITTEE TO REVIEW EPA's DRAFT IRIS ASSESSMENT OF FORMALDEHYDE, NAT'L RESEARCH COUNCIL, REVIEW OF THE 

ENViRONMENTAL PROTECTION AGENCY's DRAFT IRIS ASSESSMENT OF FORMAl,DEHYDE (2011), available at http"/books nap.cdu! 

openbook phv~record id-13142, Industry interprets the NAS report as critical of EPA's risk assessment; environmental gmuf:s 

~~~~e~~.~~hT~~tRdi~~~~~~tn~e~~h~t~~~~~I~!r~~rfhr:tt f~re~~f£:h;Jeqi~e~~~r~~~e~f;s disl:ussion of how formaldehyde cause.~ luad 
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At HHS, NTP responded to the IARC listing and 

new research by proposing to move formaldehyde from 

an "anticipated" human carcinogen to a "known human 

carcinogen;> causing upper airway cancers and leukemia, 

as they prepared the 12,h Report on Carcinogens. The 

Formaldehyde Council and the ACC strongly objected, 

filing multiple comments with NTP. Industry demanded 

that NTP incorporate the NAS analysis of the IRIS risk 

assessment into its evaluation, which it did. But the ACC 

and Dow Chemical continued to lobby Congress to delay 

"NTP Excerpt - What is the 

detailed imrustry ar~ment 

that this is incorrect?" 

-e-mail subject line from Kevin L. 

Bromberg, Office of Advocacy, to 

Randy Schumacher, registered lobbyist 

for ACC 

publication of the Report on Carcinogens until another NAS review was conductedY Republican 

House representatives unsuccessfully pushed an appropriations rider to delay the Report's 

release.48 

Advocacy Involvement 

The Office of Advocacy waded into the debate in November 2011 with formal comments 

claiming that "[sJmall businesses have taken issue with ... formaldehyde's listing as 'known to be 

a human carcinogen'" and that they were "concerned with the quality of scientific analysis" relied 

upon by NTP." 

Our review of the materials gathered from 

our Freedom of Information Act request shows no 

documents from any small businesses asking the Office 

of Advocacy to intervene in the formaldehyde listing, 

nor did any small business file comments with NTP 

criticizing its analysis. 50 Instead, internal Advocacy 

documents show that Advocacy communicated regularly 

with registered lobbyists for the Formaldehyde Council 

and ACC.5l 

"I guess he's essentially 

wrong. It's probably better 

for now that 1 keep the NTP 

contact in the dark:' 

-e-mail from Kevin L. Bromberg, to 

David Fischer, ACC 

48 COMMITTF.F. ON ApPROPRIATIONS, llzn • CONGRESS, WORKING BILl. ON ApPROPRIATIONS FOR DEPARTMENTS 01' LASOR, 

HEALTH AND HUMAN SERVICES, EOUCA.TlON. AND RELATED AGENCIES FY 2013. (Comm. Print 2012), available athJ.U?;LL 

appropriations.house.gov!up!oadedfiles/biUs-112hr*sc-'W-fyl3-1ahorhhsed pdf. 

49 letter from Winslow Sargeant, Chief Counsel for Advocacy, and Sarah BresoHn Silver. Assistllot Chief Counsel, Office of Advocacy, to Kathleen Sebelius, See'y of Health & Human Services, U.S. Dep't ofHea!th & Human Services (Nov. 22,2011),.huI!.;LL 

wwwsba goy/sites/default/files/Advocacy Comment I.etter-R.!:port On Carcinogens.pdf. 

;~ade~~ ~~l :e~~~hni~s~i;:i~~~~i~~~ ~~:Ztd~;~~d[~~~~~o~t1~1~~'o~~r.~~~~;;~~~~c~~::~~:~s~~~:~}%~~~~:~j~:~d ~47~;Ji~oRDf5~D~~~f~:~J£'~dlb~~':;!fa{~3t~el~~ ~~1Jr/index.cfm?obiectid:=20A477F2-FlF6-975E51 See E- mails between Kevin Bromberg, Office of Advocacy, and Randy Schumacher, registered lobbyist for ACe (May 20 [I); 

E-mails between Kevin Bromberg, Office of Advocacy. and Charles Grizzle. registered lobbytst for the Formaldehyde Council 

(June-Aug. 2010). 

17 
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Moreover, documents show that the Office of Advocacy made no effort to evaluate the 

scientific evidence behind the NTP assessment. Instead, Advocacy asked lobbyists for ACC to 

provide a "detailed industry" rebuttal to NTP." In May 2011, Advocacy staff followed up with 

ACC and its lobbyists about their meetings with agency officials regarding formaldehyde. 53 

Advocacy also collaborated on press strategy with ACC" and discussed whether and when to 

share materials with agency staff.55 

Styrene Skirmishes 

Styrene is a clear, liquid, volatile organic compound used predominantly in the 

manufacture of plastics and rubber." Synthetic styrene derived from oil and natural gas is 

most commonly found in carpet backing, fiberglass composites (e.g., bathtubs and kitchen 

countertops), and even in polystyrene food containers. Styrene may be released into the 

environment during manufacture, use, or disposal, contaminating air and drinking water. 

As far back as 1988, studies showed styrene caused cancer in laboratory mice.57 Human 

studies in the years since have suggested that occupational exposure to styrene can lead to 

increased risk oflymphomas, leukemia, and pancreatic or esophageal cancers. 58 The !ARC has 

listed styrene as "possibly carcinogenic to humans" since 2002." Growing evidence from animal 

studies and limited evidence of cancer risks among workers caused NTP to propose listing 

styrene as "reasonably anticipated" to cause cancer in its 12th Report on Carcinogens. 

52 E-mail from Kevin L Bromberg. Office of Advocacy. to Randy Schumacher, registereulobbyist for ACe. and cc: David 

Fischer, ACe (May 25, 2011). The e-mail contained the subject line, "NTP Excerpt - What is the detailed industry argument that 

this is incorrect?" 

f'~et~~~~ [:h~ m~~~~g~;,~r~~a~I'f~:~~~tn~~V~~:b!~tg~rcs~F~d:~~ae;y,r~t;j:~fJ ~~~c~:,t l~t~a~~~; i~i f)O (l,FJ;as lhere an ACe meeting today with HHS? Any news?"). 

54 E-mail from Kevin L Bromberg, Office of Advocacy, to David Fischer. ACe. and Randy Schumacher, registered lohbyist for 

ACC (May2S, 2011) (Kevin Bromberg; 'Will the news about an RoC delay get into the press? Do you want it there?"), 

55 [-mail from David Fischer, ACe, to Kevin L. Bromberg, Office of Advocacy (May 25. 2011) (David Fischer; "Who at NTP 

were you thinkinf of 1>harin'tit with? John Bucher ofNTP essentially told House committee 1>talfthat the NR(:'s report was not 

~~~~~~?:,f; ~~~~, ft'~~~~1bIYh:~!::f!~ ~~: t~:~nk;~:ili~~T~ ~~)~:~1:!h~hd~r~~)! 25, 20 II) (Kevin Bromberg; "} guess he's 

56 AGENCY FOR TOXIC SUBSTANCES & DISEASE REGISTRY, U.S, DEP'T OF HEALTH & HUMAN SERVICES, TOXICOLOGICAL PROFILE 

FOR STYRENE 1-8 (2010), available at s ox s d; NAT'I. TOXIC(ROGY PaOGRAM. U.s. DF.P'T 

OF HEALTH & HUMAN SERVICES, STYRENE: KEY POINTS {June 2011 ,allailab e at . \\1'\ ' " v ' 

,~tyrene 508 pdf; Frequently Asked Question5, Styrene Info. & Res. Center, http://www.styrene.org/faQ.htrrMone (1a1>t visited Jan. 7, 

2013). 

57 Barbara Conti et al., Long~ Term Carcinogenicity Biodssays on S:Jrene Administered by Inhalation, Ingestion and. Injection and 

1~ZI~; ~:::~:JS:7;:t~~~.~l4~::::I.~n~~;~f~~~~~~{:a~ ~~t. fg~~tf(~hl~~retle Administered by Ingestion In Sprague58 NAT'L TOXICOLOGY PROGRAM, supra note 50. 

monographs 

~iyre~~,t~tr~~IT iarc.fr/ENG/Monographs/vol82/monQ82 ~~:~~~~~~~~~~E~~~~~i~~~~ pdf. t:~~!~~a~!tg~I~:~~~~~~~~ zr;~~~~i(~O~:r.t;:;~~6l~:1 ~ 
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Not surprisingly, companies producing styrene vigorously disputed its danger to humans. 

Like formaldehyde producers, they argued that humans metabolize the toxin differently than 

animals, so higher exposures are less toxic to people than to laboratory mice. The Styrene 

Information and Research Council (SIRC) spent over $20 million on 47 studies examining the 

health and environmental effects of styrene exposure; none found clear cancer risks.60 Yet other 

evidence tells a different story.'l 

In fact, OSHA has regulated styrene's "narcotic" health effects on workers since 1971." By 

1989, with evidence of cancer risks increasing, OSHA proposed to revisit its limits on permissible 

exposure to styrene." But industry associations strongly objected to OSHA characterizing styrene 

as carcinogenic, arguing there was insufficient data to support such a classification!' OSHA 

backed down; its final rule reducing styrene exposure, later overturned in court, relied only on 

"its narcotic effects" as justification.65 

In 1998, SIRC convinced EPA to allow SIRC to conduct the IRIS hazard assessment of 

styrene." The industry assessment was of such poor quality that it was unusable. However, the 

tactic delayed EPAs IRIS assessment update of the cancer risks of styrene for some time." 

60 Summary ofSIRC*Supported Research, Styrene Info. & Res. Center, http'llwww.styrencorg/sdencelrtsearch slImmar:yhtml 

(last visited Jan. 7. 2013). 

61 See supra notes 57-59, 

62 Air Contaminants, 29 CP.R. § 1910.1000 tbl. Z-l (1999). 

:~OPl~~b~~~:tx;~~tce~r~~~nt~r~~~~~t~~::;~:n~ l~~~~t~~~~~i~~s~~(l~~~~)~~tw:!el ~~~~~~~h~~~~~~~~!t:l~~d~~sfirst current in the late 1980&. Final Rule, Air Contaminants, 54 Fed. Reg. 2332-2983 (Jan. 19, 1989), revoked 58 Fed. Reg. 35338- 35351 (June 30,1993). 

64 Letter from John B. Jenks, Chairman, Styrene Info. & Research Ctr. et aI., to Josepb A. Dcar, Assistant Sec'y of Occupational 

Safcty & Health, U.S. Dep't of Labor (Jan. 30, 1996), available at bttp:IIWW1.\' acmanet org/ga/osha styrene agreement docs 1996 

clf· 

65 OSHA's PEL update was invalidatcd by the llih Circuit. AFL-CIO v. OSHA, 965 F,2d 962 (11th CiT. 1992); see also Revocation afFinal Rule, 58 Fed. Reg. 35338-35351 (June 30,1993). 

66 See JENNIFER SMiS & DANIEl. ROSF,NlIERG, NATURAl. RESOURCES DEFENSE COUNCIl., TIn OF-1.AY GAMF.: How TIn 

CUEMlCAL INDUSTRY DUCKS REGULATION OF THE MOST TOXIC St;BSTANCES 15 (2011), available athttp'/IwwwnrdcorglhcaIth/ 

6ie!'ilTrisDelayRcDort·rd( 

67 ld. at 16. 

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20 

Since styrene was nominated for inclusion in the 12'" Report on Carcinogens in 2004, 

SIRC filed 22 comments arguing against listing the substance." As the Report neared publication, 

the industry group doubled its lobbying expenditures, increasing its funding from $200,000 in 

2010 to over $400,000 in 2011." Rep. Rick Boucher (D-VA), Rep. John Shadegg (R-AZ), and 34 

other members of Congress sent a letter to HHS Secretary Kathleen Sebelius criticizing the NTP 

assessment of styrene's risks," and the American Composite Manufacturers Association (ACMA) 

campaigned "aggressively to overturn the NTP listing:'" When the Report on Carcinogens was 

finally released on June 10, 2011, it listed styrene as "reasonably anticipated" to cause cancer. The 

same day, SIRC and Dart Corporation filed suit challenging this assessment of styrene's risks." 

Dow Chemical is a founding member of SIRe. Two of the association's websites are 

registered to the Management Informations Systems Director at the American Chemistry 

Council. SIRe's offices, coincidentally, were in the same location in Arlington, VA, as those of the 

Formaldehyde Council. And one of its lobbying firms also lobbied for ACC, while another of its 

firms lobbied for Dow Chemical. 

Advocacy Involvement 

The Office of Advocacy was asked by lobbyists from SIRC and ACMA to comment on 

the NTP assessment of styrene and did so. A consultant from a lobbying firm hired by SIRC first 

contacted the Office of Advocacy on June 4, 2010, regarding the styrene listing under review for 

the 12"' Report on Carcinogens." Following that contact, the same consultant helped ACMA 

representatives plan a meeting with Advocacy on Sept. 15,2010, to discuss ACMA:s concerns 

about the styrene assessment." 

68 Intcrvcnor- Defendants' Reply in Support of Dclcndants' & Cross Motions for Summary Judgment at 6, Styrene Info. & 

Research Ctr .. Inc. v. Scbclius. No. 11·1079 (D.ne. Aug. 10,2012), 

69 SIRe's lobbying expenditures had been minimal before 2010. Lobbying: Styrtme Information and Research Center (2011). 

~~ri)~ [~b R~~r.~~;;n~O};;jg~*~ql;::nJ~is~~C:~C~T;t2"¥Ma~,eg~nt: ¥;fi~;;~~~~~V~~t~i[~~~~!;~:!~~~~~/i:bQY' . s . =D 00 72 (last visited Jan. 7,2012). 

~OCP'l ~t~~~rili~ ~~~~i~~:~~~e(A;~ fl~PiJ~~)\~~~:~fne; ~'~tt~:ei~~l~~~nO}es~~i:~ ~~cJeftr%~~o~ ~e~~:~~l~i~~C~~;hU.s. Report on Carcinogens). 

ACMA Continues Pi ht 011 NTP Styrene Usting, Am. Composites Manufacturers Ass'n (ACMA). http-/lwwwacmanetorg/ 

. , 2.0131a~~}:!~~:~ ~)~~Yi~81 ~):C~~t~~1;;i~:s~o~J:e 1oi~, \~;;. f=Oj;e~~~gr:~do~~3=1 (last visited Jan. 7, 2013); I.obb mg: American Composites Manufacturers Assn (2010), . .?' =D 394 r=201 (last visited Jan. 7, 

72 Complaint, Styrene [nfo. & Research etr., Inc. v. Sebelius, No. 11-1079 (D.ne June Hl. 2011), available. at~ 

styrene.org/news/pdfsI06- 10-1 t -SIRCvSebeliusComplaint.pdf. 

73 E-mail fro~ Burleson Smith to Kevin L. Bromherg (june 4, 2010) (attaching letters sent by the Styrene Information and 

~:fc~~~~ a~~~~:~~!~~v~de:~~T: f~\fR~3~~~)~ g:~~~~::~:).ofHealth and Human Services requesting that the styrene listing be 

74 E-mail from Burleson Smith to Charles A. Maresca (Sept. 14,2010) (sending over the list of attendees for the meeting); 

E-mail from Burleson Smith to Charles A, Maresca (Sept. 15, 2010) (attaching the ACMA Issue Summary in advance of the meeting outlining ACMA's "previous efforts to ask NTP to review all of the data .... "). 
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At the meeting, directors of ACMA or its lobbyists asked Advocacy to schedule an 

interagency meeting with the Office of Management and Budget and NTP to discuss the 

assessment and to submit a request to Sebelius asking her to drop the styrene listing." After a 

second meeting on Nov. 30, 20lO, ACMA directors submitted letters to the Office of Advocacy 

asking the Office to get involved with the styrene listing." Staff at Advocacy quickly did as they 

were asked and forwarded ACMA:s letter to HHS on the same day.n In its letter, ACMA claimed 

the NTP listing would jeopardize 500,000 jobs. That figure represents more than 75 percent of all 

jobs SIRC identifies as styrene-related. 

When these efforts failed to block the listing, industry lobbyists asked for help in securing 

changes to the assessment procedures so that they could have more opportunities to influence the 

process, even though the industry trade associations and research groups had already commented 

extensively on NTP's proposed listing .. The ACC launched a lobbying campaign to get Congress 

to change the procedures; SIRC actively lobbied in support of this effort." 

No individual small business contacted Advocacy about the styrene listing. The Office of 

Advocacy received correspondence about the styrene assessment only from SIRC and ACMA. 

Small businesses did not file comments on styrene with NTP independent of ACMA." 

75 E-mail from Burleson Smith to Charles A. Maresca (Sept. 15,2010). the e-mail includes an attachment describing ACMA's 

actions related to the styrene listing and asks the Small Business. Administration to; "Elevate thiS issue as a priority within the 

Office of Advocacy and assign a member of your staff to champIOn this effort; Contact the Office of Management and Budget Ofilce ofInformalion and Regulatory A{falTS (OMB·OIRA) and request an interagency meeting with NTP to evaluate these 

~:~~~~ :~~il:~~ ~~~u~~t~~~~~J:~~~t~:;rPI:~:~!t~~~~~:~c~~~~~~~~~~~~:st~Jd~:,r~~e~~ft~1 ~h; S~:rf:/~~~~~eb~f~~ng making a determination regarding the potential for carcino~enicity in keeping with o~er review rocesses:' (.1 Letter from 

ij~;,~l~£J:~Ftha~\{~%~~Csoe~~!;(~~~Vl~c;rrbf~~~~l~~t a~ocacy, to Kathleen Sebdms, Sec'y 0 Health & Human Services, U.S. 

http:lb""W'W:sbagov/si\es/Jefauh/fileslhhslO }20] pdf. 

76 E-mail from Burleson Smith to David J. Rostker (Nov. 30, 2010) (sending afollow~up email from the meeting earlier that day with an attachment to an Information Quality Act Request for Corrections that SIRe submitted to HHS in October 2009); E-mail 

~~;n~11~~ ~j~~I~~~;)~aviJ J. Rostkcr (Dec. 1, 2010) (attaching separate letters from Tom Dobbins and Monty Felix to the Chief 

77 E-m.ail fTom An~ic Castillo to David J ..Rostkcr (Dec. 1,20 to) (attaching separate letters from Tom Dohbins and Mon~ Pelix 

~~~~~~~~~~c~oofn~~lal~h ~dJ~~~~\;~~~~U.~ ij~~,~I~fJ::ftha:tH~~~nCSoe~~~:(~~~v~c2acITof~v~~I~it~~h~~~~;:.~~en 

mo:t~:1{~~~Z::~~~%S~tt~~s,1 fgcl1~it~g ~~:ili~~Clt~~~~r:;e;:~::i~; ::~~~~ll~~~~i~J,,~~J :(~ '7c~~!}~n; ~~~~ide~~~~~j:~~~~e~!~aa~nthe 

;;:ni~eld; °Rw~~li&~~nT~~fi~~~hl~sa~od 6~~~r?~~~~r:r\ f~~~~l{ ~~~ ~)~~~~~~~~~~~:,I~r.1~r~e~n1~~~rh~:~~~~ ~~Vt~~Y for the qUick turnaround on this important letter."). 

Kate Sheppard. Re ublicans Attem t to Ax Pro am Monitoring Carcinogens. Mother Jones (Aug. 24. 2012, 2:00 AM), ~ 

TO ram- oni orin ar' 0 s; Sar Hands 012. 

abby, N.Y. Times (Oct. 6, 2012), 

==illlllli-=<O' see also sources cited supra note 69. 

79 Scientific Reviews for Listings in the 121" Report an Carcinogens: Public Comments, Nat'l Toxicology Program, http://ntp.niehs. nih goy(jndex cfm?objectid=2QA477F2-FIF6-975E-7472FC6BODA56D9C#styrene (last updated July 19, 2012). 

21 
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22 

Advocacy filed a second set of comments after the Report on Carcinogens was published 

and SIRC had filed its lawsuit challenging the styrene classification. In its comments in 

November 2011, Advocacy criticized the NTP listing of styrene again, in the same letter it sent 

criticizing the formaldehyde listing, expressing concern about "the quality of [the Report on 

Carcinogens] scientific analysis, the robustness of the scientific process, including procedures for 

peer review and public comment procedures, and that [the Report on Carcinogens] is duplicative 

of other federal chemical risk assessment programs, particularly the IRIS:'so These comments 

repeated the talking points provided by ACMA and SIRC" 

The Office of Advocacy became involved in the styrene issue in response to a request by 

the affected trade associations, which are dominated by big businesses or their lobbyists, and its 

comments repeated their arguments. At a hearing on the Report on Carcinogens, held by the 

House Science Committee and Small Business Committee in April 2012, Advocacy staff admitted 

they made no effort to verify industry's claims." After hearing the testimony, Rep. Brad Miller 

(D-NC) commented that the Office of Advocacy "relied for their scientific judgment and process 

comments on the information provided by Styrene lobbyists, so their testimony was really just an 

echo of what we heard from the Dow Chemical industry scientisf'" 

80 Letter from Winslow S~rgeant. Chief Counsel for Advocacy, and Sarah Bresolin Silver, Assistant Chief Counsel, Office of 

Advocacy, to Kathleen Sebehus, Sec'y of Health & Human Services, US. Dep't of Health & Human Servict.'S (Nov. 22, 20 11), hI::Q2JL 

www.saovs·sfasAoCo·Lt-oOC·Ii;LctterfromWinslowSargeant.Chief 

Counsel or Advocacy, and Sarah Bresolin Silver. Assistant Chic Counsel. Office 0 Advocacy, to Dr. Ruth Lunn, Director. Office 

(lfthe Report on Carcinogens 4 (Dec. 14,2011), available athttp·lIntp.niehs.nih.gov!NTP/RoC/Thirteenth/Proce~s/PuhlicCorom! 

SBA20111214 pdf 

81 E-mail from Burleson Smith to Charles A. Maresca (Sept. 15,20 lO). 1bis e-mail includes an attachment of an ACMA Issue 

Summary to be discussed at the meeting with Advocacy on Sept. 15. 2010, The document identifies four major areas of concern: 

! 1] The styrene listing will raise unnecessary concerns about the safety of styrene among employees and communities exposed 

to the chemical; [2} NTP's position on styrene is inconsistent with a European report and a Blue Ribbon Panel report on styrene 

because NTP failed to adequately consider negative studies; [3] NTP's review process causes concerns about the scientific quality 

and validity of its findings ~n styrene; and [4J Businesses that have participated in the NTP process have not heen assured that 

~~d~~~y~~~~~~~~::~~i~~~:d:~b~ ~: ;~~~~I~r~Oc~:~. i;:~~a~:~ileft~~~n~sN:~:~~:~r;~~~J~ t r~~:srili~~j:~~~:~~A formaldehyde mirror the talking points made in these two documents. 

J;bs. :e~~f:;tB~~~~ j~~ ~~t~~~:. ~r:;~~:~~~;~tY;~~ ~~d~~:~si~h:~f:h~t~f~~:~~~~~a,~~;;~'c~,~~ ~~:':~(:t~;L*~~~:r Bau:~nd:! Subcomm. on I!ealthcare and Technology of t~e H. Comm. on Small Business. tI2th Cong. (2-012) 1hereinafter Hearing on Report orr Carcinogensl (statement of Charles A.Maresca, Dir., Interagency Affairs. Office of Advocacy. U.S. Small Bus. Admin.), available at http·l!science.edgehoss.netlwmcclia!science!s;<:t20121042512 wyx. 

~~e I:;~~~ ~;~~:f~~al~;~~~hl~~ ~~~~~~~1~P:~~~~~~nT~~~~~~~fen~:~;r:~'5~~g~~rht:~~id~!~~~~:fc1~U~~~o~s~;~;£~:~s~ release/subcommittee-mlsseg-opportumty-understand-impact-national-toxico!og.y.pmgram%E2%80%Q9s.report 
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Chromium Battles 

Chromium is a naturally occurring heavy metal, found in two widely used classes of 

compounds: trivalent chromium (chromium-3) and the more carcinogenic hexavalent chromium 

(chromium-6).S< Hexavalent chromium is used for chrome plating, dyes and pigments, treating 

wood, and for producing steel and other alloys." Hexavalent chromium exposure can come from 

inhaling or ingesting the substance. Inhalation of hexavalent chromium has long been recognized 

as a cancer risk to workers in the chromium industry. In fact, hexavalent chromium has been 

listed as a "known human carcinogen" in NTP's Report on Carcinogens since 1980,86 and the EPA 

IRIS database has calculated maximum limits for chromium inhalation since 199887 

OSHA began regulating worker exposure to chromium in 1971, after it adopted a 

consensus standard as a mandatory workplace limit." The National Institute for Occupational 

Safety and Health recommended OSHA improve its chromium-6 standard in 1975 to better 

protect workers," but no new OSHA standard was forthcoming. In 1993, Public Citizen and the 

Oil, Chemical and Atomic Workers sued OSHA to compel it to set new exposure standards to 

reduce workers' chromium cancer risk.90 

The Chrome Coalition, a trade association of chromium manufacturers, immediately 

hired consultants to publicize the findings from 18 studies on the health effects of hexavalent 

chromium it had commissioned; all found minimal cancer risks.9l Industry groups also urged 

OSHA to delay action until an EPA study on chromium's cancer risk had been completed. When 

the study showed cancer risks, industry interests urged further delays and more analysis. 

~1RC s~(f.!~~:~:I~\~:~~~Ct~~~~:~~~~~~~~:~~~~~r::~kl~~;o:H~::~~etf;ltor~~~7!ab1: at hUpRmQnographs illrc frf 

ENG/Monograrhslvo1491mono49 pdf. 

85 AGENCY FOR TOXIC SUBSTANCES & DISEASE REGISTRY, US. DEP'T OF HEALTH & HUMAN SERVICES, TOXICOI.OGICAL 

PROFILE FOR CHROMIUM 1-8 (2012). available at httpHVlww.atsdr.cdc.£ov/toxprofilcs/tp7.pdf. 

86 Notice, First Annual Report on Carcinogens, 45 Fed. Reg. 61,372 (Sept 16, 1980); see also TARe, supra. note R4 (explaining 

~~~~~~:~l~i~h~;:!~de~~~ ~~e;::~~~~:~;~~eI~~3~lcl~~;:tc~~~~).known human carcinogen in 1973, and supplementing the 

87 U.S. ENVIRONMENTAL PROTECTION AGENCY, IRIS TOXICOLOGICAl- REVIF.W OF HEXAVALENT CHROMIUM (1998), available at 

htW:lfl."'WW.!,l?a covljris/toxrcyicwslO 144tr pdf. 

88 Air Contaminant. ... 29 CER. § 1910.1000 thl. Z-1 (1999). Public Citizen Health Research Group v. Chao, 314 F.3d 143,146- 47,2002 U.S. App. LEXIS 26778 (3d Cir. Dec. 24, 2002) (explaining that OSHA's 1971 standard for hexavalent chromium was 

~:;~~~)fr~~~h~~~~~~t~~t"~~~v~re~~Cc~r~:-;~~s ~~~~n:k~~)~ards Institute (ANSI) in 1943. ANSI's standard followed from 

89 NAT'1. INSTITUTE FOR OCCUPATIONAl. SAFETY & HEAI.TH, DHHS (NIOSH) PUB. No. 76-129. CRITERIA FOR A 

RECOMMENDED STANDARD: OCCUPATIONAL EXPOSURE TO CHROMIUM (VI) (1975). available at http'//wwwcdcgoy/niosh/ 

docs/1970176-129.html 

h~d a~;;Ut~/;n~~~[~ S::~:~a~~r~f~~I~~~~7u~~J !~~~Yo~'a~:%n~i~~~~ ~a~~~~~~~nf)s~:~d~dt"l ~~;,db~rSi; ~~~~~~~~~~rt invalidatea the OSHA rulemaking, finding that the a~ency musifcerform an individual risk asscssment for each chemic-al standard 

~7~el~~(Cz~O~).e DAVID MICHAELS, DOUBT IS THEIR RODUCT; ow INDUSTRY'S ASSAULT ON SCIENCE THREATENS YOUR HEALTH 

Vnde~i~~~~Ldt;J;~~~~~~~'n~tJ~~o-~i~;:S~a~~~d~if~~I~ ~';~th~A~l~br!J' 1~:~!:1~i~i~~~;c~~ 1~~~~?a~:rla~1;g; hkw 

wwwehiournalnet/contentlpdf/1476-069X-5-Spdf. 

23 
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24 

As the debate over the cancer risks of inhaling chromium-6 progressed, another battle 

opened up. The movie Erin Brockovich, which premiered in 2000, described the struggle of 

residents of Hinkley, CA, to get compensation from Pacific Gas & Electric after it contaminated 

the town's drinking water with chromium, making many residents ill. The case settled for $333 

million in 1993, making it the largest class-action in U.S. history at the time." 

By 20 I 0, an NTP study showed that ingestion of drinking water contaminated with 

hexavalent chromium caused cancer in laboratory animals," and staff at EPA believed there 

was enough information to calculate a reference concentration (maximum exposure level) for 

chromium ingestion. If EPA was able to do this, new drinking water standards for chromium 

levels nationwide would likely follow. 

Industry objected," arguing that chromium is metabolized by humans into a less toxic 

form of the metal, thus posing minimal cancer risk from drinking water. Their "evidence" was 

a 1997 re-analysis (shown to be fraudulent in 2005';) of a 1987 Chinese study." The American 

Chemistry Council's Hexavalent Chromium Panel, the apparent successor to the Chrome 

Coalition, led the objections, urging EPA to delay its IRIS assessment until an industry-funded 

study had been completed." Since October 2010, the American Chemistry Council has filed 25 

separate comments objecting to the IRIS assessment of hexavalent chromium - almost half of 

the total number of comments filed." EPA bowed to industry pressure and agreed to indefinitely 

delay its IRIS assessment." 

~f003~~~~n~~~~~~~~~irn~;~~~i~~:tr:~.~'~;~r~~:~a t~h;f;$r~i~im~~fo~6 cf:a~~~o:t,~:~t~; ~ ~e~YJ!'r;~:' i~~ECCA SUTTON, RNVIRONMF.NTAt WORKING GROUP, CHROMIUM-6 IN u.s. TAP WATER 17 (2010), available atht~rlls.taticewgorg/ 

~it~~2a~~~;?wT!rg&hI~C~1So:fnr.tc;KtJ4t 1bf{I~~.1'g~s:~~~~~;~~ I';;~~ ~~~~f.a;:;:~ f~n2em}~1 & PG Industries in 2010. 

93 NAT'L TOXICOLOGY PROGRAM, NTP TR 546, TECHNICAL REPORT ON THE TOXICOLOGY AND CARCINOGENESIS STUDiES OF 

SODIUM DICHROMATE DIlIYDRATE (CAS No. 7789-12-0) IN F_H4/N RATS AND B6C]FI MICE (DRINKING WATER STUDIES) (July 

2008), . . . v r s r 4. f; Press Release, Nat'} Institute of Health, Hexavalent Chromium in 

Drinking ater Causes Cancer in Lab Animals May 16, 007), htlp:llwww nih gov/news!prfmayl007/niehs-16,htm. 

94 See U.S. ENVIRONMENTAL PROTECTlON AGENCY, PUBLIC DOCKET FOLDER, DRAFT TOXICOLOGICAL REVIEW OF CHROMIUM: 

IN SUPPORT OF SUMMARY INFORMATION ON THE INTEGRATED RISK INFORMATTON SYSTEM (IRIS), EPA-HQ-ORD-:1010-0540, 

http://wwwregulatiom.gQv!#ldocketRro\'y''licr-rpp=25·po=O·D=EPA-HO-ORD-2010-0540 (last visited Jan. 10, 2013). 

~;anJ~'R~~f~ Jj~~~~{ ~t~~~~~,e2~~~~~~I~r~JU!;~na~ PCNi~~;! ~~~fa~~~~~;~s::;~o iH~~~v~::~~e~h~g~~~g i;;~:t~~~~~(·7rJ. OCCUPATIONAl. & ENVTL. MEDICINE 749 (2006). 

96 See ENVIRONMENTAl. WORKlNG GROUP, CHROME-PLATED FRAUD: How PG&E's SCIENTISTS-FOl~.-HIRE REVERSED FINDINGS 

OF CANCER STUDY (2005), http·//wwwewgm;g/hookkxport/html/8626. 

97 Letter from Ann Mason, Senior Director. Am. Chemistry Council, to Rebecca Clark, Actin Director. Nat'l Ctr, for Envt1. Assessment, U.S. Environmental Protection Agency (Dec. 23, 2010), available at . wwwr r 0 s. 

fiQY/#!documentDetail.D=EPA-HQ-ORD-201O-0S40~0027 (select the Rdficon by "view attac ment" to ownload the attached lie). American ChemIstry CounCil's Hexavalent Chromium Panel funded this new, $4 million study, which was conducted by 

lox Strategies and a team of scientists with ties to industry. According to ACe's website, "The panel's primary activities include sponsoring research to G,n the s' . ... or hexavalent chromIUm in drinking water and 

communicating the findmgs of ". .. 

com/HepvalentChromjum. A as in.g the agency 

me~~~ars:t;~~~T(~t~~h~~~i!:~:ralletters from o~t~~aj:~::~~~oK;~!~p~~'n~r~h~~~~~ assessment of chromIum until ACe completes its ongoing research project and EPA has had an opportunity to conSIder the data). 

98 U.S. ENVIRON.MENHL PROTECTION AGENCY, PUBLIC DOCKET FOLDER, supra note 94. 

99 JRTSTrack Detailed Report: Chromium VI Assessment Milestones and Dates, U.S. EnvtL Protection Agency, http-Ifcfpub.epa 

goy/ncea/iristraclindm; Cfm~fuseaction-yiewChemical showChemical&sw jd-1114 (last updated ian. 8, 2013). 
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Advocacy Involvement 

The Office of Advocacy became involved in the debate about the cancer risks of ingesting 

chromium after being contacted by the same ACC lobbyist who had urged Advocacy to become 

involved in the debate about formaldehyde risks!OO In june 2011, the lobbyist suggested Advocacy 

staff write a letter to EPA asking that it delay completion of the chromium assessment until after 

the ACC study had been completed.'O! The request did not mention any small business concerns. 

Advocacy did not attempt to research or validate the ACC's position on chromium. Staff 

at the Office of Advocacy did ask if there was evidence showing a link between chromium-laced 

drinking water and cancer and was assured that new industry-funded research would answer 

these questions.I02 This apparently satisfied Advocacy staff.'O) 

Staff at the Office of Advocacy also asked if any small businesses were affected by the 

chromium risk assessment. ACC assured Advocacy that they were, and Advocacy staff asked 

no more questions. to4 No small business contacted the Office of Advocacy to challenge the IRIS 

chromium assessment. A few small businesses filed comments with EPA on the IRIS chromium 

assessment, echOing the comments already filed by ACC asking EPA to delay the IRIS assessment 

until after completion of ACe's new study. 

On Oct. 5, 2011, Advocacy submitted a letter to EPA expressing the concerns of "small 

business representatives" over EPA's IRIS evaluation that hexavalent chromium is carcinogenic.'05 

The Office of Advocacy went on to claim that EPA did not have sufficient data to estimate the 

risk from ingestion of chromium and argued that EPA should not rely on a linear model to 

estimate the cancer risks of exposure to low doses of chromium. The Office asked EPA to delay 

its final assessment until a new industry study was completed and its results incorporated into the 

assessment. 

~~h y{~~;n:~v~~~R~ff1le ~~~k~:~~~e~~o B~~~dl;'e~~r~~~~~t~~~~~~~O We (~~itc[ ~;W~~o~~t~: h~l~ aahea;rng

a 

~eJ~~~ing water contaminants yesterday at which Administrator Jackson testified. My interest in selting up the meeti~ has been rab:ed 

~~:\~:dl~r~~~::~~~ ~~~h~ ~~~:~~f~h~h%~~n~:~r. recall, I represent the American Chemistry Counci!:<; exavalent Chromium 

101 E.m~d from Randy Schumacher to Kevin L. Bromberg (June 28.2011) ("'I would like ytJU to bt!' aware EPA's er6 risk 

assessment ~s moving. forward apparently without waiting for ACe's MOA amI PK studies to he completed and accepted 

for publicatlOn, notv.r:tthstanding the agency's own peer reviewers strong recommendation. NFJB recently sent a letter to 

~dd:S~bi~.r~~~Si~~:~tO~p~~~~~\:~O~e~ds tl~ ~~i~t~~~r~~;:: c~~~~::t~:~:s ~~~~St~ tus~gn ~aft~Yo~nE:!~ ~:~~~~~~,r~~~ld~gA be 

willing to send a letter to Ms. Jackson to weigh m on this matter?"). 

~~~mI7t~er:;~a~r~~d~:s:i~~~~S::b~~~~ ~~~c~~~~j:\Z:~;~i~~iy ~rg~~ac~~r ;~S~~~~i~~eb!r:~~5h;~a~~~:~~~~~~~o!~ the 

~~IK~~~ r.a~~~l~b~~:<F~b'. Ps~~1 ~~r(!A~(:~er~~:!~:~~~~e:;~fn\~~ r~h;eth~:~~~~~:~~dt~~~~~':~ ~;~::II~~do~:~tlo~~t~~~~Cher with existing drmklng water standards) has the same carcinogenic effects and mode if [sic] action, ... "). 

103 E:mail from Kevin L. Bromberg to Randy$chumacher (Feh. 25, 201l) ("th.x:') (responding to chain of e~mails on the assodatton between hexavalent chromium in drinking water and cancer). 

104 E-mail from Kevin L. Bromberg to Ann Mason and Randal Schumacher(Oct. 3, 2(11) ("Since this is the oral ingestion 

standard, is this tOXicolOgical review even relevant to platers, like NAMF? Isn't that only inhalation risk - and a separate risk 

f::,~s~:~~1~~~~ ~oe~~~~\~~~~~:r~°!nd~:~d~l~c~~~:;~~~ t~~etl: 3~~~~tf)(~V~ ~ten~f't:~~~~~\!!il{~:~'a~es;rnki~;il water systems AND will impact all cleanup and possible cffiuent standards" So the industries interested in the Cr6 oral tox review include all of the Cr6 user industries, including all industries that do plating or use chromium."). 

105 Letter from Winslow Sargeant, Chief Counsel for Advocacy, and Sarah Bresolin Silver, Assistant Chief Counsel. Office 

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The ACC lobbyist provided the Office of Advocacy with these tallting points and edited its 

draft letter to EPA.I" Advocacy's final letter to EPA precisely mirrors the text forwarded to it by 

the ACC and is remarkably similar to ACe's comments to EPA.!07 

of Advocacy. to Paul Anastas, Assistant Adm'r, US. Environmental Protection Agency (Oct,S, 2011), hm,.Uwww.sba.govl adyocac:y1816127201. 

106 See E-mail from Randy Schumacher to Kevin 1. Bromberg (Sept. 15, 2011) (attaching several letters from trade associations 

all asking EPA Administrator Lisa Jackson to postpone the IRIS assessment o~ chromium until ACe completes its ongoing 

~~h~~ch~~(gc~~t. ~Kfl ~(~;:~, ~a~Ifr°!~U~~~s~~~O~i~~r 6~h1:i~i:i;r~;::;t~1~,r~: ~tV~lv~~~:~~~)a~~n~~~~~~~ il:~dndy that the human stomach has a substantial ability to reduce Cr(VI) to the benign chromium-3. Confirmation of a threshold would 

mean that there is no canccrrisk at low doses, contTaryto the current EPA moder Would you edit these sentences -or is this 

~~~t)~~~:;~11;~~i~~~~~:~~~~~a~:lC~~h~~~~he~~S~~~~t'L~'ir~~~~f~(~~~;~l ~i~ t~)g~~r~~~ t~~:~st~:::h ~:~~~m~ 

f:c~j~drq~o~~e [~~ sili~~f.r)~W_!~ fr~% rK:~~~.S ;;~~6::ti~3;~Jai~~h~~=~h~: !~~ ~~i~~~~~(O~~ §~~O~~)y.~e:: ;~u get some good 9.,uotes from scientists not named in the NRD~letter? Also, is there a good argument about the gastric issue that 

you could offer? ). 

107 Letter from Winslow Sargeant, Chief Counsel for Advocacy. and Sarah Bresolin Silver, Assistant Chief ('.,ouose!. Office 

~~!~:~;isr'6t/2ji~~ .AUS~~~v~;~~:~~~~;~~;~~~:~~F.e~~~ ~~U:~~~iDo~i~~f;~~;!~~~~~;~ ~~t~~i~www sba gov/ 
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4. Did the Office of Advocacy's Actions Really Serve the 

Interests of Small Businesses? 

Like most Americans, we 

believe a vibrant small business 

sector supports a more resilient 

economy. The assistance the 

Small Business Administration 

provides to small business owners 

is an important public service, 

increasingly so when markets are 

dominated by large corporations. 

The mission of the Office of 

Advocacy is to ensure that other 

federal agencies consider small 

business concerns. 

However, this investigation reveals that, rather than aligning its mission with the work 

of other federal agencies, the Office of Advocacy actually worked with large business interests to 

obstruct and delay the work of at least two agencies tasked with protecting the health and safety 

of the American people. One part of government should not be working to undermine the efforts 

of another. 

The correspondence into and out of the Office of Advocacy that we have examined 

paints a picture of a federal agency extremely responsive to the agenda of trade associations 

dominated by big chemical manufacturers and their lobbyists. No small business asked the Office 

of Advocacy to intervene with the NTP Report on Carcinogens or the EPA IRIS assessments of 

cancer risks. Advocacy's comments on these assessments offered no small business perspective to 

NTP or IRIS. No small business filed an independent comment critical of the formaldehyde and 

styrene assessments; a few small businesses did comment on the chromium assessment. In each 

case, the Office of Advocacy made no attempt to determine whether the views of the American 

Chemistry Council, the American Composite Manufacturers Association, or the Formaldehyde 

Council actually represented the views or interests of small businesses. 

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The Office of Advocacy's close coordination of its efforts with lobbyists seeking legislation 

to obtain the same results suggests its staff engaged in impermissible lobbying. Advocacy's efforts 

to block the NTP and IRIS assessments were initiated by the American Chemistry Council and 

groups or lobbyists associated with it. ACC is made up of 140 chemical companies; it claims that 

70 of its members are "small and medium sized businesses" but doesn't specify what it means 

by "small" or "medium:' Its membership is dominated by the largest chemical companies in the 

country, including Dow, DuPont, Exxon Mobil, Georgia-Pacific, and more. Its federal lobbying 

expenditures in the fourth quarter of 20 11 were the fifth highest of any group filing lobbying 

reports. Its Formaldehyde Panel is funded by Georgia-Pacific and Hexion, both large companies. 

Dow is a major player in both ACC and the Styrene Information and Research Council. ACe's 

Chromium Panel succeeded the Chrome Coalition. There is no evidence of any small business 

role in any of the ACC coalitions. 

This is not surprising since small businesses do not share the anti-regulatory views oflarge 

chemical companies. A survey by the American Sustainable BUSiness Council concluded that: 

Organizations like the American Chemistry Council have made antiregulation legislation in Congress and state legislatures a top priority, 

pushing the myth that all regulations are a threat to small business growth 

. . .. But the reality is that small business owners see the value of sound 

regulations to help guide the market to deliver innovation for safer 

chemicals and products, which consumers are demanding. This data shows 

that no matter what your political affiliation is, there is agreement that 

toxic chemicals need to be regulated to prevent risk for business and the 

public.lO' 

Even the Office of Advocacy's own research shows that challenging cancer assessments is 

simply not a priority of actual small business owners. According to an initiative to identify the 

interest of small business (referred to as the r3 initiativelO'), the top regulatory issues of concern 

to small business related to their ability to compete against large businesses for government 

contracts: EPA rules, particularly its "Once in, Always in" policy,"O were also a concern. 

Advocacy received no nominations related to scientific assessments. lit 

108 Toxic Chemical Reform Goodfor Rusiness-New Poll, American Sustainable BUSiness Council (ASBe) (Nov. 13,2012), 

htW·UasbcoI!ncil.oQ,fnQde!845. 

i2~iati~:'b!1 ~~s~~ed~rRct~~ft~:?'u~~;:fu/~~v~1~;' -:~:::~~ll~:~b~t~~d ~~~~~~~~~ ~~g~/~er~~\~~~~ai;o;&8t~;\n~a~i~e was Jesigne§ to allow small businesses to nominate rules for review, which Advocacy woulJ then review and publish as a top ten 

list in its annual RFA report. Post Hearing Questions and Answers for the Record Submitted to Sen. Olympia Snowe by Winslow 8argeant, Jan.2S, 201 I (Next StepsIor Main 8lreet: RedUCing the ReJ;ulatory and Administrative Burdens on Americas Small Businesses: Hearing Before the U.S. Senate Committee on Small Busmess and Efltrepreneurship (Nov. 18,2010», available at.hu2J1 

www.sba.gov/advoc<lL:y!2675114163;seealsoNewSmallBusiness Program wm Influence Agency Regulatory Reviews, OMB Watch 

(Sept. 11.2007). bttp'lIwww foretTedivegQv:org/nQde/3419. 

110 See US. ENVIRONMENTAl. PROTECTION AGENCY, POTENTIAl, TO EMIT FOR MACT STANDARDS -- GUIDANCE ON TIMING 

~~~~fd(~l Hi, 1995) for an explanation of the Once in, Always in air quality policy, htl;~l'lIwwwepa goy/ttn/caaa/t3/memorandal 

III Regulatory Review and Reform (r3) Top 10 Rules, 2008 in REPORT ON THE REGULATORY FLEXIBILITY ACT FY :Z007: ANNUAL 

REPORT 01' THE CHIEF COUNSEL FOR ADVOCACY ON IMPLEMENTATION OF THE REGULATORY FLEXIBILITY ACT AND EXECUTrVE 

~ej~:~ (;3y}~;tl~~I~~ i~~~~kDa~agfi:~~ ~tf~~~~~~hs8:.!ia%ti:i£:V'!~V~~3~~W:~:f~~:fi9~h~~~O~iMh~:gh 
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Moreover, testimony at a recent joint hearing of the House Science Committee and 

Small Business Committeell2 suggests that small businesses may in fact benefit from stricter 

regulation of some toxic substances, because the prohibition of some chemicals may open up new 

markets for those who manufacture "green" substitutes. The Vice President of BioAmber, Ally 

Latourelle, stated in her testimony that "recognition that styrene is 'reasonably anticipated' to be 

carcinogenic is not detrimental to our small business. In fact, for our business, as an alternative 

to petrochemicals, and the developers of non-toxic styrene replacement products, reports 

published by government on the toxicology of chemicals and regulations of those chemicals is 

a driver to our business as well as our strategic partners in the area of chemical production and 

manufacturing:'l!3 Apparently, the Office of Advocacy never inquired about these issues. 

~dvocacy's website indicated that it was. accepting nominations until December 31, 2010 for its 2011 r3 initiative, the r3 Top Ten 

hst has not heen published in the RFA since 2009. 

112 Hearing on Report on Carcinogens. supm note 82 (statement of Ally Latourelle. Vice President. Gov't Atfairs, BioAmber, 

Inc.). 

113 Id. 

29 
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30 

5. Conclusions 

The Regulatory Flexibility Act assigns to the Office of Advocacy responsibility for 

ensuring that federal agencies evaluate the impacts on small businesses of the rules they adopt. 

Cancer risk assessments are not covered by the Regulatory Flexibility Act. They do not regulate 

small business. The Office of Advocacy had no reasonable basis for becoming involved in the 

NTP or IRIS assessments. 

The Office of Advocacy's decision to comment on technical, scientific assessments 

represents a significant and unwarranted expansion of its role and extends its reach well beyond 

the regulatory process. By its own admission, Advocacy lacks the scientific expertise to evaluate 

the merits of the NTP/IRIS assessments. Advocacy's comments on these assessments raised 

no issues of specific COncern to small business but relied almost exclusively on talking points 

provided by trade associations engaged in major lobbying campaigns. 

Between 2005 and 2012, the American Chemistry Council and its members spent more 

than $333 million lobbying Congress and federal agencies. I " The Formaldehyde Institute/ 

Council, Styrene Industry Research Council, and Chrome Coalition spent millions of dollars in a 

protracted lobbying campaign to prevent government agencies from designating these substances 

as carcinogenic and tens of millions more on research carefully designed to support their claims 

that these substances do not cause cancer in humans. These groups asked the Office of Advocacy 

for assistance, and the Office became a willing partner in these lobbying efforts. 

The Office of Advocacy's efforts to block the NTP and IRIS assessments came amid 

efforts by the ACC to win congressional approval oflegislation overhauling the NTP and IRIS 

assessment processes. Both ACC and Dow Chemical lobbied Congress to delay publication 

of the Report on Carcinogens until the National Academy of Sciences conducted yet another 

review. ll5 Rep. Denny Rehberg (R-MT) unsuccessfully pushed an appropriations rider to do just 

that'!6 

Besides the moral and ethical concerns raised by efforts to keep substances known 

to cause cancer on the market and in wide use, the activities of the Office of Advocacy are 

disturbing because they may be illegaL Civil and criminal laws bar federal employees from 

lobbying. While the Government Accountability Office admits that lobbying restrictions are 

"unclear and imprecise;' the Comptroller General has said anti-lobbying laws prohibit providing 

"administrative support for teh [sic]lohbying activities of private organizations:'ll7 

114 Jeremy P. Jacobs. InduuryGroup Roasted Political SpendinK 1.as! Year - And it Paid Off. E&E Daily (Feb. 7, 2012), h11p.;Ll wwweenews netlpuhliC/EEDll.i.Q;:t2Q 1 11Q2107/1. 

115 See Sass,supm nole47. 

116 COMMTTTF:F- ON ApPROPRJATTONS, supra note MI. 

117 u.s. GENERAL ACCOUNTING OFFICE, GAO!T-OGC~96~18. TESTIMONY BEFORE THE COMMITTEE ON GOVERNMENT 

REFORM ANn OVERSIGH1; HOUSE Or REl'lI,ESENTATIVES: H.R. 3(ll8, THF. FEDERAL A<if.NCY ANTI-I.ODSYINCi ACT; STATEMENT OF 

ROBERT P. MU:RPHY, GENERAL COUNSEL, GENERAL ACCOUNTr~G OFFICE (1996), aVClilable at http'Upo iustia com/deoartment· 

~~b~i~i;;~;ip;t;:;~~~~hG~~~?I~~;~:~l;t;c;i:;:TAd~i!k~~Wa~;tI~~~i~e·~~·A~~I;~)i~~:i·~6p!!;:~~Wt;~·fet~;i~s°!l~~K ;~~/ 
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Our investigation raises serious questions about the lack of oversight of the Office of 

Advocacy's actions. The Office's activities are not reviewed by the administrator of the Small 

Business Administration or the White House. Congress has conducted no oversight hearings on 

the Office in more than 25 years, and GAO has not investigated the Office's activities. 

Specific Findings and Recommendations 

The Office of Advocacy submitted comments regarding three widely used chemicals, objecting 

to cancer assessments by the National TOXicology Program and the Environmental Protection 

Agency's Integrated Risk Information System, even though no federal regulation was at stake. 

These actions were not authorized by the Regulatory Flexibility Act and improperly expanded the 

Office of Advocacy's jurisdiction into areas in which it has no expertise. 

~ Recommendation: The Office of Advocacy should limit its work to regulatory activities 

affecting small business, as authorized by the Regulatory Flexibility Act and subsequent laws. 

The Office of Advocacy hosts regular Environmental Roundtables attended by trade association 

representatives and lobbyists. The discussions and minutes are kept secret, although the 

consensus positions that emerge appear to inform the Office of Advocacy's policy positions. 

These meetings violate the spirit, and perhaps the letter, of the Federal Advisory Committee Act. 

~ Recommendation: Congress should ask GAO to investigate whether the Office of Advocacy's 

Environmental Roundtables violate Federal Advisory Committee Act provisions. 

The Office of Advocacy staff made no effort to educate themselves on the science underlying 

the debates about the cancer risks of these chemicals or to verify the accuracy of the talking 

points provided to them by industry lobbyists before filing comments critical of the NTP IIRIS 

processes and the scientific conclusions in each assessment.ll8 Instead, the Office of Advocacy 

simply repackaged and submitted talking points provided by trade association lobbyists as formal 

comments. 

~ Recommendation: The Office of Advocacy should independently verify the factual claims 

it makes in comments to other federal agencies and should not comment on technical or 

scientific matters on which its staff have no expertise. 

S~!ft~~~~!if;i~e~~~ig~(~\~~J~~\n~ri~~ ~~;~eUrod!~~~f;~l~~~ 2~ei~~~ 2~~:r~n;~~:~~~iff~~d:~;~~dp~r~i~~t'~~:~~t:dfthe P!'!tential for conflicts otnterest or violations oflaw." Rep. Rob Bishop (R~Utat) who had called for the investigation responded: 

.'~.eTh~~r~~g·p~pl:f;~~ :;ddif~!n;f ~~::t~~d~~~~l~bb~~~~k~~~;~~t~~;~rcr; t~~o::r ~f~[i~~vi~n:~~~ :t;~~~t : .i~ ~o;r~~~g Hosking, RokofhIM Employees Questioned In Federal Investigation, Examiner.com (Oct 8, 2009), http://WW},,examinercmn/ 

artidclrolc-o(.blm.cmp!oyccs-qucstioncd.fcdcraJ-investicaUon. 

~;~nSi~nel~a~vfef~~dS~h~~;~sa~~:~f!~~.h~~ ~rfi:~tA~v~hc~oc;~~J~ ~~~ff~~~~~a!:;~~~:~~~~ ~~~~!~~~I~~S ~~~~~:~t~ to 

the work of other federal agencies. 

31 
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32 

Correspondence between the Office of Advocacy and trade associations dominated by large 

chemical companies and their lobbyists suggests the Office became entangled in a major lobbying 

campaign to prevent the federal government from listing certain chemicals as known or probable 

carcinogens. E-mails suggest the Office of Advocacy may have violated the Anti-Lobbying Act 

and other lobbying restrictions. 

» Recommendation: Congress should ask GAO to investigate whether the activities of the 

Office of Advocacy represent impermissible lobbying by federal employees. 

No small businesses objected to the scientific assessments or asked the Office of Advocacy 

to intervene in the cancer assessments. The Office of Advocacy made no effort to determine 

whether the positions it took represented small business views and interests. Moreover, since 

small businesses may produce substitutes for toxic chemicals, a cancer finding for existing 

chemicals could open up new markets for substitute chemicals produced by small businesses. 

" Recommendation: The Office of Advocacy should develop procedures to verify that its 

policies represent the interests of small business. Its comments should be limited to offering a 

small business perspective that the regulating agency would not otherwise hear. 

No process or procedures seem to be in place to ensure that the activities of the Office of 

Advocacy are consistent with, and do not work to undermine, the statutory responsibilities of 

other agencies. 

» Recommendation: Congress should exert more rigorous overSight over the Office of 

Advocacy to ensure its work does not delay or prevent other federal agencies from fulfilling 

their statutory goals, especially those scientific and regulatory agencies tasked with protecting 

the health of the American people. 
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EFFECTIVE 

GOVERNM 

2040 S Street NW, 2nd Floor 

Washington, DC 20009 

web www.foreffectivegov.org 

phone 202-234-8494 

1'IX 202-234-8584 

email info@foreffectivegov.org 

@foreffectivegov 

facebookcom/foreffectivegov 
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Al.odated Bull ..... alldColrtnlltlon,lnc. 

March 13, 2013 

The Honorable Dave Schweikert 

Chairman, Subcommittee on Investigations, 

Oversight and Regulations 

U.s. House of Representatives 

Washington, D.C. 20515 

Dear Chairman Schweikert and Ranking Member Clarke: 

The Honorable Yvette D. Clarke 

Ranking Member, Subcommittee on Investigations, 

Oversight and Regulations 

U.S. House of Representatives 

Washington, D.C. 20515 

On behalf of Associated Builders and Contractors (ABC), a national association of 72 chapters representing 

22,000 merit shop construction and construction-related firms, I am writing in regard to the upcoming 

subcommittee hearing, ''"Regulating the Regulators - Reducing Burdens on Small Business." 

As builders of our communities and infrastructure, ABC members understand the value of standards and 

regulations based on solid evidence, with appropriate consideration paid to implementation costs and input from 

affected businesses. It is important that federal agencies appropriately evaluate risks, weigh the costs and assess 

the benefits of regulations. 

However, federal agencies today are exercising incredible power through rulemaking and guidance. They are 

able to operate relatively unchecked and unsupervised, especially during the early stages of the regulatory 

process. In addition, they often circumvent the will of Congress and the public by issuing regulations with poor 

or incomplete economic cost-benefit forecasting or other data analysis, instead of using the best and most 

accurate data that could have created more practical and sustainable rules and regulations. At a time when 

construction races an unemployment rate greater than 15 percent, there needs to be greater accountability and 

transparency in the federal regulatory process. 

One way the small business community has continued to have a voice in the regulatory process is through the 

Small Business Administration's Office of Advocacy (Advocacy). Due in large part to its independence, 

Advocacy has been able to reduce the regulatory cost of small businesses to comply with federal regulations, 

without undermining rulemaking objectives. In the fiscal year 2012, Advocacy reported that it saved small 

businesses more than $2.4 billion in new regulatory costs. The agency provides a voice to small businesses by 

SUbmitting comments in response to proposed rulemaking, hosting public roundtables, presenting congressional 

testimony, engaging in interagency dialogue, filing amicus curiae, periodically reviewing existing regulations, 

and participating in SmallOusiness Regulatory Enforcement Fairness Act (SBREFA) panels when convened by 

other federal agencies. 

We appreciate your attention on the issue of regulatory reform and look forward to continuing to work with you 

on making the regulatory process more accountable and transparent for small businesses. 

Sincerely, 

Kristen 

~ Swearingen 

Senior Director. Legislative Affairs 

4250 North Fairfax Drive, 9th Floor· Arlington, VA 22203 • 703.812.2000 • www.abc.org 
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March 14,2013 

The Honorable Sam Graves 

Chairman 

Small Business Committee 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Nydia Velazquez 

Ranking Member 

Small Business Committee 

U.S. House of Representatives 

Washington, DC 20515 

Chairman Graves and Ranking Member Velazquez, 

We are writing to thank you for holding a hearing on the Office of Advocacy ("Advocacy") at 

the U.S. Small Business Administration (SBA). The Regulatory Flexibility Act of 1980 was 

designed to give small businesses a more effective voice in the regulatory process and 

Advocacy's role in implementing the Regulatory Flexibility Act (RFA) is an important one that 

deserves Congress's attention. 

As you know, small businesses are the backbone of our nation's economy and great care must be 

taken to ensure they are not unduly burdened by federal regulations that may unnecessarily 

hamper their ability to create jobs and build communities. One of the first research reports 

released by Dr. Winslow Sargeant as Chief Counsel for Advocacy showed that small businesses 

are disproportionately affected by federal regulations. J The study found that small businesses 

spend more than $8,000 per employee annually to comply with federal regulations. In fact, the 

study concluded that complying with federal regulations costs small businesses 36 percent more 

than it docs for businesses that employ 500 or more employees. Advocacy works every day to 

try and create a more level playing field on which small businesses can compete. 

Advocacy advances the interests of small businesses in the development of federal regulations by 

ensuring that the requirements set forth by the Regulatory Flexibility Act of 1980,2 as amended 

by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996,3 are met. 

Advocacy reviews the regulatory flexibility analysis or certification prepared by federal 

departments and agencies, submits comments on proposed rules, hosts roundtables to solicit 

comments from small business entities, presents congressional testimony, engages in interagency 

dialogue, files amicus curiae, periodically reviews existing regulations, and participates as a 

panel member on SBREFA panels when convened by the respective federal agency. In our 

I Nicole V. Crain and W. Mark Crain, The Impact oJRegulatory Costs on Small Firms, U.S. Small Business 

Administration, Office of Advocacy-sponsored research ( September 2010), at 

www.sba.gov/advo/research/rs37Itot.pdf. 

2 PUb.L.No.96-354, 94 Stat. 1164 (1981). 

] Pub.L.No. 104-121, 110 Stat. 857 (1996), codified as amended at 5 U.S.C. Sec. 601-612. 
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experience, Advocacy fulfilled those duties by focusing exclusively on representing small 

entities and by going to great lengths to solicit input from organizations that represent small 

businesses. We provided agencies with small business input that we were able to obtain because 

Advocacy has a better trust relationship with small business advocacy organizations than many 

federal regulatory and enforcement agencies. It is our belief that this practice continues and 

regulatory agencies benefit tremendously from Advocacy's engagement with the small business 

community. 

The need for Advocacy to represent the interests of small businesses in the development of 

federal regulations is arguably more important now than it was when we were Chief Counsels. 

One report shows that at the end of 20 12 there were 854 regulations under development at 

federal agencies that will impact small businesses: The last time the number of rules under 

development with small-business impacts exceeded 800 was more than 10-years ago. 

At a time when our economy is still seeking to fully recover and our nation is counting on small 

businesses to hire new employees in order to bring the unemployment rate down, we must be 

sensitive to how federal regulations impact small business. Advocacy's role is to ensure that 

agencies reflect that sensitivity in their rulemakings. 

We greatly appreciate the Committee's attention to these important issues. 

Sincerely, 

Thomas Sullivan 

Chief Counsel for Advocacy 

2002-2008 

Jere Glover 

Chief Counsel for Advocacy 

1994-2001 

, Wayne Crews, Small Business Regulations Surge Under Obama, Forbes (February 6, 2012) at 

http://www.forbes.com/sites/waynecrews/2013/02/06/small-business-regulations-surge-under-obamal . 
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~, Servwg ti:e \lendmg. Coffee S-eN1ce afld footlservlC/! !','iarugefT'e<1\ Indus.\m:s 

March 11,2013 

The Honorable Sam Graves 

Chairman, Committee on Small Business 

Unites States House of Representatives 

2361 Raybum House Office Building 

Washington, DC 20515-6315 

RE: Regulatory Flexibility Act (RFA) 

Dear Chairman Graves, 

It has recently been brought to my attention that the Committee on Small Business 

Subcommittee on Investigations, Oversight and Regulations will be conducting a 

hearing on March 14, 2013 to examine agency compliance with the Regulatory 

Flexibility Act (RFA) and to highlight issues to be addressed through future 

congreSSional activity. On behalf of the National Automatic Merchandising Association 

(NAMA), I would like to submit this letter for the hearing record. 

As you may be aware, NAMA is the leading voice of the $42 billion vending and 

refreshment services industry. Founded in 1936, NAMA is comprised of over 1,700 

industry suppliers, operators, equipment manufacturers and service providers, including 

many of the world's most recognized brands. The vending and refreshment services 

industry provides jobs for more than 700,000 hardworking Americans. NAMA members 

also include many small, multi-generational family-owned businesses, with three or 

fewer employees. • 

Due to the large number of these small enterprises, it is important for the federal 

govemment to apply principles of flexibility and awareness when issuing regulations that 

affect our industry. The RFA provides this flexibility and awareness by requiring 

agenci~s to consider the impact of their regulatory proposals, and to analyze 

altern~tives that minimize the impact of regulations on small business. Also, by allowing 

public comment, small business people are given the opportunity for input regarding the 

effects the proposed regulations could have on their operations. 

Our industry is appreciative of the RFA's recognition that small businesses have 

needs that may be different from larger bUSiness entities. We believe that it has led to 

greater sensitivity to small businesses when drafting proposed regulations. For 

example, in recent comments to the Food and Drug Administration (FDA) regarding 

proposed rules for calorie disclosure on vending machines, NAMA strongly supported 

the FDA's attempt to allow maximum flexibility in how disclosure can take place, and the 

Agency's attempt to minimize the economic impact to small businesses. 

Thl! NlItinnitl.lutOfdstic Millrc1'la:ndlting: AsmciRtlo!l • \\IIoIIW_IIflldbtg.nl"g 

Headqulrten 20 North Wacker Dnve, SllIte 3500. Chicago, tL 6IJ6C6.-3102" VC1~e 3121346-{)370· Fa~ 3121704-4140 

Eastern Office 1000 Wilson Blvd. Ste. 650. Arlmglor:, VA 22209 • VQlce 571134& 1900" Fax 7031836-8262 

Southern DffIa12300 Lakev,ew Park.way. 5wte 700. Alpnaretta, GA 3Q0')9. VO'C€: 67&19:6-3852 .. Fax 678fH&-3853 

Western Oftitll lSi) South los Robies Aven ;0. SLiEte roO. Pasadena ('A 31101 • ,/u;:e- 52&'229-Q900· Fax 6?fi.'229·Q777 
203 

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Thank you for allowing NAMA the opportunity to provide our input on the importance 

of RFA, specifically with regard to our small business members. We look forward to 

working with the Committee and federal agencies to promote the specific needs of small 

businesses within the vending and refreshment services industry. 

Sincerely, 

Carla 8alakgie, FASAE, CAE 

President and CEO 

NAMA 
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The Honorable Sam Graves 

Chairman 

Committee on Small Business 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Graves: 

NFIB 

The Voice of Small Business~ 

March 11,2013 

The National Federation of Independent Business (NFIB) appreciates the opportunity to submit 

this letter for the record to the Committee on Small Business for the hearing entitled "Regulating 

the Regulators - Reducing Burdens on Small Business." 

NFIB is the nation's leading small business advocacy organization representing over 350,000 

small business owners across the country, and we appreciate the opportunity to provide our 

perspective on how the Regulatory Flexibility Act (RF A) helps small businesses. 

Excessive and complex regulatory burdens continue to be a hardship for many small business 

owners across America. In NFIB's most recent Small Business Economic Trends, released today, 

small-business owners ranked "government requirements and red tape" as the most important 

problem facing their business, in a tie with taxes.! More than one in five respondents cited 

regulation as the biggest issue. 

Furthermore, a U.S. Small Business Administration's Office of Advocacy study found in 2010 

that regulatory compliance costs small businesses 36 percent more per employee per year than 

their larger counterparts? 

Small businesses operate on thin margins. Mandating that a small business install an expensive 

piece of equipment or take on a burdensome process that makes their company less efficient 

affects a business's ability to either retain or grow jobs. Regulation is indeed necessary, but its 

impacts need to be studied carefully. 

The RFA has been a critical tool to ensuring that rules are not simply "one-size-fits-all." Coupled 

with its amending law, the Small Business Regulatory Enforcement Fairness Act (SBREFA), the 

RFA requires agencies to analyze their rules' impact on small business and encourages 

regulations that meet agency goals while minimizing the compliance burden. 

The law and its ideals have traditionally been supported by both parties. The RFA itself was 

signed by President Carter. SBREFA was signed by President Clinton. Executive Order 13272, 

I http://www.nfib.com/research-foundationlsurveys/small-business-economic-trends 

2 http://w,,w.sba.gov/advo/researchlrs37Itot.pdf 

National Federation ofindependent Business 1201 F Street NW '" Suite 200 '" Washington, DC 20004 '" 202-554-9000 * Fax 202-554-0496 '" \,,"¥<w NFIB com 
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which helped further ensure the proper consideration of small entities in agency rulemaking, was 

signed by President George W. Bush. 

The analyses provided for under the RFA give agencies the opportunity to further understand 

how their rules affect small businesses. By attaining this understanding on the front end of the 

rulemaking process, agencies can actually save time by getting a rule right the first time rather 

than having to make corrections after a rule has been finalized. 

As the government agency in charge of implementing many elements of the RFA, the U.S. Small 

Business Administration's Office of Advocacy (Advocacy) has likewise played a critical role in 

helping to reduce the regulatory burden on small firms. Advocacy is uniquely positioned within 

the federal government to work with agencies on commonsense fixes to complex regulatory 

schemes that provide small businesses the relief they need while meeting agency objectives. 

Advocacy works with small businesses to ensure that it truly represents the concerns of those 

employers that are disproportionately burdened by regulation. In FY 2012 alone. Advocacy 

saved small businesses $2.4 billion in initial-year regulatory compliance costsJ

. 

NFIB could not be more supportive of the RF A and SBREF A, and how Advocacy carries out its 

responsibilities under these laws. Without them, small businesses, which continue to be burdened 

by excessive regulation, would surely be worse off. We encourage the Small Business 

Committee to ensure agency compliance with the RF A, and to strengthen it by giving Advocacy 

greater authority over implementing it. 

NFIB appreciates the opportunity to share the views of our members regarding the RF A and 

looks forward to working with the Committee to improve the regulatory environment for small 

business owners. 

Sincerely, 

Susan Eckcrly 

Senior Vice President 

Public Policy 

3 http://www.sba.gov/sitesidefaultifiles/filesiFIN 12regflx.pdf. pp. 3. 

National Federation oflndependent Business 

1201 F Street NW * Suite 200 • Washmgton, DC 20004 * 202-554-9000 * Fax 202-554-0496 ... w,\",w.NFIB com 
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IilNRCA 

March 14,2013 

The Honorable Sam Graves, 

ChailTI1an, House Committee on Small Business 

U ,S, House of Representatives 

Washington, DC 20515 

Dear Mr. ChailTI1an: 

National Roofing Contractors Association 

Washington, D.C. Office 

324 Fourth Street, N.E. 

Washington, D.C 20002 

202/546-7584 

Fax: 2021546-9289 

http://www.orca.nct 

The National Roofing Contractors Association commends you and other members of the House 

Small Business Committee for holding a subcommittee hearing entitled "Regulating the 

Regulators Reducing Burdens on Small Business," The impact of burdensome and often 

counterproductive regulations on roofing industry entrepreneurs has been a major concern of 

NRCA for many years, We look forward to working with you and other members of the 

committee to address this issue through the passage of regulatory reform legislation, 

Established in 1886, NRCA is one of the nation's oldcst trade associations and the voice of 

professional roofing contractors worldwide, NRCA has approximately 4,000 members in all 50 

states who are typically small, privately held companies, with the average member employing 45 

people and attaining sales of about $4,5 million per ycar. 

The outlook for economic growth in the construction industry, despite some progress in recent 

months, remains uncertain, NRCA fears that any hope of resuming significant job creation in the 

roofing industry could be jeopardized by an avalanche of federal regulations and their impacts on 

small businesses, Employers in the roofing industry face an unprecedented combination of 

regulations issued by the Occupational Safety and Health Administration (OSHA), Dept of 

Labor, National Labor Relations Board and other federal agencies, In addition, much uncertainty 

exists over the voluminous regulations to implement the Affordable Care Act which will impose 

new mandates on employers beginning next year. The cumulative burden of counter-productive 

regulations is highly disruptive to entrepreneurs seeking to start or grow a business, 

Congress should take action to strengthen and improve current protections for small business in 

the regulatory process, such as the Regulatory Flexibility Act Congress cannot create jobs but 

can provide employers with a less burdensome regulatory cnvironment that facilities job 

creation, 
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NRC A is aware that this hearing will review the role of the Regulatory Flexibility Act (RFA), 

which requires certain federal agencies to consider the impact of proposed regulations on small 

businesses and consider the least burdensome altcrnative form of regulation. The RFA also 

established the Small Business Administration Office of Advocacy, which represents small 

businesses in the development of federal regulations. NRCA believes that the RFA and the 

Office of Advocacy have played crucial roles in protecting small businesses from intrusive 

regulations over the years. For example, the Office of Advocacy's work demonstrating how the 

Department of Homeland Security's 2007 Social Security Letter No-Match Rule would have 

been extremely burdensome for small employers was instrumental in having that regulation 

withdrawn in 2009. 

As far back as 1996, NRCA was a major advocate for passage of the Small Business Regulatory 

Enforcement Fairness Act, which made important improvements to the RFA. Given the passage 

of time since the last major changes to the RFA. NRC A strongly believes that the law should be 

reviewed and strengthened in order to better ensure the concerns of small businesses are heard 

and considered throughout the regulatory process. Given the current explosion of regulation, it is 

obvious there are gaps in the law that need to be reformed so the RFA can again ensure the 

interests of small businesses are protected from burdensome regulations. 

During the previous Congress, NRCA supported the Regulatory Flexibility Improvements Act 

(H.R. 527), which would strengthen protections for small businesses against intrusive 

government regulations by updating the RFA. This legislation would require regulators to 

conduct more comprehensive analysis of the impact of proposed regulations on job creation, 

consider the indirect impact of regulations on small businesses (in addition to direct impacts), 

and conduct economic analyses before issuing agency guidance documents. H.R. 527 also 

expands the existing small business advocacy review panel process and clarifies the standard for 

review of existing regulations by federal agencies. These and other reforms will greatly improve 

the process under which federal agencies analyze and develop new regulations. 

H.R. 527 received significant bipartisan support when it was approved by the House in 

December, 2011, but unfortunately died in the Senate. NRCA urges Congress to move forward 

with this and other regulatory reform measures on a bipartisan basis to address the needs of small 

business in the current regulatory process. 

Again, thank you for holding this hearing and considering NRCA's views on the issue of 

regulatory reform. NRCA looks forward to working with Congress in efforts to improve the 

federal regulatory process in order to minimize burdens on small businesses. 

Sincerely, 

Bruce McCrory 

Kiker Corp., Mobile, AL 

President, NRCA 

2 
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N&:;"-- THE RURAL 

BROADBAND 

ASSOCIATION 

Honorable Sam Graves 

Chairman 

U. S. House of Representatives 

Committee on Small Business 

Washington, D. C. 20515 

Dear Mr. Chairman: 

March 12,2013 

Thank you for convening the upcoming hearing of the Subcommittee on Investigations, 

Oversight and Regulations in the matter of "Regulating the Regulators Reducing Burdens <In 

Small Business." 

NTCA-The Rural Broadband Association represents more than 800 providers of advanced 

communications infrastructure and services that are situated throughout rural America. Each one 

ofthese highly regulated entities are small businesses in the purest sense of the phrase, operating 

as locally owned and operated partners with the consumers and communities they serve. 

Nevertheless, a multitude of entities with diverse abilities and resources operate in the American 

communications industry. To counteract the natural inclination to develop "one size fits all" 

approaches to policy, Congress and the President enacted the Regulatory Flexibility Act (RF A) 

in 1980. The RF A directs agencies to balance the societal goals tied to federal regulations with 

the needs of small businesses such as our members. 

Though the RF A has been good for small business, we are often concerned that our industry's 

primary federal regulator, the Federal Communications Commission (FCC), often gives 

insufficient regard to the law and its mandate to thoroughly review the impact of proposed 

regulatory orders on America's small community-based communications providers. The RFA is 

supposed to force agencies to be creative with regulatory alternatives. Instead of conducting this 

analysis, agencies often summarily state that alternative regulation was considered and rejected. 

In 2004 our organization sued the FCC over its new number portability obligations on telephone 

companies. The rules created costly new obligations and, in NTCA's opinion, were heavily 

skewed in favor of large competitive providers that can readily absorb the cost of new 

regulations. The court forced the agency to perform the required RF A analysis and NTCA and 

its members offered suggestions on lessening the burden of the rule while still accomplishing its 

goals. Ultimately, the FCC rejected or ignored the suggestions and NTCA sued again, arguing 

that the analysis was deficient. The court stated that the RF A's requirements are "purely 

procedural." It requires the agency to do no more than state and summarize issues and situations. 

NTCA-The Rural Broadband Association, 4121 Wilson Boulevard, 10'h Floor, Arlington, Virginia 22203 
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Because the FCC is an independent agency, it is largely not subjected to direct oversight by the 

Office of Management and Budget's Office of InfOlmation and Regulatory Affairs (OIRA) as 

most other federal agencies are. The OIRA was created by Congress to review Federal 

regulations and reduce unnecessary burdens. 

Further, the FCC is not required to comply with Executive Order 13272, which specifically deals 

with cooperation between the Small Business Administration's Office of Advocacy (OA) and 

other federal agencies regarding implementation of the RFA, or Executive Order 12866, which 

requires a cost benefit analysis for all significant rules. The OA is the independent voice for 

small business within the federal government and the watchdog of the RFA. The FCC's Office 

of Communications Business Opportunities is responsible for overseeing compliance with the 

RF A for every agency rule, but doesn't appear to work very closely with the various FCC 

bureaus until late in the regulatory process. 

Should the committee determine legislative initiatives may be warranted to address such 

concerns, we offer the following suggestions: 

• Codify the appropriate provisions of Executive Orders 13272 and 12866 to make them 

applicable to independent agencies in the same manner that they now apply to all other 

Executive agencies; 

• Require all agencies to explain whether and how each rulemaking promotes and/or 

protects small businesses; 

• Amend the RF A to require agencies to suggest and analyze alternatives that account for 

the nature and competitive position of small businesses when conducting rulemakings; 

• Require regulatory entities to consult with the Small Business Administration's OA well 

in advance of rules being adopted and to specifically address any suggested additions or 

modifications; 

• Provide the FCC's OCBO with specific authority and responsibility to require agency 

bureaus to coordinate regulatory initiatives with the office from the very conception of 

action on any proceeding. 

Mr. Chairman, again we express our gratitude that you have seen fit to convene this hearing and 

we look forward to continuing to work with you and your committee colleagues to develop a 

regulatory environment that will give America's small businesses thc confidence to invest and 

flourish. 

Sincerely, 

Tom Wacker 

NTCA-The Rural Broadband Association 

Vice President of Government Affairs 

NTCA-The Rural Broadband Association, 4121 Wilson Boulevard. 10'" Floor. Arlington, Virginia 22203 
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-~ .. ATA AMERICAN TRUCKING ASSOCIATIONS 

95D N. Glebe Road * Suite 21D * Arlington, VA * 22203 .. 4181 

www.trucklln&.com 

v. *------------------------------------------------------ Dave Osiecki 

Senior Vice President 

policy and Regulatory Affairs 

March 11,2013 

The Honorable Sam Graves 

Chainnan 

Committee on Small Business 

U.S. House of Representatives 

1415 Longworth House Office Building 

Washington, D.C. 20515 

Dear Congressman Graves: 

The American Trucking Associations (ATA), 950 N. Glebe Road, Arlington, VA 22203, is pleased to 

submit this letter in support of the Regulatory Flexibility Act (RFA). ATA, founded in 1933, serves as 

the nation's preeminent organization representing the interests of the U.S. trucking industry. Directly 

and through its affiliated organizations, A TA encompasses every type and class of motor carrier 

operating on our nation's highways. 

Since its passage in 1980, the RF A has established a comprehensive process requiring federal agencies 

to balance the intent of proposed regulations with their potential impact on regulated entities, including 

small businesses. The RF A has not only resulted in federal regulatory agencies better understanding 

and weighing the potential costs and benefits of proposed and final regulations through impact 

analyses on small businesses, but it has also improved the transparency ofthe entire regulatory 

processes. As a result ofthe RF A, today federal agencies develop and publish annual Unified 

Regulatory Agendas, allowing private sector entities to better detennine and analyze what potential 

rules are likely to have a "significant" impact on specific economic sectors. 

Because the trucking industry is comprised primarily of small businesses, the RF A has been an 

important instrument in detennining the potential impact and burden of proposed regulations on motor 

carriers. According to the U.S. Department of Transportation's, Federal Motor Carrier Safety 

Administration, there are approximately 500,000 motor carriers operating today. Of these motor 

carriers, 90.2 percent operate six or fewer trucks, and 97.2 percent operate fewer than twenty truckl 

Although the trucking industry generates over $600 billion in gross freight revenues and transports 

67.0% of total domestic tonnage;;, the vast majority of motor carriers generate less than $25.5 million 

in revenue, the SBA's threshold amount for defining an enterprise as a small business;;;. As an essential 

and ubiquitous industry within the U.S. economy, trucking companies employ more than 3 million 

commercial truck drivers, and employ roughly 6.3 million people throughout the economy injobs that 

relate to trucking (excluding self-employed). 

Good stuff. 

7D3~838~1998 * FAX: 703·838~1748 * doaleckl@truc:klng.org 
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As a heavily regulated industry, ATA and motor carriers have worked incessantly, many times with the 

support of the SBA's Office of Regulatory Affairs, on a number of rules to reduce any potential 

adverse effects while seeking positive regulatory outcomes based on sound data, scientific research and 

risk-based approaches. For example, recent significant regulatory initiatives include the impact of: 

o Hours of Service regulations impacting commercial truck drivers; 

o The Compliance, Safety and Accountability (CSA) program; 

o Multiple background checks and credentials required of truck drivers. 

Again, the trucking industry is a strong supporter of the RF A as it has added important elements of 

management oversight, predictability and transparency to the federal regulatory process. Although the 

RF A does not compel specific regulatory outcomes, it requires agencies to assess the impacts of their 

proposed and final rules on small entities, and to select less burdensome alternatives - or explain why 

they cannot do so. 

A TA and its members thank you for allowing us to express our support for the RF A and for your 

leadership on this important issue. We look forward to working with you and other members of the 

Small Business Committee in continuing to improve the federal regulatory process. 

David J. Osiecki 

Senior Vice President 

I American Trucking Association's American Trucking Trends, 2012 

U Ibid, 

iii Table of Small Business Size Standards Matched to North American Industry Classification System Codes; U. S. Small 

Business Administration; October 1, 2012; pg. 24 
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The Honorable Sam Graves 

Chairman 

Small Business Committee 

U.S. House of Representatives 

Washington DC 20515 

Dear Chairman Graves: 

March 14,2013 

Thank you for holding a hearing today to examine how the Office of Advocacy 

("Advocacy") at the U.S. Small Business Administration (SBA) is effectively representing small 

businesses in federal rulemaking proceedings. As you know, Advocacy was given specific 

authority by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) to 

represent the views of small business in conjunction with rulemakings initiated by the Consumer 

Financial Protection Bureau (CFPB). 1 Advocacy is working with small business stakeholders 

and with the CFPB to ensure small business concerns are considered in CFPB rulemakings. On 

behalf of the undersigned small business organizations, we want to impress upon your 

Committee that more needs to be done to guarantee that the CFPB approaches rulemakings with 

the highest sensitivity towards the Bureau's impact on small businesses. 

Advocacy has solicited the views of small business stakeholders by hosting six 

roundtables on CFPB regulatory proposals. At those roundtables, Advocacy encouraged CFPB 

officials to attend so they could hear concerns directly from small business stakeholders. 

Advocacy has submitted five public comment letters on four CFPB regulatory proposals to 

ensure the views of those small business stakeholders are part of the public comments that CFPB 

considers prior to deciding what form tinal rulemakings will take. Finally, Advocacy has 

participated in threc Small Business Advocacy Review Panels that are required by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA). 

Advocacy's involvement has made a difference in sensitizing CFPB to its impact on the 

small business community. In CFPB's loan originator compensation rule, Advocacy was 

publicly critical of the Bureau's "zero-zero alternative" proposal that would have required 

lenders to offer a loan option with no discount points or origination fees. 2 Advocacy argued that 

the "zero-zero alternative" would not have been a viable option for small banks and the CFPB 

agreed. The "zero-zero alternative" was not included in the final rule. 

I Pub. L. No. 111-203, Section 1100 G. Small Business Fairness and Regu/ato/y Transparency, (July 21,2010). 

2 Office of Advocacy Letter to The Honorable Richard Cordray, Director, CFPS re: 2012 Truth in Lending Acl 

(Regulation Z) Loan Originator Compensation (Docket No. (' FP B-20 12-0037, RIN3170-AA J3), pages 4-5 (October 

16, 2012). Letter may be accessed at: http://www.sba.gov/advocacy/816/337341 . 
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In CFPB's mortgage servicing rule, Advocacy applauded the CFPB's exemption for 

small servicers. Advocacy helped convince the CFPB that an exemption for small servicers that 

service 5,000 mortgage loans or less was a better policy than CFPB's original proposal to exempt 

servicers that handle 1.000 mortgage loans per year. 3 

These are two examples of Advocacy's work to help CFPB minimize the regulatory 

burden on small entities while accomplishing the Bureau's regulatory objectives. 

While Advocacy deserves credit for their work on small business issues, more needs to 

be done. We believe that the CFPB should do a better job disclosing how its regulations will 

impact the cost of credit for small businesses, a requirement under the Dodd-Frank law.4 

We also believe that the CFPB should convene a Small Business Advocacy Review Panel any 

time a regulatory proposal will negatively impact small entities. We believe that when there is a 

question of whether to convene a panel, the CFPB should err on the side of convening one. The 

CFPB is well advised to work closely with Advocacy to solicit and receive small business 

stakeholder input as early in the regulatory process as possible. That way, the CFPB can lessen 

the likelihood of issuing regulations that have unintended negative consequences on the small 

business sector. 

Thank you for your Committee's attention to these important issues. 

Sincerely, 

Air Conditioning Contractors of America 

American Bankers Association 

American Composites Manufacturers Association 

CHKB, LLC 

Community Mortgage Lenders of America 

Direct Marketing Association 

Illinois Association of Mortgage Professionals 

Institute for Liberty 

International Franchise Association 

IPC Association Connecting Electronics Industries 

Lorraine Enterprises 

National Association for the Self-Employed 

National Association of Independent Housing Professionals 

National Association of the Remodeling Industry 

National Black Chamber of Commerce 

3 Office ojAdvocacy I.elter to The Honorable Richard Cordray. Director, CFPB re: 2012 Real Estate Settlement 

Procedures Act (Regulation X) Mortgage Servicing Proposal (Docket No. CFPB-2012-0034, R1N 3170-AA 14) and 

2012 Truth in Lending Act (Regulation Z) lvlortgage Servicing Proposal (Docket No. CFPB-2012-0033, RIN3170-

AA 14). Page 4 (October 5, 2012). Letter may be accessed at: http://www.sba.gov/advocacy/816/335841 . 

.. Pub. L. No. 111-203, Section 1\000 (d)(I)(A). 
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National Federation of Independent Business 

National Kitchen & Bath Association 

National Lumber and Building Material Dealers 

Association 

National Roofing Contractors Association 

National Small Business Association 

NJ-PMO 

Painting & Decorating Contractors of America 

Plumbing-Heating-Cooling Contractors--National 

Association 

Rowley Company 

Small Business & Entrepreneurship Council 

Small Business Investor Alliance 

SteegerUSA 

Team Builders International 

The Capital Corporation 

The Financial Services Roundtable 

The Latino Coalition 

The National Roofing Contractors 

Truck Renting and Leasing Association 

U.S. Chamber of Commerce 

UpFront Mortgage Brokers 
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./ 

NARr 

NATIONAL ASSOCIATION Of 

fHf RfMOnnlNG INnmTRY 

The Honorable Sam Graves 

Chairman 

Small Business Committee 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Nydia Velazquez 

Ranking Member 

Small Business Committee 

U.S. House of Representatives 

Washington, DC 20515 

March 14,2013 

Dcar Chairwoman Graves and Ranking Member Velazquez: 

On behalf of the National Association of the Remodeling Industry (NARI), I am writing to thank 

you for holding a hearing on reducing burdens on small business and for including the Chief 

Counsel for Advocacy at the U.S. Small Business Administration (SBA) as a witness. Through this 

letter, NARI would like to express its strong support for SBA's Ollice of Advocacy because of the 

ollice's work on behalf of small businesses that dominate the remodeling sector. 

NARI is a non-profit trade association with national headquarters in Des Plaines, Illinois with 58 

local chapters located in most major metro areas. NARl's core membership is comprised of 7,000 

residential remodeling contractors, 80% of which have 20 employees or less. 

Small businesses are the backbone of our Nation's economy and their ability to operate elliciently 

and free of unnecessary regulatory burdens are vital components of our country's economic 

recovery. Regulations emanating from the Affordable Care Act, the Dodd-Frank Law, changing 

federal tax provisions. and other statutes make the Office of Advocacy's mission morc important 

now than ever before. 

Thc Office of Advocacy has been particularly helpful in our dialogue with the U.S. Environmental 

Protection Agency (EPA). In December 2005, EPA proposed rules directed at remodeling and 

construction firms to protect pregnant women and young children from the hazards of lead paint 

during renovations in homes constructed before 1978. Although we provided constructivc input to 

EPA, the agency's regulatory approach failed to recognize the role NARI plays in educating and 

training our members and educating our customers on lead-safe work practices. Additionally. EPA 

did not adequately demonstrate how the additional requirements levied on remodelers would reduce 

the risk of lead poisoning. NARI was worricd that higher costs for remodeling jobs (it was 

estimated that EPA's rules would raise remodeling costs by 15 % and insurance costs by 28%) 

would lead to home owners hiring less professional contractors which would put children and 

pregnant womcn at greater risk of lead poisoning. 

780 Lee SL Suite 200, Des Plaines. IL 60016 • 847 298~9200 tel. • 847 298~9225 fux .• E-mail: info'(lnari.org 

Visit us on our website at \vww.Rcmodc!Today.com and at hUp:!lnariremode1ers.com 
216 

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/ 

NARr 

'.).\TI'-)~'A! A~\\X:r\n{,~ ,'1 

1 >H l~f ~l, 1Il}! p'-;\: iNPli\j RY 

NARI's concerns about the costs of EPA regulations driving customers toward cheap alternatives to 

professional remodeling continue today, We feel as though we have a partner in SBA's Office of 

Advocacy when we try and communicate to EPA that there are more cost-effective ways to protect 

pregnant women and young children from lead paint hazards that can occur during remodeling jobs. 

NARI greatly appreciates the Committee's activity to ensure small businesses are not crippled by 

unnecessary or unduly burdensome regulations. We are confident that your oversight will help 

SBA's Office of Advocacy do an even better job representing us and other organizations that are 

made up of small business members. 

Sincerely, 

47'3~?~ 

Mary Busey Harris, CAE 

Executive Vice President 

780 Lee St., Suite 200. Des Plaines, lL 60016.847298-9200 ld .• 847 298~9225 fax .• E~mail: iniofcinari.org 

Visit us on our website af \vww.RemodeIToday.com and at http://narircmodelers.com 
217 

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March 12,2013 

The Honorable Sam Graves 

Chairman 

Committee on Small Business 

U.s, House of Representatives 

Washington D.C. 20515 

RESTAURANT NATIONA~ 

ASSOCIATION • 

The Honorable Nydia M. Velazquez 

Ranking Member 

Committee on Small Business 

U.S. House of Representatives 

Washington, D.C. 20515 

Re: Support for Efforts to Examine Agency Compliance with the Regulatory Flexibility Act 

Dear Chainnan Graves and Ranking Member Velazquez: 

The National Restaurant Association strongly supports the House Small Business 

Committee's efforts to examine agency compliance with the Regulatory Flexibility Act. 

The National Restaurant Association is the leading business association for the restaurant 

and food service industry. The industry is comprised of 980,000 restaurant and foodservice 

outlets employing 13.1 million people who serve 130 million guests daily. Despite being an 

industry of predominately small businesses, the restaurant industry is the nation's second-largest 

private-sector employer, employing about 10 percent of the U.S. workforce. 

Small businesses are the backbone of our nation's economy, and their ability to operate 

efficiently and free of unnecessary regulatory burdens is critical to our country's economic 

recovery. Research from a 2010 study released by the Small Business Administration Office of 

Advocacy illustrates that the small business community is disproportionately affected by 

burdensome federal regulations. 

We appreciate the Committee's efforts to ensure that agencies are complying with the 

Regulatory Flexibility Act and thank you for your efforts to examine this critical issue. We look 

forward to continuing to work with you to advance this cause. 

Sincerely, 

Angelo I. Amador, Esq 

Vice President 

Labor & Workforce Policy 

Ryan P. Kearney 

Manager 

Labor & Workforce Policy 

Cc: Members of the House Committee on Small Business 

Enhancing the quaiity of life for all we serve 

Restaurant.org j \'?LWeRRestaurants 

2055 L Street NW, Washington, DC 20036 I (202) 331-5900 I (BOO) 424-5156 
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.. ~~ 

/" National Retail Federation ® 

The Voice of Retail Worldwide 

The Honorable David Schweikert 

Chairman 

Investigations, Oversight and Regulations 

Subcommittee 

Committee on Small Business 

U.S. House of Representatives 

Washington, D.C. 20515 

March 12,2013 

The Honorable Yvette Clarke 

Ranking Member 

Investigations, Oversight and Regulations 

Subcommittee 

Committee on Small Business 

U.S. 1I0use of Representatives 

Washington, D.C. 20515 

Dear Chairman Schweikert and Ranking Member Clarke: 

The National Retail Federation applauds your leadership in convening the Committee on Small Business 

Subcommittee on Investigations, Oversight and Regulations hearing titled, "Regulating the Regulators 

Reducing Burdens on Small Businesses." The Regulatory Flexibility Act (RFA) is an important tool working to 

alleviate regulatory burdens for small retail businesses around the country. 

As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership 

includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry 

partners from the United States and more than 45 countries abroad. In the U.S., NRF represents an industry that 

includes more than 3.6 million establishments and which directly and indirectly accounts for 42 million jobs one 

in four U.S. jobs. The IOtal U.S. GDP impact of retail is $2.5 trillion annually, and retail is a daily barometer for 

the health of the nation's economy. 

More than 95 percent of retailers are small businesses operating one location and Main Street merchants, focused 

on growth and innovation. Over half of all retail establisbments employ fewer than five workers. Even the 

largest retailers work regularly with suppliers and vendors that are small businesses, driving job growth for all 

sectors of the economy. NRF enjoys a productive working relationship with the Small Business Administration's 

Office of Advocacy (OOA) on a variety of issues. This letter will discuss three examples of the OOA's 

commitment to small retailers~ concerns. 

NRF welcomed the OOA's February 25, 2011 letter to the Department of Transportation, Federal Motor Carrier 

Safety Administration (FSCMA) highlighting the significant burdens included in the Proposed Hours of Service 

of Drivers Rule. The OOA's letter included a robust reflection of small businesses concerns including the lack of 

support for the proposed rule in existing safety and health data, the reduction in flexibility and possible negative 

impact of the proposed rule on safety and driver health, and the operationally disruptive and costly impact of the 

proposed rule. 

NRF appreciated the OOA's October 25,2011 comment letter to the U.S. Securities and Exchange Conunission 

(SEC) recommending the SEC publish an amendment initial regulatory flexibility analysis (IRFA) for the 

proposed conflict mineral rule. The OOA argued that the SEC's originallRFA did not accurately reflect the costs 

associated with compliance based on their meetings with small retailers and the SEC underestimated the number 

of small businesses that would be impacted by the proposed rule. 

Liberty Place 

325 7th Street NW, Suite 1100 

Washington, DC 20004 

800.NREHOW2 (800.673.4692) 

202.783.7971 fax 202.737.2849 

www.nrtcom 
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March 12,2013 

National Retail Federation 

Page Two 

As a final example, NRF participated in a Roundtable hosted by the Office to discuss impact of sales tax fairness 

legislation in May 2012. The SBA and the OOA have been involved in years of discussions about the impact of 

sales tax fairness legislation and the appropriate size of the bill's small business exemption, and they continue to 

have an important role in giving a voice to all small businesses around the country when legislation is being 

considered by Congress. 

Thank you for your commitment to the small business community's concerns. We look forward to continuing to 

working with you on this issue. 

Sincerely, 

~.~ ~.-c~'--

Da vid French 

Senior Vice President 

Government Relations 

cc: Members of the House Small Business Subcommittee on Investigations, Oversight and Regulations 
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March 13,2013 

The Honorable Sam Graves 

Chairman 

Committee on Small Business 

United States House of Representatives 

Washington, D.C. (via electronic email) 

Dear Chairman Graves: 

The Small Business & Entrepreneurship Council (SBE Council) strongly supports the 

Regulatory Flexibility Act (RF A). The RF A, even with its limitations, remains an 

effective tool in helping to mitigate the impact of burdensome regulation on our nation's 

small business owners and entrepreneurs. As you know, SBE Council and our 100,000 

members continue to support efforts to strengthen and improve the RFA. The 

considerable increase in regulatory activity, along with inconsistency in how federal 

agencies follow the RF A, warrants greater accountability by the agencies as well as tools 

and procedures to strengthen the voice of small businesses in the rulemaking process. 

From the beginning, the RFA and its intentions have enjoyed wide bipartisan backing. 

That's because common sense, along with what small business owners report, have 

justified action by Congress to protect entrepreneurs from the harmful consequences of 

overregulation. Research and data affirm this effect - that is, regulation has a 

disproportionate cost impact on small businesses and their ability to compete, create jobs 

and grow. The SBA's Office of Advocacy has captured this impact through its research, 

but so have the extensive findings of the small business community at large and the 

countless personal stories of entrepreneurs before your Committee and other House 

Committees. 

Unfortunately, the RFA has not kept pace with the growth of the federal government and 

the extreme pace of rule making. According to the Office ofInformation and Regulatory 

Affairs (2012), there are 4,062 proposed federal regulations in the pipeline with more 

than 400 impacting small business. SBE Council supported the House-passed Regulatory 
221 

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Flexibility Improvements Act of2011 (H.R. 527) in the 11th Congress (which would 

strengthen and improve the RF A), along with other reform measures to hold federal 

agencies - and Congress more accountable when it comes to regulations. 

It is our hope that the hearing on March 14, "Regulating the Regulators - Reducing 

Burdens on Small Business," explores these issues and identifies solutions that will better 

protect small businesses and our economy from the high costs of too much regulation. 

We must strengthen the RFA. Again, it has been a useful tool that can be made even 

more effective through common sense changes. 

Regulatory burden and threats, on top of the weak economic recovery and higher 

business and health coverage costs, continue to weigh heavily on America's small 

businesses. We look forward to our continued work with you and the Committee to 

identify solutions to help our small businesses grow and thrive in the competitive global 

economy. 

Thank you for your leadership. 

Sincerely, 

Karen Kerrigan 

President & CEO 

Protecting Small Business, Promoting Entrepreneurship 

SBE Council. 301 Maple Avenue West, Suite 690. Vienna. VA 22180.703-242-5840. 

www.sbecouncil.org