Report on the Regulatory Flexibility Act, FY 2004 Annual Report of the Chief Counsel for Advocacy on Implementation of the Regulatory Flexibility Act and Executive Order 13272 February 2005 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/advo or call (202) 205-6533. Receive email notices of new Office of Advocacy information by signing up on Advocacy's Listservs at http://web.sba.gov/list R ADVOCACY COMMUNICATIONS R ADVOCACY NEWSLETTER R ADVOCACY PRESS R ADVOCACY RESEARCH To the President and the Congress of the United States September 2005 marks the 25th anniversary of the Regulatory Flexibility Act of 1980 (RFA). As we approach the RFA's silver anniversary, I am pleased to present to Congress and the President this Report on the Regulatory Flexibility Act, FY 2004. Included in this report is the status of agency compliance with Executive Order 13272. The RFA requires agencies to consider the impact of their rules on small entities and examine significant alternatives that minimize small entity impacts. Similarly, Executive Order 13272 (E.O. 13272) directs agencies to submit draft rules that may have a significant economic impact on small entities to the Office of Advocacy for review and to address Advocacy's comments on proposed rules in the analysis accompanying the final rule. It also requires the Office of Advocacy to train regulatory agencies in how to comply with the RFA and E.O. 13272. In Fiscal Year 2004, the Office of Advocacy trained 26 agencies on the RFA in accordance with the requirements of E.O. 13272. Our office also submitted written comments on a variety of agency rules, testified before Congress on small business issues and potential legislative changes to the RFA as well as agency compliance with the RFA, and worked successfully with several states to pass state regulatory flexibility legislation. In fact, during 2004, seven states enacted regulatory flexibility legislation. Additionally, Advocacy participated on four Small Business Regulatory Enforcement Fairness Act (SBREFA) panels and filed a notice of intent to submit an amicus curiae or "friend of the court" brief in a Federal Communications Commission (FCC) regulatory matter. Throughout Fiscal Year 2004, the Office of Advocacy continued to rely on small entities to help identify and prioritize regulations that would significantly affect their operations. As part of this process, Advocacy hosted numerous roundtables to gather small entity input on the regulatory process and key rules. Advocacy also conducted RFA training for trade associations and other members of the private sector affected by agency regulations, as well as for congressional staff. These activities helped the Office of Advocacy focus our efforts on the rules and actions most important to regulated small entities. Training small business stakeholders on the valuable tools provided by the RFA and E.O. 13272 helped engage a broader advocacy community and leverage limited resources. There were notable improvements in agency compliance with the RFA and E.O. 13272 in Fiscal Year 2004. For example, after receiving RFA training, some federal agencies began consistently submitting draft rules to Advocacy for review; others sought assistance with RFA compliance early in the rulemaking process. Further, some agencies were more willing to make regulatory changes and consider significant alternatives following discussions with Advocacy and affected small entities. Agencies willing to work with Advocacy showed significant progress in their RFA and E.O. 13272 compliance. In 2004, Advocacy's involvement in agency rulemakings helped secure more than $17 billion in first-year cost savings and more than $2 billion in recurring annual savings for small entities. In Fiscal Year 2005, Advocacy will continue to be a bridge between regulatory agencies and small entities. Advocacy recognizes that facilitating communications between agencies and small entities will help agencies achieve compliance with the RFA and E.O. 13272 and, ultimately, reduce regulatory burdens on small entities. Our long-term objective is for agencies to have in-house RFA expertise and to internalize thoughtful consideration of small entity impacts pursuant to the RFA and E.O. 13272. Thomas M. Sullivan Chief Counsel for Advocacy Contents Abbreviations Introduction 1 Overview of the Regulatory Flexibility Act and Related Policy History of the RFA Analysis Required by the RFA The Small Business Regulatory Enforcement Fairness Act of 1996 Executive Order 13272 2 Federal Agency Compliance and the Role of the Office of Advocacy Is Executive Order 13272 Making a Difference? RFA Training under E.O. 13272 Table 1 Summary of Cabinet Department Compliance with Section 3 (a) of E.O. 13272 Table 2 RFA Training in Federal Agencies, FY 2003-2004 RFA and SBREFA Implementation Chart 1 Advocacy Comments by Key RFA Compliance Issue, FY 2004 Chart 2 Advocacy Comments and Regulatory Interventions by Agency, FY 2004 Table 3 SBREFA Panels through Fiscal Year 2004 Table 4 Regulatory Comment Letters Filed by the Office of Advocacy, Fiscal Year 2004 Table 5 Regulatory Cost Savings, Fiscal Year 2004 Table 6 Summary of Cost Savings, Fiscal Year 2004 Small Business Friendly Regulation: Model Legislation for the States Map: Model Legislation Initiative Table 7 Small Business Friendly Legislation by the Numbers 3 RFA Achievements in Fiscal Year 2004 and Ongoing Concerns Department of Agriculture Agricultural Marketing Service Department of Commerce National Marine Fisheries Service Department of Defense Department of Education Department of Energy Department of Health and Human Services Centers for Medicare & Medicaid Services Food and Drug Administration Department of Homeland Security Department of Housing and Urban Development Department of the Interior Fish and Wildlife Service Department of Justice Department of Labor Employment Standards Administration Occupational Safety and Health Administration Department of State Department of Transportation Federal Aviation Administration National Highway Traffic Safety Administration Department of the Treasury Internal Revenue Service Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve System Department of Veterans Affairs Architectural and Transportation Barriers Compliance Board Board of Governors of the Federal Reserve System Environmental Protection Agency Federal Acquisition Regulation Council Federal Communications Commission Federal Trade Commission Securities and Exchange Commission Small Business Administration Conclusion Appendix A: The Regulatory Flexibility Act Appendix B: Executive Order 13272 Abbreviations ADA Americans with Disabilities Act AEM Association of Equipment Manufacturers AFPA American Forest Products Association AMS Agricultural Marketing Service ANPRM advance notice of proposed rulemaking APA Administrative Procedure Act APPA American Public Power Association APHIS Animal and Plant Health Inspection Service BIS Bureau of Industry and Security CAN-SPAM Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 Check 21 The Check Clearing for the 21st Century Act CIBO Council of Industrial Boiler Owners CMS Centers for Medicare and Medicaid Services COOL Country-of-Origin Labeling CPG Compliance Policy Guide CRA Community Reinvestment Act CRS Computer Reservations System CVM Center for Veterinary Medicine DAS days at sea DHS Department of Homeland Security DOC Department of Commerce DOD Department of Defense DOE Department of Energy DOI Department of the Interior DOJ Department of Justice DOL Department of Labor DOT Department of Transportation EBSA Employee Benefits Security Administration E.O. Executive Order EMA Engine Manufacturers Association EPA Environmental Protection Agency ESA Endangered Species Act ESA Employment Standards Administration FAA Federal Aviation Administration FAR Federal Acquisition Regulation FCC Federal Communications Commission FDA Food and Drug Administration FDIC Federal Deposit Insurance Corporation FLSA Fair Labor Standards Act FMCSA Federal Motor Carrier Safety Administration FMP fishery management plan FRA Federal Railroad Administration FRFA final regulatory flexibility analysis FRS Federal Reserve System FTC Federal Trade Commission FWS Fish and Wildlife Service FY fiscal year GSA General Services Administration GIPSA Grain Inspection, Packers and Stockyard Administration HHS Department of Health and Human Services HSAR Homeland Security Acquisitions Regulations HUD Department of Housing and Urban Development IP Internet Protocol IRF inpatient rehabilitation facility IRFA initial regulatory flexibility analysis IRS Internal Revenue Service MACT maximum achievable control technology MSHA Mine Safety and Health Administration MMA Medicare Prescription Drug Improvement and Modernization Act MO&O memorandum opinion and order NAICS North American Industry Classification System NANC North American Numbering Council NATM National Association of Trailer Manufacturers NEFMC New England Fishery Management Council NHTSA National Highway Traffic Safety Administration NMFS National Marine Fisheries Service NOAA National Oceanic and Atmospheric Administration NOx nitrogen oxide NPRM notice of proposed rulemaking NTCA National Telecommunications Cooperative Association OCC Office of the Comptroller of the Currency OIRA Office of Information and Regulatory Affairs OMB Office of Management and Budget OPASTCO Organization for the Promotion and Advancement of Small Telecommunications Companies OSHA Occupational Safety and Health Administration OTS Office of Thrift Supervision PACA Perishable Agricultural Commodities Act PEL permissible exposure limit P.L. Public Law RESPA Real Estate Settlement Procedures Act RFA Regulatory Flexibility Act RSPA Research and Special Programs Administration RVIA Recreational Vehicle Industry Association SBA Small Business Administration SBREFA Small Business Regulatory Enforcement Fairness Act SEC Securities and Exchange Commission TSA Transportation Security Administration USDA United States Department of Agriculture U.S.C. United States Code VA Department of Veterans Affairs VoIP Voice over Internet Protocol Introduction This Report on the Regulatory Flexibility Act, FY 2004 informs the President, the Office of Management and Budget, and Congress whether agencies are properly considering the impact of their rules on small entities and thus improving their compliance with the Regulatory Flexibility Act (RFA) and Executive Order (E.O.) 13272. The RFA, enacted 25 years ago, requires federal agencies to determine the impact of their rules on small entities, consider alternatives that minimize small entity impacts, and make their analyses available for public comment. Signed by President George W. Bush in August 2002, E.O. 13272 provides a renewed incentive for agencies to improve their compliance with the RFA and give proper consideration to small entities in the agency rulemaking process. Throughout the past year, the Office of Advocacy continued its efforts to represent small entities before regulatory agencies, lawmakers, and policymakers. The Office of Advocacy worked closely with small entities and their representatives to identify and comment on agency rules that would affect their interests. Advocacy's Regulatory Alerts web page, located at http://www.sba.gov/advo/laws/law_regalerts.html, was a useful tool, highlighting notices of proposed rulemaking that may significantly affect small entities. The Office of Advocacy focused on the issues that were the most important to small entities, significantly reducing regulatory burden and producing substantial cost savings. In fiscal year 2004, the Office of Advocacy achieved more than $17 billion in regulatory cost savings and more than $2 billion in recurring annual savings on behalf of small entities. This report contains three main sections. Section 1 is a brief overview of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). This initial section outlines the history of the RFA, and discusses the requirements of the original law and the SBREFA amendments. Section 2 details the role of the Office of Advocacy. This section discusses how the Office of Advocacy works with regulatory agencies to encourage them to consider the impacts of their rules on small entities, and minimize those burdens where possible. The section uses charts and tables to illustrate Advocacy's involvement in rulemakings by agency and type of comment. Also included is a listing of Advocacy's formal comment letters, SBREFA panels held by EPA and OSHA, and cost savings realized by small entities in fiscal year (FY) 2004. Section 2 also contains a map outlining state regulatory flexibility legislation and a list of the RFA training sessions Advocacy conducted in the last fiscal year. Section 3 briefly describes many of the rules in which Advocacy intervened on behalf of small businesses in 2004. Each narrative describes the agency's action, Advocacy's intervention in the rulemaking, and the final regulatory action and cost savings where available. 1 Overview of the Regulatory Flexibility Act and Related Policy History of the RFA Before Congress enacted the Regulatory Flexibility Act(1) in 1980, federal agencies did not recognize the pivotal role of small business in an efficient marketplace, nor did they consider the possibility that agency regulations could put small businesses at a competitive disadvantage with large businesses or even constitute a complete barrier to small business market entry. Similarly, agencies did not appreciate that small businesses were restricted in their ability to spread costs over output because of their lower production levels. As a result, when agencies implemented "one-size-fits-all" regulations, small businesses were placed at a competitive disadvantage with respect to their larger competitors. This problem was exacerbated by the fact that small businesses were also disadvantaged by larger businesses' ability to influence final decisions on regulations. Large businesses have more resources and can afford to hire staff to monitor proposed regulations to ensure effective input in the regulatory process. As a result, consumers and competition were undercut while larger companies were rewarded. The White House has taken a leadership position in standing up for small business. In 1980, when the first White House Conference on Small Business was held, small business delegates told the President and Congress that they needed relief from the unfair burdens of federal regulation. The President listened when small businesses explained that the burden of federal agency regulations often fell hardest on them. They asserted that "one- size-fits-all" regulations, although easier to design and enforce, disproportionately affected small businesses. This led the federal government to recognize the different impacts of regulations on firms of different sizes and the disparity between large and small firms in the level of input in the regulatory process. In 1980, Congress and the President enacted the RFA to alter how agencies craft regulatory solutions to problems and to change the "one-size-fits-all" approach to regulatory policy.(2) In 1993, President Clinton issued Executive Order 12866, which required federal agencies to determine whether a regulatory action was "significant" and therefore subject to review by the Office of Management and Budget (OMB) and the analytical requirements of the executive order. In September 2003, OMB issued Circular A-4, which provides guidance to federal agencies for preparing regulatory analyses of economically significant regulatory actions under Executive Order 12866.(3) In 1996, Congress and the President helped the Office of Advocacy to more effectively implement the RFA by enacting the Small Business Regulatory Enforcement Fairness Act (SBREFA).(4) SBREFA amended the RFA to allow a small business, appealing from an agency final action, to seek judicial review of an agency's compliance with the RFA. Not surprisingly, this change has encouraged some agencies to increase their compliance with the requirements of the RFA. In 2002, President George W. Bush signed Executive Order 13272, titled "Proper Consideration of Small Entities in Agency Rulemaking." The E.O. requires agencies to place emphasis on the consideration of potential impacts on small entities when promulgating regulations in compliance with the RFA. Advocacy is required to provide the agencies with information and training on how to comply with the RFA and must report to OMB annually on agency compliance with the E.O. By signing this executive order, the President provided the small business community with another important tool to ensure that federal regulatory agencies comply with the RFA and include Advocacy in the process. Analysis Required by the RFA The RFA requires each federal agency to review its proposed and final rules to determine if the rules will have a "significant economic impact on a substantial number of small entities." Section 601 of the RFA defines small entities to include small businesses, small organizations, and small governmental jurisdictions. Unless the head of the agency can certify that a proposed rule is not expected to have a significant economic impact on a substantial number of small entities,(5) an initial regulatory flexibility analysis (IRFA) must be prepared and published in the Federal Register for public comment.(6) If the analysis is lengthy, the agency may publish a summary and make the analysis available upon request. This initial analysis must describe the impact of the proposed rule on small entities. It must also contain a comparative analysis of alternatives to the proposed rule that would minimize the impact on small entities and document their comparative effectiveness in achieving the regulatory purpose. When an agency issues a final rule, it must prepare a final regulatory flexibility analysis (FRFA) unless the agency head certifies that the rule will not have a significant economic impact on a substantial number of small entities and provides a statement containing the factual basis for the certification. The final regulatory flexibility analysis must: provide a succinct statement of the need for, and objectives of, the rule; summarize the issues raised by public comments on the IRFA and the agency's assessment of those issues; describe and estimate the number of small entities to which the rule will apply or explain why no such estimate is available; describe the compliance requirements of the rule, estimate the classes of entities subject to it and the type of professional skills essential for compliance; describe the steps followed by the agency to minimize the economic impact on small entities consistent with the stated objectives of the applicable statutes; and give the factual, policy, and legal reasons for selecting the alternative(s) adopted in the final rule, and explain why other alternatives were rejected.(7) The FRFA may be summarized for publication with the final rule. However, the full text of the analysis must be available for review by the public. The RFA is built on the premise that when an agency undertakes a careful analysis of its proposed regulations, with sufficient small business input, the agency can and will identify the economic impact on small businesses. Once an agency identifies the impact a rule will have on small businesses, the agency is expected to seek alternative measures to reduce or eliminate the disproportionate small business burden without compromising public policy objectives. The RFA does not require special treatment or regulatory exemptions for small business, but mandates an analytical process for determining how best to achieve public policy objectives without unduly burdening small businesses. The Small Business Regulatory Enforcement Fairness Act of 1996 The Small Business Regulatory Enforcement Fairness Act amended the RFA in several critical respects. First, the SBREFA amendments to the RFA were specifically designed to ensure meaningful small business input during the earliest stages of the regulatory development process. Most significantly, SBREFA authorized judicial review of agency compliance with the RFA, and strengthened the authority of the Chief Counsel for Advocacy to file amicus curiae briefs in regulatory appeals brought by small entities. SBREFA also added a new provision to the RFA requiring the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA) to convene small business advocacy review panels (SBREFA panels) to review regulatory proposals that may have a significant economic impact on a substantial number of small entities. The purpose of a SBREFA panel is to ensure small business participation in the rulemaking process, to solicit comments, and to discuss less burdensome alternatives to the regulatory proposal. Included on the SBREFA panel are representatives from the rulemaking agency, the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA), and the Chief Counsel for Advocacy. The Office of Advocacy assists the rulemaking agency in identifying small entity representatives from affected industries, who provide advice and comments to the SBREFA panel on the potential impacts of the proposal. Finally, the panel must develop a report on its findings and submit the report to the head of the agency within 60 days. Additionally, SBREFA amended the RFA to bring certain interpretative rulemakings of the Internal Revenue Service (IRS) within the scope of the RFA. The law now applies to those IRS rules (that would normally be exempt from the RFA as interpretative) published in the Federal Register that impose a "collection of information" requirement on small entities.(8) Congress took care to define the term "collection of information" to be identical to the term used in the Paperwork Reduction Act, which means that a collection of information includes any reporting or recordkeeping requirement for more than nine people.(9) Executive Order 13272 On August 13, 2002, the President signed Executive Order 13272, titled "Proper Consideration of Small Entities in Agency Rulemaking."(10) The E.O. strengthened the Office of Advocacy by enhancing its relationship with OIRA and directing agencies to work closely with the Office of Advocacy to properly consider the impact of their regulations on small entities. The E.O. first required federal regulatory agencies to establish written procedures and policies on how they intend to measure the impact of their regulatory proposals on small entities, and vet those policies with the Office of Advocacy before publishing them.(11) By February 13, 2003, agencies were to have considered Advocacy's comments and made their final procedures available to the public through the Internet or other easily accessible means.(12) Second, the agencies must notify the Office of Advocacy of draft rules expected to have a significant economic impact on a substantial number of small entities under the RFA.(13) Third, agencies must consider the Office of Advocacy's written comments on proposed rules and publish a response to those comments with the final rule.(14) The Office of Advocacy, in turn, must provide periodic notification, as well as training, to all federal regulatory agencies on how to comply with the RFA.(15) These preliminary steps set the stage for agencies to work closely with the Office of Advocacy and properly consider the impact of their regulations on small entities. 2 Federal Agency Compliance and the Role of the Office of Advocacy By independently representing the views of small business, the Office of Advocacy is an effective voice for small business before Congress and federal regulatory agencies. Since its creation in 1976, the Office of Advocacy has pursued its mission of creating research products that help lawmakers understand the contribution of small businesses to the U.S. economy. Since enactment of the RFA in 1980, Advocacy's regulatory experts have monitored federal agency compliance with the law and worked to convince federal agencies to consider the impact of their rules on small businesses before the rules go into effect. In 2003, the Office of Advocacy added a new component: reducing regulatory burdens for small businesses at the state level. The Office of Advocacy's regional advocates promoted state model legislation based on Advocacy's experience with the federal RFA and E.O.13272.(16) Is Executive Order 13272 Making a Difference? With the new E.O., some agencies are increasingly recognizing the importance of small business to the nation's economy and the benefit of considering the impacts of their rulemakings on small entities. Those agencies trying to comply with the requirements of the E.O. are coming to Advocacy earlier in the rule development process, resulting in earlier consideration of small business impacts of draft regulations. However, many agencies still do not solicit Advocacy's input early enough in the rule development process. Section 3(a) of the E.O requires agencies to issue written procedures and policies to ensure that their regulations consider the potential impact on small entities and make them publicly available. All Cabinet-level departments except the Department of State have submitted written plans to Advocacy. The departments have also made the procedures publicly available in compliance with the E.O. (Table 1). Section 3(b) of E.O. 13272 requires agencies to notify Advocacy of any draft rules that may have a significant economic impact on a substantial number of small entities under the RFA. Such notifications are to be made (i) when the agency submits a draft rule to OIRA under Executive Order 12866, or (ii) if no submission to OIRA is required, at a reasonable time prior to publication of the rule by the agency. To make it easier for agencies to comply electronically with the notice requirements of the E.O. and the RFA, Advocacy established an email address, notify.advocacy@sba.gov. A few agencies have adopted an email system to advise Advocacy of such rules. The agencies that use the email exclusively(17) have found it to be a simple process for meeting the notification requirements. Section 3(c) of E.O. 13272 requires agencies to give every appropriate consideration to Advocacy's comments on a proposed rule. In the final rule, published in the Federal Register, an agency must respond to any written comments submitted by Advocacy on the proposed rule. Many agencies have not yet had an opportunity to comply with this section of the E.O. because the rules on which Advocacy has commented have not been finalized. More time is needed to assess overall agency compliance with this provision of the E.O. Advocacy continues to be less satisfied with the response to E.O. 13272 by independent regulatory agencies. Of the 75 independent regulatory agencies, 16 responded to the requirements of the E.O. Of these, eight provided written procedures to Advocacy, six claimed not to regulate small entities, and two claimed to be exempt from the E.O. Independent agencies with plans are generally complying with sections 3(b) and 3(c) of the E.O., or have not had an opportunity to comply. Advocacy remains most concerned with the noncompliance of eight particular independent agencies that regulate small entities and did not submit written procedures to Advocacy. The eight independent agencies are the Export-Import Bank of the United States, the Farm Credit Administration, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Board, the Federal Maritime Commission, the Federal Reserve System, and the Securities and Exchange Commission. Both the Federal Communications Commission and the Federal Deposit Insurance Corporation submitted letters in response to E.O. 13272.(18) As government-wide RFA training moves forward, the training of independent agencies will be an important step in helping these agencies to comply with the executive order. RFA Training under E.O. 13272 Executive Order 13272 requires Advocacy to train regulatory agencies on how to comply with the RFA and the E.O. Advocacy identified 66 departments, agencies, and independent commissions that promulgate regulations affecting small business. By training approximately 25 agencies each year, Advocacy hopes to complete training of all 66 agencies before FY 2008. A list of the RFA training sessions conducted in FY 2004 is in Table 2 of this report. The government-wide rollout of the RFA training began in October 2003. Advocacy has trained more than 30 federal agencies in how to comply with the RFA and the E.O. Agencies that have participated in the rigorous half-day training are more aware of their compliance responsibilities under the RFA and the E.O. Increasingly, agency staff are willing to share draft rules and other important information with Advocacy. This enables Advocacy to better assist them in assessing the small business impacts of their draft rules. Moreover, a large part of the training is laying the foundation for productive relationships between Advocacy and the regulatory agencies. For those agencies willing to take advantage of Advocacy's expertise, knowing where to go for assistance on RFA issues is vital. Advocacy is in the process of developing the next phase of its RFA training program. The office is working with an outside contractor to create an online computer-based RFA training module. The online training will be useful for both new agency employees and as a review for existing employees. Advocacy remains optimistic that small businesses will begin to realize the benefits of E.O. 13272 when agencies adjust their regulatory development processes to accommodate the requirements of the RFA and the E.O. As more agencies work with the Office of Advocacy earlier in the rule development process and give small entity impacts appropriate consideration, regulations should show more sensitivity to small business considerations. The E.O. is an important tool designed to guarantee small businesses a seat at the table where regulatory decisions are made. Advocacy will continue working closely with all federal regulatory agencies to train them on the RFA and increase compliance with both the RFA and E.O. 13272. "We are grateful to [Advocacy] for bringing to the FCC their interactive training on addressing small business concerns in regulatory proceedings. We have worked closely with SBA's Office of Advocacy in the past, and appreciate their efforts on behalf of small telecommunications businesses. We congratulate them on creating a fine program." -Carolyn Fleming Williams, Director, Office of Communications Business Opportunities, Federal Communications Commission "During the training.[Advocacy staff] did a wonderful job of articulating the purpose and requirements of the RFA. Because most of the ATF employees attending the training had no background in the RFA, your staff had a particularly hard job, but they were extremely effective.We are certain we will take advantage of [Advocacy's offer to assist ATF in the future] as we begin to apply our training to regulatory projects." -Stephen Rubenstein, Chief Counsel, Bureau of Alcohol, Tobacco, and Firearms "EBSA employees have said your training was excellent. It's a credit to all of you for keeping up the quality after so many sessions." -Fred Siskind, Office of the Assistant Secretary for Policy, U.S. Department of Labor Table 1 Summary of Cabinet Department Compliance with 3(a) of E.O. 13272: Establishing Procedures to Promote RFA Compliance Department Document made available at: Agriculture http://www.ocio.usda.gov/directives/files/d r/DR1512-001.pdf Commerce www.ogc.doc.gov/ogc/legreg/testimon/108f/gu idelines.htm Defense DOD has not submitted its own procedures separate from the FAR Council/GSA's submission. Education www.ed.gov/legislation/FedRegister/finrule/ 2003-2/051203d.html Energy www.gc.doe.gov/rulemaking/eo13272.pdf Health and www.hhs.gov/execsec/smallbus.html Human Services Homeland www.tsa.gov/public/display?theme=5 Security Housing and www.hud.gov/offices/osdbu/policy/impact.cfm Urban Development Interior http://elips.doi.gov/elips/release/3207.htm Justice www.usdoj.gov/olp/execorder13272.pdf Labor www.dol.gov/dol/regs/guidelines.htm State State has not complied. Transportation www.regs.dot.gov/docs/eo-13272.pdf Treasury www.treas.gov/regs/2002-rfa- compliance.pdf?IMAGE.X=24\&IMAGE.Y=8 Veterans www.va.gov/OSDBU/library/eo13272.htm Affairs Note: The following independent agencies that regulate small entities did not submit written procedures under Section 3(a) of E.O. 13272: the Export-Import Bank of the United States, the Farm Credit Administration, the Federal Communications Commission (submitted letter saying not covered by executive orders), the Federal Deposit Insurance Corporation (submitted letter saying not covered by executive orders), the Federal Emergency Management Agency, the Federal Housing Finance Board, the Federal Maritime Commission, the Federal Reserve System, and the Securities and Exchange Commission. Table 2 RFA Training in Federal Agencies, FY 2003-2004 In fulfillment of E.O. 13272 requirements, Advocacy has trained the following federal departments and agencies in how to comply with the Regulatory Flexibility Act. Cabinet Departments Department of Commerce National Oceanic and Atmospheric Administration* Department of Health and Human Services Center for Medicare and Medicaid Services Food and Drug Administration Department of the Interior Bureau of Indian Affairs Bureau of Land Management Fish and Wildlife Service Minerals Management Service National Park Service Office of Surface Mining, Reclamation, and Enforcement Department of Justice Bureau of Alcohol, Tobacco, and Firearms Department of Labor Employee Benefits Security Administration Employment and Training Administration Employment Standards Administration Mine Safety and Health Administration Occupational Safety and Health Administration Department of Transportation Federal Aviation Administration Federal Motor Carrier Safety Administration Federal Railroad Administration Research and Special Programs Administration* Department of the Treasury Alcohol, Tobacco, Tax, and Trade Bureau Financial Crimes Enforcement Network Financial Management Service Internal Revenue Service Office of the Comptroller of the Currency Department of Veterans Affairs Independent Federal Agencies Environmental Protection Agency* Federal Communications Commission General Services Administration/FAR Council Small Business Administration *Trained in FY 2003 RFA and SBREFA Implementation Advocacy promotes agency compliance with the RFA in several ways.(19) Advocacy staff members regularly review proposed regulations and work closely with small entities, trade associations, and federal regulatory contacts to identify areas of concern, then work to ensure that the RFA's requirements are fulfilled (Charts 1 and 2). Early intervention by the Office of Advocacy has helped federal agencies develop a greater appreciation of the role small business plays in the economy and the rationale for ensuring that regulations do not unduly stifle entrepreneurial growth. The Office of Advocacy continues to provide economic data, whenever possible, to help agencies identify industrial sectors dominated by small firms. Statistics show regulators why rules should be written to fit the unique characteristics of small businesses if public policy objectives will not otherwise be compromised. Advocacy makes statistics available on its Internet website and maintains a database of information on trade associations that can be helpful to federal agencies seeking input from small businesses. The Office of Advocacy also promotes agency compliance with the RFA through its collaboration with a network of small business representatives. Advocacy staff regularly meet with small businesses and their trade associations regarding federal agency responsibilities under the RFA, factors to be addressed in agency economic analyses, and the judicial review provision enacted in the SBREFA amendments. Roundtable meetings with small businesses and trade associations focus on specific regulations and issues, such as procurement reform, environmental regulations, and industrial safety. Advocacy also plays a key role as a participant in the SBREFA panels convened to review EPA and OSHA rules (Table 3). As regulatory proposals and final rules are developed, the Office of Advocacy is involved through pre-proposal consultation, interagency review under E.O. 12866, formal comment letters and informal comments to the agency, congressional testimony and "friend of the court" briefs. In 2004, Advocacy submitted a notice of intent to file an amicus curiae brief in a litigation proceeding involving the FCC's memorandum opinion and order on local number portability. Ultimately, the notice of intent was withdrawn, as Advocacy and the FCC were able to reach a settlement agreement. Table 4 lists Advocacy's formal comment letters to federal agencies in FY 2004. Table 5 outlines the rules in which Advocacy intervened and assisted small businesses in obtaining cost savings. Advocacy calculates cost savings based on agency data or industry estimates in the absence of agency data. In FY 2004, revisions to federal agency actions and rulemakings in response to Advocacy's interventions produced first-year cost savings of more than $17 billion (Table 6). Chart 1 Advocacy Comments, by Key RFA Compliance Issue, FY 2004 (percent) yy_y"_y"%ycy.yyryy,y.y3y3%y3_y_y%yy.y_yAyAy, y+y%y_yI_yIy-&PMSPUBEPS COLORDEF =<.000.000.000.000-d- &PMSPUBEPS COLORDEF =<.000.000.000.000- dZ82d.y,yy~y|ya|y_yU~yx_yyOyyY+y_,yyyyy.yy^ y^y%y%yYSyUyU_yY_y_yoysy~ysy>yoy _y_y>y>ydsydTyd-yd.y`y"yya-y-y_-yY-yy"y`yY_y_y_yZy Zy_y_y`y-&PMSPUBEPS COLORDEF =<.000.000.000.000-d- &PMSPUBEPS COLORDEF =<.000.000.000.000-d8qy_y_yqyqy- &PMSPUBEPS COLORDEF =<.000.000.000.000-d-&PMSPUBEPS COLORDEF =<.000.000.000.000-d8qy_y_yqyqy-&PMSPUBEPS COLORDEF =<.000.000.000.000-d-&PMSPUBEPS COLORDEF =<.000.000.000.000- dh8'<"y;"y:-y9-y7-y4-y2y0"y0`y/_yE_yE_yD^yC.yB,y@y=