Small Entities and Rulemaking
What small entities should know about EPA and the Small Business Regulatory Enforcement Fairness Act
- Why should I be interested in the Regulatory Flexibility Act / Small Business Regulatory Enforcement Fairness Act (RFA/SBREFA)?
- What is the Small Business Regulatory Enforcement Fairness Act?
- How does SBREFA affect EPA's rulemaking?
- What does RFA/SBREFA require for proposed rules?
- What does RFA/SBREFA require for final rules?
What potential small entity representatives should know about the Small Business Advocacy Review Panel process
- What is a Small Business Advocacy Review Panel?
- What is an EPA Small Entity Representative?
- Why does EPA need Small Entity Representatives?
- Who is eligible to be a Small Entity Representative?
- Who chooses Small Entity Representatives?
- At what stage in the rulemaking does the Panel process occur?
- What will being a Small Entity Representative entail?
- What will be done with my small entity input?
What small entities should know about EPA and the Small Business Regulatory Enforcement Fairness Act
EPA has an ongoing commitment to minimize the burden of our regulations on small entities to the extent we can while still meeting our statutory requirements. The Regulatory Flexibility Act (RFA), as amended by Small Business Regulatory Enforcement Fairness Act (SBREFA), provides small entities with an expanded opportunity to participate in the development of certain regulations.
SBREFA was signed into law on March 29, 1996, and contains five distinct sections:
- Subtitle A–Regulatory Compliance Simplification:
Among other things, requires the agency to publish Small Entity
Compliance Guides that are written in plain language and explain
the actions a small entity must take to comply with a rule
or group of rules.
- Subtitle B–Regulatory Enforcement Reforms: Requires
agencies to support the rights of small entities in enforcement
actions, specifically providing for the reduction, and in
certain cases, the waiver of civil penalties for violations
by small entities.
- Subtitle C–Equal Access to Justice: Provides small
businesses with expanded authority to go to court to be awarded
attorneys' fees and costs when an agency has been found to
be excessive in enforcement of federal regulations.
- Subtitle D–Regulatory Flexibility Act Amendments:
Provides small entities with expanded opportunities to participate
in the development of certain regulations.
- Subtitle E–Congressional Review of Agency Rulemaking: Agencies generally must provide Congress and the General Accounting Office with copies of all final rules and supporting analyses. Congress may decide not to allow a rule to take effect.
SBREFA established certain formal procedural and analytical requirements (outlined below) for rules with the potential to impose a significant economic impact on a substantial number of small entities. But EPA also considers the concerns of small entities in the more frequent cases where impacts on small entities are more modest, even though SBREFA doesn't require it.
Initial Regulatory Flexibility Analysis. Generally, the RFA requires EPA to prepare an Initial Regulatory Flexibility Analysis (IRFA) for each proposed rule unless the rule will not have a significant economic impact on a substantial number of small entities. A regulatory flexibility analysis examines the type and number of small entities potentially subject to the rule, recordkeeping and compliance requirements, and significant regulatory alternatives, among other things.
Small Business Advocacy Review Panel. When an IRFA is required, EPA must also convene a Small Business Advocacy Review Panel before proposing a rule. EPA's Small Business Advocacy Chair convenes each Panel, which includes representatives from the Small Business Administration, the Office of Management and Budget, and EPA. A Panel conducts its own outreach to Small Entity Representatives likely to be subject to the rule and prepares a report to the Administrator of EPA on ways to reduce the potential impact of the rule on small entities. Each Panel's report becomes part of the rulemaking record for the proposed rule.
Final Regulatory Flexibility Analysis. When EPA issues a rule that may have a significant impact on a substantial number of small entities, we must prepare a Final Regulatory Flexibility Analysis (FRFA). The elements of a FRFA are similar to those of an IRFA, outlined above. In addition, each FRFA must summarize the significant issues raised by public comments on the IRFA, assess these issues, and describe any changes made in response to the comments.
Small Entity Compliance Guide. When a FRFA is required, EPA must also publish Small Entity Compliance Guides that are written in plain language and explains the actions a small entity must take to comply with a rule or group of rules.
- EPA has completed numerous SBAR Panels in cooperation with SBA and
OMB. Access a full list on the SBAR Panels web page. In each case, the Panel recommended changes to the rule that would
reduce impacts on small entities.
- In August 2011, EPA launched this revised RFA/SBREFA website: www.epa.gov/sbrefa.
The primary purpose of the site is to provide public access to information
and documents produced for, or directly related to, the Agency's implementation
- Small Entity Compliance Guides are available on the RFA/SBREFA website. Access a full list on the Compliance Guides web page.
What Potential small entity representatives should know about the Small Business Advocacy Review Panel process
The Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act requires EPA to convene a Small Business Advocacy Review (SBAR) Panel for a proposed rule unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The Panel process offers an opportunity for small businesses, small governments, and small not-for-profit organizations (collectively referred to as small entities) to provide advice and recommendations to ensure that EPA carefully considers small entity concerns. The Panel itself is comprised of federal employees from EPA, the Office of Management and Budget, and the Small Business Administration's Office of Advocacy. Small Entity Representatives (SERs) provide advice and recommendations to the Panel. Typically, EPA prefers that SERs be owner-operators of small businesses, small organization officials, or small government officials. Other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may serve as SERs. These other representatives are evaluated on a case by case basis.
Information about what constitutes a "small business" is available at the Small Business Administration's website. A "small government" is defined as a jurisdiction serving a population of 50,000 residents or fewer. A "small organization" is defined as any "not-for-profit enterprise which is independently owned and operated and is not dominant in its field." To learn more, review EPA's fact sheet, What Potential Small Entities Should Know About the Small Business Advocacy Review Panel Process (2009) (PDF) (4 pp, 22K, About PDF).
The Small Business Advocacy Review (SBAR) Panel will ask a selected group of Small Entity Representatives (SERs) to provide comments on behalf of their company, community, or organization to advise the Panel regarding a particular proposed rule. SERs' participation in the rulemaking process will ensure that EPA hears small entity concerns.
A SER is a person appointed by the Small Business Advocacy Chair (SBAC) as a participating representative of small entities likely to be subject to the requirements of a specific proposed rule under development. The Regulatory Flexibility Act (RFA) defines small entities as small businesses, small governments, and small non-profit organizations.
EPA has an ongoing commitment to minimize the burden of its regulations on small entities to the extent feasible, while still meeting its statutory requirements. The Small Business Regulatory Enforcement Fairness Act (SBREFA), enacted in March 1996, amended the RFA to provide small entities with an expanded opportunity to participate in the development of certain regulations.
In particular, EPA must convene a SBAR Panel for certain proposed rules under development, unless the Agency determines the rule will not impose a significant economic impact on a substantial number of small entities. Each Panel is led by the SBAC and includes federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA. The Panel meets with SERs likely to be subject to the rule to hear their views on the potential impacts of the rule and on ways to reduce them.
A small entity stakeholder is eligible to be a SER if he or she is directly subject to the particular proposed regulation that is under development and meets one of the following definitions of small entity listed below. Please note, however, EPA has the authority to use an alternative definition after notice and comment, and for small businesses, consulting with SBA.
- Small Business: Defined under Section 3 of the Small
Business Act. SBA defines "small business" variably,
based on each firm's category in the North American Industry
- Small Organization: Any not-for-profit enterprise which
is independently owned and operated and is not dominant in
- Small Governmental Jurisdiction: Governments of cities, counties, towns, townships, villages, school districts, or special districts, with population of less than 50,000.
Typically, EPA prefers the actual owners or operators of small businesses, community officials, and non-profit organizations for this purpose. However, a person from a trade association that exclusively or primarily represents potentially regulated small entities, may also serve as a SER.
For each rule that may have a significant economic impact on a substantial number of small entities, EPA identifies what types of small entities are likely to be subject to the rule and develops a list of potential SERs. EPA also consults with the SBA Chief Counsel for Advocacy to identify individuals to serve as SERs. The SBAC considers these recommendations and appoints a group of official SERs.
Prior to proposing a rule, EPA engages its small entity stakeholders in a dialog to learn more about their concerns and ideas regarding the rule under development. If the Agency believes that the rule may have a significant economic impact on a substantial number of small entities, EPA will begin the SBAR Panel process. This process is intended to provide a special opportunity for small entities to participate in the rulemaking.
Generally, SERs will be asked to review background information, listen to informational briefings and provide oral and written comments to the Agency and later to the Panel.
Typically, prior to convening a Panel, EPA will provide the SERs with some background information on the rule and ask for their initial feedback. The Agency may also arrange a meeting with small entities potentially subject to a particular rule to hear their initial concerns and suggestions. Representatives of OMB and SBA are also invited to this meeting.
After the SBAR Panel is convened, the Panel will provide the SERs with some additional information, followed by a teleconference or a face-to-face meeting to give them the opportunity to communicate directly with the Panel members. The Panel also generally requests SERs' comments in writing. The goal of this consultation is to provide a forum for the SERs to raise issues of concern and to provide the Panel with insight into technical issues and potential ways of approaching them.
Each SBAR Panel has 60 days to consider SER comments in addition to other rule-related materials prepared by EPA and prepare a report to the Administrator of EPA on the potential small entity impacts of the rule and on possible ways to reduce those impacts. The Panel report is considered by the Agency as it makes decisions on the proposed rule and is made part of the official rulemaking record with all written small entity comments appended. SERs may also submit comments during the standard public comment period after the publication of the proposed rule in the Federal Register.