118th Congress }                                       {    Rept. 118-854
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                       {           Part 1

======================================================================



 
             ENHANCED REGULATORY FLEXIBILITY ASSESSMENT ACT

                                _______
                                

               December 10, 2024.--Ordered to be printed

                                _______
                                

Mr. Williams of Texas, from the Committee on Small Business, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 9032]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 9032) to amend chapter 6 of title 5, United States 
Code (commonly known as the ``Regulatory Flexibility Act''), to 
ensure complete analysis of potential impacts on small entities 
of rules, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                CONTENTS

                                                                   Page
   I. Purpose and Bill Summary........................................2
  II. Need for Legislation............................................2
 III. Hearings........................................................2
  IV. Committee Consideration.........................................2
   V. Committee Votes.................................................2
  VI. Section-by-Section of H.R. 9032.................................5
 VII. Congressional Budget Office Cost Estimate.......................5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure5
  IX. Oversight Findings & Recommendations............................5
   X. Performance Goals and Objectives................................6
  XI. Statement of Duplication of Federal Programs....................6
 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
      Benefits........................................................6
XIII. Federal Mandates Statement......................................6
 XIV. Federal Advisory Committee Statement............................6
  XV. Applicability to Legislative Branch.............................6
 XVI. Statement of Constitutional Authority...........................6
XVII. Changes in Existing Law Made by the Bill, As Reported...........6
XVIII.Minority Views.................................................12


                      I. Purpose and Bill Summary

    On July 15, 2024, Rep. Maloy introduced H.R. 9032. The 
purpose of H.R. 9032, the ``Enhanced Regulatory Flexibility 
Assessment Act,'' is to amend Initial Regulatory Flexibility 
Analysis requirements to include stronger language and 
descriptions of the cumulative impact of the rule and any 
disproportionate impacts on small entities.

                        II. Need for Legislation

    Section 603 of the Regulatory Flexibility Act (RFA) 
requires agencies to conduct what is known as an initial 
regulatory flexibility analysis (IRFA) as a step in the RFA 
certification process. The IRFA has to include information such 
as a summary of what the rule is trying to accomplish, and a 
summary of what type of entities will be impacted by a proposed 
rule. This bill amends the IRFA requirements to include 
stronger language and descriptions of the cumulative impact of 
the rule and any disproportionate impacts on small entities.
    As written, the IRFA and RFA include flexible language such 
as ``where feasible'' and ``to the extent practicable'' which 
give agencies clearance to not do a full analysis of how 
impactful a rule will be. This legislation will strengthen that 
language so that agencies and Main Street alike can better 
understand how these rules impact America's businesses.
    Throughout the Committee's investigation, we uncovered that 
many agencies would ignore some of the requirements in the IRFA 
in order to get the rule implemented faster. If agencies are 
going to force small businesses to comply with burdensome 
regulations, they should have a full and accurate analysis on 
what the impacts will be rather than not conducting an analysis 
because of this loophole built into the law.

                             III. Hearings

    In the 118th Congress, the Committee held one hearing 
examining the issues covered in H.R. 9032. On May 22, 2024, the 
Committee held a hearing titled ``Burdensome Regulations: 
Examining the Biden Administration's Failure to Consider Small 
Businesses'' which examined the impacts of the Biden 
Administration's burdensome regulatory landscape and explored 
ways to support small businesses and overcome agencies' 
noncompliance with the RFA.

                      IV. Committee Consideration

    The Committee on Small Business met in open session, with a 
quorum being present, on September 10, 2024 and ordered H.R. 
9032 reported to the House of Representatives. During the 
markup no amendments were offered.

                           V. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. The Committee voted to favorably report H.R. 9032 to 
the House of Representatives at 2:27 PM.


                  VI. Section-by-Section of H.R. 9032


Section 1: Short title

    This bill may be cited as the ``Enhanced Regulatory 
Flexibility Assessment Act.''

Section 2: Requirements providing for more detailed analyses

    Expands requirements for the IRFA and final regulatory 
flexibility analysis (FRFA) to contain additional information 
about the proposed rule including why the agency is considering 
the action, the objectives and legal basis for the rule, an 
estimate of the number of small entities to which the rule will 
apply, and information such as whether access to credit would 
be impacted or whether some businesses will be more impacted 
than others.
    Additionally, agencies are required to acknowledge and 
respond to comments or concerns of the proposed rule in the 
case of certification, rather than just the FRFA.
    Strikes the single ``factual basis requirement'' in a 
certification to instead require ``detailed statement providing 
the factual and legal basis for such certification. The 
detailed statement shall include an economic assessment or a 
sufficiently detailed summary to support the certification by 
the agency.
    Requires a quantifiable description of the rule's impact or 
a descriptive statement on why the quantification isn't 
possible.

             VII. Congressional Budget Office Cost Estimate

    Pursuant to clause 3(d)(1) of House rule XIII, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974. The Committee has 
requested but not received from the Director of the 
Congressional Budget Office a cost estimate for the Committee's 
provisions. Once available, the cost estimate will be published 
in the Congressional Record.

VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a)(I) of the 
Congressional Budget Act of 1974, the Committee provides the 
following opinion and estimate with respect to new budget 
authority, entitlement authority, and tax expenditures. While 
the Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974, the Committee does 
not believe that there will be any additional costs 
attributable to this legislation. H.R. 9032 does not direct new 
spending, but instead reallocates funding independently 
authorized and appropriated.

                IX. Oversight Findings & Recommendations

    In accordance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the oversight findings and recommendations of the Committee on 
Small Business with respect to the subject matter contained in 
the H.R. 9032 are incorporated into the descriptive portions of 
this report.

                  X. Performance Goals and Objectives

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of H.R. 9032 are to require 
stronger descriptions of the cumulative impact a rule may have 
on Americans and any disproportionate impacts on small 
entities.

            XI. Statement of Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, no provision of H.R. 9032 is known to 
be duplicative of another Federal program, including any 
program that was included in a report to Congress pursuant to 
section 21 of Public Law 111-139 or the most recent Catalog of 
Federal Domestic Assistance.

 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee finds that the bill 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9(e), 
9(f), or 9(g) of rule XXI of the Rules of the House of 
Representatives.

                    XIII. Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

               XIV. Federal Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                XV. Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               XVI. Statement of Constitutional Authority

    Pursuant to clause 7 of rule XII of the Rules of the House, 
the Committee finds that the authority for this legislation in 
Art. I, Sec. 8, cl.1 of the Constitution of the United States.

      XVII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 5, UNITED STATES CODE



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PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *


CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS

           *       *       *       *       *       *       *


Sec. 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 rulemaking 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 
rules impose on small entities a collection of information 
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;
          [(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 of professional 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.]
  (b) Each initial regulatory flexibility analysis required 
under this section shall contain a detailed statement--
          (1) describing the reasons why action by the agency 
        is being considered;
          (2) describing the objectives of, and legal basis 
        for, the proposed rule;
          (3) estimating the number and type of small entities 
        to which the proposed rule will apply;
          (4) describing 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 of professional skills necessary for 
        preparation of the report and record;
          (5) describing all relevant Federal rules which may 
        duplicate, overlap, or conflict with the proposed rule, 
        or the reasons why such a description could not be 
        provided;
          (6) estimating the additional cumulative economic 
        impact of the proposed rule on small entities beyond 
        that already imposed on the class of small entities by 
        the agency or why such an estimate is not available;
          (7) describing any disproportionate economic impact 
        on small entities or a specific class of small 
        entities; and
          (8) describing any impairment of the ability of small 
        entities to have access to credit.
  (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)(1) 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 of representatives of 
        small entities relating to issues described in 
        subparagraphs (A) and (B) and subsection (b).
  (2) A covered agency, as defined in section 609(d)(2), shall, 
for purposes of complying with paragraph (1)(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 
        (B) of paragraph (1) and subsection (b).

Sec. 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--
          (1) 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 (or certification of 
        the proposed rule under section 605(b)), a statement of 
        the assessment of the agency of such issues, and a 
        statement of any changes made in the proposed rule as a 
        result of such comments;
          (3) 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;
          (4) a detailed description of and an estimate of the 
        number of small entities to which the rule will apply 
        or [an explanation] a detailed explanation of why no 
        such estimate is available;
          (5) a detailed description of the projected 
        reporting, recordkeeping and other compliance 
        requirements of the rule, including an estimate of the 
        classes of small entities which will be subject to the 
        requirement and the type of professional skills 
        necessary for preparation of the report or record;
          (6) a detailed 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; [and]
          (6)   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.
          (8) a detailed description of any disproportionate 
        economic impact on small entities or a specific class 
        of small entities.
  [(b) The agency shall make copies of the final regulatory 
flexibility analysis available to members of the public and 
shall publish in the Federal Register such analysis or a 
summary thereof.]
  (b) The agency shall make copies of the final regulatory 
flexibility analysis available to the public, including 
placement of the entire analysis on the website of the agency, 
and shall publish in the Federal Register the final regulatory 
flexibility analysis, or a summary thereof which includes the 
telephone number, mailing address, and link to the website 
where the complete analysis may be obtained.

Sec. 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.]
  (a) A Federal agency shall be treated as satisfying any 
requirement regarding the content of a regulatory flexibility 
agenda or regulatory flexibility analysis under section 602, 
603, or 604 if the Federal agency provides in the agenda or 
analysis a cross-reference to the specific portion of another 
agenda or analysis which is required by any other law and which 
satisfies the requirement.
  (b) Sections 603 and 604 of this title shall not apply to any 
proposed or final rule if the head of 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 
of the 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.] detailed 
statement providing the factual and legal basis for such 
certification. The detailed statement shall include an economic 
assessment or a summary thereof that is sufficiently detailed 
to support the certification of the agency. 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 related rules as one rule for the 
purposes of sections 602, 603, 604 and 610 of this title.

           *       *       *       *       *       *       *


[Sec. 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 of a proposed rule or 
alternatives to the proposed rule, or more general descriptive 
statements if quantification is not practicable or reliable.]

Sec. 607. Quantification requirements

  In complying with sections 603 and 604, an agency shall 
provide--
          (1) a quantifiable or numerical description of the 
        effects of--
                  (A) the proposed or final rule; and
                  (B) alternatives to the proposed or final 
                rule; or
          (2) a more general descriptive statement and a 
        detailed statement explaining why quantification is not 
        practicable or reliable.

           *       *       *       *       *       *       *


                         XVIII. MINORITY VIEWS

    Under the Regulatory Flexibility Act (RFA), if an agency 
determines that a proposed rule would have a significant 
economic impact on a substantial number of small entities, 
(SEISNSE), then it must, to the extent practicable, determine 
the economic impact the rule would have on small businesses and 
consider alternatives to accomplish the objectives without 
unduly burdening the small entities. The economic analysis 
consists of an initial regulatory flexibility (IRFA) and a 
final regulatory flexibility analysis (FRFA), which are 
published at the proposed and final rule stages, respectively.
    The ``Enhanced Regulatory Flexibility Assessment Act'' 
would require agencies to include more analytical and 
procedural requirements in the IRFA and FRFA. First, the 
addition of an estimate of the cumulative impact to the IRFA 
would require agencies to look not just at the rule but look at 
it in the context of all rules, as well as the past, present 
and future costs. This requirement is time-consuming for 
agencies to do and would slow the rule-making process down 
considerably. Under current law, agencies have not been 
required to complete this analysis, so the information is not 
presently available. An estimate of the cumulative impact would 
also require an economic assessment justifying certification 
for IRFAs. Congress has never explicitly required cost-benefit 
analyses for every proposed rule. Moreover, agencies have 
limited resources to conduct this type of analysis.
    Second, these new additional analytical and procedural 
requirements included in the FRFA would be subject to judicial 
review, meaning they could be used as a basis for those who 
don't like the rule to attempt to overturn it. Additionally, it 
is unclear why the bill asks for a ``legal basis'' in addition 
to a factual basis. The legal basis is already established in 
section 605 (permitting such certifications).
    Third, the bill requires the agency to provide a 
quantitative or numerical description of the effects of the 
proposed rule in the IRFA and FRFA. This tightens up the 
current 607 requirement and reduces the amount of flexibility 
agencies have in providing a general description statement if 
the quantification is not practicable or reliable. This new 
provision would require agencies to provide a justification for 
the rule, and the justification for the FRFA would be 
judicially reviewable.
    Agencies must consider the impact of rulemaking on small 
entities, and the Office Advocacy monitors their compliance 
with the RFA. These additional requirements are unnecessary, 
burdensome to agencies, delay the implementation of rules that 
benefit small businesses and Americans, add limited value to 
small businesses, and require more agency resources, without 
improving the rule-making process.
    It is important to note, that agencies are carrying out the 
laws that Congress passed, and agencies have to operate within 
the guidelines to improve public participation, respond to 
comments, ensure benefits justify the costs, and follow the 
procedural requirements of the APA and RFA.
    We have learned from Committee hearings that smart, well-
crafted regulations can spur innovation and the development of 
new technologies that provide new opportunities for 
entrepreneurs.
    This bill gets stuck on the message that regulations hinder 
the growth of small businesses, rather than look to the future 
and understand that regulations can drive innovation, grow the 
economy, and protect the environment, labor, and consumer 
safety.

                                        Nydia M. Velazquez,
                                                    Ranking Member.