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Small Business Regulatory Enforcement Fairness Act

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The Small Business Regulatory Enforcement Fairness Act (SBREFA) is a federal law passed in 1996 providing for greater participation of small businesses in the federal regulatory process. It amended and expanded the Regulatory Flexibility Act (RFA) of 1980, which required federal agencies to consider the effects of regulation on small entities such as small businesses, nonprofit organizations, and local governments. The SBREFA permitted judicial review of alleged agency violations of the RFA. It also established requirements for federal agencies to provide small businesses with compliance assistance and opportunities for input in the regulatory process.[1][2]

Background

See also: Regulatory Flexibility Act

The SBREFA was signed into law by President Bill Clinton on March 29, 1996. It was part of the Contract with America Advancement Act of 1996, legislation that also included the Congressional Review Act.[3][4][5] The SBREFA amended the Regulatory Flexibility Act (RFA) of 1980, which had established requirements for federal agencies to consider the effects of regulation on small entities such as small businesses, nonprofit organizations, and local governments.[6]

According to Inc. magazine, "by the early 1990s there was a growing clamor in the small business community and Congress for an amended RFA." In 1993, President Bill Clinton's Executive Order 12866 directed agencies to adhere to the RFA and its principles.[2] The SBREFA amended and expanded the requirements of the RFA, which was later amended again by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and the 2010 Small Business Jobs Act.[6]

Provisions

Judicial review of RFA compliance

The SBREFA guaranteed judicial review for small entities that believe an agency violated the RFA. The U.S. Small Business Administration (SBA) administers and monitors agency compliance with both the RFA and the SBREFA. According to a 1996 summary of the SBREFA provided by the SBA:[1]

“ Many agencies have failed to comply with the RFA over the past 16 years, and small businesses found little recourse in the courts due to the absence of any enforcement mechanism. The Small Business Regulatory Enforcement Fairness Act corrects that by permitting judicial review of agencies' compliance with the Regulatory Flexibility Act.


Whenever a small business is adversely affected or aggrieved by an agency rulemaking for failure to comply with the RFA, the small business may seek review of the rule in court. The RFA now also applies to previously exempt interpretative rulemakings promulgated by the Internal Revenue Service that have information collection requirements.[7]

”
—U.S. Small Business Administration, "Summary of SBREFA" (1996)[1]


The SBREFA also enhanced the authority of the SBA Office of Advocacy to file amicus curiae briefs in court proceedings dealing with alleged agency violations of the RFA. According to the SBA, "the following issues are subject to judicial review under the SBREFA:"[1]

“
  • the final regulatory flexibility analysis including the agency's efforts to evaluate alternative regulatory approaches and reasons for rejecting or accepting them;
  • the agency's effort to collect comments from small entities through a variety of mechanisms;
  • the agency's decision to certify that a rule will not have a significant impact on a substantial number of small entities, and the factual basis for the certification;
  • the agency's compliance with a requirement for periodic reviews at the 10-year anniversary of every rule or the enactment of the 1980 law, which ever is first.[7]
 ”
—U.S. Small Business Administration, "Summary of SBREFA" (1996)[1]

Compliance assistance for small businesses

The SBREFA established requirements for federal agencies to publish regulatory compliance guides for all rules with a significant impact on small businesses. According to the SBA, "these guides must explain in plain language how the firms can comply with the regulations. If a small business is cited for a violation of a regulation, the court review may include the content of the small business compliance guide in assessing the reasonableness of the proposed penalty." Additionally, the act directed agencies to establish systems for addressing small business compliance inquiries. According to the SBA, "any guidance provided by an agency will be considered as evidence of the reasonableness of proposed penalties, fines or damages assessed against a small entity."[1]

Small business responses to regulatory enforcement actions

The SBREFA established a process for small businesses to register complaints about regulatory enforcement actions with the SBA. Complaints can be registered with the SBA ombudsman or a regional Small Business Regulatory Fairness Board. The position of ombudsman and the regional boards were created by the SBREFA. The act also required federal agencies to establish policies providing for the reduction or waiver of civil penalties assessed against small businesses for violating statutory or regulatory requirements.[1]

Finally, the SBREFA expanded provisions of the Equal Access to Justice Act of 1980 allowing small businesses to recover attorney fees and other expenses resulting from administrative or judicial proceedings with the government. Fees may be recovered if the government's demands in a case are found to be unreasonable when compared with the actual outcome of the litigation.[1]

Periodic review of existing rules

See also: Retrospective regulatory review

The SBREFA added additional periodic review requirements to the RFA.[2] The RFA, as amended by the SBREFA, includes a requirement for federal agencies to "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."[6]

Additional requirements for covered agencies

The RFA and SBREFA impose additional reporting and review requirements on what they refer to as a covered agency, a term which includes the following:[6]

According to a summary of the requirements for covered agencies from the Environmental Protection Agency:[8]

“ The purpose of the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), is to fit regulatory requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to the regulation. The RFA requires that agencies determine, to the extent feasible, the rule's economic impact on small entities, explore regulatory options for reducing any significant economic impact on a substantial number of such entities, and explain their ultimate choice of regulatory approach. The Agency refers to the RFA as amended by SBREFA simply as the RFA.


Unless the Agency certifies that a rule does not have a Significant Economic Impact on a Substantial Number Of Small Entities (SISNOSE), RFA requires a formal analysis of the potential adverse economic impacts on small entities, completion of a Small Business Advocacy Review Panel (proposed rule stage), preparation of a Small Entity Compliance Guide (final rule stage), and Agency review of the rule within 10 years of promulgation. Agency compliance with many of the RFA requirements is judicially reviewable.[7]

”
—Environmental Protection Agency[8]


*Note: The Consumer Financial Protection Bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and added to the definition of covered agency for the purposes of the RFA and SBREFA.[9][10]

See also

External links

Footnotes

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 U.S. Small Business Administration, "Summary of SBREFA," accessed February 20, 2018
  2. ↑ 2.0 2.1 2.2 Inc., "Regulatory Flexibility Act," accessed September 11, 2017
  3. ↑ U.S. Government Publishing Office, "Public Law 104–121—Mar. 29, 1996," accessed February 20, 2018
  4. ↑ U.S. Small Business Administration, "SBREFA Legislative History," accessed February 20, 2018
  5. ↑ Congress.gov, "H.R.3136 - Contract with America Advancement Act of 1996," accessed February 20, 2018
  6. ↑ 6.0 6.1 6.2 6.3 Small Business Administration, "The Regulatory Flexibility Act," accessed September 11, 2017
  7. ↑ 7.0 7.1 7.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
  8. ↑ 8.0 8.1 Environmental Protection Agency, "Summary of the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act," last updated October 17, 2016
  9. ↑ Legal Information Institute, "5 U.S. Code § 609 - Procedures for gathering comments," accessed February 21, 2018
  10. ↑ U.S. Government Publishing Office, "Public Law 111-203 - Dodd-Frank Wall Street Reform and Consumer Protection Act," accessed February 21, 2018
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