Regulatory Reform

Implementation of the Small Business Advocacy Review Panel Requirements Gao ID: GGD-98-36 March 18, 1998

Small businesses play a significant role in the nation's economy, accounting for about half of the gross domestic product and 53 percent of private industry's workforce. In addition, small government's comprise 97 percent of all the local governments in the United States. Although these two groups can be disproportionately affected by federal regulatory requirements, federal agencies may not adequately weigh the impact of those requirements on small entities when they are implemented. As a result, Congress passed the Regulatory Flexibility Act requiring federal agencies to analyze the effects of proposed rules on small entities. Last year, Congress passed legislation to strengthen the act's protections for small entities. The Small Business Regulatory Enforcement Fairness Act requires that, before publishing a notice of proposed rulemaking that may have a significant economic impact on many small entities, the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA) convene a small business advocacy review panel for the draft rule. This report (1) discusses whether EPA and OSHA had applied the advocacy review panel requirements to all rules that they proposed between June 1996 and June 1997 that may have a significant economic impact on many small entities; (2) determines whether the EPA and OSHA panels, the regulatory agencies themselves, and the Small Business Administration's Chief Counsel for Advocacy followed the statutes' procedural requirements for panels convened between June 1996 and November 1997 and whether differences existed among the panels in how the statute's requirements were implemented; (3) identifies the changes that EPA and OSHA made to notices of proposed rulemaking because of the panels' recommendations; and (4) discusses suggestions by agency officials and small entity representatives on how to improve the advocacy review panel process. GAO summarized this report in testimony before Congress; see: Regulatory Flexibility Act: Implementation of the Small Business Advocacy Review Panel Requirements, by L. Nye Stevens, Director of Federal Management and Workforce Issues, before the Subcommittees on Government Programs and Oversight and Regulatory Reform and Paperwork Reduction, House Committee on Small Business. GAO/T-GGD-98-75, Mar. 18 (13 pages).

GAO noted that: (1) during the first year of the SBREFA advocacy review panel requirements' implementation, OSHA convened a panel for one draft rule and published two other proposed rules for which panels were not held; (2) the Small Business Administration's (SBA) Chief Counsel for Advocacy agreed with OSHA's certification that neither of these two proposed rules required an advocacy review panel; (3) as of November 1, 1997, EPA had convened advocacy review panels for four draft rules; (4) EPA published 17 other proposed rules during the first year of the panel requirements that were reviewed by the Office of Information and Regulatory Affairs and for which panels were not held because EPA certified that the proposed rules would not have a significant economic impact on a substantial number of small entities; (5) the Chief Counsel said EPA should have convened panels for 2 of these 17 proposed rules; (6) it is unclear whether EPA should have convened panels for these rules because there are no criteria for determining whether a draft rule will have an impact on small entities; (7) EPA and OSHA panels, the regulatory agencies themselves, and the SBA Chief Counsel for Advocacy generally followed SBREFA's advocacy review panel procedural requirements in the five panels that had been convened as of November 1, 1997; (8) however, the panels did not meet some of the specific deadlines that SBREFA established; (9) there were some differences in how the five panels were conducted; (10) some of these differences appeared to occur because the panel process is new and evolving; however, the panels have made adjustments to their procedures as they have gained experience; (11) the five panels' recommendations to the regulatory agency heads focused on the agencies' consideration of additional regulatory alternatives and clarification of what the draft rules would require; (12) as of November 1, 1997, EPA and OSHA each had published one notice of proposed rulemaking for which they had convened advocacy review panels; (13) the agencies primarily responded to the panels' recommendations in the preambles of those notices, soliciting public comments on issues that the panels had recommended; and (14) many of the small entity representatives that GAO interviewed suggested ways to improve the panel process.


Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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