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SBA Executive
Order Training
SBA Executive
Order Training
Complying With the Complying With the Regulatory Flexibility Act Regulatory Flexibility Act
Complying With the Complying With the Regulatory Flexibility Act Regulatory Flexibility Act
A presentation of the Office of Advocacy, U.S. Small Business AdministrationPursuant to Executive Order 13272
SBA Executive Order Training2
Welcome!
Who are we? Office of Advocacy, SBA
Deputy Chief Counsel: Claudia Rayford [email protected]
Why are we here? Executive Order 13272 requires Advocacy to
provide training to agencies on compliance with the RFA
Advocacy wants to help you improve your RFA compliance
SBA Executive Order Training3
Session Objectives
Upon completion of this module, participants willbe able to: Determine if the Regulatory Flexibility Act (RFA) applies to a
rule Explain what a “significant economic impact” and
“substantial number” are Create an adequate and specific, fact-based certification for a
regulation Identify a missing or incorrect aspect of an Initial Regulatory
Flexibility Analysis (IRFA) and address its deficiencies Identify a missing or incorrect aspect of a Final Regulatory
Flexibility Analysis (FRFA) and address its deficiencies
SBA Executive Order Training4
Session Schedule
1. RFA Compliance Strategy and Process :15
2. Applicability :10
3. Threshold Analysis and Certification :20
4. Exercise: Certification :30
--Break-- :10
5. Initial Regulatory Flexibility Analysis (IRFA) :15
6. Exercise: IRFA :30
7. Final Regulatory Flexibility Analysis (FRFA) :158. Exercise: FRFA :309. Key Points Review, Q&A :05
3 hours
SBA Executive Order Training5
RFA Compliance is beneficial!
To you… Minimizes legal problems and challenges Avoids delays due to challenges Improves public and congressional support Improves compliance with the regulation
To small business… Provides a more level playing field Supports the largest and most vital
segment of the American economy!
SBA Executive Order Training6
RFA Compliance is necessary!
Congressional interest Enabling legislation in 1980 and 1996 Ongoing committee and budgetary oversight
Court intervention Clear court precedents on RFA requirements and agencies’
compliance Advocacy has Amicus status in federal courts
White House initiativesExecutive Orders: 12866, 13272, 13563, 13579, and 13610 OIRA works closely with Advocacy on RFA compliance
issues
SBA Executive Order Training7
RFA Compliance is easier… if you start early!
Develop your regulations with an eye to small entity impact
Less rework due to impacts discovered later Improves project planning, such as scheduling
for public comments and outreach activities
Use Advocacy as a resource May have ideas on a more effective way Will point you to valuable resources
SBA Executive Order Training8
RFA Compliance
There are 4 key RFA-related questions to answer:
Threshold Analysis: Will there be a significant economic impact on a substantial number of small entities? If yes, will you so certify?
The IRFA: What is the rule’s potential economic impact on small entities? What are the significant alternatives?
The FRFA: What has been done to minimize the adverse economic impact of the rule on small entities?
Applicability: Does the RFA apply? 1
2
3
4
SBA Executive Order Training9
RFA Compliance Overview
Threshold (Preliminary)
Analysis
Initial Regulatory Flexibility AnalysisFinal
Regulatory Flexibility Analysis
= check with Advocacy
Yes
AdequateFRFA?
PublishFRFA with
final regulation
Adequate IRFA?
SignificantEconomic Impact…?
Certification“No significant
impact…”
No
Does RFA
apply? Yes
Begin Rule
Development
Yes
No
NoNo
Yes
Yes
NotifyAdvocacy;
Publish in F.R.
Send copy toAdvocacy
SBA Executive Order Training10
Question One: Applicability
Is there good cause to bypass notice and comment under the APA?• “Impracticable, unnecessary, or contrary to the public interest”• Reasons must be included in rule
Is the regulation subject to the APA?• No, if military or foreign affairs matter• No, if agency management matter, e.g. personnel, public property, grants, loans, benefits, or contracts
Is this an exempt interpretative rule?• Restatement of statute• IRS interpretative rules requiring small entities to collect information are NOT exempt
General Principle of Applicability: If notice and comment are required by the Administrative Procedure Act (APA) or some other law, then the RFA applies.
Does the RFA apply to the rule?
Applicability?
SBA Executive Order Training11
Question Two: Threshold (Preliminary) Analysis
“Will the rule have a significant economic impact on
a substantial number of small entities?”
To answer, threshold analysis should determine:
1.Who are the small entities, if any, that will be regulated by the rule?
2.What are the compliance costs?
SBA Executive Order Training12
Question Two: Threshold (Preliminary) Analysis, continued
3. Do these costs represent a significant
economic impact? Why or why not?
4. How many small entities experience a
significant economic impact?
5. Is that number substantial? Why or why not?
SBA Executive Order Training13
Certification
If the threshold analysis indicates there will not be a significant economic impact on a substantial number of small entities, the head of your agency may so certify.
SBA Executive Order Training14
Certification
Is your reasoning clear?• Are assumptions explicit and transparent?• Did you justify any judgments such as “significant” and “substantial?”
What is a small entity?• Did you use the SBA size standard? • If you used an alternate size standard for RFA analysis, did you consult with Advocacy?
Does the statement directly correspond to RFA language?Your certification should state and demonstrate that the regulation will result in: “no significant economic impact on a substantial number of small entities.”
Is the certification supported bya factual basis?• Identify number of small entities regulated• Justify and qualify estimates or assumptions• Use and cite sources, e.g. SBA economic research, census figures, agency registration data, etc.
Certification
Follow these guidelines to be sure your RFA Certification is valid:
SBA Executive Order Training15
Exercise 1: Certification
Your role: Imagine yourself as a small business advocate Review Certification statements sent to you by an agency
Your mission: Review statements for facts and details Respond to the questions Share answers
Your instructors will be timekeepers and coaches
SBA Executive Order Training16
Exercise 1: Debrief
Review each team’s insights. What problems did you identify? What resolutions did you suggest? How could this problem be avoided?
SBA Executive Order Training17
Question Three: IRFA
What significant alternatives might exist?
What small entities are regulated?
What are the reasons for the rule?
What are the agency objectives?
What is the economic impact?
What is the potential economic impact of the rule on small entities?
InitialRegulatoryFlexibilityAnalysis
• Are there multiple ways to achieve the statutory objectives?
• Perform outreach activities to identify other alternatives
• Compare compliance costs to revenue, profit, other financial/ nonfinancial characteristics
• Calculate disproportionality
• Often taken from Preamble of the rule• Explains the need for the rule in terms
the public can understand
• Explains the legal basis• The rule must achieve
statutory requirements
• Identify and describe diversity• Estimate numbers
SBA Executive Order Training18
IRFA
What are the reasons for the rule? Often taken from the preamble of the rule
Explains the need for the rule in plain language to facilitate public understanding
Describe the problem the rule is designed to solve Provide reference to any technical documentation
SBA Executive Order Training19
IRFA
What are agency objectives? Explains the legal basis for the rule
States the statutory requirements the rule must meet, if any
State what measures the rule proscribes for addressing the identified problem
SBA Executive Order Training20
IRFA
What small entities are regulated? Identify and describe the diversity of regulated small
entities
Estimate the number of affected small entities in each identified category
Use the best data available Identify all affected small entity groups
SBA Executive Order Training21
IRFA
What is the economic impact? Calculate compliance costs to affected small
entities
Include capital, operating, and paperwork costs as well as losses to revenue
Compare costs to revenue and/or profits Use all available data to estimate the per small entity
impacts of the rule Relate to revenue and/or profit measures
SBA Executive Order Training22
IRFA
What alternatives might exist? Search for alternative ways to achieve regulatory
standards while mitigating small business impacts
Perform outreach to affected small entities to help identify alternatives
Identify and analyze significant alternatives that minimize small entity impacts
SBA Executive Order Training23
Required elements of an IRFA
1. Description of reasons why action is being considered
2. Objectives of, and legal basis for, rule
3. Description and estimated number of small entities regulated
4. Description and estimate of compliance requirements including differences in cost, if any, for different groups of small entities
5. Identification of duplication, overlap, and conflict with other rules and regulations
6. A description of significant alternatives to the rule
E.O. 13272 requires that IRFAs be submitted to Advocacy
SBA Executive Order Training24
Hints for IRFA development
Use internal agency resources
Use Advocacy as a Resource Advocacy wants you to succeed! Contact Advocacy early for suggestions and resources
Provide Greater Transparency State your assumptions Explain your estimating process Identify sources of information (e.g., industry estimates, agency
and/or census data) List and describe compliance requirements Use simple, clear language
SBA Executive Order Training25
Exercise 2: IRFA
Your role: Imagine yourself as a small business advocate Agency has been developing an IRFA You have received the draft IRFA for comment
Your mission: Review the draft IRFA Respond to the questions Share answers
Your instructors will be timekeepers and coaches
SBA Executive Order Training26
Exercise 2: Debrief
Review each team’s insights. What problems did you identify? What resolutions did you suggest? How could this problem be avoided?
SBA Executive Order Training27
Question Four: FRFA
Who are the regulated small entities?• Describe• Estimate
What are the reasons for and objectives of the rule?May reference other parts of the rule
FinalRegulatoryFlexibilityAnalysis
What significant issues were raised by public comments?• Summarize significant issues and state responses to each• State changes to rule, if any, that resulted from public comments• Give Advocacy comments appropriate consideration
What are the compliance requirements and costs?• Describe all compliance requirements, such
as reporting and record-keeping• Describe and estimate requirements and costs, if any, by type and size of small entity
What steps have been taken to minimize the economic impact on small entities?• Describe steps taken to minimize impact• Include statement of factual, policy, and legal reasons for selecting alternative adopted, and why others were rejected
What has been done to minimize adverse economic impact on small entities?
SBA Executive Order Training28
Required elements of a FRFA
1. Statement of need for, and objectives of, the rule
2. Summary of significant issues raised by public comments, summary of assessment of such issues, and statement of any changes in rule as result of such comments
3. Description and estimate of number of small entities or explanation of why no such estimate is available
4. Description of compliance requirements, including estimate of small entities regulated by rule
5. Description of steps taken to minimize significant adverse economic impact on small entities
RFA requires agency to make copies of FRFA available to public and publish FRFA or its summary in the Federal Register
SBA Executive Order Training29
Hints for FRFA development
Use internal agency resources
Use Advocacy as a Resource Advocacy wants you to succeed! Contact Advocacy early for suggestions and resources
Provide Greater Transparency Use simple, clear language State and respond to significant issues raised List and describe significant alternatives List and describe compliance requirements Explain why one alternative adopted and others rejected
SBA Executive Order Training30
Exercise 3: FRFA
Your role: Imagine yourself as a small business advocate Agency has been developing a FRFA You have received a draft FRFA for your comments
Your mission: Review the draft FRFA Answer the four questions Share answers
Your instructors will be timekeepers and coaches
SBA Executive Order Training31
Exercise 3: Debrief
Review each team’s insights. What problems did you identify? What resolutions did you suggest? How could this problem be avoided?
SBA Executive Order Training32
Key Points
Involve Advocacy early and often! Reach out to small entities for input Consider RFA compliance from the beginning
and follow processes step by step Answer 4 key questions:
1. Does the RFA apply to this regulation?2. Will the rule have a “significant economic impact on a
substantial number of small entities?” 3. What is the potential economic impact of the rule on small
entities?4. What has been done to minimize the adverse economic
impact on small entities?
Ensure conclusions are factual and objective
SBA Executive Order Training33
THANK YOU!
Q&ACourse
Evaluation