HR1163-119

What This Bill Does

The Prove It Act changes how federal agencies justify rules that they say will not significantly affect small entities. It requires initial regulatory flexibility analyses to consider reasonably foreseeable indirect costs on small businesses, including firms that buy from, sell to, or otherwise interact with directly regulated entities. It gives any small entity, group of small entities, or organization representing small entities a petition process at the SBA Office of Advocacy to challenge an agency certification that a proposed rule will not have a significant economic impact on a substantial number of small entities. The Chief Counsel for Advocacy must make a prima facie decision within 10 days and, if review is warranted, hold a meeting with the petitioner, the rulemaking agency, and OIRA. If the Chief Counsel finds the rule would significantly affect small entities, the agency must perform initial and final regulatory flexibility analyses. If the agency fails to assist in the full review, the final rule does not apply to small entities. The bill also requires agencies to post guidance and related documents on regulations.gov or a similar website for rules likely to significantly affect small entities, allows small entities to comment on that guidance, strengthens 10-year periodic review of rules, and says rules that miss required section 610 review cease to be effective until the agency publishes notice, takes comments, and completes review.

Who Benefits and How

Small businesses benefit because agencies must account for indirect compliance costs that flow through suppliers, customers, and related government requirements instead of ignoring them. Small business trade associations benefit because they can petition the SBA Chief Counsel for Advocacy to review agency certifications that no regulatory flexibility analysis is needed. The SBA Office of Advocacy benefits from a formal role in challenging weak agency certifications and forcing review meetings with agencies and OIRA. Small entities affected by older rules benefit because agencies must consider indirect costs in 10-year reviews and overdue reviews can make a rule cease to be effective. Public commenters benefit because guidance documents for major small-entity rules must be posted online with an opportunity for feedback.

Who Bears the Burden and How

Federal agencies must perform more economic analysis, publish certifications within 10 days, participate in SBA Advocacy review meetings, post guidance documents, accept comments, and complete 10-year rule reviews on time. OIRA must participate in full-review meetings. Agencies that miss periodic review deadlines must publish Federal Register notices that a rule has ceased to be effective and then justify reinstatement within 180 days after deciding reinstatement is warranted. Regulated-program offices bear implementation work without additional authorized appropriations. Agencies that do not assist the Chief Counsel face the penalty that their final rule will not apply to small entities.

Key Provisions

• Requires agencies to include reasonably foreseeable indirect costs on small entities in initial regulatory flexibility analyses.
• Creates a petition process for small entities and small business organizations to challenge agency no-significant-impact certifications.
• Directs the SBA Chief Counsel for Advocacy to decide within 10 days whether a petition merits full review.
• Requires full-review meetings among the Chief Counsel, petitioner, rulemaking agency, and OIRA when review is warranted.
• Blocks application of a final rule to small entities if the agency fails to assist in the Chief Counsel's full review.
• Requires online publication and comment opportunities for guidance documents tied to rules significantly affecting small entities.
• Provides that rules missing required 10-year section 610 review cease to be effective until review and reinstatement steps are completed.