S. 5178 — Small Business Regulatory Flexibility Improvements Act

This section expands the Regulatory Flexibility Act by broadening the definition of "rule," adding indirect economic effects (including compliance costs and revenue impacts) on small entities to the definition of economic impact, and requiring initial and final regulatory flexibility analyses to consider alternatives that maximize beneficial significant economic impacts on small entities. It also adds Tribal organizations (as defined in 25 U.S.C. 5304(l)) to the entities covered, applies the Act to revisions and amendments of Forest Service and Bureau of Land Management land management plans, and includes certain IRS interpretive rules and recordkeeping requirements.

This section expands each agency's semiannual regulatory flexibility agenda to include a brief description of the North American Industrial Classification System sector primarily affected by any rule expected to have a significant economic impact on a substantial number of small entities. It requires agencies to post a plain language summary of each agenda on their websites within 3 business days of Federal Register publication and directs the Small Business Administration Office of Advocacy to compile and post the summaries on the SBA website within the same period.

This section expands the required contents of initial and final regulatory flexibility analyses to include estimates of cumulative economic impacts on small entities, descriptions of any disproportionate impacts, and assessments of effects on access to credit. It also requires detailed factual and legal statements supporting agency certifications of no significant impact on small entities, mandates quantifiable descriptions of rule effects where practicable, and permits cross-references to other required analyses.

This section repeals the authority of agency heads to waive or delay regulatory flexibility analyses under sections 603 and 604 during emergencies. It instead requires the Chief Counsel for Advocacy of the Small Business Administration to issue rules governing agency compliance with the Regulatory Flexibility Act within 270 days after enactment, prohibits agencies from supplementing those rules without prior consultation with the Chief Counsel, authorizes the Chief Counsel to intervene in agency adjudications (except those imposing fines or penalties) to address impacts on small entities, and permits the Chief Counsel to file comments on any agency notice requesting comment.

This section expands the small entity review panel process to proposed rules with an annual economic effect of $100 million or more, major cost or price increases, significant adverse effects on competition or innovation, or a significant economic impact on a substantial number of small entities. It requires agencies to provide the Chief Counsel for Advocacy of the Small Business Administration with all draft materials and impact data, mandates panels including Small Business Administration and Office of Management and Budget representatives to issue reports within 60 days assessing effects on energy costs and startup costs plus alternatives, incorporates those reports into the rulemaking record with agency explanations of responsive actions, and allows small entities to obtain the reports and materials within 10 business days.

This section requires each agency to publish within 180 days a plan for periodic review of rules that have a significant economic impact on a substantial number of small entities, with all existing rules reviewed within 10 years (extendable once by up to 2 years). It mandates outreach to small businesses, including those owned and controlled by women, veterans, and socially and economically disadvantaged individuals; annual reports to Congress, the SBA Chief Counsel for Advocacy, and OIRA; consideration of seven enumerated factors when amending or rescinding rules; and annual Federal Register publication of rules scheduled for review with solicitation of public comments.

This section makes judicial review of agency compliance with the Regulatory Flexibility Act available upon publication of the final rule rather than final agency action. It also authorizes the Chief Counsel for Advocacy to intervene in such proceedings on compliance with requirements for initial and final regulatory flexibility analyses, periodic review of rules, and related provisions.

This section grants the courts of appeals exclusive jurisdiction over all final rules issued under section 608(a) of title 5. It authorizes the Office of Advocacy of the Small Business Administration to participate as a party in those proceedings and expands existing authority to intervene and comment on agency compliance with the Regulatory Flexibility Act to cover chapters 5 and 7 of title 5.

This section authorizes the Chief Counsel for Advocacy to specify small business size standards for purposes of any Act other than the Small Business Act or the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.), while the Administrator retains that authority for those two statutes. It requires approval by the Chief Counsel for Advocacy of size standards proposed by other federal agencies and permits the Chief Counsel to be joined as a party in judicial review of standards the Chief Counsel approves.

This section adds capitalized headings to the definitions of agency, small business, small governmental jurisdiction, and small entity in 5 USC 601. It revises the heading of section 605 to “Incorporations by reference and certifications” and updates the table of sections for chapter 6. It also removes references to covered agencies from the initial regulatory flexibility analysis requirements in sections 603 and 604, applying those requirements uniformly to all agencies.

This section requires agencies to prepare compliance guides for rules affecting small entities, written in plain language likely to be understood by those entities. Agencies may prepare separate guides for groups of similarly affected small entities, cooperate with associations of small entities to distribute the guides, and solicit input from affected small entities or their associations when developing the guides. An agency may prepare guides for a single rule or a group of related rules.

This section directs the Comptroller General to complete and publish a study within 90 days of enactment examining whether the Chief Counsel for Advocacy of the Small Business Administration has the capacity and resources to carry out duties under the Act and its amendments.

This section prohibits federal agencies from imposing civil fines on small businesses for first-time violations of information collection requirements under the Paperwork Reduction Act. It defines a first-time violation as one with no similar violation of the same agency in the prior five years and allows fines only if the violation risks serious public harm, impedes criminal detection, involves tax laws, remains uncorrected after six months, or endangers public health or safety (with a 24-hour correction window permitted in some health or safety cases).