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Testimony: 

Before the SubCommittee on Commercial and Administrative Law, Committee 
on the Judiciary, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 11:30 a.m. EDT: 

Thursday, July 20, 2006: 

Regulatory Flexibility Act: 

Congress Should Revisit and Clarify Elements of the Act to Improve Its 
Effectiveness: 

Statement of J. Christopher Mihm: 
Managing Director, Strategic Issues: 

GAO-06-998T: 

GAO Highlights: 

Highlights of GAO-06-998T, a testimony before the Subcommittee on 
Commercial and Administrative Law, Committee on the Judiciary, House of 
Representatives 

Why GAO Did This Study: 

Federal regulation is one of the basic tools of government used to 
implement public policy. In 1980, the Regulatory Flexibility Act (RFA) 
was enacted in response to concerns about the effect that regulations 
can have on small entities, including small businesses, small 
governmental jurisdictions, and certain small not-for-profit 
organizations. Congress amended RFA in 1996, and the President issued 
Executive Order 13272 in 2002, to strengthen requirements for agencies 
to consider the impact of their proposed rules on small entities. 
However, concerns about the regulatory burden on small entities 
persist, prompting legislative proposals such as H.R. 682, the 
Regulatory Flexibility Improvements Act, which would amend RFA. 

At the request of Congress, GAO has prepared many reports and 
testimonies reviewing the implementation of RFA and related policies. 
On the basis of that body of work, this testimony (1) provides an 
overview of the basic purpose and requirements of RFA, (2) highlights 
the main impediments to the Act’s implementation that GAO’s reports 
identified, and (3) suggests elements of RFA that Congress might 
consider amending to improve the effectiveness of the Act. GAO’s prior 
reports and testimonies contain recommendations to improve the 
implementation of RFA and related regulatory process requirements. 

What GAO Found: 

RFA established a principle that agencies should endeavor to fit their 
regulatory requirements to the scale of small entities. Among other 
things, RFA requires regulatory agencies to assess the impact of 
proposed rules on small entities, consider regulatory alternatives that 
will accomplish the agencies’ objectives while minimizing the impacts 
on small entities, and ensure that small entities have an opportunity 
to participate in the rulemaking process. Further, RFA requires 
agencies to review existing rules within 10 years of promulgation that 
have or will have a significant impact on small entities to determine 
whether they should be continued without change or amended or rescinded 
to minimize their impact on small entities. RFA also requires the Chief 
Counsel for Advocacy of the Small Business Administration (Office of 
Advocacy) to monitor agencies’ compliance. In response to Executive 
Order 13272, the Office of Advocacy published guidance in 2003 on how 
to comply with RFA. 

In response to congressional requests, GAO reviewed agencies’ 
implementation of RFA and related requirements on many occasions, with 
topics ranging from specific statutory provisions to the overall 
implementation of RFA. Generally, GAO found that the Act’s results and 
effectiveness have been mixed; its reports illustrated both the promise 
and the problems associated with RFA. On one hand, RFA and related 
requirements clearly affected how federal agencies regulate and 
produced benefits, such as raising expectations regarding the 
analytical support for proposed rules. However, GAO also found that 
compliance with RFA varied across agencies, within agencies, and over 
time. A recurring finding was that uncertainties about RFA’s 
requirements and key terms, and varying interpretations by federal 
agencies, limited the Act’s application and effectiveness. 

GAO’s past work suggests that Congress might wish to review the 
procedures, definitions, exemptions, and other provisions of RFA to 
determine whether changes are needed to better achieve the purposes 
Congress intended. In particular, GAO’s reports indicate that the full 
promise of RFA may never be realized until Congress revisits and 
clarifies elements of the Act, especially its key terms, or provides an 
agency or office with the clear authority and responsibility to do so. 
Attention should also be paid to the domino effect that an agency’s 
initial determination of whether RFA is applicable to a rulemaking has 
on other statutory requirements, such as preparing compliance guides 
for small entities and periodically reviewing existing regulations. GAO 
also believes that Congress should reexamine not just RFA but how all 
of the various regulatory reform initiatives fit together and influence 
agencies’ regulatory actions. Recent developments, such as the Office 
of Advocacy’s RFA guidance, may help address some of these long-
standing issues and merit continued monitoring by Congress. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-998T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact J. Christopher Mihm at 
(202) 512-6806 or mihmj@gao.gov. 

[End of Section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to contribute to your review of H.R. 682, 
the Regulatory Flexibility Improvements Act, and your continuing 
general agenda to review administrative law, process, and procedure 
issues. In my statement today, I will summarize findings from our past 
body of work on the Regulatory Flexibility Act (RFA),[Footnote 1] which 
H.R. 682 would amend, and related policies. Specifically, I will 
provide an overview of the basic purpose and requirements of RFA, 
highlight the main impediments to the Act's implementation that our 
work identified, and suggest elements of RFA that Congress might 
consider amending to improve the effectiveness of the Act. 

In brief, RFA was enacted in response to concerns about the effect that 
federal regulations can have on small entities. Among other things, RFA 
prompts regulatory agencies to analyze the potential effects of their 
rules on small entities, consider alternatives to reduce the burden of 
those rules, and ensure that small entities have an opportunity to 
participate in the rulemaking process. In response to congressional 
requests, we have reviewed RFA's implementation on many occasions over 
the years. Our reports illustrated both the promise and the problems 
associated with the Act, with a recurring theme being the varying 
interpretations of RFA's requirements by federal agencies. Although 
some progress has been made to address issues we identified, the full 
promise of RFA may never be realized until Congress clarifies key terms 
and definitions in the Act, such as "a substantial number of small 
entities," or provides an agency or office with the clear authority and 
responsibility to do so. It is also important to keep in mind the 
domino effect that an agency's initial determination of whether RFA is 
applicable to a rulemaking has on other statutory requirements, such as 
preparing compliance guides for small entities and periodically 
reviewing existing regulations. 

RFA and Related Requirements Are Intended to Promote Attention to 
Regulations' Effects on Small Entities: 

Federal regulation is one of the basic tools of government. Agencies 
issue thousands of rules and regulations each year to implement 
statutes enacted by Congress. The public policy goals and benefits of 
regulations include, among other things, ensuring that workplaces, air 
travel, foods, and drugs are safe; that the nation's air, water, and 
land are not polluted; and that the appropriate amount of tax is 
collected. The costs of these regulations are estimated to be in the 
hundreds of billions of dollars, and the benefits estimates are much 
higher.[Footnote 2] Given the size and impact of federal regulation, 
Congresses and Presidents have taken a number of actions to refine and 
reform the regulatory process within the past 25 years.[Footnote 3] 

In September 1980, RFA was enacted in response to concerns about the 
effect that federal regulations can have on "small entities," defined 
by the Act as including small businesses, small governmental 
jurisdictions, and certain small not-for-profit organizations. As we 
have previously noted, small businesses are a significant part of the 
nation's economy, and small governments make up the vast majority of 
local governments in the United States.[Footnote 4] However, there have 
been concerns that these small entities may be disproportionately 
affected by federal agencies' regulatory requirements. RFA established 
the principle that agencies should endeavor, consistent with the 
objectives of applicable statutes, to fit regulatory and informational 
requirements to the scale of these small entities. 

RFA requires regulatory agencies--including the independent regulatory 
agencies--to assess the potential impact of their rules on small 
entities. Under RFA, an agency must prepare an initial regulatory 
flexibility analysis at the time a proposed rule is issued unless the 
head of the agency determines that the proposed rule would not have a 
"significant economic impact upon a substantial number of small 
entities."[Footnote 5] Further, agencies must consider alternatives to 
their proposed rules that will accomplish the agencies' objectives 
while minimizing the impacts on small entities. The Act also requires 
agencies to ensure that small entities have an opportunity to 
participate in the rulemaking process and requires the Chief Counsel 
for Advocacy of the Small Business Administration (Office of Advocacy) 
to monitor agencies' compliance. Among other things, RFA also requires 
regulatory agencies to review, within 10 years of promulgation, 
existing rules that have or will have a significant impact on small 
entities to determine whether they should be continued without change 
or amended or rescinded to minimize their impact on small entities. 

Congress amended RFA with the Small Business Regulatory Enforcement 
Fairness Act of 1996 (SBREFA). [Footnote 6] SBREFA made certain agency 
actions under RFA judicially reviewable. Other provisions in SBREFA 
added new requirements. For example, SBREFA requires agencies to 
develop one or more compliance guides for each final rule or group of 
related final rules for which the agency is required to prepare a 
regulatory flexibility analysis, and it requires agencies to provide 
small entities with some form of relief from civil monetary penalties. 
SBREFA also requires the Environmental Protection Agency (EPA) and the 
Occupational Safety and Health Administration to convene advocacy 
review panels before publishing an initial regulatory flexibility 
analysis. 

More recently, in August 2002, President George W. Bush issued 
Executive Order 13272, which requires federal agencies to establish 
written procedures and policies on how they would measure the impact of 
their regulatory proposals on small entities and to vet those policies 
with the Office of Advocacy. The order also requires agencies to notify 
the Office of Advocacy before publishing draft rules expected to have a 
significant small business impact, to consider its written comments on 
proposed rules, and to publish a response with the final rule. The 
order requires the Office of Advocacy to provide notification of the 
requirements of the Act and training to all agencies on how to comply 
with RFA. The Office of Advocacy published guidance on the Act in 2003 
and reported training more than 20 agencies on RFA compliance in fiscal 
year 2005.[Footnote 7] 

GAO Reviews Found that Varying Interpretations of RFA Requirements 
Hampered Effective Implementation of the Act: 

In response to congressional requests, we have reviewed agencies' 
implementation of RFA and related requirements on many occasions over 
the years, with topics ranging from specific statutory provisions to 
the overall implementation of RFA.[Footnote 8] Generally, we found that 
the Act's overall results and effectiveness have been mixed. This is 
not unique to RFA; we found similar results when reviewing other 
regulatory reform initiatives, such as the Unfunded Mandates Reform Act 
of 1995.[Footnote 9] Our past reports illustrated both the promise and 
the problems associated with RFA. RFA and related requirements have 
clearly affected how federal agencies regulate, and we identified 
important benefits of these initiatives, such as increasing attention 
on the potential impacts of rules and raising expectations regarding 
the analytical support for proposed rules. However, a recurring theme 
in our findings was that uncertainties about RFA's requirements and 
varying interpretations of those requirements by federal agencies 
limited the Act's application and effectiveness. 

Some of the topics we reviewed, and our main findings regarding 
impediments to RFA's implementation, are illustrated in the following 
examples: 

* We examined 12 years of annual reports from the Office of Advocacy 
and concluded that the reports indicated variable compliance with RFA 
across agencies, within agencies, and over time--a conclusion that the 
Office of Advocacy also reached in subsequent reports on implementation 
of RFA (on the 20th and 25th anniversaries of RFA's 
enactment).[Footnote 10] We noted that some agencies had been 
repeatedly characterized as satisfying RFA requirements, but other 
agencies were consistently viewed as recalcitrant. Agencies' 
performance also varied over time or varied by offices within the 
agencies. We said that one reason for agencies' lack of compliance with 
RFA requirements was that the Act did not expressly authorize the Small 
Business Administration (SBA) to interpret key provisions and did not 
require SBA to develop criteria for agencies to follow in reviewing 
their rules. 

* We examined RFA implementation with regard to small governments and 
concluded that agencies were not conducting as many regulatory 
flexibility analyses for small governments as they might, largely 
because of weaknesses in the Act.[Footnote 11] Specifically, we found 
that each agency we reviewed had a different interpretation of key RFA 
provisions. We also pointed out that RFA allowed agencies to interpret 
whether their proposed rules affected small governments and did not 
provide sufficiently specific criteria or definitions to guide agencies 
in deciding whether and how to assess the impact of proposed rules on 
small governments. 

* We reviewed implementation of small business advocacy review panel 
requirements under SBREFA and found that the panels that had been 
convened were generally well received.[Footnote 12] However, we also 
said that implementation was hindered--specifically, that there was 
uncertainty over whether panels should have been convened for some 
proposed rules--by the lack of agreed-upon governmentwide criteria as 
to whether a rule has a significant impact. 

* We examined other related requirements regarding agencies' policies 
for the reduction and/or waiver of civil penalties on small entities 
and the publication of small entity compliance guides.[Footnote 13] 
Again, we found that implementation varied across and within agencies, 
with some of the ineffectiveness and inconsistency traceable to 
definitional problems in RFA. All of the agencies' penalty relief 
policies that we reviewed were within the discretion that Congress 
provided, but the policies varied considerably. Some policies covered 
only a portion of agencies' civil penalty enforcement actions, and some 
provided small entities with no greater penalty relief than large 
entities. The agencies varied in how key terms were defined. Similarly, 
we concluded that the requirement for small entity compliance guides 
did not have much of an impact, and its implementation also varied 
across, and sometimes within, agencies. 

* RFA is unique among statutory requirements with general applicability 
in having a provision, under section 610, for the periodic review of 
existing rules. However, it is not clear that this look-back provision 
in RFA has been consistently and effectively implemented. In a series 
of reports on agencies' compliance with section 610, we found that the 
required reviews were not being conducted.[Footnote 14] Meetings with 
agencies to identify why compliance was so limited revealed significant 
differences of opinion regarding key terms in RFA and confusion about 
what was required to determine compliance with RFA. At the request of 
the House Committee on Energy and Commerce, we have begun new work 
examining the subject of regulatory agencies' retrospective reviews of 
their existing regulations, including those undertaken in response to 
Section 610, and will report on the results of this engagement in the 
future. 

We have not yet examined the effect of Executive Order 13272 and the 
Office of Advocacy's subsequent guidance and training for agencies on 
implementing RFA. Therefore, we have not done any evaluations that 
would indicate whether or not those developments are helping to address 
some of our concerns about the effectiveness of RFA. 

Key Terms and Provisions of RFA Should Be Revisited and Clarified: 

While RFA has helped to influence how agencies regulate small entities, 
we believe that the full promise of the Act has not been realized. The 
results from our past work suggest that the Subcommittee might wish to 
review the procedures, definitions, exemptions, and other provisions of 
RFA, and related statutory requirements, to determine whether changes 
are needed to better achieve the purposes Congress intended. The 
central theme of our prior findings and recommendations on RFA has been 
the need to revisit and clarify elements of the Act, particularly its 
key terms. Although more recent developments, such as the Office of 
Advocacy's detailed guidance to agencies on RFA compliance, may help 
address some of these long-standing issues, current legislative 
proposals, such as H.R. 682, make it clear that concerns remain about 
RFA's effectiveness--for example, that agencies are not assessing the 
impacts of their rules or identifying less costly regulatory approaches 
as expected under RFA--and the impact of federal regulations on small 
entities. 

Unclear terms and definitions can affect the applicability and 
effectiveness of regulatory reform requirements. We have frequently 
cited the need to clarify the key terms in RFA, particularly 
"significant economic impact on a substantial number of small 
entities." RFA's requirements do not apply if an agency head certifies 
that a rule will not have a "significant economic impact on a 
substantial number of small entities." However, RFA neither defines 
this key phrase nor places clear responsibility on any party to define 
it consistently across the government. It is therefore not surprising, 
as I mentioned earlier, that we found compliance with RFA varied from 
one agency to another and that agencies had different interpretations 
of RFA's requirements. 

We have recommended several times that Congress provide greater clarity 
concerning the key terms and provisions of RFA and related 
requirements, but to date Congress has not acted on many of these 
recommendations. The questions that remain unresolved on this topic are 
numerous and varied, including: 

* Does Congress believe that the economic impact of a rule should be 
measured in terms of compliance costs as a percentage of businesses' 
annual revenues, the percentage of work hours available to the firms, 
or other metrics? 

* If so, what percentage or other measure would be an appropriate 
definition of "significant?" 

* Should agencies take into account the cumulative impact of their 
rules on small entities, even within a particular program area? 

* Should agencies count the impact of the underlying statutes when 
determining whether their rules have a significant impact? 

* What should be considered a "rule" for purposes of the requirement in 
RFA that agencies review rules with a significant impact within 10 
years of their promulgation? 

* Should agencies review rules that had a significant impact at the 
time they were originally published, or only those that currently have 
that effect? 

* Should agencies conduct regulatory flexibility analyses for rules 
that have a positive economic impact on small entities, or only for 
rules with a negative impact? 

It is worth noting that the Office of Advocacy's 2003 RFA compliance 
guide, while reiterating that RFA does not define certain key terms, 
nevertheless provides some suggestions on the subject. Citing parts of 
RFA's legislative history, the guidance indicates that exact standards 
for such definitions may not be possible or desirable, and that the 
definitions should vary depending on the context of each rule and 
preliminary assessments of the rule's impact. For example, the guidance 
points out that "significance" can be seen as relative to the size of a 
business and its competitors, among other things. However, the guidance 
does identify factors that agencies might want to consider when making 
RFA determinations. In some ways, this mirrors other aspects of RFA, 
such as section 610, where Congress did not explicitly define a 
threshold for an agency to determine whether an existing regulation 
should be maintained, amended, or eliminated but rather identified the 
factors that an agency must consider in its reviews.[Footnote 15] We do 
not yet know whether or to what extent the guidance and associated 
training has helped agencies to clarify some of the long-standing 
confusion about RFA requirements and terms. Additional monitoring of 
RFA compliance may help to answer that question. Congress might also 
want to consider whether the factors that the Office of Advocacy 
suggested to help agencies define key terms and requirements are 
consistent with congressional intent or would benefit from having a 
statutory basis. 

I also want to point out the potential domino effect of agencies' 
determinations of whether or not RFA applies to their rules. This is 
related to the lack of clarity on key terms mentioned above, the 
potential for agencies to waive or delay analysis under RFA, and the 
limitation of RFA's applicability to only rules for which there was a 
notice of proposed rulemaking. The impact of an agency head's 
determination that RFA is not applicable is not only that the initial 
and final regulatory flexibility analyses envisioned by the Act would 
not be done, but also that other related requirements would not apply. 
These requirements include, for example, the need for agencies to 
prepare small entity compliance guides, convene SBREFA advocacy panels, 
and conduct periodic reviews of certain existing regulations. While we 
recognize, as provided by the Administrative Procedure Act, that 
notices of proposed rulemaking are not always practical, necessary, or 
in the public interest, this still raises the question of whether such 
exemptions from notice and comment rulemaking should preclude future 
opportunities for public participation and other related procedural and 
analytical requirements. Our prior work has shown that substantial 
numbers of rules, including major rules (for example, those with an 
impact of $100 million or more), are promulgated without going through 
a notice of proposed rulemaking.[Footnote 16] 

We also believe it is important for Congress to reexamine, not just 
RFA, but how all of the various regulatory reform initiatives fit 
together and influence agencies' regulatory actions. As I previously 
testified before this Subcommittee, we have found the effectiveness of 
most regulatory reform initiatives to be limited and that they merit 
congressional attention.[Footnote 17] In addition, we have stated that 
this is a particularly timely point to reexamine the federal regulatory 
framework, because significant trends and challenges establish the case 
for change and the need to reexamine the base of federal government and 
all of its existing programs, policies, functions, and 
activities.[Footnote 18] 

Our September 2000 report on EPA's implementation of RFA illustrated 
the importance of considering the bigger picture and interrelationships 
between regulatory reform initiatives.[Footnote 19] On the one hand, we 
reported about concerns regarding the methodologies EPA used in its 
analyses and its conclusions about the impact on small businesses of a 
proposed rule to lower certain reporting thresholds for lead and lead 
compounds.[Footnote 20] The bigger picture, though, was our finding 
that after SBREFA took effect EPA's four major program offices 
certified that almost all (96 percent) of their proposed rules would 
not have a significant impact on a substantial number of small 
entities. EPA officials told us this was because of a change in EPA's 
RFA guidance prompted by the SBREFA requirement to convene an advocacy 
review panel for any proposed rule that was not certified. Prior to 
SBREFA, EPA's policy was to prepare a regulatory flexibility analysis 
for any rule that the agency expected to have any impact on small 
entities. According to EPA officials, the SBREFA panel requirement made 
continuation of the agency's more inclusive RFA policy too costly and 
impractical. In other words, a statute Congress enacted to strengthen 
RFA caused the agency to use the discretion permitted in RFA to conduct 
fewer regulatory flexibility analyses.[Footnote 21] 

In closing, I would reiterate that we believe Congress should revisit 
aspects of RFA and that our prior reports have indicated ample 
opportunities to refine the Act. Despite some progress in implementing 
RFA and other regulatory reform initiatives since 1980, it is clear 
from the introduction of H.R. 682 and related bills that Members of 
Congress remain concerned about the impact of regulations on small 
entities and the extent to which the rulemaking process encourages 
agencies to consider ways to reduce the burdens of new and existing 
rules, while still achieving the objectives of the underlying statutes. 

Mr. Chairman, this concludes my prepared statement. Once again, I 
appreciate the opportunity to testify on these important issues. I 
would be pleased to address any questions you or other Members of the 
Subcommittee might have at this time. 

Contact and Acknowledgements: 

If additional information is needed regarding this testimony, please 
contact J. Christopher Mihm, Managing Director, Strategic Issues, on 
(202) 512-6806 or at mihmj@gao.gov. Tim Bober, Jason Dorn, Andrea 
Levine, Latesha Love, Joseph Santiago, and Michael Volpe contributed to 
this statement. 

[End of section] 

Related GAO Products: 

Federal Rulemaking: Past Reviews and Emerging Trends Suggest Issues 
That Merit Congressional Attention. GAO-06-228T. Washington, D.C.: 
November 1, 2005. 

Regulatory Reform: Prior Reviews of Federal Regulatory Process 
Initiatives Reveal Opportunities for Improvements. GAO-05-939T. 
Washington, D.C.: July 27, 2005. 

Regulatory Flexibility Act: Clarification of Key Terms Still Needed. 
GAO-02-491T. Washington, D.C.: March 6, 2002. 

Regulatory Reform: Compliance Guide Requirement Has Had Little Effect 
on Agency Practices. GAO-02-172. Washington, D.C.: December 28, 2001. 

Federal Rulemaking: Procedural and Analytical Requirements at OSHA and 
Other Agencies. GAO-01-852T. Washington, D.C.: June 14, 2001. 

Regulatory Flexibility Act: Key Terms Still Need to Be Clarified. GAO- 
01-669T. Washington, D.C.: April 24, 2001. 

Regulatory Reform: Implementation of Selected Agencies' Civil Penalty 
Relief Policies for Small Entities. GAO-01-280. Washington, D.C.: 
February 20, 2001. 

Regulatory Flexibility Act: Implementation in EPA Program Offices and 
Proposed Lead Rule. GAO/GGD-00-193. Washington, D.C.: September 20, 
2000. 

Regulatory Reform: Procedural and Analytical Requirements in Federal 
Rulemaking. GAO/T-GGD/OGC-00-157. Washington, D.C.: June 8, 2000. 

Regulatory Flexibility Act: Agencies' Interpretations of Review 
Requirements Vary. GAO/GGD-99-55. Washington, D.C.: April 2, 1999. 

Federal Rulemaking: Agencies Often Published Final Actions Without 
Proposed Rules. GAO/GGD-98-126. Washington, D.C.: August 31, 1998. 

Regulatory Reform: Implementation of the Small Business Advocacy Review 
Panel Requirements. GAO/GGD-98-36. Washington, D.C.: March 18, 1998. 

Regulatory Reform: Agencies' Section 610 Review Notices Often Did Not 
Meet Statutory Requirements. GAO/T-GGD-98-64. Washington, D.C.: 
February 12, 1998. 

Regulatory Flexibility Act: Agencies' Use of the October 1997 Unified 
Agenda Often Did Not Satisfy Notification Requirements. GAO/GGD-98-61R. 
Washington, D.C.: February 12, 1998. 

Regulatory Flexibility Act: Agencies' Use of the November 1996 Unified 
Agenda Did Not Satisfy Notification Requirements. GAO/GGD/OGC-97-77R. 
Washington, D.C.: April 22, 1997. 

Regulatory Flexibility Act: Status of Agencies' Compliance. GAO/GGD-94- 
105. Washington, D.C.: April 27, 1994. 

Regulatory Flexibility Act: Inherent Weaknesses May Limit Its 
Usefulness for Small Governments. GAO/HRD-91-16. Washington, D.C.: 
January 11, 1991. 

FOOTNOTES 

[1] 5 U.S.C. §§ 601-612. 

[2] The Office of Management and Budget reported that the estimated 
quantified and monetized annual benefits of the major federal 
regulations it reviewed from October 1995 through September 2005 range 
from $94 billion to $449 billion, while estimated annual costs range 
from $37 billion to $44 billion. See Office of Management and Budget, 
Draft 2006 Report to Congress on the Costs and Benefits of Federal 
Regulations (Washington, D.C.: April 2006). 

[3] See GAO, Regulatory Reform: Prior Reviews of Federal Regulatory 
Process Initiatives Reveal Opportunities for Improvements, GAO-05-939T 
(Washington, D.C.: July 27, 2005) for summary descriptions of major 
regulatory reform initiatives implemented since 1980. 

[4] GAO, Regulatory Reform: Implementation of the Small Business 
Advocacy Review Panel Requirements, GAO/GGD-98-36 (Washington, D.C.: 
Mar. 18, 1998). 

[5] RFA generally applies only where notice and comment rulemaking 
under the Administrative Procedure Act (APA) is required. When 
promulgating a final rule, agencies must also prepare a final 
regulatory flexibility analysis unless the agency finds that the rule 
will not have a significant economic impact on a substantial number of 
small entities. 

[6] 5 U.S.C. § 601 note. 

[7] See U.S. Small Business Administration, Office of Advocacy, A Guide 
for Government Agencies: How to Comply with the Regulatory Flexibility 
Act (Washington, D.C.: May 2003). 

[8] A list of related GAO products appears at the end of this 
statement. 

[9] 2 U.S.C. §§ 658-658(g), 1501-1571. See GAO, Federal Rulemaking: 
Past Reviews and Emerging Trends Suggest Issues That Merit 
Congressional Attention, GAO-06-228T (Washington, D.C.: Nov. 1, 2005) 
and GAO-05-939T. 

[10] See GAO, Regulatory Flexibility Act: Status of Agencies' 
Compliance, GAO/GGD-94-105 (Washington, D.C.: Apr. 27, 1994). 

[11] See GAO, Regulatory Flexibility Act: Inherent Weaknesses May Limit 
Its Usefulness for Small Governments, GAO/HRD-91-16 (Washington, D.C.: 
Jan. 11, 1991). 

[12] See GAO, Regulatory Reform: Implementation of the Small Business 
Advocacy Review Panel Requirements, GAO/GGD-98-36 (Washington, D.C.: 
Mar. 18, 1998). 

[13] See GAO, Regulatory Reform: Implementation of Selected Agencies' 
Civil Penalty Relief Policies for Small Entities, GAO-01-280 
(Washington, D.C.: Feb. 20, 2001), and Regulatory Reform: Compliance 
Guide Requirement Has Had Little Effect on Agency Practices, GAO-02-172 
(Washington, D.C.: Dec. 28, 2001). 

[14] See, for example, GAO, Regulatory Flexibility Act: Agencies' 
Interpretations of Review Requirements Vary, GAO/GGD-99-55 (Washington, 
D.C.: Apr. 2, 1999). 

[15] In conducting their reviews of existing rules under section 610, 
agencies are to consider the following factors: (1) the continuing need 
for the rule; (2) the nature of complaints or comments received 
concerning the rule from the public; (3) the complexity of the rule; 
(4) the extent to which the rule overlaps, duplicates, or conflicts 
with other federal rules and, to the extent feasible, with state and 
local government rules; and (5) the length of time since the rule has 
been evaluated or the degree to which technology, economic conditions, 
or other factors have changed since adoption of the rule. 

[16] See, for example, GAO, Federal Rulemaking: Agencies Often 
Published Final Actions Without Proposed Rules, GAO/GGD-98-126 
(Washington, D.C.: Aug. 31, 1998). 

[17] GAO-06-228T. 

[18] See GAO, 21st Century Challenges: Reexamining the Base of the 
Federal Government, GAO-05-325SP (Washington, D.C.: February 2005) and 
GAO-05-939T. 

[19] See GAO, Regulatory Flexibility Act: Implementation in EPA Program 
Offices and Proposed Lead Rule, GAO/GGD-00-193 (Washington, D.C.: Sept. 
20, 2000). 

[20] EPA had certified that the proposed rule would not have a 
significant impact and, therefore, did not trigger RFA's analytical and 
procedural requirements. Although we raised questions, we concluded 
that the analytic methods that EPA's program office used in its 
original and revised economic analysis, as well as the conclusions the 
office drew as a result of those analyses, were within the discretion 
provided by both RFA and EPA guidance. 

[21] We made no new recommendations in GAO/GGD-00-193, but we referred 
to our prior recommendations, noting that clarifying what Congress 
intends the term "significant economic impact on a substantial number 
of small entities" to mean would make the implementation of RFA more 
consistent and help to prevent concerns about how agencies are 
implementing the Act. 

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