Regulatory Reform:

Implementation of Selected Agencies' Civil Penalty Relief Policies for Small Entities

GAO-01-280: Published: Feb 20, 2001. Publicly Released: Mar 26, 2001.

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One of the ways that federal regulatory agencies enforce applicable statutes and regulations is through the imposition of civil monetary penalties for violations of those statutes and regulations. The amounts of the penalties imposed can vary substantially, depending on the limits specified in the applicable statutes or regulations and the degree to which the agencies impose the maximum fines permitted. Congress provided agencies with substantial discretion in developing their Small Business Regulatory Enforcement Fairness Act (SBREFA) policies. Not surprisingly, the agencies used that discretion and developed policies that vary substantially. The agencies also varied in how key terms were defined and in their policies' conditions and exclusions. This variability notwithstanding, all of the agencies' policies and programs that GAO reviewed were within the discretion afforded to them by the SBREFA Agencies were allowed to limit the scope of their programs to only a portion of their enforcement actions against small entities, and they could decide not to give small entities any additional penalty relief. Agencies were also allowed to establish whatever conditions or exclusions they wanted for participation in their programs, subject to the requirements and limitations in other statutes.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: With the passage of the Small Business Paperwork Relief Act of 2002 (Public Law 107-198, June 28, 2002--116 STAT. 729-733), Congress required under subsection 4(b)(3) that agencies develop and report data on each of the following: (A) the number of enforcement actions in which a civil penalty is assessed, (B) the number of enforcement actions in which a civil penalty is assessed against a small entity, (C) the number of enforcement actions described under subparagraphs (A) and (B) in which the civil penalty is reduced or waived, and (D) the total monetary amount of the reductions or waivers referred to under subparagraph (C). Further, under subsection 4(b)(4) Congress required that each report under this subsection include definitions selected at the discretion of the reporting agency of the terms "enforcement action," "reduction or waiver," and "small entity" as used in the report.

    Matter: To facilitate congressional oversight in this area, Congress should consider amending that act to require agencies to maintain data by fiscal year or some other time period on such factors as the number of enforcement actions involving all small entities, the number of enforcement actions that resulted in penalty reductions, and the amount of penalty relief provided. Any such data provided to Congress should clearly indicate how the agency defines key terms such as "penalty reduction" and "small entities."

  2. Status: Closed - Not Implemented

    Comments: Congress has taken no action to amend the Small Business Regulatory Enforcement Fairness Act (SBREFA; 5 U.S.C. 601 note) provisions to require that agencies' policies or programs cover all of their civil penalty enforcement actions involving small entities and that they provide small entities with more penalty relief than other similarly situated entities.

    Matter: If Congress wishes to strengthen civil penalty relief for small entities, it should consider amending section 223 of SBREFA to require that agencies' policies or programs (including relevant conditions and exclusions) cover all of the agencies' civil penalty enforcement actions involving small entities and provide small entities with more penalty relief than other similarly situated entities.

 

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