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[ulatoryJELexibillt Act
eM
of the RFA/SBREFA P
NOTICE
The statements in this document are intended solely as guidance. This document is not intended nor
can it be relied upon, to create any rights enforceable by any party in litigation with the United States
EPA may decide to follow the guidance provided in this document, or to act at variance with the
guidance, based on its analysis of the specific facts presented. This guidance may be revised without
public notice to reflect changes in EPA's approach to implementing the Regulatory Flexibility Act as
amended by the Small Business Regulatory Enforcement Fairness Act or to clarify and update text
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Revised Interim Guidance for EPA Rulewriters:
Regulatory Flexibility Act
as amended by the
Small Business Regulatory
Enforcement Fairness Act
MARCH 29, 1999
This Guidance was developed by the Regulatory Management Division of EPA 's Office of
Policy. To find out if we have issued corrections or revised this guidance, you can call (202)
260-5480 or EPA staff can access the Regulatory Development intranet site:
http://intranet.epa.gov/rapids.
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\
I
a.
'P*
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
APR
OFFICE OF
POLICY
MEMORANDUM
SUBJECT:
FROM:
TO:
Transmittal of Revised Interim Guidance for EPA Rulewriters: Regulatory
Flexibility Act as Amended by th&Small Business and Regulatory Enforcement
rairnessAct - / ^ \ -
Thomas E. Ke
Small Business Advocacy Chair
Assistant Administrators
Regional Administrators
General Counsel
«*!«* I*mApleaSe? t0 Provide y°u with the document referenced above. This revised guidance
reflects the Agency's accumulated experience with the RFA, as amended by SBREFA since we
ofTh6. ! QQ7Pre,V;°US gU!*?nCe °n/ebruary 5> 1997- This new edition retains much of the substance
ndins chapters on smal1
evenmoreh teful s w n ts
even more helpful than its predecessor in sorting through the variety of issues we can expect to
Pr°ViSi0nS *" ^^ t0 the ^ and ^*« °f-ll entities
Attachment
cc:
Steering Committee Representatives
Regional Regulatory Contacts
Send comments on the guidance to me c/o Jennifer Greenamoyer
E-mail: greenamover.jennifer@.epa. gnv
Telephone: 202-260-7829
U.S. mail: mail code 2136 @ 401 M Street SW, Washington DC 20460
Fax:202-260-5478
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r
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TABLE OF CONTENTS
List of Acronyms
Preface. A Quick Glimpse of this Guidance and the RFA/SBREFA Process ii
Chapter 1. Introduction to the Regulatory Flexibility Act as amended by SBREFA 1
1.1 What is the RFA?
1.2 What is SBREFA? j
1.3 What Do I Need to Know about RFA/SBREFA? .............. 2
1.4 What is EPA's Policy for Implementing the Regulatory Flexibility Act as
Amended by SBREFA? 3
1.5 What Rules Are Subject to the RFA/SBREFA? .. 4
1.6 What Part of RFA/SBREFA Compliance is Judicially Reviewable? 5
1.7 What is in this Guidance? 6
1.8 What are the RFA/SBREFA Requirements for Rule Proposal? 8
1 -9 What are the RFA/SBREFA Requirements for Final Rule Promulgation? " 9
1.10 How Does this Guidance Differ from the 1997 Interim SBREFA Guidance? 10
1.11 How Do I Provide Feedback on the RFA/SBREFA or this Guidance? .. 10
Chapter 2. RFA/SBREFA Screening Analysis: Assessing Impact on Small Entities 11
2.1 RFA/SBREFA: The Basics ' JJ
2.2 Performing a Screening Analysis 16
2.3 What Should I Do After Applying the Matrix? 28
Chapter 3. Implementing Small Entity Outreach: Informing, Listening, Responding 31
3.1 Small Entity Outreach: The Basics 31
3.2 What does "Outreach" mean? 32
3.3 Is Small-Entity Outreach Subject to FACA? 33
3.4 Should I Coordinate My Stakeholder Involvement Activities? '.'.'.'." 33
3.5 What Kind of Outreach Does RFA/SBREFA Require? .......','.'.'......... 34
3.6 Where Can I Get Assistance with My Small Entity Outreach? 34
3.7 What Steps Can I Take to Reach Small Entities? 35
3.8 Where Can I Get More Information? 35
Chapter 4. The Small Business Advocacy Review Panel Process for Proposed Rules 41
4.1 What is a Small Business Advocacy Review Panel? 41
4.2 What are the Statutory Panel Requirements? '.'.'.'.'.'.'.'. 41
4.3 What Help is Available to Me in Preparing for a Panel? ... '.'.'.'.'. 43
4.4 What Circumstances Require EPA to Convene a Panel? 45
4.5 Can I Request a Waiver from the SBAR Panel process? . 45
4.6 When Should We Convene a Panel? [[[ " 47
4.7 What Should Be Done Before my Panel Can Be Convened? 48
4.8 What Can I Expect from Panel Review? '.'.'.'.'.'. 54
4.9 Consideration of the Panel Report during Development of the Proposed Rule and
Initial Regulatory Flexibility Analysis 58
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Chapter 5. Small Entity Compliance Guides 59
5.1 EPA'S Approach to Small Entity Compliance Guides 59
5.2 What is the Goal in Writing a Compliance Guide? 61
5.3 Who Participates in the Development of a Compliance Guide? 61
5.4 When Should I Develop a Compliance Guide? 62
5.5 What Sorts of Questions Should I Ask My Small Entity Reviewers? 62
5.6 How Do I Document Development of the Guide? 63
5.7 Who Can Help Me with Distribution? 63
5.8 How Do We Ensure that Compliance Guides are Kept Up to Date? 63
5.9 Template for Compliance Guides 64
Chapter 6. Ongoing Informal Small Entity Guidance 75
6.1 Overview of EPA's Section 213 Program 75
6.2 List of Compliance Assistance Resources 77
Chapter 7. Periodic Review of Final Rules as Required by RFA Section 610 81
7.1 Introduction gj
7.2 How Do We Identify Rules for Review? 82
7.3 Scheduling Section 610 Reviews 82
7.4 Must We Review a Rule More than Once? '.'.'.'.'.'. 82
7.5 What If a Rule has been Subsequently Amended? 82
7.6 Dp We Review a Rule or a CFR Part or Section? !... 83
7.7 Can a Section 610 Review Be Deferred? .83
7.8 Conducting the Review 83
7.9 Does the Line-by-line Review also Satisfy Section 610 Requirements? 85
7.10 Announcing the Results of the Review !. 85
7.11 Follow-up to the Section 610 Review 85
7.12 Example of "Prerule" Regulatory Agenda Entry ' 85
7.13 Example Entry for Completed Section 610 Review 87
7.14 Section 610 Judicial Review ! " 89
Figure 1
Figure 2
Figure 3
Figure 4
FigureS
Table 1
Table 2
RFA/SBREFA Process Overview For Proposed Rules
RFA/SBREFA Process Overview For Final Rules
RFA/SBREFA Screening Process
Small Business Advocacy Review Panel Process
Small Entity Compliance Guides
Recommended Quantitative Guidelines for Evaluating the Economic Impact of a
Rule on Small Entities
Summary of Quantitative Information Used to Identify Applicable Categories for
the Preferred Quantitative Guideline
I, "Li.. llhllli j
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List of Acronyms
APA
CFR
FRFA
IRFA
NPRM
OCEPA
OCIR
OECA
OGC
OIRA
OMB
OP
ORMI
RFA
RMD
SBA
SBAC
SBAR
SBO
SBREFA
SERs
SISNOSE
Administrative Procedure Act
Code of Federal Regulations
Final Regulatory Flexibility Analysis
Initial Regulatory Flexibility Analysis
Notice of Proposed Rulemaking
Office of Communications, Education and Public Affairs (EPA)
Office of Congressional and Intergovernmental Relations (EPA)
Office of Enforcement and Compliance Assurance (EPA)
Office of General Counsel
Office of Information and Regulatory Affairs (OMB)
Office of Management and Budget
Office of Policy (EPA)
Office of Regulatory Management and Information (EPA)
Regulatory Flexibility Act
Regulatory Management Division (EPA)
Small Business Administration
Small Business Advocacy Chair (EPA)
Small Business Advocacy Review Panel or simply Panel
Small Business Ombudsman (EPA)
Small Business Regulatory Enforcement Fairness Act
Small Entity Representatives
Significant economic Impact on a Substantial Number Of Small Entities
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Preface.
A Quick Glimpse of this Guidance and the RFA/SBREFA Process
i
The purpose of this Guidance is to help you, the rulewriter, understand how the
requirements of the Regulatory Flexibility Act as amended by the Small Business Regulatory
Enforcement Fairness Act (RFA/SBREFA) fit into the Agency's Action Development Process.1
You should use this guidance in conjunction with EPA Guidelines for Implementing the
Regulatory Flexibility Act,2 which details how to prepare regulatory flexibility analyses.
i
When EPA initiates a regulatory development project, RFA/SBREFA compliance should
be near the top of the list of issues you address in your project plan or Analytic Blueprint.3 This
guidance outlines the analytical and sequential process that will apply to most rules subject to the
Regulatory Flexibility Act as amended by SBREFA. Figure 1 illustrates the RFA/SBREFA
process for proposed rules and Figure 2 illustrates the RFA/SBREFA process for final rules.
Analyzing a Rule's Impact on Small Entities. Once you have determined that your rule is
subject to the RFA (i.e., you are required to publish a notice of proposed rulemaking under the
APA or any other statute), the first thing you need to do for RFA compliance is to determine
what, if any, impact your rule will have on small entities. To do this, you need to screen your
proposed and final rules by answering a series of questions posed and discussed in detail in
Chapter 2 of this guidance.
Implementing Small Entity Outreach. If the screening analysis indicates that your rule may
have some impact on some small entities or that you need more information, Chapter 3 will
provide you with guidance for identifying and engaging in a dialogue with representatives of
small entities that may be subject to the rule under development.
1" - ' i
Small Business Advpcacy Review Panels. If the screening analysis of your rule indicates that
the rule is likely to have a significant economic impact on a substantial number of small entities,
you should plan to prepare for a Small Business Advocacy Review Panel. In Chapter 4 you will
find detailed information about how you should go about complying with the requirement that
See EPA's Action Development Process: Regulatory and Policy Development; Guidelines for
Implementation, July 1994, available from the Office of Policy's Regulatory Management Division
(RMD) at (202) 260-5480, or EPA's Regulatory Development intranet site: http://intranet.epa.gov/rapids.
This document supersedes and revokes all prior agency guidance on the Regulatory Flexibility Act
as amended by the Small Business Regulatory Enforcement Fairness Act, except for the material on
preparing a regulatory flexibility analysis contained in the EPA Guidelines for Implementing the
Regulatory Flexibility Act, April 1992. The EPA Guidelines for Implementing the Regulatory Flexibility
Act (April 1992) are available from RMD, or EPA's Regulatory Development intranet site:
http://intranet.epa.gov/rapids.
3 See Guidance for Analytic Blueprints, June 1994, available from RMD, or EPA's Regulatory
Development intranet site: http://intranet.epa.gov/rapids.
ii
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the Agency convene a Small Business Advocacy Review Panel for proposed rules which are
likely to have a significant economic impact on a substantial number of small entities.
Regulatory Flexibility Analyses. If the outcomes of your screening analysis and Panel suggest
that the Agency will not certify that the rule will not have a significant economic impact on a
substantial number of small entities, you must prepare an Initial Regulatory Flexibility Analysis
at the proposed rule stage and a Final Regulatory Flexibility Analysis at the final rule stage For
guidance on preparing regulatory flexibility analyses, please refer to the material contained in the
bfA Guidelines for Implementing the Regulatory Flexibility Act, April 1992.
Small Entity Compliance Guides. If you must prepare a final regulatory flexibility analysis for
your final rule (i.e., you do not certify the rule as having no significant economic impact on a
substantial number of small entities), RFA/SBREFA also requires you to prepare a small entity
compliance guide. Chapter 5 answers questions regarding what constitutes such a guide and
gives guidance for designing a small entity compliance guide.
Ongoing Informal Small Entity Guidance. When planning for the post-promulgation stage of
your rule, refer to the discussion in Chapter 6 regarding the RFA/SBREFA provision on giving
informal advice to small entities in response to inquiries.
Periodic Review of Rules. The SBREFA amendments to the RFA made judicially renewable
the provisions found in RFA section 610 requiring the Agency to periodically review
promulgated rules which have or will have a significant economic impact upon a substantial
number of small entities. Chapter 7 explains our plans for continued compliance with this
requirement.
Please note: This guidance is not a binding agency procedural rule. In determining and
mitigating impacts on small entities, we anticipate that there will be many situations in which
agency staff and management must exercise considerable judgment. Nevertheless, we intend this
guidance to provide you with an analytic and sequential structure that should be sufficient for
most covered rulemakings. Should you come across a situation that does not appear to be
discussed in this guidance, or a situation where an approach other than that suggested by this
guidance makes sense, you may follow that approach in consultation with your Regulatory
Steering Committee representative, the Office of Policy (OP) and your assigned attorney from
the Office of General Counsel (OGC). We provide a list of OP and Steering Committee
representative contacts in Section 3.8.
The Regulatory Management Division of EPA's Office of Policy developed this guidance
for practical use. From place to place it repeats information already introduced in order to
increase its accessibility and utility to a rulewriter working under pressure and looking to find
adequate guidance on a particular point quickly. We apologize in advance to more leisurely
readers who may find the narrative occasionally redundant for this reason. Even so we strongly
urge all users of the guidance to review it in its entirety before embarking on a rulemakine likelv
to directly regulate small entities. y
in
-------
This document supersedes and revokes all prior agency guidance on the Regulatory
Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act, except
for the material on preparing a regulatory flexibility analysis contained in the EPA Guidelines for
Implementing the Regulatory Flexibility Act, April 1992. To find out if we have issued
corrections or revised this guidance, you can call (202) 260-5480 or EPA staff can access the
Regulatory Development intranet site: http://intranet.epa.gov/rapids.
IV
-------
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Chapter 1.
Introduction to the Regulatory Flexibility Act as amended by SBREFA
Contents of Chapter 1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
What is the RFA?
WhatisSBREFA?
What Do I Need to Know about
RFA/SBREFA?
Page No.
1
What is EPA's Policy for Implementing
RFA/SBREFA?
1
1.1 What is the RFA?
President Carter signed the Regulatory
Flexibility Act (RFA) into law on September 19,
1980. In enacting the law, the Congress found
that "uniform Federal regulatory and reporting
requirements have in numerous instances imposed
unnecessary and disproportionately burdensome
demands ... upon small [entities] ... [T]he
practice of treating all regulated [entities] as
equivalent may lead to inefficient use of
regulatory agency resources, enforcement
problems and, in some cases, to actions
inconsistent with the legislative intent of health,
safety, environmental and economic welfare
legislation."
The RFA imposes both analytical and
procedural requirements on EPA and other federal
agencies. The analytical requirements call for
EPA to carefully consider the economic impacts
our rules will have on small entities. The
procedural requirements are intended to ensure
that small entities have a voice when EPA makes policy determinations in shaping its rules
Together, these requirements ensure that EPA carefully considers the effect our regulations may
have on small entities. However, the RFA's analytical and procedural requirements do not
require EPA to reach any particular result regarding small entities.
What Rules are Subject to the RFA/SBREFA? 4
What Part of RFA/SBREFA Compliance is
Judicially Reviewable? 5
What is in this Guidance? 6
What are the RFA/SBREFA Requirements for
Rule Proposal? 3
What are the RFA/SBREFA Requirements for
Final Rule Promulgation? 9
How Does this Guidance Differ from the 1997
Interim Guidance? 10
How Do I Provide Feedback? 10
1.2 What is SBREFA?
SBREFA is the Small Business Regulatory Enforcement Fairness Act, a regulatory
reform statute passed by the 104th Congress and signed into law by President Clinton on
March 29, 1996. SBREFA (Pub Law No. 104-121) enacted a variety of provisions, including
several amendments to the Regulatory Flexibility Act, 5 U.S.C. §§ 601 et sea, of particular
importance to EPA rulemakings. The statute is now known as the Reg Flex Act as amended bv
SBREFA, RFA/SBREFA or just the RFA.
~ Chapter I Introduction ~
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1.3
1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
What Do I Need to Know about RFA/SBREFA?
In short, SBREFA amended the Regulatory Flexibility Act (RFA) to establish certain
formal procedural and analytical requirements (detailed below) for the limited number of rules
developed by EPA with the potential to impose a significant economic impact on a substantial
number of small entities.4 More specifically, as a rulewriter, if your rule will impose a
significant economic impact on a substantial number of small entities (see Chapter 2) you most
likely will be required to prepare a formal analysis of the potential adverse economic impacts on
small entities, participate in a Small Business Advocacy Review Panel (proposed rule stage), and
prepare a Small Entity Compliance Guide (final rule stage).
SBREFA also made other changes to agency regulatory
practice as it affects small entities. Many Agency actions under
the RFA are now judicially reviewable, including decisions to
certify a rule as not having a significant impact on a substantial
number of small entities, the preparation of a regulatory flexibility
analysis and periodic review of final rules. SBREFA's other
provisions include Subtitles A through C, relating to enforcement
of federal laws and regulations with respect to small entities, and
Subtitle E, wholly unrelated to the small entity provisions of the
rest of SBREFA, which provides for Congressional review of
virtually all final rules.5
The purpose of the RFA/SBREFA is "to fit regulatory and
informational requirements to the scale of the business,
organizations and governmental jurisdictions subject to the
regulation." To achieve this principle, agencies are required to "solicit and consider flexible
regulatory proposals and to explain the rationale for their actions to assure that such proposals
are given serious consideration." The RFA/SBREFA does not require an agency to necessarily
minimize a rule's impact on small entities if there are legal, policy, factual or other reasons for
not doing so. The RFA/SBREFA requires only that agencies determine, to the extent feasible,
The Regulatory
Flexibility Act (RFA)
was amended by the
Small Business
Regulatory Flexibility
Act (SBREFA) in 1996.
irhe statute is now
known as: the Reg
Flex Act as amended
by SBREFA,
RFA/SBREFA or just
the RFA.
"The Regulatory Flexibility Act definition of small entities includes small businesses, small
governments and small organizations. The RFA references the definition of small business found in the
Small Business Act, which authorizes the Small Business Administration (SBA) to further define small
business by regulation. The SBA's small business definitions are codified at 13 CFR §121.201. More
information on the definition of "small" can be found in Chapter 2.
Congressional review was previously discussed in Chapter 5 of our 1997 SBREFA Guidance. EPA's
guidance on Congressional Review is now a freestanding document entitled Congressional Review Act,
Guidance for Rule Writers, June 1998, available from the Office of Policy, Regulatory Management
Division on (202) 260-5480 or on EPA's Regulatory Development intranet site:
http://intranet.epa.gov/rapids.
~ Chapter 1 Introduction ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
the rule's economic impact on small entities, explore regulatory options for reducing any
significant economic impact on a substantial number of such entities, and explain their ultimate
choice of regulatory approach.
1.4 What is EPA's Policy for Implementing the Regulatory Flexibility Act as Amended
bySBREFA?
Since its enactment in 1980, the RFA has required every federal agency to prepare
regulatory flexibility analyses for any rule for which the agency is required to issue a notice of
proposed rulemaking under the Administrative Procedure Act or any other statute unless the
agency certifies that the rule "will not, if promulgated, have a significant economic impact on a
substantial number of small entities." One important function of this guidance is to establish
workable guidelines for determining if a particular rule will have
a "significant impact" on a "substantial number" of small entities.
Prior to the enactment of SBREFA, EPA exceeded the
requirements of the RFA by preparing regulatory flexibility
analyses for every rule that would have any impact on any
number of small entities, regardless of the size of impact or the
number of small entities affected. That policy is embodied in the
EPA Guidelines for Implementing the Regulatory Flexibility Act
guidance document dated April 1992 (1992 RFA Guidance).6
It remains EPA policy
that program offices
should assess the
direct impact of every
rule on small entities
and minimize any
adverse impact to the
extent feasible,
regardless of the size
of the impact or
number of small
entities affected.
When SBREFA became law in 1996, we developed
additional procedures for full compliance with SBREFA's
multiple and various provisions. To ensure the Agency gave top
priority to this effort, a cross-Agency Task Force was established
to develop comprehensive procedures for our implementation of
SBREFA. The efforts of the Task Force were reflected in the
EPA Interim Guidance for Implementing the Small Business Regulatory Enforcement Fairness
Act and Related Provisions of the Regulatory Flexibility Act guidance document dated February
5, 1997 (1997 Interim SBREFA Guidance). This guidance document updates and replaces the
1997 Interim Guidance. A summary of the changes made to the 1997 Interim SBREFA
Guidance is provided in Section 1.10.
It remains EPA policy that program offices should assess the direct impact of every
rule on small entities and minimize any adverse impact to the extent feasible, regardless of
the magnitude of the impact or number of small entities affected. In view of the changes
This document supersedes and revokes all prior agency guidance on the Regulatory Flexibility Act
as amended by the Small Business Regulatory Enforcement Fairness Act, except for the material on
preparing a regulatory flexibility analysis contained in the EPA Guidelines for Implementing the
Regulatory Flexibility Act, April 1992.
Chapter 1 Introduction ~
-------
1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
made by SBREFA, however, the Agency decided to implement the RFA as written; that is, a
regulatory flexibility analysis as specified by the RFA will not be required simply because the
rule has some impact on some number of small entities. Instead, such analyses will be required
only in cases where we will not certify that the rule will not have a significant economic impact
on a substantial number of small entities. This approach allows us to manage our resources
such that we can consider the potential small entity impacts of all rules while preparing full
regulatory flexibility analyses for those rules warranting such analyses under the RFA.
The SBREFA amendments also directed agencies to name a Small Business Advocacy
Chairperson (SBAC) to act as permanent chair of their review panels. EPA's Small Business
Advocacy Chair is responsible for convening Small Business Advocacy Review (SBAR) Panels
and, among other things, overseeing policy decisions regarding certification that a rule will not
have a significant economic impact on a substantial number of small entities. Chapter 4 provides
detailed information on the SBAR Panel process.
1.5 What Rules Are Subj ect to the RFA/SBREFA?
,|
As a threshold matter, the RFA/SBREFA requirement to prepare a regulatory flexibility
analysis or a certification of no significant economic impact on a substantial number of small
entities applies only to
proposed rules subject to notice-and-comment rulemaking requirements
under the Administrative Procedure Act (APA) or any other statute, and
final rules promulgated under the notice-and-comment rulemaking
requirements of the APA
ii , , |
Exempt from the RFA requirement to prepare either a regulatory flexibility analysis or a
certification are
agency actions that are not rales (e.g., orders or adjudications), and
rales that the Agency is not required by statute to propose before promulgating.
Most EPA rulemakings are subject to Section 553 of the APA, which generally requires
that an agency issue a notice of proposed rulemaking and take comment on a rale before issuing
it. The APA, however, exempts from notice-and-comment requirements:
rales of agency organization, procedure or practice that do not substantially affect
the rights of non-agency parties
rales for which the agency finds "for good cause" that notice and an opportunity
to comment are "impracticable, unnecessary, or contrary to the public interest,"
and
rales relating to agency management or personnel or to public property loans,
grants, benefits or contracts.
It should be noted that "direct final rales" (i.e., rales that the Agency issues without first
Chapter 1 Introduction ~
-------
1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
proposing them, that are withdrawn if anyone files an adverse comment) are generally subject tn
notice-and-comment requirements and are therefore subject to the RFA requirements in this
guidance. For more information on direct final rulemaking see, Direct Final Rulemaking-
Guidance for EPA Rule Writers, prepared by EPA Office of General Counsel, Cross Cutting
Issues Law Office (October, 1998) available at EPA's Regulatory Development intranet site-
http://mtranet.epa.gov/rapids.
The procedures for some EPA rulemakings are governed by other statutes. For example
many Clean Air Act (CAA) rulemakings are subject to the procedural requirements of section
307(d) of the CAA instead of the APA. In such cases, you should consult those statutes and your
OGC attorney to determine if the rule is subject to the RFA's analytical requirements.
1.6 What Part of RFA/SBREFA Compliance is Judicially Reviewable?
Judicial review is the process whereby an adversely affected person can challenge an
EPA final regulatory action in Federal court if the statute so allows and ask the court either to
vacate or stay enforcement of the rule. During review of a rule, EPA must demonstrate that we
complied with not only the substantive statutory requirements of the implementing statute (e g
the Clean Air Act), but also all procedural requirements contained in regulatory statutes, such as
the APA and RFA/SBREFA. During judicial review, EPA also must demonstrate that our
mterpretation of the law is reasonable in areas that we had discretion and that we had a rational
basis for our regulatory decision.
The SBREFA Amendments to the RFA added provisions that now allow a small entity
that is adversely affected by a final rule to seek review in court of an agency's compliance with
the following RFA requirements:
Section 601 - Establishing an alternative definition for small businesses, small
governmental jurisdictions, and/or small non-profit organizations (see Chapter 2);
Section 604 - Final regulatory flexibility analysis (FRFA) (see Section 1.9, below);
Section 605(b) - Certification of the proposed or final rule and the factual basis for the
certification (see Chapter 5);
Section 608(b) - Delaying the completion of a FRFA for up to 180 days due to an
emergency; and
Section 610 - Periodic review of final rules that were not certified within ten years of
promulgation (see Chapter 8).
The RFA gives a reviewing court broad discretion in deciding what the appropriate
5
~ Chapter 1 Introduction ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
remedy should be if the court finds an agency has not complied with either the RFA's procedural
requirements (e.g., consulting with the Small Business Administration and providing notice and
an opportunity for comment before establishing an alternative small business definition) or the
RFA's substantive requirements (e.g., preparing a meaningful FRF A). Such remedies may
include vacating and/or remanding the rule to the agency for further action or deferring
enforcement of the rule against small entities.
Thus, even if you have fulfilled the requirements of your implementing statute, have
reasonably interpreted those statutory requirements in areas in which the agency has discretion to
do so, have explained on the record your rationale for selecting the option you did, but you fail to
comply with one or more RFA requirements or fail to adequately explain your conclusions, a
reviewing court could decide to vacate, remand, or stay the rule on that basis. Indeed, one
agency recently had a rule vacated for basing its RFA analysis on an alternative small entity
definition it did not establish properly.
,l
In addition, a rule may be challenged if the agency fails to adequately respond to adverse
comments challenging any aspect of the rule. This applies to an agency's failure to respond to
comments on the agency's certification, the factual basis for the certification, or the initial
regulatory flexibility analysis.
1.7 What is in this Guidance?
The purpose of this Guidance is to help you, the rulewriter, to understand how the
requirements of the RFA/SBREFA fit into the Agency's Action Development Process.7 You
should use this guidance in conjunction with EPA Guidelines for Implementing the Regulatory
Flexibility Act, April 1992, available from the Office of Policy, Regulatory Management
Division on (202) 260-5480 or on EPA's Regulatory Development intranet site:
http://intranet.epa.gov/rapids. The 1992 RFA Guidance details how to prepare a regulatory
flexibility analysis.
When EPA initiates a regulatory development project, RFA/SBREFA compliance should
be near the top of the list of issues you address in your project plan or Analytic Blueprint.8 This
guidance outlines the analytical and sequential process that will apply to most rules subject to the
Regulatory Flexibility Act as amended by SBREFA. Figure 1 (above) illustrates the
7 See EPA's Action Development Process: Regulatory and Policy Development; Guidelines for
Implementation, July 1994, or contact the Office of Policy's Regulatory Management Division at (202)
260-5480. EPA's Action Development Guidance can be found at EPA's Regulatory Development
intranet site: http://intranet.epa.gov/rapids.
8 See Guidance for Analytic Blueprints, June 1994, (available at http://intranet.epa.gov/rapids) or
contact the Office of Policy's Regulatory Management Division at (202) 260-5480.
~ Chapter 1 Introduction
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
RFA/SBREFA process for proposed rules and Figure 2 (above) illustrates the RFA/SBREFA
process for final rules.
Analyzing a Rule's Impact on Small Entities. Once you have determined that your rule is
subject to the RFA (i.e. you are required to publish a notice of proposed rulemaking under the
APA or any other statute), the first thing you need to do for RFA compliance is to determine
what, if any, impact your rule will have on small entities. To do this, you need to screen your
proposed and final rules by answering a series of questions posed and discussed in detail in
Chapter 2 of this guidance. If the results of your screening analysis indicate that the Agency will
not certify that the rule will not have a significant economic impact on a substantial number of
small entities, then you must prepare an Initial Regulatory Flexibility Analysis at the proposed
rule stage and a Final Regulatory Flexibility Analysis at the final rule stage. For guidance on
preparing regulatory flexibility analyses, please refer to the material contained in the EPA
Guidelines for Implementing the Regulatory Flexibility Act, April 1992.
Implementing Small Entity Outreach. If the screening analysis indicates that your rule may
have some impact on some small entities or that you need more information, Chapter 3 will
provide you with guidance for identifying and engaging in a dialogue with representatives of
small entities that may be subject to the rule under development.
Small Business Advocacy Review Panels. If the screening analysis of your rule indicates that
the rule is likely to have a significant economic impact on a substantial number of small entities
you should prepare for a Small Business Advocacy Review Panel. In Chapter 4 you will find
detailed information about how you should go about complying with the requirement that the
Agency convene a Small Business Advocacy Review Panel for proposed rules which are likely
to have a significant economic impact on a substantial number of small entities.
Small Entity Compliance Guides. If you must prepare a final regulatory flexibility analysis for
your final rule (i.e. you do not certify the rule as having no significant economic impact on a
substantial number of small entities), RFA/SBREFA also requires you to prepare a small entity
compliance guide. Chapter 5 answers questions regarding what constitutes such a guide and
gives guidance for designing a compliance guide.
Ongoing Informal Small Entity Guidance. When planning for the post-promulgation stage of
your rule, refer to the discussion in Chapter 6 regarding the RFA/SBREFA provision on giving
informal advice to small entities in response to inquiries.
Periodic Review of Rules. The SBREFA amendments to the RFA made judicially reviewable
the provisions found in RFA section 610 requiring the Agency to periodically review
promulgated rules which have or will have a significant economic impact upon a substantial
number of small entities. Chapter 7 explains our plans for continued compliance with this
requirement.
7
~ Chapter 1 Introduction ~
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1999 Revised RFA/SBREFA Guidance for EPA Rule-writers
This guidance is not a binding agency procedural rule. In determining and mitigating
impacts on small entities, we anticipate that there will be many situations in which agency staff
and management must exercise considerable judgment. Nevertheless, we intend this guidance to
provide you with an analytic and sequential structure that should be sufficient for most covered
ruiemakings. Should you come across a situation that does not appear to be discussed in this
guidance, or a situation where an approach other than that suggested by this guidance makes
sense, you may follow that approach in consultation with your Regulatory Steering Committee
representative , the Office of Policy (OP) and your assigned attorney from the Office of General
Counsel (OGC). We provide a list of OP and Steering Committee representative contacts in
Section 3.8. To find out if we have issued corrections or revised this guidance, you can call
(202) 260-5480 or EPA staff can access the Regulatory Development intranet site:
http://intranet.epa.gov/rapids.
1.8 What are the RFA/SBREFA Requirements for Rule Proposal?
If the RFA APPLIES to your rule and your screening analysis indicates your rule most
likely WILL NOT have a significant economic impact on a substantial number of small
entities:
Certification statement and statement of factual basis. You must prepare a certification statement
and a statement of factual basis supporting the certification that your rule will not have a
significant economic impact on a substantial number of small entities. The RFA Section 605(b)
requires you to publish in the Federal Register "a statement providing the factual basis for such
certification." With SBREFA, that certification and the factual basis for the certification are
subject to judicial review. Accordingly, it is important that you provide sufficient detail in your
factual basis to explain why the Agency is certifying the rule.
~OR~
If the RFA APPLIES to your rule and your rule most likely WILL have a significant
economic impact on a substantial number of small entities:
Initial Regulatory Flexibility Analysis. Generally, the RFA/SBREFA requires EPA to prepare
an Initial Regulatory Flexibility Analysis (IRFA) for each proposal, unless the Administrator
certifies that the rule, if promulgated, will not have a significant economic impact on a
substantial number of small entities (see Figure 1). You will find more detailed guidance on
performing an IRFA in EPA Guidelines for Implementing the Regulatory Flexibility Act, April
1992, available from the Office of Policy, Regulatory Management Division on (202) 260-5480
or on EPA's Regulatory Development intranet site: http://intranet.epa.gov/rapids.
-AND-
~ Chapter 1 Introduction ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
Small Business Advocacy Review Panels. Under the RFA as amended by SBREFA, EPA must
convene a Small Business Advocacy Review Panel for a rule under development, unless the
Agency certifies that the rule will not impose a significant economic impact on a substantial
number of small entities. Each Panel includes representatives from the Small Business
Administration, the Office of Management and Budget, and EPA. The Panels conduct outreach
to individuals representative of small entities likely to be subject to the rule and prepare a report
to the EPA Administrator for each rulemaking on the potential small entity impacts of the rule
and on potential ways to reduce those impacts (see Figure 1). More detailed information on the
Small Business Advocacy Review Panel process is contained in Chapter 4.
1.9 What are the RFA/SBREFA Requirements for Final Rule Promulgation?
If the RFA APPLIES to your rule and your screening analysis indicates your rule most
likely WILL NOT have a significant economic impact on a substantial number of small
entities:
Certification statement and statement of factual basis. You must prepare a certification statement
and a statement of factual basis to support the certification that your rule will not impose a
significant economic impact on a substantial number of small entities. The RFA Section 605(b)
requires you to publish in the Federal Register "a statement providing the factual basis for such
certification." With SBREFA, that certification and the factual basis for the certification are
subject to judicial review. Accordingly, it is important that you provide sufficient detail in your
factual basis to explain why the Agency is certifying the rule.
~OR~
If your rule most likely WILL have a significant economic impact on a substantial number
of small entities:
Final Regulatory Flexibility Analysis. For each rule that EPA promulgates and does not certify
as having no significant economic impact on a substantial number of small entities, the Agency
must prepare a Final Regulatory Flexibility Analysis (FRFA; see Figure 2). Importantly,
RFA/SBREFA requires that each FRFA summarize the significant issues raised by public
comments on the IRFA, assess these issues, and describe any changes made in response to the
public comments. You will find more guidance on performing a FRFA in EPA Guidelines for
Implementing the Regulatory Flexibility Act, April 1992, available from the Office of Policy,
Regulatory Management Division on (202) 260-5480 or on EPA's Regulatory Development'
intranet site: http://intranet.epa.gov/rapids.
-AJVD-
Small Entity Compliance Guide. For each final rule where RFA/SBREFA requires preparation
9
~ Chapter 1 Introduction ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
of a FRF A, the Agency must also issue a small entity compliance guide providing a Plain
Language explanation of how to comply with the regulation (see Figure 2). More guidance on
developing a small entity compliance guide can be found in Chapter 5.
1.10 How Does this Guidance Differ from the 1997 Interim SBREFA Guidance?
This guidance revises the 1997 Interim SBREFA Guidance and incorporates the lessons
we have learned in the three years of RFA implementation since SBREFA was enacted. More
specifically, we have
substantially expanded the discussion of the Small Business Advocacy Review
Panel process (Chapter 4) and small entity outreach (Chapter 3); and
added chapters on informal small entity guidance (Chapter 6) and periodic review
of rules (Chapter 7).
1
In addition, we have rewritten most of this Guidance in plain language,.
i
This guidance document supersedes and revokes all prior agency guidance on the RFA
and SBREFA, except for the material on preparing regulatory flexibility analyses contained in
the 1992 RFA Guidance.
1.11 How Do I Provide Feedback on the RFA/SBREFA or this Guidance?
To provide feedback on the RFA/SBREFA or this guidance contact your Steering
Committee representative or the staff of the Small Business Advocacy Chair. Contact
information is provided in Section 3.8.
10
Chapter 1 Introduction
-------
Chapter 2.
RFA/SBREFA Screening Analysis: Assessing Impact on Small Entities
This chapter describes a screening process
for determining whether a regulatory flexibility
analysis or a certification of no significant
economic impact on a substantial number of small
entities should be prepared for a proposed or final
rule.9
2.1 RFA/SBREFA: The Basics
Contents of Chapter 2
Page No.
2.1 RFA/SBREFA: The Basics 11
2.2 Performing a Screening Analysis 16
2.3 What Should I Do After Applying the Matrix? .. 28
Please refer to Chapter 1 for answers to questions such as:
* What is the RFA?
» What is SBREFA?
* What do I need to know about SBREFA?
> What is EPA's policy for implementing the Reg Flex Act as amended by SBREFA?
» What are the RFA/SBREFA requirements for rule proposal and promulgation?
The purpose of the Regulatory Flexibility Act (RFA) as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA) is to ensure that, in developing rules, agencies
identify and consider ways of tailoring regulations to the size of the regulated entities. The
RFA/SBREFA does not require an agency to minimize a rule's impact on small entities if there
are legal, policy, factual or other reasons for not doing so. The RFA/SBREFA generally
requires that for certain rules, you
determine, to the extent feasible, the rule's economic impact on small entities,
explore regulatory options for reducing any significant economic impact on a'
substantial number of such entities, and
explain your ultimate choice of regulatory approach.
Once you have determined that your rule is subject to the RFA/SBREFA, it is most
important for you to determine if your rule may have a significant economic impact on a
substantial number of small entities, thereby making you responsible for certain procedural
requirements under the RFA, as amended by SBREFA. This chapter outlines procedures for
making an initial assessment of the potential of your rule to have a significant economic impact
As noted earlier, the RFA requirement for a regulatory flexibility analysis or a certification applies
only to rules subject to notice and comment requirements under the APA or other applicable statutes. If
the action you are taking is something other than a notice and comment rulemaking, the RFA does not
apply.
11
~ Chapter 2 Small Entity Screening Analysis-
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1999 Revised RFA/SB REFA Guidance for EPA Rulewriters
on a substantial number of small entities. This process is also illustrated in Figure 3. Under
RFA/SBREFA* the Agency must prepare a formal analysis of potential negative economic
impacts on small entities, convene a Small Business Advocacy Review Panel (proposed rule
stage), and prepare a Small Entity Compliance Guide (final rule stage) for most regulations
unless the Agency certifies that the rule will not have a significant economic impact on a
Substantial number of small entities (SISNOSE).
This chapter of the guidance provides you with advice and direction on how to comply
with the analytical requirements of the RFA as amended by SBREFA and our policy for
implementing those requirements. In many respects, the advice and direction provided here go
beyond what the law requires, and instead reflect Agency policy about how best to ensure that
small entity concerns are considered in the rulemaking process.
As we gain additional experience implementing the RFA as
amended by SBREFA, we will review this guidance and revise it
as appropriate.
SISNOSE;
Significant economic
Impact on a
Substantial
Number
Qf
Small
Entities
The RFA/SBREFA statute does not analytically define the
terms significant or substantial in regard to extent of economic
impact and number of small entities affected. Here we suggest
guidelines for determining if a particular rule may have a
SISNOSE. We recognize that there can be no one-size-fits-all
methodology for making this determination. Therefore we
recommend specific approaches but leave you the flexibility to
use alternative methods or reach different conclusions where
appropriate in the context of a particular rule. The rationale underlying your ultimate
conclusions must be included in the rulemaking record.
''',!'
Where the Agency does not certify that a rule will have no SISNOSE, according to
RFA/SBREFA you must prepare a regulatory flexibility analysis meeting the applicable statutory
requirements. More information on preparation of regulatory flexibility analyses can be found
in the EPA Guidelines for Implementing the Regulatory Flexibility Act (April 1992) available
from the Office of Policy, Regulatory Management Division on (202) 260-5480 or on EPA's
Regulatory Development intranet site: http://intranet.epa.gov/rapids. It bears repeating, however,
that even where the Agency certifies that a rule will not have a SISNOSE, EPA's policy is to
make an assessment of the rule's impact on any small entities, to engage the potentially
regulated entities in a dialog regarding the rule, and minimize the impact to the extent
feasible. As always, program managers should determine what level of outreach is appropriate
to the expected level of impact.
12
Chapter 2 Small Entity Screening Analysis~
-------
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
2.1.1 What are "small entities"?
The RFA/SBREFA defines small entities as including:
small businesses
small governments, and
small organizations.
The RFA/SBREFA further defines each type of small entity (detailed below), and
authorizes agencies to adopt alternative definitions where appropriate in accordance with
specified procedures. More information on the adoption of an alternative definition is provided in
Section 2.1.2 (below).
What is a "small business"?
The RFA/SBREFA references the definition of "small business" found in the Small
Business Act. The Small Business Act further authorizes the Small Business Administration
(SBA) to define "small business" by regulation. The SBA's small business definitions are
codified at 13 CFR 121.201; the SBA reviews and reissues those definitions every year.10 The
SBA defines small business by category of business using Standard Industrial Classification
(SIC) codes,11 and in the case of manufacturing, generally defines small business as a business
having 500 employees or fewer. For many types of manufacturing, however, the SBA's size
standards define small business as a business having up to 750, 1000 or 1500 employees,
depending on the particular type of business. In the case of agriculture.; mining; and gas and
sanitary services, the SBA size standards generally define small business with respect to annual
receipts (from $0.5 million for crops to $25 million for certain types of pipelines). The SBA
definition of a small business applies to a firm's parent company and all affiliates as a single
entity.
What is a "small government"?
The RFA/SBREFA defines "small governmental jurisdiction" as the government of a
city, county, town, school district or special district with a population of less than 50,000. The
RFA also authorizes agencies to establish alternative definitions of small government after
opportunity for public comment but consultation with the SBA is not required. Any alternative
definition must be "appropriate to the activity of the agency" and "based on such factors as
location in rural or sparsely populated areas or limited revenues due to the population of such
jurisdiction." Any alternative definition must be published in the Federal Register. For the
10 The current version of SBA's size standards can be found at:
http://www.sba.gov/library/lawroom.html
11 Federal agencies are making the transition from the Standard Industrial Classification (SIC) system
to the North American Industrial Classification (NAIC) system - further guidance will be forthcoming.
14
i
Chapter 2 Small Entity Screening Analysis*
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
purposes of the RFA, States and tribal governments are not considered small governments but
rather as independent sovereigns.12
What is a "small organization"?
The RFA/SBREFA defines "small organization" as any "not-for-profit enterprise which is
independently owned and operated and is not dominant in its field." Here again, agencies are
authorized to establish alternative definitions "appropriate to the activities of the agency" after
providing an opportunity for public comment (consultation with the SBA is not required). Any
alternative definition must be published in the Federal Register.
2.1.2 When Should I Consider Establishing an Alternative Small Entity Size Standard?
Under the Small Business Act, SBA establishes size definitions for small businesses
organized by SIC code and published at 13 CFR, Part 121. In setting these definitions, SBA
seeks to ensure the availability of certain government preferences, such as loan guarantees or
start-up assistance to businesses under a certain size. The RFA defines small governments as
those serving under 50,000 in population. Ironically, the use of these definitions in any given
regulatory situation may actually defeat the Congressional intent of the RFA.
The Regulatory Flexibility Act requires that we seek reasonable accommodation of small
entities, but only if we can do so and still "accomplish the stated objectives of applicable
statutes," meaning for EPA the governing environmental statutes. In some cases the number of
entities defined as "small" in 13 CFR, Part 121 may be so high that the Agency can provide little
or no accommodation to parties defined as small without jeopardizing our environmental
objective. In such a case, the established definition may actually work against the interests of the
very smallest businesses or governments, few, if any, of which may be contributing substantially
to the environmental problem the regulation seeks to address. Rather than allow the existing
definition of small business, government, or non-profit organization to dictate an unreasonable
outcome, the Agency may consider an alternative definition that will keep the majority of
polluting activities within the full scope of regulation, while affording needed flexibility to an
appropriately defined sub-group of the smallest entities.
Although the RFA does not require you to analyze the impacts of your rule on States and tribal
governments, you may be required to analyze these impacts and/or consult with State or tribal
governments in accordance with various statutes and Executive Orders such as the Unfunded Mandates
Reform Act, Executive Order 12875 (Enhancing the Intergovernmental Partnership), and/or Executive
Order 13084 (Consultation and Coordination with Indian Tribal Governments). Consult EPA's
Regulatory Development intranet site: http://intranet.epa.gov/rapids and your OGC attorney for more
information regarding these requirements.
~ Chapter 2 Small Entity Screening Analysis~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
2.1.3 How Do I Establish an Alternative Small Entity Size Standard?
The RFA/SBREFA authorizes an agency to adopt and apply alternative definitions, "which
are appropriate to the activities of the agency" for each category of small entity (i.e., small
business, small organization and small governmental jurisdiction). To adopt an alternative
definition you must provide an opportunity for public comment and publish the alternative
definition in the Federal Register. To adopt an alternative definition of "small business," you
must also consult with the Chief Counsel for Advocacy of the SB A.
If you plan to adopt an alternative definition, it is extremely important to comply with
these specific procedures; at least one agency recently had a rule vacated for basing its RFA
analysis on an alternative small entity definition it did not properly establish. Therefore, it is
imperative that you consult with your Steering Committee representative and the SBAC staff
before you proceed with adoption of an alternative definition.
Moreover, you should be clear in the rulemaking notice in which an alternative definition is
proposed whether you are proposing to use this alternative definition for that particular
rulemaking only, for that rulemaking and any subsequent amendments, or for that rulemaking as
well as all subsequent rulemakings regulating the same small entities under the same authority.
If you fail to indicate this in your original proposed rule, you may be required to repeat the
process for subsequent rules (i.e., give notice, take comment and, for an alternative definition of
"small business," consult with SBA). Once an alternative definition is established for a
particular set of rules, you must use that definition for those rules until you adopt a different
definition. Adopting a new alternative definition will involve the same process described above.
Re-establishing a previous definition also requires notice and opportunity for public comment
and may require consultation with SBA if re-establishing a definition for "small business."
2.2 Performing a Screening Analysis
This section lays out our suggested RFA/SBREFA screening process step-by-step so that
the relevant issues are addressed in an order that will ensure that appropriate determinations are
made. You should follow this screening process for both the proposed and final versions of your
rule, since the RFA generally requires that a regulatory flexibility analysis or certification be
prepared for each version.
Phrased as questions, the six steps of the screening process are as follows:
Ql.
Is the rule subject to notice-and-comment rulemaking requirements?
If your rule is not required by statute to undergo notice and comment, it is not subject to
16
~ Chapter 2 Small Entity Screening Analysis
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
the RFA's analytical requirements and you do not need to prepare a regulatory flexibility
analysis or a certification of no significant economic impact on a substantial number of small
entities. See Section 1.5 for a more complete discussion of which rules require notice-and-
comment. However, as a matter of Agency policy, even if your rule is not subject to the
RFA/SBREFA, to the extent that you foresee that your rule will have an adverse economic
impact on small entities, you should assess and make efforts to minimize that impact through
consultation with the small entities likely to be regulated.
Even if your rule is not subject to the RFA, the preamble to the proposed rule, if any, and
the preamble of the final rule should include a "Regulatory Flexibility" section that explains why
the rule is not subject to the RFA.
What types of entities will be subject to the rule's requirements?
The RFA requires analysis of a rule's economic impact on the small entities that will be
subject to the rule's requirements. Indeed, an IRFA or FRFA cannot be prepared for a rule
that does not establish requirements applicable to small entities. The RFA requires that an IRFA
or FRFA identify the types, and estimate the numbers, of small entities "to which the proposed
[or final] rule will apply," and describe the rule "requirements" to which small entities ' Vill be
subject" and any regulatory alternatives, including exemptions and deferrals, which would lessen
the rule's burden on small entities (see sections 603 and 604 of the RFA). Rules that do not
establish requirements applicable to small entities (e.g., rules establishing or revising national
ambient air quality standards under the CAA or water quality standards under the Clean Water
Act) are thus not susceptible to RFA analysis and may be certified as not having a SISNOSE.
Similarly, if your rule is applicable only to large entities, but small entities are among those who
may experience economic effects downstream from the rule's implementation, you may certify
that the rule has no SISNOSE. However, you should evaluate those "ripple" effects as part of
your broader economic analysis for the rule.
If your rule is subject to statutory notice-and-comment rulemaTkmg requirements, you
should conduct and document a screening analysis. The first step in the analysis is to identify
what types of entities (regardless of size) would be subject to the rule's requirements, as follows:
Businesses: Identify the types of businesses potentially subject to the rule's requirements
and determine the SIC code for those types of businesses, since the SBA's size standards
apply to specific SIC codes. ,
Governments: Identify all forms of governments potentially subject to the rule, including
cities, counties, towns, townships, villages, and special districts.
Nonprofit Organizations: Identify what types of nonprofit entities such as hospitals,
17
~ Chapter 2 Small Entity Screening Analysis-
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
colleges, universities and research institutions are potentially subject to the rule.
Q3.
What types of small entities, if any, will be subject to the rule's
requirements?
Of the types of entities potentially subject to any of the rule's requirements, you should
next determine the extent to which those types of entities include small, entities. In identifying
small entities, you should apply the RFA definition of small or, where applicable, any
appropriate alternative definitions13 that the Agency has adopted or intends to adopt in
accordance with the procedures established by the RFA. The RFA default definitions of small
business, small government, and small non-profit organization are detailed in Section 2.1.1
(above).
Q4.
Will any small entities potentially be subject to the rule's requirements?
If no small entities will be subject to any of the rule's requirements, you may certify that
your rule will not have a significant economic impact on a substantial number of small entities
on that basis. The certifications should be published and explained in the preambles of the
proposed and final rules and supported in the rulemaking record as appropriate. No further
analysis is required to support your certifications, unless the Agency receives comments on the
proposed rule's certification that indicate its basis is flawed.
Q5.
Will any small entities be adversely affected by the mile's requirements?
EPA believes only rules that will have a significant adverse economic impact on small
entities require an IRFA and FRF A, since the primary purpose of both analyses is to identify and
address regulatory alternatives "which minimize any significant economic impact of the
proposed [or final] rule on small entities." (sections 603 and 604, emphasis added). Thus, rules
that relieve regulatory burden, or otherwise have a positive economic effect on the small entities
13 The RFA grants agencies discretion to develop and apply alternative definitions of small business,
small governments and small nonprofit organizations. In exercising this discretion, however, care should
be taken to develop alternative definitions that identify small entities as opposed to entities that emit a
small volume of pollution. It may be appropriate for the Agency to provide regulatory flexibility or
relief to small-volume polluters on general policy grounds, but the focus of the RFA is on entities whose
size or resources are small in comparison to other entities of their type.
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subject to the rule, do not require an IRFA or a FKFA.
If your rule will not have any adverse effect on any small entity subject to the rule's
requirements, you may certify that the proposed and final rules will not have a significant
economic impact on a substantial number of small entities on that basis. The certifications
should be published and explained in the preambles of the proposed and final rules and supported
in the rulemakmg record as appropriate. No further analysis is required to support the
certification, unless the Agency receives comments on the proposed rule's certification that
indicate its basis is flawed. If one or more small entities subject to the rule will be adversely
affected by the rule, it remains EPA policy that program offices should assess the impact on
small entities and minimize any negative impact to the extent feasible, regardless of the
magnitude of the impact or number of small entities affected.
It should be noted that a particular rule may reduce some burdens on small entities and
create or increase burden on others. Where the rule reduces the burden on one type of small
entity while increasing the burden on another type of small entity, the decrease and increase in
burden generally may not be netted. Where both a decrease and increase in burden will occur to
the same small entities, it is appropriate to consider the net impact on those small entities. For a
rule that will establish requirements applicable to small entities, only the impacts of the rule on
the small entities subject to the rule's requirements need to be analyzed for RFA purposes
Will the rule have a significant economic impact on a substantial number of
small entities?
For a proposed or final rule that will have an adverse effect on one or more small entities
directly subject to the rule, you must next determine the extent of the impact and the number of
small entities so impacted. Both qualitative information and quantitative analysis will be
relevant in making this determination.
What is the role of qualitative information?
Before investing in detailed quantitative analysis, you should describe the steps a small
entity will have to take to comply with the requirements of the rule. In doing so, you will better
clarify the nature of the impacts (e.g., installation of new technological processes, institution of
new maintenance practices). You may then be able to deduce whether the potential impacts are
of sufficient magnitude and scope to warrant requiring the preparation of an IRFA or FRFA.
If a qualitative assessment indicates that your rule is likely to have a SISNOSE, you may
choose to prepare an IRFA and FRFA on that basis and avoid the need for a full screening
analysis. Where a qualitative assessment indicates that a rule will not have a SISNOSE, you
may be able to certify the rule on that basis or you may need to conduct a quantitative analysis to
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confirm the results of the qualitative assessment. For example, where the information necessary
to conduct a quantitative analysis is not reasonably available, it may be appropriate to certify the
rule based on the qualitative assessment alone. Since the decision to certify a rule is judicially
reviewable, you should expect to prepare a quantitative analysis whenever possible to support
such a conclusion. You should consult with your Steering Committee representative and the
Small Business Advocacy Chair when you anticipate relying on qualitative analysis to
certify a rule.
How should I conduct a quantitative analysis?
The Agency is in the final stages of revising its Guidelines for Preparing Economic
Analyses'4, once these are formally issued, you should follow the relevant procedures for
calculating costs, as outlined in Chapter 9 of the Guidelines, for the purposes of your screening
analysis. The Guidelines detail a process for considering equity and distributional concerns as a
component in rulemakings and small entity impacts are a specific sub-set of these concerns that
are directly addressed in Chapter 9.
What measures of economic impact should I use?
The table below (Table 1) lists our current suggested economic guidelines for assessing
the impact of a rule on small entities. The suggested guidelines are drawn from standard
economic analyses and vary by type of small entity in view of the different economic
characteristics of small businesses, small governments, and small nonprofit organizations. The
value of the denominator of the quantitative screening guidelines should be based on an average
of at least three years of data when possible and practical. Further, for each type of small entity,
more than one approach is listed. The guidelines vary in terms of the type of data involved, and
thus you may choose to apply one over the others based on the type of information available.
The table nevertheless indicates a preferred guideline for each type of small entity (i.e., Bl, Gl
andNl).
j
Conceptually, we believe that a profits test represents the most accurate screening
analysis for determining whether a regulation will pose a significant economic burden on small
businesses. However, because of procedural and operational issues associated with the
implementation of a profits test, a sales test remains our preferred quantitative guideline at this
time. Because data on profits are limited, especially for small businesses, routine use of a profits
test would require us to estimate profits for small businesses where there are currently
insufficient data. For example, sufficient data are unlikely to exist across all SIC codes that a
'4 At the time of publication, this document is under review. To obtain more information on final
release or availability of copies call EPA's Office of Economy and Environment at (202) 260-3354.
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regulation affects. This would limit our ability to rely on consistent information to determine the
magnitude and scope of economic impacts on small business, both for a single regulation and
across-regulations. We remain committed to developing the ability to implement the most
accurate screening analysis possible and to establishing a process to implement a profits test.
Our goal is to develop a profits test that may be used in addition to, or in preference to, the sales
test when there are sufficient reliable data to support it and the procedural and operational issues
have been resolved.
You should use the preferred guidelines listed in Table 1 because they are logistically
simple to apply and data are more readily available to allow consistent applications from rule to
rale. You may nonetheless use one of the other guidelines, or even a guideline not included in
the table, where you have sound reasons for doing so and can explain those reasons in the
rulemaking record.15 Further, when data are available to support other relevant measures of
impact other than the preferred guideline (or its listed substitute), we encourage you to use them
to supplement your analysis.
To what extent should my analysis differentiate among types of small businesses, small
governments or small nonprofits?
A rale may apply to more than one kind of business, government, or nonprofit
organization. For example, a rale may apply the same requirements to printers, dry cleaners, and
auto-body shops. In assessing the impact of such a rale on "small business," it may be
appropriate to analyze the rale's impact on each kind of business separately, particularly where
the rale may impose significantly higher costs on some kinds of businesses than on others.
However, as described in more detail below, for the purposes of deciding if preparation of a
regulatory flexibility analysis or a certification is required, the impacts of the rale, once assessed
for the two types of business, should be aggregated and the aggregates fed into the matrix
presented in Table 2.
When applying any alternative quantitative guidelines other than the preferred approach, you must
consult with your Steering Committee representative and the Small Business Advocacy Chairperson
(SBAC), the OP's Office of Economy and Environment and other relevant Agency offices (including
those identified by the SBAC) in determining the level at which the impact may warrant requiring
preparation of a regulatory flexibility analysis.
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TABLE 1: Recommended Quantitative Guidelines for Evaluating the Economic
impact of a Rule on Small Entities
Type of Entity and Guidelines (preferred guidelines in bold italics)1
SMALL BUSINESSES
B.1
Annualized compliance costs as a percentage of sales ("Sales Test")
B.2
Debt-financed capital compliance costs relative to current cash flow ("Cash Flow Test")
B.3
Annualized compliance costs as a percentage of before-tax profits ("Profit Test")
SMALL GOVERNMENTS
G.1
Annualized compliance costs as a percentage of annual government revenues
("Revenue Test")
G.2
Annualized compliance costs to household (per capita) as a percentage of median
household (per capita) income ("Income Test")
SMALL NONPROFIT ORGANIZATIONS
N.1
Annualized compliance costs as a percentage of annual operating expenditures
("Expenditure Test")
N.2
Annualized compliance costs as a percentage of total assets ("Asset Test")
1 When applying any quantitative guidelines other than the preferred approach, you must
consult with your Steering Committee representative and the Small Business Advocacy
Chairperson (SBAC), the OP's Office of Economy and Environment and other relevant
Agency offices (including those identified by the SBAC) in determining the level at which
the impact may warrant requiring preparation of a regulatory flexibility analysis.
For proposed rules, what should I analyze if more than one regulatory approach is being
proposed or seriously considered?
For proposed rules, one of the guidelines listed in Table 1, or any other economic
guideline you decide to use, should be applied to the regulatory approach in the proposal. Where
you plan to propose multiple regulatory alternatives (i.e., two or more approaches from
among which one will be selected for promulgation in the final rule), you should apply the
guidelines to each of the proposed alternatives and at a minimum to the alternative that
would likely have the greatest impact on small entities.
Similarly, if you plan to propose a single regulatory approach but seek comment on
variations of that approach or on different approaches altogether, you should ordinarily analyze
not only the proposed approach but also the potentially most burdensome variation or
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approach that has a significant chance of being promulgated. You should contact your
Steering Committee representative and your OGC contact when uncertain about the appropriate
scope of an IRFA for a proposed rule.
In assessing costs, should I assume compliance with existing legal requirements? Should
I assess incremental or cumulative costs?
Yes, in calculating the costs the rule will impose on small entities, you should presume
full compliance with all existing applicable statutory or regulatory requirements. Generally, in
the case of a rule revising an existing rule, you should assess only the incremental cost of the rule
revision because the cost of the existing rule was assessed, and a regulatory flexibility analysis or
certification prepared, when the rule was developed. However, there may be some unique
circumstances where the presumption of full compliance may not be appropriate. In such cases,
you should consult with your Steering Committee representative, the SBAC and OGC before
conducting the analysis.
Using the economic guidelines suggested in Table 1. what degree and extent of
impact constitute "a significant economic impact on a substantial number of small
entities"?
Application of the guidelines suggested above to a particular rule will yield quantitative
estimates of the rule's impact on small entities. Table 2 presents a matrix that categorizes the
rule based on the magnitude of its impact (as measured using the preferred guidelines) and the
number of entities expected to experience the impact. Each category establishes either a process
or a presumption regarding whether a rule can be certified as having no SISNOSE. The
categories are as follows:
Category 1: The rule is presumed not to have a significant economic impact on a substantial
number of small entities, but your Assistant Administrator may, at his or her
discretion, decide to prepare a regulatory flexibility analysis for the rule.
Category 2: No presumption applies. You must consult with the Small Business Advocacy
Chair if you believe that your rule should be certified as not having a significant
impact on a substantial number of small entities. You may recommend (through
your Steering Committee representative) certification to the SBAC and provide
the SBAC with information and analysis supporting your recommendation.
Category 3: The rule is presumed to be ineligible for certification, so you should contact the
SBAC through your Steering Committee representative, prepare a regulatory
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flexibility analysis and participate in a Small Business Advocacy Review Panel.16
The scope of each category is defined by various thresholds for three variables:
the magnitude of the economic impact,
the absolute number of small entities that will experience that impact, and
the percentage of small entities that will experience that impact.
It is important to keep in mind, however, that these are only guidelines for assessing if a
rule may have a SISNOSE. The RFA itself does not establish a formula for making this
determination, and indeed, it would be impossible to develop a formula that would yield an
appropriate answer in the context of every rule. For that reason, the guidelines suggest categories
that establish no more than a presumption. Agency management may exercise judgment in
deciding whether to prepare an IRFA or FRFA or to certify your rule. Indeed, the Agency has
already employed such discretion by choosing not to certify a proposed rule that directly
regulated fewer than 100 small businesses, but with an impact considerably greater than 3% of
sales. Another such case is currently pending. With more information and experience, the
Agency may conclude that the guidelines defining the categories should, themselves be changed.
For the time being, however, we believe the guidelines used in Table 2, have been successfully
and flexibly applied over the past two years, and remain useful as initial referents in determining
whether a rule is likely to have a SISNOSE.
Should I apply the Table 2 matrix separately to each type of small entity subject to the
rule?
Yes, where the rule will apply to more than one type of small entity (i.e., small
businesses, small governments, or small nonprofit organizations), you should apply the matrix
from Table 2 separately to each type subject to the rule. For example, for a rule that will impose
the same (or substantially similar) requirements on small businesses and small governments, you
should analyze the rule's impact on small businesses using an economic guideline appropriate to
small businesses, and analyze the impact on small governments using a guideline appropriate to
small governments. You should then feed the results of each analysis into the matrix separately.
The rule will thus be categorized twice once for its impact on small businesses and a second
time for its impact on small governments.
Under this approach, it is possible that a rule may fall into Category 1 with respect to one
type of small entity and Category 2 (or 3) with respect to another type. This could be the case,
16To overcome the presumption that a rule falling in Category 3 will have a significant impact,
additional quantitative analysis may be necessary. For examples of types of additional quantitative
analysis that could provide further information, see EPA Guidelines for Implementing the Regulatory
Flexibility Act (April 1992) sections IV and VI, and Appendix E.
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for example, where the rule's impact would be less than 1% of sales for small businesses
(Category 1), but 2% of revenues for over 1000 small governments (Category 2). Where a rule
falls into more than one category, the rule should be placed in the highest category into which it
falls. Thus, in the above example, the rule would be considered a Category 2 rule, and the
Agency would approach the decision about whether to prepare a regulatory flexibility analysis or
a certification for the rule in accordance with the guidelines for Category 2 rules. The RFA does
not require that you decide whether to prepare an analysis or a certification based on the rule's
impact on the type of small entity most affected by the rule, but EPA has chosen to take this
approach to ensure that we identify and address potentially significant impacts on any one type
of small entity.
Where a rule applies to more than one type of small entity, and separate application of the
table places the rule in Category 1, one further analytic step is required to categorize the rule:
aggregation of the results of the impact analyses on the different types of affected small entities
and application of the matrix to the aggregated results. This step is necessary because the table
uses absolute numbers as well as percentages to assess whether the rule is likely to impact a
substantial number of small entities. The absolute numbers provide a suggested floor and ceiling
for what may constitute a substantial number. For example, a rule that imposes a significant
economic impact on over 1000 small entities is presumed to meet the "substantial
number"guideline even if that number represents less than 20% of affected small entities.
We chose these absolute numbers as indicative of a substantial number not only with
respect to any one type of small entity, but with respect to all small entities taken together. Thus,
a rule with an impact of 2% of sales, revenues or assets with respect to 334 small businesses, 334
small governments and 334 small nonprofits, where 334 is less than 20% of each type of small
entity, would be a Category 1 rule if each type of small entity were looked at separately, but
should be a Category 2 rule since more than 1000 small entities may be significantly affected by
the rule.
The issue of applying the matrix to each type of small entity may be taken one step
further - that is, you should apply the matrix separately to different kinds of small
businesses, small governments, or small nonprofits. A rule may, for example, apply the same
requirements to dry cleaners and auto-body shops, but the rule's economic impact may be much
greater on one than on the other kind of business. As indicated above, it would be' appropriate in
such a case to analyze the impact of the rule separately for the two kinds of business. For
purposes of deciding whether to prepare a regulatory flexibility analysis or a certification,
however, the impacts of the rule, once assessed for the two kinds of business, should be
aggregated and the aggregates fed into the matrix. Please note that if your rule is certified, the
Agency is assuring the public that the rule will not impose a significant impact on a substantial
number of small entities of all types taken together. It is not appropriate to prepare separate
certifications for small businesses, small governments, and small non-profit organizations.
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How does my screening analysis relate to a Regulatory Flexibility Analysis?
f
If a decision is made to conduct a regulatory flexibility analysis for the small businesses
subject to the rule, the analysis may address the two kinds of businesses separately. Indeed, such
a disaggregated analysis is likely to improve your ability to identify ways of tailoring rule
requirements to the different characteristics of the affected small businesses.
Moreover, any regulatory flexibility analysis or certification you prepare for a rule should
generally cover the rule's impact on all types of small entities subject to the same (or
substantially similar) rule requirements, even if only one type of small entity may be
significantly affected in substantial numbers. We believe that if one type of small entity warrants
analysis, it is generally prudent to include all types of affected small entities in the regulatory
flexibility analysis and the Panel process that accompanies preparation of the initial regulatory
flexibility analysis for the rule. At the same time, as previously noted, any regulatory flexibility
analysis prepared for a rule may analyze and address the rule's impact on each type of small
entity separately, particularly where the degree and extent of impact varies with the type of small
entity.
Finally, your regulatory flexibility analysis need only explore regulatory alternatives for
those types of small entities that would otherwise be significantly impacted by the rule in
substantial numbers. The RFA provisions for initial regulatory flexibility analyses require that
the Agency discuss any significant regulatory alternatives which "minimize any significant
economic impact" of the proposed rale (section 603(c) (emphasis added)). For final rules, the
RFA requires that final regulatory flexibility analyses describe "the steps the agency has taken to
minimize the significant economic impact on small entities" (section 604(a)(5) (emphasis
added)). Thus, you are legally required to describe and address significant regulatory alternatives
only with respect to those types of small entities that may be significantly affected by the rule in
substantial numbers. As per EPA policy, however, you should continue: to consider and adopt
ways of minimizing a rule's burden on any small entities to the extent practicable.
Are Table 2's listed outcomes mutually exclusive?
No, as indicated above, the matrix relates three variables in suggesting the appropriate
category for your rale. For example, the matrix categorizes a rale based on whether it will have
an impact of more than 1% of sales or revenues on less than 100, 100 to 999, or 1000 or more
small entities and whether the absolute number of small entities so impacted is 20% or more of
all affected small entities. In applying the matrix to a rale, it is important to note that the
outcomes set forth in the matrix are not mutually exclusive. Your rale may have an impact of
2% of sales or revenues for 1000 small entities representing 40% of affected small entities
(placing it in category 2) and 4% of sales or revenues for 500 small entities representing 20% of
small entities (placing it in category 3).' If a rale's impact falls into more than one category, place
your rale in the highest category.
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TABLE 2: Summary of Quantitative Information Used to Identify Applicable
Categories for the Preferred Quantitative Guideline1
Quantitative Guidelines
Economic Impact
Condition
(based on preferred
guidelines from Table 1)
Number of Small
Entities
Experiencing
Economic Impact
Condition
Number of Small
Entities
Experiencing
Economic Impact
(as a Percentage
of All Affected
Small Entities)
Regulatory
Process
Category2
Less than 1% for all
affected small entities
Any number
Any percent
Category 1
1% or greater for one or
more small entities3
Fewer than 100
Any percent
Category 1
100 to 999
Less than 20%
Category 1
100 to 999
20% or more
Category 2
1000 or more4
Any percent
Category 2
3% or greater for one or
more small entities
Fewer than 100
Any percent
Category 1
100 to 999
Less than 20%
Category 2
100 to 999
20% or more
Category 3
1000 or more4
Any percent
Category 3
Nothing in this table on applying quantitative measures of economic impacts and enumerating the number of
impacted small entities should be interpreted as indicating that the certification decision is strictly or solely based
upon application of the above quantitative steps. Additional information and other factors may be relevant in
deciding whether to prepare a regulatory flexibility analysis or certify under the RFA.
2 There may be cases where the extent of the impact (measured in quantitative or qualitative terms) is particularly
severe, even though the number of affected small entities totals fewer than 100 or 20% of all affected small
entities. In such cases, the lead office should consider placing the rule in a higher category than would otherwise
be applicable.
3 For purposes of applying this portion of the table, the number of small entities that will experience an impact of
1 % to 3% should be aggregated with the number of small entities that will experience an impact of 3% or greater
The total number of small entities that will experience an impact of 1% or greater should be used here in order to
determine whether the number of small entities so impacted is large enough to warrant preparation of a
regulatory flexibility analysis.
4 As the number of small entities that will be affected by a rule by more than 1 % of sales or revenues
approaches 1000 in number, the substantial number guidelines of 20% of affected small entities may become
less relevant in determining whether a regulatory flexibility analysis or a certification should be prepared
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2.3 What Should I Do After Applying the Matrix?
As noted above, the guidelines set forth by this guidance cannot be applied
mechanistically. You may factor additional information into the decision to certify your rule as
having no significant economic impact on a substantial number of small entities. The following
sections explore some of the common factors that may be relevant in deciding whether or not to
certify a rule under the RFA/SBREFA.
Would an alternative definition of "substantial number" be appropriate?
When application of the matrix suggests that a rule will not impact a "substantial
number" of small entities, it is appropriate for you to consider whether alternative approaches to
defining "substantial number" should apply for one of the following reasons:
Where the extent of the impacts, measured in economic or non-economic terms,
would be of sufficient magnitude (e.g., potential collapse of a viable regionally-
concentrated fraction of an industrial sector) to warrant using either a smaller
absolute number (i.e., a figure lower than 100) or a smaller fraction of small
entities (i.e., a figure lower than 20%).
Where the size and distribution of entities within the industry, the distribution of
revenues, market share, etc., suggest an alternative definition of "substantial
number" for businesses. In such cases, it may not be possible or appropriate to
determine whether a "substantial number" will be affected until after collecting
the data necessary to prepare an IRFA or FRFA and analyzing the data for this
purpose.
Should I analyze relative impacts?
Comparing a rule's impacts on small entities versus large entities (i.e., a rule's
disproportionate impact on small entities) may be one analytical means of providing additional
insight into whether a rule will have a "significant impact" on a "substantial number" of small
entities. Analytical tests and guidelines for making relative comparisons are listed in section V
of EPA Guidelines for Implementing the Regulatory Flexibility Act (April 1992).
Are there other qualitative considerations relevant at this stage?
You may factor qualitative information into this phase of determining whether a rule will
not have a significant economic impact on a substantial number of small entities. Qualitative
assessment of the impacts on small entities ensures consideration of legitimate non-quantitative
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factors that may or may not be supported through data. Qualitative analysis can take on the
appearance of a quantitative analysis, such as when the program office uses its judgment to make
use of related summary data or "model" financial data in the absence of more detailed
information. For example, where you cannot obtain data for a particular type of small entity
subject to the rule, you may choose to use quantitative information on another type of small
entity whose behavior and financial characteristics are similar to those subject to the rule.
Another example might entail the creation of baseline financial characteristics for a set of small
entities drawing upon quantitative information available on larger entities in the same industrial
or governmental sector. You can also draw your general patterns of comparison between larger
and smaller entities so as to infer the small entities' financial characteristics. In general, where
quantitative information is sought, the goal is to obtain the type of data that allow for the most
reliable form of quantitative analysis to be used. But where data limitations persist, we
encourage adoption of reliable alternatives.
Should the screening analysis be reviewed within the Agency?
The Assistant Administrator of the office preparing a screening analysis is responsible for
ensuring the integrity and validity of the screening analysis. Your AA may decide to have your
screening analysis reviewed by workgroup members, or OP's Office of Economy and
Environment, (OEE) and the Small Business Advocacy Chair.
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30
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Chapter 3.
Implementing Small Entity Outreach: Informing, Listening, Responding
Contents of Chapter 3
Page No.
3.1 Small Entity Outreach: The Basics 31
3.2 What Does "Outreach" Mean? 32
3.3 Is Small-Entity Outreach Subject to FACA? .. 33
3.4 Should I Coordinate my Stakeholder Involvement
Activities? 33
3.5 What Kind of Outreach Does RFA/SBREFA
Require? 34
3.6 Where Can I Get Assistance with my Small
Entity Outreach? 34
3.7 What Steps Can I Take to Reach Small
Entities? 35
3.8 Where Can I Get More Information? 38
3.1 Small Entity Outreach: The Basics
The Small Business Regulatory
Enforcement Fairness Act (SBREFA) amended
the Regulatory Flexibility Act (RFA) to bolster
the RFA's requirements that agencies provide
small entities with a meaningful opportunity to
participate in the development of rules that may
significantly affect them. EPA's success in
carrying out our obligations under the
RFA/SBREFA requires early and continuing
interaction with small entities throughout the
regulatory development process. The
RFA/SBREFA process, and your interactions with
small entities in general, should be a genuine
dialogue with meaningful engagement and
exchange of ideas and information. The goal of
small entity outreach is to ensure promulgation of
a rule that is tailored to achieve a specific environmental goal while taking into account the
particular concerns of small entities.17
It is important that outreach to small entities occur as early as possible in regulation
development. Indeed, it will often be appropriate to start
outreach before or concurrently with performance of a
preliminary screening analysis (see Figure 1). Early outreach
and accommodation of small entity issues has proven to have a
substantial positive impact on the quality of our regulations.
First, small entities can often fill gaps in our knowledge and
experience to provide alternate, less burdensome regulatory
options that will accomplish a stated environmental goal.
Second, you can gain support for the regulatory option ultimately
selected by bringing small entities into the process early on,
listening and responding to their concerns, and having that input
influence the direction of your rule. When you believe your rule is likely to have a significant
Early outreach and
accommodation of
small entity issues has
proven to have a
substantial positive
impact on the quality
of regulations.
As a practical matter, most of the outreach we describe in this chapter will take place in the pre-
proposal phase of the rule development process. While further outreach may be appropriate in the post-
proposal stage, any contact with small entities at that time is subject to the same ex oarte restrictions that
govern all external contacts once the public comment period closes.
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economic impact on a substantial number of small entities (SISNOSE)., this early involvement
should also include OGC and staff to the Agency's Small Business Advocacy Chair (SBAC,
contact information below). At a later point it will be appropriate to involve the Small Business
Administration's (SBA) Office of Advocacy and the Office of Management and Budget's
(OMB) Office of Information and Regulatory Affairs.
> . i
Detailed below is a strategy outlining how you can identify and engage in dialogue with
representatives of small entities that may be subject to your rule.
3.2 What does "Outreach" mean?
According to the EPA Manual on Consultative Processes,1S
Outreach is a means by which the Agency keeps its constituencies - those who are
interested in or affected by its action - informed about what it is doing, what it is
planning, and what its needs are. Outreach is basic communication. In addition
to informing those affected of the Agency's activities, outreach also encourages
and provides the means by which members of the public can communicate their
needs and desires to the Agency so they may be taken into account when making
decisions.
In sum, outreach includes informing potentially regulated parties about EPA's regulatory plans,
listening to their concerns and suggestions about how the rule may affect them, and responding
through appropriate action to meet environmental objectives while minimizing unnecessary
burden.
There are many forms and styles available for providing information to small entities potentially
subject to a rule, including:
public announcements
interviews
informal and formal meetings
web sites and list serves
magazine and journal articles
speeches
dockets, and
press releases.
While each of these can be used to transmit necessary information to members of the public,
simply providing notice of EPA's intent is not enough. Adequate outreach also requires that we
seek opportunities for genuine engagement that places the Agency in a position to hear from and
EPA Manual on Consultative Processes: Better Decisions Through Consultation and
Collaboration, Draft - October 1998, copies available from Debbie Dalton at 202.260.5495
32
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
respond to small entities.
3.3 Is Small-Entity Outreach Subject to FACA?
Some forms of outreach are regulated by statute. Specifically, the Federal Advisory
Committee Act (FACA) establishes requirements for the convening and operating an official
advisory committee. However, many groups are exempt from FACA coverage including: fact-
finding and information exchange groups, meetings with persons providing individual advice or
recommendations (as opposed to collective advice or recommendations); and, meetings with
groups of people to interactively discuss and debate individual opinions or recommendations.19
RFA/SBREFA outreach has commonly occurred in the form of information exchanges.
According to the EPA Manual on Consultative Processes, information exchanges primarily seek
to enhance the parties' understanding of the situation. During information exchanges, at least
one side will be providing information or advice to the other and oftentimes there will be an
exchange of views or concerns. Importantly, the participants involved in information exchanges
are not expected to reach agreement. Sections 3.4 and 3.6 (below) provide more specific
information on where to get assistance with your outreach efforts
and steps to take to reach small entities.
3.4
Should I Coordinate My Stakeholder Involvement
Activities?
A stakeholder
involvement process is
not an end in itself; it
is a means to a better,
more widely accepted
decision.
-EPA Manual on
Consultative Processes
You are strongly encouraged to coordinate your
stakeholder activities and allow these distinct processes
internal workgroup, peer review, FACA committee, SBAR Panel
to inform each other. Although each group has its own
policies and procedures, they do not take place in isolation;
indeed, they may have overlapping membership. Moreover,
every stakeholder activity is based on relationships, and the relationships you develop rely on
trust. Consequently, you will have greater success if you demonstrate a willingness to share
information not only with your stakeholders but also between your stakeholder groups to nurture
that trust. Beyond the importance of these considerations, you need to make the most of your
time and resources. As you invest time at the outset of your rulemaking to develop an Analytic
Blueprint or other planning document for your rule, you should be able to recognize some
efficiencies in coordinating some of your stakeholder activities. For example, if you engage a
For more information on FACA, contact Vicki Ellis, Committee Management Officer
(202.260.4999) or Chris Rice, Committee Management Secretariat (202.260.5986) or access the EPA
Office of Reinvention website on stakeholder involvement: http://www.epa.gov/reinvent/epastake/.
33
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contractor to assist you in identifying participants for a FACA committee, as part of the same
effort, the contractor may be able to identify a group of potential small entities for a SBAR
Panel. Similarly, outreach documents prepared for one group may be appropriate for your other
stakeholders.
3.5 What Kind of Outreach Does RFA/SBREFA Require?
|
The RFA/SBREFA requires an agency to "assure that small entities have been given an
opportunity to participate in the rulemaking process" for any rule that "will have a significant
economic impact on a substantial number of small entities." 5 U.S.C. § 609(a). RFA/SBREFA
also directs us to ensure small entity participation through the reasonable use of techniques such
as those listed in section 609(a), as follows:
use of computer networks to solicit and receive comments
publication of the notice of proposed rulemaking in publications likely to be
obtained by small entities
direct notification of interested small entities
conduct of open conferences or public hearings concerning the rule for small
entities;
inclusion in an advance notice of proposed rulemaking, if issued, of a statement
that the proposed rule may have a significant economic effect on a substantial
number of small entities, and
the adoption or modification of agency procedural rules to reduce the cost and
complexity of participation in the rulemaking for small entities.
SBREFA also strengthened the RFA's outreach provisions in two principal ways. First,
the RFA now requires EPA to convene a Small Business Advocacy Review Panel (SBAR Panel
or Panel) prior to proposing a rule for which we are required to prepare an IRFA (i.e., those rules
for which EPA does not certify that the rule will not, if promulgated, have a SISNOSE). As
described in detail in Chapter 4, the Panels are required to consult with representatives of small
entities that will be subject to the rule. Second, the amended RFA allows small entities adversely
affected by the final rule to sue agencies in court for failure to comply with specified RFA
provisions, including section 609(a), which requires agencies to assure that small entities have
an opportunity to participate in rulemakings that will have a SISNOSE.
3.6 Where Can I Get Assistance with My Small Entity Outreach?
You should first consult your Steering Committee representative to determine what
resources are available to you within your program office. EPA also has several offices that may
be able to assist you with outreach throughout different stages of rule development. EPA's
Small Business Ombudsman (SBO), located in OP's Office of Regulatory Management and
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Information, can provide support and assistance in your outreach activities to small entities. The
SBO maintains an updated list of key small entity contacts, which will be made available to you .
upon request. These small entity contacts include:
* national small-entity trade association executives and contact persons
> contacts for the CAA State Section 507 Program, including the Small Business
Ombudsman, Small Business Assistance Program, and the Compliance Advisory
Panels; and,
* EPA Regional Small Business Liaisons.
Additional support and assistance with outreach and development of small-entity contacts is
available from the Office of Communications, Education and Public Affair's (OCEPA) Public
Liaison Division, the Office of Policy's Regulatory Management and Information Division,
Consensus and Dispute Resolution Team, and the Office of Congressional and Intergovernmental
Relations (OCIR). Also, OCIR supports a small town FACA group, the Small Community
Advisory Subcommittee of the Local Government Advisory Committee. OCIR assistance could
include: 1) help creating an outreach strategy to support the rulemaking; 2) supporting the
distribution of information; and 3) help developing and maintaining a comprehensive list of
small entity contacts for use by individual program offices. Points of contact within EPA's OP
OCEPA, and OCIR are provided below (Section 3.8).
In addition to these general resources, each program office is encouraged to develop and
maintain a comprehensive contact list of small entity representatives, keyed to their program area
of responsibility. These could include:
* small business trade associations; and
> organizations representing townships, counties and municipalities, and decision-
making individuals within these organizations (public and private non-profit).
You could use this contact list to help identify knowledgeable individuals who may serve as
small entity representatives for your rulemaking.
EPA's Small Business Advocacy Chair (SBAC) is responsible for overseeing policy
decisions regarding certifying that a rule will not have a SISNOSE, as well as decisions to
convene a Small Business Advocacy Review Panel. The SBAC and SBAC staff are responsible
for coordination of SBAR Panels, including communication with SBA and OMB and Panel
logistics. Points of contact for the SBAC are provided in Section 3.8 (below).
3.7 What Steps Can I Take to Reach Small Entities?
The following sections outline some suggested steps you can take in developing a
proposed rule, particularly if it appears that it may not be possible to certify that your rule will
have no SISNOSE. As noted above, you should also check with your Steering Committee
35
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1999 Revised RFA/SBREFA Guidance for EPA_Rulewriters
representative to explore what resources are available to you within your own program office.
Contact SBAC staff
If you believe that it may not be possible to certify your rule as having no SISNOSE
(according to the screening analysis in Chapter 2), you should contact the SBAC staff through
your Steering Committee representative. The SBAC staff will work to provide you with the
support and service needed to make each SBAR Panel process as efficient and productive as
possible. SBAC staff can advise you on how the RFA/SBREFA Panel process can fit into your
rulemaking schedule, potential inclusion of SB A and OMB in outreach efforts, and the
implications of the results of your screening analysis, among other things.
Identify and contact small entities
Stakeholders are those who have an interest direct or indirect in the action the
Agency is planning to take. Small entities are a subset of your broader stakeholder group those
that meet the statutory definition of small business, small government or small non-profit
enterprise.20 As part of your outreach efforts, you should make informal contact with potential
small entities to confirm their small entity status.
There is an important distinction to note at this time between small entities which should
be included as stakeholders through your broader outreach efforts and official Small Entity
Representatives for a Small Business Advocacy Review Panel process. Official Small Entity
Representatives are chosen through a process of consultation with the EPA Small Business
Advocacy Chair and the Small Business Administration. This process is described in more detail
in Chapter 4. While small entities with whom the Agency has consulted from the beginning are
the chief candidates to serve later as official advisors to a Panel, small entities do not become
official Small Entity Representatives (known as SERs) until they are officially designated as
such by the Small Business Advocacy Chair. The formal selection of Small Entity
Representatives is made after SBA's response to your formal notification from the SBAC, which
is typically very close to the time a Panel convenes.
Consider drafting informal notification to SBA
During the outreach process, if you believe that your rule may not be able to be certified
as having no SISNOSE (according to the screening analysis in Chapter 2), you should consider
drafting an informal notification to the Small Business Administration. You should route both
informal and formal notifications, as well as any communications regarding potential
RFA/SBREFA issues, through your Steering Committee representative to the SBAC. Section
4.6.2 provides more information on drafting an informal notification. Outreach to small entities
20 See Chapter 2 for more information on the definition of 'small entity.'
36
~ Chapter 3 Small Entity Outreach ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
or informal notification to SB A do not represent an EPA finding that your rule will have a
significant economic impact on a substantial number of small entities, nor does it commit you to
preparing a regulatory flexibility analysis or convening a Small Business Advocacy Review
Panel. Small entities can provide input to help the Agency ultimately determine if either of these
activities are required. Further, they can offer ideas to help the agency formulate alternatives that
achieve your environmental objective and do not impose a SISNOSE.
Conduct outreach to small entities (i.e., substantive engagement)
It is clear from the specific requirements set forth by RFA/SBREFA that Congress
intended agencies to provide small entities with a meaningful opportunity to participate in the
development of rules that may significantly affect them. One of the keys to fostering productive
participation is effective outreach and exchange of information. In conducting small entity
outreach, you should distribute sufficient information to your small entity representatives about
your regulation so that they can provide you with informed feedback on the four elements of an
Initial Regulatory Flexibility Analysis under section 603 of the RFA which Congress identified
in SBREFA as key issues. Those elements are:
A description of, and where feasible, an estimate of the number of small entities to which
the proposed rule will apply;
A description of projected reporting, recordkeeping, and other compliance requirements
of the proposed rule, including an estimate of the classes of small entities which will be
subject to the requirements and the type of professional skills necessary for preparation of
the report or record;
An identification, to the extent practicable, of all relevant Federal rules which may
duplicate, overlap, or conflict with the proposed rule; and
A description of any significant alternatives to the proposed rule which accomplish the
stated objectives of applicable statutes and which minimize any significant economic
impact of the proposed rule on small entities.
For small entities, it is advisable to request comments in writing since these will be used
later as part of your SBAR Panel convening document or as documentation of your factual basis
for a certification of no SISNOSE (see also Keep Records section, below). You may want to
include the SBAC and staff, OMB, and SB A in your outreach efforts. Much of the success of
previous SBAR Panel processes can be attributed to the level of familiarity that the Small Entity
Representatives and the Panel members (described in Chapter 4) have gained with provisions
under consideration for the regulation, as well as with the program staff developing the
regulation, prior to convening the Panel.
So long as you ensure genuine engagement with small entities, you can certainly
37
~ Chapter 3 Small Entity Outreach ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
include this responsibility as part of your overall outreach efforts. EPA's guidance on
stakeholder involvement, EPA Manual on Consultative Processes: Better Decisions Through
Consultation and Collaboration, Draft - October 1998, offers guidance as to what process to use
for public involvement in your rulemaking and what steps to take to maximize your outreach
efforts. Sections 3.2 and 3.5 (above) list some suggested venues for small entity outreach and
Chapter 7 also contains a list of resources for getting your information disseminated to the
public. In conducting outreach to small entities, however, it is important to ensure these parties
have an opportunity to address their concerns separately and specifically to the Agency. While
small entities may participate in public meetings designed for a broader group of participants,
such a forum should provide an opportunity for EPA to hear separately and particularly from
smaller interests. A particular reason that the Congress passed, and the President signed
SBREFA was to "level the playing field" by affording smaller interests a chance to be heard
independently from competing interests, including large entities likely to be regulated.
Keep Records
For any rule for which the Agency is required to prepare a Regulatory Flexibility
Analysis (see Chapter 2), you are responsible for keeping a record of your outreach efforts and
including that record in the rulemaking docket for purposes of judicial review. It is crucial for
you to demonstrate and document a pattern of dialogue with and outreach to all interested
stakeholders with particular attention to the interests of small entities that may be subject to your
regulation. For each meeting, formal or informal, with your stakeholders you should take notes
regarding the major topics of discussion and create meeting summaries. You should append any
materials you distribute or present, including agendas, outreach packages, fact sheets, and
overheads to your meeting summaries.
It is also a good practice to maintain a file documenting outreach even for rules not
requiring an IRFA. This will allow the program to demonstrate its adherence to the Agency's
standing policy of outreach and, when feasible, accommodation of small entities in any rule to
which they will be subject. In addition, since the Agency can now be sued on the factual basis it
presents supporting its certification that a rule does not impose a SISNOSE, it may prove
necessary to demonstrate how the Agency considered small entities' concerns in reaching its
decision to certify.
3.8 Where Can I Get More Information?
Program Steering Committee Representatives
OAR: Tom Eagles, Tel: (202)260-5585, Email: eagles.tom@epa.gov
OPPTS: Angela Hofrnann, Tel: (202)260-2922, Email: hofmann.angela@epa.gov
OSWER: Barbara Hostage, Tel: (202)260-7979, Email: hostage.barbara@epa.gov
OW: Cynthia Puskar, Tel: (202)260-8532, Email: puskar.cynthia@epa.gov
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
EPA Small Business Advocacy Chair
Tom Kelly, Director
Office of Regulatory Management and Information
Tel: (202) 260-4001
Small Business Advocacy Chair Staff
Stuart Miles-McLean, Tel: (202) 260-8518, E-mail: miles-mclean.stuart@epa.gov
Jennifer Greenamoyer, Tel: (202) 260-7829, E-mail: greenamoyer.jennifer@epa.gov
Jennifer Kim, Tel: (202) 260-1045, E-mail: kim.jennifer@epa.gov
Patrick Easter, Tel: (202) 260-6843, E-mail: easter.patrick@epa.gov
EPA Small Business Ombudsman Program
Karen V. Brown
EPA Small Business Ombudsman
Tel: (202) 260-0490
Small Business Ombudsman Program Staff
SBO Staff
Robert Rose
James Malcolm
Larry Tessier
Arnold Medbery
Thomas Nakley
Media/Regulatory Speciality
Clean Air Act, and general assistance
Toxic Substances and Hazardous Materials
Asbestos, Radon, and Lead
Clean Air Act, Water, Asbestos
Clean Water Act and general assistance
Telephone Number
(202)260-1133
(202) 260-1616
(202)260-1946
(202)260-1787
(202) 260-1863
In addition, the two EPA programs involved with small governments, small communities,
and small non-profit organizations that also are available to provide assistance and support in
outreach to small entities under SBREFA are:
Small Governments and Small Communities
Steve Wilson, Small Community Coordinator
Office of State and Local Relations
Office of Congressional and Intergovernmental Relations
Tel: (202) 260-2294
Non-profit Organizations
Margaret Morgan Hubbard, Director
Office of Communications
Office of Communications, Education and Public Affairs (OCEPA)
Tel: (202) 260-4454
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40
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Chapter 4.
The Small Business Advocacy Review Panel Process for Proposed Rules
4.1
4.1 What is a Small Business Advocacy
Review Panel?
A Small Business Advocacy Review Panel
(SBAR Panel or Panel) is an additional means for
small entities to provide input into certain EPA
rulemakings to ensure that the unique concerns of
small entities are carefully considered during the
rulemaking process. The Small Business
Regulatory Enforcement Fairness Act (SBREFA)
amended the Regulatory Flexibility Act (RFA) to
require EPA to convene a SBAR Panel for any
proposed rule for which the EPA is required to
prepare an initial regulatory flexibility analysis
(IRFA).
The RFA requires that we prepare an IRFA
for all rules which EPA is required by statute to
publish a NPRM unless the agency certifies that
the rule "will not, if promulgated, have a
significant economic impact on a substantial number of small entities (SISNOSE)."21 If an
IRFA is required for a proposed rule under the RFA, we must also convene a SBAR Panel. Each
Panel consists of representatives from EPA, the Small Business Administration, and the Office of
Management and Budget. Although the statutory name for the Panel refers only to small
businesses, each Panel must solicit and consider the concerns of all small entities directly
regulated by the rule, including small governmental jurisdictions and small nonprofit
organizations, in addition to small businesses.
Contents of Chapter 4
Page No.
What is a Small Business Advocacy Review
Panel? 41
4.2 What are the Statutory Panel Requirements? . 41
4.3 What Help is Available to Me in Preparing for a
Panel? 43
4.4 What Circumstances Require EPA to Convene a
Panel? 45
4.5 Can I Request a Waiver from the SBAR Panel
Process? 46
When Should We Convene a Panel? 47
What Should be Done Before my Panel Can Be
Convened? 48
4.7 What Can I Expect from Panel Review? 54
4.8 Consideration of the Panel Report During Rule
Development and Preparation the IRFA 58
4.6
4.7
4.2 What are the Statutory Panel Requirements?
Since the RFA was enacted in 1980, RFA section 609 has required all agencies to
facilitate small entities' participation in rulemakings that will have a significant economic impact
on a substantial number of small entities (see Chapter 3 for further discussion of general outreach
Because the term 'significant economic impact on a substantial number of small entities' is
cumbersome, it is commonly called a "SISNOSE". When we determine that there will not be a
significant adverse economic impact on a substantial number of small entities, we call that a "No
SISNOSE" finding or "making the RFA/SBREFA certification."
41
~ Chapter 4 SBAR Panel Process-
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
provisions). SBREFA expanded RFA section 609 to require EPA to convene SBAR Panels to
ensure that small entity representatives are involved in the development of certain rules.22
Under RFA section 609(b), as amended by SBREFA, we must convene a Small Business
Advocacy Review Panel for any rule for which the Agency is required to prepare an IRFA. If we
exercise our discretion to make the RFA/SBREFA certification (i.e., certify that a proposed rule
will have No SISNOSE), we do not need to convene a Panel. Even if we convene a Panel, EPA
may defer the decision to certify a rule until after a Panel has concluded its work. Also,
RFA section 609(c) authorizes us to convene a Panel for a rule that we intend to certify, but that
we believe may have "a greater than de minimis impact on substantial number of small entities."
Section 609(b) requires that the Panel process occur before publication of the IRFA, which must
be made publicly available at the same time the proposed rule is published, except in cases of
emergency. Accordingly, we (generally) must convene a Panel before a rule is proposed.
Section 609(b) establishes the following statutory framework for the Panel process:
- For any rule subject to the Panel requirement, EPA is to notify the Chief Counsel for
Advocacy of the Small Business Administration (SB A) and provide the SB A Chief
Counsel with information on the potential impact of the proposed rule on small entities
and the type of small entities that might be regulated.
- The SB A Chief Counsel has 15 days from receiving notification of a rule to identify
individuals representative of the small entities likely to be regulated by the rule.
- EPA is to convene a review Panel consisting only of full-time federal employees,
including representatives of the Agency office responsible for developing the rule, the
Office of Management and Budget's Office of Information and Regulatory Affairs
(OERA), and the SBA Chief Counsel.
- The Panel is to review any material EPA has prepared in connection with the rulemaking,
including any draft proposed rule, and collect the advice and recommendations of each
individual small entity representative selected by EPA, after consultation with the SBA
Chief Counsel for Advocacy, on issues related to specific elements of an IRFA for the
proposed rule under development. The specific elements of an IRFA are
> a description of, and where feasible, an estimate of the number of small entities to
which the proposed rule will apply;
* a description of projected reporting, recordkeeping and other compliance
requirements of the proposed rule, including an estimate of the classes of small
entities which will be subject to the requirement and the type of professional skills
22 The Occupational Health and Safety Administration is also subject to the Panel requirement.
42
~ Chapter 4 SBAR Panel Process-
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
necessary for preparation of the record or report,
» an identification, to the extent practicable, of all relevant Federal rules which may
duplicate, overlap or conflict with the proposed rule, and
a description of any significant alternatives to the proposed rule which accomplish
the stated objectives of applicable statutes and which minimize any significant
economic impact of the proposed rule on small entities.
Not later than 60 days after EPA convenes the Panel, the Panel must report on the
comments of the small entity representatives and the Panel's findings with regard to the
issues related to the IRFA elements listed above. The Panel report must be included in
the rulemaking record.
In light of the Panel report, the Agency is to modify, where appropriate, the proposed
rule, the IRFA or the decision on whether an IRFA is required.
4.3 What Help is Available to Me in Preparing for a Panel?
First, you should check with your Steering Committee representative to see what
resources are available to you within your own program office. EPA's Office of Policy has
created this guidance document which should answer most of your procedural and substantive
questions about the SBAR Panel process. EPA's Office of Policy also has a team of
RFA/SBREFA experts who serve as staff to the SBAC to help you manage your Panel and
answer questions before, throughout and after the Panel process. Each of these is described
below.
4.3.1 How Can this Guidance Help Me with My Panel?
This chapter provides you with a step-by-step approach to implementing the SBAR Panel
requirement. Our suggested approach is further illustrated in Figure 4 While the SBREFA
amendments to the RFA establish the basic outline of the Panel process (described below) it also
leaves us with discretion to determine many details of that process, including when to convene a
Panel prior to proposing a rule. EPA has, therefore, developed a suggested process that will
typically involve small entity representatives early in the rulemaking process Early
involvement helps ensure that small entity comments and insights inform EPA's thinking
about fundamental issues of rule design and scope, as well as more specific issues posed by
the particular regulatory program at issue.
43
~ Chapter 4 SBAR Panel Process-
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
This Guidance reflects agency policy and practice in implementation of the RFA/SBREFA. At
the same time, we recognize the need for flexibility in implementing the RFA. Some rules
subject to the Panel requirement may have developed in such a way that the Panel process must
take place later in the rulemaking process than this guidance suggests. Nevertheless, this
suggested process should work in most situations.
Our suggested Panel process is divided into several parts. You may not need to complete
each part of the process if, during the course of rule development, you (or, more accurately, your
Assistant Administrator, who is responsible to the Administrator for the certification decision)
determine that your rule will not have a SISNOSE. However, even if your rule will not have a
SISNOSE (i.e., you are making the RFA/SBREFA certification), but may have some impact on
one or more small entities, it is important for you to engage in consultation with the relevant
small entity stakeholders (see Chapter 3 on small entity outreach).
4.3.2 Who Will Help Me with My Panel?
Under SBREFA section 244(b),23 SBAR Panels are chaired by a Small Business
Advocacy Chairperson designated by the Administrator. The Chairperson is responsible for
implementing the Panel review process. In 1996 Administrator Carol Browner appointed Tom
Kelly, Director of the Office of Regulatory Management and Information of the Office of Policy,
to serve as the Agency's first Small Business Advocacy Chairperson (SBAC). The Small
Business Advocacy Chairperson heads a small staff (SBAC staff) who mainly work on
RFA/SBREFA issues.
The SBAC Staff can help you in several ways. Two of the most important are:
the SBAC staff serve as EPA's experts in the Panel process, providing
support to program offices in resolving both complex and day to day
issues, and
the SBAC staff provide support for many of the mechanics of convening
and operating the Panel.
An SBAC staff member will be assigned to work with you on your Panel. We encourage you to
make contact with the SBAC staff as early as possible in the rule development process. This
staff-level informal contact should also include your Steering Committee representative. You
should also check with your Steering Committee Representative to explore what resources are
available to you within your own program office.
23SBREFA has several provisions that are not codified into the RFA but that still have an impact upon
RFA implementation. SBREFA section 244(b) is one such provision.
45
~ Chapter 4 SBAR Panel Process-
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
4.4 What Circumstances Require EPA to Convene a Panel?
The first step you must take to determine whether we must convene a Panel is to conduct
the screening analysis detailed in Chapter 2. As noted above, if your proposed rule may have a
SISNOSE, you must prepare an Initial Regulatory Flexibility Analysis, and EPA must convene a
Panel prior to proposal. Because the determination to convene a Panel can have a significant
impact on your rulemaking schedule, you should identify the rule's potential impact on small
entities as soon as possible. After the screening analysis is completed, you should consult with
your Steering Committee Representative and the SBAC and SBAC staff. At this early stage, you
should consider ways of structuring the rule to avoid any undue burden on small entities while
still meeting the environmental objective of the statute. In doing so, yc>u may find that it may be
possible to certify the rule as having No SISNOSE.
As stated in Chapter 2, we believe that only rules which
may have a significant adverse economic impact on a substantial
number of small entities require an IRFA, since the primary
purpose of the IRFA is to identify and address regulatory
alternatives "which minimize any significant economic impact
of the proposed rule on small entities." (RFA section 603,
emphasis added). Thus, if your rule will exclusively relieve
regulatory burden, or otherwise have a positive economic effect
on the small entities subject to the rule, your rule may be
certified and, therefore, you are not required to prepare an IRFA
or convene a Panel.
EPA's decision to
convene a Panel is not
a commitment to
prepare an IRFA (for
rule proposal), a FRFA
(for rule
promulgation) nor
does it prevent you
from certifying your
proposed or final rule.
In any case, our decision to convene a Panel is not a
commitment to prepare an IRFA (for rule proposal) or a FRFA
(for rule promulgation), nor does it prevent EPA from certifying your proposed or final rule if its
substance so warrants. In fact, each step in the RFA/SBREFA process, from informal
notification through completion of the RFA/SBREFA Panel Report, leaves open the prospect
that your rule can be certified as having no SISNOSE, should the provisions of your rule change
or new information be discovered. For example, you may adopt Panel recommendations that
would result in a proposed rule no longer having a SISNOSE. In that case, EPA could properly
certify your rule and you would not be required to complete an IRFA or convene a Panel.
4.5 Can I Request a Waiver from the SBAR Panel process?
Under RFA section 609(e), EPA may request that the SB A Chief Counsel for Advocacy
waive the Panel requirement for a rule. The SB A Chief Counsel may grant a waiver if he or she
finds that convening a Panel would not advance the effective participation of small entities in the
rulemaking process. (Note, however that the waiver applies only to the requirement to convene a
Panel; it does not relieve you from preparing an IRFA, notifying the SB A Chief Counsel of the
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rule or the SB A Chief Counsel from identifying small entity representatives.)
The SB A Chief Counsel will consider the extent to which you have already consulted
with small entity representatives and taken their concerns into account; "special circumstances
necessitating prompt issuance of the rule"; and whether the Panel process would provide the
small entity representatives involved in the process a competitive advantage over other small
entities. Before granting the waiver, the SB A Chief Counsel must consult with OIRA and the
small entity representatives identified by the SB A Chief Counsel after receiving formal
notification of the rule. The SB A Chief Counsel must also provide you with a written
explanation of the waiver decision for the rulemaking record.
Your waiver request must be submitted through your Steering Committee representative
to the Agency SB AC. EPA will only request the waiver of a Panel requirement in exceptional
circumstances (e.g., when a rule is subject to a near-term legal deadline) or when you have
already engaged in extensive outreach to representatives of potentially regulated small entities
such that a Panel would be demonstrably redundant.
Even if the Agency decides to request a waiver, you, in cooperation with your Steering
Committee Rep and SB AC staff contact, will still need to complete the formal notification step
of the process as outlined below. The SB AC will also informally notify the SB A Chief Counsel
of the Agency's intent to request a waiver before formally requesting it. If the SBA Chief
Counsel grants the waiver, you are not required to complete the remaining steps of the Panel
process, but you should conduct as much outreach as time permits or as appropriate under the
circumstances.
4.6 When Should We Convene a Panel?
It is EPA's policy to convene Panels relatively early in the proposed rule development
process to give the Panel the best opportunity to inform decision makers during the initial stages
of rule development (i.e., prior to option selection). This is balanced with the need for sufficient
shape and development such that the small entity representatives and the Panel members will
have adequate information to critically appraise EPA's intention. Generally, the Agency SBAC
will consult the other standing Panel members with respect to an appropriate time to convene a
Panel. However, no matter when in the regulatory development process a Panel is convened, the
Panel's final report must be completed within 60 days of convening the Panel. EPA expects that
the Panel process will normally be concluded well in advance of Final Agency Review (or
equivalent stage for Tier 3 rules), in order to be most useful to the development of the proposed
rule.
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4.7 \VhatShouldBeDoneBeforeniyPanelCanBeConvened?
Once you determine that we must convene a Panel for your rule, you should make contact
with the SB AC Staff through your Steering Committee representative to find out who you will
be working with on your Panel. You should share information about your expectations for the
Panel process and the rulemaking schedule. Bear in mind that the Panel itself should take no
more than the 60 days provided by the statute to conduct its review; however, the entire
Panel process once begun in earnest with focused small-entity outreach, through SBA
notifications, preparation for and convening of the Panel and completion of the Panel
report will usually take between four and ten months. The amount of time is dependent on
the complexity of the rule and the amount of outreach done prior to the initiation of the Panel
process. This time line may require you to change your rulemaking schedule or resource
commitments. When negotiating court schedules, program staff and management should take
into consideration the time and resources that may be needed to comply with the RFA/SBREFA
Panel requirement. However, the Agency will not ask for an extension of any court-ordered
deadlines solely to comply with RFA/SBREFA Panel requirements, so it is vital that the program
fully consider these responsibilities in setting its initial rulemaking schedule.
Prior to convening a Panel, the typical steps include:
identifying and making contact with small entity representatives (SERs) among
your stakeholders
providing informal notification of the Panel to SB A and OMB
creating a dialogue with your SERs
providing formal notification of the Panel to SBA and OMB
. hosting a final pre-panel outreach meeting with the SER.S to which SBA and OMB
are invited
i i
participating in a pre-panel meeting with SBA and OMB staff to discuss available
data and other related issues, and
creating a convening document for the Panel.
You, as the program office representative or rulewriter, are responsible for each of these steps
(discussed further below). Your SBAC staff contact and your Steering Committee representative
are available to give you support, review drafts and provide you with examples of documents
from previous Panels.
It is very important for you to keep records of all your small entity outreach efforts. An
important part of convening your Panel will be demonstrating that your office has worked with
small entities throughout development of the rule. When you begin to involve SBA and OMB in
your small entity outreach efforts, it is important to ensure that your SBAC staff contact is also
provided with any outreach material, notices, or announcements. Your SBAC staff contact keeps
the Agency's official record of the Panel process including all communication between Panel
members regarding Panel issues.
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4.7.1 Identify and Contact Small Entity Representatives
After it is determined that you will need to convene a Panel and you make contact with
the SB AC Staff through your Steering Committee representative, your next step in the Panel
process is to identify potential small entity representatives that may be formerly appointed later
in the process. Small entity representatives (SERs) are typically a subset of your broader
stakeholder group - those representative of small entities likely
to be directly subject to your regulation. Specifically, EPA
prefers that SERs be owner-operators of small business or
organizations or small government officials24 potentially subject
to the rule. If this proves to not be practical, other
representatives, such as trade associations that exclusively or at
least primarily represent potentially regulated small entities may
serve as small entity representatives. Other persons who wish to
act as SERs must be evaluated on a case by case basis. To avoid
the appearance of conflict of interest, you should apply a general
"reasonable person" rule, that is, ask yourself if a reasonable
person would conclude that this potential representative is
capable of truly representing only the interests of small entities.
Small entity
representatives (SERs)
are typically a subset
of your broader
stakeholder group -
those representative of
small entities likely to
be directly subject to
your regulation.
For each rule, or group of related rules,25 you should identify as early as possible what
types of small entities are likely to be adversely affected by the rule, and what those adverse
impacts are apt to be (to the extent feasible at this early stage). An important resource for the
Panel process will be the list of small entities that you developed under Chapter 3 to support your
rulemaking activities generally. Once you identify candidate SERs, you must contact them to
confirm their small entity status and ask if they would agree to serve as a small entity
representative for your Panel, if so requested. Unless the program is in a position to sponsor
necessary travel, each SER is responsible for his or her own expenses. It is advisable to let any
potential SERs know what to expect from an RFA/SBREFA Panel process. The SBAC staff
have developed a handout (available from the SBAC staff, see Section 3.8 for contact
information) that will answer questions such as:
* Why Does EPA Need Small Entity Representatives?
* What is an EPA Small Entity Representative?
* Who Is Eligible to be a Small Entity Representative?
Small businesses are defined by the Small Business Administration through the Small Business Act
(codified at 13 CFR 121.201). See Chapter 2 for more information on the definition of 'small entity' for
RFA/SBREFA purposes.
25RFA section 605(c) permits, but does not require, EPA to "consider a series of closely related rules
as one rule for the purposes of preparing an IRFA. In certain circumstances, it may also be appropriate
to convene one Panel to consider a series of closely related rules as well.
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> Who Chooses Small Entity Representatives?
> At What Stage in the Rulemaking Does the Panel Process Occur?
» What Will Being a Small Entity Representative Entail?
» What Will Be Done with Small Entity Input?
> How Can I Get More Information?
I ,, I
More information and ideas regarding small entity outreach are detailed in Chapter 3.
Although this stage of the process will most likely take place before your rule is drafted, you
should provide each potential SER with an outline describing the important components of your
rule and any significant alternative approaches under consideration. Indeed, these early
discussions with your potential SERs may bring to light other ways of structuring the rule to
avoid any significant economic impact on a substantial number of small entities, in which case a
Panel need not be convened.
To the extent that comments from potential SERs (or any other information) confirm the
rule is likely to have impacts warranting preparation of an IRFA, you must continue to prepare
for the Panel process. If comments received or changes made to the rule so warrant, it may still
be possible to certify your rule. You should always consult with the SB AC staff and your
Steering Committee representative if you stop preparations for a Panel.
4.7.2 Prepare Informal Notification to SBA
Once you complete your screening analysis and it has been determined that your rule may
have a significant impact on a substantial number of small entities, through your Steering
Committee representative, you must request that the Agency SB AC give the SBA Chief Counsel
informal notification that EPA is developing a rule that may be subject to the Panel requirement,
and that EPA may shortly ask SBA to nominate small entity representatives according to the
statutory procedure. This preliminary notification is a courtesy to the Chief Counsel for
Advocacy in order to provide SBA time to inform itself about the rule and review its own list of
small-entity contacts. At this time, the EPA SB AC will provide the SBA Chief Counsel with a
Program Office staff contact (normally this will be you as the workgroup chair), and will also ask
for an SBA staff contact. Typically, the SB AC sends the informal notification via e-mail, with a
courtesy copy also directed to OMB. Keep in mind that SB AC staff are always available to
facilitate communication with SBA staff. Again, because the office of the SB AC is responsible
for keeping the Agency's record for each Panel, you should copy them on any written exchanges
with SBA and OMB regarding the Panel process.
You will need to draft the informal notification for the EPA SBAC to transmit to SBA.
The informal notification could include:
the title of the rule and projected NPRM date,
« the statutory authority for this action and the environmental objective,
an explanation of any alternatives that are or have been under serious consideration,
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the potential impacts of the rule on small entities, and
list of any potential SERS already identified.
SBAC staff are available to help you with this task and a model informal notification is available
from the SBAC staff, see Section 3.8 for contact information.
4.7.3 Prepare Formal Notification to SBA
To the extent that it continues to appear that your rule may have significant impacts on a
substantial number of small entities, you should work through your Steering Committee
representative to request that the Agency SBAC provide formal notification to the SBA Chief
Counsel that a rule is being developed that may be subject to the Panel requirement EPA
transmits the formal notification in hard copy under the SBAC's signature with a courtesy copy
directed to OMB. Formal notification triggers the SBA Chief Counsel's statutory obligation to
nominate small entity representatives within 15 days of receiving the notification Formal
notification does not commit the Agency to convening a Panel. The program office may still
learn as a result of further consultations with small entity representatives and the SBA Chief
Counsel's Office, or further analysis, that the rule will not have a SISNOSE, and thus neither an
IRFA nor a Panel would be required.
Beyond the basic rule identifying information, you should provide the SBAC with the
following information for the formal notification:
a description of the problem the rule is trying to solve;
a list of the types of small entities likely to be affected;
a list of potential small-entity representatives you've already identified, if any;
and
any material you have already shared with small-entity representatives.
The notice, prepared by you for the SBAC, will emphasize that the request to identify
small entity representatives does not represent an EPA finding that the rule will necessarily have
a SISNOSE, nor does it commit EPA to preparing a formal regulatory flexibility analysis or
convening a formal Small Business Advocacy Review Panel. A sample of a formal notification
to the SBA Chief Counsel is available from the SBAC staff, see Section 3.8 for contact
information.
4.7.4 Respond to SBA Input; Complete Recommendations for Small Entity
Representatives
In response to your formal notification to SBA, you will receive a list of suggested SERs
from SBA's Chief Counsel for Advocacy through the Agency SBAC. If EPA's outreach has
been strong, the Chief Counsel usually identifies individuals with whom the Agency has already
been consulting, and adds new names from SBA's own experience. After consultation with your
SBAC staff contact and SBA staff on the names under consideration, you should recommend an
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official list of SERs for appointment by the SB AC. You must take great care to ensure that SERs
are truly representing small entities likely to be directly regulated by the rule under
consideration. It is better to take time to confirm a small entity's status than to be forced to
exclude someone later if he or she is not eligible. As stated earlier, EPA prefejs that SERs be
owner-operators or officials of small entities potentially subject to the rule. Barring that, other
representatives such as trade associations that exclusively or primarily represent potentially
regulated small entities may serve as SERs, and SBA's Chief Counsel for Advocacy has
sometimes nominated such second-level representatives (see Section 4.7.1 for more discussion of
SER selection).
While the RFA authorizes you to select the SERs for the Panel process, you should
ordinarily include the SERs identified by the SB A Chief Counsel among those you recommend
for appointment unless you discover any reason that one or more should be considered ineligible.
Before deciding not to recommend any SBA-suggested representative for the official list, you
should consult with your SB AC staff contact. You can include among your recommendations
additional small entities not suggested by SBA, but ultimately it is desirable that
EPA reach consensus with the SBA Chief Counsel on the roster of small-entity representatives.
The SB AC will rely heavily on the program's recommendations in appointing SERs for the
Panel.
4.7.5 Conduct Outreach to Small Entity Representatives
There is additional information regarding small entity outreach in Chapter 3.
1'..
You must provide the SERs with enough information about the rule for them to be able to
judge the likely impacts of the rulemaking on small entities. Outreach materials could
include any draft of the rule or preamble text, if such materials are available.
You must solicit information, advice and recommendations on issues relating to the
specific elements of an initial regulatory flexibility analysis (listed in Section 4.2) from
each small entity representative.26
,,l , j, r . , |
You should encourage SERs to put their comments and suggestions in writing for
inclusion in the convening document and your rulemaking record.
You should keep detailed records of the SERs' participation for later use in developing
the rule and any regulatory flexibility analysis or certification for the rule. The outreach
process may lead to, and help substantiate, a determination that the rule will not have a
26Small entity representatives can be consulted individually, particularly since the RFA requires that
the Panel collect the advice and recommendations of "each" representative. If, however, you choose to
consult with small entity representatives as a group, be careful not to solicit a group recommendation
because issues under the Federal Advisory Committee Act (FACA) may be raised.
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significant impact on a substantial number of small entities. Also, document your
outreach efforts.
If the outreach process indicates that there will be no significant adverse economic impact on a
substantial number of small entities, it may be possible to certify your rule. In that case, the
remaining steps of the Panel process would no longer apply to your rule.
4.7.6 Prepare a convening document for the Panel
The convening document is critical to the operation of a Panel. It provides the context
and analytical framework for the Panel's deliberations and much of the Panel's report will be
based upon the convening document you prepare. By following the outline suggested below
you will reduce the amount of work you must do to complete the Panel report. The organization
outlined below has been used for most of the previous Panel reports, so it also offers the benefit
of being familiar to the standing Panel members (i.e., Chair, OMB and SBA). The convening
document should include the following information in approximately the following order:
1. Introduction;
2. Background and Regulatory History;
3. Overview of Proposal Under Consideration;
4. Applicable Small Entity Definitions;
5. Small Entities that May Be Subject to the Proposed Regulation;
6. Summary of Small Entity Outreach;
7. List of Small Entity Representatives; and
8. Summary of Input from Small Entity Representatives
You should attach copies of: any materials previously shared with the SERs and the written
comments submitted by the small entity representatives to EPA as an appendix to the convening
document. The convening document should not contain a discussion of the regulatory option or
options actually selected by the Agency, since this document generally should be prepared before
such decisions are made. The convening document should be forwarded to the SB AC staff
assigned to your Panel at least one week prior to the convening date for the Panel The SB AC
staff are also available to review drafts of your convening document. A sample of a convening
document is available from the SBAC staff, see Section 3.8 for contact information.
4.7.7 Consider a Pre-Panel Meeting with SBA and OMB
Recently, several program offices have consented to pre-Panel meetings with SBA and
OMB to discuss information needs, and we have found this to be an increasingly valuable
planning step. SBA and OMB tend to request a great deal of background information that they
consider potentially relevant to developing significant alternatives to minimize burdens on small
entities. At a minimum, SBA and OMB typically ask to review any materials that describe the
regulatory alternatives under consideration (to which small entities would be subject), their
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environmental rationale and/or benefits, and the costs they would impose on small parties, as
well as the analysis and methods supporting these descriptions and estimates. SBREFA charges
the Panel to review "any material the agency has prepared in connection with this chapter."
("This chapter" refers to the RFA itself and suggests the elements of an IRFA, which include "a
description of any significant alternatives to the proposed rule which accomplish the stated
objectives of applicable statutes and which minimize any significant economic impact of the
proposed rule on small entities.")
Since the full range of data and analysis needed to construct a publishable IRFA may not
become available until relatively late in the rulemaking, the "materials the agency has prepared,"
as well as their stage of completion and level of supporting detail at the time of convening, will
vary from rule to rule. In effect, the Panel encounters the rulemaking as a work in progress, with
the opportunity to affect its future development to avoid unnecessary burden on small entities.
EPA supports the Panel's thorough, meaningful consideration of such impacts and the design of
justifiable accommodations for small entities. We seek to provide the Panel with whatever
information may be available to promote those objectives, and it has been our practice to respond
generously to SBA's and OMB's requests for existing data, reports, and surveys. Nevertheless,
because each rule presents its own special circumstances bearing on what information is both
available and relevant for the Panel's review, a preliminary meeting to consider what materials
the Panel will receive, as well as what may be suitably provided to our non-Federal advisors,
may-be useful in clarifying the expectations of all members. See further discussion of data needs
under 4.8.2 below.
4.8 What Can I Expect from Panel Review?
Each Small Business Advocacy Review Panel is chaired by the Agency Small Business
Advocacy Chair (SBAC). The three other statutory Panel members are:
1) an EPA senior manager from the Program Office developing the rule,
2) the SB A Chief Counsel for Advocacy and,
3) the Administrator of OMB's Office of Information and Regulatory Affairs
Each of these officials signs the final Panel Report, though, as a practical matter, one or more
may be represented by a designee during a portion of the Panel's deliberations. The Panel
member representing the EPA program should be a senior manager familiar with your rule who
has the authority to negotiate the program's position on potential regulatory alternatives for small
entities. Remember, small entity representatives (SERs) are not members of the Panel
they provide input to the Panel, but by statute the Panel comprises only Federal employees, as
identified above.
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4.8.1 When is the Panel Officially Convened?
The SB AC convenes the Panel at the first formal meeting of the Panel members. The
SBAC sets the convening date in coordination with all the Panel members through consultation
facilitated by the SBAC staff. The convening document and a program office presentation on the
regulation are generally used as the main vehicles for initiating review. Once the Panel
convenes, it is critical that all Panel, members review the same set of information. Accordingly,
during a Panel, all communication to the Panel members should be channeled through the
SBAC's staff. Materials not for public release can be marked deliberative and circulated to
Panel members as Federal employees. Such materials will be kept confidential and will
not be released to the public as part of the Panel Report.
4.8.2 What Information Am I Required to Provide to the Panel?
The program office Panel member should be prepared to negotiate with SB A and OMB
on the type and amount of data and supporting information that is needed to support the Panel's
discussions. We have found that a pre-convening meeting can provide a useful forum for
arriving at workable understandings on this matter, but unexpected issues can arise during the
60-day Panel term as well. SBA and OMB sometimes request information and analyses that
have not yet been performed. As detailed below, according to the statute, the Panel is to review
any existing RFA-related materials and any draft proposed rule, if those materials have been
prepared by the time the Panel convenes. The RFA does not require EPA to develop
materials or perform analyses specifically for the Panel process.
The following describes the information the RFA requires you to provide to the Panel:
Draft regulatory text - Section 609(b)(4) states that "the panel shall review any material
the agency has prepared in connection with this chapter, including any draft proposed
rule." This language does not require EPA to prepare a draft proposed rule prior to
convening a Panel, however, if you convene the Panel after you have prepared a draft
NPRM, you must provide it to the Panel members.
Economic impact data - Section 609(b)(l) requires EPA to provide SBA "information on
the potential impacts of the proposed rule on small entities and the type of small entities
that might be affected." Section 609(b)(l) does not specify the requisite level of analysis
of the potential impacts. EPA does not believe the RFA requires you to prepare a full
economic analysis of potential impacts for the Panel process, nonetheless, EPA clearly
must provide some information - either quantitative or qualitative - on the potential
impacts.
Regulatory Alternatives - Section 603(c) requires the IRFA to include "a description of
any significant regulatory alternatives to the proposed rule which accomplish the stated
objectives of applicable statutes and which minimize any significant economic impact of
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\
the proposed rule on small entities." [Emphasis added] The RFA does not require you to
prepare for comment by the Panel what essentially would be a draft IRFA for all
regulatory alternatives you have identified. You do, however, need to describe in
sufficient detail, including some analysis of the impact on small entities and
environmental benefits, each significant regulatory alternative you have identified that
accomplishes the statutory mandate. It is important to note that the Panel process
precedes and is intended to contribute to the development of the IRFA, not the reverse.
' , , ' ' ' I I '
Technical and legal supporting materials - Pursuant to subsection 603(b)(2), an IRFA
must address the legal basis for a proposed rule. However, section 603(b)(2) is not one of
the expressly enumerated subsections on which the Panel is to collect advice and
recommendations. Since the RFA places the legal basis for the proposed rule outside the
purview of the Panel, the RFA does not require EPA to provide such information to the
Panel.
Although the above list describes what the RFA does and does not require you to provide to the
Panel, as a matter of policy, EPA typically provides information beyond the statutory minimum.
When doing so, you should consult with staff to the SB AC and establish clearly that the
provision of such information is not statutorily mandated. In previous Panel processes, several
EPA program offices have made it a practice to provide requested information to the Panel as
long as the information has been cleared by OGC for public release or otherwise would have
been provided to any requestor. We have also honored requests for materials not already
prepared if fulfilling the request would not consume excessive resources or delay the
rulemaking/Panel schedule.
It is vital that program regulatory staff remain in close consultation with its own
management to ensure that its provision of non-statutory information is neither
inappropriately restrictive nor unacceptably intrusive on the program organization's
internal priorities and schedules. SBAC staff can be helpful to you in establishing how the
Agency has viewed and treated similar requests for information in other Panel settings. (See
4.7.7 for further discussion of how we typically anticipate such requests and determine whether
and when the Agency can fulfill them.)
4.8.3 Panel Outreach to SERs
The RFA also tasks the Panel with performing its own outreach to the Small Entity
Representatives. Typically, this consists of a meeting with the SERs, either in person or via
teleconference. Prior to this meeting, the Panel generally sends a letter or package of information
to the Small Entity Representatives that provides them with enough information about the rule
for them to be able to judge the likely impacts of the rulemaking on themselves and other small
entities. The Panel agrees on the content, but development of this outreach package is the
responsibility of the EPA program office responsible for the rule. The outreach letter will
request written comments from each small entity representative on the four elements of an IRFA
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(see Section 4.2) as well as other issues identified by the Panel. The program office should try to
anticipate what information the Panel would like to provide to the SERs and develop the SER
outreach package prior to convening the Panel. We encourage you to circulate the draft outreach
package to the Panel members within one week of convening. The outreach materials are
circulated and agreed upon by all Panel members before they are sent out under the signature of
the SBAC. An example of an outreach package is available from SBAC staff, see Section 3.8 for
contact information.
At the outreach meeting, chaired by the SBAC, the program office is generally
responsible for a brief presentation on the proposal under consideration and the remainder of the
time is devoted to feedback from and dialogue with the SERs. The program office is
responsible for creating a summary of this meeting for inclusion in the Panel report. The
SER outreach meeting should generally take place within the first 30 days of the Panel process.
4.8.4 Panel Deliberations/Generating the Panel Report
The Panel generally meets very soon after the SER outreach meeting to discuss the SER
comments. It is useful at this point, for each Panel member to be able to bring to the table
proposals for regulatory options that may minimize economic impacts on small entities. Panel
deliberations can occur through a series of face-to-face meetings of the Panel members (or their
designees), conference calls, e-mail exchanges or facsimile transmissions. Deliberations
generally center around the language that will be contained in the Panel report. You should be
prepared to devote a significant amount of time and effort to drafting materials for your SBREFA
Panel, especially toward the end of the 60-day process. The program office has the primary
responsibility for drafting the Panel report. The first complete draft of the Panel report is
based primarily on SBA and OMB's input (based on the SER comments) to the convening
document. Each of the Panel members will sign the completed Panel report,; therefore, each
Panel member has a vested interest in the specifics of the Panel report language. The program
office Panel member should be prepared to negotiate with OMB and SBA on Panel
recommendations; this could require a substantial amount of time as well as direct, immediate
feedback from management.
By statute, the Panel only has 60 days from the date it is convened to produce its official
final report. The Panel is not required to take the full 60 days, and should issue its report as soon
as possible to provide timely input to the development of the proposed rule. The Panel need not
reach consensus in order to issue a final report; the views of each of the members can simply be
reflected in that report. When possible, the report should state matters of Panel agreement, but
no Panel member is under compulsion to agree to any position. Indeed, any member may demur
and even insert into the Panel Report a contrary position, with the knowledge that the Report will
be part of the public record offered for comment when the proposed rule is published. Since an
EPA program office representative signs the Panel Report, it is generally recognized that any
recommendations agreed upon by the entire Panel are acceptable to the Agency, whether as
modifications to the regulatory proposal, or as issues to be discussed in the preamble.
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Even if there are subsequent data findings or circumstances that warrant a change in
EPA's position after the Panel closes, it is important to discuss the Panel's
recommendations and the Agency's response in the NPRM. The program office Panel
member should not agree to any Panel recommendation if it appears that the agency cannot
implement it. The final Panel report will not contain a discussion of the option or options
actually selected by the Agency, since the report will normally be prepared before such decisions
are made.
4.9 Consideration of the Panel Report during Development of the Proposed Rule and
Initial Regulatory Flexibility Analysis
The RFA requires the Agency to consider the Panel report in selecting proposed
regulatory options to address small entity concerns, and where appropriate, to modify the
proposed rule, the initial regulatory flexibility analysis or the decision on whether an initial
regulatory flexibility analysis is required. As stated earlier, it is generally recognized that any
recommendations agreed upon by the entire Panel will be addressed in the proposed rule unless
unforseen circumstances intervene between completion of the Panel report and the time of
proposal. You should document the results of the outreach and Panel process, and their role in
the Agency's deliberations in the initial regulatory flexibility analysis prepared for the rule. You
should integrate the substantive Panel recommendations into your preamble text in the
appropriate sections and also summarize these results in the Regulatory Flexibility Section of the
preamble of your proposed rule. The Regulatory Management Division of EPA's Office of
Policy, which is responsible for the review of regulations prior to OMB review and signature by
the Administrator, will, in conjunction with OGC, ensure that your preamble language is
sufficient.
EPA's policy is to keep the Panel report confidential until the rule is proposed, since
we consider its recommendations to be protected as part of the Federal deliberative
process. Upon proposal, the Panel report must be placed in the docket for the rulemaking
so that it will be accessible to all parties interested in the rulemaking.
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Chapter 5.
Small Entity Compliance Guides
5.1 EPA'S Approach to Small Entity
Compliance Guides
When the Agency is required to prepare a
regulatory flexibility analysis for a final rule,
SBREFA Section 212 also requires the Agency to:
prepare and publish one or more documents
regarding such a rule or group of rules as
small entity compliance guides and
specifically "designate such as small entity
compliance guides;"
explain in the compliance guide actions that a
small entity must take to comply with a rule
or group of rules; and
distribute the guides to small entities through
"comprehensive sources of information."
Contents of Chapter 5
Page No.
5.1 EPA's Approach to Compliance Guides 59
5.2 What is the Goal in Writing a Compliance
Guide? ei
5.3 Who Participates in the Development of a
Compliance Guide? 61
5.4 When Should I Develop a Compliance Guide? 62
5.5 What Sorts of Questions Should I Ask My Small
Entity Reviewers? 62
5.6 How Do I Document Development of the
Guide? 63
5.7 Who Can Help Me with Distribution? 63
5.8 How Do We Ensure that Compliance Guides are
Kept Up to Date? 63
5.9 Template for Compliance Guides 64
While compliance guides are not judicially reviewable, they may be considered as evidence of
the reasonableness or appropriateness of any penalties or damages in any civil or administrative
action against a small entity. Accordingly, the statute gives us broad discretion with regard to
implementing these requirements particularly in regard to designation, development and
distribution of the guides. Although guides are required only for final rules for which a
regulatory flexibility analysis was prepared, rulewriters should start their planning for the guide
during the proposed rule phase. Timing is discussed further in Section 5.4
The sections that follow describe how the Agency has chosen to exercise this discretion
the specifics of which may not necessarily be required by SBREFA. As we gain experience we
may issue additional guidance. Figure 5 illustrates our approach to developing a small entity
compliance guide.
59
~ Chapter 5 Small Entity Compliance Guides~
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5.2 What is the Goal in Writing a Compliance Guide?
As mentioned above, SBREFA Section 212 requires that Agency to prepare and publish
one or more documents regarding such a rule or group of rules as small entity compliance guides
and specifically "designate such as small entity compliance guides." Beyond meeting the
statutory obligation, the primary goal of the guide is to help small entities- whether they are
small businesses, small governments or small non-profit organizations- to comply with the
regulation. You should therefore write your guide with your audience in mind and recognize that
this segment of our regulated community may have trouble with standard government writing
styles. President Clinton's memorandum of June 1, 1998 entitled "Plain Language in
Government Writing," requires agencies to use plain language in all documents that explain how
to obtain a benefit or service or comply with a regulation. You should focus your guide on what
a small entity will need to know to comply with your regulation and minimize the inclusion of
any other information (see the template in section 5.10, below). While small entities are the
primary audience for the guides, some of the compliance information may also be applicable to
large entities and you may choose to present these similarities/differences as you develop your
guide.
5.3 Who Participates in the Development of a Compliance Guide?
The lead rule-writing office is responsible for developing the rule-specific compliance
guide as part of the rulemaking process. You should have your draft guide reviewed by both the
Office of General Counsel attorney assigned to your rule and by a representative from OECA.
Your regulatory development workgroup, as well as representatives from SBO, OPPT's
Pollution Prevention Division, regional offices and the SBAC's staff can also provide
assistance/support, or develop sections of the guide, as appropriate. If your regulatory
development workgroup does not include representatives of the appropriate offices, you should
work through your Steering Committee representative to identify such individuals.
Small entity representatives should typically be involved in reviewing the draft
compliance guide after the rule is promulgated so that we have the benefit of their comments and
advice in preparing the final version of the guide. Generally, draft compliance guides should not
be released to outside parties prior to the rule's promulgation. In those unusual circumstances
where the outline of the compliance guide is clear to you at pre-proposal, then you may seek
review and feedback from small entity stakeholders at that stage. You should share the draft
compliance guide and solicit comment from small entity stakeholders after promulgation, but
will need to balance such review with equal concern for timely issuance of the guide.
You will need to obtain concurrence from both OGC and OECA. Normally, you will ask
members of your workgroup from these offices to ensure that appropriate levels of management
in their offices approve the draft. (OGC and OECA will determine the level of concurrence they
need within their offices.)
61
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\ \
5.4 When Should I Develop a Compliance Guide?
You should integrate development of the guide into the rulemaking process. Generally,
you should begin work on your guide as soon as you have enough information to do so. This
point will vary from rule to rule; sometimes it is clear even before the rule is proposed, and in
other cases not enough is known until just prior to final promulgation. In either event, you
should plan to devote time during the rulemaking process for development of a guide,
however, the Agency will not ask for an extension of any court-ordered deadlines in order
to complete compliance guides.
Keep in mind that the goal is to make the guide available after promulgation in sufficient
time for it to be of practical help to small entities in evaluating and implementing their
compliance options before the compliance deadline. You should make every effort to issue the
guide within two months of the promulgation of the final rule.
The constraints on outside participation during the final rule phase in development of the
Guide leave a relatively short time after promulgation to both take comment from small entity
stakeholders and issue the final Guide. This makes advance planning and drafting essential.
Tip: Identify your small entity reviewers early in the process. You may want to consider
using those small entity representatives who participated in the Panel process during the
development of the proposed rule.
If the issuance of your guide may be delayed beyond a month or two, you should issue a Fact
Sheet or other brief description of the rule as an interim measure. If your rule has a distant
compliance date (e.g., two years or more), closer to the compliance date you may want to ensure
the information in your compliance guide is still current and re-issue the guide, if appropriate.
5.5 What Sorts of Questions Should I Ask My Small Entity Reviewers?
Some suggestions include:
:l
Is the format appropriate?
Is the guide clear and easy to read and understand?
Does the guide accurately describe the rule as published?
,
Is the guide useful in planning for compliance?
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5.6 How Do I Document Development of the Guide?
If you are doing an Analytic Blueprint, it should include plans for developing a small
entity compliance guide, including a time line, and the resources needed. If there is no Blueprint
you should integrate development of a compliance guide into your action or work plan When '
you submit your final rule to the Administrator for signature, you must also submif a schedule for
development and completion of a compliance guide. Include your distribution strategy for the
guide in your Communications Plan. Information related to the development of the guide will be
tracked in OP's Rule and Policy Information and Development System (RAPIDS) Lad offices
are also encouraged to develop internal methods for tracking the development of the guides.
5.7 Who Can Help Me with Distribution?
r«m i
completed Guides to the staff of the Small Business Advocacy Chair, the Office of the Small
Business Ombudsman, the Office of Regional and State/Local Relations, and the Office of
ST^10^ ' f U,Cvati°nuand Public Affairs- Th^e offices will distribute the Guide to their
small entity contacts (You should ensure, to the extent it is feasible, that these offices do not
have duplicate distribution lists.). Small entity compliance guides should be included in the
Agency s Enhanced Public Access system which makes agency guidance documents related to
statutory and regulatory requirements electronically available, for more information on this
system, contact your Steering Committee representative (contact information is provided in
section 3.8). Other small business assistance providers include:
State Technical Assistance Programs for Pollution Prevention
State Small Business Assistance Programs
Small Business Development Centers
Trade Associations
Professional Organizations
the Small Business Administration, USDA and OSHA
A copy of your small entity compliance guide should be placed in the docket for your rule.
5.8 How Do We Ensure that Compliance Guides are Kept Up to Date?
As a statutory matter, compliance guides may have evidentiary uses in litigation so it is
important that guides are reviewed and revised as needed. The guide should be revised when the
rule for which it was developed is revised. It is the responsibility of the lead office to ensure
compliance guides are kept current.
Other circumstances that may cause you to revise the compliance guide include:
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' : ' ' , i , '
Changes in the rule which affect compliance
!l ' ! , ,1
Comments from the public suggesting revisions, or from OECA based on
their experience in enforcing the regulation.
Litigation citing a guide as a reason to challenge the appropriateness of
proposed penalties.
You should include in every compliance guide the following disclaimer on the cover
page of your guide to inform small entities that the guide may be revised in the future and
that it may be used in determining appropriate penalties in the case of non-compliance.
You also should send a copy of your compliance guide to EPA's Small Business Ombudsman's
office and place the most current guide in the appropriate docket, on a special section in EPA's
internet page, or other electronic bulletin boards and the guide should also be included in the
agency's Enhanced Public Access system.
. I ' '
NOTICE
This guide was prepared pursuant to section 212 of the Small Business Regulatory
Enforcement Fairness Act of 1996 ("SBREFA"), Pub. L. 104-121. The statements in
this document are intended solely as guidance to aid you in complying with [insert
name of your rule and its CFR citation]. In any civil or administrative action against a
small business, small government or small non-profit organization for a violation of the
[insert the name of your rule], the content of this guide may be considered as
evidence of the reasonableness or appropriateness of proposed fines, penalties or
damages. EPA may decide to revise this guide without public notice to reflect changes
in EPA's approach to implementing [insert the name of your rule] or to clarify and
update text. To determine whether EPA has revised this guide and/or to obtain copies,
contact EPA's [insert Small Business Ombudsman Office and phone number and
name of Program Office that issued the rule and its main phone number and/or
website address].
Note: OECA may, at a later date, develop sector-specific, multimedia guides which would
integrate rule-specific guides. OECA will notify program offices if and when it undertakes this
project and will coordinate development of such guides through the Agency's Regulatory
Steering Committee.
5.9 Template for Compliance Guides
An Agency workgroup has developed the following template to help you in structuring
your compliance guide, and you should use it in accordance with the guidance given earlier in
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the chapter. While SBREFA does not mandate a particular format, we urge you to adopt it so
that we may have general consistency across the Agency and to assure that significant
compliance issues are adequately covered. If your rule does not, for some reason, lend itself to
this template, you may use it as a checklist to ensure that all potentially relevant compliance
issues are covered.
The template is organized as follows:
Non-italicized text indicates sections which should normally be included in the
compliance guide.
Italicized text indicates standard language which you may choose to use if it is
appropriate to your rule. You should adapt this standard language to the specifics of your
rule as necessary.
Program offices have lead responsibility unless otherwise designated in bold.
Please make your best effort to write your guide in plain language using the guidance at
http://www.blm.gov/nhp/NPRyplaineng.html.
[Insert standard publication header, including the date and
appropriate publication number]
SMALL ENTITY COMPLIANCE GUIDE
[insert title of rule or program. ..]
INTRODUCTION
This document is published by the Environmental Protection
Agency (EPA) as our official compliance guide for small entities
as required by the Small Business Regulatory Enforcement Fairness
Act of 1996. Before you begin using the guide you should know
that the information in this guide was compiled and published on
[INSERT PUBLICATION DATE]. EPA is continually improving and
upgrading its rules, policies, compliance programs, and outreach
efforts. You can determine whether EPA has revised or
supplemented the information in this guide by calling [INSERT
HOTLINE NUMBER OR INTERNET ADDRESS].
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Who Should Use this Guide?
1. To the extent possible, the guide should identify all the
types/categories of small entities that will be subject to
the rule's requirements. Bear in mind that other entities
may be indirectly affected but may not be required to
comply. This section needs to make this distinction clear
to the reader.
Tip: Use the compliance table from the
^Summary" section of your rule's preamble to
convey this information. Be sure to modify
it if necessary to target small entities.
1
2. In many cases, the guide will also be useful to larger
entities subject to the rule. You may wish to point out any
similarities or differences at this stage but you should not
go into great detail on this subject.
What does the Guide Cover?
How do I use the Guide?
How do I Obtain a Complete Copy of the Rule?
i i
List an 800 number, Federal Register citation or the
Government Information Locator Service.
WHAT DOES THE REGULATION REQUIRE?
What environmental/human health issue(s) does this rule
address and why it is important?
Summary of the New Regulation
1 ' " '! ' !
i. Using plain English, summarize the rule in a narrative
format. This should be a simplified adaptcition of the
issues you discussed in the rule's preamble.
2. Additionally, provide a visual description (e.g., chart or
flowchart) of the rule's requirements as it applies to small
entity operations or processes. "Operations" include
traditional facility-based operations and rion-traditional
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based operations such as farms, communities or schools.
Compliance Timetable
Identify in easy-to-read format (e.g., flowchart, time line
timetable) compliance dates for notifications and other
requirements.
How Does this Regulation Relate to Other Federal, State, and
Local Requirements?
1. Each Program should develop specific template language
concerning program delegations and relationships to other
requirements generally, or, where appropriate, referring
back to general provisions applicable to all regulations in
a subgroup to which the new regulation belongs (e.g., New
Source Performance Standards under the Clean Air Act)
Programs have the flexibility to expand this section as
appropriate, to address this issue more specifically.
2. Meanwhile, here is suggested template language which may be
appropriate in many cases:
This compliance guide explains your federal compliance
obligations with respect to rule. There may be
other state or local requirements which apply to you
which are different from, or more stringent than, the
federal requirements. For example, some environmental
statutes allow EPA to delegate environmental programs to
a state. The state may then promulgate its own rules
which may supersede the federal requirements. For more
information on the rules that apply in your State, please
contact [INSERT CONTACT POINT] .
STEP-BY-STEP PROCEDURES FOR COMPLIANCE WITH THIS RULE
This is where you break down the rule into discrete subject
areas using a step-by-step, question/answer approach.
Questions in this section will depend on the particular rule.
All the following questions are EXAMPLES of the types of
questions that may be appropriate to include.
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~ Chapter 5 Small Entity Compliance Guides-
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1.
2.
1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
.
How can I tell if I am subject to this rule?
What requirements am I subject to?
When do I need to comply ? (elaborate on flowchart, as
appropriate)
What do I need to do to comply?
'!'* J ' , "'
Be sure to address such questions as:
How does this rule affect my existing permit?
How much will it cost to comply with this rule?
What, when and how must I monitor or test?
What records do I need to keep and for how long?
Include sample forms and calculations.
What, when and to whom must I report?
Include sample forms.
1 ! i
How do I minimise harm if I think I am out of compliance?
(Program lead/OECA support)
Where do I go for help?
Give information on federal, State and local contacts,
Agency hotlines, or State Small Business Assistance Program
contacts.
What is pollution prevention and how can it affect my
operations? (OPPT lead)
Discuss pollution prevention and its benefits, including how
it may be used to help a facility/operation save money
and/or possibly avoid regulation.
To the extent that there are other pollution prevention
opportunities, including those which may make good business
sense or could exempt a small entity from certain
requirements, the program, with support from OPPT, has the
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option to expand this section and include this information.
Are there opportunities for flexibility or waivers?
K.1; a5plicable in a 9iven rule, these opportunities
,u £e ^ghlxghted^here. For example, there are circumstances in
which the Safe Drinking Water Act allows temporary variances or
exemptions from maximum contaminant levels.
OPTIONAL QUESTIONS AND ANSWERS ABOUT FACILITY/ OPERATIONS/
PROCESSES
Here you want to anticipate questions of potential concern
to the regulated community, including how the rule fits into
the overall regulatory program. Questions will depend on the
rule; the questions below are only EXAMPLES. [Tip; A self -audit
checklist can be very helpful to small entities and may be used
alone or in conjunction with a question and answer format.]
How do I conduct a self-audit of my facility/firm/operation
to help me evaluate whether I am in compliance with this
rule?
Provide Self-Audit Checklist (Program/OECA)
What are the implications of this rule for my existing
permits? a
Adapt this to your particular rule or program.
How Does this Rule Change How I Handle/ Store Wastes? (if
guide were written for RCRA rule)
THE COMPLIANCE ASSURANCE PROCESS (OECA LEAD)
This section should describe in clear, non- threatening terms
why compliance is important, the potential consequences of
violating the law, and how the entity can work with us to
identify and correct its compliance problems, often without the
need for a formal enforcement action or penalty.
Draft this section to ensure that small entities understand:
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show EPA determines compliance
what they must do if they discover a violation, and
the available compliance assistance/enforcement
options.
Include only information that is directly relevant to the
rule. You may attach more detailed information, or information
you feel may be helpful, in an Appendix.
How Is My Operation's Compliance With Environmental
Requirements Determined?
Discuss compliance assistance, inspections, self-monitoring
and the role of citizens.
If I Discover a Violation, How Can I Work With The Agency
to Correct It?
Discuss compliance incentives policies: Small Communities
Policy, Policy on Compliance Incentives for Small Businesses,
,i Self-Disclosure Policy.
If the Agency Discovers a Violation, What Might Be Its
Response?
To maximize compliance, EPA implements a balanced
program of compliance assistance, compliance incentives,
and traditional law enforcement. EPA knows that small
businesses which must comply with complicated new
statutes or rules often want to do the right thing, but
may lack the requisite knowledge, resources, or skills.
Compliance assistance information and technical advice
helps small businesses to understand and meet their
environmental obligations. Compliance incentives, such
as our Small Business Policy, encourage persons to
voluntarily discover, disclose, and correct violations
before they're identified by the government. EPA's
strong law enforcement procrram protects all of us by
targeting persons who neither comply nor cooperate to
address their problems.
1
EPA uses a variety of methods to determine whether
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Chapter 5 Small Entity Compliance Guides-
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businesses are complying, including- inspecting
facilities, reviewing records and reports, and responding
to citizen complaints. If we learn a person is violating
the law, EPA (or a State, if the program is delegated)
may file an enforcement action seeking penalties of up to
$ [INSERT STATUTORY MAXIMUM AMOUNT], per violation, per
day. The proposed penalty in a given case will depend on
many factors, including the number, length, and severity
of the violations, the economic benefit obtained by the
violator, and its ability to pay. EPA has polices in
place to ensure penalties are calculated fairly. These
policies are available to the public. In addition, any
company charged with a violation has the right to contest
EPA's allegations and proposed penalty before an
impartial judge or jury.
In summary, EPA recognizes that we can achieve the
greatest possible protection by encouraging small
businesses to work with us to discover, disclose, and
correct violations. That's why we've issued self-
disclosure, small business, and small community policies
to eliminate or reduce penalties for small and large
entities which cooperate with EPA to address compliance
problems. In addition, we've established compliance
assistance centers to serve over a million small
businesses. For more information on these and other EPA
programs for small businesses, please contact [INSERT
POINT OF CONTACT] .
What is the legal status of this guide?
A judge can look at a compliance guide in
determining what penalty is appropriate and reasonable,
although the content of the guide cannot otherwise be
reviewed by the court.
In this Compliance Guide, we have tried to make
clear what you must do to comply with the applicable law
and regulation. This is the minimum required by SBREFA.
You'll notice, however, that here and there we have also
included suggestions for alternative approaches that may
make compliance easier and possibly even reduce costs
We hope you find this presentation of regulatory
requirements useful and the additional information
helpful in reaching and maintaining compliance.
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APPENDIX
Glossary of Environmental Terms
Define terms which are relevant to the rule but which may
be too basic to be defined in the rule itself. For example,
"permit," "pollution prevention," "process."
Where to Obtain More Information
This section gives supplemental information. Examples might
include other existing quality compliance guidance,
pollution prevention guidance, pollution prevention case
studies, other media contacts, trade associations, or
university assistance programs.
Questionnaire - How Useful Was This Guide?
Each guide should contain a brief questionnaire to solicit
feedback from users as to the usefulness, readability, and
improvements needed for the guide. Questionnaires will be
returned to OP/RMD and then forwarded to the Agency contact.
Please use the following page:
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
Date:
Title of Rule or Program:
Name ofCommenter (optional):
Please take a moment to let us know if you found this guide useful by answering the
following questions. Thank you, your feedback is important to us.
1. I could easily understand what requirements I must meet.
2. The guide is written in understandable language.
3. The guide helped me understand the steps I must take to comply with the rule.
4. If you have suggestions to improve the guide, please indicate below:
Thantyou.
Affix
Postage
Here
U.S. EPA
Regulatory Management Division
Mail Code 2136
401 M St. SW
Washington, DC 20460
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[This page intentionally left blank]
74
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Chapter 6.
Ongoing Informal Small Entity Guidance
This chapter provides a brief overview of
our informal small entity compliance program and
list of compliance assistance tools. A more
detailed explanation of this program can be found
in the Section 213 Informal Guidance Program
Report to Congress (March, 1998) that can be
obtained from OP's Regulatory Management
Division at (202) 260-5480. This information is
provided here to help you understand what resources are available to assist you in your
small entity compliance assistance efforts.
Contents of Chapter 6
Page No.
6.1 Overview of the Section 213 Program 75
6.2 List of Compliance Assistance Resources 77
6.1 Overview of EPA's Section 213 Program
Section 213 of the Regulatory Flexibility Act (RFA) as amended by the Small Business
Regulatory Enforcement and Fairness Act (SBREFA) requires us to: 1) provide guidance to
small entities Whenever appropriate in the interest of administering statutes and regulations" 2)
Drott "uZ^ nr T*^ ^ r?^' md 3) t0 ^ a rep°rt t0 Congress regarding the
program. Under §213(a), we are required to answer inquiries from small entities regarding
compliance with all agency statutes and final regulations. In particular, we are required to
provide advice based on the application of the law to specific sets of facts supplied by small
entities. This advice and guidance can be considered as evidence of the reasonableness or
appropriateness of penalties sought against a small entity.
EPA's Informal Guidance Program consists of four main components:
the Asbestos and Small Business Ombudsman (SBO), located at EPA
Headquarters;
regional small business liaisons, who serve as local resources to assist small
entities who contact the EPA regional offices;
various hotlines and clearinghouses that serve entities of any size, including large
percentages of small entities; and
technical and program staff located throughout Headquarters and the regions who
are available to answer questions in their subject area or who refer small entities
to the appropriate State and local resources.
In designing this program, EPA's guiding principles were: 1) to ensure the accessibility
of the informal guidance program to the small entity community, and 2) to avoid duplication
with existing activities. As provided in §213(b), we have applied existing functions and
personnel in creating the program. By incorporating our Small Business Ombudsman (SBO) and
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I
other existing services into the core of the Agency's Informal Guidance Program, we have been
able to achieve both goals.
Organizationally, the SBO is located in the Office of Policy's
Management and Information and reports to the Small Business
Advocacy Chair. The SBO is already well-known in the small
entity community, serving as a "first-stop shop" for multi-media
compliance information. The SBO administers a free hotline
handling approximately 1000 calls per month, answering fact-
specific compliance questions, distributing supporting
documentation, and providing information on additional sources
of assistance. Callers may remain anonymous at their own
discretion. In addition to these calls to the hotline, SBO staffers
respond to another 1,000 or more calls annually that are made
directly to their desks. Contact information for the SBO is listed
in section 3.8 and the hotline information is listed below.
Office of Regulatory
Informal small entity
advice and guidance
can be considered as
evidence of the
reasonableness or
appropriateness of
penalties sought
against a small entity.
In addition to the SBO, EPA has numerous other resources to answer compliance
questions from small entities, such as the small business liaisons, program-specific hotlines and
clearinghouses, and technical and program media staff, some of which are listed below. For
example, we sponsor approximately 89 hotlines and clearinghouses throughout Headquarters and
the regions, which are available to customers of any size, including small entities.
We have a long history of developing authoritative materials to aid the regulatory
community in its compliance efforts. These documents include such items as Sector Notebooks,
Plain English Guides, and Fact Sheets. Through the issuance of such documents, you can often
preclude the need for a small entity to contact us with a related inquiry. In addition to these
written materials, you can make numerous resources easily accessible through the main EPA
home page (www.epa.gov) or through your program office web site.
If you provide informal guidance to small entities, whether as a technical or program
expert answering questions in your field of expertise or via a hotline or clearinghouse, you
should be aware of a recent memorandum issued by the Office of General Counsel. The October
2,1998 memo from Scott Fulton, Acting General Counsel, entitled "Treatment of Information
Provided by Callers Seeking Compliance Assistance," provides guidance on the kinds of
assurances EPA can make about the confidentiality of information provided by callers to EPA
hotlines and is intended to apply to all EPA personnel providing informal guidance, in addition
to hotline staff. As a matter of law, the Agency generally is unable to guarantee that any
information received by EPA personnel or hotline staff will remain "confidential." As stated in
EPA's SBREFA Section 213 Report to Congress, it is EPA's position that callers to an Agency
hotline who request compliance assistance may choose to remain anonymous. Callers speaking
with program or technical experts may similarly choose to remain anonymous. This means that
the caller is not required to provide specific information such as her/her name, phone number, or
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address, that could be used to identify the caller. The caller may simply choose to provide
whatever information is necessary to describe his/her situation and to seek EPA's assistance in
answering their questions. Anonymity, however, is not the same as confidentiality. For instance
EPA staff may t suggest or guarantee that (1) the information provided would not be viewed '
by other parts of EPA; or (2) the information would not be released by EPA to a third party if it
were the subject of a Freedom of Information Act request.
6.2 List of Compliance Assistance Resources
EPA offers small businesses a wide variety of compliance assistance resources and tools
designed to assist businesses in complying with federal and state environmental laws These
resources can help businesses understand their obligations, improve compliance and find cost-
effective ways to comply through the use of pollution prevention and other innovative
technologies. You and your management should assess which of these venues would be the most
effective means to provide small entity compliance assistance regarding your rule.
Websites
EPA offers a great deal of compliance assistance information and materials for small
businesses on the following Websites, available through public libraries:
""* www.epa.gov
'"* www.smallbiz.enviroweb.org
»* www.epa.gov/sbo
'"* www.smallbiz-enviroweb/org/state.html
'"* www.epa.gov.ttn.sbap
'"* www.epa.gov/oeca/polguid.html
'"* www.epa.gov/oeca/smbusi.html
'"* www.epa.gov/oeca/oc
'"* www.epa.gov/oeca/ccsmd/commpull.htnil
'"» www.epa.gov/oeca/ccsmd/mun.html
EPA's Home Page
EPA's Small Business Home Page
EPA's Small Business Ombudsman
List of State Contacts
Small Business Assistance Programs
Enforcement Policy and Guidance
Small Business Policy
Compliance Assistance Home Page
Small Businesses and Commercial Services
Small Communities Policy
Hotlines
EPA sponsors approximately 89 hotlines and clearinghouses that provide a free and
convenient avenues to obtain assistance with environmental requirements. The Small
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Business Ombudsman Hotline can provide you with a list of all the hot lines and assist
you with determining which hotline will best meet your needs. Key hotlines that may be
of interest to you include:
*"» Small Business Ombudsman
»- RCRA/UST/CERCLA Hotline
*» Toxic Substances and Asbestos Information
"* Safe Drinking Water
'** Stratospheric Ozone/CFC Information
"* Clean Air Technical Center
"» Wetlands Hotline
(800) 368-5888
(800) 424-9346
(202) 554-1404
(800) 426-4791
(800)296-1996
(919)541-0800
: ' 1
(800)832-7828
Compliance Assistance Centers
EPA has established national compliance assistance centers, in partnership with industry,
academic institutions, and other federal and state agencies, that provide on line and fax
back assistance services in several industry sectors heavily populated with small
businesses. You can access each center directly, or from the main Small Business
Compliance Assistance homepage at: www.epa.gov/oeca/mfcac.html.
Metal Finishing
Printing
Automotive
Agriculture
Printed Wiring Board Manufacturing
Chemical Industry
Transportation
Paints and Coatings
Local Governments
www.nmfrc.org
1-888-USPNEAC orwww.pneac.org
1-888-GRN-LINK or www.ccar-greenlink.org
1-888-633-2155 or www.epa.gov/oeca/ag
www.pwbrc.org
1-800-672-6048 or www.chemalliance.org
1-888-459-0656 or www.transouorce.org
www.paintcenter. org
1-877-TO-LGEAN or www.lgean.org
State Agencies
Many state agencies have established compliance assistance programs that provide on-
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site as well as other types of assistance. Please contact your local state environmental
agency for more information. EPA's Small Business Ombudsman can provide you with
State Agency contacts by calling (800) 368-5888 or (202) 260-1211.
Compliance Policies Incentive
EPA's Small Business Policy and Small Communities Policy are intended to promote
environmental compliance among small businesses by providing incentives such as
penalty waivers and reductions for participation in compliance assistance programs and
encouraging voluntary disclosure and prompt correction of violations. These policies
can not be applied to enforcement actions that have already been initiated. Contact Karin
Leff (202-564-7068) for information on the Small Business Policy and Ken Harmon
(202-564-7049) for information on the Small Communities Policy.
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Chapter 7.
Periodic Review of Final Rules as Required by RFA Section 610
7.1 Introduction
The Regulatory Flexibility Act (RFA)
generally requires agencies to examine the impact
of their proposed and final regulations on small
entities.27 Under §610, the RFA also requires that
agencies review rules which have a significant
economic impact on a substantial number of small
entities (SISNOSE) within ten years of
promulgation. The Small Business Regulatory
Enforcement Fairness Act (SBREFA), enacted in
1996, added a judicial review provision to the
RFA, which means the Agency can be challenged
in court as to its compliance with the provisions
of this section on a rule-by-rule basis.
This Chapter . . .
This chapter provides information on:
identifying rules subject to review
performing a §610 review
ensuring your review meets §610
requirements
publishing your results
What's a Section 610 review?
In general, a §6 1 0 review involves:
Contents of Chapter 7
Page No.
Introduction 31
How Do We Identify Rules for Review? 82
Scheduling Section 610 Reviews 82
Must We'Review a Rule More than Once? . 82
What If a Rule has been Subsequently
Amended? 32
Do We Review a Rule or a CFR Part or
Section? 33
Can a Section 610 Review Be Deferred? ... 83
Conducting the Review 83
Does the Line-by-line Review also Satisfy Section
610 Requirements? 85
7.10 Announcing the Results of the Review .... 85
7.11 Follow-up to the Section 610 Review 85
7.12 Example of "Premie" Regulatory Agenda
Entry 85
7.13 Example Entry for Completed Section 610
Review 37
7.14 Section 610 Judicial Review 39
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
SISNOSE)!" ^ ** * "*
determining if the rule should be amended, rescinded, or let stand, based on five
27Small entities are defined as small businesses, small governments, and non-profits that are not
dominant in their field, see Chapter 2 for more information.
28 "Certification" means that the Agency determined that the rule had no SISNOSE, and stated this to
be the case in the published rule, see Chapter 1 for more information.
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statutorily prescribed factors; and
documenting the review and conclusions within 10 years of the date the rule was
promulgated.
7.2 How Do We Identify Rules for Review?
, ' , , j
Only rules that were subject to the RFA and were not certified, are subject to §610
review. EPA's Office of Policy provides aperiodic preliminary list of rules to Steering
Committee representatives that were subject to the RFA, not certified, and published during the
last ten years, using an electronic search of the Federal Register. This list should be verified by
each program office.
7.3 Scheduling Section 610 Reviews
The RFA requires that we complete the review by the tenth year anniversary date of
publication. You may undertake a review any time within ten years of publication of the original
rule. Conducting the review close to the ten-year anniversary, however, allows a more focused
perspective on any changed impacts on small entities.
We will use the Regulatory Agenda (published semiannually in the Federal Register) to
provide public notice of the review. You must complete the review within one year of that
public notice. You do not need to initiate or complete any regulatory action to amend or rescind
the rule within that year.
7.4 Must We Review a Rule More than Once?
There is no requirement to review rules more than once. After you
and decide to rescind, amend or to let the rule stand, that completes the obhgat
complete a review,
ion under §610.
7.5 What If a Rule has been Subsequently Amended?
The original, final rule as published in the Federal Register is the basis for §610 review.
In some case.s, a subsequent amendment may eliminate impacts on small entities so that there is
no longer a SISNOSE. Under these circumstances, when the original rule comes up for its
section 610 review, you must be able to adequately document the elimination of the SISNOSE,
and publish this finding in the "Completed Actions" section of the Regulatory Agenda.
" , . ., i
If an amendment reduces, but does not eliminate, a SISNOSE, then you should evaluate
the need for a §610 review based on current guidelines for SISNOSE thresholds (see Chapter 2).
I
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If a subsequent amendment has created, rather than eliminated, a SISNOSE based on
*?£ S^ f ISN°SE thresholds' then the le ^ust be reviewed within ten years of
the date of the published amendment.
7.6 Do We Review a Rule or a CFR Part or Section?
r A J^RFfLtieXpl!Citiy stiPulates a review by rule, rather than by sections or parts in the
Code of Federal Eolations (CFR). While we recognize that rules subsequently become
amalgamated mto the CFR and may lose their individual identity, the final rule as published in
the Federal Register remains the basis for §610 reviews. You will need to decide on a case-by-
case basis if the rule can be sufficiently separated from its context in the CFR to do an adequate
or want' to include additional regulatory materiai t
7.7 Can a Section 610 Review Be Deferred?
?FA all°WS,the head °f the Agency to certify in a statement published in the Federal
that a review of an existing rule is not "feasible" by the 10 year anniversary of them's
n a T^ PraCtlC6' ^^ the Administrator ^P^ts that program offices will initiate
and complete the reviews within this time. Any extensions must be justified on a case-by-case
bras and requested by the program AA. Your Steering Committee representative will manage
the process for you if you must request an extension.
7.8 Conducting the Review
Once you have determined that your rule:
is subject to the RFA, and
was not certified, either at the time of promulgation or when amended, you are ready to
conduct the §610 review.29 Bear in mind that §610 does not require that you initiate a
regulatory action to rescind or amend a rule within the one-year review period It only
requires that you complete the review in that time frame, publish your determination and
29 Over time, EPA's definition of SISNOSE has evolved to meet new statutory and administrative
we'll Tvoi 86 1 0 T ^ *" threSh°ld f°r Perf0iming S regUlat0ry fleXibiH* ^Sis has changed as
well. If your §610 rule does not meet current guidelines for SISNOSE, you should take this into
account when conducting the §610 review, e.g., if a final regulatory flexibility analysis wasperformed
r rT ShOU
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~ Chapter 7 Section 610 Review ~
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
explain the basis for your decision.
To conduct a section 610 review follow the three steps described below:
1. Before you begin your review, develop an entry for each rule for the "Prerule" section of
the Regulatory Agenda, indicating that you will be conducting this review over the next
year, and requesting public comment. Contact your Steering Committee representative
for specific information about the semiannual Regulatory Agenda exercise.
ij ,
v' The "Prerule" entry must:
. state your intent to review the rule under §610;
'! . '
f give a brief description of the rule;
1 ,'ilr , !
explain the need for and legal basis of the rule; and
invite public comment on the factors listed below.
You should also indicate in the abstract the length of the public comment period.
Normally, this is 60 to 90 days. (See Section 7.12 for an example of a "Prerule" §610
entry in the Regulatory Agenda).
2, You must specifically address and ask the public for comment on the following factors
when performing a review under §610:
the continued need for the rule;
i
the nature of complaints or comments received concerning the rule from the
public since promulgation;
the complexity of the rule (i.e., can you make the rule less complex so that small
entities can comply more easily?);
the extent to which the rule overlaps, duplicates or conflicts with other Federal
rules, and, to the extent feasible, with State and local governmental rules; and
the length of time since the rule has been evaluated or the degree to which
technology, economic conditions, or other factors have changed in the are affected
by the rule. (Evaluate these factors to the extent that they affect small entities, not
the entire regulated universe.)
3. Put the results of the review hi your program office docket. You must explicitly consider
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all of these factors in your review, and document the results, either positive or negative.
7.9 Does the Line-by-line Review also Satisfy Section 610 Requirements?
ah review ^ualifies as a §610 review if you address the required factors
stated above, request public comments, and adequately document the review. Contact your
Steering Committee representative or OGC if you are not sure that the review meets the 8610
requirements. In most cases you will need develop a separate "Prerule" entry for the 6610
portion of the line-by-line review, and proceed with an independent analysis.
7.10 Announcing the Results of the Review
The results of this review-either to rescind, amend or leave the rule unchanged-will be
published in the "Completed Actions" section of the Regulatory A .end. one year from the time
HZ t tHed ^ " PTQmlf- Y°U ShOUW USe thC "loi form", i.e, the oneLt allows 1
abstract, so that you can explain your determinations. Supporting documents should be placed in
uodee Section 7.13 for an example of "Completed Action" entries in tlTe
7.11 Follow-up to the Section 610 Review
You should follow any decision to amend or rescind the rule with an entry in the "Prerule"
Proposed Rules" section of a subsequent Regulatory
or
7.12 Example of "Prerule" Regulatory Agenda Entry
MtiSon^^fp' r,rSlPref5? a ReSulatorv Agend" entry by completing an Action
uimation *orm (All-). Each office has different procedures for preparing and submitting their
ALF s. Your Steering Committee Representative can tell you what the procedure is for your
SlT t rnnlC»r?ittee m!,mbers m listed on the EpA Guide to Regulation Development
intranet site in the "Roles and Contacts" section of the Reference Library. The address is-
http://mtranet.epa.gov/rapids.
TITLE: (NEW) Technical Standards and Corrective Action Requirements for
and Operators of Underground Storage Tanks (Section 610
AGENCY: EPA
REGULATORY PLAN: No
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1999 Revised RFA/SBREFA Guidance for EPA Rulewriters
PRIORITY: Info./Admin./Other ' \
REINVENTING GOVERNMENT: This action is not part of the Reinventing Government
effort.
LEGAL AUTHORITY: 5 USC 610
CFR CITATION: 40 CFR 280
LEGAL DEADLINE: None
I
ABSTRACT:
In September 1988, the Environmental Protection Agency (EPA) promulgated
regulations establishing technical standards and corrective action
requirements applicable to underground storage tanks (USTs) (September 23,
3.988, 53 FR 37082). EPA issued the UST regulations under the authority of
sections 2002, 9001 through 9007, and 9009 of the Solid Waste Disposal Act of
1970, as amended by the Resource Conservation and Recovery Act of 1976, as
amended (42 USC 6912, 6991, 6991(a) through (f), 6991(h)). They became
affective December 22, 1988, and are applicable to underground storage tanks
containing petroleum or substances defined as hazardous under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980.
EPA performed a regulatory flexibility analysis for this rule and concluded
that it may have a significant economic impact on a substantial number of
small entities, namely [identify which small entities we believed would be
affected, i.e., small business, governments or non-profits. If you know what
the impacts were, briefly describe them].
This gives notice that EPA will review the UST regulations pursuant to section
610 of the Regulatory Flexibility Act (5 USC 610). EPA solicits comments on
the continued need for the rule; the complexity of the rule; the extent to
which it overlaps, duplicates, or conflicts with other Federal, State, or
local government rules; and the degree to which technology, economic
conditions, or other relevant factors have changed since the rule was
promulgated. EPA also will welcome comments on any other aspect of the rule.
1 " , ' ' I !
EPA continues to view this regulation as a vital component of State-EPA
efforts to ensure effective detection, remediation, and prevention of UST
releases in order to protect human health and the environment. EPA intends to
continue to require compliance with the regulation. Until and unless the
Agency modifies the rule, owners and operators of underground storage tanks
will be expected to comply with all parts of the rule. The Agency performed a
similar review 3 years ago and concluded at that time that there was neither a
need for nor any significant stakeholder support for changes to the UST
regulation.
TIMETABLE:
ACTION DATE PR CITE
Begin Review 04/00/98
End Comment Period 07/00/98
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1999 Revised RFA/SBREFA Guidance for EPA Rule-writers
End Review ....................... , ....... ......... 09/00/98
SMALL ENTITIES AFFECTED: None
GOVERNMENT LEVELS AFFECTED: None
ADDITIONAL INFORMATION: SAN No. 1234
AGENCY CONTACT:
Irwin L. Auerbach,
Environmental Protection Agency
Solid Waste and Emergency Response
Mail Code 5401G
Washington, DC 20460
703 603-7139
RIN: 2050-AE57
7.13 Example Entry for Completed Section 610 Review
All of EPA's Regulatory Agenda entries are submitted to OMB via EPA's Rule and Policy
^formation and Development System (RAPIDS). Your pre-rule entry announcing the review
(Regulatory Agenda Review Form) is still in RAPIDS, and you only need to enterlhe results of
^H f T reSUltS m th£ "ComPIeted" Action which is highlighted in bold, below
Insert the date the review ended, and insert either "Rule will remain in effect without
modification", or "New rulemaking started, see SAN # (insert SAN# of newlv started
' Each office has a different system for updating and submitting Agenda entries.
.
DeTare vS?7? '"^f entatlve wil1 §ive 3 appropriate instructions when it is time to
prepare your Regulatory Agenda entry.
entry
Standards and Corrective' Action Requirements for
and Operators of Underground Storage Tanks (Section 610 Review)
AGENCY: EPA
REGULATORY PLAN: No
PRIORITY: Info./Admin./Other
REINVENTING GOVERNMENT: This review is not part of the Reinventing Government
LEGAL AUTHORITY: 5 USC 610
CFR CITATION: 40 CFR 280
LEGAL DEADLINE: None
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ABSTRACT:
In September 1988, the Environmental Protection Agency (EPA) promulgated
regulations establishing technical standards and corrective action
requirements applicable to underground
storage tanks (USTs) (September 23, 1988, 53 FR 37082). EPA issued the UST
regulations under authority of sections 2002, 9001 through 9007, and 9009 of
the Solid Waste Disposal
Act of 1970, as amended by the Resource Conservation and Recovery Act of 197S,
as amended (42 USC 6912, 6991, 6991(a) through (f), 6991(h))'. They became
effective December 22, 1988, and are applicable to underground storage tanks
containing petroleum or substances defined as hazardous under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980.
EPA performed a regulatory flexibility analysis for this rule and concluded
that it may have a significant economic impact on a substantial number of
small entities, namely [Identify which small entities we believed would be
affected, i.e., small business, governments or non-profits. If you know what
the impacts were expected to be, briefly describe them]. In the April 27,
1998 -Regulatory Agenda, we indicated that we would perform a review of this
rule in accordance with 610 of the Regulatory Flexibility Act. We are now
announcing the completion of that review and our decisions based on that
review.
.. , , | . .
i . « i
We have concluded that this rule should remain in effect with no modification.
[Add a brief summary of the analysis that led you to this conclusion, and
reference where full information may be found in the docket].
TIMETABLE:
ACTION DATE FR CITE
Begin Review
End Review
[If rule will be changed or modified, add:]
New rulemaking started: see SAN 1234
SMALL ENTITIES AFFECTED: none
GOVERNMENT LEVELS AFFECTED: none
ADDITIONAL INFORMATION: SAN No.1234.
AGENCY CONTACT:
Irwin L. Auerbach,
Environmental Protection Agency,
Solid Waste and Emergency Response,
Mail Code 5401G,
Washington, DC 20460,
703 603-7139
RIN: 2050-AE57
.04/00/98
. .09/00/98
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7.14 Section 610 Judicial Review
The 1996 SBREFA amendments to the RFA gave small entities adversely affected by a
rule the right to seek judicial review of our compliance with the requirements of section 610. A
reviewing court has wide discretion in deciding what the appropriate remedy should be for an
agency's failure to comply with section 610, including remanding the rule or deferring
enforcement of the rule against small entities, unless the court finds that continued enforcement
of the rule is in the public's interest.
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~ Chapter 7 Section 610 Review -
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