Chief Counsel DePriest Participates on ABA panel on the RFA

By Katie Moore, Legal Intern

On Wednesday, June 15, 2016, Chief Counsel for Advocacy Darryl L. DePriest participated as a panelist in the Regulatory Policy Committee of the Administrative Law and Regulatory Practice Section of the American Bar Association’s Administrative Law Summer School: The Regulatory Flexibility Act. Joining him on the panel were: Daniel Cohen – the Assistant General Counsel for Legislation, Regulation, and Energy Efficiency at the Department of Energy; Keith Holman – Senior Policy Counsel and Managing Director at the U.S. Chamber of Commerce; and Viktoria Z. Seale – Counsel at the U.S. House of Representatives, Committee on Small Business.

The panel was hosted by Jennifer Smith, Co-Chair of the Regulatory Policy Committee. Smith is also an assistant chief counsel for the Office of Advocacy. She briefly introduced the panelists and then each panelist offered his/her views on the current status and role the Regulatory Flexibility Act (RFA) serves. Mr. DePriest spoke first and gladly reported that the Office of Advocacy is celebrating the 40th Anniversary of its founding. Mr. DePriest also gave a brief history of the RFA, highlighting for those in attendance that this is the 35th year since the RFA was passed and the 20th year since Congress amended the RFA through the Small Business Regulatory Enforcement Fairness Act (SBREFA).

DePriest discussed Congress’ concern regarding the “one size fits all” approach that was not working prior to the passage of the RFA. He also said the goal of the Act is to still achieve the regulatory goals, but minimize the impact on small entities. SBREFA amended the RFA in three main ways: the judicial review of agency action; the SBREFA panel process; and the requirement of small entity compliance guides.  He noted that the RFA applies only to notice and comment rulemaking, but questioned whether the RFA is broad enough. He posed the following question: Should the RFA apply to other aspects, such as interpretative rules or policy? Some other issues he raised include whether agencies should be required to conduct indirect impact analysis, whether other agencies should be required to hold SBREFA panels, and the issue of retrospective review.

Daniel Cohen shared various lessons from his experience in litigation. First, the initial guidelines of the terms “significant impact” and “substantial number” proved less helpful because it was difficult to be that precise. Second, he discussed the “universe problem” of how one defines the denominator too large or too small leads to meeting or not meeting the significant number of small entities. Third, the question of who is directly regulated is very important, as opposed to someone only indirectly regulated. And finally, when in doubt, he recommended doing the full analysis.

Keith Holman started his discussion by posing the following question: Why is the RFA important, and does it do any good? Mr. Holman stressed the importance of agencies considering how their regulations will affect small businesses. He said that we need the RFA to work even better today than it has so far, because, “We’re in a small business recession.” He expressed a wish for the RFA to work “the way it was supposed to.”

Viktoria Z. Seale began her discussion stating that she thinks the RFA can be improved, and noted that both sides of Congress have typically supported this law. Federal agencies performing more due diligence “just makes a lot more sense,” she said, as opposed to small businesses checking the Federal Register. Mrs. Seale pointed out that analysis is done for just less than 8% of all rules. She said that certification of rules 92% of the time is shocking and Congress is concerned about appropriate certification. Seale stated that she thinks the requirement on all agencies to do affirmative outreach to small entities is great, but should be improved. She also stressed the importance of the quality of analyses – without good analyses, the agencies will lack a complete picture of the future impact. Ms. Seale noted that 90% of employers in the U.S. have 20 employees or less, which is why she said it is very important to pay attention to these issues and improve certain areas.

After each panelist spoke, Smith led a question and answer session, with some questions coming from people in attendance. The panel discussion was very illuminating of the different points of view held by people on the various sides of regulatory law. For people both with little knowledge of the RFA and with extensive knowledge, the panel was very interesting and informative. The ABA will be holding three additional Administrative Law Summer School sessions this July.