Federal agencies have routinely certified new regulations as not having “a significant economic impact on a substantial number of small entities” without the “factual basis” that the law requires. Important rules promulgated by the Biden administration either contradicted their own economic findings or supplied no quantitative evidence at all. This practice impedes congressional and executive oversight while undermining competition and innovation in the U.S. economy.
Many certifications were fictional. The agency acknowledged major or economy-wide effects yet asserted that small entities would be unaffected. Examples include Environmental Protection Agency rules mandating rapid transitions to electric vehicles, Department of Health and Human Services rules imposing staffing mandates on nursing homes, and National Labor Relations Board rules expanding joint-employer liability. Each of these rules cites substantial costs or disruption while simultaneously claiming that small entities will experience no significant impact.
Thousands of other certifications are baseless, providing no numerical estimates of either (1) the number of affected small entities or (2) the typical impact per entity. Many consist solely of boilerplate language such as “the agency certifies that this rule will not have a significant economic impact on a substantial number of small entities,” without any accompanying data or explanation.
The report’s key findings are:
- Fictional certifications are unlawful. Congress amended 5 U.S.C. § 605(b) in 1996 to require agencies to publish a statement providing the factual basis for a certification. Certifications that contradict a rule’s own analysis, ignore quantified costs, or provide no supporting facts fail this statutory requirement.
- Unlawful certifications were widespread. Agencies routinely published certifications that were unsupported or inconsistent with the agency’s own findings. Falsely certified rules would by themselves have imposed $200 billion – $600 billion in regulatory costs on small entities, mitigated only by deregulatory actions taken since January 20, 2025.
- Unlawful certifications were widespread even among the most important rules. Among rules disapproved by Congress under the Congressional Review Act, 75 percent were certified as having no significant small entity impact or were claimed to be exempt from the Regulatory Flexibility Act (RFA). Among all major rules, nearly two-thirds fell into this category despite major rules being economically significant.
- Five recurring patterns characterize many fictional certifications:
- Ignoring direct compliance costs and enforcement or liability risks.
- Treating product bans, facility closures, or firm exit as economically insignificant.
- Dismissing millions of hours of paperwork acknowledged elsewhere in the same rule.
- Applying arbitrary “below-threshold” tests that ignore cumulative burdens (“death by a thousand cuts”) and the smallest of small businesses.
- Excluding large, foreseeable “indirect” effects that are quantified and relied upon in regulatory impact analyses.
These practices have rendered the RFA’s small-business safeguards largely illusory. When agencies declare major, economically significant rules to have no small-entity impact, they bypass the analyses, consultations, and compliance guides that the law requires. The result is a body of federal regulation built, in many cases, on fiction rather than fact. Falsely-certified rules from the Biden administration impose costs on millions of small entities without disclosure or consideration. They also expose small entities to capricious enforcement actions.
This report thoroughly documents the extent of improper and fictional certifications. Drawing on machine-assisted classification of every Biden-era final rule published in the Federal Register, it identifies both the frequency and character of fictional and baseless certifications. Each identified certification fails to meet the statutory standard of a “factual basis.” Dozens of examples illustrate how the plain language and purpose of the RFA have been disregarded—an Orwellian reversal in which agencies describe major burdens on small businesses as having “no significant economic impact” on them.