03-11762. Regulatory Flexibility Act

AGENCY:

Department of Education.

ACTION:

Notice of procedures and policies.

SUMMARY:

This notice announces Department of Education procedures and policies to promote compliance with the Regulatory Flexibility Act. This notice is issued in accordance with Executive Order 13272 on “Proper Consideration of Small Entities in Agency Rulemaking.” Executive Order 13272 provides that draft rules must be thoroughly reviewed “to assess and take appropriate account of the potential impact on small businesses, small governmental jurisdictions, and small organizations.”

FOR FURTHER INFORMATION CONTACT:

Kenneth C. Depew, Office of the General Counsel, U.S. Department of Education, 400 Maryland Avenue, SW., room 6E227, Washington, DC 20202-2241. Telephone: [phone].

If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.

Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape, or computer diskette) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

The Regulatory Flexibility Act, as amended (Act), 5 U.S.C. 601 et seq., applies, with certain limited exceptions, to any rule for which an agency issues a notice of proposed rulemaking pursuant to 5 U.S.C. 553(b) or any other law, including any rule of general applicability governing Federal grants to State and local governments for which the agency provides an opportunity for notice and public comment.

Except in those cases that the Secretary of Education can certify the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities, the Department must publish an initial regulatory flexibility analysis (IRFA) or a summary of an IRFA in the Federal Register with the proposed rule. A final regulatory flexibility analysis (FRFA) or a summary of an FRFA must be published with the final rule.

The IRFA must include the following:

(1) A description of the reasons why action by the Department is being considered;

(2) A succinct statement of the objectives of, and legal basis for, the proposed rule;

(3) A description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply;

(4) A description of the 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 necessary for preparation of the report or record;

(5) An identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap or conflict with the proposed rule; and

(6) 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.

The FRFA must include the following:

(1) A succinct statement of the need for, and objectives of, the rule;

(2) A summary of the significant issues raised by the public comments in response to the IRFA, a summary of the assessment of the Department of such issues, and a statement of any changes made in the proposed rule as a result of such comments;

(3) A description of and an estimate of the number of small entities to which the rule will apply or an explanation of why no such estimate is available;

(4) A description of the projected reporting, recordkeeping and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record; and

(5) A description of the steps the Department has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the Department which affect the impact on small entities was rejected.

Notice to Public

Semiannually, under section 602 of the Act, the Department publishes an Agenda of Federal Regulatory and Deregulatory Actions, which contains a list of all rules currently under development or review. The purpose of the agenda is to encourage more effective public participation in the regulatory process by providing the public with early information about pending regulatory activities.

For each rule listed, the agenda provides the following information:

• An abstract, which includes a description of the problem to be addressed, any principal alternatives being considered, and potential costs and benefits of the action.
• An indication of whether the planned action is likely to have a significant economic impact on a substantial number of small entities as defined by the Act.
• A reference to where the reader can find any current regulations in the Code of Federal Regulations.
• A citation of legal authority.
• The name, address, and telephone number of the contact person at the Department from whom a reader can obtain additional information regarding the planned regulatory action.

In addition, the Department publishes its Regulatory Plan on an annual basis. The plan contains a statement of the Department's regulatory and deregulatory priorities for the coming year.

In order to provide information and support enhanced exchange, the Department has instituted 1-800-USA-LEARN (1-800-872-5327) to connect our customers to a center for information about departmental programs and initiatives; 1-800-4FED-AID (1-800-433-3243) for information on student aid; and an on-line library of information on education legislation, research, statistics, and promising programs.

The Department has an impressive record of successful communication and shared policy development with affected persons and groups, including parents, students, educators, representatives of State and local governments, neighborhood groups, schools, colleges, special education and rehabilitation service providers, professional associations, advocacy organizations, business, and labor.

In particular, the Department continues to seek greater and more useful customer participation in its rulemaking activities through the use of consensual (negotiated) rulemaking and new technology. When rulemaking is determined to be absolutely necessary, customer participation is essential and sought at all stages—in advance of formal rulemaking, during rulemaking, and after rulemaking is completed—in anticipation of further improvements through statutory or regulatory changes. The Department has expanded its outreach efforts through the use of satellite broadcasts, electronic bulletin boards, and teleconferencing. For example, the Department invites comments on all proposed regulations through the Internet.

The Department is streamlining information collections, reducing burden on information providers involved in our programs, and making information maintained by the Department easily available to the public. To the extent permitted by statute, regulations are being revised to eliminate barriers that inhibit coordination across programs (such as by creating common definitions), to reduce the frequency of reports, and to eliminate unnecessary data requirements.

The Department has also piloted the use of two new Internet-based software applications, e-Application and e-Reports, that enable applicants, grantees, and grant teams to process applications and file performance reports online, and we have received positive feedback from participants in the pilot programs. Our goal over time is to encourage applicants and grantees to make electronic commerce, or the process of conducting business over the Internet, their preferred method of doing business with the Department.

Periodic Review of Rules

Section 610 of the Act requires review of existing rules within 10 years of the effective date of the Act and review of rules adopted after the effective date within 10 years of the adoption of the final rule. The purpose of the reviews is to determine if these rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize any significant economic impact of the rules upon a substantial number of small entities. The Department considers the following factors in reviewing the rules:

• The continued need for the rule.
• The nature of complaints or comments received concerning the rule from the public.
• The complexity of the rule.
• 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.
• 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 area affected by the rule.

In accordance with section 610, on August 5, 1981 (46 FR 39882), the Department published a notice of its plan for review of its rules that might have a significant economic impact upon a substantial number of small entities. The plan for review established a deadline of January 1, 1991, for completing the review of all rules existing on January 1, 1981, and the Department met this deadline.

The Department has reviewed all rules published after January 1, 1981, prior to publication to determine if the rule would have a significant economic impact upon a substantial number of small entities. Periodic enactment of reauthorizing legislation for Department programs therefore ensures a review of existing regulations under section 610 at least every four or five years.

Review of All Proposed and Final Rules

It is the policy of the Secretary of Education that all proposed and final rules be thoroughly reviewed to assess their impact on small entities. To ensure this review, the Department has established a clearance process for all regulatory documents managed by the Division of Regulatory Services (DRS) in the Office of the General Counsel.

While it is Department policy to regulate only when absolutely necessary and in the least burdensome way possible, it is necessary for the Department to issue a limited number of proposed and final rules each year. Each rule is carefully screened under the Act to determine if it will have an impact on any small entities and, if so, what this impact will be.

In most cases the analysis supports a determination the rule can be certified by the Secretary as not having a significant economic impact upon a substantial number of small entities. The certification and a supporting explanation are then included with both the proposed and final rules.

For a proposed rule with a certification by the Secretary, all of the comments received are carefully screened to determine if any of them specifically address the certification or relate to the consequences of the rule or the alternatives considered by the Department. If comments are received on the certification or the supporting rationale for the certification, the Department analyzes the impact of the rule on small entities in light of the additional information provided by the commenters, prepares an appropriate response to the comments, and certifies the final rule or prepares a regulatory impact analysis, as appropriate.

A significant rule, following Department clearance, is also sent to the Office of Management and Budget (OMB) for further review under Executive Order 12866 (Regulatory Planning and Review). Similarly, a draft rule that has a significant economic impact on a substantial number of small entities under the Act will be sent to the Small Business Administration Office of Advocacy (Advocacy), and Advocacy comments will be given appropriate consideration by the Department, as required by Executive Order 13272. As necessary, OMB may consult with Advocacy on the impact on small entities under the March 29, 2002, Memorandum of Understanding between those offices.

For those rules where a certification is not supported by the analysis of the impact on small entities, the Department prepares an IRFA and FRFA, as appropriate, in accordance with the following procedures.

Procedures for Compliance With the Regulatory Flexibility Act and Executive Order 13272

(1) Determine whether the rule is subject to the Act. Generally, the Act applies in all cases in which the Department is required to publish a notice of proposed rulemaking (NPRM).

(2) If the rule is subject to the Act, prepare an IRFA for the rule incorporating the necessary information. Some of this information will be available from the initial analysis of the proposed rule and the preamble to the NPRM, other information will require identifying the specific actions a small entity must take in order to comply with the rule.

(3) Notify the Chief Counsel for Advocacy of the Small Business Administration (SBA) and provide a copy of the draft NPRM and IRFA a reasonable time prior to publication. This notification will usually occur at the time the draft NPRM is submitted to the Office of Management and Budget for review under Executive Order 12866.

(4) Publish the IRFA or a summary of the IRFA with the NPRM in the Federal Register. Unless the IRFA is extremely lengthy or complex, it is preferable to publish the entire analysis rather than a summary.

(5) In preparing the final rule, consider and respond to all comments on the impact of the rule on small entities, including comments from the SBA.

If a determination is made at this time that the rule will not have a significant economic impact on a substantial number of small entities, a certification and statement of factual basis of support may be included with the final rule. Otherwise, a FRFA incorporating the required information must be prepared. Publish the FRFA or a summary in the Federal Register with the final rule. Unless the FRFA is extremely lengthy or complex, it is preferable to publish the entire analysis rather than a summary.

Electronic Access to This Document

You may view this document, as well as all other Department of Education documents published in the Federal Register, in text or Adobe Portable Document Format (PDF) on the Internet at the following site: www.ed.gov/​legislation/​FedRegister.

To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at [phone].

Note:

The official version of this document is published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available on GPO Access at: http://www.access.gpo.gov/​nara/​index.html.

(Catalog of Federal Domestic Assistance Number does not apply.)

Dated: May 6, 2003.

Rod Paige,

Secretary of Education.