October 21, 2002
The Regulatory Flexibility Act of 1980 (RFA), as amended by the Small Business Regulatory Fairness and Enforcement Act of 1996 (SBREFA), requires agencies to ask for and consider regulatory proposals that consider the size of the businesses or other organizations subject to regulation. When a proposed regulation will have a significant economic impact on a substantial number of small businesses, the RFA requires, among other things, that agencies analyze and take into consideration small business concerns. Under the RFA, when an agency issues a rule that will have a significant economic impact on a substantial number of small entities, the agency must provide small businesses the opportunity to participate in the rulemaking. Providing the opportunity to participate may include soliciting and receiving comments from small businesses. The participation of small businesses helps agencies fulfill their statutory objectives while reducing, as much as possible, the burden on small businesses. This guide is primarily directed towards owners or operators of small food, cosmetic or dietary supplement businesses that are regulated by the Center for Food Safety and Applied Nutrition in the Food and Drug Administration.
One of the most common ways that agencies create regulations is through "informal rulemaking." In this type of rulemaking, agencies will usually publish in the Federal Register a proposed rule that contains both a "codified" part of the regulation (the actual rules that, when finalized, will appear in the Code of Federal Regulations) and a "preamble," which has a discussion of why and how the agency thinks the rules will accomplish the mission. In addition, there will be a cost-benefit analysis (Preliminary Regulatory Impact Analysis) of the rules, which is required by Executive Order (from the President), and an Initial Regulatory Flexibility Analysis (IRFA), which is an analysis of how the regulation will affect small businesses or other small entities.
Before putting out the proposed rule or "proposal," the agency may publish an Advanced Notice of Proposed Rulemaking (ANPR) in the Federal Register, or it may meet with various constituencies to solicit comments on how the rule should be crafted. Once it has been published in the Federal Register, anyone may send the agency a written comment on the proposal. A time limit for the acceptance of comments is specified in the proposal.
The final rule is also published in the Federal Register, where the agency sets the date by when the regulated community must comply with the rule. In the final rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, the agency will publish a Final Regulatory Flexibility Analysis addressing the small business impacts and small business comments that were raised during the comment period for the proposed rule.
Small Business Comments
Small businesses may be involved at any time in the rulemaking process -- before the proposal, during the comment period, or after the publication of the proposal. As previously discussed, submitting comments is one way that small businesses can participate in the rulemaking. These comments will be more likely to influence the agency, the higher their quality.
The following general guidance is intended to help you write useful and persuasive comments. Commenting will help FDA give full consideration to your particular needs. Remember that FDA files all comments in a public docket and that the information that is submitted is also available to anyone who requests it under the Freedom of Information Act.
Suggestions for Submitting Comments
There are four general areas that you may wish to comment on concerning regulations:
A. The need for the rule - In the preamble of a proposed rule the agency describes the need for the rule. If you agree or disagree with the agency's explanation of the health, safety or fraud issue that is addressed by the rule, you could comment on that. Be as factual and detailed as you can.
B. Other options - If the agency has proposed or discussed requirements, you may be able to think of other things the agency could do that would solve the problem in a less costly way for your firm or industry. One option that has often been suggested is for the agency to give small firms more time to comply with a regulation, such as a change to a food label. Another option may be for the agency to identify a goal companies must meet, but to allow each firm to achieve the stated goal in its own way. Another option may be to request an exemption for certain types of businesses for which the requirements are not applicable. Because the quality and persuasiveness of your comment affects the agency's decision, including data, logical reasoning, and other information to support your comment always helps.
C. Benefits of the Rule - By Executive Order, the agency is required to estimate the benefits of each proposed and final rule. This requirement might mean, for example, estimating how many lives would be saved or illnesses averted by causing an industry to change manufacturing practices. You may want to explain (in detail if possible) whether you think a specific requirement would achieve the intended results. For example, you may want to provide detailed information documenting whether your industry has a particular problem. Furthermore, you may want to comment on the degree to which a proposed requirement is already common practice, and how much a federal rule would change practices in your industry. Finally, you may want to comment on how a proposed regulation would benefit your firm through reduced costs or increased revenues.
D. Costs of the Rule - In many cases, the regulatory options and costs of the rule will be the areas that you will know most about and may want to include in your submission. Under the Executive Order the agency must consider the costs of the rule to the entire industry. Under SBREFA and the RFA the agency must consider the costs that will be incurred by a small business. The chart below gives examples of costs that your company or industry may experience as a result of a regulation. You may find it helpful in preparing a comment.
Cost Factor Chart
The factors below can be used for commenting on each proposed requirement in the codified section. This chart is only a suggestion for submitting comments. You are free to comment in any manner you wish or not at all. You may also, for example, respond by plant, firm, industry group, or in any other manner.
|1. What type of worker will have to do something different due to this regulation?||Divide workers into categories based on their wages and salaries. Include anyone you will need to hire because of the rule.||Managers, quality control workers, production line workers, contractors, laboratory workers, secretaries|
|2. What will those workers have to do differently?||Using the requirements of the rule, explain the new duties each person will take on. If it is something they are already doing, you should not include it, even though it is a requirement of the rule.||A manager may have to oversee implementation of the regulation; a quality control worker may focus more on a safety activity rather a quality control activity; a new production line worker may be hired.|
|3. How much time will the new activity take for each category of worker?||Estimate by day, week, month or year how much time will be spent on the new activity and whether the new activity is a one-time event or is a repeated activity.||A lab worker must perform 2 new tests per week taking a total of 4 hours per week or 200 hours per year (plant closed 2 weeks each year) every year.|
|4. What are the average salaries by group or person engaged in a new activity?||Estimate the full annual cost of labor (salary + overhead) or hourly rate for each category of worker who must change activities.||Managers are paid $35,000 per year including overhead. Production workers get $19 per hour including overhead.|
|5. What new capital equipment or materials will you have to buy to comply with the regulation?||Estimate the actual cost of new capital equipment or materials that you will have to purchase (one time or annually) and any loss of equipment that can no longer be used.||Chemicals for new tests will cost $40 per test for each of the 4 tests per week. The depreciated value of an extruder that will no longer be able to be used is $7500.|
|6. What is the size of your firm?||Estimate the size of your firm either by number of employees or by annual sales. A range may be given.||Our firm has 200 full time employees and 20 part time employees. Annual sales are between $10 and $50 million.|
|7. What products do you make?||Describe the type of products that your firm makes that are covered by the potential regulation.||Our firm makes 2 varieties of herbal supplements in 3 sizes each. We make 4 flavors of Larry's Ice Cream in 2 sizes each.|
|8. What are your average annual profits?||Again, do not report sensitive information but you may wish to provide an approximate annual amount that you can use to finance new requirements.||My firm makes between $20,000 and $50,000 per year.|
|9. Who owns your firm? How many plants do you have?||Explain whether or not you are a subsidiary of a larger firm. If so, it may disqualify you from being a small business unless the entire firm is small.||We are a solely owned firm with 2 plants.|
Statement of Nonbinding Effect
For further information about this guide contact:
Small Business Guide
Division of Market Studies, HFS-726
Center for Food Safety and Applied Nutrition
Food and Drug Administration
5100 Paint Branch Parkway
College Park, Maryland 20740