HR 7198: Prove It Act of 2024

HR 7198 in plain English: The Prove It Act of 2024 strengthens federal rulemaking requirements to better protect small businesses, small organizations, and small local governments from regulatory burdens. It requires agencies to account for indirect costs of proposed rules on small entities and creates a formal process for small entities to challenge agency decisions that a rule will not significantly impact them. If an agency fails to cooperate with the review process, the finalized rule cannot apply to small entities.

Stated purpose

The bill aims to increase transparency in federal rulemaking by requiring agencies to more thoroughly analyze and disclose the potential costs their rules may impose on small businesses, and to give small businesses a formal process to challenge an agency's claim that a rule will not significantly affect them.

Key points

• Requires agencies to include reasonably foreseeable indirect costs to small entities in regulatory analyses.
• Agencies must notify the SBA Office of Advocacy within 10 days if they certify a rule won't significantly impact small entities.
• Small entities can petition the SBA Office of Advocacy to review that certification.
• If the Office of Advocacy finds a rule does significantly impact small entities, a full flexibility analysis is required.
• Rules cannot apply to small entities if the issuing agency refuses to participate in the review process.

Arguments supporters make

• Agencies have sometimes skipped full small-business impact reviews by certifying that a rule has no significant effect; this bill creates a real check on that practice by giving small businesses a voice and a path to challenge those decisions.
• Requiring agencies to account for indirect costs — like effects on businesses that supply or buy from directly regulated entities — gives a more complete and honest picture of a rule's true burden on small businesses.
• If an agency refuses to engage in the review process, the rule simply cannot apply to small entities, which creates a strong incentive for agencies to take small-business concerns seriously from the start.

Arguments opponents make

• Adding petition processes, mandatory consultations, and additional analysis requirements could significantly slow down rulemaking, delaying regulations that protect workers, consumers, or the environment.
• The provision allowing small entities to escape a finalized rule if an agency does not fully participate in review could create a loophole that lets businesses avoid rules intended to protect the public, based on a procedural technicality rather than the rule's merits.
• Agencies already have flexibility analysis requirements under existing law; critics may argue this bill layers on new procedural hurdles that increase compliance costs for agencies without meaningfully improving outcomes for small businesses.

Tradeoffs

Stronger protections and a formal voice for small businesses in the rulemaking process come at the cost of added procedural steps and potential delays that could slow the finalization of rules meant to serve broader public interests; shielding small entities from rules when agencies fail to cooperate may protect those businesses but could also reduce the reach and effectiveness of regulations.

Current status in Congress: Passed House.

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