Section 610’s Flaws are Right Under Your SEISNOSE

Section 610’s Flaws are Right Under Your SEISNOSE As the regulatory scope of the federal government grew substantially in the 1960s and '70s, many rightly came to the realization that while agencies were pumping out new rules with regularity, there was no mechanism in place to retrospectively review regulations to see if they were working as intended. Many were also concerned about the impact of all these rules on small businesses, governments, and organizations. Enter the Regulatory Flexibility Act (RFA), a 1980 law that requires agencies to consider the disproportionate impacts their rules can have on small entities. Included in the RFA was Section 610, a provision requiring agencies to review their rules within 10 years of being published to determine if the rule should be kept as is, modified, or repealed. Section 610 even goes further than simply requiring agencies to make sure their rules work as planned; it requires them to consider changes in the marketplace and technology to help make sure rules stay up to date. Problem solved, right? Well, not exactly. As Rose Laoutaris and I explain in our recent Insight, there are several reasons why Section 610 has been a relative flop. The main problem has to do with something called SEISNOSE. No, that’s not some sort of vestigial organ; it’s an acronym that stands for “significant economic impact on a substantial number of small entities.” The phrase is critical because agencies only review rules that have a SEISNOSE. Unfortunately, the phrase is not defined in the RFA. This ambiguity leads agencies to use their own interpretations, and incentivizes them to primarily review rules only in the most obvious cases. The problems don’t end there. Even among the small group of rules that do have a SEISNOSE, few of those ever get reviewed in the future. For example, only about 12 percent of the Environmental Protection Agency's rules listed in the Unified Agenda as impacting small entities going back to the 1990s have been reviewed under Section 610. Another flaw of the RFA and Section 610 is that there are no serious consequences if agencies do not do a good job retrospectively reviewing rules. Even judicial reviews have failed to measurably help. Finally, there are other ad hoc regulatory review efforts that have cropped up, mostly through executive orders, that have undermined Section 610. These flaws are well known – the then-General Accounting Office first flagged issues with SEISNOSE in 1991. But attempts to provide more clarity on the phrase and add guardrails to make sure agencies do a better job of reviewing rules have failed to pass Congress. Forty-one years is a long time for these problems to persist. It’s time to strengthen the RFA and Section 610 by creating a workable definition of SEISNOSE and adding meaningful consequences for agencies that fail to comply.