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CFPB Explains the Role of Small Businesses in Rulemaking Process
Friday, April 3, 2015 6:35 AM

The Consumer Federal Protection Bureau blog is currently running a series about how the rulemaking process works.

The March 26 post says the CFPB is one of three federal regulators required to include a small business review process. "Small businesses provide us with valuable feedback as we write regulations to help consumer financial products and services work for Americans," the post says.

The CFPB is a data-driven, evidence-based agency with a philosophy of issuing regulations "only where there’s a strong justification for doing so. The Dodd-Frank Act, the law that created the CFPB, requires us to organize a Small Business Review Panel when we’re working on a rule that could have significant economic impacts on small entities. Small entities include small businesses, organizations, and small government bodies."

Each Small Business Review Panel consists of representatives from the CFPB, Small Business Administration, and the Office of Management and Budget’s Office of Information and Regulatory Affairs. The panel holds an outreach meeting with a representative group of small businesses to discuss the potential rules we’re considering.

The panel decides which small businesses participate. First, they determine which types of small entities the proposed rule under consideration could directly affect. Then, they coordinate with the Small Business Administration to select individuals to represent those small entities. About 15 to 20 small business representatives usually participate in the process.

Before the outreach meeting, the panel will distribute materials to each participant, including general background, an overview of the proposals being considered, and a list of issues and questions the panel will discuss with participants. They post those materials on the CFPB website simultaneously so their rulemaking plans are transparent.

Small business representatives are given time to study the materials; then, during the meeting, the panel hears from the representatives about the regulatory proposals. "Representatives typically discuss the anticipated compliance requirements and potential costs of the proposed rule," the post says. "In addition to providing verbal feedback during the meeting, the small business representatives may submit written comments."

The panel’s meetings aren’t public, but CFPB will publish meeting materials on their website. While CFPB wants a free and open discussion with the small business representatives, they think the best way to do that is to keep the meetings small, and will summarize the discussions in the panel report.

Within 60 days of meeting, the panel will complete a report on the input they received from the small business representatives. The report may include any significant alternatives that would minimize economic impacts. "We’ll publish the panel’s report along with a proposed rule, which is the next step in the rulemaking process," the post says in closing. "We’ll keep seeking feedback from consumers, consumer advocates, other regulators, and industry representatives that were not part of the panel process as we develop a proposed rule."