HR-1606-119
Referred to the Committee on the Judiciary, and in addition to the Committees on Small Business, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Scott Fitzgerald (R-WI)
What it does
The bill would require the Consumer Financial Protection Bureau, when it considers rules, to weigh the impact of proposed rules on small entities under section 609 of title 5. It would require the initial regulatory flexibility analysis of a covered agency that adopts no small-entity alternative to include a detailed justification, supported by factual, policy and legal reasons, for finding that small entities' size and resources should have no bearing on the rule. It would also require the final analysis to describe steps taken to minimize any added cost of credit for small entities, with the same justification if no significant alternative was adopted.
Who benefits
Small lenders, community banks, credit unions and other small entities subject to CFPB rules, which may see rules tailored to their size or more clearly justified. Small businesses that rely on credit may benefit if the cost-of-credit review leads to lower compliance costs passed along to them. Trade groups representing small financial firms would gain a clearer record to use in comments and court challenges.
Who is hurt
The CFPB would face added analytic and drafting work, which could slow rulemaking or divert staff resources. Consumers and advocacy groups may see weaker or delayed protections if the agency scales back rules to avoid the justification burden. Larger firms are not directly burdened, but rule exemptions for small entities could create gaps in coverage. Rules could also face more litigation over whether the justification was adequate.
Supporters argue
Supporters argue that small lenders bear disproportionate compliance costs, and that the Regulatory Flexibility Act already says agencies must consider alternatives but lets them skip real analysis. They contend that requiring a detailed factual, policy and legal justification when no alternative is adopted forces the CFPB to show its work, while leaving its authority to issue rules intact.
Opponents argue
Opponents argue that the CFPB already conducts small-business review panels, and that added justification requirements create new grounds for litigation that could delay or block consumer protections. They contend that focusing on the cost of credit for small entities may tilt rulemaking toward industry interests, and that the new burdens fall on only one agency rather than being applied across government.
Constitutional context
Congress may set procedural requirements for agency rulemaking under Article I, including its Commerce Clause and Necessary and Proper powers, and the bill raises no direct constitutional conflict. Courts reviewing the resulting rules would apply the Administrative Procedure Act and, after Loper Bright v. Raimondo (2024), interpret statutory limits independently.
Checks and balances
Congress gains oversight over the CFPB's rulemaking process by adding procedural requirements, the agency bears new obligations, and courts could review whether the required justifications were adequate.
Historical precedent
The Small Business Regulatory Enforcement Fairness Act of 1996 and the Dodd-Frank Act of 2010 previously added small-business review panel requirements for the CFPB, EPA and OSHA.