HR-9885-119
Referred to the Committee on Small Business, and in addition to the Committee on the Judiciary, 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 Nydia Velázquez (D-NY)
What it does
This bill would remove an existing exemption that allows the Small Business Administration (SBA) to skip the standard public notice-and-comment process when making rules about public property, loans, grants, benefits, or contracts. Under current law, Section 553(a)(2) of the Administrative Procedures Act (APA) lets agencies bypass that process for such matters. This bill would require the SBA to follow the full APA rulemaking process — publishing proposed rules, accepting public comments, and responding to them — for those categories of actions.
Who benefits
Small businesses that apply for SBA loans, grants, or contracts, who would gain a formal opportunity to comment on rules that affect their eligibility and terms. Small business advocacy organizations that would gain a legal foothold to challenge SBA rules they view as harmful. Competing lenders and contractors who could weigh in on SBA program rules that affect their markets. Legal and consulting firms that assist businesses in navigating SBA programs. Courts, which would receive a clearer administrative record when reviewing SBA actions.
Who is hurt
The SBA itself would face increased administrative burden and slower rulemaking timelines. Congress and the Executive Branch would lose some flexibility to rapidly adjust SBA programs in response to economic emergencies — such as the speed with which pandemic-era loan programs (PPP, EIDL) were deployed. Small businesses seeking urgent program changes may face longer waits. Taxpayers could bear the cost of expanded SBA administrative processes.
Supporters argue
Supporters argue that the SBA's exemption from notice-and-comment rulemaking leaves small businesses — the very constituency the agency exists to serve — with no formal voice when the agency sets rules governing loans, grants, and contracts worth billions of dollars annually. They contend that the APA's notice-and-comment process exists precisely to catch errors, reduce arbitrary decisions, and build a reviewable record, and that there is no principled reason to exempt SBA benefit programs from these basic procedural safeguards that apply to most other federal agencies.
Opponents argue
Opponents argue that the Section 553(a)(2) exemption was deliberately designed to give agencies managing benefit programs the speed and flexibility needed to respond to changing conditions — a flexibility demonstrated during COVID-19, when the SBA deployed hundreds of billions in emergency loans within weeks. They contend that layering notice-and-comment requirements onto SBA benefit rules would slow program delivery, increase litigation exposure, and impose procedural costs that ultimately harm the small businesses the bill claims to protect.
Constitutional context
This bill directly implicates the post-Loper Bright (2024) landscape: by requiring the SBA to follow full APA notice-and-comment procedures, it creates a clearer statutory record for courts exercising independent judgment on SBA rules, reducing the agency's interpretive latitude. The Necessary and Proper Clause (Art. I, §8, cl. 18) supports Congress's authority to set procedural requirements for executive agencies it creates.
Checks and balances
Congress would gain oversight leverage by requiring the SBA (Executive Branch) to follow formal rulemaking procedures, giving the public, courts, and Congress itself a clearer record to scrutinize; the SBA retains substantive rulemaking authority but loses procedural flexibility in the covered categories.
Historical precedent
Congress has previously narrowed APA exemptions for specific agencies — for example, the Congressional Review Act (1996) imposed additional procedural requirements on agency rulemaking broadly — but a targeted removal of the Section 553(a)(2) exemption for a single agency has no direct legislative precedent.