Home > Alerts > New law requires Pennsylvania state agencies to consider impact on small businesses before passing new regulations

New law requires Pennsylvania state agencies to consider impact on small businesses before passing new regulations

Posted: 07/06/2012

On June 30, 2012, Pennsylvania Gov. Tom Corbett signed into law a bill intended to prevent state agencies from enacting new regulations that impose unnecessary burdens on small businesses. Referred to as Act 76 of 2012, the new law aims to thwart newly proposed regulations that would disproportionately burden small businesses.

Act 76 requires state agencies, when proposing a new regulation to the Independent Regulatory Review Commission (IRRC), to identify numerous factors concerning how the proposed regulation will affect small businesses. IRRC is the Pennsylvania agency tasked with reviewing all Pennsylvania agency regulations to ensure they are in the public interest. Most agency regulations, including those proposed by the Pennsylvania Department of Environmental Protection, must be approved by IRRC before going into effect. Under the new law, state agencies must:

  • Identify how the new regulation will financially, economically and socially impact small businesses.
  • Estimate the number of small businesses that will be affected by the proposed regulation.
  • Project the cost of compliance with the proposed regulation for small businesses.
  • Describe methods by which the state agency could reduce the proposed regulation’s impact on small businesses.

Law requires alternatives analysis for impact on small businesses

Act 76 requires state agencies to conduct an analysis of whether there are less costly or intrusive alternatives to achieving a regulation's goal. Under the law, state agencies have the burden of providing IRRC with an analysis of potential methods to reduce the proposed regulation's impact on small businesses. For example, agencies must consider establishing less stringent compliance or reporting requirements for small businesses, among other things. IRRC has the authority to reject a proposed regulation if it is not in the public interest.

Last month, IRRC rejected a proposed regulation that would have substantially increased the application fee for non-coal mining permits. IRRC disapproved the proposed regulation on grounds that the fee increase would have an adverse economic impact on the regulated community. IRRC also expressed concern that the proposed regulation ignored less burdensome alternatives. Notably, many small businesses objected to the proposed regulation because it disproportionately affected them. Act 76 statutorily recognizes their concerns by incorporating consideration of small businesses into the regulation proposal process.

This is the second time in two years that the legislature has amended the law governing the passage of new regulations. Last year, it amended the Regulatory Review Act to require that proposed regulations be based on "acceptable data." Saul Ewing's client alert concerning last year's amendment may be found here.

Why is Act 76 important?

Pennsylvania has over 900,000 small businesses. As new regulations are proposed, Act 76 aims to limit regulatory burdens that would be disproportionately placed on small businesses.

Download Document