Technical corrections only. The primary change is the short title of the Act, which was updated from the "Prove It Act of 2025" in v1 to the "Prove It Act" in v2. No substantive policy changes were made between the two versions.
Prove It Act
- Sponsor
- Rep. Finstad, Brad [R-MN-1]
- Committees
- Judiciary Committee (primary)
- Last action
- May 4, 2026
Bottom line
This bill significantly strengthens the RFA by expanding the scope of regulatory impact analysis, creating a new oversight mechanism for small business advocacy, and adding teeth to periodic review requirements, aiming to reduce regulatory burdens on small entities.
What it actually does
The "Prove It Act" amends the Regulatory Flexibility Act (RFA) to increase transparency and accountability for federal agencies when issuing regulations that impact small businesses. It requires agencies to consider indirect costs on small entities, establishes a new petition and review process through the Small Business Administration's Chief Counsel for Advocacy for agency certifications of "no significant economic impact," and mandates publication of guidance documents for rules affecting small entities. Furthermore, it introduces a penalty for agencies failing to conduct required periodic reviews of rules, making such rules cease to be effective until reviewed.
Proponents argue
Supporters argue that the bill will ensure federal agencies thoroughly consider the full economic impact of regulations on small businesses, including indirect costs, preventing undue burdens. They contend that the new review process will provide small entities with a crucial avenue to challenge inadequate agency analyses, fostering greater transparency and accountability in rulemaking. The automatic sunset provision for unreviewed rules is seen as a vital mechanism to prevent outdated or overly burdensome regulations from persisting indefinitely.
Opponents contend
Critics might argue that the bill could significantly slow down the rulemaking process, creating additional bureaucratic hurdles and potential litigation risks for agencies. They may contend that expanding the definition of "indirect costs" and granting the SBA Chief Counsel broad review powers could be exploited to delay or block necessary regulations, regardless of their public benefit. Concerns could also be raised about the potential for rules to lapse due to administrative oversight, creating regulatory uncertainty.
The bill is moderately complex but relatively short, allowing an informed reader to understand its core provisions within a reasonable timeframe, especially given its focus on procedural changes.
Section 2(a)(1), amending 5 U.S.C. 603(b)
Inclusion of Indirect Costs in Initial Regulatory Flexibility Analysis
This provision expands the requirements for an agency's initial regulatory flexibility analysis (IRFA). When proposing a new rule, agencies must now, where feasible, identify and analyze any reasonably foreseeable potential indirect costs the rule may impose on small businesses. This includes small entities that interact with directly regulated entities, are regulated by other governmental entities due to the rule, or are otherwise subject to other agency rules as a result of the proposed rule.
Supporters argue
Supporters argue this closes a loophole where agencies could overlook significant burdens on small businesses by only considering direct impacts. They contend that indirect costs often represent a substantial portion of the true regulatory burden, and including them will lead to more thoughtful and less harmful regulations.
Critics contend
Critics might argue that defining and quantifying "reasonably foreseeable potential indirect costs" is inherently difficult and subjective, potentially leading to protracted analyses and disputes. They may contend it could create an unreasonable analytical burden on agencies, slowing down necessary rulemaking.
Tradeoffs
Balances the desire for comprehensive regulatory impact analysis against the potential for increased administrative burden and delays in rulemaking.
Section 2(a)(2), amending 5 U.S.C. 605(b)
Deadline for Publishing Regulatory Flexibility Certifications
This provision establishes a clear deadline for agencies to publish their certification that a proposed rule will not have a significant economic impact on a substantial number of small entities. Agencies must now publish this certification not later than 10 days after completing it.
Section 2(a)(3), inserting new 5 U.S.C. 605A
Petition and Review Process for Regulatory Flexibility Certifications
This new section creates a formal process for small entities to challenge an agency's certification that a proposed rule will not significantly impact small businesses. Small entities can petition the Chief Counsel for Advocacy of the Small Business Administration (SBA) to review such a certification. The Chief Counsel conducts a "prima facie" review, and if merited, a "full review" involving a meeting with the agency and the Office of Information and Regulatory Affairs (OIRA). If the Chief Counsel determines the rule would have a significant impact, the agency must then perform a full initial and final regulatory flexibility analysis.
Section 3, amending 5 U.S.C. 609
Publication and Comment on Guidance Documents
For any rule an agency determines is likely to have a significant economic impact on a substantial number of small entities, the agency head must publish all relevant guidance documents and their interpretations of the rule on regulations.gov or a similar website. The agency must also allow for public comments on these documents.
Section 4(a)(1), amending 5 U.S.C. 610(b)
Inclusion of Indirect Costs in Periodic Review of Rules
This provision expands the factors agencies must consider when conducting their periodic review of existing rules (required every 10 years). Agencies must now include any indirect costs identified in the initial regulatory flexibility analysis, as well as any other indirect costs that may have arisen during the 10-year period since the rule was promulgated.
Section 4(a)(2), adding new 5 U.S.C. 610(d)
Penalty for Failure to Conduct Periodic Review of Rules
This provision establishes a significant penalty for agencies that fail to conduct the required 10-year periodic review of a rule. If an agency misses the deadline, the Chief Counsel for Advocacy of the SBA notifies the agency that the rule has ceased to be effective. The agency must then publish this notification in the Federal Register, solicit public comments on why the rule should be reinstated, and if it decides to reinstate, it has 180 days to complete the review. Upon completion, the rule is reinstated without needing new notice and comment rulemaking. This applies to rules issued 5 years prior to enactment or later.
This clause states that if an agency fails to attend the required meeting with the Chief Counsel and OIRA during a full review of a certification, or otherwise fails to assist the Chief Counsel, the final rule shall not apply to small entities.
Section 2(a)(3), new 5 U.S.C. 605A(d)(4)
Why it matters:This is a significant enforcement mechanism, making agency cooperation mandatory. While not intentionally "buried" in an evasive sense, its placement within procedural details means its full impact might not be immediately obvious.
Case for: Proponents would argue this penalty is essential to ensure agencies take the Chief Counsel's review process seriously and cooperate fully. Without such a consequence, agencies might simply ignore requests or meetings, undermining the entire oversight mechanism.
Case against: Critics might argue this penalty is disproportionate and could lead to arbitrary outcomes. A rule might be beneficial or even critical for public safety, but if an agency representative misses a meeting due to unforeseen circumstances, small entities could be exempted, creating an uneven playing field and potentially undermining the rule's effectiveness.
Estimated impact: Potentially significant, as it could exempt a large segment of the regulated community from a rule, depending on the rule's scope and the number of small entities affected.
This provision states that for purposes of judicial review, an agency's certification under section 605(b) (that a rule will not have a significant economic impact on small entities) becomes a "final agency action" either when the Chief Counsel determines the petition does not merit further review, or when the Chief Counsel publishes the results of a full review.
Section 2(a)(3), new 5 U.S.C. 605A(d)(5)
Why it matters:This is standard legislative practice for defining when an administrative decision becomes ripe for court challenge. It clarifies the legal standing of the Chief Counsel's determinations.
Case for: Proponents would argue this clarifies the legal pathway for small entities to challenge agency certifications in court, ensuring that the Chief Counsel's review process has legal weight and can ultimately be enforced through the judiciary. It provides a definitive point for legal recourse.
Case against: Critics might argue that making these determinations "final agency action" could open the door to increased litigation, further slowing down the regulatory process and diverting agency resources to defending challenges rather than implementing policy.
Estimated impact: Could increase the number of lawsuits challenging regulatory impact analyses, potentially leading to delays in rule implementation or judicial invalidation of rules.
This subsection specifies the application of the penalty for failing to conduct periodic reviews (new 5 U.S.C. 610(d)). It states that this penalty applies to any final rule issued by an agency during the 5-year period preceding the date of enactment of this Act, or on or after the date of enactment.
Section 4(b)
Why it matters:This is a standard legislative technique for defining the effective date and scope of an amendment. Its placement is typical for such "application" clauses.
Case for: Proponents would argue that applying the penalty retroactively (to rules issued in the preceding 5 years) ensures that agencies are immediately incentivized to catch up on any overdue periodic reviews, rather than waiting for new rules to be promulgated. This accelerates the goal of reducing regulatory burdens from existing rules.
Case against: Critics might argue that applying a penalty retroactively could be seen as unfair to agencies, potentially creating a sudden and overwhelming burden to review a backlog of rules under new, stricter conditions. It could also lead to immediate regulatory uncertainty for rules that are already past their 10-year review mark.
Estimated impact: Could immediately trigger the "cease to be effective" penalty for numerous existing rules that have not undergone timely periodic review, leading to a scramble for agencies to comply or reinstate.