"Prove It Act of 2025" Forces Agencies to Show Small Business Impact of New Rules, Adds Review Process

The "Prove It Act of 2025" aims to make federal agencies more accountable for the impact of regulations on small businesses. Instead of just looking at direct effects, agencies now have to consider indirect costs – like how a rule affecting a big supplier might ripple down to the smaller businesses that buy from them. The bill also gives small businesses a new way to challenge agency decisions and requires more transparency in the rulemaking process.

Digging Deeper into the Details

The core of the "Prove It Act" is about forcing agencies to think harder about how their rules affect small businesses, before those rules go into effect. The bill specifically amends Title 5 of the United States Code, which deals with government organization and employees. Here's the breakdown:

• Indirect Costs Matter (SEC. 2): Agencies can no longer just consider the direct compliance costs for businesses they regulate. They also have to look at the knock-on effects. Think of a small bakery that buys flour from a major supplier. If a new regulation hits that supplier, the bakery's costs might go up, even if the bakery itself isn't directly regulated by the new rule. This section forces agencies to consider those kinds of scenarios.
• Challenging Agency Decisions (SEC. 2): If an agency claims a proposed rule won't have a significant impact on small businesses, those businesses now have a way to fight back. They can petition the Small Business Administration's (SBA) Chief Counsel for Advocacy to review that claim. This is a big deal because it gives small businesses a formal channel to challenge decisions that could hurt them.
  • Example: Imagine a new environmental regulation on chemical manufacturers. An agency might say it won't significantly affect small businesses. But a small cleaning company that relies on those chemicals could argue otherwise, citing potential price increases. They could petition the SBA to review the agency's assessment.
• Guidance and Transparency (SEC. 3): The bill requires agencies to publish guidance documents and take comments on rules that have a big economic impact on small businesses. This is all about making the process more transparent and giving businesses a chance to weigh in. This must be done on regulations.gov or a similar site.
• 10-Year Review or It's Gone (SEC. 4): Agencies already have to review their rules every 10 years. This bill adds teeth to that requirement. If an agency doesn't do the review, the rule automatically becomes ineffective. The SBA's Chief Counsel will notify the agency, and the agency has to publish a notice saying the rule is no longer in force. They can reinstate it, but only after getting public comments and completing the review within 180 days. This applies to rules issued in the 5 years before this Act and any going forward.
  • Example: If a rule about trucking safety hasn't been reviewed in 10 years, it could be automatically scrapped, forcing the agency to reconsider its impact and potentially update it based on current conditions.
• No New Money (SEC. 5): The bill specifically states that no additional funds will be allocated to make any of this happen. All of this will have to occur under current budgets.

Real-World Rollout and Potential Roadblocks

While the "Prove It Act" sounds good in theory, there are some practical challenges. For one, it puts a lot of responsibility on the SBA's Chief Counsel for Advocacy. That office could get swamped with petitions, leading to delays. Also, the "no additional funds" clause (SEC. 5) means agencies will have to do more work with the same resources. This could lead to shortcuts or less thorough analysis.

Ultimately, the "Prove It Act" is trying to level the playing field for small businesses in the regulatory process. It's a move towards more transparency and accountability, but its success will depend on how well agencies and the SBA can handle the new workload and whether the review process becomes a real check on regulatory overreach, or just another bureaucratic hurdle.