HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.
![handle is hein.crs/goveeim0001 and id is 1 raw text is: ~m~g th~ ie~sI4~ Je~ te erite 4
9
August 16,2021
The Regulatory Flexibility Act: An Overview
Congres s enacted the Regulatory Flexibility Act (RFA; 5
U.S.C. § §601-612) in 1980 to require federal agencies to
consider the effects of their regulations on smallbusinesses
and other small entities. If a regulation is expected to have a
significant economic impact on a substantial number of
small entities, the RFA requires the is suing agency to
consider regulatory impacts and alternatives, with the goal
of minimizing significant economic impacts on small
entities. In 1996, Congress amended the RFA in the Small
Business Regulatory Enforcement Fairness Act, adding
judicial review for some ofthe act's provisions, a
requirement for a limited number of agencies to hold small
business advocacy review panels, and a requirementfor
agencies to produce regulatory compliance guides.
Overview of the Regulatory Flexibility
Act
The RFA requires federal agencies to assess the effects of
their regulations on smallentities, which it defines as
including small businesses, smallgovernmental
jurisdictions, and certain s mallnonprofit organizations.
The RFA applies to allregulatory agencies, including
Cabinet agencies and the statutorily designated
independent regulatory agencies, which haves ometimes
been exempted fromother procedural rulemaking
requirements.
As noted above, the RFA is triggered if the head of the
is suing agency certifies that the rule will have a significant
economic impact on a substantial number of smallentities.
This threshold determination is key: If an agency certifies
that this type ofimpact is not expected to occur, the RFA is
not triggered. The RFA does not define significant
economic impactor substantial numberofsmall entities,
however, and agencies generally have a fair amount of
discretion to determine its applicability. The lackof clarity
of the specific meaning of these phrases, and the resulting
amount of discretion agencies haveto determine when the
act is triggered, have sometimes led to criticis mover its
implementation.
Regulatory Flexibility Analyses
The RFA may be viewed primarily as an analytical statute.
When triggered by the criteria identified above, the agency
is to conduct aspecifiedregulatoryimpact analysis during
the proposed and fmalrule stages. These two analyses are
distinct and are referred to as the initialregulatory
flexibility analysis (IRFA) and final regulatory flexibility
analysis (FRFA), respectively.
Initial Regulatory Flexibility Analysis
When issuing a proposed rule that triggers its analytical
requirements, the RFA requires an agency to analyze a
number of specific factors relating to the proposedrule's
potential impact on s mall entities. Section 603 requires
agencies to include in each IRFA (1) a description of the
reasons why action by the agency is being considered; (2) a
succinct statementofthe objectives of, and legalbasis for,
the proposed rule; (3) a description of and, where feasible,
an estimate of the number of smallentities to whichthe
proposedrule will apply; (4) a descriptionof the projected
reporting, recordkeeping and other compliance
requirements of the proposed rule ...; [and] (5) an
identification, to the extent practicable, of allrelevant
federalrules which may duplicate, overlap or conflict with
the proposed rule.
IRFAs are also required to contain a description of any
significant alternatives to the proposed rule which
accomplish the stated objectives of applicable statutes and
which minimize any significant economic impact of the
proposedrule on small entities.
Further, the agency must dis cuss different types of
flexibilities that could be includedin the rule, such as (1)
the establishment of differing compliance or reporting
requirements or timetables that take into account the
resources available to s mall entities; (2) the clarification,
consolidation, or simplification of compliance andreporting
requirements under therule for such smallentities; (3) the
use of performance rather than design standards; and (4) an
exemption from coverage of the rule, or any part thereof,
for such small entities.
The IRFA, or a summary of the IRFA, must be publishedin
the Federal Register when theproposed rule is published.
This allows the public an opportunity for input on the IRFA
while the agency is already taking comment on the
proposed rule as required by the Administrative Procedure
Act (APA).
The RFA does notrequire agencies to choose any particular
outcome based on an IRFA. Rather, it requires agencies to
consider the impacts of a rule on small entities and whether
more flexible alternatives may be appropriate.
Final Regulatory Flexibility An alysis
When an agency promulgates a fmalrule afterhaving
issued a covered proposed rule, it must conduct a FRFA
under Section 604 (unles s the IRFA led the agency to
determine that the rule will not have the requisite impact on
small entities). Whereas the IRFA requires the agency to
consider regulatory impacts and alternatives for small
entities, the FRFA requires that the agencyjustify its
actions and regulatory choices, including an explanation of
why any more flexible regulatory alternatives were rejected.
https ://c rs rep](ViewImageLocal?handle=hein.crs/goveeim0001&div=1&collection=&method=preview&ext=.png&size=3)