Regulatory Flexibility Act - Implementation

Implementation

The RFA tasked SBA's Office of Advocacy with monitoring agency compliance with the new law. Over the next decade and a half, the Office carried out its mandate, reporting annually on agency compliance to the President and the Congress.

Those reports soon made it clear that the law wasn’t strong enough. A briefing paper prepared for the 1986 White House Conference on Small Business noted: “The effectiveness of the Regulatory Flexibility Act largely depends on small business’ awareness of proposed regulations and ability to effectively voice concerns to regulatory agencies. In addition, the courts’ ability to review agency compliance with the law is limited.”

The delegates to the 1986 conference recommended that the RFA be strengthened by requiring agencies to comply and by providing that agency action or inaction be subject to judicial review. President Ronald Reagan’s 1987 report on small business noted: “Regulations and excessive paperwork place small businesses at a disadvantage in an increasingly competitive world marketplace…This Administration supports continued deregulation and other reforms to eliminate regulatory obstacles to open competition.” But it would take an act of Congress to make judicial review law—and reaching that consensus needed more time.

Regulations’ effects on the economic environment for competition also concerned President George H. W. Bush, whose 1992 message in the annual small business report noted: “My Administration this year instituted a moratorium on new federal regulations to give federal agencies a chance to review and revise their rules. And we are looking at ways to improve our regulatory process over the long term so that regulations will accomplish their original purpose without hindering economic growth.”

In early September 1993, Vice President Al Gore's National Partnership for Reinventing Government also urged that the Regulatory Flexibility Act be strengthened by permitting judicial review of agency compliance.

A few weeks later, President Bill Clinton issued Executive Order 12866, "Regulatory Planning and Review", designed, among other things, to ease the regulatory burden on small firms.

The order required federal agencies to analyze their major regulatory undertakings and to take action to ensure that these regulations achieved the desired results with minimal burden on the U.S. economy.

An April 1994 report by the Government Accountability Office reviewed the Office of Advocacy’s annual reports on agency compliance with the RFA and concluded: “The SBA annual reports indicated agencies’ compliance with the RFA has varied widely from one agency to another. …the RFA does not authorize SBA or any other agency to compel rulemaking agencies to comply with the act’s provisions.”