Regulatory Flexibility Act - Requirements of The Act

Requirements of The Act

The White House Conference recommendations lent significant impetus for the passage, in September 1980, of the Regulatory Flexibility Act (RFA). The intent of the act was clearly stated:

It is the purpose of this act to establish as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives…of applicable statutes, to fit regulatory and informational requirements to the scale of businesses…To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.

The key requirement of the law is that federal agencies must analyze the impact of their regulatory actions on small entities (small businesses, small non-profit organizations and small jurisdictions of government) and, where the regulatory impact is likely to be "significant", affecting a "substantial number" of these small entities, seek less burdensome alternatives for them. Both current and proposed federal regulations are subject to the RFA.

The process for seeking these less burdensome alternatives is three-fold. Agencies must:

• Solicit views of affected small entities
• Consider the views of the SBA Office of Advocacy
• Publish an initial regulatory flexibility analysis (IRFA) and/or a final regulatory flexibility analysis (FRFA) in the Federal Register, or provide a certification that the regulation will have no "significant impact"

The RFA has added important elements of management oversight, predictability and transparency to the federal regulatory process. This is particularly evident in the government-wide semi-annual regulatory agendas that the RFA requires.

These documents, now known as "unified agendas", note all planned federal regulations. Those regulations expected to "significantly" impact small entities, thereby triggering special analyses under the RFA, are separately indexed, as are those that may affect small entities, but not "significantly." The unified agendas also single out anticipated regulations covered by other statutes and executive orders.

One of the more ambitious aspects of the RFA is its requirement that federal agencies review all of their existing regulations over a period of ten years and revise those that are duplicative, excessively burdensome, or no longer necessary. Although this RFA provision (Section 610 of the Act) is often ignored by agencies, a plan for this review of existing regulations is likewise published with the unified agendas.

It is important to note that the RFA does not compel specific regulatory outcomes. Agencies are required to assess the impacts of their proposed and final rules on small entities, and to select less burdensome alternatives—or explain why they cannot do so. But they are not required to alter their agency missions or their legal mandates. Like the Administrative Procedure Act that it amends, the RFA primarily defines the required procedural steps in a process. While agency non-compliance with these required steps can (and has) led to suspensions of various regulations by the courts, it is the failure to faithfully observe the process, not the subject matter of the regulations, that has led to these outcomes.

The RFA comprises Chapter 6 of Title 5 of the United States Code.