Regulatory Flexibility Act: Congress Should Revisit and Clarify Elements of the Act to Improve Its Effectiveness Page: 2 of 17
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SGAO
aAccountabiity Integrity-Reliability
Highlights
Highlights of GAO-06-998T, a testimony
before the Subcommittee on Commercial
and Administrative Law, Committee on the
Judiciary, House of Representatives
Why GAO Did This Study
Federal regulation is one of the
basic tools of government used to
implement public policy. In 1980,
the Regulatory Flexibility Act
(RFA) was enacted in response to
concerns about the effect that
regulations can have on small
entities, including small businesses,
small governmental jurisdictions,
and certain small not-for-profit
organizations. Congress amended
RFA in 1996, and the President
issued Executive Order 13272 in
2002, to strengthen requirements
for agencies to consider the impact
of their proposed rules on small
entities. However, concerns about
the regulatory burden on small
entities persist, prompting
legislative proposals such as H.R.
682, the Regulatory Flexibility
Improvements Act, which would
amend RFA.
At the request of Congress, GAO
has prepared many reports and
testimonies reviewing the
implementation of RFA and related
policies. On the basis of that body
of work, this testimony
(1) provides an overview of the basic
purpose and requirements of RFA,
(2) highlights the main
impediments to the Act's
implementation that GAO's reports
identified, and (3) suggests
elements of RFA that Congress
might consider amending to
improve the effectiveness of the
Act. GAO's prior reports and
testimonies contain
recommendations to improve the
implementation of RFA and related
regulatory process requirements.
www.gao.gov/cgi-bin/getrpt?GAO-06-998T.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact J. Christopher
Mihm at (202) 512-6806 or mihmj@gao.gov.REGULATORY FLEXIBILITY ACT
Congress Should Revisit and Clarify
Elements of the Act to Improve Its
EffectivenessWhat GAO Found
RFA established a principle that agencies should endeavor to fit their
regulatory requirements to the scale of small entities. Among other things,
RFA requires regulatory agencies to assess the impact of proposed rules on
small entities, consider regulatory alternatives that will accomplish the
agencies' objectives while minimizing the impacts on small entities, and
ensure that small entities have an opportunity to participate in the
rulemaking process. Further, RFA requires agencies to review existing rules
within 10 years of promulgation that have or will have a significant impact
on small entities to determine whether they should be continued without
change or amended or rescinded to minimize their impact on small entities.
RFA also requires the Chief Counsel for Advocacy of the Small Business
Administration (Office of Advocacy) to monitor agencies' compliance. In
response to Executive Order 13272, the Office of Advocacy published
guidance in 2003 on how to comply with RFA.
In response to congressional requests, GAO reviewed agencies'
implementation of RFA and related requirements on many occasions, with
topics ranging from specific statutory provisions to the overall
implementation of RFA. Generally, GAO found that the Act's results and
effectiveness have been mixed; its reports illustrated both the promise and
the problems associated with RFA. On one hand, RFA and related
requirements clearly affected how federal agencies regulate and produced
benefits, such as raising expectations regarding the analytical support for
proposed rules. However, GAO also found that compliance with RFA varied
across agencies, within agencies, and over time. A recurring finding was that
uncertainties about RFA's requirements and key terms, and varying
interpretations by federal agencies, limited the Act's application and
effectiveness.
GAO's past work suggests that Congress might wish to review the
procedures, definitions, exemptions, and other provisions of RFA to
determine whether changes are needed to better achieve the purposes
Congress intended. In particular, GAO's reports indicate that the full
promise of RFA may never be realized until Congress revisits and clarifies
elements of the Act, especially its key terms, or provides an agency or office
with the clear authority and responsibility to do so. Attention should also be
paid to the domino effect that an agency's initial determination of whether
RFA is applicable to a rulemaking has on other statutory requirements, such
as preparing compliance guides for small entities and periodically reviewing
existing regulations. GAO also believes that Congress should reexamine not
just RFA but how all of the various regulatory reform initiatives fit together
and influence agencies' regulatory actions. Recent developments, such as
the Office of Advocacy's RFA guidance, may help address some of these
long-standing issues and merit continued monitoring by Congress.,United States Government Accountability Office
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United States. Government Accountability Office. Regulatory Flexibility Act: Congress Should Revisit and Clarify Elements of the Act to Improve Its Effectiveness, text, July 20, 2006; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc295030/m1/2/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.