The Regulatory Flexibility Act (RFA) requires federal agencies to examine the impact of their proposed and final rules on small businesses. If the proposed rule or final rule is determined to have a significant economic impact on a substantial number of small businesses, the agency is required to examine less burdensome alternatives.
Main Goals of the legislation:
• Reducing Federal Regulatory Overreach – Federal agency promulgate regulations, often without considering the consequences of those rules on how small businesses operate. Thus, the regulations may impose serious costs on small business operations without any concomitant benefit to the public in terms of improving health, safety, the environment, etc. The RFA was enacted to eliminate that consequence but agencies do not comply or their compliance is half-hearted.
• Job Creation -- Research from the Office of the Chief Counsel for Advocacy has shown that small businesses spend more per employee to comply with federal regulations than larger businesses. If that is the case and regulations do not achieve any significant benefit to the public than the largest generator of new jobs will have less available capital to hire workers because they must divert funds to regulatory compliance.