The Regulatory Flexibility Act

The Regulatory Flexibility Act

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The Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), passed completely in 1979 even though passage was all but certain in 1978, aims to reduce the costs of regulating agencies, in turn saving taxpayers money. The Government was realizing that the effects of regulation, on small businesses in particular, were having a negative market impact.

Prior to this Act, all businesses were treated the same, whether they were a small or large business. This, in turn, meant that a small business would need to file all the paperwork that a large business did as well as abide by the same rules. The RFA sought to ease the burden on small businesses across America thereby reducing their operational costs. The Regulatory Flexibility Act would save both the Government and small businesses money in the long run.

Small businesses were becoming less and less competitive in the market, which would pose a serious problem to the United States economy if they would continue to lose their competitiveness. Small business employs the majority of Americans and is an integral part to the economy. Through the RFA, small businesses would save time and money restoring competition to their market.

The Regulatory Flexibility Act, which was approved overwhelmingly in each chamber, would allow small business to finally have a reprieve from being treated as a large market entity. The RFA would undergo subsequent revisions and additions over time as well.

One central platform many presidential candidates run on is the protection of small business interests, therefore many presidents after the Carter administration added their own adjustments to the RFA, with the help of Congress of course.

With the use of the Regulatory Flexibility Act, small businesses now need not file as many Government forms as they did before. Equally, their regulators do not need to file the same forms as those for small businesses. However, initial and final reports do need to be filed. Differing though is the need to file for every change made. Now only substantial changes to small business over the course of the year need to be filed in the Federal Register. This simple change has saved time and money for the regulators and those being regulated, streamlining the small business-Government interaction process.

During the Clinton Administration, the savings of the Regulatory Flexibility Act started to be tabulated. Over the course of time it is now estimated that the Regulatory Flexibility Act has saved over 200 billion dollars for the Federal Government and small businesses. Moreover, following the United States lead, many developed countries have taken up their own forms of the Regulatory Flexibility Act in efforts to help small businesses in an ever globalized world.

Even though the RFA was adopted in 1979, there have been constant revisions and additions over the years. As domestic and global markets have become more advanced through further integration, the need to develop the law further has become important. In doing so, the RFA has been able to adapt with a changing business climate saving the Government and small businesses needed time and money.

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