§603 Initial Regulatory Flexibility Analysis

Summary

When an agency issues a proposed rule that needs a public notice, it must prepare an initial regulatory flexibility analysis (IRFA) about how the rule will affect small businesses and other small entities. The agency must publish the IRFA or a short summary in the Federal Register when the proposed rule appears. The agency must also send a copy to the Chief Counsel for Advocacy at the Small Business Administration. For interpretive rules about internal revenue, an IRFA is required only when the rule is published in the Code of Federal Regulations and it forces small entities to gather information. The IRFA must explain why the agency is acting, the rule’s goals and legal basis, how many small entities will likely be affected (if possible), what reporting or recordkeeping the rule will require and what skills those tasks need, and any federal rules that might overlap or conflict. It must also describe important alternatives that meet the law’s goals but reduce harm to small entities, such as different compliance schedules, simpler requirements, using performance standards, or exempting small entities. If the agency is a “covered agency,” the IRFA must also address any expected rise in small entities’ credit costs, describe alternatives to limit that rise, and include advice from small-entity representatives identified with the SBA Advocate.