[Federal Register Volume 76, Number 14 (Friday, January 21, 2011)]
[Presidential Documents]
[Pages 3827-3829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1387]


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  Federal Register / Vol. 76 , No. 14 / Friday, January 21, 2011 / 
Presidential Documents  

[[Page 3827]]


                Memorandum of January 18, 2011

                
Regulatory Flexibility, Small Business, and Job 
                Creation

                Memorandum for the Heads of Executive Departments and 
                Agencies

                Small businesses play an essential role in the American 
                economy; they help to fuel productivity, economic 
                growth, and job creation. More than half of all 
                Americans working in the private sector either are 
                employed by a small business or own one. During a 
                recent 15-year period, small businesses created more 
                than 60 percent of all new jobs in the Nation.

                Although small businesses and new companies provide the 
                foundations for economic growth and job creation, they 
                have faced severe challenges as a result of the 
                recession. One consequence has been the loss of 
                significant numbers of jobs.

                The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, 
                establishes a deep national commitment to achieving 
                statutory goals without imposing unnecessary burdens on 
                the public. The RFA emphasizes the importance of 
                recognizing ``differences in the scale and resources of 
                regulated entities'' and of considering ``alternative 
                regulatory approaches . . . which minimize the 
                significant economic impact of rules on small 
                businesses, small organizations, and small governmental 
                jurisdictions.'' 5 U.S.C. 601 note.

                To promote its central goals, the RFA imposes a series 
                of requirements designed to ensure that agencies 
                produce regulatory flexibility analyses that give 
                careful consideration to the effects of their 
                regulations on small businesses and explore significant 
                alternatives in order to minimize any significant 
                economic impact on small businesses. Among other 
                things, the RFA requires that when an agency proposing 
                a rule with such impact is required to provide notice 
                of the proposed rule, it must also produce an initial 
                regulatory flexibility analysis that includes 
                discussion of significant alternatives. Significant 
                alternatives include the use of performance rather than 
                design standards; simplification of compliance and 
                reporting requirements for small businesses; 
                establishment of different timetables that take into 
                account the resources of small businesses; and 
                exemption from coverage for small businesses.

                Consistent with the goal of open government, the RFA 
                also encourages public participation in and 
                transparency about the rulemaking process. Among other 
                things, the statute requires agencies proposing rules 
                with a significant economic impact on small businesses 
                to provide an opportunity for public comment on any 
                required initial regulatory flexibility analysis, and 
                generally requires agencies promulgating final rules 
                with such significant economic impact to respond, in a 
                final regulatory flexibility analysis, to comments 
                filed by the Chief Counsel for Advocacy of the Small 
                Business Administration.

                My Administration is firmly committed to eliminating 
                excessive and unjustified burdens on small businesses, 
                and to ensuring that regulations are designed with 
                careful consideration of their effects, including their 
                cumulative effects, on small businesses. Executive 
                Order 12866 of September 30, 1993, as amended, states, 
                ``Each agency shall tailor its regulations to impose 
                the least burden on society, including individuals, 
                businesses of differing sizes, and other entities 
                (including small communities and governmental 
                entities), consistent with obtaining the regulatory 
                objectives, taking into account,

[[Page 3828]]

                among other things, and to the extent practicable, the 
                costs of cumulative regulations.''

                In the current economic environment, it is especially 
                important for agencies to design regulations in a cost-
                effective manner consistent with the goals of promoting 
                economic growth, innovation, competitiveness, and job 
                creation.

                Accordingly, I hereby direct executive departments and 
                agencies and request independent agencies, when 
                initiating rulemaking that will have a significant 
                economic impact on a substantial number of small 
                entities, to give serious consideration to whether and 
                how it is appropriate, consistent with law and 
                regulatory objectives, to reduce regulatory burdens on 
                small businesses, through increased flexibility. As the 
                RFA recognizes, such flexibility may take many forms, 
                including:

                     extended compliance dates that take into 
                account the resources available to small entities;
                     performance standards rather than design 
                standards;
                     simplification of reporting and compliance 
                requirements (as, for example, through streamlined 
                forms and electronic filing options);
                     different requirements for large and small 
                firms; and
                     partial or total exemptions.

                I further direct that whenever an executive agency 
                chooses, for reasons other than legal limitations, not 
                to provide such flexibility in a proposed or final rule 
                that is likely to have a significant economic impact on 
                a substantial number of small entities, it should 
                explicitly justify its decision not to do so in the 
                explanation that accompanies that proposed or final 
                rule.

                Adherence to these requirements is designed to ensure 
                that regulatory actions do not place unjustified 
                economic burdens on small business owners and other 
                small entities. If regulations are preceded by careful 
                analysis, and subjected to public comment, they are 
                less likely to be based on intuition and guesswork and 
                more likely to be justified in light of a clear 
                understanding of the likely consequences of alternative 
                courses of action. With that understanding, agencies 
                will be in a better position to protect the public 
                while avoiding excessive costs and paperwork.

                This memorandum is not intended to, and does not, 
                create any right or benefit, substantive or procedural, 
                enforceable at law or in equity by any party against 
                the United States, its departments, agencies, or 
                entities, its officers, employees, or agents, or any 
                other person. Nothing in this memorandum shall be 
                construed to impair or otherwise affect the functions 
                of the Director of the Office of Management and Budget 
                relating to budgetary, administrative, or legislative 
                proposals.

[[Page 3829]]

                The Director of the Office of Management and Budget is 
                authorized and directed to publish this memorandum in 
                the Federal Register. 
                
                
                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, January 18, 2011

[FR Doc. 2011-1387
Filed 1-20-11; 8:45 am]
Billing code 3110-01-P