RFA Data Resources for Federal Agencies
Office of Economic Research, SBA Office of Advocacy
In order to comply with the Regulatory Flexibility Act (RFA), federal agencies must consider the impact on small entities when drafting their rules. Doing so requires detailed small business data. The Office of Advocacy created the following summary of data resources to help meet this need. This quick reference guide supplements the training and guidance Advocacy provides to help federal agencies comply with the Regulatory Flexibility Act. For in-depth guidance on developing an RFA analysis, agencies should consult Advocacy’s guide “A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act.” Advocacy also offers training to federal agencies on the RFA. To schedule an RFA training at your agency, contact email@example.com.
Developing the RFA Analysis
After considering the impacts of a proposed rule on small entities, there are two paths an agency may take:
- Certification. If an agency certifies that a proposed rule will have no “significant impact on a substantial number of small entities,” the agency must provide a factual basis. The factual basis should address 1) the number of small entities affected and 2) the economic impact on small entities.
- Initial Regulatory Flexibility Analysis. If there is not a sufficient factual basis to certify “no significant impact on a substantial number of small entities,” the agency must analyze the impact in an initial regulatory flexibility analysis or IRFA. An IRFA contains information on the affected small entities and the impacts on them, as well as other elements.
The Regulatory Flexibility Act does not define “significant impact” or “substantial number,” and it is the agencies’ discretion on where to set these thresholds on a rule-to-rule basis based on their judgment. Some agencies, such as EPA, have issued their own guidance on “significant” and “substantial” thresholds for its rules.
Data for RFA Analyses
The publicly available data resources listed here are useful in developing the analysis to complete a certification or an IRFA.
Defining small businesses: Size standards for small entities
The Small Business Administration publishes size standards by industry in the Table of Size Standards. It is available in xlsx or PDF. Size standards vary by industry and are based either on number of employees or a revenue ceiling. Further detail on industry classifications, developed by OMB and used by federal statistical agencies, can be found here. Small entities also include small nonprofit organizations and small governmental jurisdictions.
Number of small businesses: Small entity counts, employment, and revenues
The Census Bureau’s Statistics of U.S. Businesses (SUSB) publishes the number of employer firms and employment by firm size and industry on an annual basis. The most recent data available is from 2017. Many size standards are based on the number of employees, so the 2017 SUSB employment size categories are useful for identifying the number of small entities in each affected industry.
Data on revenues by firm size and industry are also available in the SUSB, but are published less frequently. The most recent data available is from 2017; however, the tabulation of this data by enterprise receipt class has not yet been updated from the 2012 release. This data is useful for estimating the average revenues of small entities in affected industries, and identifying the number of small entities when the size standard is based on revenue . Agencies often use this data to compare the average revenues of affected small entities to the rule’s estimated compliance costs per small entity to assess whether the impact is economically significant. An issue brief from the Office of Advocacy shows that using the most detailed size categories in these analyses yields the most precise estimates.
Estimating costs per small entity
Rules often require companies to hire consultants or for workers to spend time on compliance activities. Wages are a convenient way to translate that burden into monetary costs. The Bureau of Labor Statistics publishes Occupational Employment Statistics with estimated wage rates for many occupations.
If you have questions about data resources or need guidance on RFA analysis, please contact firstname.lastname@example.org.
—Created October 2, 2019