What is SBREFA and Why Should You Get Ready for it Now?

Jane Luxton

When Congress created the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) in 2010, it made the Bureau subject to a special provision in the Small Business Regulatory Enforcement Fairness Act (“SBREFA”), which applies to only two other federal agencies.

This action obligates the Bureau to fulfill an extra regulatory duty before it can issue a proposed rule that substantially affects small businesses.  The SBREFA process involves significant time and effort, requiring the Bureau to lay out the rule’s impact on small businesses, consider the input provided by small entity representatives, respond to their comments in a written report, and seriously assess any alternatives they suggest.  Not only does this put the Bureau to the test in setting forth and explaining its proposed approach, but the small business input is part of the formal administrative rulemaking record, and can be used in any legal challenge that dissatisfied parties may bring once the rule is finalized.

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