Judicial Review and State Regulatory Flexibility Laws

Article excerpt

In December 2002 the Office of Advocacy introduced the State Model Legislation Initiative to assist states in developing their regulatory regimes by providing draft legislation modeled after the federal Regulatory Flexibility Act (RFA). Since then, 22 states have adopted regulatory flexibility legislation. In the last year alone, 13 states have introduced regulatory flexibility legislation.

While small businesses in many states have clearly benefited from the program's success, there are still eight states without any form of regulatory flexibility. While many states have responded with progressive legislation, others have voiced concern over the potential for the judicial review provision of the model legislation to invite litigation.

Recent research by the Office of Advocacy suggests that this concern may be unfounded. Since 2002 there have been 20 cases raising a regulatory flexibility issue in state courts. These 20 cases are distributed across only 10 states. A review of these cases indicates the following:

* By comparing the federal and state case law, the average number of state cases per year is substantially lower than the average number of REA-related federal court opinions.

* States that have adopted regulatory flexibility legislation over the past five years (such as South Carolina and Indiana) have not faced an influx of lawsuits in their state court systems. …