[House Report 104-284]
[From the U.S. Government Publishing Office]



                                                                       
104th Congress                                           Rept. 104-284,
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     Part 1
_______________________________________________________________________


 
                REGULATORY SUNSET AND REVIEW ACT OF 1995

_______________________________________________________________________


                October 19, 1995.--Ordered to be printed

                                _______


  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 994]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform and Oversight, to which 
was referred the bill (H.R. 994) to require the periodic review 
and automatic termination of Federal regulations, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
  I. Summary of Legislation...........................................8
 II. Background and Need for the Legislation.........................10
III. Legislative Hearings and Committee Action.......................18
 IV. Section-by-Section Analysis.....................................26
  V. Compliance with Rule XI.........................................51
 VI. Budget Analysis and Projections.................................52
VII. Cost Estimate of the Congressional Budget Office................52
VIII.Inflationary Impact Statement...................................54

 IX. Changes in Existing Law.........................................54
  X. Committee Recommendation........................................55
 XI. Congressional Accountability Act; Public Law 104-1; Section 
     102(b)(3).......................................................56
XII. Appendix: Congressional Budget Office Response to Request from the 
     Honorable Cardiss Collins, Ranking Minority Member..............56
     Additional Views................................................58
  The amendment adopted by the Committee is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Regulatory Sunset and Review Act of 
1995''.

SEC. 2. PURPOSE.

  The purposes of this Act are--
          (1) to require agencies to regularly review their significant 
        rules to determine whether they should be continued without 
        change, modified, consolidated with another rule, or allowed to 
        terminate;
          (2) to require agencies to consider the comments of the 
        public, the regulated community, and the Congress regarding the 
        actual costs and burdens of rules being reviewed under this 
        Act, and whether the rules are obsolete, unnecessary, 
        duplicative, conflicting, or otherwise inconsistent;
          (3) to require that any rules continued in effect meet all 
        the legal requirements that would apply to the issuance of a 
        new rule, including any applicable Federal cost/benefit and 
        risk assessment requirements;
          (4) to provide for the automatic termination of significant 
        rules that are not continued in effect as a result of sunset 
        reviews;
          (5) to provide for a petition process that allows the public 
        and appropriate committees of the Congress to request that 
        other rules that are not significant be reviewed in the same 
        manner as significant rules; and
          (6) to require the Administrator to coordinate and be 
        responsible for sunset reviews conducted by the agencies.

SEC. 3. REVIEW AND TERMINATION OF REGULATIONS.

  The effectiveness of a covered rule shall terminate on the applicable 
termination date specified in section 7(a) or (b), unless the rule is 
reviewed in accordance with the procedures in section 6 before that 
termination date and complies with section 5.

SEC. 4. RULES COVERED.

  (a) Covered Rules.--For purposes of this Act, a covered rule is a 
rule that--
          (1) is determined by the Administrator to be a significant 
        rule under subsection (b); or
          (2) is any other rule designated by the Administrator under 
        this Act for sunset review.
  (b) Significant Rules.--For purposes of this Act, a significant rule 
is a rule that the Administrator determines--
          (1) has resulted in or is likely to result in an annual 
        effect on the economy of $100,000,000 or more;
          (2) is a major rule, as that term is defined in Executive 
        Order 12291 (as in effect on the first date that Executive 
        order was in effect); or
          (3) was issued pursuant to a significant regulatory action, 
        as that term is defined in Executive Order 12866 (as in effect 
        on the first date that Executive order was in effect).
  (c) Public Petitions.--
          (1) In general.--Any person adversely affected by a rule that 
        is not a significant rule may submit a petition to the 
        Administrator requesting that the Administrator designate the 
        rule for sunset review. The Administrator shall designate the 
        rule for sunset review unless the Administrator determines that 
        it would be unreasonable to conduct a sunset review of the 
        rule. In making such determination, the Administrator shall 
        take into account the number and nature of other petitions 
        received on the same rule, whether or not they have already 
        been denied.
          (2) Form and content of petition.--A petition under paragraph 
        (1)--
                  (A) shall be in writing, but is not otherwise 
                required to be in any particular form;
                  (B) shall identify the rule for which sunset review 
                is requested with reasonable specificity and state on 
                its face that the petitioner seeks sunset review or a 
                similar review of the rule; and
                  (C) shall be accompanied by a $20 processing fee.
          (3) Response required for noncomplying petitions.--If the 
        Administrator determines that a petition does not meet the 
        requirements of this subsection, the Administrator shall 
        provide a response to the petitioner within 30 days after 
        receiving the petition, notifying the petitioner of the problem 
        and providing information on how to formulate a petition that 
        meets those requirements.
          (4) Decision within 90 days.--Within the 90-day period 
        beginning on the date of receiving a petition that meets the 
        requirements of this subsection, the Administrator shall 
        transmit a response to the petitioner stating whether the 
        petition was granted or denied, except that the Administrator 
        may extend such period by a total of not more than 30 days.
          (5) Petitions deemed granted for substantial inexcusable 
        delay.--A petition for sunset review of a rule is deemed to 
        have been granted by the Administrator, and the Administrator 
        is deemed to have designated the rule for sunset review, if a 
        court finds there is a substantial and inexcusable delay, 
        beyond the period specified in paragraph (4), in notifying the 
        petitioner of the Administrator's determination to grant or 
        deny the petition.
          (6) Public log.--The Administrator shall maintain a public 
        log of petitions submitted under this subsection, that includes 
        the status or disposition of each petition.
  (d) Congressional Requests.--
          (1) In general.--An appropriate committee of the Congress, or 
        a majority of the majority party members or a majority of 
        nonmajority party members of such a committee, may request in 
        writing that the Administrator designate any rule that is not a 
        significant rule for sunset review. The Administrator shall 
        designate such rule for sunset review within 30 days after 
        receipt of such a request unless the Administrator determines 
        that it would be unreasonable to conduct a sunset review of the 
        rule.
          (2) Notice of denial.--If the Administrator denies a 
        congressional request under this subsection, the Administrator 
        shall transmit to the congressional committee making the 
        request a notice stating the reasons for the denial.
  (e) Publication of Notice of Designation for Sunset Review.--After 
designating a rule under this Act for sunset review, the Administrator 
shall promptly publish a notice of that designation in the Federal 
Register.

SEC. 5. CRITERIA FOR SUNSET REVIEW.

  (a) Compliance With Other Laws.--In order to continue without change, 
modify, or consolidate any rule subject to sunset review, the 
continued, modified, or consolidated rule must be authorized by law and 
meet all applicable requirements that would apply under other laws or 
Executive orders if it were issued as a new rule. For purposes of this 
section, applicable requirements include any requirements for cost/
benefit analysis and any requirements for standardized risk analysis 
and risk assessment.
  (b) Governing Law.--If there is an irreconcilable conflict between 
such applicable requirements and an Act under which a rule was issued, 
the conflict shall be resolved in the same manner as such conflict 
would be resolved if the agency were issuing a new rule.

SEC. 6. SUNSET REVIEW PROCEDURES.

  (a) Functions of the Administrator.--
          (1) Notice of rules subject to review.--
                  (A) Inventory and first list.--Within 6 months after 
                the date of the enactment of this Act, the 
                Administrator shall conduct an inventory of existing 
                rules and publish a first list of covered rules. The 
                list shall--
                          (i) specify the particular group to which 
                        each significant rule is assigned under 
                        paragraph (2), and state the termination date 
                        for all significant rules in each such group; 
                        and
                          (ii) include other rules subject to sunset 
                        review for any other reason, and state the 
                        termination date for each such rule.
                  (B) Subsequent lists.--After publication of the first 
                list under subparagraph (A), the Administrator shall 
                publish an updated list of covered rules at least 
                annually, specifying the termination date for each rule 
                on the list.
          (2) Grouping of significant rules in first list.--
                  (A) Staggered review.--The Administrator shall assign 
                each significant rule in effect on the date of 
                enactment of this Act to one of 4 groups established by 
                the Administrator to permit orderly and prioritized 
                sunset reviews, and specify for each group a 
                termination date in accordance with section 7(a)(1).
                  (B) Prioritizations.--In determining which rules 
                shall be given priority in time in that assignment, the 
                Administrator shall consult with appropriate agencies, 
                and shall prioritize rules based on--
                          (i) the grouping of related rules in 
                        accordance with paragraph (3);
                          (ii) the extent of the cost of each rule on 
                        the regulated community and the public, with 
                        priority in time given to those rules that 
                        impose the greatest cost;
                          (iii) consideration of the views of regulated 
                        persons, including State and local governments;
                          (iv) whether a particular rule has recently 
                        been subject to cost/benefit analysis and risk 
                        assessment, with priority in time given to 
                        those rules that have not been subject to such 
                        analysis and assessment;
                          (v) whether a particular rule was issued 
                        under a statutory provision that provides 
                        relatively greater discretion to an official in 
                        issuing the rule, with priority in time given 
                        to those rules that were issued under 
                        provisions that provide relatively greater 
                        discretion;
                          (vi) the burden of reviewing each rule on the 
                        reviewing agency; and
                          (vii) the need for orderly processing and the 
                        timely completion of the sunset reviews of 
                        existing rules.
          (3) Grouping of related rules.--The Administrator shall group 
        related rules (and designate other rules) for simultaneous 
        sunset review based upon their subject matter similarity, 
        functional interrelationships, and other relevant factors to 
        ensure comprehensive and coordinated review of redundant, 
        overlapping, and conflicting rules and requirements. The 
        Administrator shall ensure simultaneous sunset reviews of 
        covered rules without regard to whether they were issued by the 
        same agency, and shall designate any other rule for sunset 
        review that is necessary for a comprehensive sunset review 
        whether or not such other rule is otherwise a covered rule 
        under this Act.
          (4) Guidance.--The Administrator shall provide timely 
        guidance to agencies on the conduct of sunset reviews and the 
        preparation of sunset review notices and reports required by 
        this Act to ensure uniform, complete, and timely sunset reviews 
        and to ensure notice and opportunity for public comment.
          (5) Review and evaluation of reports.--The Administrator 
        shall review and evaluate each preliminary and final report 
        submitted by the head of an agency pursuant to this section. 
        Within 90 days after receiving a preliminary report, the 
        Administrator shall transmit comments to the head of the agency 
        regarding--
                  (A) the quality of the analysis in the report, 
                including whether the agency has properly applied 
                section 5;
                  (B) the consistency of the agency's proposed action 
                with actions of other agencies; and
                  (C) whether the rule should be continued without 
                change, modified, consolidated with another rule, or 
                allowed to terminate.
  (b) Agency Sunset Review Procedure.--
          (1) Sunset review notice.--At least 2\1/2\ years before the 
        termination date under section 7(a) for a covered rule issued 
        by an agency, the head of the agency shall--
                  (A) publish a sunset review notice in accordance with 
                section 8(a) in the Federal Register and, to the extent 
                reasonable and practicable, in other publications or 
                media that are designed to reach those persons most 
                affected by the covered rule; and
                  (B) request the views of the Administrator and the 
                appropriate committees of the Congress on whether to 
                continue without change, modify, consolidate, or 
                terminate the covered rule.
          (2) Preliminary report.--In reviewing a covered rule, the 
        head of an agency shall--
                  (A) consider public comments and other 
                recommendations generated by a sunset review notice 
                under paragraph (1); and
                  (B) at least 1 year before the termination date under 
                section 7(a) for the covered rule, publish in the 
                Federal Register and transmit to the Administrator and 
                the appropriate committees of the Congress a 
                preliminary report in accordance with section 8(b).
          (3) Final report.--The head of an agency shall consider the 
        public comments and other recommendations generated by the 
        preliminary report under paragraph (2) for a covered rule, and 
        shall consult with the appropriate committees of the Congress 
        before issuing a final report. At least 90 days before the 
        termination date of the covered rule, the head of the agency 
        shall publish in the Federal Register and transmit to the 
        Administrator and the appropriate committees of the Congress a 
        final report in accordance with section 8(c).
  (c) Effectiveness of Agency Recommendation.--If a final report under 
subsection (b)(3) recommends that a covered rule should be continued 
without change, modified, or consolidated with another rule, the rule 
is continued, modified, or consolidated in accordance with the 
recommendation effective 60 days after publication of the final report, 
unless the Administrator or another officer designated by the President 
publishes a notice within that 60-day period stating that the rule 
shall not be so continued without change, modified, or consolidated. 
The Administrator or other officer designated by the President shall 
state in the notice the reasons for such action.
  (d) Reissuance.--If a covered rule terminates for any reason pursuant 
to this Act, it shall not be reissued in substantially the same form 
unless the rule complies with section 5 and the Administrator or other 
officer designated by the President approves the rule.
  (e) Preservation of Independence of Federal Bank Regulatory 
Agencies.--The head of any appropriate Federal banking agency (as that 
term is defined in section 3(q) of the Federal Deposit Insurance Act 
(12 U.S.C. 1813(q)), the Federal Housing Finance Board, the National 
Credit Union Administration, and the Office of Federal Housing 
Enterprise Oversight shall have the authority with respect to that 
agency that would otherwise be granted under subsections (c) and (d) of 
this section, section 7(a)(2)(B), and section 7(c) to the Administrator 
or other officer designated by the President.

SEC. 7. TERMINATION DATES FOR COVERED RULES.

  (a) In General.--For purposes of section 3, the termination date of a 
covered rule is as follows:
          (1) Existing significant rules.--For a significant rule in 
        effect on the date of the enactment of this Act, the initial 
        termination date is the last day of the 4-year, 5-year, 6-year, 
        or 7-year period beginning on the date of the enactment of this 
        Act, as specified by the Administrator under section 
        6(a)(2)(A). For any significant rule that 6 months after the 
        date of enactment is not assigned to such a group specified 
        under section 6(a)(2)(A), the initial termination date is the 
        last day of the 4-year period beginning on the date of 
        enactment of this Act.
          (2) New significant rules.--For a significant rule that first 
        takes effect after the date of the enactment of this Act, the 
        initial termination date is the last day of either--
                  (A) the 3-year period beginning on the date the rule 
                takes effect, or
                  (B) if the Administrator determines as part of the 
                rulemaking process that the rule is issued pursuant to 
                negotiated rulemaking procedures or that compliance 
                with the rule requires substantial capital investment, 
                the 7-year period beginning on the date the rule takes 
                effect.
          (3) Rules covered pursuant to public petition or 
        congressional request.--For any rule subject to sunset review 
        pursuant to a public petition under section 4(c) or a 
        congressional request under section 4(d), the initial 
        termination date is the last day of the 3-year period beginning 
        on--
                  (A) the date the Administrator so designates the rule 
                for review; or
                  (B) the date of issuance of a final court order that 
                the Administrator is deemed to have designated the rule 
                for sunset review.
          (4) Related rule designated for review.--For a rule that the 
        Administrator designates under section 6(a)(3) for sunset 
        review because it is related to another covered rule and that 
        is grouped with that other rule for simultaneous review, the 
        initial termination date is the same as the termination date 
        for that other rule.
          (5) Rules extended in effectiveness.--For a rule the 
        effectiveness of which has been extended under section 3, the 
        next termination date is the last day of the 7-year period 
        beginning on the date the rule would have terminated under 
        section 3 if it had not been extended.
  (b) Temporary Extension.--The termination date under subsection (a) 
for a covered rule may be extended by the Administrator for not more 
than 6 months by publishing notice thereof in the Federal Register that 
describes--
          (1) modifications that should be made to the rule and the 
        reasons why the modifications cannot be made by the original 
        termination date; or
          (2) reasons why the temporary extension is necessary to 
        respond to or prevent an emergency situation.
  (c) Limitation on Interim Reviews.--An agency may not undertake a 
comprehensive review and significant revision of a covered rule more 
frequently than required by this section or another law, unless the 
head of the agency determines, and the Administrator concurs, that the 
likely benefits from such review and revision outweigh the reasonable 
expenditures that have been made in reliance on the rule. For purposes 
of this section, a law may be considered to require a comprehensive 
review and significant revision of a rule if it makes significant 
changes in the Act under which the rule was issued.
  (d) Determinations Where Rules Have Been Amended.--For purposes of 
this Act, if various provisions of a covered rule were issued at 
different times, then the rule as a whole shall be treated as if it 
were issued on the later of--
          (1) the date of issuance of the provision of the rule that 
        was issued first; or
          (2) the date the most recent comprehensive review and 
        significant revision of the rule was completed.
  (e) Comprehensive Review and Significant Revision Defined.--In this 
section, the term ``comprehensive review and significant revision'' 
means--
          (1) a sunset review, whether or not the rule is revised; or
          (2) a review and revision of a rule consistent with 
        subsection (c).

SEC. 8. SUNSET REVIEW NOTICES AND AGENCY REPORTS.

  (a) Sunset Review Notices.--The sunset review notice under section 
6(b)(1) for a rule shall--
          (1) request comments regarding whether the rule should be 
        continued without change, modified, consolidated with another 
        rule, or allowed to terminate;
          (2) if applicable, request comments regarding whether the 
        rule meets the applicable Federal cost/benefit and risk 
        assessment criteria; and
          (3) solicit comments about the past implementation and 
        effects of the rule, including--
                  (A) the direct and indirect costs incurred because of 
                the rule, including the net reduction in the value of 
                private property (whether real, personal, tangible, or 
                intangible), and whether the incremental benefits of 
                the rule exceeded the incremental costs of the rule, 
                both generally and regarding each of the specific 
                industries and sectors it covers;
                  (B) whether the rule as a whole, or any major feature 
                of it, is outdated, obsolete, or unnecessary, whether 
                by change of technology, the marketplace, or otherwise;
                  (C) the extent to which the rule or information 
                required to comply with the rule duplicated, 
                conflicted, or overlapped with requirements under rules 
                of other agencies;
                  (D) in the case of a rule addressing a risk to health 
                or safety or the environment, what the perceived risk 
                was at the time of issuance and to what extent the risk 
                predictions were accurate;
                  (E) whether the rule unnecessarily impeded domestic 
                or international competition or unnecessarily intruded 
                on free market forces, and whether the rule 
                unnecessarily interfered with opportunities or efforts 
                to transfer to the private sector duties carried out by 
                the Government;
                  (F) whether, and to what extent, the rule imposed 
                unfunded mandates on, or otherwise affected, State and 
                local governments;
                  (G) whether compliance with the rule required 
                substantial capital investment and whether terminating 
                the rule on the next termination date would create an 
                unfair advantage to those who are not in compliance 
                with it;
                  (H) whether the rule constituted the least cost 
                method of achieving its objective consistent with the 
                criteria of the Act under which the rule was issued, 
                and to what extent the rule provided flexibility to 
                those who were subject to it;
                  (I) whether the rule was worded simply and clearly, 
                including clear identification of those who were 
                subject to the rule;
                  (J) whether the rule created negative unintended 
                consequences;
                  (K) the extent to which information requirements 
                under the rule can be reduced; and
                  (L) the extent to which the rule has contributed 
                positive benefits, particularly health or safety or 
                environmental benefits.
  (b) Preliminary Reports on Sunset Reviews.--The preliminary report 
under section 6(b)(2) on the sunset review of a rule shall request 
public comments and contain--
          (1) specific factual findings and legal conclusions of the 
        head of the agency conducting the review regarding the 
        application of section 5 to the rule, the continued need for 
        the rule, and whether the rule duplicates functions of another 
        rule;
          (2) a preliminary determination on whether the rule should be 
        continued without change, modified, consolidated with another 
        rule, or allowed to terminate; and
          (3) if consolidation or modification of the rule is 
        recommended, the proposed text of the consolidated or modified 
        rule and other relevant information required by law in a notice 
        of proposed rulemaking.
  (c) Final Reports on Sunset Reviews.--The final report under section 
6(b)(3) on the sunset review of a rule shall contain--
          (1) the final factual findings and legal conclusions of the 
        head of the agency conducting the review regarding the 
        application of section 5 to the rule and whether the rule 
        should be continued without change, modified, consolidated with 
        another rule, or allowed to terminate; and
          (2) in the case of a rule that is continued without change, 
        modified, or consolidated with another rule, the text of the 
        rule.

SEC. 9. DESIGNATION OF AGENCY REGULATORY REVIEW OFFICERS.

  The head of each agency shall designate an officer of the agency as 
the Regulatory Review Officer of the agency. The Regulatory Review 
Officer of an agency shall be responsible for the implementation of 
this Act by the agency and shall report directly to the head of the 
agency and the Administrator with respect to that responsibility.

SEC. 10. RELATIONSHIP TO OTHER LAW; SEVERABILITY.

  (a) Relationship to APA.--Except to the extent that there is a direct 
conflict with the provisions of this Act, nothing in this Act is 
intended to supersede the provisions of chapters 5, 6, and 7 of title 
5, United States Code.
  (b) Severability.--If any provision of this Act, or the application 
of any provision of this Act to any person or circumstance, is held 
invalid, the application of such provision to other persons or 
circumstances, and the remainder of this Act, shall not be affected 
thereby.

SEC. 11. EFFECT OF TERMINATION OF A COVERED RULE.

  (a) Effect of Termination, Generally.--If the effectiveness of a 
covered rule terminates under section 3--
          (1) this Act shall not be construed to prevent the President 
        or an agency from exercising any authority that otherwise 
        exists to implement the statute under which the rule was 
        issued;
          (2) in an agency proceeding or court action between an agency 
        and a non-agency party, the rule shall be given no legal effect 
        (subject to paragraph (3)) except at the request of the non-
        agency party; and
          (3) notwithstanding section 3, this Act shall not be 
        construed to prevent the continuation or institution of any 
        enforcement action that is based on a violation of the rule 
        that occurred before the effectiveness of the rule terminated.
  (b) Effect on Deadlines.--
          (1) In general.--Notwithstanding subsection (a), any deadline 
        for, relating to, or involving any action dependent upon, any 
        rule terminated under this Act is suspended until the agency 
        that issued the rule issues a new rule on the same matter, 
        unless otherwise provided by a law.
          (2) Deadline defined.--In this subsection, the term 
        ``deadline'' means any date certain for fulfilling any 
        obligation or exercising any authority established by or under 
        any Federal rule, or by or under any court order implementing 
        any Federal rule.

SEC. 12. JUDICIAL REVIEW.

  (a) In General.--A denial or substantial inexcusable delay in 
granting or denying a petition under section 4(c) shall be considered 
final agency action. A denial of a congressional request under section 
4(d) shall not be subject to judicial review.
  (b) Time Limitation on Filing a Civil Action.--Notwithstanding any 
other provisions of law, an action seeking judicial review of a final 
agency action under this Act may not be brought--
          (1) in the case of a final agency action denying a public 
        petition under section 4(c) or continuing without change, 
        modifying, or consolidating a covered rule, more than 30 days 
        after the effective date of that agency action; or
          (2) in the case of an action challenging a delay in granting 
        or denying a petition for a rule under section 4(c), more than 
        1 year after the period applicable to the rule under section 
        4(c)(4).
  (c) Availability of Judicial Review Unaffected.--Except to the extent 
that there is a direct conflict with the provisions of this Act, 
nothing in this Act is intended to affect the availability or standard 
of judicial review for agency regulatory action.

SEC. 13. DEFINITIONS.

  In this Act:
          (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Office of Information and Regulatory 
        Affairs in the Office of Management and Budget.
          (2) Agency.--The term ``agency'' has the meaning given that 
        term in section 551(1) of title 5, United States Code.
          (3) Appropriate committee of the congress.--The term 
        ``appropriate committee of the Congress'' means, with respect 
        to a rule, each standing committee of Congress having authority 
        under the rules of the House of Representatives or the Senate 
        to report a bill to amend the provision of law under which the 
        rule is issued.
          (4) Rule.--
                  (A) General rule.--Subject to subparagraph (B), the 
                term ``rule'' means any agency statement of general 
                applicability and future effect, including agency 
                guidance documents, designed to implement, interpret, 
                or prescribe law or policy, or describing the 
                procedures or practices of an agency, or intended to 
                assist in such actions, but does not include--
                          (i) regulations or other agency statements 
                        issued in accordance with formal rulemaking 
                        provisions of sections 556 and 557 of title 5, 
                        United States Code;
                          (ii) regulations or other agency statements 
                        that are limited to agency organization, 
                        management, or personnel matters;
                          (iii) regulations or other agency statements 
                        issued with respect to a military or foreign 
                        affairs function of the United States;
                          (iv) regulations, statements, or other agency 
                        actions that are reviewed and usually modified 
                        each year (or more frequently), or are reviewed 
                        regularly and usually modified based on 
                        changing economic or seasonal conditions;
                          (v) regulations or other agency actions that 
                        grant an approval, license, permit, 
                        registration, or similar authority or that 
                        grant or recognize an exemption or relieve a 
                        restriction, or any agency action necessary to 
                        permit new or improved applications of 
                        technology or to allow the manufacture, 
                        distribution, sale, or use of a substance or 
                        product; and
                          (vi) regulations or other agency statements 
                        that the Administrator certifies in writing are 
                        necessary for the enforcement of the Federal 
                        criminal laws.
                  (B) Scope of a rule.--For purposes of this Act, each 
                set of rules designated in the Code of Federal 
                Regulations as a part shall be treated as one rule. 
                Each set of rules that do not appear in the Code of 
                Federal Regulations and that are comparable to a part 
                of that Code under guidelines established by the 
                Administrator shall be treated as one rule.
          (5) Sunset review.--The term ``sunset review'' means a review 
        of a rule under this Act.

SEC. 14. SUNSET OF THIS ACT.

  This Act shall have no force or effect after the 10-year period 
beginning on the date of the enactment of this Act.

                       i. summary of legislation

    H.R. 994, the Regulatory Sunset and Review Act of 1995, 
provides a framework for the systematic review of current and 
future federal rules. The bill requires federal agencies to 
periodically review their significant rules to determine 
whether the rules should be continued without change, modified, 
consolidated with other rules, or allowed to terminate. The 
legislation also creates a petition process that would permit 
the public and appropriate Committees of Congress to request 
that agencies review less significant rules in the same manner.
    A rule designated for review will not expire if the issuing 
agency reviews and reissues it in accordance with the 
procedures established by the bill and the rule meets all the 
legal requirements that apply to the issuance of new rules. 
This legislation will help ensure that obsolete, unnecessary, 
duplicative, or conflicting rules are reviewed and either 
modified or terminated.
    Agencies will review their existing significant rules, 
which include those that have an annual effect on the economy 
of $100 million or more, over a staggered seven-year period 
beginning on the date the bill becomes law. Agencies will 
review their new significant rules seven years after issuance 
if the rules are capital intensive or were promulgated pursuant 
to a negotiated rulemaking procedure. Agencies will review 
their new significant rules seven years after issuance if the 
rules are capital intensive or were promulgated pursuant to a 
negotiated rulemaking procedure. Agencies will review other new 
significant rules three years after issuance. After the initial 
agency review, all covered rules will be subject to review 
every seven years.
    The Administrator for the Office of Information and 
Regulatory Affairs in the Office of Management and Budget is 
responsible for supervising and coordinating agency sunset 
reviews and providing guidance on how to conduct sunset reviews 
properly. The Administrator's initial task is to establish and 
publish a schedule in the Federal Register of all covered rules 
together with the potential termination date for each rule, and 
to update that list at least annually. In setting the sunset 
review schedule, the Administrator shall consult with the 
agencies and prioritize the sunset reviews based on: the cost 
of each rule to the regulated community, the views of regulated 
parties, whether a particular rule has recently undergone cost/
benefit and risk assessment analysis, the burden that reviewing 
the rule places on the agency, and the need for orderly and 
timely sunset review of all rules. In addition, the 
Administrator shall group related rules for simultaneous 
review, regardless of the issuing agency, based upon their 
subject matter similarity and their interrelationship with 
other rules to ensure efficient, comprehensive, and coordinated 
review of all rules across the government.
    The legislation establishes a reasonable review timetable 
to ensure that agencies will complete each sunset review in an 
orderly manner and well ahead of the rule's potential 
termination date. The dates in the timetable will alert the 
Administrator and other interested parties of the need to take 
corrective action if the agency falls behind schedule. All of 
the deadlines on the timetable are linked to the rule's 
potential termination date, which the Administrator shall 
specify at the time the Administrator designates the rule for 
sunset review. The Administrator must make that designation at 
least three to seven years prior to the potential termination 
date so that the agencies and all interested parties will have 
sufficient notice that the rule is subject to termination if it 
is not reauthorized.
    The legislation provides that, at least two and one half 
years before the rule's scheduled termination date, the agency 
shall publish a sunset review notice in the Federal Register 
requesting comments on twelve factors related to the rule's 
implementation. This notice will allow the public to comment on 
the actual costs, burdens, and benefits of the rule and whether 
the rule is obsolete, unnecessary, duplicative, conflicting, or 
otherwise inconsistent with the requirements of other rules. At 
least one year before the rules potential termination date, the 
agency must issue a preliminary report stating whether it 
intends to continue the rule without change, modify it, 
consolidate it with another rule, it must publish the text of 
the new proposed rule in its preliminary report. The agency 
then shall consult the appropriate Committees of Congress 
regarding its preliminary report and its proposed rulemaking 
action. At least 90 days before the rule's scheduled 
termination date, the agency must issue a final report (with a 
final rule, if the rule is going to be modified or 
consolidated). The final rule would become effective 60 days 
after publication. The Administrator may extend the potential 
sunset date of a rule by six months if necessary modifications 
in the rule cannot be made in time or if it is necessary to 
respond to or prevent an emergency situation.
    The Regulatory Sunset and Review Act covers regulatory 
actions by all the federal agencies. However, the legislation 
does contain several generic exceptions that cross agency 
lines. Covered rules do not include: formal rulemaking (agency 
adjudication) pursuant to 5 U.S.C. Sec. Sec. 556 and 557; rules 
related to agency organization, management, and personnel 
matters; rules related to military or foreign affairs 
functions; rules that are already reviewed and usually modified 
each year or are based on changing economic or seasonal 
conditions; rules that grant a product approval, license, 
permit, or permission, or relieve a statutory restriction; or 
rules that the Administrator certifies are necessary for the 
enforcement of the federal criminal laws.
    In the event of a rule's unintended termination, the 
legislation expressly recognizes the President's and the 
agency's authority to continue to enforce the underlying 
statute. The bill provides that the President or an agency is 
free to exercise any authority that otherwise exists to 
implement the statute under which the rule was issued. Thus, 
the termination of a rule does not prevent the Executive Branch 
from taking action to enforce the statute or to replace any 
important rule that has terminated.
    The Sunset and Review Act, itself, will terminate and will 
have no force or effect ten years after the date of its 
enactment unless it is reauthorized by a subsequent act of 
Congress.

              ii. background and need for the legislation

    Although public frustration with regulation has increased 
over the past three decades, Alexis de Tocqueville's warning 
more than 150 years ago about the dangers of despotic power 
applies to this concern about over-regulation:

          [Despotic power] covers the surface of society with a 
        network of small complicated rules, minute and uniform, 
        through which the most original minds and the most 
        energetic characters cannot penetrate. * * * Such a 
        power does not destroy, but it prevents existence; it 
        does not tyrannize, but it compresses, enervates, 
        extinguishes, and stupefies a people, till each nation 
        is reduced to be nothing better than a flock of timid 
        and industrious animals, of which the government is the 
        shepherd.\1\
    \1\ Alexis de Tocqueville, ``Democracy in America'' (1840), edited 
by Phillips Bradly, vol. 2 at 319 (Alfred A. Knopf, New York 1976).

The Regulatory Sunset and Review Act of 1995 makes a 
substantial contribution toward addressing public concerns 
about over-regulation by requiring that agency rules undergo 
regular public review and reauthorization.

A. Brief history of Federal regulation\2\

    The history of federal regulation in the United States 
shows that the theory supporting the creation of various 
regulatory programs has changed over time and, in some cases, 
is no longer valid. Yet many regulatory agencies and programs 
remain largely unchanged from their creation. Their missions 
and outlook continue to be defined by their original organic 
acts, agency history, and regulatory inertia. This creates an 
institutional bias in favor of each agency maintaining and 
defending the corpus of its own regulations and regulatory 
programs--even if they are unnecessary or overlap with the 
regulatory programs of other agencies. Past regulatory reform 
efforts have had some positive effects, but they have not kept 
pace with the increased public demand for systematic regulatory 
reform. More importantly, these past efforts have not included 
an effective mechanism requiring regulatory agencies to 
regularly review and revise existing regulations.
    \2\ See Daniel J. Gifford, ``The New Deal Regulatory Model: A 
History of Criticisms and Refinements,'' 68 Minn. L. Rev. 299 (1983). 
Professor Gifford's article provides the background for much of the 
information in this history.
---------------------------------------------------------------------------
    Although Congress established the first regulatory agency--
the Interstate Commerce Commission--more than 100 years ago, 
the number of regulatory agencies grew rapidly during the Great 
Depression. President Franklin Roosevelt's Administration 
argued that the Depression was caused in large part by a 
general malfunctioning of the American economic system, 
including perceived market failures in the price and 
distribution of goods and services. Thus, the Congress created 
new regulatory agencies to administer ``economic regulations'' 
such as rate making, licensing, route allocation, subsidization 
of services in rural areas, and the policing of financial 
markets. Unfortunately, because services were not allocated by 
market forces, the aggregate cost of all services was usually 
greater than if providers were free to respond to prevailing 
market conditions.\3\
    \3\ Gifford, supra, note 2, at 304.
---------------------------------------------------------------------------
    In response to concerns about the economic well-being of 
certain industries. Congress also established new ``independent 
agencies,'' often with the justification that only agencies 
with neutral institutional expertise and technical staff could 
effectively regulate these industries. The public, the 
legislature, and the courts were thought to lack the necessary 
expertise, and thus, substantial discretion was given to agency 
decision-making. It was also argued that such independent 
agencies would exercise neutral and unbiased policy expertise 
free of political constraints.
    Within a few decades, however, questions were raised about 
the level of discretion regulatory agencies exercised to meet 
broad legislative objectives. In 1946, Congress enacted the 
Administrative Procedure Act (APA) \4\ provide specific 
procedures for agencies to follow in issuing regulations. APA 
established standards of procedural due process for the 
regulated community and guaranteed the right of public 
participation in the rulemaking process. The APA also restated 
and codified the right to judicial review of agency regulatory 
action. Congress thought judicial review was a necessary 
element of agency oversight; without it, private citizens would 
have little protection from abuses of discretion.
    \4\ Ch. 324, 60 Stat. 237 (1946) (codified as amended at 5 U.S.C. 
Sec. Sec. 551-559, 701-706).
---------------------------------------------------------------------------
    In the 1950s and beyond, the theory of agency technical 
competence began to erode, as did the perception that 
administrative decisions lacked and political element, As 
federal agencies grew in size and jurisdiction and began to 
address issues that required overt policy choices that were not 
rooted in legislation or legislative history, these problems 
became more evident.\5\ During this period, the theory of 
administrative expertise increasingly was undermined by the 
realization that agency expertise alone, even where it was 
present, was not enough to guide agency action. Furthermore, 
agencies were increasingly criticized for failing to develop 
effective and transparent standards for governing their own 
actions.\6\
    \5\ See Marver H. Bernstein, ``Regulating Business by Independent 
Commission'' 74-92 (1955).
    \6\ See Henry J. Friendly, ``The Federal Administrative Agencies'' 
(1962).
---------------------------------------------------------------------------
    Beginning in the late 1960s, Congress responded with 
changes in the regulatory statues which agencies administered. 
Contrary to the New Deal approach, Congress began enacting 
regulatory statutes with much greater specificity. This new 
approach reflected the concern that regulatory agencies lacked 
the ability to set public welfare goals and the perception that 
agencies had misused their discretion.\7\ For example, Congress 
passed environmental legislation with very specific standards 
and goals. Partly in response to this type of legislation, 
agencies increasingly resorted to rulemaking of general 
applicability rather than case-by-case adjudication, which 
previously had been the prevailing method of regulation. As a 
result, each rulemaking had a broad impact on a greater number 
of people and entities.
    \7\ Gifford, supra, note 2, at 319.
---------------------------------------------------------------------------
    Regulatory statutes in the 1960s and early 1970s also 
differed from New Deal ``economic regulations'' by 
concentrating on remedying social problems relating to human 
health, safety, and the environment. Many of these statutes 
were based on perceived ``external'' costs, or those costs from 
production or operations that are borne by persons other than 
producers.\8\ Major legislation of that era included the 
National Traffic and Motor Vehicle Safety Act of 1966, the 
Federal Coal Mine Health and Safety Act of 1969, the Clean Air 
Act Amendments of 1970, the National Environmental Policy Act 
of 1969, the Occupational Safety and Health Act of 1970, and 
the Consumer Product Safety Act of 1972.
    \8\ See Richard A. Posner, ``Economic Analysis of Law'' 30 (1972).
---------------------------------------------------------------------------
    Proponents argued that the appropriate response to 
``externalities'' is to require the producers to 
``internalize'' such costs so that they have an incentive to 
take the optimal level of preventive care. However, the type of 
regulations promulgated under these statutes imposed 
government-mandated preventive solutions. In many cases, 
agencies imposed one-size-fits-all preventive measures on the 
regulated community which prevented individual employers or 
producers from developing more cost-effective approaches for 
achieving the specified level of protection. For instance, the 
Occupational Safety and Health Administration often imposes 
identical safety rules on all employers in a given industry. 
These standards removed the discretion of employers to take 
actions that, under the particular circumstances, would achieve 
the same or a superior level of worker protection at less cost.
    Thus, the command-and-control regulations created under 
these new statutes failed to achieve the intended legislative 
goals or achieved them at an unnecessarily high price. In the 
end, agencies tried to remedy the perceived market failure of 
external costs by forcing industry to over internalize such 
costs, thereby unduly increasing production costs and the 
prices paid by consumers.\9\
    \9\ Gifford, supra, note 2, at 325-26.
---------------------------------------------------------------------------
    Today, the theory of unbiased and technically competent 
agency decision-making underlying the growth of regulatory 
agencies for half a century is the subject of even greater 
skepticism than ever. Those who criticize the lack of 
regulatory action accuse agencies of being ``captured'' by the 
industries they regulate. Those who believe that these agencies 
promulgate overly burdensome regulations maintain that the 
agencies do not adequately consider the regulations' economic 
and social costs and whether there are more flexible 
alternatives that achieve the same level of protection.\10\
    \10\ Modern public choice theory, which attempts to explain the 
actions of pubic decision-makers, provides support for both types of 
criticism of agency regulatory behavior. Agency objectivity is 
undermined when agencies provide disproportionate attention to the 
views of favored ``stakeholders'' in relation to the concerns of the 
general public. At the same time, the incentive agency officials have 
to increase their influence is a powerful force that often conflicts 
with sound science and regulatory need analysis, and creates an 
insensitivity to the costs regulations impose on the regulated 
community and the public.
---------------------------------------------------------------------------

B. Regulatory reform efforts

    There is little dispute that many regulations have provided 
increased protections for human health, safety, and the 
environment. In the last twenty years, however, there also has 
been a growing recognition that over-regulation imposes 
unnecessary costs on the United States economy. Beginning in 
the late 1970s, Congress began to evaluate and reform 
regulations, starting with so-called ``economic regulations'' 
in the transportation sector. In 1978, Congress reexamined the 
comprehensive structure of airline regulations.\11\ Congress 
found that airline regulation had produced an inefficient 
airline system with noncompetitive fares and virtually no 
offsetting benefits. As a result, Congress deregulated the 
airline industry and eliminated the Civil Aeronautics Board. 
Later, Congress substantially deregulated the rail and motor 
transport industries. Congress concluded that market forces 
provided a more efficient method for satisfying the public 
interest than government regulation. As a result of 
deregulation, transportation costs have fallen substantially 
and the array and frequency of services have increased.
    \11\ See Stephen G. Breyer, ``Regulation and Its Reform'' 197-221 
(1982).
---------------------------------------------------------------------------
    Most other regulatory reform efforts undertaken during the 
1980s and 1990s were procedural in nature and focused on 
mechanisms by which the three branches of government could 
better oversee the work of the regulatory agencies. In 1980, 
Congress enacted the Regulatory Flexibility Act (RFA) and the 
Paperwork Reduction Act (PRA). The RFA was designed to reduce 
the regulatory burdens on small businesses and government 
entities by requiring agencies to analyze proposed regulations 
and tailor those regulations to lessen the impacts on small 
entities. Although the RFA has achieved some success, agencies 
have taken advantage of loopholes in the statute and failed to 
implement it fully. The RFA does not require impact analysis if 
an agency certifies that a proposed rule had no significant 
impact on small entities.\12\ Most importantly, the RFA does 
not contain an effective enforcement mechanism since it 
prohibits judicial review in cases where an agency certifies 
that an RFA analysis was not necessary.\13\
    \12\ 5 U.S.C. 605(b); see also ``Regulatory Flexibility Act: Status 
of Compliance,'' GAO Report to the Chairman, Committee on Small 
Business, House of Representatives and Chairman, Committee on 
Government Affairs, U.S. Senate (April 1994).
    \13\ 5 U.S.C. Sec. 611(a); see also Paul R. Verkuil, ``A Critical 
Guide to the Regulatory Flexibility Act,'' Duke L.J. 213, 259-60 
(1982).
---------------------------------------------------------------------------
    The intent of the PRA was to minimize the federal paperwork 
burden on individuals, businesses, state and local governments, 
and others, and to maximize the usefulness of information 
collected by the government. Essentially, the PRA established a 
policy for the handling of government information and 
designated the Office of Management and Budget (OMB) to 
administer that policy. Significantly, the PRA contained a 
``hammer'' provision which prevented an agency from taking 
enforcement actions for violations of paperwork requirements 
when PRA approval had expired. Administrative agencies thus 
came to understand the importance of regularized paperwork 
review.\14\ Notwithstanding the meritorious intent of the 
statute, the PRA was only authorized for sporadic three-year 
periods, 1981-83 and 1987-89.\15\ On the whole, the reform 
efforts embodied in the RFA and the PRA did not significantly 
change the rulemaking process.
    \14\ The Regulatory Sunset Review Act extends this principle to 
more general rulemaking activities.
    \15\ Through the work of this Committee in the 104th Congress, the 
PRA was reauthorized for a six-year period of time. Pub. L. No. 104-13, 
109 Stat. 163 (1995). The reauthorized PRA will strengthen the OMB 
Office of Information and Regulatory Affairs (OIRA), increase agency 
responsibilities for the reduction of paperwork burdens on the public, 
and improve OIRA and other central management oversight of agency 
information collection policies and practices.
---------------------------------------------------------------------------
    Early executive branch reform efforts relied on the theory 
that requiring agencies expressly to consider costs or other 
factors during the process of developing new regulations would 
cure over-regulation. These efforts began as early as the Nixon 
Administration, which initiated ``Quality of Life'' review in 
the White House, primarily of EPA regulations. Both Presidents 
Ford and Carter implemented more formal Executive Orders 
designed to require all executive branch agencies to consider 
inflation or other cost factors in developing regulations. None 
of these efforts met with much success, however, until 
President Reagan issued Executive Order 12291 in 1981.
    President Reagan's approach was effective because it was 
more comprehensive in reforming the regulatory process and it 
created a centralized review process at OMB to enforce such 
reforms. Executive Order 12291 provided mandatory requirements 
for agencies to follow when issuing a regulation. The order 
empowered OMB to oversee and enforce its provisions, with 
support from the Presidential Task Force on Regulatory Relief 
headed by the Vice President. The requirements of Executive 
Order 12291 were simple: the agencies could not regulate unless 
a clear need existed, benefits outweighed costs, and the agency 
chose the least costly alternative. Moreover, President Reagan 
backed up the executive order the day after he took office with 
a regulatory moratorium that halted most regulatory activity 
for several months. The Reagan Administration eventually 
documented tens of billions of dollars saved as a result of 
such efforts.
    During the Bush Administration, the most important 
legislative reform was the development of market incentives as 
an alternative compliance mechanism, as exemplified by the acid 
rain allowance trading system in the Clean Air Act. The 
innovation, modeled in part upon the successful lead phase-down 
program of the early 1980s, cut the anticipated costs of the 
acid rain reduction program by as much as 50% and greatly 
accelerated the cleanup.\16\ Both the Bush and Clinton 
Administrations have explored ways to extend this innovation to 
other regulatory programs. The Bush Administration's effort was 
part of a reform initiative that began in January of 1992 with 
a moratorium on new regulations.
    \16\ ``Economic Environmental and Coal Market Impacts of SO2 
Emissions Tracking Under Alternative Acid Rain Control Proposals,`` 
I.C.F. Resources, Inc. (March 1989).
---------------------------------------------------------------------------
    However, other developments made it difficult for the Bush 
Administration to continue the executive branch reform efforts 
President Reagan had begun. The agencies' regulatory budgets 
were increased and expansive new regulatory statutes were 
enacted. At the same time, the Senate refused to confirm an 
Administrator for the OMB Office of Information and Regulatory 
Affairs (OIRA), which had played a central role in overseeing 
agency regulatory activities and implementing E.O. 12291. OIRA 
oversight was further hampered by Congress's refusal to 
reauthorize the PRA.
    Partially in response to these developments, President Bush 
created the President's Council on Competitiveness. The Council 
was a Cabinet-level body, chaired by Vice President Dan Quayle. 
The Council strove to reduce the burdens of excessive 
regulation and to encourage America's international 
competitiveness. The Council reported many notable successes, 
including reforms to the FDA drug approval process that were 
estimated to save thousands of lives, efforts to streamline 
regulations for small businesses, and other actions which cut 
regulatory red tape to save an estimated 200,000 jobs. When 
President Clinton was elected, however, he eliminated the 
Council on Competitiveness and repealed President Reagan's E.O. 
12291, replacing it with a weaker executive order, E.O. 12866.
    The congressional mid-term election of November 8, 1994 
provided the catalyst for congressional action to pass 
comprehensive regulatory reform legislation, including this 
bill. As part of the Republican Contract with America, the 
House considered and passed two regulatory reform bills in late 
February and early March of 1995. H.R. 450, the ``Regulatory 
Transition Act of 1995,'' would impose a moratorium on most new 
federal regulations to allow the Congress time to enact 
substantive regulatory reform legislation. H.R. 9, the ``Job 
Creation and Wage Enhancement Act of 1995,'' contained the 
House version of such a regulatory reform program. H.R. 9 would 
establish reasonable criteria that agencies must apply 
prospectively to ensure that future regulations are reasonable 
and cost-effective given the actual risks involved. Until now, 
however, the full House has not considered a comprehensive bill 
to require agencies to review or reform existing regulations.
    H.R. 994 extends the regulatory reform effort and bridges a 
crucial gap by addressing concerns about existing regulations. 
Much of the public concern and criticism about regulations is 
directed at rules currently in effect. H.R. 994 requires 
agencies to periodically review existing and future regulations 
to ensure that they are still necessary and effective.

C. The need for a Sunset and Review Act

    The total number of federal regulations continues to grow 
at a rapid pace as reflected in the thousands of new final 
rules issued each year.\17\ Many of the older rules were 
adopted under conditions that have long since changed. Although 
some regulations are essential to protect human health, safety, 
and the environment, the American public should not be asked to 
bear the burden of any regulation if there is an alternative 
that would achieve the same or a superior level of protection 
at a lower cost. Unless there is a mechanism to require the 
review and revision of existing regulations, American consumers 
and workers will be forced to continue to absorb the costs of a 
growing number of regulations that are no longer warranted, are 
not particularly effective, or should be modified to reflect 
less costly alternatives.
    \17\ Between 1990-1993, OMB has reviewed approximately 1,100-1,300 
final rules each year, which does not include all types of rules or the 
rules issued by certain independent agencies.
---------------------------------------------------------------------------
    President Clinton's National Performance Review recently 
stated that the cost of complying with current federal 
regulations on the private sector alone is ``at least $430 
billion per year--9 percent of our gross domestic product.'' 
Others have estimated that the cost to the private sector and 
to State and local governments is between $500 and $850 billion 
per year--more than the total amount of discretionary domestic 
spending by the federal government each year.
    Although President Clinton has expressed support for 
several important regulatory reforms, the agencies have not 
always acted consistently with his stated goals. On the 
surface, President Clinton's Executive Order 12866 on 
``Regulatory Planning and Review'' includes some of the same 
standards and requirements that are in President Reagan's E.O. 
12291 and many pending regulatory reform bills. For example, 
E.O. 12866 addresses the need for risk analysis and cost/
benefit analysis and examines the need for selecting the most 
cost-effective and least burdensome means of complying with 
regulations.\18\
    \18\ Although E.O. 12866 incorporated many of the important 
features of E.O. 12291, it significantly limited the number of 
regulations that must undergo cost/benefit analysis.
---------------------------------------------------------------------------
    President Clinton's Executive Order, however, has not 
effectively curbed the excesses of the regulatory agencies. 
Like the previous executive orders, including E.O. 12291, there 
is no effective enforcement mechanism and the requirements of 
the order are not judicially enforceable. Although OIRA bears 
responsibility for overseeing the implementation of Executive 
Order 12866, OIRA's implementation of the order has been the 
subject of criticism.\19\
    \19\ One recent study found OIRA's oversight was inadequate to 
ensure compliance. ``Ensuring Accountability for Developing Well-
Founded Federal Regulations,'' Institute for Regulatory Policy (Federal 
Focus, Inc. 1995). Although the study's methodology has been 
challenged, the limited study still highlights some problems in current 
OIRA oversight of many rulemaking actions. Even OIRA admits ``that 
there is much to be done to obtain the benefits'' of the executive 
order. ``The First Year of Executive Order No. 12866,'' OMB Report 
(Oct. 1994).
---------------------------------------------------------------------------
    Most importantly, E.O. 12866 does not ensure the periodic 
review of existing regulations. Although it states as a goal 
that agencies should review existing regulations to eliminate 
rules that are duplicative, unnecessary, or not cost-effective, 
there is no effective mechanism to ensure that such reviews 
actually take place. In short, federal agencies are unlikely to 
review their existing rules on a regular basis unless 
legislation is enacted requiring them to do so.
    In addition to E.O. 12866, the Clinton Administration has 
announced several other public reviews of its regulatory 
activity. For example, EPA announced its Common Sense 
Initiative (``CSI'') two years ago. CSI was designed to 
encourage intergovernmental coordination and technological 
innovation in pollution control. In practice, CSI has provided 
little in the way of true reform. Despite much fanfare, a 
proposed CSI project known as the pulp and paper cluster 
rulemaking (as originally proposed) did not significantly re-
examine or harmonize command-and-control-style regulation. One 
portion of the proposed rule designed to control air pollutants 
alone might have cost $4.4 billion. The total cost for the 
cluster rule might have been as high as $11.5 billion for very 
small benefits. As a result of public criticism and 
congressional pressure, EPA was forced to abandon its initial 
rulemaking plans.
    After the House began legislative action on H.R. 450 and 
H.R. 9, President Clinton announced a new regulatory reform 
agenda that is fully consistent with the purposes of the Sunset 
and Review Act. In a speech on February 21, 1995, the President 
acknowledged that the regulatory culture that has permeated the 
government needs fundamental change. The President instructed 
all regulatory agencies ``to go over every single regulation 
and cut those regulations which are obsolete * * * and make a 
report to me by June 1st, along with any legislative 
recommendations [needed] to implement the changes that would be 
necessary to reduce the regulatory burden on the American 
people.'' Weekly Comp. Pres. Docs. 280 (Feb. 27, 1995). See 
also id. at 281 (``this is very important. By June 1st, I want 
to know which obsolete regulations we can cut and which ones 
you can't cut without help from Congress.'').
    The agencies' response to President Clinton's directive, 
however, has been disappointing and again underscores the need 
for congressional action that will be legally binding on 
regulatory agencies. Instead of focusing on reforms that will 
actually reduce the regulatory burden on consumers and 
businesses, the agencies have largely turned the President's 
initiative into a housekeeping exercise. EPA, for instance, 
responded to the initiative by eliminating a number of rules 
from the Code of Federal Regulations (CFR)-- but only rules 
that no longer are in effect. See, e.g., 60 Fed. Reg. 33915 
(June 29, 1995) (rules eliminated are those that (1) 
``implement statutory provisions which have been repealed;'' 
(2) ``have expired by their own terms;'' and (3) ``have been 
vacated (i.e., declared void and of no effect by a court'')). 
While these efforts are commendable, they are insufficient. 
Moreover, the Committee has found the past several months that 
many regulatory agencies are unwilling to discuss alternative 
means of regulation seriously.
    On June 15, 1995, the Administrative Conference of the 
United States (ACUS) adopted Recommendation 95-3 on the 
``Review of Existing Agency Regulations.'' ACUS explained in is 
preamble that:

         There is increasing recognition * * * of the need to 
        review regulations already adopted to ensure that they 
        remain current, effective, and appropriate. Although 
        there have been instances where agencies have been 
        required to review their regulations to determine 
        whether any should be modified or revoked, there is no 
        general process for ensuring review of agency 
        regulations. * * * The obligation to review existing 
        regulations should be made applicable to all agencies, 
        whether independent or in the executive branch. 
        (Emphasis in italic.)

The ACUS recommendation contains many important features that 
are in the Committee legislation, including recommendations 
that legislation: should cover all agencies; ``should assign to 
the President the responsibility for overseeing agency 
compliance;'' should set priorities regarding which rules 
should be reviewed first; should provide adequate opportunity 
for public input; should not change the standard or 
availability of judicial review of agency action; and should 
review rules on a pre-set schedule subject to ``sunset'' dates.
    The Sunset and Review Act takes the regulatory review 
concepts embodied in Executive Orders 12291 and 12866 and 
President Clinton's speech of February 21, 1995 and creates an 
efficient, accountable, and enforceable process for the review 
of existing rules. Given the scope of existing rules and their 
drain on the United States economy, H.R. 994 will provide a 
review mechanism to determine when rules are unnecessary and 
when rules should be modified to reflect the actual costs, 
benefits, and risks involved. Just as important, the review 
procedure will require agencies to take account of subsequent 
changes in technology, science, markets, and other factors. An 
enforceable review mechanism is an essential tool to ensure 
that regulatory programs make sense and do not overly burden 
the public.
    Because current law does not require old rules to be 
reviewed, obsolete and duplicative rules remain in place when 
they no longer represent the most cost-efficient or effective 
means of dealing with particular problems. H.R. 994 requires 
federal agencies to listen to the public's comments on their 
existing regulatory programs and evaluate whether improvements 
can be made in light of changing conditions, new information, 
and experience under the current rules. In this way, the Sunset 
and Review Act provides a mechanism for eliminating 
conflicting, duplicative, and unnecessarily costly regulations 
in an era when regulations impose an enormous burden on our 
economy.
            III. Legislative Hearings and Committee Actions
    H.R. 994, the bipartisan ``Regulatory Sunset and Review Act 
of 1995,'' was introduced by Reps. Jim Chapman, John Mica, Tom 
DeLay, Nathan Deal, and Gene Green on February 21, 1995, and 
referred to the Committee on Government Reform and Oversight 
and the Committee on the Judiciary. On February 24, 1995, 
Government Reform and Oversight Committee Chairman William F. 
Clinger, Jr. referred the bill to the Subcommittee on National 
Economic Growth, Natural Resources, and Regulatory Affairs for 
its consideration.

A. Subcommittee action

    On March 28, 1995, Chairman David M. McIntosh convened the 
Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs (the Subcommittee) for the first day of 
hearings on H.R. 994. The witnesses at the hearing included the 
principal congressional sponsors of the legislation, the OIRA 
Administrator, an administrative law and regulatory expert, 
private citizens, and business people concerned about federal 
regulations.
    The Honorable John Mica and the Honorable Jim Chapman 
testified strongly in favor of the bill. Congressman Mica 
testified that over-regulation has become the number one job 
killer in the United States and that it penalizes American 
business, sending more American jobs overseas than any other 
action by the federal government. He also stated that a 
commonsense approach was needed to review the massive number of 
regulations that are already on the books. Congressman Mica 
said that because technology and communications now outpace 
regulations, it is critical to review, revise, and discard 
unnecessary regulations on a regular basis.
    Congressman Chapman testified that the regulations 
contained in the Federal Register for just the past twelve 
years were monumental. He explained that the regulatory reforms 
in H.R. 9 would provide prospective relief only, and that 
Congress needed to address federal regulations already on the 
books that are counterproductive and anti-competitive. He said 
that every President in recent history has attempted to deal 
with excessive regulatory burdens by executive order, but that 
the agencies have not faithfully complied with the Presidents' 
executive orders.
    The Honorable Sally Katzen, Administrator of the Office of 
Information and Regulatory Affairs, OMB, testified that the 
Clinton Administration agreed with the bill's goals but did not 
agree with all of the provisions in the original version of 
H.R. 994. Ms. Katzen questioned why the original version of 
H.R. 994 applied to every regulation without a monetary 
threshold or all of the traditional exemptions found in the 
Administrative Procedure Act (APA). She also said that some of 
the language used in the original bill was ambiguous or 
inconsistent and might result in litigation. Ms. Katzen was 
opposed to providing citizens even the limited right of 
judicial review of agency action provided in the APA. At the 
same time, she said that she thought the review process should 
be open to more public comment as provided in the APA. In 
addition, she was concerned that the bill could divert agency 
resources away from other regulatory activities. Ms. Katzen 
testified that S. 291, a regulatory reform bill introduced in 
the Senate, had a ``look back'' provision that she believed was 
more workable.
    Mr. Gene Schaerr, a partner at Sidley & Austin law firm and 
former Associate Counsel to the President, testified in favor 
of H.R. 994. Mr. Schaerr said that every regulatory system 
needs some mechanism in place to systematically review and 
abolish outdated or unnecessary regulatory requirements or the 
economy will be seriously impaired. He stated that there is 
currently no check on the power of regulatory agencies to issue 
regulations that impose staggering costs on private enterprise. 
He recommended reducing the review period for existing 
regulations to three years and requiring agencies to apply a 
cost/benefit standard when they review their regulations. He 
suggested that the cost/benefit standard should be the main 
review criterion and that agencies should simply consider the 
remaining factors identified in the bill to determine whether 
the cost/benefit standard is met.
    Mr. Charles Bechtel, CEO of the Harold J. Becker Company, 
Inc. and President of the National Roofing Contractors 
Association, testified in support of H.R. 994. Mr. Bechtel 
stated that H.R. 994 is necessary to establish a thorough 
regulatory review process to remove the stranglehold that 
regulations have on economic growth. He said that the impact of 
government regulations on his small business is staggering 
because of regulatory discrepancies. Although OIRA is supposed 
to reduce these discrepancies, he said the problem has not been 
alleviated. He testified that small business owners must become 
experts in OSHA, DOT, and EPA regulations--to name a few. He 
believed that a mandated review of regulations would result in 
the termination of outmoded and misguided rules. Mr. Bechtel 
said that H.R. 994 would impose a disciplined, enforceable 
regimen of review for federal agencies.
    Ms. Kaye Whitehead, who owns and operates a small family 
farm near Muncie, Indiana, testified in strong support of H.R. 
994. Ms. Whitehead testified that farmers cannot keep up with 
the thousands of burdensome farming regulations that agencies 
issue each year. She testified that there are 75 handbooks of 
regulations that deal with grain farming alone, and that in 
1994, there were 1,180 regulatory changes for farmers in her 
county. She said that many of these regulations conflict with 
each other. Ms. Whitehead testified that state EPA officials 
(following guidelines from Washington) and USDA Soil and 
Conservation Service officials contradict each other regarding 
how to dispose of manure, such as that from her pig farm. One 
agency required her to plow it into the soil while the other 
mandated that she spread it on top of the ground. By complying 
with one rule, she automatically violated the other. She 
testified that she does what makes here neighbors happy and 
plows the waste into the soil. Ms. Whitehead said that while 
farmers are expected to be major players in a global market, 
over-regulation is eroding American farmers' competitive 
advantages.
    Mr. Steven Dean, who operates a family-owned sawmill and 
lumber treating company in Gilmer, Texas, testified in favor of 
H.R. 994. As the head of one of the largest employers in the 
county, Mr. Dean charged the federal government with being his 
company's ``number one problem.'' Mr. Dean's testimony included 
various anecdotes revealing the excessive and counterproductive 
nature of many of the regulations to which his company is 
subjected. He produced a piece of pressure-treated ``two-by-
four'' lumber, which he said the EPA deemed to be ``very, very, 
very hazardous.'' He also said that he had to seek the 
assistance of a professional engineer to obtain a federal 
permit to deal with rainwater runoff on his property. Mr. Dean 
expressed aggravation at what he perceived as the prevailing 
attitude that every possible problem must be dealt with by 
regulation and that people are not responsible for their own 
behavior.
    Mr. Joe Bob Burgin, President of the Sulphur Springs 
Chamber of Commerce, owns and operates two convenience stores 
in Sulphur Springs, Texas. Mr. Burgin testified in favor of 
H.R. 994 because he said that any attempt to reduce the number 
of local, state, and federal regulations imposed upon small 
business people was a step in the right direction. Mr. Burgin 
was especially critical of recent federal regulations that he 
said made it difficult for him to run a profitable business. He 
described several regulations regarding fuel storage tanks with 
which he had to comply that he believed were unnecessarily 
burdensome and prescriptive. In addition, he said that the 
regulations mandated that he replace his storage tanks by 1998. 
He said that these regulations highlight ``only the tip of the 
environmental regulatory iceberg.'' Mr. Burgin summarized his 
plight by saying that he and other small businesses were 
``choking to death on'' and ``drowning in'' excessive federal 
regulations.
    Mr. Paul Mashburn, owner and President of Viking Builders 
in Winter Park, Florida, also testified in favor of H.R. 994. 
He said current regulatory overkill is the reason that Viking 
Builders is no longer in construction and development 
activities, resulting in lost jobs. He mentioned three major 
regulatory problems that are important to America's builders. 
First, he said the EPA's and Army Corps of Engineer's 
guidelines on wetlands classifications are questionable and 
have forced builders to wait two to three years and spend 
hundreds of thousands of dollars to obtain necessary permits, 
all of which builders have to pass on to consumers as a hidden 
tax. Second, he complained about the economic impact of 
determinations under the Endangered Species Act. Mr. Mashburn 
testified that the designation of land in Texas as protected 
habitat reduced the value of the land dramatically, including 
the value of people's homes. Lastly, he testified that the 
numerous OSHA regulations are too lengthy and non-specific. He 
said OSHA often does not distinguish between a small home 
remodeling site and a major industrial or commercial works 
project.
    David Vladeck, Director of the Public Citizen Litigation 
Group, testified against the original version of H.R. 994. 
However, he said that there is a need for a mechanism to ensure 
that regulations imposed on businesses are not obsolete or 
outdated. Mr. Vladeck suggested strengthening judicial review 
of agency regulatory action, utilizing the petition process in 
the Administrative Procedure Act, and scrutinizing statutory 
mandates. He also said that industry needs the complex 
documents issued by federal agencies and that regulated 
industries create a demand for guidance documents.
    At the request of four minority Members of the 
Subcommittee, Chairman David McIntosh scheduled a second day of 
hearings with additional testimony heard from Administration 
witnesses on their concerns with H.R. 994 as originally 
introduced. On May 2, 1995, the Subcommittee reconvened 
pursuant to notice and heard testimony from officials of the 
Securities Exchange Commission (SEC), the Department of Health 
and Human Services, the Department of Agriculture, the 
Department of Treasury, the Department of Transportation, and 
the Federal Communications Commission (FCC).
    SEC Commissioner Richard Roberts testified that he shared 
the goals of H.R. 994, but expressed concerns about how the 
bill's regulatory review process would affect the SEC. 
Commissioner Roberts said that the original version of H.R. 
994, which covered almost all rules, did ``not adequately 
distinguish between those rules that are critical to the 
functioning of our markets that may need careful and constant 
monitoring or that deal with areas in which specific problems 
have arisen, and those that are not and do not.'' He said that 
because the original version of H.R. 994 required agency 
resources to review many non-problematic rules, less attention 
would be paid to key regulations or to the immediate problems 
that affect the securities markets. He claimed this would 
adversely affect both the securities industry and investors.
    Ms. Judith Feder, Principal Deputy Assistant Secretary for 
Planning and Evaluation in the Department of Health and Human 
Services, testified that the Department strongly agreed with 
the objective of H.R. 994 and commended the idea ``that no 
regulatory burdens continue without careful evaluation and an 
affirmative decision to continue them.'' However, Ms. Feder was 
skeptical about the impact the original version of H.R. 994 
would have on the Department's programs. Ms. Feder suggested 
that, in practice, the original bill might produce an ``uneven 
process.'' She said the original bill might require 
``cumbersome, complex, and unnecessary steps in reviewing every 
existing regulation.'' Instead, Ms. Feder suggested that the 
regulatory streamlining effort focus more narrowly on the 
desired goals while providing flexibility in attaining them.
    Mr. James Gilliland, General Counsel to the Department of 
Agriculture, testified that the Department of Agriculture also 
agreed with the objectives of H.R. 994. However, Mr. Gilliland 
said that he was opposed to the original version of H.R. 994 
because he did not believe it provided ``an effective or 
efficient means of assuring that unnecessary regulations are 
eliminated.'' Mr. Gilliland stated that he thought the original 
scope of the bill was too broad, and that the eighteen review 
criteria were inappropriate for the review of all regulations. 
He testified that the Agriculture Department already has a 
regulatory review process which he believed ``works,'' and 
guards against potentially complex and uncertain rules. In 
addition, he believed Executive Order 12866 had improved their 
regulatory process tremendously. Because of these existing 
procedures at the Department of Agriculture, Mr. Gilliland 
believed that H.R. 994 was unnecessary for his Department.
    Mr. Edward Knight, General Counsel to the Department of the 
Treasury, agreed with the other witnesses that ``principles of 
good government and sound regulatory policy demand that 
agencies periodically review their regulations [to ensure] that 
they are necessary and working as intended, reflect current 
statutory authority, and impose the least burden on the public 
consistent with legitimate regulatory objectives.'' Mr. Knight 
testified that the Treasury Department already reviewed its 
regulations to make them less burdensome. Moreover, Mr. Knight 
thought the original version of H.R. 994 was flawed because its 
scope was too broad, and as originally written, it would have 
required significant agency resources. Mr. Knight also said 
that the definition of a rule did not distinguish between 
regulations published only in the Federal Register and those 
codified in the Code of Federal Regulations.
    Mr. Stephen Kaplan, General Counsel for the Department of 
Transportation, testified against H.R. 994 largely because he 
believed the bill was unnecessary compared to the demands it 
might place on his agency. Mr. Kaplan testified that the 
Department of Transportation already reviewed its own 
regulations and, in response to President Clinton's order, 
would produce a list of DOT regulations that it should modify 
or eliminate as obsolete, unnecessary, or overly burdensome. 
Moreover, Mr. Kaplan questioned the necessity of certain of the 
eighteen review criteria in the original version of the bill. 
Mr. Kaplan also said that it might take the Department of 
Transportation longer than seven years to review certain of its 
rules.
    Mr. William Kennard, FCC General Counsel, testified that 
``the FCC strongly support[ed] H.R. 994 goal of eliminating 
unnecessary regulation.'' Mr. Kennard said that the FCC is 
committed to regular review of its regulations and that it has 
elimated numerous regulations, streamlined many others in 
recent years, and sought to ensure that those regulations kept 
in place further the development of pro-competitive markets and 
new services to the benefit of American consumers. He also 
explained that the FCC already uses a sunset mechanism on 
certain types of regulations. Yet, Mr. Kennard said that he 
believed that a targeted sunset approach is preferable to the 
one contained in the original version of H.R. 994, which 
covered almost every regulation.
    Congressman Paul Kanjorski, one of the Members of the 
Subcommittee who requested the second day of hearings, 
disagreed that current agency reforms and processes would 
resolve the problems. In particular, Rep. Kanjorski admonished 
the agency witnesses for not providing constructive suggestions 
for improving H.R. 994:

          Listening to the testimony of the panel, I come to 
        the conclusion that you're almost defenders of the 
        status quo. And although I know the administration, 
        over the last two years, has endeavored to [improve the 
        regulatory process], * * * I'm not sure the panel and 
        the administration [understand] the frustration that 
        brings about this type of legislation. * * * There are 
        millions and millions of average Americans, millions of 
        small business people, that totally feel overwhelmed in 
        dealing with the Federal government. * * * [T]he people 
        are so frustrated out there, they're going to do 
        anything to change the circumstances. There's got to be 
        a middle ground of reasonableness. * * * But I don't 
        hear a reasonable alternative put forth as to what we 
        really should do. * * * And I'm just telling you from 
        the position of a Democratic member of Congress--if you 
        all don't tell us how to change it, it's [still] going 
        to be changed. * * * I don't think it's good enough for 
        you to come up here and tell us why this won't work. I 
        think you've got to come up here and tell us what we 
        have to do to make a more user-friendly government and 
        a fairer government.

    In addition to the testimony of the hearing witnesses, the 
Subcommittee received written testimony from a variety of 
sources. Among the groups to submit written testimony was the 
American National Standards Institute (ANSI). Sergio Mazza, 
President of ANSI, explained that the member organizations of 
ANSI were composed of private sector and federal, state, and 
local government standards writers. There are approximately 
11,500 ANSI-approved American National Standards that provide 
ratings, test methods, performance, and safety requirements for 
a large number of industries. ANSI determines whether standards 
meet the necessary criteria to be approved as American National 
Standards, including whether the proposed standard is contrary 
to the public interest, contains unfair provisions, or is 
unsuitable for national use.
    Government representatives work closely with ANSI and often 
participate in the standards writing process. Many government 
bodies and agencies adopt or incorporate ANSI-approved 
standards in lieu of their own rulemaking in such areas as 
architecture, engineering, construction, nuclear safety, 
medical equipment, heating equipment, financial services, 
radiation protection, electrical codes, and many others. In 
fact, OMB has instructed federal agencies to utilize such 
industry standards whenever possible and practicable. See OMB 
Circular A119, 58 Reg. 57,643 (Oct. 26, 1993); see also 
Administrative Conference of the United States Recommendation 
94-1 (encouraging federal agencies to use such standards to 
meet regulatory needs). For example, there are over 200 
instances in the Code of Federal Regulations referring to or 
incorporating the National Fire Protection Association codes 
and standards alone.
    Mr. Mazza wrote that ``under ANSI's Procedures for the 
Development and Coordination of American National Standards, 
all such standards must be revised, reaffirmed or withdrawn at 
a minimum of every five years.'' Mr. Mazza described the ANSI 
three-step standards review process that is quite similar to 
the three-step agency review process ultimately adopted by the 
Committee:

          In order to revise or reaffirm an American National 
        Standard, the standards developer must fulfill due 
        process requirements and demonstrate that there is 
        consensus. The standards developer must * * * [provide 
        in ANSI's publication ``Standards Action''] public 
        notice that the standard is beginning to be reviewed to 
        determine if it should be revised or reaffirmed. 
        Interested persons may submit comments or may 
        participate in the review process. When a course of 
        action is decided upon, the standard then undergoes a 
        more lengthy public review period which also is 
        announced in ``Standards Action.''
          The standard ultimately is voted upon by the 
        consensus body whose members are representatives from 
        directly and materially affected interest groups, often 
        including regulators at the federal, state and local 
        level. * * * If it is determined that the standard is 
        technically relevant and should be reaffirmed, the 
        process generally takes about six months. If it is 
        decided that the Standard should be revised, the 
        process will take longer. In some cases, if the 
        standard has become obsolete or not pertinent, it is 
        withdrawn as an American National Standard. The net 
        result is that the American National Standards are 
        subject to a continuous review cycle to determine if 
        they are still relevant and effective. (Emphasis in 
        italic.)

    On May 18, 1995, the Subcommittee met pursuant to notice to 
mark-up H.R. 994. Chairman McIntosh offered a bipartisan 
substitute on behalf on behalf of himself and more than two-
thirds of the Subcommittee Members as co-sponsors that 
addressed many of the issues raised by the Administration and 
other witnesses about the original bill and made the sunset 
review process more than clear and workable. The Subcommittee 
passed the bipartisan substitute bill on a voice vote without 
amendment. The principal changes reflected in the bipartisan 
subcommittee substitute bill were as follows:
    (1) Rules Covered. Agencies would automatically review only 
significant rules. A petition process would allow the public 
and appropriate Committees of Congress to request agencies to 
review less significant rules. In addition, some generic, 
multi-agency exceptions were added to the type of rules covered 
by the bill.
    (2) Criteria for Review. Each agency would solicit public 
comment on a rule's actual costs, burdens and other issues 
related to its past implementation, including whether the rule 
is obsolete, unnecessary, duplicative, or otherwise 
inconsistent with the requirements of other federal rules. 
However, the ultimate review criteria would be the same 
criteria that applies to the issuance of analogous new rules.
    (3) Sunset Review Termination Dates. To make the initial 
reviewing task more workable for the agencies and the public, 
the bill would stagger the initial review of existing 
significant rules over a seven-year period. In addition, the 
first review of new, capital-intensive rules or new rules 
promulgated pursuant to a negotiated rulemaking procedure would 
take place after seven years.
    (4) Centralizing and Coordinating the Review Process. The 
OIRA Administrator would receive additional authority to group 
related or conflicting rules for simultaneous review by the 
issuing agencies. The Administrator also would be required to 
review the preliminary reports of the agencies and forward 
recommendations on how to resolve any regulatory conflicts. 
Finally, the Administrator would have the role of informing the 
public of the rules that are subject to sunset review and the 
termination dates for each rule.
    (5) Review Timetable Established. The substitute also 
contained a reasonable timetable which agencies would follow so 
that each sunset review is completed in an orderly manner and 
well ahead of the rule's potential termination date.

B. Full Committee action

    On July 18, 1995, the full Committee met pursuant to notice 
to mark-up H.R. 994. Chairman Clinger offered a bipartisan 
substitute to H.R. 994. The principal changes reflected in 
Chairman Clinger's substitute include the following:
    (1) Rules Covered. The substitute expanded the generic, 
multi-agency exceptions to the type of rules covered by the 
bill. Covered rules do not include: rules that are reviewed and 
changed at least every year or are reviewed and modified 
regularly based on changing seasonal or economic conditions; 
rules that grant a product approval, license, or permission or 
relieve a restriction; and rules that the Administrator 
certifies in writing are necessary for the enforcement of the 
federal criminal laws.
    (2) Prioritization of Reviews. Additional guidance was 
provided to the OIRA Administrator on how to prioritize the 
schedule of sunset reviews, for example, by giving priority in 
time to those rules that impose the greatest cost on the 
regulated community or are otherwise the most problematic 
rules.
    (3) Revised the Petition Process. The substitute revised 
the petition process to lessen the chance that the 
Administrator will be burdened with frivolous petitions for 
sunset review, and lengthened the time that the Administrator 
has to respond to a valid petition.
    (4) Clarified the Ultimate Review Criteria. The substitute 
further clarified that other laws supply the ultimate review 
criteria and that the Sunset and Review Act does not create a 
mandate that overrides other laws.
    (5) Clarified the Effect of Rule's Termination. A new 
provision clarifies the effect of a rule's termination. It 
provides that termination of a rule does not affect enforcement 
actions based on conduct committed while the rule was in 
effect. It also provides that a citizen or other non-agency 
party may rely on a terminated rule for guidance in actions 
brought by the agency until the agency promulgates a new rule 
or standard.
    The Chairman and the Committee adopted three amendments to 
the Chairman's substitute by voice vote. An amendment offered 
by Rep. Kanjorski provided a sunset of the legislation ten 
years after enactment. An amendment offered by Rep. Slaughter 
increased the monetary threshold for a significant rule from 
fifty million dollars to one hundred million dollars. An 
amendment offered by Rep. Shays required agencies to solicit 
information regarding the positive benefits of a rule being 
reviewed, particularly health or safety or environmental 
benefits.
    The amended bill passed on a recorded vote of 39-7.

                    IV. SECTION BY SECTION ANALYSIS

Section 1--Short title

    The bill's title is the ``Regulatory Sunset and Review Act 
of 1995.''

Section 2--Purpose

    The purpose of the legislation is to require agencies to 
conduct regular reviews of their significant rules to determine 
whether they should be continued without change, modified, 
consolidated with another rule, or allowed to terminate. The 
bill also establishes a petition process that allows the public 
and appropriate committees of Congress to request that less 
significant rules be reviewed in the same manner. The bill 
specifies the procedure agencies must follow to consider the 
comments of the public, the regulated community, and the 
Congress regarding the actual costs and burdens of rules, and 
whether the rules are obsolete, unnecessary, duplicative, 
conflicting, or otherwise inconsistent. Rules continued in 
effect in any form must meet all the legal requirements that 
apply to new rules, including any applicable federal cost/
benefit and risk assessment requirements.
    Another purpose of the legislation is to provide the 
Administrator of the Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget authority 
to coordinate the sunset reviews conducted by the agencies and 
to make the Administrator principally responsible for the 
implementation of the Sunset and Review Act. The Administrator 
shall establish the agency sunset review schedule and shall 
designate any nonsignificant rules for sunset review in 
response to public petitions or congressional requests for such 
review.

Section 3--Review and termination of regulations

    Section 3 provides for the termination of covered rules 
that are not reauthorized after the agency completes the sunset 
reviews. Section 3 specifies that covered rule shall have no 
force or effect after its applicable termination date 
(specified in section 7) unless the rule is reviewed and 
reauthorized in accordance with the procedures in section 6 and 
complies with the criteria in section 5.
    The Committee expects this provision to operate only in 
cases where the agency, after a review, consciously determines 
that the rule should terminate. The Sunset and Review Act does 
not undermine any health or safety protections. The purpose of 
this legislation is simply to require agencies to regularly 
review their rules. The more important the rule is for the 
protection of human health, safety, or the environment, the 
more important it is that it be periodically reviewed, updated, 
and improved to make it more effective. Thus, no one should 
assume that any particular rule will expire, and if a 
particular rule is mandated by law, the issuing agency could 
not allow the rule to expire without replacing it. In sum, 
there is simply no reason for the Committee to believe that 
agencies will violate this or other laws that require them to 
keep important regulations in place.
    Moreover, the bill contains a review timetable that 
requires agencies to complete each review well in advance of 
the potential sunset date.\20\ For example, agencies must begin 
the review process and publish a sunset review notice at least 
two and one-half years in advance of a rule's potential sunset 
date. At least one year before its potential sunset date, the 
agency must publish a new proposed rule or a preliminary 
determination that the rule shall continue in its current form. 
If an agency does not comply with this schedule, it will be 
apparent well in advance of the sunset date, and the OIRA 
Administrator or any interested party may take corrective 
action to see that the agency completes the review on time. In 
addition, the Administrator may extend the scheduled sunset 
date for up to six months if an agency cannot revise the rule 
by its original sunset date or if the delay is necessary to 
prevent an emergency situation.
    \20\ See the discussion of section 6 and 7 infra.
---------------------------------------------------------------------------
    The Committee believes that agencies can easily follow the 
review timetable, particularly in light of the agencies' 
response to President Clinton's directive of March 4, 1995, 
which ordered them to review all of their rules and issue a 
report in less than three months on which rules should be 
streamlined or eliminated. Regardless of how long it takes an 
agency to issue a rule, two and one-half years is long enough 
to review it. If a rule is not problematic, it should not take 
much time or many resources to review it and reissue it. \21\ 
If a rule is problematic, the agency should spend the time and 
resources it takes to make it right. If the Sunset and Review 
Act is to be effective, there must be a potential termination 
date.\22\
    \21\ The Congressional Budget Office (CBO) examined the 
requirements of the bill and concluded that ``the average cost of 
reviewing an individual rule, as required by H.R. 994, would be 
small.'' This led CBO to estimate that the bill could cost as little as 
$4 million per year for the entire government.
    \22\ Both bills reported out of committee in the Senate that 
require the review of existing agency rules contain an automatic sunset 
provision to ensure that the review will take place as scheduled. S. 
291 was reported out of the Senate Committee on Governmental Affairs 
with a unanimous vote. S. 343, which was reported out of the Senate 
Committee on the Judiciary and considered on the Senate floor, contains 
a sunset and review section that is even more like the provisions of 
H.R. 994.
---------------------------------------------------------------------------

Section 4--Rules covered

    Section 4(a) defines what is a ``covered rule'' that an 
agency must review pursuant to the bill. \23\ A covered rule 
is: (1) a rule the OIRA Administrator determines is a 
``significant rule'' under section 4(b); or (2) any other rule 
designated by the Administrator for sunset review. Because no 
rule is a ``covered rule'' unless the Administrator designates 
it for review, no rule can expire by operation of this 
legislation unless it first is designated for review. If there 
is a dispute about whether a rule should be designated by the 
Administrator for sunset review, the review clock will not 
begin to run until the dispute is resolved. A rule is not 
subject to termination until the Administrator designates the 
rule for sunset review or until a court with proper 
jurisdiction issues a final order providing that the rule is 
deemed designated for sunset review. In short, the definition 
of a covered rule helps ensure that no rule can expire 
inadvertently.
    \23\ See also section 13(4), which defines what constitutes a 
``rule'' for purposes of the bill. Section 13(4)(A) defines what agency 
documents or other statements constitute a rule. Section 13(4)(B) 
defines what set of regulations shall be treated as a single rule. 
Essentially, each ``part'' of the Code of Federal Regulations shall be 
treated as one rule.
---------------------------------------------------------------------------
    Section 4(b) defines a ``significant rule'' as one that the 
Administrator determines: (1) has resulted in or is likely to 
result in an annual effect on the economy of $100 million or 
more; (2) is a major rule as that term was defined in Executive 
Order 12291 (when that Executive order was in effect); or (3) 
was issued pursuant to a significant regulatory action, as that 
term is defined in Executive Order 12866. Since 1981, OIRA has 
been responsible for determining whether a rule is a major rule 
as defined in E.O. 12291 or constitutes a significant 
regulatory action as defined in E.O. 12866. The $100 million 
monetary threshold in section 4(b) is consistent with both 
Executive orders. Because the bill incorporates the definition 
of a ``major rule'' and a ``significant regulatory action'' 
that is in these executive orders, OIRA has the experience to 
make the determinations required by the bill. \24\
    \24\ See also the discussion of section 6(a).
---------------------------------------------------------------------------
    Sections 4(c) and (d) allow the general public and 
appropriate committees of Congress to request that the 
Administrator designate non-significant rules for sunset 
review. Section 4(c)(1) provides that any person adversely 
affected by a non-significant rule may request that the 
Administrator designate the rule for review. The Administrator 
shall designate the rule for review unless the Administrator 
determines that it would be unreasonable to conduct such a 
review of the rule. The standard of reasonableness is a 
deferential one that allows the Administrator to distinguish 
between frivolous and meritorious petitions. Together with the 
deferential standard of judicial review that applies under 
existing law to such determinations, the Administrator has 
broad discretion to grant or deny public petitions.
    Section 4(c)(2) imposes only three substantive requirements 
for a proper petition. It must be in writing, identify the rule 
for which sunset review is requested with reasonable 
specificity, and state on its face that the petitioner seeks 
sunset review or a similar review of the rule. To 
satisfactorily identify the rule, the petitioner need not list 
the formal name of the rule or provide a legal citation. 
However, the petitioner must describe the rule with sufficient 
specificity so that an appropriate agency official has no 
serious doubt about the rule's identity. All petitions that 
reasonably could be interpreted as requesting sunset review of 
a rule should be treated as satisfying the requirement of 
specifying that the petitioner seeks sunset review or similar 
review of the rule.
    The Committee intends the petition process to be simple for 
the petitioner. The Administrator may provide forms or a format 
for the convenience of all concerned, but section 4(c)(2) makes 
it clear that a petitioner does not need to submit a petition 
on an approved government form or in an approved government 
format. Moreover, the petitioner need not make any special 
showing to establish a right to have the rule considered for 
sunset review, except that the petitioner must be ``adversely 
affected by [the] rule'' in order to obtain judicial review of 
any denial.
    Petitioners must pay a twenty dollar fee pursuant to 
section 4(c)92)(C) to help defray the cost of the petition 
process. The fee also will help discourage the filing of 
frivolous petitions, such as those that do not provide 
information about why the rule should be reviewed. If the 
Administrator does receive large numbers of identical petitions 
requesting sunset review of the same rule, however, the 
Administrator may either: (1) designate the rule for sunset 
review and answer all of the petitions in the affirmative or 
(2) deny all the petitions with the same or similar response 
letter. In short, the Administrator need not specify a reason 
for a denial of a public petition and need not personalize each 
response.
    In deciding whether to grant or deny a given petition, 
section 4(c)(1) directs the Administrator to take into account 
the number and nature of other petitions received on the same 
rule, whether or not they already have been denied. The number 
of petitions on the same rule is particularly relevant if the 
petitions convey different information about why the rule 
should be reviewed. Accordingly, the Administrator must 
consider each petition to determine if information or arguments 
contained in later petitions make the case stronger for 
granting the request for a sunset review. In other words, the 
Administrator should consider the cumulative evidence for 
designating a rule for sunset review in evaluating later 
petitions. Although the Administrator is given broad discretion 
to deny any petition, the Committee intends for the 
Administrator to exercise discretion whenever possible in favor 
of granting petitions for sunset review.
    If the Administrator determines that a petition does not 
satisfy the minimal requirements of section 4(c), section 
4(c)(3) requires the Administrator to notify the petitioner of 
the problem within 30 days and provide information about how to 
formulate a petition that meets those requirements. The 
Administrator could fulfill the requirements of section 4(c)(3) 
by indicating which of the requirements the original petition 
did not satisfy those requirements.
    Section 4(c)(4) directs the Administrator to make a 
determination and forward a response within 90 days after 
receiving a proper petition, except that the Administrator may 
extend such period by a total of not more than 30 days. The 
Committee does not intend the Administrator to routinely extend 
the response period, but to do so only when necessary to 
respond to an unusual and unexpected circumstance. Section 
4(c)(5) allows a petitioner to file a civil action if there is 
a substantial delay in the Administrator's ruling beyond the 
period specified in section 4(c)(4). If a court finds there was 
a substantial and inexcusable delay beyond the period specified 
in section 4(c)(4) in notifying the petitioner of the 
Administrator's decision to grant or deny the petition, the 
petition shall be deemed to have been granted.
    Section 4(c)(6) directs the Administrator to maintain a 
public log of petitions submitted which includes the status or 
disposition of each public petition. The log will allow 
Congress and the public to know of the Administrator's 
determinations in a timely manner.
    Section 4(d) permits an appropriate committee of Congress, 
or a majority of the majority or non-majority party members of 
such a committee, to request in writing that the Administrator 
designate a non-significant rule for sunset review. The 
Administrator shall apply the same standard to these requests 
that applies to a public petition. However, there are two minor 
differences between a public petition and a congressional 
request. The first is that the Administrator must explain to 
the congressional committee making the request the reasons for 
any denial. This courtesy to a co-equal branch of government 
eliminates the need for the congressional committee to make a 
subsequent request for information in aid of its legislative 
duties. The second difference is that section 12(a) provides 
that a denial of a congressional request is not subject to 
judicial review.
    Because of their legislative experience and oversight 
responsibilities, congressional committees often have special 
knowledge and access to unique information about regulatory 
programs within their jurisdiction. Even if the Administrator 
already has denied public petitions for the review of certain 
non-significant rules, it would be proper for the appropriate 
committees of Congress to make similar requests and provide 
additional information within their purview as to why such 
rules should be reviewed. Although a congressional committee 
would not be exercising any power not conferred to the general 
public when it makes such a request, the information it 
provides would be valuable. Moreover, the Administrator's 
response to the congressional request would assist the 
committee in performing its core lawmaking duties.
    In addition to keeping a public log of public petitions, 
section 4(e) requires the Administrator to promptly publish a 
notice in the Federal Register after the Administrator 
designates a rule for sunset review, whether as a result of a 
public petition, congressional request, or for any other 
reason.

Section 5--Criteria for sunset review

    Section 5 provides that a rule subject to sunset review 
must be authorized by law and meet all of the requirements that 
would apply under other laws or executive orders if it were a 
new rule. Such requirements include any applicable federal 
requirements for cost/benefit analysis and for risk analysis 
and risk assessment. However, section 5 does not create any new 
cost/benefit or risk assessment standards or any new decisional 
criteria. In short, this bill does not override or change the 
mandates of any organic act; i.e., this bill has no 
``supermandate.'' Agencies merely have to apply those 
requirements that exist under other laws. Moreover, agencies 
only need to apply such requirements to the extent that they 
would apply if the continued, modified, or consolidated rules 
were issued as a new rule. For example, if existing law does 
not require Internal Revenue Service rules to undergo cost/
benefit analysis when they are newly issued, then Internal 
Revenue Service rules subject to sunset review would not need 
to undergo cost/benefit analysis.
    Thus, a rule continued in effect after a sunset review, 
even one continued without any change, must meet the same legal 
requirements that would apply if the rule were issued as a new 
rule. Simply put, all rules continued in effect must comply 
with then current law governing the promulgation of rules. The 
Committee believes this is an important purpose of the 
legislation and one that is necessary to ensure that 
reauthorized rules are subject to the same requirements as new 
rules.
    The requirement in section 5(a) that all rules must be 
``authorized by law'' is intended to focus attention on this 
issue during the sunset review process. Although all rules must 
be authorized by law in any event, the Committee is aware of 
many rules of questionable validity and others whose citation 
of authority is no longer valid because of a change in law. The 
Committee intends that an agency conducting a sunset review 
expressly state the authority for an extended, modified or 
consolidated rule in its preliminary and final report on the 
sunset review of the rule.
    Section 5(b) states the choice of law rule to apply if 
there is an irreconcilable conflict between an organic act that 
authorized the rule and another law, such as a law governing 
cost/benefit analysis or risk assessment. An irreconcilable 
conflict of law does not exist if the agency can exercise its 
discretion to comply with both laws. Statutes that do not to 
require cost/benefit analysis or risk assessment in rulemaking 
do not necessarily conflict with a later statute that does 
require such analysis to be performed. Agencies generally have 
discretion in issuing most rules and few, if any, statutes 
actually prohibit considerations of cost or risk. Thus, an 
irreconcilable conflict of law rarely will arise. The test of 
whether an irreconcilable conflict exists is if it would be 
impossible for the agency to comply with the requirements of 
both statues. A statute that actually prohibits an agency from 
considering costs in promulgating a rule and another statute 
that requires agencies to take the costs of rules into account 
presents a hypothetical example of a true conflict of law.
    If an irreconcilable conflict of law does exist, the agency 
shall resolve the conflict in the same manner as if it would if 
the agency were issuing a new rule. Thus, if the agency cannot 
comply with the legal mandates of several laws, the agency 
first should determine which law would prevail if it were 
issuing a new rule like the one under review. The agency then 
should apply that same choice of law rule to the rule under 
review. This reflects the Committee's judgment that future 
legislation may address the choice of law issue for new rules 
and that a rule subject to sunset review should satisfy the 
exact same legal requirements as a new rule.

Section 6--Sunset review procedures

    Section 6(a) sets forth the functions of the Administrator 
under the Sunset and Review Act. Section 6(a)(1) governs the 
Administrator's duty to provide a notice of rules subject to 
review. Within six months after enactment, the Administrator 
must conduct an inventory of existing rules and publish a first 
list of covered rules. This first list will be comprised 
primarily of significant rules in effect on the date of the 
bill's enactment. Section 13(4)(B) specifies that a ``part'' in 
the Code of Federal Regulations (CFR) or an equivalent set of 
regulations if it is not contained in the CFR, shall constitute 
one rule. Thus, the Administrator essentially must determine 
how many CFR parts and equivalent sets of non-codified 
regulations satisfy the definition of a significant rule.
    Because the definition of a significant rule in section 
4(b) incorporates both the definition of ``major rule'' in E.O. 
12291 and ``significant regulatory action'' in E.O. 12866, any 
rule that was determined originally to satisfy either of these 
definitions will almost certainly constitute the whole or a 
part of a ``significant rule'' within the meaning of this 
bill.\25\ Thus, the first list of covered rules the 
Administrator publishes should include all, or almost all, of 
the regulations issued since 1981 that OMB determined to be 
major rules or significant rules pursuant to Executive Orders 
12291 and 12866.
    \25\ It is possible that some rules that originally were determined 
to be ``major rules'' or ``significant rules'' under these executive 
orders have been modified sufficiently that they no longer fit that 
definition. Nevertheless, the relevant determination under the bill is 
whether the CFR part that contains the rule (if it is codified in the 
CFR) satisfies the definition of a significant rule.
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    The Administrator should also consult the agencies to help 
identify other existing rules that fit the definition of a 
significant rule under section 4(b), including rules issued 
prior to 1981 and other rules that OMB did not review. 
President Clinton's directive of March 4, 1995 ordered the 
agencies to conduct a thorough review of every one of their 
rules in a three-month period. The information gathered in 
response to the President's directive should be useful in 
identifying any other rules that fit the definition of a 
significant rule. To the extent that the agencies fail to 
identify all possible significant rules, the Committee 
encourages the public to inform the Administrator of rules it 
considers significant under the legislation.
    When the Administrator publishes the first list of covered 
rules subject to sunset review, the Administrator must state 
the potential sunset date for each rule on the list so that the 
reviewing agencies and the public will have ample notice of 
when each rule is scheduled for sunset review. For significant 
rules in existence at the time of enactment, the Administrator 
shall assign each rule to one of four groups. Pursuant to 
section 6(a)(2) and 7(a)(1), the Administrator shall specify 
the 4-year, 5-year, 6-year, or 7-year sunset date applicable to 
each group, to stagger the review of these rules.
    In determining which rules shall be given priority in that 
assignment, section 6(a)(2)(B) provides that the Administrator 
shall consult with the appropriate agencies, and shall 
prioritize rules based on: the grouping of related rules as 
provided by section 6(a)(3); the cost of each rule to the 
regulated community and the public, with priority given to 
those rules that impose the greatest cost; consideration of the 
views of regulated persons, including State and local 
governments; whether a rule has recently been subject to cost/
benefit analysis and risk assessment, with priority given to 
those rules that have not yet undergone such analysis or 
assessment; whether a particular rule was issued under a 
statutory provision that provides relatively greater discretion 
to the official issuing the rule, with priority in time given 
to those rules issued under provisions that provide relatively 
greater discretion; the burden of reviewing each rule on the 
reviewing agency; and the need for orderly processing and the 
timely completion of the sunset reviews of existing rules.
    Section 6(a)(1)(B) provides that the Administrator shall 
publish an updated list of covered rules at least annually and 
specify the potential termination date for each rule on the 
list. An updated list should include the rules on earlier lists 
(unless they no longer exist), any new significant rules that 
have been issued since the publication of the last list, and 
any rules designated for sunset review as a result of a public 
petition or a congressional request.
    Section 6(a)(3) provides for simultaneous sunset review of 
related rules. Section 6(a)(3) directs the Administrator to 
group related rules for simultaneous sunset review based on 
their subject matter similarity, functional interrelationships, 
and other relevant factors, to ensure a comprehensive and 
coordinated review of overlapping and conflicting rules. The 
Administrator shall group rules for simultaneous sunset review 
without regard to whether the same agency issued the rules. The 
Administrator also shall designate for sunset review any other 
rule that is necessary for comprehensive sunset review, whether 
or not such rule is otherwise covered by this legislation.
    Section 6(a)(4) specifies that the Administrator shall 
provide timely guidance to agencies on how to conduct sunset 
reviews and the preparation of sunset review notices and 
reports required by this legislation, to ensure uniform, 
complete, and timely sunset reviews and to ensure notice and 
opportunity for public comment.
    Section 6(a)(5) provides that the Administrator shall 
review and evaluate each preliminary and final report submitted 
by the head of an agency. Within 90 days after receiving a 
preliminary report, the Administrator shall transmit comments 
to the head of the agency regarding the quality of the analysis 
in the report, including: whether the agency has properly 
applied the review criteria in section 5; the consistency of 
the agency's proposed action with actions of other agencies; 
and whether the rule should be continued without change, 
modified, consolidated with another rule, or allowed to 
terminate.
    Section 6(b) specifies the agency's three-step review 
process, consisting of publishing a sunset review notice, a 
preliminary report, and a final report. Section 6(b)(1) 
provides that a sunset review notice must be published by the 
reviewing agency or agencies at least two and one-half years 
before the potential termination date of each rule. An agency 
should begin the sunset review process even earlier if the 
agency believes it might take more than two and one-half years 
to complete the review and revise the rule.
    Section 6(b)(1)(A) provides that the agency head shall 
publish a sunset review notice in the Federal Register and, to 
the extent reasonable and practicable, in other publications or 
media designed to reach persons most affected by the covered 
rule. Such other publications or media would include trade 
journals, newspapers, and other periodicals read by those 
persons most affected by the covered rule. Section 8(a) 
specifies the contents of the sunset review notice, which 
include the solicitation of information on twelve enumerated 
factors related to the rule's implementation. Section 
6(b)(1)(B) provides that, at the time the agency publishes the 
sunset review notice, the agency head also must request the 
views of the Administrator and the appropriate congressional 
committees on whether to extend, modify, consolidate, or 
terminate the covered rule. The comments of the Administrator 
and the appropriate congressional committee should be made 
public and remain a part of the rulemaking record.
    In reviewing a covered rule, section 6(b)(2)(A) requires 
the head of the agency to consider the public comments and 
other recommendations generated by the sunset notice. Section 
6(b)(2)(B) provides that, at least one year before the 
termination date of the rule, the agency head must publish a 
preliminary report in the Federal Register and transmit it to 
the Administrator and the appropriate congressional committees. 
Section 8(b) details the specific requirements of the 
preliminary report, which shall include the agency's 
preliminary determination of whether the rule should be 
continued without change, modified, consolidated or terminated. 
If the agency recommends modification or consolidation of the 
rule, the preliminary report must contain the text of the draft 
rule and all other information that is required in a notice of 
proposed rulemaking under the Administrative Procedure Act 
(APA). If the agency recommends terminating the rule, it still 
must follow the notice and comment requirements of the APA, 
since this legislation is not intended to supersede any such 
requirements.
    The preliminary report will provide the general public, the 
Administrator, and the appropriate congressional committees 
with an opportunity to comment upon the preliminary conclusions 
reached by the agency and the agency's proposed solution. Under 
section 6(b)(3), the agency must take the comments and other 
recommendations generated by the preliminary report into 
account in issuing its final report on the sunset review of a 
rule. Thus, the comments, recommendations, and information 
generated in response to the preliminary report provide a basis 
upon which the agency head should make a decision regarding a 
covered rule. Before issuing the final report, the agency also 
must consult with the appropriate congressional committee about 
its planned rulemaking action. At least 90 days prior to the 
termination date of the covered rule, the agency must publish 
its final report in the Federal Register and transmit it to the 
Administrator and to the appropriate congressional committees. 
Section 8(c) specifies the contents of the final report, which 
shall include the text of any final rule and the factual 
findings and legal conclusions upon which the agency's 
rulemaking is predicated.
    Section 6(c) provides that if a final report recommends 
that a covered rule be continued without change, modified, or 
consolidated with another rule, such action will take effect 60 
days after publication of the final report, unless the 
Administrator or another officer designated by the President 
publishes a notice within that 60-day period stating that the 
rule should not be so continued without change, modified, or 
consolidated.
    When different agencies simultaneously review the same or 
related rules, agencies should try to resolve any conflict 
prior to each agency's preliminary report. Under section 6(c), 
the Administrator or other officer designated by the President 
should ensure that regulations do not conflict and that they 
satisfy the requirements of this and other laws. If necessary, 
the Administrator may also extend the review period under 
section 7(b) to provide time to resolve any regulatory 
conflict. In short, the Committee believes it is necessary to 
give the President's representative some means to resolve 
inter-agency conflict and to ensure that the agencies carry out 
the intent of this legislation. If the Administrator or other 
officer designated by the President exercises his or her 
authority under section 6(c), such officer shall specify the 
reasons for doing so in the public notice.
    Section 6(d) provides that if a covered rule terminates for 
any reason pursuant to this legislation, the rule shall not be 
reissued in substantially the same form unless the rule 
complies with section 5 and the Administrator or other officer 
designated by the President approves the rule. This provision 
eliminates any incentive there otherwise might be to allow a 
rule to terminate in an attempt to avoid the requirements of 
this bill. This is important because nothing in this 
legislation overrides an organic statute that requires an 
agency to issue a rule or keep it in place. Thus, allowing a 
rule required by statute to terminate would be as wrongful as 
repealing the rule.
    Section 6(e) preserves the independence of the Board of 
Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, the Office of Thrift Supervision, the 
Comptroller of the Currency, the Federal Housing Finance Board, 
the National Credit Union Administration, and the Office of 
Federal Housing Enterprise Oversight by providing that the head 
of such agencies shall exercise the authority of the 
Administrator or other officer designated by the President, for 
purposes of section 6(c), section 6(d), section 7(a)(2)(B), and 
section 7(c). These agencies will have to conduct sunset 
reviews of their rules, consult with appropriate congressional 
committees on such reviews, and solicit comments from the 
public and the Administrator on the sunset review of their 
rules. The Administrator will also have the authority to set 
the initial sunset review schedule for these agencies and group 
related rules for simultaneous sunset review. However, the 
Administrator or other officer designated by the President will 
not have final review authority over the rules of these 
agencies; nor will the Administrator have certain other related 
authority. This preserves the integrity of these federal 
financial regulatory agencies, which is justified by the nature 
of their underlying statutes and because of their unique 
history, which in some cases includes a history of improper 
political interference.

Section 7--Termination dates for covered rules

    Section 7 specifies the potential sunset dates on which 
covered rules will terminate unless the agency reviews the rule 
and extends it consistent with sections 5 and 6. For 
significant rules in effect on the date of enactment, the first 
potential termination date for the rule depends upon which of 
the four groups the Administrator assigns the rule, as 
specified in section 6(a)(2)(A). The potential termination date 
of rules placed in the respective four groups is 4 years, 5 
years, 6 years, and 7 years from the date of enactment of this 
bill. For any significant rule the Administrator has not 
assigned to one of these groups six months after the date of 
enactment, the initial termination date is 4 years from the 
date of the bill's enactment.
    With regard to significant rules that first take effect 
after the date of enactment of this bill, the first potential 
termination date is either three or seven years from the date 
the rule takes effect. If the Administrator determines as part 
of the rulemaking process that the agency issued the rule 
pursuant to negotiated rulemaking procedures or that compliance 
with the rule requires substantial capital investment, the 
first potential termination date is seven years from the date 
the rule takes effect. Otherwise the initial termination date 
is three years from the date the new significant rule takes 
effect.
    The Committee believes that participants in a negotiated 
rulemaking procedure generally will provide sufficient input so 
that a subsequent review may not be necessary after only three 
years. The distinction between a capital-intensive and a 
noncapital-intensive rule provides the other ground for 
delaying the initial sunset review of a new rule. Businesses 
making a substantial capital investment to comply with a rule 
need to know that the rule will not terminate or be 
substantially modified a few years after implementation, which 
would allow others who did not comply with the rule to gain a 
competitive advantage. This exception promotes additional 
certainty and stability in the regulatory review process.
    A rule that only imposes extensive record-keeping or 
reporting requirements on a number of entities is an example of 
a non-capital intensive rule. Although a business might 
purchase a computer program to help it comply with the rule, it 
is still probably a labor-intensive rule. By reviewing the rule 
after only three years, the agency will learn early if it is 
working as intended or if the rule needs to be modified, and if 
the rule costs more than initially projected. Moreover, no 
business would suffer a particular competitive disadvantage if 
the agency modified or terminated a labor-intensive rule after 
only three years. Instead, most businesses could benefit 
equally.
    Many environmental regulations are examples of capital-
intensive rules because they impose substantial costs. The 
reformulated gas rule is an obvious example of a capital-
intensive rule because of the hundred of millions of dollars 
required ensure refinery compliance. Yet, there is no set 
dollar threshold required in order for a rule to require a 
``substantial capital investment.'' A rule that requires a 
substantial capital investment for someone like Joe Bob Burgin, 
who testified before the Subcommittee, is one that requires him 
to spend thousands of dollars to replace his gas storage tanks 
at his convenience store. The used oil rule, 40 C.F.R. Part 
279, provides another helpful example of a capital-intensive 
rule because it requires those who handle used oil process and 
store it using approved storage equipment, tanks, or other 
collection devices that cost a substantial amount of money. The 
handlers also must meet general facility standards for 
preparedness and prevention of fire, explosion, and unplanned 
releases of oil, and must have the ability to determine if used 
oil is contaminated with other hazardous wastes. It does not 
matter if most of the current handlers of used oil already had 
the capital equipment to comply with the rule before it was 
issued. To the extent that the rule imposes substantial capital 
costs on new entrants in the market, it is a capital-intensive 
rule.
    The used oil rule is also an example of a rule that is 
phased-in over several years. The used oil rule will be phased-
in over several years because different states will implement 
it over the course of several years.\26\ Other capital-
intensive rules frequently are phased-in over several years to 
allow the regulated community time to purchase the required 
capital equipment or to develop the technology necessary for 
compliance. The Sunset and Review Act requires a sunset review 
seven years after such a rule first becomes effective, which 
may mean seven years after the first phase of the rule becomes 
effective or seven years after the first State implements it. 
The Committee believes that those affected by the rule will be 
able to provide meaningful comments 5-7 years after such a rule 
is first made effective even if the rule is not completely 
phased-in at that time. The regulated community and other 
affected persons will know how difficult the first phase of the 
rule's implementation was and generally will know what problems 
might arise in the next phase of the rule's implementation. Any 
other approach would create an incentive for agencies to phase-
in rules over long periods of time in order to delay the 
eventual review of the rule.
    \26\ I should be noted, however, that state rules themselves are 
not covered rules subject to review or termination under this bill. See 
also the discussion of section 13(2), which defines an agency not to 
include agencies of States or the District of Columbia.
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    For rules subject to sunset review as a result of a public 
petition under section 4(c) or a congressional request under 
section 4(d), section 7(a)(3) specifies that the first 
potential termination date is 3 years from the date the rule is 
designated for sunset review. Under section 6(a)(3), if the 
Administrator designates a rule for sunset review because it is 
related to another covered rule, the termination date is the 
same as that for the rule with which it is grouped.
    For rules that have undergone an initial sunset review and 
have been continued in any form, section 7(a)(5) provides that 
the next termination date is seven years from the original 
termination date. Thus, once a rule is reviewed and 
reauthorized, it is subject to sunset review every seven years 
thereafter (unless the agency conducts another review of the 
rule prior to that time).\27\
    \27\ For an explanation of why an agency might review a rule more 
frequently than every seven years, see the discussion of sections 7(c)-
(e).
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    Section 7(b) provides that the Administrator may grant a 
temporary extension of the termination date of a covered rule 
for up to six months by publishing a notice in the Federal 
Register that describes either necessary modifications to the 
rule and the reasons why the modifications cannot be made by 
the original termination date, or reasons why the temporary 
extension is necessary to respond to or prevent an emergency 
situation.
    To ensure predictability in the rulemaking process, the 
Committee has established a review schedule that allows 
businesses to anticipate any review or revision of a rule years 
in advance. Under current law and practice, however, agencies 
can and sometimes do change their rules after a short period of 
time without taking into account the expenditures made in 
reasonable reliance on the rules. On some occasions, a new 
administration changes a rule to reflect different policies 
without adequate consideration of the reliance on the existing 
rule.
    Section 7(c) provides that an agency may not engage in 
comprehensive review and significant revision of a covered rule 
more frequently than required by this section or another act, 
unless the head of the agency determines, and the Administrator 
concurs, that the likely benefits from such review and revision 
outweigh the reasonable expenditures made in reliance on the 
rule. There are some statutes that require agencies to review 
or revise specified rules more frequently than under this bill, 
based on a periodic schedule or upon the happening of some 
event (such as a technological development). Such regulatory 
reviews are ``required by * * * another act'' and would not be 
subject to the limitation on interim reviews in section 7(c). 
Section 7(c) also provides that ``a law may be considered to 
require a comprehensive review and significant revision of a 
rule'' (and thus no finding needs to be made) if it 
significantly revises the act that authorized the rule. In 
other words, if a statutory revision or reauthorization of an 
organic act requires revision of a rule, Congress has made the 
necessary finding that the rule must be changed.
    When a rule has been amended or parts of it have been 
promulgated at different times, section 7(d) provides the means 
to determine the date of issuance of the rule, which is 
important for determining the when the rule must be reviewed 
next. If an agency issued various provisions of a covered rule 
at different times, then the rule as a whole shall be treated 
as if it were issued on the latter of either: (1) the date the 
agency issued the first portion of the rule, or (2) the date 
the agency completed the most recent comprehensive review and 
significant revision of the rule. Section 7(e) defines 
``comprehensive review and significant revision'' to mean a 
sunset review, whether or not the rule is revised, or a review 
and significant revision of a rule consistent with section 
7(c). Thus, if another law or reauthorization statute requires 
an agency to undertake a comprehensive review and significant 
revision of a particular rule, that rule's date of issuance 
would be the date the most recent review and revision was 
completed. As a result, rules that are regularly reviewed under 
statutory schemes that are more frequent than every seven years 
may never have to undergo a sunset review as provided in this 
bill.

Section 8--Sunset review notices and agency reports

    Section 8 lists the required elements of the sunset review 
notices and agency reports required by section 6(b). As noted 
in the analysis of section 6(b), it is important that the 
sunset review notices and reports provide an adequate record 
and contain the information specified in section 8(a) because 
they form the basis for public, Administrator, and 
congressional input as well as the basis for agency action as 
required by this bill.
    Section 8(a) enumerates the mandatory elements of the 
sunset review notice required by section 6(b)(1). Agencies that 
are reviewing related rules or different parts of the same rule 
should publish joint sunset review notices so the public may 
send in one comment on the entire or regulated regulatory 
program(s). Each sunset review notice must request comments 
regarding whether the rule should be continued without change, 
modified, consolidated with another rule, or allowed to 
terminate. If applicable, the sunset review notice must also 
request comments regarding whether the rule meets the federal 
cost/benefit and risk assessment criteria that would apply to 
an analogous new rule. In addition, the sunset review notice 
must solicit comments about the past implementation and effects 
of the rule, including twelve specified factors that the agency 
must consider in reviewing the rule:
    (1) Agencies must solicit comments on the direct and 
indirect costs incurred because of the rule, including the net 
reduction in the value of private property, and whether the 
incremental benefits of the rule exceeded the incremental costs 
of the rule, both generally and with regard to the specific 
industries and sectors covered by the rule. When an agency 
first issues a rule, information is not always available upon 
which to base an accurate cost estimate. As a result, agencies 
have underestimated the true cost of compliance on many 
occasions. The information supplied in response to this factor 
will help agencies assess the actual costs of the rule. It will 
also help agencies assess the differential costs and benefits 
of the rule as it is applied to various industries and sectors.
    (2) Agencies must also solicit comments on whether the rule 
as a whole or any of its major features are outdated, obsolete, 
or unnecessary due to changes in technology, the marketplace, 
or otherwise. Many federal regulations were first adopted under 
circumstances that have long since changed. This factor would 
require federal agencies to take notice of these changes. The 
FTC appears to have recognized this need, at least in theory, 
in its recent proposal to sunset certain types of cease and 
desist orders after 20 years. However, the Department of 
Justice sunsets similar orders after just ten years. An 
examination of several FTC orders still in place raises 
questions about whether they are anti-competitive in today's 
market. In short, government rules should not act as an 
impediment to changes in technology or the marketplace.
    (3) The agency must solicit comments regarding the extent 
to which the rule or information required to comply with the 
rule duplicates, conflicts, or overlaps with requirements under 
rules of other agencies. Many federal rules impose overlapping 
or conflicting requirements. In some cases, compliance with one 
rule actually violates another rule. For instance, the 
Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs drew attention to an OSHA rule that 
requires certain employees to wear masks that fit tightly 
around the mouth, making it difficult for employees with beards 
to wear the devices. Equal Employment Opportunity Commission 
rules, on the other hand, require employers to accommodate an 
employee who has a beard for religious or health reasons. OSHA 
falsely denied that it has a respirator rule ``that even 
mentions facial hair,'' which proves just how badly OSHA needs 
to review its own rules.\28\
    \28\ See 29 C.F.R. 1910.134(e)(5) (``Respirators shall not be worn 
when conditions prevent a good seal. Such conditions may be a growth of 
beard [or] sideburns''). Moreover, the rule is enforced against workers 
who wear beards even if they demonstrate that they can safely use a 
respirator. One worker explained to the Subcommittee that his employer 
forced him to shave his beard pursuant to the OSHA rule despite proof 
that his beard did not interfere with his use of a respirator.
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    (4) In the case of a rule addressing a risk to health, 
safety, or the environment, the reviewing agency must solicit 
information comparing the perceived risk at the time the agency 
issued the rule with the extent to which risk predictions were 
accurate. When previous risk perceptions are not consistent 
with the current realities upon which sound regulations should 
be based, the whole foundation of the rule is in question. 
Agency perceptions of risk often differ with the opinion of 
non-agency experts. In one example, initial over-reaction 
regarding the crop protection chemical alar caused tremendous 
economic dislocation in the apple-growing sector with no 
concomitant environmental benefit--causing the price of apples 
to fall to their lowest point in years (around $7 for a 420 
pound box), well below the $12 break-even point. Washington 
State apple growers alone lost $135 million for 189, 15 percent 
of their projected revenue of $875 million.\29\
    \29\ Michael Fumento, ``Science Under Siege'' 19-44 (William Morrow 
& Co. 1993); see also Timothy Egan, ``Apple Growers Brusied and Bitter 
After Alar Scare,'' New York Times, July 9, 1991, at A1 (citing similar 
statistics).
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    (5) A reviewing agency also must solicit information about 
whether the rule unnecessarily impeded domestic or 
international competition or unnecessarily intruded on free 
market forces, and whether the rule unnecessarily interfered 
with opportunities or efforts to transfer to the private sector 
duties carried out by the government. Recent experience with 
environmental statutes has demonstrated that agencies can use 
market mechanisms to achieve results far superior to 
traditional command-and-control regulations. The acid rain 
reduction program, which is based on a market trading 
mechanism, is a notable example because it has dramatically 
reduced the projected program costs and greatly accelerated the 
cleanup. When statutes allow it, agencies should embrace market 
approaches wherever possible in their own regulations.\30\
    \30\ EPA's proposed Open Market Trading Rule for Ozone Smog 
Precursors, 60 Fed. Reg. 39,668 (July 26, 1995), which capitalizes on 
the success of the acid rain reduction program, is an important step in 
the right direction.
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    Agencies also should consider whether the federal 
government should yield regulatory functions to other levels of 
government or to the private sector. The Clinton Administration 
has issued two position statements urging federal agencies to 
use private sector standards whenever possible or practicable. 
OMB Circular A119, 58 Fed. Reg. 57,643 (Oct. 26, 1993), directs 
federal agencies to review their regulations at least every 
five years and ``replace those for which an adequate and 
appropriate voluntary standard can be substituted.'' 
Administrative Conference of the United States Recommendation 
94-1 encourages the use of private sector processes to meet 
regulatory needs. Examples of private sector regulation include 
voluntary industry standards, such as various industry codes, 
and independent laboratory testing which provides consumers 
with recognized seals of approval.
    With respect to international competitiveness, the cost of 
complying with United States regulations in many cases greatly 
exceeds any similar cost borne by foreign producers. These 
costs imposed by our government undermine the ability of 
domestic producers, even those operating the most efficient 
facilities in the world, to complete on a level playing field 
with international competitors. In an increasingly global 
economy, United States producers are often placed at a 
significant disadvantage compared to foreign producers. In 
short, agencies need to focus more on the anti-competitive 
effects of their regulations.
    (6) An agency must also request information about whether, 
and to what extent, the rule imposed unfunded mandates on, or 
otherwise affected, State and local governments. Although the 
recent passage of the Unfunded Mandates Act, Pub. L. No. 104-4, 
109 Stat. 48 (1995), will require Congress to evaluate future 
statutes that impose unfunded mandates on state and local 
governments, existing regulatory programs account for 
significant unfunded mandates--often without real benefit. For 
example, under the Safe Drinking Water Act, EPA generally 
requires the identical expensive battery of tests for community 
water systems irrespective of what chemicals are found in each 
State. Although EPA will permit a State to waive testing 
requirements for certain chemicals if specific conditions are 
met, the waiver criteria are difficult to meet and require the 
State to invest additional technical and financial resources 
that few States can afford.\31\ Efforts should be made to 
minimize costs imposed upon state and local governments 
whenever possible.
    \31\ See generally 40 C.F.R. Sec. Sec. 141.21-141.30.
---------------------------------------------------------------------------
    (7) The reviewing agency also must request information on 
whether compliance with the rule required substantial capital 
investment and whether terminating the rule would create an 
unfair advantage to those who are not in compliance with it. In 
some instances, companies have made significant investments to 
bring facilities into compliance with existing regulations. The 
disruptions caused by standing these investments may be 
significant and should be considered. Agencies should pay 
special attention to the competitive effect of terminating 
rules with which only certain entities have complied. For 
example, certain oil refiners have invested hundreds of 
millions of dollars to establish the infrastructure necessary 
to sell reformulated gasoline (RFG) in those areas of the 
country where it is mandated. Other oil refiners opted not to 
make similar investments, and currently, cannot participate in 
the RFG program. Repealing such a rule soon after it was 
implemented would raise competitive issues that are not 
directly related to the merits of the original rule.
    (8) The agency must solicit information about whether the 
rule constituted the least cost method of achieving its 
objective consistent with the criteria of the act under which 
the rule was issued, and to what extent the rule provided 
flexibility to those who were subject to it. There is a growing 
recognition that command-and-control regulations (i.e., when 
the government dictates the specific approach that citizens 
must take to comply with the statute as opposed to programs in 
which the government sets performance standards and allows 
entities to decide the best method of compliance) are costly 
and not always the best method of protecting human health and 
the environment.
    Where affected parties are requested to suggest alternative 
compliance strategies, there is an opportunity for them to 
develop alternative methods of compliance that can potentially 
provide superior protection of human health and the environment 
for less money. The classic example of the effectiveness of 
this approach was demonstrated in a joint EPA-industry project, 
exploring source reduction of pollutants from industrial 
facilities. The Amoco Corporation's Yorktown, Virginia refinery 
was the test site. One of the key findings was that when there 
was flexibility to apply innovative approaches to emission 
reductions, rather than prescriptive regulatory methods, the 
project achieved significant cost savings. In fact, the results 
were dramatic. It was shown that about 97 percent of the 
emission reductions required by regulations could be achieved 
for about 25 percent of the cost by focusing on overall 
facility performance rather than following a prescriptive 
regulatory methodology.\32\ If permissible, performance goals 
should be adopted that allow affected parties the flexibility 
to determine the best ways to meet those goals.
    \32\ Howard Klee, Jr. (Amoco Corp.) and Mahesh Podar (U.S. EPA), 
``Amoco-USEPA Pollution Prevention Project, Yorktown, Va.,'' p.v. (Dec. 
1991, rev. May 1992).
---------------------------------------------------------------------------
    (9) Agencies must request information about whether the 
rule is worded simply and clearly, including clear 
identification of those who were subject to the rule. One of 
the most common complaints of the citizen witnesses who 
testified on behalf of H.R. 994 was that federal regulations 
are simply too long and too complex. Regulations should be 
concise, simple, and understandable. To satisfy procedural due 
process requirements in the Constitution and the APA, 
regulations must--at a minimum--provide fair notice of the 
conduct proscribed by the regulation.
    A recent case illustrates just how unclear and uncertain 
government regulations can be. EPA sets rigorous standards 
regarding the distillation and disposal of polychlorinated 
biphenyls, or PCBs. As a result, a complex and often 
unintelligible regulatory regime has developed. One federal 
appellate court found this system so confusing that it said the 
regulated community could not know what constituted a 
violation. The court found that EPA's interpretation ``could 
not have fairly informed [the defendant] of the Agency's 
judgment'' because the regulation just as clearly allowed the 
activity as banned it. Further, EPA was: (1) unable even to 
identify the applicable portion of the regulation; (2) plagued 
by internal disagreement over the regulation between various 
EPA offices; and (3) guilty of changing its interpretation even 
during the course of the case.\33\ Administrative agencies can 
and must provide clearer guidance.
    \33\ General Electric Co. v. U.S. E.P.A., 53 F. 3d 1324, 1330-33 
(D.C. Cir. 1995).
---------------------------------------------------------------------------
    (10) The reviewing agency also must solicit information 
about whether the rule created negative unintended 
consequences. As a general matter, the sheer cost of 
regulations increases the price of food and consumer goods and 
may force businesses to hire fewer workers or even go out of 
business. The Food and Drug Administration's elaborate and 
costly approval process often leads to a serious lag in time 
between the discovery of a life-saving drug or medical device 
and its approval. It has been estimated that FDA rules have 
resulted in tens of thousands of deaths in the United States 
because patients here do not have access to drugs or medical 
devices approved years earlier in other countries.\34\ 
Sometimes, compliance with one environmental rule may have an 
unintended affect on another or related environmental problem. 
For example, the removal of asbestos from schools and other 
public buildings may result in exposure to more friable 
asbestos that can be as much as 100 percent more dangerous.\35\
    \34\ See e.g., Sam Kazman, ``Deadly Overcaution: FDA's Drug 
Approval Process,'' 1 ``Journal of Regulation & Social Costs,'' 35 
(Aug. 1990) (describing several instances where drug approval delays 
caused tens of thousands of deaths); David C. Murray, ``The Human Costs 
of Regulation: The Case of Medical Devices and the FDA,'' Hudson 
Briefing Paper No. 183 (Hudson Inst. Nov. 1995) (FDA delay in approving 
medical devices causes thousands of deaths); Carolyn Lochhead, ``FDA 
Assailed for Slow Testing of New Drugs,'' San Francisco Chronicle, A1 
(Oct. 26, 1992) (FDA's nine-year delay in approving beta blockers may 
have resulted in tens of thousands of needless deaths); Peter Brimelow 
& Leslie Spencer, ``Food and drugs and politics,'' Forbes, p. 115 (Nov. 
22, 1993) (same).
    \35\ Frank B. Cross, ``Asbestos in Schools: A Remonstrance Against 
Panic,'' 11 Column. J. Env'tl L. 73, 92 (1986).
---------------------------------------------------------------------------
    (11) The agency must request comments on the extent to 
which the agency can reduce the information requirements under 
the rule. The purpose of this factor is to help reduce 
mandatory paperwork burdens. Small businesses in particular do 
not have the manpower or other resources to comply with 
needless paperwork burdens and must pass the costs on to 
consumers. If information sought by one agency is available 
from other federal agencies, such as the Census Bureau, the 
Internal Revenue Service, or from non-government sources, then 
it should be gathered from those other sources. In some cases, 
the information sought by government agencies is not even used. 
There also is concern that paperwork requirements are excessive 
and that government forms are overly burdensome. The federal 
government must try harder to streamline its reporting 
requirements and eliminate those that are unnecessary.
    (12) The final factor requires agencies to request 
information regarding the extent to which the rule has 
contributed positive benefits, particularly health or safety or 
environmental benefits. The reviewing agencies already should 
be aware of the intended benefits of their rules, but it is 
important for them to obtain concrete information about how 
their rules are having a positive effect, especially if that 
benefit would be lost if a given rule were modified or allowed 
to terminate. The agencies should also solicit information 
regarding positive unintended consequences of their rules so 
that the agencies may consider those benefits when the rule is 
reviewed.
    Section 8(b) specifies the contents of preliminary reports 
on sunset reviews, which section 6(b)(2) requires the agency 
head to prepare. Preliminary reports must request public 
comments and contain: specific factual findings and legal 
conclusions of the agency head regarding the application of 
section 5 to the rule, the continued need for the rule, and 
whether the rule duplicates functions of another rule; a 
preliminary determination of whether the rule should be 
continued without change, modified, consolidated with another 
rule, or allowed to terminate; and if the agency recommends 
consolidation or modification of the rule, the proposed text of 
the consolidated or modified rule and other relevant 
information required by law to be contained in a notice of 
proposed rulemaking under the Administration Procedure Act 
(APA). Thus, the preliminary report shall serve as or include a 
notice of proposed rulemaking under the APA if the agency 
believes the rule should be modified in any way. The 
preliminary report also shall provide the required notice under 
the APA if the agency proposes to terminate the rule.\36\
    \36\ See also section 10(a), which provides that unless there is a 
direct conflict with the provisions of this legislation, nothing in 
this legislation is intended to supersede the APA. Because there is no 
direct conflict between H.R. 994 and the notice and comment provisions 
of the APA, nothing in H.R. 994 should be interpreted to supersede the 
APA notice and comment requirements for the modification or termination 
of a rule.
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    Section 8(c) specifies the requirements of final reports on 
sunset reviews. Final reports must contain: the final factual 
findings and legal conclusions of the agency head regarding the 
application of section 5 to the rule and whether the rule 
should be continued without change, modified, consolidated with 
another rule, or allowed to terminate; and in the case of a 
rule continued without change, modified, or consolidated with 
another rule, the text of the rule and a notice, consistent 
with section 6(c), extending the effectiveness of the rule as 
of the end of the 60-day period beginning on the date of that 
publication.

Section 9--Designation of agency regulatory officers

    The head of each agency shall designate an agency official 
as the Regulatory Review Officer of the agency. The Regulatory 
Review Officer shall be responsible for the implementation of 
the Sunset and Review Act by the agency and shall report 
directly to the head of the agency and to the Administrator 
with regard to its implementation. In the case of agencies set 
forth in section 6(e), the Regulatory Review Officer shall 
report directly to the head of the agency and to the 
Administrator to the extent that the Administrator is 
responsible for supervising the agency's sunset reviews.

Section 10--Relationship to other law; severability

    Section 10(a) provides that, unless there is a direct 
conflict with the provisions of this legislation, nothing in 
this legislation is intended to supersede the provisions of 
chapters 5-7 of title 5 of the United States Code, which is 
commonly referred to as the Administrative Procedure Act (APA). 
This provision is intended to make clear that a conflict with 
the APA should not be lightly inferred and that the courts 
should construe this legislation whenever possible to 
incorporate APA requirements. There is a direct conflict 
between this legislation and the APA only if it would be 
impossible to follow the requirements of both laws. The time 
limitations on the availability of judicial review in 
subsection 12 (a) and (b) of this bill is a possible example of 
an exception to the APA because the APA does not provide time 
limits on the availability of judicial review of agency action. 
Nevertheless, these time limitations were chosen because they 
are analogous to provisions in many regulatory statutes.
    Section 10(b) provides for the severability of the Sunset 
and Review Act in the event that any provision of it or the 
application of any provision to any person or circumstance is 
held invalid. In such a case, the remainder of the Act, or the 
application of such provisions to other persons and 
circumstances, shall not be affected. This expresses the 
congressional intent that no portion of Sunset and Review Act 
is so integral to its operation that Congress would want the 
Act to be struck down in its entirety if any portion of it is 
held invalid.

Section 11--Effect of termination of covered rule

    Section 11(a) addresses the effect of a termination of a 
covered rule. However, there is no reason why rules that are 
required by law or that are necessary to protect the public 
health, safety, or the environment should terminate under this 
bill without being replaced. The Committee believes that 
agencies will review their rules according to the timetable 
provided in the bill and will not allow important rules to 
terminate without replacing them. President Clinton's directive 
of March 4, 1995 shows that agencies can expeditiously review 
their own rules when they are required to do so. Pursuant to 
that directive, the agencies reviewed every page of their rules 
and issued reports in three months on which rules should be 
streamlined or eliminated.
    If an agency did allow a rule to terminate for some reason, 
section 11(a)(1) provides that the Sunset and Review Act shall 
not prevent the President or an agency from exercising any 
authority that otherwise exists to implement the statute that 
authorized the rule. The statute is what supplies the agency's 
enforcement authority, not the rule. Although a regulation may 
contain the agency's interpretation of the statute, it is 
rarely necessary for an agency to prove a violation of a rule 
in order to prove a violation of statute. Thus, the termination 
of a rule should not prevent the agency from enforcing the 
underlying statute.
    In addition, this legislation does not affect the agency's 
authority to enforce related statues and rules, or to issue new 
rules under the statute at issue--subject to section 6(d). 
Thus, if a rule terminates, the agency may issue an interim 
rule or a new rule as specified in section 6(d). The President 
also has inherent authority under the Constitution and 
authority under many laws to issue executive orders to address 
or prevent emergency situations. Nothing in this legislation is 
intended to infringe or narrow such authority. In short, 
section 11(a)(1) ensures that the President and an agency can 
continue to enforce any statute or replace any important rule 
that has terminated.
    Section 11(a)(2) addresses the legal effect of the 
terminated rule itself. In any agency proceeding or court 
action between an agency and non-agency party, the terminated 
rule has no legal effect (subject to section 11(a)(3) regarding 
prior conduct) except at the request of the non-agency party. 
This means that a citizen or other non-agency party may rely on 
a terminated rule for guidance until the agency promulgates a 
new rule or standard.
    A safe harbor rule issued by the Securities Exchange 
Commission (SEC) is a good example. Such a rule informs non-
agency parties what actions they should take to comply with a 
securities statute. If such a rule were allowed to terminate 
and the SEC brought an enforcement action against the non-
agency party, the SEC could not invoke the rule to prove a 
violation of the statute. The SEC would have to prove that the 
non-agency party violated the statutory standard without 
reference to the expired rule. In such a case, the court or 
administrative law judge may not defer the agency's 
interpretation of the statute found in the rule, but would have 
to make an independent judgment on what is the best 
interpretation of the statute. The non-agency party, however, 
could invoke the provisions of the safe harbor rule to show 
compliance with the rule and the statute. In short, the court 
or administrative law judge may not give deference to the 
interpretation of the statute contained in the rule unless the 
non-agency party invokes the rule to show compliance with the 
statute.
    An Internal Revenue Service (IRS) interpretive rule or 
ruling is another good example because many people rely on such 
guidance documents to compute their tax liability. As discussed 
in the definitional section, the bill does not cover many IRS 
interpretive rulings and tax preparation documents. Assuming, 
however, that the bill covered such a document and it did 
terminate, taxpayers could continue to rely on the IRS document 
to compute their tax liability (or for other purposes) until 
the IRS replaced it. In an agency proceeding or court action, 
the taxpayer could continue to invoke the guidance document 
against the IRS to show that he paid the correct amount of 
taxes. Thus, an agency's failure to extend or reissue any rule 
will not harm a non-agency party.
    Section 11(a)(3) is an exception to section 11(a)(2) and 
allows an agency to invoke a rule in an enforcement action that 
is based on conduct that occurred while the rule was in effect. 
Section 11(a)(3) provides that notwithstanding section 3, this 
bill shall not be construed to prevent the continuation or 
institution of any enforcement action that is based on a 
violation of the rule that occurred before the rule terminated.
    Section 11(b) provides for tolling of any regulatory 
deadline until the agency reissues a terminated rule with such 
a deadline. In essence, any deadline based on or relating to a 
terminated rule is suspended until the agency that issued the 
rule issues a new rule on the same matter, unless otherwise 
provided by law. Such deadlines include deadlines established 
by court order implementing any federal rule.

Section 12--Judicial review

    Sectin 12(a) provides that a denial or substantial 
inexcusable delay in granting or denying a petition under 
section 4(c) shall be considered final agency action for 
purposes of judicial review. It also provides that a denial of 
a congressional request under section 4(d) is not subject to 
judicial review.
    Section 12(b) establishes a time limitation for seeking 
judicial review of a final agency action. In the case of a 
final agency action denying a public petition under section 
4(c) or continuing without change, modifying, or consolidating 
a covered rule, an action may not be brought more than 30 days 
after the effective date of that agency action. This is similar 
to the time limitation on the review of agency action in many 
regulatory statutes. In the case of an action challenging a 
delay in granting or denying a petition for a rule under 
section 4(c), an action for judicial review of a final agency 
action may not be brought more than one year after the period 
applicable to the rule under section 4(c)(4).
    Section 12(c) provides that the Congress does not intend to 
affect the availability or standard of judicial review for 
agency regulatory action except as otherwise expressly provided 
in this legislation. Section 12 (a) and (b) provide a limited 
exception to the availability of judicial review. Nothing else 
in this legislation is intended to affect the availability or 
standard of judicial review for agency regulatory action. In 
short, this bill is fully consistent with the APA and the 
regulatory statutes that provide for judicial review of 
regulatory action. It is expected that the relatively limited 
judicial review allowed under those statutes will continue to 
have a positive influence on agency fidelity to the underlying 
law.

Section 13--Definitions

    (1) The term ``Administrator'' means the Administrator of 
the Office of Information and Regulatory Affairs in the Office 
of Management and Budget.
    (2) The term ``agency'' has the meaning given that term in 
section 551(1) of title 5, United States Code. This is a broad 
definition that includes almost all federal agencies except 
those in the judicial and legislative branches. However, this 
definition does not include agencies of the States or the 
District of Columbia. Because state agencies are not covered by 
this bill, their rules will not be affected.\37\
    \37\ See also the appendix to this report, in which the 
Congressional Budget Office concludes that: ``H.R. 994, the Regulatory 
Sunset and Review Act of 1995, as ordered reported by the House 
Committee on Government Reform and Oversight on July 18, 1995 . . . 
would not impose enforceable duties on state, local, or private 
parties, nor would its enactment result in direct costs to those 
entities.''
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    (3) The term ``appropriate committee of the Congress'' is 
defined, with respect to a rule, as each standing committee of 
Congress having authority to report a bill to amend the 
provision of law under which the rule is issued.
    (4) Section 13(4)(B) provides that each set of rules 
designated in the Code of Federal Regulations (CFR) as a 
``parts'' or each set of rules that is comparable to a ``part'' 
in the CFR shall be treated as one rule. Thus, if an agency 
revises a single section of a larger rule, or revises a small 
part of a larger regulatory program, that is not a separate 
rule subject to sunset review. Section 13(4)(B) should also be 
read in conjunction with sections 7(c)-(e), which specify how 
to determine the effective date of a rule when the agency has 
issued different parts of it at different times.
    The Committee's intent in sections 7(c)-(e) and 13(4)(B) is 
to define a rule so that agencies review coherent regulatory 
programs at the same time. In most cases, a CFR ``part'' or 
multiple CFR ``parts'' represent coherent regulatory programs. 
Section 6(a)(3) grants the Administrator the authority to group 
related rules, i.e., related parts of the CFR, for simultaneous 
sunset review based on their subject matter similarity and 
functional interrelationships ``to ensure comprehensive and 
coordinated review of such rules.'' However, the Administrator 
may not designate less than a CFR part or its equivalent for 
review. The Committee believes that the scope of a rule needs 
to be defined in a uniform way to provide administrative 
certainty and to prevent an agency from breaking apart a rule 
to affect its status as a ``significant rule'' under section 
4(b) or to affect whether the rule complies with the applicable 
review criteria. If an agency learns in response to the sunset 
review notice that only one section of a rule is problematic, 
then the agency need only address the concerns raised about 
that section and reissue the remainder of the rule in its 
current form. In other words, there is no harm in reviewing the 
entire CFR part. At the same time, commenters might suggest 
improvements to non-problematic sections of the rule that no 
one otherwise would have considered.
    Section 13(4)(A) supplies the general definition of a rule. 
Subject to certain generic exclusions, the term ``rule'' is 
defined broadly to mean any agency statement of general 
applicability and future effect, including agency guidance 
document, designed to implement, interpret, or prescribe law or 
policy, or describing the procedures or practices of an agency, 
or intended to assist in such actions. This definition of a 
rule is similar to the definition in Executive Orders 12291 and 
12866.
    Although the definition of a rule should be broadly 
construed in most respects, the type of agency standards that 
qualify as a rule still must be ``of general applicability and 
future effect.'' Many agencies, including the Treasury, 
Justice, and Commerce Departments, issue letter rulings or 
other opinion letters to individuals who request a specific 
ruling on the facts of their situation. These letter rulings 
are sometimes published and relied upon by other people in 
similar situations, but the agency is not bound by the earlier 
rulings even on facts that are closely analogous. Thus, such 
rulings or opinion letters do not fall within the definition of 
a rule. IRS private letter rulings are a classic example of 
this type of agency statement. United States Customs Service 
letter rulings are another example of agency statements that 
are not of general applicability and future effect. Although 
the Customs Service states that the principles in a letter 
ruling may be cited as authority in transactions involving the 
same circumstances, such ruling is expressly made subject to 
modification and revocation without notice to any person, 
except the person to whom the letter was addressed. It should 
be noted, however, that even though letter rulings or opinion 
letters themselves are not rules within the meaning of this 
bill, the regulations that govern the procedure for considering 
and issuing such rulings usually will satisfy the definition of 
a rule.
    The Sunset and Review Act also recognizes certain common-
sense, generic exceptions to the general definition of a 
``rule.'' Although there are no specific agency exceptions, 
these multi-agency exceptions exclude certain types of agency 
actions from the definition of a rule because their sunset 
review would not further the purpose of the Sunset and Review 
Act:
          (i) Formal rulemaking pursuant to 5 U.S.C. Sec. 556 
        and 557 is excluded because it is a form of agency 
        adjudication. For this reason, such rules also are 
        excluded from the APA notice and comment provisions.
          (ii) Regulations or other agency statements that are 
        limited to agency organization, management, or 
        personnel matters are excluded because they do not 
        affect the rights or benefits of parties outside the 
        government. Such rules also are excluded from the APA 
        notice and comment provisions.
          (iii) Regulations or other agency statements related 
        to a military or foreign affairs function of the United 
        States are excluded because they often are an exercise 
        of the President's constitutional authority as 
        Commander in Chief and sole representative in 
        diplomatic relations. Such rules also are excluded from 
        the APA notice and comment provisions.
          (iv) Regulations, statements, or other agency actions 
        that are reviewed and usually modified each year (or 
        more frequently), or are reviewed regularly and usually 
        modified based on changing economic or seasonal 
        conditions are also excluded from the definition of a 
        rule. The first clause of this exception covers rules 
        that are reviewed and modified more frequently than the 
        schedule provided in this bill. It would serve little 
        purpose to require rules that already are reviewed and 
        modified each year to undergo a sunset review process 
        that spanned two or more years. The second clause of 
        this exception is intended to exclude a narrow type of 
        agency action that is tied to changing market, 
        seasonal, or economic conditions. Because these types 
        of agency action are based on conditions prevailing at 
        the time the action is taken, the review process 
        provided for in the bill would not be productive: by 
        the time the sunset review was completed, the 
        underlying seasonal or economic conditions would have 
        changed, and the results of the review would be 
        irrelevant to an evaluation of the current policy 
        decision. However, this exemption would not extend to 
        permanent rules that underlie the agency action and are 
        not regularly reviewed, such as definitional rules or 
        rules that set forth the procedures that are followed 
        in making such policy decisions.
    Many, if not most, agencies have rules that fit within this 
exception. IRS tax preparation documents are a good example of 
agency statements that fall within the first clause of the 
exception. The IRS reviews most tax preparation documents and 
usually modifies them each year. The modifications might be 
based on changes in the tax law, changes in policy, or simply 
to make the documents more understandable. Although the 
modifications might not necessarily be based on changing 
economic or seasonal conditions, documents that are reviewed 
and usually modified each year (or more frequently) qualify for 
the exclusion for that reason alone.
    Some agency rules might fit both clauses of the exception. 
Agricultural marketing orders are reviewed and usually modified 
each year and are based on seasonal or market (economic) 
conditions. The Department of Interior's hunting and fishing 
regulations also satisfy both clauses of the exception because 
they are ``reviewed and usually modified each year'' and 
because they are ``reviewed regularly and usually modified 
based on changing * * * seasonal conditions.'' The Committee 
also intends the national and regional fishery management 
regulations and analogous regulations to fit within this 
exception. The fishing industry depends on the timely issuance 
and adjustment of regulations to protect its supply of marine 
stock. Such rules are reviewed regularly (most are reviewed 
every year) and usually modified based on changing economic or 
seasonal conditions. Such decisions are based on conditions 
prevailing at the time the action is taken, which would render 
uproductive the review process provided for in the statute.
    The Federal Reserve Board's monetary policy tools fall 
within this exception as well. The Federal Open Market 
Committee regularly reviews economic conditions and meets 
several times a year in order to determine the appropriate 
monetary policy directive, discount rate, and reserve 
requirements. These decisions obviously are based on changing 
economic conditions. Other bank regulators make periodic 
changes in their rules to reflect changing market or economic 
conditions that are analogous to the Federal Reserve's monetary 
policy decisions. The financial market regulators might also 
have rules that fit within this exemption. Although changes in 
the disclosure requirements for public offerings probably do 
not qualify under this exception, changes in the margin trading 
requirements might qualify if the agency reviews them regularly 
and usually modifies them based on changing economic or market 
conditions.
    (v) Regulations or other agency actions that grant an 
approval, license, registration, or similar authority, or that 
grant or recognize an exemption or other actions relieving a 
restriction, or any agency action necessary to permit new or 
improved applications of technology or to allow the 
manufacture, distribution, sale, or use of a substance or 
product are also excluded from the definition of a rule. This 
is probably the largest category of agency actions that are 
excluded. Whether these determinations are made on an 
individual basis or by category, they are not the proper 
subject of sunset review for several reasons, including the 
fact-based nature of the decisions and the need for finality in 
such matters. Just a few of the examples that fall within this 
exclusion are product approvals, individual pesticide 
tolerances, import or export licenses, individual rate and 
tariff approvals, wetlands permits, grazing permits, plant 
licenses or permits, drug and medical device approvals, hunting 
and fishing season take limits, new source review permits, and 
broadcast licenses.
    (vi) Regulations or other agency statements that the 
Administrator certifies in writing are necessary for the 
enforcement of the Federal criminal laws are also excluded from 
the definition of a rule. The Committee intends this exception 
to be narrowly construed because it believes that few 
regulations are necessary for the enforcement of the Federal 
criminal laws. Moreover, the phrase ``the Federal criminal 
laws'' does not include every criminal enforcement provision of 
an otherwise civil regulatory program. ``[T]he Federal criminal 
laws'' include the free standing criminal laws codified in 
title 18, United States Code, and elsewhere that have analogues 
in the common law of crime. The Committee also intends to 
include other free standing criminal statutes, such as the 
controlled substances laws and the munitions and gun laws, 
because they are not merely an enforcement mechanism for an 
otherwise civil regulatory program. One important consideration 
is whether the statute as a whole is considered to be a 
criminal law and is enforced primarily through criminal 
sanctions. Under this test, most if not all regulatory statutes 
would not be a part of ``the Federal criminal laws'' within the 
meaning of section 13(4)(A)(vi). Although there are criminal 
enforcement provisions in many regulatory statutes, such as the 
environmental laws, these statutes as a whole generally are 
considered to be civil laws and criminal sanctions are not the 
primarily means of ensuring compliance with them. Thus, rules 
that implement the criminal enforcement provisions of 
regulatory statutes would have to be reviewed with the rest of 
the regulatory program. Any other reading of the criminal law 
exception would undermine the central purpose of the 
legislation, which is to require a review of significant 
regulatory programs.
    Given the Committee's intent regarding what ``the Federal 
criminal laws'' mean, the Committee believes there are few 
regulations that are necessary for their enforcement. Most 
criminal indictments are brought solely on the basis of a 
criminal statute. Generally, no proof is offered at trial as to 
what the regulations provide. Thus, such regulations are not 
necessary for the enforcement of the vast majority of criminal 
laws. Agencies, therefore, would have to review such rules in 
the same manner as other rules covered by this legislation. The 
Committee notes one obvious exception. Drug convictions may 
depend on regulations that list the controlled substances. 
Examples such as this prompted the Committee to create this 
narrow exception.\38\
    \38\ The Federal Sentencing Guidelines may also be necessary for 
the enforcement of the criminal laws, but they are issued by an agency 
of the judicial branch that is not covered by the bill.
---------------------------------------------------------------------------
    (5) The term ``sunset review'' means a review of a rule 
under the Sunset and Review Act.

Section 14--Sunset of this act

    Section 14 provides that the Sunset and Review Act will 
have no force or effect after the ten-year period beginning on 
the date of the enactment of this legislation unless it is 
reauthorized by subsequent act of Congress. The first full 
cycle of sunset reviews will be completed within seven and one-
half years after enactment of this legislation. At that time, 
Congress would be in a good position to reevaluate the 
effectiveness of the Sunset Review Act and make any changes 
that are necessary.

                       v. compliance with rule xi

    Pursuant to rule XI, clause 2(1)(3) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings from 
committee oversight activities are incorporated in the bill and 
this report.

                  vi. budget analysis and projections

    This Act provides for no new authorization, budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a) of the Congressional Budget Act are not 
applicable.

         vii. cost estimate of the congressional budget office

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 14, 1995.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight, U.S. House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 994, the Regulatory Sunset and Review Act of 
1995, as ordered reported by the House Committee on Government 
Reform and Oversight on July 18, 1995. We estimate that 
enactment of this bill would result in additional costs to the 
federal government of at least $4 million annually, assuming 
appropriation of the necessary funds. This estimate assumes the 
Administration would use the broad discretion it would be 
granted under the bill to decide which regulations need to have 
a sunset review and that an average of at least 50 regulations 
would undergo such reviews each year.
    The bill would not affect direct spending or receipts. 
Therefore, pay-as-you-go procedures would not apply to H.R. 
994.

Bill purpose

    H.R. 994 would require the Administrator of the Office of 
Information and Regulatory Affairs in the Office of Management 
and Budget (OMB) to categorize all existing regulations that 
would be covered by this bill into one of four groups. 
Regulations in the first group would cease to be effective four 
years after enactment of H.R. 994 unless reviewed in accordance 
with procedures that would be established by the bill. 
Regulations in groups two through four would expire in the 
fifth, sixth, and seven years following enactment of H.R. 994, 
unless reviewed. New regulations that would be covered by the 
bill would expire three years after they take effect unless the 
agency follows the sunset review procedures outlined by this 
bill. Certain new rules that involve either negotiated 
rulemakings or large capital investments would not expire for 
seven years.
    H.R. 994 would apply to all existing regulations and future 
new rules that are estimated to have an annual impact on the 
economy of $100 million or more, or would:
          result in a major increase in costs or prices for 
        consumers, industries, governments, or geographic 
        regions;
          have significant adverse effects on competition, 
        employment, investment, productivity, innovation, or 
        international competitiveness of U.S. enterprises;
          change the budgetary impact of entitlements, grants, 
        user fees, or loan programs; or
          have an adverse affect on the environment, public 
        health, or safety.
    Moreover, Congressional committees and citizens could 
petition federal agencies to request that other rules be 
reviewed according to the procedures specified in this bill. If 
the agencies do not find such petitions to be unreasonable, 
then they would also carry out the sunset reviews requested by 
these petitions.
    Starting two and one-half years before the expiration of 
any rule, agencies would have to issue notice to the public and 
to the Congress of the sunset review, and would solicit 
comments concerning the cost and effectiveness of the rule. The 
agencies would then make preliminary and final reports on 
whether to extend, modify, or consolidate the rule, and would 
respond to public and Congressional comments.
    H.R. 994 does not require that all existing or new rules be 
subject to a cost/benefit test or risk assessment review. Under 
section 5 of the bill, however, cost/benefit analysis and risk 
assessment reviews would be required to extend, modify, or 
consolidate existing rules if subsequent legislation were to 
require this kind of regulatory analysis for all new rules.
    Section 13 of H.R. 994 would exclude a rule from the sunset 
provisions if it:
          relates to a military or foreign affairs function of 
        the United States;
          concerns agency organization, management, or 
        personnel matters;
          is reviewed and usually modified each year (or more 
        frequently), or if it is reviewed regularly and usually 
        modified based on changing economic or seasonal 
        conditions;
          grants an approval, license, permit, registration, or 
        similar authority; grants or recognizes an exemption or 
        relieves a restriction; is necessary to permit new or 
        improved applications of technology; allows the 
        manufacture, distribution, sale, or use of a substance 
        or product; or
          is necessary for the enforcement of a Federal 
        criminal law.

Estimated budgetary impact

    Existing formal regulations are collected in about 6,800 
parts of the Code of Federal Regulations (CFR). Approximately 
1,400 parts of the CFR would be exempt from review because they 
relate to agency organization, management, personnel matters, 
or the military or foreign affairs functions of the government. 
We estimate that most of the remaining 5,400 parts of the CFR 
would not be covered by this bill, because they are already 
regularly reviewed, are necessary to enforce Federal Criminal 
laws, or involve approvals, licenses, permits and 
registrations. The Administration would have broad discretion 
in determining which rules would be covered by the provisions 
of H.R. 994 and, thus, in deciding how many reviews would be 
conducted.
    Enacting H.R. 994 would increase federal costs, subject to 
appropriation of the necessary amounts, because the bill would 
require agencies to conduct regulatory reviews that they do not 
perform under current law. While the number of sunset reviews 
that would be conducted under the bill is uncertain, CBO 
believes that relatively few sunset reviews would be required 
because the Administration would have broad discretion over 
choosing rules for review, and in deciding which rules would be 
exempt from review.
    Based on information from regulatory agencies, CBO believes 
that the average cost of reviewing an individual rule, as 
required by H.R. 994, would be small. We estimate that for most 
rules the cost of publishing a sunset review notice, soliciting 
public comments, and making preliminary and final 
recommendations in response to these comments would average 
about $75,000 per review. CBO cannot predict how the 
Administration would use discretion granted under this bill to 
determine which rules should have a sunset review, but assuming 
that an average of at least 50 rules would be reviewed 
annually, we estimate the bill would cost at least $4 million 
per year.

Previous estimate

    On June 16, 1995, CBO prepared a cost estimate for H.R. 994 
as ordered reported by the Subcommittee on National Economic 
Growth, Natural Resources and Regulatory Affairs of the House 
Committee on Government Reform and Oversight on May 18, 1995. 
CBO estimated that the earlier version of H.R. 994 would 
require agencies to conduct 330 to 670 sunset reviews annually 
at a cost of $25 million to $50 million per year. The 
difference between our cost estimates for these two versions of 
H.R. 994 reflects the difference in criteria for exempting 
regulations from sunset review. As compared to the earlier 
version of H.R. 994, the bill as ordered reported by the full 
committee would significantly limit the definition of rules for 
the purpose of conducting sunset reviews and would provide 
considerable discretion to the Administration for making 
decisions about which rules to review.

State and local costs

    To the extent that change in a federal rule would mandate 
change at the state level, the bill could result in direct 
costs to state governments. However, CBO has not been able to 
identify any rules in this category. CBO anticipates that most 
rule changes would not require modification of procedures or 
regulations by states, although states may choose to do so. 
Budgets of local governments would not be directly affected by 
this bill's provisions.
    If you wish further details on this estimate, we will be 
pleased to provide them. The staff contacts are Kim Cawley and 
Karen McVey.
            Sincerely,
                                             James L. Blum,
                                   (For June E. O'Neill, Director).

                  VIII. INFLATIONARY IMPACT STATEMENT

    In accordance with rule XI, clause 2(l)(4) of the Rules of 
the House of Representatives, this legislation is assessed to 
have no inflationary effect on prices and costs in the 
operation of the national economy.

                      IX. CHANGES IN EXISTING LAW

    Clause 3 of the rule XIII of the Rules of the House of 
Representatives requires that any change in existing law made 
by the bill, as reported, be shown with the existing law 
proposed to be omitted enclosed in black brackets, new matter 
printed in italic, and existing law in which no change is 
proposed shown in roman. This provision is inapplicable for the 
reported bill, which makes no change in existing law.

                      X. COMMITTEE RECOMMENDATION

    On July 18, 1995, a quorum being present, the Committee 
ordered the bill favorably reported.

Amendment #1 of H.R. 994--Offered by: Mr. Kanjorski

    At the end of a bill, add the following new section:

SEC. 14. SUNSET OF THIS ACT.

    Passed by voice vote.

Amendment # 2 of H.R. 994--Offered by: Mrs. Slaughter

    In section 4(b)(1), strike ``$50,000,000'' and insert 
``$100,000,000''.
    Passed by voice vote.

Amendment # 3 of H.R. 994--Offered by: Mr. Spratt

    In section 13(4)(A), strike ``subparagraphs (B) and (C)'' 
and insert ``subparagraphs (B), (C), and (D)''.
    Failed by voice vote.

Amendment # 4 of H.R. 994--Offered by: Mr. Spratt

    At the end of section 6, add the following new subsection:
    (f) Preservation of Independence of Other Specified 
Agencies.--
    Failed by voice vote.

Amendment # 5 of H.R. 994--Offered by: Mrs. Collins of Illinois

    In section 3--(1) insert ``(a) In General.--'' before ``The 
effectiveness''; and (2) at the end add the following new 
subsection: (b) Limitation on Termination of Rule.--
    Failed by voice vote.

Amendment # 6 of H.R. 994--Offered by: Mr. Shays

    Amendment Language: Page 19, line 22, add ``(L) The extent 
to which the rule has contributed positive benefits, 
particularly health or safety or environmental benefits.''
    Passed by voice vote.

                               FINAL PASSAGE OF H.R. 994--OFFERED BY: MR. McINTOSH                              
----------------------------------------------------------------------------------------------------------------
                   Name                        Aye       Nay                Name                 Aye       Nay  
----------------------------------------------------------------------------------------------------------------
Mr. Clinger...............................        X   ........  Mrs. Collins--IL............  ........        X 
Mr. Gilman................................        X   ........  Mr. Waxman..................  ........  ........
Mr. Burto.................................        X   ........  Mr. Lantos..................  ........  ........
Mr. Hastert...............................        X   ........  Mr. Wise....................        X   ........
Mrs. Morella..............................  ........        X   Mr. Owens...................  ........        X 
Mr. Shays.................................        X   ........  Mr. Towns...................  ........        X 
Mr. Schiff................................        X   ........  Mr. Spratt..................  ........  ........
Ms. Ros-Lehtinen..........................        X   ........  Ms. Slaughter...............        X   ........
Mr. Zeliff................................        X   ........  Mr. Kanjorski...............        X   ........
Mr. McHugh................................        X   ........  Mr. Condit..................        X   ........
Mr. Horn..................................        X   ........  Mr. Peterson................        X   ........
Mr. Mica..................................        X   ........  Mr. Sanders.................  ........        X 
Mr. Blute.................................        X   ........  Mrs. Thurman................        X   ........
Mr. Davis.................................        X   ........  Mrs. Maloney................        X   ........
Mr. McIntosh..............................        X   ........  Mr. Barrett.................        X   ........
Mr. Fox...................................        X   ........  Mr. Taylor..................        X   ........
Mr. Tate..................................        X   ........  Ms. Collins--MI.............  ........  ........
Mr. Chrysler..............................        X   ........  Ms. Norton..................  ........        X 
Mr. Gutknecht.............................        X   ........  Mr. Moran...................  ........  ........
Mr. Souder................................        X   ........  Mr. Green...................        X   ........
Mr. Martini...............................        X   ........  Mrs. Meek...................  ........  ........
Mr. Scarborough...........................        X   ........  Mr. Fattah..................  ........        X 
Mr. Shadegg...............................        X   ........  Mr. Brewster................        X   ........
Mr. Flanagan..............................        X   ........  Mr. Holden..................        X   ........
Mr. Bass..................................        X   ........                                                  
Mr. LaTourette............................        X   ........                                                  
Mr. Sanford...............................        X   ........                                                  
Mr. Ehrlich...............................        X   ........                                                  
----------------------------------------------------------------------------------------------------------------

    Totals: 39 Ayes, 7 Nays.

    xi. congressional accountability act; public law 104-1; section 
                               102(b)(3)

    This provision is inapplicable to the legislative branch 
because it does not relate to any terms or conditions of 
employment or access to public services or accommodations.

                             xii. appendix

    Congressional Budget Office response to request from the 
Honorable Cardiss Collins, ranking minority member.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 12, 1995.
Hon. Cardiss Collins,
Ranking minority member, Committee on Government Reform and Oversight, 
        U.S. House of Representatives, Washington, DC.
    Dear Representative: As you requested, the Congressional 
Budget Office has examined the potential costs to state and 
local governments and the private sector of H.R. 994, the 
Regulatory Sunset and Review Act of 1995, as ordered reported 
by the House Committee on Government Reform and Oversight on 
July 18, 1995, consistent with the requirements of the Unfunded 
Mandates Reform Act of 1995 (Public Law 104-4). CBO believes 
that H.R. 994 would not impose enforceable duties on state, 
local, or private parties, nor would its enactment result in 
direct costs to those entities.
    H.R. 994 would require that federal regulations covered by 
the bill cease to be effective at a specified time unless 
reviewed in accordance with procedures that would be 
established by the bill. H.R. 994 would apply to all existing 
federal regulations and future rules, with certain exceptions. 
In the cost estimate for the bill prepared on August 14, 1995, 
CBO estimated that the bill's enactment would result in 
additional costs to federal agencies totaling about $4 million 
annually.
    Public Law 104-4 establishes a narrow definition of the 
terms ``mandate'' and ``direct costs.'' The law defines a 
mandate as any provision in legislation, statute, or regulation 
(with certain specific exemptions) that would impose an 
enforceable duty upon state and local governments or the 
private sector. Direct costs would be limited to spending 
directly resulting from implementing provisions of the proposed 
legislation.
    H.R. 994 requires only that certain federal regulations be 
reviewed or face elimination. It does not require that rules be 
modified. Nonetheless, we discussed H.R. 994 with a number of 
federal agencies and organizations representing state interests 
to understand better the bill's potential effects.
    We found that the indeterminate scope of H.R. 994 makes it 
particularly difficult to predict or estimate impacts at the 
state, local, and private level. Given the Administration's 
broad discretion under the bill, we have no basis for 
identifying which regulations would need to have a sunset 
review. Furthermore, there is no way to predict the extent or 
direction of changes, if any, in the federal regulations that 
would be reviewed. Thus, we cannot specify whether or how 
state, local, or private interests might be induced to modify 
their actions as a result of rule changes emanating from H.R. 
994. Although some actions resulting from the bill could effect 
state, local, or private interests, the bill itself does not 
impose any mandates on such entities.
    With regard to the private sector, we estimate that 
enactment of H.R. 994 would not lead to a significant increase 
in fees paid to federal regulatory agencies to cover the cost 
of conducting sunset reviews. Agencies that charge fees would 
not necessarily bear significant burdens under the bill. For 
example, two agencies that collect substantial portions of 
their operating budgets through fees are the Nuclear Regulatory 
Commission and the Federal Energy Regulatory Commission. It 
would appear that most of the regulations administered by those 
agencies could be exempt from the provisions of H.R. 994, 
because the agencies' mission generally is to regulate permits 
and issue licenses to private industry, and those kinds of 
regulations are excluded by section 13 of the bill. 
Furthermore, in instances in which an agency would face 
increased costs to conduct a review, H.R. 994 would not require 
it to cover its costs through fees. Many agencies could choose 
to meet the costs in a number of ways, such as reducing other 
costs or requesting additional appropriations. Because the 
estimated annual cost to the federal government of complying 
with the bill is only about $4 million, the potential impact on 
the private sector from additional fees is quite small.
    If you have any questions or if there is a specific issue 
related to H.R. 994's impact on state and local governments or 
the private sector that you would like us to investigate 
further, we would be pleased to provide you with more 
assistance. The CBO staff contact for state and local estimates 
is Karen McVey. For private sector estimates, the contact is 
Jan Paul Acton.
            Sincerely,
                                         June E. O'Neill, Director.
                            ADDITIONAL VIEWS

    The Regulatory Sunset and Review Act of 1995, H.R. 994, was 
ordered reported by the Committee with strong bi-partisan 
support. Clearly, all Committee Members accept the need to 
conduct reviews of regulations.
    The reported bill requires all Federal agencies to conduct 
periodic reviews of regulations. If a required review of a 
particular regulation is not completed by its termination date 
(specified as either 3, 4, 5, 6, or 7 years after the date of 
enactment), that regulation would automatically sunset under 
the terms of the reported bill.
    While we strongly support the need for agency reviews of 
regulations, we continue to be concerned about certain 
provisions of this legislation. These concerns should be 
addressed, before the bill passes the House.
    A major concern we have is that firms and individuals 
subject to the laws Congress passes could be exposed to greatly 
increased liability, if regulations, which provide guidance and 
clarify how to fulfill statutory obligations, were to sunset, 
while those statutory obligations continue.
    Without regulations to identify and to clarify statutory 
obligations, statutory obligations would have to be identified 
through court and administrative proceedings on a case-by-case 
basis.
    The reported bill attempts to make a partial solution to 
this problem. In an agency proceeding or court action between 
agency and a ``non-agency'' party, the reported bill permits 
the ``non-agency'' party to invoke its continued compliance 
with a sunsetted regulation, as a legal defense that it is in 
compliance with statutory requirements.
    However, the reported bill does not give a ``non-agency'' 
party similar authority in cases where the ``non-agency'' party 
is the target of legal action by a private party, not an 
agency. Therefore, the underlying question remains unanswered: 
How would a firm or individual demonstrate compliance with 
statutory obligations, if regulations were to sunset?
    There are a large number of statutes under which private 
parties, as well as agencies, are explicitly given the right to 
go to court to seek enforcement of a statute. The American Law 
Division of the Library of Congress' Congressional Research 
Service (CRS) has compiled lists of over 170 different Federal 
statutes that all contain private rights of action.
    Some of the statutes that CRS identified as providing 
private rights of action include: the Freedom of Information 
Act; the Natural Gas Act; the Bankruptcy Act; the Clayton Act; 
the Privacy Act; the Securities Exchange Act; the National Bank 
Act; the Atomic Energy Act; the Age Discrimination Act; the 
Bank Holding Company Act; the Communications Act; the Truth in 
Lending Act; the Federal Deposit Insurance Act; the Foreign 
Intelligence Surveillance Act; the Clean Air Act; the Water 
Pollution Prevention and Control Act; and the Safe Drinking 
Water Act.
    As a result, the potential liability that firms and 
individuals would face is enormously increased, as a result of 
the reported bill's failure to permit continued compliance with 
a sunsetted regulation to be used as a legal defense in all 
cases.
    The reported bill also intrudes upon the independence of 
certain regulatory agencies. Under the reported bill, the 
Office of Management and Budget (OMB) has responsibility for 
identifying, scheduling and prioritizing rules for agency 
review. In addition, OMB would evaluate, monitor, and certify 
agency reviews. However, an exception is created in the 
reported bill for bank regulatory agencies which are exempted 
from much of the oversight OMB would perform.
    In addition to bank regulatory agencies, we believe that 
the reported bill should also preserve the independent status 
of agencies, such as the Securities and Exchange Commission, 
the Commodities Futures Trading Commission, and the Nuclear 
Regulatory Commission.
    Each of these agencies have responsibilities for the 
protection of investors, the openness and efficiency of 
markets, economic stability and soundness, and public safety 
that are no less critical and important than functions of the 
bank regulatory agencies. Like the situation with bank 
regulatory agencies, the SEC, the CFTC, and the NRC are not 
currently subject to OMB oversight or approval in the issuance 
of regulations.
    The following statement of Mary L. Schapiro, Chairman of 
the Commodity Futures Trading Commission, supports an amendment 
to preserve the independent status of the CFTC:
    ``I want to express support for the inclusion of the 
Commodity Futures Trading Commission within the scope of this 
amendment. The amendment thus would treat agencies such as the 
Commission and the Securities and Exchange Commission in a 
manner equivalent to the treatment afforded to other financial 
service agencies, and will assure that financial service 
regulation can be applied to a consistent and coordinated 
manner.''
    We also believe there are certain cases where it may not 
make any sense to require periodic reviews at all. One such 
case was raised at markup; it was proposed that tax regulations 
and rules issued by the Internal Revenue Service should be 
exempt from the requirements of the reported bill altogether.
    The Tax Executives Institute, for example, made the 
following comments in opposition to reviews of tax regulations, 
like those that would be required by the reported bill:
    ``We would oppose any rule requiring the ``Treasury 
Department and IRS to review and repromulgate all extent tax 
rules every few years and to ``sunset'' those rules not so 
revalidated. Such a rule would consume an extraordinarily large 
amount of government resources and no doubt distract the IRS, 
Treasury, and taxpayers from important tasks. Indeed, a 
``sunset'' rule could have the unintended and counterproductive 
effect of requiring business taxpayers to spend scarce 
resources defending longstanding, beneficial, and generally 
accepted rules that otherwise might find themselves sunsetted. 
Such an approach would frustrate rather than further the true 
goals of regulatory reform.''
    The reported bill clearly addresses the need many have seen 
to provide for agency reviews of regulations. The concerns we 
have raised can and should be addressed, as the process goes 
forward.

                                   Cardiss Collins.
                                   Edolphus Towns.
                                   Tom Barrett.
                                   Bob Wise.
                                   Louise Slaughter.
                                   Carolyn B. Maloney.
                                   John Spratt.
                                   Eleanor H. Norton.
                                   Chaka Fattah.
                                   Tim Holden.
                                   Carrie P. Meek.
                                   Major R. Owens.
                                   Jim Moran.
                                   Tom Lantos.
                                   Paul E. Kanjorski.

                                
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