[House Report 104-48]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-48
_______________________________________________________________________
REGULATORY REFORM AND RELIEF ACT
_______________________________________________________________________
February 23, 1995.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hyde, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 926]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 926) to promote regulatory flexibility and enhance public
participation in Federal agency rulemaking and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment 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 Reform and Relief Act''.
TITLE I--STRENGTHENING REGULATORY FLEXIBILITY
SEC. 101. JUDICIAL REVIEW.
(a) Amendment.--Section 611 of title 5, United States Code, is
amended to read as follows:
``Sec. 611. Judicial review
``(a)(1) Except as provided in paragraph (2), not later than 180 days
after the effective date of a final rule with respect to which an
agency--
``(A) certified, pursuant to section 605(b), that such rule
would not have a significant economic impact on a substantial
number of small entities; or
``(B) prepared a final regulatory flexibility analysis
pursuant to section 604,
an affected small entity may petition for the judicial review of such
certification or analysis in accordance with the terms of this
subsection. A court having jurisdiction to review such rule for
compliance with the provisions of section 553 or under any other
provision of law shall have jurisdiction to review such certification
or analysis.
``(2)(A) Except as provided in subparagraph (B), in the case where a
provision of law requires that an action challenging a final agency
regulation be commenced before the expiration of the 180 day period
provided in paragraph (1), such lesser period shall apply to a petition
for the judicial review under this subsection.
``(B) In the case where an agency delays the issuance of a final
regulatory flexibility analysis pursuant to section 608(b), a petition
for judicial review under this subsection shall be filed not later
than--
``(i) 180 days; or
``(ii) in the case where a provision of law requires that an
action challenging a final agency regulation be commenced
before the expiration of the 180-day period provided in
paragraph (1), the number of days specified in such provision
of law,
after the date the analysis is made available to the public.
``(3) For purposes of this subsection, the term `affected small
entity' means a small entity that is or will be adversely affected by
the final rule.
``(4) Nothing in this subsection shall be construed to affect the
authority of any court to stay the effective date of any rule or
provision thereof under any other provision of law.
``(5)(A) In the case where the agency certified that such rule would
not have a significant economic impact on a substantial number of small
entities, the court may order the agency to prepare a final regulatory
flexibility analysis pursuant to section 604 if the court determines,
on the basis of the rulemaking record, that the certification was
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.
``(B) In the case where the agency prepared a final regulatory
flexibility analysis, the court may order the agency to take corrective
action consistent with the requirements of section 604 if the court
determines, on the basis of the rulemaking record, that the final
regulatory flexibility analysis was prepared by the agency without
observance of procedure required by section 604.
``(6) If, by the end of the 90-day period beginning on the date of
the order of the court pursuant to paragraph (5) (or such longer period
as the court may provide), the agency fails, as appropriate--
``(A) to prepare the analysis required by section 604; or
``(B) to take corrective action consistent with the
requirements of section 604,
the court may stay the rule or grant such other relief as it deems
appropriate.
``(7) In making any determination or granting any relief authorized
by this subsection, the court shall take due account of the rule of
prejudicial error.
``(b) In an action for the judicial review of a rule, any regulatory
flexibility analysis for such rule (including an analysis prepared or
corrected pursuant to subsection (a)(5)) shall constitute part of the
whole record of agency action in connection with such review.
``(c) Nothing in this section bars judicial review of any other
impact statement or similar analysis required by any other law if
judicial review of such statement or analysis is otherwise provided by
law.''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
only to final agency rules issued after the date of enactment of this
Act.
SEC. 102. RULES COMMENTED ON BY SBA CHIEF COUNSEL FOR ADVOCACY.
(a) In General.--Section 612 of title 5, United States Code, is
amended by adding at the end the following new subsection:
``(d) Action by the SBA Chief Counsel for Advocacy.--
``(1) Transmittal of proposed rules and initial regulatory
flexibility analysis to sba chief counsel for advocacy.--On or
before the 30th day preceding the date of publication by an
agency of general notice of proposed rulemaking for a rule, the
agency shall transmit to the Chief Counsel for Advocacy of the
Small Business Administration--
``(A) a copy of the proposed rule; and
``(B)(i) a copy of the initial regulatory flexibility
analysis for the rule if required under section 603; or
``(ii) a determination by the agency that an initial
regulatory flexibility analysis is not required for the
proposed rule under section 603 and an explanation for
the determination.
``(2) Statement of effect.--On or before the 15th day
following receipt of a proposed rule and initial regulatory
flexibility analysis from an agency under paragraph (1), the
Chief Counsel for Advocacy may transmit to the agency a written
statement of the effect of the proposed rule on small entities.
``(3) Response.--If the Chief Counsel for Advocacy transmits
to an agency a statement of effect on a proposed rule in
accordance with paragraph (2), the agency shall publish the
statement, together with the response of the agency to the
statement, in the Federal Register at the time of publication
of general notice of proposed rulemaking for the rule.
``(4) Special rule.--Any proposed rules issued by an
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 National Credit Union Administration, or the
Office of Federal Housing Enterprise Oversight, in connection
with the implementation of monetary policy or to ensure the
safety and soundness of federally insured depository
institutions, any affiliate of such an institution, credit
unions, or government sponsored housing enterprises or to
protect the Federal deposit insurance funds shall not be
subject to the requirements of this subsection.''.
(b) Conforming Amendment.--Section 603(a) of title 5, United States
Code, is amended by inserting ``in accordance with section 612(d)''
before the period at the end of the last sentence.
SEC. 103. SENSE OF CONGRESS REGARDING SBA CHIEF COUNSEL FOR ADVOCACY.
It is the sense of Congress that the Chief Counsel for Advocacy of
the Small Business Administration should be permitted to appear as
amicus curiae in any action or case brought in a court of the United
States for the purpose of reviewing a rule.
TITLE II--REGULATORY IMPACT ANALYSES
SEC. 201. DEFINITIONS.
Section 551 of title 5, United States Code, is amended by striking
``and'' at the end of paragraph (13), by striking the period at the end
of paragraph (14) and inserting a semicolon, and by adding at the end
the following:
``(15) `major rule' means any rule subject to section 553(c)
that is likely to result in--
``(A) an annual effect on the economy of $50,000,000
or more;
``(B) a major increase in costs or prices for
consumers, individual industries, Federal, State, or
local government agencies, or geographic regions, or
``(C) significant adverse effects on competition,
employment, investment, productivity, innovation, or on
the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and
export markets; and
``(16) `Director' means the Director of the Office of
Management and Budget.''
SEC. 202. RULEMAKING NOTICES FOR MAJOR RULES.
Section 553 of title 5, United States Code, is amended by adding at
the end the following:
``(f)(1) Each agency shall for a proposed major rule publish in the
Federal Register, at least 90 days before the date of publication of
the general notice required under subsection (b), a notice of intent to
engage in rulemaking.
``(2) A notice under paragraph (1) for a proposed major rule shall
include, to the extent possible, the information required to be
included in a regulatory impact analysis for the rule under subsection
(i)(4)(B) and (D).
``(3) For a major rule proposed by an agency, the head of the agency
shall include in a general notice under subsection (b), a preliminary
regulatory impact analysis for the rule prepared in accordance with
subsection (i).
``(4) For a final major rule, the agency shall include with the
statement of basis and purpose--
``(A) a final regulatory impact analysis of the rule in
accordance with subsection (i); and
``(B) a clear delineation of all changes in the information
included in the final regulatory impact analysis under
subsection (i) from any such information that was included in
the notice for the rule under subsection (b).''.
SEC. 203. HEARING REQUIREMENT FOR PROPOSED RULES; AND EXTENSION OF
COMMENT PERIOD.
(a) Hearing Requirement.--Section 553 of title 5, United States Code,
as amended by section 202, is further amended by adding after
subsection (f) the following:
``(g) If more than 100 interested persons acting individually submit
requests for a hearing to an agency regarding any rule proposed by the
agency, the agency shall hold such a hearing on the proposed rule.''.
(b) Extension of Comment Period.--Section 553 of title 5, United
States Code, as amended by subsection (a), is further amended by adding
after subsection (g) the following:
``(h) If during the 90-day period beginning on the date of
publication of a notice under subsection (f) for a proposed major rule,
or if during the period beginning on the date of publication or service
of notice required by subsection (b) for a proposed rule, more than 100
persons individually contact the agency to request an extension of the
period for making submissions under subsection (c) pursuant to the
notice, the agency--
``(1) shall provide an additional 30-day period for making
those submissions; and
``(2) may not adopt the rule until after the additional
period.''.
(c) Response to Comments.--Section 553(c) of title 5, United States
Code, is amended--
(1) by inserting ``(1)'' after ``(c)''; and
(2) by adding at the end the following:
``(2) Each agency shall publish in the Federal Register, with each
rule published under section 552(a)(1)(D), responses to the substance
of the comments received by the agency regarding the rule.''.
SEC. 204. REGULATORY IMPACT ANALYSIS.
Section 553 of title 5, United States Code, as amended by section
203, is amended by adding after subsection (h) the following:
``(i)(1) Each agency shall, in connection with every major rule,
prepare, and, to the extent permitted by law, consider, a regulatory
impact analysis. Such analysis may be combined with any regulatory
flexibility analysis performed under sections 603 and 604.
``(2) Each agency shall initially determine whether a rule it intends
to propose or issue is a major rule. The Director shall have authority
to order a rule to be treated as a major rule and to require any set of
related rules to be considered together as a major rule.
``(3) Except as provided in subsection (j), agencies shall prepare--
``(A) a preliminary regulatory impact analysis, which shall
be transmitted, along with a notice of proposed rulemaking, to
the Director at least 60 days prior to the publication of
notice of proposed rulemaking, and
``(B) a final regulatory impact analysis, which shall be
transmitted along with the final rule at least 30 days prior to
the publication of a major rule.
``(4) Each preliminary and final regulatory impact analysis shall
contain the following information:
``(A) A description of the potential benefits of the rule,
including any beneficial effects that cannot be quantified in
monetary terms and the identification of those likely to
receive the benefits.
``(B) An explanation of the necessity, legal authority, and
reasonableness of the rule and a description of the condition
that the rule is to address.
``(C) A description of the potential costs of the rule,
including any adverse effects that cannot be quantified in
monetary terms, and the identification of those likely to bear
the costs.
``(D) An analysis of alternative approaches, including market
based mechanisms, that could substantially achieve the same
regulatory goal at a lower cost and an explanation of the
reasons why such alternative approaches were not adopted,
together with a demonstration that the rule provides for the
least costly approach.
``(E) A statement that the rule does not conflict with, or
duplicate, any other rule or a statement of the reasons why
such a conflict or duplication exists.
``(F) A statement of whether the rule will require on-site
inspections or whether persons will be required by the rule to
maintain any records which will be subject to inspection.
``(G) An estimate of the costs to the agency for
implementation and enforcement of the rule and of whether the
agency can be reasonably expected to implement the rule with
the current level of appropriations.
``(5)(A) the Director is authorized to review and prepare comments on
any preliminary or final regulatory impact analysis, notice of proposed
rulemaking, or final rule based on the requirements of this subsection.
``(B) Upon the request of the Director, an agency shall consult with
the Director concerning the review of a preliminary impact analysis or
notice of proposed rulemaking and shall refrain from publishing its
preliminary regulatory impact analysis or notice of proposed rulemaking
until such review is concluded. The Director's review may not take
longer than 90 days after the date of the request of the Director.
``(6)(A) An agency may not adopt a major rule unless the final
regulatory impact analysis for the rule is approved or commented upon
in writing by the Director or by an individual designated by the
Director for that purpose.
``(B) Upon receiving notice that the Director intends to comment in
writing with respect to any final regulatory impact analysis or final
rule, the agency shall refrain from publishing its final regulatory
impact analysis or final rule until the agency has responded to the
Director's comments and incorporated those comments in the agency's
response in the rulemaking file. If the Director fails to make such
comments in writing with respect to any final regulatory impact
analysis or final rule within 90 days of the date the Director gives
such notice, the agency may publish such final regulatory impact
analysis or final rule.
``(7) Notwithstanding section 551(16), for purposes of this
subsection with regard to any rule proposed or issued by an 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 National Credit
Union Administration, or the Office of Federal Housing Enterprise
Oversight, the term `Director' means the head of such agency,
Administration, or Office.''.
SEC. 205. STANDARD OF CLARITY.
Section 553 of title 5, United States Code, as amended in section
204, is amended by adding after subsection (i) the following:
``(j) To the extent practicable, the head of an agency shall seek to
ensure that any proposed major rule or regulatory impact analysis of
such a rule is written in a reasonably simple and understandable manner
and provides adequate notice of the content of the rule to affected
persons.''.
SEC. 206. EXEMPTIONS.
Section 553 of title 5, United States Code, as amended by section
205, is further amended by adding after subsection (j) the following:
``(k)(1) The provisions of this section regarding major rules shall
not apply to--
``(A) any regulation that responds to an emergency situation
if such regulation is reported to the Director as soon as is
practicable;
``(B) any regulation for which consideration under the
procedures of this section would conflict with deadlines
imposed by statute or by judicial order; and
``(C) any regulation proposed or issued in connection with
the implementation of monetary policy or to ensure the safety
and soundness of federally insured depository institutions, any
affiliate of such institution, credit unions, or government
sponsored housing enterprises regulated by the Office of
Federal Housing Enterprise Oversight.
A regulation described in subparagraph (B) shall be reported to the
Director with a brief explanation of the conflict and the agency, in
consultation with the Director, shall, to the extent permitted by
statutory or judicial deadlines, adhere to the process of this section.
``(2) The Director may in accordance with the purposes of this
section exempt any class or category of regulations from any or all
requirements of this section.''.
SEC. 207. REPORT.
The Director of the Office of Management and Budget shall submit a
report to the Congress no later than 24 months after the date of the
enactment of this Act containing an analysis of rulemaking procedures
of Federal agencies and an analysis of the impact of those rulemaking
procedures on the regulated public and regulatory process.
TITLE III--PROTECTIONS
SEC. 301. PRESIDENTIAL ACTION.
Pursuant to the authority of section 7301 of title 5, United States
Code, the President shall, within 180 days of the date of the enactment
of this title, prescribe regulations for employees of the executive
branch to ensure that Federal laws and regulations shall be
administered consistent with the principle that any person shall, in
connection with the enforcement of such laws and regulations--
(1) be protected from abuse, reprisal, or retaliation, and
(2) be treated fairly, equitably, and with due regard for
such person's rights under the Constitution.
Purpose and Summary
H.R. 926, the ``Regulatory Reform and Relief Act'' is
designed to improve the federal regulatory system by: (1)
strengthening the Regulatory Flexibility Act of 1980,\1\ (2)
amending the Administrative Procedure Act \2\ to require the
preparation of regulatory impact analyses whenever a ``major
rule'' is promulgated by a federal agency, and (3) directing
the President to prescribe regulations for the executive branch
aimed at protecting citizens from abuse and retaliation in
their dealings with the regulatory system.
\1\ 5 U.S.C. 601-12.
\2\ 5 U.S.C. 551 et seq.
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Title I of the bill strengthens the Regulatory Flexibility
Act of 1980 which was designed to relieve the regulatory burden
on small entities by requiring agencies when promulgating rules
to consider their impact on such small entities and, where
possible, to mitigate the effect of such rules. First, H.R. 926
grants to affected small entities judicial review to determine
whether rules have been adopted in compliance with RFA.
Secondly, it requires agencies to circulate proposed rules to
the Chief Counsel for Advocacy of the Small Business
Administration (SBA) at least 30 days prior to their
publication so as to permit him an opportunity to comment upon
the effect they would have on small entities. Finally, the bill
states as the sense of the Congress that the Chief Counsel for
Advocacy of the SBA should be authorized to file briefs as an
amicus curiae in actions before any federal court.
Title II of the bill is intended to provide the public
greater opportunity to participate in the agency rulemaking
process. This provision requires agencies to give advance
notice to the public of impending rulemaking activity, and
creates new procedures by which citizens may affect agency
determinations to hold a public hearing or extend a public
comment period. Most significantly, title II requires agencies
to complete and publish a regulatory impact analysis with
regard to all major rules and provides authority to the
director of the Office of Management and Budget (OMB) to
enforce agency compliance with such analysis requirements. The
impact analysis criteria require agencies to undertake a cost
and benefit analysis of every major rulemaking and explain why
the method chosen by an agency to implement a law is the least
costly. Provisions created by this legislation will be subject
to judicial review under the same standard as are the
provisions of the Administrative Procedure Act, which this
title amends.
Title III of the bill responds to the problem of abuse and
retaliation by government regulators. It directs the President,
within 180 days of enactment, to prescribe regulations for
employees of the executive branch to protect persons against
abuse, reprisal, or retaliation in connection with the
enforcement of Federal laws and regulations. Such regulations
must also insure that persons are treated fairly, equitably,
and with due regard for their Constitutional rights.
Background and Need for the Legislation
On January 9, 1995, H.R. 9 was introduced by
Representatives Archer, DeLay, Saxton, Smith of Washington, and
Tauzin, for themselves and 111 co-sponsors. The bill, entitled
the ``Job Creation and Wage Enhancement Act of 1995'',
contained several provisions aimed at improving the climate for
business and production, as well as attempting to improve the
Federal regulatory system for all citizens.\3\ Divided into
twelve titles, the bill was referred for consideration to
several committees of the House, with the Judiciary Committee
receiving primary reference to titles VI, VII, VIII, and IX.
The first three of these titles, relating to improvement of the
Federal regulatory system, were the subject of hearings in the
Subcommittee on Commercial and Administrative Law,\4\ while
title IX, concerning private property rights protections and
compensation, was the subject of a hearing by the Subcommittee
on the Constitution.\5\
\3\ The purpose stated at the outset of H.R. 9 is: To create jobs,
enhance wages, strengthen property rights, maintain certain economic
liberties, decentralize and reduce the power of the Federal Government
with respect to the States, localities, and citizens of the United
States, and to increase the accountability of Federal officials.
\4\ The subcommittee's hearings were held February 3 and 6, 1995.
\5\ The subcommittee held one hearing on February 10, 1995.
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Subsequent to hearings by the Subcommittee on Commercial
and Administrative Law, H.R. 926 was introduced on February 14,
1995 by Mr. Gekas, together with Mr. Hyde. The bill contained
the substance of titles VI, VII, and VIII of H.R. 9 as revised
and improved, taking into consideration comments offered by
witnesses at the hearings and suggestions proposed by other
Members. Title I of H.R. 926 is based upon Title VI of H.R. 9,
while titles II and III of the former are based respectively on
titles VII and VIII of the latter.
On February 16, 1995, the Judiciary Committee reported H.R.
926 to the House by a voice vote, after having adopted several
amendments.
title i
The Regulatory Flexibility Act was signed into law by
President Jimmy Carter on September 19, 1980 and became
effective on January 1, 1981.\6\ The Act sought to ensure that
agencies ``fit regulatory and informational requirements to the
scale of the business, organizations, and governmental
jurisdictions subject to regulation.'' \7\ It encouraged
agencies to use innovative administrative procedures in dealing
with individuals, as well as small businesses, small
organizations, and small governmental bodies that might
otherwise be unnecessarily adversely affected by Federal
regulations.
\6\ Public Law 96-354. The legislation was passed by the Senate on
August 6, 1980 and by the House of Representatives on September 9,
1980. House consideration is reported at 126 Cong. Rec. 24823 (1980).
\7\ Footnote to 5 U.S.C. 601, Findings and Declarations of Purpose.
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The Act was based on the conclusion that while the cost of
regulatory compliance is essentially constant among entities,
the size of an entity is relevant to its compliance potential.
In business, for example, there would appear to be an obvious
difference in the respective abilities of smaller and larger
companies to spread the cost of complying with a regulation
because of their varying volumes of sales or production. Given
a company with sales of $1 million and another with $10
million, the smaller may be crucially affected in its ability
to set competitive prices or perhaps even to make a profit
while the larger would be less affected because of its sheer
size.\8\ The Act intends that agencies take this difference
into account rather than merely concluding reflexively in
drafting rules that ``one size fits all''.
\8\ During hearings before the Senate prior to the enactment of the
Regulatory Flexibility Act of 1990, Dr. Milton Kafoglis, a member of
President Carter's Council on Wage and Price Stability, described the
economic argument for regulatory flexibility for small entities:
There seem to be clear economies of scale imposed by most
regulatory endeavors. Uniform application of regulatory requirements
thus seems to increase the size firm that can effectively compete. The
cost curve of the firm is shifted upward and to the right with its
minimum point (or the elbow in an L-shaped cost curve) occurring at a
larger output. If one employs the economists' theoretical ``dominant
firm'' model and introduces such upward shifts in cost curves (the
small firms'), the share of the dominant firm will increase while that
of small firms will decrease. As a result industrial concentration will
have increased. This hypothesis has not been questioned and is
consistent with most of the case analyses that have been completed. It
suggests that the ``small business'' problem goes beyond sympathy for
the small businessman, but strikes at the heart of the established
national policy of maintaining competition and mitigating monopoly. S.
Rep. No. 878, 96th Cong., accompanying S. 299, p. 3-4.
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The Regulatory Flexibility Act applies to every federal
rule for which notice is required by Section 553(b) of the
Administrative Procedure Act or other laws.\9\ The Act requires
an agency to prepare one or more of three documents:
\9\ This exempts such things as interpretive rules, which are those
intended only to implement a statute and in which Congress has not
delegated legislative-type authority to the agency. One theory behind
the exemption of interpretive rules from ``notice and comment''
rulemaking is that an agency is merely following the specifics of
legislation and has little or no discretion to change the rules.
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A certification that a proposed rule will not have a
significant impact on a substantial number of small
entities, or
An initial regulatory flexibility analysis, and
subsequently
A final regulatory flexibility analysis.
Pursuant to Section 605(b) of the Act, the certification is
to be made by the head of the agency and published in the
Federal Register at the time of general notice of proposed
rulemaking for the rule or at the time of final publication of
the rule. It is to be accompanied by ``a succinct statement
explaining the reasons for such certification.'' \10\ Debate
during floor consideration indicated that this explanation
should be more than a mere statement that a rule will not have
a significant impact on a substantial number of small entities.
It must explain the decision to certify and discuss why it
draws that conclusion, and any doubt as to whether an impact
analysis should be filed, must be resolved in favor of
performing the analysis.\11\
\10\ 5 U.S.C. 605(b).
\11\ 126 Cong. Rec. H8468 (daily ed. Sept. 9, 1980) (statement of
Representative Andy Ireland).
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If an agency anticipates that a proposed rule will have a
significant impact on a substantial number of small entities,
it must prepare an initial regulatory flexibility analysis and
publish it in the Federal Register at the time of publication
of general notice of proposed rulemaking for the rule. This
initial regulatory flexibility analysis is supposed to include:
A description of the reasons why the agency is
considering such action;
A succinct statement of the objective of and legal
basis for the proposed rule;
A description of the reporting, recordkeeping and
other compliance requirements of the proposed rule;
An identification, to the extent practicable, of all
relevant Federal rules which may duplicate, overlap, or
conflict with the proposed rule; and
A description of any significant alternatives to the
proposed rule which accomplish the stated objectives of
applicable statutes and which minimize any significant
economic impact on small entities.\12\
\12\ 5 U.S.C. 603.
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When an agency promulgates its final rule, it must either
prepare a final regulatory flexibility analysis or certify that
its rule will not have a significant impact on a substantial
number of small entities. The final regulatory flexibility
analysis must discuss comments received from the regulated
community and others as well as the alternatives considered by
the agency while drafting the final rule.\13\
\13\ 5 U.S.C. 604.
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The RFA gives the Chief Counsel for Advocacy of the Small
Business Administration the responsibility of monitoring
compliance with the Act and requires him to report annually on
this to the President and the Congress.\14\ It gives him the
authority to appear as amicus curiae in any action brought in a
court of the United States to review a rule in order to present
his views with respect to the effect of the rule on small
entities.\15\
\14\ 5 U.S.C. 612.
\15\ Id. The Chief Counsel for Advocacy has only infrequently
attempted to appear as amicus under this section. In the case of Lehigh
Valley Farmers v. Block 640 F. Supp. 1497, aff'd 829 F.2d 409 (1987),
there was debate between the Office for Advocacy and the Department of
Justice over the constitutionality of the former's appearance as amicus
and the Chief Counsel withdrew his brief. In September of 1994, the
Chief Counsel filed notice of intent to file an amicus brief in Time
Warner Entertainment Limited Partnership v. Federal Communications
Commission, No. 93-1723 (D.C. Circuit), but came to an accord with the
FCC obviating his need to file.
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Despite the specific requirements that are placed on
agencies by the Act, there has been concern that agencies are
circumventing its spirit by taking advantage of 5 U.S.C. 611,
which exempts ``any determination by an agency concerning the
applicability of any of the provisions'' of the Act from
judicial review. Section 611 does authorize a regulatory
flexibility analysis to be made part of the record on review of
the ultimate reasonableness of a rule. A court could determine
that a defective regulatory flexibility analysis led an agency
to underestimate the effect of a rule on small entities and
this might be of such a magnitude as to undermine the rule's
rationality.\16\ But this may be of little practical
significance to the successful functioning of the RFA. As the
former Acting Chief Counsel for Advocacy of the SBA, Doris S.
Freeman noted:
\16\ In Thompson v. Clark, 741 F. 2d 401, (D.C. Cir. 1984), then
Judge Scalia hypothesized such a case, saying that the rule would be
set aside: . . . not because the regulatory flexibility analysis was
defective, but because the mistaken premise reflected in the . . .
analysis deprives the rule of its required rational support, and thus
causes it to violate--not any special obligation of the Regulatory
Flexibility Act--but the general legal requirement of reasoned,
nonarbitrary decisionmaking, . . . . (at 405).
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Thus, a federal agencies can ignore the burden
imposed on small business until those burdens are
sufficient to undercut the rationality of a rule. The
probability that any particular rule will fail due to
the faulty premises underpinning an incorrect
regulatory flexibility analysis are rare indeed. With
the potential for federal court litigation fairly
remote, agencies have little to lose in ignoring their
responsibilities under the RFA.\17\
\17\ Hearing on H.R. 830 Before Subcomm. on Administrative Law and
Governmental Relations of the House Comm. on the Judiciary, 103rd Cong.
1st Sess. Serial No. 69, p. 37 (1993) (testimony of Doris S. Freeman).
---------------------------------------------------------------------------
In testimony this year,\18\ Representative Ike Skelton
pointed to a 1987 report of the House Committee on Small
Business entitled: ``Implementation of the Regulatory
Flexibility Act--A Five Year Report''. The report resulted from
the work the Small Business subcommittees on Exports, Tourism,
and Special Problems, chaired at that time by Representative
Skelton.\19\ The report discusses at considerable length the
problems with enforcement of the RFA, concluding that Section
605(b) (permitting agencies to certify no significant impact on
small entities) was particularly subject to abuse because the
prohibition against judicial review contained in Section 611
makes it impossible to question the agency's action. The
apparent conflict within the Act has been noted by the
courts.\20\
\18\ Hearing on H.R. 9, Before the Subcomm, on Commercial and
Administrative Law of the House Comm. on the Judiciary, 104th Cong.,
1st Session. (1995).
\19\ H. Rep. No. 273, 100th Cong. (1987).
\20\ In Lehigh Valley Farmers v. Block, supra., the court stated in
a footnote: ``We would be less than candid if we did not recognize that
Congress theoretically rendered Sections 603 and 604 of the RFA
nullities based on Sections 605 and 611. However, it for Congress to
correct this anomaly if it so desires.'' (at 1520).
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In his 1993 annual report on implementation of RFA, the
Chief Counsel for Advocacy of the SBA, Jere W. Glover, noted
that many agencies have decided merely to use boilerplate
certifications. The Counsel's report indicated that the Federal
Energy Regulatory Commission, for one, has modified its
procedures from providing a statement explaining its
certification to a simple assertion that a rule will not have a
significant impact upon a substantial number of small
entities.\21\ After identifying similarly recalcitrant agencies
(i.e. Food and Nutrition Service, Forest Service, Bureau of
Indian Affairs, and the Departments of Transportation and
Justice), the report explained: ``The Office of Advocacy is
powerless to force agencies to provide concise statements
explaining their rationale [for certification].'' \22\
\21\ Standards of Conduct and Reporting Requirements for
Transportation and Affiliate Transactions of Natural Gas Pipelines, 59
Fed. Reg. 268 (1994). Although the report criticized FERC for its use
of boilerplate certifications, it did note that in other ways it was
one of the agencies most responsive to small business concerns because
of its willingness to modify a rule after taking account of concerns
raised by small entities.
\22\ Annual Report of the Chief Counsel for Advocacy on
Implementation of the Regulatory Flexibility Act, U.S. Small Business
Administration, p.16 (1993).
---------------------------------------------------------------------------
Thus, the most significant feature of title I of H.R. 926
is its deletion of the prohibition against judicial review
contained in Section 611 of the RFA. This is in clear response
to strong sentiment expressed not only during the hearings, but
also from many other sources and for many years. The National
Performance Review, chaired by Vice-President Gore, made
deletion of the ban against judicial review its primary
recommendation with respect to the Small Business
Administration. Many small businesses, manufacturing and
municipal organizations have concurred with the Vice-
President.\23\
\23\ See Hearings on H.R. 9, supra. Also, Hearings on H.R. 930
before Subcomm. on Administrative Law and Governmental Relations of the
House Comm. on the Judiciary, Rep. No. 69, 103rd Cong. (1993).
---------------------------------------------------------------------------
There was some concern that providing judicial review might
result in an influx of court challenges to agency rules,\24\
although the National Performance Review discounted its impact.
Nonetheless, the committee thought it sound policy to create a
right to judicial review with distinct parameters. Thus Section
101 of title I, while providing for judicial review, limits the
time during which an affected small entity may seek judicial
review to 180 days after the effective date of an agency's
rule, or, in cases where an agency has delayed the issuance of
a final regulatory analysis because of an emergency, 180 days
after the final regflex analysis has been made available to the
public.\25\ If a shorter time period is provided by law under
which the rule was promulgated, then the shorter time period
controls.\26\
\24\ Hearing on H.R. 830, ibid 63-9 (testimony of Professor Thomas
O. McGarity, University of Texas Law School).
\25\ Section 101(2)(B) of H.R. 926.
\26\ Section 101(2)(A) of H.R. 926.
---------------------------------------------------------------------------
But, beyond judicial review there are other ways to promote
the successful functioning of the RFA and H.R. 926 attempts to
do so.
The Office of Chief Counsel for Advocacy within the Small
Business Administration was established by law in 1976.\27\ The
law gives the Counsel a wide variety of responsibilities which
are aimed at making the SBA and other Federal agencies
sensitive to the concerns of small business and vice-versa. The
Counsel was subsequently entrusted oversight responsibility of
RFA.\28\ Drafters of H.R. 830 of the 103rd Congress, upon which
H.R. 926 is based, argued that one way to ensure a successful
RFA is to bolster the Counsel in his oversight role. Thus, they
proposed that Counsel be given advance notification of proposed
federal rules so that he can comment upon them to the agency
before they are published.
\27\ P.L. 94-305, Title II, Sec. 201. 15 U.S.C. 634a et seq.
\28\ 5 U.S.C. 612.
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It is obviously desirable that rules be drafted so well
that they never need to be challenged. One way this quality of
product can be achieved with respect to the particular concerns
of small entities is to provide for pre-publication review by
the Chief Counsel for Advocacy. As the principal sponsor,
Representative Thomas Ewing noted: ``This would involve that
office in this process at an earlier stage. Advocacy should be
working hand-in-hand with the regulators to write rules which
meet the requirements of the RFA and keep the agencies out of
court.'' \29\ The committee agreed with the drafters, although
it should also be noted that the Counsel's role is only to
comment and suggest. He cannot veto an agency's proposed rule.
\29\ Hearing on H.R. 830, supra. See also the statement of James W.
Morrison, appearing on behalf of the National Association of the Self-
Employed, who suggested that pre-publication notification could remedy
the lack of useful effect from 5 U.S.C. 602 regarding the provision of
regulatory agendas to the Counsel. Id. at 79.
---------------------------------------------------------------------------
As was discussed above, the Counsel is authorized by law to
appear as amicus curiae in his oversight function with respect
to the RFA. But, given the history of the RFA, it appears
useful at this point to restate this authority as a sense of
Congress.
title ii
The methods by which the Federal government promulgates and
enforces regulations is a subject which has received increased
scrutiny in the past three decades. Since 1887, when Congress
established the first modern day regulatory agency, the
Interstate Commerce Commission, to regulate American railroads,
the Federal government has liberally increased its role in
regulating American business.\30\ However, by the 1960's and
1970's, this unfettered growth of Federal agencies and the
cumbersome process by which they implement regulatory actions
had attracted many critics.
\30\ Since 1887, 56 regulatory agencies have been created; and as
of June 1994, those agencies collectively employ over 131,000
regulatory staff.
---------------------------------------------------------------------------
Consequently, starting in the mid-1970's five successive
U.S. presidents attempted, through the Executive branch, to
impose some criteria on the agency rulemaking process.
Beginning in 1974, a series of executive orders were initiated
to impose objective standards upon the process, and to attempt
to measure the impact of regulations created pursuant to that
process. In 1974 and 1976 respectively, President Ford imposed
an ``Inflationary Impact Analysis'' on regulations, and then an
``Economic Impact Analysis'' on the rulemaking process.\31\ In
1978, President Carter called for ``Economic Impact
Statements'' on regulations,\32\ and in 1981, President Reagan
in his order on ``Federal Regulations'' required regulatory
impact analysis to be completed on all regulations before they
could be issued,\33\ Most recently, in 1993, President Clinton
imposed a ``Regulatory Planning Review'' on the rulemaking
process.\34\ This Executive branch movement toward measuring
and curbing what appears to be the inevitable growth of federal
regulations has generated support during the past two decades
for legislative efforts with similar goals.
\31\ Exec. Order No. 11821, 3 C.F.R. 926 (1971-1975 compilation)
and Exec. Order No. 11949, 3 C.F.R. 161 (1976).
\32\ Exec. Order No. 12044, 43 Fed. Reg. 12661 (1978).
\33\ Exec. Order No. 12291, 3 C.F.R. 127 (1982). President Bush
continued to enforce Executive Order 12291 during his administration.
\34\ Exec. Order No. 12866, 58 Fed. Reg. 51735 (1993).
---------------------------------------------------------------------------
Title II of H.R. 926, entitled ``Regulatory Impact
Analysis'' is the most recent legislative product of sporadic
congressional efforts which began over thirty years ago.\35\
The most successful of those efforts culminated in 1982, when
the Senate passed S. 1080, the ``Regulatory Reform Act'', by a
vote of 94 to 0.\36\ This legislation represents the first
viable legislative attempt, since the demise of S. 1080, to
codify improvements to the agency rulemaking process which
executive orders have temporarily imposed during the past three
decades.
\35\ In the 88th Congress, in 1964, the Subcommittee on
Administrative Practice and Procedure [of the Senate Judiciary
Committee] held three days of hearings and heard from 36 witnesses on a
bill intended to update and improve the procedural rules that govern
proceedings before departments and agencies. Hearings on this subject
continued in the 89th, the 94th, and the 95th Congresses. [During the
96th Congress], the Subcommittee on Administrative practice and
Procedure [of the Senate Judiciary Committee] embarked on an ambitious
schedule of ten days of hearings, receiving testimony from over 100
witnesses on all manner of regulatory reform. During the [96th
Congress], the [Senate] Committee on Governmental Affairs held eleven
days of hearings on Regulatory Reform legislation and heard testimony
from 80 witnesses. S. Rep. No. 284, 98th Cong., 1st Sess. 1-2 (1981).
\36\ Despite the overwhelming and bipartisan support for the bill
in the Senate, S. 1080 was never afforded a vote in the House. S. 1080
contained provisions which are similar to those of this title,
including a requirement that Federal agencies complete and publish a
preliminary and final regulatory impact analysis during the
consideration of, and upon publication of a major rule.
---------------------------------------------------------------------------
Without question it is the Executive branch which is
charged with enforcing the laws Congress passes; and agencies
are the governmental entities within the Executive responsible
for crafting the regulations by which to implement Federal
laws. However, Congress has the power to address the Federal
agency rulemaking process and did so comprehensively in 1946,
with the enactment of the ``Administrative Procedure Act''
(APA), which is codified in title 5 of the U.S. Code.\37\ The
failure to date of the Executive branch to comprehensively
discipline the rulemaking process is due in part to the limited
authority of executive orders. An executive order cannot amend
the primary rulemaking statute, the APA; and an executive order
can easily be repealed simply by the issuance of a subsequent
order.\38\
\37\ 5 U.S.C. Sec. 551 et seq.
\38\ A recent example of the ephemeral nature of executive orders
is the revocation of President Reagan's 1981 Executive Order 12291,
supra, by President Clinton's Executive Order 12866, supra, on
September 30, 1993. The repeal of Reagan's Order by President Clinton
did not require any action by the Legislative branch, and is not
subject to review by the Judicial branch; it is simply an internal
Executive branch mechanism.
---------------------------------------------------------------------------
A major impetus for the drafting of title VII of H.R. 9,
the predecessor to this title, was frustration by many in the
business community at the revocation of President Reagan's
Executive Order 12291 by President Clinton.\39\ The Reagan
Executive Order not only mandated completion by agencies of a
regulatory impact analysis, but provided substantial
enforcement authority to the director of OMB to oversee agency
compliance. The subsequent Clinton Executive Order is generally
less imposing on agencies, provides more agency discretion, and
grants less enforcement authority to the director of OMB.\40\
\39\ ``The regulatory impact analysis you are considering today is
the result of meetings with scores of business leaders and individuals
throughout the country who have found themselves snagged in government
red tape, . . . .'' Hearings on H.R. 9, supra (testimony of Congressman
Bob Franks).
\40\ For example, the language of Reagan Executive Order 12291
provides in part the following:
To permit each proposed major rule to be analyzed in
light of the requirements of this Order . . . each
preliminary and final regulatory impact analysis shall
contain the following information: (1) a description of the
potential benefits of the rule . . ., (2) a description of
the potential cost of the rule . . ., (3) a determination
of the net benefits of the rule . . ., (4) a description of
alternative approaches that could substantially achieve the
same regulatory goal at a lower cost . . .,
Upon the request of the director, an agency shall consult
with the director concerning the review of preliminary
regulatory impact analysis . . . and shall . . . refrain
from publishing its preliminary regulatory impact analysis
. . . until such review is concluded. (Emphasis added)
By contrast, the language of Clinton Executive Order 12866, provides
in part the following:
To ensure that the agencies' regulatory programs are
consistent with the philosophy set forth above, agencies
should adhere to the following principles, to the extent
permitted by law and where applicable: (1) each agency
shall identify the problem it intends to address . . ., (2)
each agency shall examine whether existing regulations . .
. have created, . . . the problem that a new regulation is
intended to correct . . ., (3) each agency shall identify
and assess available alternatives to direct regulation, . .
. (4) in setting regulatory priorities, each agency shall
consider, to the extent reasonable, the degree and nature
of the risks posed. . . .
Coordinated review of a agency rulemaking is necessary to
ensure that regulations are consistent with applicable law,
. . . . The Office of Management and Budget shall carry out
that review function. . . . To the extent permitted by law,
OMB shall provide guidance to agencies . . . and shall be
the entity that reviews individual regulations. . . .
(emphasis added)
The literal differences between Reagan Executive Order
12291 and Clinton Executive Order 12866 are fundamental. While
the Clinton Order addresses the same topics as Executive Order
12291, its language is significantly different, and tends to
weaken rather than strengthen regulatory analysis in the
Executive branch. Specifically, the express regulatory impact
analysis and decisional criteria provisions of the Reagan Order
are replaced in Clinton's Order with general statements of
``Regulatory Philosophy'' and ``Principles of Regulation'' that
speak in the more benign ``shoulds'' rather than the Reagan
Order's mandatory ``shalls''. A consequence of President
Clinton's revocation of the 1981 Reagan Order was the
incorporation by reference of Executive Order 12291 into the
legislative language of title VII of H.R. 9.
Title II of H.R. 926 represents a substantial rewrite of
title VII of H.R. 9. Reagan Executive Order 12291 is not
incorporated by reference into title II as it was in H.R. 9.
Instead, the APA, specifically section 553 of title 5, is
amended to include some original and some amended provisions of
Executive Order 12291. For example, title II contains a reduced
set of impact analysis criteria, which was created, in part,
through combining language from the previous Reagan Order and
from title VII of H.R. 9. Furthermore, the definition of a
major rule, pursuant to this legislation, will now be included
within the definition provision of the APA, but generally
reflects the definition of a major rule from prior Executive
Order 12291.
Title III
Title III of H.R. 926 is derived from title VIII of H.R. 9,
which sought to provide a citizen's regulatory bill of rights
and protection for private sector whistleblowers. The
Commercial and Administrative Law Subcommittee heard testimony
and received other evidence indicating the presence of
regulatory abuse and its disruptive effects on the confidence
that citizens and businessmen alike should have in the
functioning of their government. There is, furthermore, a
perception that retaliatory actions may be taken by government
agencies against private sector whistleblowers, and such
perceptions can have very real consequences in determining
whether a person decides to come forward with his or her
evidence. As Representative Tom DeLay advised the Subcommittee
during the hearing on title VIII, ``Our constituents struggle
daily to comply with an unending array of regulatory
requirements [and] at the very least they should feel free to
speak openly about regulatory actions taken against them that
they believe to be unfair.''
There is clearly broad agreement that persons who are the
subjects of regulatory abuse should as a matter of course be
protected from abuse by regulators, and that persons who
criticize regulators should be protected from reprisals against
such criticism. These are the concerns that underlie this
title.
After discussions among the Members and careful
consideration of the testimony and other communications
received, it was decided that the concerns giving rise to title
VIII would be best met at this time as follows: The President,
pursuant to his authority under 5 U.S.C. 7301, is directed
within 180 days of enactment to prescribe regulations for
employees of the executive branch of government to insure that
Federal laws and regulations shall be administered consistent
with the principle that any person shall, in connection with
the enforcement of such laws and regulations, (1) be protected
from abuse, reprisal, or retaliation, and (2) be treated
fairly, equitably, and with due regard for such person's rights
under the Constitution.
Recent examples of the exercise of the President's
authority under 5 U.S.C. 7301 to ``prescribe regulations for
the conduct of employees in the executive branch'' would
include executive orders relating to a drug-free Federal
workplace,\41\ setting forth principles of ethical conduct for
government officials and employees \42\ and prescribing ethical
commitments by executive branch appointees.\43\
\41\ Exec. Ord. No. 12564. 51 Fed.Reg. 32889 (1986).
\42\ Exec. Ord. No. 12674, 54 Fed.Reg. 15159 (1989), as amended by
Exec. Ord. No. 12731, 55 Fed.Reg. 42547 (1990).
\43\ Exec. Ord. No. 12834, 58 Fed.Reg. 5911 (1993).
---------------------------------------------------------------------------
The regulations issued pursuant to title III prohibiting
regulatory abuse and retaliation and requiring fair and
equitable treatment should receive the broadest possible
dissemination throughout the executive branch. Their content
should also be incorporated into agency training, agency field
manuals, and elsewhere as appropriate. In the future, the
Committee anticipates that it may conduct regular oversight
hearings into the subject of regulatory abuse and reprisals by
agencies of the Federal Government.
Hearings
The Committee's Subcommittee on Commercial and
Administrative Law held two days of hearings on titles VI, VII
and VIII of H.R. 9, the precursors of titles I, II and III of
H.R. 926, on February 3 and 6, 1995.
Testimony on title VI was received on February 3 from the
following witnesses: Representative Ike Skelton; Representative
Tom Ewing; John Spotila, General Counsel, Small Business
Administration; Jere Glover, Chief Counsel for Advocacy, Small
Business Administration; Joseph Stehlin, representing Green
Cove Maritime, Inc.; Rick Stadelman, Executive Director,
Wisconsin Towns and Townships; Bennie Thayer, President of the
National Association of Self-Employed; Donald Dorr, Esq.,
representing the U.S. Chamber of Commerce; James P. Carty, Vice
President of Small Manufacturers, National Association of
Manufacturers; Kim McKernan, Director of House Governmental
Affairs, National Federation of Independent Businessmen; and
David Vladek, representing Public Citizen.
Testifying on title VIII on February 3 were Representative
Tom DeLay; Jamie Gorelick, Deputy Attorney General, United
States Department of Justice; Edward Hudgins, Director of
Regulatory Studies at the CATO Institute; and Susan Eckerly,
Deputy Director of Economic Policy at the Heritage Foundation.
Testimony was received from Professor Thomas O. McGarity of the
University of Texas School of Law, who at the time of his
scheduled appearance was testifying before another
Congressional committee and was made part of the record.
On February 6, the Subcommittee heard testimony on title
VII from the following persons: Representative Bob Franks;
Representative David McIntosh; Sally Katzen, Administrator of
the Office of Information and Regulatory Affairs of the Office
of Management and Budget; Cornelius E. Hubner, President of the
American Felt and Filter Company; Brian Maher, President of
Maher Terminals; Al Wenger, Executive Officer, Wenger Feed
Mills; Ed Dunkelberger, Esq., representing the National Food
Processors Association; C. Boyden Gray, Esq.; David Hawkins,
Senior Attorney, Natural Resources Defense Council; James C.
Miller, representing Citizens for a Sound Economy; Thomasina
Rogers, Chair of the Administrative Conference of the United
States, accompanied by Ernest Gellhorn, Esq.; Gary Bass,
Executive Director, OMB Watch; and George C. Freeman, Jr.,
Esq., Chairman of the American Bar Association's Working Group
on Regulatory Reform.
Additional material was submitted by a number of
individuals and organizations.
Committee Consideration
On February 16, 1995, the Committee met in open session and
ordered reported the bill H.R. 926, with amendments, by voice
vote, a quorum being present.
Vote of the Committee
There were three amendments adopted by voice vote. The
first was an amendment offered by Mr. Gekas which provides an
exemption from the pre-publication notification requirements of
section 102 for certain monetary agencies. The second was an
amendment offered by Mr. Schumer which provides an exemption
for certain monetary agencies from OMB enforcement authority
over the impact analysis requirements of title II. The third
was an amendment offered by Mr. Reed which limits the period
for review of the OMB director to 90 days regarding preliminary
and final impact analyses and proposed final rules.
There were recorded votes on four amendments during the
Committee's consideration of H.R. 926, as follows:
1. An amendment offered by Mr. Frank to an amendment by Mr.
Gekas regarding an exemption for certain banking agencies from
the pre-publication requirement to notify the Chief Counsel for
Advocacy of the SBA. Defeated 13-16.
YEAS NAYS
Mr. Conyers Mr. Hyde
Ms. Schroeder Mr. Moorhead
Mr. Frank Mr. McCollum
Mr. Schumer Mr. Gekas
Mr. Boucher Mr. Coble
Mr. Bryant (Texas) Mr. Schiff
Mr. Reed Mr. Gallegly
Mr. Nadler Mr. Canady
Mr. Scott Mr. Inglis
Mr. Watt Mr. Goodlatte
Mr. Serrano Mr. Buyer
Ms. Lofgren Mr. Bono
Ms. Jackson Lee Mr. Heineman
Mr. Bryant (Tennessee)
Mr. Flanagan
Mr. Barr
2. A Substitute amendment to the Schumer amendment offered
by Mr. Watt, further exempting monetary agencies from the
regulatory impact analysis requirements of title II. Defeated
13-19.
YEAS NAYS
Mr. Conyers Mr. Hyde
Ms. Schroeder Mr. Moorhead
Mr. Frank Mr. Sensenbrenner
Mr. Schumer Mr. McCollum
Mr. Boucher Mr. Gekas
Mr. Bryant (Texas) Mr. Coble
Mr. Reed Mr. Schiff
Mr. Nadler Mr. Gallegly
Mr. Scott Mr. Canady
Mr. Watt Mr. Inglis
Mr. Serrano Mr. Goodlatte
Ms. Lofgren Mr. Buyer
Ms. Jackson Lee Mr. Hoke
Mr. Bono
Mr. Heineman
Mr. Bryant (Tennessee)
Mr. Chabot
Mr. Flanagan
Mr. Barr
3. An amendment offered by Mr. Reed increasing the monetary
threshold for defining a ``major rule'' in title II from $50
million to $100 million. Defeated 13-19.
YEAS NAYS
Mr. Conyers Mr. Hyde
Ms. Schroeder Mr. Moorhead
Mr. Frank Mr. Sensenbrenner
Mr. Schumer Mr. McCollum
Mr. Boucher Mr. Gekas
Mr. Bryant (Texas) Mr. Coble
Mr. Reed Mr. Smith (Texas)
Mr. Nadler Mr. Schiff
Mr. Scott Mr. Gallegly
Mr. Watt Mr. Canady
Mr. Serrano Mr. Inglis
Ms. Lofgren Mr. Goodlatte
Ms. Jackson Lee Mr. Hoke
Mr. Bono
Mr. Heineman
Mr. Bryant (Tennessee)
Mr. Chabot
Mr. Flanagan
Mr. Barr
4. An amendment offered by Mr. Conyers requiring that all
contracts to an agency regarding informal rulemakings be
described, recorded and made available to the public. Defeated
14-19.
YEAS NAYS
Mr. Conyers Mr. Hyde
Ms. Schroeder Mr. Moorhead
Mr. Frank Mr. Sensenbrenner
Mr. Schumer Mr. McCollum
Mr. Berman Mr. Gekas
Mr. Boucher Mr. Coble
Mr. Bryant (Texas) Mr. Smith (Texas)
Mr. Reed Mr. Schiff
Mr. Nadler Mr. Gallegly
Mr. Scott Mr. Canady
Mr. Watt Mr. Inglis
Mr. Serrano Mr. Goodlatte
Ms. Lofgren Mr. Hoke
Ms. Jackson Lee Mr. Bono
Mr. Heineman
Mr. Bryant (Tennessee)
Mr. Chabot
Mr. Flanagan
Mr. Barr
Committee Oversight Findings
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 2(l)(3)(B) of House rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 2(l)(C)(3) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to H.R. 926, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 403 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 23, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 926, the
Regulatory Reform and Relief Act.
Enactment of H.R. 926 could effect direct, spending.
Therefore, pay-as-you-go procedures would apply to the bill.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
James L. Blum
(For Robert D. Reischauer, Director).
Enclosure.
1. Bill number: H.R. 926.
2. Bill title: Regulatory Reform and Relief Act.
3. Bill status: As ordered reported by the House Committee
on the Judiciary on February 17, 1995.
4. Bill purpose: Title I of H.R. 926 would permit small
entities to petition for judicial review of a federal agency's
compliance with the requirements of the Regulatory Flexibility
Act. The bill also would require that a federal agency transmit
to the Small Business Administration (SBA) a copy of any
proposed rule (and the agency's initial regulatory flexibility
analysis, if required) at least 30 days prior to the
publication of the notice of proposed rulemaking. The SBA would
be permitted to transmit to the proposing agency the SBA's
analysis of the proposed rule's effects on small business.
Title II of the bill would make several changes to the
current laws relating to federal rulemaking. These provisions
would apply to most agency rules expected to have an effect on
the economy of at least $50 million annually. First, the bill
would require a 90-day advanced notice to the public of
proposed rulemaking. Second, H.R. 926 would require agencies to
hold an informal hearing on a rule if more than 100 persons
request such a hearing, and to extend the public comment period
on proposed rules by 30 days if more than 100 persons make such
a request. Third, the bill would require agencies to prepare a
preliminary regulatory impact analysis along with the public
notice of proposed rulemaking, in addition to a final
regulatory impact analysis.
Title III of H.R. 926 would require the President, within
180 days of enactment of the bill, to prescribe guidelines to
protect private sector whistleblowers from retaliation by
federal regulatory agencies.
5. Estimated cost to the Federal Government:
Title I.--Federal agencies required to file regulatory
flexibility analyses would incur some additional costs in
transmitting the required documents to the SBA, but CBO does
not expect these costs to be significant. Based on information
from the SBA, CBO estimates that reviewing proposed rules and
preparing analyses of their effects on small businesses would
cost the federal government approximately $200,000 per year
over the next five years, assuming appropriation of the
necessary amounts.
Title II.--We estimate that enactment of Title II of H.R.
926 would increase the cost of issuing and reviewing
regulations by the major federal regulatory agencies by at
least $150 million annually. Few of the agencies that would be
affected by this bill have had time to systematically study the
additional costs that its implementation would impose. The
provisions are similar to the work most agencies now conduct
for some regulations expected to have an economic impact
greater than $100 million annually. This estimate assumes that
agencies will try to adhere to their current schedules for
implementing new regulations and revising existing rules. CBO
has insufficient information at this time to estimate the cost
impacts of this bill on all federal agencies; however, we
believe the major cost impacts would fall upon the agencies
discussed below.
EPA currently spends more than $120 million annually on
regulatory impact analysis to support rule making efforts for
regulations expected to have an economic impact greater than
$100 million annually. Based on preliminary information from
the agency, we estimate that requiring regulatory impact
analysis for regulations with annual economic impacts of $50
million or more would increase the agency's costs by $50
million to $100 million annually.
The Department of Agriculture (USDA) currently prepares
regulatory impact assessments, environmental impact statements,
and risk analyses for all regulatory actions affecting human
health, safety, or the environment that are expected to result
in annual costs to the economy of more than $100 million. Based
on information from USDA, we estimate that lowering the
threshold for these analyses would increase the number of
assessments and cost/benefit studies by 50 to 100 each year.
The additional costs associated with such assessments and
studies range from less than $100,000 for a relatively routine
rule to several million dollars for a major regulatory change.
CBO estimates that most of the additional work would cost
$150,000 to $250,000 per analysis, or an additional $10 million
to $25 million annually for the department.
Based on information from the Food and Drug Administration,
CBO estimates that the bill's requirements would add less than
$15 million annually to the agency's current spending on pre-
market regulatory activities.
The Department of the Interior currently spends about $50
million per year for regulatory analysis. This work is carried
out primarily by the Office of Surface Mining, the Minerals
Management Service, and the Bureau of Land Management as part
of their overall regulatory enforcement activities. Lowering
the threshold for regulatory analyses from $100 million to $50
million would increase the number of analyses these agencies
would have to prepare, resulting in additional annual costs of
less than $20 million.
Requirements in Title II of H.R. 926 also would increase
costs for the Occupational Safety and Health Administration,
the Mine Safety and Health Administration, and the Consumer
Product Safety Commission. Based on information from these
agencies, CBO estimates that enactment of the bill would result
in total additional costs of less than $15 million per year for
these agencies.
The Department of Energy, Department of Transportation, and
Department of Defense would incur additional costs to implement
the bill. CBO cannot quantify the impact on these agencies at
this time, but the additional costs could be significant.
6. Comparison with spending under current law: CBO
estimates that enactment of this bill would add at least $150
million annually to the cost of issuing regulations.
7. Pay-as-you-go considerations: Section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985 sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts through 1998. Enactment of H.R. 926 could
affect direct spending; therefore, pay-as-you-go procedures
would apply to the bill.
Enactment of Title I of H.R. 926 could result in additional
lawsuits against the federal government requesting judicial
review of federal agency compliance with the requirements of
the Regulatory Flexibility Act. To the extent that the
additional lawsuits were successful and the plaintiffs were
awarded attorney's fees, enactment of H.R. 926 could result in
additional direct spending because these fees are paid from the
Claims, Judgments and Relief Acts account. CBO cannot estimate
either the likelihood or the magnitude of the direct spending,
because there is no basis for predicting either the outcome of
possible litigation or the amount of potential compensation.
8. Estimated cost to State and local governments: How
enactment of H.R. 926 would affect the budgets of state and
local governments is unclear. If regulations that would impose
additional requirements on state and local governments are
delayed by the enactment of these provisions, then costs to
these entities would be less. It is also possible, however,
that some regulatory actions that would otherwise provide
relief to state and local governments could be delayed, thereby
increasing their costs for various activities. CBO has no basis
for predicting the direction, magnitude, or timing of such
impacts.
9. Estimate comparison: None.
10. Previous CBO estimate: None.
11. Estimate prepared by: John Webb and Mark Grabowicz
(226-2860), and Connie Takata (226-2820).
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that H.R. 926
will have no significant inflationary impact on prices and
costs in the national economy.
Section-By-Section Analysis
Title I--Strengthening Regulatory flexibility
Section 101--Judicial review
Currently, 5 U.S.C. 611 generally bars judicial review of
the Regulatory Flexibility Act. Judicial review is provided
only in those limited instances when an action for judicial
review is instituted on other grounds and only to the extent
that the regflex analysis is to be made part of the record to
be considered by the court in those cases. Not reviewable is an
agency's certification that a regflex analysis is not required,
nor is the adequacy of the analysis unless considered as a part
of a larger challenge.
Section 101 creates a new 5 U.S.C. 611 which in subsection
(a)(1) grants judicial review of compliance with regflex to
affected small entities but requires that they must petition
within 180 days after the effective date of the final rule they
seek to challenge. The challenge must be brought to the court
having jurisdiction to review such rule for compliance with the
provisions of the Administrative Procedure Act or any other
provision of law.
Subsection (a)(2)(A) provides that where a provision of law
requires that an action challenging a final agency regulation
be commenced before 180 days, a challenge based upon the RFA
must be brought within that shorter time. Subsection (a)(2)(B)
covers those situations where an agency has foregone the
issuance of a regflex analysis because it was operating under
an emergency situation described in Section 608 of the Act. In
those cases, an affected small entity has 180 days to seek
judicial review from the date the analysis is made available to
the public or within a shorter period if a law requires a
challenge be brought in such a shorter time.
Subsection (a)(3) defines ``affected small entity'' as one
that is or will be adversely affected by the rule. Thus, if a
rule creates requirements that will be imposed on identifiable
small entities at a time certain in the future, aggrieved
entities must seek judicial review within the time period
established in the bill.
Subsection (a)(4) states that nothing in the subsection
shall be construed to affect a court's authority to stay a
rule's effective date. A court is left to determine what is
appropriate under the circumstances, consistent with its
authority, but should consider the availability of remedies
described subsections (5) and (6) following.
Subsection (5)(A) gives a court reviewing a challenge under
the RFA the authority to order an agency to prepare a regflex
analysis if the agency has improperly certified that a proposed
rule would not have a significant impact on a substantial
number of small entities. The standard that the court is to
follow is that, on the basis of the rulemaking record, the
certification was ``arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.''
If the agency has prepared a final regflex analysis,
subsection (5)(B) authorizes the court to order the agency to
take corrective action consistent with Section 604 of the RFA
(which describes what should be in a final regflex analysis.)
Subsection (6) grants agencies a 90-day period in which to
take corrective action pursuant to Subsection (5). If after
that period the agency has not complied, the court may stay the
rule or grant such other relief as it deems appropriate.
Subsection (7) requires the court to take due account of
the rule of prejudicial error.
Subsection (7)(b) provides that in an action for judicial
review of a rule, a regflex analysis shall be considered part
of the whole record of agency action in connection with such
review.
Subsection (7)(c) states that nothing in the section bars
judicial review of any other impact statement or analysis
required or permitted by another law.
Subsection 101(b) provides that the amendments contained in
subsection (a) apply only to final agency rules issued after
the date of enactment.
Section 102--Rules commented upon by SBA Chief Counsel for Advocacy
Section 102(a) amends 5 U.S.C. 612 by adding to it a new
subsection (d). The new subsection attempts to bolster the role
of the Chief Counsel for Advocacy of the Small Business
Administration by providing in subparagraph (1) that when an
agency promulgates rules, it must send them to the Chief
Counsel at least 30 days prior to the publication of a general
notice of proposed rulemaking. Subparagraph (2) gives the Chief
Counsel fifteen days to transmit a written statement to the
agency discussing the effect of the proposed rule on small
entities. Subparagraph (3) provides that the Chief Counsel's
statement, together with any response by the agency, shall be
published in the Federal Register at the time of publication of
the general notice of proposed rulemaking for the rule.
Subparagraph (4) was added during committee consideration as an
amendment offered by Representative Gekas. It provides an
exception to the requirement that proposed rules be sent to the
Chief Counsel prior to publication for those issued by an
``appropriate banking agency'',\44\ the National Credit Union
Administration or the Office of Federal Housing Enterprise
Oversight in connection with the implementation of monetary
policy or to ensure the safety and soundness of federally
insured depository institutions, any affiliate of such an
institution, credit unions, or government sponsored housing
enterprises or to protect the Federal deposit insurance funds.
The exception recognizes that in this narrow class of
situation, given the volatility of financial markets and their
sensitivity to information, it would be not be advantageous to
provide advance notice to the Chief Counsel.
\44\ Reference is made to the definition of that term in Section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).
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Section 103--Sense of the Congress regarding the SBA Chief Counsel for
Advocacy
Section 103 merely states as the sense of Congress that the
Chief Counsel for Advocacy of SBA should be permitted to appear
as amicus curiae in any action or case brought in a federal
court to review a rule. Section 612 of title 5 gives the Chief
Counsel that authority, but it is viewed as useful in the
context of the Chief Counsel's responsibilities and his
position within the federal bureaucracy to restate this point.
title ii--regulatory impact analysis
Section 201--Definitions
Section 201 makes two amendments to section 551 of title 5
of the U.S. Code. First, section 201 adds a new paragraph (15)
to section 551 defining ``major rule''. A ``major rule'' is
generally defined to mean any rule that is likely to result in
an annual effect on the economy of $50 million or more; or
result in a major increase in costs for consumers, industries,
or government agencies; or result in significant adverse
effects on employment or productivity, or on the ability of
U.S. companies to compete with foreign companies in export
markets. This definition is identical to that found in previous
Executive Order 12291 issued by President Reagan on February
17, 1981 except for the monetary threshold of $50 million. The
monetary threshold in the prior Reagan Order was set at $100
million.
The definition of a major rule is pivotal to this
legislation since only major rules are subject to the impact
analysis requirements mandated by this title. The determination
of the level at which to set the monetary threshold was
significant for the business community who supported title VII
of H.R. 9. A major rule in H.R. 9 was defined to mean any
proposed rulemaking which affects more than 100 persons or
compliance with which requires the expenditure of more than $1
million by any single person. That definition which established
a relatively low trigger for requiring impact analysis
attracted many comments on H.R. 9.
Most of the witnesses who testified at the Subcommittee's
hearing on February 6, 1995, regarding title VII of H.R. 9
encouraged the Committee to raise the monetary threshold for
the definition of a major rule contained in the bill. Witnesses
suggested that defining a major rule at too low a threshold
would require impact analysis on so many perfunctory and
innocuous rulemakings that it would be wasteful; and indicated
that covering too many rules would dilute OMB's enforcement
effectiveness.\45\ However, some witnesses testifying on behalf
of the business community emphasized the need to lower the
definition of a major rule from the current level of $100
million set forth in Clinton Executive Order 12286. At least
one witness encouraged the Committee to lower the monetary
threshold of the definition to below that contained in title
VII.\46\ The major rule definition in this section represents a
compromise between the competing interests, who are effected by
the rulemaking process of the Administrative Procedure Act.
\45\ See Hearings on H.R. 9 Before the Subcomm. on Commercial and
Administrative Law of the House Comm. on the Judiciary, 104th Cong.,
1st Sess. (1995) (testimony of Sally Katsen, Administrator of the
Office of Information and Regulatory Affairs, and C. Boyden Gray,
Esquire).
\46\ Id., (testimony of Cornelius E. Hubner).
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Section 201 adds another paragraph (16) to section 551 to
clarify that the term ``director'' as used in title II means
the director of OMB. Where the term ``director'' is used in
title II to mean a person other than the director of OMB, its
use is distinguished by the specific language of the relevant
subsection which includes that term.
Section 202--Rulemaking notices for major rules
Under current law, section 553 of title 5 of the U.S. Code
is that provision of the APA which governs the process of
informal rulemaking. Section 201 amends section 553 by adding a
new subsection (f) which creates new notice procedures and adds
new substantive requirements to the current notice provisions.
Subsection (f) requires a new Advance Notice of Proposed
Rulemaking to be published at least 90-days prior to the
currently required ``general notice.'' This new requirement is
significant in that it provides the public considerably more
notice of an agency's impending rulemaking activities and
allows the public to become involved in the process at a
substantially earlier point than current practice generally
provides. Current law, pursuant to section 553, only requires
agencies to provide ``general notice'' to the public regarding
informal rulemaking. Agencies have the discretion to determine
limitations for the general notice requirement; which in
practice, ranges between 15 to 45 days.
Section 202 requires that the advance notice of proposed
rulemaking include ``to the extent possible'' some of the
information required in a regulatory impact analysis. This
information, is to include an explanation of the necessity of
the rule as set forth by the agency and of the specific legal
authority upon which the rulemaking is based. Furthermore, such
notice should include an analysis of alternative approaches
available to the agency that could have achieved the same
regulatory goal, together with an explanation as to why those
alternatives were not adopted. This provision is an attempt to
ensure that the advance notice required in this section is
sufficiently substantive to provide meaningful guidance to the
public regarding the purpose and legitimacy of a rulemaking,
and to make available to the public an agency's analysis of
potential alternative methods.
The limiting words, ``to the extent possible'' are included
in section 202 regarding the advance notice requirement due to
practical considerations. It is not likely, with regard to all
major rules, that 90-days prior to a general notice, an agency
will be in a position to articulate all the information
required in new subsections (i)(4)(B) and (D). However, it is
expected that much information will be available to an agency
at this point in time with regard to many rules; and therefore,
despite some latitude the requirement is mandated.
A significant provision in the new subsection (f) of the
APA is the requirement that agencies provide a preliminary
impact analysis of a rule at the time the general notice of
proposed rulemaking is provided. An impact analysis is a
significant agency review of potential costs and benefits of a
rule including explanations of agency determinations.\47\ The
requirement to make a preliminary impact analysis available to
the public, at the general notice stage, is intended to give
the public an opportunity to comment upon specific agency
determinations and conclusions regarding a pending rulemaking.
this new procedural requirement allows the public the
opportunity for a substantially more detailed review of a
potential rule during the comment period, than current law
presently allows. The Committee is hopeful that this additional
information will allow the public to more substantively impact
the content of a final rule.
\47\ See specific discussion of regulatory impact analysis--Section
204 herein.
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Finally, section 202 requires agencies to include a final
regulatory impact analysis together with the statement of basis
and purpose for a final major rule. This provision also places
the burden on the agency to delineate all changes in the final
impact analysis from any information which the agency provided
at the advance notice stage. In other words, if the agency's
explanation of the necessity or legal authority of a rule, or
its analysis of potential alternative approaches that could
have been adopted has changed between the time of the advance
notice and the time of the final rule, the agency must describe
those changes in a way that informs the public of the
differences.
Section 203--Hearing requirement for proposed rules; and extension of
comment period
Section 203 of title II adds a new subsection (g) to
section 553 of title 5 of the U.S. Code for the purpose of
providing two procedural changes. First, new subsection (g)
provides that if more than 100 interested persons acting
individually submit requests for a hearing to an agency
regarding any rule, then the agency shall hold such a hearing
on the proposed rule. To the extent that a hearing on a
proposed rule gives the public an opportunity to interact with
an agency and express their views on agency determinations,
this new procedural requirement would appear inconsequential.
However, considered together with the new requirement that a
preliminary regulatory impact analysis be provided at the
general notice stage (as provided under section 202 herein),
individuals who have reviewed such analysis may be able to have
a significant impact on the direction an agency has indicated
with regard to a proposed rulemaking. The requirement in new
subsection (g) that the 100 interested persons ``individually
submit requests,'' is intended to require that 100 different
interested persons make such requests. It is not intended to
allow, for example, 100 employees of one company to make such
requests and mandate agency compliance. It should also be noted
that the type of hearing contemplated by section 203 is not a
formal agency hearing but is intended to be merely a public
hearing, organized and noticed by the agency.\48\
\48\ The type of hearing contemplated in this provision is not the
type of hearing required by section 554 of title 5 of the U.S. Code.
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Section 203 adds a new subsection (h) to section 553 of
title 5 of the U.S. Code. New subsection (h) provides that if
during the 90-day period beginning on the date of the advance
notice of proposed rulemaking, required under new subsection
(f), more than 100 persons individually contact an agency to
request an extension of the public comment period pursuant to
subsection (c) of section 553 of title 5, that the agency shall
provide an additional 30-day period; and may not adopt a rule
until that additional 30-day period expires. The comment period
provided for under current law, may become more significant, in
the event that the new advance notice and preliminary impact
analysis requirements of this legislation become law. If these
new provisions, as contemplated, provide the public an
opportunity for more informed participation in agency
rulemaking, then additional time within which to prepare
substantive comments to an agency may be advantageous. It is
important to note, that as with subsection (g), the requirement
that ``more than 10 persons individually contact the agency'',
is intended to require contact by 100 different individuals;
and is not intended to allow, for example, 100 employees of one
company to trigger agency compliance.
New subsection (h) amends section 553(c) of title 5 of the
U.S. Code by placing the current language of subsection (c)
into a new paragraph (1), and by creating a new paragraph (2).
New paragraph (2) shall require agencies to publish in the
Federal Register all comments submitted to the agency on a
proposed rulemaking. This provision is intended to confirm that
agencies are required to publish general responses to the
substance of comments received by an agency which are relevant
to the subject matter of a proposed rulemaking. This provision
is not intended to require an agency to publish an individual
response to each and every comment received by an agency
regarding such rulemakings.
Section 204--Regulatory impact analysis
Section 204 of title II amends section 553 of title 5 of
the U.S. Code by adding new subsection (i). Subsection (i)
generally requires that agencies prepare and consider a
regulatory impact analysis for every major rule. This provision
makes clear that agencies shall have the discretion to
determine whether the rule is a major rule pursuant to the
definition provided in section 201 herein. Furthermore,
subsection (i) provides the Director of OMB with the authority
to order a rule, not so defined, to be treated as a major rule
or to require any set of related rules, not defined as major
rules, to be considered together as one major rule. This
provision is intended to grant the OMB Director considerable
discretion in requiring any particular rule or set of related
rules to be subject to the impact analysis requirements of this
legislation.
Subsection (i) creates procedures pursuant to which an
agency must abide for the transmitting of impact analysis to
the Director of OMB. Specifically, this provision requires a
preliminary regulatory impact analysis to be transmitted along
with a notice of proposed rulemaking to the Director at least
60 days prior to publication of the proposed rulemaking.
Furthermore, subsection (i) requires a final regulatory impact
analysis to be transmitted to the Director together with the
final rule at least 30-days prior to the publication of a major
rule. These time frames are intended to give the OMB Director
sufficient time to review these analyses prior to publication.
Most significantly, new subsection (i)(4) sets forth the
specific information which each preliminary and final
regulatory impact analysis must contain. The seven analysis
criteria set forth in (i)(4) are the result of the reduction by
elimination and combination of the twenty-three criteria
originally included in title VII of H.R. 9. Subparagraph
(i)(4)(A) requires an agency to provide a description of the
potential benefits of a rule, and to identify the individuals
likely to receive those benefits. Subparagraph (i)(4)(B)
requires an agency to explain the necessity and reasonableness
of a rule and to set forth the specific legal authority upon
which a rule is based; and requires a description of the
condition the rule is to address. Subparagraph (i)(4)(C)
requires an agency to describe the potential cost of a rule and
identify the individuals most likely to bear those costs. This
provision is intended to require an agency to identify
individuals within the private sector who are most likely to be
burdened by the potential costs of a rulemaking.
Subparagraph (i)(4)(D) requires an agency to make public an
analysis of alternative approaches, other than one chosen by
the agency, which the agency considered but discarded in its
determination of how best to implement a law. Subparagraph (D)
specifically requires an analysis of market-based mechanisms
that could have achieved the same regulatory goal, and
explanations as to why such market-based mechanisms were not
adopted for the rulemaking. This provision requires that an
agency not only explain any alternative approaches that were
considered and not adopted, but to demonstrate that the rule
provides for the least costly approach. To some extent, an
agency's determination of the least costly approach must be
based on estimations; however, subparagraph (i)(4)(D) is
intended to require an agency to make as realistic a cost
analysis of its potential alternatives as information available
at the time of the analysis allows.
Subparagraph (i)(4)(E) places some burden on agencies to
research current regulations in order to determine that a
pending rule does not conflict with any other regulation issued
by that agency or issued by other agencies. Subparagraph (E)
further requires an agency to explain why such a conflict
between two regulations should exist if it is contemplated that
such a conflict is unavoidable.
Subparagraph (i)(4)(F) merely requires an agency to state
whether, based on the information available at the time the
rule is published, the rule will require on-site inspections or
whether individuals affected by the rule will be required to
maintain records which will be subject to inspection. If an
agency rulemaking contemplates on-site inspections or
inspections of records, required by the rule, then it is
expected that the agency should have some idea of where the on-
site inspections will be required, and who will be required to
maintain records to be made subject to inspection. Subparagraph
(i)(4)(F) requires the agency to, based on information
available to it, publish that information.
Subparagraph (i)(4)(G) requires agencies to estimate the
cost to the agency for implementing and enforcing a rule.
Furthermore, subparagraph (G) requires an agency to, based on
information available to it, to determine whether it can
implement a rule with its current level of appropriations.
The regulatory impact analysis requirements of subsection
(i)(4) are intended to mandate that agencies perform
comprehensive analysis regarding many aspects of a proposed
rule. These criteria are intended to lighten the burden of
regulations on private citizens by requiring agencies to
implement laws through the method which is least costly on
individuals and businesses engaged in commerce in the United
States. While in some respects the language of the impact
criteria appears to place an undue burden on agencies, it is
intended that the burden be placed upon agencies to avoid
unnecessarily costly regulations rather than on citizens in
complying with such regulations.
Subsection (i) provides authority to the director of the
OMB to enforce agency compliance with the new impact analysis
requirements. Specifically, this provision authorizes the OMB
director to review any preliminary or final impact analysis,
notice of proposed rulemaking or final rule in order to
determine whether the impact analysis requirements have been
satisfied. Pursuant to subsection (i), an agency may not adopt
a final regulatory impact analysis until the director has
either approved it or commented upon it in writing.
An agency may not publish a final impact analysis or final
rule that is commented upon in writing by the director until
those comments have been responded to by the agency and
incorporated in the agency rulemaking file. This provision is
intended to provide significant enforcement authority to the
OMB director to require agency compliance with the impact
analysis criteria set forth in new subsection (i). The OMB
director is empowered to either approve an agency's impact
analysis statement or compel an agency to conform its final
impact analysis and/or final rule to the mandates of the
analysis requirements.
The Committee adopted an amendment by voice vote to create
a 90-day deadline by which the OMB director must either approve
or comment upon a final regulatory impact analysis or final
rule. Pursuant to the amendment, new subsection (i) provides
that an agency may publish a final impact analysis or final
rule in the event that the director fails to either approve or
respond in writing to such analysis or rule within 90-days
after the date of request for review by the director. This
language is intended to prevent the OMB director from vetoing a
rule or impact analysis by simply failing to respond back to
the agency once the director has initiated a review. The
amendment was offered in response to testimony elicited at the
Subcommittee hearing on February 6, 1995, wherein concerns were
expressed that granting review authority to the OMB director
without a time limitation could allow OMB to completely
frustrate the agency rulemaking process.
Finally, the Committee adopted an amendment to subsection
(i) to preclude OMB oversight of impact analysis requirements
for certain monetary agencies. Section 204 now provides that
with regard to major rulemakings by the Federal Reserve Board,
the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union
Administration, or the Office of Housing Enterprise Oversight,
that the term ``director'', will mean the head of such agency.
This provision is intended to require impact analysis to be
completed by these agencies, but in order to avoid potential
political conflicts of interest, it specifically exempts them
from OMB review.
Section 205--Standard of clarity
Section 205 amends section 553 of title 5 of the U.S. Code
by creating new subsection (j). Section 205 represents a
substantial rewrite of a more extensive provision included in
title VII of H.R. 9. The language of section 205 is intended to
merely encourage the head of an agency to ensure that
regulatory impact analysis, and rules published by the agency
are written in a simple and understandable manner that provides
adequate notice to those affected by the rule. This provision
does not provide authority to the director of OMB to enforce
its requirements; and is intended to merely encourage agency
compliance. This provision is not intended to create
justiciable questions regarding improper grammar or sentence
structure or to interfere with court interpretations of
adequate notice.
Section 206--Exemptions
Section 206 amends section 553 of title 5 of the U.S. Code
to create a new subsection (k). Section 206 specifically
exempts from the impact analysis requirements of this
legislation, any regulation that responds to an emergency
situation and any regulation for which consideration under
these procedures would conflict with deadlines imposed by
statute or by judicial order. This provision is intended to
preclude impact analysis requirements from delaying the
issuance of a regulation regarding an emergency situation.
Furthermore, this provision is intended to allow agencies to
forego compliance with impact analysis requirements where it is
evident that to complete such analysis would make it impossible
for the agency to meet a statutorily or judicially imposed
deadline. The language of section 206 requires that regardless
of the exemption regarding statutorily or judicially imposed
deadlines, an agency must report to the OMB director why such
conflict exists; and attempt to comply with the analysis
requirements of this legislation to the extent permitted by the
relevant statutory or judicial deadline.
The Committee adopted an amendment by voice vote which
exempts one other class of regulations pursuant to section 206.
Consequently, section 206 completely exempts from the impact
analysis process, any regulations concerned with the
implementation of monetary policy or to ensure the safety and
soundness of federally insured depository institutions. This
provision is intended to exempt such regulations that are
issued by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration or the
Office of Federal Housing Enterprise Oversight.
Finally, new subsection (k) provides authority to the
director of OMB to exempt from the impact analysis
requirements, any class or category of regulations. This
provision is intended to allow discretion to the director of
OMB to exempt from its review authority those rulemakings which
it lacks the requisite expertise to competently review.
Section 207--Report
Section 207 requires the director of OMB to submit a report
to the Congress within 24 months of the date of enactment of
this legislation containing an analysis of rulemaking
procedures of Federal agencies. The report mandated by this
section requires the OMB director to review the impact of
federal rulemaking procedures on the regulated public and the
regulatory process. This provision is intended to require the
OMB director to analyze potential improvements in the
rulemaking process which have resulted as a consequence of the
enactment of this legislation.
title iii--protections
Section 301--Presidential action
This section of the bill directs the President to prescribe
regulations for government employees in order to insure that
Federal laws and regulations are administered consistent with
the principle that any person shall, in connection with their
enforcement, be protected from abuse, reprisal, or retaliation,
and be treated fairly, equitably, and with due regard for such
persons' Constitutional rights. The President is given 180 days
from the date of enactment to take such action. Authority to
prescribe regulations for the conduct of employees in the
executive branch is vested in the President under 5 U.S.C.
7301.
Agency Views
The Administration was represented during hearings on the
material reflected in title I by John Spotila, General Counsel
of the Small Business Administration. Sally Katzen,
Administrator of the Office of Information and Regulatory
Affairs (OIRA), testified on behalf of the Administration with
respect to the material reflected in title II, and Deputy
Attorney General Jamie Gorelick testified with respect to the
material reflected in title III. In addition, letters were
received from: Ricki Tigert Helfer, Chairman of the Federal
Deposit Insurance Corporation; Derek J. Vander Schaaf, Deputy
Inspector General of the Department of Defense; Steven Herman,
Assistant Administrator of the Environmental Protection Agency;
and Donna Shalala, Secretary of Health and Human Services, all
with respect to title VIII of H.R. 9. The Committee made
substantive changes to title VIII of that bill in response to
these letters, the testimony of witnesses, and consultation
with Members, which are reflected in title III of H.R. 926.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
TITLE 5, UNITED STATES CODE
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PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 5--ADMINISTRATIVE PROCEDURE
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SUBCHAPTER II--ADMINISTRATIVE PROCEDURE
* * * * * * *
Sec. 551. Definitions
For the purpose of this subchapter--
(1) * * *
* * * * * * *
(13) ``agency action'' includes the whole or a part
of an agency rule, order, license, sanction, relief, or
the equivalent or denial thereof, or failure to act;
[and]
(14) ``ex parte communication'' means an oral or
written communication not on the public record with
respect to which reasonable prior notice to all parties
is not given, but it shall not include requests for
status reports on any matter or proceeding covered by
this subchapter[.];
(15) ``major rule'' means any rule subject to section
553(c) that is likely to result in--
(A) an annual effect on the economy of
$50,000,000 or more;
(B) a major increase in costs or prices for
consumers, individual industries, Federal,
State, or local government agencies, or
geographic regions, or
(C) significant adverse effects on
competition, employment, investment,
productivity, innovation, or on the ability of
United States-based enterprises to compete with
foreign-based enterprises in domestic and
export markets; and
(16) ``Director'' means the Director of the Office of
Management and Budget.
* * * * * * *
Sec. 553. Rule making
(a) This section applies, according to the provisions
thereof, except to the extent that there is involved--
* * * * * * *
(c)(1) After notice required by this section, the agency
shall give interested persons an opportunity to participate in
the rule making through submission of written data, views, or
arguments with or without opportunity for oral presentation.
After consideration of the relevant matter presented, the
agency shall incorporate in the rules adopted a concise general
statement of their basis and purpose. When rules are required
by statute to be made on the record after opportunity for an
agency hearing, sections 556 and 557 of this title apply
instead of this subsection.
(2) Each agency shall publish in the Federal Register, with
each rule published under section 552(a)(1)(D), responses to
the substance of the comments received by the agency regarding
the rule.
* * * * * * *
(f)(1) Each agency shall for a proposed major rule publish in
the Federal Register, at least 90 days before the date of
publication of the general notice required under subsection
(b), a notice of intent to engage in rulemaking.
(2) A notice under paragraph (1) for a proposed major rule
shall include, to the extent possible, the information required
to be included in a regulatory impact analysis for the rule
under subsection (i)(4)(B) and (D).
(3) For a major rule proposed by an agency, the head of the
agency shall include in a general notice under subsection (b),
a preliminary regulatory impact analysis for the rule prepared
in accordance with subsection (i).
(4) For a final major rule, the agency shall include with the
statement of basis and purpose--
(A) a final regulatory impact analysis of the rule in
accordance with subsection (i); and
(B) a clear delineation of all changes in the
information included in the final regulatory impact
analysis under subsection (i) from any such information
that was included in the notice for the rule under
subsection (b).
(g) If more than 100 interested persons acting individually
submit requests for a hearing to an agency regarding any rule
proposed by the agency, the agency shall hold such a hearing on
the proposed rule.
(h) If during the 90-day period beginning on the date of
publication of a notice under subsection (f) for a proposed
major rule, or if during the period beginning on the date of
publication or service of notice required by subsection (b) for
a proposed rule, more than 100 persons individually contact the
agency to request an extension of the period for making
submissions under subsection (c) pursuant to the notice, the
agency--
(1) shall provide an additional 30-day period for
making those submissions; and
(2) may not adopt the rule until after the additional
period.
(i)(1) Each agency shall, in connection with every major
rule, prepare, and, to the extent permitted by law, consider, a
regulatory impact analysis. Such analysis may be combined with
any regulatory flexibility analysis performed under sections
603 and 604.
(2) Each agency shall initially determine whether a rule it
intends to propose or issue is a major rule. The Director shall
have authority to order a rule to be treated as a major rule
and to require any set of related rules to be considered
together as a major rule.
(3) Except as provided in subsection (j), agencies shall
prepare--
(A) a preliminary regulatory impact analysis, which
shall be transmitted, along with a notice of proposed
rulemaking, to the Director at least 60 days prior to
the publication of notice of proposed rulemaking, and
(B) a final regulatory impact analysis, which shall
be transmitted along with the final rule at least 30
days prior to the publication of a major rule.
(4) Each preliminary and final regulatory impact analysis
shall contain the following information:
(A) A description of the potential benefits of the
rule, including any beneficial effects that cannot be
quantified in monetary terms and the identification of
those likely to receive the benefits.
(B) An explanation of the necessity, legal authority,
and reasonableness of the rule and a description of the
condition that the rule is to address.
(C) A description of the potential costs of the rule,
including any adverse effects that cannot be quantified
in monetary terms, and the identification of those
likely to bear the costs.
(D) An analysis of alternative approaches, including
market based mechanisms, that could substantially
achieve the same regulatory goal at a lower cost and an
explanation of the reasons why such alternative
approaches were not adopted, together with a
demonstration that the rule provides for the least
costly approach.
(E) A statement that the rule does not conflict with,
or duplicate, any other rule or a statement of the
reasons why such a conflict or duplication exists.
(F) A statement of whether the rule will require on-
site inspections or whether persons will be required by
the rule to maintain any records which will be subject
to inspection.
(G) An estimate of the costs to the agency for
implementation and enforcement of the rule and of
whether the agency can be reasonably expected to
implement the rule with the current level of
appropriations.
(5)(A) the Director is authorized to review and prepare
comments on any preliminary or final regulatory impact
analysis, notice of proposed rulemaking, or final rule based on
the requirements of this subsection.
(B) Upon the request of the Director, an agency shall consult
with the Director concerning the review of a preliminary impact
analysis or notice of proposed rulemaking and shall refrain
from publishing its preliminary regulatory impact analysis or
notice of proposed rulemaking until such review is concluded.
The Director's review may not take longer than 90 days after
the date of the request of the Director.
(6)(A) An agency may not adopt a major rule unless the final
regulatory impact analysis for the rule is approved or
commented upon in writing by the Director or by an individual
designated by the Director for that purpose.
(B) Upon receiving notice that the Director intends to
comment in writing with respect to any final regulatory impact
analysis or final rule, the agency shall refrain from
publishing its final regulatory impact analysis or final rule
until the agency has responded to the Director's comments and
incorporated those comments in the agency's response in the
rulemaking file. If the Director fails to make such comments in
writing with respect to any final regulatory impact analysis or
final rule within 90 days of the date the Director gives such
notice, the agency may publish such final regulatory impact
analysis or final rule.
(7) Notwithstanding section 551(16), for purposes of this
subsection with regard to any rule proposed or issued by an
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 National Credit Union Administration, or the
Office of Federal Housing Enterprise Oversight, the term
``Director'' means the head of such agency, Administration, or
Office.
(j) To the extent practicable, the head of an agency shall
seek to ensure that any proposed major rule or regulatory
impact analysis of such a rule is written in a reasonably
simple and understandable manner and provides adequate notice
of the content of the rule to affected persons.
(k)(1) The provisions of this section regarding major rules
shall not apply to--
(A) any regulation that responds to an emergency
situation if such regulation is reported to the
Director as soon as is practicable;
(B) any regulation for which consideration under the
procedures of this section would conflict with
deadlines imposed by statute or by judicial order; and
(C) any regulation proposed or issued in connection
with the implementation of monetary policy or to ensure
the safety and soundness of federally insured
depository institutions, any affiliate of such
institution, credit unions, or government sponsored
housing enterprises regulated by the Office of Federal
Housing Enterprise Oversight.
A regulation described in subparagraph (B) shall be reported to
the Director with a brief explanation of the conflict and the
agency, in consultation with the Director, shall, to the extent
permitted by statutory or judicial deadlines, adhere to the
process of this section.
(2) The Director may in accordance with the purposes of this
section exempt any class or category of regulations from any or
all requirements of this section.
* * * * * * *
CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS
* * * * * * *
Sec. 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this
title, or any other law, to publish general notice of proposed
rulemaking for any proposed rule, the agency shall prepare and
make available for public comment an initial regulatory
flexibility analysis. Such analysis shall describe the impact
of the proposed rule on small entities. The initial regulatory
flexibility analysis or a summary shall be published in the
Federal Register at the time of the publication of general
notice of proposed rulemaking for the rule. The agency shall
transmit a copy of the initial regulatory flexibility analysis
to the Chief Counsel for Advocacy of the Small Business
Administration in accordance with section 612(d).
* * * * * * *
[Sec. 611. Judicial review
[(a) Except as otherwise provided in subsection (b), any
determination by an agency concerning the applicability of any
of the provisions of this chapter to any action of the agency
shall not be subject to judicial review.
[(b) Any regulatory flexibility analysis prepared under
sections 603 and 604 of this title and the compliance or
noncompliance of the agency with the provisions of this chapter
shall not be subject to judicial review. When an action for
judicial review of a rule is instituted, any regulatory
flexibility analysis for such rule shall constitute part of the
whole record of agency action in connection with the review.
[(c) Nothing in this section bars judicial review of any
other impact statement or similar analysis required by any
other law if judicial review of such statement or analysis is
otherwise provided by law.]
Sec. 611. Judicial review
(a)(1) Except as provided in paragraph (2), not later than
180 days after the effective date of a final rule with respect
to which an agency--
(A) certified, pursuant to section 605(b), that such
rule would not have a significant economic impact on a
substantial number of small entities; or
(B) prepared a final regulatory flexibility analysis
pursuant to section 604,
an affected small entity may petition for the judicial review
of such certification or analysis in accordance with the terms
of this subsection. A court having jurisdiction to review such
rule for compliance with the provisions of section 553 or under
any other provision of law shall have jurisdiction to review
such certification or analysis.
(2)(A) Except as provided in subparagraph (B), in the case
where a provision of law requires that an action challenging a
final agency regulation be commenced before the expiration of
the 180 day period provided in paragraph (1), such lesser
period shall apply to a petition for the judicial review under
this subsection.
(B) In the case where an agency delays the issuance of a
final regulatory flexibility analysis pursuant to section
608(b), a petition for judicial review under this subsection
shall be filed not later than--
(i) 180 days; or
(ii) in the case where a provision of law requires
that an action challenging a final agency regulation be
commenced before the expiration of the 180-day period
provided in paragraph (1), the number of days specified
in such provision of law,
after the date the analysis is made available to the public.
(3) For purposes of this subsection, the term ``affected
small entity'' means a small entity that is or will be
adversely affected by the final rule.
(4) Nothing in this subsection shall be construed to affect
the authority of any court to stay the effective date of any
rule or provision thereof under any other provision of law.
(5)(A) In the case where the agency certified that such rule
would not have a significant economic impact on a substantial
number of small entities, the court may order the agency to
prepare a final regulatory flexibility analysis pursuant to
section 604 if the court determines, on the basis of the
rulemaking record, that the certification was arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.
(B) In the case where the agency prepared a final regulatory
flexibility analysis, the court may order the agency to take
corrective action consistent with the requirements of section
604 if the court determines, on the basis of the rulemaking
record, that the final regulatory flexibility analysis was
prepared by the agency without observance of procedure required
by section 604.
(6) If, by the end of the 90-day period beginning on the date
of the order of the court pursuant to paragraph (5) (or such
longer period as the court may provide), the agency fails, as
appropriate--
(A) to prepare the analysis required by section 604;
or
(B) to take corrective action consistent with the
requirements of section 604,
the court may stay the rule or grant such other relief as it
deems appropriate.
(7) In making any determination or granting any relief
authorized by this subsection, the court shall take due account
of the rule of prejudicial error.
(b) In an action for the judicial review of a rule, any
regulatory flexibility analysis for such rule (including an
analysis prepared or corrected pursuant to subsection (a)(5))
shall constitute part of the whole record of agency action in
connection with such review.
(c) Nothing in this section bars judicial review of any other
impact statement or similar analysis required by any other law
if judicial review of such statement or analysis is otherwise
provided by law.
Sec. 612. Reports and intervention rights
(a) * * *
* * * * * * *
(d) Action by the SBA Chief Counsel for Advocacy.--
(1) Transmittal of proposed rules and initial
regulatory flexibility analysis to sba chief counsel
for advocacy.--On or before the 30th day preceding the
date of publication by an agency of general notice of
proposed rulemaking for a rule, the agency shall
transmit to the Chief Counsel for Advocacy of the Small
Business Administration--
(A) a copy of the proposed rule; and
(B)(i) a copy of the initial regulatory
flexibility analysis for the rule if required
under section 603; or
(ii) a determination by the agency that an
initial regulatory flexibility analysis is not
required for the proposed rule under section
603 and an explanation for the determination.
(2) Statement of effect.--On or before the 15th day
following receipt of a proposed rule and initial
regulatory flexibility analysis from an agency under
paragraph (1), the Chief Counsel for Advocacy may
transmit to the agency a written statement of the
effect of the proposed rule on small entities.
(3) Response.--If the Chief Counsel for Advocacy
transmits to an agency a statement of effect on a
proposed rule in accordance with paragraph (2), the
agency shall publish the statement, together with the
response of the agency to the statement, in the Federal
Register at the time of publication of general notice
of proposed rulemaking for the rule.
(4) Special rule.--Any proposed rules issued by an
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 National Credit
Union Administration, or the Office of Federal Housing
Enterprise Oversight, in connection with the
implementation of monetary policy or to ensure the
safety and soundness of federally insured depository
institutions, any affiliate of such an institution,
credit unions, or government sponsored housing
enterprises or to protect the Federal deposit insurance
funds shall not be subject to the requirements of this
subsection.
* * * * * * *
MINORITY VIEWS
We agree that steps need to be taken to make the regulatory
process more sensitive to the needs of small businesses. Small
businesses lack the staff and resources to follow regulatory
developments, are less likely to have their interests
represented by trade associations and lobbyists, and may bear a
disproportionate cost of complying with federal regulations. We
support the concept of bringing greater accountability to the
Federal agencies that deal with small businesses and taxpayers.
Nonetheless, we continue to have significant concerns about
Title II of the bill.
The rulemaking process has been criticized as being overly
prescriptive, expensive, and laden with burdensome and useless
paperwork. Title II exacerbates these problems by creating a
costly, time-consuming, and maze-like process that does nothing
to streamline government or roll back red tape. In fact, Title
II fails its own test: it is not the most cost-effective
approach to regulatory reform.
The most obvious problem with Title II is that it defines a
``major rule''--the trigger for time-consuming procedural steps
and costly analysis--as any rule with an annual effect on the
economy of $50 million. For 20 years, beginning with the
Administration of former President Gerald Ford, the Executive
Branch has used $100 million as the benchmark for defining a
``major rule,'' a standard that in today's dollars would be
$300 to $400 million. Presidents Reagan and Bush, in fact every
President since Ford regardless of party affiliation, set the
threshold at $100 million. The vast majority of the witnesses,
including C. Boyden Gray--President Bush's White House Counsel
and current Chairman of Citizens for a Sound Economy--
recommended that the $100 million threshold be retained.
Another problem with the definition of ``major rule'' is
the inclusion of two other triggers drawn from Reagan Executive
Order 12,291. It is one thing to use expansive language in a
flexible executive order; but it is another to use the same
language in a statute that is subject to judicial review. For
example, what is a ``significant effect on competitiveness''?
Does that include a regulation that makes small business more
competitive with big business? How do you quantify an effect on
innovation? These questions could lead to endless litigation.
The Committee rightly eliminated consideration of indirect
effects from Title I of the bill, but we are concerned that we
are introducing the same concept here.
OMB has the authority under the bill to call any rule a
``major rule,'' so truly far-reaching regulations will not
escape notice. However, the resources devoted to regulatory
analysis should be commensurate with the significance of the
decision to be made. The EPA estimates it will cost taxpayers
up to $1.6 million for each Regulatory Impact Analysis and risk
assessment. Do we really want to impose that kind of cost on
the Federal Emergency Management Agency before it makes changes
to grants for disaster victims or technical changes to flood
maps? Or the Food and Drug Administration before it approves
the use of a new sweetener in food? Or the Department of the
Interior before it opens migratory bird hunting season? At a
time when we are burdened with enormous deficits, we should
prioritize more wisely.
Another issue is the extended timeline for regulations.
Title II could add two years to the length of time it takes to
issue a regulation. The public expects government to act in a
timely and appropriate fashion to protect health, safety, and
the environment. Likewise, industry does not benefit from
interminable delay--businesses will be unable to get timely
answers on how laws are to be implemented. The timeline can and
should be condensed, and reconsidered altogether for situations
where there is a substantial threat to public health or safety.
H.R. 926 is a significant improvement over the 23-step
analysis that would have been required by H.R. 9. But we still
have some concerns with several of the remaining steps and
would like to continue working with the Committee to establish
practical criteria that ensure that agencies will choose the
approach that provides the most for the resources spent. The
bill's ``least costly'' language does not accomplish this and
in fact could force an agency to ignore the most cost-effective
approach. The bill could also cause expensive, never ending
rulemaking proceedings by forcing an agency to analyze an
unreasonable number of hypothetical alternatives to the rule.
We understand that is not the intent of the drafters, and hope
to work with the Chairman to clarify this section prior to
floor consideration.
The Regulatory Impact Analysis, as part of the rulemaking
record, is reviewable when the regulation itself is challenged.
This is the appropriate time for review. To allow for separate
review of the Regulatory Impact Analysis itself is litigation
overkill.
Both the Chairman and the Ranking Member were concerned
that simply by dragging its heels, OMB could hold up urgent
rules indefinitely. The Committee voted to eliminate the
possibility of a pocket veto by OMB. We understand technical
changes are necessary to give full effect to the Committee's
decision and that the majority is willing to make the necessary
changes.
However, we continue to be concerned about the possibility
of perverting the requirements of openness and accountability
in the regulatory process by allowing ex parte and third party
contacts to be off the record at critical stages of the
regulation writing process. Congressional investigations over
the years have repeatedly documented the profound impact that
such secret contacts can have on important regulations
affecting the public health and welfare. We believe that
consistent with the spirit of the Administrative Procedure Act,
records should be kept when government officials involved in
writing regulations meet with private parties attempting to
influence the outcome of those regulations. Justice Brandeis
once said that the best antiseptic for government misdeeds was
sunshine. Unfortunately, an amendment to put such ``sunshine''
requirements in statute was defeated.
Finally, we commend the Committee for adopting amendments
to preserve the necessary independence of the bank regulatory
agencies, especially as it affects their responsibilities
concerning the safety and soundness of the U.S. banking system
and the conduct of monetary policy. Banking regulators must be
able to exercise independent and expeditious judgement to
safeguard system stability and protect the Federal deposit
insurance funds. In order to fulfill these obligations, the
regulators must be as free as possible from political influence
and unnecessary bureaucratic layers that could distort or delay
implementation of regulations directly affecting the nation's
financial and economic stability. We are pleased that the
Committee recognized that the procedures outlined in H.R. 926
are not appropriate for every type of regulation.
Carefully crafted regulations protect consumers from
dangerous products, control immigration, establish traffic
lanes for airplanes, quarantine areas to prevent the spread of
pests such as the medfly, and help combat drug trafficking by
setting standards for tracing money laundering, among other
things. Government must be able to take these important actions
efficiently without wasting taxpayer's money. While the
Committee has made substantial improvements to the bill, many
Members of the minority continue to believe that it will
unnecessarily slow and add needless expense to the regulatory
process. We hope the majority will continue to work with us to
resole these problems so that we can enact legislation that
provides remedies for the shortcomings of the regulatory
process without undermining its strengths.
Jack Reeds.
Xavier Becerra.
Robert Scott.
Jose E. Serrano.
Jerrold Nadler.
Scheila Jackson-Lee.
Melvin L. Watt.
John Conyers, Jr.
Pat Schroeder.
John Bryant.
Zoe Lofgren.
Howard L. Berman.
Barney Frank.
Charles Schumer.